MILWAUKEE, Jan. 24, 2013 /PRNewswire/ -- Northwestern Mutual today announced its 2012 financial results, which include a record dividend payout to policyowners expected to exceed $5 billion in 2013. In addition, the company's insurance and annuity lines set new sales records, with annual insurance premium sales greater than $1 billion1 for the first time in the company's history.
"This past year's financial and sales performance was solid," said John Schlifske, chairman and chief executive officer of Northwestern Mutual. "We achieved record levels in new insurance premium sales and numbers of policies purchased, and that tells me our approach to helping people plan holistically for their financial future is compelling."
2013 record dividend payout expected to exceed $5 billion2One of Northwestern Mutual's primary measures of financial success is the amount of dividends it returns to policyowners. In a year marked by a weak but improving economy and lingering fiscal issues in Washington, Northwestern Mutual expects to pay the most dividends in its history.
Dividends reflect the company's favorable claims experience, low expense levels and returns on its diversified $174.0 billion investment portfolio.
Northwestern Mutual expects again to lead the U.S. insurance industry by a wide margin in total life, disability income and long-term care insurance dividends paid. It expects to pay approximately three timesthe ordinary life insurance dividends of its nearest competitor.
Financial strengthThe company's total surplus increased by more than $1.2 billion in 2012, totaling $19.4 billion at year end.
"Total surplus" (the combination of surplus and asset valuation reserve) represents an insurance company's capital position, a cushion for the unexpected that is maintained above and beyond the reserves it also holds to provide for future insurance benefits.
"In this low interest rate environment, it's something to both pay record dividends and add to our capital base," said Schlifske. "Still, we aren't immune from what is happening around us. We've had to be disciplined in our product decisions, adjust risk levels in our investment portfolio and make tough decisions related to long-term expenses."
Independent sources confirm the company's financial strength in a difficult environment. In 2012, Northwestern Mutual continued to receive the highest possible financial strength ratings awarded to any life insurer by all four of the major credit rating agencies.3
Record sales recorded in 2012The company's 2012 financial performance reflects a record level of insurance and annuity sales.
In 2012, Northwestern Mutual also set a new annual record for the number of insurance policies purchased. Including life, disability income and long-term care, policies purchased were up 13 percent over 2011 and represented the most purchased in any year in company history.
The company's combined 2012 new premium sales for life, disability income and long-term care insurance totaled $1.03 billion1, up 11 percent over 2011. Annuity sales also increased 11 percent to a record $1.7 billion1.
Financial planning approach driving successWhat is driving the company's strong results? According to Schlifske, it's a combination of consistent value, increasing brand awareness, a growing sales force and an emphasis on holistic financial planning with clients.
In 2012, the company set a recruiting record, bringing more than 5,000 full-time financial representatives and financial representative interns into its system. "We have more 'feet on the street,'" said Schlifske, "getting us in front of more people in more markets."
Schlifske said the company has made significant investments in an integrated financial planning approach that equips its financial representatives to address their clients' full range of financial needs.
"The focus on integrated financial planning serves people well," Schlifske said. "Seeing record sales in virtually all of our product lines – and that we are either number one or two in market share4 nationally in each insurance line – shows it works."
2012 financial resultsFollowing are highlights of the company's 2012 financial performance:
About Northwestern Mutual The Northwestern Mutual Life Insurance Company – Milwaukee, WI (Northwestern Mutual) – among the "World's Most Admired" life insurance companies in 2012 according to FORTUNE® magazine – has helped clients achieve financial security for more than 155 years.
As a mutual company with $1.4 trillion of life insurance protection in force, Northwestern Mutual has no shareholders. The company focuses solely and directly on its clients and seeks to deliver consistent and dependable value to them over time.
Northwestern Mutual and its subsidiaries offer a holistic approach to financial security solutions including: life insurance, long-term care insurance, disability income insurance, annuities, investment products, and advisory products and services. Subsidiaries include Northwestern Mutual Investment Services, LLC, broker-dealer, registered investment adviser, member FINRA and SIPC; the Northwestern Mutual Wealth Management Company, limited purpose federal savings bank; Northwestern Long Term Care Insurance Company; and Russell Investments.
1Annualized new sales figures reported here count premiums for life insurance policies paid for with a single premium at 10 percent. This is a common industry convention to put sales of single premium policies on a comparable basis to annual premium policies.
2Dividends may be declared and credited, at the Board of Trustees' discretion, when current experience in investment earnings, mortality, morbidity and expenses is more favorable than the original assumptions used to establish policy premiums. Northwestern Mutual has paid a dividend every year since 1872. Future dividends are not guaranteed.
3A.M. Best Company A++ (highest), 4/2012; Fitch Ratings AAA (highest), 12/2012; Moody's Investors Service Aaa (highest), 12/2012; Standard & Poor's AA+ (second highest), 6/2012. Ratings are subject to change.
4Northwestern Mutual U.S. market share rankings based on most current sales data provided by Life Insurance Market Research Association (LIMRA). For the 12 months ended Sept. 30, 2012: first in individual life insurance; second in individual disability income insurance; second in individual long-term care insurance.
Summary of Operations
(Statutory basis, in millions)*
Twelve months ended December 31:
Net investment income
Policyowner benefits paid
Increase in benefit reserves
Commissions and expenses
Total benefits and expenses
Gain before dividends and taxes
Gain before taxes
Income tax expense
Net gain from operations
Net realized capital gains (losses)
The summarized financial statement above was prepared on the statutory basis of accounting. Financial statements prepared on the statutory basis of accounting differ materially from financial statements prepared in accordance with generally accepted accounting principles ("GAAP").
Summary of Financial Position
Common and preferred stocks
Cash and short-term investments
Separate account assets
Policy benefit reserves
Policyowner dividends payable
Separate account liabilities
Liabilities (excluding AVR)
Asset valuation reserve (AVR)
Surplus and AVR
Total liabilities and surplus
SOURCE Northwestern Mutual