Northwestern Mutual

Northwestern Mutual Reports Record Dividends and Surplus

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:

               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:

1/25/2007 6:00:00 AM