Insurer posts record revenue
Nationwide had sales of $57 billion in 2022
Nationwide posted record sales in 2022 amid a challenging stew of issues ranging from higher interest rates, more costly claims, supply chain problems, distracted driving, inflation, volatile stock markets and severe weather.
The insurer and financial services company had sales − defined by the company as a combination of premiums paid by policyholders along with new deposits and assets that come through the company's financial services arm, which are not considered revenue in the financial industry at large − of $57 billion, up $4 billion from 2021 which also was a record for Nationwide.
Net operating profit − Nationwide's key measure of profitability − was $1.4 billion, down from $2.8 billion in 2021, and Nationwide paid $19 billion in claims and benefits.
“The solutions and experience Nationwide provides clearly resonated with our customers in 2022 – leading to our best year yet for total sales and premiums,” Nationwide CEO Kirt Walker said in a statement. “It was also one of our most profitable years as we continued to focus on our risk management and underwriting disciplines while responding to inflation and financial market volatility.”
Nationwide says its diverse portfolio mix of insurance products along with retirement and other financial products drove its 2022 results even as it dealt with assorted issues such as inflation.
“We're trying to make enough money to keep the promise we make to people,” Walker said.
Auto insurance, for example, jumped 14.7% over the past year, according to federal data. The cost of a new vehicle has gone from an average of $36,590 in 2019 to $49,388 this year, Walker said.
More expensive cars cost more to fix. Supply chain problems have meant vehicles take longer to repair and customers are driving rental vehicles longer, said Tim Frommeyer, the company's CFO.
As a result of higher premiums, about a third of Nationwide's new auto insurance customers are turning to usage-based programs that can lower auto-insurance costs.
Nationwide's Smartride program has been in the market 10 years, offering drivers an average 25% discount based on their driving behavior. For those who are driving less, according to Nationwide, its Smartmiles program offers an average 34% discount compared with a traditional policy.
There was instability in financial markets in 2022 as stock markets tumbled in 2022 and bond funds lost value because of rising interest rates.
“In 2022, our industry experienced
uncertain economic conditions,” Frommeyer said. “Supply-demand imbalances in the U.S. economy led to many challenges, including historic increases in inflation, broad-based compression in the U.S. economy and a looming recession.”
Nationwide's annuity products that provide guaranteed income in retirement continue to be popular, especially in volatile markets, Frommeyer said. Nationwide also has worked to deepen partnership with big financial services firms such as Fidelity to reach more savers.
Among other highlights from 2022: In April, Nationwide boosted its minimum wage to $21 per hour. Walker said the company's turnover rate was 8.3% in 2022, below the industry benchmark of 12% and below where it was before the pandemic started.
With its hybrid-work model, Nationwide is continuing to repurpose facilities it no longer needs. Last November, the insurer converted a Downtown building into a center leased to nonprofits.
Nationwide, the nation's biggest pet insurer, introduced new partnerships with Petco and Adopt a Pet.
Nationwide was successful in getting legislators in Ohio to pass Senate Bill 288 that makes distracted driving a primary offense. The legislation makes using a hand-held phone a primary offense for adults so officers can pull them over. mawilliams@dispatch.com @Bizmarkwilliams