Northwestern Mutual

Northwestern Mutual Reports Record Dividend, Strong Financial Position

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 --

First Call Analyst:
FCMN Contact:

SOURCE: Northwestern Mutual

CONTACT: Jean Towell of Northwestern Mutual, 1-800-323-7033,

Web site:

1/24/2008 10:00:00 AM