Fitch Publishes Unrated Issuer Report on Nationwide Mutual Insurance Group
In addition to highlighting what Fitch considers to be Nationwide's main credit issues and trends, the report takes a closer look at:
--Franchise and Market Position.
Nationwide is one of a handful of remaining multi-line companies operating in the U.S. market. Nationwide's overall franchise is driven by its property/casualty (P/C) business, as a large, geographically diversified personal lines underwriter with a small to midsized commercial market presence, supported by independent agent distribution. The company's 2009 repurchase of the remaining minority interest in NFS underscores its commitment to the stability and growth potential of the niche-focused NFS franchise.
For the P/C business changes in technology, shifting consumer buying preferences and advances by direct insurance distributors present future threats to Nationwide's longer term market share that necessitate significant investment and expenditure for the company to keep pace.
Operating as a mutual insurer allows Nationwide to concentrate less than stock company peers on return on capital and short-term results in either business. Nationwide's fundamental profitability trend is steady with uneven underwriting results, primarily due to catastrophes. NFS' profitability provides stability for consolidated results.
The UIR includes a peer analysis comparing Nationwide with other large P/C underwriters on several important financial metrics.
UIRs are not solicited by the issuer, and Fitch receives no compensation from the issuer for the provision of an UIR. While an UIR is typically based primarily on public information, Fitch analysts may ask questions of an issuer's management while preparing an UIR. The level of management participation, if any, can vary significantly from case to case.