Nationwide Mutual Agrees to Settle Claims

Nationwide Mutual Insurance Co. said it agreed to a $100-million settlement of claims that it misled customers who bought its life insurance policies. The agreement covers about 650,000 Nationwide policyholders involved in a class-action suit against the Columbus, Ohio-based insurer. Policyholders can apply to receive higher dividends, premium discounts or other benefits, Nationwide said. Nationwide, which is the sixth-largest U.S. property and casualty insurer and has about $68.5 billion in life insurance assets, said the settlement will not materially affect its financial condition. The company said reserves will cover benefits to policyholders resulting from the settlement. Shares of its life insurance unit, Nationwide Financial Services Inc., fell $1.75 to close at $43.44 on the NYSE. The 72-year-old insurer didn’t admit any wrongdoing. John Millen, a Nationwide spokesman, said it took the action to avoid a costly court fight. The settlement must be approved by the New York Supreme Court. Nationwide policyholders charged that the insurer led them to believe that dividends from their life insurance policies would cover their premiums after a few years. Dividends on the policies, which were sold from 1992 to 1997, actually decreased as interest rates fell, leaving customers to pay premiums longer than they expected, the suit said.