Northwestern Mutual: Reports growth in dividends and continued financial strength in 2009

“Stable and Consistent in Volatile Times” Says Chairman and CEO

Milwaukee, WI (January 28, 2010) – Northwestern Mutual today announced its financial results for 2009, highlighted by more than $4.7 billion in dividends approved for payment to policyowners in 2010. The company expects to remain the industry leader in the payment of life insurance dividends. The company also strengthened its total surplus and financial position during 2009, continuing to earn the highest available ratings for insurance financial strength from all four major rating agencies – Moody’s (Aaa), Standard & Poor’s (AAA), Fitch Ratings (AAA) and A.M. Best (A++) – each with a stable rating outlook.

“Given the rotten economy during 2009, we are more than satisfied with what we have accomplished for our policyowners,” said Edward J. Zore, chairman and chief executive officer of Northwestern Mutual. “At its heart, our brand of financial security is about giving people confidence in their future. I’m proud of how we’ve been able to keep our promises at a time when people need to know who they can really count on.”

The company’s commitment to its policyowners is demonstrated in both its continued financial strength and the increased amount of policyowner dividends approved for payment in 2010. “This year we expect to once again lead our industry by a wide margin with our dividend payout of over $4.7 billion,” Zore said. In addition, he cited the company’s record recruiting results, high customer loyalty and strong sales activity in 2009 as endorsements of the company’s performance.

“As the dust starts to settle on a difficult period for the economy, we can look back on 2009 and know that our business model performs well in both good times and bad. Our results have been remarkably stable and consistent in volatile times,” said Zore. “We provided industry-leading value and maintained our unquestioned financial strength. That performance brings more talented financial representatives to our system and gives our clients the confidence to stick with the plans they have made for their financial future.”

The company highlighted the following from its 2009 financial results:

* Dividends approved for payment to participating policyowners in 2010 are expected to be more than $4.7 billion, an increase of almost $200 million over the 2009 payout and the second highest in company history. Policyowner dividends reflect a dividend interest rate of 6.15 percent on most unborrowed permanent life insurance funds, while approximately one-half of the total dividends paid are attributable to favorable claims and expense results. The estimated dividend payout for 2010 includes $120 million in dividends paid on term life insurance, as compared to $83 million in 2009, and $225 million in dividends on individual disability insurance policies, an increase of $19 million over the 2009 payout. Northwestern Long Term Care Insurance Company has approved payment of an estimated $8 million in dividends to its participating long-term care policyowners in 2010.

* The company maintained a strong financial position, as total surplus (the combination of surplus and asset valuation reserve) increased more than $800 million during 2009 to end the year at $14.2 billion, a very strong position relative to industry comparisons and regulatory standards. At year-end 2009, total surplus represented 11.4 percent of general account insurance reserves.

* The company continues to employ a diversified investment strategy to protect the long-term financial security of its more than three million policyowners. This strategy includes an increased allocation to investment-grade corporate bonds and U.S. agency mortgage-backed securities, with reduced exposure to equities and high-yield bonds. Ninety percent of the company’s $91 billion bond portfolio was rated as investment-grade at year-end 2009.

* The company maintains a very strong liquidity position. At year-end 2009, Northwestern Mutual held $26.1 billion in cash and cash equivalents, U.S. Treasuries and other highly liquid government-guaranteed investments. Due in part to the company’s exceptional level of policy persistency, it enjoys substantial positive operating cash flow from its large and stable block of participating life insurance business.

* Total insurance premium revenue, including both new and renewal premiums, totaled $13.1 billion for 2009, a decrease of 4 percent from the prior year. This decrease was due in large part to the change in the life insurance dividend interest rate for 2009, which reduced the amount of dividends available to policyowners for purchase of additional life insurance protection.

* Net investment income was $7.8 billion for 2009, a 1 percent decrease from 2008. Interest income on fixed income investments increased 3 percent. This increase in interest income was offset by lower returns from the company’s private equity and real estate investments compared to the prior year.

* Insurance benefits paid to policyowners and their beneficiaries increased 12 percent for 2009 and totaled $6.8 billion for the year. The company’s 12-month persistency rate for life insurance protection in force remained very strong at 95.5 percent. The increase in benefits paid was largely offset by a lower net increase in benefit reserves compared with 2008. The company’s reserves for future policy benefits totaled $125 billion at year-end 2009.

* Operating gain before dividends and taxes of $5.2 billion was down 3 percent from 2008 due primarily to lower net investment income. Operating results for 2009 also reflected the company’s continued commitment to rigorous management of operating expenses. Net gain from operations was $475 million for 2009, a decline from $1.1 billion in 2008, which included the benefit of a significant, one-time tax reserve adjustment. Net realized capital losses of $154 million were reported for 2009, a substantial improvement from $667 million of net realized capital losses in 2008. Realized capital losses primarily reflected impairment adjustments for invested assets, offset in large part during 2009 by realized capital gains on selective sales of real estate and other equity investments.

* New financial representatives were recruited in record numbers for the third consecutive year, as 2,340 new full-time financial representatives joined the Northwestern Mutual Financial Network in 2009, a 12 percent increase over 2008. The Network’s internship program has been ranked in Vault Inc.’s “Top Ten” list of best internships in each of the past 13 years.

The Northwestern Mutual Life Insurance Company – Milwaukee, WI (Northwestern Mutual) has helped clients achieve financial security for more than 150 years. As a mutual company with $1.2 trillion of life insurance protection in force, Northwestern Mutual seeks to share its gains with policyowners and deliver consistent and dependable value to clients over time.

Northwestern Mutual is an industry leader in total individual life insurance and disability insurance dividends paid to participating policyowners. Though dividends are not guaranteed, are reviewed annually and are subject to change, the company has paid life insurance dividend every year since 1872.

Northwestern Mutual and its subsidiaries offer a holistic approach to financial security solutions including: life insurance, long-term care insurance, disability 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; and Northwestern Long Term Care Insurance Company; and Russell Investments.

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CONTACT

Jean Towell

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