Northwestern Mutual has announced its financial results for 2006. The company reported $4.6 billion in dividends approved for payment to its participating policyowners during 2007, again expected to be the highest in the U.S. life insurance industry. Northwestern Mutual's total surplus position at year-end 2006 was a record $14.8 billion.
"As we enter our 150th year in business, our goal is to continue balancing financial strength and policyowner value," said Edward J. Zore, President and CEO of Northwestern Mutual. "The results from this past year, highlighted by our growing surplus and record dividend payout, show that we have honored the mission we've set for ourselves."
The company highlighted the following from its 2006 financial results:
-- Dividends to participating policyowners of an estimated $4.6 billion
have been approved for payment during 2007, including a 7.5 percent
dividend interest rate to be credited on most unborrowed permanent life
insurance funds. The estimated dividend also includes a 40 percent
increase in total dividends paid on term life insurance policies and a
14 percent increase in disability insurance dividends. Northwestern
Long Term Care Insurance Company has approved payment of the first
dividend to its participating long-term care policyowners in 2007,
expected to total almost $4 million.
-- Total surplus, including asset valuation reserve, increased over
14 percent to $14.8 billion from $12.9 billion at the end of 2005. The
ratio of total surplus to general account insurance reserves at the end
of 2006 was 14.7 percent, compared to 13.8 percent a year earlier. The
$1.9 billion surplus increase includes nearly $1 billion of net
realized and unrealized capital gains from the company's general
account investment portfolio, after taxes and required deferrals.
-- Premium revenue grew 7 percent to $12.1 billion in 2006, and included
relative increases from 2005 for each of the company's insurance
product lines. Premium from the company's flagship life insurance line
increased 7 percent to $9.9 billion for the year. The company expects
to again have the largest market share of total individual life
premiums of any company in the U.S. life insurance industry.
Disability premiums increased 5 percent, long-term care premiums
increased 36 percent and individual annuity premiums increased
16 percent from 2005.
-- Net investment income of $7.1 billion for 2006 was 8 percent higher
than the prior year, primarily attributable to an 8 percent increase in
the company's general account invested assets of over $122 billion.
The company's general account investment portfolio generated realized
and unrealized capital gains of $1.4 billion during 2006, before taxes
and required deferrals. At year-end 2006, this diversified portfolio
included bonds and short term investments ($73 billion), commercial
mortgage loans ($19 billion) and common stocks and other equities ($19
-- Operating gains before dividends and taxes for 2006 exceeded $5 billion
for the first time in the company's history. This amount takes into
account $5 billion of insurance benefits paid to policyowners and their
beneficiaries, and $7.7 billion of increases in reserves for future
policy benefits, which grew to $101 billion at year-end 2006. After
provision for the payment of dividends and income taxes, net gain from
operations was $419 million, a decrease from $614 million in 2005.
Including net realized capital gains, net income for 2006 was $829
million, down from $924 million a year earlier.
-- Strong sales growth across all product lines was reported for 2006.
Measured as new and single premium revenue, life insurance sales
increased 11 percent from 2005 to $1.2 billion. These sales represent
$104 billion of additional protection in force, which when combined
with an overall in-force persistency rate of 96.5 percent during 2006,
increased total life insurance protection in force to $995 billion at
year-end. Disability and long-term care premium sales increased 7
percent and 13 percent, respectively, over 2005. Total premiums on
individual annuities rose 16 percent in 2006.
-- Recruiting increased 32 percent from 2005, as 1,619 full-time Financial
Representatives began a career with the Northwestern Mutual Financial
Network during 2006. The Network's internship program has been ranked
in Vault Inc.'s "Top-Ten" list of best internships in each of the past
eleven years, and in 2006 Northwestern Mutual was recognized as one of
the "50 Best Companies to Sell For," by Selling Power magazine.
"While the economic and competitive environments remain challenging, the fundamentals for success remain the same," explained Zore. These fundamentals are rigorous expense management, a disciplined assessment of insurance risk, and a high-quality and diversified investment portfolio, according to Zore. "We also enjoy the competitive advantage of our exclusive distribution network which is the best in the industry," he added.
The Northwestern Mutual Life Insurance Company, Milwaukee, WI (Northwestern Mutual) and Northwestern Long Term Care Insurance Company maintain the highest available insurance financial strength ratings from all four major rating agencies: Standard & Poor's, Fitch Ratings, A. M. Best and Moody's. For 23 years, a FORTUNE magazine survey has named Northwestern Mutual the "Most Admired" company in its industry.
The company, its subsidiaries and affiliates are providers of life insurance, long-term care insurance, disability insurance, annuities, mutual funds, and employee benefit services to the group employee and executive markets. These products and services are distributed through the representatives of the Northwestern Mutual Financial Network. Among Northwestern Mutual's affiliated companies are those that comprise the Russell Investment Group, which provide investment management and advisory services; Northwestern Mutual Investment Services, LLC (NMIS), a wholly-owned company of Northwestern Mutual, broker-dealer and member NASD and SIPC; and Northwestern Mutual Wealth Management Company, a wholly-owned company of Northwestern Mutual, limited purpose federal savings bank and a registered investment adviser which provides financial planning, investment management and trust services. A subsidiary, Northwestern Long Term Care Insurance Company, offers long-term care insurance. Further information on Northwestern Mutual can be found at: www.northwesternmutualnews.com.
Summary of Operations and Changes in Surplus
(Consolidated statutory basis, in millions)*
Year ended December 31: 2006 2005
Premiums $12,149 $11,363
Net investment income 7,073 6,543
Other income 511 494
Total revenue 19,733 18,400
Policyowner benefits paid 5,049 4,577
Increase in benefit reserves 7,726 7,109
Commissions and expenses 1,894 1,774
Total benefits and expenses 14,669 13,460
Gain before dividends and taxes 5,064 4,940
Policyowner dividends 4,628 4,269
Gain before taxes 436 671
Income tax expense 17 57
Net gain from operations 419 614
Net realized capital gains 410 310
Net income 829 924
Change in net unrealized capital gains 581 343
Other surplus changes 457 153
Net increase in surplus and AVR $1,867 $1,420
Summary of Financial Position
(Consolidated statutory basis, in millions)*
December 31: 2006 2005
Bonds and short-term investments $73,449 $ 68,023
Mortgage loans 19,363 18,118
Policy loans 10,995 10,265
Common and preferred stocks 9,228 8,120
Real estate 1,489 1,620
Other investments 7,930 6,935
Total investments 122,454 113,081
Other assets 4,601 4,223
Separate account assets 18,047 15,753
Total assets $145,102 $133,057
Policy benefit reserves $ 101,481 $94,144
Policyowner dividends 4,632 4,270
Other liabilities 6,165 5,980
Separate account liabilities 18,047 15,753
Total liabilities 130,325 120,147
Asset valuation reserve (AVR) 3,093 2,529
Surplus 11,684 10,381
Total surplus and AVR 14,777 12,910
Total liabilities and surplus $145,102 $133,057
* The accompanying financial information is based on accounting practices
prescribed or permitted by the Office of the Commissioner of Insurance
of the State of Wisconsin ("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").
SOURCE: Northwestern Mutual
CONTACT: Jean Towell of Northwestern Mutual, 800-323-7033, or
Web site: http://www.northwesternmutual.com/