Northwestern Mutual expects to set record with $6.8B dividend

Another year, another record dividend for Northwestern Mutual Insurance policyholders. Or maybe it’s a broken record that keeps repeating. The company said it will once again break its own industry-leading payout record with an expected $6.8 billion to be delivered to policy owners in 2023. Northwestern Mutual has paid a dividend every year for more than 150 years, the mutual company said.

The 2023 dividend will be the highest in company history – last year’s was a record $6.5 billion – across four of the company’s product areas: whole life, term disability insurance, and annuities. The company said its dividend payout is nearly triple its nearest competitor.

In a statement the company’s chairman and CEO, John Schlifske, ran down a ho-hum list of why Northwestern Mutual’s dividend record is unmatched, attributing it to strong investment performance, disciplined underwriting, and sound financial management.

“We’re able to consistently share the company’s success with our policy owners generation after generation,” he said.

Pressed a bit further on why and how Milwaukee-based Northwestern Mutual has racked up enviable numbers in a so-so economy, company executives pointed to raft of traditions and disciplines that drive the mutual-owned company forward.

Field force cited

“Our results speak to a lot of things,” said Jason Klawonn, vice president and chief actuary at Northwestern Mutual. “It speaks to our field force, which is the only field force that can sell our products, and it's how they sit down with clients and solve problems and actually plan out and stick to those plans. And when you think about the combination of all that in the value that we bring, it becomes this cycle that builds on itself. And that persistency is why more people stick with us. That, in turn, helps reinforce all of our fundamentals.”

With more than $561 billion in combined company and client assets, $34 billion in revenues, and $2.1 trillion worth of life insurance protection in force, Northwestern Mutual counts five million clients with its life, disability income and long-term care insurance, annuities, and brokerage and advisory services.

Northwestern Mutual ranked 97 on the 2022 Fortune 500 and was recognized by as one of the "World's Most Admired" life insurance companies in 2022 by Fortune.

Last year the company acknowledged that the pandemic might have spurred growth as more people were inspired to assess their finances as well as health. Northwestern Mutual saw a 52% increase in new life insurance premium sales in 2021. But Klawonn said the company does not see a retreat to pre-pandemic levels.

“To think we’d see that rate of growth year after year would be ridiculous, right?” he said. “But, we're not seeing a retrenchment. So I think that there's something about the environment that speaks to the awareness or receptivity of meeting the needs that families have been forced to learn to use digital tools better and how to be more efficient with how they spend their time and money. And so we’ve been able to reach more people than we otherwise would?”

Mutual concept an 'advantage'

Klawonn also said he and other company executives believe the mutual concept is advantageous to long-term strategies and growth.

“If you're a mutual company, you are owned by your policyholders and that brings a great deal of focus to who you're serving,” he said. It brings a lot of clarity to really important decisions and the ability to take a long view and make long-term promises without have to worry about temporary short-term ups and downs. And so that's absolutely an advantage that we have.”

The company said the dividend payout represents one of the most important ways it demonstrates its mutuality. Those who receive dividends can apply the funds in a variety of ways, from increasing the cash value and/or death benefit of a life insurance policy, to reducing the out-of-pocket cost of premiums, to funding immediate financial needs by receiving dividends as cash distributions.

With its financial strength and long history of profitability, Klawonn said there are probably investment bankers who would love to see the company demutualize and go the public company route. But he discouraged the notion.

“That’s a door they probably know isn’t worth knocking on,” he said.

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].