An incredible $6.5 billion dividend – and other secrets to Northwestern Mutual’s success

This morning,?our company shared a?historic?announcement:?Northwestern Mutual?is?planning?to pay a $6.5?billion dividend to?our?participating policyowners?in 2022 . All totaled, this will be our highest payout in our company’s 164-year history – and?nearly?triple?our closest competitors.??

Dividends are one of the most important ways that?we?share?success with?our?policyowners, providing them with value,?options?and flexibility. Our clients use?dividends?to increase the?accumulated?value?of their policy?and in some cases death benefit of their policy, reduce the cost of their?out-of-pocket?premiums, or fund immediate needs by receiving the dividends as cash.??

What others may find extraordinary is that we’re paying this?largest-ever, industry-leading dividend during a health crisis and?amidst?uncertainty?on?a number of?fronts.?So how is this possible??Ultimately,?it’s a reflection of the strength of the company and?the way we manage our business to thrive regardless of what is happening around us. As a mutual company owned by our policyowners – not by shareholders and not by Wall Street – it’s what we’ve always sought to deliver since our founding. In fact, we’ve paid a dividend to our clients every single year since 1872.?Next year’s dividend payout represents our 150th?consecutive year delivering dividends to clients while maintaining our company’s unquestionable long-term financial strength.??

How many companies can say that they’ve delivered exceptional value to their customers for a century-and-a-half? Not many, and in fact, the number of companies with consistently extraordinary business performance is shrinking.?The average lifespan of a U.S. company in the S&P 500 has fallen 80% in the last 80 years . Today, the average S&P 500 company remains on the list for just 20 years, and?by 2027, McKinsey & Company predicts that span will drop to only 12 .?Northwestern Mutual is strikingly different?– not just?surviving but thriving and growing?for generations.?

A number of?business leaders inside and outside our industry have asked me to explain?how?Northwestern Mutual has been able to thrive through every downturn, disruption, infectious disease and natural disaster over generations. It’s my honor to share with you what I’ve shared with them.??

Everyone does well when everyone does well.?

One of the things other leaders find remarkable about Northwestern Mutual is that the interests of?all?of?our?stakeholders are aligned.?There is no space between what’s right for the company, our policyowners, our advisors and our employees.?When our company has a strong year, our policyowners?benefit, including?through our dividend payout.?When our policyowners do well,?they?keep their policies in-force and refer their friends and family to us, that’s good for our advisors. And when our clients and our advisors?have a successful year, that’s good for our employees?because we align their?incentives to the overall long-term success of our business through our?company’s annual incentive program.??

There?is a?total alignment of incentives and mission?– and?it?creates an environment where everyone is working together.?That?circle of success has a significant impact?on our business:?

• 97% of our clients stay with us year after year.?
• We now protect more than?four?million?Americans?and have $2.1 trillion of?life insurance?protection in force.??
• We are an investment leader—with a combined $500 billion invested through company and client assets to help people build long-term financial security.

Prepare in advance.?

Another way we stand out is the way we prepare for the future.?Economic ups and downs are inevitable, so we plan for them.?Even though the pandemic,?we continue to be the strongest company in our industry, and we remain one of the strongest companies across all industries.?In fact, Northwestern Mutual?is one of?only three?U.S.?companies Moody’s recognized with a AAA rating and stable outlook . That kind of financial strength enables us to?lead the company boldly with a long-term view - ultimately?driving?stronger returns for our clients.??

In?fact,?we ended the year stronger than we’ve ever?been?– making sure that we have?extraordinary protection from any economic storm that?could?come.?No matter what happens in the environment, we know that we have?superior liquidity?which?enables us to meet our obligations to policyowners and act opportunistically across global markets, buying assets “on sale”?when?opportunities arise. Our savvy, seasoned investment team is always looking for value mismatches in the markets, especially during market valleys, to deliver even?more financial strength and product value to our policyowners.?

Always taking?the long-term view.?

Many?publicly-traded?companies prioritize quarterly earnings targets to push their stock prices higher. As a mutual company with no shareholders, we don’t need to spend any time satisfying short-term interests. We can always do things in the long-term best interests of policyowners,?driving consistent and steady performance year after year.?Our?goal is to earn the loyalty of clients throughout their life.?

One of the ways we earn that loyalty is by?paying the maximum?amount?of dividends to policyowners while maintaining our exceptional financial strength.?As a CEO,?I’m thrilled to share that this year, we are paying out a record amount of dividends to participating policyowners and we’re growing our surplus to?the highest level ever.?This is great news?for?all of?our clients?who?rely on us for?long-term product values, stability and consistency. When our surplus is strong,?it ensures?we have the?financial strength to pay claims?no matter what happens?– but it also gives us another huge benefit. It also?ensures that we have the capital to take advantage of down markets and market corrections, enabling us to generate stronger returns for our clients over time.??

For?any?leader who wonders?how?our company has been able to thrive for so long, it comes down to this:?Northwestern Mutual is?the policyowners’ company.?Our commitment to our clients’ long-term best interests?is second-to-none?– and?it’s proven yet again this year?by our?record-setting?dividend announcement and enduring strength.??

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According to Financial Planning’s 2020 IBD Elite report, Northwestern Mutual ranks #7 overall (based on total revenue) and #9 (based on total revenue growth rate).?

Combined client assets of NMIS and NMWMC as of September 30, 2021.?The advisory programs offered by NMWMC are in conjunction with brokerage services from NMWMC’s affiliate?Northwestern Mutual Investment Services, LLC (NMIS). NMIS is a?wholly-owned?subsidiary of Northwestern Mutual.

Northwestern Mutual continues to have the highest financial strength ratings awarded to any U.S. life insurer by all four of the major rating agencies: A.M. Best Company,?

A++ (highest), May 2021; Fitch Ratings, AAA (highest), July 2021; Moody’s Investors Service,?Aaa?(highest), July 2021; S&P Global Ratings, AA+ (second highest), July 2021. Third-party ratings are subject to change and are a measure of the company’s relative financial strength and security but are not a reflection of the performance or stability of funds invested in a company’s separate accounts. Ratings are for The Northwestern Mutual Life Insurance Company and Northwestern Long Term Care Insurance Company