3. Nationwide Financial Services, Inc.
Statistical Supplement
September 30, 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 September 30, 2006 5
For the three months ended September 30, 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 withdrawal 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
27-40
Historical Data
Glossary 41-44
Shareholder Information 45
4. Nationwide Financial Services, Inc.
Statistical Supplement
September 30, 2006
Quarterly Financial Highlights
($ in millions except for per share data) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06
Operating Revenues
Individual investments $ 385.3 $ 380.1 $ 382.6 $ 373.2 $ 382.3
Retirement plans 271.4 276.0 278.6 294.9 286.5
Individual protection 331.4 339.7 338.4 333.7 338.6
Corporate and other 97.4 103.5 100.1 111.5 108.8
Total operating revenues $ 1,085.5 $ 1,099.3 $ 1,099.7 $ 1,113.3 $ 1,116.2
Net realized gains (losses) on investments, hedging
(1)
instruments and hedged items (14.5) 3.7 (8.1) (11.0) 5.5
Total revenues $ 1,071.0 $ 1,103.0 $ 1,091.6 $ 1,102.3 $ 1,121.7
Pre-tax Operating Earnings
Individual investments $ 56.2 $ 53.4 $ 56.4 $ 52.5 $ 60.4
Retirement plans 45.4 49.7 53.6 64.4 53.6
Individual protection 63.8 59.6 64.9 60.5 71.0
Corporate and other (1.1) 22.6 11.6 16.6 21.7
Pre-tax operating earnings $ 164.3 $ 185.3 $ 186.5 $ 194.0 $ 206.7
Federal income tax expense (8.0) 33.1 42.2 (70.0) 52.0
Net operating earnings $ 172.3 $ 152.2 $ 144.3 $ 264.0 $ 154.7
Net realized gains (losses) on investments, hedging
instruments and hedged items, net of taxes (1) (9.4) 2.4 (5.3) (7.2) 3.6
Adjustment to amortization related to net realized
gains (losses), net of taxes 2.9 0.1 3.3 1.0 1.2
Discontinued operations, net of taxes 0.9 (24.4) - - -
Net income $ 166.7 $ 130.3 $ 142.3 $ 257.8 $ 159.5
Per Diluted Share
Net operating earnings $ 1.12 $ 0.99 $ 0.94 $ 1.76 $ 1.03
Net realized gains (losses) on investments, hedging
(1)
(0.07) 0.02 (0.03) (0.05) 0.02
instruments and hedged items, net of taxes
Adjustment to amortization related to net realized
gains (losses), net of taxes 0.02 - 0.02 0.01 0.01
Discontinued operations, net of taxes 0.01 (0.16) - - -
Net income $ 1.08 $ 0.85 $ 0.93 $ 1.72 $ 1.06
Sales by Channel
Non-affiliated
Independent broker/dealers $ 1,280.4 $ 1,207.9 $ 1,487.8 $ 1,380.7 $ 1,363.9
Wirehouse and regional firms 449.1 482.3 590.1 555.6 596.4
Financial institutions 398.8 424.3 523.7 580.7 570.1
Pension plan administrators 108.2 104.9 135.9 139.6 124.8
Life specialists 82.5 69.0 172.6 84.0 46.3
Affiliated
Nationwide Retirement Solutions 1,012.7 948.8 1,028.5 1,001.2 1,031.3
Nationwide agents 188.8 207.2 196.4 203.1 186.6
Nationwide Financial Network 160.2 181.6 185.7 171.0 168.3
The 401(k) Company 303.5 288.3 535.9 422.3 365.2
TBG Financial 92.3 36.0 110.4 62.7 21.4
Total $ 4,076.5 $ 3,950.3 $ 4,967.0 $ 4,600.9 $ 4,474.3
(1)
Excluding operating items (periodic net coupon settlements on non-qualifying derivatives, trading portfolio realized gains and losses,
trading portfolio valuation changes, and net realized gains and losses related to securitizations).
Note: All prior periods have been reclassified to reflect NFS Bermuda and TBG Lynch (a subsidiary of TBG Financial) as discontinued operations.
1
5. Nationwide Financial Services, Inc.
Statistical Supplement
September 30, 2006
Quarterly Financial Highlights
($ in millions except for per share data) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06
Balance Sheet Data
Total assets $ 117,421.3 $ 116,159.9 $ 116,558.7 $ 113,083.0 $ 114,880.0
Customer funds managed and administered $ 155,650.6 $ 155,612.9 $ 162,451.7 $ 160,051.6 $ 163,240.5
Shareholders' equity
(1)
Including accumulated other comprehensive income (AOCI) $ 5,375.6 $ 5,350.4 $ 5,126.2 $ 5,236.8 $ 5,630.0
AOCI 196.1 100.7 (77.9) (202.0) 47.8
Excluding AOCI $ 5,179.5 $ 5,249.7 $ 5,204.1 $ 5,438.8 $ 5,582.2
Net operating return on average equity excluding AOCI 13.5% 11.7% 11.0% 19.8% 11.2%
(2)
Adjusted net operating return on average equity excluding AOCI 11.2% 11.7% 11.0% 11.4% 11.2%
Statutory capital and surplus $ 3,305.9 $ 3,262.1 $ 3,279.3 $ 3,437.4 $ 3,504.2
Stock Data
Closing Price $ 40.05 $ 44.00 $ 43.02 $ 44.08 $ 48.10
Weighted average shares outstanding
Basic 153.1 152.9 152.3 149.2 149.5
Diluted 153.9 153.6 152.9 149.9 150.3
Book value per share
Including AOCI $ 35.09 $ 35.08 $ 34.40 $ 35.08 $ 37.61
Excluding AOCI $ 33.81 $ 34.42 $ 34.93 $ 36.43 $ 37.29
(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. 2Q 2006 return adjusted for $113.1 million of released tax reserves and associated tax-related adjustments relating to prior tax years.
Note: All prior periods have been reclassified to reflect NFS Bermuda and TBG Lynch (a subsidiary of TBG Financial) as discontinued operations.
NFS Operating Segment Reporting Structure
NATIONWIDE FINANCIAL
SERVICES, INC.
Individual Retirement Individual Corporate
Investments Plans Protection & Other
Variable Annuities Public Sector - 457 Fixed Life Medium Term Notes
Universal
Fixed Annuities Private Sector – 401(k) Structured Products
Whole
Term
Income Products Corporate Other
Investment Life
Variable Universal
Advisory Services
COLI
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7. Nationwide Financial Services, Inc.
Statistical Supplement
September 30, 2006
Quarterly Consolidated Income Statements
($ in millions) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06
Operating Revenues
Asset fees $ 163.1 $ 163.0 $ 168.9 $ 170.0 $ 169.2
Cost of insurance charges 97.8 97.5 98.9 100.2 100.6
Administrative fees 29.6 27.7 30.2 47.2 36.2
Surrender fees 24.1 22.6 23.0 20.2 21.6
Total policy charges 314.6 310.8 321.0 337.6 327.6
Traditional life and immediate annuity premiums 97.2 107.1 107.8 109.7 110.5
Net investment income 592.8 587.9 577.3 572.1 577.9
Operating realized gains (losses) 0.5 1.1 1.3 1.1 4.1
Other income 80.4 92.4 92.3 92.8 96.1
Total operating revenues 1,085.5 1,099.3 1,099.7 1,113.3 1,116.2
Benefits
Interest credited 350.6 347.7 342.1 345.7 348.2
Life insurance and annuity benefits 142.9 149.9 156.1 156.4 163.8
Policyholder dividends 27.1 27.0 20.2 24.5 24.6
Total benefits 520.6 524.6 518.4 526.6 536.6
Expenses
Commissions 130.2 140.1 153.1 160.4 160.7
General operating expenses 198.9 209.3 213.4 214.6 201.0
Debt extinguishment costs 21.7 - - - -
Deferral of policy acquisition costs (112.4) (120.8) (135.1) (147.4) (138.8)
Subtotal 238.4 228.6 231.4 227.6 222.9
Amortization of policy acquisition costs 122.9 123.7 125.7 127.5 109.8
Amortization of value of business acquired 11.3 10.0 11.6 12.5 14.9
Interest expense on debt 28.0 27.1 26.1 25.1 25.3
Total expenses 400.6 389.4 394.8 392.7 372.9
Pre-tax operating earnings $ 164.3 $ 185.3 $ 186.5 $ 194.0 $ 206.7
Federal income tax expense (8.0) 33.1 42.2 (70.0) 52.0
Net operating earnings $ 172.3 $ 152.2 $ 144.3 $ 264.0 $ 154.7
Net realized gains (losses) on investments, hedging
instruments and hedged items, net of taxes (1)
Realized gains on sales, net of hedging 8.4 20.5 7.3 11.0 10.2
Realized losses on sales, net of hedging (3.3) (7.9) (12.9) (19.1) (4.4)
Other-than-temporary impairments, including mortgage loan
valuation allowance adjustment (12.6) (7.5) (0.6) (2.5) (2.9)
Credit default swaps (2.8) (0.4) (0.1) (0.1) (0.1)
Derivatives, excluding hedging gains and losses on sales
and credit default swaps 1.4 (1.9) 0.5 3.4 0.3
Amounts credited to policyholder dividend obligation (2.1) 0.3 0.1 (0.7) 0.5
Adjustment to VOBA amortization 1.6 (0.7) 0.4 0.8 -
Subtotal (9.4) 2.4 (5.3) (7.2) 3.6
Adjustment to amortization related to net realized
gains (losses), net of taxes 2.9 0.1 3.3 1.0 1.2
Discontinued operations, net of taxes 0.9 (24.4) - - -
Net income $ 166.7 $ 130.3 $ 142.3 $ 257.8 $ 159.5
(1)
Excluding operating items (periodic net coupon settlements on non-qualifying derivatives, trading portfolio realized gains and losses,
trading portfolio valuation changes, and net realized gains and losses related to securitizations).
Note: All prior periods have been reclassified to reflect NFS Bermuda and TBG Lynch (a subsidiary of TBG Financial) as discontinued operations.
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8. Nationwide Financial Services, Inc.
Statistical Supplement
September 30, 2006
Combining Income Statement
For the three months ended September 30, 2006
Individual Retirement Individual Corporate
($ in millions) Investments Plans Protection and Other Total
Operating Revenues
Asset fees $ 125.2 $ 32.9 $ 11.1 $ - $ 169.2
Cost of insurance charges - - 100.6 - 100.6
Administrative fees 5.5 7.9 22.8 - 36.2
Surrender fees 14.7 0.8 6.1 - 21.6
Total policy charges 145.4 41.6 140.6 - 327.6
Traditional life and immediate annuity premiums 37.3 - 73.2 - 110.5
Net investment income 199.1 164.7 118.6 95.5 577.9
Operating realized gains (losses) - - - 4.1 4.1
Other income 0.5 80.2 6.2 9.2 96.1
Total operating revenues 382.3 286.5 338.6 108.8 1,116.2
Benefits
Interest credited 131.5 112.2 49.5 55.0 348.2
Life insurance and annuity benefits 55.5 - 108.3 - 163.8
Policyholder dividends - - 24.6 - 24.6
Total benefits 187.0 112.2 182.4 55.0 536.6
Expenses
Commissions 86.0 37.4 29.9 7.4 160.7
General operating expenses 54.5 78.2 68.8 (0.5) 201.0
Deferral of policy acquisition costs (86.9) (8.8) (43.1) - (138.8)
Subtotal 53.6 106.8 55.6 6.9 222.9
Amortization of policy acquisition costs 79.5 9.7 20.6 - 109.8
Amortization of value of business acquired 1.8 4.2 8.9 - 14.9
Interest expense on debt - - 0.1 25.2 25.3
Total expenses 134.9 120.7 85.2 32.1 372.9
Pre-tax operating earnings $ 60.4 $ 53.6 $ 71.0 $ 21.7 $ 206.7
Federal income tax expense 52.0
Net operating earnings $ 154.7
Net realized gains (losses) on investments, hedging
instruments and hedged items, net of taxes (1)
Realized gains on sales, net of hedging 10.2
Realized losses on sales, net of hedging (4.4)
Other-than-temporary impairments, including mortgage loan
valuation allowance adjustment (2.9)
Credit default swaps (0.1)
Derivatives, excluding hedging gains and losses on sales
and credit default swaps 0.3
Amounts credited to policyholder dividend obligation 0.5
Adjustment to VOBA amortization -
Subtotal 3.6
Adjustment to amortization related to net realized
gains (losses), net of taxes 1.2
Discontinued operations, net of taxes -
Net income $ 159.5
(1)
Excluding operating items (periodic net coupon settlements on non-qualifying derivatives, trading portfolio realized gains and losses,
trading portfolio valuation changes, and net realized gains and losses related to securitizations).
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9. Nationwide Financial Services, Inc.
Statistical Supplement
September 30, 2006
Combining Income Statement
For the three months ended September 30, 2005
Individual Retirement Individual Corporate
($ in millions) Investments Plans Protection and Other Total
Operating Revenues
Asset fees $ 118.5 $ 34.2 $ 10.4 $ - $ 163.1
Cost of insurance charges - - 97.8 - 97.8
Administrative fees 4.1 1.8 23.7 - 29.6
Surrender fees 16.0 1.7 6.4 - 24.1
Total policy charges 138.6 37.7 138.3 - 314.6
Traditional life and immediate annuity premiums 26.4 - 70.8 - 97.2
Net investment income 219.9 165.7 117.1 90.1 592.8
Operating realized gains (losses) - - - 0.5 0.5
Other income 0.4 68.0 5.2 6.8 80.4
Total operating revenues 385.3 271.4 331.4 97.4 1,085.5
Benefits
Interest credited 148.2 115.4 48.0 39.0 350.6
Life insurance and annuity benefits 37.3 - 105.6 - 142.9
Policyholder dividends - - 27.1 - 27.1
Total benefits 185.5 115.4 180.7 39.0 520.6
Expenses
Commissions 62.4 33.7 27.9 6.2 130.2
General operating expenses 47.3 72.6 75.3 3.7 198.9
Debt extinguishment costs - - - 21.7 21.7
Deferral of policy acquisition costs (59.9) (9.1) (43.4) - (112.4)
Subtotal 49.8 97.2 59.8 31.6 238.4
Amortization of policy acquisition costs 92.2 12.1 18.6 - 122.9
Amortization of value of business acquired 1.6 1.3 8.4 - 11.3
Interest expense on debt - - 0.1 27.9 28.0
Total expenses 143.6 110.6 86.9 59.5 400.6
Pre-tax operating earnings $ 56.2 $ 45.4 $ 63.8 $ (1.1) $ 164.3
Federal income tax expense (8.0)
Net operating earnings $ 172.3
Net realized gains (losses) on investments, hedging
instruments and hedged items, net of taxes (1)
Realized gains on sales, net of hedging 8.4
Realized losses on sales, net of hedging (3.3)
Other-than-temporary impairments, including mortgage loan
valuation allowance adjustment (12.6)
Credit default swaps (2.8)
Derivatives, excluding hedging gains and losses on sales
and credit default swaps 1.4
Amounts credited to policyholder dividend obligation (2.1)
Adjustment to VOBA amortization 1.6
Subtotal (9.4)
Adjustment to amortization related to net realized
gains (losses), net of taxes 2.9
Discontinued operations, net of taxes 0.9
Net income $ 166.7
(1)
Excluding operating items (periodic net coupon settlements on non-qualifying derivatives, trading portfolio realized gains and losses,
trading portfolio valuation changes, and net realized gains and losses related to securitizations).
Note: All prior periods have been reclassified to reflect NFS Bermuda and TBG Lynch (a subsidiary of TBG Financial) as discontinued operations.
6