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Detailed financial results

The combination of record total dividend payout and surplus reflects our deep, longstanding commitment to both policyowner value and financial strength.

a year of new highs

As the numbers show, your company is strong. As Northwestern Mutual's Vice President and Controller, and as a policyowner, the figures you see below in the summary of operations and financial position give me tremendous confidence in the current position of this company. As of the end of 2019, we'd broken six company financial records: revenue; total assets in the company's investment portfolio; surplus1; life insurance sales2; client investment assets; and our anticipated total dividend payout.3,4

Operating gain before dividends and taxes (OGBDT), listed in the summary of operations below, supported record-breaking highs in both dividends and surplus.

Our $6 billion anticipated total dividend payout is the highest Northwestern Mutual has ever paid. Not only that, it's the highest in the industry and more than our three closest competitors combined.

And the growth you see in surplus—funds set aside to ensure we remain strong even through severe economic challenges—leaves us with our highest ever total surplus and asset valuation reserve (AVR), demonstrating our unmatched financial strength. In fact, no other U.S. life insurer currently has our combination of the highest possible financial strength ratings and stable outlook from all four major ratings agencies.5

The combination of record total dividend payout and surplus reflects our deep, longstanding commitment to both policyowner value and financial strength, upheld by the actions we take with our finances. This prudent financial management is exactly what you'd expect from a company that's achieved long-term success by putting policyowners first for 160 years. I can confidently say that all of us here are working—still putting policyowners first—towards the next 160.

Todd Jones
Vice President and Controller

Summary of Operations

(Statutory basis, in millions)

Years ended December 31

2019

2018

PremiumsInsurance revenue increased 5% in 2019 to a record level. This was driven in part by higher first year/single insurance premiums and in part by higher renewal premium and dividend additions (both of which grow when insurance in-force increases and we maintain high persistency). 2019 was a record year for new life premiums.

$19,010

$18,036

Net investment incomeNet investment income was also up 4%, despite interest rates declining to near all-time lows in 2019.

10,149

9,791

Other income

696

655

Total revenueTotal revenue (insurance revenue + net investment income) reached $29.9B, a company record.

29,855

28,482

Policyowner benefits paid

11,515

11,436

Increase in benefit reserves

8,668

7,582

Commissions and expenses

3,306

3,230

Total benefits and expenses

23,489

22,248

Gain before dividends and taxesIn 2019, operating gain before dividends and taxes (OGBDT) increased 2%. OGBDT is the amount left over from revenue to fund dividends and surplus after policyowner benefits and expenses have been paid. This reflects our efficiency, what we've paid and reserved for benefits, and the performance of our investments.

6,366

6,234

Policyowner dividendsIn 2019, policyowner dividends increased 6%. Our goal is to pay the highest possible dividends while sustaining our unsurpassed financial strength.

*While dividends are reviewed annually and not guaranteed, Northwestern Mutual has paid dividends every year since 1872.

5,999

5,634

Gain before taxes

367

600

Income tax benefit

(199)

(159)

Net gain from operations

566

759

Net realized capital gains (losses)Realized capital gains were strong primarily due to the sale of select, well-performing real estate investments.

702

24

Net income

$1,268

$783

The summarized financial statement above was prepared 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).

Summary of Financial Position

(Statutory basis, in millions)


December 31, 2019

December 31, 2018

Bonds

$159,760

$153,713

Mortgage loans

39,771

36,755

Policy loans

17,829

17,693

Common and preferred stocks

4,677

5,574

Real estate

2,872

2,576

Other investments

20,962

17,048

Cash and short-term investments

2,408

1,899

Total investments

248,279

235,258

Other assets

7,207

7,192

Separate account assets

34,832

29,717

Total assets

$290,318

$272,167

Policy benefit reserves

$211,100

$202,816

Policyowner dividends payable

5,995

5,635

Other liabilities

7,972

7,268

Separate account liabilities

34,832

29,717

Liabilities (excluding AVR)

259,899

245,436

Asset valuation reserve (AVR)

6,203

4,597

Surplus

24,216

22,134

Surplus and AVRWe achieved record surplus growth in 2019, which ended the year at $30.4 billion.* Surplus is the amount we hold above our policyowner benefit reserves to cover the unexpected, including especially challenging periods. A strong surplus means you can have confidence that we will remain financially strong through all economic environments. It also gives us the flexibility to invest for greater potential return for policyowners while sustaining unsurpassed financial strength.

*Includes surplus notes and asset valuation reserve

30,419

26,731

Total liabilities and surplus

$290,318

$272,167

The summarized financial statement above was prepared 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).

Back to the Annual Report

1 Includes surplus notes and asset valuation reserve.

2 Source: Q3 2019 LIMRA U.S. Retail Individual Life Insurance Sales Report

3 Total dividend payout based on announced estimates. Actual payout is not yet known.

4 While dividends are reviewed annually and not guaranteed, Northwestern Mutual has paid dividends every year since 1872.

5Ratings are for The Northwestern Mutual Life Insurance Company and Northwestern Long Term Care Insurance Company, as of the most recent review and report by each ratings agency. Ratings are as of 09/19 (Moody's Investors Service), 05/19 (A.M. Best Company), 10/19 (Fitch Ratings), 12/19 (S&P Global Ratings). Ratings are subject to change.