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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: SEPTEMBER 4, 1998 COMMISSION FILE NO. 1-12785
NATIONWIDE FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 31-1486870
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
ONE NATIONWIDE PLAZA
COLUMBUS, OHIO 43215
(614) 249-7111
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
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ITEM 5. OTHER EVENTS.
On September 4, 1998 Nationwide Mutual Insurance Company and
Nationwide Life Insurance Company (NLIC), a wholly-owned
subsidiary of Nationwide Financial Services, Inc, announced a
settlement in a class action lawsuit related to certain products
sold by NLIC.
NFS's news release issued on September 4, 1998 regarding this
announcement is attached as an exhibit to this report and is
incorporated herein by reference.
The information contained in this Current Report on Form 8-K
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% of the combined voting power of
all the outstanding common stock and approximately 81.5% 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 or A.M.
Best Company; and (xii) inaccuracies in assumptions regarding
future persistency, mortality, morbidity and interest rates used
in calculating reserve amounts.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit 99 News release of Nationwide Financial Services,
Inc. dated September 4, 1998
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATIONWIDE FINANCIAL SERVICES, INC.
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(Registrant)
Date: September 4, 1998 /s/ MARK R. THRESHER
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Mark R. Thresher, Vice President -
Finance and Treasurer
(Chief Accounting Officer)
EXHIBIT INDEX
Exhibit No. Description
99 News release of Nationwide Financial Services, Inc.
dated September 4, 1998
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FOR IMMEDIATE RELEASE
NATIONWIDE INSURANCE ANNOUNCES CLASS ACTION SETTLEMENT
COMPANY SAYS AGREEMENT PROVIDES RANGE OF OPTIONS
TO FAIRLY COMPENSATE POLICYOWNERS
COLUMBUS, OHIO - Nationwide Life Insurance and Nationwide Mutual
Insurance today announced that they have reached a settlement agreement in a
class action lawsuit concerning individual whole life, universal life, and
variable universal life insurance policies issued by the Company from 1982
through 1997. The Company said the agreement, which covers approximately 650,000
policyowners, serves the mutual interest of policyowners, Nationwide
shareholders, and the Company by providing substantial benefit to policyowners
and avoiding the disruption and expense of a lengthy court fight.
The Company said its decision to settle reflected a desire to address
policyowners' concerns and would enable it to focus its full energy on
continuing to meet its customers' financial and insurance needs.
The suit was filed with the New York State Supreme Court in February
1997. The proposed settlement was preliminarily approved by the Court on August
20, 1998, and a Fairness Hearing is scheduled for December 17, 1998. At that
Hearing, the Court will review the fairness and reasonableness of the proposed
settlement prior to issuing a Final Order and Judgment.
INTEREST RATE DECLINES CAUSED UNDERPERFORMANCE
"Nationwide has a long history of providing individuals with outstanding
insurance protection," said John C. Millen, Officer - National Media Relations.
"We value the tradition of professionalism and integrity set by our Company and
our agents, and we deeply regret that certain life insurance products did not
meet our customers' expectations. "This proposed settlement is a fair and
reasonable effort to compensate policyowners for any disappointed expectations
related to the performance of these products," Millen continued. The Company
said the inability to meet expectations was largely due to declining interest
rates.
RANGE OF OPTIONS GIVES POLICYOWNERS FINAL SAY ON COMPENSATION
Nationwide said the proposed settlement, which is subject to approval
by the New York Supreme Court in Syracuse, New York, provides policyowners with
a potential value of approximately $100 million in policy adjustments,
discounted premiums, and discounted products. The proposed settlement gives
eligible policyowners the right to choose from five compensation options under
General Policy Relief depending upon the type of policy initially purchased.
Class Members who believe they suffered specific harm may apply for alternative
relief under a Claim-Review Process.
"By providing a range of options, the proposed settlement enables
eligible policyowners to choose the option that best meets their needs," Millen
said.
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SETTLEMENT WILL NOT MATERIALLY AFFECT NATIONWIDE'S FINANCIAL CONDITION
The Company said the proposed settlement benefits shareholders by
reducing the Company's exposure and by establishing a fair and certain
compensation process that will have no material impact on the financial
condition of the Company.
The Company said an enhanced internal compliance program, evolution in
Company and industry practices and new regulatory safeguards will provide
policyowners with a better understanding of the potential benefits and risks
associated with certain products.
"Nationwide is fully committed to compliance with applicable laws and
regulations and will ensure that it operates in conformity with all state and
federal regulations," Millen said.
NATIONWIDE ESTABLISHES SETTLEMENT INFORMATION CENTER AND WEB SITE
Nationwide said it had established an extensive communications program
to inform policyowners about the proposed settlement, explain policyowner
options, and enable Class Members to take full advantage of the opportunities it
presents.
It said it was in the process of sending a detailed notice to some
650,000 eligible policyowners of the suit and proposed settlement, has
established a Class Action Call Center, and developed "user friendly" documents
to make sure that policyowners clearly understand their options.
The Company said that policyowners with questions or comments or who
need additional information should call 1-888-891-8154, or visit
the settlement Web site at www.nationwide.com/classaction
