Consistency Counts

1. THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY (NORTHWESTERN MUTUAL)
CONSISTENCY COUNTS
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2. CONSISTENCY COUNTS
It’s hard to evaluate a financial services company. How do you measure performance and
decide which company is best? At Northwestern Mutual we have developed a scorecard,
mostly for internal use (we present this data annually to our Board of Trustees), to help
us decide: How are we doing? How well are we positioned to take care of our customers
in the future? How are we performing relative to our competitors?
In golf tournaments, the ultimate winners don’t necessarily have the lowest score on each
and every hole. They need to perform consistently well: to hit the ball straight; to have
more birdies than bogies; to avoid the hazards that lie in wait for those who take undue
risks; to lay up when necessary and to hit the ball far when the opportunity presents
itself. They play to win the tournament, not to gain the admiration of the crowd with the
occasional great shot. And the outstanding champions, who win consistently, perform at
the highest levels again and again and again.
Northwestern Mutual’s scorecard has nine measures – nine ways the company keeps
track of how it is doing; nine fundamentals that are crucial to the overall success of
the company. Stock companies might include additional measures – after all, they have
their stockholders to consider. But, as a mutual company, owned by its policyowners,
Northwestern Mutual can afford to be singular in its efforts to provide policyowner
value. We have the advantage of being able to have a long-term perspective in an
industry that was created to provide consumers with financial security over an entire
lifetime. But we measure how we are doing all the time, so we can make adjustments
if necessary. And we keep track of how our competitors are doing, so we have a relative
measure as well as an absolute one.
AS IN GOLF, THE LOW SCORE WINS.

3. Performance Size & Scale Strength & Security
HOW
THEY 1 2 3 4 5 6 7 8 9
RANKED Gain
Life
Lapse Unit Total Surplus
Total
Before
Dividends
Total Life Capital Ratings Total
Dividends Rate Costs Assets Premium Ratio
Paid & Surplus
& Taxes
NORTHWESTERN MUTUAL 1 1 1 1 6 1 4 3 1 19
Metropolitan 5 3 2 7 1 3 8 1 6 36
Prudential 2 2 5 4 2 4 9 4 8 40
New York Life 6 4 7 10 5 2 5 2 1 42
Massachusetts Mutual 7 5 4 8 9 7 2 5 3 50
Hartford 3 10 3 6 3 10 3 7 10 55
John Hancock 8 7 10 2 4 5 10 8 5 59
Guardian 10 6 6 5 10 9 1 10 3 60
AXA / Equitable 4 8 9 3 8 8 6 9 6 61
Lincoln National 9 9 8 9 7 6 7 6 8 69
While the rankings of financial results shown here are the most recent available (2009),
Northwestern Mutual’s status and its “margin of victory” has been consistent for the last
several years.
OUR SCORECARD
1. GAIN BEFORE DIVIDENDS & TAXES – the driver to dividend-paying 5. TOTAL ASSETS – an indicator of relative size and scale
capacity and continued financial strength 6. TOTAL LIFE PREMIUM – an indicator of market share
2. DIVIDENDS PAID – an important way companies provide value 7. SURPLUS RATIO – the company’s surplus relative to its obligations
3. LAPSE RATE – an indicator of policyowner satisfaction 8. TOTAL CAPITAL & SURPLUS – the amount assets exceed obligations
4. UNIT COSTS – a measure of how expenses are being controlled 9. RATINGS – financial strength as determined by rating agencies

4. SCORECARD DESCRIPTIONS
• Gain before Dividends and Taxes is the difference between the company’s • Surplus ratio (the ratio of total capital and surplus to general account
revenue and its expenses, prior to the deductions for dividends and reserves) is the amount over and above reserves that is set aside to cover
taxes. This measure is positively impacted by increases in premium benefits and losses. As such it is an indicator of additional safety margin.
and investment income, savings from mortality experience and careful
management of expenses. • Total Capital and Surplus identifies the difference between assets and
liabilities and is one measure of the financial foundation of an insurer.
• These life insurance dividends represent value over and above any As of December 31, 2009, Northwestern Mutual’s assets totaled
contractual guarantees. Dividends are determined annually by the $167 billion; its liabilities totaled $154 billion.
Board of Trustees; they are not guaranteed. Northwestern Mutual’s
primary financial objective is to pay a level of dividends that delivers • Insurance financial strength ratings by rating agencies provide a
the highest product value to policyowners without compromising its third-party perspective on current financial strength. Northwestern
financial strength. Mutual’s ratings are A.M. Best (A++), Fitch (AAA), Moody’s (Aaa)
and Standard & Poor’s (AAA); they are current as of May 11, 2010.
• A low Lapse Rate means a company has a high retention rate, referred All ratings are subject to change.
to as persistency. Northwestern Mutual views this as an indicator of
policyowner satisfaction with the performance of their policies. The
chart reflects the lapse rate on the amount of life insurance in force. Sources: Ratings are from the ratings agencies themselves (and are
current as of May 2010). All other rankings are based on information
• The unit costs reflected here are the ratio of life insurance expenses published by SNL Financial. Calculations were made by The
incurred to total life insurance premiums paid. Northwestern Mutual’s Northwestern Mutual Life Insurance Company, Milwaukee, WI,
focus on overall expense management while attracting a growing for a self-defined group of peer companies.
number of new and repeat customers results in lower unit costs.
The Northwestern Mutual Life Insurance Company (Northwestern
• Total assets includes both those the company invests on behalf of its
Mutual), Milwaukee, WI (life insurance, disability insurance, annuities).
policyowners (the general account) and those policyowners direct within
Securities are offered by Northwestern Mutual Investment Services, LLC,
their life insurance policy or annuity (separate account assets), and is an
a wholly-owned company of Northwestern Mutual, broker-dealer and
important reflection of an insurer’s size and scale of operations.
member of FINRA and SIPC.
• Total Direct Ordinary Life Premium is the primary way Northwestern
Mutual measures its market share. Total premium includes all the
individual life insurance premiums paid by policyowners as well as
the premiums received when policyowners use policy dividends to
purchase additional insurance coverage. The Northwestern Mutual
Life Insurance Company • Milwaukee, WI
www.nmfn.com
29-5136 (0709) (REV 0510)