Nationwide Financial Reports First Quarter Operating Earnings of $0.89 Per Share

Life segment fueled earnings growth



Apr 30, 2001, 01:00 ET from Nationwide Financial Services, Inc.

    COLUMBUS, Ohio, April 30 /PRNewswire/ -- Nationwide Financial Services,
 Inc. (NYSE:   NFS), a leading provider of personalized long-term savings and
 retirement products, today reported results for the first quarter 2001.
 Highlights include the following:
 
     * Net operating income increased 8 percent to $115.1 million or $0.89 per
       diluted share for the quarter.  Net operating income for the first
       quarter 2000 was $106.8 million or $0.83 per diluted share.
 
     * Net income for the quarter was $107.7 million or $0.83 per diluted
       share, compared to $104.8 million or $0.82 per diluted share a year ago.
       Included in net income in the current quarter is a charge of $4.8
       million due to the adoption of SFAS 133, a new accounting standard which
       addresses accounting for derivative instruments and hedging activities.
 
     * Operating revenues of $806.1 million for the first quarter increased
       slightly compared to $798.8 million reported a year ago.
 
     * Total sales of $4.2 billion in the quarter were essentially flat to a
       year ago and increased 8 percent from the $3.9 billion reported in the
       fourth quarter of 2000.  Slower sales of individual variable annuities
       were offset by strong growth in life products and individual fixed
       annuities.  Life insurance posted sales of $577.2 million, 41 percent
       ahead of the prior year.  Individual fixed annuity sales of $357.6
       million nearly tripled from the $124.2 million reported a year ago.
 
     * Return on equity was 15.7 percent for the quarter, compared to 16.8
       percent a year ago.
 
     * Customer funds managed and administered totaled $108.9 billion at
       quarter end, down from the  $111.0 billion reported at year-end.
 
     * The individual variable annuity surrender rate, adjusted for internal
       exchanges, was 10.3 percent for the quarter, level with the fourth
       quarter of 2000 and improved over the 12.5 percent reported a year ago.
 
     "Considering the current equity market, and its related impact on our
 business, I'm pleased with our first quarter results and our ability to
 continue to grow earnings in a very challenging environment," said W.G.
 Jurgensen, chief executive officer.  "We will continue to focus our efforts on
 the elements of our business that we can control -- carefully managing our
 expense levels, delivering innovative product solutions and service to our
 customers, and aggressively supporting our distribution partners."
 
     Segment Results
     Nationwide Financial reports its results in four business segments:
 individual annuity, institutional products, life insurance, and asset
 management.  A discussion of the results for each segment follows.
 
                               Individual Annuity
 
     * Pre-tax operating earnings for first quarter were $60.5 million, down
       from the $70.1 million reported a year ago.
     * Revenues of $269.9 million decreased 6 percent, compared to $286.9
       million a year ago.
     * Net flows, or sales net of withdrawals, of $577.0 million in the quarter
       were ahead of both the prior year and the fourth quarter of 2000.
     * Assets ended the quarter at $40.0 billion, compared to $43.7 billion at
       year-end.
 
     The weak equity markets experienced in the second half of 2000 and the
 first quarter of 2001 created downward pressure on separate account assets and
 related fees.  Average separate account balances ended the quarter 6 percent
 lower than a year ago, which contributed to the 8 percent reduction in asset
 fees.  Also contributing to the decrease in revenues was a 34 percent decline
 in surrender fees as a result of continued improvement in customer retention
 in individual variable annuities.  Lower general expenses in the quarter, due
 to strong expense management, and lower asset based commissions helped to
 offset lower revenues.
     Total individual annuity sales of $1.6 billion were slightly below the
 $1.7 billion reported a year ago.  Individual variable annuity sales declined
 21 percent from a year ago, as weaker equity markets dampened production in
 the quarter.  Tremendous growth in the quarter from individual fixed annuity
 products helped offset the slowdown in variable annuity sales, as fixed sales
 reached $357.6 million or a 188 percent increase over a year ago.
     "During the first quarter we continued to focus our efforts on expanding
 our portfolio of retirement savings solutions with the addition of new and
 innovative fixed annuity products," said Joseph J. Gasper, president and chief
 operating officer.  "We also continue to expand distribution, as sales from
 our newest partner, Waddell & Reed, had an immediate impact on our production
 through wirehouse and regional firms."
 
                             Institutional Products
 
     * Pre-tax operating earnings increased modestly to $53.1 million.
     * Revenues of $284.5 million were slightly below the $286.4 million
       reported a year ago.
     * Net flows, or sales net of withdrawals, of $438.0 million increased by
       10 percent compared to the prior year.
     * Assets totaled $47.9 billion, up from $47.2 billion at year-end.
 
     Weak equity markets also impacted the institutional segment, as first
 quarter average separate account assets declined 11 percent compared to a year
 ago, resulting in lower asset fees and policy charges.  Offsetting these lower
 revenues was increased spread from average general account assets, which
 increased 3 percent versus a year ago, and lower selling expenses.  Return on
 average assets for the quarter was 44 basis points, up slightly from 43 basis
 points a year ago.  During the first quarter, $275.2 million of medium term
 notes were issued, bringing the total medium term notes outstanding to $1.9
 billion.  Additionally, we established a new $2 billion global note program in
 the quarter to expand our capacity for future opportunities.
     Sales for the segment were $2.0 billion, just below the $2.1 billion
 reported a year ago.  Although a record number of new private sector pension
 plans were written in the first quarter, sales of $1.3 billion were flat
 compared to a year ago, as weaker equity markets have reduced the average size
 of new cases.  Sales of public sector pension plans declined 10 percent from a
 year ago as previously lost cases are impacting recurring deposits.  However,
 when compared to the fourth quarter of 2000, public sector sales increased 14
 percent as The State of California case is starting to impact production
 levels.
 
                                 Life Insurance
 
     * First quarter pre-tax operating earnings were $52.1 million, up 46
       percent from a year ago.
     * Revenues increased 17 percent to $212.9 million, compared to $181.9
       million a year ago.
     * Sales of corporate-owned life products increased 65 percent from the
       prior year.
     * Investment life reserves increased 26 percent, or $1.0 billion over the
       prior year.
 
     Investment life, with earnings growth of 48 percent over the prior year,
 continues to be the catalyst for growth in the life segment.  Revenues from
 administrative fees and cost of insurance charges on investment life drove
 total revenues 17 percent higher for the quarter.  Revenue growth continues to
 outpace expense growth as scale is being gained within the life segment.  Life
 insurance in-force for investment life products reached $34.6 billion as of
 March 31, 2001 compared to $27.8 billion a year ago.
     Sales for the life segment grew 41 percent to $577.2 million in the first
 quarter, led by 47 percent growth in investment life product sales, while
 traditional product sales improved slightly over a year ago.  Life sales
 continue to grow across multiple channels as sales in the first quarter
 exceeded the prior year in all distribution channels.
     "The life segment continues to experience tremendous growth and become a
 larger contributor to our bottom line," said Gasper.  "We've created an
 impressive franchise in the corporate-owned life insurance business, where for
 the full year 2000 we led the market in new business for the second year in a
 row."
 
                                Asset Management
 
     * Pre-tax operating earnings were $1.4 million, compared to $3.9 million a
       year ago.
     * Revenues of $30.3 million were flat compared to $29.8 million a year
       ago.
     * Assets under management increased $1.2 billion or 5 percent compared to
       year-end.
 
     Earnings for the asset management segment were impacted by the continued
 strategic investments in several internet distribution and venture capital
 initiatives.  Excluding the impact of these ventures, the segment earnings
 were $3.6 million, compared to $4.4 million a year ago.  Increased flows into
 money market funds helped offset the weak equity markets in the quarter, as
 revenues were flat compared to the prior year.
     Assets under management ended the quarter at $24.2 billion, up from $23.0
 billion at year-end.  Net inflows of $2.0 billion during the quarter were
 partially offset by market depreciation of $770.8 million.  Transfers within
 Nationwide Financial annuities to money market funds managed by Villanova
 Capital contributed approximately $1.0 billion to the net flows.
 
     Balance Sheet
     Total assets at March 31, 2001 of $87.0 billion were down from $93.2
 billion at year-end 2000.  Included in the current period total assets were
 $58.7 billion in assets underlying variable annuities and variable life
 products held in separate accounts, down from $66.0 billion at year-end 2000.
 Shareholders' equity was $3.2 billion, or $24.82 per share, at March 31, 2001
 compared to $3.0 billion or $23.29 per share at year-end 2000.  Excluding
 other comprehensive income, book value was $23.12 per share at March 31, 2001
 versus $22.40 per share at year-end 2000.
 
     Business Outlook
     The following statements that are forward-looking and based on current
 business conditions.  Due to the inherent difficulty in forecasting the short-
 term performance of the equity markets, as measured by the S&P 500, and the
 related performance of our separate account assets, the information provided
 below incorporates a range of possible results that are intended to illustrate
 the sensitivity of our revenue and earnings to the ultimate performance of the
 equity markets.  To the extent that actual equity market performance varies
 from that assumed in the illustration below, our results will vary
 accordingly.
 
     * Should the equity markets and the related performance of our separate
       account assets achieve a return of 0 to 2 percent per quarter, earned
       evenly throughout the balance of the year, operating earnings per share
       for the full year 2001 would be within a range of $3.50 to $3.65.
 
     * Utilizing the same equity market assumptions noted above, revenue growth
       would be within a range of 0 to 5 percent for the full year 2001 and
       return on equity for the full year would be within a range of 14.0 to
       15.0 percent.
 
     * Consistent with the realization of certain tax minimization strategies,
       our effective tax rate is expected to be no more than 27 percent for the
       full year 2001.
 
     Our ability to meet the indicated outlook and expectations is subject to
 the factors described in the forward-looking information section below.  Prior
 to the start of the quiet period, investors can continue to rely on the
 earnings release and web site as still being Nationwide Financial's current
 expectations on matters covered, unless the company publishes a notice stating
 otherwise.
 
     Earnings Conference Call
     Management of Nationwide Financial will host a conference call on May 1,
 2001 at 11:00 am ET to discuss first quarter earnings.  To listen to the call,
 dial (712) 271-0002 and enter conference code NFS.  The call will also be
 broadcast live over the internet with a link available on the Company's web
 site.  For those unable to listen to the call live, an audio archive and
 transcript will be available on the Company's web site within 48 hours.
 
     Quiet Period
     Following the end of each quarter, Nationwide Financial has a "quiet
 period" when it no longer publishes or updates its current expectations and
 forecasts and company representatives will not comment concerning the
 company's financial results or expectations.  The quiet period will extend
 until the day when Nationwide Financial's next earnings release is published.
 For the second quarter of 2001, the quiet period will be July 9, 2001 through
 July 30, 2001.
     Columbus-based Nationwide Financial is the holding company for the
 retirement savings operations of Nationwide which owns 81.3 percent of the
 outstanding common shares of NFS.  The major operating subsidiary of NFS is
 Nationwide Life Insurance Company, the country's 10th largest life insurer.
 To obtain investor materials, including the Company's 2000 annual report, Form
 10-K, and other corporate announcements, please visit our web site at
 www.nationwidefinancial.com .
 
     Forward Looking Information
     The information included herein contains certain forward-looking
 statements within the meaning of the Private Securities Litigation Reform Act
 of 1995 with respect to the results of operations and businesses of the
 Company.  These forward-looking statements involve certain risks and
 uncertainties.  Factors that may cause actual results to differ materially
 from those contemplated or projected, forecast, estimated or budgeted in such
 forward looking statements include, among others, the following possibilities:
 (i) Nationwide Corporation's control of the Company through its beneficial
 ownership of approximately 97.8 percent of the combined voting power of all
 the outstanding common stock and approximately 81.3 percent of the economic
 interest in the Company; (ii) the Company's primary reliance, as a holding
 company, on dividends from its subsidiaries to meet debt payment obligations
 and the applicable regulatory restrictions on the ability of the Company's
 subsidiaries to pay such dividends; (iii) the potential impact on the
 Company's reported net income that could result from the adoption of certain
 accounting standards issued by the FASB; (iv) tax law changes impacting the
 tax treatment of life insurance and investment products; (v) heightened
 competition, including specifically the intensification of price competition,
 the entry of new competitors and the development of new products by new and
 existing competitors; (vi) adverse state and federal legislation and
 regulation, including limitations on premium levels, increases in minimum
 capital and reserves, and other financial viability requirements; (vii)
 failure to expand distribution channels in order to obtain new customers or
 failure to retain existing customers; (viii) inability to carry out marketing
 and sales plans, including, among others, changes to certain products and
 acceptance of the revised products in the market; (ix) changes in interest
 rates and the stock markets causing a reduction of investment income or asset
 fees, reduction in the value of the Company's investment portfolio or a
 reduction in the demand for the Company's products; (x) general economic and
 business conditions which are less favorable than expected; (xi) unanticipated
 changes in industry trends and ratings assigned by nationally recognized
 statistical rating organizations, and (xii) inaccuracies in assumptions
 regarding future persistency, mortality, morbidity and interest rates used in
 calculating reserve amounts.
 
                             Exhibit 1 to First Quarter Earnings Announcement
 
     Nationwide Financial Services, Inc.
     Consolidated Income Statements
 
 
                                                           Quarters Ended
                                                              March 31,
     ($ in millions, except for per share data)          2001           2000
     Revenues
      Policy charges                                    $267.9         $272.7
      Life insurance and immediate annuity premiums       63.9           66.9
      Net investment income                              426.2          410.4
      Other income                                        48.1           48.8
       Total operating revenues                          806.1          798.8
 
     Benefits and Expenses
      Interest credited                                  302.2          294.2
      Life insurance and annuity benefits                 65.0           67.3
      Policyholder dividends                              10.5           12.0
      Amortization of deferred policy
       acquisition costs                                  94.2           85.9
      Other operating expenses                           162.9          170.6
      Interest expense on debt and trust securities       14.1           11.8
       Total benefits and expenses                       648.9          641.8
 
     Operating income before federal income tax expense  157.2          157.0
 
     Federal income tax expense                           42.1           50.2
     Net operating income                                115.1          106.8
 
     Net realized losses on investments, hedging
      instruments, and hedged items, net of taxes         (2.6)          (2.0)
     Cumulative effect of adoption of accounting
      principle, net of tax                               (4.8)            --
     Net income                                         $107.7         $104.8
 
     Diluted Earnings Per Share
     Net operating income                                $0.89          $0.83
     Net realized losses on investments, hedging
      instruments, and hedged items, net of taxes        (0.02)         (0.01)
     Cumulative effect of adoption of accounting
      principle, net of tax                              (0.04)            --
     Net income                                          $0.83          $0.82
 
     Weighted average shares outstanding
      Basic                                              128.8          128.6
      Diluted                                            129.1          128.6
 
                               Exhibit 2 to First Quarter Earnings Announcement
 
     Nationwide Financial Services, Inc.
     Consolidated Balance Sheets
 
                                                       March 31,   December 31,
     ($ in millions, except for per share data)          2001           2000
     Assets
     Investments:
      Fixed maturity securities, at fair value       $16,112.8      $15,497.2
      Equity securities, at fair value                    81.6          150.2
      Mortgage loans on real estate, net               6,349.9        6,168.3
      Real estate, net                                   309.3          310.7
      Policy loans                                       572.8          562.6
      Other long-term investments                        110.3          111.8
      Short-term investments                             750.2          558.4
       Total investments                              24,286.9       23,359.2
     Cash and cash equivalents                            50.9           62.7
     Accrued investment income                           274.0          252.5
     Deferred policy acquisition costs                 2,914.2        2,872.7
     Other assets                                        774.4          662.7
     Assets held in separate accounts                 58,733.5       65,968.8
       Total assets                                  $87,033.9      $93,178.6
 
     Liabilities and Shareholders' Equity
     Liabilities:
      Future policy benefits and claims              $22,666.8      $22,243.3
      Short-term borrowings                              179.0          118.7
      Other liabilities                                1,659.4        1,251.9
      Senior debt                                        298.4          298.4
      Liabilities related to separate accounts        58,733.5       65,968.8
       Total liabilities                              83,537.1       89,881.1
 
 
     Company-obligated mandatorily-redeemable capital
       and preferred securities of subsidiary trusts     300.0          300.0
 
 
     Shareholders' equity:
      Class A common shares                                0.2            0.2
      Class B common shares                                1.0            1.0
      Additional paid-in capital                         645.1          640.8
      Retained earnings                                2,338.9        2,245.5
      Accumulated other comprehensive income             219.4          114.5
      Other                                               (7.8)          (4.5)
       Total shareholders' equity                      3,196.8        2,997.5
 
     Total liabilities and shareholders' equity      $87,033.9      $93,178.6
 
     Book Value per Share
     Including other comprehensive income               $24.82         $23.29
     Excluding other comprehensive income               $23.12         $22.40
 
 
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SOURCE Nationwide Financial Services, Inc.
    COLUMBUS, Ohio, April 30 /PRNewswire/ -- Nationwide Financial Services,
 Inc. (NYSE:   NFS), a leading provider of personalized long-term savings and
 retirement products, today reported results for the first quarter 2001.
 Highlights include the following:
 
     * Net operating income increased 8 percent to $115.1 million or $0.89 per
       diluted share for the quarter.  Net operating income for the first
       quarter 2000 was $106.8 million or $0.83 per diluted share.
 
     * Net income for the quarter was $107.7 million or $0.83 per diluted
       share, compared to $104.8 million or $0.82 per diluted share a year ago.
       Included in net income in the current quarter is a charge of $4.8
       million due to the adoption of SFAS 133, a new accounting standard which
       addresses accounting for derivative instruments and hedging activities.
 
     * Operating revenues of $806.1 million for the first quarter increased
       slightly compared to $798.8 million reported a year ago.
 
     * Total sales of $4.2 billion in the quarter were essentially flat to a
       year ago and increased 8 percent from the $3.9 billion reported in the
       fourth quarter of 2000.  Slower sales of individual variable annuities
       were offset by strong growth in life products and individual fixed
       annuities.  Life insurance posted sales of $577.2 million, 41 percent
       ahead of the prior year.  Individual fixed annuity sales of $357.6
       million nearly tripled from the $124.2 million reported a year ago.
 
     * Return on equity was 15.7 percent for the quarter, compared to 16.8
       percent a year ago.
 
     * Customer funds managed and administered totaled $108.9 billion at
       quarter end, down from the  $111.0 billion reported at year-end.
 
     * The individual variable annuity surrender rate, adjusted for internal
       exchanges, was 10.3 percent for the quarter, level with the fourth
       quarter of 2000 and improved over the 12.5 percent reported a year ago.
 
     "Considering the current equity market, and its related impact on our
 business, I'm pleased with our first quarter results and our ability to
 continue to grow earnings in a very challenging environment," said W.G.
 Jurgensen, chief executive officer.  "We will continue to focus our efforts on
 the elements of our business that we can control -- carefully managing our
 expense levels, delivering innovative product solutions and service to our
 customers, and aggressively supporting our distribution partners."
 
     Segment Results
     Nationwide Financial reports its results in four business segments:
 individual annuity, institutional products, life insurance, and asset
 management.  A discussion of the results for each segment follows.
 
                               Individual Annuity
 
     * Pre-tax operating earnings for first quarter were $60.5 million, down
       from the $70.1 million reported a year ago.
     * Revenues of $269.9 million decreased 6 percent, compared to $286.9
       million a year ago.
     * Net flows, or sales net of withdrawals, of $577.0 million in the quarter
       were ahead of both the prior year and the fourth quarter of 2000.
     * Assets ended the quarter at $40.0 billion, compared to $43.7 billion at
       year-end.
 
     The weak equity markets experienced in the second half of 2000 and the
 first quarter of 2001 created downward pressure on separate account assets and
 related fees.  Average separate account balances ended the quarter 6 percent
 lower than a year ago, which contributed to the 8 percent reduction in asset
 fees.  Also contributing to the decrease in revenues was a 34 percent decline
 in surrender fees as a result of continued improvement in customer retention
 in individual variable annuities.  Lower general expenses in the quarter, due
 to strong expense management, and lower asset based commissions helped to
 offset lower revenues.
     Total individual annuity sales of $1.6 billion were slightly below the
 $1.7 billion reported a year ago.  Individual variable annuity sales declined
 21 percent from a year ago, as weaker equity markets dampened production in
 the quarter.  Tremendous growth in the quarter from individual fixed annuity
 products helped offset the slowdown in variable annuity sales, as fixed sales
 reached $357.6 million or a 188 percent increase over a year ago.
     "During the first quarter we continued to focus our efforts on expanding
 our portfolio of retirement savings solutions with the addition of new and
 innovative fixed annuity products," said Joseph J. Gasper, president and chief
 operating officer.  "We also continue to expand distribution, as sales from
 our newest partner, Waddell & Reed, had an immediate impact on our production
 through wirehouse and regional firms."
 
                             Institutional Products
 
     * Pre-tax operating earnings increased modestly to $53.1 million.
     * Revenues of $284.5 million were slightly below the $286.4 million
       reported a year ago.
     * Net flows, or sales net of withdrawals, of $438.0 million increased by
       10 percent compared to the prior year.
     * Assets totaled $47.9 billion, up from $47.2 billion at year-end.
 
     Weak equity markets also impacted the institutional segment, as first
 quarter average separate account assets declined 11 percent compared to a year
 ago, resulting in lower asset fees and policy charges.  Offsetting these lower
 revenues was increased spread from average general account assets, which
 increased 3 percent versus a year ago, and lower selling expenses.  Return on
 average assets for the quarter was 44 basis points, up slightly from 43 basis
 points a year ago.  During the first quarter, $275.2 million of medium term
 notes were issued, bringing the total medium term notes outstanding to $1.9
 billion.  Additionally, we established a new $2 billion global note program in
 the quarter to expand our capacity for future opportunities.
     Sales for the segment were $2.0 billion, just below the $2.1 billion
 reported a year ago.  Although a record number of new private sector pension
 plans were written in the first quarter, sales of $1.3 billion were flat
 compared to a year ago, as weaker equity markets have reduced the average size
 of new cases.  Sales of public sector pension plans declined 10 percent from a
 year ago as previously lost cases are impacting recurring deposits.  However,
 when compared to the fourth quarter of 2000, public sector sales increased 14
 percent as The State of California case is starting to impact production
 levels.
 
                                 Life Insurance
 
     * First quarter pre-tax operating earnings were $52.1 million, up 46
       percent from a year ago.
     * Revenues increased 17 percent to $212.9 million, compared to $181.9
       million a year ago.
     * Sales of corporate-owned life products increased 65 percent from the
       prior year.
     * Investment life reserves increased 26 percent, or $1.0 billion over the
       prior year.
 
     Investment life, with earnings growth of 48 percent over the prior year,
 continues to be the catalyst for growth in the life segment.  Revenues from
 administrative fees and cost of insurance charges on investment life drove
 total revenues 17 percent higher for the quarter.  Revenue growth continues to
 outpace expense growth as scale is being gained within the life segment.  Life
 insurance in-force for investment life products reached $34.6 billion as of
 March 31, 2001 compared to $27.8 billion a year ago.
     Sales for the life segment grew 41 percent to $577.2 million in the first
 quarter, led by 47 percent growth in investment life product sales, while
 traditional product sales improved slightly over a year ago.  Life sales
 continue to grow across multiple channels as sales in the first quarter
 exceeded the prior year in all distribution channels.
     "The life segment continues to experience tremendous growth and become a
 larger contributor to our bottom line," said Gasper.  "We've created an
 impressive franchise in the corporate-owned life insurance business, where for
 the full year 2000 we led the market in new business for the second year in a
 row."
 
                                Asset Management
 
     * Pre-tax operating earnings were $1.4 million, compared to $3.9 million a
       year ago.
     * Revenues of $30.3 million were flat compared to $29.8 million a year
       ago.
     * Assets under management increased $1.2 billion or 5 percent compared to
       year-end.
 
     Earnings for the asset management segment were impacted by the continued
 strategic investments in several internet distribution and venture capital
 initiatives.  Excluding the impact of these ventures, the segment earnings
 were $3.6 million, compared to $4.4 million a year ago.  Increased flows into
 money market funds helped offset the weak equity markets in the quarter, as
 revenues were flat compared to the prior year.
     Assets under management ended the quarter at $24.2 billion, up from $23.0
 billion at year-end.  Net inflows of $2.0 billion during the quarter were
 partially offset by market depreciation of $770.8 million.  Transfers within
 Nationwide Financial annuities to money market funds managed by Villanova
 Capital contributed approximately $1.0 billion to the net flows.
 
     Balance Sheet
     Total assets at March 31, 2001 of $87.0 billion were down from $93.2
 billion at year-end 2000.  Included in the current period total assets were
 $58.7 billion in assets underlying variable annuities and variable life
 products held in separate accounts, down from $66.0 billion at year-end 2000.
 Shareholders' equity was $3.2 billion, or $24.82 per share, at March 31, 2001
 compared to $3.0 billion or $23.29 per share at year-end 2000.  Excluding
 other comprehensive income, book value was $23.12 per share at March 31, 2001
 versus $22.40 per share at year-end 2000.
 
     Business Outlook
     The following statements that are forward-looking and based on current
 business conditions.  Due to the inherent difficulty in forecasting the short-
 term performance of the equity markets, as measured by the S&P 500, and the
 related performance of our separate account assets, the information provided
 below incorporates a range of possible results that are intended to illustrate
 the sensitivity of our revenue and earnings to the ultimate performance of the
 equity markets.  To the extent that actual equity market performance varies
 from that assumed in the illustration below, our results will vary
 accordingly.
 
     * Should the equity markets and the related performance of our separate
       account assets achieve a return of 0 to 2 percent per quarter, earned
       evenly throughout the balance of the year, operating earnings per share
       for the full year 2001 would be within a range of $3.50 to $3.65.
 
     * Utilizing the same equity market assumptions noted above, revenue growth
       would be within a range of 0 to 5 percent for the full year 2001 and
       return on equity for the full year would be within a range of 14.0 to
       15.0 percent.
 
     * Consistent with the realization of certain tax minimization strategies,
       our effective tax rate is expected to be no more than 27 percent for the
       full year 2001.
 
     Our ability to meet the indicated outlook and expectations is subject to
 the factors described in the forward-looking information section below.  Prior
 to the start of the quiet period, investors can continue to rely on the
 earnings release and web site as still being Nationwide Financial's current
 expectations on matters covered, unless the company publishes a notice stating
 otherwise.
 
     Earnings Conference Call
     Management of Nationwide Financial will host a conference call on May 1,
 2001 at 11:00 am ET to discuss first quarter earnings.  To listen to the call,
 dial (712) 271-0002 and enter conference code NFS.  The call will also be
 broadcast live over the internet with a link available on the Company's web
 site.  For those unable to listen to the call live, an audio archive and
 transcript will be available on the Company's web site within 48 hours.
 
     Quiet Period
     Following the end of each quarter, Nationwide Financial has a "quiet
 period" when it no longer publishes or updates its current expectations and
 forecasts and company representatives will not comment concerning the
 company's financial results or expectations.  The quiet period will extend
 until the day when Nationwide Financial's next earnings release is published.
 For the second quarter of 2001, the quiet period will be July 9, 2001 through
 July 30, 2001.
     Columbus-based Nationwide Financial is the holding company for the
 retirement savings operations of Nationwide which owns 81.3 percent of the
 outstanding common shares of NFS.  The major operating subsidiary of NFS is
 Nationwide Life Insurance Company, the country's 10th largest life insurer.
 To obtain investor materials, including the Company's 2000 annual report, Form
 10-K, and other corporate announcements, please visit our web site at
 www.nationwidefinancial.com .
 
     Forward Looking Information
     The information included herein contains certain forward-looking
 statements within the meaning of the Private Securities Litigation Reform Act
 of 1995 with respect to the results of operations and businesses of the
 Company.  These forward-looking statements involve certain risks and
 uncertainties.  Factors that may cause actual results to differ materially
 from those contemplated or projected, forecast, estimated or budgeted in such
 forward looking statements include, among others, the following possibilities:
 (i) Nationwide Corporation's control of the Company through its beneficial
 ownership of approximately 97.8 percent of the combined voting power of all
 the outstanding common stock and approximately 81.3 percent of the economic
 interest in the Company; (ii) the Company's primary reliance, as a holding
 company, on dividends from its subsidiaries to meet debt payment obligations
 and the applicable regulatory restrictions on the ability of the Company's
 subsidiaries to pay such dividends; (iii) the potential impact on the
 Company's reported net income that could result from the adoption of certain
 accounting standards issued by the FASB; (iv) tax law changes impacting the
 tax treatment of life insurance and investment products; (v) heightened
 competition, including specifically the intensification of price competition,
 the entry of new competitors and the development of new products by new and
 existing competitors; (vi) adverse state and federal legislation and
 regulation, including limitations on premium levels, increases in minimum
 capital and reserves, and other financial viability requirements; (vii)
 failure to expand distribution channels in order to obtain new customers or
 failure to retain existing customers; (viii) inability to carry out marketing
 and sales plans, including, among others, changes to certain products and
 acceptance of the revised products in the market; (ix) changes in interest
 rates and the stock markets causing a reduction of investment income or asset
 fees, reduction in the value of the Company's investment portfolio or a
 reduction in the demand for the Company's products; (x) general economic and
 business conditions which are less favorable than expected; (xi) unanticipated
 changes in industry trends and ratings assigned by nationally recognized
 statistical rating organizations, and (xii) inaccuracies in assumptions
 regarding future persistency, mortality, morbidity and interest rates used in
 calculating reserve amounts.
 
                             Exhibit 1 to First Quarter Earnings Announcement
 
     Nationwide Financial Services, Inc.
     Consolidated Income Statements
 
 
                                                           Quarters Ended
                                                              March 31,
     ($ in millions, except for per share data)          2001           2000
     Revenues
      Policy charges                                    $267.9         $272.7
      Life insurance and immediate annuity premiums       63.9           66.9
      Net investment income                              426.2          410.4
      Other income                                        48.1           48.8
       Total operating revenues                          806.1          798.8
 
     Benefits and Expenses
      Interest credited                                  302.2          294.2
      Life insurance and annuity benefits                 65.0           67.3
      Policyholder dividends                              10.5           12.0
      Amortization of deferred policy
       acquisition costs                                  94.2           85.9
      Other operating expenses                           162.9          170.6
      Interest expense on debt and trust securities       14.1           11.8
       Total benefits and expenses                       648.9          641.8
 
     Operating income before federal income tax expense  157.2          157.0
 
     Federal income tax expense                           42.1           50.2
     Net operating income                                115.1          106.8
 
     Net realized losses on investments, hedging
      instruments, and hedged items, net of taxes         (2.6)          (2.0)
     Cumulative effect of adoption of accounting
      principle, net of tax                               (4.8)            --
     Net income                                         $107.7         $104.8
 
     Diluted Earnings Per Share
     Net operating income                                $0.89          $0.83
     Net realized losses on investments, hedging
      instruments, and hedged items, net of taxes        (0.02)         (0.01)
     Cumulative effect of adoption of accounting
      principle, net of tax                              (0.04)            --
     Net income                                          $0.83          $0.82
 
     Weighted average shares outstanding
      Basic                                              128.8          128.6
      Diluted                                            129.1          128.6
 
                               Exhibit 2 to First Quarter Earnings Announcement
 
     Nationwide Financial Services, Inc.
     Consolidated Balance Sheets
 
                                                       March 31,   December 31,
     ($ in millions, except for per share data)          2001           2000
     Assets
     Investments:
      Fixed maturity securities, at fair value       $16,112.8      $15,497.2
      Equity securities, at fair value                    81.6          150.2
      Mortgage loans on real estate, net               6,349.9        6,168.3
      Real estate, net                                   309.3          310.7
      Policy loans                                       572.8          562.6
      Other long-term investments                        110.3          111.8
      Short-term investments                             750.2          558.4
       Total investments                              24,286.9       23,359.2
     Cash and cash equivalents                            50.9           62.7
     Accrued investment income                           274.0          252.5
     Deferred policy acquisition costs                 2,914.2        2,872.7
     Other assets                                        774.4          662.7
     Assets held in separate accounts                 58,733.5       65,968.8
       Total assets                                  $87,033.9      $93,178.6
 
     Liabilities and Shareholders' Equity
     Liabilities:
      Future policy benefits and claims              $22,666.8      $22,243.3
      Short-term borrowings                              179.0          118.7
      Other liabilities                                1,659.4        1,251.9
      Senior debt                                        298.4          298.4
      Liabilities related to separate accounts        58,733.5       65,968.8
       Total liabilities                              83,537.1       89,881.1
 
 
     Company-obligated mandatorily-redeemable capital
       and preferred securities of subsidiary trusts     300.0          300.0
 
 
     Shareholders' equity:
      Class A common shares                                0.2            0.2
      Class B common shares                                1.0            1.0
      Additional paid-in capital                         645.1          640.8
      Retained earnings                                2,338.9        2,245.5
      Accumulated other comprehensive income             219.4          114.5
      Other                                               (7.8)          (4.5)
       Total shareholders' equity                      3,196.8        2,997.5
 
     Total liabilities and shareholders' equity      $87,033.9      $93,178.6
 
     Book Value per Share
     Including other comprehensive income               $24.82         $23.29
     Excluding other comprehensive income               $23.12         $22.40
 
 
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 SOURCE  Nationwide Financial Services, Inc.