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First Quarter
2006 Nationwide Financial® Statistical Supplement
3. Nationwide Financial Services, Inc.
Statistical Supplement
March 31, 2006
Table of Contents
Page
Quarterly Financial Highlights 1-2
NFS Financial Reporting Structure 2
Quarterly Consolidated Income Statements 4
Combining Income Statements
For the three months ended March 31, 2006 5
For the three months ended March 31, 2005 6
Quarterly Consolidated Balance Sheets 8
Individual Investments Segment
Quarterly earnings trends 9
Account value activity 9
Account values by product 10
Sales by product 10
Sales by channel 10
Retirement Plans Segment
Quarterly earnings trends 11
Account value activity 11
Account values by product 12
Sales by product 12
Sales by channel 12
Individual Protection Segment
Quarterly earnings trends 13
Policy reserves 13
Insurance in force 13
Sales by product 14
Sales by channel 14
Investment life quarterly earnings trends 15
Investment life policy reserve activity 15
Fixed life quarterly earnings trends 16
Fixed life policy reserve activity 16
Corporate and Other Segment
Quarterly earnings trends 17
Medium term notes account value activity 17
Other Data
Customer funds managed and administered 18
Separate account assets by segment and fund type 18
Securities available-for-sale 19
Aging of gross unrealized losses on securities available-for-sale 19
Credit quality of fixed maturity securities available-for-sale 20
Mortgage loans by region and property type 20
Deferred policy acquisition costs 21
Individual variable annuity deferred acquisition costs 22
Value of business acquired 23
Individual variable annuity guaranteed minimum death benefits 24
Individual variable annuity guaranteed minimum accumulation benefits 25
Individual variable annuity guaranteed minimum income benefits 25
Individual variable annuity guaranteed minimum death benefit reserve activity 26
Individual variable annuity guaranteed minimum accumulation benefit embedded derivative activity 26
Individual fixed annuity and fixed option of variable annuity summary of crediting rate detail 26
Historical Data 27-40
Glossary 41-44
Shareholder Information 45
4. Nationwide Financial Services, Inc.
Statistical Supplement
March 31, 2006
Quarterly Financial Highlights
($ in millions except for per share data) Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
Operating Revenues
Individual investments $ 371.8 $ 377.3 $ 385.3 $ 380.1 $ 382.6
Retirement plans 263.7 262.6 271.4 276.0 278.6
Individual protection 338.6 338.8 331.4 339.7 338.4
Corporate and other 87.9 96.2 97.4 103.5 100.1
Total operating revenues $ 1,062.0 $ 1,074.9 $ 1,085.5 $ 1,099.3 $ 1,099.7
Net realized gains (losses) on investments, hedging
(1)
instruments and hedged items 27.3 1.7 (14.5) 3.7 (8.1)
Total revenues $ 1,089.3 $ 1,076.6 $ 1,071.0 $ 1,103.0 $ 1,091.6
Pre-tax Operating Earnings
Individual investments $ 61.3 $ 66.1 $ 56.2 $ 53.4 $ 56.4
Retirement plans 47.1 45.3 45.4 49.7 53.6
Individual protection 71.8 63.0 63.8 59.6 64.9
Corporate and other 12.9 21.3 (1.1) 22.6 11.6
Pre-tax operating earnings $ 193.1 $ 195.7 $ 164.3 $ 185.3 $ 186.5
Federal income tax expense 50.7 50.8 (8.0) 33.1 42.2
Net operating earnings $ 142.4 $ 144.9 $ 172.3 $ 152.2 $ 144.3
Net realized gains (losses) on investments, hedging
(1)
instruments and hedged items, net of taxes 17.8 1.1 (9.4) 2.4 (5.3)
Adjustment to DAC amortization related to net realized
gains (losses), net of taxes (1.0) (2.5) 2.9 0.1 3.3
Discontinued operations, net of taxes 1.3 (2.3) 0.9 (24.4) -
Net income $ 160.5 $ 141.2 $ 166.7 $ 130.3 $ 142.3
Per Diluted Share
Net operating earnings $ 0.93 $ 0.94 $ 1.12 $ 0.99 $ 0.94
Net realized gains (losses) on investments, hedging
(1)
instruments and hedged items, net of taxes 0.12 0.01 (0.07) 0.02 (0.03)
Adjustment to DAC amortization related to net realized
gains (losses), net of taxes (0.01) (0.02) 0.02 - 0.02
Discontinued operations, net of taxes 0.01 (0.01) 0.01 (0.16) -
Net income $ 1.05 $ 0.92 $ 1.08 $ 0.85 $ 0.93
Sales by Channel
Non-affiliated
Independent broker/dealers $ 1,485.6 $ 1,292.1 $ 1,280.4 $ 1,207.9 $ 1,487.8
Wirehouse and regional firms 501.9 479.2 449.1 482.3 590.1
Financial institutions 514.4 470.5 398.8 424.3 523.7
Pension plan administrators 139.9 116.0 108.2 104.9 135.9
Life specialists 126.6 104.3 82.5 69.0 172.6
Affiliated
Nationwide Retirement Solutions 959.5 993.7 1,012.7 948.8 1,028.5
Nationwide agents 176.9 184.9 188.8 207.2 196.4
Nationwide Financial Network 160.9 155.3 160.2 181.6 185.7
The 401(k) Company 426.8 323.7 303.5 288.3 535.9
TBG Financial 108.5 38.6 92.3 36.0 110.4
Total $ 4,601.0 $ 4,158.3 $ 4,076.5 $ 3,950.3 $ 4,967.0
(1)
Excluding operating items (periodic net coupon settlements on non-qualifying derivatives, trading portfolio realized gains and losses,
and trading portfolio valuation changes).
Note: All prior periods have been reclassified to reflect Cap Pro Holding, Inc., NFS Bermuda and TBG Lynch (a subsidiary of TBG Financial) as discontinued operations.
1
5. Nationwide Financial Services, Inc.
Statistical Supplement
March 31, 2006
Quarterly Financial Highlights
($ in millions except for per share data) Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
Balance Sheet Data
Total assets $ 116,005.9 $ 115,699.7 $ 117,421.3 $ 116,159.9 $ 116,558.7
Customer funds managed and administered $ 149,093.4 $ 150,614.7 $ 155,650.6 $ 155,612.9 $ 162,451.6
Shareholders' equity
(1)
Including accumulated other comprehensive income (AOCI) $ 5,147.3 $ 5,434.9 $ 5,375.6 $ 5,350.4 $ 5,126.2
AOCI 222.6 395.7 196.1 100.7 (77.9)
Excluding AOCI $ 4,924.7 $ 5,039.2 $ 5,179.5 $ 5,249.7 $ 5,204.1
Net operating return on average equity excluding AOCI 11.7% 11.6% 13.5% 11.7% 11.0%
(2)
Adjusted net operating return on average equity excluding AOCI 11.7% 11.6% 11.2% 11.7% 11.0%
Statutory capital and surplus $ 3,015.9 $ 3,152.3 $ 3,305.9 $ 3,262.1 $ 3,279.3
Stock Data
Closing Price $ 35.90 $ 37.94 $ 40.05 $ 44.00 $ 43.02
Weighted average shares outstanding
Basic 152.7 153.0 153.1 152.9 152.3
Diluted 153.5 153.7 153.9 153.6 152.9
Book value per share
Including AOCI $ 33.64 $ 35.52 $ 35.09 $ 35.08 $ 34.40
Excluding AOCI $ 32.19 $ 32.94 $ 33.81 $ 34.42 $ 34.93
(1)
Includes changes in fair value of certain investments and derivatives under SFAS 115 and SFAS 133.
(2)
3Q 2005 return adjusted for $42.6 million impact of one-time tax adjustments associated with separate account dividend received deductions and $14.1 million
charge related to calling of trust preferred securities.
Note: All prior periods have been reclassified to reflect Cap Pro Holding, Inc., NFS Bermuda and TBG Lynch (a subsidiary of TBG Financial) as discontinued operations.
NFS Operating Segment Reporting Structure
NATIONWIDE FINANCIAL
SERVICES, INC.
Individual Retirement Individual Corporate
Investments Plans Protection & Other
Variable Annuities Public Sector - 457 Fixed Life Medium Term Notes
Universal
Fixed Annuities Private Sector – 401(k) Structured Products
Whole
Term
In Retirement Corporate Other
Investment Life
Income Products
Variable Universal
Advisory Services
COLI
2
7. Nationwide Financial Services, Inc.
Statistical Supplement
March 31, 2006
Quarterly Consolidated Income Statements
($ in millions) Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
Operating Revenues
Asset fees $ 157.0 $ 156.8 $ 163.1 $ 163.0 $ 168.9
Cost of insurance charges 96.4 96.8 97.8 97.5 98.9
Administrative fees 30.6 27.0 29.6 27.7 30.2
Surrender fees 25.1 26.4 24.1 22.6 23.0
Total policy charges 309.1 307.0 314.6 310.8 321.0
Traditional life and immediate annuity premiums 95.9 99.7 97.2 107.1 107.8
Net investment income 576.1 587.1 592.8 587.9 577.3
Operating realized gains (losses) 0.2 0.8 0.5 1.1 1.3
Other income 80.7 80.3 80.4 92.4 92.3
Total operating revenues 1,062.0 1,074.9 1,085.5 1,099.3 1,099.7
Benefits
Interest credited 334.5 348.1 350.6 347.7 342.1
Life insurance and annuity benefits 136.2 145.9 142.9 149.9 156.1
Policyholder dividends 26.9 26.3 27.1 27.0 20.2
Total benefits 497.6 520.3 520.6 524.6 518.4
Expenses
Commissions 137.8 138.6 130.2 140.1 153.1
General operating expenses 202.5 197.7 198.9 209.3 213.4
Debt extinguishment costs - - 21.7 - -
Deferral of policy acquisition costs (128.9) (126.9) (112.4) (120.8) (135.1)
Subtotal 211.4 209.4 238.4 228.6 231.4
Amortization of policy acquisition costs 121.8 111.0 122.9 123.7 125.7
Amortization of value of business acquired 12.0 11.7 11.3 10.0 11.6
Interest expense on debt 26.1 26.8 28.0 27.1 26.1
Total expenses 371.3 358.9 400.6 389.4 394.8
Pre-tax operating earnings $ 193.1 $ 195.7 $ 164.3 $ 185.3 $ 186.5
Federal income tax expense 50.7 50.8 (8.0) 33.1 42.2
Net operating earnings $ 142.4 $ 144.9 $ 172.3 $ 152.2 $ 144.3
Net realized gains (losses) on investments, hedging
instruments and hedged items, net of taxes (1)
Realized gains on sales, net of hedging 24.7 9.4 8.4 20.5 7.3
Realized losses on sales, net of hedging (3.0) (4.2) (3.3) (7.9) (12.9)
Other-than-temporary impairments, including mortgage loan
valuation allowance adjustment (3.0) (3.8) (12.6) (7.5) (0.6)
Credit default swaps (1.1) (0.5) (2.8) (0.4) (0.1)
Derivatives, excluding hedging gains and losses on sales
and credit default swaps 0.5 0.8 1.4 (1.9) 0.5
Amounts credited to policyholder dividend obligation (0.8) (0.7) (2.1) 0.3 0.1
Adjustment to VOBA amortization 0.5 0.1 1.6 (0.7) 0.4
Subtotal 17.8 1.1 (9.4) 2.4 (5.3)
Adjustment to DAC amortization related to net realized
gains (losses), net of taxes (1.0) (2.5) 2.9 0.1 3.3
Discontinued operations, net of taxes 1.3 (2.3) 0.9 (24.4) -
Net income $ 160.5 $ 141.2 $ 166.7 $ 130.3 $ 142.3
(1)
Excluding operating items (periodic net coupon settlements on non-qualifying derivatives, trading portfolio realized gains and losses,
and trading portfolio valuation changes).
Note: All prior periods have been reclassified to reflect Cap Pro Holding, Inc., NFS Bermuda and TBG Lynch (a subsidiary of TBG Financial) as discontinued operations.
4
8. Nationwide Financial Services, Inc.
Statistical Supplement
March 31, 2006
Combining Income Statement
For the three months ended March 31, 2006
Individual Retirement Individual Corporate
($ in millions) Investments Plans Protection and Other Total
Operating Revenues
Asset fees $ 124.0 $ 33.9 $ 11.0 $ - $ 168.9
Cost of insurance charges - - 98.9 - 98.9
Administrative fees 4.6 2.7 22.9 - 30.2
Surrender fees 15.2 1.5 6.3 - 23.0
Total policy charges 143.8 38.1 139.1 - 321.0
Traditional life and immediate annuity premiums 31.9 - 75.9 - 107.8
Net investment income 206.4 164.2 116.2 90.5 577.3
Operating realized gains (losses) - - - 1.3 1.3
Other income 0.5 76.3 7.2 8.3 92.3
Total operating revenues 382.6 278.6 338.4 100.1 1,099.7
Benefits
Interest credited 137.7 113.2 45.6 45.6 342.1
Life insurance and annuity benefits 41.0 - 115.1 - 156.1
Policyholder dividends - - 20.2 - 20.2
Total benefits 178.7 113.2 180.9 45.6 518.4
Expenses
Commissions 73.6 37.8 35.6 6.1 153.1
General operating expenses 48.4 72.2 82.0 10.8 213.4
Debt extinguishment costs - - - - -
Deferral of policy acquisition costs (74.4) (9.4) (51.3) - (135.1)
Subtotal 47.6 100.6 66.3 16.9 231.4
Amortization of policy acquisition costs 97.6 10.1 18.0 - 125.7
Amortization of value of business acquired 2.3 1.1 8.1 0.1 11.6
Interest expense on debt - - 0.2 25.9 26.1
Total expenses 147.5 111.8 92.6 42.9 394.8
Pre-tax operating earnings $ 56.4 $ 53.6 $ 64.9 $ 11.6 $ 186.5
Federal income tax expense 42.2
Net operating earnings $ 144.3
Net realized gains (losses) on investments, hedging
instruments and hedged items, net of taxes (1)
Realized gains on sales, net of hedging 7.3
Realized losses on sales, net of hedging (12.9)
Other-than-temporary impairments, including mortgage loan
valuation allowance adjustment (0.6)
Credit default swaps (0.1)
Derivatives, excluding hedging gains and losses on sales
and credit default swaps 0.5
Amounts credited to policyholder dividend obligation 0.1
Adjustment to VOBA amortization 0.4
Subtotal (5.3)
Adjustment to DAC amortization related to net realized
gains (losses), net of taxes 3.3
Discontinued operations, net of taxes -
Net income $ 142.3
(1)
Excluding operating items (periodic net coupon settlements on non-qualifying derivatives, trading portfolio realized gains and losses,
and trading portfolio valuation changes).
5
9. Nationwide Financial Services, Inc.
Statistical Supplement
March 31, 2006
Combining Income Statement
For the three months ended March 31, 2005
Individual Retirement Individual Corporate
($ in millions) Investments Plans Protection and Other Total
Operating Revenues
Asset fees $ 112.6 $ 35.1 $ 9.3 $ - $ 157.0
Cost of insurance charges - - 96.4 - 96.4
Administrative fees 4.2 2.5 23.9 - 30.6
Surrender fees 15.7 2.1 7.3 - 25.1
Total policy charges 132.5 39.7 136.9 - 309.1
Traditional life and immediate annuity premiums 22.1 - 73.8 - 95.9
Net investment income 216.8 166.3 119.1 73.9 576.1
Operating realized gains (losses) - - - 0.2 0.2
Other income 0.4 57.7 8.8 13.8 80.7
Total operating revenues 371.8 263.7 338.6 87.9 1,062.0
Benefits
Interest credited 146.6 111.8 45.6 30.5 334.5
Life insurance and annuity benefits 33.8 - 102.4 - 136.2
Policyholder dividends - - 26.9 - 26.9
Total benefits 180.4 111.8 174.9 30.5 497.6
Expenses
Commissions 61.7 33.7 35.8 6.6 137.8
General operating expenses 44.5 68.1 78.1 11.8 202.5
Debt extinguishment costs - - - - -
Deferral of policy acquisition costs (60.3) (10.0) (58.6) - (128.9)
Subtotal 45.9 91.8 55.3 18.4 211.4
Amortization of policy acquisition costs 82.6 12.3 26.9 - 121.8
Amortization of value of business acquired 1.6 0.7 9.7 - 12.0
Interest expense on debt - - - 26.1 26.1
Total expenses 130.1 104.8 91.9 44.5 371.3
Pre-tax operating earnings $ 61.3 $ 47.1 $ 71.8 $ 12.9 $ 193.1
Federal income tax expense 50.7
Net operating earnings $ 142.4
Net realized gains (losses) on investments, hedging
instruments and hedged items, net of taxes (1)
Realized gains on sales, net of hedging 24.7
Realized losses on sales, net of hedging (3.0)
Other-than-temporary impairments, including mortgage loan
valuation allowance adjustment (3.0)
Credit default swaps (1.1)
Derivatives, excluding hedging gains and losses on sales
and credit default swaps 0.5
Amounts credited to policyholder dividend obligation (0.8)
Adjustment to VOBA amortization 0.5
Subtotal 17.8
Adjustment to DAC amortization related to net realized
gains (losses), net of taxes (1.0)
Discontinued operations, net of taxes 1.3
Net income $ 160.5
(1)
Excluding operating items (periodic net coupon settlements on non-qualifying derivatives, trading portfolio realized gains and losses,
and trading portfolio valuation changes).
Note: All prior periods have been reclassified to reflect Cap Pro Holding, Inc., NFS Bermuda and TBG Lynch (a subsidiary of TBG Financial) as discontinued operations.
6
11. Nationwide Financial Services, Inc.
Statistical Supplement
March 31, 2006
Quarterly Consolidated Balance Sheets
($ in millions, except per share data) Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
Assets
Investments
Securities available-for-sale:
Fixed maturity securities $ 31,188.2 $ 31,778.5 $ 31,092.2 $ 30,106.0 $ 28,645.0
Equity securities 77.5 80.8 78.6 75.6 76.5
Trading assets 26.0 28.5 34.7 34.4 27.8
Mortgage loans 9,127.8 9,214.7 9,332.5 9,148.6 9,048.3
Real estate 108.6 103.8 107.7 108.7 108.6
Policy loans 921.9 928.6 935.6 930.6 933.9
Other long-term investments 581.8 628.0 617.6 691.9 688.9
Short-term investments 2,126.1 2,022.0 2,104.2 2,073.2 2,830.5
Total investments 44,157.9 44,784.9 44,303.1 43,169.0 42,359.5
Cash 38.3 45.8 47.6 16.4 23.9
Accrued investment income 427.3 409.6 436.8 396.3 398.9
Deferred policy acquisition costs 3,706.0 3,581.0 3,710.4 3,685.4 3,794.7
Value of business acquired 477.0 458.9 457.7 449.7 443.3
Other intangible assets 48.6 46.7 46.1 45.6 45.4
Goodwill 400.5 389.6 389.6 364.5 359.0
Other assets 2,383.5 2,214.1 2,227.5 2,069.2 2,200.3
Assets held in separate accounts 64,366.8 63,769.1 65,802.5 65,963.8 66,933.7
Total assets $ 116,005.9 $ 115,699.7 $ 117,421.3 $ 116,159.9 $ 116,558.7
Liabilities and shareholders' equity
Future policy benefits and claims $ 40,816.2 $ 40,842.3 $ 40,787.4 $ 39,748.1 $ 39,519.4
Short-term debt 182.9 352.1 391.2 252.3 147.4
Long-term debt 1,406.4 1,406.1 1,406.0 1,398.0 1,398.3
Other liabilities 4,086.3 3,895.2 3,658.6 3,447.3 3,433.7
Liabilities related to separate accounts 64,366.8 63,769.1 65,802.5 65,963.8 66,933.7
110,858.6 110,264.8 112,045.7 110,809.5 111,432.5
Shareholders' equity 5,147.3 5,434.9 5,375.6 5,350.4 5,126.2
Total liabilities and shareholders' equity $ 116,005.9 $ 115,699.7 $ 117,421.3 $ 116,159.9 $ 116,558.7
Capital Structure
Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
Total capital, including AOCI $ 6,553.7 $ 6,841.0 $ 6,781.6 $ 6,748.4 $ 6,524.5
Less AOCI 222.6 395.7 196.1 100.7 (77.9)
Total capital, excluding AOCI $ 6,331.1 $ 6,445.3 $ 6,585.5 $ 6,647.7 $ 6,602.4
Leverage, including AOCI
Long-term debt--to--total capital 21.5% 20.6% 20.7% 20.7% 21.4%
Leverage, excluding AOCI
Long-term debt--to--total capital 22.2% 21.8% 21.3% 21.0% 21.2%
Ratio of pre-tax operating earnings before interest
expense to interest expense 8.4X 8.3X 6.9X 7.8X 8.1X
8
12. Nationwide Financial Services, Inc.
Statistical Supplement
March 31, 2006
Individual Investments
Quarterly Earnings Trends
($ in millions) Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
Operating Revenues
Asset fees $ 112.6 $ 112.7 $ 118.5 $ 118.1 $ 124.0
Administrative fees 4.2 3.6 4.1 4.3 4.6
Surrender fees 15.7 16.2 16.0 14.2 15.2
Total policy charges 132.5 132.5 138.6 136.6 143.8
Net Investment Income
General account assets 223.1 226.1 226.4 220.3 212.7
Charge for invested capital (6.3) (6.3) (6.5) (6.9) (6.3)
Total net investment income 216.8 219.8 219.9 213.4 206.4
Premiums on income products 22.1 24.7 26.4 29.7 31.9
Other income 0.4 0.3 0.4 0.4 0.5
Total operating revenues 371.8 377.3 385.3 380.1 382.6
Benefits
Interest credited 146.6 149.8 148.2 144.5 137.7
Immediate annuity benefits 19.7 21.1 22.7 25.7 28.5
Policy benefits 14.1 21.2 14.6 16.3 12.5
Total benefits 180.4 192.1 185.5 186.5 178.7
Expenses
Commissions 61.7 67.7 62.4 65.7 73.6
General operating expenses 44.5 47.2 47.3 50.7 48.4
Deferral of policy acquisition costs (60.3) (68.5) (59.9) (62.0) (74.4)
Subtotal 45.9 46.4 49.8 54.4 47.6
Amortization of policy acquisition costs 82.6 70.8 92.2 83.7 97.6
Amortization of value of business acquired 1.6 1.9 1.6 2.1 2.3
Total expenses 130.1 119.1 143.6 140.2 147.5
Pre-tax operating earnings $ 61.3 $ 66.1 $ 56.2 $ 53.4 $ 56.4
Key Ratios/Statistics
Average Account Values:
General account $ 16,300.2 $ 16,223.7 $ 16,110.5 $ 15,515.1 $ 14,825.4
Separate account 35,430.3 35,060.4 35,669.0 35,975.9 36,504.3
Advisory services program 222.2 281.5 345.3 393.7 443.3
Total average individual investments account values $ 51,952.7 $ 51,565.6 $ 52,124.8 $ 51,884.7 $ 51,773.0
Earned rate 5.47% 5.57% 5.62% 5.68% 5.74%
Credited rate 3.60% 3.69% 3.68% 3.73% 3.72%
Interest spread on average general account values 1.87% 1.88% 1.94% 1.95% 2.02%
Prepayment penalties and bond call premium income 0.17% 0.17% 0.30% 0.19% 0.11%
Base interest spread on average general account values 1.70% 1.71% 1.64% 1.76% 1.91%
Asset fees to average separate account values 1.27% 1.29% 1.33% 1.31% 1.36%
General operating expenses to average account values 0.34% 0.37% 0.36% 0.39% 0.37%
Pre-tax operating earnings to average account values 0.47% 0.51% 0.43% 0.41% 0.44%
Pre-tax operating earnings to operating revenues 16.5% 17.5% 14.6% 14.0% 14.7%
Average allocated capital $ 1,685.5 $ 1,678.2 $ 1,689.8 $ 1,649.3 $ 1,563.0
Return on average allocated capital 11.1% 12.0% 16.7% 12.1% 11.9%
(1)
Adjusted return on average allocated capital 11.1% 12.0% 10.9% 12.1% 11.9%
(1)
3Q 2005 return adjusted for $24.3 million impact of one-time tax adjustments associated with separate account dividend received deductions.
Note: All prior periods have been reclassified to reflect NFS Bermuda as discontinued operations.
Individual Investments
Account Value Activity
($ in millions) Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
Individual Variable Annuities
Balance, beginning of period $ 41,481.9 $ 40,441.0 $ 40,726.4 $ 41,651.8 $ 40,796.0
Deposits 944.4 943.1 870.2 903.5 1,045.0
Withdrawals and surrenders (1,299.2) (1,388.7) (1,429.5) (1,456.8) (1,535.4)
Net flows (354.8) (445.6) (559.3) (553.3) (490.4)
Investment performance/interest credited (513.6) 848.7 1,615.9 971.1 1,903.4
Policy charges (133.4) (133.5) (138.9) (137.6) (140.6)
Benefits and other (39.1) 15.8 7.7 24.6 3.1
Acquisitions/(terminations), net - - - (1,160.6) -
Balance, end of period $ 40,441.0 $ 40,726.4 $ 41,651.8 $ 40,796.0 $ 42,071.5
Individual Fixed Annuities
Balance, beginning of period $ 8,902.5 $ 8,817.6 $ 8,731.8 $ 8,559.3 $ 8,041.8
Deposits 50.1 52.4 27.4 31.0 38.6
Withdrawals and surrenders (210.0) (230.0) (274.0) (330.0) (400.9)
Net flows (159.9) (177.6) (246.6) (299.0) (362.3)
Policyholder interest credited 83.6 83.7 82.8 77.6 73.4
Policy charges (2.7) (2.9) (3.2) (2.6) (2.8)
Benefits and other (5.9) 11.0 (5.5) (3.9) (3.5)
Acquisitions/(terminations), net - - - (289.6) -
Balance, end of period $ 8,817.6 $ 8,731.8 $ 8,559.3 $ 8,041.8 $ 7,746.6
Income Products $ 1,916.3 $ 1,935.0 $ 1,954.7 $ 1,978.3 $ 2,025.1
Advisory services program $ 248.4 $ 314.6 $ 375.9 $ 411.5 $ 475.0
Total individual investment account values $ 51,423.3 $ 51,707.8 $ 52,541.7 $ 51,227.6 $ 52,318.2
9
13. Nationwide Financial Services, Inc.
Statistical Supplement
March 31, 2006
Individual Investments
Account Values by Product
($ in millions) Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
Individual Variable Annuities
BEST of AMERICA products $ 32,801.3 $ 33,119.9 $ 33,989.0 $ 32,937.0 $ 34,117.5
Private label annuities 7,119.5 7,110.0 7,178.4 7,398.9 7,505.5
Nationwide Financial Network and other 520.2 496.5 484.4 460.1 448.5
Total individual variable annuities $ 40,441.0 $ 40,726.4 $ 41,651.8 $ 40,796.0 $ 42,071.5
Individual Fixed Annuities $ 8,817.6 $ 8,731.8 $ 8,559.3 $ 8,041.8 $ 7,746.6
Income Products $ 1,916.3 $ 1,935.0 $ 1,954.7 $ 1,978.3 $ 2,025.1
Advisory Services Program $ 248.4 $ 314.6 $ 375.9 $ 411.5 $ 475.0
Total individual investment account values $ 51,423.3 $ 51,707.8 $ 52,541.7 $ 51,227.6 $ 52,318.2
Individual Investments
Sales by Product
($ in millions) Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
Individual Variable Annuities
BEST of AMERICA products $ 815.4 $ 832.4 $ 720.1 $ 767.6 $ 912.5
Private label annuities 89.2 95.3 79.8 82.3 73.0
Nationwide Financial Network and other 1.2 1.3 1.1 1.1 0.9
Total individual variable annuities $ 905.8 $ 929.0 $ 801.0 $ 851.0 $ 986.4
Individual Fixed Annuities $ 62.7 $ 67.6 $ 31.5 $ 32.6 $ 39.5
Income Products $ 44.9 $ 47.7 $ 49.3 $ 54.8 $ 58.5
Advisory Services Program $ 53.2 $ 63.8 $ 65.1 $ 49.2 $ 62.6
Total individual investment sales $ 1,066.6 $ 1,108.1 $ 946.9 $ 987.6 $ 1,147.0
Individual Investments
Sales by Channel
($ in millions) Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
Individual Variable Annuities
Non-affiliated
Independent broker/dealers $ 327.9 $ 355.5 $ 309.4 $ 311.5 $ 347.7
Wirehouse and regional firms 208.2 217.6 198.3 197.8 220.8
Financial institutions 289.2 267.2 224.8 250.3 318.2
Life specialists 0.3 - - - 0.8
Affiliated
Nationwide agents 58.5 63.2 48.1 60.5 63.6
Nationwide Financial Network 21.7 25.5 20.4 30.9 35.3
Total individual variable annuities $ 905.8 $ 929.0 $ 801.0 $ 851.0 $ 986.4
Individual Fixed Annuities
Non-affiliated
Independent broker/dealers $ 1.6 $ 1.9 $ 1.9 $ 1.6 $ 2.6
Wirehouse and regional firms 1.7 3.4 1.2 1.9 1.0
Financial institutions 50.8 53.5 16.3 8.8 14.7
Pension plan administrators - - - - -
Affiliated
Nationwide agents 7.5 7.9 11.0 17.9 17.4
Nationwide Financial Network 1.1 0.9 1.1 2.4 3.8
Total individual fixed annuities $ 62.7 $ 67.6 $ 31.5 $ 32.6 $ 39.5
Income Products
Non-affiliated
Independent broker/dealers $ 22.3 $ 16.6 $ 17.6 $ 20.4 $ 28.1
Wirehouse and regional firms 10.7 15.5 19.0 18.2 17.0
Financial institutions 6.8 9.0 4.8 8.6 6.1
Affiliated
Nationwide agents 2.0 3.1 3.7 3.9 3.6
Nationwide Financial Network 3.1 3.5 4.2 3.7 3.7
Total income products $ 44.9 $ 47.7 $ 49.3 $ 54.8 $ 58.5
Advisory Services Program
Non-affiliated
Independent broker/dealers $ 48.3 $ 54.9 $ 57.7 $ 44.4 $ 48.0
Financial institutions 0.5 2.9 1.5 3.2 4.0
Affiliated
Nationwide Financial Network 4.4 6.0 5.9 1.6 10.6
Total advisory services program $ 53.2 $ 63.8 $ 65.1 $ 49.2 $ 62.6
Total individual investment sales $ 1,066.6 $ 1,108.1 $ 946.9 $ 987.6 $ 1,147.0
10
14. Nationwide Financial Services, Inc.
Statistical Supplement
March 31, 2006
Retirement Plans
Quarterly Earnings Trends
($ in millions) Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
Operating Revenues
Asset fees $ 35.1 $ 34.1 $ 34.2 $ 34.4 $ 33.9
Administrative fees 2.5 2.0 1.8 2.4 2.7
Surrender fees 2.1 2.5 1.7 1.9 1.5
Total policy charges 39.7 38.6 37.7 38.7 38.1
Net investment income 166.3 162.3 165.7 167.1 164.2
Other income 57.7 61.7 68.0 70.2 76.3
Total operating revenues 263.7 262.6 271.4 276.0 278.6
Benefits
Interest credited 111.8 112.2 115.4 115.6 113.2
Expenses
Commissions 33.7 31.6 33.7 34.3 37.8
General operating expenses 68.1 70.7 72.6 72.8 72.2
Deferral of policy acquisition costs (10.0) (9.2) (9.1) (8.9) (9.4)
Subtotal 91.8 93.1 97.2 98.2 100.6
Amortization of policy acquisition costs 12.3 11.1 12.1 11.9 10.1
Amortization of value of business acquired 0.7 0.9 1.3 0.6 1.1
Total expenses 104.8 105.1 110.6 110.7 111.8
Pre-tax operating earnings $ 47.1 $ 45.3 $ 45.4 $ 49.7 $ 53.6
Key Ratios/Statistics
Average Account Values:
General account $ 10,589.9 $ 10,795.0 $ 11,010.1 $ 11,151.0 $ 11,241.2
Separate account 20,206.2 19,582.4 19,342.2 19,737.8 19,298.8
Non insurance assets 10,987.4 11,914.9 13,023.6 14,056.6 15,258.6
Administration only 35,093.1 35,400.4 36,725.4 37,508.5 39,690.3
Total average retirement plan account values $ 76,876.6 $ 77,692.7 $ 80,101.3 $ 82,453.9 $ 85,488.9
Earned rate 6.28% 6.01% 6.02% 5.99% 5.84%
Credited rate 4.22% 4.16% 4.19% 4.15% 4.03%
Interest spread on average general account values 2.06% 1.85% 1.83% 1.84% 1.81%
Prepayment penalties and bond call premium income 0.25% 0.19% 0.18% 0.19% 0.09%
Base interest spread on average general account values 1.81% 1.66% 1.65% 1.65% 1.72%
Asset fees to average separate account values 0.69% 0.70% 0.71% 0.70% 0.70%
General operating expenses to average account values 0.35% 0.36% 0.36% 0.35% 0.34%
Pre-tax operating earnings to average account values 0.25% 0.23% 0.23% 0.24% 0.25%
Pre-tax operating earnings to operating revenue 17.9% 17.3% 16.7% 18.0% 19.2%
Average allocated capital $ 745.5 $ 753.6 $ 784.1 $ 806.5 $ 816.2
Return on average allocated capital 18.6% 17.7% 25.1% 20.1% 19.4%
(1)
Adjusted return on average allocated capital 18.6% 17.7% 17.7% 20.1% 19.4%
(1)
3Q 2005 return adjusted for $14.6 million impact of one-time tax adjustments associated with separate account dividend received deductions.
Retirement Plans
Account Value Activity
($ in millions) Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
Private Sector Pension Plans
Balance, beginning of period $ 37,736.0 $ 38,109.3 $ 39,324.9 $ 41,235.7 $ 42,906.5
New deposits/sales 2,255.2 1,682.4 1,833.3 1,676.4 2,327.7
Participant withdrawals and surrenders (1,497.8) (1,308.3) (1,464.6) (1,601.7) (1,855.7)
Net flows 757.4 374.1 368.7 74.7 472.0
Investment performance/interest credited (361.0) 811.6 1,591.8 1,027.6 2,112.0
Policy and other charges (52.3) (52.9) (53.5) (57.8) (25.2)
Case acquisitions/(terminations), net 29.2 82.8 3.8 626.3 784.6
Balance, end of period $ 38,109.3 $ 39,324.9 $ 41,235.7 $ 42,906.5 $ 46,249.9
Public Sector Pension Plans
Balance, beginning of period $ 38,925.2 $ 38,982.5 $ 38,968.6 $ 40,673.4 $ 40,092.0
New deposits/sales 952.3 984.8 1,004.2 940.3 1,020.0
Participant withdrawals and surrenders (739.1) (640.6) (634.2) (625.0) (694.2)
Net flows 213.2 344.2 370.0 315.3 325.8
Investment performance/interest credited (208.0) 575.5 1,359.3 850.3 1,376.2
Policy and other charges (17.2) (17.3) (17.5) (17.4) (18.0)
Case acquisitions/(terminations), net 69.3 (916.3) (7.0) (1,729.6) (46.8)
Balance, end of period $ 38,982.5 $ 38,968.6 $ 40,673.4 $ 40,092.0 $ 41,729.2
Total retirement plan account values $ 77,091.8 $ 78,293.5 $ 81,909.1 $ 82,998.5 $ 87,979.1
11
15. Nationwide Financial Services, Inc.
Statistical Supplement
March 31, 2006
Retirement Plans
Account Values by Product
($ in millions) Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
Private Sector Pension Plans
BEST of AMERICA annuity products $ 8,204.6 $ 7,995.6 $ 7,969.2 $ 7,791.9 $ 7,738.8
BEST of AMERICA trust products 11,416.3 12,413.4 13,633.7 14,479.5 16,037.7
Subtotal BEST of AMERICA 19,620.9 20,409.0 21,602.9 22,271.4 23,776.5
The 401(k) Company 11,328.9 11,712.4 12,215.3 13,147.7 16,349.9
Nationwide Financial Network products 1,429.2 1,411.2 1,372.3 1,378.4 1,316.5
Nationwide employee and agent benefit plans 5,097.7 5,155.2 5,426.4 5,504.2 4,207.1
Other 632.6 637.1 618.8 604.8 599.9
Total private sector pension plans $ 38,109.3 $ 39,324.9 $ 41,235.7 $ 42,906.5 $ 46,249.9
Public Sector Pension Plans
IRC Section 457 annuities $ 15,394.0 $ 14,797.6 $ 15,321.2 $ 15,790.2 $ 16,148.1
Administration only agreements 23,588.5 24,171.0 25,352.2 24,301.8 25,581.1
Total public sector pension plans $ 38,982.5 $ 38,968.6 $ 40,673.4 $ 40,092.0 $ 41,729.2
Total retirement plan account values $ 77,091.8 $ 78,293.5 $ 81,909.1 $ 82,998.5 $ 87,979.1
Retirement Plans
Sales by Product
($ in millions) Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
Private Sector Pension Plans
BEST of AMERICA annuity products $ 392.6 $ 357.5 $ 361.0 $ 296.7 $ 351.0
BEST of AMERICA trust products 1,167.0 888.7 948.0 971.2 1,277.5
Subtotal BEST of AMERICA 1,559.6 1,246.2 1,309.0 1,267.9 1,628.5
The 401(k) Company 426.8 323.7 303.5 288.3 535.9
Nationwide Financial Network products 53.2 41.7 52.6 58.4 56.5
Other 23.1 16.0 - - 12.6
Total private sector pension plan $ 2,062.7 $ 1,627.6 $ 1,665.1 $ 1,614.6 $ 2,233.5
Public Sector Pension Plans
IRC Section 457 annuities $ 373.8 $ 394.4 $ 397.6 $ 379.0 $ 407.3
Administration only agreements 578.5 590.4 606.7 561.3 612.6
Total public sector pension plans $ 952.3 $ 984.8 $ 1,004.3 $ 940.3 $ 1,019.9
Total retirement plan sales $ 3,015.0 $ 2,612.4 $ 2,669.4 $ 2,554.9 $ 3,253.4
Retirement Plans
Sales by Channel
($ in millions) Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
Private Sector Pension Plans
Non-affiliated
Independent broker/dealers $ 1,019.9 $ 793.2 $ 828.6 $ 770.3 $ 994.7
Wirehouse and regional firms 264.9 225.1 215.3 248.4 337.0
Financial institutions 154.5 125.7 133.8 137.2 167.7
Pension plan administrators 139.9 116.0 108.2 104.9 135.9
Affiliated
Nationwide Retirement Solutions 7.2 8.9 8.4 8.5 8.6
Nationwide agents 20.8 16.5 39.0 19.2 24.0
Nationwide Financial Network 28.7 18.5 28.3 37.8 29.7
The 401(k) Company 426.8 323.7 303.5 288.3 535.9
Total private sector pension plans $ 2,062.7 $ 1,627.6 $ 1,665.1 $ 1,614.6 $ 2,233.5
Public Sector Pension Plans
Nationwide Retirement Solutions $ 952.3 $ 984.8 $ 1,004.3 $ 940.3 $ 1,019.9
Total retirement plan sales $ 3,015.0 $ 2,612.4 $ 2,669.4 $ 2,554.9 $ 3,253.4
12
16. Nationwide Financial Services, Inc.
Statistical Supplement
March 31, 2006
Individual Protection
Quarterly Earnings Trends
($ in millions) Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
Operating Revenues
Asset fees $ 9.3 $ 10.0 $ 10.4 $ 10.5 $ 11.0
Administrative fees 23.9 21.4 23.7 21.0 22.9
Surrender fees 7.3 7.7 6.4 6.5 6.3
Cost of insurance 96.4 96.8 97.8 97.5 98.9
Total policy charges 136.9 135.9 138.3 135.5 139.1
Net Investment Income
General account assets 123.4 125.7 121.3 122.3 120.5
Charge for invested capital (4.3) (4.4) (4.2) (4.7) (4.3)
Total net investment income 119.1 121.3 117.1 117.6 116.2
Traditional life premiums 73.8 75.0 70.8 77.4 75.9
Other income 8.8 6.6 5.2 9.2 7.2
Total operating revenues 338.6 338.8 331.4 339.7 338.4
Benefits
Interest credited 45.6 49.6 48.0 47.5 45.6
Life benefits 102.4 103.6 105.6 107.9 115.1
Policyholder dividends 26.9 26.3 27.1 27.0 20.2
Total benefits 174.9 179.5 180.7 182.4 180.9
Expenses
Commissions 35.8 32.8 27.9 33.8 35.6
General operating expenses 78.1 74.6 75.3 78.4 82.0
Deferral of policy acquisition costs (58.6) (49.2) (43.4) (49.9) (51.3)
Subtotal 55.3 58.2 59.8 62.3 66.3
Amortization of policy acquisition costs 26.9 29.1 18.6 28.1 18.0
Amortization of value of business acquired 9.7 8.9 8.4 7.2 8.1
Interest expense on debt - 0.1 0.1 0.1 0.2
Total expenses 91.9 96.3 86.9 97.7 92.6
Pre-tax operating earnings $ 71.8 $ 63.0 $ 63.8 $ 59.6 $ 64.9
Key Ratios/Statistics
General operating expenses to operating revenues 23.1% 22.0% 22.7% 23.1% 24.2%
Pre-tax operating earnings to operating revenues 21.2% 18.6% 19.3% 17.5% 19.2%
Average allocated capital $ 1,764.1 $ 1,782.5 $ 1,798.5 $ 1,817.9 $ 1,829.6
Return on average allocated capital 11.0% 9.6% 10.9% 9.5% 9.8%
Adjusted return on average allocated capital (1) 11.0% 9.6% 10.0% 9.5% 9.8%
(1)
3Q 2005 return adjusted for $3.7 million impact of one-time tax adjustments associated with separate account dividend received deductions.
Note: All prior periods have been reclassified to reflect NFS Bermuda and TBG Lynch (a subsidiary of TBG Financial) as discontinued operations.
Individual Protection
Policy Reserves
Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
($ in millions)
Individual investment life $ 4,892.1 $ 4,994.9 $ 5,209.5 $ 5,329.5 $ 5,573.1
Corporate investment life - general account 5,106.4 5,173.7 5,499.4 5,613.8 5,997.2
Corporate investment life - separate account 1,161.5 1,164.4 1,143.6 1,130.8 1,143.6
Subtotal investment life 11,160.0 11,333.0 11,852.5 12,074.1 12,713.9
Traditional life 4,234.5 4,227.9 4,229.8 4,225.2 4,210.3
Universal life 1,022.4 1,043.4 1,067.7 1,089.3 1,108.1
Subtotal fixed life 5,256.9 5,271.3 5,297.5 5,314.5 5,318.4
Total individual protection policy reserves $ 16,416.9 $ 16,604.3 $ 17,150.0 $ 17,388.6 $ 18,032.3
Individual Protection
Insurance In Force
($ in millions) Q1'05 Q2'05 Q3'05 Q4'05 Q1'06
Individual investment life $ 56,772.8 $ 56,756.8 $ 56,739.3 $ 57,021.7 $ 57,164.1
Corporate investment life - general account 9,777.4 9,840.0 10,310.4 10,305.0 10,633.5
Corporate investment life - separate account 13,344.9 13,344.9 13,336.2 13,330.5 13,330.5
Subtotal investment life 79,895.1 79,941.7 80,385.9 80,657.2 81,128.1
Traditional life 33,596.4 34,628.5 35,500.1 36,589.3 37,678.6
Universal life 8,510.3 8,776.5 8,887.1 9,114.6 9,192.6
Subtotal fixed life 42,106.7 43,405.0 44,387.2 45,703.9 46,871.2
Total individual protection insurance in force $ 122,001.8 $ 123,346.7 $ 124,773.1 $ 126,361.1 $ 127,999.3
13