Nationwide Financial Services Inc., Feb. 4, 5:10 p.m. – Nationwide Financial Services Inc., Columbus, Ohio, is reporting $59 million in net income for the fourth quarter of 2001 on $806 million in revenue, compared with $109 million in net income on $804 million in revenue for the fourth quarter of 2000.

The net results include $43 million in losses on investments, including $17 million in losses related to the collapse of Enron Corp., Houston, and $2.3 million in losses on fixed-income securities from Argentina.

Operating earnings, which exclude those losses, fell to $102 million, from $115 million, Nationwide says.

Nationwide sells individual annuities, pension management services, asset management services and life insurance.

Nationwide says it lost one big, unnamed customer that pulled $2.6 billion out of a stable value arrangement at its asset management unit. Excluding the loss of that account, the net flow of cash into the pension, annuity and asset management operations increased to $1.7 billion, from $992 million for the fourth quarter of 2000.

Interest rate spreads turned out to be reasonably stable.

Some analysts worried last fall that low interest rates would hurt U.S. life insurers, by reducing the difference between the returns they had promised and the returns they could earn.

At Nationwide, spreads for individual annuities were narrower in the fourth quarter than they were a year earlier, but higher than they were in the summer, the company says.

Spreads on pension plans were fatter in the fourth quarter than they were last summer or late 2000.

Nationwide reports each of its four major units recorded a pre-tax operating profit for the latest quarter:

  • The individual annuity unit generated $51 million in operating earnings for the fourth quarter on $285 million in revenue, compared with $66 million in operating earnings on $273 million in revenue.
  • The pension unit generated $49 million in operating earnings on $277 million in revenue, down from $57 million on $292 million in revenue.
  • The asset management unit generated $4.3 million in operating earnings on $34 million in revenue, up from $1.9 million on $30 million in revenue.
  • The life insurance unit generated $49 million in operating earnings on $211 million in revenue, up from $46 million on $196 million in revenue. Despite predictions of massive increases in purchases of traditional life insurance products, traditional life sales were up only 2% from the fourth quarter of 2000, Nationwide says.