Northwestern Mutual dividend nears $7 billion; during rough economy, company's focus remains long-term

Northwestern Mutual said Wednesday that it will return nearly $7 billion in dividend payouts to its policy holders.

The Milwaukee-based insurance and financial services company said it will pay out a $6.8 billion dividend to its policyowners.

The company has paid a dividend every year for more than 150 years.

The 2023 dividend is expected to be the highest in company history across four of Northwestern Mutual’s product areas: whole life insurance, term insurance, disability income insurance and annuities, the company said in a statement.

“Our annual dividend is a demonstration of the company’s superior financial strength, strong investment performance, disciplined underwriting and sound financial management, which enables us to deliver exceptional value to our policyowners while ensuring we can keep our promises to them,” said John Schlifske, chairman, president and chief executive officer, said in the statement. “We are incredibly proud that our products continue to play a critical role in helping people protect and grow their wealth, and that we are able to consistently share the company’s success with our policyowners – generation after generation.”

Northwestern Mutual has more than $561 billion in combined company and client assets. The company has annual revenue of $34 billion and has $2.1 trillion worth of life insurance protection in force.

The annual dividend payment comes as the U.S. faces the highest inflation in a generation as well as big declines in stocks as interest rates rise.

Northwestern Mutual offers life, disability income and long-term care insurance, annuities, and brokerage and advisory services.

"While economic ups and downs are inevitable, 2022 has been especially volatile given persistently high inflation, geo-political uncertainty, ongoing supply chain disruptions and increased energy prices," the company said in the statement.

Even in this economic environment, Northwestern Mutual plans to pay the most dividends while remaining one of the strongest companies in the financial services industry. All four major rating agencies – A.M. Best, Fitch Ratings, S&P Global Ratings and Moody’s – have awarded the company their highest available financial strength ratings available to any U.S. insurer and a stable outlook for 2022. This makes Northwestern Mutual one of only six companies across all industries to be so recognized by Moody’s.

The company's strategy, in the most simple terms, is to literally be prepared for anything.

During its more than 160 years in business, "We've seen a lot," said Jason Klawonn, Northwestern Mutual's chief actuary.

World wars, the 9/11 terrorist attacks, COVID and now the highest inflation many people have ever seen in their lives are among the things the company has navigated or is navigating.

"That's part of what we do as an insurance company -- to manage uncertainty and to help take that volatility or that risk away from our policyowners," Klawonn said. "That's why what we do is so important. We've made a promise to be there for them."

So in an era of high inflation and volatile markets, the company remains on a long-term course.

"It's really not a fundamental change to our approach and our business model," Klawonn said. "We made a promise to be there on claim day. We give them the conviction that until that claim day, they will be treated well and they will be treated fairly -- that no matter what the economy brings we will be there."

Despite choppy economic waters, the focus doesn't change.

"It's really important for us to manage with a long-term lens," Klawonn said. "That really plays to our strengths in how we manage the business.

"From the company's perspective, we're never in a position where we're trying to predict exactly what the future will look like," Klawonn added. "So we're not here saying, 'we have a plan for inflation that is going to be at X percent and is going to last for Y years.' That's a fool's game."

"I go back to the long term focus we have," Klawonn said. "Our financial strength and products are built to be be viable no matter what the environment is like."

"What we do matters," he added. "At the end of the day what we are trying to do for families and for individuals is take away financial anxiety. The whole purpose for doing what we do is so our client doesn't have to worry."

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company and its subsidiaries. Subsidiaries include Northwestern Mutual Investment Services, LLC; the Northwestern Mutual Wealth Management Company, federal savings bank; and Northwestern Long Term Care Insurance Company.

This article originally appeared on Milwaukee Journal Sentinel: Milwaukee-based Northwestern Mutual to pay out nearly $7 billion dividend