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Wednesday, October 26, 2011

Northwestern Mutual Life Insurance Co has approved a dividend payout of almost $5 billion for 2012

Northwestern Mutual Life Insurance Co has approved a dividend payout of almost $5 billion for 2012 : Northwestern Mutual Life Insurance Co. said Wednesday it has approved a dividend payout of almost $5 billion for 2012, up more than $125 million from this year.

The payout - second highest in the 154-year history of the Milwaukee-based insurer, trailing only 2008's more than $5 billion - is in keeping with a key company goal of paying the largest dividends possible while maintaining strength and the ability to grow, said Chris Kelly, vice president and controller.

Every year about this time we make our most important annual financial decision, which is how much to return to policy owners in the form of dividends, and what probably relatively small amount we reinvest in surplus to stay strong and keep the company growing," he said.

The company said its underwriting, expense management, diversified investing and operating fundamentals are behind the big dividend payout.

"As a mutual company, we don't have stockholders whose demands we need to meet," John Schlifske, chairman and chief executive of Northwestern Mutual, said in a statement announcing the 2012 dividend payout. "Our only priority is to help create security and value for our policy owners - the people who own our products."

Northwestern Mutual said about 90% of the nearly $5 billion will be paid to participating permanent life insurance policy owners.

The payout amounts to a dividend interest rate of 5.85% on unborrowed funds for most permanent life insurance products. That is down from 6% this year, but still stands out in an environment in which newly issued long-term corporate bonds are at about 4% and 10-year Treasury bonds are yielding about 2%, the company said.

Schlifske noted the company is the top dividend payer in the country on permanent life policies.

Policy owners can use their dividends to purchase additional insurance coverage and reduce future premiums. They also can receive the money in a check. About 75% use their dividends to buy additional coverage, the company said.

Northwestern Mutual also pays dividends on policies other than permanent life. The company said it expects to pay disability insurance policy owners $252 million in dividends in 2012, and those with term life insurance are expected to be paid dividends totaling $120 million.

Fixed and variable-rate annuity product owners are expected to receive $27 million in dividends in 2012. Northwestern Mutual's long-term care insurance unit approved a dividend payout of $12.8 million.

Northwestern Mutual, which has 3.3 million policy owners and more than $1.2 trillion of life insurance in force, has paid dividends every year since 1872.source www.jsonline.com

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