2010 Annual Report

Trusted. Strong. Proven.

SECURITY DEFINED

2 0 1 0 a n n u a l r e p o r t

2

John E. Schlifske n Chairman and Chief Executive Officer Results in brief

“ We remain committed to doing what’s best for our policyowners.”

Best valuehighest total cash value

rate of return among major

insurance companies.*

* According to 20-year actual policy performance information compiled through independent analysis (Blease Research Full Disclosure 2010 Whole Life Edition), Northwestern Mutual’s whole life product provided the highest internal rate of return on policy cash value compared to all other similar products offered by competitors based on $250,000 whole life policy issued in 1990 to a male age 45 with best class underwriting.

2010 2009 Change

policyowner dividends $4,861 $4,715 +3%

policyowner benefits paid $6,876 $6,807 +1%

Individual life insurance in force $1,242,136 $1,176,845 +6%

total revenue $23,109 $21,366 +8%

total assets $180,038 $167,180 +8%

Surplus & asset valuation reserve $17,635 $14,246 +24%

3

Results in brief (in millions)

LEARN MORE ABOUT US: northwesternmutual.com | About Northwestern Mutual

At the close of a year that began with considerable economic uncertainty, I’m pleased to tell you your company delivered an exceptionally strong performance in 2010. We kept a sharp focus on helping you and all policyowners plan for your long-term financial security. We maintained unquestioned financial strength and continued to deliver superior financial value.

The year saw Northwestern Mutual again receiving the best possible insurance financial strength ratings from all four major rating agencies. Our total surplus, a key indicator of our financial position, grew $3.4 billion to $17.6 billion. And you saw a powerful confirmation of our financial strength and commitment to you in our approved policyowner dividend payout of nearly $4.9 billion for 2011, the second-largest payout in our history, which includes the largest life insurance payout in the industry.

I invite you to look at all of our results, which tell an exciting story of the continuing power of our business model and the relevance of our products and services in all economic environments. In 2010, for example, our policyowners and clients bought more life insurance, individual disability insurance and long-term care insurance than in any year in our history.

At a time when many companies struggle simply to remain profitable, we feel fortunate to create billions of dollars of value that we can pass back to our policyowners. We value the trust you place in us as your financial partner and will continue to honor it by delivering exceptional quality on your behalf.

I hope you agree that Northwestern Mutual is truly a company for all economic seasons.

2010 2009 Change

policyowner dividends $4,861 $4,715 +3%

policyowner benefits paid $6,876 $6,807 +1%

Individual life insurance in force $1,242,136 $1,176,845 +6%

total revenue $23,109 $21,366 +8%

total assets $180,038 $167,180 +8%

Surplus & asset valuation reserve $17,635 $14,246 +24%

4

Manish (Manny) ShahFinancial Representative • Princeton, New Jersey

early choices allow this couple

the flexibility to balance a

medical practice and family life.

Financial security does not come

from some magic formula, say

paul and Maritoni Shah. rather,

it takes hard work, careful

planning and, if at all possible,

an early start.

a partner for all life stages ...

We expect to pay nearly

$4.9 billion in total dividends

to policyowners in 2011 —

and more than twice the

life insurance dividends

of our closest competitor.

dividendsMost

Trusted.

WATCH OUR VIDEO ONLINE: northwesternmutual.com | About Northwestern Mutual | Our Company | Annual Report

“ The plan we’ve put in place suits us. It reflects our beliefs and priorities, and it continues to keep current with our changing lives.”

– Paul and Maritoni Shah

5

Maya and Milan, have choices for college.

their decisions over the years have given them the freedom to make other choices as well. Even as they

expanded their medical practice, Maritoni

has been able to scale back her hours to

achieve flexibility for the family.

Today, working with Financial Representative

Manish Shah (who is not related to the Shah

family), Paul and Maritoni are enjoying

the present and feeling confident in their

future. “While we know the decisions and the

responsibility for implementing them rest with

us, we feel secure knowing that

Manny does his homework and makes

recommendations that fit our life and

our circumstances,” Maritoni says.

Having been raised to plan ahead, Paul and Maritoni did start early, buying life and

disability income insurance during their medical

residencies. They chose Northwestern Mutual for

these products for several reasons. “One thing that

impressed us was that the company paid attention

to us at that point in our lives – before we were

married, had steady jobs, or owned any assets,”

Maritoni recalls. “It led us to believe this was a

company that would grow with us. And we knew

we could trust it to be there for us as well.”

the prediction was accurate: As Paul and Maritoni moved on in life,

establishing a medical practice and having

children, they turned to Northwestern Mutual

for additional personal and business

products. For them, the highest

priority in that mix is saving

enough so that their children,

Honoring the past and looking forward to the future ...

a policyowner’s family learns first-

hand the most important reason

for life insurance.

Kim Bray was just 40 years old when

she passed away suddenly, leaving

behind her husband, tom, and three

children: tJ, 13; Sara, 11; and alex, 7.

“ Today my family and I can say we honor our past, but also look forward to the future. Northwestern Mutual has helped us do both.”

– Tom Bray

We maintain the best possible

insurance financial strength

ratings from all four major

rating agencies.

a.M. Best, Fitch ratings, Moody’s Investors Service and Standard & poor’s. ratings current as of March 1, 2011.

ratingsBest

6

7

“When we lost Kim, so many

aspects of our lives were uncertain.

Thanks to our life insurance planning,

however, I was sure of one thing:

our family could grieve without worrying about leaving our home – the stable

and loving environment we had built

together,” says Tom. “In addition, I knew

I could maintain our standard of living

with one income, and count on the funds

needed for the kids’ college educations.

“You buy life insurance hoping something

like this never happens,” he adds, “but

it’s the most important reason to have it.

I’ve seen it come true.”

His experience makes Tom grateful

for the work he and Kim did with

Northwestern Mutual Financial

Representative Pat Kohler. He explains,

“Pat did a great job of communicating

the features and benefits of all of

our options and, most importantly,

explaining what they meant in

real-life terms.”

Today, Tom is remarried to Kellie,

who has two daughters, Alexandra

and Elizabeth. “My policy continues to give me peace of mind, knowing

our family is protected should

something happen to me,” Tom says.

“And Kellie and I are building a

portfolio of insurance and investments

that will allow us to enjoy our lives

together without worrying about our

financial security.”

Tom thinks of himself as a living

example of how to make good choices for today and tomorrow. He explains,

“I’ve lived through one of the worst

things that can happen. I want my

children to see why it’s so important

to prepare for the unknown.”


Patrick J. Kohler, CLU, ChFCFinancial Representative • Milwaukee, Wisconsin

Proven.

With a solid foundation in place, these

business partners are living their values

and seizing opportunities.

they started with a dream and a plan.

looking to combine their personal

passions and professional expertise,

Marsia Geldert-Murphey and Geri Boyer

started their own engineering company,

Kaskaskia engineering Group, in 2006.

ordinary people accomplishing extraordinary things ...

8

Our life expenses are

consistently less than our

industry peers. More of your

premium is used for policy

benefits and cash values.

Source: lIMra, 2009. prepared and calculated by the northwestern Mutual life Insurance Company.

Lowestexpenses

“ Financial security means we can fund our passion. It’s given us a solid foundation to make business decisions that reflect our values.”

– Marsia Geldert-Murphey

Nicole Holland, CLUWealth Management Advisor • Belleville, Illinois

“After doing what it took

to climb the success ladder in ‘safe’

jobs, we both – separately – came

to the conclusion that we wanted

more for ourselves and our families,”

says Marsia.

It wasn’t a decision either woman took lightly.

“While our families were at different

stages – my children were young; Geri’s

were in college – we needed to feel

confident that their financial futures

were secure,” Marsia adds.

That was one of the reasons they chose

Wealth Management Advisor Nicole

Holland and Northwestern Mutual

to help them achieve financial security.

“We knew we needed a company that was solid, stable

and dependable, so at

least that part of our world

would be free from worry,”

Geri explains. “With

Nicole’s help, we put a

plan in place that suits us,

our values and our vision for Kaskaskia

Engineering Group. It works for our

employees. And it works for our

families.”

“Nicole understands our business, how

we approach our work as engineers

and entrepreneurs, and our unique value

proposition,” adds Marsia. “She helps

us determine how best to manage our financial risk with a price tag we can afford. And she has aided us in achieving the

flexibility to expand and grow our

business when the opportunity arises

through the cash value we’ve built

in our permanent life insurance

policies.”

“We have financial security,

and we have financial options,”

concludes Geri. “And those

two things allow us to

live our mission – as a

company of ordinary

people accomplishing

extraordinary things.”

9

Wealth Management Advisors offer investment advisory services to the public through Northwestern Mutual Wealth Management Company, a limited purpose federal savings bank.

Strong.


taking care of today and tomorrow ...

Phillip Washington, Jr.Financial Representative • Dallas, Texas

“ We work hard in jobs we love. And we work hard to teach our children to take care of

today and tomorrow. Northwestern Mutual is helping us do just that.”

– Reggie and Vivian Smith

Trusted.

there is no substitute for being

prepared, assert this firefighter

and teacher.

reggie and Vivian Smith are serious

about doing good work, and they’re

serious about taking good care of their

family. It is this value structure that led

them to northwestern Mutual Financial

representative phillip Washington.

Northwestern Mutual

is the market share leader

in the sale of individual

life insurance.

Source: Snl Financial, 2009.

preferredMost

10

“Working with Phillip has been

an eye-opener in so many ways,” says

Vivian. “He asks the tough questions and makes us think and talk about what’s important to us –

what we need and want for our children,

Jaylon and Jasmine, and ourselves, now and

in the future. From the beginning, I knew he

was someone we could trust, representing a

company that would earn our trust as well.

We are proud of the decisions we’ve made

so far to get us to where we are today.”

Those decisions have first and foremost

included having enough life insurance.

“Reggie has seen a lot in his work as a

firefighter,” explains Vivian, a third-grade

teacher. “We are extremely aware of how

important it is to reduce risk where we can

and protect our family’s financial security

should something happen to one or both of us.

Over the years, the cash value of our permanent

life insurance policies has become a bonus.”

Another bonus has been the comfort level they’ve achieved by making the right choices for their family. “Like most parents,

we have a lot to manage every day – our jobs,

our kids, all kinds of other responsibilities –

but because we know this part of our lives

is well-managed, we don’t have to worry

about it. And that’s

worth a lot.”


11

Financial results

2010 TRUSTED. STRONG. PROVEN.

12

these summary financial statements are derived from the

company’s audited consolidated financial

statements, which are prepared on the

statutory basis of accounting.

Insurance regulators require that financial

statements be prepared on a statutory basis of accounting that differs

materially from financial statements prepared in

accordance with generally accepted accounting

principles (Gaap).

pricewaterhouseCoopers llp is the company’s independent auditor.

the company’s audited consolidated financial statements

are available at northwesternmutual.com

or by written request to northwestern

Mutual, Corporate Communications,

room n04, 720 e. Wisconsin ave., Milwaukee, Wisconsin

53202.

Year ended December 31: 2010 2009

premiums $14,252 $13,062net investment income 8,306 7,772other income 551 532

Total revenue 23,109 21,366

policyowner benefits paid 6,876 6,807Increase in benefit reserves 8,332 7,138Commissions and expenses 2,320 2,189

Total benefits and expenses 17,528 16,134

Gain before dividends and taxes 5,581 5,232

Policyowner dividends 4,861 4,715

Gain before taxes 720 517Income tax expense (benefit) (224) 42

Net gain from operations 944 475

net realized capital losses (188) (154)

Net income $756 $321

Summary of operations(consolidated statutory basis, in millions)

Summary of Financial position(consolidated statutory basis, in millions)

December 31: 2010 2009

Bonds $96,829 $91,004 Mortgage loans 21,291 21,024 policy loans 14,472 13,717 Common and preferred stocks 9,170 5,918 real estate 1,619 1,582 other investments 9,902 8,587Cash and short-term investments 1,928 2,610 Total investments 155,211 144,442

other assets 6,164 6,394 Separate account assets 18,663 16,344 Total assets $180,038 $167,180 policy benefit reserves $133,066 $125,025 policyowner dividends payable 4,859 4,730 other liabilities 5,815 6,835 Separate account liabilities 18,663 16,344 Liabilities (excluding AVR) 162,403 152,934 asset valuation reserve (aVr) 3,250 1,843 Surplus 14,385 12,403

Surplus and AVR 17,635 14,246 Total liabilities and surplus $180,038 $167,180

Northwestern Mutual’s basic 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 company’s superior financial strength and stability.

13

Financial Strength Substantial uncertainty in the economy and volatility in the financial markets continue to reinforce the value of Northwestern Mutual’s time-tested strategy, including prudent management of insurance product risk; careful attention to operating expenses; and a well-balanced, diversified general account investment portfolio. these fundamental priorities, along with our commitment to mutuality and the financial flexibility of our participating dividends, enable the company to weather even extreme financial stress – and deliver on our commitment to long-term financial security for our policyowners and clients.

During 2010, surplus and asset valuation reserve (aVr) increased $3.4 billion to $17.6 billion. the increase in total surplus reflected the issuance of $1.75 billion of surplus notes in early 2010, market appreciation on the equity portfolio and strong operating results. Surplus provides the company with protection against the unexpected, while aVr supports our long-term investment strategy by cushioning against market volatility.

at year-end 2010, surplus and aVr represented 13.3% of general account insurance reserves, an increase from 11.4% at year-end 2009. this level of surplus is very strong relative to the company’s risk profile and regulatory benchmarks. It also compares favorably to our historically strong financial position.

StronG perForManCeour FInanCIal poSItIon remains strong WItH a SurpluS ratIo oF

aSSurInG tHat tHe CoMpany Can Keep ItS proMISeS to polICyoWnerS.

13.3%

Total assets(in billions)

09 1006 07 08

Total investmentsSeparate account assetsOther assets

1989 19941974 1979 1984 2004 20101999

0

25

50

75

100

125

150

175

200

General account managed investments(excludes policy loans)

70%

15%

15%

70% Bonds & cash15% Mortgage loans15% Stocks & other equities

Premium revenue(in billions)

1006 07 08 09

Life insuranceDisability/ Long-term careAnnuity

0

3

6

9

12

15%

At year-end 2010

Surplus Ratio(surplus and AVR as a percentage of general account insurance reserves)

0

3

6

9

12

15

AVRSurplus

14

Financial results

2010

Mutuality and policyowner Value northwestern Mutual is managed for the long-term benefit of our policyowners. this mutual perspective requires a balance between participating dividends and long-term financial strength and security. participating dividends reflect our underlying claims experience, expense structure and investment performance.

In total, dividends to policyowners are estimated to be nearly $4.9 billion in 2011. this represents an increase of about $150 million over the 2010 payout and is expected to be the second-highest payout of dividends in company history. this includes:

the dividend scale interest rate on most unborrowed permanent life insurance funds will be 6.00% during 2011, down modestly from 6.15% during 2010. While important, investment performance is only a part of permanent life insurance policyowner value. our favorable claims experience and rigorous approach to expense management account for more than one-half of total dividends to be paid during 2011.

Superior product value contributes to policyowner satisfaction and loyalty. our persistency rate for life insurance in force was 96% during 2010. life insurance policyowners used approximately 75% of dividends available during 2010 to purchase additional insurance protection, contributing to a 6% increase in total life insurance in force that totaled $1.2 trillion at year-end 2010.

n $4.4 billion in dividends on participating permanent life insurance policies;

n $123 million in dividends on term life insurance policies;

n $233 million in dividends on individual disability insurance policies;

n $11 million in dividends paid to long-term care policyowners through our subsidiary, northwestern long term Care Insurance Company; and

n $27 million in dividends on individual fixed and variable annuity contracts.


09 1006 07 08


1989 19941974 1979 1984 2004 20101999

0

25

50

75

100

125

150

175

200


70%

15%

15%



1006 07 08 09


0

3

6

9

12

15%

At year-end 2010


0

3

6

9

12

15

AVRSurplus

15

Investment results the company’s general account investment portfolio is diversified and largely composed of high-quality, fixed-income assets, appropriate for our investment strategy to provide superior returns over the long term while managing overall credit, market and interest-rate risk. our investment guidelines limit exposure to any single asset class or issuer.

the $97 billion bond portfolio represents 69% of our general account managed investments and remains the cornerstone of our investment strategy. this portfolio of public and private debt remained high-quality and well-diversified by sector, with 90% rated as investment grade at year-end 2010. the company’s $21 billion commercial mortgage loan portfolio, underwritten by our own real estate professionals, enjoys significant collateral protection and is well-diversified geographically and by property type.

equity investments include public and private common stocks, real estate and other holdings that enhance total portfolio returns in the long term, but for which market values can be volatile. this time-tested investment strategy is made possible by a strong surplus position and the stable nature of our participating life insurance products.

northwestern Mutual maintains a very strong liquidity position. at year-end 2010, the company held $25 billion in cash equivalents, u.S. treasurys and other highly liquid, government-supported investments. We enjoy substantial positive operating cash flows, primarily from our large and stable block of participating life insurance business and general account investment portfolio.

In total, general account investments generated $1.1 billion in net realized and unrealized capital gains during 2010, after taxes and required deferrals of interest rate-related gains. these net gains primarily reflected substantial unrealized capital gains generated by the company’s equity portfolio.

the power of our portfolio

a Well-BalanCeD anD DIVerSIFIeD portFolIo

ContrIButeS to tHe CoMpany’S exeMplary

DIVIDenD reCorD.


09 1006 07 08


1989 19941974 1979 1984 2004 20101999

0

25

50

75

100

125

150

175

200


70%

15%

15%



1006 07 08 09


0

3

6

9

12

15%

At year-end 2010


0

3

6

9

12

15

AVRSurplus


09 1006 07 08


1989 19941974 1979 1984 2004 20101999

0

25

50

75

100

125

150

175

200


70%

15%

15%



1006 07 08 09


0

3

6

9

12

15%

At year-end 2010


0

3

6

9

12

15

AVRSurplus

General Account Managed Investments (excludes policy loans)

tHe CoMpany’S

BonD portFolIo remains the cornerstone oF our General aCCount InVeStMent StrateGy.

proven Investment Strategy

$97 billion

operating results total premium revenue, including both new and renewal premiums, was $14.3 billion for 2010, an increase of 9% from 2009. premium revenue from life insurance increased 8% during 2010, primarily reflecting a $500 million increase in new life insurance premium and continued favorable persistency. premium revenue for disability and long-term care insurance increased 4% and 18% respectively. annuity premium and deposits increased 2% from 2009.

net investment income was $8.3 billion for 2010, a 7% increase from 2009, including a 6% increase in interest from fixed-income investments. the company also generated growth in investment income from equity-related investments, including higher distributions from private equity and real estate investments.

Benefits paid to policyowners or their beneficiaries totaled $6.9 billion during 2010, a 1% increase from 2009. Mortality and other claims experience were very favorable during 2010, a reflection of the company’s careful assessment of insurance risk. reserves for future policy benefits increased by $8.3 billion during 2010 and totaled $133 billion at year-end 2010. operating results for 2010 also reflected our continued commitment to the rigorous management of operating expenses.

after provision for taxes and dividends to policyowners, net gain from operations was $944 million for 2010, an increase from $475 million in 2009. net realized capital losses primarily reflected impairment adjustments for investments – offset in large part during 2010 by realized capital gains on the sale of public and private equity investments.

looking ahead While the economic and financial market environment appears to be improving, significant risks and uncertainties remain. Northwestern Mutual remains strong, stable and committed to our promise of financial security to our policyowners and clients. our focus on long-term policyowner value and financial strength will remain constant regardless of the challenges that may lie ahead.


09 1006 07 08


1989 19941974 1979 1984 2004 20101999

0

25

50

75

100

125

150

175

200


70%

15%

15%



1006 07 08 09


0

3

6

9

12

15%

At year-end 2010


0

3

6

9

12

15

AVRSurplus

Financial results

2010

16

17

Management Committee John E. SchlifskeChairman and CEO

Gary A. PolinerPresident and Chief Risk Officer

Mark G. DollExecutive Vice President and Chief Investment Officer

Jean M. MaierExecutive Vice PresidentEnterprise Operations and Technology

Gregory C. OberlandExecutive Vice PresidentInsurance and Investment Products

Marcia RimaiExecutive Vice President and Chief Administrative OfficerChief Compliance Officer

Todd M. SchoonExecutive Vice PresidentAgencies

Executive Officers

Sandra L. BotcherVice PresidentEnterprise Risk Assurance

Michael G. CarterVice President and Chief Financial Officer

Eric P. ChristophersenVice PresidentWealth Management

David D. ClarkSenior Vice PresidentReal Estate

Jefferson V. DeAngelisSenior Vice PresidentPublic Markets

Joann EisenhartVice PresidentHuman Resources

Christina H. FiascaSenior Vice PresidentAgency Services

Timothy J. GerendVice PresidentCompliance/Best Practices

Kimberley GoodeVice PresidentCommunications and Corporate Affairs

Karl G. GouverneurVice PresidentInformation Systems

John M. GroganSenior Vice PresidentFinancial Planning and Product Delivery

Thomas C. GuayVice PresidentNew Business

Gary M. HewittVice President and Treasurer

J. Chris KellyVice President and Controller

John L. KordsmeierVice PresidentDisability Income

Jeffrey J. LuekenSenior Vice PresidentSecurities

Raymond J. ManistaGeneral Counsel and Secretary

Meridee J. MaynardSenior Vice PresidentProduct Distribution

Kathleen A. OmanVice PresidentPolicyowner Services

Steven M. RadkeVice PresidentGovernment Relations

David R. RemstadVice President and Chief Actuary

Bethany M. RodenhuisVice PresidentCorporate Planning

Timothy G. SchaeferChief Information Officer

Calvin R. SchmidtVice PresidentInvestment Product Operations

David W. SimbroVice PresidentLife Product

Paul J. SteffenVice PresidentAgencies

Conrad C. YorkVice PresidentMarketing

Todd O. ZinkgrafVice PresidentEnterprise Solutions

executive officers as of March 1, 2011

18

Board of trustees Trustees as of March 1, 2011

Facundo L. Bacardi 1

ChairmanBacardi LimitedCoral Gables, Florida

John N. Balboni 6

Senior Vice President and Chief Information OfficerInternational Paper CompanyMemphis, Tennessee

David J. Drury 4, 5

PresidentPoblocki Sign Company, LLCMilwaukee, Wisconsin

Connie K. Duckworth 4, 5

President and Chairman of the BoardARZULake Forest, Illinois

David A. Erne 2, 3, 4

Of CounselReinhart, Boerner, Van Deuren, S.C.Milwaukee, Wisconsin

James P. Hackett 3, 6A

President and CEOSteelcase, Inc.Grand Rapids, Michigan

Hans Helmerich 5

President and CEO Helmerich & Payne, Inc.Tulsa, Oklahoma

Dale E. Jones 1

Vice ChairmanHeidrick & StrugglesWashington, D.C.

Margery Kraus 1A, 3

President and CEOAPCO WorldwideWashington, D.C.

David J. Lubar 2, 4

PresidentLubar & Co.Milwaukee, Wisconsin

Ulice Payne, Jr. 4, 5

President and CEOAddison-Clifton, LLCBrookfield, Wisconsin

Gary A. Poliner 3, 4

President and Chief Risk OfficerThe Northwestern Mutual Life Insurance CompanyMilwaukee, Wisconsin

John E. Schlifske 3A, 4A

Chairman and CEOThe Northwestern Mutual Life Insurance CompanyMilwaukee, Wisconsin

H. Mason Sizemore, Jr. 6 Retired President & COOThe Seattle TimesSeattle, Washington

Peter M. Sommerhauser 3, 4, 5A

AttorneyGodfrey & Kahn, S.C.Milwaukee, Wisconsin

Mary Ellen Stanek 2, 4

Managing Director and Director of Asset ManagementRobert W. Baird & Co.Milwaukee, Wisconsin

Timothy W. Sullivan 2

President & CEOBucyrus International, Inc.Milwaukee, Wisconsin

S. Scott Voynich 2A, 3

Managing PartnerRobinson, Grimes & Company, P.C.Columbus, Georgia

Barry L. Williams 1

Retired Managing General PartnerWilliams Pacific Ventures, Inc.San Francisco, California

Benjamin F. Wilson 6

Managing PrincipalBeveridge & Diamond, P.C.Washington, D.C.

Edward J. Zore 1, 4

Retired ChairmanThe Northwestern Mutual Life Insurance CompanyMilwaukee, Wisconsin

Committee affiliation key:1 Agency and Marketing2 Audit3 Executive4 Finance5 Human Resources, Nominating and Corporate Governance6 Operations and TechnologyA Chair

Pictured left to right: Ralph A. Weber, a founding member of trial law firm Gass Weber Mullins, Milwaukee, Wisconsin; Sidney Dillard, head of the Corporate Investment Banking Division, loop Capital Markets, Chicago, Illinois; P. Russell Hardin (chair), president of the robert W. Woodruff Foundation, atlanta, Georgia; Timothy J. Wallen, Chief executive officer and principal, naI MlG Commercial, Brookfield, Wisconsin; Randall Schilling, president and Chief executive officer of Candlestiq, St. Charles, Missouri.

Every year for more than 100 years, Northwestern Mutual has invited

a committee of policyowners to assess the

Company’s strengths, opportunities and

strategies and to challenge management in

new ways. This demonstrates the essence

of a mutual company: namely, an organization operated for the benefit of those who collectively own it – the policyowners. As members of the

2010 Policyowners’ Examining Committee,

we were pleased and privileged to spend

five days in the home office meeting with

senior management, field representatives

and emerging company leaders. All of

them shared candid, informative insights

and responded to our inquiries with

transparency. We felt their passion for our

Company and its mission to help clients

achieve their financial security goals.

A principle of mutuality is that

Northwestern Mutual serves generations

of clients – past, current and future.

the Company’s mission is timeless: It must be there to fulfill

its promises to every generation. While

the Company is an industry leader today,

we encourage it to maintain its strength

and vitality by continuing to grow. As a

practical matter, future growth will enable

Northwestern Mutual to take further

advantage of scale to enhance its position as

the industry’s low-cost leader and continue

to invest in relevant products and services.

We were pleased to learn that Northwestern

Mutual continues to implement a growth

strategy while maintaining an unmatched

position of financial strength in its industry.

Led by an experienced management team,

northwestern Mutual has a well-defined corporate strategy to deepen client relationships, grow its

distribution system and broaden its reach

in the marketplace.

2010 Policyowners’ Examining Committee Report

continued on page 20 >>

19

Deepen Client relationshipsNorthwestern Mutual has evolved from

its roots as a life insurance company to

become a financial security provider. Today,

the Company addresses clients’ changing

financial security needs over a lifetime by

offering relationship-based, expert guidance

through its exclusive network of financial

representatives and top-quality insurance

and investment products. The Company’s

investment in developing and maintaining a

top-quality, proprietary financial planning

tool is strong evidence of its commitment to

holistic financial security.

In the past year, the home office took steps

to strengthen its alignment with the field.

The Company created a department to

integrate financial planning and product sales

and streamlined its support of the field to better

meet the needs of financial representatives

and clients. We look forward to monitoring

how these and related initiatives increase the

productivity of veteran financial representatives.

In addition, the Company increased its efforts

to deliver client service and communications in

a manner that reflects the client’s perspective

and complements the field-client relationship.

In today’s technology-driven environment, we

encourage the Company to continue to invest

in technology, including electronic statements

and online and mobile client interfaces, to meet

the growing expectations of clients for real-time

information about their financial security.

Grow the Distribution SystemTo deliver financial security to more people,

the Company is working to increase the

number of financial representatives in

its exclusive distribution system. Widely

recognized as a competitive advantage to

the Company, the distribution system’s

vitality is critical. To foster growth of the

field, the Company has implemented new

incentives for network office leaders to

recruit and develop promising talent over

the next ten years. This effort is showing

early signs of success.

As the Company assists the network office

leadership in this endeavor, we encourage

it to be intentional about recruiting and

retaining women and people of color in

order to broaden the reach and impact of its

relationship-based network. The Company’s

unique and award-winning college internship

program offers an excellent opportunity to

introduce Northwestern Mutual to a wide

range of candidates.

Broaden reach in the MarketplaceCentral to the Company’s mission is the

belief that every life matters. To carry out

its mission, the Company needs to broaden

its reach in an ever-changing marketplace

and access underserved markets. We define

these as both geographic and demographic

markets where the Company’s penetration

is below its national average or where the

additional market growth opportunity, in

absolute size, is significant. We note that

Northwestern Mutual has implemented

pilot programs to develop effective

strategies for penetrating underserved

markets. We encourage the Company to

expand upon and accelerate efforts to

deliver financial security to a broader array

of clients. We believe a presence in these

markets positions the Company for long-

term growth that reflects the changing

demographics of our country.

continued on page 21 >>

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The Company’s recent efforts to raise

brand awareness help lay a foundation to

increase its visibility and broaden its reach

to more clients. We note the opportunity

to build on the Company’s presence in

the marketplace and amplify its impact

by taking a strategic approach to the

Northwestern Mutual Foundation’s

investments in the communities it serves.

ManagementWe have the highest level of confidence in

the management of the Company. We applaud

new Chairman and CEO John Schlifske

and his leadership team for their focus on

leadership development, accountability and

alignment of compensation with performance

throughout the organization.

One of the things that impresses us most is

management’s execution of a comprehensive

growth strategy while maintaining the

fundamentals of the business. Management

views the Company’s enduring financial

strength and mutual values as guardrails

that guide how the Company should grow.

Management’s discipline is evident in the

Company’s current managed expense budget,

which is lower than managed expenses at the

end of 2007. Continued expense discipline

will be fundamental to the Company’s long-

term financial strength and future growth.

Management actively evaluates the ongoing

and potential changes to the regulatory

structure in which the Company operates.

As the political and regulatory environment

changes, we are confident that management

will remain vigilant to identify potential

risks and advocate for sensible regulations

and tax policy.

Call to actionNorthwestern Mutual has differentiated itself

as a company intent on delivering financial

security to its clients through one-on-one

relationships between financial representatives

and their clients employing a comprehensive

planning process. Be assertive in achieving

your own financial security. Ask your financial

representative how Northwestern Mutual can

help you realize your financial security goals

through the actions you take today.

As policyowners, we all can play a part in

helping our Company deliver financial security

to more people. The next time your financial

representative asks you for a referral, consider

it your opportunity to introduce others

to our exceptional Company.

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report submitted December 1, 2010.

NORTHWESTERN MUTUALNorthwestern Mutual helps clients protect against financial risk and achieve financial security. The company, its subsidiaries and affiliates offer life, disability and long-term care insurance, investment products, advisory services and trust services that address client needs for financial protection, wealth accumulation, estate preservation and asset distribution. Headquartered in Milwaukee, Wisconsin, the mutual company has nearly 4 million policyowners and investment customers. It expects to continue as the leading U.S. company in total life insurance dividends paid to policyowners.

SUBSiDiARiESQuietCare® long-term care insurance is offered through Northwestern Long Term Care Insurance Company, Milwaukee, Wisconsin. Strategic Employee Benefit Services™ is a nationwide group marketing program providing specialized services in the employee benefit arena. Securities are offered through Northwestern Mutual investment Services, LLC (NMiS), Suite 600, 611 E. Wisconsin Ave., Milwaukee, Wisconsin, 53202, 1-866-664-7737. NMIS, a registered investment adviser, broker-dealer and member of FINRA and SIPC, is a wholly owned company of Northwestern Mutual. Northwestern Mutual Wealth Management Company, a wholly owned company of Northwestern Mutual, is a limited purpose federal savings bank authorized to offer a range of financial planning, trust, fiduciary, investment advisory and investment management products and services. Russell Investment Group is a Washington, USA, corporation, which operates through subsidiaries worldwide and is a subsidiary of The Northwestern Mutual Life Insurance Company.

MORE ABOUT DiViDENDS Decisions with respect to the determination and allocation of divisible surplus are left to the discretion and sound business judgment of the company’s Board of Trustees. There is no guaranteed specific method or formula for the determination and allocation of divisible surplus. Accordingly, the company’s approach is subject to change. Neither the existence nor the amount of a dividend is guaranteed on any policy in any given policy year. Some policies may not receive any dividends in a particular year or years even while other policies receive dividends. In its 2011 dividend scale resolution, the Board of Trustees has exercised its discretion to guarantee a minimum amount of dividends to be paid in 2011 to the policyholders as a group. If this guaranteed amount exceeds the aggregate amount of dividends actually paid to individual policyholders in 2011, that excess will be paid out in 2012 pursuant to the 2011 dividend scale resolution. The presence of a guaranteed minimum amount in the 2011 dividend scale resolution does not obligate Northwestern Mutual to declare a dividend in future years or to guarantee any portion of dividends that may be declared in future years.

REPORTiNG FRAUDEvery year, insurance fraud costs companies and consumers billions of dollars. What can policyowners do to help the company’s anti-fraud efforts? The company’s website has information on this topic. To report fraud, e-mail [email protected] or call toll-free 1-877-607-2485.

CLiENT-REPRESENTATiVE RELATiONSHiPSThis report contains profiles of certain Northwestern Mutual clients, their personal financial needs and how Northwestern Mutual and its affiliated companies met their needs.

The personal financial needs and results of the clients shown in this report may not reflect the experience of other clients. Please discuss your personal financial situation with your Northwestern Mutual financial representative before purchasing any product or service. Please keep in mind that working with a Northwestern Mutual financial representative or any other financial services provider is not a guarantee as to future investment success.

ENTERPRiSE RiSK MANAGEMENTNorthwestern Mutual has a strong risk management culture that is vigilant in identifying and managing risks — whether financial, operational, strategic or environmental — that could impact the strength and security of your company. We apply risk models, experience and judgment as part of a well-coordinated structure to identify, evaluate, address and monitor current and emerging risks. This structure assures accountability for scrutinizing risks, defining tolerance levels and managing risks within those levels.

Cross-functional senior management committees have been established to review risks related to our business. They are central to our internal system of checks and balances. These committees work in partnership with the President and Chief Risk Officer, who facilitates consistent direction and communication between various risk management functions in the company and reports directly to the Chief Executive Officer. The company’s Board of Trustees oversees all risk management efforts.

As a financial security company, we believe that managing risks lies at the heart of our business and is deeply rooted in the more than 150-year-old culture that guides our employees and financial representatives.

ANNUAL MEETiNG 8 A.M., MAY 25, 2011The Annual Meeting of Policyowners of The Northwestern Mutual Life Insurance Company will be held at 8 a.m., Wednesday, May 25, 2011, at the company’s Milwaukee campus, 720 E. Wisconsin Ave., Milwaukee, Wisconsin.

HAVE A QUESTiON?For policy inquiries or general information, go to northwesternmutual.com. For billing and payment inquiries, call 1-800-388-8123. The company’s general phone number is (414) 271-1444.

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Trusted.

Proven.

Strong.

23

Since 1857, northwestern Mutual’s financial strength and stability

have backed our promise to be there for our clients when their

financial security is tested. We remain steadfastly guided by our

mission to build enduring relationships with clients founded on

sound guidance and expert solutions that meet a lifetime of needs.

today – as we have throughout our 154-year history – we continue

to deliver consistent long-term value, while maintaining exceptional

financial strength, helping our clients achieve a secure financial future.

Security Defined ...

YOUR VOTE is important

Please sign and return the proxy in the envelope provided in this package.

Maintaining a strong system of corporate governance is

fundamental to our success.

the northwestern Mutual Life Insurance Company • Milwaukee, WI www.northwesternmutual.com

90-0073-01 (0311)

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HIGHEST CUSTOMER SATISFACTIONNorthwestern Mutual leads the industry with the highest customer satisfaction score among U.S. life insurers.

The American Customer Satisfaction Index, fourth-quarter 2010 report

WORLD’S MOST ADMIREDNorthwestern Mutual is the “World’s Most Admired” life insurance company according to executives, directors and analysts in FORTUNE® magazine’s 2011 annual survey.

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MOST DIVIDENDSWe expect to pay nearly $4.9 billion in total dividends to policyowners in 2011 — and more than twice the life insurance dividends of our closest competitor.

2010 Annual Report

Documents

Transcript of 2010 Annual Report