Moodys.com
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Email page
Email
print page
Print

Rating Action:

Moody’s affirms Nationwide’s ratings (insurance financial strength A1); outlook to stable from negative

27 May 2020

Affirming ratings of Nationwide P&C and Nationwide Financial Services

New York , May 27, 2020 – Moody's Investors Service has affirmed the A1 insurance financial strength (IFS) ratings of Nationwide Mutual Insurance Company (NMIC) and its property & casualty (P&C) affiliates (collectively, Nationwide P&C), and the A1 IFS ratings of its life insurance and retirement services subsidiaries (collectively Nationwide Financial Services (NFS)). Moody's has also affirmed the A3 (hyb) surplus note rating of NMIC, the Baa1 senior unsecured debt rating of NFS holding company Nationwide Financial Services, Inc. and other ratings within the group (see list below). Moody's has changed the rating outlook for all of these entities to stable from negative.

RATINGS RATIONALE

According to Moody's, the ratings affirmation and stable outlook reflect the solid capital base and diversified product offerings of Nationwide Enterprise, which encompasses Nationwide P&C and NFS, along with improving profitability at Nationwide P&C and relatively stable performance at NFS. The group also benefits from its mutual ownership structure, which helps align the interests of policyholders/owners and company managers. Credit challenges include natural catastrophe and loss reserving risks at Nationwide P&C, equity market and interest rate risks at NFS, and the complexity of enterprise risk management across the group's many business lines.

The coronavirus and related economic downturn heighten the challenges facing Nationwide Enterprise and its peers. Moody's believes the downturn will lead to lower premiums and sales, more volatile investment results, and higher claims in pandemic-exposed P&C and life insurance lines. However, Nationwide Enterprise has a sound balance sheet to withstand the market pressures, and will benefit from lower claim frequencies in lines with reduced economic activity such as personal auto. Moody's expects that the insurer will limit its discretionary spending through the downturn to conserve liquidity and capital.

NATIONWIDE P&C

Nationwide P&C ranks as the eighth-largest US personal lines writer and ninth-largest US commercial lines writer based on 2019 direct premiums written. The P&C group's ratings reflect its good market presence in personal, small commercial and excess and surplus insurance lines; its healthy product and geographic diversification across the US; and its moderate high-teens financial leverage at year-end 2019. The group is re-underwriting its P&C book through rate increases, greater use of reinsurance, and exiting certain segments to enhance core profitability after years of weak and volatile results. Nationwide P&C also benefits from the relatively steady earnings at NFS.

Offsetting these strengths are Nationwide P&C's exposure to natural catastrophes as well as potential adverse reserve development in core business lines and runoff asbestos and environmental lines. The group also faces elevated expenses associated with re-underwriting initiatives and transitioning captive agents to a more diversified independent distribution platform. The company has been preparing for this transition for several years, and expects to complete it by July 2020.

NFS

NFS's ratings are based on its established position in US life insurance, annuity and retirement plans along with its diversified distribution channels and strong brand recognition. Solid capitalization and a dynamic hedging program support the group's variable annuity (VA) liabilities. Moody's said NFS remains a leading player in the 457 market for retirement plans sold to state and local governments and has a top-tier position in life insurance and annuities. The group's consolidated NAIC company action level risk-based capital (RBC) ratio stood at 690% at year-end 2019 and remains strong under a stress scenario.

These strengths are offset by the challenges of hedging contract guarantees in VA liabilities, which expose NFS's capital and earnings to equity market and interest rate risks. NFS also offers highly competitive, lower-margin asset accumulation products such as pension plans and mutual funds, which add further earnings sensitivity to equity markets and low interest rates. Another challenge is above-industry-average exposure to commercial mortgage loans, which represented 18% of cash and invested assets at year-end 2019.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

For Nationwide P&C, the following factors could lead to a rating upgrade: (i) improved profitability with combined ratios in the mid-90s or lower and a return on capital in the mid-to-high single digits, (ii) gross underwriting leverage below 2.5x, (iii) consistently favorable loss development, and (iv) continued strong performance at NFS.

Factors that could lead to a rating downgrade for Nationwide P&C include: (i) combined ratios above 102%, (ii) gross underwriting leverage above 3.5x, (iii) decline in policyholders' surplus by 10% or more in a one-year period, (iv) deterioration in the credit profile of NFS, or (v) financial leverage above 30% or interest coverage below 4x.

For NFS, the following factors could lead to a rating upgrade: (i) an upgrade of the Nationwide P&C ratings, (ii) return on capital consistently greater than 8%, and (iii) consolidated RBC ratio for the life companies greater than 425%.

Factors that could lead to a rating downgrade for NFS include: (i) a downgrade of the Nationwide P&C ratings, (ii) significant growth in exposure to VAs with guarantees relative to total liabilities, or (iii) consolidated RBC ratio for the life companies below 400%.

Moody's has affirmed the following ratings:

Nationwide P&C:

Nationwide Mutual Insurance Company – insurance financial strength A1, surplus notes A3 (hyb);

Crestbrook Insurance Company, Farmland Mutual Insurance Company, Harleysville Insurance Company, Harleysville Insurance Company of New Jersey, Harleysville Insurance Company of New York, Harleysville Lake States Insurance Company, Harleysville Preferred Insurance Company, Harleysville Worcester Insurance Company, Nationwide Agribusiness Insurance Company, Nationwide Assurance Company, Nationwide General Insurance Company, Nationwide Mutual Fire Insurance, Nationwide Property & Casualty Insurance Company, Scottsdale Insurance Company – insurance financial strength A1.

NFS:

Nationwide Life Insurance Company – insurance financial strength A1, commercial paper P-1;

Nationwide Life & Annuity Insurance Co – insurance financial strength A1;

Nationwide Financial Services, Inc. – backed senior unsecured debt A2, senior unsecured debt Baa1, junior subordinated debt Baa2 (hyb);

Nationwide Financial Services Capital Trust – backed preferred stock Baa2 (hyb).

Moody's has changed the rating outlook for these entities to stable from negative.

Moody's insurance financial strength ratings are opinions of the ability of insurance companies to pay senior policyholder claims and obligations.

The principal methodology used in rating Nationwide Mutual Insurance Company, Crestbrook Insurance Company, Farmland Mutual Insurance Company, Harleysville Insurance Company, Harleysville Insurance Company of New Jersey, Harleysville Insurance Company of New York, Harleysville Lake States Insurance Company, Harleysville Preferred Insurance Company, Harleysville Worcester Insurance Company, Nationwide Agribusiness Insurance Company, Nationwide Assurance Company, Nationwide General Insurance Company, Nationwide Mutual Fire Insurance, Nationwide Property & Casualty Insurance Company and Scottsdale Insurance Company was Property and Casualty Insurers Methodology published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1187352 . The principal methodology used in rating Nationwide Life Insurance Company, Nationwide Life & Annuity Insurance Co, Nationwide Financial Services, Inc. and Nationwide Financial Services Capital Trust was Life Insurers Methodology published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1187348 . Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

NMIC, a mutually owned insurer headquartered in Columbus, Ohio, is the lead member of one of the 10 largest US P&C groups, writing a broad mix of personal and commercial lines. NMIC also owns NFS, a US life insurance, annuity and retirement plan provider with diversified distribution channels and strong brand recognition. On a consolidated GAAP basis, the Nationwide Enterprise generated revenue of $27.0 billion and net income of $1.3 billion in 2019, and had total assets of $253.6 billion and total equity of $27.1 billion as of December 31, 2019.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004 .

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entities or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569 .

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

The below contact information is provided for information purposes only. Please see the ratings tab of the issuer page at www.moodys.com, for each of the ratings covered, Moody's disclosures on the lead rating analyst and the Moody's legal entity that has issued the ratings.

The person who approved Nationwide Mutual Insurance Company, Crestbrook Insurance Company, Farmland Mutual Insurance Company, Harleysville Insurance Company, Harleysville Insurance Company of New Jersey, Harleysville Insurance Company of New York, Harleysville Lake States Insurance Company, Harleysville Preferred Insurance Company, Harleysville Worcester Insurance Company, Nationwide Agribusiness Insurance Company, Nationwide Assurance Company, Nationwide General Insurance Company, Nationwide Mutual Fire Insurance, Nationwide Property & Casualty Insurance Company and Scottsdale Insurance Company credit ratings is Sarah Hibler, Associate Managing Director, JOURNALISTS: 1 212 553 0376, Client Service: 1 212 553 1653. The person who approved Nationwide Life Insurance Company, Nationwide Life & Annuity Insurance Co, Nationwide Financial Services, Inc. and Nationwide Financial Services Capital Trust credit ratings is Scott Robinson, Associate Managing, Director JOURNALISTS: 1 212 553 0376, Client Service: 1 212 553 1653.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Bruce Ballentine
VP-Sr Credit Officer
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

Sarah Hibler
Associate Managing Director
Financial Institutions Group
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

Releasing Office :
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

© 2020 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody’s investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

Moodys.com