Northwestern Mutual Reports Record Dividend, Strong Financial Position

2007 Results Include Strong Sales Growth, Record Recruiting

MILWAUKEE, Jan. 24 /PRNewswire/ — Northwestern Mutual today announced its financial results for 2007, highlighted by a record $5 billion in dividends approved for payment to participating policyowners in 2008. The company again expects to pay the largest amount of participating insurance dividends in the U.S. life insurance industry. Other financial highlights for 2007 include a strong financial position with record surplus, significant growth in sales of new insurance, record recruiting of new financial representatives and excellent investment performance.

“The year 2007 was a very good year in our company’s history,” said Edward J. Zore, President and CEO of Northwestern Mutual. “We celebrated our 150th anniversary, surpassed $1 trillion of life insurance in-force, and set a company record for paying dividends to policyowners. By all accounts, it was an outstanding year for delivering financial security to our policyowners and clients.”

  The company highlighted the following from its 2007 financial results:

— Premium revenue, including both new and renewal premiums, increased to
$13.2 billion in 2007, an increase of 9 percent from 2006. The
company’s persistency rate for life insurance protection in-force
remained over 96 percent during 2007, while new premium from life
insurance rose 39 percent to $1.7 billion, aided by a record amount of
new single premium sales. New premium from sales of individual
disability insurance increased 8 percent to $50 million, while new
long-term care premium increased 19 percent to $29 million. New
premiums and deposits for annuity contracts totaled $1.3 billion for
2007, an 11 percent increase over last year.

— Dividends to participating policyowners approved for payment during
2008 are expected to surpass $5 billion for the first time in company
history. The company will continue to pay a dividend interest rate of
7.5 percent on most unborrowed permanent life insurance funds for a
fourth consecutive year and expects to pay $86 million in dividends on
term life insurance policies. The estimated dividend includes a
45 percent increase in total dividends paid on individual disability
insurance policies. Northwestern Long Term Care Insurance Company has
approved payment of an estimated $6 million to its participating
long-term care policyowners in 2008.

— Insurance benefits totaling $5.6 billion were paid to policyowners and
their beneficiaries, and an additional $8.3 billion of net increases in
insurance reserves were established for future policy benefits.

— The combination of surplus and asset valuation reserve (“AVR”) reached
an all-time high of $15.8 billion, an increase of $1 billion from
year-end 2006. Net income for 2007 of $1 billion increased 21 percent
over 2006, and included $381 million of net operating gains and
$619 million of net realized capital gains, after taxes and required
deferrals. Surplus and AVR at year-end 2007 represented 14.5 percent
of general account insurance reserves compared to 14.7 percent one year
earlier. The company’s extremely strong capitalization allows it to
hold a diversified investment portfolio of fixed income and equity

— Gains before dividends and taxes increased to $5.4 billion for 2007, an
increase of 7 percent from $5.1 billion during 2006. Growth in net
investment income and lower disability claim costs were the two primary
contributors to this improvement. Operating results for 2007 also
reflected the company’s continued commitment to disciplined
underwriting of new insurance risks and rigorous management of
operating expenses.

— The company’s diversified investment strategy again produced superior
results compared to market benchmarks and contributed to strong
operating results, surplus growth and dividend paying capacity. Net
investment income increased 7 percent to $7.6 billion, while net
realized and unrealized capital gains totaled $1 billion for 2007,
before taxes and required deferrals. Public common stocks and private
equity investments contributed the majority of net capital gains for

At year-end 2007, the company’s general account portfolio was
diversified among bonds and short term investments ($79 billion),
commercial mortgage loans ($21 billion) and equity-related securities,
including common stocks and real estate ($20 billion). While equity
investments are not immune from short-term market volatility, over the
long-term the company expects equity investments to provide attractive
returns. Northwestern Mutual was largely unaffected by problems in the
below prime residential mortgage market. The company’s investment in
these securities, which are substantially all AAA-rated, represented
less than one half of 1 percent of invested assets as of year-end.

— New Financial Representatives were recruited into the Northwestern
Mutual Financial Network in record numbers during 2007 as 1,824 new
full-time Financial Representatives began their career with
Northwestern Mutual, a 13 percent increase from 2006. The Network’s
internship program has been ranked in Vault Inc.’s “Top-Ten” list of
best internships in each of the past twelve years, and in 2007
Northwestern Mutual was ranked #1 among U.S. service companies in
Selling Power magazine’s annual “The 50 Best Companies to Sell For”

“The company is in an extremely strong position as we enter 2008 amidst the turmoil currently roiling the equity markets,” added Zore. “Our long-term diversified investment strategy has helped us build financial strength and has served our policyowners well in volatile investment environments. We’re well-positioned to continue doing what we do best-help our clients achieve financial security through our growing Northwestern Mutual Financial Network.”

The Northwestern Mutual Life Insurance Company, Milwaukee, WI, a FORTUNE 500 company with over $1 trillion of life insurance protection in force, has been helping its policyowners and clients achieve financial security for more than 150 years. The company maintains the highest available ratings for insurance financial strength from all four major rating agencies: Standard & Poor’s, Fitch Ratings, A. M. Best and Moody’s.

Through the Northwestern Mutual Financial Network, the marketing name for the company’s nationwide sales distribution arm, the company and its affiliates deliver a unique approach to combining insurance and investment solutions to help clients achieve financial security. These solutions include life insurance, long-term care insurance, disability insurance, annuities, mutual funds, and employee benefit services. Northwestern Mutual’s subsidiaries and affiliates are comprised of Northwestern Mutual Investment Services, LLC, a wholly-owned company, broker-dealer, member of FINRA and SIPC; the Northwestern Mutual Wealth Management Company, a wholly-owned company of Northwestern Mutual and limited purpose federal savings bank; Northwestern Long Term Care Insurance Company; and the Russell Investment Group. Further information on Northwestern Mutual, its subsidiaries and affiliates can be found at:

                          Summary of Operations
(Consolidated statutory basis, in millions)

Year ended December 31: 2007 2006

Premiums $13,242 $12,149
Net investment income 7,568 7,073
Other income 545 511

Total revenue 21,355 19,733

Policyowner benefits paid 5,641 5,049
Increase in benefit reserves 8,291 7,726
Commissions and expenses 2,009 1,894

Total benefits and expenses 15,941 14,669

Gain before dividends and taxes 5,414 5,064

Policyowner dividends 5,012 4,628

Gain before taxes 402 436
Income tax expense 21 17

Net gain from operations 381 419
Net realized capital gains 619 410

Net income $1,000 $829

Summary of Financial Position
(Consolidated statutory basis, in millions)*

December 31: 2007 2006

Bonds and short-term investments $79,389 $73,449
Mortgage loans 20,833 19,363
Policy loans 11,797 10,995
Common and preferred stocks 9,525 9,228
Real estate 1,499 1,489
Other investments 8,749 7,930

Total investments 131,792 122,454

Other assets 5,051 4,601
Separate account assets 19,704 18,047

Total assets $156,547 $145,102

Policy benefit reserves $109,573 $101,481
Policyowner dividends payable 5,024 4,632
Other liabilities 6,453 6,165
Separate account liabilities 19,704 18,047

Liabilities (excluding AVR) 140,754 130,325

Asset valuation reserve (AVR) 3,687 3,093
Surplus 12,106 11,684
Surplus and AVR 15,793 14,777

Total liabilities and surplus $156,547 $145,102

* The accompanying financial information is based 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”).

For more information on Northwestern Mutual’s 2007 financial results,
please visit the company’s financial statements online —–fi_consolidated

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Source: Northwestern Mutual