A.M. Best Affirms Ratings of Nationwide Financial Services, Inc.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit rating (ICR) of "aa-"of Nationwide Life Insurance Company (NLIC). Additionally, A.M. Best has affirmed the FSR of A+ (Superior) and has assigned ICRs of "aa-" to Nationwide Financial Services, Inc.'s (NFS) (NYSE:NFS) three other key life insurance subsidiaries. A.M. Best has also affirmed the ICR of "a-" of NFS, as well as the debt ratings for all outstanding debt securities of NFS and NLIC. All companies are domiciled in Columbus, OH, unless otherwise specified. All ratings have a stable outlook.

The ratings recognize NFS' favorable business profile, which is characterized by balanced sources of revenue and earnings, strong and diversified distribution, sound overall earnings capabilities, an improved capital position and a high quality investment portfolio. NFS enjoys a solid market position as a provider of annuities, life insurance and retirement plans for both retail and institutional markets. NFS' ratings also recognize the advances it has made in adopting an integrated risk management process, which provides an improved framework for managing the risks inherent in its various lines of business.

NFS' financial leverage and interest coverage are within acceptable parameters for its current ratings. The company's adjusted debt-to-capital ratio is expected to remain at or near its current level of 23%, as is its interest coverage of 7 to 8 times. NFS also benefits from the significant franchise value associated with being a 63%-owned subsidiary of Nationwide Mutual Insurance Company, a market leader in the property/casualty industry.

Primary offsetting rating factors include the highly competitive markets faced by NFS in several of its core product lines. A.M. Best believes the group will continue to be challenged to reverse the recent trend of variable annuity net outflows and recapture lost individual life market share. These markets are becoming increasingly commoditized, which will place further pressure on sales, persistency and spread margins. Also, given NFS' heavy reliance on equity-based products, future earnings will continue to be correlated to the performance of the equity markets. Additionally, NFS' level of intangibles to equity is somewhat high relative to similarly-rated peers.

For a complete listing of Nationwide Financial Services, Inc.'s financial strength, issuer credit and debt ratings, please visit www.ambest.com/press/013006nationwide.pdf.

For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.