Insurance company Nationwide Mutual said profits in the first half of the year fell by more than half after paying claims, like the rest of the industry, for some of the worst tornadoes in U.S. history.
Privately held Nationwide, one of the country’s 10 largest property insurers, said Friday it had net income of $219 million in the first half of 2011, down from $483 million a year earlier. Operating income of $398 million was down from $759 million in 2010.
The 2011 results include disaster payouts of more than $1.5 billion, reflecting the record-setting tornadoes that hit the country in April in May as well as other catastrophes.
“It tells us we need to continue to diversify our (property and casualty) risk in places that we’re not,” said Mark Thresher, Nationwide’s chief financial officer, in an interview.
Thresher said Nationwide is still reviewing its business in the most-affected regions and has not made any conclusions yet as far as changes to pricing or concentration. Some smaller insurers have already said they will reduce their exposure to or pull out of some of the hardest-hit areas.
Stripping out the disasters, Nationwide said growth was strong, as variable annuity sales rose, assets under management grew, lending picked up at the banking unit and insurance premiums continued to rise.
The market turmoil of the last few weeks, with multiple 4 percent swings in the broader indexes, could ultimately hurt net income but has not diminished investor appetite yet, Thresher said.
“We haven’t seen much of an impact from a sales standpoint, we’re continuing to see good flows into the business,” he said.
In the company’s core property and casualty business, premiums were flat overall, though small business lines rose 4 percent on what the company said was a “modest improvement” in the economy.
(Reporting by Ben Berkowitz; Editing by Derek Caney)
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