2011 Annual Report

Partnerships made and promises kept.

Nationwide 2011 Annual Report

Our customers put their trust in Nationwide.

And 2011 gave us a record number of opportunities to earn that trust.
Tornadoes, floods and hurricanes. Heat, drought and wildfires. Volatile markets and economic uncertainty. It was a year of intense conditions all around, and record claims paid. But for Nationwide, it was also a year of promises kept. Time and again, Nationwide was there for our customers when they needed us most. Thats the promise of a mutual, and fulfilling it takes lasting, meaningful relationships with our business partners and a genuine commitment to community partnership. These partnerships provided strength. A greater depth and breadth of coverage and services offered relief. And moving forward together, it all ensures well continue to keep our promise.

Letter from Our CEO

At Nationwide, we care about our business, and we also care deeply about our partnerships with our customers, communities, producers, agents and associates. The strength and longevity of these partnerships are the foundation of our unique advantage and have helped make Nationwide the great company it is today.

2011 was an unprecedented year. Numerous severe storms, tornadoes and a hurricane devastated communities across the country. No matter what the circumstance, Nationwide was there to help our customers restore their lives when they needed us most. Despite the adverse weather and volatile markets, Nationwides capital position remains strong, enabling us to fulfill our promises to our customers. In 2011, operating revenue was $20.7 billion. For the year, Nationwide earned $585 million in net operating income, reflecting strong performance in our financial services businesses, which offset weather-driven losses in our property and casualty businesses. As a mutual company, we exist to serve our customers. In 2011, we were proud to return to our customers $13.2 billion in auto, home and life insurance claims. This included $2.3 billion in weather-related claims in 2011, nearly $1 billion more than in 2010. Nationwide takes a conservative approach to managing our capital. Despite a record number of claims, statutory surplus remained stable at $12.8 billionmore than three times the amount required by regulators. Statutory capital is the primary measure of financial strength and claims-paying ability used by rating agencies and insurance regulators. Our capital strength ensures that were able to fulfill our promises now and for the long term. Our diverse businesses are a competitive advantage. Nationwides diverse business mix across property and casualty insurance and financial services helps deliver balanced financial results, as was the case in 2011 despite the extreme weather. Our broad set of products helps our customers protect whats most important and live well in retirement: Property and casualtyAuto and homeowners insurance, farm coverage, agribusiness and commercial insurance, excess and surplus lines, and specialty health and pet insurance Financial servicesTraditional life insurance, fixed and variable annuities, variable and universal life insurance, banking, mutual funds, and public- and private-sector retirement plans

Nationwide is further diversifying its distribution. Distribution through exclusive and independent agents and investment professionals plays a critical role in Nationwides success, balancing our distribution across our retail and wholesale businesses. We are able to provide our products in almost any way an agent or producer wishes to sell them or consumers wish to buy them. In September 2011, Nationwide announced its intent to merge with Harleysville Insurance, which has independent agents in 32 states and deep experience in commercial insurance. The proposed combination represents a strong strategic business fit. Harleysvilles strong presence in the Northeast will complement Nationwides footprint through Allied Insurance in the Midwest and West, creating a national distribution of independent agencies. Our history of building enduring partnerships is a unique advantage. At Nationwide, we care about our business, and we also care deeply about our partnerships with our customers, communities, producers, agents and associates. The strength and longevity of these partnerships are the foundation of our unique advantage and have helped make Nationwide the great company it is today. Thanks to our mutual heritage and long-term perspective, we can focus on things beyond our bottom line. One of the ways we demonstrate this value is through our long-standing commitment to the communities where our leaders and associates volunteer their time and resources. So when we say we are more than a business, our associates actively back up that statement every day. Were proud to deliver on our On Your Side promise to our customers, as we continue to build and strengthen our partnerships for generations to come.

Steve Rasmussen
Chief Executive Officer Nationwide

Market Positions and Rankings

Partnership by the numbers.

In a true partnership, the participants are stronger together than they are apart. And with the market leadership of a partner like Nationwide, there is truly strength in numbers.

#1 provider of public-sector retirement plans

1

4thlargest excess and surplus 2 lines insurer

#1 writer of farmowner insurance

3

#
#6 provider of variable universal life insurance 4

provider of variable annuities

8

9thlargest commercial insurer

6

7th-largest homeowner insurer in the U.S.

5

7th-largest auto insurer

#1 veterinarianrecommended pet insurance 7 company

1. Source: Plansponsor, 2010. Based on number of record-keeping plans. 2. Source: A.M. Best, 2010 DWP. Based on premiums written. 3. Source: A.M. Best, 2010 DWP. Based on premiums written. 4. Source: Tillinghast 2011. 5. Source: A.M. Best, 2010 DWP. Based on premiums written. 6. Source: A.M. Best, 2010 DWP. Based on premiums written. 7. Source: 2010 Veterinary AAU Study. 8. Source: VARDS. Based on 2011 figures. 9. Source: A.M. Best, 2010 DWP. Based on premiums written.

Our Finances

The results of many successful partnerships.

Numbers matter. But when its time to close the books and measure the success of the previous year, we look back to make sure we gave our customers everything they expected, and look ahead to make sure were positioned to keep delivering on our promise for years to come.

Financial Highlights
(in millions) INCOME STATEMENT
Premiums and policy charges Net investment income

Year ended December 31 2011 2010

16,503

$ 16,584 3,080 3,080

(74) (282) 957 20,265 (127) 989

Net realized investment losses

(1,809)

Net other-than-temporary impairment losses

Other revenues Total revenues Property and casualty losses and loss expense Life, accident and health benefits Insurance acquisition and other operating expenses Taxes and other Net (loss) income $ $

18,636

10,942

9,866 2,181 7,220 39 959

2,279 6,906 (909) (582) $

2011 2010

Balance Sheet
Total investments

$ $ $

68,203 64,674 154,762

$ $

Separate account assets Total assets

66,050 64,346 148,702

Property and casualty loss and loss expense reserves Future policy benefits and claims Long-term debt Total policyholders equity

$ $ $

14,574 34,589 4,931

$ $ $

14,602 32,032 4,492

$ 16,971 $ 16,838

Key Performance Indicators (Unaudited)

Operating revenue Net operating income $

20,720

$ 20,739
$ 645 528 (37)

Property and Casualty Financial Services

(203)

737 51

Corporate and Other

Total net operating income $

585 1,136

Financial Services

New and renewal production premiums and deposits Net flows

19,577

$ $

4,007

Property and Casualty direct written premium

14,748

$ 17,188 $ 2,732 $ 14,633

$ $ 12,974 160,084

Statutory surplus Customer funds managed and administered

$ $

12,828 160,430

Certain prior-period amounts have been reclassified to conform to current-year presentation.

Our Finances

Operating Performance
operating revenue: $20.7 billion Operating revenue held steady at $20.7 billion in 2011. Earned premiums were down slightly in 2011, but direct written premiums of $14.7 billion exceeded 2010 results, driven by improvements in retention and new business growth. Premiums in the direct and affinity channels exceeded $1 billion for the first time, while robust growth in commercial lines more than offset modest declines in personal lines. Higher average customer assets managed in the financial services business also drove an increase in policy charges and fee revenues collected. Net Operating Income: $585 million Nationwides operating earnings of $585 million in 2011 reflect strong performance in the companys financial services business, offsetting weather-driven losses in its property and casualty businesses. Nationwide paid a record $2.3 billion in weather-related claims, nearly $1 billion more than in 2010. Offsetting these weather-related losses were some one-time benefits related to customer acquisition costs and taxes in the companys financial services business, as well as an increase in revenues collected driven by higher average customer assets managed.

Total Assets: $154.8 billion Total assets increased to $154.8 billion, up from $148.7 billion in 2010. General account investments increased to $68.2 billion, up from $66.1 billion in 2010, driven by significant declines in interest rates, which increased the value of fixed income investments that comprise a significant portion of general account investments.

$22.8 $21.5 $20.9

$20.7

$20.7

Operating Revenue
(in billions)

2007

2008

2009

2010

2011

$1.57

Net Operating Income

(in billions)

$0.90

$1.14 $0.59

$0.25 2007 2008 2009 2010 2011

$161.1 $154.8 $148.7

Total Assets
(in billions)

$140.1 $135.0 2007 2008 2009 2010 2011

Our Finances

Capital Strength
Nationwide remains strong and stable. Policyholders equity increased to nearly $17 billion in 2011, up from $16.8 billion at the end of 2010. Statutory surplusthe primary measure of financial strength and claims-paying ability evaluated by regulators and rating agencies remained stable at $12.8 billion at the end of 2011, more than three times the amount required by regulators to cover Nationwides obligations to its customers. Rating agencies continue to validate our financial strength. In July 2011, Standard & Poors affirmed Nationwides A+ rating and upgraded Nationwides outlook to Stable. Nationwides capital position, excellent risk management capabilities, product and distribution breadth, market leadership, and diversified businesses are also factors supporting strong ratings.

Standard & Poors A+ A1 Moodys A.M. Best A+

1 2 3

Risk Management
Managing risk is one of Nationwides competitive advantages, and its something weve dedicated resources to for many years. We have a comprehensive risk management program and have developed a rigorous process for identifying, evaluating and managing the risks across our businesses. A risk-appetite framework sets clear and comprehensive targets, tolerances and limits to better manage risks and protect capital. The company uses reinsurance and catastrophe bonds to help manage risk within specified tolerances and to mitigate the impact of large catastrophes. Investment risk is controlled using strong management oversight processes and rigorous modeling and monitoring tools. Standard and Poors affirmed a separate rating of Strong for our risk management capabilities, a rating only 15 percent of insurance companies share with us.4

10

1. Standard & Poors assigned rating and upgraded outlook for Nationwide Mutual Insurance Company on July 8, 2011. 2. Moodys assigned rating on Nationwide Mutual Insurance Company on February 23, 2011. 3. A.M. Best assigned rating on Nationwide Mutual Insurance Company on March 16, 2011. 4. Standard & Poors assigned rating of risk management capabilities on July 8, 2011.

Investment Approach
We follow a disciplined investment process, developing investment strategies that achieve desired financial objectives and risk tolerances. Our approach focuses on clearly linking investments to the product liabilities they support. Our investment strategy is designed to ensure that Nationwide has the capital and liquidity to fulfill its financial obligations and pay claims across all business lines over the short and long term. Our investment team uses macroeconomic analysis, thorough credit analysis, portfolio diversification and ongoing portfolio monitoring to accomplish these goals. We believe that using both top-down and bottom-up views will maximize the opportunity to make value-added investment decisions across economic and market cycles.

Investment Portfolio
$68.2 billion

75% Fixed maturity securities 2% Real estate 3% Short-term investments 9% Other investments 11% Mortgage loans

11

Our Businesses

12

Partnership runs in the family.

Some have Nationwide in the name. Some dont. But every business at Nationwide believes that when partners work together, everyone benefits.

Property and Casualty

Financial Services

13

13

Our Businesses

Property and Casualty

Nationwide Insurance Allied Insurance Scottsdale Insurance Nationwide Agribusiness Titan Insurance

Direct written premiums: $14.7 billion As the economy gradually improved, positive trends emerged in new business writing, average commercial premiums and customer retention, leading to $14.7 billion in direct written premiums in 2011. Additionally, the company saw growth in its direct and affinity channels, which surpassed $1 billion for the first time, up 13 percent from last year. Premiums also were up strongly in the companys excess and surplus, small- and mid-sized commercial, and agribusiness lines, which offset modest declines in personal lines premiums.

Net operating loss: $203 million Property and casualty results were heavily impacted by severe weather claims of $2.3 billion, a record for the company. This was nearly $1 billion more in weather-related claims than in 2010. The property and casualty business reported a net operating loss of $203 million in 2011, compared to net operating income of $645 million in 2010.

Direct Written Premiums

$14.7 billion

52% Nationwide Insurance 5% Titan Insurance 6% Nationwide Agribusiness 14% Scottsdale Insurance

23% Allied Insurance

14

Financial Services
Nationwide Financial
Group Retirement Plans Individual Investment Products Individual Protection Products Mutual Funds

Nationwide Bank

Customer assets managed: $160.4 billion Financial services customer assets under management were $160.4 billion in 2011. This included nearly $41 billion managed by Nationwide Funds Group, the companys mutual fund division. Individual investment assets increased 7 percent to $52.7 billion, led by strong sales and positive net flows in variable annuities. Retirement plan assets totaled $81.1 billion, and life insurance assets totaled $20.9 billion. Nationwide Bank continued its strong momentum, as customer deposits increased by 19 percent to $3.4 billion.

Net operating income: $737 million Net operating income grew to $737 million in 2011, up from $528 million in 2010. Results were driven by an increase in policy charges and fee revenues collected, reflecting an increase in average customer assets managed, and by one-time benefits related to customer acquisition costs and taxes. Record variable annuity sales drove total sales to $19.6 billion, up 14 percent from 2010.

Sales
$19.6 billion

47% Group Retirement Plans 2% Retail Mutual Funds 9% Individual Protection Products

42% Individual Investment Products

15

Profiles in Partnership

16

Behind every promise, a partner. Beside every partner, Nationwide.

Standing stronger by standing together. Doing more as a group than you could ever do on your own. Meeting the needs of customers. To Nationwide, this is more than a vision or an inspirational talk; its how we do business. Every day, and with every partner. After all, Nationwide came together in 1926 to serve the needs of farmers who, weighing their challenges ahead against their funds on hand, realized they could do more together than they could do alone. It was the beginning of the Nationwide mutual model and the first of many great partnerships to come. Nationwide has thrived, but only because weve kept true to the principles of partnership. Focusing on long-term goals to build lasting financial stability. Building strong, resilient relationships based on mutual benefit. And staying focused on the one outcome that makes everything possible: the well-being of our customers, our partners and everyone they serve. This commitment has made Nationwide a trusted advocate for consumers and businesses. Its made Nationwide a stronger company. But more than anything, its made Nationwide a better partner. And our partners agree.

17

Mike & Roxie Hicks + Nationwide Insurance

18

What partnership can put back together.

When Nationwide Claims Representative Joe Miano visited Mike and Roxie Hicks at their home, there was no home to speak of. Just a pile of rubble and two people scared, shaken and ready to move forward.
The tornado that tore through their Tuscaloosa neighborhood in the spring of 2011 didnt wait for them to evacuate. It demolished their home around them as they hid beneath their staircase. It wrestled their pets from their grasp, and scattered everything they owned, quite literally, to the winds. Joe knew it would take time for the Hicks family to put their life back together, and they couldnt wait a day to begin trying. So he provided them with $10,000 on the spot to help with immediate needs. Mike and Roxie were grateful. As grateful as when Mikes lucky silver dollar was found embedded 20 feet up in a nearby tree, and nearly as grateful as when their dog, Ally, and their three cats, Cheetah, Felix and Tangerine, were all found wandering the neighborhood, shaken, confused and ready to come home.

What the Tuscaloosa tornado outbreak took from the Hicks family, Nationwide is helping restore. Here, Roger Downs, Nationwide Insurance Exclusive Agent (left), joins Mike Hicks (center) and Terrance Williams, Nationwide Insurance Regional Vice President for the Southern and Central Plains Regions.

SBS Insurance + Allied Insurance

20

Seeing solid growth together.

The best partnerships are the kind that just work. Thats what SBS Insurance Agency president Jim Runnebaum can tell you.
His company had been handling farm and commercial agribusiness insurance for generations. As his clients grew, so did his need to provide more robust commercial coverage. His search for a larger regional insurer led him to Allied Insurance. He signed in 1989, and the advantages of combining personal lines and commercial lines, coupled with Allieds competitive profit-sharing agreement, made Jim a believer. And a few years later it made him an AIDCO partner. An AIDCO agency is one that contractually commits to writing all standard personal lines of business with Allied Insurance. The AIDCO contract has a lot to offer if the agent commits to implementing the programs, says Runnebaum, adding, The On Your Side Certified program distinguishes my agency from others and offers a professional approach. Runnebaum credits his annual double-digit growth to his partnership with Allied Insurance, and he enjoys the benefits of being a Master Farm Certified agency and using digital marketing. As in any great partnership, both parties can take credit for their success.

New York Farm Bureau + Nationwide Sponsor Relations

22

A growing partnership with deep roots.

Farmers have given this nation so much. In fact, they gave us Nationwide.
It was in 1926 that members of the Ohio Farm Bureau realized they could accomplish more and risk less if they pooled their resources. This was the humble beginning of Nationwide. So it only makes sense that the New York Farm Bureau and Nationwide have joined together for this generation of farmers. Now almost 30,000 New York Farm Bureau member families will have access to savings on a broad range of Nationwide products, from auto insurance to powersports and pet insurance. But more to the point, New York Farm Bureau members have access to Nationwide Agribusiness, the exclusive provider of the On Your Side Farm Certification Program. It also means they can partner with an On Your Side Farm Certified Agent, trained and certified in farm and ranch insurance. No other farm insurance provider in America offers a program as comprehensive as the Nationwide coverage now shared by the New York Farm Bureau and our many other Farm Bureau and agricultural cooperative sponsors. These are partnerships with a lot of history behind them and a very bright future ahead.

Wells Fargo + Nationwide Financial

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Partnering for success.

Being named Carrier of the Year by Wells Fargos Retail Retirement Group is definitely a point of pride for Nationwide Financial. Numbers played a big role in the decision. Working together collaboratively played an even bigger part.
Nationwide Financial came in first for putting customers needs first. In areas such as relationship management, operational efficiency, communications and follow-through, Nationwide Financial boosted portfolios and strengthened relationships. To be certain, the numbers were impressive. Nationwide Financial and Wells Fargo worked together to deliver more than $586 million in total sales. This included immediate annuities, variable annuities, life insurance, retirement plans and mutual funds. Even more impressive was the work of Nationwide Financials teams. Advisor-facing wholesalers, internal sales and service, marketing and strategyall functioned as one team, working together, standing together and pushing each other to the top. When 2011 was said and done, Wells Fargo praised Nationwide Financial for the success and service they accomplished together. Looking ahead to 2012, the team at Nationwide Financial has the relationships in place for another successful performance.

National Audubon Society + Nationwide Affinity Solutions

26

All partners great and small.

Nationwide Affinity Solutions teams up with organizations of all sizes. And while they can be as diverse as small alumni groups and major financial institutions, they have this in common: their strength and successes come from healthy memberships.
Youll see this in the service Nationwide is bringing to the National Audubon Society. By offering its more than 400,000 members exclusive discounts on auto, powersports and pet coverage, together were strengthening the organization, and Nationwide is supporting Audubons mission of conservation and protecting the environment for all. The relationship with Audubon is relatively new, but it has all the characteristics of the enduring relationships Nationwide Affinity Solutions has brought to hundreds of organizations and millions of members. A spokesperson for Audubon puts it best: Nationwide has proven to be perceptive and considerate of the unique needs of a major conservation group. I am confident that this level of sensitivity and intuition will be successfully executed with any institution with which they enter a partnership. This vital component ensures the safeguarding of our most valuable assetour brand. And thats the kind of advocacy we look for and find in all our partners.

Nationwide Childrens Hospital + Nationwide

28

Partnering for kids and community.

For many corporations, community commitment begins and ends with a checkbook. But Nationwide is not like many corporations. Our promise to Nationwide Childrens Hospital goes far beyond our name on a sign. Likewise, the Memorial Tournament presented by Nationwide Insurance is about much more than getting our brand name in front of people.
Every commitment we make to the community begins with building partnerships. And any initiative that calls for giving today must make a clear promise for tomorrow that will be fulfilled year over year. We treat the Memorial Tournament, a premier stop on the PGA TOUR, as a catalyst for broadening community engagement, raising awareness for child health, and boosting funding for research and care. In short, for turning partnerships into promise. In 2006 the Nationwide Insurance Foundation made a $50 million promise to Nationwide Childrens Hospital, and 2012 saw it come to life with the grand opening of a 2.4 million-square-foot expansion. It was the culmination of the hospitals Miracles at Play movement, but in so many ways, its just the beginning. Now, it is possible to treat 1 million children annually, not just from central Ohio, but from around the country and the world. And expanded research capabilities will make new treatments possible for the children of today and their children, too. Expanding the concept of community, and strengthening everyone in it, from the littlest ones up. Its a perfect expression of what Nationwide believes partnerships can do.

Photo: PGA TOUR pro Chris DeMarco high-fives his new friend, Micah Ross, at the newly expanded Nationwide Childrens Hospital in Columbus, Ohio. Chris has partnered with Nationwide for stronger communities and healthier kids.

Nationwide Leadership

The people behind the partnerships.

Our board members come from uncommon backgrounds, but they all share a common goal: to show how much more people can accomplish when they work together than when they work apart. Thats what being a mutual is about, and Nationwide proves it every day.

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Board of Directors
Lewis J. Alphin James B. Bachmann A. I. Bell Timothy J. Corcoran Yvonne M. Curl Kenneth D. Davis Keith W. Eckel Fred C. Finney Daniel T. Kelley M. Diane Koken Lydia M. Marshall Terry W. McClure Barry J. Nalebuff Brent R. Porteus Stephen S. Rasmussen Jeffrey W. Zellers

Executive Leadership
W. Kim Austen
President and Chief Operating Officer, Allied Group*

Patricia R. Hatler
Chief Legal and Governance Officer

Matthew Jauchius
Chief Marketing and Strategy Officer

Michael C. Keller
Chief Information Officer

Gale V. King
Chief Administrative Officer and Chief Human Resources Officer

Mark A. Pizzi
President and Chief Operating Officer, Nationwide Insurance

Stephen S. Rasmussen
Chief Executive Officer

Mark R. Thresher
Chief Financial Officer

Kirt A. Walker
President and Chief Operating Officer, Nationwide Financial

*Includes Nationwide Agribusiness, Scottsdale Insurance and Titan Insurance

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Combined Balance Sheets

(in millions) Assets
Investments Fixed maturity securities, available-for-sale Equity securities, available-for-sale Mortgage loans, net of allowance Policy loans Real estate, net of accumulated depreciation Short-term investments Other investments Total investments Cash and cash equivalents Accrued investment income Premiums in course of collection, net of allowance Deferred policy acquisition costs Reinsurance recoverables, net of allowance Goodwill Other assets Separate account assets Total assets

December 31 2011 2010

$ $ $ $

51,286 $ 49,143 322 7,542 1,088 1,311 2,911 3,733 66,050

231 7,445 1,008 1,335 2,280 4,618 68,203 $

344 $ 666 722 2,853 5,114 3,450 1,536 3,965 64,346 148,702

804 3,018 5,579 3,968 1,536 6,636 64,674 154,762 $

Liabilities and Equity

Liabilities Property and casualty loss and loss expense reserves Future policy benefits and claims Unearned premiums Short-term debt Long-term debt Customer bank deposits Other liabilities Separate account liabilities Total liabilities Equity Policyholders equity Retained earnings Accumulated other comprehensive income Total policyholders equity Noncontrolling interests Total equity

$ $

14,574 $ 14,602 32,032 5,832 927 4,492 2,746 6,495 64,346 131,472

34,589 5,928 648 4,931 3,290 8,583 64,674 137,217 $

$ $ $ $ 14,912 $ 15,494 1,344 16,838 392 17,230

2,059 16,971 $

574 17,545 $ $

Total liabilities and equity

154,762

148,702

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Combined Statements of Operations

(in millions)
Year ended December 31 2011 2010

Revenues
Property and casualty insurance premiums $ 14,224 Policy charges Life and accident and health insurance premiums Net investment income Net realized investment losses Other-than-temporary impairment losses Total other-than-temporary impairment losses Non-credit portion of loss recognized in other comprehensive income Net other-than-temporary impairment losses recognized in earnings

$ 14,430 1,391 763 3,080 (74)

1,496 783 3,080 (1,809)

(275) 148 (127) 989 18,636 $ (513) 231 (282) 957 20,265

Other revenues Total revenues $

Benefits and Expenses

Incurred property and casualty losses and loss expense $ Life and accident and health insurance benefits Interest credited to policyholder account values Other benefits and claims

10,942 $ 9,866 1,039 1,240 2,881 346 3,679 20,127 (1,491) (842) (649) $ $ $ 1,102 1,079 3,223 317 3,680 19,267 998 105 893 (66) 959

Amortization of deferred policy acquisition costs Interest expense Other expenses, net of deferrals Total benefits and expenses (Loss) income before federal income taxes and noncontrolling interests $ $

Federal income tax (benefit) expense Net (Loss) income $

Less: Loss attributable to noncontrolling interests, net of tax Net (loss) income attributable to Nationwide $

(67) (582) $

33

33

Combined Statements of Equity

(in millions)
Balance as of December 31, 2009 Comprehensive income (loss): Net income (loss) Other comprehensive income Total comprehensive income (loss) Change in noncontrolling interest $

Retained earnings
$ 14,544

Accumulated other comprehensive income

$ 603

Total policyholders equity

$ 15,147

Noncontrolling interests
$ 435

Total equity
$ 15,582

959 959 732 $ 732 959 732 $ 1,691 $ (66) (66) 893 732 $ 1,625 25 (2)

(9)

25 (2)

Other

Balance as of December 31, 2010 Comprehensive income (loss): Net loss Other comprehensive income Total comprehensive (loss) income Change in noncontrolling interest

15,494

1,344

16,838

392

$ 17,230

(582) $ (582) 715 $ 715 (582) 715 $ 133 $ (67) (67) (649) 715 $ 66 249

249

Balance as of December 31, 2011

14,912

2,059

16,971

574

$ 17,545

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Combined Statements of Cash Flows

(in millions)
Year ended December 31 2011 2010

Cash flows from operating activities

Net (loss) income Adjustments to net (loss) income Capitalization of deferred policy acquisition costs Amortization of deferred policy acquisition costs (3,559) 2,881 1,039 240 1,809 127 (853) (3,403) 3,223 1,102 353 74 282 206 $ (649) $ 893

Interest credited to policyholder account values Depreciation, accretion and amortization Net realized investment losses Net other-than-temporary impairment losses recognized in earnings Deferred tax (benefit) expense

Changes in: Premiums and insurance balances receivable Future policy benefits and claims and losses and loss expense reserves Unearned premiums $ (165) 79 (1,105) (186) (179) 269 1,608

(1,007) 96 (583) (413) (1,037) $

Derivatives Other, net

Net cash (used in) provided by operating activities

Cash flows from investing activities

Proceeds from maturities of available-for-sale securities $ Proceeds from sales of available-for-sale securities Purchases of available-for-sale securities Proceeds from repayments of mortgage loans Issuance and purchases of mortgage loans Net decrease in short-term investments Other, net Net cash used in investing activities $

4,755 $ 6,389 4,332 (11,801) 1,131 (751) 358 (874) (1,216) 4,350 (9,152)

1,568 (1,476)

611 (893) (237) $

Cash flows from financing activities

Net change in short-term debt $ Proceeds from issuance of long-term debt Repayments of long-term debt Investment and universal life insurance product deposits Investment and universal life insurance product withdrawals Net increase in customer bank deposits Other, net Net cash provided by (used in) financing activities NET (decrease) increase in cash and cash equivalents $ $

(279) $ 490 84 (83) 4,540 (5,405) 297 52 (25) 367 299 666 794 (373) 5,314 (5,024)

544 (24) 952 (322) $ $

Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year $

666 344 $

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Statutory Financial Highlights

Nationwide prepares its combined financial statements using generally accepted accounting principles, which is a common set of accounting principles, standards and procedures that companies across different industries use to compile their financial statements. This basis of accounting provides for consistency and comparability in reporting financial results across businesses in different industries. As an insurance company, Nationwide also prepares financial statements following statutory accounting principles, which are a set of accounting rules for insurance companies set forth by the National Association of Insurance Commissioners. Statutory accounting principles are generally regarded as more conservative than generally accepted accounting principles. Statutory financial information is the basis for state regulation of insurance company solvency throughout the United States. Additionally, rating agencies use statutory financial information in their evaluation of an insurance companys financial strength. These charts highlight Nationwides financial results under statutory accounting principles.
$11.7 $13.0 $12.8

Statutory Surplus
(in billions)

2009

2010

2011

Statutory surplus is a financial measure of Nationwides ability to meet future obligations that is calculated based on accounting practices prescribed or permitted by the department of insurance of the state of domicile. Each of the states in which Nationwides insurance companies are domiciled has adopted the National Association of Insurance Commissioners statutory accounting practices as the basis of its statutory accounting practices.

$30.7 $136.8 $27.8 $26.8 $128.7

$141.3

combined Statutory revenue

(in billions)

Total Statutory Assets

(in billions)

2009

2010

2011

2009

2010

2011

Combined statutory revenue is a financial measure that is primarily calculated by combining and consolidating the statutory revenues of Nationwides property and casualty and financial services insurance subsidiaries.

Total statutory assets is a financial measure that is primarily calculated by combining the net admitted statutory assets of Nationwides property and casualty and financial services insurance subsidiaries.

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Glossary
Nationwide prepares its combined financial statements in accordance with accounting principles generally accepted in the United States (GAAP).
Corporate and other operations The Corporate business consists of real estate development operations, real estate and other investments, medical insurance for companion animals, and run-off asbestos and environmental claims. Customer funds managed and administered The value of assets Nationwide manages on behalf of its customers. Financial Services The financial services segment includes operating results from Nationwide Financial Services, Inc., which includes Nationwide Bank. The businesses within the financial services segment, through a diverse distribution network, develop and sell a wide range of products, including individual annuities, private- and public-sector group retirement plans, life insurance, investment advisory services, banking products and services, mutual funds, and other investment products. Net flows Customer deposits, net of withdrawals, affiliated with products offered by the financial services segment, which include retirement plans, individual annuities, life insurance products and bank deposits. Net operating income Nationwide analyzes operating performance using a non-GAAP financial measure called net operating income, which Nationwide believes enhances the understanding and comparability of its performance by highlighting its results from continuing operations and the underlying profitability drivers. Net operating income excludes the impact of realized gains (losses) on sales of investments and hedging instruments, certain hedged items, other-than-temporary impairments, discontinued operations, and extraordinary items, all net of taxes. New and renewal premiums and deposits A financial measure of the volume of new and renewal business generated by Nationwide in a period. New and renewal premiums and deposits (sales) are not derived from any specific GAAP income statement accounts or line items and should not be viewed as a substitute for any financial measure determined in accordance with GAAP, including sales as it relates to noninsurance companies. Nationwide believes that the presentation of new and renewal premiums and deposits enhances the understanding of Nationwides business and helps depict longer-term trends that may not be apparent in the results of operations due to differences between the timing of sales and revenue recognition. Property and Casualty The Property and Casualty business includes operating results from five operating brands: Nationwide Insurance, Allied Insurance, Titan Insurance, Nationwide Agribusiness and Scottsdale Insurance. The businesses within the Property and Casualty business underwrite personal automobile, personal property and commercial insurance products and services primarily through exclusive and independent agents, as well as excess and surplus insurance through general agents and brokers. Property and Casualty direct written premium The total premiums received by the Property and Casualty business without any adjustments for the ceding or assumption of any portion of premiums with reinsurers.

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Nationwide