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Ultimate Parent: Nationwide Mutual Insurance Company

NATIONWIDE MUTUAL INSURANCE COMPANYOne West Nationwide Blvd, Columbus, OH 43215-2220

Mailing Address: One West Nationwide Blvd,, 1-04-701, Columbus, OH43215-2220

Web: www.nationwide.comTel: 614-249-7111 Fax: 866-315-1430AMB#: 002358 NAIC#: 23787Ultimate Parent#: 002358 FEIN#: 31-4177100

BEST’S CREDIT RATING

Best’s Financial Strength Rating: A+ Outlook: NegativeBest’s Financial Size Category: XV

The company’s rating reflects its pooling arrangement with other poolmembers of the Nationwide Group (AMB# 005987).

RATING RATIONALE

The following text is derived from A.M. Best’s Credit Report onNationwide Group (AMB# 005987).

Rating Rationale: The ratings reflect Nationwide Group’s (Nationwide) solidrisk-adjusted capitalization, overall favorable operating results, and extensivebusiness profile featuring significant national market presence andbrand-name recognition. These positive rating factors are the result ofNationwide’s capital management strategies, its multi-variant pricing model,strict underwriting guidelines, and diversified product mix distributed throughmultiple channels.

The aforementioned rating factors are partially offset by the group’sunprofitable underwriting performance in recent years, largely due to theimpact of severe weather-related and catastrophic events, despite theirmitigation by a comprehensive reinsurance program and wide geographicdiversification. In addition, Nationwide’s underwriting expense ratiogenerally exceeds that of other personal lines carriers, primarily due to asomewhat elevated level of commission expense. The group carries asbestos

Printed November 15, 2017 www.ambest.com of 12

NATIONWIDE MUTUAL INSURANCE COMPANY

Columbus, Ohio

A+

Best’s Rating Report

and environmental (A&E) reserves that unfavorably influenced older years’loss reserve development. The group also remains susceptible to competitivepersonal lines market conditions and regulatory and legal decisions that couldimpact profitability. Despite underwriting losses in recent years, the group’ssurplus and capitalization have shown consistent growth. However,management continues to face challenges in the near term to generate positiveunderwriting results that will further strengthen its capital position.

Nationwide utilizes multiple distribution channels that include exclusiveand independent agents, direct sales via telephone and the Internet, as well asdirectly marketing to affinity groups. Management’s business acquisitionstrategy has enabled the group to increase its operating scale, provide solidplatforms for running its agency distribution network and increase geographicand product diversification.

Regarding future rating movement, if trends in underwriting performancecontinue to be unprofitable in the near term, leading to a notable decline inrisk-adjusted capitalization, further downward rating pressure would beconsidered. Conversely, an established improving trend in underwritingprofitability could eventually lead to consideration of a stable outlook.

FIVE-YEAR RATING HISTORY

DateBest’sFSR Date

Best’sFSR

10/02/17 A+ 04/02/14 A+07/07/16 A+ 05/22/13 A+03/19/15 A+

KEY FINANCIAL INDICATORS ($000)————————————Statutory Data————————————

PeriodEnding

DirectPremiumsWritten

NetPremiumsWritten

Pre-taxOperating

IncomeNet

Income

TotalAdmitted

Assets

Policy-holders’Surplus

2012 3,581,373 12,492,606 -436 21,650 29,551,793 11,343,9982013 3,596,738 14,630,884 479,757 499,835 32,675,758 11,792,5292014 3,331,544 14,962,667 679,792 718,375 34,711,195 12,137,9892015 2,885,382 15,510,776 162,589 184,128 35,923,712 12,315,8752016 2,669,671 16,174,411 -427,635 -314,581 37,185,213 12,690,338

——Profitability—— ———Leverage——— ——Liquidity——

PeriodEnding

Comb.Ratio

Inv.Yield(%)

Pre-taxROR(%)

NAInvLev

NPWto

PHSNetLev.

OverallLiq.(%)

Oper.Cash

flow (%)2012 106.9 3.8 0.0 28.9 1.1 2.7 162.6 93.82013 99.9 2.8 3.5 27.1 1.2 3.0 156.8 101.52014 104.3 5.3 4.6 33.6 1.2 3.1 154.0 104.62015 104.3 3.1 1.1 37.0 1.3 3.2 152.3 109.32016 106.6 2.1 -2.7 32.4 1.3 3.2 152.0 103.8

5-Yr 104.4 3.4 1.2 … … … … …

(*) Within several financial tables of this report, this company is compared against the PrivatePassenger Standard Auto & Homeowners Composite.

(*) Data reflected within all tables of this report has been compiled from the company-filedstatutory statement.

CORPORATE OVERVIEW

Nationwide Mutual Insurance Company (NMIC), Nationwide Mutual FireInsurance Company (Nationwide Mutual Fire) and Farmland MutualInsurance Company are affiliated property/casualty insurers.

NMIC fully owns the following groups of companies and their respectiveproperty/casualty subsidiaries: ALLIED Group, Inc. (five subsidiaries),Scottsdale Insurance Company (five subsidiaries) and THI HoldingsDelaware, Inc. (seven subsidiaries). NMIC also owns fourteen otherindividual property/casualty subsidiaries, including Atlantic FloridianInsurance Company, Crestbrook Insurance Company, Nationwide IndemnityCompany and Nationwide Insurance Company of Florida.

NMIC and Nationwide Mutual Fire respectively own 95.2% and 4.8% ofNationwide Corporation, parent of Nationwide Financial Services, Inc.(NFS). NFS is the holding company for Nationwide Life Insurance Company(NLIC) and other companies that comprise the life insurance and retirementsavings operations of the Nationwide group of companies (Nationwide). Thisgroup also includes Nationwide Life Insurance Company of America(NLICA) and its subsidiaries, including the affiliated distribution network(Nationwide Financial Network [NFN]).

CORPORATE STRUCTURE

AMB# COMPANY NAME DOMICILE % OWN002358 Nationwide Mutual Ins Co OH033595 Allied Holdings (DE), Inc. DE 100.00058310 ALLIED Group, Inc IA 100.00001772 ALLIED Property & Cas Ins Co IA 100.00052365 Nationwide Advantage Mortgage IA 8.47002014 AMCO Insurance Company IA 100.00052365 Nationwide Advantage Mortgage IA 87.30

090236 AGMC Reinsurance, Ltd.Turks and CaicosIslands 100.00

001872 Depositors Insurance Company IA 100.00052365 Nationwide Advantage Mortgage IA 4.23002513 Nationwide Insurance Co of Am OH 100.00058389 Harleysville Group Inc DE 100.00000643 Harleysville Insurance Company PA 100.00012051 Harleysville Insurance Co NY PA 100.00001921 Harleysville Ins Co of NJ NJ 100.00000603 Harleysville Lake States Ins MI 100.00003779 Harleysville Preferred Ins Co PA 100.00002483 Harleysville Worcester Ins Co PA 100.00011541 Allied Ins Co of America OH 100.00001987 Crestbrook Insurance Company OH 100.00006517 Harleysville Life Ins Co PA 100.00054013 Lone Star General Agency Inc TX 100.00010346 Colonial County Mutual Ins Co TX003007 National Casualty Company OH 100.00078197 Natl Cas Co of America Ltd United Kingdom 100.00011802 Nationwide Affinity Ins Co Am OH 100.00003539 Nationwide Agribusiness Ins Co IA 100.00000277 Nationwide Assurance Company OH 100.00050675 Nationwide Corporation OH 95.20



058160 Nationwide Financial Services DE 100.00006812 Nationwide Life Ins Co OH 100.00062060 Eagle Captive Reinsurance LLC OH 100.00051872 Jefferson National Financial DE 100.00006475 Jefferson National Life Ins Co TX 100.00061881 Jefferson National Life Ins NY NY 100.00009070 Nationwide Life & Annuity Ins OH 100.00060680 Olentangy Reinsurance LLC VT 100.00002356 Nationwide General Ins Co OH 100.00011664 Nationwide Indemnity Company OH 100.00012238 Nationwide Insurance Co of FL OH 100.00002855 Nationwide Lloyds TX002594 Nationwide Prop & Cas Ins Co OH 100.00001931 Scottsdale Indemnity Company OH 100.00003292 Scottsdale Insurance Company OH 100.00013981 Freedom Specialty Insurance Co OH 100.00012121 Scottsdale Surplus Lines Ins AZ 100.00001722 Veterinary Pet Insurance Co OH 100.00000601 Western Heritage Insurance Co AZ 100.00050366 THI Holdings (Delaware) Inc DE 100.00000548 Titan Indemnity Company TX 100.00010709 Titan Insurance Company MI 100.00000671 Victoria Fire & Casualty Co OH 100.00011688 Victoria Automobile Ins Co OH 100.00012059 Victoria National Ins Co OH 100.00011689 Victoria Select Insurance Co OH 100.00012058 Victoria Specialty Ins Co OH 100.00000366 Farmland Mutual Insurance Co IA002357 Nationwide Mutual Fire Ins Co OH

BUSINESS PROFILE


Nationwide is one of the largest multi-line insurers and financial servicesorganizations in the U.S., with statutory assets of nearly $53.0 billion. Itscombined operations are serviced by 33,000 employees and by more than60,000 agents and producers. Through its various affiliates, Nationwide isengaged in two core businesses: Property/Casualty Insurance and Life &Retirement Savings.

The Property/Casualty Insurance segment, led by Nationwide MutualInsurance Company (NMIC), generates approximately 80% of Nationwide’snet premiums written. NMIC provides personal and main-street commercialinsurance primarily through a national network of exclusive agencies. Inaddition, Nationwide distributes through direct response and independentagency channels, which were enhanced by the acquisition of the ALLIEDgroup of companies and Nationwide Insurance Company of America. THIHoldings Delaware, Inc. (THI), which is led by Victoria Fire & CasualtyCompany, includes seven operating companies and specializes in writingnon-standard automobile business. On January 1, 2017, National GeneralHoldings Corp. entered into a renewal rights transaction with THI for itspersonal and commercial non-standard vehicle in-force policies. The group’scommercial segment includes the Scottsdale companies and Farmland Mutual

Insurance Company. Western Heritage Insurance Company, which wasacquired along with ALLIED Group, Inc., provides a wide range ofcommercial insurance products and services. The Scottsdale companies andWestern Heritage Insurance Company write property/casualty and specialtyclasses of insurance on an excess and surplus lines basis. The Harleysvillecompanies write mainly commercial multi-peril and auto lines in northeasternstates. The specific lines of commercial business for the group’s commercialsegment include contract property and casualty, professional, transportationand brokerage lines. These lines account for approximately 9% of the group’snet premiums written.

Nationwide’s primary property/casualty lines of business include privatepassenger automobile liability and physical damage, homeowners andmain-street commercial business. NMIC predominantly writes standardpersonal automobile and main-street commercial coverages. NationwideMutual Fire specializes in providing homeowners insurance. NationwideProperty and Casualty Insurance Company provides alternative-pricedpersonal automobile products to Nationwide’s agents. Nationwide GeneralInsurance Company specializes in providing auto insurance for selectmid-size employer groups and professional organizations. NationwideAssurance and its affiliate, Colonial County Mutual Insurance Company,specialize in nonstandard auto and motorcycle coverages. The ALLIEDcompanies specialize in personal and main-street commercial insuranceproducts primarily written through independent agents in the western U.S.Thirteen service centers are maintained throughout the country to issue andservice policies, collect premiums and pay claims in their respectiveterritories.

The main rating unit, Nationwide Group, consists of four members of theintercompany reinsurance pool: Nationwide Mutual Insurance Company,72.0%; Nationwide Mutual Fire Insurance Company, 23.0%; ScottsdaleInsurance Company, 4.0%; and Farmland Mutual Insurance Company, 1.0%.The pooling agreement also includes thirty-two affiliates, thirty of whichreinsure with either a pool member or another affiliate and qualify for areinsurance affiliation code. One subsidiary company, Nationwide IndemnityCompany, since 1998 has primarily served as the runoff entity forNationwide’s discontinued operations, mainly those with exposure to asbestosand environmental (A&E) claims.

As part of its plans to significantly grow its property/casualty revenues,Nationwide continues to leverage its multi-channel presence to respond tochanging customer preferences. The group utilizes multiple access points toattract new customers with acquisitions, such as the ALLIED companies andNationwide Insurance Company of America. While offering new outlets tocustomers, the group expects its exclusive and independent agents to remain akey part of its growth strategy. Additional growth is planned by expandingexisting distribution channels, comprised of exclusive and independentagents, into areas where Nationwide has little or no presence supplemented byusing multiple access points, such as direct response, the Internet, and greateremployer and affinity group endorsements of Nationwide products. Infurtherance of this strategy, in January 2009, the group completed theprivatization of Nationwide Financial Services, Inc. (NFS), the intermediateparent holding company of its life insurance subsidiaries. The increased



cultural alignment brought about by the privatization is expected to strengthenthe group’s competitive position, facilitate a more integrated, focusedcustomer-centric view and enhance delivery of Nationwide’s “On Your Side”promise.

In 2014 the organization began the process of re-branding all companiespreviously mentioned herein as “Nationwide” to further enforce the conceptof membership.

The Life & Retirement Savings segment, led by NFS and its subsidiaries,Nationwide Life Insurance Company and Nationwide Life and AnnuityInsurance Company, provides long-term savings and retirement products,including variable annuities, fixed annuities and life insurance as well aspension products and administrative services. These products are distributedthrough financial planners, financial institutions, pension plan administrators,stockbrokers and Nationwide’s exclusive sales representatives and agencyforce.

Scope of Operations: Nationwide Group and its subsidiary companiesprovide a wide and comprehensive variety of personal lines and smallcommercial lines products, available through multiple distribution channels inall fifty states.

TOTAL PREMIUM COMPOSITION & GROWTH ANALYSIS

PeriodEnding

———DPW———Reinsurance

—Prem Assumed—Reinsurance

—Prem Ceded—($000) (% Chg) ($000) (% Chg) ($000) (% Chg)

2012 3,581,373 -4.8 13,670,775 6.9 4,759,541 12.72013 3,596,738 0.4 14,671,783 7.3 3,637,637 -23.62014 3,331,544 -7.4 15,916,400 8.5 4,285,278 17.82015 2,885,382 -13.4 17,038,203 7.0 4,412,809 3.02016 2,669,671 -7.5 18,029,273 5.8 4,524,533 2.5

5-Yr CAGR … -6.6 … 7.1 … 1.4

PeriodEnding

————NPW———— ————NPE————($000) (% Chg) ($000) (% Chg)

2012 12,492,606 1.3 12,405,018 1.52013 14,630,884 17.1 13,847,154 11.62014 14,962,667 2.3 14,641,281 5.72015 15,510,776 3.7 15,240,897 4.12016 16,174,411 4.3 15,930,827 4.5

5-Yr CAGR … 5.6 … 5.5

Territory: The company is licensed in the District of Columbia, Guam, U.S.Virgin Islands and all states.

2016 BY-LINE BUSINESS ($000)Reinsurance Reinsurance

———DPW——— —Prem Assumed— —Prem Ceded—Product Line ($000) (%) ($000) (%) ($000) (%)Priv Pass Auto Liab 903,791 33.9 3,651,466 20.3 844,122 18.7Auto Physical 698,989 26.2 2,925,150 16.2 678,984 15.0Homeowners 135,104 5.1 3,183,132 17.7 652,811 14.4Com’l MultiPeril 309,061 11.6 2,321,290 12.9 562,505 12.4Oth Liab Occur 183,034 6.9 1,271,962 7.1 337,519 7.5Comm’l Auto Liab 171,007 6.4 1,372,756 7.6 435,162 9.6Inland Marine 73,230 2.7 934,054 5.2 408,111 9.0Workers’ Comp 57,988 2.2 467,637 2.6 128,000 2.8Farmowners 5,469 0.2 468,372 2.6 84,717 1.9Oth Liab CM 3,205 0.1 477,217 2.6 112,271 2.5Allied Lines 57,394 2.1 318,970 1.8 102,538 2.3All Other 71,398 2.7 637,267 3.5 177,793 3.9

Total 2,669,671 100.0 18,029,273 100.0 4,524,533 100.0

Business———NPW——— Retention

Product Line ($000) (%) (%)Priv Pass Auto Liab 3,711,135 22.9 97.8Auto Physical 2,945,156 18.2 99.7Homeowners 2,665,426 16.5 96.2Com’l MultiPeril 2,067,847 12.8 97.4Oth Liab Occur 1,117,476 6.9 99.2Comm’l Auto Liab 1,108,601 6.9 99.9Inland Marine 599,173 3.7 99.0Workers’ Comp 397,624 2.5 99.5Farmowners 389,123 2.4 98.7Oth Liab CM 368,151 2.3 100.0Allied Lines 273,826 1.7 87.1All Other 530,873 3.3 96.1

Total 16,174,411 100.0 97.9

BY-LINE RESERVES ($000)Product Line 2016 2015 2014 2013 2012Priv Pass Auto Liab 3,135,806 2,795,750 2,642,198 2,609,490 2,610,602Auto Physical 119,534 80,645 89,337 82,976 55,192Homeowners 618,791 575,438 515,260 510,302 533,588Com’l MultiPeril 2,272,141 2,178,690 2,013,943 1,924,915 1,205,611Oth Liab Occur 2,125,159 1,962,953 1,788,331 1,660,548 1,483,006Comm’l Auto Liab 1,602,057 1,524,727 1,394,928 1,212,720 850,519Inland Marine 59,639 24,175 35,920 36,951 29,345Workers’ Comp 1,038,892 1,058,010 1,026,156 1,000,409 606,406Farmowners 112,480 111,805 93,658 79,987 80,794Oth Liab CM 407,929 371,530 321,492 233,130 207,300Allied Lines 78,133 60,724 62,208 50,692 49,234All Other 346,557 307,575 266,114 276,131 274,407

Total 11,917,119 11,052,020 10,249,545 9,678,250 7,986,005



Market Share/MarketPresence: Nationwide Group and its subsidiarycompanies maintain leading market positions in nearly all product lines. Thegroup is the largest writer of farm policies and pet insurance nationally. Thegroup also ranks as the 8th largest auto insurer, 7th largest homeownersinsurer, and the 2nd largest E&S insurer nationally.

GEOGRAPHIC BREAKDOWN BYDIRECT PREMIUM WRITINGS ($000)

2016 2015 2014 2013 2012North Carolina 407,117 436,739 467,629 494,123 493,393Pennsylvania 299,135 341,060 429,137 478,589 423,446Ohio 258,803 280,144 328,312 341,573 348,132Virginia 222,761 242,171 275,364 286,969 295,734California 199,962 195,392 259,287 258,580 237,815Maryland 144,584 164,264 180,643 197,547 186,909New York 112,757 119,909 119,348 121,745 127,250Georgia 112,056 101,368 51,519 30,614 25,714West Virginia 109,251 121,892 138,695 155,952 167,915Delaware 69,198 81,388 93,878 101,581 100,711All Other 734,048 801,056 987,731 1,129,465 1,174,353

Total 2,669,671 2,885,382 3,331,544 3,596,738 3,581,373

RISK MANAGEMENT


Nationwide Group maintains a comprehensive and continually developingERM program, with a dedicated Chief Risk Officer and extensive staff. Riskmanagement teams are independent and embedded in business units, and riskmanagement leaders are also members of business unit management teams.The group sees value in the process in its Risk Transfer Framework, in pricing/ product design, and by internally assessing required and available economiccapital through its Risk Adjusted Return on Capital (RAROC) program.

Risk are formally delegated to committees, and the Board of Directorsmanages the intersections of oversight responsibilities. The Board is alsoultimately responsible for all risk management oversight, and for any risks notspecifically delegated to these committees.

Stress Tests Performed: Nationwide Group’s risk adjusted capital is stressedto a 100 year probable maximum loss for a hurricane event to ensure capitalstability. Additional stress tests are run to consider various terrorism anddeficit in earnings scenarios.

Catastrophe Exposure and Management: Nationwide underwrites andmonitors its hurricane risk in a number of ways. Corporate underwritingguidelines are used in all coastal states, and state specific adjustments appliedwhere permitted. Additionally, risk assessment tools may be employed incertain geographies for specific lines of business during the underwritingprocess. Hurricane modeling is performed semi-annually by a team ofexperienced catastrophe modeling professionals in the group’s Product and

Pricing Risk Management Department. Additional modeling, including forother perils such as tornado/hail, earthquake and winter freeze, is performedthroughout the year as required, for purposes such as concentration andexposure management, pricing applications, strategic analysis, and relativitymodeling. In all cases, coastal exposure levels are managed and monitoredmonthly to ensure compliance with established target levels. Policy provisionmanagement, including the use of minimum wind/hurricane deductibleswhere permitted, are also employed extensively.

OPERATING PERFORMANCE


Operating Results: Nationwide’s earnings fluctuated over the past five yearsdue to underwriting losses, interest rate fluctuations and the variability of itsaffiliated investments. The group’s average five-year pre-tax operating andtotal returns on revenue lagged the composite. Total returns have beensomewhat influenced by variability in unrealized capital gains/losses on thegroup’s common stock portfolio and its affiliated investments, primarily NFS.

Operating results reflect management’s adherence to strict underwritingprinciples and increased rates, primarily on its personal lines book of business.Consequently, earnings in the group’s core lines of business improved as rateincreases developed through earned premiums. Management alsoimplemented underwriting and agency management strategies that includedre-underwriting initiatives, risk segmentation and technologicalenhancements that were designed to sustain positive underwriting results. Inaddition, the group continued to expand its customer access points, diversifyits spread of risk throughout the U.S. and re-focused on its core competencies.However, earnings were impacted by the additional, albeit declining level of,A&E reserving performed in each of the past five years, and more notably bythe significant underwriting losses suffered from auto lines and the frequentand severe weather-related losses over the same time.

The group’s diversified fixed-income portfolio produced average five-yearpre-tax investment yields and total investment returns that were comparable tothe composite and a robust stream of investment income that has offsetunderwriting losses in three of the past five years. In addition, realized capitalgains have minimally supported operating earnings over the past five years.Nationwide’s common stocks and sizable affiliated holdings have somewhatlimited its average return on invested assets.



PROFITABILITY ANALYSIS ($000)———————————Company———————————

Pre-tax After-taxPeriod Operating Operating Net TotalEnding Income Income Income Return2012 -436 42,512 21,650 -338,9042013 479,757 488,733 499,835 528,4632014 679,792 786,557 718,375 902,0842015 162,589 316,193 184,128 145,9582016 -427,635 -309,407 -314,581 112,662

5-Yr Total 894,067 1,324,588 1,109,406 1,350,263

————Company———— ——Industry Composite——Period Pre-tax Return Operating Pre-tax Return OperatingEnding ROR (%) on PHS (%) Ratio (%) ROR (%) on PHS (%) Ratio (%)2012 0.0 -3.0 100.4 3.0 6.1 97.02013 3.5 4.6 95.4 6.8 9.8 92.72014 4.6 7.5 95.5 6.2 8.2 93.52015 1.1 1.2 99.0 5.4 3.9 94.42016 -2.7 0.9 103.0 3.1 5.4 97.0

5-Yr Avg 1.2 2.3 98.7 4.9 6.6 94.9

Underwriting Results: Nationwide’s underwriting performance continues tobe impacted by competitive market conditions, escalating loss costs,significant weather-related losses and asbestos and environmental (A&E)reserve changes that caused its average five-year combined ratio to lag thecomposite. Underwriting performance has lagged each year since 2012 due tosignificant frequent and severe weather-related losses, particularly tornadoes,concentrated hail events, and Superstorm Sandy. Recently more variability hasbeen noted due to increasing frequency and severity in the auto lines.

The group’s operating expenses reflect its decentralized operating structurewhile loss and loss adjustment expenses are closely controlled. Coreunderwriting results were impacted by increased automobile loss costs which,several times during this period, outpaced premium rate increases. However,the group steadily increased automobile rates and tightened underwritingguidelines, which tempered the loss experience. Commercial business hasalso been subject to rate increases, re-underwriting initiatives and refined risksegmentation. These actions, as well as management’s efforts to focus onNationwide’s core personal and main-street commercial lines of business,have led to some improvement in the group’s underwriting results.

However, the additional reserving of A&E claims continued to impact thegroup’s underwriting results. These reserves are recorded on NationwideIndemnity Company which allows management to better monitor this aspectof the group’s loss reserve development. Also, the group’s Florida hurricaneexposure, while significantly reduced via recent years’ ongoing non-renewalinitiatives, is confined to Nationwide Insurance Company of Florida(NICOF).

Due to its decentralized organizational structure, the group has been able tofocus on specific target markets and establish solid platforms for running its

multiple distribution network and geographic diversification strategythroughout the United States. Furthermore, the group has acquired small- tomedium-size insurance organizations which have enhanced the group’sproduct distribution network. The increased cultural alignment brought aboutby the privatization of NFS in January 2009 has strengthened the group’scompetitive position, facilitated a more integrated, focused customer-centricview and enhanced delivery of Nationwide’s “On Your Side” promise. Thegroup’s underwriting results will continue to be influenced by weather-relatedevents, competitive market and economic conditions and legislative decisions.

UNDERWRITING EXPERIENCE

PeriodEnding

Net UndrwIncome($000)

—Loss Ratios— —Expense Ratios— IndPureLoss LAE

Loss &LAE

NetComm.

OtherExp.

TotalExp.

Div.Pol.

Comb.Ratio

Comb.Ratio

2012 -881,011 60.8 11.1 71.9 14.9 20.0 34.9 0.1 106.9 103.72013 -257,058 55.8 10.4 66.2 15.1 18.6 33.7 0.1 99.9 98.82014 -733,868 61.1 10.0 71.1 15.1 18.0 33.1 0.1 104.3 99.42015 -739,593 61.5 9.5 71.1 15.0 18.2 33.1 0.1 104.3 99.72016 -1,125,065 65.3 9.4 74.7 14.8 17.0 31.8 0.1 106.6 101.8

5-Yr Total/Avg -3,736,595 61.1 10.0 71.1 15.0 18.3 33.2 0.1 104.4 100.6

BY-LINE LOSS RATIOProduct Line 2016 2015 2014 2013 2012 5-Yr AvgPriv Pass Auto Liab 78.9 70.9 64.6 47.0 62.4 64.8Auto Physical 66.4 62.2 64.5 61.7 62.0 63.4Homeowners 59.6 57.1 60.2 52.6 65.5 58.9Com’l MultiPeril 54.7 53.5 59.0 60.3 59.5 57.1Oth Liab Occur 59.9 58.8 50.4 48.9 40.9 52.6Comm’l Auto Liab 77.7 73.1 73.1 76.6 67.1 73.9Inland Marine 53.8 35.7 37.6 49.2 50.0 47.0Workers’ Comp 45.8 53.3 56.2 107.3 72.6 64.8Farmowners 57.4 57.0 66.0 52.8 61.7 58.9Oth Liab CM 27.3 30.5 44.0 27.1 32.4 32.1Allied Lines 84.0 67.8 58.2 55.9 79.0 68.8All Other 64.9 60.9 47.9 48.8 48.6 54.6

Total 65.3 61.5 61.1 55.8 60.8 61.1



DIRECT LOSS RATIO BY STATE2016 2015 2014 2013 2012 5-Yr Avg

North Carolina 48.4 44.6 47.3 42.6 50.1 46.6Pennsylvania 45.0 54.9 52.8 44.2 49.1 49.2Ohio 48.5 45.2 47.2 47.7 57.1 49.3Virginia 47.7 45.0 49.7 48.0 49.3 48.0California 59.3 57.9 50.9 48.6 45.5 52.0Maryland 47.8 43.2 44.8 42.2 46.0 44.7New York 59.5 50.6 46.6 55.1 55.5 53.5Georgia 112.2 93.9 67.8 50.0 43.2 89.0West Virginia 44.4 41.3 41.7 39.2 43.1 41.8Delaware 53.6 58.4 51.7 56.9 64.4 57.2All Other 60.7 52.9 54.1 49.5 54.0 53.8

Total 55.2 51.2 50.5 47.1 51.5 50.9

Investment Results: Nationwide’s invested asset base generates a reliablestream of investment income that helped to offset the total underwriting lossesreported in two of the past five years. Pre-tax investment yields and totalinvestment returns were impacted by the group’s substantial holdings of fixedincome securities and the level of affiliated investments and slightly laggedthe composite average of the past five years. The group’s investment portfolioprimarily consists of high-quality bonds followed by affiliated investmentsand real estate and mortgages. Affiliated investments representapproximately 20% of invested assets, primarily due to the group’s ownershipof Nationwide Financial Services, Inc. (NFS), the intermediate holdingcompany of its life insurance subsidiaries. Investment income has beensignificant but variable since 2012 due to fluid financial market conditions.

INVESTMENT GAINS ($000)——————————Company——————————

Net Realized UnrealizedInv Capital Capital

Year Income Gains Gains2012 806,794 -20,861 -360,5542013 634,656 11,101 28,6292014 1,291,828 -68,182 183,7092015 800,601 -132,066 -38,1692016 562,009 -5,174 427,243

5-Yr Total 4,095,889 -215,182 240,858

———————Company——————— Industry CompositePre-taxInvest

Inv Inc Inv Return on Total Inv Inc InvGrowth Yield Inv Assets Return Growth Yield

Year (%) (%) (%) (%) (%) (%)2012 168.4 3.8 3.7 2.3 13.8 3.72013 -21.3 2.8 2.9 3.6 -0.6 3.42014 103.5 5.3 5.0 5.5 -1.0 3.22015 -38.0 3.1 2.6 2.4 -3.8 3.02016 -29.8 2.1 2.1 3.9 -7.7 2.7

5-Yr Avg 6.8 3.4 3.2 3.6 -0.1 3.1

BALANCE SHEET STRENGTH


Capitalization: Nationwide Group’s risk-adjusted capitalization, asevidenced by its Best’s Capital Adequacy Ratio (BCAR) comfortably supportsthe current rating. This capital position reflects the equity embedded inNationwide’s unearned premium and loss reserves offset slightly by itsmoderate underwriting and investment leverage positions. Comprehensivereinsurance coverage and a surplus note program help to maintainNationwide’s net, after-tax probable maximum loss (PML) expected to arisefrom a 100-year hurricane event to less than 10% of reported policyholders’surplus.

In prior years, the group’s surplus was adversely impacted by realized andunrealized capital losses on both affiliated and unaffiliated equity holdings;however, improved operating performance and capital gains producedincreases in surplus in four of the past five years. Slight decline in surplus wasnoted in 2012 mainly due to weather related losses. Surplus grew slightly in2013 due to improvement in operating performance, in 2014 due mainly toinvestment income and unrealized investment gains, and in 2015 due mainly toinvestment income. Surplus growth in 2016 was impacted mainly byadditional unrealized gains.

Nationwide Mutual currently has five surplus notes outstanding with anaggregate value of $2.2 billion, the proceeds of which were used to fund newbusiness growth and for other general business purposes. Nationwide Mutualmay consider issuing additional notes and/or establish other contingent noteprograms in support of the group’s ongoing insurance operations.

Current BCAR: 214.2



CAPITAL GENERATION ANALYSIS ($000)————————Source of Surplus Growth————————

Pre-tax Realized UnrealizedOperating Capital Income Capital

Year Income Gains Taxes Gains2012 -436 -20,861 -42,947 -360,5542013 479,757 11,101 -8,976 28,6292014 679,792 -68,182 -106,765 183,7092015 162,589 -132,066 -153,604 -38,1692016 -427,635 -5,174 -118,228 427,243

5-Yr Total 894,067 -215,182 -430,521 240,858—————Source of Surplus Growth—————

Net Change % ChgContrib. Other in in

Year Capital Changes PHS PHS2012 -57,379 445,577 49,294 0.42013 22,248 -102,181 448,530 4.02014 25,690 -582,314 345,461 2.92015 526 31,402 177,886 1.52016 526 261,275 374,463 3.0

5-Yr Total -8,389 53,760 1,395,634 2.4

QUALITY OF SURPLUS ($000)Surplus Other Contributed Unassigned

Year Notes Debt Capital Surplus2012 2,142,621 … … 9,201,3772013 2,164,869 … … 9,627,6602014 2,190,559 … … 9,947,4302015 2,191,085 … … 10,124,7902016 2,191,611 … … 10,498,727

Year-End Conditional AdjustedYear PHS Reserves PHS2012 11,343,998 31,951 11,375,9492013 11,792,529 41,027 11,833,5552014 12,137,989 33,846 12,171,8352015 12,315,875 24,210 12,340,0852016 12,690,338 24,009 12,714,346

LEVERAGE ANALYSIS

PeriodEnding

—————Company———— ————Industry Composite————

NPW toPHS

Res.to

PHSNetLev.

GrossLev.

NPW toPHS

Res.to

PHSNetLev.

GrossLev.

2012 1.1 0.7 2.7 2.8 1.1 0.8 2.6 3.02013 1.2 0.8 3.0 3.1 1.1 0.8 2.6 3.02014 1.2 0.8 3.1 3.2 1.1 0.7 2.6 2.92015 1.3 0.9 3.2 3.3 1.1 0.8 2.6 3.02016 1.3 0.9 3.2 3.3 1.1 0.8 2.7 3.0

CEDED REINSURANCE ANALYSIS ($000)

PeriodEnding

——————Company—————— ——Industry Composite——

CededReins. Total

Bus.Ret.(%)

Reins.Recov. toPHS (%)

CededReins. toPHS (%)

Bus.Ret.(%)

Reins.Recov. toPHS (%)

CededReins. toPHS (%)

2012 1,411,442 97.0 9.0 12.4 91.4 22.1 35.82013 1,388,100 97.5 8.5 11.8 92.1 21.2 34.02014 1,316,332 97.6 7.8 10.8 92.6 20.9 32.52015 1,262,762 97.8 7.4 10.3 92.7 21.1 32.62016 1,190,833 97.9 6.7 9.4 92.2 21.0 32.9

2016 REINSURANCE RECOVERABLES ($000)Paid &UnpaidLosses IBNR

UnearnedPremiums

OtherRecov*

TotalReinsRecov

US Affiliates.................... 2,184,273 1,627,208 1,725,976 42,123 5,579,580US Insurers ..................... 199,533 24,971 14,606 22 239,132Pools/Associations........... 456,888 73,469 31,506 1 561,864Other Non-US................. 28,126 16,922 4,243 … 49,291

Total (ex US Affils) ...... 684,547 115,362 50,355 23 850,287Grand Total.................... 2,868,820 1,742,570 1,776,331 42,146 6,429,867

* Includes Commissions less Funds Withheld

Loss Reserves: Nationwide’s historical loss and LAE reserve developmentwas somewhat distorted due to the inclusion of both ongoing and discontinuedbusiness. NIC’s runoff A&E operations and NICOF’s largely unfavorable lossmaturation adversely affected the overall group’s loss development; however,their impact has declined in recent years. Ongoing operations resulted in thereporting of some adverse development in recent years.

According to A.M. Best’s estimates, Nationwide Group ranks among thetop five insurers in the nation in commercial lines that are exposed to ongoingA&E claims emergence. Much of Nationwide’s potential A&E liabilityexposure stems from policies assumed through various reinsuranceagreements and from a former affiliate. On December 31, 1998, NationwideIndemnity assumed loss and loss adjustment expense (LAE) reserves totaling$2 billion as a result of two loss portfolio transfers. First, the companyassumed from the Wausau Companies, liability for all losses and LAE relatedto its discontinued operations totaling nearly $1.4 billion, including A&Ereserves of approximately $646 million. In addition, the company assumedfrom Nationwide Mutual Insurance Company liability for all losses and LAErelated to business Nationwide Mutual assumed from National CasualtyCompany, an affiliate, and certain other assumed contracts as defined in thereinsurance contract. The total amount transferred, which is primarily reservesfor A&E claims, was approximately $676 million. Assumption of these twoportfolios established Nationwide Indemnity as the runoff entity forNationwide’s discontinued operations.

Management continues to closely monitor its A&E loss development;however, in light of the ongoing volatility and litigation surrounding A&Eclaims, the potential for further adverse development remains.



LOSS & ALAE RESERVE DEVELOP.: CALENDAR YEAR ($000)

CalendarYear

Orig.Loss

Reserves

DevelopedReserves

Thru LatestYear End

Develop.to

Orig. (%)

Develop.to

PHS (%)

Develop.to

NPE (%)

UnpaidReserves@LatestYear End

UnpaidRes. to

Develop. (%)2011 9,235,445 8,931,035 -3.3 -2.7 69.9 1,379,000 15.42012 9,295,231 9,172,208 -1.3 -1.1 69.6 1,800,192 19.62013 9,325,974 9,558,120 2.5 2.0 69.0 2,624,551 27.52014 9,893,830 10,279,369 3.9 3.2 70.2 4,147,812 40.42015 10,688,314 10,991,420 2.8 2.5 72.1 6,703,667 61.02016 11,594,133 11,594,133 … … 72.8 11,594,133 100.0

LOSS & ALAE RESERVE DEVELOP.: ACCIDENT YEAR ($000)

AccidentYear

Orig.Loss

Reserves

DevelopedReserves

Thru LatestYear End

Develop.to

Orig. (%)

UnpaidReserves@LatestYear End

Acc. YrLoss

Ratio

Acc. YrComb.Ratio

2011 3,682,281 3,759,149 2.1 286,118 81.1 114.92012 3,753,358 3,779,294 0.7 421,192 73.3 108.32013 3,741,843 3,954,869 5.7 824,359 68.6 102.42014 4,125,070 4,361,691 5.7 1,523,261 72.1 105.22015 4,503,406 4,603,581 2.2 2,555,855 70.3 103.52016 4,890,466 4,890,466 … 4,890,466 72.9 104.7

ASBESTOS & ENVIRONMENTAL (A&E) RESERVE ANALYSIS

Year

———————Company——————— —Industry Composite—

Net A&EReserve($000)

ReserveReten-

tion(%)

NetIBNRMix(%)

SurvivalRatio(3yr)

Comb.Ratio

Impact(1 yr)

Comb.Ratio

Impact(3 yr)

SurvivalRatio(3 yr)

Comb.Ratio

Impact(1 yr)

Comb.Ratio

Impact(3 yr)

2012 51,439 25.9 75.4 XX 0.0 XX XX 0.3 XX2013 43,022 23.7 81.5 XX 0.0 XX XX 0.3 XX2014 35,559 22.2 71.7 7.5 0.0 0.0 7.1 0.2 0.22015 33,741 19.8 73.5 6.8 0.0 0.0 6.1 0.1 0.22016 27,689 17.2 61.4 5.8 0.0 0.0 6.2 0.2 0.2


Liquidity: All of Nationwide’s measures of liquidity (the quick, current andoverall ratios) lagged the composite average over the past five years. However,liquidity was enhanced by the positive operating cash flows reported in each ofthe last five years. The group’s invested assets are predominantly held in theform of fixed-income securities that provide an adequate rate of return andwith maturities that closely match the expected payout of losses and expenses.In addition, Nationwide Mutual could potentially issue additional surplusnotes and/or establish contingent note programs, should the need arise.

LIQUIDITY ANALYSIS

PeriodEnding

—————Company————— ————Industry Composite————

QuickLiq. (%)

CurrentLiq. (%)

OverallLiq. (%)

GrossAgents Bal.to PHS (%)

QuickLiq. (%)

CurrentLiq. (%)

OverallLiq. (%)

GrossAgents Bal.to PHS (%)

2012 11.5 47.8 162.6 14.7 25.6 100.7 164.5 7.62013 9.4 56.0 156.8 17.4 25.5 102.9 164.4 7.32014 9.9 55.1 154.0 18.1 27.9 104.4 167.0 7.22015 10.5 57.3 152.3 18.9 27.2 102.9 165.4 7.42016 7.9 57.4 152.0 19.1 26.9 102.6 164.9 7.6

CASH FLOW ANALYSIS ($000)—————————Company————————— Industry CompositeUnderw Oper Net Underw Oper Underw Oper

Cash Cash Cash Cash Cash Cash CashYear Flow Flow Flow Flow (%) Flow (%) Flow (%) Flow (%)2012 -1,957,510 -857,260 -161,157 85.8 93.8 97.8 105.32013 -530,727 205,278 105,511 96.2 101.5 107.6 113.02014 18,334 681,047 9,183 100.1 104.6 102.3 107.52015 240,976 1,408,750 -155,298 101.6 109.3 103.7 108.82016 -203,412 613,882 229,229 98.7 103.8 101.7 107.3

5-Yr Total -2,432,339 2,051,696 27,468 … … … …


Investments: Nationwide’s current holdings of other investments, real estateand common stock result in non-affiliated investment leverage that iscomparable to the composite. This includes non-traditional investmentformats as indicated on Schedule BA. However, primarily due to the group’sownership of Nationwide Financial Services, Inc. (NFS), the intermediateholding company of its life insurance subsidiaries, its historically elevatedlevel of affiliated investment leverage remains at approximately 49% ofpolicyholders’ surplus.

INVESTMENT LEVERAGE ANALYSIS (% OF PHS)

PeriodEnding

—————————Company—————————Industry

—Composite—Class3-6

Bonds

RealEstate/Mtg.

OtherInvestedAssets

CommonStocks

Non-Affil.Inv.Lev.

Affil.Inv.

Class3-6

BondsCommon

Stocks2012 5.0 4.7 18.4 0.9 28.9 88.7 7.1 17.52013 5.9 3.9 15.3 2.0 27.1 87.3 7.7 20.32014 9.1 5.7 15.1 3.7 33.6 86.6 8.2 20.42015 11.3 7.0 14.2 4.5 37.0 84.5 9.9 19.92016 10.3 8.4 13.5 0.1 32.4 83.1 10.5 19.9



INVESTMENTS - SECURITIESCurrent Year Distribution of Bonds By Maturity

————————Years———————— Yrs-Avg0-1 1-5 5-10 10-20 20+ Maturity

Government 0.1 1.0 2.5 0.7 0.7 10Gov’t Agencies & Muni 3.2 9.9 8.2 5.1 1.1 7Industrial & Misc 5.7 27.2 28.9 3.7 2.0 6Hybrid Securities … … … … 0.0 25

Total 9.0 38.1 39.6 9.5 3.8 72016 2015 2014 2013 2012

Bonds (000) 13,448,898 12,596,065 11,459,137 11,085,768 8,327,756US Government 5.0 6.6 8.3 10.6 16.7Foreign Government 0.1 0.1 0.1 0.1 0.1Foreign - All Other 8.5 8.7 12.5 12.2 6.7State/Special Revenue - US 27.5 32.2 34.2 34.6 39.7Industrial & Misc - US 58.9 52.4 44.9 42.5 36.7

Private Issues 21.1 19.9 17.4 14.9 9.5Public Issues 78.9 80.1 82.6 85.1 90.5

Bond Quality (%) 2016 2015 2014 2013 2012Class 1 65.4 67.4 70.4 74.0 77.1Class 2 24.9 21.6 19.9 19.8 16.2Class 3 4.6 5.6 4.7 3.1 1.9Class 4 4.3 4.1 4.1 2.6 3.7Class 5 0.8 1.3 0.7 0.3 0.6Class 6 0.1 0.1 0.1 0.2 0.4

INVESTMENTS - EQUITIES2016 2015 2014 2013 2012

Stocks (000) 8,177,132 8,606,235 8,424,743 7,956,008 7,861,556Unaffiliated Common 0.2 6.4 5.3 3.0 1.3Affiliated Common 99.8 93.6 94.7 97.0 98.7Unaffiliated Preferred 0.0 0.0 0.0 0.0 0.0Affiliated Preferred … … … 0.0 0.0

INVESTMENTS - MORTGAGE LOANS & REAL ESTATE2016 2015 2014 2013 2012

Mortgage Loans &Real Estate (000) 1,637,173 1,428,462 1,315,903 1,093,989 1,162,844Mortgage Loans 64.3 55.2 49.4 37.7 41.7Property Occupied by Co 33.8 39.5 47.9 58.2 54.3Property Held for Inc 1.9 5.4 2.7 4.1 4.0

INVESTMENTS - OTHER INVESTED ASSETS2016 2015 2014 2013 2012

Other Inv Assets (000) 3,995,280 3,860,443 4,192,979 4,078,612 3,958,978Cash -7.2 -6.9 -6.7 -5.5 -5.6Short-Term 18.9 13.1 16.1 15.0 12.7Schedule BA Assets 85.4 87.9 86.1 85.3 90.7All Other 2.9 5.9 4.5 5.3 2.2

HISTORY

This company, incorporated on December 16, 1925, under the laws of Ohio,began business on April 14, 1926, under the sponsorship of The Ohio FarmBureau Federation to provide automobile insurance for Farm Bureau membersat cost.

Operations were conducted under the title Farm Bureau Mutual AutomobileInsurance Company until September 1, 1955. On that date, the presentcorporate title was adopted.

MANAGEMENT

Officers: Chairman, Timothy J. Corcoran; Chief Executive Officer, StephenS. Rasmussen; Presidents and Chief Operating Officers, Mark A. Berven(Property & Casualty), Mark A. Pizzi (Nationwide Direct & MemberSolutions), Kirt A. Walker (Nationwide Financial); Executive Vice Presidentand Chief Financial Officer, Mark R. Thresher; Executive Vice President andChief Information Officer, Michael C. Keller; Executive Vice President andChief Marketing Officer, Terrance Willams; Executive Vice President andChief Administrative Officer, Gale V. King; Executive Vice President andChief Legal Officer, Mark S. Howard; Senior Vice President and ChiefInvestment Officer, Harry H. Hallowell; Senior Vice President and Treasurer,David LaPaul; Senior Vice Presidents, Tina Ambrozy, David G. Arango,David A. Bano, James D. Benson, Pamela A. Biesecker, Shelley BrazeauTemple, John L. Carter, Thomas E. Clark, Gary A. Douglas, Timothy G.Frommeyer, Peter A. Golato, Susan J. Gueli, Eric S. Henderson, Terri L. Hill,Gregory S. Jordan, James Korcykoski, Michael P. Leach, Brad R. Liggett,Michael W. Mahaffey, Sandra L. Rich, Jeff M. Rommel, Amy T. Shore, Eric E.Smith, Michael S. Spangler, Guruprasad C. Vasudeva, Andrew Walker; VicePresident and Secretary, Robert W. Horner, III.

Directors: James B. Bachmann, Craig R. Adams, Timothy J. Corcoran,Yvonne M. Curl, Jacquelin M. Fernandez, Stephen F. Hirsch, Daniel T. Kelley,M. Diane Koken, Lydia M. Marshall, Terry W. McClure, Barry J. Nalebuff,Brent R. Porteus, Suku Radia, Stephen S. Rasmussen, Michael J. Toelle,Sparky Weilnau, Jeffrey W. Zellers.

REGULATORY

An examination of the financial condition is being made as of December31, 2016, by the insurance department of Ohio. The 2016 annual independent



audit of the company was conducted by KPMG, LLP. The annual statement ofactuarial opinion is provided by G. Christopher Nyce, FCAS, MAAA, KPMG,LLP.

REINSURANCE


Nationwide Group maintains various reinsurance agreements with bothaffiliates and non-affiliates.

Reinsurance agreements with non-affiliates are designed to protect thegroup from potential losses in excess of what management concludes arereasonable retentions of risk. Nationwide’s comprehensive reinsuranceprogram provides excess coverage for individual property and casualty lossesand for property catastrophe loss. The group also maintains various quotashare agreements and purchases facultative reinsurance for its largest risks.

Nationwide’s national property catastrophe treaty provides coverageattaching at $1.05 billion and exhausting at $3.65 billion per occurrence.Included in this coverage is a one multi-peril catastrophe bond with a net $225million limit. Tower features eight layers of coverage with varying levels ofco-participation.

Affiliated agreements include the participation in the Nationwide poolingagreement by seventeen affiliated companies, numerous quota sharereinsurance agreements between affiliates and the aforementioned propertycatastrophe agreement between NICOF and Nationwide Mutual.

BALANCE SHEET

ADMITTED ASSETS ($000)YE 2016 YE 2015 ’16% ’15%

Bonds .............................................. 13,448,898 12,596,065 36.2 35.1Preferred stock ................................. 178 267 0.0 0.0Common stock.................................. 18,686 553,107 0.1 1.5Cash and short-term invest ................. 468,089 238,860 1.3 0.7Real estate, investment....................... 31,424 76,804 0.1 0.2Derivatives ....................................... 2,639 … 0.0 …Other non-affil inv asset ..................... 2,748,081 2,619,950 7.4 7.3Investments in affiliates ...................... 9,987,040 9,842,302 26.9 27.4Real estate, offices ............................. 553,448 563,851 1.5 1.6

Total invested assets....................... 27,258,482 26,491,205 73.3 73.7Premium balances ............................. 5,653,603 5,308,157 15.2 14.8Accrued interest ................................ 132,029 132,510 0.4 0.4All other assets.................................. 4,141,099 3,991,840 11.1 11.1

Total assets................................... 37,185,213 35,923,712 100.0 100.0

LIABILITIES & SURPLUS ($000)YE 2016 YE 2015 ’16% ’15%

Loss & LAE reserves .......................... 11,917,119 11,052,020 32.0 30.8Unearned premiums........................... 6,541,079 6,297,474 17.6 17.5Conditional reserve funds ................... 24,009 24,210 0.1 0.1Derivatives ....................................... 54,811 75,570 0.1 0.2All other liabilities ............................ 5,957,858 6,158,563 16.0 17.1

Total liabilities ............................. 24,494,875 23,607,837 65.9 65.7Surplus notes .................................... 2,191,611 2,191,085 5.9 6.1Unassigned surplus............................ 10,498,727 10,124,790 28.2 28.2

Total policyholders’ surplus............ 12,690,338 12,315,875 34.1 34.3

Total liabilities & surplus ............... 37,185,213 35,923,712 100.0 100.0

SUMMARY OF 2016 OPERATIONS ($000)

Statement of Income 2016Funds Provided from

Operations 2016Premiums earned............ 15,930,827 Premiums collected......... 15,980,116

Losses incurred ............ 10,398,633Benefit & loss-related pmts

9,501,858LAE incurred .............. 1,500,482Undrw expenses incurred

5,145,858LAE & undrw expenses paid

6,670,152Div to policyholders ..... 10,919 Div to policyholders ..... 11,518

Net underwriting income -1,125,065 Undrw cash flow ............ -203,412Net investment income.... 562,009 Investment income.......... 643,273

Other income/expense ... 135,421 Other income/expense ... 95,311

Pre-tax oper income ... -427,635Pre-tax cash operations

535,173Realized capital gains...... -5,174Income taxes incurred ..... -118,228 Income taxes pd (recov)... -78,709

Net income................ -314,581 Net oper cash flow...... 613,882




Why is this Best’s® Rating Report important to you?The A.M. Best Company is the oldest, most experienced rating agency inthe world and has been reporting on the financial condition of insurancecompanies since 1899.

A Best's Financial Strength Rating (FSR) is an independent opinion ofan insurer's financial strength and ability to meet its ongoing insurancepolicy and contract obligations. An FSR is not assigned to specificinsurance policies or contracts and does not address any other risk,including, but not limited to, an insurer's claims-payment policies orprocedures; the ability of the insurer to dispute or deny claims payment ongrounds of misrepresentation or fraud; or any specific liabilitycontractually borne by the policy or contract holder. An FSR is not arecommendation to purchase, hold or terminate any insurance policy,

contract or any other financial obligation issued by an insurer, nor doesit address the suitability of any particular policy or contract for aspecific purpose or purchaser.

The company information appearing in this pamphlet is an extractfrom the complete AMB Credit Report. You may obtain the completereport by contacting Customer Service at +1(908)439-2200 [email protected]. Please reference the company'sidentification number (AMB#) listed on this rating report.

For the latest Best's Financial Strength Ratings along with their definitionsand A.M. Best's Terms of Use, please visit www.ambest.com.


Copyright © 2017 A.M. Best Company, Inc. and/or its affiliates. All rights reserved.No part of this report may be reproduced, distributed, or stored in a database or retrieval system, or transmitted in any form or by any means without the priorwritten permission of the A.M. Best Company. While the data in this report was obtained from sources believed to be reliable, its accuracy is not guaranteed.

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