NU Online News Service, Nov. 4, 2003, 12:47 p.m. EST – Nationwide Financial Services Inc., Columbus, Ohio, says recent increases in interest rates and steps taken to cope with low rates helped it improve its third-quarter results.
The company is reporting $126 million in net income for the latest quarter on $1 billion in revenue, up from a net loss of $141 million on $802 million in revenue for the third quarter of 2002.
The spreads between the rates that Nationwide has promised its customers and the rates it earns on its own investments fell to 1.62 percentage points for individual fixed annuities and fixed-rate options within individual variable annuities during the third quarter, down from 1.81 percentage points for the third quarter of 2002.
But the spread for individual fixed annuity products was up from a low of 1.55 percentage points in the second quarter of 2003, and the average interest spread for institutional products increased to 2.1 percentage points for the latest quarter, from 1.8 percentage points for the third quarter of 2002, Nationwide says.
Spreads are stabilizing partly because interest rates are up and, especially at the individual annuities unit, because of efforts to manage the level of sales of fixed annuities and enforce “restrictions on customer allocations to general account investment options in individual variable annuities,” Nationwide says.
Nationwide let individual fixed annuity sales fall 40%, to $547 million. Sales of variable annuities increased 1%, to $986 million.
At the life unit, sales of corporate-owned life insurance were down 11% because of the recent regulatory turmoil surrounding the product, but fixed life sales increased 88%, to $113 million, because of the introduction of new products and the acquisition of Provident Mutual Life Insurance Company, Berwyn, Pa.