Investing for the long term with discipline, experience and humility

It is a privilege to write to you again as chief investment officer of Northwestern Mutual. As a mutual company, we operate for the benefit of our policyowners, and that fact continues to guide every investment decision we make. Our mission is to maximize long-term value for policyowners while maintaining Northwestern Mutual’s exceptional financial strength so we can deliver on the promises we make to you, regardless of the market environment. Our General Account investment portfolio exists to support this mission.

2025 in review

In 2025, global markets were tested by global trade uncertainty, uneven economic growth and technological change. Volatility increased across asset classes, challenging investor conviction. Against this backdrop, our investment team delivered strong long-term results, supported by disciplined underwriting, a commitment to diversification and active portfolio management.

Your company’s financial results in 2025 reflect this success. Net investment income continues to grow, as our portfolio continues to benefit from normalization of long-term interest rates we saw beginning in 2022. The portfolio contributed to a record expected total dividend payout for 2026 of over $9 billion and a record surplus of over $42 billion, assisted by very strong equity markets.

Looking across the portfolio, our real estate equity investments and commercial mortgage loans reflect our disciplined underwriting. Real estate has been under significant pressure since 2022’s interest rate increases, and our real estate investments have weathered that storm exceptionally well, as our focus on high-quality properties and prudent lending has paid off.

In 2025, private credit entered the headlines again. A few years ago, private credit was promoted by some as a superior investment for nearly any purpose. More recently, media coverage has suggested that private credit is under severe strain. In our view, neither characterization is accurate.

Private credit is not a single market, but a range of strategies with meaningfully different risk profiles. Some are higher risk, others lower risk, with outcomes driven by structure, underwriting standards, borrower quality, and leverage. Our experience in these markets spans decades and multiple credit cycles. When we invest in higher-risk private credit, we do so deliberately, with a clear understanding of illiquidity, credit, and other risks. We size these investments carefully, in the context of the overall portfolio.

More broadly, our scale, liquidity, and surplus allow us to remain steadfast during periods of market stress. In 2025, we avoided forced selling, continued originating new investments, and selectively added exposure where we saw long-term value. These actions contributed to Northwestern Mutual’s financial strength and dividend-paying capacity.

We invest differently

Many investors today focus on short-term outcomes, reacting to headlines or managing to quarterly targets. Northwestern Mutual is different. Our liabilities – the promises we make to you – are long term, and our investment approach reflects that reality. To maximize long-term returns while preserving our financial strength requires discipline, patience, and a willingness to think in years and decades rather than quarters.

Rigorous stress testing and strong liquidity give us confidence that the portfolio can successfully navigate even extreme downturns, thanks to our financial strength. Because we are built for the long term, we can pursue prudent risk-taking strategies that are unavailable to investors who prioritize predictable quarterly earnings while fearing quarterly market volatility. In addition, our long-standing presence in markets has enabled us to build deep relationships with leading investment partners, supporting strong origination capabilities and access to opportunities that are often unavailable to others.

Investing with humility in an environment of rapid change

We are operating in a period of rapid change. Advances in artificial intelligence are beginning to reshape the economy, while conflicts in Eastern Europe and the Middle East continue to influence global market conditions.

The fact is that no one knows exactly how AI will change markets or the broader economy. History suggests that transformative technologies rarely evolve in straight lines, and their effects are difficult to predict. In this environment, we believe the right approach is to invest with humility—acknowledging uncertainty, avoiding overconfidence, and maintaining a balanced view of risk and return.

As we navigate these changes, we rely on the deep experience of our investment team, built over decades of investing across public markets, private markets, and real estate through multiple economic cycles.

Looking ahead

We expect volatility to persist as economic, political, and technological forces continue to evolve. Future returns are highly unlikely to mirror those of the past decade. Higher interest rates should remain a tailwind, while relatively expensive valuations across most markets and geopolitical concerns temper our enthusiasm. Regardless of market conditions, our responsibility remains the same: to invest with prudence and discipline, with a focus on optimizing long-term outcomes.

On behalf of the entire investment team, thank you for the trust you place in Northwestern Mutual. We take that responsibility seriously and remain committed to earning it every day.