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Northwestern Increases Dividend

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Northwestern Mutual Life Insurance Company expects the total amount of dividends it pays to its policyholders to increase to $4.9 billion in 2011, from $4.7 billion this year.

Northwestern, Milwaukee, had to cut the dividend payment total to $4.6 billion in 2009, from $5 billion in 2008, as a result of the 2008 credit market crisis, but it has succeeded at paying dividends every year since 1872.

About 90% of the 2011 dividends will go to life insurance policyholders.

Dividend payments will increase to $123 million, from $120 million, for term life policyholders; to $233 million, from $225 million, for disability insurance policyholders; and to about $11 million for long term care insurance policyholders, from $8 million.

Holders of fixed and variable annuities will get about $27 million in dividends.

The company’s dividend interest rate on most unborrowed permanent life insurance funds will be 6%, down from 6.15% this year.

Northwestern notes that the dividend scale interest rate is substantially higher than the rates issuers are paying on long-term corporate bonds. Today, the typical rate is about 4%, the company says.

- Allison Bell


CORRECTION: An earlier version of this article described Northwestern’s dividend actions incorrectly. The total amount of dividends to be paid will increase, but the dividend rate will decrease.