Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
Jan. 24--Northwestern Mutual Life Insurance Co. said Thursday it had record sales last year and expects to make its biggest dividend payout ever in 2013.
Including life, disability income and long-term care, policies purchased were up 13% over 2011, the Milwaukee-based insurer said. In all, new-premium sales topped $1 billion last year.
The company said it plans to pay policy owners more than $5 billion in dividends this year.
Northwestern Mutual's total surplus -- a sign of its financial strength -- increased by more than $1.2 billion during the year.
John Schlifske, chairman and chief executive of the Northwestern Mutual, called the company's 2012 performance "solid."
"In this low interest rate environment, it's something to both pay record dividends and add to our capital base," Schlifske said. "Still, we aren't immune from what's 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."
Overall premium revenue, including both new and renewal premium, was $15.4 billion, an increase of 5% from 2011.
Among other highlights:
Net investment income of $8.7 billion was 3% higher than in 2011.
Annuity sales increased 11% to a record $1.7 billion.
The total surplus, which is a cushion for the unexpected that is held in addition to the reserves set aside to provide for future insurance benefits, reached $19.4 billion, up from $18.2 billion at the end of 2011
The company set a recruiting record, bringing in 5,000 full-time financial representatives and rep interns into its system.
Northwestern Mutual paid $7.3 billion in policy owner benefits, up from almost $7.1 billion in 2011.
Net income was $783 million, up from $645 million in 2011.
Chris Kelly, vice president and controller for Northwestern Mutual, said in an interview the company has two primary financial objectives each year: To pay the most policy owners dividends possible and to maintain the company's strength with its total surplus.
"We were able to both things again this year. We were able to provide for a little over $5 billion in participating dividends next year, and were still able to increase that surplus base for long term strength -- that $19.4 billion -- by about $1.2 billion," Kelly said. "Whenever we're able to do both of those things together, we know we're striking the right balance and managing the company with that long-term perspective that's so important to people."
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