-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TCvZRYpCzC5Zso/o5iiRR/S4smZvcACk/ahvAh/+kR2saQrCY3XYSGnMyfePqhBj 0gfqzQ5vNwUQFIDLOr9XTw== 0000950137-97-001337.txt : 19970401 0000950137-97-001337.hdr.sgml : 19970401 ACCESSION NUMBER: 0000950137-97-001337 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970331 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NML VARIABLE ANNUITY ACCOUNT B CENTRAL INDEX KEY: 0000072176 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 811-01668 FILM NUMBER: 97569814 BUSINESS ADDRESS: STREET 1: 720 E WISCONSIN AVE CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4142711444 MAIL ADDRESS: STREET 1: 720 EAST WISCONSIN AVENUE CITY: MILWAUKEE STATE: WI ZIP: 53202 10-K 1 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996 Commission file numbers 2-64683, 2-94234 and 2-89905. THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY (Exact name of Registrant as specified in its Charter) Wisconsin 39-0509570 - ---------------------------------------- --------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 720 East Wisconsin Avenue Milwaukee, Wisconsin 53202 - ---------------------------------------- --------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 414/271-1444 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered ------------------- ------------------------ None None ---- ---- Securities registered pursuant to Section 23(g) of the Act: None ---- "Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ." ------- ------- "State the aggregate market value of the voting stock held by non-affiliates of the Registrant. The aggregate market value shall be computed by reference to the price at which the stock was sold or the average bid and asked prices of such stock, as of a specified date within 60 days prior to the date of filing. (See definition of affiliate in Rule 405.)" Not Applicable -------------- "Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date." None ---- "DOCUMENTS INCORPORATED BY REFERENCE" None ---- This Form 10-K report contains 70 pages. The Exhibit Index is located on page 46. 2 The Northwestern Mutual Life Insurance Company Form 10-K PART I Item 1. Business (a) General development of business. There have been no material changes or developments since the beginning of the fiscal year in the business done or intended to be done by the Registrant and its subsidiaries. (b) Financial information about industry segments. The registrant is a mutual life insurance company whose principal product is life insurance. The Registrant also sells annuity contracts, including variable annuity contracts. (c) Description of business. The Registrant is the seventh largest life insurance company in the United States with total assets in excess of $62 billion on December 31, 1996. The Registrant's principal products are life insurance contracts distributed by approximately 5,900 full-time producing agents. Sales of life insurance contracts as a percentage of total sales is as follows: 1996 80.78% 1995 81.22% 1994 80.60% 1993 82.44% 1992 81.44% 1991 81.11% 1990 82.64% 1989 83.12% 1988 84.18% As of December 31, 1996, the Registrant had 3,513 employees. (d) Not applicable. Item 2. Properties - ------- ---------- The principal properties used in the business are located at 720 East Wisconsin Avenue and 818 East Mason Street, Milwaukee, Wisconsin. The properties, which house the Registrant's home office, include approximately three and one-half square blocks improved with three office buildings and a parking structure. Title to land and buildings is held in fee. Item 3 is on page 3. 2 3 The Northwestern Mutual Life Insurance Company Form 10-K Item 3. Legal Proceedings The Northwestern Mutual Life Insurance Company is engaged in litigation of various kinds, which in its judgment is not of material importance in relation to its total assets. The litigation includes various administrative or judicial proceedings, relating to investments of the Registrant, arising under Federal, State or local provisions that have been enacted or adopted regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment. The Registrant believes that these proceedings, singly and in the aggregate, are not material. In addition, NML Variable Annuity Accounts A and C are not engaged in any litigation which is considered material to their total assets. Item 4. Submission of Matters to a Vote of Security Holders (a) Not applicable. The Registrant is a mutual life insurance company and has no stockholders as such. (b) Not applicable. (c) Not applicable. (d) Not applicable. Item 5 is on page 4. 3 4 The Northwestern Mutual Life Insurance Company Form 10-K PART II Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters (a) Not applicable. The Registrant is a mutual life insurance company and has no equity securities or stockholders as such. (b) Not applicable. (c) Not applicable. Item 6 is on page 5. 4 5 The Northwestern Mutual Life Insurance Company Form 10-K Item 6. Selected Financial Data - ------- ----------------------- Results of Operations for NML Variable Annuity Account A for each of the five years ending December 31, follows:
1996 1995 1994 1993 1992 ------------ ------------- ---------------- ------------- ------------- Investment Income Dividend Income from Northwestern Mutual Series Fund, Inc. Growth Stock Portfolio.............. $ 379,453 $ 128,854 $ 18,971## NA NA Dividend Income from Northwestern Mutual Series Fund, Inc. Aggressive Growth Stock Portfolio... 2,456,762 256,787 248,438 359,370 52,183 Dividend Income from Northwestern Mutual Series Fund, Inc. International Equity Portfolio...... 1,820,972 217,966 853,704 97,043# NA Dividend Income from Northwestern Mutual Series Fund, Inc. Growth and Income Stock Portfolio... 1,206,606 465,091 53,075## NA NA Dividend Income from Northwestern Mutual Series Fund, Inc. Index 500 Stock Portfolio........... 1,906,168 522,842 2,155,181 256,688 191,946 Dividend Income from Northwestern Mutual Series Fund, Inc. Money Market Portfolio.............. 1,024,534 1,119,254 708,559 520,596 620,178 Dividend Income from Northwestern Mutual Series Fund, Inc. Balanced Portfolio.................. 14,325,426 8,146,698 33,071,685 13,161,961 9,729,580 Dividend Income from Northwestern Mutual Series Fund, Inc. Select Bond Portfolio............... 906,892 652,667 2,990,731 1,423,472 1,251,161 Dividend Income from Northwestern Mutual Series Fund, Inc. High Yield Bond Portfolio........... 473,729 199,805 68,840## NA NA Dividend Income from Northwestern Mutual Capital Appreciation Stock Fund, Inc................... NA NA NA 976,621** 714,398 ----------- ------------- ------------- ------------ ------------- Total Income................................... 24,500,542 11,709,964 40,169,184 16,795,751 12,559,446 Annuity Rate and Expense Guarantees.............. 5,783,739 5,072,064 4,466,142 4,074,129 3,496,742 ----------- ------------- ------------- ------------ ------------- Net Investment Income............................ $18,716,803 $ 6,637,900 $ 35,703,042 $ 2,721,622 $ 9,062,704 =========== ============= ============= ============ ============= Realized and Unrealized Gain (Loss) on Investments Realized Gain on Investments..................... $13,967,988 $ 13,141,169 $ 1,687,702 $ 2,347,432 $ 858,030 Unrealized Appreciation (Depreciation) of Investments During the Year.................... 33,051,905 76,916,515 (39,969,923) 14,612,044 2,977,783 ----------- ------------- ------------- ------------ ------------- Net Gain (Loss) on Investments................... $47,019,893 $ 90,057,684 ($38,282,221) $ 16,959,476 $ 3,835,813 =========== ============= ============= ============ =============
** Represents operations through April 29, 1993. # Commenced operations on April 30, 1993. ## Commenced operations on May 3, 1994. See Notes to Financial Statements on page 22-23. 5 6 The Northwestern Mutual Life Insurance Company Form 10-K Item 6. (continued) - ------- ----------- Changes in Equity for NML Variable Annuity Account A for each of the five years ending December 31, follows:
1996 1995 1994 1993 1992 ------------ ------------ ------------ ------------ ------------- From Investment Activities Net Investment Income............ $ 18,716,803 $ 6,637,900 $ 35,703,042 $ 12,721,622 $ 9,062,704 Net Realized Gain on Investments. 13,967,988 13,141,169 1,687,702 2,347,432 858,030 Net Change in Unrealized Appreciation (Depreciation) of Investments...................... 33,051,905 76,916,515 (39,969,923) 14,612,044 2,977,783 ------------ ----------- ------------ ------------ ------------- Increase (Decrease) in Equity Derived from Investment Activities..................... 65,736,696 96,695,584 (2,579,179) 29,681,098 12,898,517 ------------ ----------- ------------ ------------ ------------- From Equity Transactions Contract Owners' Net Payments.... 65,169,358 49,124,853 52,262,816 51,044,522 48,215,264 Annuity Payments................. (830,996) (610,983) (603,158) (522,956) (497,390) Surrenders and Other (Net)....... (52,376,445) (62,309,189) (33,008,630) (33,141,406) (27,934,737) ------------ ------------ ------------ ------------ ------------- Increase (Decrease in Equity Derived from Equity Transactions.................. 11,961,917 (13,795,319) 18,651,028 17,380,160 19,783,137 ------------ ------------ ------------ ------------ ------------- Net Increase (Decrease) in Equity 77,698,613 82,900,265 16,071,849 47,061,258 32,681,654 Equity, Beginning of Year.......... 469,821,427 386,921,162 370,849,313 323,788,055 291,106,401 ------------ ------------ ------------ ------------ ------------- Equity, End of Year................ $547,520,040 $469,821,427 $386,921,162 $370,849,313 $ 323,788,055 ============ ============ ============ ============ =============
See Notes to Financial Statements on page 22-23. 6 7 The Northwestern Mutual Life Insurance Company Form 10-K Item 6. (continued) Total Assets of NML Variable Annuity Account A for each of the five following years at December 31, follows:
1996 1995 1994 1993 1992 -------------- -------------- ----------------- ------------ ------------ Assets Investments at Market Value: Northwestern Mutual Series Fund, Inc. Growth Stock Portfolio..................... $ 9,523,179 $ 4,284,669 $ 1,397,703 ## NA NA Northwestern Mutual Series Fund, Inc. Aggressive Growth Stock Portfolio............... 78,087,972 56,491,009 36,256,480 22,946,546 13,743,522 Northwestern Mutual Series Fund, Inc. International Equity Portfolio.............. 41,497,787 31,789,148 28,832,978 11,844,559 # NA Northwestern Mutual Series Fund, Inc. Growth and Income Stock Portfolio............... 13,199,558 7,891,655 3,282,764 ## NA NA Northwestern Mutual Series Fund, Inc. Index 500 Stock Portfolio..................... 80,917,025 62,391,687 43,545,408 43,534,827 7,067,703 Northwestern Mutual Series Fund, Inc. Money Market Portfolio..................... 23,380,205 21,556,895 20,120,832 17,036,899 19,413,335 Northwestern Mutual Series Fund, Inc. Balanced Portfolio. 270,745,111 257,867,967 230,871,659 252,635,446 233,054,698 Northwestern Mutual Series Fund, Inc. Select Bond Portfolio..................... 26,648,961 25,742,752 22,258,901 24,004,669 20,752,581 Northwestern Mutual Series Fund, Inc. High Yield Bond Portfolio..................... 4,907,490 2,060,076 1,242,382 ## NA NA Northwestern Mutual Capital Appreciation Stock Fund, Inc.. NA NA NA 0 ** 30,340,518 Due from NML Insurance Company 123,152 491,572 179,152 182,546 142,654 Due from Sale of Fund Shares.. 387,086 78,037 319,392 418,356 243,505 ------------ ------------ ------------ ------------ ------------ Total Assets.................. $549,417,526 $470,645,467 $388,307,651 $372,603,848 $324,758,516 ============ ============ ============ ============ ============
** Capital Appreciation Stock Fund was merged into Index 500 Stock Fund on April 30, 1993. # Commenced operations on April 30, 1993. ## Commenced operations on May 3, 1994. See Notes to Financial Statements on page 22-23. 7 8 The Northwestern Mutual Life Insurance Company Form 10-K Item 6. (continued) Results of Operations for NML Variable Annuity Account C for each of the five years ending December 31, follows:
1996 1995 1994 1993 1992 -------------- --------------- ------------------- ------------ --------- Investment Income Dividend Income from Northwestern Mutual Series Fund, Inc. Growth Stock Portfolio............... $ 366,920 $ 59,271 $ 4,518 ## NA NA Dividend Income from Northwestern Mutual Series Fund, Inc. Aggressive Growth Stock Portfolio.... 2,574,462 242,583 232,345 342,725 38,628 Dividend Income from Northwestern Mutual Series Fund, Inc. International Equity Portfolio....... 1,805,160 190,138 703,931 26,336 # NA Dividend Income from Northwestern Mutual Series Fund, Inc. Growth and Income Stock Portfolio.... 1,146,200 276,923 19,233 ## NA NA Dividend Income from Northwestern Mutual Series Fund, Inc. Index 500 Stock Portfolio............ 2,082,261 544,553 2,226,240 260,710 125,787 Dividend Income from Northwestern Mutual Series Fund, Inc. Money Market Portfolio............... 609,543 494,253 443,639 269,586 315,038 Dividend Income from Northwestern Mutual Series Fund, Inc. Balanced Portfolio................... 7,534,370 4,212,478 17,046,665 6,769,160 4,909,056 Dividend Income from Northwestern Mutual Series Fund, Inc. Select Bond Portfolio................ 566,451 395,357 1,874,182 813,051 670,892 Dividend Income from Northwestern Mutual Series Fund, Inc. High Yield Bond Portfolio............ 309,003 55,220 11,456 ## NA NA Dividend Income from Northwestern Mutual Capital Appreciation Stock Fund, Inc.................... NA NA NA 1,078,208 ** 760,962 ----------- ----------- ------------- ----------- ---------- Total Income................................... 16,994,370 6,470,776 22,562,209 9,559,776 6,820,363 Annuity Rate and Expense Guarantees.............. 1,738,625 856,764 509,648 235,930 80,714 ----------- ----------- ------------- ----------- ---------- Net Investment Income............................ $15,255,745 $ 5,614,012 $ 22,052,561 $ 9,323,846 $6,739,649 =========== =========== ============= =========== ========== Realized and Unrealized Gain (Loss) on Investments Realized Gain on Investments..................... $8,855,390 $ 9,884,364 $ 5,949,795 $ 3,670,743 $ 855,374 Unrealized Appreciation (Depreciation) of Investments During the Year..................... 29,832,124 53,407,857 (27,055,878) 7,227,689 1,645,252 ----------- ----------- ------------- ----------- ---------- Net Gain (Loss) on Investments.................. $38,687,514 $63,292,221 $ (21,106,083) $10,898,432 $2,500,626 =========== =========== ============= =========== ==========
** Represents operations through April 29, 1993. # Commenced operations on April 30, 1993. ## Commenced operations on May 3, 1994. See Notes to Financial Statements on page 31-32. 8 9 The Northwestern Mutual Life Insurance Company Form 10-K Item 6. (continued) Changes in Equity for NML Variable Annuity Account C for each of the five years ending December 31, follows:
1996 1995 1994 1993 1992 ------------ ------------- ------------ ------------- ------------- From Investment Activities Net Investment Income.................. $ 15,255,745 $ 5,614,012 $ 22,052,561 $ 9,323,846 $ 6,739,649 Net Realized Gain (Loss) on Investments 8,855,390 9,884,364 5,949,795 3,670,743 855,374 Net Change in Unrealized Appreciation (Depreciation) of Investments.......... 29,832,124 53,407,857 (27,055,878) 7,227,689 1,645,252 ------------- ------------ ------------ ------------ ------------ Increase in Equity Derived from Investment Activities............... 53,943,259 68,906,233 946,478 20,222,278 9,240,275 ------------- ------------ ------------ ------------ ------------ From Equity Transactions Contract Owners' Net Payments.......... 89,650,916 59,390,267 48,709,729 39,748,661 40,797,216 Surrenders and Other (Net)............. (34,747,640) 60,872,729 (26,720,946) (22,334,176) (22,756,886) ------------- ------------ ------------ ------------ ------------ Increase in Equity Derived from Equity Transactions........................... 54,903,276 (1,482,462) 21,988,783 17,414,485 18,040,330 ------------ ------------ ------------ ------------ ------------ Net Increase in Equity................. 108,846,535 67,423,771 22,935,261 37,636,763 27,280,605 Equity, Beginning of Year.............. 317,806,038 250,382,267 227,447,006 189,810,243 162,529,638 ------------ ------------ ------------ ------------ ------------ Equity, End of Year.................... $426,652,573 $317,806,038 $250,382,267 $227,447,006 $189,810,243 ============ ============ ============ ============ ============
See Notes to Financial Statements on page 31-32. 9 10 The Northwestern Mutual Life Insurance Company Form 10-K Item 6. (continued) Total Assets of NML Variable Annuity Account C for each of the five following years at December 31, follows:
1996 1995 1994 1993 1992 -------------- -------------- ---------------- ------------ ------------- Assets Investments at Market Value: Northwestern Mutual Series Fund, Inc. Growth Stock Portfolio....................... $ 9,734,427 $ 2,084,697 $ 329,792 ## NA NA Northwestern Mutual Series Fund, Inc. Aggressive Growth Stock Portfolio................. 95,276,983 57,421,016 33,266,862 21,836,950 10,964,260 Northwestern Mutual Series Fund, Inc. International Equity Portfolio....................... 49,461,520 30,039,223 24,647,586 3,183,126 # NA Northwestern Mutual Series Fund, Inc. Growth and Income Stock Portfolio................. 13,034,961 4,888,505 1,159,187 ## NA NA Northwestern Mutual Series Fund, Inc. Index 500 Stock Portfolio....................... 93,249,123 64,560,752 45,552,429 45,850,766 5,456,402 Northwestern Mutual Series Fund, Inc. Money Market Portfolio....................... 13,784,374 9,324,692 11,510,121 9,930,082 9,242,596 Northwestern Mutual Series Fund, Inc. Balanced Portfolio... 131,324,909 132,469,239 119,452,506 131,574,218 118,944,619 Northwestern Mutual Series Fund, Inc. Select Bond Portfolio....................... 17,803,016 16,281,140 14,262,125 15,071,860 11,641,722 Northwestern Mutual Series Fund, Inc. High Yield Bond Portfolio....................... 2,983,258 736,774 201,656 ## NA NA Northwestern Mutual Capital Appreciation Stock Fund, Inc.... NA NA NA 0 ** 33,555,890 Due from NML Insurance Company..... 1,662,368 808,493 279,107 35,475 23,303 Due from Sale of Fund Shares....... 52,909 36 79,226 145,027 32,679 -------------- -------------- ---------------- ------------ ------------ Total Assets....................... $428,367,848 $318,614,567 $250,740,600 $227,627,504 $189,861,471 ============== ============== ================ ============ ============
** Capital Appreciation Stock Fund was merged into Index 500 Stock Fund on April 30, 1993. # Commenced operations on April 30, 1993. ## Commenced operations on May 3, 1994. See Notes to Financial Statements on page 31-32. Item 7 is on page 11. 10 11 The Northwestern Mutual Life Insurance Company Form 10-K Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (a) Liquidity The assets of the Northwestern Mutual Life Insurance Company Variable Annuity Account A and C are invested solely in shares of Northwestern Mutual Series Fund, Inc. Index 500 Stock Portfolio, Northwestern Mutual Series Fund, Inc. Aggressive Growth Stock Portfolio, Northwestern Mutual Series Fund, Inc. International Equity Portfolio, Northwestern Mutual Series Fund, Inc. Select Bond Portfolio, Northwestern Mutual Series Fund, Inc. Growth and Income Stock Portfolio, Northwestern Mutual Series Fund, Inc. Balanced Portfolio, Northwestern Mutual Series Fund, Inc. Money Market Portfolio, Northwestern Mutual Series Fund, Inc. Growth Stock Portfolio, and Northwestern Mutual Series Fund, Inc. High Yield Bond Portfolio (the "Funds"). The Funds are open-end investment companies registered under the Investment Act of 1940. In order to pay annuity benefits and expenses, the Accounts redeem shares in these Funds. The Registrant's liquidity is not expected to change in a material way. (b) Capital Resources All payments from contract owners of NML Variable Annuity Accounts A and C are invested in shares of the Funds. The capital resources of NML Variable Annuity Accounts A and C are the equity in the respective Accounts. This consists of payments from the contract owners, plus unrealized and realized appreciation on the investment of these payments, plus investment income received from the Funds, minus payment of annuity benefits and expenses. (c) Results of Operations NML Variable Annuity Account A Accumulation Unit Values Contracts Issued Prior to December 17, 1981:
Division 12/31/96 % of Change 12/31/95 % of Change 12/31/94 - -------- --------- ----------- --------- ----------- --------- Growth Stock........ $1.572985 20.00% $1.310823 29.85% $1.009479 Agressive Growth Stock............... 3.286265 16.82 2.813200 38.26 2.034747 International Equity 1.679665 20.11 1.398467 13.72 1.229716 Growth and Income Stock............... 1.545596 19.07 1.298065 30.15 0.997398 Index 500 Stock..... 2.487952 21.83 2.042204 36.23 1.499054 Money Market........ 2.415898 4.49 2.311989 5.04 2.201139 Balanced............ 5.180408 12.60 4.600659 25.45 3.667322 Select Bond......... 6.685035 2.54 6.519655 18.21 5.515295 High Yield Bond..... 1.412413 18.87 1.188188 15.91 1.025095
11 12 The Northwestern Mutual Life Insurance Company Form 10-K Item 7. (continued) - ------- ----------- Accumulation Unit Values Contracts Issued After December 16, 1981 and Prior to March 31, 1995:
Division 12/31/96 % of Change 12/31/95 % of Change 12/31/94 - -------- --------- ----------- --------- ----------- --------- Growth Stock........ $1.552125 19.40% $1.299976 29.20% $1.006136 Aggressive Growth Stock............... 3.188266 16.23 2.743106 37.57 1.993956 International Equity 1.649102 19.50 1.379966 13.16 1.219510 Growth and Income Stock............... 1.525144 18.47 1.287355 29.50 0.994105 Index 500 Stock..... 2.413788 21.21 1.991330 35.56 1.469006 Money Market........ 2.241420 3.97 2.155845 4.51 2.062740 Balanced............ 4.805896 12.04 4.289623 24.83 3.436463 Select Bond......... 6.200523 2.02 6.077689 17.62 5.167101 High Yield Bond..... 1.393713 18.27 1.178371 15.33 1.021705
Accumulation Unit Values Contracts Issued On or After March 31, 1995: Front Load Version
Division 12/31/96 % of Change 12/31/95 % of Change 3/31/95 - -------- --------- ----------- --------- ----------- --------- Growth Stock........ $1.455537 20.42% $1.208718 20.87% $1.000000 Aggressive Growth Stock............... 1.529999 17.22 1.305186 30.52 1.000000 International Equity 1.374484 20.53 1.140398 14.04 1.000000 Growth and Income Stock............... 1.429760 19.49 1.196596 19.66 1.000000 Index 500 Stock..... 1.527085 22.25 1.249114 24.91 1.000000 Money Market........ 1.090643 4.86 1.040089 4.01 1.000000 Balanced............ 1.334426 13.00 1.180953 18.10 1.000000 Select Bond......... 1.161454 2.90 1.128765 12.88 1.000000 High Yield Bond..... 1.326020 19.29 1.111614 11.16 1.000000
12 13 Form 10-K Item 7. (continued) - ------- ----------- Accumulation Unit Values Contracts Issued On or After March 31, 1995: Back Load Version
Division 12/31/96 % of Change 12/31/95 % of Change 3/31/95 - -------- ------------ ------------ ------------ ----------- --------- Growth Stock........ $ 1.552125 19.40% $ 1.299976 20.11% $1.082329 Aggressive Growth Stock............... 3.188266 16.23 2.743106 29.69 2.115045 International Equity 1.649102 19.50 1.379966 13.32 1.217764 Growth and Income Stock............... 1.525144 18.47 1.287355 18.91 1.082672 Index 500 Stock..... 2.413788 21.21 1.991330 24.12 1.604306 Money Market........ 2.241420 3.97 2.155845 3.35 2.085911 Balanced............ 4.805896 12.04 4.289623 17.35 3.655399 Select Bond......... 6.200523 2.02 6.077689 12.16 5.418578 High Yield Bond..... 1.393713 18.27 1.178371 10.46 1.066782 Equity: 12/31/96 12/31/95 12/31/94 -------- -------- -------- $547,520,040 $469,821,427 $386,921,162
The change in these amounts is largely derived from investment activities within the Account: A $2,579,179 decrease for the year ended December 31, 1994, a $96,695,584 increase for the year ended December 31, 1995, and a $65,736,696 increase for the year ended December 31, 1996. Net contributions (surrenders) from contract owners amounted to $18,651,028 for the year ended December 31, 1994, $(13,795,319) for the year ended December 31, 1995, and $11,961,917 for the year ended December 31, 1996. NML Variable Annuity Account C Accumulation Unit Values Contracts Issued Prior to December 17, 1981 or between April 30, 1984 and December 31, 1991:
Division 12/31/96 % of Change 12/31/95 % of Change 12/31/94 - -------- ---------- ----------- ---------- ----------- ---------- Growth Stock........ $16.046821 20.91% $13.271899 30.82% $10.144941 Aggressive Growth Stock............... 32.542621 17.70 27.648691 39.29 19.849331 International Equity 1.726413 21.01 1.426613 14.57 1.245144 Growth and Income Stock............... 15.767435 19.97 13.142782 31.12 10.023581 Index 500 Stock..... 27.133645 22.75 22.104982 37.25 16.105431 Money Market........ 26.011476 5.29 24.705630 5.82 23.346279 Balanced............ 58.832423 13.45 51.855817 26.39 41.028821 Select Bond......... 76.681608 3.31 74.222515 19.10 62.322013 High Yield Bond..... 14.408967 19.77 12.030416 16.78 10.301956
13 14 The Northwestern Mutual Life Insurance Company Form 10-K Item 7. (continued) - ------- ---------------------------------------------------------------------- Accumulation Unit Values Contracts Issued After December 16, 1981 or Prior to May 1, 1984:
Division 12/31/96 % of Change 12/31/95 % of Change 12/31/94 - -------- ---------- ----------- ---------- ----------- ---------- Growth Stock........ $15.834243 20.30% $13.162242 30.17% $10.111365 Aggressive Growth Stock............... 31.591115 17.11 26.975930 38.60 19.463084 International Equity 1.695019 20.41 1.407741 14.00 1.234814 Growth and Income Stock............... 15.558532 19.37 13.034162 30.47 9.990409 Index 500 Stock..... 26.337300 22.13 21.564611 36.57 15.790165 Money Market........ 24.167111 4.76 23.069838 5.30 21.909448 Balanced............ 54.595947 12.88 48.364840 25.76 38.457844 Select Bond......... 71.125132 2.79 69.192181 18.50 58.388451 High Yield Bond..... 14.218083 19.17 11.931003 16.20 10.267863
Accumulation Unit Values Contracts Issued After December 31, 1991 - Front Load Version:
Division 12/31/96 % of Change 12/31/95 % of Change 12/31/94 - -------- --------- ----------- --------- ----------- --------- Growth Stock........ $1.577134 20.12% $1.312966 29.98% $1.010139 Aggressive Growth Stock............... 2.077739 16.93 1.776871 38.39 1.283916 International Equity 1.685759 20.23 1.402156 13.83 1.231747 Growth and Income Stock............... 1.549666 19.19 1.300190 30.27 0.998049 Index 500 Stock..... 1.937139 21.95 1.588496 36.37 1.164877 Money Market........ 1.192105 4.60 1.139693 5.14 1.083976 Balanced............ 1.599774 12.71 1.419325 25.57 1.130270 Select Bond......... 1.370157 2.64 1.334934 18.33 1.128176 High Yield Bond..... 1.416152 18.99 1.190149 16.02 1.025776
14 15 The Northwestern Mutual Life Insurance Company Form 10-K Item 7. (continued) - ------- ----------- Accumulation Unit Values Contracts Issued After December 31, 1991 - Simplified Load Version:
Division 12/31/96 % of Change 12/31/95 % of Change 12/31/94 - -------- --------- ----------- --------- ----------- --------- Growth Stock........ $1.552125 19.40% $1.299976 29.20% $1.006136 Aggressive Growth Stock............... 3.199964 16.23 2.753170 37.57 2.001269 International Equity 1.649102 19.50 1.379966 13.16 1.219510 Growth and Income Stock............... 1.525144 18.47 1.287355 29.50 0.994105 Index 500 Stock..... 2.463008 21.22 2.031929 35.56 1.498956 Money Market........ 2.246287 3.97 2.160533 4.51 2.067227 Balanced............ 4.829655 12.04 4.310821 24.83 3.453452 Select Bond......... 6.260939 2.02 6.136911 17.62 5.217451 High Yield Bond..... 1.393713 18.27 1.178371 15.33 1.021705
Equity:
12/31/96 12/31/95 12/31/94 ------------ ------------ ------------ $426,652,573 $317,806,038 $250,382,267
These changes are largely derived from investment activities within the Account: A $946,478 increase for the year ended December 31, 1994, a $68,906,233 increase for the year ended December 31, 1995 and a $53,943,259 increase for the year ended December 31, 1996. Net contributions (surrenders) from contract owners amounted to $21,988,786 for the year ended December 31, 1994, $(1,482,462) for the year ended December 31, 1995, and $54,903,276 for the year ended December 31, 1996. Item 8 is on page 16. 15 16 The Northwestern Mutual Life Insurance Company Form 10-K Item 8. Financial Statements and Supplementary Data NML VARIABLE ANNUITY ACCOUNT A STATEMENT OF ASSETS AND LIABILITIES
December 31 1996 1995 ------------ ------------ Assets Investments at market value: Northwestern Mutual Series Fund, Inc. Growth Stock 1996: 6,504,903 shares (cost $8,193,212)........... $ 9,523,178 1995: 3,392,454 shares (cost $3,733,506)........... $ 4,284,669 Aggressive Growth Stock 1996: 24,829,244 shares (cost $54,025,343)......... 78,087,971 1995: 20,408,602 shares (cost $38,233,857)......... 56,491,009 International Equity 1996: 26,635,293 shares (cost $34,100,468)......... 41,497,787 1995: 23,460,626 shares (cost $28,902,664)......... 31,789,148 Growth and Income Stock 1996: 10,014,839 shares (cost $11,804,187)......... 13,199,558 1995: 6,516,643 shares (cost $7,030,408)........... 7,891,655 Index 500 Stock 1996: 39,375,681 shares (cost $51,893,158)......... 80,917,025 1995: 36,232,106 shares (cost $43,680,571)......... 62,391,687 Money Market 1996: 23,380,205 shares (cost $23,380,205)......... 23,380,205 1995: 21,556,895 shares (cost $21,556,895)......... 21,556,895 Balanced 1996: 157,593,196 shares (cost $210,643,607)....... 270,745,111 1995: 160,765,565 shares (cost $209,057,927)....... 257,867,967 Select Bond 1996: 21,772,027 shares (cost $25,386,654)......... 26,648,961 1995: 20,963,153 shares (cost $24,227,622)......... 25,742,752 High Yield Bond 1996: 4,465,414 shares (cost $4,847,740)........... 4,907,490 1995: 2,007,871 shares (cost $2,071,600)........... 2,060,076 ------------ ------------ 548,907,286 470,075,858 Due from Sales of Fund Shares................................. 387,086 78,037 Due from Northwestern Mutual Life Insurance Company........... 123,152 491,572 ------------ ------------ Total Assets........................................ $549,417,524 $470,645,467 ============ ============ Liabilities Due to Participants........................................... $ 1,387,248 $254,431 Due to Northwestern Mutual Life Insurance Company............. 387,086 78,037 Due from Purchase of Fund Shares.............................. 123,150 491,572 ------------ ------------ Total Liabilities.................................. $ 1,897,484 $ 824,040 ============ ============
The Accompanying Notes are an Integral Part of the Financial Statements. 16 17 The Northwestern Mutual Life Insurance Company Form 10-K Item 8. (continued) NML VARIABLE ANNUITY ACCOUNT A STATEMENT OF ASSETS AND LIABILITIES
December 31 --------------------------------- Equity 1996 1995 -------------- ----------------- Contracts Issued Prior to December 17, 1981: Growth Stock Division 1996: 118,168 Accumulation Units @ 1.572985.... $185,861 1995: 1,782 Accumulation Units @ 1.310823...... $2,336 Annuity Reserves................................ 9,807 0 -------------- ----------------- 195,668 2,336 -------------- ----------------- Aggressive Growth Stock Division 1996: 890,850 Accumulation Units @ 3.286265.... 2,927,568 1995: 861,229 Accumulation Units @ 2.813200.... 2,422,811 Annuity Reserves................................ 75,244 74,993 -------------- ----------------- 3,002,812 2,497,804 -------------- ----------------- International Equity Division 1996: 1,332,812 Accumulation Units @ 1.679665.. 2,238,678 1995: 1,166,796 Accumulation Units @ 1.398467.. 1,631,726 Annuity Reserves................................ 147,829 2,889 -------------- ----------------- 2,386,507 1,634,615 -------------- ----------------- Growth and Income Stock Division 1996: 69,566 Accumulation Units @ 1.545596..... 107,521 1995: 9,498 Accumulation Units @ 1.298065...... 12,329 Annuity Reserves................................ 180,931 29,486 -------------- ----------------- 288,452 41,815 -------------- ----------------- Index 500 Stock Division 1996: 9,600,286 Accumulation Units @ 2.487952.. 23,885,052 1995: 10,111,615 Accumulation Units @ 2.042204. 20,649,980 Annuity Reserves................................ 1,300,177 1,273,520 -------------- ----------------- 25,185,229 21,923,500 -------------- ----------------- Money Market Division 1996: 1,103,625 Accumulation Units @ 2.415898.. 2,666,245 1995: 1,264,988 Accumulation Units @ 2.311989.. 2,924,637 Annuity Reserves................................ 60,981 63,276 -------------- ----------------- 2,727,226 2,987,913 -------------- ----------------- Balanced Division 1996: 4,743,812 Accumulation Units @ 5.180408.. 24,574,880 1995: 5,651,599 Accumulation Units @ 4.600659.. 26,001,081 Annuity Reserves................................ 1,454,827 1,442,962 -------------- ----------------- 26,029,707 27,444,043 -------------- ----------------- Select Bond Division 1996: 1,215,131 Accumulation Units @ 6.685035.. 8,123,192 1995: 1,172,420 Accumulation Units @ 6.519655.. 7,643,772 Annuity Reserves................................ 75,632 244,850 -------------- ----------------- 8,198,824 7,888,622 -------------- ----------------- High Yield Bond Division 1996: 428,588 Accumulation Units @ 1.412413.... 605,343 1995: NA....................................... 0 Annuity Reserves................................ 7,644 0 -------------- ----------------- 612,987 0 -------------- -----------------
The Accompanying Notes are an Integral Part of the Financial Statements. 17 18 The Northwestern Mutual Life Insurance Company Form 10-K Item 8. (continued) NML VARIABLE ANNUITY ACCOUNT A STATEMENT OF ASSETS AND LIABILITIES
December 31 ----------------------------- Equity (cont'd.) 1996 1995 ------------- -------------- Contracts Issued After December 16, 1981 and Prior to March 31, 1995: Growth Stock Division 1996: 4,845,965 Accumulation Units @ 1.552125.. $7,521,543 1995: 2,970,905 Accumulation Units @ 1.299976.. $3,862,105 Annuity Reserves................................ 0 0 ------------- -------------- 7,521,543 3,862,105 ------------- -------------- Aggressive Growth Stock Division 1996: 21,479,837 Accumulation Units @ 3.188266. 68,483,433 1995: 19,083,707 Accumulation Units @ 2.743106. 52,348,631 Annuity Reserves................................ 191,587 167,625 ------------- -------------- 68,675,020 52,516,256 ------------- -------------- International Equity Division 1996: 22,132,206 Accumulation Units @ 1.649102. 36,498,266 1995: 21,338,268 Accumulation Units @ 1.379966. 29,446,084 Annuity Reserves................................ 100,731 153,834 ------------- -------------- 36,598,997 29,599,918 ------------- -------------- Growth and Income Stock Division 1996: 7,054,484 Accumulation Units @ 1.525144.. 10,759,104 1995: 5,605,215 Accumulation Units @ 1.287355.. 7,215,902 Annuity Reserves:............................... 0 160,662 ------------- -------------- 10,759,104 7,376,564 ------------- -------------- Index 500 Stock Division 1996: 20,092,060 Accumulation Units @ 2.413788. 48,497,973 1995: 18,961,291 Accumulation Units @ 1.991330. 37,758,187 Annuity Reserves................................ 1,673,310 1,340,376 ------------- -------------- 50,171,283 39,098,563 ------------- -------------- Money Market Division 1996: 7,029,739 Accumulation Units @ 2.241420.. 15,756,598 1995: 7,896,022 Accumulation Units @ 2.155845.. 17,022,599 Annuity Reserves................................ 368,369 387,730 ------------- -------------- 16,124,967 17,410,329 ------------- -------------- Balanced Division 1996: 48,457,793 Accumulation Units @ 4.805896. 232,883,113 1995: 52,575,295 Accumulation Units @ 4.289623. 225,528,193 Annuity Reserves................................ 3,048,888 2,924,538 ------------- -------------- 235,932,001 228,452,731 ------------- -------------- Select Bond Division 1996: 2,691,481 Accumulation Units @ 6.200523.. 16,688,589 1995: 2,778,441 Accumulation Units @ 6.077689.. 16,886,499 Annuity Reserves................................ 580,678 597,617 ------------- -------------- 17,269,267 17,484,116 ------------- -------------- High Yield Bond Division 1996: 2,456,295 Accumulation Units @ 1.393713.. 3,423,371 1995: 1,609,770 Accumulation Units @ 1.178371.. 1,896,907 Annuity Reserves................................ 0 0 ------------- -------------- 3,423,371 1,896,907 ------------- --------------
The Accompanying Notes are an Integral Part of the Financial Statements. 18 19 The Northwestern Mutual Life Insurance Company Form 10-K Item 8. (continued) NML VARIABLE ANNUITY ACCOUNT A STATEMENT OF ASSETS AND LIABILITIES
December 31 ------------------------------- Equity (cont'd.) 1996 1995 -------------- --------------- Contracts Issued On or After March 31, 1995 - Back Load Version: Growth Stock Division 1996: 922,390 Accumulation Units @ 1.552125... $1,431,665 1995: 227,218 Accumulation Units @ 1.299976... $295,378 Aggressive Growth Stock Division 1996: 1,734,023 Accumulation Units @ 3.188266. 5,528,526 1995: 407,729 Accumulation Units @ 2.743106... 1,118,443 International Equity Division 1996: 1,281,128 Accumulation Units @ 1.649102. 2,112,711 1995: 374,986 Accumulation Units @ 1.379966... 517,469 Growth and Income Stock Division 1996: 1,215,721 Accumulation Units @ 1.525144. 1,854,150 1995: 310,321 Accumulation Units @ 1.287355... 399,493 Index 500 Stock Division 1996: 1,970,961 Accumulation Units @ 2.413788. 4,757,482 1995: 471,752 Accumulation Units @ 1.991330... 939,414 Money Market Division 1996: 1,123,081 Accumulation Units @ 2.241420. 2,517,297 1995: 379,473 Accumulation Units @ 2.155845... 818,085 Balanced Division 1996: 1,347,427 Accumulation Units @ 4.805896. 6,475,593 1995: 372,457 Accumulation Units @ 4.289623... 1,597,701 Select Bond Division 1996: 182,907 Accumulation Units @ 6.200523... 1,134,116 1995: 50,828 Accumulation Units @ 6.077689.... 308,917 High Yield Bond Division 1996: 572,121 Accumulation Units @ 1.393713... 797,373 1995: 138,470 Accumulation Units @ 1.178371... 163,170
The Accompanying Notes are an Integral Part of the Financial Statements. 19 20 The Northwestern Mutual Life Insurance Company Form 10-K Item 8. (continued) NML VARIABLE ANNUITY ACCOUNT A STATEMENT OF ASSETS AND LIABILITIES
December 31 -------------------------------- Equity (cont'd.) 1996 1995 --------------- --------------- Contracts Issued On or After March 31, 1995 - Front Load Version: Growth Stock Division 1996: 257,158 Accumulation Units @ 1.455537... $374,303 1995: 103,292 Accumulation Units @ 1.208718... $124,851 Aggressive Growth Stock Division 1996: 568,732 Accumulation Units @ 1.529999... 870,160 1995: 255,895 Accumulation Units @ 1.305186... 333,991 International Equity Division 1996: 286,469 Accumulation Units @ 1.374484... 393,747 1995: 32,573 Accumulation Units @ 1.140398.... 37,146 Growth and Income Stock Division 1996: 208,323 Accumulation Units @ 1.429760... 297,852 1995: 114,414 Accumulation Units @ 1.196596... 136,908 Index 500 Stock Division 1996: 454,096 Accumulation Units @ 1.527085... 693,444 1995: 278,235 Accumulation Units @ 1.249114... 347,547 Money Market Division 1996: 1,843,605 Accumulation Units @ 1.090643. 2,010,713 1995: 327,441 Accumulation Units @ 1.040089... 340,568 Balanced Division 1996: 786,271 Accumulation Units @ 1.334426... 1,049,220 1995: 164,303 Accumulation Units @ 1.180953... 194,035 Select Bond Division 1996: 38,713 Accumulation Units @ 1.161454.... 44,963 1995: 26,732 Accumulation Units @ 1.128765.... 30,174 High Yield Bond Division 1996: 55,625 Accumulation Units @ 1.326020.... 73,760 1995: NA...................................... 0 Total Equity.................................. 547,520,040 469,821,427 ----------- ----------- Total Liabilities and Equity.................. 549,417,524 470,645,467 =========== ===========
The Accompanying Notes are an Integral Part of the Financial Statements. 20 21 The Northwestern Mutual Life Insurance Company Form 10-K Item 8. (continued) NML VARIABLE ANNUITY ACCOUNT A COMBINED STATEMENT OF OPERATIONS AND CHANGES IN EQUITY For the Years Ended December 31
1996 1995 1994 ------------- ------------- ------------- Investment Income Dividend Income........................................... $ 24,500,542 $ 11,709,964 $40,169,184 Annuity Rate and Expense Guarantees....................... 5,783,739 5,072,064 4,466,142 ------------ ------------ ------------ Net Investment Income..................................... 18,716,803 6,637,900 35,703,042 ------------ ------------ ------------ Realized and Unrealized Gain on Investments Net Unrealized Gain on Investments........................ 13,967,988 13,141,169 1,687,702 Unrealized Appreciation (Depreciation) During the Year.... 33,051,905 76,916,515 (39,969,923) ------------ ------------ ------------- Net Gain (Loss) on Investments............................ 47,019,893 90,057,684 (38,282,221) ------------ ------------ ------------- Increase (Decrease) in Equity Derived from Investment Activity 65,736,696 96,695,584 (2,579,179) ------------ ------------ ------------ Equity Transactions Contract Owners' Net Payments............................. 65,169,358 49,124,853 52,262,816 Annuity Payments.......................................... (830,996) (610,983) (603,158) Surrenders and Other (Net)................................ (52,376,445) (62,309,189) (33,008,630) ------------ ------------ ------------ Increase (Decrease) in Equity Derived from Equity Transactions 11,961,917 (13,795,319) 18,651,028 ------------ ------------ ------------ Net Increase in Equity........................................ 77,698,613 82,900,265 16,071,849 Equity, Beginning of Year..................................... 469,821,427 386,921,162 370,849,313 ------------ ------------ ------------ Equity, End of Year........................................... $547,520,040 $469,821,427 $386,921,162 ============ ============ ============
The Accompanying Notes are an Integral Part of the Financial Statements. 21 22 The Northwestern Mutual Life Insurance Company Form 10-K Item 8. (continued) NML VARIABLE ANNUITY ACCOUNT A NOTES TO FINANCIAL STATEMENTS Note 1--NML Variable Annuity Account A (the "Account") is a segregated asset account of The Northwestern Mutual Life Insurance Company ("Northwestern Mutual Life") used to fund variable annuity contracts ("contracts") for HR-10 and corporate pension and profit-sharing plans which qualify for special tax treatment under the Internal Revenue Code. Beginning March 31, 1995, two versions of the contract are offered: Front Load contracts with a sales charge up to 4% of purchase payments and Back Load contracts with a withdrawal charge of 0-8%. Note 2--The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Principal accounting policies are summarized below. Note 3--All assets of each Division of the Account are invested in shares of the corresponding Portfolio of Northwestern Mutual Series Fund, Inc. (the "Fund"). The shares are valued at the Fund's offering and redemption price per share. On May 3, 1994, five new portfolios commenced operations in the Fund: Aggressive Growth Stock Portfolio, International Equity Portfolio, Growth Stock Portfolio, Growth and Income Stock Portfolio and High Yield Bond Portfolio. Additionally, on May 3, 1994, the assets of Northwestern Mutual Life's Variable Annuity funds were merged into the respective portfolio of the Fund in a tax-free exchange of shares. The Fund is an open-end investment company registered under the Investment Company Act of 1940. Note 4--Annuity reserves are based on published annuity tables with age adjustment and benefit payments which reflect actual investment experience. For variable payment plans issued prior to January 1, 1974, annuity reserves are based on the 1955 American Annuity Table with assumed interest rates of 3%, 3 1/2% or 5%. For variable payment plans issued on or after January 1, 1974 and before January 1, 1985, annuity reserves are based on the 1971 Individual Annuity Table with assumed interest rates of 3 1/2% or 5%. For variable payment plans issued on or after January 1, 1985, annuity reserves are based on the 1983 Table with assumed interest rates of 3 1/2% or 5%. Note 5--Dividend income from the Fund is recorded on the record date of the dividends. Transactions in Fund shares are accounted for on the trade date. The basis for determining cost on sale of Fund shares is identified cost. Purchases and sales of Fund shares for the years ended December 31 by each Division are shown below:
Purchases 1996 1995 1994 - --------- ------------ ------------ ------------ Growth Stock Division $ 4,830,460 $ 2,702,664 $ 1,651,267 Aggressive Growth Division 17,797,661 10,658,292 14,415,626 International Equity Division 8,274,087 4,305,567 19,932,991 Growth & Income Stock Division 5,756,071 4,147,264 3,579,504 Index 500 Stock Division 11,279,772 7,998,931 7,554,309 Money Market Division 13,328,217 14,421,123 12,836,216 Balanced Division 20,896,761 14,258,034 42,118,207 Select Bond Division 5,463,472 3,837,930 5,853,201 High Yield Bond Division 3,296,028 1,411,373 1,328,717 Sales - ----- Growth Stock Division 508,512 427,690 236,591 Aggressive Growth Division 4,234,497 5,672,013 2,578,041 International Equity Division 3,828,530 5,324,662 1,723,339 Growth & Income Stock Division 1,277,020 576,160 214,192 Index 500 Stock Division 5,728,800 5,165,148 5,927,056 Money Market Division 11,504,938 12,987,931 9,752,283 Balanced Division 26,932,275 36,790,058 30,795,275 Select Bond Division 4,528,222 3,928,823 3,922,478 High Yield Bond Division 568,230 673,375 32,399
22 23 The Northwestern Mutual Life Insurance Company Form 10-K Item 8. (continued) NML VARIABLE ANNUITY ACCOUNT A NOTES TO FINANCIAL STATEMENTS Note 6--On April 30, 1993, Northwestern Mutual Capital Appreciation Stock Fund was merged into the Northwestern Mutual Index 500 Stock Fund in a tax-free exchange of fund shares. 21,689,286 shares of Northwestern Mutual Capital Appreciation Stock Fund, Inc. were exchanged for 22,749,651 shares of Northwestern Mutual Index 500 Stock Fund, Inc. The shares exchanged were valued at $30,719,638 for each Division. Note 7--A deduction for annuity rate and expense guarantees is determined daily and paid to Northwestern Mutual Life as compensation for assuming the risk that annuity payments will continue for longer periods than anticipated because the annuitants as a group live longer than expected, and the risk that the charges made by Northwestern Mutual Life may be insufficient to cover the actual costs incurred in connection with the contracts. For contracts issued on or after March 31, 1995, for the Front Load version and the Back Load version, the deduction for annuity rate and expense guarantees is determined daily at annual rates of 4/10 of 1% and a1 1/4%, respectively, of the net assets of each Division attributable to these contracts and is paid to Northwestern Mutual Life. For these contracts, the rates may be increased or decreased by the Board of Trustees of Northwestern Mutual Life not to exceed 3/4 of 1% and 1 1/2%, respectively. For contracts issued after December 16, 1981 and prior to March 31, 1995, the deduction is at an annual rate of 1 1/4% of the net assets of each Division attributable to these contracts. For these contracts, the rate may be increased or decreased by the Board of Trustees of Northwestern Mutual Life not to exceed a 1 1/2% annual rate. For contracts issued prior to December 17, 1981, the deduction is at an annual rate of 3/4 of 1% of the net assets of each Division attributable to these contracts. For these contracts, the rate may be increased or decreased by the Board of Trustees of Northwestern Mutual Life not to exceed a 1% annual rate. Beginning in 1995, Northwestern Mutual Life paid a dividend to certain contracts. The dividend was reinvested in the Account and has been reflected as a Contract Owners' Net Payment in the accompanying financial statements. Note 8--Northwestern Mutual Life is taxed as a "life insurance company" under the Internal Revenue Code and the operations of the Account form a part of and are taxed with those of Northwestern Mutual Life. Under current law, no federal income taxes are payable with respect to the Account. Accordingly, no provision for any such liability has been made. 23 24 [PRICE WATERHOUSE LLP LETTERHEAD] REPORT OF INDEPENDENT ACCOUNTANTS To The Northwestern Mutual Life Insurance Company and Contract Owners of NML Variable Annuity Account A In our opinion, the statements appearing on pages 16 through 23 present fairly, in all material respects, the financial position of NML Variable Annuity Account A at December 31, 1996 and 1995, and the results of its operations and the changes in its equity for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. These financial statements are the responsibility of The Northwestern Mutual Life Insurance Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP January 22, 1997 25 The Northwestern Mutual Life Insurance Company Form 10-K Item 8. (continued) NML VARIABLE ANNUITY ACCOUNT C STATEMENT OF ASSETS AND LIABILITIES
December 31 ------------------------------------- Assets 1996 1995 ---------------- ------------------- Investments at market value: Northwestern Mutual Series Fund, Inc. Growth Stock 1996: 6,649,199 shares (cost $9,029,280).......... $ 9,734,427 1995: 1,650,591 shares (cost $1,947,392).......... $ 2,084,697 Aggressive Growth Stock 1996: 30,294,748 shares (cost $70,855,533)........ 95,276,983 1995: 20,744,587 shares (cost $40,636,758)........ 57,421,016 International Equity 1996: 31,746,803 shares (cost $41,642,844)........ 49,461,520 1995: 22,169,169 shares (cost $27,851,615)........ 30,039,223 Growth and Income Stock 1996: 9,889,955 shares (cost $12,379,951)......... 13,034,961 1995: 4,036,751 shares (cost $4,620,194).......... 4,888,505 Index 500 Stock 1996: 45,376,702 shares (cost $63,645,634)........ 93,249,123 1995: 37,491,726 shares (cost $46,641,879)........ 64,560,752 Money Market 1996: 13,784,374 shares (cost $13,784,374)........ 13,784,374 1995: 9,324,692 shares (cost $9,324,692).......... 9,324,692 Balanced 1996: 76,440,576 shares (cost $108,531,164)....... 131,324,909 1995: 82,586,808 shares (cost $113,566,515)....... 132,469,239 Select Bond 1996: 14,544,948 shares (cost $16,953,280)........ 17,803,016 1995: 13,258,257 shares (cost $15,437,346)........ 16,281,140 High Yield Bond 1996: 2,714,521 shares (cost $2,978,850).......... 2,983,258 1995: 718,103 shares (cost $760,109).............. 736,774 ---------------- ------------------- 426,652,571 317,806,039 Due from Sales of Fund Shares......................... 52,909 36 Due from Northwestern Mutual Life Insurance Company 1,662,368 808,493 ---------------- ------------------- Total Assets....................................... $428,367,848 $318,614,568 ================ =================== Liabilities Due to Northwestern Mutual Life Insurance Company $ 52,909 $ 36 Due from Purchase of Fund Shares....................... 1,662,368 808,493 ---------------- ------------------- Total Liabilities.................................. $ 1,715,277 $ 808,529 ================ ===================
The Accompanying Notes are an Integral Part of the Financial Statements. 25 26 The Northwestern Mutual Life Insurance Company Form 10-K Item 8. (continued) NML VARIABLE ANNUITY ACCOUNT C STATEMENT OF ASSETS AND LIABILITIES
December 31 ------------------------------- Equity 1996 1995 -------------- --------------- Contracts Issued Before December 17, 1981 or Between April 30, 1984 and December 31, 1991: Growth Stock Division 1996: 378,236 Accumulation Units @ 16.046821... $ 6,069,485 1995: 63,881 Accumulation Units @ 13.271899.... $ 847,822 Aggressive Growth Stock Division 1996: 1,944,411 Accumulation Units @ 32.542621. 63,276,230 1995: 1,397,886 Accumulation Units @ 27.648691.. 38,649,707 International Equity Division 1996: 20,439,570 Accumulation Units @ 1.726413. 35,287,138 1995: 14,747,735 Accumulation Units @ 1.426613. 21,039,310 Growth and Income Stock Division 1996: 424,144 Accumulation Units @ 15.767435... 6,687,664 1995: 117,004 Accumulation Units @ 13.142782... 1,537,752 Index 500 Stock Division 1996: 2,386,284 Accumulation Units @ 27.133645. 64,748,577 1995: 2,232,985 Accumulation Units @ 22.104982. 49,360,095 Money Market Division 1996: 57,013 Accumulation Units @ 26.011476.... 1,483,002 1995: 62,209 Accumulation Units @ 24.705630.... 1,536,924 Balanced Division 1996: 1,489,658 Accumulation Units @ 58.832423. 87,640,161 1995: 1,889,324 Accumulation Units @ 51.855817. 97,972,463 Select Bond Division 1996: 97,868 Accumulation Units @ 76.681608.... 7,504,704 1995: 124,163 Accumulation Units @ 74.222515... 9,215,714 High Yield Bond Division 1996: 119,423 Accumulation Units @ 14.408967... 1,720,768 1995: 21,583 Accumulation Units @ 12.030416.... 259,657
The Accompanying Notes are an Integral Part of the Financial Statements. 26 27 The Northwestern Mutual Life Insurance Company Form 10-K Item 8. (continued) NML VARIABLE ANNUITY ACCOUNT C STATEMENT OF ASSETS AND LIABILITIES
December 31 --------------------------------- Equity (Cont'd.) 1996 1995 ---------------- --------------- Contracts Issued After December 16, 1981 and Prior to May 1, 1984: Aggressive Growth Stock Division 1996: 4,243 Accumulation Units @ 31.591115... $ 134,035 1995: 5,527 Accumulation Units @ 26.975930... $ 149,103 Annuity Reserves.............................. 31,590 0 ---------------- --------------- 165,625 149,103 ---------------- --------------- International Equity Division 1996: 109,569 Accumulation Units @ 1.695019.. 185,722 1995: 497,710 Accumulation Units @ 1.407741.. 700,647 Annuity Reserves.............................. 16,637 0 ---------------- --------------- 202,359 700,647 ---------------- --------------- Growth and Income Stock Division 1996: 1,252 Accumulation Units @ 15.558532... 19,472 1995: N/A.................................... 0 Annuity Reserves.............................. 33,791 0 ---------------- --------------- 53,263 0 ---------------- --------------- Index 500 Stock Division 1996: 45,781 Accumulation Units @ 26.337300.. 1,205,748 1995: 49,450 Accumulation Units @ 21.564611.. 1,066,361 Annuity Reserves.............................. 34,467 0 ---------------- --------------- 1,240,215 1,066,361 ---------------- --------------- Money Market Division 1996: 14,233 Accumulation Units @ 24.167111.. 343,966 1995: 14,478 Accumulation Units @ 23.069838.. 334,015 Annuity Reserves.............................. 7,669 0 ---------------- --------------- 351,635 334,015 ---------------- --------------- Balanced Division 1996: 90,172 Accumulation Units @ 54.595947.. 4,923,025 1995: 113,109 Accumulation Units @ 48.364840. 5,470,492 Annuity Reserves.............................. 429,289 405,494 ---------------- --------------- 5,352,314 5,875,986 ---------------- --------------- Select Bond Division 1996: 7,598 Accumulation Units @ 71.125132... 540,440 1995: 7,287 Accumulation Units @ 69.192181... 504,224 Annuity Reserves.............................. 39,535 0 ---------------- --------------- 579,975 504,324 ---------------- ---------------
The Accompanying Notes are an Integral Part of the Financial Statements. 27 28 The Northwestern Mutual Life Insurance Company Form 10-K Item 8. (continued) NML VARIABLE ANNUITY ACCOUNT C STATEMENT OF ASSETS AND LIABILITIES
December 31 Equity (cont'd) 1996 1995 ---------- ---------- Contracts Issued After December 31, 1991 Front Load Version: Growth Stock Division 1996: 587,482 Accumulation Units @ 1.577134................ $ 926,538 1995: 361,207 Accumulation Units @ 1.312966................ $ 474,252 Aggressive Growth Stock Division 1996: 3,197,341 Accumulation Units @ 2.077739.............. 6,643,240 1995: 2,242,402 Accumulation Units @ 1.776871.............. 3,984,459 International Equity Division 1996: 2,709,249 Accumulation Units @ 1.685759.............. 4,567,140 1995: 2,009,228 Accumulation Units @ 1.402156.............. 2,817,251 Growth and Income Stock Division 1996: 1,357,354 Accumulation Units @ 1.549666.............. 2,103,446 1995: 861,211 Accumulation Units @ 1.300190................ 1,119,738 Index 500 Stock Division 1996: 3,880,961 Accumulation Units @ 1.937139.............. 7,517,961 1995: 2,399,586 Accumulation Units @ 1.588496.............. 3,811,733 Money Market Division 1996: 2,829,669 Accumulation Units @ 1.192105.............. 3,373,263 1995: 2,956,017 Accumulation Units @ 1.139693.............. 3,368,952 Balanced Division 1996: 5,934,240 Accumulation Units @ 1.599774.............. 9,493,443 1995: 5,275,308 Accumulation Units @ 1.419325.............. 7,487,377 Select Bond Division 1996: 2,676,832 Accumulation Units @ 1.370157.............. 3,667,680 1995: 1,800,898 Accumulation Units @ 1.334934.............. 2,404,080 High Yield Bond Division 1996: 275,323 Accumulation Units @ 1.416152................ 389,899 1995: 90,184 Accumulation Units @ 1.190149................. 107,332
The Accompanying Notes are an Integral Part of the Financial Statements. 28 29 The Northwestern Mutual Life Insurance Company Form 10-K Item 8. (continued) NML VARIABLE ANNUITY ACCOUNT C STATEMENT OF ASSETS AND LIABILITIES
December 31 ------------------------------- Equity (cont'd) 1996 1995 -------------- --------------- Contracts Issued After December 31, 1991 Simplified Load Version: Growth Stock Division 1996: 1,742,522 Accumulation Units @ 1.552125. $ 2,704,613 1995: 586,644 Accumulation Units @ 1.299976... $ 762,623 Aggressive Growth Stock Division 1996: 7,872,553 Accumulation Units @ 3.199964. 25,191,889 1995: 5,316,689 Accumulation Units @ 2.753170. 14,637,748 International Equity Division 1996: 5,703,032 Accumulation Units @ 1.649102. 9,404,881 1995: 3,972,573 Accumulation Units @ 1.379966. 5,482,016 Growth and Income Stock Division 1996: 2,769,823 Accumulation Units @ 1.525144. 4,224,380 1995: 1,733,022 Accumulation Units @ 1.287355. 2,231,015 Index 500 Stock Division 1996: 8,015,553 Accumulation Units @ 2.463008. 19,742,371 1995: 5,080,179 Accumulation Units @ 2.031929. 10,322,563 Money Market Division 1996: 3,818,067 Accumulation Units @ 2.246287. 8,576,475 1995: 1,890,645 Accumulation Units @ 2.160533. 4,084,801 Balanced Division 1996: 5,971,232 Accumulation Units @ 4.829655. 28,838,992 1995: 4,902,410 Accumulation Units @ 4.310821. 21,133,413 Select Bond Division 1996: 966,414 Accumulation Units @ 6.260939... 6,050,655 1995: 677,396 Accumulation Units @ 6.136911... 4,157,122 High Yield Bond Division 1996: 626,090 Accumulation Units @ 1.393713... 872,590 1995: 313,810 Accumulation Units @ 1.178371... 369,785 ------------ ------------ Total Equity................................. $426,652,571 $317,806,038 ------------ ------------ Total Liabilities and Equity................. $428,367,848 $318,614,567 ============ ============
The Accompanying Notes are an Integral Part of the Financial Statempents. 29 30 The Northwestern Mutual Life Insurance Company Form 10-K Item 8. (continued) NML VARIABLE ANNUITY ACCOUNT C COMBINED STATEMENT OF OPERATIONS AND CHANGES IN EQUITY For the Years Ended December 31
1996 1995 1994 -------------- -------------- ------------- Investment Income Dividend Income................................................. $ 16,994,370 $ 6,470,776 $ 22,562,209 Annuity Rate and Expense Guarantees............................. 1,738,625 856,764 509,648 -------------- -------------- ------------- Net Investment Income........................................... 15,255,745 5,614,012 22,052,561 -------------- -------------- ------------- Realized and Unrealized Gain (Loss) on Investments Net Realized Gain (Loss) on Investments......................... 8,855,390 9,884,364 5,949,795 Unrealized Appreciation (Depreciation) During the Year.......... 29,832,124 53,407,857 (27,055,878) -------------- -------------- ------------- Net Gain (Loss) on Investments.................................. 38,687,514 63,292,221 (21,106,083) -------------- -------------- ------------- Increase in Equity Derived from Investment Activity............. 53,943,259 68,906,233 946,478 -------------- -------------- ------------- Equity Transactions Contract Owners' Net Payments................................... 89,650,916 59,390,267 48,709,729 Surrenders and Other (Net)...................................... (34,747,640) (60,872,729) (26,720,946) -------------- -------------- ------------- Increase (Decrease) in Equity Derived from Equity Transactions.. 54,903,276 (1,482,462) 21,988,783 -------------- -------------- ------------- Net Increase in Equity.......................................... 108,846,535 67,423,771 22,935,261 Equity, Beginning of Year....................................... 317,806,038 250,382,267 227,447,006 -------------- -------------- ------------- Equity, End of Year............................................. $426,652,573 $317,806,038 $250,382,267 ============== ============== =============
The Accompanying Notes are an Integral Part of the Financial Statements. 30 31 The Northwestern Mutual Life Insurance Company Form 10-K Item 8. (continued) NML VARIABLE ANNUITY ACCOUNT C NOTES TO FINANCIAL STATEMENTS Note 1--NML Variable Annuity Account C (the "Account") is a segregated asset account of The Northwestern Mutual Life Insurance Company ("Northwestern Mutual Life" or "Sponsor") used to fund variable annuity contracts ("contracts") for HR-10 and corporate pension and profit-sharing plans which qualify for special tax treatment under the Internal Revenue Code. Beginning December 31, 1991, two versions of the contract are offered: Front Load contracts with a sales charge up to 4.5% of purchase payments and Simplified Load contracts with an installation fee of $750. Note 2--The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Principal accounting policies are summarized below. Note 3--All assets of each Division of the Account are invested in shares of the corresponding Portfolio of Northwestern Mutual Series Fund, Inc. (the "Fund"). The shares are valued at the Fund's offering and redemption price per share. On May 3, 1994, five new portfolios commenced operations in the Fund: Aggressive Growth Stock Portfolio, International Equity Portfolio, Growth Stock Portfolio, Growth and Income Stock Portfolio and High Yield Bond Portfolio. Additionally, on May 3, 1994, the assets of Northwestern Mutual Life's Variable Annuity funds were merged into the respective portfolio of the Fund in a tax-free exchange of shares. The Fund is an open-end investment company registered under the Investment Company Act of 1940. Note 4--Annuity reserves are based on published annuity tables with age adjustment and benefit payments which reflect actual investment experience. Annuity reserves are based on the 1983 Table with assumed interest rates of 3 1/2% or 5%. Note 5--Dividend income from the Fund is recorded on the record date of the dividends. Transactions in Fund shares are accounted for on the trade date. The basis for determining cost on sale of Fund shares is identified cost. Purchases and sales of Fund shares for the years ended December 31 by each Division are shown below:
Purchases 1996 1995 1994 - --------- -------------- ------------ -------------- Growth Stock Division $ 7,308,964 $ 1,794,866 $ 356,487 Aggressive Growth Division 30,690,195 15,956,497 12,289,757 International Equity Division 15,119,614 6,724,373 23,854,689 Growth & Income Stock Division 8,410,421 3,709,640 1,282,402 Index 500 Stock Division 19,824,136 9,719,794 8,659,996 Money Market Division 20,346,897 10,821,340 11,074,834 Balanced Division 19,426,753 17,257,735 31,432,161 Select Bond Division 5,445,050 4,302,192 5,219,278 High Yield Bond Division 2,362,508 632,095 303,059 Sales - ----- Growth Stock Division $303,927 213,213 24,577 Aggressive Growth Division 1,045,256 6,866,522 2,229,844 International Equity Division 1,571,810 4,899,939 1,132,149 Growth & Income Stock Division 839,196 310,894 108,587 Index 500 Stock Division 5,253,981 7,360,855 7,244,819 Money Market Division 15,887,232 13,008,176 9,494,795 Balanced Division 29,797,911 29,565,575 26,386,243 Select Bond Division 3,918,139 4,475,998 3,718,654 High Yield Bond Division 158,086 87,219 91,658
31 32 The Northwestern Mutual Life Insurance Company Form 10-K Item 8. (continued) NML VARIABLE ANNUITY ACCOUNT C NOTES TO FINANCIAL STATEMENTS Note 6--On April 30, 1993, Northwestern Mutual Capital Appreciation Stock Fund was merged into the Northwestern Mutual Index 500 Stock Fund in a tax-free exchange of fund shares. 23,586,477 shares of Northwestern Mutual Capital Appreciation Stock Fund, Inc. were exchanged for 24,739,593 shares of Northwestern Mutual Index 500 Stock Fund, Inc. The shares exchanged were valued at $33,406,725 for each Division. Note 7--A deduction for annuity rate and expense guarantees is determined daily and paid to Northwestern Mutual Life as compensation for assuming the risk that annuity payments will continue for longer periods than anticipated because the annuitants as a group live longer than expected and the risk that the charges made by Northwestern Mutual Life may be insufficient to cover the actual costs incurred in connection with the contracts. Generally, for contracts issued after December 31, 1991, for the Front Load Version and the Simplified Load Version, the deduction for annuity rate and expense guarantees if determined daily at annual rates of 6.5/10 of 1% and 1 1/4%, respectively, of the net assets of each Division attributable to these contracts and is paid to Northwestern Mutual Life. For these contracts, the rates may be increased or decreased by the Board of Trustees of Northwestern Mutual Life not to exceed 1% and 1 1/2% annual rates, respectively. Generally, the deduction for contracts issued before December 17, 1981 or between April 30, 1984 and December 31, 1991, as provided for in the contracts has been waived by the Board of Trustees of Northwestern Mutual Life. For these contracts, the rate may be determined by the Board of Trustees of Northwestern Mutual Life not to exceed a 1/4 of 1% annual rate. For contracts issued after December 16, 1981, and prior to May 1, 1984, the deduction is determined daily at an annual rate of 1/2 of 1% of the net assets of each Division attributable to these contracts and is paid to Northwestern Mutual Life. For these contracts, the rate may be increased or decreased by the Board of Trustees of Northwestern Mutual Life not to exceed a 3/4 of 1% annual rate. Note 8--Northwestern Mutual Life is taxed as a "life insurance company" under the Internal Revenue Code and the operations of the Account form a part of and are taxed with those of Northwestern Mutual Life. Under current law, no federal income taxes are payable with respect to the Account. Accordingly, no provision for any such liability has been made. Item 9 is on page 34. 32 33 [PRICE WATERHOUSE LLP LETTERHEAD] REPORT OF INDEPENDENT ACCOUNTANTS To The Northwestern Mutual Life Insurance Company and Contract Owners of NML Variable Annuity Account C In our opinion, the statements appearing on pages 25 through 32 present fairly, in all material respects, the financial position of NML Variable Annuity Account C at December 31, 1996 and 1995, and the results of its operations and the changes in its equity for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. These financial statements are the responsibility of The Northwestern Mutual Life Insurance Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP January 22, 1997 34 The Northwestern Mutual Life Insurance Company Form 10-K Item 9. Disagreements on Accounting and Financial Disclosure ------- ---------------------------------------------------- Not applicable. Item 10 is on page 35. 34 35 The Northwestern Mutual Life Insurance Company Form 10-K PART III Item 10. Directors and Executive Officers of the Registrant (a) The following information as of March 1, 1997, is provided with respect to each director, including persons chosen to become directors, of the Registrant. The Registrant uses the title of Trustee to denote the directors.
EXPIRATION OF TERM TRUSTEE AGE YEAR ELECTED OF OFFICE OTHER POSITIONS PRESENTLY HELD WITH REGISTRANT - ----------------------- --- ------------ -------------------- ------------------------------------------------------------------ R. Quintus Anderson 66 1984 May 1999 Chairman, Audit Committee Edward E. Barr 60 1991 May 1999 Member, Human Resources and Public Policy Committee Gordon T. Beaham, III 65 1988 May 1997 (1) Member, Operations and Technology Committee Robert C. Buchanan 56 1991 May 1999 Member, Audit, Executive and Finance Committee Robert E. Carlson 61 1989 May 1998 Executive Vice President; Member, Executive Committee George A. Dickerman 58 1994 May 2000 Member, Agency and Marketing Committee Thomas I. Dolan 69 1986 May 2000 Member, Human Resources and Public Policy Committee Pierre S. DuPont 62 1985 May 1998 Member, Agency and Marketing Committee James D. Ericson 61 1989 May 2000 President and C.E.O.; Member, Human Resources and Public Policy, Agency & Marketing, and Operations and Technology Committees; Chairman, Executive and Finance Committees J. E. Gallegos 61 1985 May 2000 Member, Audit Committee Stephen N. Graff 62 1996 May 2000 Member, Executive, Finance, and Operations and Technology Committees Patricia Albjerg Graham 62 1980 May 2000 Member, Human Resources and Public Policy Committee Stephen F. Keller 58 1984 May 1999 Member, Audit Committee Barbara A. King 50 1996 May 1998 Member, Agency and Marketing Committtee J. Thomas Lewis 60 1978 May 1998 Chairman, Human Resources and Public Policy Committee
(1) Candidate proposed for re-election by the Board of Trustees for the election to be held at the May 1997 Annual meeting of policyholders. If re-elected, these Trustees' terms will expire in May of 2001. * Retiring on May 28, 1997. 35 36 The Northwestern Mutual Life Insurance Company Form 10-K
YEAR EXPIRATION OF TRUSTEE AGE ELECTED TERM OF OFFICE OTHER POSITIONS PRESENTLY HELD WITH REGISTRANT ------- --- ------- --------------- ---------------------------------------------- Daniel F. McKeithan, Jr. 61 1988 May 1999 Member, Executive, Finance, and Human Resources and Public Policy Committees Guy A. Osborn 61 1994 May 1997 (1) Member, Operations and Technology, Executive and Finance Committees Donald J. Schuenke 68 1980 May 1998 Member, Agency and Marketing, Executive and Finance Committees H. Mason Sizemore, Jr. 55 1993 May 1999 Member, Agency and Marketing Committee Harold B. Smith 63 1973 May 2000 Member, Operations and Technology Committee Sherwood H. Smith, Jr. 60 1992 May 1998 Chairman, Agency & Marketing Committee John E. Steuri 57 1994 May 1999 Chariman, Operations and Technology Committee John J. Stollenwerk 57 1993 May 1997 (1) Member, Agency and Marketing, Executive and Finance Committees Barry L. Williams 52 1987 May 1997 (1) Member, Human Resources and Public Policy Committee Kathryn D. Wriston 58 1986 May 1997 (1) Member, Audit Committee
(1) Candidate proposed for re-election by the Board of Trustees for the election to be held at the May 1997 Annual meeting of policyholders. If re-elected, these Trustees' terms will expire in May of 2001. 36 37 The Northwestern Mutual Life Insurance Company Form 10-K Item 10. (continued) (b) The following information as of March 1, 1997, is provided with respect to each Executive Officer of the Registrant.
NAME AGE POSITION - -------------------- --- ---------------------------------------------------------- James D. Ericson 61 President and Chief Executive Officer, Trustee Robert E. Carlson 61 Executive Vice President (Agencies and Marketing), Trustee Peter W. Bruce 51 Executive Vice President (Operations and Administration) Frederic H. Sweet 53 Senior Vice President (Government Relations) Dennis Tamcsin 58 Senior Vice President (Agencies) James W. Ehrenstrom 60 Senior Vice President Walt J. Wojcik 57 Senior Vice President (Information Systems) Edward J. Zore 51 Executive Vice President (Finance and Investments) Mason G. Ross 52 Senior Vice President (Real Estate) Richard L. Hall 51 Senior Vice President (Marketing) John M. Bremer 49 Senior Vice President, General Counsel and Secretary Mark G. Doll 47 Senior Vice President (Public Markets) William C. Koenig 49 Senior Vice President and Chief Actuary Gary E. Long 52 Vice President and Controller Deborah A. Beck 49 Senior Vice President (Insurance Operations) Donald L. Mellish 58 Vice President (Field Financial Services) Barbara F. Piehler 46 Vice President (Policyowner Services) James F. Reiskytl 59 Vice President (Tax and Financial Planning Leonard F. Stecklein 50 Vice President (Agency Services) Martha M. Valerio 50 Vice President (Corporate Development) W. Ward White 57 Vice President (Communications) Thomas E. Dyer 51 Vice President (New Business) Steven T. Catlett 47 Vice President (Corporate Services) Gregory C. Oberland 39 Vice President (Policy Benefits) Meridee J. Maynard 41 Vice President (Annuity and Accumulation Products) Susan A. Lueger 43 Vice President (Human Resources) William H. Beckley 49 Vice President (Agencies) Robert J. Berdan 50 Vice President (Compliance/Best Practices) John E. Schlifske 37 Vice President (Securities) Bruce L. Miller 50 Senior Vice President (Corporate Planning and Development)
All of the Executive Officers, except Susan A. Lueger and Bruce L. Miller, have been associated with the Registrant, although not necessarily in their present positions, for more than five years. Susan A. Lueger has been Vice President of NML since May, 1994; Vice President of Human Resources at Wisconsin Electric Power Company 1992-1994; prior thereto with WEPC in the following positions: Assistant Vice President-Human Resources 1/92 to 11/92; Director-Human Resources 5/91 to 1/92; Manager-Compensation & Benefits Division 7/90 to 5/91; Project Specialist-Employment and Training Division 2/88 to 7/90. Bruce L. Miller has been Senior Vice President of NML since july, 1996. Prior thereto consultant for Medication Delivery Services 1995-96; CoreSource, Inc. 1992-94; Crabtree Capital Corporation 1989-92; Aon Corporation 1980-89; Glover, Inc. 1977-80; Whitman Corporation 1973-77; McKinsey & Company, Inc. 1966-73. 37 38 The Northwestern Mutual Life Insurance Company Form 10-K
Item 10. (continued) - -------- ---------------------------------------------------------------------------- Term of office for all Executive Officers is one year expiring May 31, 1997. (c) Not applicable (d) No one of the Executive Officers or Trustees is related to any other to the best of our knowledge. (e) Business experience and directorships of Trustees are as follows:
PRINCIPAL OCCUPATION TRUSTEE DURING PAST FIVE YEARS DIRECTORSHIPS - -------------------------------------------------------------------------------------------------------------------------------- R. Quintus Anderson Chairman, The Aarque Capital Corporation, Jamestown, New York. Cold Metal Products Company, Inc. Oneida, Ltd. Edward E. Barr President and Chief Executive Officer, Sun Chemical First Union Corporation Corporation, Fort Lee, New Jersey. United Water Resources Gordon T. Beaham, III Chairman and President, Faultless Starch/Bon Ami Company, Kansas City, Missouri, since 1987. Prior thereto, President and Chief Executive Officer. Robert C. Buchanan President and Chief Executive Officer, Fox Valley Grady, W. H. Company Corporation, Appleton, Wisconsin. Firstar Corporation Robert E. Carlson Executive Vice President of NML since 1987. Senior Vice President 1982-1987. Prior thereto, Vice President-Research, Life Insurance Marketing and Research Association, Farmington, Connecticut. George A. Dickerman President, Spalding Sports Worldwide, Chicopee, Evenflo & Spalding Holdings Corp. Massachusetts, since 1981. Thomas I. Dolan Retired Chairman, A. O. Smith Corp., Milwaukee, Wisconsin, A. O. Smith Corporation since 1992. Chairman, 1989-1992; Chairman and Chief Executive Officer 1984-1989; prior thereto President. Pierre S. Du Pont Attorney, Richards, Layton & Finger, Wilmington, Delaware, Louisiana-Pacific Corporation since 1985; prior thereto, Governor of Delaware. Pet Incorporated Whitman Corporation James D. Ericson Senior Vice President-Investments 1980-1987. MGIC Investment Corporation President and Chief Executive Officer of NML since 10-1-93. President and Chief Operating Officer 1991-1993. President 1990-1991; Executive Vice President 1987-1990; prior thereto, Senior Vice President- Investments 1980-1987.
38 39 The Northwestern Mutual Life Insurance Company Form 10-K
PRINCIPAL OCCUPATION TRUSTEE DURING PAST FIVE YEAS DIRECTORSHIPS - ------------------------------------------------------------------------------------------------------------------ J. E. Gallegos Attorney, Gallegos Law Firm, Santa Fe, New Mexico since 1988; prior thereto, Chairman of the Board, Enviromed Inc., Santa Fe, New Mexico, since 1987; prior thereto, President, Jones, Gallegos, Snead & Wertheim, P.A., Santa Fe, New Mexico. Stephen N. Graff Office Managing Partner (retired), Arthur Andersen LLP, Mason Street Funds Milwaukee, Wisconsin, since 1994. Managing Partner Regal-Beloit (Milwaukee office) 1981-93; head of Audit Division Patricia Albjerg Graham President, Spencer Foundation, Chicago, Illinois, since 1991; and Professor of the History of American Education, Harvard University, Cambridge, Massachusetts, since 1974. Dean of the Graduate School of Education at Harvard 1982-1991. Stephen F. Keller Former Chairman, The Santa Anita Companies, and Attorney, Los Angeles, California, since August 1996. Chairman, The Santa Anita Companies, 1993-1996. Chairman, Santa Anita Realty Enterprises; and President, Santa Anita Operating Company, Arcadia, California, 1992-1993. President and C.O.O., The Santa Anita Companies, Arcadia, California, 7/91 to 1/92. Attorney, Fulbright & Jaworski, Los Angeles, California, 1/91 to 7/91. attorney, Seidler, Amdec Securities, Inc., Los Angeles, California 1987-1991. Prior thereto, Attorney, Lillick McHose & Charles, Los Angeles, California. Barbara A. King President, Landscape Structures, Inc., Delano, Minnesota, since 1973. J. Thomas Lewis Attorney, Monroe & Lemann, New Orleans, Louisiana. Daniel F. McKeithan, Jr. President, Tamarack Petroleum Co. Inc., Milwaukee, Wisconsin, Firstar Corporation since 1982. Marcus Corporation WICOR Corporation Guy A. Osborn Chairman, Universal Foods Corp., Milwaukee, Wisconsin, since Firstar Corporation October 1996. Chairman and Chief Executive Officer, Firstar Bank Milwaukee Universal Foods Corp., Milwaukee, Wisconsin, 1990-1996. Fleming Cos. Prior thereto, Chief Executive Officer 1988-1990. Universal Foods Corporation WICOR Wisconsin Gas Company Donald J. Schuenke Chairman of the Board Northern Telecom Limited since April A. O. Smith Corporation 1994. Retired Chairman of NML since 2-1-94. Chairman of the Badger Meter, Inc. Board of NML 10-1-93 to 1-31-94. Chairman and Chief Federal Home Loan Mortgage Executive Officer 1990-1993. President and Chief Executive Corporation (Freddie Mac) Officer 1983-1990; President and Chief Operating Officer Northern Telecom, Ltd. 1981-1983; President 1980-1981; prior thereto, Senior Vice President-Investments.
39 40 The Northwestern Mutual Life Insurance Company Form 10-K
PRINCIPAL OCCUPATION TRUSTEE DURING PAST FIVE YEARS DIRECTORSHIPS - ------------------------------------------------------------------------------------------------------------------------------ H. Mason Sizemore, Jr. President and Chief Operating Officer, The Seattle Times, Seattle, Washington since 1985. Harold B. Smith Chairman, Executive Committee, Illinois Tool Works Inc., Grainger, W. W., Inc. Glenview, Illinois since 1982; Vice Chairman, 1981; prior Illinois Tool Works Inc. thereto, President. Northern Trust Corporation Sherwood H. Smith, Jr. Chairman of the Board, Carolina Power & Light Company, Carolina Power & Light Co. Raleigh, North Carolina, since October 1996. Chairman and Northern Telecom Ltd. Chief Executive Officer, Carolina Power & Light Company, Springs Industries, Inc. Raleigh, North Carolina, 1992-1996. Prior thereto, Wachovia Corporation Chairman/President and CEO 1980-1992; President and CEO 1979-1980; President 1976-1979. John E. Steuri Retired Chairman and CEO *ALLTEL Information Services, Inc., National Computer Systems Little Rock, Arkansas, since May 1996. Chairman and CEO 1989-1996. John J. Stollenwerk President and Owner, Allen-Edmonds Shoe Corporation, Port Badger Meter, Inc. Washington, Wisconsin since 1980. Firstar Bank Milwaukee N.A. Koss Corporation Barry L. Williams President and Chief Executive Officer, Williams Pacific American President Companies Ventures, Inc., San Francisco, California, since 1/1993. Pacific Gas & Electric Prior thereto: President 1987-1992; President and Chief Simpson Manufacturing Company Executive Officer, C. N. Flagg Power, Inc., Meriden, Tenera L.P. Connecticut 1988-1992. Prior thereto, Managing Principal, Bechtel Investments, Inc. and Sequoia Investments, Inc., San Francisco, California. Kathryn D. Wriston Director of various corporations. Santa Fe Energy Resources Stanley Works, The
* Note: Prior to 2/15/95, this company was known as Systematics Information Services, Inc. 40 41 The Northwestern Mutual Life Insurance Company Form 10-K Item 10. (continued) (f) To the best of the Registrant's knowledge, none of the Registrant's Executive Officers or Trustees have been involved in any of the items required to be reported in response to Item 401(f) of Regulation S-K. (g) Not applicable. Item 11 is on page 42. 41 42 Form 10-K Item 11. Executive Compensation Not applicable. NML Variable Annuity Accounts A and C have no directors or executive officers, the Executive Officers and Trustees of The Northwestern Mutual Life Insurance Company spend no substantial portion of their time on matters relating to NML Variable Annuity Accounts A and C, and the amounts of compensation received by the Executive Officers and Trustees of The Northwestern Mutual Life Insurance Company have no bearing on the values associated with variable annuity contracts issued in connection with Northwestern Mutual Variable Annuity Accounts A and C. 42 43 Form 10-K Item 12. Security Ownership of Certain Beneficial Owners and Management (a) Not applicable. The Registrant is a mutual life insurance company and has no stockholders as such. (b) Not applicable. (c) Not applicable. Item 13 is on page 44. 43 44 Form 10-K Item 13. Certain Relationships and Related Transactions (a) (1) The Registrant's second-tier subsidiary, Northwestern Mutual Investment Services, Inc. ("NMIS"), serves as the investment advisor to Northwestern Mutual Series Fund, Inc. (the "Fund"), a series company registered as an open-end management company under the Investment Company Act of 1940 and consisting of nine portfolios; and the Registrant is a party to an investment advisory agreement with each of these portfolios: the Index 500 Stock Portfolio, the Select Bond Portfolio, the Money Market Portfolio, the Balanced Portfolio, the Growth and Income Stock Portfolio, the Growth Stock Portfolio, the Aggressive Growth Stock Portfolio, the High Yield Bond Portfolio and the International Equity Portfolio. The investment advisory agreements with the Index 500 Stock Portfolio, the Select Bond Portfolio, the Money Market Portfolio and the Balanced Portfolio were renewed during the fiscal year. The investment advisory agreements between Registrant, NMIS and the Growth and Income Stock Portfolio, the Growth Stock Portfolio and the High Yield Bond Portfolio were entered into on April 15, 1994. The investment advisory agreements between Registrant, NMIS and the Aggressive Growth Stock Portfolio and the International Equity Portfolio were entered into on April 29, 1994. Various Trustees and Officers of the Registrant serve as directors and officers of the Fund and may be deemed to have a direct or indirect material interest in the existence of the investment advisory agreements. (2) Various Trustees and Officers of the Registrant have securities accounts with Robert W. Baird and Co. Incorporated ("Baird") and effected transactions through such accounts during the fiscal year. Baird is a regional broker-dealer firm and a member of the New York Stock Exchange. Baird is a majority-owned indirect subsidiary of the Registrant. 44 45 Form 10-K Item 13. (continued) (b) The Registrant, during 1994, retained the following law firms with whom certain Trustees of the Registrant are affiliated: Gibbs, Roper, Loots & Williams, of which Wayne J. Roper, a Trustee of the Registrant, for a portion of 1994, is a member, and Monroe & Lerman, of which J. Thomas Lewis, a Trustee of the Registrant, is a member. The firms were retained to perform certain legal functions for the Registrant. (c) Loans are made to Trustees and officers in accordance with the provisions of insurance policies which they may own. Such loans are made in the ordinary course of business and are administered solely according to the terms of the policy. (d) Not applicable. The Registrant was not organized within the past five years. Item 14 is on page 46. 45 46 The Northwestern Mutual Life Insurance Company Form 10-K
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K Page - -------- ------------------------------------------------------------------- ---- (a) Financial Statements and Exhibits 16 (1) NML Variable Annuity Account A (in Part II, Item 8) Statement of Assets and Liabilities, December 31, 1996 and 1995 Statement of Operations and Changes in Equity, for years ended December 31, 1996, 1995 and 1994 Notes to Financial Statements Report of Independent Accountants (2) NML Variable Annuity Account C (in Part II, Item 8) 25 Statement of Assets and Liabilities, December 31, 1996 and 1995 Statement of Operations and Changes in Equity, for years ended December 31, 1996, 1995 and 1994 Notes to Financial Statements Report of Independent Accountants (3) The Northwestern Mutual Life Insurance Company 47 Attached are: Report of Independent Accountants Consolidated Statement of Financial Position, December 31, 1996 and 1995 Consolidated Statement of Operations, for years ended December 31, 1996, 1995 and 1994 Consolidated Statement of General Contingency Reserve, for years ended December 31, 1996, 1995 and 1994 Consolidated Statement of Cash Flows, for years ended December 31, 1996, 1995 and 1994 Notes to Financial Statements (b) No reports on Form 8-K have been filed during the last quarter of the year ended December 31, 1996. (c) Compensation amounts deferred in 1996 are included as Exhibit I. 65 Financial Statements of majority owned subsidiaries of the Registrant not consolidated have been omitted because, considered in the aggregate as a single subsidiary, they do not constitute a significant subsidiary. (d) Not applicable.
46 47 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY CONSOLIDATED FINANCIAL STATEMENTS GENERAL DISTRIBUTION DECEMBER 31, 1996 AND 1995 47 48 [PRICE WATERHOUSE LLP LETTERHEAD] REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Trustees and Policyowners of The Northwestern Mutual Life Insurance Company We have audited the accompanying consolidated statement of financial position of The Northwestern Mutual Life Insurance Company and its subsidiary as of December 31, 1996 and 1995, and the related consolidated summary of operations and consolidated statements of general contingency reserve and of cash flows for each of the three years in the period ended December 31, 1996. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our report dated January 24, 1996, we expressed an opinion that the 1995 consolidated financial statements, prepared using accounting practices prescribed or permitted by the Insurance Departments of the states in which the Company and its subsidiary are domiciled (statutory basis of accounting,), were presented fairly, in all material respects, in conformity with generally accepted accounting principles. As described in Note 1 to these financial statements, pursuant to the pronouncement of the Financial Accounting Standards Board, financial statements of mutual life insurance enterprises prepared using accounting practices prescribed or permitted by insurance regulators (statutory basis of accounting) are no longer considered presentations in conformity with generally accepted accounting principles. Accordingly, our present opinion on the presentation of the 1995 financial statements, as presented herein, is different from the expressed in our previous report. 49 As described in Note 1, these consolidated financial statements were prepared in conformity with accounting practices prescribed or permitted by the Insurance Departments of the states in which the Company and its subsidiary are domiciled (statutory basis of accounting), which practices differ from generally accepted accounting principles. Accordingly, the consolidated financial statements are not intended to represent a presentation in accordance with generally accepted accounting principles. The effects on the consolidated financial statements of the variances between the statutory basis of accounting and generally accepted accounting principles, although not reasonably determinable, are presumed to be material. In our opinion, the consolidated financial statements audited by us (1) do not present fairly in conformity with generally accepted accounting principles, the financial position of The Northwestern Mutual Life Insurance Company and its subsidiary at December 31, 1996 and 1995, or the results of their operations or their cash flows for each of the three years in the period ended December 31, 1996 because of the effects of the variances between the statutory basis of accounting and generally accepted accounting principles referred to in the preceding paragraph and (2) do present fairly, in all material respects, the financial position of The Northwestern Mutual Life Insurance Company and its subsidiary at December 31, 1996 and 1995 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, on the basis of accounting described in Note 1. Price Waterhouse LLP January 22, 1997 50 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY CONSOLIDATED STATEMENT OF FINANCIAL POSITION (In millions)
ASSETS December 31, -------------------------- 1996 1995 ----------- ----------- Bonds United States Government $ 5,417 $ 3,282 Industrial and other 23,659 22,236 ------- ------- 29,076 25,518 ------- ------- Stocks Common 3,356 2,894 Unconsolidated subsidiaries 612 531 Preferred 760 546 ------- ------- 4,728 3,971 ------- ------- Mortgage loans 9,564 8,429 Real estate Investment 1,257 1,294 Home office 128 135 ------- ------- 1,385 1,429 ------- ------- Loans on policies 6,802 6,476 Other investments 1,714 1,589 Cash and temporary investments 1,131 544 Due and accrued investment income 764 721 ------- ------- Total invested assets 55,164 48,677 ------- ------- Separate account business 6,339 5,000 Other assets 1,177 1,199 ------- ------- Total Assets $62,680 $54,876 ======= ======= LIABILITIES AND RESERVES December 31, -------------------------- 1996 1995 ----------- ----------- Liability for policy benefits Insurance and annuity reserves $43,209 $39,545 Policy benefits in process or left for future payments 1,140 1,109 Premium deposits 427 427 Policyowner dividends payable 2,350 2,115 ------- ------- 47,126 43,196 ------- ------- Other liabilities Interest maintenance reserve 299 281 Income taxes 942 895 Miscellaneous 2,921 1,336 ------- ------- 4,162 2,512 ------- ------- Separate account business 6,339 5,000 ------- ------- Asset valuation reserve 1,538 1,382 ------- ------- Total liabilities 59,165 52,090 ------- ------- General contingency reserve 3,515 2,786 ------- ------- Total Liabilities and Contingency Reserve $62,680 $54,876 ======= =======
The accompanying notes are an integral part of the financial statements 49 51 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY CONSOLIDATED SUMMARY OF OPERATIONS (In millions)
For the year ended December 31, --------------------------- 1996 1995 1994 ---- ---- ---- Income Premiums $ 6,760 $ 6,196 $ 5,743 Net investment income 3,836 3,673 3,106 Policy benefits left with Company and other income 666 733 636 ------- ------- ------- Total income 11,262 10,602 9,485 ------- ------- ------- Disposition of income Costs Agents' compensation 529 508 492 Other insurance costs 418 398 334 Premium and other taxes or assessments 96 120 120 ------- ------- ------- 1,043 1,026 946 ------- ------- ------- Benefits to policyowners and beneficiaries Death benefits 673 655 609 Surrender benefits 1,182 1,375 904 Disability benefits 202 174 151 Annuity benefits 128 92 94 Matured endowments 52 48 54 Payments from policy benefits left with Company 684 590 568 Net transfers to separate accounts 579 236 344 Net additions to policy reserves 3,701 3,506 3,313 ------- ------- ------- 7,201 6,676 6,037 ------- ------- -------- Total disposition of income 8,244 7,702 6,983 ------- ------- -------- Savings from operations before income taxes and dividends 3,018 2,900 2,502 Income tax expense 452 467 281 ------- ------- -------- Savings from operations before dividends 2,566 2,433 2,221 Policyowner dividends 2,341 2,111 1,942 ------- -------- -------- Net savings from operations 225 322 279 Net realized capital gains, less tax expense of $208, $98 and 85, respectively 395 137 119 ------- -------- -------- Contribution to general contingency reserve from operations $ 620 $ 459 $ 398 ======= ======== ========
The accompanying notes are an integral part of the financial statements. 50 52 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY CONSOLIDATED STATEMENT OF GENERAL CONTINGENCY RESERVE (In millions)
For the year ended December 31, ----------------------- 1996 1995 1994 ---- ---- ---- Beginning of year balance $2,786 $2,225 $2,030 Contribution to general contingency reserve from operations 620 459 398 Change in net unrealized capital gains 295 373 (242) Change in asset valuation reserve (156) (192) 37 Other-net (30) (79) 2 ------ ------ ------ End of year balance $3,515 $2,786 $2,225 ====== ====== ======
51 The accompanying notes are an integral part of the financial statements. 53 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS (In millions)
For the year ended December 31, ----------------------------- 1996 1995 1994 -------- -------- -------- Cash flows from operating activities Insurance premiums, annuities and other considerations $ 7,361 $ 6,864 $ 6,299 Net investment income received 3,634 3,480 3,013 Net loans on policies (326) (331) (297) Benefits paid to policyholders and beneficiaries (2,912) (2,939) (2,357) Net transfers to separate accounts (579) (236) (344) Policyowner dividends paid (2,105) (1,945) (1,777) Expenses and taxes (1,424) (1,279) (1,033) Other-net 1,558 381 89 ------- ------- ------- Net cash provided by operating activities 5,207 3,995 3,593 Cash flows from investing activities Proceeds from investments sold or matured Bonds 31,942 25,317 27,096 Stocks 4,570 2,465 1,469 Mortgage loans 1,253 431 512 Real estate 178 48 164 Other invested assets 316 149 213 Capital gain (tax) benefit (239) (85) 28 ------- ------- ------- 38,020 28,325 29,482 Cost of investments acquired Bonds 35,342 27,596 29,672 Stocks 4,463 2,562 1,606 Mortgage loans 2,455 1,883 1,356 Real estate 125 202 6 Other invested assets 255 336 413 -------- ------- ------- 42,640 32,579 33,055 Net cash used in investing activities (4,620) (4,254) (3,573) ------- ------- ------- Net (decrease) increase in cash and temporary investments 587 (259) 20 Cash and temporary investments, beginning of year 544 803 783 ------- ------- ------- Cash and temporary investments, end of year $ 1,131 $ 544 $ 803 ======= ======= =======
The accompanying notes are an integral part of the financial statements. 52 54 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS DECEMBER 31, 1996, 1995 AND 1994 NOTE 1 - PRINCIPAL ACCOUNTING POLICIES The accompanying consolidated statutory financial statements include the accounts of The Northwestern Mutual Life Insurance Company (the "Company") and its wholly-owned life insurance subsidiary. The Company offers life, annuity and disability income products to the personal, business, estate and tax-qualified markets. The consolidated financial statements have been prepared using accounting policies prescribed or permitted by the Insurance Departments of the states in which the Company and its subsidiary are domiciled (statutory basis of accounting). Prior to December 15, 1995, these policies were considered generally accepted accounting principles ("GAAP") for mutual life insurance enterprises. However, in April 1993, the Financial Accounting Standards Board issued Interpretation No. 40, "Applicability of Generally Accepted Accounting Principles to Mutual Life Insurance Companies and Other Enterprises," which established a different definition of GAAP for mutual life insurance enterprises. Under the Interpretation, financial statements of mutual life insurance enterprises for periods beginning after December 15, 1995 which are prepared on the statutory basis of accounting are no longer characterized as being in conformity with GAAP. The consolidated financial statements are prepared on the statutory basis of accounting and are not intended to represent a presentation in accordance with GAAP. Financial statements prepared on a statutory basis of accounting vary from financial statements prepared on a GAAP basis primarily because on a GAAP basis policy acquisition costs are deferred and amortized, investment valuations and insurance reserves are based on different assumptions, deferred taxes are provided for book and tax differences and premiums on annuity contracts are accounted for as deposits to policyholders' accounts. The preparation of financial statements in conformity with the statutory basis of accounting requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Investments The Company's investments are valued on the following bases: Bonds - Amortized cost using the interest method; loan- backed and structured securities are amortized using estimated prepayment rates and, generally, the prospective adjustment method. -53- 55 Common Stocks - Market value Unconsolidated Subsidiaries - Equity in subsidiaries' net assets Preferred Stocks - Cost Mortgage Loans - Amortized cost Investment Real Estate - Lower of cost, less depreciation and encumbrances, or estimated net realizable value Home Office Real Estate - Cost, less depreciation Loans on Policies - Cost Other Investments - Joint Ventures - Lower of equity in or market value of ventures' net assets
Separate Account Business This business consists of annuities funded by specific assets held in separate accounts. The assets in these accounts are carried at market value. The policy values reflect the investment performance of the respective accounts. Insurance, Annuity and Disability Income Reserves Life insurance reserves on substantially all policies issued since 1978 are based on the Commissioner's Reserve Valuation Method with interest rates ranging from 3-1/2% to 5-1/2%. Other policy reserves are based primarily on the net level premium method employing various mortality tables at interest rates ranging from 2% to 4-1/2%. Deferred annuity reserves on policies issued since 1985 are valued using the Commissioner's Annuity Reserve Valuation Method with interest rates ranging from 3-1/2% to 6-1/4%. Other deferred annuity reserves are based on the contract value. Immediate annuity reserves are present values of expected benefit payments at interest rates ranging from 3-1/2% to 7-1/2%. Active life reserves for disability income ("DI") policies issued since 1987 are primarily based on the two-year preliminary term method using a 4% interest rate and the 1985 Commissioner's Individual Disability Table A ("CIDA") for morbidity. Previous DI business uses the net level premium method, using a 3% or 4% interest rate and the 1964 Commissioner's Disability Table for morbidity. Disabled life reserves for DI policies are based on the present values of expected benefit payments using primarily the 1985 CIDA (modified for Company experience in the first two years of disability) with interest rates ranging from 3% to 5-1/2%. Use of these actuarial tables and methods involves estimation of future mortality and morbidity based on past experience. Actual future experience could differ from these estimates. Interest Maintenance Reserve The Company is required to maintain an interest maintenance reserve ("IMR"). The IMR establishes a reserve for realized gains and losses, net of tax, resulting from changes in interest rates on short and long-term fixed income investments. Net realized gains and losses charges to -54- 56 the IMR are amortized into investment income over the approximate remaining life of the investment sold. Asset Value Reserve The Company is also required to maintain an asset valuation reserve ("AVR"). The AVR establishes a reserve for certain invested assets held by the Company. In the aggregate, AVR was 83.8% of the allowable maximum at December 31, 1996. Premium Income Life insurance premiums are recognized as income at the beginning of each policy year. Reinsurance In the normal course of business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding reinsurance to other insurance enterprises or reinsurers under excess coverage and co-insurance contracts. In 1996, the Company increased its use of coinsurance on term insurance. As of December 31, 1996, total life insurance inforce approximated $430 billion, of which approximately $146 billion, comprised principally of term insurance, had been ceded to various reinsurers. The Company retains a maximum of $15 million of coverage per individual life and $20 million maximum of coverage per joint life. Operating Costs Operating costs, including costs of acquiring new policies, are charged to operations as incurred. Income Taxes Provisions for income taxes are based on current income tax returns without recognition of deferred taxes due to timing differences. The portion of the federal income tax based on mutual life insurance company equity is reflected as a component of income tax expense, including related adjustments for prior years. The Company files a consolidated life-nonlife federal income tax return. Federal income tax returns for years through 1988 are closed as to further assessment of tax. Adequate provision has been made in the financial statements for any additional taxes which may become due with respect to the open years. The Company's effective tax rate on savings from operations before income tax expense (after dividends) in 1996 was approximately 67%. Two significant factors cause the Company's effective tax rate to exceed the federal corporate rate of 35%. First, the Company pays a tax that is assessed only on mutual life insurance companies, which is an amount that purports to equate a portion of policyholder dividends with nondeductible dividends paid to shareholders of stock -55- 57 companies. Second, the Company must capitalize and amortize (as opposed to immediately deducting) an amount deemed to represent the cost of acquiring new business ("DAC tax"). Policyowner Dividends Dividends payable in the following year on participating policies are charged to current operations. All life insurance policies issued by the Company are participating. Reclassification Certain amounts in previously issued financial statements have been reclassified to conform to current year presentation. NOTE 2 - DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS The following summarizes the bases used by the Company in estimating its fair value disclosures for financial instruments: Bonds and common and preferred stocks - Fair values are based upon quoted market prices, if available. For securities not actively traded, fair values are estimated using independent pricing services or internally developed pricing models. Mortgage loans - Fair values are derived by discounting the future estimated cash flows using current interest rates of debt securities with similar credit risk and maturities, or utilizing net realizable values. Loans on policies - The carrying amount reported in the statement of financial position approximates fair value since loans on policies reduce the amount payable at death or at surrender of the contract. Cash and temporary investments and due and accrued investment income - The carrying amounts reported in the statement of financial position approximate fair value. Annuity reserves (without mortality/morbidity features) - Fair values are derived by discounting the future estimated cash flows using current interest rates with similar maturities. Other deposit liabilities - The carrying amounts reported in the statement of financial position approximate fair value. -56- 58 NOTE 3 - INVESTMENTS Net Investment Income The Company's net investment income for the years ended December 31, 1996, 1995 and 1994 of the following:
1996 1995 1994 ------- -------- -------- (In millions) Interest, dividends, rents, equity in unconsolidated subsidiaries' earnings and joint venture income $4,125 $3,952 $3,395 Less: Investment expenses and depreciation (289) (279) (289) ------ ------ ------ Net investment income $3,836 $3,673 $3,106 ====== ====== ======
Realized Gains and Losses During 1996, 1995 and 1994, the Company, in its normal course of business, sold certain invested assets realizing gains and losses before transfer to the IMR and capital gains tax from such sales as follows:
For the year ended For the year ended For the year ended December 31, 1996 December 31, 1995 December 31, 1994 ------------------------------ ----------------------------- ----------------------------- Net Net Net Realized Realized Realized Realized Realized Gains Realized Realized Gains Realized Realized Gains Gains Losses (Losses) Gains Losses (Losses) Gains Losses (Losses) -------- -------- -------- -------- -------- -------- -------- -------- -------- (In millions) Bonds $ 396 $(383) $ 13 $ 576 $(130) $446 $171 $(535) $(364) Stocks 580 (115) 465 574 (429) 145 499 (291) 208 Mortgage loans 2 (15) (13) 2 (32) (30) - (37) (37) Real estate 36 0 36 14 (3) 11 16 (7) 9 Other invested assets 204 (51) 153 188 (95) 93 110 (98) 12 ------ ----- ---- ------ ----- ---- ---- ----- ----- $1,218 $(564) $654 $1,354 $(689) $665 $796 $(968) $(172) ====== ===== ==== ====== ===== ==== ==== ===== =====
Debt Securities Debt securities consist of all bonds, fixed maturity preferred stocks and short term fixed income investments. -57- 59 The statement values, which principally represent amortized cost, and estimated market values of the Company's debt securities at December 31, 1996 and 1995 are as follows:
December 31, 1996 Reconciliation to Estimated Market Value - ----------------- ---------------------------------------- Gross Gross Estimated Statement Unrealized Unrealized Market Value Appreciation Depreciation Value --------- ------------ ------------ --------- (In millions) US Government and political obligations $ 4,809 $ 171 $ (2) $ 4,978 Mortgage-backed securities 6,747 179 (38) 6,888 Corporate and other debt securities 18,722 776 (99) 19,399 ------- ------ ----- ------- 30,278 1,126 (139) 31,265 Preferred stocks 84 6 (1) 89 ------- ------ ----- ------- Total $30,362 $1,132 $(140) $31,354 ======= ====== ===== =======
December 31, 1995 Reconciliation to Estimated Market Value - ----------------- ---------------------------------------- Gross Gross Estimated Statement Unrealized Unrealized Market Value Appreciation Depreciation Value --------- ------------ ------------ --------- (In millions) US Government and political obligations $ 3,267 $ 296 $ (1) $ 3,562 Mortgage-backed securities 6,734 336 (12) 7,058 Corporate and other debt securities 15,999 1,250 (47) 17,202 ------- ------ ----- ------- 26,000 1,882 (60) 27,822 Preferred stocks 108 3 (2) 109 ------- ------ ----- ------- Total $26,108 $1,885 $ (62) $27,931 ======= ====== ===== =======
-58- 60 The amortized cost and estimated value of debt securities at December 31, 1996 and 1995, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
December 31, 1996 December 31, 1995 ----------------------- --------------------- Estimated Estimated Statement Market Statement Market Value Value Value Value --------- --------- --------- --------- Due in one year or less $ 1,659 $ 1,713 $ 977 $ 979 Due after one year through five years 4,077 4,205 3,658 3,879 Due after five years through ten years 7,802 8,092 6,879 7,347 Due after ten years 10,077 10,456 7,860 8,668 ------- ------- ------- ------- 23,615 24,466 19,374 20,873 Mortgage-backed securities 6,747 6,888 6,734 7,058 ------- ------- ------- ------- $30,362 $31,354 $26,108 $27,931 ======= ======= ======= =======
The fair value of perpetual preferred stocks as of December 31, 1996 and 1995 approximates $892 million and $578 million, respectively, compared to the statement values of $676 million and $439 million, respectively. The Company has entered into a securities lending agreement whereby blocks of securities are loaned to third parties, primarily major brokerage firms. As of December 31, 1996 the estimated fair value of loaned securities was $2.2 billion. The Company's policy requires a minimum of 102 percent of the fair value of the loaned securities as collateral, calculated on a daily basis in the form of either cash or securities. Cash collateral received and related amounts due to counterparties are reflected in the consolidated statement of financial position. To further minimize the credit risks related to this program, the financial condition of counterparties is monitored on a regular basis. -59- 61 Mortgage Loans As of December 31, 1996 and 1995, the mortgage loan portfolio was distributed as follows:
December 31, 1996 December 31, 1995 ------------------- ------------------- Statement % of Statement % of Geographic Location Value Total Value Total ------------------- --------- ------ --------- ------ (In millions) (In millions) Middle Atlantic $1,170 12.3% $ 945 11.2% South Atlantic 2,845 29.7 2,346 27.8 North Central 1,675 17.5 1,560 18.5 South Central 1,035 10.8 1,018 12.1 Pacific Northwest 578 6.1 454 5.4 Pacific 1,998 20.9 1,803 21.4 Canada 263 2.7 303 3.6 ------ ----- ------ ----- $9,564 100.0% $8,429 100.0% ====== ===== ====== ===== Property Type ------------- Retail $3,099 32.4% $2,897 34.4% Office Building 2,963 31.0 2,677 31.8 Residential 2,340 24.5 1,804 21.4 Commercial 818 8.5 792 9.4 Other 344 3.6 259 3.9 ------ ----- ------ ----- $9,564 100.0% $8,429 100.0% ====== ===== ====== =====
The fair value of mortgage loans as of December 31, 1996 and 1995 approximates $9,823 million and $8,983 million, respectively. -60- 62 Affiliates The Company has a 17.7% investment in MGIC Investment Corporation ("MGIC"), an affiliate. At December 31, 1996, the market value of the Company's investment in MGIC (10.4 million shares) exceeded the statement value by $466 million. During 1996, NML sold 1.2 million shares of MGIC resulting in a realized gain of $50.0 million. In July 1995, the Company entered into a forward contact with a brokerage firm to deliver 4.4 million to 5.4 million shares of MGIC (or cash) in August 1998 for a price determined by the market value of the MGIC shares at that time in exchange for a fixed cash payment of $247 million ($48 per share). The Company's objective in entering into the forward contract is to hedge against depreciation in the value of its MGIC holdings during the contract period below the initial spot price of $48, while partially participating in appreciation, if any, during the forward contract's duration. Real Estate For real estate and joint venture properties acquired subsequent to December 1990, the Company calculates depreciation using the straight-line method in accordance with guidelines established by the National Association of Insurance Commissioners. For properties acquired prior to December 1990, the Company calculates depreciation using either the straight-line method or the constant-yield method. Home office real estate is depreciated using the straight-line method. At December 31, 1996, investment real estate includes $119 million of real estate acquired through foreclosure. In 1996, the Company recorded writedowns of $31 million and $12 million for the excess of carrying value over fair value of certain real estate investments and mortgage loans, respectively. Valuation allowances for real estate and mortgage loans with fair values that are less than statement values are adequately covered by normal AVR reserves and by a $110 million special investment reserve established by the Company for real estate, mortgage loans and other invested assets. Derivative Financial Instruments The Company's current utilization of derivative financial instruments is limited. The Company's derivative transactions are used to reduce or modify risks of volatility related to foreign currency, interest rate movements and stock price fluctuation. These hedging strategies use forwards, futures, options and swaps. -61- 63 At December 31, 1996 the Company held the following positions:
Notional Contract Derivative Financial Instruments: Amounts Risks Reduced - --------------------------------- -------- ------------- ($ millions) Foreign Currency Forward Contracts $854 Currency exposure on foreign denominated investments. Stock Futures 279 Stock market price fluctuation. Option to acquire an Interest Rate Swap 320 Interest rate payable on Fixed Annuities. Foreign Currency and Interest Rate Swaps 251 Interest rates on variable rate notes and currency on foreign denominated bonds.
The hedges are recorded by the Company in the same manner as the underlying investments. Changes in the values of these contracts are expected to offset the gains and losses on the hedged investments. On hedges marked to market, gains and losses are unrealized before contract settlement and realized on settlement. The effect of derivative transactions is not significant to the Company's results of operations or financial position. NOTE 4 - ANNUITIES AND OTHER DEPOSIT LIABILITIES The value of annuities (without mortality/morbidity features) and other deposit liabilities as of December 31, 1996 and 1995 are as follows:
December 31, 1996 December 31, 1995 --------------------- -------------------- Statement Fair Statement Fair Value Value Value Value ----------- ------- ----------- ------ (In millions) Annuities $2,554 $2,477 $2,631 $2,437 Other deposit liabilities 797 797 783 783
-62- 64 NOTE 5 - BENEFIT PLANS The Company maintains non-contributory defined benefit retirement plans for all eligible employees and agents as well as a 401(k) plan for eligible employees and a non-contributory defined contribution plan for all full-time agents. These plans are funded currently and plan assets of $1.3 billion at December 31, 1996 are primarily included in the separate accounts of the Company. As of January 1, 1996, the most recent actuarial valuation date available, the defined benefit plans were fully funded. In addition to pension benefits, the Company provides certain health care and life insurance benefits ("postretirement benefits") for retired employees. Substantially all employees may become eligible for these benefits if they reach retirement age while working for the Company. Postretirement benefit cost for the year ended December 31, 1996 was a benefit of $12 million; it includes the expected cost of postretirement benefits for newly eligible and vested employees and interest cost totaling $6 million offset by gains from differences between actuarial assumptions and actual experience of $18 million. At December 31, 1996 and 1995, the unfunded postretirement benefit obligation for retirees and other fully eligible or vested employees was $35 million and $49 million, respectively. The estimated postretirement benefit obligation for active non-vested employees was $43 million. The discount rate used to determine the postretirement benefit obligation was 7% and the health care cost trend rate was 10% in 1996, declining by 1% per year to an ultimate rate of 5% over 5 years. If the health care cost trend rate assumptions were increased by 1%, the postretirement benefit obligation as of December 31, 1996 would be increased by $5 million. At December 31, 1996, the plan assets attributable to postretirement health care benefits totaled $34 million. -63- 65 NOTE 6 - REINSURANCE The amounts shown in the accompanying consolidated financial statements are net of reinsurance activity. Reserves at December 31, 1996 are stated net of reinsurance of $355 million. The effect of reinsurance on premiums and benefits for the year ended December 31, 1996 and 1995 are as follows (in millions):
1996 1995 1996 ------ ------ ----- Direct premiums $7,064 $6,452 $5,977 Reinsurance ceded (304) (256) (234) ------ ------ ------ Net premiums $6,760 $6,196 $5,743 ====== ====== ====== Benefits to policyholders and beneficiaries $7,348 $6,818 $6,178 Reinsurance recoveries (147) (142) (141) ------ ------ ------ Net benefits to policyholders and beneficiaries $7,201 $6,676 $6,037 ====== ====== ======
In addition, the Company received credits of $93 million for reinsurers representing reimbursements of commissions and other expenses. The credits are included in other income in the consolidated summary of operations. Reinsurance contracts do not relieve the Company from its obligations to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company; consequently, allowances are established for amounts deemed uncollectible. The Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. NOTE 7 - CONTINGENCIES In the normal course of business, the Company enters into transactions to reduce its exposure to fluctuations in interest rates and market volatility. These instruments may involve credit risk and may also be subject to risk of loss due to interest rate fluctuations. The Company has guaranteed certain obligations of its affiliates. These guarantees totaled approximately $120 million at December 31, 1996 and are generally supported by the underlying net asset values of the affiliates. The Company is engaged in various legal actions in the normal course of its investment and insurance operations. In the opinion of management, any losses resulting from such actions would not have a material effect on the Company's financial condition. -64- 66 Form 10-K EXHIBIT I Reference is made to a form of deferred compensation agreement filed as Exhibit B-2 with Form 10-K for 1970 and The Northwestern Mutual Employee Savings Plan filed as Exhibit II for 1985. Pursuant to such contracts the following amounts were deferred in 1996:
Executive Officers ------------------ James D. Ericson 391,500 Robert E. Carlson 176,000 Walt J. Wojcik 188,600 Mason G. Ross 72,211 Frederic H. Sweet 19,680 James F. Reiskytl 21,650 Richard L. Hall 39,200 Madonna M. Hostetter 7,042 Gary E. Long 57,200 Donald L. Mellish 100,437 Deborah A. Beck 38,000 Edward J. Zore 83,000 Dennis Tamcsin 42,500 Peter W. Bruce 68,040 Mark G. Doll 87,000 John M. Bremer 100,000 James W. Ehrenstrom 68,500 William C. Koenig 18,920 Leonard F. Stecklein 69,000 Martha M. Valerio 148,805 Virgil Renne, Jr. 14,000 W. Ward White 67,000 Barbara F. Piehler 71,680 Thomas E. Dyer 44,670 Steven T. Catlett 14,350 Gregory C. Oberland 13,936 Susan A. Lueger 33,710 Ralph A. Pelton 26,000 Meridee J. Maynard 78,430 William H. Beckley 22,560 Robert J. Berdan 14,000 Trustees -------- Stephen F. Keller 41,500 R. Quintus Anderson 43,750 Jake E. Gallegos 39,000 Patricia Albjerg Graham 41,500 Richard H. Holton 6,000 Robert C. Buchanan 37,900 Edward E. Barr 41,500 Sherwood H. Smith, Jr. 42,250 John J. Stollenwerk 77,900 Herman M. Sizemore 41,500 George A. Dickerman 35,000 John E. Steuri 42,750 $2,688,171 ==========
65 67 The Northwestern Mutual Life Insurance Company Form 10-K SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY (Registrant) By James D. Ericson ------------------------------------- James D. Ericson President and Chief Executive Officer By Gary E. Long ------------------------------------- Gary E. Long Vice President and Controller Date: March 24, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Title James D. Ericson Trustee, President and Chief Executive Officer - --------------------- James D. Ericson Dated March 24, 1997 66 68 The Northwestern Mutual Life Insurance Company Form 10-K SIGNATURES (continued) R. QUINTUS ANDERSON* Trustee - ---------------------------- R. Quintus Anderson EDWARD E. BARR Trustee - ---------------------------- Edward E. Barr GORDON T. BEAHAM, III* Trustee - ---------------------------- Gordon T. Beaham, III FRANK H. BERTSCH* Trustee - ---------------------------- Frank H. Bertsch ROBERT C. BUCHANAN* Trustee - ---------------------------- Robert C. Buchanan ROBERT E. CARLSON* Trustee - ---------------------------- Robert E. Carlson GEORGE A. DICKERMAN* Trustee - ---------------------------- George A. Dickerman THOMAS I. DOLAN* Trustee - ---------------------------- Thomas I. Dolan PIERRE S. DU PONT, IV* Trustee Dated March 24, 1997 - ---------------------------- Pierre S. Du Pont, IV JAMES D. ERICSON* Trustee - ---------------------------- James D. Ericson J. E. GALLEGOS* Trustee - ---------------------------- J. E. Gallegos PATRICIA ALBJERG GRAHAM* Trustee 67 69 The Northwestern Mutual Life Insurance Company Form 10-K SIGNATURES (continued) RICHARD H. HOLTON* Trustee - ------------------------------------ Richard H. Holton STEPHEN F. KELLER* Trustee - ------------------------------------ Stephen F. Keller J. THOMAS LEWIS* Trustee - ------------------------------------ J. Thomas Lewis FRED G. LUBER* Trustee - ------------------------------------ Fred G. Luber DANIEL F. McKEITHAN, JR.* Trustee - ------------------------------------ Daniel F. McKeithan, Jr. GUY A. OSBORN Trustee - ------------------------------------ Guy A. Osborn DONALD J. SCHUENKE* Trustee Dated March 24, 1997 - ------------------------------------ Donald J. Schuenke H. MASON SIZEMORE, JR. Trustee - ------------------------------------ H. Mason Sizemore, Jr. HAROLD B. SMITH* Trustee - ------------------------------------ Harold B. Smith SHERWOOD H. SMITH, JR.* Trustee - ------------------------------------ Sherwood H. Smith, Jr. JOHN J. STOLLENWERK* Trustee - ------------------------------------ John J. Stollenwerk BARRY L. WILLIAMS* Trustee - ------------------------------------ Barry L. Williams KATHRYN D. WRISTON* Trustee - ------------------------------------ Kathryn D. Wriston *By JAMES D. ERICSON* -------------------------------- James D. Ericson, Attorney in fact, pursuant to the Power of Attorney attached hereto 68 70 Form 10-K POWER OF ATTORNEY The undersigned Trustees of THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY hereby constitute and appoint James D. Ericson and Robert E. Carlson, or either of them, their true and lawful attorneys and agents to sign the names of the undersigned Trustees to (1) the registration statement or statements to be filed under the Securities Act of 1933 and to any instrument or document filed as part thereof or in connection therewith or in any way related thereto, and any and all amendments thereto in connection with variable contracts issued or sold by The Northwestern Mutual Life Insurance Company or any separate account credited therein and (2) the Form 10-K Annual Report or Reports of The Northwestern Mutual Life Insurance Company and/or its separate accounts for its or their fiscal year ended December 31, 1995 to be filed as part thereof or in connection therewith or in any way related thereto, and any and all amendments thereto. "Variable contracts" as used herein means any contracts providing for benefits or values which may vary according to the investment experience of any separate account maintained by The Northwestern Mutual Life Insurance Company, including variable annuity contracts and variable life insurance policies. Each of the undersigned hereby ratifies and confirms all that said attorneys and agents shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, each of the undersigned has subscribed these presents this 27th day of July, 1994. R. QUINTUS ANDERSON Trustee ------------------------------------------ R. Quintus Anderson EDWARD E. BARR Trustee ------------------------------------------ Edward E. Barr GORDON T. BEAHAM, III Trustee ------------------------------------------ Gordon T. Beaham, III FRANK H. BERTSCH Trustee ------------------------------------------ Frank H. Bertsch ROBERT C. BUCHANAN Trustee ------------------------------------------ Robert C. Buchanan ROBERT E. CARLSON Trustee ------------------------------------------ Robert E. Carlson GEORGE A. DICKERMAN Trustee ------------------------------------------ George A. Dickerman THOMAS I. DOLAN Trustee ------------------------------------------ Thomas I. Dolan PIERRE S. DU PONT, IV Trustee ------------------------------------------ Pierre S. Du Pont, IV JAMES D. ERICSON Trustee ------------------------------------------ James D. Ericson J. E. GALLEGOS Trustee ------------------------------------------ J. E. Gallegos PATRICIA ALBJERG GRAHAM Trustee ------------------------------------------ Patricia Albjerg Graham 69 71 Form 10-K RICHARD H. HOLTON Trustee --------------------------------------------- Richard H. Holton STEPHEN F. KELLER Trustee --------------------------------------------- Stephen F. Keller J. THOMAS LEWIS Trustee --------------------------------------------- J. Thomas Lewis FRED G. LUBER Trustee --------------------------------------------- Fred G. Luber DANIEL F. McKEITHAN, JR. Trustee --------------------------------------------- Daniel F. McKeithan, Jr. GUY A. OSBORN Trustee --------------------------------------------- Guy A. Osborn DONALD J. SCHUENKE Trustee --------------------------------------------- Donald J. Schuenke H. MASON SIZEMORE, JR. Trustee --------------------------------------------- H. Mason Sizemore, Jr. HAROLD B. SMITH Trustee --------------------------------------------- Harold B. Smith SHERWOOD H. SMITH, JR. Trustee --------------------------------------------- Sherwood H. Smith, Jr. JOHN E. STEURI Trustee --------------------------------------------- John E. Steuri JOHN J. STOLLENWERK Trustee --------------------------------------------- John J. Stollenwerk BARRY L. WILLIAMS Trustee --------------------------------------------- Barry L. Williams KATHRYN D. WRISTON Trustee --------------------------------------------- Kathryn D. Wriston 70 EX-27.01 2 FDS
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NORTHWESTERN MUTUAL LIFE VARIABLE ANNUITY ACCOUNT A, DECEMBER 31, 1996 FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH POST-EFFECTIVE AMENDMENT. 01 ACCOUNT A 1,000 YEAR DEC-31-1996 JAN-01-1996 DEC-31-1996 424,275 548,907 510 0 0 549,417 123 0 1,774 1,897 547,520 0 240,088 157,092 0 0 0 0 0 547,520 24,501 0 0 5,784 18,717 13,968 33,052 65,737 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27.02 3 FDS
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NORTHWESTERN MUTUAL LIFE VARIABLE ANNUITY ACCOUNT C, DECEMBER 31, 1996 FORM 10K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH POST-EFFECTIVE AMENDMENT. 02 ACCOUNT B 1,000 YEAR DEC-31-1996 JAN-01-1996 DEC-31-1996 339,801 426,653 1,715 0 0 428,368 1,662 0 53 1,715 426,653 0 88,544 63,813 0 0 0 0 0 426,653 16,994 0 0 1,739 15,255 8,855 29,832 53,942 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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