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12/12/2020 Presentation Materials
EX-99.C.3 3 dex99c3.htm PRESENTATION MATERIALS
CONFIDENTIAL
19 MAY 2008 MATERIALS
DISCUSSION
Nationwide
LAZARD Financial
https://www.sec.gov/Archives/edgar/data/1029786/000119312508191210/dex99c3.htm 1/80
Nationwide
Disclaimer Financial
The information
estimates herein provided
and forecasts has been prepared by Lazard
by the Company based
with upon
respect toinformation supplied
the anticipated futureby NationwideofFinancial
performance Services,
the Company. We Inc. (the “Company”), or publicly available information, and portions of the information herein may be anybased upon certain statements,
independent
forecasts, weverification
have assumedof such information
that they or any independent valuation or appraisal of any of currently
the assets or liabilities ofhave relied
the and
Company upon
or the
any accuracy
of other
and or
entity, completeness
ofconcerning
of the foregoing
solvency or fair information,
value and have or
of the performance
Company not assumed
any other responsibility
entity. With respectnofor any
to financial
responsibility
us as of, to
theanyfor hereof.
date and express
Theseno viewhave
materials tobeen
as and such reasonably
forecasts
theincome orprepared
information the
contained
on bases
assumptions
herein
reflecting
upon whichthe best
they
are confidential are based.
and may not
available
The estimates
beinformation
disclosed set forth
publicly
judgments
orherein
made of
management
is based
available upon the Company
economic,
to third parties monetary,
without
as to the
themarket
prior
future
and
written
financial
other conditions
consent
of on,
the
as in provided,
of Lazard; effect Company.
and We assume
the information
however, that the made available
Company may to
disclose
Committee of and
the all
Board persons
of the U.S.
Directors of federal
the Company, tax
and treatment
will not beand tax structure
responsible for of
and the
willtransaction
not providedescribed
any tax, herein and
accounting, the portions
actuarial, legalthese
or materials
other that
specialist relate
advice.to such tax treatment or structure. Lazard is acting as investment banker to the Special
LAZARD
CONFIDENTIAL
Nationwide Financial
Table of Contents
I INTRODUCTION 1
II
IIIBUSINESS
MARKET OVERVIEW
PERSPECTIVES 6 15
IV PRELIMINARY
V SUPPLEMENTAL VALUATION
CASH FLOW23VALUATION 36
Appendix
A Supplementary Financial Information 43 47
B Additional
C Property & Casualty Rating Comparison
LAZARD Company Information 48
I Introduction
LAZARD
I INTRODUCTION
LAZARD
INationwide
Summary
Financial
INTRODUCTION
ofFinancial
Lazard Involvement to Date
Nationwide
Lazard subsequently Services
spoke with thesubmitted (“NFS”
Special Committee or the “Company”)
of the Boardto
ofthereceived of
Directors an NFS
offer(the
from“Special
Nationwide Mutual, dated
Committee”) March
on March 5, 2008,
7, 2008 andto acquire
was the Class
engaged A shares
as financial of thetoCompany
advisor forCommittee
the Special $47.20 per as
share
of March 10, 2008
Lazard
Lazard has also reviewed an information
publicly request
available information Company
regarding and reviewed
the Company the material received in response to the request and subsequent follow-up requests
On March
Lazard met24, 2008,
with themanagement
senior Special Committee,
at in consultation
Company with
headquarters onLazard
April and
8, Sidley
2008 and Austin LLP, legal
participated in counsel
other to the discussions
telephonic Special Committee
with (“Sidley
members of Austin”),
managementdecided to engage Milliman, Inc. (“Milliman”) to perform an actuarial valuation
Lazard participated
Lazard also participated
in a in various discussions
telephonic discussion withsenior
with Sidleymanagement
Austin and Milliman
and Milliman on May 13, 2008 regarding actuarial assumptions
1LAZARD
I INTRODUCTION
Analyst
Analyst Perspectives
estimates of aon Offer
final Price
transaction price range from approximately $48 to $56 per share
REPORT
DATE COMMENTS
RAYMOND
JAMES 5/13/08 Current
doubtvaluation
thatsee levels
it will are basicallyabove
beshares
substantially in-linethe
with thosequote
current of comparable life insurers so while we think that the bid will be raised, we
CITIGROUP
DEUTSCHE 5/11/08 We NFS’ as offering little downside risk from their current price level and potential 15% upside consistent with our $56 target
5/8/08 We believe a sale agreement will be reached at a price closer to $51 per share
BANK
JPMORGAN Nationwide Mutual will likely raise the offer price for NFS.but we believe the chances of a bid significantly above $50 are low
5/8/08
MORGAN [Maintaining
STANLEY a] $48 price
5/8/08 be meaningfully target.the generally disappointing results weaken investor arguments that the offer price from the parent should
increased
CREDIT
5/8/08 [Maintaining a] $48 price target.suspect a moderate increase [in offer price] is probable
SUISSE
UBS 4/10/08 Raising ouranticipates
price targetantoincrease
$55…based on our review of [similar]
MERRILL
LYNCH [T]he market
3/11/08that NFS is worth close to the offer in Nationwide Mutual’s bid. Wepast deals… this point of view, as our discounted cash flow
understand
model suggests
FOX-PITT [A] take-out in the…low to mid $50 range…wouldprice today better
on a public marketabasis
incorporate normalized trading basis, NFS prospects and some takeout
KELTON
premium 3/10/08
Valuation [implied
WACHOVIA by the offer] would be higher than or near to the valuations presently afforded many of NFS’ life insurance
3/10/08
2peers…
LAZARD
Recognizing this, we do not see current shareholders as having much leverage to push for a higher offer price
Nationwide
I INTRODUCTION Financial
Rating Agencies
POSITIVES Perspectives on Transaction
CONCERNS
Minimal
S&P NFS’ integration
existence, risk due to
similar majority
branding ownership
and the throughout
sharing many The
of transaction acquirer’s
senior lower financial
isthe than that strength rating ( A+, Outlook Stable),
of the target
RATING
(NEGATIVE AA- executives
WATCH) Potential
capitalizationnegative
of NFS, effect of is
which the
currently veryonstrong
(10
WouldMarch
allow08) the Nationwide enterprise to focus on Loss of access to equity market and ability to raise equity
policyholderselling
MOODY’S needs and to potentially
opportunities benefit
Material from greater
increase cross- capital,
in the ultimate oflowering
offer the company’s financial flexibility
RATING Aa3
(STABLE) Transaction
diversification will
of likely
revenue result
streams in Nationwide
cost synergies and acost
Mutual greaterthe
pressure could
on theput
ratings of both Nationwide Life and
Less restricted
between life flow of and
insurance and more efficient
property and allocation
casualty of capital
operations(10 March 08)
Transaction should result in a clearly aligned organization, Likely to be somewhat dilutive to NFS’
A.M. BEST in terms of affiliated distribution, as well as limited though expected to remain at a level adequate to risk-based capital,
particularly
RATING A+disruptions due to the level of integration already current rating maintain
operational
(STABLE)
present between
Transaction will the two organizations(11
significantly reduce the March 08)
capital of the
organization,
RATING though capital adequacy is estimated
AA- commensurate with the current rating level to remain
within thresholds
(STABLE)
3(11 March 08)
LAZARD
Nationwide
Investor
ApproximatelyReturns66%
at Various Transaction
of the total Class A Prices
float has traded since the Nationwide Mutual offer
Current
Quarterly Share Price per
Dividend (5/15/08): $51.00
Share: $0.29 on 7/14/08 $0.29 on 10/14/08
ANNUALIZED UNLEVERED INVESTOR RETURN
4MONTHS
Months
9/15/08 5TO CLOSE
Months
10/15/08 6 Months
11/15/08
$$ASSUMED
47.20 (4%)
50.00 (19%)(3%)
(16%) (13%)
(3%)
$ 52.00 8% 6% 5%
FINAL
TRANSACTION $ 54.00 20% 16% 13%
PRICE
$$ 58.00 $ 56.00 34% 27% 22%
60.00 49%
4LAZARD 65% 38%
49% 30%
40%
Nationwide
Recent Trading
The multiples
median Performance
share price of lifeatinsurance
P/E
SHARE PRICE have increased
2008E P/E a greater peers
(a) 3/7/08%
has increased
percentage, by market
as current 8.6% since March have
conditions 7, 2008
pressured operating earnings x
Today 3/7/08%
NFS $ Life Change
51.00Comparables:
$ 37.93 Today
34.5% Change
11.2x 8.0x 40.4%
Public
Ameriprise $ 50.65 $ 48.78 3.8% 13.3x 11.0x 21.3%
Genworth
Lincoln 23.53 21.92 7.3% 10.0 8.2 21.5%
Manulife54.70
MetLife 39.2248.55
36.7712.7%
6.7% 9.9
13.4 8.4 18.8%
12.1 11.2%
Principal62.30
Protective 56.06
41.85
56.47
51.68
37.52
10.3%
8.5%
11.5%
10.0 12.5
14.2
10.7
9.1 10.3%
9.2 13.7%
17.3%
Prudential
Sun Life 48.2076.46 69.22
45.08 10.5%
6.9% 11.810.1
10.58.9 14.3%
12.1%
Torchmark
Mean 8.7% 64.24
11.4x 59.07
10.0x 8.8% 10.8
14.9% 2 10.0 8.2%
Median
S&P 500 8.6% 10.8
$Market
1,423.579.6 14.0%
$ 1,293.37 10.1%
Impact
Implied of
OfferChangeChange
Median on Offer Price 1
Price Price%
$x 51.27 $ 47.20 8.6%
Source: Factset (3/7/08 and 5/15/08) and company filings.
5(a) Based on IBES median. 5/18/20
LAZARD
II Business Overview
LAZARD
Nationwide
II Business Financial
Overview
Business
INDIVIDUAL Overview
INDIVIDUAL
INVESTMENTS
Variable annuities RETIREMENT
Private sector PLANS
(401k) PROTECTION
plans CORPORATE
Variable life Medium term notes program
Primarily marketed
Best of American underthe
brand the Primarily
Best marketed
of America brandunder COLI/BOLI Nationwide Bank
Universal
Fixed life Nationwide
annuities Trust and Funds
annuity products
PRODUCTS
Public sector Wholeplans
(457) and term life Structured products
Income products
Primarily single premium Groupadministration
annuity products
immediate
only servicesannuities Also offer
Advisory services Annuity: #13 Public: #1 Variable Life: #5
Deferred Fixed
Variable
Deferred
CURRENT Annuity: #35 Private (Small Case): #6 Universal Life: #28
RANKINGS
Single Premium Immediate Variable Annuity: #3 Private (Midsize Case): #8 Term Life: #27
Annuity: #14 Immediate COLI: #1
DISTRIBUTION
2007 SALES
Non-Affiliated
Affiliated
Total: 68% 32%
$18.6bn
2007 NON-AFFILIATED
Pension Plan Life SpecialistsSALES
Administrators
4% 3%
Financial
IndependentInstitutions 20% 50% Wirehouse/ Regional Firms 23%
Broker/Dealers
Total: $12.6bn
2007 AFFILIATED SALES
Nationwide
Mullin TBGagentsFinancial 4% Network
Nationwide
Total: $6.0bn Nationwide 13% 12%
Retirement Solutions 71%
5/18/20
Source: Company filings and management.
6LAZARD
Nationwide
Overview
Key Segment Data
2007 SALES
Individual Protection 9%
Individual
Retirement Investments
Plans 58% 33%
Total: $18.6bn
2007 OPERATING REVENUE
Corporate
15% and Other
Individual Investments 24%
Individual Protection
Retirement Plans 32%29%
Total:PRE-TAX
2007 $4.7bn OPERATING EARNINGS
Corporate and
Individual Other 8%
Individual Investments Protection 33% 32%
Retirement Plans 27%
Source: Company filings. Total: $0.9bn
CUSTOMER
Corporate FUNDS
and Other 4% Individual
13% Individual
Retirement PlansInvestments
50% 33% Protection
Total:
5/18/20$162.4bn
7LAZARD
II BusinessFinancial
Overview
Historical exceptPerformance
($ in millions, REVENUE for per share data)
OPERATING
CAGR $5,000 2003-2007 3.9% 2006-2007 2.6% $4,682
2007-LTM
3,500 1Q08 (6.3%) $4,563 $4,607 4,500 $4,398 $4,209 $4,023 4,000
2003
1Q 2004
2008 2005 2006 2007 LTM
NET OPERATING INCOME/ OPERATING EARNINGS PER SHARE( b )
CAGR
2007-LTM
Net $1,000 2003-2007 2006-2007 1Q 2008 $8.00 EPS 10.3% 13.1%(20.0%)
6.00Operating
2.00 $655 $611Income
200
8.6%$4.57
$590 $608 7.7%(24.4%)
600 $551800
$4.32Operating
$3.84 $4.04 $471 $3.60 4.00 $3.09 400
01Q0.00
20082003
Net2004 2005 2006
Operating Income2007
NetLTM
Operating EPS
BOOK VALUE
2003-2007 8.0% PER SHARE(
2006-2007 a
1.9% ) $45.00 CAGR
2007-LTM
$34.67 35.00 1Q 08 0.3% $39.03 $39.06 40.00 $38.29
$31.49
30.00 $28.73
25.00
2003 2004 2005 2006 2007 1Q
2008
OPERATING RETURN ON AVERAGE EQUITY( a ) ( b )
14%
12.1% 11.9% 11.7%
012
2003
11.2% 11.3% 11.0% 10 8 6 4 2
1Q 2008Company2006
Source:
2004 2005 2007 LTM
filings.
(a) Excluding AOCI.
08 5/18/20 (b) Excludes the impact of tax related adjustments of $37.9mm in 2005 and $113.1mm in 2006. Excludes net after-tax benefit of $37.3mm in 2007 from unusual items.
8LAZARD
II Business Portfolio
Overview
Investment
($ in millions) Comparison
Although
The rating mortgage
profile ofloans
the reflect
fixed a greater
income percentage
portfolio ofisthe
ofinvestments,
NFS investment
consistent withportfolio
the peerofgroup
NFS, the portfolio exposure is diversified both regionally and by property type
NFS is
NFS Mean more heavily
Median weighted
Ameriprise toward structured particularly residential mortgage-backed securities
Total
Fixed Invested
Income Assets
72% 76%$ 37,360
75% $Genworth
84%29,808
76% $ Lincoln
81%69,399
62% $Manulife
68,841
73% 73% $MetLife
153,104
83% 73%
Principal
$ 61%
335,806 Protective
95% $ 64,899 Prudential
$ 27,849 $Sun Life Torchmark
228,908 $ 95,792 $ 9,550
Equities 0% 2%
PORTFOLIO 1% 0% Loans
Mortgage 1% 1%17% 22% 4% 1%13%
13% 1% 4%
10% 5% 0%11% 17% 14% 20% 12% 13% 22% 0%
13%
Real Estate
Other 6% 7%0%7%1%5% 0%10%
0% 7%0% 8%0% 7%
5% 5%
2% 4%1% 10%
0% 0%8% 4%
4% 0%
Total Fixed
Total Invested Assets$ 100%
Income 26,797 100% 100%
$ 25,186 100% 100%
$ 53,031 100% 100% $100% 100% 100% 100%
AAA/AA/A
FIXED 69% 66%
INCOME 69% 70% 73% 61% 72%$74%55,624
56% $ 94,848
68% 69% 244,088
69% 47% $ 47,166 $ 23,168 $ 166,572 $ 58,765 $ 9,109
BY
BelowRATING BBB2Grade
Investment 25% 29%6% 5%26%5% 24%6% 22% 33%4%
5%100%
6% 24%
7%20%5% 39%
5%100%
8%27%3% 23%
7% 29% 46%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100%
STRUCTURED Total Structured Invest. $ 10,722 $ 10,100 $ 12,292 NA NA $ 86,745 $ 9,201 $ 8,900 $ 44,702 $ 6,146 NA
INVESTMENTS
(AS A % OF ABS 10% 4% 3% 3% 7% NA NA 3% 3% 5% 8% 1% 2%
TOTAL
MBS 19% 17% 14% 31% 11% 17% NA 22% 11% 27% 11% 5% NA
INVESTED
ASSETS) Total 3 29% 21% 20% 34% 18% NA NA 26% 14% 32% 20% 6% NA
9Source:
LAZARD
Company filings as of 3/31/08.
Comparative
($ in has
millions) Alt-A and Subprime Exposure
NFS
Alt-A significantly
exposure is of more
almost Alt-A andAAA
exclusively subprime exposure than the peer group
The rating
1 NFSAlt-A profile
MeanABS/MBS
Median the subprime
Ameriprise exposure Lincoln
is consistent withPrincipal
the peersPrudential
and more weighted
Sun Life toward older vintages
Total
% Invested Assets 5.5% $1.7% —Genworth
2,0411.6% —3.7%
$ 1,095
1.4% $ 952 MetLife
1.8%$ 7.5%
1,227
NA NANA
0.1% $ 68NA
NA NA
% Shareholders’
By Ratings: Equity (a) 37.8% 8.2% 9.1% 13.7% 10.7% NA 1.0% NA NA
AAA1%
AA 2 99%
13% 82% 86% 90%14%56%NA 81% NA 100%
NA NA NA
A 0%0%
BBB 4% 2%12%
1% 1%0%
0%
9% 28%
14% 2%3%0%NA NA0% 0%NA0%
NA
NA
NANA0% 0% 1% NA 0% NA NA
ALT-A
ABS/MBS Below Investment
Total 100% 100% Grade 0%
100% 0%
100% 0%NA 100% NA NA
By Vintage:
Pre-2005 24% 22% 21% 11% 21% 32% NA NA NA
2005
2006 33%
23% 35%
31% 39%
32%18%39%
32%9% 44%
26% 24%
36% NA
NA NA
NA NA
NA NA NA
2007
2008 20%
0% 12%
0% 0%9%0% 0% 8%
0% 100% NA NA
NA NA
NA NA
NA NA NA
Total
Total 100%
Subprime100% 100%
ABS/MBS $ NA
726 — NA
— NA
$ 247NA $ 1,146 $ 651NA
$ 1,925 NA $ 10,887 $ 292
% Shareholders’
% Invested AssetsEquity
1.9% (a)
1.5% 0.9%12.1%
13.4% 0.8% 5.7%
1.7% 3.1%
0.9% 9.0%
0.6% 5.7%4.8%
5.6%0.3%
NA 47.3% 1.7%
By Ratings:
AAA
AA12%
A 1 63%
22%
12%
66%
18%
12%
59%
19%
0%
89%
6%
27%
47%6%
19%
12%
78%
3% 36%57%
NA NA NA
17% 23%59%
NA NANA
BBB 1% 3% 4%
SUB-PRIME 4% Investment
Below 5% 4% 3% Grade
NA 1% 2%NA0% 0% 0%100%
1% 0%
ABS/MBS
By Vintage: Total 100% 100% 100% 100% 100% NA NA0% NA 0% NA
Pre-2005
13%331%
2005 22% 61%34%
31% 30%42% 25%33%
13%34%25%36%51%NA 44%10% NANA16% NA
2006
2007 0%
4% 1%7% 0% 32%
7% 6% 36%
4% 0%10%0%32%
0%0% 15%
7%NA 13%
NA0% 15%NANA 59% NA
2008
Total 100% 100% filings
100% 100% NA
100% NA 100% NA
Source:
Note: Company
Data forAOCI. as of
Manulife and 3/31/08.
Protective not disclosed. Torchmark has no Alt-A or subprime exposure. 5/18/20
(a) Excluding
10
LAZARD
Comparative
($ inquarter
millions)Realized and Unrealized Gains
4th
NET REALIZED 2007 and
LOS 1stSES
quarter 2008
I N 4Q realized
2007 & 1Qand unrealized losses compare favorably to the peer group
2008
$0(0.0%)
($22)($8)($6) (200)($150)
($ 154)
(1.5%)
($ 286)
($ 262)
(400)
(3.0%) (600)
(800)($742)(4.5%)
($ 769) MetLife Principal Genworth NFS Lincoln Protective Torchmark Ameriprise
Prudential
Net Realized Losses Net LOSSES
Realized Losses as a % of Shareholders’ Equity (a)
GROSS
$0(0.0%) UNREALIZED IN 1Q 2008
($ 509)
($935)($656) (2,000)($1,106)
(10.0%)
($2,520)($2,375) (6,000)
(4,000)($3,533)
($3,574)(20.0%)
(10,000) ($8,798)(40.0%) (30.0%)
MetLife (8,000)
Prudential Genworth
Gross Unrealized
Source: Company Losses
filings Gross Unrealized
as of(b)
3/31/08. Losses as a %Principal Lincoln NFS
of Shareholders’ Protective
Equity (a) Torchmark Ameriprise (b)
(a) Excluding
08 AOCI. 5/18/20 As of 12/31/07.
11
LAZARD
Nationwide
Fitch Alt-A Overview
and Subprime Exposure Review
($ in millions)
Fitch Stress
NFS $80 542Year-End
% 595
535 % 2006%RBC
%(7) Year-End 2006 Prism Score Gross Loss Reported Fitch- Reported Fitch-Exposure RBC Stressed Difference Prism Score Stressed
Ameriprise
289(7) AA $53
AA(2/21/08).
Prudential %AAA
589450 (6) AAA
475%461(14)
AAA AAAAAAGenworth
AAA Sun(a) 494(d)377
Life 14 343(34) AANA
339 337(2) AA-Lincoln (b) 128—361
NA Torchmark 338355(6)
338 0AA-
AA+AA-Manulife
AA+ (c) 64 376 374(2) NA NA MetLife 264 335 333(2) AAA AAA Principal 32 419 417(2) AAA AAA Protective 57 296
Source:
(a) Fitch
(c) Subprime exposure as of 12/31/07. 5/18/20 (d)including
08
Exposure data is for consolidated investments The issuerthose
doesoutside of the U.S.
not participate liferating
in the insurance subsidiaries.
process other thanRBC and medium
through Prism data is for
of its U.S.disclosures.
public life insurance subsidiaries only. (b) Subprime exposure as of 10/31/07.
12
LAZARD
Nationwide
Overview
Key Strengths
Diversified business mix across retirement and and
protection spectrum supported by brand recognition
Leading provider
Well positioned toofcapitalize
group retirement products
on long-term demographicsignificant
trends competitor in small and mid-case 401(k)
Generally
Recentand consistent
variable net initiatives,
annuity inflows in such
publicasand private
advisor sector retirement
segmentation, haveandplans
positioned the Company
Broad
Beginning extensive
to realize distribution
benefits of relationships
recent through
implementation both
of affiliated
centralized non-affiliated
relationship entities for continued sales growth
management
Developing
New initiatives
distribution to increase
relationships withcross-selling
competitive through Nationwide Mutual agents
lifeinproducts
Leading
Steady COLI/BOLI
expense providerimprovement
management and strong presence
across lines variable life major contributor to earnings growth
of business
Significant
Generally excess
high-qualitycapital availableportfolio
investment for deployment
supported(management estimated
by conservative at approximately
risk management $1.4 billion)
practices
Development of Nationwide Bank as part of asset
Strong management team with strategic vision to position the retention strategy,
Companyalthough expansion
for improved may and
growth prove challenging
return in expansion
on equity current market conditions
13
LAZARD
Nationwide
Overview
Principal Challenges
Current mutual ownership structureto life insurance peer group provides less relative liquidity
Significantly
Limited lower
ability to float compared
No opportunity
Returns onnetequityforreturn
third excess
below
capital towithout
partycompanies
takeover shareholders without
Nationwide shareconsent
Mutual price impact, particularly in absence of Nationwide Mutual participation
Persistent
Private sector outflows
retirement inpeer
variable
sales challenges,
withannuities
and fixed operational
particularly
challenges
mitigates
driven byrecent
inpositive
meetingVA
macroeconomic
specified targets
sales performance
factors and segment expense management progress
Lower return
Capital on equity
management profilelimited
options of individual protection products
General
#13 in lack of annuity
variable variable annuities and individual life products above
scale in sales by ownership structure as described
Below top-25
Highly in universal
competitive and term
environment forlife sales
accumulation retirement assets
Ability
Impact to near-term
of compete for rollover
market assets
conditions givenreturns
business
Low interest
Greater Alt-Arate
and environment
subprimecredit may pressure
exposure than life onmix
insurance
withproducts
spread
peer2007
significant equity market exposure
group
110.2 million of aggregate impairments
However, rating profile and vintage generally compare in 4th quarter
favorably andloss
and 1st quarter
exposure2008
viewed as limited in comprehensive industry analysis performed by rating agency
14
LAZARD
III Market Perspectives
LAZARD
III Market Perspectives
PRICE/VOLUME
Price Volume HISTORY
$65.00 1 Price
5,000,000
1Average
Week
4,000,000 $39.59 Pre-Offer
1 Year $52.35 1 Month 41.89 2 Years 50.22 3 Month 42.75 3 Years 46.67
Price
55.00 Post-Offer
Current $51.00 Avg. Since Offer 48.71
3,000,000
45.00
10 Mar 08 2,000,000 NFS announces receipt of $47.20 per share cash offer from Nationwide Mutual
35.00
1,000,000
25.00 0 7 Mar 05 26 Oct 05 16 Jun 06 4 Feb 07 25 Sep 07 15 May 08
INDEXED
Indexed Total TOTAL
ReturnRETURN HISTORY
190
NFS Pre-Offer Return CAGR
180
21160Year (29.3%) (29.3%) 2 Years (11.6%) (6.0%) 170 3 Years 2.5% 0.8%
150
47%
140
40%
130
120
16%
110
100
90
7NFS
MarLife
05 26 Oct 05 16
Insurance Jun(a)
Index 06S&P
4 Feb500
07 25 Sep 07 15 May 08
Source: FactSet
(a) Includes (5/15/08).
Ameriprise, Genworth, Lincoln, Manulife, MetLife, Principal, Protective, Prudential, Sun Life and Torchmark.
15
LAZARD
III Market Valuation:
Perspectives
Historical
25.0x Price/Earnings (Current Fiscal Year)
Post-Offer
Current Pre-Offer
3/7/2008 Avg. Since
3/7/2008 12 YearAs2 of Average
Year 3 Year NFS: 11.2x 10.3x 8.0x 11.4x 11.3x 11.1x
Life Insurance
High 14.2 13.3 Index
12.5 (a): 315.9
15.7 1
Median
Nationwide10.8 10.4 9.6 12.0 12.415.8
12.575th Percentile
3/10/08 12.9 11.9 10.1
25th Percentile 10.8 9.8
13.68.9
13.9 13.9
11.2 11.7 11.6
Low Mutual
19.0 9.9 9.0 8.2
Offer9.6 10.4 10.6
13.0
47.0
3/7/2005
Life 8/19/2005
Insurance 1/31/2006 7/15/2006 12/27/2006 6/10/2007 11/22/2007 5/15/08
1st Quartile
NFS Peer 2nd(a)Quartile
Group Median 3rdNFSQuartile
multiple4th
as Quartile
of 3/7/08 Peer group median multiple as of 3/7/08
Source:
(a) FactSet
Includes (5/15/08).
Ameriprise, Genworth, Lincoln, Manulife, MetLife, Principal, Protective, Prudential, Sun Life and Torchmark. 5/18/20
16
LAZARD
III Market Valuation:
Perspectives
Historical
4.00x Price/Reported Book Value
Post-Offer
Current Pre-Offer
3/7/2008 Avg. Since
3/7/2008 1 YearAs2 of Average
Year 3 Year
NFS:
3.50 1.40x 1.32x 0.99x 1.36x 1.34x 1.28x 3/10/08
Life
High Insurance
2.40 2.36 Index
2.34 (a): 32.46
2.47 2 1 2.36
Nationwide
Mutual Offer 75th Percentile 1.78 1.73 1.64 1.90 1.88 1.81 Median 1.49 1.50 1.42 1.79 1.74 1.67 3.00 25th Percentile 1.35 1.32 1.17 1.45 1.48 1.44 Low 1.28 1.21 1.07 1.28 1.33 1.31
2.50
2.00
1.50
41.00
0.50
3/7/2005 8/21/2005 2/4/2006 7/21/2006 1/4/2007 6/20/2007 12/4/2007 5/15/08
LifeQuartile
1st Insurance
2nd(a)Quartile
NFS Peer
Source: Group
FactSet Median 3rd
(5/15/08). NFSQuartile
multiple4th
as Quartile
of 3/7/08 Peer group median multiple as of 3/7/08
(a) Includes
17 Ameriprise, Genworth, Lincoln, Manulife, Metlife, Principal, Protective, Prudential, Sun Life and Torchmark. 5/18/20
LAZARD
Nationwide
III Marketof Financial
Perspectives
Summary
SELECTED NFS AnalystPRICE
ANALYST Estimates and Recommendations
TARGETS DETAIL – Pre-Offer
Upside vs. Report
Broker Rating Price
Fox-Pitt
Citigroup Kelton HoldTarget
Buy 50.00 32%
Unaffected
$ 51.00
6% 34% Offer Price Date
8% 3/4/08
2/25/08
Keefe,
Bank Bruyette & Woods Hold 46.00 21%(3%) 2/11/08
CreditofSuisse
Deutsche
America
Bank HoldHold
Hold
47.00
48.00 27%
49.00
24%(0%)
29% 2%4%
2/8/08
2/8/08
2/8/08
Lehman Stanley
Morgan Brothers Hold
Hold 53.00
48.00 40%
27% 12%
2% 2/8/08
2/8/08
Sanford
UBS HoldBernstein
48.00 Hold
27% 2%56.00 48%
2/8/08 19% 2/8/08
Wachovia
CONSENSUS HoldMean
43.50$15%(8%)
49.0527%
29%2/8/08
4% 1
STATISTICS
NFS Share Median
Price 48.00
(3/7/08) $ 37.93 2%
Offer Price
RECOMMENDATION 47.20 SUMMARY
Buy
2Hold9%
11 91%
Recommendations
Source:
CONSENSUS Bloomberg,
RATINGequity research and FactSet (3/7/08).
TRENDS
Rating
5$ Price
6070
342 50
40
1 30 7 Mar 05 12 Oct 05 19 May 06 24 Dec 06 5/18/20 31 Jul 07 7 Mar 08 Rating Consensus Share Price 08 12:36:22
5=Buy
18 3=Hold 1=Sell
LAZARD
Nationwide
III Market Financial
Perspectives
“In ourofview, is on
stillBusiness
there(5/8/08) work to Strengths
be done, but we believe NFS’s turnaround and ROE expansion toward 13%, although measured, appears to be achievable.”
Bank
“[D]espiteAmerica
the difficult market environment and the resulting impact on revenues, earnings in NFS’ operating statements were still roughly in-line with our estimates. In addition, the company maintained its full-year margin guidance for its respective
business
Sanford segments.”
Bernstein (5/8/08)
“On
40% our numbers,
longer-term NFS’
returns ROE
in seems
NFS’ poised
retail banktoandincrease
mutualtofund
13%intitatives.
by year end 2009.
[and] helped by:ofImproving
deployment $800-$900variable
millionannuity
in excess sales and netflows. Solid 401(k) deposit growth . strenghtening individal life insurance sales. attractive and accretive 14-16% and 30-
capital.”
UBS (4/8/08)
“Few companies within U.S. Life sector possess growth potential of NFS -The combination of its very stronghas
group retirement,
of the
its industry’s
solid foundationmostin desirable
business franchises.
lines such asWhile
group NFS has
pension struggled
and for annuities
variable several years,
that CEO above
offer Mark Thresher,
average growth finally gotten itre-building
potential.”
variable
to turn the corner annuity,
with 4Q07’sandresults
recovering lifewe
the best insurance
have seenoperations provide
in quite some an we
time. exceptionally strongtoearnings
remain attracted platform
the company and one
because of
Citigroup (3/10/08)
“Initiatives on bothmanagement
the life and retirement plan side, combined with better salesinlevels in VA, suggests aand
continuing to improve franchise and story.”
growth prospects. Despite equity market exposure given business mix, at only a slight premium to book value with
significant capital
Fox-Pitt Kelton (3/4/08) initiatives, we consider the shares inexpensive a beaten down sector a good long term ROE expansion
“Expense control
insuranceBrothers was excellent.
the ratio(2/8/08) The ratio of general operating expenses to average account values was 30 bps this year compared
of operating expenses to revenue fell to 18.4% in this year’s December quarter from 22.1% in last year’s December quarter.” with 50 bps last year; the comparable figures for retirement plans were 33 bps, down from 44 bps last year; and in life
Lehman
5/18/20
19
LAZARD
Nationwide
Perspectives
“We believe on Business
the company’s attemptChallenges
to improve its returns and sales will ultimately be successful. However, we think the company’s turnaround will take longer than anticipated to accomplish.”
Wachovia (5/8/08)
“Our fundamental view remains cautious. We expect capital deployment to lift returns over time, but the weak equity market and lower retirement/annuity spreads present near-term challenges. Also, we forecast VA flows to remain negative through 2008.”
JPMorgan (5/8/08)
“Prior to the recent takover announcement, NFS shares had languished as the company worked towards operational and return improvements in the face of short-term shareholder interests, overhang of mutual parent owndership, and tough equity market
conditions.”
UBS(4/10/08)
“NFS remains
Bernstein a show me story given its mixed track record in terms of execution. Based on our current forecast, we do not expect the company will achieve its 13% ROE target by 2009.”
(3/10/08)
“The 4Q07
assets on anwas the 18thbasis)
annualized consecutive quarter
in Private with
Sector negative VA net flows, and we expect break even fund flows for at least the next couple of years. Deposits and surrenders in 401(k) were disappointing, leading to a rare net fund outflow (-1.4% of beginning
Plans.”
Merrill
“For Lynch
more (2/22/08)
thanbusiness.
a year now the company
life insurance
Lehman Brothers (2/8/08) In short, virtuallyhas
anybeen strugglingoff
improvement with
of anemic
this lowflows in its flagship
base would individual-annuity
be a welcome departure.” and retirement-plans businesses - certainly the flows have been uneven. It has also been reporting poor sales in another big business, individual
20
LAZARD
Nationwide
Perspectives
Rating Agency
POSITIVES Perspectives
CONCERNS
Insurance
retirement subsidiaries
savings and positioned among
life insurance the leading
protection providers
solutions regainofvariable
Challenges to improve overall
annuity business execution in in
theretail life and
S&P Extensive
RATING AA-Strong relationships
market-linked with multiple
asset-based distribution
fee income, channels
primarily Inherent
related earningsmarket
to variable
share
volatility levels
resulting from
from earlier
significant decade
exposure to equity
(NEGATIVE
annuities fixed-charge coverage and leverage
WATCH)
Very Strong
strong enterprise
capital adequacy risk
at management
the operating companies and good
(13 Dec 07)
liquidity
Established accumulation
recognition position in theprojects,
annuity and pension
which markets,
increase exposurestrong brand compression
to spread Increasing focus on highly competitive, lower-margin asset
MOODY’S
RATING Aa3 Diversified
Conservativedistribution
balance channels
sheet withPersistent
excellent net outflows
capitalization in causing
the fixedpressure
and variable annuity business,
on earnings
(STABLE)
High qualityModerate financial
bond portfolio, leverage/fixed
albeit with charges
relatively high and sizabletodouble
exposure leverage
commercial
(10 Mar 08, mortgages
15 Jan 08) put pressure on earnings and capital formation
Extensive
product brand recognition and established position in multiple Significant
lines bonds and mortgage-backed securities, somewhat limiting liquidity allocation to commercial mortgages, private placement
A.M. BEST
Diversified business mix which has consistently generated solid GAAP Continuing negative net flows in variable and fixed annuity lines
RATING A+
operating revenues and pre-tax operating earnings
(STABLE)
Maintains moderate financial
Strong growth
21 in total accountleverage and coverage
values within ratios
retirement plans segment(11 Mar 08)
LAZARD
Nationwide
Perspectives
Class A Shareholder
ClassINSTITUTIONAL
A shares Ownership
represent 33.7% asthe
of of April
equity29, 2008
ownership, and 4.8% of the voting power, of NFS
TOP SHAREHOLDERS
1Rank Holder Name
Renaissance # Shares%
Technologies O/S3,595,000 7.8%
Corp.
324 Vanguard
LSV AssetGroup,
Fidelity
Management
Management Inc. &
2,403,000
1,334,000
Research 2.9 5.2
1,290,000 2.8
657 Barclays
State Street Global
Global
Charles Schwab
Advisors
Investors
Investment
869,000
829,000 1.81.9 612,000 1.3
Management
89 California
Dimensional Public
Fund Employees
Advisors Retirement
Inc. 576,000 System
1.3 1.1585,000 1.3
10
11 Westchester
AQR Capital Capital Management
Management, L.L.C. Inc. 521,000
505,000 1.1491,000 1.1
12 Morgan
13 TIAA-CREF StanleyInvestment
& CompanyManagement,
379,000 L.L.C.
0.8
14 PowerShares
15 UBS WarburgCapitalLLC 299,000 0.6
Management, L.L.C. 294,000 0.6
16 Scoggin
17 Caxton Associates, L.L.C. 280,000 0.60.6
19 GoldmanCapital,
18 Highbridge Sachs L.L.C.
Asset
Capital
265,000
Management
Management, LLC255,000 0.6 0.5
252,000
20 First
Top 20 Trust Advisors, L.P.
Institutions 23,837,914 225,000
15,859,000 51.8
34.5% 0.5
Total Institutitonal
Source: Company management.
Note: Hedge
BREAKDOWN funds are highlighted
OF CURRENT OWNERSHIPin grey.
Insiders
Retail 1%
Institutions 47% 52%
22
LAZARD
IV Preliminary Valuation
LAZARD
Overview
Summaryavailable
valuationinformation
based upon:
Publicly
Information provided
Discussions
The followingwith NFSby
primary
NFS management
management
analyses have been performed:
Comparable
Precedent public market
transaction trading
analysis analysis
Premiums
Control paid were
premiums in also reviewed
recent selected life insurance transactions
Selected
A cash minority
supplemental cash buy-in
flow transactions
analysis prepared in part by Milliman and in part by Lazard is shown in Section V
23
LAZARD
Financial Projections
($ in millions, except –per
Summary
share data)
Management has
The projections indicated
for 2009E that2010E
and the financial
shownprojections
below wereofupdated
NFS arebygenerally reviewed
management as of in
Maydetail
14;with the NFS Board
management intendsoftoDirectors and shared
provide these with
updated the Nationwide
projections Mutual Mutual
to Nationwide Board
2006A 2007A
Operating 2008E
Revenue 2009E
$ 4,563.1 2010E
$ 4,681.7 $ 4,506.1 $ 4,766.3 $ 5,199.7
Pre-Tax
Net Operating
Operating Income
Earnings 789.8
608.1(b) 860.7(a)
655.2(c) 794.4
619.9 907.3
699.3 999.6
766.8
Net Operating
Key Metrics EPS $ 4.04 $ 4.57 $ 4.49 $ 5.21 $ 5.89
Operating
Pre-Tax Revenue
Margin Growth 3.8% 2.6%(3.7%) 5.8% 9.1%
Operating
Source: ROAE17.3%
Management 11.3% 18.4%
11.9%17.6%
projections.11.3%19.0%
12.4%19.2%
13.2%
(a) Includes
(b) Excludes net
thepre-tax
Excludes the impactbenefit
of tax of $67.5mm
tax related
related in 2007of( $113.1mm.
adjustments $43.9mm after tax, adjusted for an assumed tax rate of 35%) from unusual items.
(c)
24 impact of adjustments of $6.4mm. 5/18/20
LAZARD
Change
share in Management Forecast
data)
January 2008 Forecast
2008E 2009E April
2010E$ 2008E 2008
2009E Update
2010E May
2008E2008 Update
Operating
Pre-Tax Revenue
Operating 4,721.1
Income $ 5,042.9
$ 843.3 $ 5,409.3
$ 790.1
942.8 $2009E
$ 1,031.5
2010E
4,468.3 $ 4,717.8
$ 787.3(a) $ 5,152.6
$ 839.0 $ 945.9$$4,506.1
794.4 $$907.3
4,766.3 $ 5,199.7
$ 999.6
Net
Net Operating
Operating Earnings
EPS $ 4.73650.9
$ 722.7
5.38 $ 6.01 $ 615.2
4.46 $ 655.0
4.91 $ 731.9
5.70 $619.9
4.49 699.3
5.21 766.8
Net Operating
Key Metrics EPS Change — — —(5.6%)(8.7%)(5.2%) 0.7% 6.1%$ 3.3% $ 5.89
Operating
Pre-Tax Revenue
Margin Growth
17.9% 18.7% 0.8% 6.8% 7.3%(4.6%)18.4%
5.6% 9.2%(3.7%) 5.8% 9.1%
Operating
ROAE ROAE
Change —11.8% 12.6%19.1%
— projections. 13.2%17.6%
—(0.5%)(0.8%)(0.4%) 11.3%17.8%
11.8%0.7%
0.1% 12.8% 17.6%
11.3%19.0%
0.4% 12.4%19.2%
13.2%
Source: Management
(a) Includes pre-tax expense reduction target of $30.0mm.
25
LAZARD
Analyst
share Forecasts
data)
Analysts who have
NET OPERATING adjusted 2008E estimates for first quarter results have generally not revised estimates for the remaining quarters of 2008E or 2009E
Broker Date 2008E EPS
Updated/Confirmed 2009E OPERATING
Since 1Q Broker DateROAE
Release: 2008E 2009E
Raymond
Citigroup James
5/11/08 & Associates
4.65 5.35 5/13/08
Bank of $Updated/Confirmed
4.45 $5/8/08
America 5.20 UBS
11.4%
Since11.5%
5/8/08 1Q Release:
12.6%
Wachovia
UBS 5/8/08
5/8/08 4.61 4.52 KBW
5.41 5.25 Credit
5/8/08Suisse
11.3% 5/8/08
12.5%11.7% — 13.2%
Deutsche
Bank of Bank 5/8/08
America 5/8/08 4.40
4.32 5.20 Sanford Bernstein
5.00 5/8/08 11.2% 12.4%
JPMorgan
Sanford 5/8/08 4.42
Bernstein 5/8/08 5.194.55 5.40
KBW 5/8/08
High $4.48 $4.40
4.655.225.41 4.95
High 11.7% 13.2%
Mean
UPDATED Mean
CONSENSUS 11.4% 12.7%
UPDATED
Median 4.45
Low 4.32 4.95 5.20 Median
Low 11.2% 11.4%
12.4% 12.5%CONSENSUS
Additional Analysts
Fox-Pitt Cochran in IBES
Caronia Consensus:
2/26/08 $ 4.53 Additional Analysts
$ 5.22 Fox-Pitt in IBES
Cochran Consensus:
Caronia
Dowling
Morgan & Partners
Stanley 2/14/08
2/12/08 4.70 4.65
5.155.25
MorganDeutsche Bank
Stanley 3/10/08
2/12/08 12.0%
11.9% — 4/15/08 11.6% 12.8%
13.0%
LangenResearch
Argus McAlenney 2/8/0811/8/07
Company 4.65 5.004.85 5.25
Lehman
High Brothers 11/2/07 4.90 —
Mean$CONSENSUS
IBES
4.90
4.57 $ 5.41
5.20 MeanHigh 12.0%
11.6%
IBES
13.2%
12.8%
CONSENSUS
Median
Low 4.32 4.55
4.955.21
LowMedian
11.2%11.6% 12.4%12.7%
26
LAZARD
Nationwide
IV Preliminary Financial
Valuation
NET OPERATING – Management
EPS( vs. Analyst
a ) OPERATING ROAE( Forecasts
a ) $5.50 13.5%
$5.21
12.4%
12.5
5.00
11.5
$4.49 11.3%
4.50
10.5
4.00 9.52009E 2008E 2009E
2008E
9#Estimates
9of5 4
Management
Source: Estimate Analyst
Factset Low (b) Analyst Median (b) Analyst High (b)
Note:
(a) 2010E not(5/15/08) and management.
shown estimate
given limited analyst forecasts.pre-tax expense reduction target.
(b) 2008E
27
Management
Based on analysts that includes
have updated or$30.0mm
confirmedofestimates since first quarter earnings release. 5/18/20
LAZARD
Preliminary Valuation
A supplemental Summary
cash flow analysis prepared in part by Milliman and in part by Lazard is shown in Section V
PER SHARECompany
Comparable EQUITY VALUATION
$44.50 $47.00 Public Market
Precedent $56.25
Transactions $65.00
Comparable
Public MarketCompany
$51.18 $58.75 + 15 to 25% Control Premium
Minority Buy-in
52-Week $37.93 $50.00
$64.59 $57.00 Premiums
Range
Analyst Forecasted $56.00 $48.00
Transaction
$35$ 40 $45 Value
$50 $55 $60 $65
5/18/20
Nationwide Mutual Offer Price:
08
28$ 47.20 per share
12:36:22
28
LAZARD
Nationwide
IV PreliminaryFinancial
Valuation
NFS
($ in Summary Valuation
millions, except perRelevant
share data)
NFS Comparable
Statistic Low HighRange
Low High LowRange High Per Share Equity Value
I. PUBLIC
a) Analyst MARKET
Estimates: VALUATION:
2008E
2009E P/E
P/E $ 4.45(a)
5.20(a) 9.9x
7.0 - - 14.2x
12.3 8.5x 10.0x
- 9.0x -44.20
10.5x-$46.80
44.50 - $ 46.73
Price/Adjusted
Selected Book
Valuation Value$ per
Range 44.50Share $ 39.06
- $ 47.00 0.80x - 2.18x 1.20x - 1.20x $ 46.92 - $ 46.92
b) Management
2008E P/E $ Estimates:
4.49 9.9x - 14.2x 10.0x - 10.5x $ 44.92 - $ 47.16
2009E P/E 5.21Book
Price/Adjusted 7.0 - Value
12.3 8.5 - Share
9.0 44.29 - 46.90
Selected Range $ per
ValuationTRANSACTIONS:
II. PRECEDENT
$ 39.06
44.50 - $ 47.00 0.80x - 2.18x 1.19x - 1.19x $ 46.35 - $ 46.64
LTM P/E (1Q 2008)
FY1 P/E (Management) $ 4.32(b) 12.6x
4.49(3/31/2008)- 15.2x
12.1 - 13.8$12.5 13.0x -
- 13.5 15.0x $- 60.64
56.152.25x56.20 - $ 64.85
Price/Adjusted
Selected Book Value 5,382.3 0.77x- 1.55x - 1.80x $ 59.84 - $ 69.28
(a)
29 BasedValuation Range
on analysts that $have
56.25 - $ 65.00
updated or confirmed estimates since first quarter earnings release. (b) Excludes net after-tax benefit of $37.3mm in 2007 from unusual items.
LAZARD
Nationwide
Valuation
Analysis at Various
($ in millions, exceptPrices
per shareMinority
amounts)
Nationwide
NFS Precedent Illustrative Public
Mutual
StatisticNFS Trading Buy-In
Transactions (b)
Offer
Per Share
Share $ Price
47.20 Comparables
$ 48.00 $ (a)$Premiums
50.00 52.00 (c) $ 56.00 $ 58.00 $ 60.00 Financial All
$ 54.00
Aggregate
Price Equity Value $ 6,547 $ 6,660
as a Multiple $ 6,944 $ 7,227 $ 7,511 $ 7,795 $ 8,080 $ 8,365 Mean Median Mean Median Services Transactions
Operating
LTM (1Q EPS: (d)of:
2008) $ 4.32 10.9x 11.1x 11.6x 12.0x
2008E (Management)
2008E (Analyst Median) (e)10.5
4.49 4.4510.7
10.611.1
10.811.6 11.712.5x
11.212.0 13.0x
12.112.9
12.5
13.4x
12.613.4
13.0 13.9x
13.5
11.4
— 10.8x
11.4x
10.8
— 13.9x
13.1
13.4x
13.1 13.3 —
—— —
2009E (Analyst
2009EValue Median)
(Management) (e) 5.20 9.1 9.2 9.6 10.0
5.21 9.1 9.2 9.6 10.0 10.4 10.710.4 10.811.5
11.1 11.29.9
11.5
9.69.9
— 9.6
—— —— —13.3
—— ——
Book
Reported (f) (12/31/07):
$ 5,004 1.31x 1.33x 1.39x 1.44x 1.50x 1.56x 1.61x 1.67x 1.62x 1.54x 1.37x 1.32x — —
Adjusted
Premium $ 5,382
to Unaffected 1.22 1.24
Price: 1.29 1.34 1.40 1.45 1.50 1.55 1.50 1.45 1.52 1.61 — —
1-Day
1-WeekShare
SharePrice
Price(3/7/08)
(2/29/08)$ 37.93 24%
41.2518% 27%
14%20% 32%
16%25% 37%
21%30% 42%
26%35% 48%
31%40% 53%
36%45%41%51%58%
45%— —
—— —————— —
—— 25%
39% 27%
1-Week
4-Week Average Share Price 42.05
39.87 — 37%
4-Week Share
26-Week Average
High
Price (2/8/08)
Share
(10/12/07)Price 41.95 12%
13% 14%
14% 19%
19% 24%
55.04(14%)(13%)(9%)(6%)(2%) 24% 28%
29%2% 33%
33%
5%
38%
38%
9%
43%
43%
— —
—
——
———
—
——
—
——
33%
— —35%
52-Week High (6/19/07) 64.59(27%)(26%)(23%)(19%)(16%)(13%)(10%)(7%) — — — — — —
Memo:
Equity Value
Source: to Class
FactSet A Shares
(5/15/08) $2,215 $filings.
and company 2,255 $ 2,355 $ 2,455 $ 2,555 $ 2,656 $ 2,757 $ 2,859
(a)
(c) Includes
Includes Ameriprise, Genworth, Lincoln, Manulife, MetLife, Principal, Protective Life, Prudential, Sun Life and cash
Torchmark. (b) Includes
only. (d)selected transactions since 2002.of $37.3mm in 2007 from unusual items.
(e)
30 Based onpending
analystsandthatcompleted
have updatedminority buy-ins estimates
or confirmed with U.S. since
targets andquarter
first offer values greater
earnings than(f)
release. $50 mm. 100%
Excludes transactions
accumulated other comprehensive Excludes net after-tax
income. benefit
LAZARD
Nationwide
Valuation
Public Market except
($ in millions, Trading Analysis
per share data)
Share Price
ShareMkt. as a Multiple
FD Equity Estimated of:EPS
Growth
(a) Adj. Book 2008ECapital
Adj. Debt/ IBESRatio
2008E
Price Cap.
Manulife62.30
$ 39.19 Float 2008E
$ 59,096 2009E
$ 58,755 Value
13.4x (b) ROAE
11.9x 2.03x 17.8% (c) RBC
17.7% 439% (d)- LTGR
12.0% 2009E EPS
12.8%
MetLife
Prudential 76.4645,020
33,83428,212
33,437 10.0
10.19.1 1.38
8.6 1.54 13.4%
15.1%23.3%
35.3%383%
551% 10.0%
14.3%10.5%
17.5%
Sun Life 48.16
Principal 56.06 27,158
14,648 27,155
14,455 11.8
14.2 10.5
12.3 1.45
2.18 14.0%
14.9% 19.8%
19.6% 358%
376% 8.0%
12.0%12.4%
14.9%
Lincoln 54.70
Ameriprise 14,283
50.65 14,391
11,409 9.9 13.3
11,452 8.6 1.24
11.3 12.4%
1.45 22.8%16.5%
11.5% 475%683%
11.1%11.0%
15.0%18.1%
Genworth 23.53
Torchmark 64.2410,261 10,155
5,9512,923
5,754 10.010.0
10.8 7.0 0.80
1.74 8.0%
15.7% 22.0%
21.5%385%
283%10.0% 42.6%
9.0% 8.8%
Protective
High 14.2x 41.85
12.3x 2,937
2.18x 17.8% 10.7 9.3 1.15
35.3% 683% 10.9%
14.3% 23.9%
42.6%465% 9.0% 15.4%
Mean
Median 11.4 9.9
10.8 1.50
9.6 1.4513.4%
13.7% 22.2%
21.7% 440%
412% 10.6%
10.5% 16.8%
14.9%
Low
NFS: 9.9 7.0 0.80 8.0% 16.5% 283% 8.0% 8.8%
Pre-Offer (3/7/08)51.00
Current FactSet
(5/15/08) $ 37.93 $5,270
7,074 $1,781(e) 8.0x
2,337(e) 7.2x 0.97x 11.8% 21.3% 563% 8.6% 10.0%
Source:
(a) (5/15/08). and company11.5(f)
filings.9.8(f) 1.31 11.4%(f) 22.1% 563% 9.3% 16.9% (f)
(b) Based
(e)
on to
Adjusted
Reflects
IBES
class A
median
exclude estimates.
accumulated
shares. other comprehensive income. (c) Calculated based on Moody’s hybrid security rating guidelines (d) Based on company action level. Data as of 12/31/07.
(f) Based on analysts that have updated or confirmed estimates since first quarter earnings release.
31
LAZARD
Nationwide
Valuation
Price/Adjusted
($ in millions,(AS Book
except Value vs. 2008E ROAE – Pre-Offer
PRE-OFFER
Adj. yP/B (a) OF per share
3/7/2008) amounts)
2.5x =
Principal 0.3466e9.8221x R2 = 0.7777
2.0
Manulife
Implied
1.5 NFS (IBES
Ameriprise Est.)MetLife
Sun Life Torchmark (11.8%, 1.10x) Implied Share Price: $43.11
Lincoln
NFS Protective
Actual (11.8%,1.0 NFS ActualPrudential
0.97x) Share Price: $37.93 Genworth Discount to Implied Share Price: 12%
0.5
5% 10% 15% 20%
2008E
Source: ROAE
FactSet (3/7/08)accumulated
and companyother
filings.
(a)
32 Adjusted to exclude comprehensive income.
LAZARD
Nationwide
Valuation
Current Price/Adjusted
($ in millions, exceptBOOKBook
per shareValue vs. ROAE
amounts)
PRICE/ADJUSTED
Adj. yP/B (a) VALUE VS. 2008E ROAE
2.5x =
Principal 0.4123e9.3817x R2 = 0.815
2.0
Manulife
Implied NFS
(Analyst Est.(b)) Torchmark (11.4%, 1.20x) Implied Share Price:
Ameriprise
1.5 Prudential
Sun$46.92
LifeProtective
Lincoln MetLife
1.0
Implied NFS (Mgmt Est.) Genworth(11.3%, 1.19x) Implied Share Price: $46.64
0.5
5% 10% 15% 20%
2008E
Source: ROAE
FactSet (5/15/08) andforcompany filings.excludes pre-tax annual run-rate target of $27.0mm. (a) Adjusted to exclude accumulated other comprehensive income.
Note: Management
(b) Based estimate
on analysts that have 2008E ROAE
updated
PRICE/ADJUSTED
Adj. P/B (a) BOOK VALUE VS.or2009E
confirmed
ROAEestimates since first quarter earnings release.
2.5x y = 0.3662e9.4736x
Principal R2 = 0.7083
Implied NFS
Manulife
(Analyst Est.(b)) 2.0(12.5%, 1.20x) Implied Share Price: $46.92
Torchmark
Prudential 1.5 Ameriprise Sun Life MetLife
Protective Lincoln
1.0
Genworth
Implied
0.5 NFS (Mgmt Est.) (12.4%, 1.19x) Implied Share Price: $46.35
8%
2009E ROAE 20% 24%
12% 16%
33
LAZARD
Nationwide
Valuation
Selected Precedent
($ in millions) Life Transactions
Announce%
Date Acquiror Equity
TargetPrice/Book
Acquired Price/Earnings
Value (b) ReportedPremium to Unaffected
Adjusted (c) LTM Share
(d) FY1Price
(e) 1-Day 1-Week
5/17/07 (a) American
7/12/06 Lincoln
Aviva AmerUs Financial
100% Great1.93
2,916 American
1.79 14.9Resources
13.8 17%19%30%$ 1,194
18% 1.08x 1.12x 15.2x 13.1x 1-Month
13% 15% 12%
10/9/05
1/31/05 MetLife National
Travelers Jefferson-Pilot
Life & Annuity 100%
Co. 7,510
100% 1.85
11,5002.25 13.4
1.28 13.5
1.54 9% 8%NA 11%
9/28/03 AXA
9/17/03 Manulife
MONY John100%
Hancock1,508100%
0.74 10,951
0.77 NM1.37NM1.68
6%12.6
8% 12.1
9% 19% 22%NA
13.2 25% NA NA
8/8/01 Nationwide
5/11/01 AIG Financial
American GeneralProvident Mutual
Corporation Life23,622
100% 100% 1,555
2.75 1.3517.4
2.85 1.41 NA 20%(f)
NA NA NA NA
10/18/00
5/1/00 (a)ReliaStar
ING AXA Group
100% AXA5,018Financial 40% 24,422 3.82 3.65 26.2 18.215.9
5% 9% 42%16%(f) 19%(f)
5/18/00
2/18/99 (a) Hartford
Aegon Hartford
Transamerica Life 2.54
100% 19% 2.37
9,7157,08918.2
1.70 2.8815.4
2.582.5475%
21.5 13.988%
19.413.3
35%
68%
19%
46% 40%
40% 43%
8/20/98 AIG
Since1.93x SunAmerica Inc. 100%
2002:2.25x 15.2x 13.8x 19% 30% 25% 18,820 5.05 5.43 35.2 33.3 26% 37% 28%
High
Mean 1.37 1.52 13.9 13.1 13% 16% 15%
Median 1.32 1.61
LowTransactions:
0.74 0.77 12.613.4
12.113.3
6%13%8% 9% 15% 12%
All
High 5.05x 5.43x18.3
35.2x 33.3x 75% 88% 68%
Mean 2.18
Median 1.852.31
2.25 16.8
15.2 22%
14.6 19% 29% 29%
Low 0.74
Source: 0.77 12.6
FactSet and 12.1 5% 8%
company 9% 25%
22%
filings.
Note:
(b) Minority
Fully diluted buy-in
equitytransactions
value shown
assuming in bold. (a)
acquisition Announcement
of non-recurring
100% of target. date of final offer.
(c) Excludes accumulated other
(d) Excludes
based net realized
on management investment gains/losses and
plan. charges. Assumes 35% tax rate forcomprehensive income.
adjustments when no disclosure is available. (e) Based on IBES median estimates, except for American Financial/Great American Resources, which is
(f)
34 Prudential PLC made an offer to acquire American General on 3/12/01. The unaffected share prices are measured from 3/9/01.
LAZARD
Summary Minority
Key assumptions forBuy-In Premiums
precedents include:
Pending
Minority and completed
buy-in transactions
transactions announced
(U.S. public since
targets) withJanuary 1, 1998
offer value in excess of $50 million
100% cash consideration
At least 51% MINORITY
held at announcement and 100% ownership after transaction
SUMMARY
Number of 1-Day 1-Week BUY-IN
4-Week PREMIUMS
Transactions Mean Median Mean Median Mean Median
FINANCIAL
14 35% 25% 38% 40% 36% 34%
SERVICES
ALL
44 40%OTHER
28% 42% 34% 49% 37%
INDUSTRIES
TOTAL Equity
58 39%Value
28% 41%Share
37% 46% 36%
Implied
1-Day 1-Week 4-WeekPer
Premium
25% 49.31 to Unaffected
$ 47.41 NFS Share Price:
$ 51.56 $ 52.56
30% 51.21 53.63
35% 53.10 55.69 54.67
56.77
40%
Source: 57.75 58.87
SDC (5/16/08). 5/18/20
35
LAZARD
V Supplemental Cash Flow Valuation
LAZARD
Nationwide
V SupplementalFinancial
Cash Flow Valuation
Supplemental
millions, Cash
exceptFlow Valuation Summary
x($xin Midpoint
Low High
per share amounts)
Actuarial Analysis:
Milliman Valuation Range (a) $ 7,801.3 $ 8,502.0 $ 9,323.3
Discounted
Nationwide Cash
Funds Flows:
395.7178.0
431.8253.0
470.4
Nationwide
Balance Bank
Sheet 116.0
Based:
Other Non-Life
Implied Entities
Enterprise Value 286.2 286.2$ 286.2
$ 8,599.2 9,398.0 $ 10,333.0
Less: 1H
Less: Market
2008Value of Corporate
After-Tax CorporateDebt(1,424.5)(1,424.5)(1,424.5)
Interest(30.2)(30.2)(30.2)
Less:
Implied1HEquity
2008 Shareholders’
Value $per Dividends(76.1)(76.1)(76.1)
7,068.5 $$ 7,867.2 $56.50
8,802.2
Implied
x x Amounts set forth in the presentation,$ dated
Equity Value Share 50.88 $ 63.07
(a)
utilizeNon-Life
the Milliman Report in order to prepare MaySupplemental
this 19, 2008 (theCash
“MillimanValuation
Report”),Summary.
prepared for
In the Special Committee by valuation
Milliman range
covering the
the businesses describedfrom
therein
the(the “Covered Businesses”).
ownThe Special Committee requested Lazard to and
Other Entities,
assume responsibility foras applicable,
any for purposes
of such information orhereof.
for anyIn includingFlow
independent information
verificationfrom the 5/18/20
thereof.
so doing,
Milliman ReportLazard
in this used the
Supplemental Cash Flowfor Covered
Valuation Businesses
Summary, Milliman
Lazard is relying Report and
on the accuracy anditscompleteness
valuations for the
of such Company’s
information Funds,
and does Bank
not
36
LAZARD
Nationwide
Cash Flow Valuation
Nationwide
($ inincome Funds
millions) – Discounted Cash Flow Analysis
Net
Assumed 5% projections
ofFlows based
net income on management
retained as workingplan
capital
Projected
For 2008E Cash
the Fiscal Year2010E
Ended2011E 2012E
2H
Unlevered 2009E
Net Income $ 13.8 $ 28.3 $ 30.7 $ 33.2 $ 35.9
Less:Cash
Free Retained
FlowsCapital(0.7)(1.4)(1.5)(1.7)(1.8)
$ 13.1 $ 26.9 $ 29.2 $ 31.5 $ 34.1
Implied Value
Discount P/E Exit16.0x
Multiple
.Rate
. . 14.0x
10.0%
15.0x
$ 423.7 $ 447.0 $ 470.4
11.0% 409.4
12.0% 395.7 431.8
417.2 454.2
438.8
Implied 2008E
Discount P/E P/EMultiple
Exit Implied P/E
Perpetuity Growth Rate
Exit Multiple
Rate 14.0x
10.0% 15.4x15.0x
16.2x16.0x
17.1x14.0x
2.7%15.0x
3.1%16.0x
3.5%
11.0% 14.8
12.0% 14.4 15.7
15.1 16.5
15.9 3.6%
4.5% 4.1%
5.0% 4.5%
5.4%
Source: Company Information.
Note: Cash flows discounted to 6/30/08. Implied value includes free cash flow for first half of 2008E.
37
LAZARD
V Supplemental Cash Flow Valuation
Publicly Traded Mutual
($ in millions) Fund Managers
12/31/07 Market
CompanyResources
AUM Cap.Calendarized P/E LTGR
2008E 2009E
Franklin
T. Rowe500,100 $ 643,700
Price 400,000 17,257 $25.7
24,703
21.914.3x
13.5% 12.8x 12.0%
Invesco
Eaton Vance 12,454
152,909 16.6
5,145 13.7
21.7 12.0%
18.6 16.0%
Janus 206,700
Federated 4,855301,616
Investors 24.2 19.1 10.0%
3,759 14.8 13.4 10.5%
Waddell &
Calamos Reed 1,901
46,208 64,86821.7
2,952
15.020.5 15.6 13.2%
14.0%
GAMCO
High 25.7x31,013 1,438
16.0%22.6 18.9 8.8%
21.9x12.2%
Mean
Median 20.2 16.6
21.7 15.6 12.0%
Low 14.3
Nationwide 12.8 8.8%
Funds $30,171 —company
— — 8.0%
Source:
38 Factset (5/15/08) and filings.
LAZARD
Nationwide
Cash
Weighted Average
LeveredComparables
Cost CostFlow
of Debt/ Debt/
Valuation
of Capital Analysis – Mutual Funds
Unlevered
Public
Franklin Resources Beta
1.57 Equity
11.9% Mkt.0.6%
0.6% Cap. Total Cap. Beta
T. Rowe
Invesco Price 1.61 12.1%
1.68 1.73
12.4% 10.2% 0.0%
9.3% 0.0% 1.61 1.57
1.581.63
Eaton
Janus Vance
1.96 13.9% 12.7%
23.2% 9.7%
18.9% 8.9%
1.72
Federated&Investors
Waddell Reed 1.66
1.70 12.3%
12.5% 1.4%
6.8% 1.4% 1.65
6.3%
Calamos 1.83
GAMCO 1.50 13.2%
11.5% 27.6%
10.4% 21.6%
9.4% 1.57 1.63
1.41
Mean 1.69
Median 1.6812.5%
12.4%10.0%
9.7% 8.5%
8.9% 1.60
1.61
Debt/
Total0%Debt/
Cap. Relevered
Equity Beta Cost
Equityof
0%
5% 5% 1.61
1.66 12.1%
12.3% 12.1% RiskWACC
11.9% Market Free Assumptions
Rate
Risk (U.S. 10-Year
Premium 5.1%(a)Note as of 5/15/08) 3.9%
10%
15% 11%
18% 1.71
1.77 12.6%
12.9% 11.7%
11.6% Cost of
Marginal Debt
Tax6.5%
Rate 40.0%
20%
25% 25%
33% 1.85
1.93 13.3%
13.7% 11.4%
11.2% Definitions
Debt: Capital:
FinancialDebt
Debt(Book Value) + Equity (Market Capitalization)
30% 43%
Levered 2.02
Beta: 14.2% 11.1% Total
Barra’sAssociates.
predicted beta (4/30/08) x
(a) Source:
39 Ibbotson Based on geometric mean.
LAZARD
Nationwide
Nationwide BankCash
($ in millions)
Flow Valuation
– Discounted Cash Flow Analysis
Projections
Assumes year based
20 on management
valuation equal toplan and
book long-term
value trending
($2.7 billion)
Projected
For 2008E Cash
the Fiscal Flows
Year Ended2011E 2012E 2013E 2014E 2015E 2016E 2017E
2H
Net Income 2009E
$ 3.0 2010E
$ 10.1 $ 14.0 $ 23.3 $ 38.7 $ 55.5 $ 72.0 $ 88.3 $ 104.5 $ 122.0
Less:Cash
Free Required
FlowsCapital(2.2)(68.4)(76.4)(117.3)(151.8)(129.1)(90.7)(77.5)(85.2)(93.8)
$ 0.8($ 58.4)($ 62.4)($ 94.0)($ 113.1)($ 73.6)($ 18.6) $ 10.8 $ 19.2 $ 28.2
KeyIncome
Net Operating Metrics:
Growth 102.6%
ROAE 4.2%
Projected Cash5.5%
Flows5.5% 6.6%230.9%
(cont’d)
39.1%
8.0% 8.9% 66.7%
9.8% 65.9%
10.8% 43.5%
11.6% 29.7% 22.6% 18.3% 16.8%
12.3%
For
2018Ethe2019E
Fiscal 2020E
Year Ended
2021E 2022E 2023E 2024E 2025E 2026E 2027E
Net Income
Less:Cash $
Required 134.0 $ 147.2 $ 161.7 $ 177.6 $ 195.1 $ 214.4 $ 235.6 $ 258.9 $ 284.5 $ 312.7
Capital(103.2)(113.5)(124.8)(137.3)(151.0)(166.1)(182.7)(201.0)(221.1)(243.2)
Free
KeyIncome Flows
Operating $ 30.9 $ 33.7 $ 36.9 $ 40.3 $ 44.1 $ 48.3 $ 52.9 $ 57.9 $ 63.4 $ 69.4
Metrics:
Net
ROAE 12.3% Growth
12.3%9.8%12.3%9.8% 9.8%
12.3% 9.9%12.2%
12.3% 9.9% 9.9%
12.2%9.9% 9.9%
12.2% 9.9%
12.2% 9.9%
12.2%
IMPLIED
Discount VALUE
Rate12.0%
$10.0%
253.0
Source:
11.0%
$ 178.0
Company $ 116.0
Information.
Note:
40 Cash flows discounted to 6/30/08. Implied value includes free cash flow for first half of 2008E.
LAZARD
Nationwide
Cash Flow Valuation
Other Non-Life Entities
($ in millions)
Assumed
Entity Valuation $Methodology
NF Reinsurance
NFS Distributors 9.2 Statutory
14.6 Surplus
Pension
NWF Associates 1.4Tangible
StructuredServices Tangible
Products
Book
Book Book
7.5Tangible
Tangible
TBGServices
RIA Insurance3.2 Tangible 0.1
Book Book
Nationwide
NFS Holding Bank (Trust 204.3
Company allocation) 46.0 reflects
Primarily Tangiblemarket
Book value of
investments
Total $ 286.2held by holding company
xSource: Company information.
Note:
41 As of 12/31/07.
LAZARD
Nationwide Financial Flow Valuation

V Supplemental
Estimated MarketCash
($ in millions) Valuation of Corporate Debt
Current
Size Maturity Coupon Rating Ranking YTM Price MTM$ Value
$300.0 11/15/2011
300.0 2/13/2015 6.250%
7/1/2012 5.900% A3, A3, A- Senior
A- Senior Notes
Unsecured 5.15%
Notes 103.5 101.6
5.45% $ 310.5
304.998.5 197.0
200.0
200.0 5.625% A3,
A3, A- Senior Unsecured Unsubordinated 5.90%
100.0 10/1/2015
400.0 5/15/2037
5.100%Baa1,
3/1/2037 7.899%
6.750%
A-
Baa1,
Senior
BBB
BBB
Notes
Junior
JuniorSub
Sub
6.00%
Notes 94.7
8.41%
Debentures
189.4
94.5 94.5
8.41% 82.1 328.3
$ 1,500.0
Note: $ 1,424.5
Pricing as of 5/15/08. YTM from Trace, Bloomberg and Lazard estimates.
42
LAZARD
Nationwide
Appendix Financial
LAZARD
A Supplementary Financial Information
LAZARD
NFS
AVERAGEClass ADAILY
Trading Volume
TRADING VOLUME
Volume
800 2.0%(000s) ADV as % of Float
627
600 1.5%
1.4%
408
400 1.0%
0.9%
0200 0.5%
0.0%
Average 1Daily
Year Prior
Volumeto Offer
(000s)Since
ADV Offer
as % of Float
TOTAL
Since TRADING
Offer (47 VOLUME
Trading Days) / FLOAT
65.7%
Pre-Offer
Pre-Offer (47
(66 Trading
Trading Days)
Days) 48.8%
65.7%
ANNUALIZED
Offer Price $ RETURN
47.20
Current Share
Annualized Price $ 51.00(a )4
Return(19.1%)
(assuming
Source: 4-month
FactSet close)
(a)
43 Adjusted for (5/15/08).
$0.29 per share dividend on 7/14/08.
LAZARD
Minority
FINANCIALBuy-In Premiums
SERVICES
Announ.
Date DateEffective
Acquiror Acquisition
TargetMutual
1-DayPremiums
1-Week 4-Week 45% 45% 32%
7/17/2007 4/15/2008
9/28/2007 Alfa
2/22/2007 9/27/2007 American Alfa Corporation
Financial Group Great American
1/24/2007
11/20/2006 4/20/2007 AIG 21st Century
Toronto-Dominion Insurance
Bank TD 33% 31% 23% Financial
Banknorth
Resources 13% 15% 12%
3/21/2006 5/24/2006
10/10/2001 11/27/2001Erie Indemnity Erie Family
Toronto-Dominion Life Insurance7%
BankCompanies
TD Waterhouse 7% 8%
17%
Group
7%21%
53% 49% 33%
6/6/2001 12/13/2001
3/26/2001 8/21/2001 LibertyCSFBdirect
CSFB Mutual Insurance
140% 102% 74% 25% 40% 40%
7/24/2000 6/27/2000
3/27/2000 1/11/2001 Phoenix
Hartford Home LifeServices
Financial Mutual PhoenixHartford
Investment Partners 44% 40%
19%63%
3/21/2000
1/19/2000 4/20/2000
4/19/2000 Citigroup Travelers
Metropolitan PropertyGroup
Life Insurance CasualtyCorp
Conning
Life(ITT
25% 16%
39% 35% Hartford)
39% 52%17% 21%
40% 43%
10/27/1998
10/22/1998 12/14/1998
4/29/1999 Allmerica
Bank Financial
of America Citizens
National (Hanover
Trust Insurance)
BA Merchant 21%
Services (BankAmerica) 47% 56% 42%
Mean 35%
Median SDC 38%
25% 40% 36%
34%
Source:
44 (5/16/08).
LAZARD
A Supplementary Financial (cont’d)
Information
Minority
ALL OTHERBuy-In Premiums
INDUSTRIES
Announ.
Date DateEffective
Target 1-DayPremiums
1-Week 4-Week
10/9/2006 6/22/2007
6/6/2007 5/16/2006 VNU
OplinkNetRatings
10/31/2007Lafarge 44%
Communications 45% 46%
2/6/2006
9/1/2005 11/9/2005 IYG SA
Holding Lafarge
7-ElevenNorth OCPI 11%33%
America 10%34%
10%38%
7/8/2005 10/28/2005
7/1/2005 3/22/2006 Absolut
Santos Spirits
Ltd. Cruzan 32%
Tipperary
31% 14%
International 12% 9% 9%
2/21/2005 4/21/2005
1/27/2005 7/26/2005 Danisco
Novartis Genencor 11% 8%16%
19%
Eon Labs International 36%
23%24% 22% 16%
8/2/2004 8/22/2003
6/2/2003 12/8/2004 ICN
Cox Enterprises Cox Communications
Pharmaceuticals Ribapharm 23% 26% 50%
24% 25% 25%
12/13/2002 9/29/2003Samuel
7/26/2002 4/11/2002
2/28/2003 Savia SA de CV(Pulsar)
J. Heyman Seminis
International 48% 45%
Specialty 45% 4% 2% 34%
Products
2/19/2002
8/21/2001 9/6/2001 Sabre
2/26/2002Bacou
Thermo Holdings
Electron Travelocity.com
Spectra Physics46% 40% 22%
28%(1%)(8%)
5/30/2001
5/23/2001 10/31/2001 SA
9/28/2001 Electronic Bacou USA
Data Systems 22% 17% 11%
Unigraphics Solutions 53% 69% 81%
5/14/2001
12/29/2000 8/31/2001 Seneca
7/2/2001 Benesse Investments
Berlitz Agency.com
International 63%
106% 103% 45% 162%
12/14/2000
10/27/2000 3/16/2001 O. Gene
Enron Bicknell
Azurix NPC135%
(Enron) International 11%113%
135% 135% 7% 32%
9/21/20009/14/2000
7/9/2000 3/9/2001 Ford Motor
Invitrogen Hertz
Life 46% 43%
Technologies 12%
(Dexter) 22% 22% 20%
3/17/2000 6/20/2000
3/14/2000 9/15/2000 Alcoa
BP Amoco
HowmetVastar Resources 14%
International 16% 13%
35% 14%
69%
1/31/2000
Source: 4/20/2000
SDC Thermo
(5/16/08). Instrument Systems Thermo BioAnalysis 51% 56% 53%
45
LAZARD
A Supplementary Financial (cont’d)
Information
Minority
ALL OTHERBuy-In Premiums
INDUSTRIES (cont’d)
Announ.
Date DateEffective
Target 1-DayPremiums
1-WeekSystems
4-Week Thermo Optek 7%(5%) 41%
1/31/2000 5/12/2000
1/31/2000 2/9/2000 Thermo
5/12/2000Elyo
Thermo Instrument
Instrument Systems ThermoQuest
1/19/2000
12/8/1999 6/19/2000 Trigen
Heico Cos. Energy 38% 42%46%
Robertson-Ceco 32%44% 42%36% 47% 62%
12/1/1999 4/19/2000
10/20/1999 6/6/2000 Boise Cascade
Thermo Boise
Electron Cascade
Thermoretec Office
27% Products
33% 35% 43% 55% 60%
6/3/1999 7/30/1999
5/7/1999 6/16/1999 McDermott
Roche Holding GenentechJ.279%
International Ray 282% 279%
McDermott
4/12/19998/15/1999
4/1/1999 6/30/1999Vivendi
InvestorAqua
Group Meadowcraft
Alliance 29%Knoll65%
19% 63% 78%17% 13% 19%
102%
3/24/1999 11/4/1999
3/21/1999 7/1/1999 Warburg
Viacom Pincus
Spelling Ventures
Entertainment (Warburg
Group Pincus)
8% 43% 55%84% 52% 46%
10/16/1998 2/12/1999
9/23/1998 11/2/1998
12/17/1998 Affiliated
Usinor J&L Computer
SpecialtyServices BRC113%
Steel 100% Holdings
38%17% 42%17% 15%
4/30/1998
3/17/19985/20/1998 Dow
7/31/1998Xerox AgroSciences
Investor Group BET Mycogen
Holdings(Dow
4%15% AgroSciences)
14% 18% 40% 52%
3/5/1998
1/22/19981/30/1998
9/29/1998Rayonier XLConnect
Koninklijke KNP BTSolutions(11%)
NV BT Office 22%
Products International 33% 79% 79%
1/8/1998
Mean 40% 42% 49% Rayonier Timberlands 11% 25% 18%
Median
All 28% 34% 37%
Transactions:
Mean
Median39%
28%41%
37% 46%
36%
Source: SDC
46 (5/16/08).
LAZARD
Nationwide
B Property &Financial
Casualty Rating Comparison
LAZARD
Nationwide
B Property &Financial
Casualty Rating Comparison
Property
A.M. Best&BCAR
Casualty
Financial Rating
Strength Comparison
Rating xS&P
Company
Nationwide A.M.
Mutual 272.9Best
A+Moody’s
Aa3 A+ Stable
Outlook Stable
Allstate 229.6 Outlook
A+ Aa2 AAStable Outlook
Outlook
Chubb Stable Outlook Stable Outlook Stable
Outlook287.1
Liberty Mutual
A++
Stable Aa2 AA
Outlook
193.2 A Stable
A2 A Outlook Stable
Outlook
State Stable
Farm Outlook
297.5 A++ Aa1Negative
AA Watch Negative
Outlook
TravelersStable
245.0 Outlook
A+ Aa3 Stable
AA- Outlook Stable
Outlook Stable
Source: Rating Watch
agency Positive
reports. Outlook Stable
47
LAZARD
Nationwide
C AdditionalFinancial
Company Information
LAZARD
Nationwide
Company –Information
Individual
2007 SALES Investments
2007 VARIABLEOverview
ANNUITY SALES
Advisory
Private Services Label
PRODUCTS
Income Best of 2% Fixed 8% Annuities 3%
Products America
Independent Variable
Affiliated 92% 4% Annuities 91%
Broker/Dealers
9% Wirehouse/
36% Regional Firm 30%
DISTRIBUTION
Non-
Financial
$6.1bn Affiliated Institutions 91% 34%
$5.6bn
5/18/20
Source: Company filings.
48
LAZARD
Nationwide
Individual
INDIVIDUAL Investments
VARIABLE Sales Growth by Product
ANNUITIES
50%
36% 40%
22%
25 18% 18% 3% 0
(10%)(13%)
(25)(15%)(16%) (23%) (32%) (50)
2004of
Best 2005 2006 2007
America Private Label Total
OTHER
625% PRODUCTS
604% 75 50
28%
17% 17%
25 10% 0
(25)(4%)(4%)(6%) (16%)
(50)(34%) (53%) (75)
Source: Company 2004(77%) 2005 2006 2007 Fixed Annuities Income Products Advisory Services
filings.
49
LAZARD
Nationwide
C Additional Financial
Individual Investments
NON-AFFILIATED Variable Annuity Sales Growth by Channel
60%
51% 50 43%
40
33%
30
23%
20 15%
10 15%
0(9%)
(10)(15%) (9%) (17%) (20)(23%) (19%)
(30)
2004 2005 2006
Independent 2007
Broker/Dealers
Source:
50 Company filings. Wirehouse/Regional Firms Financial Institutions
LAZARD
Nationwide
Individual Investments
($ in millions) Account Value Activity
NET
15 13% FLOWS $1,500 20%
$948 1,000
$676
500 10
50 2%
0($81)
(5%)(2%) (1%)(3%)(5) (1%) (500) (10%)
($ 555)(10)
($799) (1,000)($883)
(15)
($ 1,098)
(20)
(25) (1,500)(21%)
($1,716)
($ 2,011) (2,000)($1,913)
(30) (31%)
(2,500)(35) 2003
Variable Flows/BOP
Annuities 2004
Fixed2005 2006 2007
Annuities
Variable
Source: Company Account
filings. Value Fixed Flows/BOP Account Value
ACCOUNT
30% VALUE GROWTH
22%
20 18%
10
7% 7%
05%
(2%)
3%
(10)
(10%)
(20)(19%)
(30)(28%) 2003 2004 2005 2006 2007
Variable Annuities
5/18/20 Fixed Annuities
51
LAZARD
Nationwide
Company Information
Individual
ANNUAL Investments
GROWTH – Financial Trends
40%
30 5.9% 34.8%
25.4% 20
10
2.8% 2.7% 0
(0.1%)
(3.7%) (10) (11.0%) (20) 2004 2005 2006 2007 Operating Revenues Pre-Tax Operating Earnings
MARGINS
25%
15 2.02.5%
20 13.9% 16.4%20.5%
1.5 16.4% 14.6%
1.37%
10 1.27%1.42%
1.27% 1.30% 1.00.37% 0.37%
50 0.5 0.47%
0.0 2003 20040.43%
20050.43%
2006 2007 Pre-Tax Operating Earnings/Operating Revenues Asset Fees/Average Separate Account Values General Operating Expenses/Average Account Values
INTEREST
2.1% SPREAD ON GENERAL ACCOUNT
1.98%
2.0 1.57%
1.92% 1.93% 1.9 1.78% 1.8 1.83% 1.7 1.78% 1.62% 1.71% 1.6 1.66%
1.5
1.4
2003
(a) 2004 2005 2006 2007
Base Spread
Source: Total filings.
Company Spread
(a) Excludes
RETURN prepayments/bond calls.
18%
12 16.7%ON
10.7% 16AVERAGE ALLOCATED
13.5% 14 12.3% CAPITAL
10 8.6% 8
062003
42
2004 2005 2006 2007
5/18/20
52
LAZARD
Nationwide
Company Information
Retirement
2007 PRIVATEPlans – Overview
SECTOR SALES 2007 PUBLIC SECTOR SALES
Other
Best of4%
457 Plans America 36% Annuity 17%
PRODUCTS
Best of AmericaOnly
Trust64%
79%
Administration
Pension Plan
Affiliated Administrators 3% 8% Financial Institutions 9%
DISTRIBUTION
Wirehouse/
Regional Nationwide Firms Retirement 18% Independent Solutions Broker/Dealers 100% 62%
$6.4bn $4.3bn
53
LAZARD
Nationwide
Company
Retirement
PRIVATE Plans – SalesInformation
Growth by Product
60%
45 53% PENSION PLANS
30
16% 23%13% 14%
15
(15)7% 6% 7% 0
(10%)
(13%) (17%)(18%) (30)
2004of
Best 2005 2006 2007
America Annuity Best of America Trust Total
PUBLIC
25% 22%PENSION PLANS
20
15
10% 6%9%
510
1%2% 5%
0Plans
(1%)Administration
(5) 2004 2005 2006 2007
457
Source: Company filings. Only
54
LAZARD
C Additional Company Information
Retirement Plan
NON-AFFILIATED – Private Pension Plans Sales Growth by Channel
30%
24%
20%
16%
15
12%16%
14%12%
5% 5%
(15) 8%10%
2% 0 (2%) (1%) (5%)
(17%)
(30)
2004 2005 2006
Independent 2007
Broker/Dealers Wirehouse/Regional Firms Financial Institutions Pension Plan Administrators
Note: 100% of public sector pension plans are sold through Nationwide Retirement Services.
55
LAZARD
Nationwide
Company Information
Retirement
($ in millions)Plans – Account Value Activity
NET
$1,606 FLOWS
1,600 $1,800 12%
10 $1,395
$1,001 1,000 $9371,400
$1,384 6% $1,301 $1,312 $1,243 $1,210 1,200 8
6%
6% 6
4% $827
600 4% 800 5%
4 400 3% 3% 2
3% 3%
200
0 0 2003Sector
Private 2004 Public
2005 2006 2007
Sector
Private
ACCOUNT Flows/BOP
VALUEAccount
GROWTH Value Public Flows/BOP Account Value
50%
47%
45
40
35
30
25%
20 25
16%
15
13% 10%
10% 12% 10% 10
05(1%)
3%
(5)Sector
2003 Public
2004 2005 2006 2007
Private
Source: Company Sector
filings.
56
LAZARD
Nationwide
Company Information
Retirement
ANNUAL GROWTH Plans – Financial Trends
20%
17.2%
15.6%
14.2% 15
10
6.4% 6.7% 5.2% 4.4% 5
2.7%
02004 2005 2006 2007 Operating Revenues Pre-Tax Operating Earnings
MARGINS
25% 1.0%18.3%
22.0%0.80.78% 19.8%
20
15 18.7%
0.70% 0.6 0.39% 16.7% 0.74% 0.72% 0.75%
510
0 0.2
0.4 0.44%
0.0 2003 2004
0.37% 0.39% 0.36%
2005 2006 2007 Pre-Tax Operating Earnings/Operating Revenues Asset Fees/Average Separate Account Values General Operating Expenses/Average Account Values
INTEREST
2.2% SPREAD ON GENERAL ACCOUNT
2.08%
1.98% 2.12.0
1.90%
(a) 1.90% 1.9 1.81% 1.8 1.87% 1.80% 1.79% 1.7 1.72% 1.70% 1.6 2003 2004 2005 2006 2007
Base Spread
RETURN Total Spread
25% 23.4%ON AVERAGE ALLOCATED CAPITAL
20.7%
19.8%
20 18.9% 17.4%
15 10 5
02003 2004 2005 2006 2007
Source:
(a) Company
Excludes filings.
prepayments/bond calls.
57
LAZARD
Nationwide
Company Information
Individual
2007 Year
SALESProtection – Overview
2007 SALES
First
PRODUCTS Traditional/ Variable 26% Universal Life Life 36% 32%
Renewal 74%
COLI 32%Institutions
Financial
Wirehouse/ Nationwide
4% 21%
5% Financial
Non-RegionalTBGFirms Network
Affiliated
57% 13%Mullin
DISTRIBUTION 43% Afilliated
Total:Nationwide
Source:$1.7bn
Company
Agents 22% Independent
filings.
Broker/Dealers 16% Life Specialists 19%
58
LAZARD
Nationwide
Company Information
Individual
VARIABLE Protection
LIFE – Sales Growth by Product
15% 9%
52%0% (5)(2%)(0%)(1%)
CORPORATE OWNED(4%)(2%) (6%)(6%)(7%) (15)(11%) 2004 2005 2006 2007
LIFE INSURANCE
80%
16% 74%
23% 45%
40 10% 4% 5% 0
(40)(9%)(5%)(9%)
(31%) (80)(54%) 2004 2005 2006
TRADITIONAL/UNIVERSAL 2007
LIFE
48%
30 18%50%
6% 3%1%
10 2% 5%1%7%(10)(2%) (3%)(8%)
2004
TOTAL 2005 2006 2007
40%
20 4% 36% 11% 3% 7%
2% 1%3% 0
(20)(3%)(1%)
(11%)
First (40)Sales
Year (31%) 2004 2005
Renewal 2006 2007
Source:
59 Company filings. Sales Total
LAZARD
Nationwide
Company Information
Individual Protection
NON-AFFILIATED – Sales Growth by Channel
60%
52% 50
40
27% 30 14%
23% 12% 10
20
1% 19%
5% 2%
0 2%
0%(1%) (1%) (10)(4%) (9%) (20)
(30)
(40)
(50)(43%) 2004
Independent 2005 2006 Wirehouse/Regional
Broker/Dealer 2007 Firm Financial Institutions Life Specialists
AFFILIATED
60%
50%
40
20 14%
2% 1%(1%)
(1%)(3%)(2%) (3%) (6%)
0(1%)
(18%)2005
(20) 2006
2004
Mullin 2007 Agents
TBGFinancial
Nationwide
Nationwide
Source: Network
Company filings.
60
LAZARD
Nationwide
Company Information
Individual
OPERATING Protection
REVENUE– Financial
GROWTH Trends
4%
02.9%
(1)
3 2.2% 1.8% 2 1.4% 1.3% 1
(1.4%)(1.5%)
(2)(1.6%)
2004 2005 OPERATING
PRE-TAX 2006 2007 EARNINGS/OPERATING REVENUES
35%
29.7%
30 26.9%
24.5% 27.5%
24.9% 25.4%
25
21.5% 22.2%
22.0%
20 20.5%
17.1% 17.6%
13.6% 15.9%
16.6% 13.8%
12.9% 18.3%
15.9% 18.0%
515
02003 2004 2005 2006 2007
10
PRE-TAX OPERATING EARNINGS GROWTH
40%
31.4%
18.1% 30
20 14.5% 12.5%
10 5.6%
0(3.0%)
(10)(8.8%)(7.5%)
Investment Life 2004 2005 2006 2007
General
RETURN Operating Expenses/Operating Revenues (Investment Life)
15%
11.8% 14.1%ON AVERAGE ALLOCATED CAPITAL
11.4% 11.3% 10.4% 10.2% 10.3%
510 8.8% 8.9% 8.0%
02003 2004 2005 2006 2007
Fixed Life
General Company
Operating filings.
Expenses/Operating Revenues (Fixed Life)
Source:
61
LAZARD
Nationwide
Company Information
Corporate – Overview
12/31/07 ACCOUNT VALUES
Nationwide
Nationwide Bank 11%
Medium Term Funds Group Notes 26% 63%
$7.2bn
NATIONWIDE FUNDS CUSTOMER FUNDS12%
Corporate
Individual and Other Individual
Investments 6% Protection
52% Retirement Plans 30%
$30.2bn
62
LAZARD
Nationwide
CompanyTrends
Information
Corporate – Financial
($ in millions)
INCOME
30% 27.0% STATEMENT
2518.6% 19.4% GROWTH
19.6%
ACCOUNT 19.1% VALUE GROWTH 20 14.7% 14.6% 15 10 5 0 (5) (10) (15) (20) (17.8%) (25) 2004 2005 2006 2007 Operating Revenues Pre-Tax Operating Earnings
280%
259% 31%
30 15% 20
10
0(4%)
(2%)
(30) (10) (9%)(6%) (9%) (20)
(40)(33%)
MTN 2004
NET15%FLOWS2005$595
2006$600
200730%
Medium Term Notes Nationwide Bank Nationwide Funds
0400
0 $335
(5%)($70)
20 200 8% 10 (2%)
(200)(10)
($ 215) (9%)
(400)(20)
($ 405) 2003 2004 2005 2006 2007 Net Flows As % of BOP Account Value
(600)(30)
MTN SPREAD
2.0%
1.53%
1.5
1.30% 1.29%
1.15%
1.37% 1.08%
1.0 1.15%
1.10% 1.08%
0.89%
0.5
2003 2004
Source: 2005 2006
Company 2007 (a) Base Spread Total Spread
filings.
(a)
63 Excludes prepayments/bond calls.
LAZARD
Nationwide
Company Information
NFS
TOTAL– Investment Portfolio
INVESTMENT Composition
PORTFOLIO
Short-Term
3% 3% Other Investments
Long-Term Policy Loans 3%
Investments
Mortgage Loans on Real Estate,
Fixed Maturity Securities 70% net 21%
$39.1bn
FIXED MATURITY PORTFOLIO
OtherPublic
14% Asset-backed 4%Securities
Corporate Securities34%
Mortgage-backed
Private Corporate Securities
Securities 26%
22%
$27.2bn
64
LAZARD
Nationwide
CompanyPortfolio
Information
NFS
($ in –millions)
Fixed Maturity
GROSS UNREALIZED GAINS/LOSSES
Gross Losses
Unrealized
Gains
U.S. Treasury securities $U.S.
17.4Government
$ 0.9
Agencies
Obligations not backed
of stakes the 61.5 1.7
— 2.8
Debt securities
Corporate issuedand
securities
political
by foreign subdivisions
governments 2.5 0.3
Public 175.2
Private 135.7 178.8
66.9
Mortgage-backed
Asset-backed securities
securities 33.440.3
184.5108.2
Total
RATINGSFixed Maturity Securities $ 467.7 $ 542.4
B/Caa
Baa 24% or lower/ In or near default Ba 2% 4%
Aaa/Aa/A
70%
$27.2bn
65
LAZARD
Nationwide
Company Information
NFS – MBS/ABS
COLLATERAL Portfolio
CLASSIFICATION
Sub-Prime
Government 7%Prime Agency 14% 33%
Alt-A 20%
Non-Mortgage Collateral 26%
$10.9bn
RATINGS
ALT-A
BBB andSUB-PRIME
below AA
1%
1%
A 4%
AA 22% AAA
AAA 99%
VINTAGE 73%
ALT-A
2007 4% SUB-PRIME
2007 Pre-2005
20%
23% Pre-2005
59%
2006 25%
2006
2005 2005 25% 32% 12%
$2.2bn $0.8bn
66
LAZARD
Nationwide
Company Information
NFS
($ in –millions)
Mortgage Loan Portfolio
Apartment
Regional &
Exposure / Property
New
Middle England
Atlantic$ 141.1
172.9 $278.0 $Type
27.1 355.5 Office
78.3164.0 Warehouse
$ 92.5970.4
$ 339.0 Retail Other Total
East
West North
North Central
Central 91.2
34.9 239.2
70.7 555.8152.3
77.0 491.7334.9
1,377.9
SouthSouth
East Atlantic 155.9
Central 494.1
25.8 45.0 737.1
122.0562.4 1,949.5
154.0 346.8
West South123.0
Mountain Central 22.8
138.1 170.1
168.4 179.7
359.4 242.4 615.0
788.9
Pacificprincipal
Total 333.0 434.5 438.6
$ 1,100.6 $386.2 1,592.3
1,896.8 $ 2,712.4 $ 2,604.9 $ 8,314.7
Valuation
Unamortized allowance(24.8)
premium 12.9
Lower of
Cumulative cost or
change market
inon adjustment
fairreal
value on mortgage
of hedged loans
mortgage heldand
loans for commitments
sale(3.8) 17.1
Total
Source:mortgage
Company loans
filings. estate, net 8,316.1
67
LAZARD
Nationwide
Company Information
NFS – Separate
SEGMENT Accounts
Corporate
Individual and Other 1%58%
Investments Individual Protection
Retirement 18%
Plans 23%
$72.9bn
FUND TYPE
Money
4% 1% Market Other
Bond 12%
Equity 83%
$72.9bn
68
LAZARD

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EX-99.C.3 3 dex99c3.htm PRESENTATION MATERIALS

Nationwide Financial Flow Valuation

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