Northwestern Mutual to pay record dividends next year [Milwaukee Journal Sentinel]

Nov. 01--Northwestern Mutual Life Insurance Co. said Wednesday it expects to pay more than $5 billion in dividends to policy owners next year, its largest payout ever.

The dividend amount is $65 million more than this year and reflects the performance of the company's investments, claims experience and expense management, executives said. The previous record was in 2008, when the Milwaukee-based insurer paid out slightly more than $5 billion.

Chris Kelly, vice president and controller, said the annual dividend announcement is "one of the proudest moments of the year" for the company.

"At the end of the day, it's kind of an acid test about how we are doing here," Kelly said.

About 90% of the more than $5 billion in dividends will go to the company's participating permanent life insurance policy owners. But the company also will pay dividends on other product lines, among them term life insurance, disability income insurance, long-term care insurance and annuities.

Policy owners can use their dividends to buy additional life insurance coverage and reduce future premiums. They also can receive the money in a check. Kelly said about 80% choose to purchase more permanent life insurance, which he said amounts to a "doubling down" on what policy owners consider a centerpiece for building financial security.

John Schlifske, chairman and chief executive of Northwestern Mutual, said dividends are one of the reasons about 96% of policy owners renew their premiums with the company each year.

"We as a company want to be the strongest company in the industry and pay out the most we possibly can in dividends to return the value that we create here back to our policy owners," Schlifske said.

Kelly said that while planning to pay record dividends, Northwestern Mutual also has built up its surplus -- a measure of a company's long-term strength -- from about $18 billion at the beginning of 2012 to almost $20 billion.

Northwestern Mutual, which has been in business more than 155 years, has about $1.2 trillion of life insurance in force.

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