[August 10, 2012]

Financial Services and Commercial Lines Drive Nationwide 2012 First Half Results

Nationwide today reported first half 2012 net operating income of $373 million, compared to $367 million during the same period in 2011¹. During both periods, financial services earnings offset a high level of severe weather-related events in the company's property & casualty business. Sales through June 30, 2012 reflect double-digit growth in commercial property & casualty lines and continued sales momentum in life insurance, fixed and immediate annuities and mutual fund lines.

Nationwide - a mutual company - paid more than $6.5 billion to members and business partners in the form of claims, life insurance benefits and other payments during the first half of 2012. Total operating revenue for the half was $10.8 billion. Total policyholder equity increased to $18.1 billion, compared to $16.2 billion at the end of 2011.

"Our diverse business mix is an enduring advantage that enables Nationwide to serve the needs of our members," said Steve Rasmussen, Chief Executive Officer for Nationwide. "This broad mix of business lines across a national footprint gives us an edge that more narrowly focused competitors can't match. In addition, our risk management and product development expertise enables us to address our customers' unique needs while providing the financial stability that helps our members and business partners protect what's most important."

During the quarter, Nationwide completed its merger with Pennsylvania-based Harleysville Mutual Insurance Company, strengthening the company's position as a premiere provider of commercial lines protection sold primarily through independent agents. The merger, which included the purchase of the publicly-traded shares of Harleysville Group, Inc. for approximately $830 million, was completed on May 1, 2012 with Harleysville Group becoming a wholly owned subsidiary of Nationwide. Nationwide's financial results through June 2012 include the impact of the merger and the two months of Harleysville's operations following the close of the transaction.

"Even with the completion of a major acquisition during the quarter our capital position remains strong," said Chief Financial Officer Mark Thresher. "Despite a very challenging operating environment, Nationwide posted strong earnings and continued top line growth for the first half, especially in commercial property & casualty lines. Our property & casualty business reported positive results, despite another period of unusually severe weather. New business writings and customer retention overall have improved compared to last year, and total policies in force have risen since the end of 2011. In addition, we continued to increase customer assets in our financial services businesses."

In July, Standard & Poor's reaffirmed Nationwide's A+ rating and stable outlook based on the company's strong capital position, risk management program and diversified earnings.²

A table of financial highlights is available at www.nationwide.com.

Financial Services Business Highlights

Nationwide offers life insurance, individual- and employer-sponsored retirement savings and banking products through four operating brands: Nationwide Financial, Nationwide Retirement Solutions, Nationwide Funds Group and Nationwide Bank.

First half net operating income for Nationwide's financial services business was $259 million compared to $410 million reported during the first six months of 2011. The year-over-year change is largely the result of a netcharge related to customer acquisition costs during the first half of 2012, which compares to several one-time benefits during the same period in 2011, primarily related to customer acquisition costs and taxes. Total customer assets grew to $167.5 billion, compared to $160.4 billion at the end of 2011. Asset fees and other policy charges were higher in the first half as market growth and net flows drove higher average customer asset values.

Year-to-date sales for the half totaled more than $9.1 billion, down 5 percent compared to the first half of 2011. Variable annuity sales fell $1.2 billion in the comparable period to $2.4 billion, the result of modifications made earlier this year to certain living benefit guarantee features of the product. Declines in variable annuity sales were partially offset by increases in the sale of fixed and immediate annuities, life insurance and mutual funds.

"Based on historically low interest rates and our ongoing risk management focus, Nationwide is being very thoughtful about how we manage our product portfolio. Changes made in June to our variable annuity living benefit guarantees are just one example of our ongoing effort to strike a careful balance between customer value risk and profitability. Our distribution partners and customers can be confident that we are committed to this business for the long-term and that we have the capital strength to stand behind our promises to customers," said Kirt Walker, President and Chief Operating Officer of Nationwide Financial. "Excluding sales of variable annuities with living benefits, financial services sales were up 10 percent for the half."

Nationwide Funds Group continued to grow, reporting $43.2 billion in assets under management. Nationwide Bank also continued its positive momentum, with customer deposits reaching $3.7 billion while customer loans were $1.5 billion.

Property and Casualty Business Highlights

Nationwide provides personal and commercial property & casualty protection products through six operating brands: Nationwide Insurance, Allied Insurance, Harleysville Insurance, Scottsdale Insurance, Titan Insurance and Nationwide Agribusiness.

First half property & casualty net operating income was $75 million, compared to a net operating loss of $61 million during the same period in 2011. Weather-related claims totaled more than $850 million for the half, including more than 33,000 claims resulting from the late June wind storm known as a "derecho" that swept through the Midwest and Mid-Atlantic States. Weather-related claims during the same period in 2011 totaled more than $1.5 billion.

Year-over-year direct written premiums for the half were up more than 7 percent to $7.9 billion, including almost $200 million from Harleysville from the date of its acquisition on May 1 through June 30, 2012. The results reflect an overall increase in new business writings and improving retention. While home and auto policy sales remain flat, commercial lines - including agribusiness, farm owners, main street commercial and excess & surplus lines - grew a combined 19 percent in the first half due to hardening market conditions, exposure growth, the addition of Harleysville and broader distribution as the company continued to add new independent agency and brokerage partnerships.

"While weather losses through mid-year were lower than 2011's record-setting levels, they were still very significant," Thresher said. "Overall, property & casualty lines were also pressured by higher severity in non-weather claims and lower investment income. Top line sales growth continued with our commercial lines business continuing to show strong momentum. Additionally, we saw our business customers add coverage in step with slowly improving economic conditions."

Investments and Capital

As of June 30, 2012, general account investments totaled $73.2 billion, including nearly $4.1 billion acquired in the Harleysville transaction. Net investment income was $1.6 billion during the first half of 2012, down from $1.7 billion in the first six months of 2011. The decrease was driven by lower yields on fixed income securities and lower alternative investment income.

Statutory surplus-a measure of financial strength and claims-paying ability evaluated by regulators and rating agencies-was $13.7 billion, more than three times the amount required by regulators to cover the company's obligations to its customers. Net income for the half was $386 million, up from $169 million during the same period in 2011, due to positive results in the company's risk management program.

"Our members can rest assured that Nationwide continues to maintain a strong and stable footing and is poised for long-term growth," Rasmussen said. "With the completion of the Harleysville merger, new advertising and a focus on providing great customer service through world-class associates and producers, Nationwide is in a great position to accelerate growth while protecting our members and expanding our On Your Side promise."

About Nationwide

Nationwide Mutual Insurance Company, based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor's. The company provides customers a full range of insurance and financial services, including auto insurance, motorcycle, boat, homeowners, pet, life insurance, farm, commercial insurance, administrative services, annuities, mortgages, mutual funds, pensions, long-term savings plans and specialty health services. For more information, visit www.nationwide.com.

Nationwide, the Nationwide frame mark, and On Your Side are service marks of Nationwide Mutual Insurance Company

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¹ Nationwide analyzes operating performance using non-GAAP financial measures called "net operating income" and "net operating revenue", which the company believes enhances understanding and comparability of its performance by highlighting its results from continuing operations and the underlying profitability drivers. Net operating income and net operating revenue exclude the impact of realized gains (losses) on sales of investments and hedging instruments, certain hedged items, other-than-temporary impairments, discontinued operations and extraordinary items, all net of taxes. Certain prior- period amounts have been reclassified to conform to current year presentation.

²Standard & Poor's A+ ranking is 5th strongest of 22. These ratings and rankings reflect Rating Agency assessment of the financial strength and claims-paying ability of Nationwide Life Insurance Company and are subject to change at any time. They are not intended to reflect the investment experience or financial strength of any variable account, which is subject to market risk. Because the dates are only updated when there's a change in the rating, the dates above reflect the most recent ratings we have received.

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