Nationwide remains ‘negative,’ according to S&P

Nationwide Financial Services Inc. of Columbus, Ohio, will remain on CreditWatch “negative,” Standard and Poor’s Ratings Services of New York said today. The news follows yesterday’s announcement of NFS’ third-quarter loss of $346.6 million, or $2.51 per share, down from a profit of $147 million, or $1.03 per share, in the comparable year-ago period. Investment losses totaled $315.4 million. The New York-based rating agency decided to keep the firm, its subsidiaries and related securities on CreditWatch “negative” after Nationwide Mutual Insurance Co., the Columbus-based parent, bought up all outstanding shares of NFS — a move that will yank the publicly held NFS back into a mutual structure either in late 2008 or in early 2009, S&P credit analyst Matthew Carroll said in a statement. “The ratings are on CreditWatch negative to reflect the lower rating on the acquirer as well as uncertainty regarding the potential effect on the capitalization of NFS and its subsidiaries, which have extremely strong capitalization that is supportive of the ratings,” he said. Nationwide Mutual’s credit ratings are currently at A+, while NFS’ core life insurance operating companies are at AA-, a notch higher than those of the mutual. S&P expects to resolve its CreditWatch after the merger is complete.