Nationwide Loses $346.4 Million In Third Quarter
November 9, 2008
Nationwide Financial Services reported a third-quarter loss on large investment losses related to the recent financial crisis, according to Dow Jones Newswires. But the company's weakened share price means that Nationwide Mutual Insurance, its parent, can take it private at a lower cost.
The insurance and financial services company reported a net loss of $346.4 million, or $2.51 a share, compared with net income of $147 million, or $1.03 a share, a year earlier. Revenue dropped 57% to $484.6 million.
Net outflows fell 50% because of lower withdrawals in the private sector and fixed annuities, partially offset by lower variable annuity deposits. Profits fell 7.2% in the retirement plans segment but rose 11% in the life insurance segment.
The operating loss, which excludes net realized investment losses, was 16 cents a share, compared with operating earnings of $1.08 a year earlier. The operating loss resulted partly from the company unlocking its deferred acquisition costs (DAC) for variable annuities because of stock market declines.
Nationwide Financial also had $49.1 million in losses from hedge funds and private equities and the mark-to-market of investments. Excluding items, operating earnings fell to 98 cents a share from $1.08.
"While these losses had a significant impact on our quarterly profitability, given the environment, we do not see these results as surprising or as negatively impacting our long-term financial stability," said Chief Executive Jerry Jurgensen. He said the company has a strong balance sheet and "the liquidity to weather times like these."
Nationwide Mutual Insurance Co. said in August that it was taking Nationwide Financial private in a $2.4 billion buyout deal, at $52.25 a share. Last month, it said it would buy shares on the open market for less than that price amid recent steep slides in stock prices. Nationwide Mutual already owns two-thirds of Nationwide Financial's shares.
For more information on related topics, visit the following:
