Fitch Rates Nationwide Financial Services' Sr Note Offering 'A-'.

CHICAGO -- Fitch Ratings assigned an 'A-' rating to Nationwide Financial Service's (NFS) proposed senior note offering. Fitch also affirms NFS's 'A-' long-term issuer rating and the ratings on all outstanding debt (as listed below). The Rating Outlook is Stable.

The $200 million proposed issuance of senior notes will carry a 5.1% fixed rate of interest and mature in 10 years. The proceeds will be used to repay outstanding trust preferred securities that carry a higher coupon. Although the transaction is basically a debt-for-debt exchange, debt-to-total capital will increase slightly. The fact that the trust preferred securities received 50% equity credit explains the higher leverage. Equity credit was based on time to maturity and the company's ability to defer payment of interest on the trust preferred securities.

Pro forma June 30, 2005 debt-to-total capital was 21%, assuming a $200 million issuance with proceeds paying down outstanding trust preferred securities. Operating earnings covered interest expense by 8.4 times (x) through the first six months on 2005. Expectations for interest coverage after the note issuance would be slightly improved given the lower interest rate on the senior debt relative to the trust preferred securities. Fitch also expects NFS to manage its debt-to-total capital to less than 25%.

NFS is a life insurance holding company that is 63% owned by Nationwide Mutual Insurance Company (Nationwide Mutual), one of the largest property/casualty companies in the United States. Although not wholly owned, Fitch considers NFS to be a strategic operation for Nationwide Mutual due to NFS' relative capital size and earnings contribution to the overall organization. Importantly, from a rating perspective, Nationwide Mutual as the larger operation does exert influence on the ratings at NFS.

Fitch's ratings on Nationwide Financial Services, Inc. (NFS) reflect the company's good competitive position in the variable annuity market, conservative financial leverage, and solid earnings-based interest coverage and a high-quality investment portfolio. Partially offsetting these positives are the effects of intense competition in the company's chosen markets, the sensitivity of the company's results to the equity market, and the mortgage-backed security and commercial mortgage concentration in the investment portfolio.

Fitch rates the following with a Stable Outlook:

-- Senior notes $200 million; 5.10%, due Oct. 1, 2015 Assigned 'A-'.

Fitch affirms the following with a Stable Outlook:

-- Long-term issuer 'A-';

-- Senior notes $300 million; 8.00%, due March 1, 2027 'A-';

-- Senior notes $300 million; 6.25%, due Nov. 15, 2011 'A-';

-- Senior notes $300 million; 5.90%, due July 1, 2012 'A-';

-- Senior notes $200 million; 5.625%, due Feb. 13, 2015 'A-';

-- Trust preferred $100 million; 7.899%, due March 1, 2037 'BBB+';

-- Trust preferred $200 million; 7.10%; due Oct. 31, 2028 'BBB+'.

Fitch's rating definitions and the terms of use 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 are also available from the 'Code of Conduct' section of this site.