Detailed Financial Results Overview

Northwestern Mutual continued to thrive in 2023 through significant headwinds—inflation, market volatility, geopolitical conflict and more. As the liquidity crisis in banking made headlines, we doubled down on our commitment to our policyowners by both growing our dividends paid to policyowners and increasing our dedicated liquidity reserves by nearly $5 billion for added flexibility to both meet policyowner demands and invest opportunistically.

The most significant financial trend of recent years is the turnaround in interest rates after more than a decade of decreases resulting in historic lows. This tailwind will continue to favorably impact our net investment income as more of the company's fixed-income investments mature and are reinvested at higher rates. When you combine this with our diligent expense management, we will continue to drive significant growth in operating gain before dividends and taxes (OGBDT), which contributes to both dividends and surplus—benefiting policyowner value for years to come.

Exceptional financial strength and industry-leading product value will always be our top priorities. As we enter 2024 with a record surplus of more than $38 billion,1 we continue to be positioned to thrive in any economic environment. And as a mutual company, we share our success solely with you—our policyowners—in the form of annual dividends, which are expected to reach $7.3 billion2 in 2024, eclipsing our previous dividend award by $550 million.

The combination of record surplus and total dividend payout reflects our longstanding commitment to both financial strength and policyowner value, upheld by the actions we take with our finances. We do this with a deep sense of mission—to serve your interests—so thank you for making what we do possible.

Todd Jones

Executive Vice President and Chief Financial Officer

Summary of operations

(Statutory basis, in millions)

For the years ended December 31

2023

2022

Premiums✕Insurance premiums decreased 1% in 2023 due to lower sales of single premium bank-owned life insurance, which had experienced very high sales the last two years relative to historical results.

$22,003

$22,288

Net investment income✕Net investment income increased 12%, mainly driven by higher fixed-income investment (i.e., bonds and mortgage loans) yields and an increase in invested assets.

13,224

11,768

Other income

896

840

Total revenue✕Total revenue (premiums + net investment income + other income) reached an all-time high of over $36 billion.

36,123

34,896

Policyowner benefits paid

12,818

11,707

Increase in benefit reserves

10,966

11,734

Commissions and expenses

4,216

4,158

Total benefits and expenses

28,000

27,599

Gain before dividends and taxes✕Operating Gain Before Dividends and Taxes (OGBDT) contributes to both dividends and surplus. It reflects our performance and is what's left after we've paid and reserved for policyowner benefits relative to total revenue. Higher net investment income was the main driver of higher operating gain before dividends and taxes compared to 2022.

8,123

7,297

Policyowner dividends✕Our objective continues to be to pay the highest possible dividends consistent with maintaining unquestionable long-term financial strength in a manner guided by mutuality.In 2023, policyowner dividends increased 8%. While dividends are reviewed annually and not guaranteed, Northwestern Mutual has paid dividends every year since 1872.

7,371

6,833

Gain before taxes

752

464

Income tax expense (benefit)

5

(160)

Net gain from operations

747

624

Net realized capital (losses) gains

(36)

288

Net income

$711

$912

The summarized financial statements above were prepared on the statutory basis of accounting. Financial statements prepared on the statutory basis of accounting differ materially from financial statements prepared in accordance with generally accepted accounting principles ("GAAP").

Summary of financial position

(Statutory basis, in millions)

As of December 31

2023

2022

Bonds

$191,692

$187,268

Mortgage loans

53,361

51,798

Policy loans

19,003

17,653

Common and preferred stocks

2,852

2,539

Real estate

2,877

2,906

Other investments

29,404

30,108

Cash and short-term investments

8,826

4,476

Total investments

308,015

296,748

Other assets

12,598

9,361

Separate account assets

38,216

34,281

Total assets

$358,829

$340,390

Policy benefit reserves

$253,960

$242,443

Deposit funds

13,072

10,987

Policyowner dividends payable

7,370

6,820

Other liabilities

8,016

8,798

Separate account liabilities

38,216

34,281

Liabilities (excluding AVR)

320,634

303,329

Asset valuation reserve (AVR)

7,885

7,176

Surplus

30,310

29,885

Surplus and AVR✕Surplus is the amount of capital we hold over and above our policyowner benefit reserves to cover the unexpected. When challenges arise, a healthy surplus level helps ensure we'll be here for the long term, paying policyowner benefits and preserving product value. It also gives us the flexibility to proactively manage the company with a long-term view and take advantage of potentially higher-yielding investments while maintaining the industry's highest financial strength ratings. The company continues to be financially strong, with a record total surplus—including surplus and the asset valuation reserve—of more than $38 billion.

38,195

37,061

Total liabilities and surplus

$358,829

$340,390

The summarized financial statements above were prepared on the statutory basis of accounting. Financial statements prepared on the statutory basis of accounting differ materially from financial statements prepared in accordance with generally accepted accounting principles ("GAAP").