Moody's downgrades Nationwide Mutual, P&C affiliates

Moody's downgraded the insurance financial strength ratings to A2 from A1 of Nationwide Mutual Insurance Co. and its property and casualty affiliates, collectively referred to as Nationwide P&C.

The affiliates are Crestbrook Insurance Co., Harleysville Insurance Co., Harleysville Insurance Co. of New Jersey, Harleysville Insurance Co. of New York, Harleysville Lake States Insurance Co., Harleysville Preferred Insurance Co., Harleysville Worcester Insurance Co., Nationwide Agribusiness Insurance Co., Nationwide Assurance Co., Nationwide General Insurance Co., Nationwide Property & Casualty Insurance Co. and Scottsdale Insurance Co.

Moody's also affirmed the A1 insurance financial strength ratings of Nationwide Life Insurance Co. and Nationwide Life & Annuity Insurance Co. The outlooks remain stable. The two companies, together with Nationwide Financial Services Inc., are collectively referred to as Nationwide Financial Services.

The downgrade reflects Nationwide P&C's weak profitability over the past several years, primarily in standard personal and standard commercial lines. The group's ratings reflect its solid market presence among the 10 largest P&C insurers in the US, its diversified product offerings, and geographic reach across the US and its mutual ownership.

Nationwide P&C benefits from the relatively steady earnings of Nationwide Financial Services and the large capital base of Nationwide Enterprise, which encompasses Nationwide P&C and Nationwide Financial Services.

These strengths are offset by Nationwide P&C's weak/volatile earnings record, catastrophe loss exposure in property lines and adverse reserve development exposure in casualty lines, including a runoff asbestos and environmental book.

The affirmation of Nationwide Financial Services' ratings reflects its strong position in US life insurance, annuities and retirement plans, as well as its diversified distribution channels and brand recognition.

Nationwide Financial Services' strengths are offset by the challenges of managing contract guarantees in variable annuity liabilities, which expose its capital and earnings to equity market and interest rate risks.