2006 nationwide annual report

Nationwide 2006 Annual Report

on your side:

Protecting what matters most...inside

Cover Financial highlights

01 Letter to shareholders

02 On Your Side

04 Key accomplishments

08 Corporate citizenship

10 diversity & inclusion

12 safety

13 environment

14 Products & services

16 Board of directors &

office of the Ceo

Pocket Key facts about nationwide

& significant u.s. rankings

nationwide has Provided On YOur Side serviCe to its Consumers For more than 80 years.

80

Financial highlights years ended december 31

(unaudited, based on u.s. generally accepted accounting principles) 2006 2005 % change

Results of Operations (in millions of u.S. dollars, except key performance indicators) Income statementPremiums and policy charges $ 17,427 $ 16,467 5.8%net investment income 3,400 3,280 3.7net realized gains on investments, hedging instruments and hedged items 237 285 (16.8)other income 1,189 1,094 8.7

total revenue 22,253 21,126 5.3total benefits and expenses 19,469 19,438 0.2Federal and foreign income taxes and other charges1 671 539 24.5net income $ 2,113 $ 1,149 83.9%

Balance sheettotal assets $160,009 $158,501 1.0%total reserves 52,412 54,272 (3.4)total liabilities 143,178 143,549 (0.3)non-controlling interests 2,549 2,478 2.9

total policyholders’ equity $ 14,282 $ 12,474 14.5%

Net Income (Loss) by SegmentProperty and Casualty insurance operations $ 1,206 $ 709 70.1%scottsdale 255 163 56.4Life and retirement savings 714 599 19.2asset management 298 (49) *Corporate2 (360) (273) (31.9)

total $ 2,113 $ 1,149 83.9%

Key Performance Indicatorstotal revenue growth 5.3% 6.5% *return on average total equity 15.8% 9.4% *statutory Property and Casualty trade combined ratio 93.6% 100.1% *statutory Property and Casualty trade combined ratio (excluding nationwide indemnity) 92.2% 95.0% *nationwide Financial services (nFs) earnings per share3 $ 4.74 $ 3.90 21.5%Full-time equivalent employees (end of period) 35,877 34,740 3.3

* Not applicable or meaningful.1 Other charges include net income attributable to non-controlling interests, discontinued operations, net of tax, and cumulative effect of adoption of accounting principle, net of tax.2 Includes charges for net income attributable to non-controlling interests.3 Per diluted common share, which takes into consideration all common stock equivalents.Note: Certain prior year amounts were reclassified to conform to the 2006 presentation.

Consolidated Total Revenue(in billions)

02 03 04 05

$21.1

$19.8

$18.3

$15.9

06

$22.3

02 03 04 05

$1,149$1,010

$662

$172

Consolidated Net Income(in millions)

06

$2,113

TOTAL ReveNueCombined revenue for 2006 grew to $22.3 billion, up from $21.1 billion a year ago. this increase of 5.3 percent was driven primarily by a nearly $1 billion increase in premiums and policy charges, and increases in asset management fees, which was associated with strong investment perform-ance and a more favorable mix of assets under management. the increase in premiums and policy charges over the prior year was fueled by a 2 percent increase in both policies in force and average premium per policy due to a more favorable business mix in the Property and Casualty insurance operations segment and higher variable annuity sales volume in the Life and retirement savings segment. Policy charges were up nearly 6 percent in 2006 over the prior year.

net investment income increased nearly 4 percent as the rising interest rate environment and an inverted yield curve drove short-term interest income higher in 2006. offsetting this increase was greater investment expenses and lower income from real estate and mortgage loans as the prior year exhibited more significant portfolio growth and prepayment income. in 2006, income from the available-for-sale investment portfolio was flat compared to last year. net realized gains on investments, hedging instruments, and hedged items for 2006 declined slightly, down nearly 17 percent over 2005. Lower net gains from sales of available-for-sale securities and greater net losses from derivative transactions were partially offset by higher income on real estate and trading securities transactions and lower other-than-temporary impairment charges. the higher level of other income was primarily due to increased levels of fees earned for the management of pension fund assets, unit trusts, investment trusts and corporate portfolios.

NeT INcOmeCombined net income for 2006 reached a record level of $2.113 billion, an increase of $964 million, or 84 percent, over 2005. during 2006, the company exited certain foreign and domestic based businesses, disposing some and holding others for sale. as a result of the sales in 2006, the company realized net after-tax gains of $313 million. a vast majority of these gains were comprised of tax benefits. more than offsetting these tax benefits was tax expense, the most significant of which was related to the increase in deferred taxes related to the excess in carrying value over the tax basis in nFs. this was the primary contributor to the rise in the company’s effective tax rate, which increased from 20 percent in 2005 to 30 percent in 2006. operating expenses rose modestly in 2006 as the company experienced better loss trends, favorable prior-year loss reserve development, and below-average current-year hurricane losses.

the Property and Casualty insurance operations segment income grew 70 percent, driven by better underwriting results and higher net investment income. in addition to the robust revenue growth, the results show continued declining loss frequency, primarily in standard auto that is partially offsetting a modest increase in severity. Loss results are outperforming the industry and are consistent with the trends of key competitors. Prior-year reserve development, particularly in non-hurricane weather losses, continues to exhibit favorable trends. the impact of hurricane-related losses was higher in 2005. scottsdale’s net income for 2006 was up 56 percent over the prior year as direct written premiums grew nearly 8 percent for the period in a highly competitive market along with better current-year accident results. these favorable factors were partially offset by higher commission expenses, which were in line with revenue growth.

net income from the Life and retirement savings segment, which included 5 percent higher revenues and tax benefits, was up 19 percent in 2006 over the prior year primarily due to significant tax benefits related to the resolution of a tax contingency and the increase in fee income, traditional life insurance and immediate annuity premiums, and policy charges.

asset management’s net income grew substantially in 2006 over the prior year due largely to the realized gains from the sale of certain foreign-based operations. excluding these realized gains and operating results, net income

increased 25 percent in 2006 over 2005, driven by increased management fees associated with strong investment performance and more favorable managed asset mix.

the Corporate segment captures all of the residual operating results of nationwide, including nationwide indemnity. Compared with 2005, loss reserve development in 2006 was favorable. Pre-tax reserve strengthening related to asbestos and environmental exposures was $207 million ($135 million after tax) in 2006 compared with $725 million ($471 million after tax) in 2005. net income attributable to noncontrolling interests increased in 2006 to $232 million, up from $190 million in 2005, which is commensurate with the net income increase in the Life and retirement savings segment.

The cOmPANynationwide is one of the largest insurance and financial services companies in the u.s., with more than $22 billion in revenue and $160 billion in assets (Fortune 100 – 2005). nationwide consists of four core businesses: domestic property and casualty insurance operations, specialty lines underwritten through the scottsdale family of companies, life insurance and retirement savings, and asset management. we are also engaged in various strategic investments (mortgage loan origination and servicing, third-party claims administration, and real estate development). nationwide provides a full range of products and financial services that include auto, fire, life, health and commercial insurance; administrative services, annuities, mutual funds and retirement plans. these products are offered through multiple distribution channels.

nationwide mutual is the sole stockholder of nationwide indemnity, a reinsurance company. nationwide indemnity holds a run-off environmental and asbestos business, which was assumed from both affiliated and unaffiliated companies.

cRedIT RATINgSnationwide does business in all 50 states, the district of Columbia and the virgin islands. nationwide mutual insurance Company and nationwide mutual Fire insurance Company are rated “a+” (strong) with a stable outlook by standard & Poor’s rating service, a division of the mcGraw-hill Companies, inc. (“s&P”), “aa3” (excellent) with a negative outlook by moody’s investor service, inc. (“moody’s”), and “a+” (superior) with a stable outlook by a.m. Best. nationwide Life insurance Company (nLiC) (and its insurance subsidiary) and nationwide Life insurance Company of america (nLiCa) (and its insurance subsidiary) are both rated “a+” (superior) with a stable outlook by a.m. Best, and both nLiC and nLiCa’s claims paying ability/financial strength are rated “aa3” (excellent) by moody’s and “aa-” (very strong) with stable outlook by s&P. the commercial paper issued by nLiC is rated “amB-1” by a.m. Best, “P-1” by moody’s and “a-1+” by s&P.

BASIS Of AccOuNTINgnationwide prepares its combined financial statements in accordance with u.s. generally accepted accounting principles (GaaP). For analytical purposes, including understanding performance trends, decision-making, and peer comparison, management of nationwide makes certain adjustments to some data, resulting in non-GaaP financial measures. the following term defines one of those financial measures:

statutory Property and Casualty trade Combined ratio: a formula used by property and casualty insurance companies to relate premium income to claims, administration and dividend expenses. it is calculated by dividing the sum of incurred losses by earned premium and underwriting expenses by written premium. it indicates the profitability of the insurer’s operations by combining the loss ratio with expense ratio (including dividends if any). this is termed the statutory combined ratio and measures the amount that an insurer must pay to cover claims and expenses per dollar of earned premium. the combined ratio does not take into account investment income.

Comments on 2006 results of operations

your life today. your future tomorrow.Nationwide had an excellent year in 2006, earning

more than $2.1 billion in net income. This level

of performance is a testament to the talent and

commitment of every associate in the company

and reflects our dedication to fulfilling our

On Your Side promise to customers.

Our primary operating units delivered strong

results. In our property and casualty operations,

our performance was driven by premium growth

that outpaced key competitors, favorable weather

conditions and lower-than-expected auto losses.

In our financial services business, Nationwide

Financial’s profitable year was highlighted by strong

variable annuity sales, new sales and relationship

management processes, refined product lineups,

and investments in new businesses such as the

Nationwide Bank.

Nationwide has earned more than $1 billion for

three consecutive years. While this achievement is

certainly worth celebrating, we realize profitability

is a means to an end rather than an end in itself.

We believe profitability allows us to:

• Build the capital strength to back the promises

we’ve made to our customers;

• Grow and extend our On Your Side promise to

more and more consumers; and

• Support the communities where we live and work.

Our profitability varies state by state because

separate rates are determined and approved for

each state based on the expected losses and

expenses within that state. This means that an

increased risk or increased losses in one state

doesn’t lead to increased rates in another. Likewise,

a rate reduction or lower-than-expected losses

in one state doesn’t lead to lower rates in others.

Because of this, profits from one state cannot be

used to subsidize rates in another.

The profitability of the insurance industry, particularly

the property and casualty insurance portion, must

be considered over a longer period than a single year.

That business is influenced by many variables such

as hurricanes, tornados, wildfires and earthquakes.

In some years, our customers may experience high

losses due to these types of events, while other

years may bring fewer losses. We recognize this

unpredictability and must retain earnings from

favorable years so we’re prepared to meet our

customers’ needs in the years when our losses are

higher than anticipated.

Our tradition of helping people protect what matters

to them most extends back to our founding in 1926,

when we began as an auto insurance company

serving the needs of Ohio’s farmers. Today, as one of

the largest diversified financial services companies in

America, we serve millions of customers who count

on us every day. And we still proudly serve the

agricultural community, whose support has helped

us become the largest insurer of farms in the nation.

Our history and heritage form the foundation of

our strength. We’re committed to building on this

strength to achieve great things for our customers

in the years ahead.

W. G. Jurgensen

Chief Executive Officer

2006 annual report 1

NATIONwIde IS cOmmITTed to helping our

customers navigate the complexities of life with

safety and security so they can look to the future

with confidence.

For many people this means we’ll help them get their

vehicle back on the road quickly after an accident, or

handle their claim so they can repair their house after

disaster strikes.

For others, it means we help them manage their finances

so they can reach their goals before and after they retire.

For small-business owners, we provide the peace of

mind they’re looking for as they build their businesses

and look after the well-being of their employees.

Our customers can interact with us in ways that best meet

their needs. Insurance for vehicles, homes and businesses

is available through a vast network of Nationwide agents

and independent agents licensed to offer Nationwide

products. Customers who prefer contacting Nationwide

directly can contact us through the Internet or by phone.

Our financial products — annuities, life insurance, mutual

funds and retirement plans — are provided through

independent investment professionals, regional and

national brokerage firms, Nationwide exclusive agents

and agents of the Nationwide Financial Network.

We’ve also created the Consumer Solutions Center

to help customers who want to rely on Nationwide’s

licensed investment professionals to help manage

their investments.

In 2006, we created another convenient way to help

people manage their finances. Nationwide Bank offers

checking and savings products and consumer loans

directly through the Internet or by phone. By eliminating

the overhead expense of bank branches, we’re able to

provide favorable rates and the flexibility for customers to

do their banking from anywhere, anytime they choose.

While Nationwide is dedicated to helping preserve our

customers’ financial health, we also know that physical

health and well-being is important. That’s why we

brought all our health-related businesses together

under the banner of Nationwide Better Health. This new

company is the first to truly integrate the best collection

of health and productivity services, including health

and wellness programming, disease and disability

management, and absence, maternity and medical case

management. With a focus on total population health

management, we’re lowering health care costs, increasing

productivity and improving the quality of life for Fortune

1000 employers and their employees.

When you get right down to it, we help take the worries

out of life and help our customers prepare for the planned,

and even the unexpected events in their lives.

It’s all a part of showing customers we’re on their side.

on your side:

we’re here to protect what matters most.

2 nationwide 2006 annual report 3

STRONg ReLATIONShIPS ARe BuILT on trust, and

every day our customers place their trust in us. They trust

that we will help them get their lives back to normal as

quickly as possible after trouble strikes. And they trust

that we’ll help provide them with a secure financial future.

When we tell people we’re on their side, that means a

lot more than just a slogan or a jingle. It’s our promise to

customers and it’s the basis of the trust that we’ll protect

what matters to them most.

Our strategy revolves around one focus — the customer.

In 2006, we made changes that helped us deliver on

our promise. We created new ways to fulfill the needs

of our customers, strengthening our relationships with

them by simplifying some of our processes, building

new products and giving them more options for how

they do business with us.

How we fulfill our promise to our customers will evolve

as their needs change. At every stage of their lives, we’ll

be there to help them live comfortably and securely.

Key aCComPLishments:

our strength continues to grow on many fronts.

Property and casualty

Our commitment to our customers is our top priority.

Whether we’re responding to a natural disaster or a

crumpled fender, our philosophy remains the same: to

help our customers get their lives back to normal simply

and easily.

When violent weather causes widespread damage, our

work becomes very visible. And 2006 was filled with wild

weather. We helped thousands of people recover after

everything from wildfires to ice storms.

But we know the smallest, everyday details can make a

big difference for people, too.

From the big things to the little things, we helped make

our customers’ lives easier in 2006. We did everything from

making our policies and bills easier to understand to

providing web-based and telephone service so customers

can make their insurance choices anytime they need to.

We also strengthened our diverse portfolio of product

lines, which includes auto, home, commercial, agriculture

and specialty insurance (like motorcycles and RVs), so

that we can perform well in all economic conditions.

That diversification has paid off in profitable growth.

simplifying service

creating an outstanding customer experience is

an important goal. Two new property and casualty

features deliver improved service:

• One is our new billing plan called the flexible

Payment Plan, developed in response to customer

requests. It gives them the option to pay the

minimum balance, the full amount or any amount

in between.

• Another is our Tow Network, currently available

in 14 states. One call to our claims hotline

dispatches a tow truck for customers who have

been in an accident or whose cars are undriveable

for other reasons.

seeing is believing

Autowatch is a free service we offer in conjunction

with our Blue Ribbon repair shops. customers who

have their vehicles repaired at any of those facilities

can watch through the Internet the progress being

made on their car or truck.

No more wondering how repairs are progressing.

customers can check it out for themselves whenever

they want.

technology in the field

Our agribusiness unit meets the needs of its

commercial customers and farmers in many different

ways, including using technology to make policy

management more convenient.

customers will be able to view their policies and

accounts — and pay their bills — online in 2007.

customers also will be able to easily compare

their current coverage with their changing needs

through the Nationwide Agribusiness’ website.

The site also will allow customers to report claims

online and to transfer funds electronically.

2006 annual report 54 nationwide

Our direct written premium climbed 3.9 percent in 2006

— that’s faster than any of our competitors. And our

policies in force jumped 1.7 percent to reach 11.1 million

by year end.

Our new motorcycle and powersports insurance

coverage helped drive that growth. It’s an example of

how we go the extra mile to protect our customers’

possessions. Instead of offering one-size-fits-all policies

like most companies’ products, we know a custom

motorcycle owner has different needs from someone

insuring a golf cart.

We partnered with the American Motorcyclist Association

to be their exclusive motorcycle insurance provider. That

let’s us reach thousands more motorcycle enthusiasts.

For our agribusiness customers, small farmers now

have more choices when it comes to protecting their

property. In 2006, Nationwide CountryElite® customers

had their coverage options expand as their policies

became part of Nationwide Agribusiness. Under their

new CountryChoice® product, these customers receive

more coverage for farm equipment without having to

list their equipment separately.

We also know that a “cookie-cutter” approach to renewing

large commercial agribusiness accounts doesn’t work for

our customers. That’s why a team of ag-experts in claims,

underwriting and loss control, set prices on a fair and

individualized basis, giving each customer the best price

for the unique services they require and risks they face.

Nationwide financial

To help our customers build a secure financial future,

we needed to look inside and do some things differently.

We developed a strategic plan to strengthen our core

business, build for growth and manage capital effectively.

We followed through on that plan and our success

showed in the financial performance — earnings per

share were $4.74, an increase of 21.5 percent from 2005.

Successes such as strengthening our variable annuity

business — which picked up 36 percent last year — and

the creation of the Nationwide Bank were important

parts of following through on our strategies.

The bank offers a full range of banking services and

products to give customers more flexibility with how they

use their money. It empowers customers to use and grow

their assets to prepare for life’s important events. And it

will allow us to provide a valuable service that enriches

our relationships with new and existing customers.

We help our customers through every event and stage

of their lives. And retirement is one in which financial

discipline and asset management is important. We

partnered with the Boston College Center for Retirement

Research to develop the National Retirement Risk Index,

which gauges how prepared we are as a nation for

retirement. Building on that, we developed the RetirAbility

CheckSM. It’s a fun, interactive web-based tool that helps

people assess how ready they are to live comfortably

in retirement.

But education is only one piece. We also increased our

capability to reach our customers by revamping our

sales process to be consistent across our distribution

channels, and we improved our products with state-

of-the-art features.

Nationwide Better health

Health care makes up a bigger chunk of consumer

expenses every year. So what can anyone do?

We created Nationwide Better Health and broke new

ground in 2006 to help keep people healthy and medical

expenses lower. We did this by becoming the first in

the industry to fully integrate disease and disability

management.

We also formed partnerships around the country with

other health and disability management companies

to enhance Better Health’s offerings. We welcomed in

FutureHealth for their expertise in disease, population

health and medical management. And the addition of

WellCorp gives us even more robust features with on-site

services such as screenings, health fairs and online health

education offerings.

Protecting financial futures

we protect financial futures with our strong financial

products so our customers can build a diverse

portfolio suited to their investment needs.

In response to customers’ desires in 2006, we created

some innovative products that offer a measure of a

guarantee their money will grow.

we also sold the u.K.-based operation of gartmore

group, while retaining the retail asset management

business, now known as Nwd Investment

management. Our retail mutual fund strategy

capitalizes on our extensive distribution channels

within Nationwide financial. In the second quarter

of 2007, we expect that Nationwide financial will

complete its purchase of Nwd Investment

management’s retail mutual funds.

To complement our vast distribution network, we’re

also integrating our exclusive insurance agents into

the Nationwide financial Network so we can better

offer customers our complete range of insurance

and financial products.

increasing financial awareness

helping to increase awareness about finances is

why we do things such as cosponsoring the State

of the Black union. The theme for the 2006 annual

meeting of African American leaders was economic

empowerment. It gave us a venue to talk about the

need to save and build wealth.

Planning for the future and preparing for retirement

is more important than ever before because of

pressures on pensions and government programs.

Knowing those safety nets can’t be relied on entirely

means people have to look to other areas to protect

and help their finances grow.

Focused efforts from our associates helped develop

an industry-leading company that looks to expand its

customer base in 2007.

Life comes at you fast

Our Life Comes at You Fast advertising campaign grew

bigger than ever in 2006. We took Fabio from romance-

novel cover heartthrob to a wrinkled Casanova in the blink

of an eye in one of the most popular ads of the 2006

Super Bowl. In early 2007, our Super Bowl ad featuring

Kevin Federline gained more attention than ever.

The ads are part of an ongoing campaign that illustrates,

in a humorous way, how consumers need to protect

their property and investments, because life has a way

of throwing curves.

And we’ll be there for our customers every step of the

way to make sure they can live comfortably, knowing

that we’ll help protect what matters most to them.


SAvINg, ReBuILdINg ANd eNRIchINg lives is what

Nationwide’s Corporate Citizenship is all about. Every day,

we turn critical moments into powerful possibilities. It’s

another way we’re helping people when it matters most.

Since 1959, the Nationwide Foundation has worked

to positively impact the quality of life in communities

where our associates, agents and their families live and

work. The highest priority for our grants is investing

in nonprofit organizations whose services provide

emergency and basic needs, or to stabilize a crisis

situation. In 2006, we made our largest gift ever, granting

$50 million to Columbus Children’s Hospital. The

Nationwide Foundation also supports our associates’

passions through matching their contributions to United

Way dollar for dollar. Last year, the Foundation matched

associate contributions totaling more than $8 million.

CorPorate CitizenshiP:

we turn critical moments into powerful possibilities.

Also in 2006, our associates logged more than 30,000

volunteer hours on the On Your Side Volunteer Network.

This network helps connect associates with nonprofit

organizations that best match their interests and talents.

The Nationwide Foundation supports these efforts by

awarding a grant to qualifying organizations where

associates spend at least 25 hours as volunteers.

Throughout the year, associates donate their time, skills

and resources to organizations like United Way, American

Red Cross, local food banks and community organizations

across the country. Through opportunities like these,

everyone has a chance to get involved.

This is how our company is reaching out to people in

communities, turning critical moments into powerful

possibilities, every day.

in 2006, we made our LarGest GiFt ever, GrantinG $50 miLLion to CoLumBus ChiLdren’s hosPitaL.

$50,000,000

2006 annual report 98 nationwide

TheRe’S A LeveL Of TRuST that’s built when we

come to know people for who they really are. Because

our customers look to us to help them protect the things

that are most valuable to them, that trust is crucial. Our

steadfast commitment to diversity and inclusion helps

us better understand the people and markets we serve.

Diversity and inclusion begins with each of us under-

standing ourselves. Then it extends to understanding our

colleagues and partners, and ultimately our customers.

It’s part of our ongoing journey to create a genuine and

authentic environment where all associates and

customers feel valued and respected.

We know diversity reaches beyond what we see on

the surface. It involves everything that makes a person

unique — life experiences, thinking style, religion, family

status and more. With this broader definition in mind,

our associates collaborate and innovate so we can create

the On Your Side experience our customers deserve.

We have a rich history of reaching out to many

communities in different ways. 2006 was no exception.

• We sponsored the State of the Black Union to help

the African American community learn about

economic empowerment.

• We stepped up our efforts to serve customers in their

preferred language with Protecting What Matters,

an educational guide to help customers understand

insurance, financial planning and safety topics. It’s

now available in Spanish and English.

• We’re the first in our industry to offer independent

agents policy-conversion materials in Chinese,

Filipino and Spanish.

diversity & inCLusion:

at nationwide, everyone has a voice.

• We strengthened partnerships with the Tom Joyner

Foundation to sponsor the On Your Side Internship

Program to offer rewarding summer internships

to students from historically black colleges and

universities.

• We grew our producer force with a new recruiting

initiative in cities across the United States through

our partnership with the National Urban League.

For us to deliver on our promise to all markets we also

have to make that promise a reality for our associates,

no matter their walk of life.

Our work to build a company where all associates

feel challenged, appreciated, respected and engaged

continued in 2006. The Human Rights Campaign listed

us as one of the best places to work in the country for the

gay, lesbian, bisexual and transgender (GLBT) community

when we received a perfect score on their Corporate

Equality Index. We were the only major company in our

industry to receive this honor. And Women’s Enterprise®

USA recognized us as one of the best in the country for

their Women Impacting Supplier Diversity.

Giving people choices is important to becoming a great

company. That’s why we give our associates options that

fit their unique lives. Flextime, telecommuting, financial

consulting and the Associate Assistance Program, which

helps associates find child and elder care are just some

of the things we do to help.

Our progress on diversity and inclusion is measured

in many ways. One measure of success is creating an

environment where all of our customers, associates,

community members and business partners feel their

voice is heard and valued. Every day we’re finding new

ways that bring us closer to that goal.


we’Re IN The BuSINeSS of protecting things. While

our focus is on personal property and investments, we

think it’s important to do what we can to help protect

the environment.

Sure, we take the traditional measures such as recycling

— it’s something we can all do. Our offices have recycling

bins in common areas and at desks. And we stress

conservation efforts to our associates.

Our associates would probably be a little warmer in the

covered walkways from downtown Columbus parking

garages into Home Office if we kept the heaters on all

the time. But the walkway heaters are just there to keep

ice and snow from piling up.

We also do some things people might not think about.

For instance, when birds are migrating through Central

Ohio we turn off the outside building lights of our

485-foot headquarters at night.

TheRe wAS A TIme when Detroit focused more on

horsepower than safety — when seatbelts and airbags

were options and muscle cars ruled. And, when the public

considered seatbelts a nuisance and sober driving only

a suggestion.

Now consumers demand safety, manufacturers brag

about it, the vast majority of people buckle up, and laws

and common sense have cracked down on drunken

driving. For more than 40 years Nationwide has helped

bring about these changes. Why? Because, as former

CEO Dean Jeffers said, “We are in the business of

preventing losses as much as we are in the business

for compensating for losses.”

Today, we’re reaching out more than ever, and educating

people about safety — in their homes, in their cars and

in their businesses.

Nationwide has a proud history of pursuing vehicle safety.

We were recently honored for our role in developing the

Airbag & Seatbelt Safety Campaign, which over the last

10 years helped increase seatbelt usage from 61 to 82

percent, child seat usage from 60 to 90 percent and

helped reduce the airbag-related death rate of children

by 96 percent.

In 2006, we conducted a national survey to help us learn

about people’s driving habits and the extent of a problem

known as DWD, or “Driving While Distracted.” After finding

that more than 80 percent of all drivers multitask behind

the wheel, we launched a media campaign to help the

public understand and avoid the dangers of DWD.

For years, Nationwide has fought for tougher drunken

driving laws and increased drinking ages, while

emphasizing education. While alcohol fatality rates

are down by more than half since 1983, 39 percent

of all traffic fatalities still involve alcohol.

environment:

we protect personal property, investments and the planet.

saFety:

we not only compensate for loss, we help prevent it.

Experts say migrating species use stars to navigate, and

lights from tall buildings are thought to confuse birds.

When a Columbus-area resident called us about dimming

our lights during the migratory seasons in the spring and

fall, we went a step further and turned them off.

And when things thaw out and we are taking care of

our gardens and grounds, we use corn gluten as an

environmentally safe weed control. Corn gluten gives

us a nontoxic, yet effective, alternative to chemical-based

weed-and-feed products.

Just another way we’re demonstrating our On Your

Side promise.

Nationwide continues to fight drunken driving, partnering

with Mothers Against Drunk Driving (MADD) to launch

“THINK,” a friend-to-friend program that educates high

schoolers and encourages them to commit to sober

driving throughout the entire year. It’s a program that

has the same mission as our former Nationwide Prom

Promise program — helping to save the lives of teens.

And we are helping keep young drivers safe through

our Time2Drive new driver program by working with

safety advocates to determine how best to educate

teens, and how best to develop more effective graduated

licensing laws.

Our work with auto manufacturers and safety advocates

to explore ways technology can help reduce drunken

driving has helped us become a leader in advocating

for the use of interlock devices that prevent convicted

drunken drivers with illegal blood alcohol levels from

starting their vehicles, as well as other technologies to

help prevent driving while drunk.

While these efforts support all communities, we have

targeted programs to help educate diverse communities

in the area of safety. Corazon de mi Vida is a program

bringing child seat safety to Latino families, while

Ay Chispas! focuses on fire safety in the home.

As we look ahead, we are excited about our work

with the Institute for Business & Home Safety. We are

committed to building an Insurance Center for Building

Safety Research that will lead to safer homes through

better testing of construction techniques and materials.

Whether it’s at home, in the car, or at work, Nationwide

has made safety an important part of what we do for

our customers.

when Birds are miGratinG throuGh CentraL ohio we turn oFF the outside BuiLdinG LiGhts oF our 485-Foot headquarters at niGht.

485


Property and casualty

cOmPANIeS PROducTS dISTRIBuTION chANNeLS

Nationwide Insurance insurance for autos, motorcycles, boats, exclusive nationwide agents, rvs, homes and businesses; individual brokers, sponsor organizations, and group health insurance, health employers, banks and internet savings accounts, health reimbursement accounts, special risk coverage

Allied Insurance insurance for autos, motorcycles, boats, independent agents rvs, homes, businesses and farms

Nationwide Agribusiness insurance for farms and direct sales, exclusive nationwide agribusinesses; loss-control services agents, independent agents

Scottsdale Insurance specialty insurance products General agents for business and individuals, commercial and excess liability coverage, pet insurance

Titan Insurance specialty auto insurance exclusive nationwide agents, independent agents

health


Nationwide Better health health and wellness programs; direct sales disease, disability, absence, maternity and medical management

Banking and mortgage


Nationwide Bank Cds, loans, savings and internet, direct sales, service centers checking accounts and atms

Nationwide Advantage mortgage mortgages, home equity internet, nationwide exclusive lines of credit agents, direct sales

Life insurance and retirement savings


Nationwide financial variable and fixed annuities, life Financial planners, brokerages, insurance, private-sector retirement financial institutions, pension plans, immediate annuities plan administrators, nationwide Financial network agents, exclusive nationwide agents

Nationwide Retirement Solutions Public-sector retirement plans direct sales

TBg mullin deferred compensation plans, direct sales corporate-owned life insurance

asset management


Nwd Investment management mutual funds, investment services Financial planners, internet for individuals and institutions

ProduCts & serviCes:

more options. more flexibility.


Board of directors

Lewis J. Alphin

James B. Bachmann

A. I. Bell

Timothy J. corcoran

yvonne m. curl

Kenneth d. davis

Keith w. eckel

fred c. finney

w. g. Jurgensen

daniel T. Kelley

Lydia m. marshall

Terry w. mcclure

Barry J. Nalebuff

Ralph m. Paige

James f. Patterson

Arden L. Shisler

office of the Ceo

w. g. Jurgensen

Chief executive officer

nationwide

Patricia R. hatler

executive vice President

Chief Legal officer

nationwide

Terri L. hill


Chief administrative officer

nationwide

michael c. Keller


Chief information officer

nationwide

James R. Lyski


Chief marketing officer

nationwide

michael d. miller

President and Chief operating officer

Scottsdale insurance

Steve S. Rasmussen


Property and Casualty insurance

nationwide

Robert A. Rosholt


Chief Financial officer,

Finance, investments and strategy

nationwide

mark R. Thresher


nationwide Financial

16 nationwide

Key facts about nationwide

• approximately 36,000 employees

• more than 16 million policies in force

significant u.s. rankings

PROPeRTy ANd cASuALTy RANKINgS*

• 4th-largest homeowner insurer

• 6th-largest auto insurer

• 10th-largest commercial insurer

• 6th-largest total property and casualty insurer

* Source: A.M. Best, 2005 DWP

LIfe ANd ReTIRemeNT SAvINgS RANKINgS

• #1 provider of defined contribution plans

• #6 provider of variable life insurance1

• #13 writer of individual variable annuities2

• #18 u.s. life insurer based on premium3

• #15 u.s. life insurer based on admitted assets3

1 VARDS Q3 2006 YTD2 Tillinghast Q3 2006 YTD3 AM Best Q3 2006 YTD

nationwideOne Nationwide PlazaColumbus, OH 43215 G-9536A

Nationwide, the Nationwide Framemark and On Your Side are federally registered service marks of Nationwide Mutual Insurance Company.

Key facts about nationwide

• approximately 36,000 employees

• more than 16 million policies in force

significant u.s. rankings

PROPeRTy ANd cASuALTy RANKINgS*

• 4th-largest homeowner insurer

• 6th-largest auto insurer

• 10th-largest commercial insurer

• 6th-largest total property and casualty insurer

* Source: A.M. Best, 2005 DWP

LIfe ANd ReTIRemeNT SAvINgS RANKINgS

• #1 provider of defined contribution plans

• #6 provider of variable life insurance1

• #13 writer of individual variable annuities2

• #18 u.s. life insurer based on premium3

• #15 u.s. life insurer based on admitted assets3

1 VARDS Q3 2006 YTD2 Tillinghast Q3 2006 YTD3 AM Best Q3 2006 YTD

2006 nationwide annual report

Economy & Finance

net income attributable

net investment income

net income loss

net of tax

total liabilities

total benefits

total reserves

policy charges