九色

Nationwide Mutual Insurance and its related entities were placed on CreditWatch with negative implications by Standard & Poor’s.

The rating actions point out S&P’s concerns that Nationwide’s earnings and capitalization will stay on a course to not attain expectations. In the first three months of the year, the company reported a combined ratio of nearly 108.8 percent against 104.8 for the same period last year and 111.1 percent for full-year 2000.

S&P is under the impression management’s ability to decrease the company’s combined ratio below 106 percent in the near to intermediate term will be hard to obtain given the weak fundamentals of the U.S. personal lines market.

Similarly, Nationwide’s capitalization, as measured by S&P’s capital adequacy ratio, has dropped significantly and is currently at the “A” level. The drop in capitalization reflects a combination of both weak earnings and the drop in the level of unrealized and realized capital gains associated with the equity portfolio. Looking to the future, S&P looks for any improvement in Nationwide’s capital adequacy to result from an improvement in earnings and not from capital gains associated with the equity portfolio.

S&P placed its ratings on Nationwide Financial Services Inc. (NFS) on CreditWatch mostly because of its relationship with its parent, not because of any material deterioration in the operating fundamentals of NFS’s business model.