Northwestern Mutual reports record dividends, sales gains
By National Underwriter
By Warren S. Hersch
Northwestern Mutual Life Insurance Company reported today double-digital increases in sales of life insurance and annuities and a record dividend payout to policyholders.
The Milwaukee-based mutual insurer disclosed in its 2012 financial results combined 2012 new premium sales for life, disability income and long-term care insurance of $1.03 billion, up 11 percent over 2011. Annuity sales also increased 11 percent to a record $1.7 billion.
Northwestern Mutual’s estimated payout of dividends in 2013 will total a record $5 billion, including a 5.6 percent dividend scale interest rate for un-borrowed funds for mostly traditional permanent life insurance policies. The estimated payout for 2013 includes $278 million in dividends on individual disability insurance policies and $140 million in dividends on term life insurance.
The company's total surplus increased by more than $1.2 billion in 2012, totaling $19.4 billion at year-end. "Total surplus" (the combination of surplus and asset valuation reserve) refers to Northwestern Mutual’s capital position, a financial cushion that supplements reserves the company also holds to provide for future insurance benefits.
Additional highlights of the company's 2012 financial performance include:
- Premium revenue, including both new and renewal premium, totaled $15.4 billion for 2012, an increase of 5 percent from the prior year. Net investment income of $8.7 billion was 3 percent higher than 2011.
- Total insurance benefits increased 5 percent to $16.4 billion for the year, including a $9.1 billion increase in reserves for future policy benefits and relatively consistent benefits paid to policy owners and their beneficiaries compared to the prior year.
- Commissions and insurance operating expenses increased 7 percent compared to the prior year. The company expects to maintain one of the lowest life insurance unit costs in the industry again during 2012, a reflection of both the productivity of its field force and its rigorous management of home office expenses.
- Operating gain before dividends and taxes remained consistent compared to the prior year, as strong fundamentals were offset by the negative impacts of continued low market interest rates. After dividends and taxes, net gain from operations was $575 million compared to $675 million for the same period last year.
- Net realized capital gains added $208 million to 2012 net income, primarily reflecting gains on the sale of common stocks and real estate investments. Including realized capital gains, net income ended the year at $783 million compared to $645 million for the same period in 2011.