Fitch Affirms Nationwide Mutual's IFS & Surplus Notes Ratings.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed the 'AA-' Insurer Financial Strength ratings on Nationwide Mutual Insurance Company Nationwide Mutual Insurance Company & Affiliated Companies is a group of large U.S. insurance and financial services companies based in Columbus, Ohio. History Beginnings as Farm Bureau Mutual (NMIC NMIC National Meat Inspection Commission (Philippines) NMIC National Maritime Intelligence Center (Office of Naval Intelligence, Suitland, MD) NMIC Northern Manhattan Improvement Corporation ) and its related intercompany pool members (collectively, Nationwide Mutual). In addition, Fitch affirms the 'A+' Issuer Default Rating to NMIC and has affirmed the 'A' ratings on NMIC's outstanding surplus notes. The Rating Outlook is Stable. Fitch's rating actions reflect Nationwide Mutual's solid competitive position in personal lines insurance. In addition, the company follows a conservative investment strategy, and earnings excluding catastrophes and adverse asbestos reserve development have been in line with peers. Partially offsetting these positives is Nationwide Mutual's capitalization, which Fitch views as comparatively weak for the rating category, especially in light of the company's potential exposure to adverse reserve development from asbestos-related exposures. Fitch also believes that the quality of Nationwide's surplus is adversely affected by its concentrated investment in affiliated companies Affiliated Companies A situation that occurs when one company owns a minority interest (less than 50%) in another company. Also refers to companies that are related to each other in some way. Notes: An affiliated company is sometimes referred to as a subsidiary. , primarily Nationwide Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , Inc. (NFS (Network File System) The file sharing protocol in a Unix network. This de facto Unix standard, which is widely known as a "distributed file system," was developed by Sun. See file sharing protocol and WebNFS. NFS - Network File System ) of which Nationwide Mutual owns 63%. Fitch believes that Nationwide Mutual utilizes a moderate amount of financial leverage, calculating its debt (which includes prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. forward contracts and surplus notes) to statutory capital at year-end 2005 at approximately 19%. Fitch estimates the company's annual interest requirements at approximately $112 million and expects near-term operating earnings-based interest coverage to exceed 10 times (x). Fitch's Stable Rating Outlook reflects its belief that Nationwide Mutual's near-term earnings trends will continue to be generally favorable and that the company's operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. will remain materially unchanged as surplus growth keeps pace with premium growth. Fitch's Stable Rating Outlook also considers the potential for adverse prior accident-year reserve development related to asbestos-related reserves. Based in part on industry wide asbestos-related reserve data, Fitch has developed a targeted asbestos reserve survival ratio of 17.5x. Nationwide Group's asbestos survival ratio was 10x at year-end 2005 and would have to increase materially to meet Fitch's 17.5x survival ratio guideline. Nationwide's asbestos reserves have developed unfavorably by an average of $550 million for each of the last three years. The following ratings are affirmed with a Stable Rating Outlook by Fitch: Nationwide Mutual Insurance Co. -- Insurer financial strength at 'AA-'; -- Issuer default rating 'A+'. Nationwide Mutual Fire Insurance Co. -- Insurer financial strength at 'AA-'. Scottsdale Insurance Co. -- Insurer financial strength at 'AA-'. Farmland Mutual Insurance Co. -- Insurer financial strength at 'AA-'. Nationwide Mutual Insurance Co. -- 8.25% surplus notes due Dec. 1, 2031 at 'A'; -- 7.875% surplus notes due April 1, 2033 at 'A'; -- 6.60% surplus notes due April 15, 2034 at 'A'. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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