2012

FI NANCI AL RESULTS
2012
12
These summary fnancial
statements are derived
from the companys audited
consolidated fnancial
statements, which are
prepared on the statutory
basis of accounting. Insurance
regulators require fnancial
statements prepared on a
statutory basis of accounting,
which differ materially
from fnancial statements
prepared in accordance
with generally accepted
accounting principles (GAAP).
PricewaterhouseCoopers LLP
is the companys independent
auditor. The companys
audited consolidated fnancial
statements are available at
northwesternmutual.com or
by written request to:
Northwestern Mutual
Corporate Communications
Room N04
720 E. Wisconsin Ave.
Milwaukee, WI 53202
December 31: 2012 2011
Bonds $114,524 $103,753
Mortgage loans 24,346 22,804
Policy loans 15,789 15,147
Common and preferred stocks 4,266 7,420
Real estate 1,304 1,632
Other investments 11,356 11,047
Cash and temporary investments 2,393 2,421

Total investments 173,978 164,224
Other assets 7,096 6,765
Separate account assets 21,376 18,697

Total assets $202,450 $189,686

Policy beneft reserves $149,599 $140,917
Policyowner dividends payable 5,041 4,976
Other liabilities 7,042 6,934
Separate account liabilities 21,376 18,697

Liabilities (excluding AVR) 183,058 171,524

Asset valuation reserve (AVR) 3,216 3,349
Surplus 16,176 14,813
Surplus and AVR 19,392 18,162

Total liabilities and surplus $202,450 $189,686
SUMMARY OF OPERATIONS
(consolidated statutory basis, in millions)
Year ended December 31: 2012 2011
Premiums $15,394 $14,618
Net investment income 8,677 8,439
Other income 550 538
Total revenue 24,621 23,595
Policyowner benefts paid 7,302 7,074
Increase in beneft reserves 9,053 8,430
Commissions and expenses 2,609 2,437
Total benets and expenses 18,964 17,941
Gain before dividends and taxes 5,657 5,654
Policyowner dividends 5,045 4,973
Gain before taxes 612 681
Income tax expense 37 6
Net gain from operations 575 675
Net realized capital gains (losses) 208 (30)
Net income $783 $645
SUMMARY OF FINANCIAL POSITION
(consolidated statutory basis, in millions)
13
MUTUALITY AND POLICYOWNER VALUE
Northwestern Mutual is managed for the long-term beneft of our policyowners. This mutual
philosophy leads us to pay participating policyowners the highest possible dividends deemed
consistent with preserving the long-term strength and security of the company. Dividends
refect our underlying claims experience, investment performance and expense structure.
In total, dividends to policyowners are estimated to exceed $5 billion in 2013
and are expected to be the highest amount of dividends paid in company history.
This includes approximately:
$4.6 BILLION
in dividends on permanent
life insurance policies
$278 MILLION
in dividends on individual
disability insurance policies
$140 MILLION
in dividends on term life
insurance policies
$30 MILLION
in dividends on xed and
variable annuity contracts
Additionally, our subsidiary, Northwestern Long Term Care Insurance Company,
approved $7 million in dividends to long-term care policyowners in 2013.
The dividend scale interest rate on most unborrowed permanent life insurance funds
will be 5.60 percent for 2013, down from 5.85 percent for 2012, refecting in part the
impact of low interest rates available on new fxed-income investments made by the
company. If rates remain at current levels or fall further, it could lead to continued decreases
in the dividend scale interest rate. While important, investment performance is only a part of
permanent life insurance policyowner value. Our favorable claims experience and rigorous
approach to expense management also contribute to the dividend payout.
Superior product value contributes to policyowner satisfaction and loyalty, demonstrated
by our persistency rate for life insurance in force, which was greater than 96 percent again
during 2012. Life insurance policyowners used approximately three-quarters of dividends
available during 2012 to purchase additional insurance protection, contributing to a
6 percent increase in total life insurance in force, which reached $1.4 trillion at year-end 2012.
NORTHWESTERN MUTUALS PRINCIPAL FINANCIAL
GOAL REMAINS THE SAME IN ANY ECONOMIC
ENVIRONMENT: to pay a level of dividends that
delivers the highest product value to policyowners
without compromising the companys superior nancial
strength and stability.
continued on page 14 >>
14
OPERATING RESULTS
Total premium revenue was $15.4 billion for 2012, an increase of
5 percent from 2011. Premium revenue from life insurance increased
4 percent during 2012 and included a 4 percent increase in renewal
premiums from inforce policies. Annuity premium increased
12 percent from 2011, while premium revenue for disability and long-
term care insurance increased 5 percent and 29 percent, respectively.
Despite the decline in market interest rates, net investment income
increased 3 percent to $8.7 billion. This includes 3 percent growth
in interest income from fxed-income investments largely due to an
increased allocation to these investments. Growth in net investment
income also included an increase in distributions of earnings from
subsidiaries.
Benefts paid to policyowners or their benefciaries totaled
$7.3 billion during 2012, a 3 percent increase from 2011. Insurance
claims experience remained favorable during 2012, in part a refection
of the companys careful assessment of insurance risk. Reserves for
future policy benefts increased by $9.1 billion during 2012 and
totaled $150 billion at the end of the year. Operating results for 2012
also refected the productivity of our feld force and our continued
commitment to rigorous management of operating expenses.
Net income was $783 million for 2012, an increase from $645 million
in 2011. Net realized capital gains added $208 million to 2012 net
income and included capital gains from the sale of common stock
and real estate investments. In comparison, the company reported net
realized capital losses of $30 million in 2011.
Total assets
(in billions)
11 12 08 09 10
Other assets
Separate account assets
Total investments
1990
1995 1975
1980
1985
2000
2012
0
25
50
75
100
125
150
175
200
Northwestern Mutual
Major
Competitors
0
1
2
3
4
5%
Major Competitors
Northwestern Mutual
2005
General account
managed investments
(excludes policy loans)
74%
15%
11%
74% Bonds & cash
15% Mortgage loans
11% Stocks & other equities
Premium revenue
(in billions)
12 08 09 10 11
Annuity
Disability/long-term care
Life insurance
0%
3%
6%
9%
12%
15%
At year-end 2012
Surplus Ratio
(surplus and AVR as a percentage of general account insurance reserves)
0
5
10
15
0 1 2 3 4 5%
4.97%
3.98%
3.65%
3.48%
3.40%
Northwestern Mutual
had a 25% Greater
Cash Value Return
4.97%
3
.
9
8
%
3
.
6
5
%
3
.
4
8
%
3
.
4
0
%
AVR Surplus
Total assets
(in billions)
11 12 08 09 10
Other assets
Separate account assets
Total investments
1990
1995 1975
1980
1985
2000
2012
0
25
50
75
100
125
150
175
200
Northwestern Mutual
Major
Competitors
0
1
2
3
4
5%
Major Competitors
Northwestern Mutual
2005
General account
managed investments
(excludes policy loans)
74%
15%
11%
74% Bonds & cash
15% Mortgage loans
11% Stocks & other equities
Premium revenue
(in billions)
12 08 09 10 11
Annuity
Disability/long-term care
Life insurance
0%
3%
6%
9%
12%
15%
At year-end 2012
Surplus Ratio
(surplus and AVR as a percentage of general account insurance reserves)
0
5
10
15
0 1 2 3 4 5%
4.97%
3.98%
3.65%
3.48%
3.40%
Northwestern Mutual
had a 25% Greater
Cash Value Return
4.97%
3
.
9
8
%
3
.
6
5
%
3
.
4
8
%
3
.
4
0
%
AVR Surplus
Total assets
(in billions)
11 12 08 09 10
Other assets
Separate account assets
Total investments
1990
1995 1975
1980
1985
2000
2012
0
25
50
75
100
125
150
175
200
Northwestern Mutual
Major
Competitors
0
1
2
3
4
5%
Major Competitors
Northwestern Mutual
2005
General account
managed investments
(excludes policy loans)
74%
15%
11%
74% Bonds & cash
15% Mortgage loans
11% Stocks & other equities
Premium revenue
(in billions)
12 08 09 10 11
Annuity
Disability/long-term care
Life insurance
0%
3%
6%
9%
12%
15%
At year-end 2012
Surplus Ratio
(surplus and AVR as a percentage of general account insurance reserves)
0
5
10
15
0 1 2 3 4 5%
4.97%
3.98%
3.65%
3.48%
3.40%
Northwestern Mutual
had a 25% Greater
Cash Value Return
4.97%
3
.
9
8
%
3
.
6
5
%
3
.
4
8
%
3
.
4
0
%
AVR Surplus
2012
FI NANCI AL RESULTS
2012
A well-balanced and
diversied portfolio
contributes to the
companys exemplary
dividend record.
(in billions)
PREMIUM
REVENUE
THE POWER OF OUR PORTFOLIO
General Account Managed Investments
(excludes policy loans)
PROVEN PROVEN PROVEN
15
INVESTMENT RESULTS
The companys general account investment
portfolio is well diversifed and allocated primarily
to high-quality bonds and commercial mortgage loans.
Our investment strategy provides superior returns over the long
term while limiting overall credit, market and interest-rate risk.
Our investment guidelines limit exposure to any single asset class
or issuer.
The $115 billion bond portfolio includes both public and private
bonds, with 91 percent of the total rated as investment grade at
year-end 2012. The companys $24 billion commercial mortgage
loan portfolio is originated and underwritten by our own real
estate professionals. It had an overall loan-to-value ratio of
57 percent at year-end 2012.
Equity investments include public and private common stocks,
real estate and other holdings. The market value of these
investments can be volatile, but they enhance total portfolio
returns over the long term. In 2012, the company continued
to follow this diversifed investment strategy while reducing its
exposure to public common stock to refect targeted risk levels.
3
In total, net realized and unrealized capital gains, after taxes
and required deferrals of interest rate-related gains, increased
total surplus (including asset valuation reserve) by $587 million
during 2012. This result refected realized gains on the sale of
common stock and real estate investments and unrealized gains
from market appreciation during 2012.
Northwestern Mutual maintains a very strong liquidity
position. At year-end 2012, the company held $31 billion
in cash equivalents, U.S. Treasurys and other highly liquid,
U.S. government-supported investments. The company enjoys
substantial positive operating cash fows, primarily from our
large and stable block of participating life insurance business.
$115 BILLION
INVESTMENT STRATEGY
BOND PORTFOLIO
REMAINS THE
CORNERSTONE
OF OUR GENERAL
ACCOUNT
INVESTMENT
STRATEGY.
THE COMPANYS
(in billions)
TOTAL
ASSETS
Total assets
(in billions)
11 12 08 09 10
Other assets
Separate account assets
Total investments
1990
1995 1975
1980
1985
2000
2012
0
25
50
75
100
125
150
175
200
Northwestern Mutual
Major
Competitors
0
1
2
3
4
5%
Major Competitors
Northwestern Mutual
2005
General account
managed investments
(excludes policy loans)
74%
15%
11%
74% Bonds & cash
15% Mortgage loans
11% Stocks & other equities
Premium revenue
(in billions)
12 08 09 10 11
Annuity
Disability/long-term care
Life insurance
0%
3%
6%
9%
12%
15%
At year-end 2012
Surplus Ratio
(surplus and AVR as a percentage of general account insurance reserves)
0
5
10
15
0 1 2 3 4 5%
4.97%
3.98%
3.65%
3.48%
3.40%
Northwestern Mutual
had a 25% Greater
Cash Value Return
4.97%
3
.
9
8
%
3
.
6
5
%
3
.
4
8
%
3
.
4
0
%
AVR Surplus
continued on page 16 >>
3 The vast majority of the companys general account managed assets back the companys
surplus and most of the life, disability and long-term care insurance liabilities. The
investment strategies described here apply to the investment of those assets. A portion of
managed assets backs the remaining liabilities (including fxed-rate annuity liabilities) and
has different investment allocations than described above.
STRONG
PERFORMANCE
STRONG STRONG
FINANCIAL STRENGTH
Total surplus (including asset valuation
reserve) increased $1.2 billion during 2012
to $19.4 billion. In addition to policy beneft
reserves, surplus provides the company with protection
against the unexpected. The asset valuation reserve supports
our long-term investment strategy by absorbing credit losses
and short-term market volatility.
At year-end 2012, surplus and asset valuation reserve represented
13 percent of general account insurance reserves, consistent with
the surplus ratio one year earlier. This level of capitalization
remains very strong compared to the companys historical surplus
levels and the standards set by insurance regulators and the major
rating agencies.
Total assets
(in billions)
11 12 08 09 10
Other assets
Separate account assets
Total investments
1990
1995 1975
1980
1985
2000
2012
0
25
50
75
100
125
150
175
200
Northwestern Mutual
Major
Competitors
0
1
2
3
4
5
%
Major Competitors
Northwestern Mutual
2005
General account
managed investments
(excludes policy loans)
74%
15%
11%
74% Bonds & cash
15% Mortgage loans
11% Stocks & other equities
Premium revenue
(in billions)
12 08 09 10 11
Annuity
Disability/long-term care
Life insurance
0%
3%
6%
9%
12%
15%
At year-end 2012
Surplus Ratio
(surplus and AVR as a percentage of general account insurance reserves)
0
5
10
15
0 1 2 3 4 5%
4.97%
3.98%
3.65%
3.48%
3.40%
Northwestern Mutual
had a 25% Greater
Cash Value Return
4.97
%
3
.
9
8
%
3
.
6
5
%
3
.
4
8
%
3
.
4
0
%
AVR Surplus
16
2012
FI NANCI AL RESULTS
2012
LOOKING AHEAD
Northwestern Mutual will continue to focus on the fundamentals, including prudent management
of insurance product risk; a balanced, diversifed general account investment portfolio; and careful
attention to operating expenses. This focus, along with our commitment to mutuality and the fnancial
fexibility provided by participating dividends, will help the company weather even extreme fnancial
stress. Regardless of the economic or fnancial market environment, policyowners and clients can
count on Northwestern Mutuals commitment to long-term fnancial security.
OUR FINANCIAL
POSITION REMAINS
STRONG WITH A
SURPLUS RATIO OF
ASSURING THAT
WE CAN KEEP
OUR PROMISES TO
POLICYOWNERS
SURPLUS RATIO
13%