Nationwide Mutual Insurance Co. reported a third-quarter operating loss of $36 million and a 42% drop in operating earnings as claims costs rose, though growth in the company’s financial services arm has left the insurer in a strong capital position.
The insurer’s property/casualty business’s operating loss compares to an operating profit of $190 million in the year-earlier period. Written premiums increased 4.8% to $5.02 billion, though losses and related expenses rose 8% to a significant $3.43 billion.
As is the case with other insurers, auto claims increased as low gas prices and an improving economy lead to a greater number of drivers on the road. Auto repair costs have also increased, particularly as the number of older vehicles in service multiply.
Chief Financial Officer Mark Thresher added that a diversification of Nationwide’s investment portfolio has made the company more vulnerable to periods of market volatility.
However, Thresher told the
Wall Street Journal, the company’s overall results were in line with expectations and Nationwide is in a strong capital position while other property/casualty insurers are suffering from volatile global market conditions and low interest rates.
Part of that is due to Nationwide’s financial services unit, which offers banking and insurance products. The unit reported net operating income rose 30% to $245 million, and new and renewal premiums and deposits grew 11% to $5.69 billion.
Companywide, Nationwide experienced a slight dip in operating profit, from $272 million during Q3 2014 to $159 million this year.
The company’s net income was also down, from $144 million last year to $113 million. Total revenue increased 2.4% to $6.34 billion.
In addition to reporting its results, Nationwide announced it will continue in its plan to unify its business operations under the Nationwide brand. That will mean rebranding for Allied Insurance, Scottsdale Insurance, Harleysville Insurance and Veterinary Pet Insurance.
