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Ready for GREAT THINGS

Our performance tells an exciting story about our readiness for great things. Consistent results, more secure futures and healthier kids are just a few highlights.
John E. SchlifskeChairman and Chief Executive Officer

When I reflect on our performance in 2012, and when I consider our future, one notion comes to mind: We’re ready. Throughout this report, you’ll see examples of our readiness to face challenges and embrace opportunities.

Ready for consistent results

No doubt, 2012 was another tough year for many companies and Americans. Yet despite a sluggish economy and a prolonged period of record-low interest rates, your company continued to stand strong. We again earned the highest financial strength ratings awarded to any life insurer by all four of the major credit rating agencies.1 We also announced our largest dividend payout ever. In 2013, we expect to pay more than $5 billion in policyowner dividends, including a life insurance dividend about three times our nearest competitor.2 

Ready for MORE secure futures

At a time when all of us need financial strength and stability, your company helped millions of people build more secure futures – people like Rick and Danielle Arnstein, who moved closer to their goals, even during a job layoff. (See client stories for their stories and others.) We believe that’s why more people are choosing Northwestern Mutual. In 2012, policyowners bought a record amount of new insurance and annuities as measured by premium revenue.

Ready for healthier children

I also want to tell you about a new battle we’ve joined. In 2012, we launched a philanthropic program to help fight childhood cancer. The aims of this program are twofold: We will support families affected by this terrible disease, and we hope to accelerate a cure for childhood cancer itself. We believe that by investing in the communities in which we work, we can make a difference in people’s lives.

As always, thank you for choosing Northwestern Mutual as a partner on your journey. We pledge to help you stay ready.

  • 1 A.M. Best Company, A++ (highest), 4/2012; Fitch Ratings, AAA (highest), 12/2012; Moody’s Investors Service, Aaa (highest), 12/2012; Standard & Poor’s, AA+ (second highest), 6/2012. Ratings current as of February 15, 2013.
  • 2 Northwestern Mutual analysis of ordinary life insurance dividend based on historical SNL data.

Ready for new beginnings

“As life has thrown uncertainty at us time and time again, the first thing that we have always done was say, ‘Let’s call Anna.’”

  • – Rick and Danielle Arnstein
  • Point Pleasant, Pennsylvania

Through careful planning with their longtime financial representative, this evolving family continues to move forward, even when faced with an unforeseen ‘career change.’

When Rick Arnstein met Financial Representative Anna Cenicola in 1994, all he could afford to contribute to his general savings account was $100 a month. But he began putting in motion a plan, and as his income grew, so did the amount he saved and put toward insurance products.

After marrying Danielle, Rick’s financial security plan evolved to meet the needs of a growing family, which now includes three children.

For a decade, the family’s plans progressed like clockwork – until Rick was laid off from a job in marketing he’d held for 15 years. While he and Danielle faced a loss of income and a loss of employee benefits such as health insurance, their significant emergency fund and life insurance cash value “put us in a good position despite the layoff,” says Danielle.

“We did not feel fearful or paralyzed,” Rick adds.

“Anna’s advice over the years helped put us in an enviable position – we could afford the time to make good decisions.

“That’s the benefit and blessing of planning,” he explains. “We learned firsthand how important it is to have a strategy and to work with someone you trust – like Anna – who can help you tweak that strategy when circumstances change.”

Today, Rick has a new job, and he and Danielle continue to appreciate the planning Anna has done throughout their evolution as a family.

“We are careful stewards of our future,” says Rick. “Every year, Anna proves once again that she is listening and understands what’s important to us. That – combined with the strength, stability and consistency of Northwestern Mutual – gives us confidence that we’ve made good decisions.

“We continue to enjoy the outcomes of those decisions. To us,” says Rick, “that is financial security.”

  • Anna Cenicola, CLU, ChFC, CLTC
  • Financial Representative
  • Montvale, New Jersey

Ready for every stage

“We really trust Sunny. He’s become more like a friend or family member. We know he’ll be there.”

  • – Uma and Gauri Iyer
  • Naperville, Illinois

a vision for today and tomorrow provides a sense of stability for this young family. With the right mix of insurance and investment products, they’re on track to reach their financial goals.

Umacharan (Uma) and Gauri Iyer’s automobile insurance agent recently asked them to consider buying financial products from his company. However, the Iyers shared their satisfaction with Northwestern Mutual Financial Representative Sunil (Sunny) Oberoi – and the planning they’ve done together to help meet their goals and objectives.

The couple learned something valuable from the exchange. Uma explains, “The agent went through his checklist and said, ‘You’re all taken care of. I’ve seen very few people your age with such a strong plan.’”

“It gave us a great sense of pride that he acknowledged the work we’ve done with Sunny,” adds Uma. “Our money is going to the right places and doing what it needs to do.”

While their relationship with Sunny began before they had children, Uma and Gauri’s planning took on greater importance when they started a family. Today, they feel financially secure and able to enjoy the present without worrying about what might happen in the future.

The mix of products that inspires this feeling of security includes annuities, whole and term life insurance, disability income insurance and long-term care insurance. The couple also has whole life insurance for their children. “When you start early, it’s a matter of putting away small sums for significant benefits,” notes Gauri.

The most challenging aspect of planning is balancing security for the future with living well in the present, the couple says. “This desire for balance involved detailed discussions and careful decisions,” says Uma. “With Sunny’s help, we’re ready for and confident in tomorrow. We continue to have a sense of stability.”

  • Sunil Oberoi
  • Financial Representative
  • Peoria, Illinois

Ready for big dreams

“todd has given us consistent, positive guidance through all of our planning. He’s always telling us what steps he thinks would work for our family’s needs.”

  • – Dr. Amye and John Michael Hall
  • Flowood, Mississippi

Northwestern Mutual products help a dentist pursue dreams of growing her practice and protecting her family. Not even a disability during pregnancy could hinder her plans.

Having a family was important to Dr. Amye and John Michael Hall. So was Amye’s dream of building her own dental practice.

While pregnant with their second child, however, Amye was told by her doctor that she needed to significantly reduce her work hours. Faced with high costs to keep her dental office open – including paying another dentist to fill in for her – Amye feared she would not only lose income, but have to curtail her plans to grow her business as well.

That was before Wealth Management Advisor Todd Tauzin explained that Amye’s disability overhead expense policy would apply during her disability in addition to her disability income policy. Amye was surprised – and relieved.

Even though she couldn’t work full time, with the help of the benefits she received from her disability overhead expense and disability income policies, Amye was able to continue moving forward on plans for her practice. She and John Michael also were able to keep funding other components of their family’s financial security plan – such as 529 college savings and long-term care solutions.

“Having Northwestern Mutual there made the financial side a lot less stressful,” says John Michael.

“You never know what’s going to happen in the future,” Amye adds. “That’s why John Michael and I continue to review our plans with Todd. He’s not only wise and informative; he cares about us and keeps us on the right path.”

For a planner like Amye, flexibility and consistency are important aspects of a financial plan.

“Todd has helped our family make good decisions about our future,” she says. “Thanks to his help, we’re ready to take on just about anything – from the unexpected to education to retirement.”

Wealth management advisors offer investment advisory services through Northwestern Mutual Wealth Management Company, a limited purpose federal savings bank.

  • Todd Tauzin, CLU, ChFC
  • Wealth Management Advisor
  • Jackson, Mississippi

Ready for what matters

“After my wife passed away, Robert was there to calm the waters and let me know what my options were. He went through everything and made a very, very tough time a little easier.”

  • – Phil Clemente
  • Diamond Bar, California

A wife and mother’s desire to prepare for the unexpected helps family members live without her. Thanks to her insistence on life insurance, they’re able to heal and focus on the things that matter most.

Shortly after their first child was born, Yvonne Clemente insisted she and her husband, Phil, buy life insurance.

“Initially, I saw it as just another bill,” Phil admits, “but Yvonne would not budge in her determination to prepare for the worst that life could bring. I never thought it would happen, but I was wrong.

“Before Yvonne was diagnosed with cancer, our lives were like a big cruise ship on still waters – everything was going smoothly,” says Phil. “Then Yvonne went from a healthy and vivacious wife, mother and attorney to a shell of the person she had been.”

In April 2010, Yvonne lost her battle with cancer, and the family was, unsurprisingly, devastated. Fortunately, the life insurance on which Yvonne had insisted provided both financial and emotional support.

“The proceeds from Yvonne’s life insurance policy allowed me to concentrate on our family, rather than on my business, while making sure the bills got paid,” explains Phil, whose financial representative is Robert Gillespie.

The policy also provided Phil with some level of comfort.

“I can’t begin to describe my feelings after Yvonne’s death,” he says. “That life insurance policy enabled me to get through the extreme sadness, one day at a time.”

In the short term, Yvonne’s policy helped pay the bills; in the long term, it will help send the couple’s three children to college.

“Not worrying about money helped us all in our healing. I’m so grateful for Yvonne’s determination to prepare for the unexpected,” says Phil.

“We know firsthand how cruel life can be,” he says, “and how important it is to prepare for every possibility you can.”

  • Robert Gillespie, CLU, ChFC, CASL, CLTC
  • Financial Representative
  • Covina, California

2012 Financial Results

Summary of Operations(consolidated statutory basis, in millions)

Year ended December 31: 2012 2011
Premiums $15,394 $14,618
Net investment income 8,677 8,439
Other income 550 538
Total revenue 24,621 23,595
Policyowner benefits paid 7,302 7,074
Increase in benefit reserves 9,053 8,430
Commissions and expenses 2,609 2,437
Total benefits and expenses 18,964 17,941
Gain before dividends and taxes 5,657 5,654
Policyowner dividends 5,045 4,973
Gain before taxes 612 681
Income tax expense 37 6
Net gain from operations 575 675
Net realized capital gains (losses) 208 (30)
Net income $783 $645

Summary of Financial Position(consolidated statutory basis, in millions)

December 31: 2012 2011
Bonds $114,524 $103,753
Mortgage loans 24,346 22,804
Policy loans 15,789 15,147
Common and preferred stocks 4,266 7,420
Real estate 1,304 1,632
Other investments 11,356 11,047
Cash and temporary investments 2,393 2,421
Total investments 173,978 164,224
Other assets 7,096 6,765
Separate account assets 21,376 18,697
Total assets $202,450 $189,686
Policy benefit reserves $149,599 $140,917
Policyowner dividends payable 5,041 4,976
Other liabilities 7,042 6,934
Separate account liabilities 21,376 18,697
Liabilities (excluding AVR) 183,058 171,524
Asset valuation reserve (AVR) 3,216 3,349
Surplus 16,176 14,813
Surplus and AVR 19,392 18,162
Total liabilities and surplus $202,450 $189,686

These summary financial statements are derived from the company’s audited consolidated financial statements, which are prepared on the statutory basis of accounting. Insurance regulators require financial statements prepared on a statutory basis of accounting, which differ materially from financial statements prepared in accordance with generally accepted accounting principles (GAAP). PricewaterhouseCoopers LLP is the company’s independent auditor. The company’s audited consolidated financial statements are available at northwesternmutual.com or by written request to:

Northwestern Mutual Corporate Communications
Room N04
720 E. Wisconsin Ave.
Milwaukee, WI 53202

2012 Financial Results

Premium Revenue (in billions)

Operating Results

Total premium revenue was $15.4 billion for 2012, an increase of 5 percent from 2011. Premium revenue from life insurance increased 4 percent during 2012 and included a 4 percent increase in renewal premiums from inforce policies. Annuity premium increased 12 percent from 2011, while premium revenue for disability and long-term care insurance increased 5 percent and 29 percent, respectively.

Despite the decline in market interest rates, net investment income increased 3 percent to $8.7 billion. This includes 3 percent growth in interest income from fixed-income investments largely due to an increased allocation to these investments. Growth in net investment income also included an increase in distributions of earnings from subsidiaries.

Benefits paid to policyowners or their beneficiaries totaled $7.3 billion during 2012, a 3 percent increase from 2011. Insurance claims experience remained favorable during 2012, in part a reflection of the company’s careful assessment of insurance risk. Reserves for future policy benefits increased by $9.1 billion during 2012 and totaled $150 billion at the end of the year. Operating results for 2012 also reflected the productivity of our field force and our continued commitment to rigorous management of operating expenses.

Net income was $783 million for 2012, an increase from $645 million in 2011. Net realized capital gains added $208 million to 2012 net income and included capital gains from the sale of common stock and real estate investments. In comparison, the company reported net realized capital losses of $30 million in 2011.

The power of our portfolio A well-balanced and diversified portfolio contributes to the company’s exemplary dividend record.
General Account Managed Investments (excludes policy loans)

2012 Financial Results

Total Assets (in billions)

Investment Results

The company’s general account investment portfolio is well diversified and allocated primarily to high-quality bonds and commercial mortgage loans. Our investment strategy provides superior returns over the long term while limiting overall credit, market and interest-rate risk. Our investment guidelines limit exposure to any single asset class or issuer.

The $115 billion bond portfolio includes both public and private bonds, with 91 percent of the total rated as investment grade at year-end 2012. The company’s $24 billion commercial mortgage loan portfolio is originated and underwritten by our own real estate professionals. It had an overall loan-to-value ratio of 57 percent at year-end 2012.

Equity investments include public and private common stocks, real estate and other holdings. The market value of these investments can be volatile, but they enhance total portfolio returns over the long term. In 2012, the company continued to follow this diversified investment strategy while reducing its exposure to public common stock to reflect targeted risk levels.3

In total, net realized and unrealized capital gains, after taxes and required deferrals of interest rate-related gains, increased total surplus (including asset valuation reserve) by $587 million during 2012. This result reflected realized gains on the sale of common stock and real estate investments and unrealized gains from market appreciation during 2012.

Northwestern Mutual maintains a very strong liquidity position. At year-end 2012, the company held $31 billion in cash equivalents, U.S. Treasurys and other highly liquid, U.S. government-supported investments. The company enjoys substantial positive operating cash flows, primarily from our large and stable block of participating life insurance business.

3 The vast majority of the company’s general account managed assets back the company’s surplus and most of the life, disability and long-term care insurance liabilities. The investment strategies described here apply to the investment of those assets. A portion of managed assets backs the remaining liabilities (including fixed-rate annuity liabilities) and has different investment allocations than described above.

2012 Financial Results

Northwestern Mutual’s principal financial goal remains the same in any economic environment: to pay a level of dividends that delivers the highest product value to policyowners without compromising the company’s superior financial strength and stability.

Mutuality and Policyowner Value

Northwestern Mutual is managed for the long-term benefit of our policyowners. This mutual philosophy leads us to pay participating policyowners the highest possible dividends deemed consistent with preserving the long-term strength and security of the company. Dividends reflect our underlying claims experience, investment performance and expense structure.

In total, dividends to policyowners are estimated to exceed $5 billion in 2013 and are expected to be the highest amount of dividends paid in company history. This includes approximately:

  • $4.6 billion in dividends on permanent life insurance policies
  • $140 million in dividends on term life insurance policies
  • $278 million in dividends on individual disability insurance policies
  • $30 million in dividends on fixed and variable annuity contracts

Additionally, our subsidiary, Northwestern Long Term Care Insurance Company, approved $7 million in dividends to long-term care policyowners in 2013.

The dividend scale interest rate on most unborrowed permanent life insurance funds will be 5.60 percent for 2013, down from 5.85 percent for 2012, reflecting in part the impact of low interest rates available on new fixed-income investments made by the company. If rates remain at current levels or fall further, it could lead to continued decreases in the dividend scale interest rate. While important, investment performance is only a part of permanent life insurance policyowner value. Our favorable claims experience and rigorous approach to expense management also contribute to the dividend payout.

Superior product value contributes to policyowner satisfaction and loyalty, demonstrated by our persistency rate for life insurance in force, which was greater than 96 percent again during 2012. Life insurance policyowners used approximately three-quarters of dividends available during 2012 to purchase additional insurance protection, contributing to a 6 percent increase in total life insurance in force, which reached $1.4 trillion at year-end 2012.

2012 Financial Results

Financial Strength

Total surplus (including asset valuation reserve) increased $1.2 billion during 2012 to $19.4 billion. In addition to policy benefit reserves, surplus provides the company with protection against the unexpected. The asset valuation reserve supports our long-term investment strategy by absorbing credit losses and short-term market volatility.

At year-end 2012, surplus and asset valuation reserve represented 13 percent of general account insurance reserves, consistent with the surplus ratio one year earlier. This level of capitalization remains very strong compared to the company’s historical surplus levels and the standards set by insurance regulators and the major rating agencies.

Surplus Ratio (surplus and AVR as a percentage of general account insurance reserves)

Looking Ahead

Northwestern Mutual will continue to focus on the fundamentals, including prudent management of insurance product risk; a balanced, diversified general account investment portfolio; and careful attention to operating expenses. This focus, along with our commitment to mutuality and the financial flexibility provided by participating dividends, will help the company weather even extreme financial stress. Regardless of the economic or financial market environment, policyowners and clients can count on Northwestern Mutual’s commitment to long-term financial security.

2012 Policyowners’ Examining Committee Report

Pictured left to right:Alyssa Altman,vice president and business unit lead at SapientNitro, a division of Sapient Corporation, Chicago, Illinois;Bryan Timm,chief operating officer and executive vice president of Columbia Sportswear Company, Portland, Oregon;William Harvey,president, DuPont Packaging & Industrial Polymers, Wilmington, Delaware;Bradley Winquist,president, owner and director, Circuit Services Group, Inc., Pewaukee, Wisconsin; andPamela Liebman(chair), president and chief executive officer, The Corcoran Group, New York, New York.

Since 1907, a group of three to five policyowners has been given unrestricted access to the company to independently evaluate its operations, management and strategic plans. Each year, the committee’s findings are published in the Annual Report. The 2012 committee’s complete report is printed here.

We’re honored to serve as this year’s Policyowners’ Examining Committee. As members of the committee, we had a chance to spend several days at Northwestern Mutual’s home office talking to leaders, learning more about the company’s strategy and hearing perspectives from the field force.

We would like to begin our 2012 report by recognizing the importance of Northwestern Mutual’s financial strength. The company has shown resilience through the economic downturn by maintaining its strong surplus, industry-leading dividend payout and the highest financial strength ratings awarded to any life insurer. In times of economic uncertainty, people are looking for the stability and security that Northwestern Mutual provides. This is reflected in the company’s strong product sales from both new and existing clients. To continue to grow and thrive in the future, the company must further evolve to meet changing demographics, consumer preferences and economic challenges. This will involve moving forward on the company’s agenda to address internal and external issues and considering action that is even more bold and visionary.

We believe that by building on the past, adapting to the present and thoughtfully looking forward, Northwestern Mutual’s leaders will ensure a secure future for policyowners, the field force and employees for decades to come.

Our external observations

Northwestern Mutual is engaging with prospects, policyowners and its field in bold new ways. The company’s brand-building efforts are raising visibility of the company and the value of working with a Northwestern Mutual financial representative – or even becoming one. In particular, the company’s partnership with the NCAA® is building national brand awareness while also strengthening local ties through sponsorships in the communities the company serves.

“We believe that by building on the past, adapting to the present and thoughtfully looking forward, Northwestern Mutual’s leaders will ensure a secure future for policyowners, the field force and employees for decades to come.”

The trusted, personal connection between clients and financial representatives has always been crucial to Northwestern Mutual’s success, and social media provides a new way to foster those connections. We applaud the company’s efforts in branding and social media because it’s another way to build relationships and share Northwestern Mutual’s unique approach to financial planning.

With economic uncertainty affecting consumer confidence, the company’s insurance and investment products, knit together by a holistic planning approach, give people confidence to achieve their financial security goals. We were pleased to see all three elements of the company’s go-to-market strategy in action, including increased marketing and brand awareness, a close connection between representatives and clients, and the integration of products and planning to help clients meet their needs.

We encourage the company to enhance its awareness and ability to react to market opportunities. The demographic face of Northwestern Mutual’s market is changing. In order to bring financial security to more people, the company must meaningfully diversify the ethnic and gender makeup of its field force. We recommend continuing the company’s successful field internship program while also exploring new ways to recruit financial representatives in the future.

Opportunities for growth also abound within the company’s current client base. The planning process must be brought to all existing clients so they can fully achieve financial security. Furthermore, planning can better span generations of clients by bringing heirs and beneficiaries into the policyowner family. We believe a stronger focus on reaching generations of clients is imperative to the company’s growth strategy.

“With economic uncertainty affecting consumer confidence, the company’s insurance and investment products, knit together by a holistic planning approach, give people confidence to achieve their financial security goals.”

Our internal observations

While devoted to the longstanding principles of mutuality, doing what’s right and putting policyowners first, Northwestern Mutual’s culture continues to evolve. Change, embodied in the mantra of “the best must get better,” has characterized Chairman and CEO John Schlifske’s leadership. John has championed advances in talent management, employee engagement, diversity and inclusion, efficiency and data-driven decision making.

In pursuit of this agenda, John is cultivating a dynamic group of new leaders and encouraging open debate and dialogue about key business issues. These new leaders are pursuing innovation while remaining committed to integrity and the strong risk management culture that has served Northwestern Mutual so well. We applaud John and his leadership team for their courage in evolving the culture to ensure the company’s continued success.

We encourage leaders to help and inspire others to bring their best. A culture of accountability is crucial to ongoing improvement. As leaders develop and empower employees, productivity and the overall employee experience will improve. Varied viewpoints also are critical to evolving the culture. We recognize progress in bringing more diversity to both the home office and field and encourage more growth in this area.

Call to action for representatives, policyowners

Our time on the Policyowners’ Examining Committee has impressed upon us the interdependence between past, current and future policyowners. We all have a stake in the financial strength, vitality and future of our great company. We should not keep Northwestern Mutual’s unique planning approach, relationship-based sales and quality products to ourselves. We issue a call to action for both financial representatives and policyowners: Create multi-generation plans and relationships.

“We all have a stake in the financial strength, vitality and future of our great company. We should not keep Northwestern Mutual’s unique planning approach, relationship-based sales and quality products to ourselves.”
  • Policyowners:Introduce your financial representative and his or her team to your family.
  • Financial representatives:Ask to meet with the family members of your clients, and prepare a plan that meets the unique needs of those families.

For more than 155 years, Northwestern Mutual has helped families navigate through their times of most dire need and weather the turbulence of inflation, deflation and economic turmoil. We owe the opportunity to be policyowners to our children, grandchildren and relatives.

Report submitted November 15, 2012

Members of the Policyowners’ Examining Committee meet withJohn Schlifske,chairman and CEO of Northwestern Mutual, to learn more about the company and its business goals during one of their visits to the downtown campus. In turn, the committee members offered their unique observations and perspectives about the company.

Company Leadersas of February 15, 2013

Management Committee

  • John E. SchlifskeChairman and CEO
  • Gary A. PolinerPresident
  • Michael G. CarterSenior Vice President and Chief Financial Officer
  • Joann M. EisenhartSenior Vice President Human Resources
  • Ronald P. JoelsonExecutive Vice President andChief Investment Officer
  • Jean M. MaierExecutive Vice President Enterprise Operations and Technology
  • Raymond J. ManistaSenior Vice President General Counsel and Secretary
  • Gregory C. OberlandExecutive Vice President Products, Sales and Marketing
  • Todd M. SchoonExecutive Vice President Agencies

Executive Officers

  • Sandra L. BotcherVice President Disability Income
  • Eric P. ChristophersenVice PresidentWealth Management
  • David D. ClarkSenior Vice President Real Estate
  • Jefferson V. DeAngelisSenior Vice President Public Markets
  • Christina H. FiascaVice President Product Finance
  • Timothy J. GerendVice President Compliance/Best Practices
  • Kimberley GoodeVice President Communications and Corporate Affairs
  • Karl G. GouverneurVice President Chief Technology Architect
  • John M. GroganSenior Vice President Planning and Sales
  • Thomas C. GuayVice President Field Rewards
  • Gary M. HewittVice President Investment Risk Management
  • Todd M. JonesVice President and Chief Risk Officer
  • J. Chris KellyVice President and Controller
  • John L. KordsmeierVice President Strategic Philanthropy and Community Relations
  • Jeffrey J. LuekenSenior Vice PresidentSecurities
  • Steven C. MannebachVice President Field Growth and Development
  • Christian W. MitchellVice President Corporate Planning
  • Kathleen A. OmanVice PresidentIT Relationship Management
  • Steven M. RadkeVice President Government Relations
  • David R. RemstadSenior Vice President and Chief Actuary
  • Bethany M. RodenhuisSenior Vice President Field Strategy and Services
  • Tammy M. RoouVice President Enterprise Risk Assurance
  • Timothy G. SchaeferSenior Vice President and Chief Information Officer
  • Calvin R. SchmidtSenior Vice President Integrated Customer Operations
  • Sarah R. SchneiderVice President New Business
  • David W. SimbroSenior Vice President Life and Annuity Products
  • Steve P. SperkaVice President Long Term Care
  • Paul J. SteffenVice President Agencies
  • Conrad C. YorkVice President Marketing
  • Todd O. ZinkgrafVice PresidentEnterprise Solutions

Board of Trusteesas of February 15, 2013

  • John N. Balboni3, 6ASenior Vice President and Chief Information Officer International Paper Memphis, Tennessee
  • David J. Drury4, 5Owner and CEO Poblocki Sign Company, LLC Milwaukee, Wisconsin
  • Connie K. Duckworth4, 5Founder and CEO ARZU, Inc. Lake Forest, Illinois
  • David A. Erne2, 3, 4Of Counsel Reinhart Boerner Van Deuren, S.C. Milwaukee, Wisconsin
  • James P. Hackett5President and CEO Steelcase, Inc. Grand Rapids, Michigan
  • P. Russell Hardin6President Robert W. Woodruff Foundation Atlanta, Georgia
  • Hans Helmerich5Chairman and CEO Helmerich & Payne, Inc. Tulsa, Oklahoma
  • Dale E. Jones1Vice Chairman Heidrick & Struggles Washington, D.C.
  • Margery Kraus1A, 3Founder and CEO APCO Worldwide Washington, D.C.
  • David J. Lubar4, 6President and CEO Lubar & Co. Milwaukee, Wisconsin
  • Ulice Payne Jr.4, 5President and CEO Addison-Clifton, LLC Brookfield, Wisconsin
  • Gary A. Poliner3, 4President The Northwestern Mutual Life Insurance Company Milwaukee, Wisconsin
  • John E. Schlifske3A, 4AChairman and CEO The Northwestern Mutual Life Insurance Company Milwaukee, Wisconsin
  • Peter M. Sommerhauser3, 4, 5AAttorney Godfrey & Kahn, S.C. Milwaukee, Wisconsin
  • Mary Ellen Stanek2, 4Managing Director and Director of Asset Management Robert W. Baird & Co. Milwaukee, Wisconsin
  • Timothy W. Sullivan2Former President and CEO Bucyrus International, Inc. Milwaukee, Wisconsin
  • S. Scott Voynich2A, 3Managing Partner Robinson, Grimes & Company, P.C. Columbus, Georgia
  • Ralph A. Weber6Founding Member Gass Weber Mullins, LLC Milwaukee, Wisconsin
  • Barry L. Williams1Retired Managing General Partner Williams Pacific Ventures, Inc. San Francisco, California
  • Benjamin F. Wilson2Managing Principal Beveridge & Diamond, P.C. Washington, D.C.
  • Edward J. Zore1, 4Retired Chairman and CEO The Northwestern Mutual Life Insurance Company Milwaukee, Wisconsin

Committee affiliation key:

  1. 1 Agency and Marketing
  2. 2 Audit
  3. 3 Executive
  4. 4 Finance
  1. 5 Human Resources, Nominating and Corporate Governance
  2. 6 Operations and Technology
  3. A Chair

Ready for giving back

Every day in the United States, 36 children are diagnosed with some form of cancer.4 Northwestern Mutual is working to reverse that trend with its new philanthropic program to fight childhood cancer. The program builds on our legacy of helping children and families.

Sponsored by the Northwestern Mutual Foundation, the company’s childhood cancer program will help accelerate the search for a cure to childhood cancer and provide support to kids and families facing the daily struggles of the disease.

“Cancer is the leading cause of death by disease in children under the age of 15 in the United States;5 yet childhood cancer research and services for families facing this disease are vastly underfunded,” says John Schlifske, chairman and CEO of Northwestern Mutual.

Through partnerships with Alex’s Lemonade Stand Foundation and Starlight Children’s Foundation, Northwestern Mutual is activating a range of programs and events in communities across the country to fight childhood cancer.

The company's childhood cancer program harnesses the passion of thousands of Northwestern Mutual employees, financial representatives and family members. Field Director and Wealth Management AdvisorWesley Pattersonand his family are just one example. The family recently ran a lemonade stand event that raised more than $5,400 for the cause.

Right:Wesley, his wife,Jennifer,and their children, (left to right)Carly, ColeandCason,operate their lemonade stand in Gadsden, Alabama.

4CureSearch for Children's Cancer 5National Cancer Institute

Northwestern Mutual

Northwestern Mutual helps clients protect against financial risk and achieve financial security. The company, together with its subsidiaries, offers life, disability and long-term care insurance; annuities; investment products; advisory services; and trust services that address client needs for financial protection, wealth accumulation, estate preservation and asset distribution. Headquartered in Milwaukee, Wisconsin, the mutual company has nearly 4 million policyowners and investment clients. It expects to continue as the leading U.S. company in total life insurance dividends paid to policyowners.

Disability insurance

Disability policies contain exclusions, limitations and reduction-of-benefits provisions. For costs and complete details of coverage, please contact your financial representative.

Subsidiaries

QuietCare® long-term care insurance is offered through Northwestern Long Term Care Insurance Company, Milwaukee, Wisconsin. Securities are offered through  Northwestern Mutual Investment Services, LLC  (NMIS), Suite 600, 611 E. Wisconsin Ave., Milwaukee, WI, 53202, 1-866-664-7737. NMIS, a registered investment adviser, broker-dealer and member of FINRA and SIPC, is a wholly owned company of Northwestern Mutual. Northwestern Mutual Wealth Management Company, a wholly owned company of Northwestern Mutual, is a limited purpose federal savings bank authorized to offer a range of financial planning, trust, fiduciary, investment advisory and investment management products and services. The Frank Russell Company (also known as the Russell Investment Group) is a Washington, USA, corporation, which operates through subsidiaries worldwide and is a subsidiary of The Northwestern Mutual Life Insurance Company.

More about dividends

Decisions with respect to the determination and allocation of divisible surplus are left to the discretion and sound business judgment of the company’s Board of Trustees. There is no guaranteed specific method or formula for the determination and allocation of divisible surplus. Accordingly, the company’s approach is subject to change. Neither the existence nor the amount of a dividend is guaranteed on any policy in any given policy year. Some policies may not receive any dividends in a particular year or years even while other policies receive dividends. In its 2013 dividend scale resolution, the Board of Trustees has exercised its discretion to guarantee a minimum amount of dividends to be paid in 2013 to policyholders as a group. If this guaranteed amount exceeds the aggregate amount of dividends actually paid to individual policyholders in 2013, that excess will be paid in 2014 in accordance with the 2013 dividend scale resolution. The presence of a guaranteed minimum amount in the 2013 dividend scale resolution does not obligate Northwestern Mutual to declare a dividend in future years or to guarantee any portion of dividends that may be declared in future years.

Reporting Fraud

Every year, insurance fraud costs companies and consumers billions of dollars. What can policyowners do to help the company’s anti-fraud efforts? The company’s website has information on this topic. To report fraud, email antifraud@northwesternmutual.com or call toll-free 1-877-607-2485.

Client-Representative Relationships

This report contains profiles of certain Northwestern Mutual clients, their personal financial needs and how Northwestern Mutual met their needs. The personal financial needs and results of the clients shown in this report may not be representative of the experience of other clients. Please discuss your personal financial situation with your Northwestern Mutual financial representative before purchasing any product or service. Please keep in mind that working with a Northwestern Mutual financial representative or any other financial services provider is not a guarantee as to future investment success.

Enterprise Risk Management

Northwestern Mutual has a strong risk management culture prevalent at all levels of the organization that promotes vigilance in identifying and managing risks – whether financial, operational, strategic or environmental – that could impact the strength and security of your company. We apply risk models, experience and judgment as part of a well-coordinated structure to identify, evaluate, address and monitor current and emerging risks. This structure assures accountability for scrutinizing risks, defining tolerance thresholds and managing risks within those thresholds. Cross-functional committees have been established to review risks related to our business. They are central to our internal system of checks and balances. These committees rely on well-informed employees and work in partnership with the chief risk officer, who facilitates consistent direction and communication between various risk management functions in the company. The company’s Board of Trustees is responsible for overseeing all risk management efforts. As a financial security company, we believe that managing risks lies at the heart of our business and is deeply rooted in the more than 155-year-old culture that guides our employees and financial representatives.

Annual Meeting 8 a.m., May 22, 2013

The Annual Meeting of Policyowners of The Northwestern Mutual Life Insurance Company will be held at 8 a.m., Wednesday, May 22, 2013, at the company’s downtown campus, 720 E. Wisconsin Ave., Milwaukee, WI.

HAVE A QUESTION?

For policy inquiries or general information, go to northwesternmutual.com. For billing and payment inquiries, call 1-800-388-8123. The company’s general phone number is (414) 271-1444.

Results in Brief (in millions)

  2012 2011 Change
Policyowner dividends $5,045 $4,973 +1%
Policyowner benefits paid $7,302 $7,074 +3%
Individual life insurance in force $1,385,000 $1,311,000 +6%
  2012 2011 Change
Total revenue $24,621 $23,595 +4%
Total assets $202,450 $189,686 +7%
Surplus & asset valuation reserve $19,392 $18,162 +7%

(consolidated statutory basis)

Your vote matters

Proxy Voting Card You have a voice in our leadership. Make sure it’s heard. Send in your proxy voting card before May 17, 2013.

As a policyowner, you play an important role in our corporate governance and keeping our company strong.

One way you can do this is by voting in our Board of Trustees election. This year, the board has nominated four candidates for election to the board at the 2013 Annual Meeting. To vote for the candidates, please return the proxy card enclosed in your 2012 Annual Report mailing. Your signed proxy must be received by May 17, 2013.

Click on the video to hear one policyowner’s perspective on the importance of proxy voting.

Are you ready?

The policyowners in this Annual Report are taking steps to help ensure they’re ready financially for what life may bring. How’s your financial planning? Research shows many Americans could use some help.

What’s your financial outlook?

  • 65 Number of Americans who think they need to work past age 65 to meet their financial goals.6
  • 59 Number of Americans who say their financial planning needs improvement.7
  • 66 Number of Americans who feel financially prepared to live to age 75.7
    • 6Northwestern Mutual’s Mature Markets Study, December 2011
    • 7Northwestern Mutual’s State of Planning in America Study, February 2012

2012 Annual Report Ready for Life

 

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