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While Competitors Exit Key Lines of Business, Nationwide Sees Bright Future

MAR. 15, 2021

Despite a variety of challenges, the solid performance of our business in 2020 reinforced the power of our mutual advantage. Our diversified portfolio provided balance in the face of headwinds for some parts of our business, and our structure as a mutual – which means we’re beholden to the customers we protect, not the whims of shareholders – enables us to take the long view on our business. That’s why we remain as committed as ever to innovating and expanding our financial services offerings, while recent headlines show some of our competitors may be ready to pull back or even head for the exit.

This is happening at a time when America needs protection solutions as much as ever. According to a recent Nationwide Retirement Institute survey, half of advisors and financial professionals agree that COVID-19 negatively impacted their clients’ financial security1.

I’m pleased to share that Nationwide is doing what we’ve consistently done when faced with adversity. We are focused on our mission to deliver extraordinary care to our customers and communities. And in 2020, we managed to do so profitably, with a firm commitment to our core businesses, including life insurance, annuities, government, institutional and not-for-profit retirement plans, mutual funds and solutions like corporate and business-owned life insurance, pension risk transfers, security backed lending and specialty insurance.

Solid performance

Our diverse portfolio enabled profitable growth, which resulted in nearly $47 billion in sales across Nationwide and $797 million in net operating income (our key measure of profitability). I’m proud that we delivered the third-best year ever for our financial services business, growing both our top-line sales and bottom-line earnings. Our capital position remains strong, which means we’re well positioned to deliver on our promises and invest in our business.

Across our business, we have been there when customers needed us most, offering 60 days premium relief and processing more than $1.2 billion in COVID-related loans and distributions while waiving fees for these transactions.

Despite unprecedented challenges, our Annuity business was recognized as the industry leader for customer experience by J.D. Power, our Life business earned higher customer experience ratings, and our Retirement Solutions team received the DALBAR Plan Participant Service Award for the seventh consecutive year.

These results don’t surprise me because Nationwide Financial has successfully managed challenging market environments in our past. Each time we’ve emerged stronger with renewed commitment to our mission. After the 2008 financial crisis, while many competitors were pulling back, we surged forward to gain market share. I expect to do the same this time.

Why Nationwide is different: Our mutual advantage

As we read news stories about competitors exiting business lines due to capital constraints or the need to deliver short-term profit to investors, it’s important to highlight why Nationwide is different. Because we’re a mutual, we don’t have to worry about the demands of shareholders. We know that current challenges are no reason to abandon a strategy that’s in our customers’ and partners’ best interest.

Our mutuality also allows us to price our products with what we believe to be a “sufficient” level of return to allow us to invest for the future and keep our promises. These returns are generally lower than those demanded by public shareholders who may be looking for more significant returns on their investment.

Our diversified portfolio allows us to flex in the face of temporary headwinds. Because we offer a wide range of protection solutions, a slower year for one product can be offset by another that’s better suited for the current environment.

Our Life business stood out this year as a leading provider in four key product lines, climbing from #10 to #8 in market share. At the end of 2020, we had $265 billion of life insurance in force supporting more than a million policies. Over the next three years, we anticipate continued growth in first-year life premium and renewals as we continue to diversify distribution and push into new product markets.

Nationwide Retirement Solutions continued to welcome new plans and participants in 2020 and expanded our ability to support plans, advisors, third-party administrators and participants in a virtual environment. We continue to grow our government 457 business, while launching our formal entry to the not-for-profit 403(b) and institutional 401(k) markets. We’re also adding new capabilities to our advisor-sold 401(k) offering. And this team continues to innovate and deliver new solutions to all our markets. For example, when the SECURE Act provided the opportunity for plan sponsors to offer new income solutions to their participants to further strengthen their ability to plan for retirement, our team introduced a new suite of In Plan Guarantee products.

Our Annuities team pivoted to less interest-rate sensitive solutions, including our traditional variable annuities and a new registered index linked annuity product called Defined Protection Annuity, allowing that important segment of our business to continue growing. As interest rates begin to rise, we are well positioned to reengage more strongly with our broader suite of solutions.

Meeting accelerated expectations of customers and financial professionals

The pandemic accelerated trends that were already in motion – particularly an expectation for technology that provides a personalized experience. Nationwide has been investing in technology for years, so we were prepared to offer virtual, digital and personal experiences, depending on the unique needs of each customer or partner.

Our individual life insurance business continues on a multi-year transformational journey, investing in people, processes and technology. We transformed our life underwriting process to be less invasive, leveraging data and advanced analytics to help replace cumbersome medical exams while ensuring we price risk accurately. As a result, we reduced the policy issuance time for some customers from months to minutes.

With market volatility spiking in the spring, our Retirement Solutions business provided extraordinary care to handle calls from more than double the normal volume of participants, with a focus on education, stability and avoiding emotional investing. In the emerging markets 401(k) space, we embarked on a new strategic partnership to expedite our speed to market and bring competitive capabilities and pricing to our 401k plans and providers, while retaining the same great service model of extraordinary care.

While the J.D. Power award reflects our Annuity business’ outstanding customer experience, our team is not resting on its laurels. In fact, we’re gearing up to launch a new transformational effort to solidify the technology foundation that underlies our current winning annuity experience.

Full speed ahead

We were prepared for 2020, and now we’re ready to surge forward in brighter days ahead. The pandemic underscored the importance of our mission and our ongoing commitment to helping you simplify timely, complex issues for your clients, with products, services and processes that are transparent, flexible and enable a better experience.

We’ve been in business for nearly 100 years, successfully navigating wars, the Great Depression and economic adversity of all types. Nationwide holds true to its mission and we look forward to partnering with you to meet the life insurance, private and public sector retirement plan, annuity, institutional investing and corporate solution needs of your clients for years to come.

 

Sources and Disclaimers

  • 1

    Nationwide Retirement Institute Advisor Flash Poll, February 2021

  • This information is general in nature and is not intended to be tax, legal, accounting or other professional advice.

    The information provided is based on current laws, which are subject to change at any time, and has not been endorsed by any government agency.

    Neither Nationwide nor its representatives give legal or tax advice. Please have your clients consult with their attorney or tax advisor for answers to their specific tax questions.

    This material is not a recommendation to buy, sell, hold or roll over any asset, adopt an investment strategy, retain a specific investment manager or use a particular account type. It does not take into account the specific investment objectives, tax and financial condition or particular needs of any specific person. Investors should discuss their specific situation with their financial professional.

    Except where otherwise indicated, the views and opinions expressed are those of Nationwide as of the date noted, are subject to change at any time and may not come to pass.

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