Two major life insurance companies, MetLife and Northwestern Mutual, have approved dividend payments.

Northwestern Mutual Life Insurance Company, Milwaukee, says it has approved a payout of nearly $5 billion for participating policyowners for 2012, an increase of more than $125 million over its expected 2011 payout. The dividend also exceeds the company’s 2010 payout of $4.7 billion.

Separately, Metropolitan Life Insurance Company, New York, declared an annual common stock dividend for 2011 of $0.74 per common share, an amount unchanged from 2010.

Northwestern Mutual says its dividend is the second-largest payout in the company’s history. The company credits its dividend payout to “careful underwriting, rigorous expense management, diversified investing, and strong performance in other operating fundamentals.”

“In 2012, we’ll probably pay more permanent life dividends than the next two companies combined,” says John Schlifske, chairman and chief executive officer of Northwestern Mutual. “We are one of a few companies who pay dividends on term life, long-term care and disability insurance.”

Northwestern Mutual highlighted the following aspects of its 2012 dividend, as well as the separate dividend announcement of its subsidiary, the Northwestern Long Term Care Insurance Company:

—Life Insurance: About 90% of the nearly $5 billion will be paid to participating permanent life insurance policyowners.

—Disability Insurance: The company expects to pay disability insurance policyowners $252 million in dividends in 2012.

—Long-Term Care Insurance: The Board of Directors of the Northwestern Long Term Care Insurance Company approved a dividend payout of $12.8 million on long-term care policies for 2012.

—Term Life Insurance: In 2012, $120 million in dividends is expected to be paid to term life insurance policyowners.

—Fixed and variable annuities: These annuity products are expected to receive $27 million in dividends during 2012.

Separately, MetLife says that its dividend will be payable on December 14, 2011 to shareholders of record as of November 9, 2011.

While MetLife’s business activities are predominantly in insurance, MetLife says that, by virtue of its ownership of MetLife Bank, it is a bank holding company. As such, MetLife’s capital planning and distribution activities relating to dividend increases and stock repurchases are subject to prior review and approval by the Federal Reserve. The company will participate in the Federal Reserve 2012 Comprehensive Capital Analysis and Review.

MetLife says it recently submitted to the Federal Reserve for approval a capital distribution plan that included both an increase in MetLife’s annual dividend as well as the resumption of stock repurchases.

The Federal Reserve concluded that the company’s planned capital actions should be tested under a revised adverse macroeconomic scenario which is being developed for those firms that will participate in the 2012 Comprehensive Capital Analysis and Review. As a result, the Federal Reserve did not approve the company’s planned dividend increase and other proposed capital actions at this time.

“MetLife is well capitalized and is firmly committed to creating shareholder value and returning capital to its shareholders,” says Steven Kandarian, president and chief executive officer of MetLife. “We are disappointed that we cannot commence increased capital actions now, as our analysis shows that the company’s current capital level and financial strength support capital action increases.

“We look forward to seeking and gaining approval of our capital plan from the Federal Reserve early next year,” he adds. “Moreover, increasing our capital actions in this current economic environment and in this time of high unemployment would prove beneficial to the economy as our shareholders re-deploy these funds in a productive manner.

“At the same time, we continue to move forward on our plans to explore the sale of the depository business and the mortgage origination activity conducted at MetLife Bank and to take the necessary steps to no longer be a bank holding company.

Kandarian adds also that that these steps that will “ensure that MetLife is able to operate on a level regulatory playing field with other insurance companies.”