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Northwestern Mutual boasts increases in revenue, surplus

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Northwestern Mutual will pay a record $5.2 billion in dividends to policy owners this year, the company disclosed in its latest earnings report.

In its 2013 financial results, released today, the Milwaukee-based mutual life insurance company also reported that premium revenue grew 8 percent and that surplus increased to $20.6 billion, a $1.2 billion rise.

Surplus represents a mutual insurance company’s capital position exceeding the reserves it holds to provide for future insurance benefits. The company’s surplus ratio, a measure of its capital position relative to its size and business risks, remained unchanged from one year earlier at 13.0 percent.

According to Northwestern Mutual Chairman, President and CEO John Schlifske, over the past five years people have bought nearly 2 million new policies and annuity contracts from the company.

Contributing to the insurer’s strong performance, he added, is growth in the size and productivity of its field force nationwide. The company had 6,662 full-time financial representatives at year-end 2013, a record for the company.

Following are highlights of the company’s 2013 financial results:

  • Premium revenue totaled $16.6 billion for 2013, an increase of 8 percent from the prior year;
  • Net investment income of $8.7 billion was 1 percent higher than 2012;
  • Total insurance benefits increased 7 percent to $17.5 billion for 2013, including a $9.6 billion increase in reserves for future policy benefits and a 9 percent increase in benefits paid to policy owners and their beneficiaries;
  • Commissions and insurance operating expenses increased 3 percent compared to the prior year;
  • Operating gain before dividends and taxes exceeded $5.7 billion for the first time during 2013;
  • Net realized capital gains added $276 million to 2013 net income, as net gains on the sale of common stocks far exceeded a modest level of investment impairments. Including realized capital gains, net income was $802 million for 2013, an increase from $783 million for 2012; and
  • The estimated $5.2 billion dividend payout for 2014 includes $300 million in dividends on individual disability insurance policies and $145 million in dividends on term life insurance.