-----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, Suh+RKbT3kJdBlhj0ICr7Hus5sOO2ZnT+i7ec3vwSuHaw9hazazXovrJ7xg2j87i GFL6B/PclhnZg/jYt9Rr6g== 0000950124-00-001665.txt : 20000531 0000950124-00-001665.hdr.sgml : 20000531 ACCESSION NUMBER: 0000950124-00-001665 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHWESTERN MUTUAL LIFE INSURANCE CO CENTRAL INDEX KEY: 0000073076 STANDARD INDUSTRIAL CLASSIFICATION: 0000 IRS NUMBER: 390509570 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 002-64683 FILM NUMBER: 581099 BUSINESS ADDRESS: STREET 1: 720 E WISCONSIN AVENUE CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4142992508 MAIL ADDRESS: STREET 1: 720 EAST WISCONSIN AVENUE CITY: MILWAUKEE STATE: WI ZIP: 53202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NML VARIABLE ANNUITY ACCOUNT A CENTRAL INDEX KEY: 0000790162 STANDARD INDUSTRIAL CLASSIFICATION: 0000 IRS NUMBER: 390509570 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 333-72913 FILM NUMBER: 581100 BUSINESS ADDRESS: STREET 1: 720 EAST WISCONSIN AVE CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4142992508 MAIL ADDRESS: STREET 1: 720 EAST WISCONSIN AVENUE CITY: MILWAUKEE STATE: WI ZIP: 53202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NML VARIABLE ANNUITY ACCT C OF NORTHWESTERN MUT LIFE INS CO CENTRAL INDEX KEY: 0000790163 STANDARD INDUSTRIAL CLASSIFICATION: 0000 IRS NUMBER: 390509570 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 002-89905-01 FILM NUMBER: 581101 BUSINESS ADDRESS: STREET 1: 720 E WISCONSIN AVE CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4142992508 MAIL ADDRESS: STREET 1: 720 EAST WISCONSIN AVENUE CITY: MILWAUKEE STATE: WI ZIP: 53202 10-K405 1 FORM 10-K405 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, 1999 ----------------- COMMISSION FILE NUMBERS 333-72913 AND 2-89905-01 ------------------------ THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY IN RESPECT OF NML VARIABLE ANNUITY ACCOUNT A & NML VARIABLE ANNUITY ACCOUNT C ----------------------------------------------------------------------------- (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 12(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 | | Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this form 10-K or any amendment to this Form 10-K. |X| State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. Not Applicable -------------- Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. None ---- DOCUMENTS INCORPORATED BY REFERENCE None ---- 2 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K PART I ITEM 1. BUSINESS Accounts A & C NML Variable Annuity Account A ("Account A") and NML Variable Annuity Account C ("Account C") are segregated asset accounts of The Northwestern Mutual Life Insurance Company ("Northwestern Mutual") formed to provide retirement annuity benefits for (i) employees of corporate employers who adopt pension or profit sharing plans meeting the requirements of Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), or annuity purchase plans meeting the requirements of Section 403(a) of the Code (collectively, "Corporate Plans"), and (ii) for self-employed individuals (and their eligible employees) who adopt plans meeting the requirements of Sections 401 or 403(a) of the Code ("HR-10 Plans"). Account A receives payments under individual variable annuity contracts issued by Northwestern Mutual in connection with Corporate Plans and HR-10 Plans. Account C receives payments under group combination variable annuity contracts issued by Northwestern Mutual in connection with Corporate Plans and HR-10 Plans. The variable annuity contracts issued by Northwestern Mutual in connection with Corporate Plans and HR-10 Plans are hereinafter referred to as the "Contracts." Account A and Account C were established on February 14, 1968 and July 22, 1970, respectively, by action of the Board of Trustees of Northwestern Mutual in accordance with the provisions of Wisconsin insurance law. Neither Account A nor Account C is registered as an investment company under the Investment Company Act of 1940. The Contracts provide for the accumulation of funds and the payment of retirement benefits to participants and their beneficiaries ("Annuitants"). Account A and Account C each have 16 divisions. Money invested to provide variable benefits under the Contracts is placed in one or more divisions of the applicable Account which are in turn invested in 11 portfolios of Northwestern Mutual Series Fund, Inc. (Small Cap Growth Stock Portfolio, Aggressive Growth Stock Portfolio, International Equity Portfolio, Index 400 Stock Portfolio, Growth Stock Portfolio, Growth and Income Stock Portfolio, Index 500 Stock Portfolio, Balanced Portfolio, High Yield Bond Portfolio, Select Bond Portfolio and Money Market Portfolio) and 5 funds of Russell Insurance Funds (Multi-Style Equity Fund, Aggressive Equity Fund, Non-U.S. Fund, Real Estate Securities Fund and Core Bond Fund), each of which corresponds to one of the Account divisions, all as directed by the Annuitant. Northwestern Mutual Series Fund, Inc. and Russell Insurance Funds, which are affiliates of Northwestern Mutual, are registered as investment companies under the Investment Company Act of 1940. The Contracts are sold through individuals who, in addition to being licensed insurance agents of Northwestern Mutual, are registered representatives of Northwestern Mutual Investment Services, LLC ("NMIS"), a wholly-owned subsidiary of Northwestern Mutual and a registered broker-dealer under the Securities Exchange Act of 1934. Under Wisconsin law, the investment operations of each of Account A and Account C are kept separate from the operations of Northwestern Mutual. Northwestern Mutual and its creditors cannot reach assets in Account A or Account C to satisfy non-Contract related obligations until all obligations under the Contracts have been satisfied. See Item 8 herein for the audited financial statements of Account A and Account C. Northwestern Mutual Founded in 1857, Northwestern Mutual is a mutual insurance company organized under the laws of the State of Wisconsin. Northwestern Mutual's products consist of a complete range of permanent and term life insurance, disability income insurance, long-term care insurance, mutual funds and annuities for personal, estate, retirement, business and benefits planning. Northwestern Mutual markets its insurance products and services in all 50 states of the United States and in the District of Columbia through an exclusive network of approximately 7,500 agents at December 31, 1999 associated with over 100 general agencies. At December 31, 1999, Northwestern Mutual had approximately 3,700 full- and part-time employees. 1 3 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K Northwestern Mutual's three principal lines of business are: (i) life insurance, which provides a full range of individual life insurance products, including traditional whole life, CompLife, variable life and term policies to meet the needs of middle to upper income individuals, small business owners and professionals, estates and selected large corporations; (ii) disability income insurance, which provides a complete line of individual and group products, including individual non-cancelable, guaranteed renewable loss of earnings, buyout, key person, and short and long-term group coverages, marketed primarily to middle to upper income individuals, professionals, and small- to medium-sized businesses and their owners; and (iii) annuity and accumulation products, which provide individual variable, fixed and immediate annuities offered in conjunction with qualified pension plans, retirement plans for self employed individuals, individual retirement and personal non-tax qualified situations, group annuities and a family of retail mutual funds known as Mason Street Funds, marketed primarily to middle to upper income individuals, small business owners and professionals. A new business line for Northwestern Mutual, long-term care insurance, commenced in August 1998 with the introduction of its QuietCare product. For the years ended December 31, 1999, 1998 and 1997, Northwestern Mutual had total premiums, including annuity considerations and deposit funds, of $8.3 billion, $8.0 billion and $7.3 billion, respectively, of which $6.8 billion, $6.5 billion and $5.9 billion, respectively, was attributable to life insurance, $0.5 billion, $0.5 billion and $0.5 billion, respectively, was attributable to disability income insurance and $1.0 billion, $1.0 billion and $0.9 billion, respectively, was attributable to annuity and accumulation products. The life insurance industry is mature and highly competitive. Competitiveness in the life insurance business is affected by various factors including, but not limited to, product quality, financial strength and stability, claims-paying ratings, size and competence of agency force, range of product lines, customer service, and reputation. At the end of 1999, there were more than 1,500 life insurance companies in the United States and many of these companies offer individual life insurance and annuity products similar to those offered by Northwestern Mutual. In addition, Northwestern Mutual competes with banks, brokerage firms, investment advisers, mutual funds and other financial entities for investment and savings customers. In the individual and group disability markets, Northwestern Mutual competes with a limited number of major national and regional companies offering these specialized products. National banks, with their pre-existing customer bases for financial services products, may pose increasing competition in the future to insurers who sell life insurance and annuity products, including Northwestern Mutual. Recent United States Supreme Court decisions have expanded the authority of national banks to sell life insurance products and annuities. In addition, legislation to overturn Depression-era restrictions on bank affiliations, the Gramm-Leach-Bliley Act (the "Act"), was signed into law by the President on November 12, 1999, implementing fundamental changes in the regulation of the financial services industry in the U.S. Generally effective March 11, 2000, the Act eliminates certain barriers to and restrictions on affiliations between banks, securities firms and insurance companies that were previously contained in the Glass-Steagall Act of 1933, as amended, and the Bank Holding Company Act of 1956, as amended. Under the Act, through the use of two new structures, financial holding companies and financial subsidiaries, qualifying bank holding companies and state and national banks will be allowed to provide a wide variety of financial services, including the authority to engage in certain insurance activities (e.g., the sale and, in the case of qualifying bank holding companies only, the underwriting of insurance and annuities). As a result of the Act, among other things, bank holding companies may acquire insurers and insurance holding companies may acquire banks. While it is too early to assess the effects of the Act on Northwestern Mutual, the Act may change the competitive and regulatory environment in which Northwestern Mutual and its subsidiaries conduct their businesses and may result in additional competition in one or more markets in which they sell their products and services. Northwestern Mutual is licensed to transact its insurance business in, and is subject to regulation and supervision by, all 50 states of the United States and the District of Columbia. Northwestern Long Term Care Insurance Company, Northwestern Mutual's only insurance subsidiary, is authorized and regulated in all jurisdictions in which it conducts its long-term care business. The extent of such regulation varies, but most jurisdictions have laws and regulations governing the financial aspects of insurance companies, including standards of solvency, reserves, reinsurance, capital adequacy and the business conduct of insurance companies. In addition, statutes and regulations usually require the licensing of insurers and their agents, the approval of policy forms and related materials and, for certain lines of insurance, the approval of rates. Such statutes and regulations also prescribe the permitted types and concentration of investments. The Act reaffirms that the states are to remain responsible for regulating the business of insurance. However, subject to certain exceptions, no state authority can prevent or restrict depository institutions and their affiliates from affiliating with insurance companies as permitted under the Act. In addition, certain state laws and regulations that place restrictions on a depository institution's insurance sales activities would be preempted. 2 4 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K Robert W. Baird & Co. Incorporated ("Baird"), a subsidiary of Northwestern Mutual, is one of the nation's largest regional investment banking firms based on dollar volume of underwritings, amount of equity capital, and the number of financial advisors and branch offices. Baird, a member of the New York Stock Exchange, Inc., provides broker-dealer, asset management, equity research, investment banking, merchant banking and public finance services for individuals, corporations, municipalities and institutional investors. On January 1, 1999, Northwestern Mutual acquired all the outstanding common stock of Frank Russell Company ("Frank Russell"). Founded in 1936, Frank Russell is a leading investment management and consulting firm, providing investment advice, analytical tools and funds to institutional and individual investors in more than 30 countries. Through its subsidiaries, at December 31, 1999, Frank Russell managed approximately $60 billion in assets. Frank Russell is also well known for its family of market indices, including the Russell 2000, which provide complete sets of performance benchmarks for investors in Australia, Canada, Japan, the United Kingdom and the United States. See Item 14 herein for the audited consolidated financial statements of Northwestern Mutual. Purpose of Annual Report This Annual Report on Form 10-K of Northwestern Mutual is filed with respect to its Account A and Account C. While certain information in this Form 10-K relates to Northwestern Mutual as a whole, this Form 10-K is intended to provide information with respect to such Account A and Account C where relevant. ITEM 2. PROPERTIES Account A and Account C own no physical properties. Northwestern Mutual owns and occupies all of the space in its home office complex in Milwaukee, Wisconsin. Northwestern Mutual is the lessee of ten leases covering its real estate regional offices in locations throughout the United States. ITEM 3. LEGAL PROCEEDINGS Neither Account A nor Account C are involved in any pending legal proceedings. Northwestern Mutual is subject to various claims and proceedings, including claims or proceedings related to its investments, that occur in the ordinary course of its business. Based on information currently available to Northwestern Mutual, Northwestern Mutual believes that none of these current claims or proceedings, either individually or in the aggregate, will have a material adverse effect on the financial position of Northwestern Mutual. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS As segregated asset accounts, Account A and Account C have no common equity securities issued by them. As a mutual life insurance company, Northwestern Mutual has no common equity securities issued by it. The Contracts issued in connection with Account A and Account C, and interests in those Contracts, are offered on a continuous basis to Corporate Plans and HR-10 Plans. The Contracts for Corporate Plans are not registered under the Securities Act of 1933, in reliance on the exemption provided by Section 3(a)(2) thereof. All of the Contracts are offered exclusively by agents of the Northwestern Mutual who are also registered representatives of NMIS. 3 5 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K During 1999, the following aggregate dollar amounts of such unregistered securities were sold to Corporate Plans, generating the aggregate commissions stated:
ACCOUNT A ACCOUNT C --------- --------- AMOUNT SOLD COMMISSIONS AMOUNT SOLD COMMISSIONS ----------- ----------- ----------- ----------- $40,480,117 (A) $1,529,592 (B) $74,577,449 (A) $1,221,524 (B)
------------------ (A) Reflects premiums paid by Contract holders as well as dividend additions. (B) Reflects an estimate of amounts paid to Northwestern Mutual agents for sales to Corporate Plans based on a pro rata allocation of all Contract sales under the Account. Accumulation units in Account A and Account C represent the interests of Contract owners. Purchase payments are applied to credit additional accumulation units based on the accumulation unit value next determined after each payment is received. Accumulation units are valued as of the close of business on the New York Stock Exchange on each business day. 4 6 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 6. SELECTED FINANCIAL DATA Results of Operations for Account A for each of the five years ending December 31, follows:
1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Investment Income Dividend Income from Northwestern Mutual Series Fund, Inc. Small Cap Growth Stock Portfolio #....... $ 149,387 N/A N/A N/A N/A Dividend Income from Northwestern Mutual Series Fund, Inc. Aggressive Growth Stock Portfolio........ 2,871,237 $ 3,294,065 $ 5,046,819 $ 2,456,762 $ 256,787 Dividend Income from Northwestern Mutual Series Fund, Inc. International Equity Portfolio........... 6,194,164 2,854,899 1,627,765 1,820,972 217,966 Dividend Income from Northwestern Mutual Series Fund, Inc. Index 400 Stock Portfolio #.............. 29,809 N/A N/A N/A N/A Dividend Income from Northwestern Mutual Series Fund, Inc. Growth Stock Portfolio................... 1,225,768 460,727 769,950 379,453 128,854 Dividend Income from Northwestern Mutual Series Fund, Inc. Growth and Income Stock Portfolio........ 4,191,005 294,097 5,154,785 1,206,606 465,091 Dividend Income from Northwestern Mutual Series Fund, Inc. Index 500 Stock Portfolio................ 3,676,359 4,267,429 3,229,605 1,906,168 522,842 Dividend Income from Northwestern Mutual Series Fund, Inc. Balanced Portfolio....................... 34,011,393 19,089,250 13,244,993 14,325,426 8,146,698 Dividend Income from Northwestern Mutual Series Fund, Inc. High Yield Bond Portfolio................ 821,476 951,201 1,418,106 473,729 199,805 Dividend Income from Northwestern Mutual Series Fund, Inc. Select Bond Portfolio.................... 2,087,636 1,767,739 1,556,695 906,892 652,667 Dividend Income from Northwestern Mutual Series Fund, Inc. Money Market Portfolio................... 1,410,026 1,254,017 1,203,410 1,024,534 1,119,254 Dividend Income from Russell Insurance Funds Multi-Style Equity Fund #................ 76,045 N/A N/A N/A N/A Dividend Income from Russell Insurance Funds Aggressive Equity Fund #................. 4,518 N/A N/A N/A N/A Dividend Income from Russell Insurance Funds Non-U.S. Fund #.......................... 37,184 N/A N/A N/A N/A Dividend Income from Russell Insurance Funds Real Estate Securities Fund #............ 12,094 N/A N/A N/A N/A Dividend Income from Russell Insurance Funds Core Bond Fund #......................... 21,682 N/A N/A N/A N/A ----------- ----------- ----------- ----------- ----------- Total Dividend Income................. 56,819,783 34,233,424 33,252,128 24,500,542 11,709,964 Annuity Rate and Expense Guarantees........ 8,723,746 8,068,866 7,048,888 5,783,739 5,072,064 ----------- ----------- ----------- ----------- ----------- Net Investment Income...................... $48,096,037 $26,164,558 $26,203,240 $18,716,803 $ 6,637,900 =========== =========== =========== =========== =========== Realized and Unrealized Gain on Investments Realized Gain on Investments............... $51,300,014 $37,627,804 $23,135,675 $13,967,988 $13,141,169 Unrealized Appreciation of Investments During the Year.......................... 9,271,096 36,249,405 56,364,111 33,051,905 76,916,515 ----------- ----------- ----------- ----------- ----------- Net Gain on Investments.................. $60,571,110 $73,877,209 $79,499,786 $47,019,893 $90,057,684 =========== =========== =========== =========== ===========
- - - - - - - - - - - - - - - - - ------------------------ # Became an investment option under the Contracts effective April 30, 1999. See Notes to Financial Statements on pages 27-28. 5 7 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 6. (continued) Changes in Equity for Account A for each of the five years ending December 31, follows:
1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- From Investment Activities Net Investment Income ........... $ 48,096,037 $ 26,164,558 $ 26,203,240 $ 18,716,803 $ 6,637,900 Net Realized Gain on Investments.................... 51,300,014 37,627,804 23,135,675 13,967,988 13,141,169 Net Change in Unrealized Appreciation of Investments ... 9,271,096 36,249,405 56,364,111 33,051,905 76,916,515 ------------- ------------- ------------- ------------- ------------- Increase in Equity Derived From Investment Activities ..... 108,667,147 100,041,767 105,703,026 65,736,696 96,695,584 ------------- ------------- ------------- ------------- ------------- From Equity Transactions Contract Owners' Net Payments .. 55,484,960 62,320,941 61,964,558 65,169,358 49,124,853 Annuity Payments ............... (1,467,552) (1,305,331) (1,046,956) (830,996) (610,983 Surrenders and Other (Net) ..... (104,113,639) (83,817,967) (65,746,579) (52,376,445) (62,309,189) ------------- ------------- ------------- ------------- ------------- Increase (Decrease) in Equity Derived from Equity Transactions.................... (50,096,231) (22,802,357) (4,828,977) 11,961,917 (13,795,319) ------------- ------------- ------------- ------------- ------------- Net Increase in Equity ............ 58,570,916 77,239,410 100,874,049 77,698,613 82,900,265 Equity, Beginning of Year ......... 725,633,499 648,394,089 547,520,040 469,821,427 386,921,162 ------------- ------------- ------------- ------------- ------------- Equity, End of Year ............... $ 784,204,415 $ 725,633,499 $ 648,394,089 $ 547,520,040 $ 469,821,427 ============= ============= ============= ============= =============
See Notes to Financial Statements on pages 27-28. 6 8 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 6. (continued) Total Assets of Account A at December 31, follows:
1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Assets Investments at Market Value: Northwestern Mutual Series Fund, Inc. Small Cap Growth Stock Portfolio # ... $ 4,846,983 N/A N/A N/A N/A Northwestern Mutual Series Fund, Inc. Aggressive Growth Stock Portfolio .... 104,344,155 $ 87,973,307 $ 89,428,723 $ 78,087,972 $ 56,491,009 Northwestern Mutual Series Fund, Inc. International Equity Portfolio ....... 45,439,022 44,994,454 50,148,435 41,497,787 31,789,148 Northwestern Mutual Series Fund, Inc. Index 400 Growth Stock Portfolio # ... 2,204,952 N/A N/A N/A N/A Northwestern Mutual Series Fund, Inc. Growth Stock Portfolio ............... 39,031,078 26,774,398 17,260,514 9,523,179 4,284,669 Northwestern Mutual Series Fund, Inc. Growth and Income Stock Portfolio .... 35,735,343 36,439,779 23,575,574 13,199,558 7,891,655 Northwestern Mutual Series Fund, Inc. Index 500 Stock Portfolio ............ 169,861,157 143,375,448 111,140,823 80,917,025 62,391,687 Northwestern Mutual Series Fund, Inc. Balanced Portfolio ................... 319,677,680 325,287,406 302,749,909 270,745,111 257,867,967 Northwestern Mutual Series Fund, Inc. High Yield Bond Portfolio ............ 6,939,731 9,287,355 8,743,385 4,907,490 2,060,076 Northwestern Mutual Series Fund, Inc. Select Bond Portfolio ................ 22,161,495 25,969,869 25,252,973 26,648,961 25,742,752 Northwestern Mutual Series Fund, Inc. Money Market Portfolio ............... 28,975,194 26,910,774 21,586,115 23,380,205 21,556,895 Russell Insurance Funds Multi-Style Equity Fund # ............ 2,500,013 N/A N/A N/A N/A Russell Insurance Funds Aggressive Equity Fund # ............. 1,142,441 N/A N/A N/A N/A Russell Insurance Funds Non-U.S. Fund # ...................... 1,383,194 N/A N/A N/A N/A Russell Insurance Funds Real Estate Securities Fund # ........ 331,977 N/A N/A N/A N/A Russell Insurance Funds Core Bond Fund # ..................... 692,598 N/A N/A N/A N/A Due from Northwestern Mutual ............. 1,011,681 22,305 322,747 123,152 491,572 Due from Sale of Fund Shares ............. 1,329,077 1,407,778 1,555,441 387,086 78,037 ------------ ------------ ------------ ------------ ------------ Total Assets ......................... $787,607,771 $728,442,873 $651,764,639 $549,417,526 $470,645,467 ============ ============ ============ ============ ============
- - - - - - - - - - - - - - - - - ------------------------ # Became an investment option under the Contracts effective April 30, 1999. See Notes to Financial Statements on pages 27-28. 7 9 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 6. (continued) Results of Operations for Account C for each of the five years ending December 31, follows:
1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Investment Income Dividend Income from Northwestern Mutual Series Fund, Inc. Small Cap Growth Stock Portfolio # ....... $ 30,993 N/A N/A N/A N/A Dividend Income from Northwestern Mutual Series Fund, Inc. Aggressive Growth Stock Portfolio ........ 3,671,476 $ 4,152,153 $ 6,049,655 $ 2,574,462 $ 242,583 Dividend Income from Northwestern Mutual Series Fund, Inc. International Equity Portfolio ........... 8,183,887 3,732,935 1,945,549 1,805,160 190,138 Dividend Income from Northwestern Mutual Series Fund, Inc. Index 400 Stock Portfolio # .............. 6,302 N/A N/A N/A N/A Dividend Income from Northwestern Mutual Series Fund, Inc. Growth Stock Portfolio ................... 1,222,775 447,543 712,380 366,920 59,271 Dividend Income from Northwestern Mutual Series Fund, Inc. Growth and Income Stock Portfolio ........ 4,566,474 343,472 5,940,640 1,146,200 276,923 Dividend Income from Northwestern Mutual Series Fund, Inc. Index 500 Stock Portfolio ................ 4,674,819 5,270,794 3,755,769 2,082,261 544,553 Dividend Income from Northwestern Mutual Series Fund, Inc. Balanced Portfolio ....................... 18,031,473 9,908,961 6,460,653 7,534,370 4,212,478 Dividend Income from Northwestern Mutual Series Fund, Inc. High Yield Bond Portfolio ................ 758,789 883,190 1,028,027 309,003 55,220 Dividend Income from Northwestern Mutual Series Fund, Inc. Select Bond Portfolio .................... 1,570,275 1,357,040 1,057,558 566,451 395,357 Dividend Income from Northwestern Mutual Series Fund, Inc. Money Market Portfolio ................... 1,015,173 899,183 738,932 609,543 494,253 Dividend Income from Russell Insurance Funds Multi-Style Equity Fund # ................ 48,375 N/A N/A N/A N/A Dividend Income from Russell Insurance Funds Aggressive Equity Fund # ................. 1,284 N/A N/A N/A N/A Dividend Income from Russell Insurance Funds Non-U.S. Fund # .......................... 13,306 N/A N/A N/A N/A Dividend Income from Russell Insurance Funds Real Estate Securities Fund # ............ 4,030 N/A N/A N/A N/A Dividend Income from Russell Insurance Funds Core Bond Fund # ......................... 15,069 N/A N/A N/A N/A ----------- ----------- ----------- ----------- ----------- Total Dividend Income .................. 43,814,500 26,995,271 27,689,163 16,994,370 6,470,776 Annuity Rate and Expense Guarantees ........ 3,445,294 3,154,686 2,501,975 1,738,625 856,764 ----------- ----------- ----------- ----------- ----------- Net Investment Income ...................... $40,369,206 $23,840,585 $25,187,188 $15,255,745 $ 5,614,012 =========== =========== =========== =========== =========== Realized and Unrealized Gain on Investments Realized Gain on Investments ............... $41,105,768 $29,250,486 $18,686,284 $ 8,855,390 $ 9,884,364 Unrealized Appreciation of Investments During the Year .......................... 36,856,549 37,105,560 44,241,434 29,832,124 53,407,857 ----------- ----------- ----------- ----------- ----------- Net Gain on Investments .................. $77,962,317 $66,356,046 $62,927,718 $38,687,514 $63,292,221 =========== =========== =========== =========== ===========
------------------------ # Became an investment option under the Contracts effective April 30, 1999. See Notes to Financial Statements on pages 37-38. 8 10 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 6. (continued) Changes in Equity for Account C for each of the five years ending December 31, follows:
1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- From Investment Activities Net Investment Income ............... $ 40,369,206 $ 23,840,585 $ 25,187,188 $ 15,255,745 $ 5,614,012 Net Realized Gain on Investments .... 41,105,768 29,250,486 18,686,284 8,855,390 9,884,364 Net Change in Unrealized Appreciation of Investments .................... 36,856,549 37,105,561 44,241,434 29,832,124 53,407,857 ------------- ------------- ------------- ------------- ------------- Increase in Equity Derived From Investment Activities .......... 118,331,523 90,196,632 88,114,906 53,943,259 68,906,233 ------------- ------------- ------------- ------------- ------------- From Equity Transactions Contract Owners' Net Payments ....... 74,901,848 93,658,882 91,195,224 89,650,916 59,390,267 Surrenders and Other (Net) .......... (117,603,594) (86,757,540) (57,974,180) (34,747,640) 60,872,729 ------------- ------------- ------------- ------------- ------------- Increase (Decrease) in Equity Derived From Equity Transactions ............ (42,701,746) 6,901,342 33,221,044 54,903,276 (1,482,462) ------------- ------------- ------------- ------------- ------------- Net Increase in Equity ................ 75,629,777 97,097,974 121,335,950 108,846,535 67,423,771 Equity, Beginning of Year ............. 645,086,497 547,988,523 426,652,573 317,806,038 250,382,267 ------------- ------------- ------------- ------------- ------------- Equity, End of Year ................... $ 720,716,274 $ 645,086,497 $ 547,988,523 $ 426,652,573 $ 317,806,038 ============= ============= ============= ============= =============
See Notes to Financial Statements on pages 37-38. 9 11 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 6. (continued) Total Assets of Account C at December 31, follows:
1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Assets Investments at Market Value: Northwestern Mutual Series Fund, Inc. Small Cap Growth Stock Portfolio #.. $ 949,166 N/A N/A N/A N/A Northwestern Mutual Series Fund, Inc. Aggressive Growth Stock Portfolio... 139,738,783 $112,355,230 $111,586,520 $ 95,276,983 $ 57,421,016 Northwestern Mutual Series Fund, Inc. International Equity Portfolio ..... 64,556,193 59,264,930 63,877,146 49,461,520 30,039,223 Northwestern Mutual Series Fund, Inc. Index 400 Stock Portfolio # ........ 473,356 N/A N/A N/A N/A Northwestern Mutual Series Fund, Inc. Growth Stock Portfolio ............. 39,775,147 27,819,393 15,850,257 9,734,427 2,084,697 Northwestern Mutual Series Fund, Inc. Growth and Income Stock Portfolio .. 41,105,386 40,353,938 27,484,626 13,034,961 4,888,505 Northwestern Mutual Series Fund, Inc. Index 500 Stock Portfolio .......... 220,074,926 183,326,114 133,927,705 93,249,123 64,560,752 Northwestern Mutual Series Fund, Inc. Balanced Portfolio ................. 167,443,550 172,971,811 153,733,599 131,324,909 132,469,239 Northwestern Mutual Series Fund, Inc. High Yield Bond Portfolio .......... 6,380,157 8,611,383 6,568,438 2,983,258 736,774 Northwestern Mutual Series Fund, Inc. Select Bond Portfolio .............. 17,537,190 20,754,940 18,059,926 17,803,016 16,281,140 Northwestern Mutual Series Fund, Inc. Money Market Portfolio ............. 19,341,129 19,628,758 16,900,306 13,784,374 9,324,692 Russell Insurance Funds Multi-Style Equity Fund # .......... 1,705,658 N/A N/A N/A N/A Russell Insurance Funds Aggressive Equity Fund # ........... 351,582 N/A N/A N/A N/A Russell Insurance Funds Non-U.S. Fund # .................... 565,156 N/A N/A N/A N/A Russell Insurance Funds Real Estate Securities Fund # ...... 102,203 N/A N/A N/A N/A Russell Insurance Funds Core Bond Fund # ................... 384,069 N/A N/A N/A N/A Due from Northwestern Mutual ........... 395,300 355,553 196,511 1,662,368 808,493 Due from Sale of Fund Shares ........... 798,688 495,042 2,927,350 52,909 36 Due from Participants .................. 232,623 0 0 0 0 ------------ ------------ ------------ ------------ ------------ Total Assets ...................... $721,910,262 $645,937,092 $551,112,384 $428,367,848 $318,614,567 ============ ============ ============ ============ ============
- - - - - - - - - - - - - - - - - ------------------------ # Became an investment option under the Contracts effective April 30, 1999. See Notes to Financial Statements on pages 37-38. 10 12 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity The assets of Account A and Account C are invested solely in shares of Northwestern Mutual Series Fund, Inc. ("Series Fund") and the Russell Insurance Funds ("Russell Funds," and collectively with the Series Fund, the "Funds"). The Series Fund consists of the Small Cap Growth Portfolio, Aggressive Growth Stock Portfolio, International Equity Portfolio, Index 400 Stock Portfolio, Growth Stock Portfolio, Growth and Income Stock Portfolio, Index 500 Stock Portfolio, Balanced Portfolio, High Yield Bond Portfolio, Select Bond Portfolio and the Money Market Portfolio. The Russell Funds consist of the Multi-Style Equity Fund, Aggressive Equity Fund, Non-U.S. Fund, Real Estate Securities Fund and Core Bond Fund. The Funds are open-end investment companies registered under the Investment Company Act of 1940. In order to pay annuity benefits and expenses, the Accounts redeem shares in the Funds. Capital Resources All payments from Contract owners of Account A and Account C are invested in shares of the Funds. The capital resources of Account A and Account 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. Results of Operations Accumulation units in Account A and Account C represent the interests of Contract owners. The value of an accumulation unit in each division varies with the investment experience of the division, which in turn is determined by the investment experience of the corresponding portfolio or fund. Set forth below for each of Account A and Account C are accumulation unit values at December 31, 1999, 1998 and 1997 for each division, and the percentage change in such values from year to year. ACCOUNT A --------- Accumulation Unit Values Contracts Issued Prior to December 17, 1981:
DIVISION 12/31/99 % CHANGE 12/31/98 % CHANGE 12/31/97 - - - - - - - - - - - - - - - - - -------- -------- -------- -------- -------- -------- Small Cap Growth Stock #.......... $1.851783 85.18% $1.000000 N/A N/A Aggressive Growth Stock........... 5.658407 42.71 3.964849 6.75% $3.714008 International Equity.............. 2.375600 21.98 1.947470 4.04 1.871861 Index 400 Stock #................. 1.122676 12.27 1.000000 N/A N/A Growth Stock...................... 3.099518 21.58 2.549324 25.75 2.027359 Growth and Income Stock........... 2.600855 6.68 2.437983 22.22 1.994748 Index 500 Stock................... 5.043329 20.01 4.202480 27.76 3.289255 Balanced.......................... 8.136959 10.37 7.372322 17.99 6.248153 High Yield Bond................... 1.563339 -1.20 1.582307 -2.57 1.624115 Select Bond....................... 7.582833 -1.76 7.718724 6.27 7.263164 Money Market...................... 2.760791 4.32 2.646458 4.64 2.529098 Russell Multi-Style Equity #...... 1.070614 7.06 1.000000 N/A N/A Russell Aggressive Equity #....... 1.103591 10.36 1.000000 N/A N/A Russell Non-U.S. #................ 1.247160 24.72 1.000000 N/A N/A Russell Real Estate Securities #.. 0.922768 -7.72 1.000000 N/A N/A Russell Core Bond #............... 0.986452 -1.35 1.000000 N/A N/A
- - - - - - - - - - - - - - - - - ------------------------ # Became an investment option under the Contracts effective April 30, 1999. 11 13 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 12/31/99 % CHANGE 12/31/98 % OF CHANGE 12/31/97 - - - - - - - - - - - - - - - - - -------- -------- -------- -------- ----------- -------- Small Cap Growth Stock #.......... $1.845580 84.56% $1.000000 N/A N/A Aggressive Growth Stock........... 5.407959 42.00 3.808330 6.22% $3.585281 International Equity.............. 2.297694 21.38 1.893030 3.52 1.828649 Index 400 Stock #................. 1.118909 11.89 1.000000 N/A N/A Growth Stock...................... 3.012947 20.98 2.490522 25.12 1.990509 Growth and Income Stock........... 2.528256 6.15 2.381813 21.61 1.958555 Index 500 Stock................... 4.820195 19.41 4.036666 27.13 3.175298 Balanced.......................... 7.436406 9.82 6.771353 17.40 5.767570 High Yield Bond................... 1.519653 -1.69 1.545816 -3.06 1.594619 Select Bond....................... 6.928532 -2.25 7.088069 5.74 6.703164 Money Market...................... 2.523294 3.80 2.430915 4.12 2.334748 Russell Multi-Style Equity #...... 1.067018 6.70 1.000000 N/A N/A Russell Aggressive Equity #....... 1.099895 9.99 1.000000 N/A N/A Russell Non-U.S. #................ 1.242993 24.30 1.000000 N/A N/A Russell Real Estate Securities #.. 0.919674 -8.03 1.000000 N/A N/A Russell Core Bond #............... 0.983142 -1.69 1.000000 N/A N/A
Accumulation Unit Values Contracts Issued On or After March 31, 1995 - Front Load Version:
DIVISION 12/31/99 % CHANGE 12/31/98 % OF CHANGE 12/31/97 - - - - - - - - - - - - - - - - - -------- -------- -------- -------- ----------- -------- Small Cap Growth Stock #.......... $1.856086 85.61% $1.000000 N/A N/A Aggressive Growth Stock........... 2.661899 43.21 1.858751 7.12% $1.735135 International Equity.............. 1.964300 22.41 1.604722 4.40 1.537080 Index 400 Stock #................. 1.125296 12.53 1.000000 N/A N/A Growth Stock...................... 2.898070 22.00 2.375383 26.18 1.882500 Growth and Income Stock........... 2.431081 7.05 2.270962 22.64 1.851666 Index 500 Stock................... 3.127888 20.43 2.597374 28.21 2.025922 Balanced.......................... 2.117903 10.75 1.912247 18.40 1.615054 High Yield Bond................... 1.483036 -0.86 1.495835 -2.24 1.530051 Select Bond....................... 1.331215 -1.42 1.350384 6.64 1.266282 Money Market...................... 1.259407 4.68 1.203067 5.01 1.145720 Russell Multi-Style Equity #...... 1.073107 7.31 1.000000 N/A N/A Russell Aggressive Equity #....... 1.106159 10.62 1.000000 N/A N/A Russell Non-U.S. #................ 1.250059 25.01 1.000000 N/A N/A Russell Real Estate Securities #.. 0.924920 -7.51 1.000000 N/A N/A Russell Core Bond #............... 0.988747 -1.13 1.000000 N/A N/A
- - - - - - - - - - - - - - - - - ------------------------ # Became an investment option under the Contracts effective April 30, 1999. 12 14 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 7. (continued) Accumulation Unit Values Contracts Issued On or After March 31, 1995 - Back Load Version:
DIVISION 12/31/99 % CHANGE 12/31/98 % OF CHANGE 12/31/97 - - - - - - - - - - - - - - - - - -------- -------- -------- -------- ----------- -------- Small Cap Growth Stock #.......... $1.845580 84.56% $1.000000 N/A N/A Aggressive Growth Stock........... 5.407959 42.00 3.808330 6.22% $3.585281 International Equity.............. 2.297694 21.38 1.893030 3.52 1.828649 Index 400 Stock #................. 1.118909 11.89 1.000000 N/A N/A Growth Stock...................... 3.012947 20.98 2.490522 25.12 1.990509 Growth and Income Stock........... 2.528256 6.15 2.381813 21.61 1.958555 Index 500 Stock................... 4.820195 19.41 4.036666 27.13 3.175298 Balanced.......................... 7.436406 9.82 6.771353 17.40 5.767570 High Yield Bond................... 1.519653 -1.69 1.545816 -3.06 1.594619 Select Bond....................... 6.928532 -2.25 7.088069 5.74 6.703164 Money Market...................... 2.523294 3.80 2.430915 4.12 2.334748 Russell Multi-Style Equity #...... 1.067018 6.70 1.000000 N/A N/A Russell Aggressive Equity #....... 1.099895 9.99 1.000000 N/A N/A Russell Non-U.S. #................ 1.242993 24.30 1.000000 N/A N/A Russell Real Estate Securities #.. 0.919674 -8.03 1.000000 N/A N/A Russell Core Bond #............... 0.983142 -1.69 1.000000 N/A N/A
Total Equity: 12/31/99 12/31/98 12/31/97 -------- -------- -------- $784,204,415 $725,633,499 $648,394,089
The changes in Total Equity are largely derived from investment activities within the Account: A $108,667,147 increase for the year ended December 31, 1999, a $100,041,767 increase for the year ended December 31, 1998, and a $105,703,026 increase for the year ended December 31, 1997. Net contributions (surrenders) from Contract owners amounted to ($50,096,231) for the year ended December 31, 1999, ($22,802,357) for the year ended December 31, 1998, and ($4,828,977) for the year ended December 31, 1997. ACCOUNT C --------- Accumulation Unit Values Contracts Issued Prior to December 17, 1981 or between April 30, 1984 and December 31, 1991:
DIVISION 12/31/99 % CHANGE 12/31/98 % OF CHANGE 12/31/97 - - - - - - - - - - - - - - - - - -------- -------- -------- -------- ----------- -------- Small Cap Growth Stock #.......... $18.610781 86.11% $10.000000 N/A N/A Aggressive Growth Stock........... 57.304251 43.78 39.854126 7.56% $37.054456 International Equity.............. 2.497127 22.90 2.031842 4.82 1.938399 Index 400 Stock #................. 11.283278 12.83 10.000000 N/A N/A Growth Stock...................... 32.336967 22.49 26.398692 26.69 20.837268 Growth and Income Stock........... 27.134671 7.48 25.245888 23.14 20.502206 Index 500 Stock................... 56.249780 20.91 46.522428 28.72 36.141676 Balanced.......................... 94.505378 11.20 84.986573 18.88 71.490869 High Yield Bond................... 16.310402 -0.46 16.385350 -1.84 16.692972 Select Bond....................... 88.954059 -1.02 89.873176 7.07 83.938645 Money Market...................... 30.399653 5.10 28.923541 5.43 27.434762 Russell Multi-Style Equity #...... 10.760032 7.60 10.000000 N/A N/A Russell Aggressive Equity #....... 11.091435 10.91 10.000000 N/A N/A Russell Non-U.S. #................ 12.534266 25.34 10.000000 N/A N/A Russell Real Estate Securities #.. 9.274172 -7.26 10.000000 N/A N/A Russell Core Bond #............... 9.914196 -0.86 10.000000 N/A N/A
- - - - - - - - - - - - - - - - - ------------------------ # Became an investment option under the Contracts effective April 30, 1999. 13 15 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 7. (continued) Accumulation Unit Values Contracts Issued After December 16, 1981 and Prior to May 1, 1984:
DIVISION 12/31/99 % CHANGE 12/31/98 % OF CHANGE 12/31/97 - - - - - - - - - - - - - - - - - -------- -------- -------- -------- ----------- -------- Small Cap Growth Stock #.......... $18.548596 85.49% $10.000000 N/A N/A Aggressive Growth Stock........... 54.800923 43.07 38.303948 7.02% $35.791674 International Equity.............. 2.415234 22.29 1.975051 4.30 1.893664 Index 400 Stock #................. 11.245478 12.45 10.000000 N/A N/A Growth Stock...................... 31.433960 21.88 25.790044 26.06 20.458788 Growth and Income Stock........... 26.376796 6.95 24.663747 22.52 20.129770 Index 500 Stock................... 53.786850 20.31 44.708227 28.08 34.906216 Balanced.......................... 86.395292 10.65 78.082648 18.29 66.012286 High Yield Bond................... 15.854730 -0.95 16.007423 -2.33 16.389706 Select Bond....................... 81.280078 -1.52 82.531570 6.54 77.468103 Money Market...................... 27.823703 4.58 26.605346 4.90 25.362364 Russell Multi-Style Equity #...... 10.723983 7.24 10.000000 N/A N/A Russell Aggressive Equity #....... 11.054275 10.54 10.000000 N/A N/A Russell Non-U.S. #................ 12.492336 24.92 10.000000 N/A N/A Russell Real Estate Securities #.. 9.243071 -7.57 10.000000 N/A N/A Russell Core Bond #............... 9.880973 -1.19 10.000000 N/A N/A
Accumulation Unit Values Contracts Issued After December 31, 1991 - Front Load Version:
DIVISION 12/31/99 % CHANGE 12/31/98 % OF CHANGE 12/31/97 - - - - - - - - - - - - - - - - - -------- -------- -------- -------- ----------- -------- Small Cap Growth Stock #.......... $1.853001 85.30% $1.000000 N/A N/A Aggressive Growth Stock........... 3.588119 42.85 2.511728 6.86% $2.350498 International Equity.............. 2.391284 22.10 1.958397 4.14 1.880500 Index 400 Stock #................. 1.123423 12.34 1.000000 N/A N/A Growth Stock...................... 3.116901 21.70 2.561090 25.87 2.034708 Growth and Income Stock........... 2.615436 6.79 2.449237 22.34 2.001981 Index 500 Stock................... 3.938401 20.13 3.278539 27.89 2.563560 Balanced.......................... 2.520233 10.48 2.281157 18.11 1.931409 High Yield Bond................... 1.572112 -1.10 1.589625 -2.48 1.630023 Select Bond....................... 1.558775 -1.66 1.585144 6.38 1.490112 Money Market...................... 1.366307 4.42 1.308441 4.74 1.249188 Russell Multi-Style Equity #...... 1.071323 7.13 1.000000 N/A N/A Russell Aggressive Equity #....... 1.104316 10.43 1.000000 N/A N/A Russell Non-U.S. #................ 1.247967 24.80 1.000000 N/A N/A Russell Real Estate Securities #.. 0.923380 -7.66 1.000000 N/A N/A Russell Core Bond #............... 0.987105 -1.29 1.000000 N/A N/A
- - - - - - - - - - - - - - - - - ------------------------ # Became an investment option under the Contracts effective April 30, 1999. 14 16 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 12/31/99 % CHANGE 12/31/98 % OF CHANGE 12/31/97 - - - - - - - - - - - - - - - - - -------- -------- -------- -------- ----------- -------- Small Cap Growth Stock #.......... $1.845580 84.56% $1.000000 N/A N/A Aggressive Growth Stock........... 5.427804 42.00 3.822308 6.22% $3.598431 International Equity.............. 2.297694 21.38 1.893030 3.52 1.828649 Index 400 Stock #................. 1.118909 11.89 1.000000 N/A N/A Growth Stock...................... 3.012947 20.98 2.490522 25.12 1.990509 Growth and Income Stock........... 2.528256 6.15 2.381813 21.61 1.958555 Index 500 Stock................... 4.918509 19.41 4.119000 27.13 3.240055 Balanced.......................... 7.473141 9.82 6.804809 17.40 5.796067 High Yield Bond................... 1.519653 -1.69 1.545816 -3.06 1.594619 Select Bond....................... 6.996057 -2.25 7.157135 5.74 6.768475 Money Market...................... 2.528768 3.80 2.436196 4.12 2.339812 Russell Multi-Style Equity #...... 1.067018 6.70 1.000000 N/A N/A Russell Aggressive Equity #....... 1.099895 9.99 1.000000 N/A N/A Russell Non-U.S. #................ 1.242993 24.30 1.000000 N/A N/A Russell Real Estate Securities #.. 0.919674 -8.03 1.000000 N/A N/A Russell Core Bond #............... 0.983142 -1.69 1.000000 N/A N/A
- - - - - - - - - - - - - - - - - ------------------------ # Became an investment option under the Contracts effective April 30, 1999.
Total Equity: 12/31/99 12/31/98 12/31/97 -------- -------- -------- $720,716,274 $645,086,497 $547,988,523
The changes in Total Equity are largely derived from investment activities within the Account: A $118,331,523 increase for the year ended December 31, 1999, a $90,196,632 increase for the year ended December 31, 1998, and an $88,114,906 increase for the year ended December 31, 1997. Net contributions (surrenders) from Contract owners amounted to ($42,701,746) for the year ended December 31, 1999, $6,901,342 for the year ended December 31, 1998, and $33,221,044 for the year ended December 31, 1997. Year 2000 Northwestern Mutual has experienced no significant operational effects as a result of the Year 2000 transition. For the four years ended December 31, 1999, Northwestern Mutual incurred approximately $33.9 million of expense to address all phases of the Year 2000 issue, including $13.8 million for the year ended December 31, 1999. 15 17 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The assets of Account A and Account C consist entirely of shares of the 11 portfolios of the Series Fund and 5 portfolios of the Russell Funds, together with current amounts due from the sale of Series Fund and Russell Funds shares and due from Northwestern Mutual. The liabilities of each of Account A and Account C consist of current amounts due to Contract owners, due to Northwestern Mutual and due on purchase of Series Fund and Russell Funds shares. Neither of the Accounts enters into any market risk sensitive instruments, either for trading purposes or for purposes other than trading purposes. Derivative Financial Instruments In the normal course of business, the Series Fund and the Russell Funds enter into transactions to reduce their exposure to fluctuations in interest rates, foreign currency exchange rates and market volatility. These hedging strategies include the use of forwards and futures. The Series Fund and Russell Funds held the following positions for hedging purposes at December 31, 1999 and 1998:
SERIES FUND ----------- UNREALIZED APPRECIATION DERIVATIVE FINANCIAL INSTRUMENT NOTIONAL VALUE (DEPRECIATION) RISKS REDUCED - - - - - - - - - - - - - - - - - ------------------------------- -------------- ----------------------- ------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 1999 1998 1999 1998 ---- ---- ---- ---- (IN THOUSANDS) (IN THOUSANDS) Stock Future Contracts $289,268 $279,931 $11,332 $16,186 Stock market price fluctuation Bond Future Contracts 16,416 6,003 (25) (3) Bond market price fluctuation RUSSELL FUNDS ------------- UNREALIZED APPRECIATION DERIVATIVE FINANCIAL INSTRUMENT NOTIONAL VALUE (DEPRECIATION) RISKS REDUCED - - - - - - - - - - - - - - - - - ------------------------------- -------------- ----------------------- ------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 1999 1998 1999 1998 ---- ---- ---- ---- (IN THOUSANDS) (IN THOUSANDS) Stock Future Contracts $49,706 $9,099 $2,592 $342 Stock market price fluctuation Bond Future Contracts 3,068 0 (10) 0 Bond market price fluctuation Foreign Currency Forward Contracts 22,740 0 10 0 Currency exposure on foreign- denominated investments
The notional or contractual amounts of derivative financial instruments are used to denominate these types of transactions and do not represent the amounts exchanged between the parties. Stock and bond futures and foreign currency forwards are reported at fair value on a daily basis. Resulting gains and losses on these contracts are unrealized until expiration of the contract. All of the stock and bond future and foreign currency forward contracts of the Funds reflected above expire in 2000. Changes in the value of derivative investments are expected to offset gains and losses on the hedged investments. The effect of derivative instruments in 1999 and 1998 was not material to the Funds' results of operations. 16 18 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 ----------- ASSETS 1999 1998 ---- ---- Investments at market value: Northwestern Mutual Series Fund, Inc. Small Cap Growth Stock # 1999: 2,701,963 shares (cost $4,384,369)........................... $ 4,846,983 N/A Aggressive Growth Stock 1999: 21,708,005 shares (cost $63,876,558)......................... 104,344,155 1998: 25,396,541 shares (cost $66,276,258)......................... $ 87,973,307 International Equity 1999: 25,519,106 shares (cost $39,067,307)......................... 45,439,022 1998: 26,830,324 shares (cost $38,805,844)......................... 44,994,454 Index 400 Stock # 1999: 1,981,567 shares (cost $2,050,979)........................... 2,204,952 N/A Growth Stock 1999: 14,699,227 shares (cost $29,389,393)......................... 39,031,078 1998: 11,915,620 shares (cost $20,533,350)......................... 26,774,398 Growth and Income Stock 1999: 22,898,038 shares (cost $34,014,600)......................... 35,735,343 1998: 22,438,287 shares (cost $31,395,228)......................... 36,439,779 Index 500 Stock 1999: 43,710,778 shares (cost $89,440,254)......................... 169,861,157 1998: 43,592,413 shares (cost $75,957,867)......................... 143,375,448 Balanced 1999: 143,907,127 shares (cost $230,277,308)....................... 319,677,680 1998: 146,262,322 shares (cost $214,781,294)....................... 325,287,407 High Yield Bond 1999: 8,444,761 shares (cost $8,362,273)........................... 6,939,731 1998: 9,922,388 shares (cost $10,685,890).......................... 9,287,355 Select Bond 1999: 19,599,330 shares (cost $23,331,292)......................... 22,161,495 1998: 20,792,528 shares (cost $24,420,052)......................... 25,969,868 Money Market 1999: 28,967,243 shares (cost $28,967,243)......................... 28,975,194 1998: 26,910,773 shares (cost $26,910,773)......................... 26,910,774 Russell Insurance Funds Multi Style Equity # 1999: 148,936 shares (cost $2,437,889)............................. 2,500,013 N/A Aggressive Equity #.................................................... 1999: 85,535 shares (cost $1,024,233).............................. 1,142,441 N/A Non-U.S. # 1999: 97,503 shares (cost $1,228,520).............................. 1,383,194 N/A Real Estate Securities # 1999: 37,690 shares (cost $341,826)................................ 331,977 N/A Core Bond # 1999: 71,866 shares (cost $716,227)................................ 692,598 N/A ----------------- ---------------- 785,267,017 727,012,790 Due from Sales of Fund Shares................................................... 1,329,077 1,407,778 Due from Northwestern Mutual Life Insurance Company............................. 1,011,681 22,304 ----------------- ---------------- Total Assets........................................................... $ 787,607,771 $ 728,442,872 ================= ================ LIABILITIES Due to Participants....................................................... $ 1,062,598 $ 1,374,691 Due to Northwestern Mutual Life Insurance Company......................... 1,329,077 1,407,778 Due from Purchase of Fund Shares.......................................... 1,011,681 26,904 ----------------- ---------------- Total Liabilities...................................................... $ 3,403,356 $ 2,809,373 ================= ================
- - - - - - - - - - - - - - - - - ------------------------------- #Fund commenced on April 30, 1999. The Accompanying Notes are an Integral Part of the Financial Statements. 17 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 ----------- 1999 1998 ---- ---- EQUITY Contracts Issued Prior to December 17, 1981: Small Cap Growth Stock Division 1999: 95,329 Accumulation Units @ 1.851783............................. $ 176,529 1998: N/A.............................................................. $ 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 176,529 0 ----------------- ---------------- Aggressive Growth Stock Division 1999: 370,787 Accumulation Units @ 5.658407............................ 2,098,068 1998: 479,410 Accumulation Units @ 3.964849............................ 1,900,789 Annuity Reserves....................................................... 76,413 63,360 ----------------- ---------------- 2,174,481 1,964,149 ----------------- ---------------- International Equity Division 1999: 630,123 Accumulation Units @ 2.375600............................ 1,496,920 1998: 647,766 Accumulation Units @ 1.947470............................ 1,261,505 Annuity Reserves....................................................... 2,519 143,068 ----------------- ---------------- 1,499,439 1,404,573 ----------------- ---------------- Index 400 Stock Division 1999: 167,651 Accumulation Units @ 1.122676............................ 188,218 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 188,218 0 ----------------- ---------------- Growth Stock Division 1999: 372,659 Accumulation Units @ 3.099518............................ 1,155,064 1998: 247,490 Accumulation Units @ 2.549324............................ 630,934 Annuity Reserves....................................................... 0 0 ----------------- ---------------- 1,155,064 630,934 ----------------- ---------------- Growth and Income Stock Division 1999: 254,027 Accumulation Units @ 2.600855............................ 660,688 1998: 310,014 Accumulation Units @ 2.437983............................ 755,809 Annuity Reserves....................................................... 140,620 0 ----------------- ---------------- 801,308 755,809 ----------------- ---------------- Index 500 Stock Division 1999: 6,687,759 Accumulation Units @ 5.043329.......................... 33,728,572 1998: 7,343,356 Accumulation Units @ 4.202480.......................... 30,860,310 Annuity Reserves....................................................... 1,665,594 1,568,449 ----------------- ---------------- 35,394,166 32,428,759 ----------------- ---------------- Balanced Division 1999: 2,738,126 Accumulation Units @ 8.136959.......................... 22,280,021 1998: 3,013,625 Accumulation Units @ 7.372322.......................... 22,217,418 Annuity Reserves....................................................... 2,394,530 2,367,898 ----------------- ---------------- 24,674,551 24,585,316 ----------------- ---------------- High Yield Bond Division 1999: 77,269 Accumulation Units @ 1.563339............................. 120,798 1998: 183,181 Accumulation Units @ 1.582307............................ 289,848 Annuity Reserves....................................................... 0 0 ----------------- ---------------- 120,798 289,848 ----------------- ---------------- Select Bond Division 1999: 715,024 Accumulation Units @ 7.582833............................ 5,421,908 1998: 899,838 Accumulation Units @ 7.718724............................ 6,945,608 Annuity Reserves....................................................... 76,035 102,541 ----------------- ---------------- 5,497,943 7,048,149 ----------------- ---------------- Money Market Division 1999: 898,198 Accumulation Units @ 2.760791............................ 2,479,738 1998: 1,723,331 Accumulation Units @ 2.646458.......................... 4,560,725 Annuity Reserves....................................................... 50,728 53,415 ----------------- ---------------- 2,530,466 4,614,140 ----------------- ----------------
The Accompanying Notes are an Integral Part of the Financial Statements. 18 20 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 8. (continued)
DECEMBER 31 ----------- 1999 1998 ---- ---- Russell Multi-Style Equity 1999: 7,554 Accumulation Units @ 1.070614.............................. $ 8,088 1998: N/A.............................................................. $ 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 8,088 0 ----------------- ---------------- Russell Aggressive Equity 1999: 7,374 Accumulation Units @ 1.103591.............................. 8,138 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 8,138 0 ----------------- ---------------- Russell Non-U.S. 1999: 12,237 Accumulation Units @ 1.247160............................. 15,261 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 15,261 0 ----------------- ---------------- Russell Real Estate Securities 1999: 4,656 Accumulation Units @ .922768............................... 4,297 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 4,297 0 ----------------- ---------------- Russell Core Bond 1999: 2,617 Accumulation Units @ .986452............................... 2,582 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 2,582 0 ----------------- ----------------
The Accompanying Notes are an Integral Part of the Financial Statements. 19 21 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 8. (continued) NML VARIABLE ANNUITY ACCOUNT A STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31 ----------- 1999 1998 ---- ---- Contracts Issued After December 16, 1981 and Prior to March 31, 1995: Small Cap Growth Stock Division 1999: 1,898,627 Accumulation Units @ 1.845580.......................... $ 3,504,067 1998: N/A.............................................................. $ 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 3,504,067 0 ----------------- ---------------- Aggressive Growth Stock Division 1999: 14,666,263 Accumulation Units @ 5.407959......................... 79,314,551 1998: 18,213,134 Accumulation Units @ 3.808330......................... 69,361,627 Annuity Reserves....................................................... 223,649 144,879 ----------------- ---------------- 79,538,200 69,506,506 ----------------- ---------------- International Equity Division 1999: 15,307,814 Accumulation Units @ 2.297694......................... 35,172,671 1998: 19,261,447 Accumulation Units @ 1.893030......................... 36,462,499 Annuity Reserves....................................................... 243,445 214,477 ----------------- ---------------- 35,416,116 36,676,976 ----------------- ---------------- Index 400 Stock Division 1999: 1,241,398 Accumulation Units @ 1.118909.......................... 1,389,011 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 1,389,011 0 ----------------- ---------------- Growth Stock Division 1999: 8,576,102 Accumulation Units @ 3.012947.......................... 25,839,341 1998: 7,215,893 Accumulation Units @ 2.490522.......................... 17,971,343 Annuity Reserves....................................................... 32,115 28,537 ----------------- ---------------- 25,871,456 17,999,880 ----------------- ---------------- Growth and Income Stock Division 1999: 9,502,862 Accumulation Units @ 2.528256.......................... 24,025,667 1998: 10,866,892 Accumulation Units @ 2.381813......................... 25,882,906 Annuity Reserves:...................................................... 493,929 476,032 ----------------- ---------------- 24,519,596 26,358,938 ----------------- ---------------- Index 500 Stock Division 1999: 20,900,522 Accumulation Units @ 4.820195......................... 100,744,593 1998: 21,467,930 Accumulation Units @ 4.036666......................... 86,658,865 Annuity Reserves....................................................... 3,343,256 2,980,558 ----------------- ---------------- 104,087,849 89,639,423 ----------------- ---------------- Balanced Division 1999: 35,440,432 Accumulation Units @ 7.436406......................... 263,549,442 1998: 40,487,925 Accumulation Units @ 6.771353......................... 274,158,039 Annuity Reserves....................................................... 5,012,937 4,964,030 ----------------- ---------------- 268,562,379 279,122,069 ----------------- ---------------- High Yield Bond Division 1999: 2,904,325 Accumulation Units @ 1.519653.......................... 4,413,566 1998: 3,974,655 Accumulation Units @ 1.545816.......................... 6,144,087 Annuity Reserves....................................................... 55,610 60,760 ----------------- ---------------- 4,469,176 6,204,847 ----------------- ---------------- Select Bond Division 1999: 1,914,749 Accumulation Units @ 6.928532.......................... 13,266,399 1998: 2,171,878 Accumulation Units @ 7.088069.......................... 15,394,427 Annuity Reserves....................................................... 542,772 593,977 ----------------- ---------------- 13,809,171 15,988,404 ----------------- ---------------- Money Market Division 1999: 7,329,873 Accumulation Units @ 2.523294.......................... 18,495,423 1998: 6,699,738 Accumulation Units @ 2.430915.......................... 16,286,495 Annuity Reserves....................................................... 549,855 444,677 ----------------- ---------------- 19,045,278 16,731,172 ----------------- ----------------
The Accompanying Notes are an Integral Part of the Financial Statements. 20 22 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 8. (continued)
DECEMBER 31 ----------- 1999 1998 ---- ---- Russell Multi-Style Equity 1999: 1,475,825 Accumulation Units @ 1.067018.......................... $ 1,574,732 1998: N/A.............................................................. $ 0 Annuity Reserves....................................................... 1,033 ----------------- ---------------- 1,575,765 0 ----------------- ---------------- Russell Aggressive Equity 1999: 760,721 Accumulation Units @ 1.099895............................ 836,714 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 836,714 0 ----------------- ---------------- Russell Non-U.S. 1999: 813,542 Accumulation Units @ 1.242993............................ 1,011,227 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 1,011,227 0 ----------------- ---------------- Russell Real Estate Securities 1999: 248,726 Accumulation Units @ .919674............................. 228,747 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 228,747 0 ----------------- ---------------- Russell Core Bond 1999: 580,967 Accumulation Units @ .983142............................. 571,173 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 571,173 0 ----------------- ----------------
The Accompanying Notes are an Integral Part of the Financial Statements. 21 23 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 8. (continued) NML VARIABLE ANNUITY ACCOUNT A STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31 ----------- 1999 1998 ---- ---- Contracts Issued On or After March 31, 1995 - Back Load Version: Small Cap Growth Stock Division 1999: 481,140 Accumulation Units @ 1.845580............................ $ 887,982 1998: N/A.............................................................. $ 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 887,982 0 ----------------- ---------------- Aggressive Growth Stock Division 1999: 3,585,337 Accumulation Units @ 5.407959.......................... 19,389,354 1998: 3,703,652 Accumulation Units @ 3.808330 ......................... 14,104,732 Annuity Reserves....................................................... 36,119 27,177 ----------------- ---------------- 19,425,473 14,131,909 ----------------- ---------------- International Equity Division 1999: 3,063,127 Accumulation Units @ 2.297694.......................... 7,038,129 1998: 3,028,502 Accumulation Units @ 1.893030.......................... 5,733,046 Annuity Reserves....................................................... 0 0 ----------------- ---------------- 7,038,129 5,733,046 ----------------- ---------------- Index 400 Stock Division 1999: 388,194 Accumulation Units @ 1.118909............................ 434,353 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 434,353 0 ----------------- ---------------- Growth Stock Division 1999: 3,381,484 Accumulation Units @ 3.012947.......................... 10,188,233 1998: 2,761,432 Accumulation Units @ 2.490522.......................... 6,877,407 Annuity Reserves....................................................... 35,756 31,578 ----------------- ---------------- 10,223,989 6,908,985 ----------------- ---------------- Growth and Income Stock Division 1999: 3,306,924 Accumulation Units @ 2.528256.......................... 8,360,751 1998: 3,046,516 Accumulation Units @ 2.381813.......................... 7,256,233 Annuity Reserves....................................................... 58,015 30,040 ----------------- ---------------- 8,418,766 7,286,273 ----------------- ---------------- Index 500 Stock Division 1999: 5,417,756 Accumulation Units @ 4.820195.......................... 26,114,640 1998: 4,504,321 Accumulation Units @ 4.036666.......................... 18,182,442 Annuity Reserves....................................................... 136,610 112,142 ----------------- ---------------- 26,251,250 18,294,584 ----------------- ---------------- Balanced Division 1999: 2,897,246 Accumulation Units @ 7.436406.......................... 21,545,097 1998: 2,565,265 Accumulation Units @ 6.771353.......................... 17,370,319 Annuity Reserves....................................................... 265,687 257,473 ----------------- ---------------- 21,810,784 17,627,792 ----------------- ---------------- High Yield Bond Division 1999: 1,174,446 Accumulation Units @ 1.519653.......................... 1,784,751 1998: 1,400,603 Accumulation Units @ 1.545816.......................... 2,165,075 Annuity Reserves....................................................... 0 0 ----------------- ---------------- 1,784,751 2,165,075 ----------------- ---------------- Select Bond Division 1999: 364,139 Accumulation Units @ 6.928532............................ 2,522,952 1998: 368,314 Accumulation Units @ 7.088069............................ 2,610,636 Annuity Reserves....................................................... 26,834 0 ----------------- ---------------- 2,549,786 2,610,636 ----------------- ---------------- Money Market Division 1999: 1,892,502 Accumulation Units @ 2.523294.......................... 4,775,339 1998: 1,515,127 Accumulation Units @ 2.430915.......................... 3,683,147 Annuity Reserves....................................................... 0 0 ----------------- ---------------- 4,775,339 3,683,147 ----------------- ----------------
The Accompanying Notes are an Integral Part of the Financial Statements. 22 24 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 8. (continued)
DECEMBER 31 ----------- 1999 1998 ---- ---- Russell Multi-Style Equity 1999: 535,268 Accumulation Units @ 1.067018............................ $ 571,141 1998: N/A.............................................................. $ 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 571,141 0 ----------------- ---------------- Russell Aggressive Equity 1999: 182,385 Accumulation Units @ 1.099895............................ 200,604 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 200,604 0 ----------------- ---------------- Russell Non-U.S. 1999: 205,407 Accumulation Units @ 1.242993............................ 255,320 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 255,320 0 ----------------- ---------------- Russell Real Estate Securities 1999: 88,176 Accumulation Units @ .919674.............................. 81,093 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 81,093 0 ----------------- ---------------- Russell Core Bond 1999: 93,910 Accumulation Units @ .983142.............................. 92,326 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 92,326 0 ----------------- ----------------
The Accompanying Notes are an Integral Part of the Financial Statements. 23 25 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 8. (continued) NML VARIABLE ANNUITY ACCOUNT A STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31 ----------------------- 1999 1998 ---- ---- Contracts Issued On or After March 31, 1995 - Front Load Version: Small Cap Growth Stock Division 1999: 149,996 Accumulation Units @ 1.856086............................ $ 278,405 1998: N/A.............................................................. $ 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 278,405 0 ----------------- ---------------- Aggressive Growth Stock Division 1999: 1,185,824 Accumulation Units @ 2.661899.......................... 3,156,543 1998: 1,195,051 Accumulation Units @ 1.858751.......................... 2,221,302 Annuity Reserves....................................................... 74,685 55,688 ----------------- ---------------- 3,231,228 2,276,990 ----------------- ---------------- International Equity Division 1999: 727,940 Accumulation Units @ 1.964300............................ 1,429,893 1998: 669,024 Accumulation Units @ 1.604722............................ 1,073,598 Annuity Reserves....................................................... 27,130 23,666 ----------------- ---------------- 1,457,023 1,097,264 ----------------- ---------------- Index 400 Stock Division 1999: 162,971 Accumulation Units @ 1.125296............................ 183,391 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 183,391 0 ----------------- ---------------- Growth Stock Division 1999: 613,097 Accumulation Units @ 2.898070............................ 1,776,797 1998: 447,934 Accumulation Units @ 2.375383............................ 1,064,015 Annuity Reserves....................................................... 0 0 ----------------- ---------------- 1,776,797 1,064,015 ----------------- ---------------- Growth and Income Stock Division 1999: 757,434 Accumulation Units @ 2.431081............................ 1,841,384 1998: 736,836 Accumulation Units @ 2.270962............................ 1,673,327 Annuity Reserves....................................................... 154,290 153,898 ----------------- ---------------- 1,995,674 1,827,225 ----------------- ---------------- Index 500 Stock Division 1999: 1,247,611 Accumulation Units @ 3.127888.......................... 3,902,386 1998: 1,057,935 Accumulation Units @ 2.597374.......................... 2,747,852 Annuity Reserves....................................................... 73,446 65,122 ----------------- ---------------- 3,975,832 2,812,974 ----------------- ---------------- Balanced Division 1999: 1,800,477 Accumulation Units @ 2.117903.......................... 3,813,235 1998: 1,768,956 Accumulation Units @ 1.912247.......................... 3,382,680 Annuity Reserves....................................................... 72,136 84,632 ----------------- ---------------- 3,885,371 3,467,312 ----------------- ---------------- High Yield Bond Division 1999: 380,690 Accumulation Units @ 1.483036............................ 564,577 1998: 400,132 Accumulation Units @ 1.495835............................ 598,531 Annuity Reserves....................................................... 0 0 ----------------- ---------------- 564,577 598,531 ----------------- ---------------- Select Bond Division 1999: 214,565 Accumulation Units @ 1.331215............................ 285,633 1998: 159,609 Accumulation Units @ 1.350384............................ 215,534 Annuity Reserves....................................................... 0 0 ----------------- ---------------- 285,633 215,534 ----------------- ---------------- Money Market Division 1999: 1,980,615 Accumulation Units @ 1.259407.......................... 2,494,401 1998: 1,564,597 Accumulation Units @ 1.203067.......................... 1,882,315 Annuity Reserves....................................................... 0 0 ----------------- ---------------- 2,494,401 1,882,315 ----------------- ----------------
The Accompanying Notes are an Integral Part of the Financial Statements. 24 26 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 8. (continued)
DECEMBER 31 ----------- 1999 1998 ---- ---- Russell Multi-Style Equity 1999: 321,514 Accumulation Units @ 1.073107............................ $ 345,019 1998: N/A.............................................................. $ 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 345,019 0 ----------------- ---------------- Russell Aggressive Equity 1999: 87,678 Accumulation Units @ 1.106159............................. 96,984 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 96,984 0 ----------------- ---------------- Russell Non-U.S. 1999: 81,105 Accumulation Units @ 1.250059............................. 101,385 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 101,385 0 ----------------- ---------------- Russell Real Estate Securities 1999: 19,288 Accumulation Units @ .924920.............................. 17,840 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 17,840 0 ----------------- ---------------- Russell Core Bond 1999: 26,817 Accumulation Units @ .988747.............................. 26,515 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 26,515 0 ----------------- ---------------- Total Equity........................................................... $ 784,204,415 $ 725,633,499 ----------------- ---------------- Total Liabilities and Equity........................................... $ 787,607,771 $ 728,442,872 ================= ================
The Accompanying Notes are an Integral Part of the Financial Statements. 25 27 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
1999 1998 1997 ---- ---- ---- Investment Income Dividend Income.............................................. $ 56,819,783 $ 34,233,423 $ 33,252,128 Annuity Rate and Expense Guarantees.......................... 8,723,746 8,068,865 7,048,888 ---------------- ---------------- --------------- Net Investment Income........................................ 48,096,037 26,164,558 26,203,240 ---------------- ---------------- --------------- Realized and Unrealized Gain on Investments Realized Gain on Investments................................. 51,300,014 37,627,804 23,135,675 Unrealized Appreciation During the Year...................... 9,271,096 36,249,405 56,364,111 ---------------- ---------------- --------------- Net Gain on Investments...................................... 60,571,110 73,877,209 79,499,786 ---------------- ---------------- --------------- Increase in Equity Derived from Investment Activity............. 108,667,147 100,041,767 105,703,026 ---------------- ---------------- --------------- Equity Transactions Contract Owners' Net Payments................................ 55,484,960 62,320,941 61,964,558 Annuity Payments............................................. (1,467,552) (1,305,331) (1,046,956 Surrenders and Other (Net)................................... (104,113,639) (83,817,967) (65,746,579) ---------------- ---------------- --------------- (Decrease) in Equity Derived from Equity Transactions................................................. (50,096,231) (22,802,357) (4,828,977) ---------------- ---------------- --------------- Net Increase in Equity.......................................... 58,570,916 77,239,410 100,874,049 Equity, Beginning of Year....................................... 725,633,499 648,394,089 547,520,040 ---------------- ---------------- --------------- Equity, End of Year............................................. $ 784,204,415 $ 725,633,499 $ 648,394,089 ================ ================ ===============
The Accompanying Notes are an Integral Part of the Financial Statements. 26 28 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. and the Russell Insurance Funds (the "Funds"). The shares are valued at the Funds' 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. On April 30, 1999, seven new portfolios commenced operations in the Funds: Small Cap Growth Stock Portfolio, Index 400 Stock Portfolio, Russell Multi-Style Equity Portfolio, Russell Aggressive Equity Portfolio, Russell Non-U.S. Portfolio, Russell Real Estate Securities Portfolio, and Russell Core Bond Portfolio. The Funds are open-end investment companies 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 Funds is recorded on the record date of the dividends. Transactions in the Funds shares are accounted for on the trade date. The basis for determining cost on sale of the Funds shares is identified cost. Purchases and sales of the Funds shares for the years ended December 31 by each Division are shown below:
PURCHASES 1999 1998 1997 - - - - - - - - - - - - - - - - - --------- ---- ---- ---- Small Cap Growth Stock Division...................... $ 7,208,705 $ N/A $ N/A Aggressive Growth Division........................... 9,958,208 10,360,035 13,774,024 International Equity Division........................ 7,974,310 6,698,885 9,401,229 Index 400 Stock Division............................. 2,853,810 N/A N/A Growth Stock Division................................ 11,793,727 9,097,053 6,679,256 Growth & Income Stock Division....................... 9,919,814 10,667,937 13,074,930 Index 500 Stock Division............................. 20,410,794 18,355,852 14,059,126 Balanced Division.................................... 44,419,512 28,049,864 21,076,301 High Yield Bond Division............................. 2,095,955 5,801,403 5,687,823 Select Bond Division................................. 4,931,954 5,372,185 4,506,469 Money Market Division................................ 20,905,226 24,597,925 13,132,202 Russell Multi-Style Division......................... 2,666,402 N/A N/A Russell Aggressive Equity Division................... 1,593,605 N/A N/A Russell Non-U.S. Division............................ 1,498,221 N/A N/A Russell Real Estate Securities Division.............. 357,723 N/A N/A Russell Core Bond Division........................... 758,431 N/A N/A
27 29 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K
ITEM 8. (continued) SALES 1999 1998 1997 - - - - - - - - - - - - - - - - - ----- ---- ---- ---- Small Cap Growth Stock Division...................... $ 3,374,541 $ N/A $ N/A Aggressive Growth Division........................... 22,717,778 14,639,276 8,367,827 International Equity Division........................ 10,228,782 11,198,223 4,431,627 Index 400 Stock Division............................. 821,170 N/A N/A Growth Stock Division................................ 5,237,895 4,198,359 1,576,559 Growth & Income Stock Division....................... 9,006,288 3,780,324 2,076,927 Index 500 Stock Division............................. 20,135,029 13,607,476 8,104,812 Balanced Division.................................... 50,211,717 40,333,474 32,274,893 High Yield Bond Division............................. 3,579,846 4,113,088 1,516,721 Select Bond Division................................. 6,390,659 4,608,524 6,636,325 Money Market Division................................ 18,848,756 19,273,286 14,926,292 Russell Multi-Style Division......................... 225,476 N/A N/A Russell Aggressive Equity Division................... 535,192 N/A N/A Russell Non-U.S. Division............................ 279,802 N/A N/A Russell Real Estate Securities Division.............. 13,625 N/A N/A Russell Core Bond Division........................... 41,756 N/A N/A
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 a 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 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. Since 1995, Northwestern Mutual has paid a dividend to certain contracts. The dividend is reinvested in the Account and has been reflected as a Contract Owners' Net Payment in the accompanying financial statements. Note 8--Northwestern Mutual 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. Under current law, no federal income taxes are payable with respect to the Account. Accordingly, no provision for any such liability has been made. 28 30 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K 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 17 through 28 present fairly, in all material respects, the financial position of NML Variable Annuity Account A at December 31, 1999 and 1998, and the results of its operations and the changes in its equity for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. 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 auditing standards generally accepted in the United States 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. /s/ PRICEWATERHOUSECOOPERS LLP Milwaukee, Wisconsin January 27, 2000 29 31 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 1999 1998 ---- ---- Investments at Market Value: Northwestern Mutual Series Fund, Inc. Small Cap Growth Stock # 1999: 529,175 shares (cost $746,064)............................... $ 949,166 N/A Aggressive Growth Stock 1999: 29,072,234 shares (cost $89,365,021)......................... 139,738,783 1998: 32,435,113 shares (cost $90,546,838)......................... $ 112,355,230 International Equity 1999: 36,249,699 shares (cost $57,059,536)......................... 64,556,193 1998: 35,339,851 shares (cost $52,600,652)......................... 59,264,930 Index 400 Stock # 1999: 425,398 shares (cost $442,230)............................... 473,356 N/A Growth Stock 1999: 14,976,894 shares (cost $30,335,095)......................... 39,775,147 1998: 12,380,682 shares (cost $21,943,825)......................... 27,819,393 Growth and Income Stock 1999: 26,336,018 shares (cost $39,527,301)......................... 41,105,386 1998: 24,848,484 shares (cost $35,764,080)......................... 40,353,938 Index 500 Stock 1999: 56,622,314 shares (cost $120,506,073)........................ 220,074,926 1998: 55,739,165 shares (cost $103,423,250)........................ 183,326,114 Balanced 1999: 75,364,260 shares (cost $128,710,511)........................ 167,443,550 1998: 77,775,095 shares (cost $122,950,926)........................ 172,971,811 High Yield Bond 1999: 7,762,704 shares (cost $7,872,845)........................... 6,380,157 1998: 9,200,196 shares (cost $10,065,238).......................... 8,611,383 Select Bond 1999: 15,507,986 shares (cost $18,559,097)......................... 17,537,190 1998: 16,617,246 shares (cost $19,964,276)......................... 20,754,940 Money Market 1999: 19,345,920 shares (cost $19,345,920)......................... 19,341,129 1998: 19,628,758 shares (cost $19,628,758)......................... 19,628,758 Russell Insurance Funds Multi-Style Equity # 1999: 101,611 shares (cost $1,641,897)............................. 1,705,658 N/A Aggressive Equity # 1999: 26,321 shares (cost $325,516)................................ 351,582 N/A Non-U.S. # 1999: 39,836 shares (cost $492,817)................................ 565,156 N/A Real Estate # 1999: 11,601 shares (cost $108,462)................................ 102,203 N/A Core Bond # 1999: 39,849 shares (cost $398,722)................................ 384,069 N/A ----------------- ---------------- 720,483,652 645,086,497 Due from Sales of Fund Shares................................................... 798,688 495,042 Due from Northwestern Mutual Life Insurance Company............................. 395,300 355,553 Due from Participants........................................................... 232,623 0 ----------------- ---------------- Total Assets....................................................... $ 721,910,262 $ 645,937,092 ================= ================ LIABILITIES Due to Northwestern Mutual Life Insurance Company......................... $ 798,688 $ 495,042 Due from Purchase of Fund Shares.......................................... 395,300 355,553 ----------------- ---------------- Total Liabilities.................................................. $ 1,193,988 $ 850,595 ================= ================
- - - - - - - - - - - - - - - - - ------------------------------ # Fund commenced on April 30, 1999. The Accompanying Notes are an Integral Part of the Financial Statements. 30 32 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 1999 1998 ---- ---- Contracts Issued Before December 17, 1981 or Between April 30, 1984 and December 31, 1991: Small Cap Growth Stock Division 1999: 7,543 Accumulation Units @ 18.610781............................. $ 140,375 1998: N/A.............................................................. $ 0 Aggressive Growth Stock Division 1999: 1,627,058 Accumulation Units @ 57.304251......................... 93,237,331 1998: 1,801,179 Accumulation Units @ 39.854126......................... 71,784,423 International Equity Division 1999: 18,571,580 Accumulation Units @ 2.497127......................... 46,375,593 1998: 20,139,789 Accumulation Units @ 2.031842......................... 40,920,871 Index 400 Stock Division 1999: 1,071 Accumulation Units @ 11.283278............................. 12,082 1998: N/A.............................................................. 0 Growth Stock Division 1999: 792,443 Accumulation Units @ 32.336967........................... 25,625,190 1998: 651,555 Accumulation Units @ 26.398692........................... 17,200,222 Growth and Income Stock Division 1999: 798,290 Accumulation Units @ 27.134671........................... 21,661,354 1998: 801,963 Accumulation Units @ 25.245888........................... 20,246,304 Index 500 Stock Division 1999: 2,756,358 Accumulation Units @ 56.249780......................... 155,044,524 1998: 2,699,180 Accumulation Units @ 46.522428......................... 125,572,411 Balanced Division 1999: 1,066,999 Accumulation Units @ 94.505378......................... 100,837,077 1998: 1,211,838 Accumulation Units @ 84.986573......................... 102,989,851 High Yield Bond Division 1999: 205,407 Accumulation Units @ 16.310402........................... 3,350,268 1998: 301,661 Accumulation Units @ 16.385350........................... 4,942,825 Select Bond Division 1999: 72,427 Accumulation Units @ 88.954059............................ 6,442,736 1998: 84,033 Accumulation Units @ 89.873176............................ 7,552,345 Money Market Division 1999: 7,939 Accumulation Units @ 30.399653............................. 241,341 1998: 45,208 Accumulation Units @ 28.923541............................ 1,307,598 Russell Multi-Style Equity 1999: 17,246 Accumulation Units @ 10.760032............................ 185,568 1998: N/A.............................................................. 0 Russell Aggressive Equity 1999: 950 Accumulation Units @ 11.091435............................... 10,539 1998: N/A.............................................................. 0 Russell Non-U.S. 1999: 0 Accumulation Units @ 12.534266................................. 0 1998: N/A.............................................................. 0 Russell Real Estate Securities 1999: 3,723 Accumulation Units @ 9.274172.............................. 34,529 1998: N/A.............................................................. 0 Russell Core Bond 1999: 0 Accumulation Units @ 9.914196.................................. 0 1998: N/A.............................................................. 0
The Accompanying Notes are an Integral Part of the Financial Statements. 31 33 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 8. (continued) NML VARIABLE ANNUITY ACCOUNT C STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31 1999 1998 ---- ---- Contracts Issued After December 16, 1981 and Prior to May 1, 1984: Small Cap Growth Stock Division 1999: 420 Accumulation Units @ 18.548596............................... $ 7,795 1998: N/A.............................................................. $ 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 7,795 0 ----------------- ---------------- Aggressive Growth Stock Division 1999: 1,438 Accumulation Units @ 54.800923............................. 78,796 1998: 1,469 Accumulation Units @ 38.303948............................. 56,266 Annuity Reserves....................................................... 53,746 33,440 ----------------- ---------------- 132,542 89,706 ----------------- ---------------- International Equity Division 1999: 24,296 Accumulation Units @ 2.415234............................. 58,680 1998: 119,120 Accumulation Units @ 1.975051............................ 235,268 Annuity Reserves....................................................... 25,861 16,925 ----------------- ---------------- 84,541 252,193 ----------------- ---------------- Index 400 Stock Division 1999: 0 Accumulation Units @ 11.245478................................. 0 1998: N/A.............................................................. 0 Annuity Reserves................................................... 0 ----------------- ---------------- 0 0 ----------------- ---------------- Growth Stock Division 1999: 137 Accumulation Units @ 31.433960............................... 4,310 1998: 137 Accumulation Units @ 25.790044............................... 3,536 Annuity Reserves....................................................... 54,469 48,049 ----------------- ---------------- 58,779 51,585 ----------------- ---------------- Growth and Income Stock Division 1999: 1,381 Accumulation Units @ 26.376796............................. 36,430 1998: 4,298 Accumulation Units @ 24.663747............................. 105,994 Annuity Reserves....................................................... 0 0 ----------------- ---------------- 36,430 105,994 ----------------- ---------------- Index 500 Stock Division 1999: 8,293 Accumulation Units @ 53.786850............................. 446,068 1998: 13,564 Accumulation Units @ 44.708227............................ 606,427 Annuity Reserves....................................................... 63,516 51,080 ----------------- ---------------- 509,584 657,507 ----------------- ---------------- Balanced Division 1999: 37,494 Accumulation Units @ 86.395292............................ 3,239,303 1998: 80,125 Accumulation Units @ 78.082648............................ 6,256,421 Annuity Reserves....................................................... 558,169 539,064 ----------------- ---------------- 3,797,472 6,795,485 ----------------- ---------------- High Yield Division 1999: 214 Accumulation Units @ 15.854730............................... 3,398 1998: 157 Accumulation Units @ 16.007423............................... 3,536 Annuity Reserves....................................................... 16,961 0 ----------------- ---------------- 20,359 3,536 ----------------- ---------------- Select Bond Division 1999: 456 Accumulation Units @ 81.280078............................... 37,103 1998: 480 Accumulation Units @ 82.531570............................... 39,623 Annuity Reserves....................................................... 53,213 40,052 ----------------- ---------------- 90,316 79,675 ----------------- ---------------- Money Market Division 1999: 0 Accumulation Units @ 27.823703................................. 0 1998: 946 Accumulation Units @ 26.605346............................... 25,162 Annuity Reserves....................................................... 228,793 7,371 ----------------- ---------------- 228,793 32,533 ----------------- ----------------
The Accompanying Notes are an Integral Part of the Financial Statements. 32 34 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 8. (continued)
DECEMBER 31 1999 1998 ---- ---- Russell Multi-Style Equity 1999: 0 Accumulation Units @ 10.723983................................. 0 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 0 0 ----------------- ---------------- Russell Aggressive Equity 1999: 0 Accumulation Units @ 11.054275................................. 0 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 0 0 ----------------- ---------------- Russell Non-U.S. 1999: 480 Accumulation Units @ 12.492336............................... 6,007 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 6,007 0 ----------------- ---------------- Russell Real Estate Securities 1999: 0 Accumulation Units @ 9.243071.................................. 0 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 0 0 ----------------- ---------------- Russell Core Bond 1999: 0 Accumulation Units @ 9.880973.................................. 0 1998: N/A.............................................................. 0 Annuity Reserves....................................................... 0 ----------------- ---------------- 0 0 ----------------- ----------------
The Accompanying Notes are an Integral Part of the Financial Statements. 33 35 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 8. (continued) NML VARIABLE ANNUITY ACCOUNT C STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31 1999 1998 ---- ---- Contracts Issued After December 31, 1991 - Front Load Version: Small Cap Growth Stock Division 1999: 73,643 Accumulation Units @ 1.853001............................. $ 136,461 1998: N/A.............................................................. $ 0 Aggressive Growth Stock Division 1999: 2,776,961 Accumulation Units @ 3.588119.......................... 9,964,067 1998: 2,921,308 Accumulation Units @ 2.511728.......................... 7,337,533 International Equity Division 1999: 2,301,771 Accumulation Units @ 2.391284.......................... 5,504,188 1998: 2,807,888 Accumulation Units @ 1.958397.......................... 5,498,960 Index 400 Stock Division 1999: 13,563 Accumulation Units @ 1.123423............................. 15,237 1998: N/A.............................................................. 0 Growth Stock Division 1999: 995,796 Accumulation Units @ 3.116901............................ 3,103,799 1998: 845,190 Accumulation Units @ 2.561090............................ 2,164,608 Growth and Income Stock Division 1999: 1,704,699 Accumulation Units @ 2.615436.......................... 4,458,532 1998: 2,452,149 Accumulation Units @ 2.449237.......................... 6,005,593 Index 500 Stock Division 1999: 4,131,824 Accumulation Units @ 3.938401.......................... 16,272,782 1998: 4,231,423 Accumulation Units @ 3.278539.......................... 13,872,886 Balanced Division 1999: 6,183,051 Accumulation Units @ 2.520233.......................... 15,582,729 1998: 6,324,559 Accumulation Units @ 2.281157.......................... 14,427,311 High Yield Bond Division 1999: 409,857 Accumulation Units @ 1.572112............................ 644,342 1998: 441,272 Accumulation Units @ 1.589625............................ 701,458 Select Bond Division 1999: 2,264,883 Accumulation Units @ 1.558775.......................... 3,530,442 1998: 2,718,375 Accumulation Units @ 1.585144.......................... 4,309,016 Money Market Division 1999: 1,879,181 Accumulation Units @ 1.366307.......................... 2,567,539 1998: 1,905,815 Accumulation Units @ 1.308441.......................... 2,493,647 Russell Multi-Style Equity 1999: 297,016 Accumulation Units @ 1.071323............................ 318,200 1998: N/A.............................................................. 0 Russell Aggressive Equity 1999: 79,144 Accumulation Units @ 1.04316.............................. 87,400 1998: N/A.............................................................. 0 Russell Non-U.S. 1999: 151,721 Accumulation Units @ 1.247967............................ 189,343 1998: N/A.............................................................. 0 Russell Real Estate Securities 1999: 36,624 Accumulation Units @ .923380.............................. 33,818 1998: N/A.............................................................. 0 Russell Core Bond 1999: 239,265 Accumulation Units @ .987105............................. 236,180 1998: N/A.............................................................. 0
The Accompanying Notes are an Integral Part of the Financial Statements. 34 36 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 8. (continued) NML VARIABLE ANNUITY ACCOUNT C STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31 1999 1998 ---- ---- Contracts Issued After December 31, 1991 - Simplified Load Version: Small Cap Growth Stock Division 1999: 360,069 Accumulation Units @ 1.845580............................ $ 664,535 1998: N/A.............................................................. $ 0 Aggressive Growth Stock Division 1999: 6,707,103 Accumulation Units @ 5.427804.......................... 36,404,843 1998: 8,671,088 Accumulation Units @ 3.822308.......................... 33,143,567 International Equity Division 1999: 5,480,221 Accumulation Units @ 2.297694.......................... 12,591,871 1998: 6,652,248 Accumulation Units @ 1.893030.......................... 12,592,906 Index 400 Stock Division 1999: 398,635 Accumulation Units @ 1.118909............................ 446,037 1998: N/A.............................................................. 0 Growth Stock Division 1999: 3,646,722 Accumulation Units @ 3.012947.......................... 10,987,379 1998: 3,373,983 Accumulation Units @ 2.490522.......................... 8,402,978 Growth and Income Stock Division 1999: 5,912,799 Accumulation Units @ 2.528256.......................... 14,949,070 1998: 5,876,089 Accumulation Units @ 2.381813.......................... 13,995,745 Index 500 Stock Division 1999: 9,809,484 Accumulation Units @ 4.918509.......................... 48,248,037 1998: 10,493,642 Accumulation Units @ 4.119000......................... 43,223,310 Balanced Division 1999: 6,319,468 Accumulation Units @ 7.473141.......................... 47,226,272 1998: 7,165,398 Accumulation Units @ 6.804809.......................... 48,759,164 High Yield Bond Division 1999: 1,556,400 Accumulation Units @ 1.519653.......................... 2,365,187 1998: 1,917,813 Accumulation Units @ 1.545816.......................... 2,964,586 Select Bond Division 1999: 1,068,272 Accumulation Units @ 6.996057.......................... 7,473,695 1998: 1,231,485 Accumulation Units @ 7.157135.......................... 8,813,904 Money Market Division 1999: 6,539,184 Accumulation Units @ 2.528768.......................... 16,536,079 1998: 6,483,460 Accumulation Units @ 2.436196.......................... 15,794,980 Russell Multi-Style Equity 1999: 1,126,401 Accumulation Units @ 1.067018.......................... 1,201,891 1998: N/A............................................................. 0 Russell Aggressive Equity 1999: 230,607 Accumulation Units @ 1.099895............................ 253,643 1998: N/A............................................................. 0 Russell Non-U.S. 1999: 297,512 Accumulation Units @ 1.242993............................ 369,806 1998: N/A............................................................. 0 Russell Real Estate Securities 1999: 36,814 Accumulation Units @ .919674.............................. 33,857 1998: N/A............................................................. 0 Russell Core Bond 1999: 150,425 Accumulation Units @ .983142............................. 147,888 1998: N/A............................................................. 0 --------------------- ---------------- Total Equity....................................................... $ 720,716,274 $ 645,087,216 ----------------- ---------------- Total Liabilities and Equity....................................... $ 721,910,262 $ 645,937,811 ================= ================
The Accompanying Notes are an Integral Part of the Financial Statements. 35 37 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
Investment Income 1999 1998 1997 ---- ---- ---- Dividend Income........................................... $ 43,814,500 $ 26,995,272 $ 27,689,163 Annuity Rate and Expense Guarantees....................... 3,445,294 3,154,687 2,501,975 ---------------- ---------------- --------------- Net Investment Income..................................... 40,369,206 23,840,585 25,187,188 ---------------- ---------------- --------------- Realized and Unrealized Gain on Investments Realized Gain on Investments.............................. 41,105,768 29,250,486 18,686,284 Unrealized Appreciation During the Year................... 36,856,549 37,105,561 44,241,434 ---------------- ---------------- --------------- Net Gain on Investments................................... 77,962,317 66,356,047 62,927,718 ---------------- ---------------- --------------- Increase in Equity Derived from Investment Activity.......... 118,331,523 90,196,632 88,114,906 ---------------- ---------------- --------------- Equity Transactions Contract Owners' Net Payments............................. 74,901,848 93,658,882 91,195,224 Surrenders and Other (Net)................................ (117,603,594) (86,757,540) (57,974,180) ---------------- ---------------- --------------- Increase (Decrease) in Equity Derived from Equity Transactions....................................... (42,701,746) 6,901,342 33,221,044 ---------------- ---------------- --------------- Net Increase in Equity....................................... 75,629,777 97,097,974 121,335,950 Equity, Beginning of Year.................................... 645,086,497 547,988,523 426,652,573 ---------------- ---------------- --------------- Equity, End of Year.......................................... $ 720,716,274 $ 645,086,497 $ 547,988,523 ================ ================ ===============
The Accompanying Notes are an Integral Part of the Financial Statements. 36 38 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. and the Russell Insurance Funds (the "Funds"). The shares are valued at the Funds' 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. On April 30, 1999 seven new portfolios commenced operations in the Funds: Small Cap Growth Stock Portfolio, Index 400 Stock Portfolio, Russell Multi-Style Equity, Russell Aggressive Equity Portfolio, Russell Non-U.S. Portfolio, Russell Real Estate Securities Portfolio, and Russell Core Bond Portfolio. The Funds are open-end investment companies 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 Funds is recorded on the record date of the dividends. Transactions in the Funds shares are accounted for on the trade date. The basis for determining cost on sale of the Funds shares is identified cost. Purchases and sales of the Funds shares for the years ended December 31 by each Division are shown below:
PURCHASES 1999 1998 1997 - - - - - - - - - - - - - - - - - --------- ---- ---- ---- Small Cap Growth Division................................... $ 759,215 $ N/A $ N/A Aggressive Growth Division.................................. 12,206,930 15,042,444 21,563,810 International Equity Division............................... 13,196,712 10,115,335 14,484,423 Index 400 Stock Division.................................... 468,108 N/A N/A Growth Stock Division....................................... 11,622,415 11,736,176 5,929,895 Growth & Income Stock Division.............................. 12,666,073 12,220,296 18,445,529 Index 500 Stock Division.................................... 24,489,112 27,128,970 22,292,577 Balanced Division........................................... 27,037,531 25,547,459 18,920,420 High Yield Bond Division.................................... 1,696,507 4,842,682 4,398,102 Select Bond Division........................................ 3,699,428 7,219,542 4,295,571 Money Market Division....................................... 22,540,096 28,689,880 20,035,837 Russell Multi-Style Division................................ 1,676,900 N/A N/A Russell Aggressive Equity Division.......................... 763,162 N/A N/A Russell Non-U.S. Division................................... 494,961 N/A N/A Russell Real Estate Securities Division..................... 109,105 N/A N/A Russell Core Bond Division.................................. 403,049 N/A N/A
37 39 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K
SALES 1999 1998 1997 - - - - - - - - - - - - - - - - - ----- ---- ---- ---- Small Cap Growth Stock Division............................. $ 13,802 $ N/A $ N/A Aggressive Growth Division.................................. 23,468,462 18,315,682 12,675,291 International Equity Division............................... 11,938,339 13,861,624 4,352,840 Index 400 Stock Division.................................... 26,390 N/A N/A Growth Stock Division....................................... 5,373,768 4,445,344 2,395,716 Growth & Income Stock Division.............................. 10,170,106 6,047,669 2,674,188 Index 500 Stock Division.................................... 21,511,153 12,386,814 10,114,507 Balanced Division........................................... 32,467,107 24,616,712 17,783,563 High Yield Bond Division.................................... 3,114,104 1,661,445 480,911 Select Bond Division........................................ 5,152,171 4,504,138 4,561,008 Money Market Division....................................... 22,822,933 25,961,429 16,919,905 Russell Multi-Style Division................................ 35,224 N/A N/A Russell Aggressive Equity Division.......................... 443,034 N/A N/A Russell Non-U.S. Division................................... 2,369 N/A N/A Russell Real Estate Securities Division..................... 569 N/A N/A Russell Core Bond Division.................................. 4,229 N/A N/A
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 is 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. Since 1996, Northwestern Mutual has paid a dividend to certain contracts. The dividend is re-invested in the Account and has been reflected as a Contract Owners' Net Payment in the accompanying financial statements. Note 8--Northwestern Mutual 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. Under current law, no federal income taxes are payable with respect to the Account. Accordingly, no provision for any such liability has been made. 38 40 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K 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 30 through 38 present fairly, in all material respects, the financial position of NML Variable Annuity Account C at December 31, 1999 and 1998, and the results of its operations and the changes in its equity for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. 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 auditing standards generally accepted in the United States 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. /s/ PRICEWATERHOUSECOOPERS LLP Milwaukee, Wisconsin January 27, 2000 39 41 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 40 42 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Neither Account A nor Account C have any directors or executive officers. The following information as of March 1, 2000, is provided with respect to each director, including persons chosen to become directors, of Northwestern Mutual. Northwestern Mutual uses the title of Trustee to denote the directors.
YEAR EXPIRATION OF TRUSTEE AGE ELECTED TERM OF OFFICE OTHER POSITIONS PRESENTLY HELD WITH REGISTRANT ------- --- ------- -------------- ---------------------------------------------- R. Quintus Anderson............ 69 1984 May 2003 Chairman, Audit Committee Edward E. Barr................. 63 1991 May 2003 Member, Human Resources and Public Policy Committee Gordon T. Beaham, III.......... 68 1988 May 2001 Member, Operations and Technology Committee Robert C. Buchanan............. 59 1991 May 2003 Member, Audit, Executive and Finance Committees George A. Dickerman............ 61 1994 May 2000 (1) Member, Agency and Marketing Committee Pierre S. du Pont.............. 65 1985 May 2002 Member, Agency and Marketing Committee James D. Ericson............... 64 1989 May 2000 (1) President and C.E.O.; Member, Agency and Marketing, Human Resources and Public Policy, and Operations and Technology Committees; Chairman, Executive and Finance Committees (2) J. E. Gallegos................. 64 1985 May 2000 (1) Member, Audit Committee Stephen N. Graff............... 65 1996 May 2000 (1) Member, Audit, Executive, and Finance Committees Patricia Albjerg Graham........ 65 1980 May 2000 (1) Member, Human Resources and Public Policy Committee Stephen F. Keller.............. 61 1984 May 2003 Member, Human Resources and Public Policy Committee Barbara A. King................ 53 1996 May 2002 Member, Agency and Marketing Committee J. Thomas Lewis................ 63 1978 May 2002 Chairman, Human Resources and Public Policy Committee Daniel F. McKeithan, Jr........ 64 1988 May 2003 Member, Executive, Finance, and Human Resources and Public Policy Committees Guy A. Osborn.................. 64 1994 May 2001 Member, Executive, Finance and Operations and Technology Committees Timothy D. Proctor............. 50 1997 May 2001 Member, Audit Committee H. Mason Sizemore, Jr.......... 58 1993 May 2003 Member, Agency and Marketing Committee Harold B. Smith................ 66 1973 May 2000 (1) Member, Operations and Technology Committee Sherwood H. Smith, Jr.......... 65 1992 May 2002 Chairman, Agency and Marketing Committee Peter M. Sommerhauser.......... 57 1999 May 2002 Member, Executive, Finance and Operations and Technology Committees John E. Steuri................. 60 1994 May 2003 Chairman, Operations and sTechnology Committee
41 43 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K
YEAR EXPIRATION OF TRUSTEE AGE ELECTED TERM OF OFFICE OTHER POSITIONS PRESENTLY HELD WITH REGISTRANT ------- --- ------- -------------- ---------------------------------------------- John J. Stollenwerk............ 60 1993 May 2001 Member, Agency and Marketing, Executive and Finance Committees Barry L. Williams.............. 55 1987 May 2001 Member, Human Resources and Public Policy Committee Kathryn D. Wriston............. 61 1986 May 2001 Member, Audit Committee Edward J. Zore (3)............. 54 2000 May 2001 Executive Vice President (Life and Disability Income Insurance)(4)
- - - - - - - - - - - - - - - - - ---------------------- (1) Candidate proposed for re-election by the Board of Trustees for the election to be held at the May 2000 Annual meeting of Policyowners. If re-elected, these Trustees' terms will expire in May 2004. (2) Effective March 31, 2000, Mr. Ericson will assume the position of Chairman and C.E.O. of Northwestern Mutual. (3) Mr. Zore was appointed as a Trustee by the Board of Trustees effective February 1, 2000. (4) Effective March 31, 2000, Mr. Zore will assume the position of President of Northwestern Mutual and will serve as a member of the Agency and Marketing, Executive, Finance, Human Resources and Public Policy, and Operations and Technology Committees. 42 44 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K The business experience and directorships of Northwestern Mutual's Trustees are as follows:
PRINCIPAL OCCUPATION TRUSTEE DURING PAST FIVE YEARS DIRECTORSHIPS ------- ---------------------- ------------- R. Quintus Anderson Chairman, The Aarque Capital Corporation Cold Metal Products Company, Inc. (diversified metal products manufacturing), Oneida, Ltd. Lakewood, New York, since 1997. Prior thereto, Chairman, The Aarque Companies. Edward E. Barr Chairman, Sun Chemical Group, B.V. (graphic First Union Corporation arts), Fort Lee, New Jersey, since 1998. United Water Resources, Inc. Chairman and CEO, 1997-1998. Prior thereto, President and Chief Executive Officer, 1987-1997. Gordon T. Beaham, III Chairman and President, Faultless Starch/Bon Ami Company (consumer products manufacturer), Kansas City, Missouri, since 1987. Robert C. Buchanan President and Chief Executive Officer, Fox W. H. Brady Corporation Valley Corporation (manufacturer of gift wrap and writing paper), Appleton, Wisconsin, since 1980. George A. Dickerman Chairman Emeritus, Spalding Sports Worldwide (manufacturer of sporting equipment), Chicopee, Massachusetts, since 1999. Prior thereto, Chairman, 1997-1998, and President, 1981-1997. Pierre S. du Pont Partner with Richards, Layton & Finger (law Whitman Corporation firm), Wilmington, Delaware, since 1985. James D. Ericson President and Chief Executive Officer of Consolidated Papers, Inc. Northwestern Mutual since 1993. Green Bay Packaging, Inc. Kohl's Corporation Mason Street Funds, Inc. MGIC Investment Corporation Northwestern Mutual Series Fund, Inc. J. E. Gallegos Attorney, Gallegos Law Firm, Santa Fe, New Mexico, since 1988. Stephen N. Graff Office Managing Partner (retired), Arthur Mason Street Funds, Inc. Andersen LLP, Milwaukee, Wisconsin, 1981-1994. Northwestern Mutual Series Fund, Inc. Regal-Beloit Corporation Patricia Albjerg Graham President, Spencer Foundation (social and behavioral sciences), Chicago, Illinois, since 1991; and Professor of the History of American Education, Harvard University, Cambridge, Massachusetts, since 1974. Stephen F. Keller Attorney, Los Angeles, California, since 1962. Chairman, The Santa Anita Companies, Arcadia, California, 1993-1996. Barbara A. King President, Landscape Structures, Inc. (manufacturer of playground equipment), Delano, Minnesota, since 1973.
43 45 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K
PRINCIPAL OCCUPATION TRUSTEE DURING PAST FIVE YEARS DIRECTORSHIPS ------- ---------------------- ------------- J. Thomas Lewis Attorney (sole practitioner), New Orleans, Louisiana, since 1998. Prior thereto, associated with Monroe & Lemann (law firm), New Orleans, Louisiana, 1965-1998. Daniel F. McKeithan, Jr. President, Tamarack Petroleum Co., Inc. Firstar Corporation (operator of oil and gas wells), Milwaukee, The Marcus Corporation Wisconsin, since 1982. WICOR, Inc. Guy A. Osborn Retired Chairman, Universal Foods Corp., Fleming Companies, Inc. Milwaukee, Wisconsin, since 1997. Chairman, WICOR, Inc. 1996-1997. Chairman and Chief Executive Officer, 1990-1996. Timothy D. Proctor Group General Counsel, Diageo PLC (manufacturer, marketer and distributor of food and beverage products), London, England, since 2000. Prior thereto, Director, Worldwide Human Resources, Glaxo Wellcome plc, 1998-1999; Senior Vice President Human Resources, General Counsel and Secretary, Glaxo Wellcome Inc., 1996-1998; and Senior Vice President, General Counsel and Secretary, 1994-1996. H. Mason Sizemore, Jr. President and Chief Operating Officer, The Seattle Times, Seattle, Washington, since 1985. Harold B. Smith Chairman, Executive Committee, Illinois Tool Illinois Tool Works Inc. Works Inc. (engineered components and Northern Trust Corporation industrial systems and consumables), W. W. Grainger, Inc. Glenview, Illinois, since 1982. Sherwood H. Smith, Jr. Chairman Emeritus, Carolina Power & Light Carolina Power & Light Company Company, Raleigh, North Carolina, since May Nortel Networks Corporation 1999. Prior thereto, Chairman, 1996-1999, Springs Industries, Inc. and Chairman and Chief Executive Officer, Wachovia Corporation 1992-1996. Peter M. Sommerhauser Attorney, Shareholder, Vice President and Kohl's Corporation Member of the Management Committee, Godfrey & Kahn, S.C. (law firm), Milwaukee, Wisconsin, since 1969. John E. Steuri Chairman, Advanced Thermal Technologies National Computer Systems Inc. (heating, air conditioning and humidity Superior Financial Corp. control), Little Rock, Arkansas, since 1997. Prior thereto, Chairman and CEO, ALLTEL Information Services, Inc., Little Rock, Arkansas, since 1989. John J. Stollenwerk President and Chief Executive Officer, Badger Meter, Inc. Allen-Edmonds Shoe Corporation, Port Firstar Corporation Washington, Wisconsin, since 1998. Prior Koss Corporation thereto, President and Owner, 1980-1998.
44 46 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K
PRINCIPAL OCCUPATION TRUSTEE DURING PAST FIVE YEARS DIRECTORSHIPS ------- ---------------------- ------------- Barry L. Williams President and Chief Executive Officer, CH2M Hill Companies, Ltd. Williams Pacific Ventures, Inc. (venture Comp USA, Inc. capital), San Francisco, California, since Pacific Gas & Electric Company 1993. R. H. Donnelly Corporation Simpson Manufacturing Co., Inc. The Newhall Land and Farming Company Kathryn D. Wriston Director of various corporations. Homeplace of America Inc. The Stanley Works Santa Fe Snyder Corporation Edward J. Zore Executive Vice President (Life and Disability MGIC Investment Corporation Income Insurance) of Northwestern Mutual since 1998. Prior thereto, Executive Vice President (Finance and Investments) since 1995.
45 47 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K The following information as of March 1, 2000, is provided with respect to each Executive Officer of Northwestern Mutual. The term of office for all Executive Officers is one year expiring May 31, 2000.
NAME AGE POSITION - - - - - - - - - - - - - - - - - ---- --- -------- James D. Ericson (1)............... 64 President and Chief Executive Officer; Trustee John M. Bremer (1)................. 52 Executive Vice President, General Counsel and Secretary (Administration and Law) Peter W. Bruce (1)................. 54 Executive Vice President (Accumulation Products and Long Term Care) Edward J. Zore (1)................. 54 Executive Vice President (Life and Disability Income Insurance); Trustee Deborah A. Beck (1)................ 52 Senior Vice President (Insurance Operations/Chief Compliance Officer) William H. Beckley (1)............. 52 Senior Vice President (Agencies) Mark G. Doll....................... 50 Senior Vice President (Public Markets) Richard L. Hall (1)................ 54 Senior Vice President (Life Marketing) William C. Koenig.................. 52 Senior Vice President and Chief Actuary Donald L. Mellish.................. 61 Senior Vice President (Field Financial Services) Bruce L. Miller (1)................ 57 Senior Vice President (Corporate Planning and Development) Mason G. Ross...................... 56 Senior Vice President and Chief Investment Officer John E. Schlifske.................. 40 Senior Vice President (Securities and Real Estate) Leonard F. Stecklein (1)........... 53 Senior Vice President Frederic H. Sweet.................. 56 Senior Vice President (Corporate and Government Relations) Walt J. Wojcik..................... 60 Senior Vice President (Information Systems) Robert J. Berdan (1)............... 53 Vice President (Compliance/Best Practices) Steven T. Catlett.................. 50 Vice President (New Business) Thomas E. Dyer..................... 54 Vice President (Corporate Services) Gary E. Long....................... 55 Vice President and Controller Susan A. Lueger.................... 46 Vice President (Human Resources) Meridee J. Maynard (1)............. 44 Vice President (Annuity and Accumulation Products) Gregory C. Oberland................ 42 Vice President (Disability Income) Barbara F. Piehler................. 49 Vice President (Policyowner Services) James F. Reiskytl.................. 62 Vice President (Tax and Financial Planning) J. Edward Tippetts................. 55 Vice President (Field Training and Development) Martha M. Valerio (1).............. 53 Vice President (Corporate Research and Analysis) W. Ward White...................... 60 Vice President (Communications)
- - - - - - - - - - - - - - - - - ---------------------- (1) Effective March 31, 2000, the following individuals will assume the positions indicated: James D. Ericson - Chairman and Chief Executive Officer; John M. Bremer - Senior Executive Vice President (Administration/Chief Compliance Officer) and Secretary; Peter W. Bruce - Senior Executive Vice President (Insurance); Edward J. Zore - President; Deborah A. Beck - Executive Vice President (Planning and Technology); William H. Beckley - Executive Vice President (Agencies); Richard L. Hall - Senior Vice President (Life Insurance); Bruce L. Miller - Executive Vice President (Marketing); Leonard F. Stecklein - Senior Vice President (Annuities and Accumulation Products); Robert J. Berdan - Vice President and General Counsel; Meridee J. Maynard - Vice President (Marketing); and Martha M. Valerio - Vice President. Messrs. Ericson and Zore will continue to serve on Northwestern Mutual's Board of Trustees. All of the Executive Officers, except Bruce L. Miller, have been associated with Northwestern Mutual, although not necessarily in their present positions, for more than five years. Bruce L. Miller has been a Senior Vice President of Northwestern Mutual since July, 1996. Prior thereto he participated in private equity investing, operating and serving as a consultant to various firms in the financial services and healthcare industries since 1989. 46 48 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K ITEM 11. EXECUTIVE COMPENSATION Not applicable. Account A and Account C have no directors or executive officers, the Executive Officers and Trustees of Northwestern Mutual spend no substantial portion of their time on matters relating to Accounts A and C, and the amounts of compensation received by the Executive Officers and Trustees of Northwestern Mutual have no bearing on the values associated with the Contracts issued in connection with Accounts A and C. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Not applicable. As segregated asset accounts, Account A and Account C have no shareholders. As a mutual life insurance company, Northwestern Mutual has no shareholders. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Northwestern Mutual's subsidiary, NMIS, serves as the investment advisor to the Series Fund. Northwestern Mutual is party to investment advisory agreements with the Series Fund. The investment advisory agreements were entered into or renewed during 1999. Various Trustees and Executive Officers of Northwestern Mutual serve as directors and officers of the Series Fund and may be deemed to have a direct or indirect material interest in the existence of the investment advisory agreements. Northwestern Mutual's subsidiary, Frank Russell, provides the Russell Funds and its investment adviser, Frank Russell Investment Management Company ("FRIMCo"), a subsidiary of Frank Russell, with asset management consulting services that it provides to its other consulting clients. The Russell Funds do not compensate Frank Russell for these services. FRIMCo is party to an investment management agreement with the Russell Funds. That investment management agreement took effect during 1999. Certain Trustees and Executive Officers of Northwestern Mutual serve as directors of Frank Russell and may be deemed to have a direct or indirect material interest in the existence of the investment management agreement. Various Trustees and Executive Officers of Northwestern Mutual have securities accounts with Baird and effected transactions through such accounts during the fiscal year, including transactions in mutual funds sponsored by Frank Russell. Loans are made to Northwestern Mutual's Trustees and Executive Officers (and their family members and associates) 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 in accordance with the terms of such policies. In the ordinary course of its business, Northwestern Mutual makes loans to its general agents in connection with their business operations. Interest on such loans is tied to Northwestern Mutual's cost of funds or the prime rate, depending upon the purpose of the loan. On occasion, a general agent who has incurred such loans may assume an Executive Officer position at Northwestern Mutual. In such circumstances, the outstanding loans remain in place and are satisfied in accordance with the terms of the underlying loan documentation. Peter M. Sommerhauser, a Northwestern Mutual Trustee since May 1999, is a Shareholder, Vice President and a Member of the Management Committee of Godfrey & Kahn, S.C. Godfrey & Kahn provided a de minimis amount of legal services to Northwestern Mutual during 1999 with respect to a matter that dates to 1996, when the firm was retained by Northwestern Mutual. Mr. Sommerhauser was not personally involved in rendering such legal services to Northwestern Mutual during 1999. Mr. Sommerhauser is the beneficial owner of approximately 10.3% of the outstanding common stock of Kohl's Corporation, primarily by virtue of his serving as a trustee of several trusts for the benefit of the families of current and former executive officers of Kohl's Corporation and as a director of charitable foundations established by executive officers of Kohl's Corporation. While Mr. Sommerhauser has sole or shared voting and investment power over such shares held in the trusts and foundations, he has no pecuniary interest in those shares. In 1994, a number of years prior to Mr. Sommerhauser becoming a Northwestern Mutual Trustee, Northwestern Mutual lent (as part of its normal portfolio investment activities) to Kohl's Department Stores, Inc., a subsidiary of Kohl's Corporation, $40,000,000 and received a 6.75% Senior Note, guaranteed by Kohl's Corporation, due March 31, 2004. The entire principal amount of the Senior Note remained outstanding during 1999 and at March 1, 2000. 47 49 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 (1) NML Variable Annuity Account A (in Part II, Item 8) .................................... 17 Statement of Assets and Liabilities at December 31, 1999 and 1998 Combined Statement of Operations and Changes in Equity for years ended December 31, 1999, 1998 and 1997 Notes to Financial Statements Report of Independent Accountants (2) NML Variable Annuity Account C (in Part II, Item 8)..................................... 30 Statement of Assets and Liabilities at December 31, 1999 and 1998 Combined Statement of Operations and Changes in Equity for years ended December 31, 1999, 1998 and 1997 Notes to Financial Statements Report of Independent Accountants (3) The Northwestern Mutual Life Insurance Company.......................................... 49 Immediately following this page are: Report of Independent Accountants Consolidated Statement of Financial Position at December 31, 1999 and 1998 Consolidated Statement of Operations for years ended December 31, 1999, 1998 and 1997 Consolidated Statement of Changes in Surplus for years ended December 31, 1999, 1998 and 1997 Consolidated Statement of Cash Flows for years ended December 31, 1999, 1998 and 1997 Notes to Consolidated Statutory Financial Statements (b) No reports on Form 8-K have been filed during the last quarter of the year ended December 31, 1999. (c) See Index to Exhibits on page 67, which is incorporated herein by reference .................................................................................... 67
48 50 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K 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, 1999 and 1998, and the related consolidated statements of operations, of changes in surplus and of cash flows for each of the three years in the period ended December 31, 1999. 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 auditing standards generally accepted in the United States. 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. As described in Note 1 to the financial statements, the Company prepared these consolidated financial statements using accounting practices prescribed or permitted by the Office of the Commissioner of Insurance of the State of Wisconsin (statutory basis of accounting), which practices differ from accounting principles generally accepted in the United States. 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 as of December 31, 1999 and 1998, or the results of their operations or their cash flows for each of the three years in the period ended December 31, 1999 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 as of December 31, 1999 and 1998 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, on the basis of accounting described in Note 1. /s/ PricewaterhouseCoopers LLP Milwaukee, Wisconsin January 24, 2000 49 51 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IN MILLIONS)
DECEMBER 31, -------------------- 1999 1998 ---- ---- ASSETS Bonds ............................................................................... $ 36,792 $ 34,888 Common and preferred stocks............................................................. 7,108 6,062 Mortgage loans.......................................................................... 13,416 12,250 Real estate............................................................................. 1,666 1,481 Policy loans............................................................................ 7,938 7,580 Other investments....................................................................... 3,443 2,353 Cash and temporary investments.......................................................... 1,159 1,275 ------------- ------------ Total investments.............................................................. 71,522 65,889 Due and accrued investment income....................................................... 893 827 Other assets............................................................................ 1,409 1,313 Separate account assets................................................................. 12,161 9,966 ------------- ------------ Total assets................................................................... $ 85,985 $ 77,995 ============= ============ LIABILITIES AND SURPLUS Reserves for policy benefits............................................................ $ 56,246 $ 51,815 Policy benefit and premium deposits..................................................... 1,746 1,709 Policyowner dividends payable........................................................... 3,100 2,870 Interest maintenance reserve............................................................ 491 606 Asset valuation reserve................................................................. 2,371 1,994 Income taxes payable.................................................................... 1,192 1,161 Other liabilities....................................................................... 3,609 3,133 Separate account liabilities............................................................ 12,161 9,966 ------------- ------------ Total liabilities.............................................................. 80,916 73,254 Surplus ............................................................................... 5,069 4,741 ------------- ------------ Total liabilities and surplus.................................................. $ 85,985 $ 77,995 ============= ============
The accompanying notes are an integral part of these financial statements. 50 52 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY CONSOLIDATED STATEMENT OF OPERATIONS (IN MILLIONS)
FOR THE YEAR ENDED DECEMBER 31, -------------------------------------- 1999 1998 1997 ---- ---- ---- Revenue Premiums and deposits............................................. $ 8,344 $ 8,021 $ 7,294 Net investment income............................................. 4,766 4,536 4,171 Other income...................................................... 970 922 861 ------------- ------------ ----------- Total revenue............................................... 14,080 13,479 12,326 ------------- ------------ ----------- Benefits and expenses Benefit payments to policyowners and beneficiaries................ 4,023 3,602 3,329 Net additions to policy benefit reserves.......................... 4,469 4,521 4,026 Net transfers to separate accounts................................ 516 564 566 ------------- ------------ ----------- Total benefits.............................................. 9,008 8,687 7,921 Operating expenses................................................ 1,287 1,297 1,138 ------------- ------------ ----------- Total benefits and expenses................................. 10,295 9,984 9,059 ------------- ------------ ----------- Gain from operations before dividends and taxes...................... 3,785 3,495 3,267 Policyowner dividends................................................ 3,091 2,869 2,636 ------------- ------------ ----------- Gain from operations before taxes.................................... 694 626 631 Income tax expense................................................... 203 301 356 ------------- ------------ ----------- Net gain from operations............................................. 491 325 275 Net realized capital gains........................................... 846 484 414 ------------- ------------ ----------- Net income........................................................ $ 1,337 $ 809 $ 689 ============= ============ ===========
The accompanying notes are an integral part of these financial statements. 51 53 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY CONSOLIDATED STATEMENT OF CHANGES IN SURPLUS (IN MILLIONS)
FOR THE YEAR ENDED DECEMBER 31, ------------------------------------ 1999 1998 1997 ---- ---- ----- Beginning of year balance................................................ $ 4,741 $ 4,101 $ 3,515 Net income............................................................ 1,337 809 689 Increase (decrease) in net unrealized gains........................... 213 (147) 576 Increase in investment reserves....................................... (377) (20) (526) Charge-off of goodwill (Note 7)....................................... (842) - - Other, net............................................................ (3) (2) (153) ----------- ----------- ----------- Net increase in surplus.................................................. 328 640 586 ---------- ----------- ---------- End of year balance...................................................... $ 5,069 $ 4,741 $ 4,101 ========== =========== ==========
The accompanying notes are an integral part of these financial statements. 52 54 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS (IN MILLIONS)
FOR THE YEAR ENDED DECEMBER 31, --------------------------------- 1999 1998 1997 ---- ---- ----- Cash flows from operating activities Insurance and annuity premiums........................................ $ 9,260 $ 8,876 $ 8,093 Investment income received ........................................... 4,476 4,216 3,928 Disbursement of policy loans, net of repayments....................... (358) (416) (360) Benefits paid to policyowners and beneficiaries....................... (4,012) (3,572) (3,316) Net transfers to separate accounts.................................... (516) (564) (565) Policyowner dividends paid............................................ (2,862) (2,639) (2,347) Operating expenses and taxes.......................................... (1,699) (1,749) (1,722) Other, net............................................................ (56) (83) 124 ----------- ----------- ---------- Net cash provided by operating activities.......................... 4,233 4,069 3,835 ---------- ----------- ---------- Cash flows from investing activities Proceeds from investments sold or matured Bonds.............................................................. 20,788 28,720 38,284 Common and preferred stocks........................................ 13,331 10,359 9,057 Mortgage loans..................................................... 1,356 1,737 1,012 Real estate........................................................ 216 159 302 Other investments.................................................. 830 768 398 ---------- ----------- ---------- 36,521 41,743 49,053 ---------- ----------- ---------- Cost of investments acquired Bonds.............................................................. 22,849 30,873 41,169 Common and preferred stocks........................................ 13,794 9,642 9,848 Mortgage loans..................................................... 2,500 3,135 2,309 Real estate........................................................ 362 268 202 Other investments.................................................. 1,864 567 359 ---------- ----------- ---------- 41,369 44,485 53,887 ---------- ----------- ---------- Net increase (decrease) in securities lending and other.................. 499 (624) 440 ---------- ----------- ---------- Net cash used in investing activities................................. (4,349) (3,366) (4,394) ----------- ----------- ---------- Net (decrease) increase in cash and temporary investments............. (116) 703 (559) Cash and temporary investments, beginning of year........................ 1,275 572 1,131 ---------- ----------- ---------- Cash and temporary investments, end of year.............................. $ 1,159 $ 1,275 $ 572 ========== =========== ==========
The accompanying notes are an integral part of these financial statements. 53 55 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying consolidated statutory financial statements include the accounts of The Northwestern Mutual Life Insurance Company ("Company") and its wholly-owned subsidiary, Northwestern Long Term Care Insurance Company ("Subsidiary"). The Company and its Subsidiary offer life, annuity, disability income and long-term care 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 Office of the Commissioner of Insurance of the State of Wisconsin ("statutory basis of accounting"). In 1998, the National Association of Insurance Commissioners ("NAIC") adopted the Codification of Statutory Accounting Principles ("Codification") guidance, which will replace the current Accounting Practices and Procedures manual as the NAIC's primary guidance on statutory accounting. The NAIC is now considering amendments to the Codification that would also be effective upon implementation. Codification provides guidance for areas where statutory accounting has been silent and changes current statutory accounting in some areas (e.g., deferred income taxes are recorded). The Office of the Commissioner of Insurance of the State of Wisconsin ("OCI") intends to adopt Codification effective January 1, 2001. The Company has not determined the potential effect of Codification, and the eventual effect of adoption could differ if changes are made prior to the effective date of January 1, 2001. Financial statements prepared on the statutory basis of accounting vary from financial statements prepared on the basis of generally accepted accounting principles ("GAAP") primarily because on a GAAP basis: (1) policy acquisition costs are deferred and amortized, (2) investment valuations and insurance reserves are based on different assumptions, (3) funds received under deposit-type contracts are not reported as premium revenue, and (4) deferred taxes are provided for temporary differences between book and tax basis of certain assets and liabilities. The effects on the financial statements of the differences between the statutory basis of accounting and GAAP are material to the Company. 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 future results could differ from these estimates. 54 56 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 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 Common and preferred stocks - Common stocks are carried at fair value, preferred stocks are generally carried at cost, and unconsolidated subsidiaries are recorded using the equity method Mortgage loans - Amortized cost Real estate - Lower of cost, less depreciation and encumbrances, or estimated net realizable value Policy loans - Unpaid principal balance, which approximates fair value Other investments - Consists primarily of joint venture investments which are valued at equity in ventures' net assets Cash and temporary investments - Amortized cost, which approximates fair value
TEMPORARY INVESTMENTS Temporary investments consist of debt securities that have maturities of one year or less at acquisition. NET INVESTMENT INCOME AND CAPITAL GAINS Net investment income includes interest and dividends received or due and accrued on investments, equity in unconsolidated subsidiaries' earnings and the Company's share of joint venture income. Net investment income is reduced by investment management expenses, real estate depreciation, depletion related to energy assets and costs associated with securities lending. Realized investment gains and losses are reported in income based upon specific identification of securities sold. Unrealized investment gains and losses include changes in the fair value of common stocks and changes in valuation allowances made for bonds, preferred stocks, mortgage loans and other investments considered by management to be impaired. INTEREST MAINTENANCE RESERVE The Company is required to maintain an interest maintenance reserve ("IMR"). The IMR is used to defer realized gains and losses, net of tax, on fixed income investments resulting from changes in interest rates. Net realized gains and losses deferred to the IMR are amortized into investment income over the approximate remaining term to maturity of the investment sold. 55 57 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 INVESTMENT RESERVES The Company is required to maintain an asset valuation reserve ("AVR"). The AVR establishes a general reserve for invested asset valuation using a formula prescribed by state regulations. The AVR is designed to stabilize surplus against potential declines in the value of investments. In addition, the Company maintained a $200 million voluntary investment reserve at each of December 31, 1999 and 1998 to absorb potential investment losses exceeding those considered by the AVR formula. Increases or decreases in these investment reserves are recorded directly to surplus. SEPARATE ACCOUNTS Separate account assets and related policy liabilities represent the segregation of funds deposited by "variable" life insurance and annuity policyowners. Policyowners bear the investment performance risk associated with variable products. Separate account assets are invested at the direction of the policyowner in a variety of Company-managed mutual funds. Variable product policyowners also have the option to invest in a fixed interest rate annuity in the general account of the Company. Separate account assets are reported at fair value. PREMIUM REVENUE AND OPERATING EXPENSES Life insurance premiums are recognized as revenue at the beginning of each policy year. Annuity and disability income premiums are recognized when received by the Company. Operating expenses, including costs of acquiring new policies, are charged to operations as incurred. OTHER INCOME Other income includes considerations on supplementary contracts, ceded reinsurance expense allowances and miscellaneous policy charges. BENEFIT PAYMENTS TO POLICYOWNERS AND BENEFICIARIES Benefit payments to policyowners and beneficiaries include death, surrender and disability benefits, matured endowments and supplementary contract payments. RESERVES FOR POLICY BENEFITS Reserves for policy benefits are determined using actuarial estimates based on mortality and morbidity experience tables and valuation interest rates prescribed by the OCI. (See Note 3.) POLICYOWNER DIVIDENDS Almost all life insurance policies, and certain annuity and disability income policies issued by the Company are participating. Annually, the Company's Board of Trustees approves dividends payable on participating policies in the following fiscal year, which are accrued and charged to operations when approved. RECLASSIFICATION Certain financial statement balances for 1998 and 1997 have been reclassified to conform to the current year presentation. 56 58 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 2. INVESTMENTS DEBT SECURITIES Debt securities consist of all bonds and fixed-maturity preferred stocks. The estimated fair values of debt securities 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. Statement value, which principally represents amortized cost, and estimated fair value of the Company's debt securities at December 31, 1999 and 1998 were as follows:
DECEMBER 31, 1999 RECONCILIATION TO ESTIMATED FAIR VALUE (IN MILLIONS) ----------------- ---------------------------------------------------- GROSS GROSS ESTIMATED STATEMENT UNREALIZED UNREALIZED FAIR VALUE GAINS LOSSES VALUE ----- ----- ------ ----- US Government and political obligations......... $ 3,855 $ 72 $ (167) $ 3,760 Mortgage-backed securities...................... 7,736 65 (256) 7,545 Corporate and other debt securities............. 25,201 249 (1,088) 24,362 ------------ ----------- ------------ ----------- 36,792 386 (1,511) 35,667 Preferred stocks................................ 85 2 - 87 ------------ ----------- ------------ ----------- Total........................................... $ 36,877 $ 388 $ (1,511) $ 35,754 ============ =========== ============ ===========
DECEMBER 31, 1998 RECONCILIATION TO ESTIMATED FAIR VALUE (IN MILLIONS) ----------------- ---------------------------------------------------- GROSS GROSS ESTIMATED STATEMENT UNREALIZED UNREALIZED FAIR VALUE GAINS LOSSES VALUE ----- ----- ------ ----- US Government and political obligations......... $ 3,904 $ 461 $ (11) $ 4,354 Mortgage-backed securities...................... 7,357 280 (15) 7,622 Corporate and other debt securities............. 23,627 1,240 (382) 24,485 ------------ ----------- ------------ ----------- 34,888 1,981 (408) 36,461 Preferred stocks................................ 189 4 (1) 192 ------------ ----------- ------------ ----------- Total........................................... $ 35,077 $ 1,985 $ (409) $ 36,653 ============ =========== ============ ===========
57 59 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 The statement value and estimated fair value of debt securities by contractual maturity at December 31, 1999 is 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.
STATEMENT ESTIMATED VALUE FAIR VALUE ----- ---------- (IN MILLIONS) Due in one year or less........................................................ $ 931 $ 942 Due after one year through five years.......................................... 5,420 5,412 Due after five years through ten years......................................... 11,168 10,796 Due after ten years............................................................ 11,622 11,059 ------------ ---------- 29,141 28,209 Mortgage-backed securities..................................................... 7,736 7,545 ------------ ---------- $ 36,877 $ 35,754 ============ ==========
STOCKS The estimated fair values of common and perpetual preferred stocks 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. The adjusted cost of common and preferred stock held by the Company at December 31, 1999 and 1998 was $4.9 billion and $4.3 billion, respectively. MORTGAGE LOANS AND REAL ESTATE Mortgage loans are collateralized by properties located throughout the United States and Canada. The Company attempts to minimize mortgage loan investment risk by diversification of geographic locations and types of collateral properties. The fair value of mortgage loans as of December 31, 1999 and 1998 was approximately $13.2 billion and $12.9 billion, respectively. The fair value of the mortgage loan portfolio is estimated 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. At December 31, 1999 and 1998, real estate includes $39 million and $61 million, respectively, acquired through foreclosure and $114 million and $120 million, respectively, of home office real estate. 58 60 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 REALIZED AND UNREALIZED GAINS AND LOSSES Realized investment gains and losses for the years ended December 31, 1999, 1998 and 1997 were as follows:
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997 ----------------- ----------------- ----------------- 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.......................... $ 219 $ (404) $ (185) $ 514 $ (231) $ 283 $ 518 $ (269) $ 249 Common and preferred stocks.... 1,270 (255) 1,015 885 (240) 645 533 (150) 383 Mortgage loans................. 22 (12) 10 18 (11) 7 14 (14) - Real estate.................... 92 - 92 41 - 41 100 (2) 98 Other invested assets.......... 308 (189) 119 330 (267) 63 338 (105) 233 ------ ------- ------ ------ ------- ------- ------ ------- ------- 1,911 (860) 1,051 1,788 (749) 1,039 1,503 (540) 963 ------ ------- ------ ------ ------- ------- ------ ------- ------- Less: Capital gains taxes...... 244 358 340 Less: IMR (losses) gains....... (39) 197 209 ------ ------- ------- Net realized capital gains..... $ 846 $ 484 $ 414 ====== ======= =======
Changes in unrealized net investment gains and losses for the years ended December 31, 1999, 1998 and 1997 were as follows:
FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1997 ---- ---- ---- (in millions) Bonds........................................................... $ (178) $ (97) $ 43 Common and preferred stocks..................................... 415 29 528 Mortgage loans.................................................. (10) (16) (7) Real estate..................................................... (2) - - Other........................................................... (12) (63) 12 ---------- ----------- ---------- $ 213 $ (147) $ 576 ========== =========== ===========
59 61 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 SECURITIES LENDING The Company has entered into securities lending agreements whereby certain securities are loaned to third parties, primarily major brokerage firms. The Company's policy requires a minimum of 102% of the fair value of the loaned securities as collateral, calculated on a daily basis in the form of either cash or securities. Collateral assets received and related liability due to counterparties of $2.1 billion and $1.5 billion, respectively, are included in the consolidated statements of financial position at December 31, 1999 and 1998, and approximate the statement value of securities loaned at those dates. INVESTMENT IN MGIC The Company owns 11.3% (11.9 million shares) of the outstanding common stock of MGIC Investment Corporation ("MGIC"). This investment is accounted for using the equity method. At December 31, 1999 and 1998, the fair value of the Company's investment in MGIC exceeded the statement value of $201 million and $180 million, respectively, by $518 million and $296 million, respectively. In August 1998, the Company delivered 8.9 million shares of MGIC to a brokerage firm to settle a forward contract. In conjunction with the settlement, the Company recorded a $114 million realized gain. DERIVATIVE FINANCIAL INSTRUMENTS In the normal course of business, the Company enters into transactions to reduce its exposure to fluctuations in interest rates, foreign currency exchange rates and market volatility. These hedging strategies include the use of forwards, futures, options and swaps. The Company held the following positions for hedging purposes at December 31, 1999 and 1998:
DERIVATIVE FINANCIAL INSTRUMENT NOTIONAL AMOUNTS RISKS REDUCED ------------------------------ ---------------- ------------- (IN MILLIONS) DECEMBER 31, DECEMBER 31, 1999 1998 ---- ---- Foreign Currency Forward Contracts $967 $601 Currency exposure on foreign- denominated investments Common Stock Futures 620 657 Stock market price fluctuation. Bond Futures 50 379 Bond market price fluctuation. Options to Acquire Interest Rate Swaps 419 419 Interest rates payable on certain annuity and insurance contracts. Foreign Currency and Interest Rate Swaps 203 94 Interest rates on variable rate notes and currency exposure on foreign-denominated bonds. Default Swaps 52 - Default exposure on certain bond investments.
60 62 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 The notional or contractual amounts of derivative financial instruments are used to denominate these types of transactions and do not represent the amounts exchanged between the parties. In addition to the use of derivatives for hedging purposes, equity swaps were held for investment purposes during 1999 and 1998. The notional amount of equity swaps outstanding at December 31, 1999 and 1998 was $136 million and $138 million, respectively. Foreign currency forwards, foreign currency swaps, stock futures and equity swaps are reported at fair value. Resulting gains and losses on these contracts are unrealized until expiration of the contract. There is no statement value reported for interest rate swaps, bond futures and options to acquire interest rate swaps prior to the settlement of the contract, at which time realized gains and losses are deferred to IMR. Changes in the value of derivative instruments are expected to offset gains and losses on the hedged investments. During 1999 and 1998, net realized and unrealized gains on investments were partially offset by net realized losses of $55 million and $104 million, respectively, and net unrealized gains (losses) of $17 million and $(58) million, respectively, on derivative instruments. The effect of derivative instruments in 1997 was not material to the Company's results of operations. 3. RESERVES FOR POLICY BENEFITS 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 life policy reserves are primarily based on the net level premium method employing various mortality tables at interest rates ranging from 2% to 4-1/2%. Deferred annuity reserves on contracts issued since 1985 are valued primarily 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 contract value. Immediate annuity reserves are based on 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. Active life reserves for prior DI policies are based on the net level premium method, a 3% to 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 primarily using the 1985 CIDA (modified for Company experience in the first four 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. Actual future experience could differ from these estimates. 61 63 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 4. EMPLOYEE AND AGENT BENEFIT PLANS The Company sponsors noncontributory defined benefit retirement plans for all eligible employees and agents. The expense associated with these plans is generally recorded by the Company in the period contributions are funded. As of January 1, 1999, the most recent actuarial valuation date available, the qualified defined benefit plans were fully funded. The Company recorded a liability of $109 million and $98 million for nonqualified defined benefit plans at December 31, 1999 and 1998, respectively. In addition, the Company has a contributory 401(k) plan for eligible employees and a noncontributory defined contribution plan for all full-time agents. The Company's contributions are expensed in the period contributions are made to the plans. The Company recorded $31 million, $29 million and $27 million of total expense related to its defined benefit and defined contribution plans for the years ended December 31, 1999, 1998 and 1997, respectively. The defined benefit and defined contribution plans' assets of $2.2 billion and $1.9 billion at December 31, 1999 and 1998, respectively, were primarily invested in the separate accounts of the Company. In addition to pension and retirement 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 costs for the years ended December 31, 1999, 1998 and 1997 were a net expense (benefit) of $5.0 million, $1.8 million and ($1.3) million, respectively.
DECEMBER 31, DECEMBER 31, 1999 1998 ---- ---- Unfunded postretirement benefit obligation for retirees and other fully eligible employees $40 million $35 million (Accrued in statement of financial position) Estimated postretirement benefit obligation for active non-vested employees (Not accrued until employee vests) $68 million $56 million Discount rate 7% 7% Health care cost trend rate 10% to an ultimate 10% to an ultimate 5%, declining 1% 5%, declining 1% for 5 years for 5 years
If the health care cost trend rate assumptions were increased by 1%, the accrued postretirement benefit obligation as of December 31, 1999 and 1998 would have been increased by $6 million and $5 million, respectively. At December 31, 1999 and 1998, the recorded postretirement benefit obligation was reduced by $28 million and $23 million, respectively, for health care benefit plan assets. These assets were primarily invested in separate accounts of the Company. 62 64 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 5. 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 to reinsurers under excess coverage and coinsurance contracts. The Company retains a maximum of $25 million of coverage per individual life and $35 million maximum of coverage per joint life. The Company has an excess reinsurance contract for disability income policies with retention limits varying based upon coverage type. The amounts shown in the accompanying consolidated financial statements are net of reinsurance. Reserves for policy benefits at December 31, 1999 and 1998 were reported net of ceded reserves of $584 million and $518 million, respectively. The effect of reinsurance on premiums and benefits for the years ended December 31, 1999, 1998 and 1997 was as follows:
1999 1998 1997 ---- ---- ---- (IN MILLIONS) Direct premiums and deposits ................. $ 8,785 $ 8,426 $ 7,647 Premiums ceded ............................... (441) (405) (353) ------- ------- ------- Net premium and deposits ..................... $ 8,344 $ 8,021 $ 7,294 ======= ======= ======= Benefits to policyowners and beneficiaries ... $ 9,205 $ 8,869 $ 8,057 Benefits ceded ............................... (197) (182) (136) ------- ------- ------- Net benefits to policyowners and beneficiaries $ 9,008 $ 8,687 $ 7,921 ======= ======= =======
In addition, the Company received $133 million, $121 million and $115 million for the years ended December 31, 1999, 1998 and 1997, respectively, from reinsurers representing allowances for reimbursement of commissions and other expenses. These amounts are included in other income in the consolidated statement of operations. Reinsurance contracts do not relieve the Company from its obligations to policyowners. 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. 6. INCOME TAXES Provisions for income taxes are based on current income tax payable without recognition of deferred taxes. The Company files a consolidated life-nonlife federal income tax return. Federal income tax returns for years through 1995 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. 63 65 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 The Company's taxable income can vary significantly from gain from operations before taxes due to differences between book and tax valuation of assets and liabilities (e.g., investments and policy benefit reserves). The Company pays a tax that is assessed only on the surplus of mutual life insurance companies ("equity tax"), and also, the Company must capitalize and amortize, as opposed to immediately deducting, an amount deemed to represent the cost of acquiring new business ("DAC tax"). The Company's effective tax rate on gains from operations before taxes for the years ended December 31, 1999, 1998 and 1997 was 29%, 48%, and 56% respectively. In 1999, the effective rate was less than the federal corporate rate of 35% due primarily to differences between book and tax investment income. In 1998 and 1997, the effective rate was greater than 35% due primarily to the equity tax and DAC tax. 7. RELATED PARTY TRANSACTIONS The Company acquired Frank Russell Company ("Frank Russell") effective January 1, 1999 for a purchase price of approximately $950 million. Frank Russell is a leading investment management and consulting firm, providing investment advice, analytical tools and investment vehicles to institutional and individual investors in more than 30 countries. This investment is accounted for using the equity method and is included in common stocks in the consolidated statement of financial position. In 1999, the Company charged-off directly from surplus approximately $842 million, representing the total goodwill associated with the acquisition. The Company has received permission from the OCI for this charge-off. The Company has unconditionally guaranteed certain debt obligations of Frank Russell, including $350 million of senior notes and up to $150 million of other credit facilities. During 1999, the Company transferred appreciated equity investments to a wholly-owned subsidiary as a capital contribution to the subsidiary. A realized capital gain of $287 million was recorded on this transaction based on the fair value of the assets upon transfer. 8. CONTINGENCIES The Company has guaranteed certain obligations of its other affiliates. These guarantees totaled approximately $101 million at December 31, 1999 and are generally supported by the underlying net asset values of the affiliates. In addition, the Company routinely makes commitments to fund mortgage loans or other investments in the normal course of business. These commitments aggregated to $1.9 billion at December 31, 1999 and were extended at market interest rates and terms. 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 position. 64 66 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 In respect of NML Variable Annuity Account A and NML Variable Annuity Account C (Registrant) By /s/ James D. Ericson ----------------------------------------- James D. Ericson President and Chief Executive Officer Date: March 23, 2000 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 GARY E. LONG Vice President and Controller - - - - - - - - - - - - - - - - - ----------------------------- (Principal Financial and Accounting Officer) Gary E. Long R. QUINTUS ANDERSON* Trustee - - - - - - - - - - - - - - - - - ----------------------------- R. Quintus Anderson EDWARD E. BARR* Trustee - - - - - - - - - - - - - - - - - ----------------------------- Edward E. Barr GORDON T. BEAHAM, III* Trustee - - - - - - - - - - - - - - - - - ----------------------------- Gordon T. Beaham, III ROBERT C. BUCHANAN* Trustee - - - - - - - - - - - - - - - - - ----------------------------- Robert C. Buchanan GEORGE A. DICKERMAN* Trustee - - - - - - - - - - - - - - - - - ----------------------------- George A. Dickerman PIERRE S. DU PONT* Trustee - - - - - - - - - - - - - - - - - ----------------------------- Pierre S. Du Pont J. E. GALLEGOS* Trustee - - - - - - - - - - - - - - - - - ----------------------------- J. E. Gallegos STEPHEN N. GRAFF* Trustee - - - - - - - - - - - - - - - - - ----------------------------- Stephen N. Graff PATRICIA ALBJERG GRAHAM* Trustee - - - - - - - - - - - - - - - - - ----------------------------- Patricia Albjerg Graham
65 67 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K
TITLE ----- STEPHEN F. KELLER* Trustee - - - - - - - - - - - - - - - - - ----------------------------- Stephen F. Keller BARBARA A. KING* Trustee - - - - - - - - - - - - - - - - - ----------------------------- Barbara A. King J. THOMAS LEWIS* Trustee - - - - - - - - - - - - - - - - - ----------------------------- J. Thomas Lewis DANIEL F. McKEITHAN, JR.* Trustee - - - - - - - - - - - - - - - - - ----------------------------- Daniel F. McKeithan, Jr. GUY A. OSBORN* Trustee - - - - - - - - - - - - - - - - - ----------------------------- Guy A. Osborn TIMOTHY D. PROCTOR* Trustee - - - - - - - - - - - - - - - - - ----------------------------- Timothy D. Proctor 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. PETER M. SOMMERHAUSER* Trustee - - - - - - - - - - - - - - - - - ----------------------------- Peter M. Sommerhauser 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 EDWARD J. ZORE Trustee - - - - - - - - - - - - - - - - - ----------------------------- Edward J. Zore
Each of the above signatures is affixed as of March 23, 2000 *By /s/ JAMES D. ERICSON --------------------------------------- James D. Ericson, Attorney in fact, pursuant to the Power of Attorney attached as exhibit 24.1 hereto. 66 68 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K INDEX TO EXHIBITS
EXHIBIT DESCRIPTION PAGE - - - - - - - - - - - - - - - - - ------- ----------- ---- 3.1 Restated Articles of Incorporation of The Northwestern Mutual Life Insurance Company. (This exhibit was filed in electronic format with Post-Effective Amendment No. 6 on Form N-4 for NML Variable Annuity Account A, File No. 33-58476, CIK 0000790162, dated November 13, 1995, and is incorporated herein by reference.) 3.2 Amended By-Laws of The Northwestern Mutual Life Insurance Company. (This exhibit was filed in electronic format with the Registration Statement on Form S-6 for Northwestern Mutual Variable Life Account, File No. 333-59103, CIK 0000742277, dated July 15, 1998, and is incorporated herein by reference.) 3.3 Resolution of the Board of Trustees of The Northwestern Mutual Life Insurance Company creating "Northwestern Mutual Variable Annuity Account A". (This exhibit was filed in electronic format with the Registration Statement on Form N-4 for NML Variable Annuity Account A, File No. 333-22455, CIK 0000790162, dated February 27, 1997, and is incorporated herein by reference.) 3.4 Resolution of the Board of Trustees of The Northwestern Mutual Life Insurance Company creating Separate Account C............................................................... 69 3.5 Resolution of the Board of Trustees of The Northwestern Mutual Life Insurance Company to use Separate Account C to facilitate the issuance and maintenance of the Contracts and renaming the Account "NML Variable Annuity Account C"............................... 70 10.1 Flexible Payment Variable Annuity Front Load Contract, RR.V.A. (032000) (sex neutral). (This exhibit was filed in electronic format with the Registration Statement on Form N-4 for NML Variable Annuity Account A, File No. 333-72913, CIK 0000790162, dated January 27, 2000, and is incorporated herein by reference.) 10.2 Flexible Payment Variable Annuity Back Load Contract, RR.V.A. (032000) (sex neutral). (This exhibit was filed in electronic format with the Registration Statement on Form N-4 for NML Variable Annuity Account A, File No. 333-72913, CIK 0000790162, dated January 27, 2000, and is incorporated herein by reference.) 10.3 Variable Annuity Front Load and Back Load Contract Payment Rate Tables, RR.V.A.B (032000), included in Exhibits 10.1 and 10.2 above (sex distinct). 10.4 Enhanced Death Benefit for Front Load and Back Load Contracts, VA. EDB. (032000), included in Exhibits 10.1 and 10.2 above. 10.5 Waiver of Withdrawal Charge for Back Load Contract, VA.WWC. (032000), included in Exhibit 10.2 above. 10.6 Application forms for Front Load and Back Load Contracts, included in Exhibits 10.1 and 10.2 above.
67 69 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K 10.7 Form of Participation Agreement Among Russell Insurance Funds, Russell Fund Distributors, Inc. and The Northwestern Mutual Life Insurance Company. (This exhibit was filed in electronic format with the Registration Statement on Form N-4 for NML Variable Annuity Account A, File No. 333-72913, CIK 0000790162, dated February 25, 1999, and is incorporated herein by reference.) 10.8 Form of Administrative Service Fee Agreement between The Northwestern Mutual Life Insurance Company and Frank Russell Company. (This exhibit was filed in electronic format with the Registration Statement on Form N-4 for NML Variable Annuity Account A, File No. 333-72913, CIK 0000790162, dated February 25, 1999, and is incorporated herein by reference.) 10.9 Distribution Contract. (This exhibit was filed in electronic format with the Registration Statement on Form N-4 for NML Variable Annuity Account A, File No. 333-22455, CIK 0000790162, dated February 27, 1997, and is incorporated herein by reference.) 10.10 Group Combination Annuity Contract, NVP.1C.(0594), with amended application, including Contract amendment (sex neutral). (This exhibit was filed in electronic format with Post-Effective Amendment No. 19 on Form N-4 for NML Variable Annuity Account C, File No. 2-89905-01, CIK 0000790163, dated February 25, 1999, and is incorporated herein by reference.) 10.11 Application Form for Group Combination Annuity Contract, included in Exhibit 10.10 above. 21.1 Subsidiaries of The Northwestern Mutual Life Insurance Company.................................... 72 24.1 Power of Attorney................................................................................. 74 27.1 NML Variable Annuity Account A Financial Data Schedule............................................ 76 27.2 NML Variable Annuity Account C Financial Data Schedule............................................ 77 27.3 The Northwestern Mutual Life Insurance Company Financial Data Schedule............................ 78
68 EX-3.4 2 RESOLUTION OF THE BOARD OF TRUSTEES 1 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K EXHIBIT 3.4 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY BOARD OF TRUSTEES RESOLUTION ESTABLISHING SEPARATE ACCOUNT C JULY 22, 1970 BE IT RESOLVED by the Board of Trustees of The Northwestern Mutual Life Insurance Company (the "Company") that: 1. The Company shall and does hereby establish a separate account ("NML Separate Account C") in accordance with the provisions of Section 206.385 of the Wisconsin Statutes of 1967 to facilitate the issuance of certain agreements (the "Agreements") which may be offered by the Company to the trustees of certain pension and profit sharing plans in connection with the purchase of life insurance policies and annuity contracts. 2. The amounts paid to the Company in connection with the Agreements, less stated amounts as set forth therein, shall be allocated to Account C. 3. The income, if any, and gains or losses, realized or unrealized, of Account C shall be credited to or charged against the amount so allocated to Account C in accordance with the terms and conditions of the Agreements without regard to the other income, gains or losses of the Company, and the assets thereof shall not be chargeable with any liabilities arising out of any other separate account or any other business of the Company. 4. Amounts paid to the Company in connection with the Agreements and allocated to Account C shall be invested in shares of NML Fund, Inc. (the "Fund") at the net asset value of such shares, except that other securities may be substituted for the shares of the Fund as provided in the Agreements, and the Company shall make appropriate arrangements with the Fund for the purchase by Account C or shares of the Fund at the net asset value thereof. 5. Account C shall be registered as a unit investment trust under the Investment Company Act of 1940. 6. $50,000,000 offering price of the Agreements or Units thereof or such lesser amount as may be designated by the President of the Company, shall be registered for sale under the Securities Act of 1933. 7. The officers of the Company are hereby authorized and directed to take all action necessary or desirable to comply with the Investment Company Act of 1940 and the Securities Act of 1933 and other applicable state and federal laws in connection with offering the Agreements for sale and operation of Account C, including, without limitation, the filing of registration statements, and amendments and exhibits thereto and the securing of such exemptions from such state and federal laws as they deem advisable. BE IT FURTHER RESOLVED, that the President of the Company and other officers of the Company are authorized and directed, under such directions as may be specified, from time to time, by the Executive Committee to execute and deliver such instruments and to do such acts and things as may be necessary or desirable to carry out the purpose and intent of the foregoing resolution in the form or substantially the form as adopted, including, without limitation, determination of the terms and conditions of the Agreements; determination of the state or states in which appropriate action shall be taken to obtain the requisite qualification, registration and/or authorization for the sale of the Agreements; performance on behalf of the Company of any and all such acts as they may deem necessary or advisable to comply with applicable securities, insurance and other laws of any such states and in connection therewith to execute and file all requisite documents, including, but not limited to, contracts, applications, reports, surety bonds, and irrevocable consents and appointments of attorneys for service or process; and execution of such contracts on behalf of the Company as may be necessary or desirable to efficiently engage in the sale and distribution of the Agreements including, without limitation, such contracts for custodial, safekeeping, transfer, accounting, legal or disbursing services as may be necessary or desirable. The execution by such officers of any document or the performance of any act in connection with the foregoing matters shall conclusively establish their authority therefore from the Company and the approval and ratification by the Company of the documents so executed and the action so taken. 69 EX-3.5 3 RESOLUTION OF THE BOARD OF TRUSTEES 1 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K EXHIBIT 3.5 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY BOARD OF TRUSTEES RESOLUTION FOR GROUP VARIABLE ANNUITY CONTRACTS ACCOUNT C NOVEMBER 23, 1983 WHEREAS, NML Separate Account C ("Account C") was established by a Resolution of the Board of Trustees on July 22, 1970 in accordance with the Wisconsin Insurance Laws to facilitate the issuance of certain agreements (the "Agreements") which have been offered and sold to certain pension and profit-sharing plans; and WHEREAS, the operations of Account C and the terms of the Agreements have been modified from time to time as authorized by Committees of the Board of Trustees and officers of the Company acting pursuant to delegated authority; and WHEREAS, it is desired to offer group variable annuity contracts (the "Contracts") for use in connection with (a) corporate pension and profit-sharing plans meeting the requirements of Section 401(a) of the Internal Revenue Code of 1954, as amended (the "Code"), and (b) plans (commonly referred to as "H.R.-10 Plans") providing retirement benefits to self-employed individuals and their employees and meeting the requirements of Section 401 or 403(a) of the Code. NOW, THEREFORE, BE IT RESOLVED as follows: 1. Account C shall be operated by the Company to facilitate the issuance and maintenance of the Agreements and the Contracts in accordance with their terms, and the amounts paid to the Company in connection with the Agreements and Contracts, less stated amounts as set forth therein, shall be allocated to Account C. 2. The income, if any, and gains or losses, realized or unrealized, of Account C shall be credited to or charged against the amounts so allocated to Account C in accordance with the terms and conditions of the Agreements and the Contracts without regard to the other income, gains or losses of the Company, and the assets thereof shall not be chargeable with any liabilities arising out of any other separate account or any other business of the Company. 3. Amounts allocated to Account C shall continue to be invested in shares of NML Stock Fund, Inc., NML Bond Fund, Inc., NML Money Market Fund, Inc. and NML One Fund, Inc. (the "Funds") at the net asset value of such shares, except that other securities may be substituted for the shares of the Funds as provided in the Agreements and the Contracts, and the Company shall maintain appropriate arrangements with the Funds for the purchase by Account C of shares of the Funds at the net asset value thereof. 4. $250,000,000 offering price of the Contracts, or units thereof, or such lesser amount as may be designated by the President of the Company, to be offered in connection with H.R.-10 Plans, shall be registered for sale under the Securities Act of 1933. 5. The offering of the Agreements and the Contracts shall be limited to H.R.-10 Plans and corporate pension and profit-sharing plans which meet the requirements of Section 401(a) of the Code so as to preclude the necessity for registration of Account C as a unit investment trust or otherwise under the Investment Company Act of 1940, as amended. 6. The officers of the Company are hereby authorized and directed to take all action necessary or desirable to comply with the Securities Act of 1933 and other applicable state and federal laws in connection with the offering of Contracts for sale and the operation of Account C, including, without limitation, the filing of registration statements, and amendments and exhibits thereto; and the securing of such exemptions from and determinations and rulings as to the application of state and federal laws as they deem advisable. The Secretary of the Company is hereby appointed the agent of the Company to receive any and all notices and communications from the Securities and Exchange Commission in relation to such registration statements and amendments and applications for such exemptions. 70 2 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K 7. The officers of the Company are authorized and directed, under such directions as may be specified from time to time by the Insurance Products and Marketing Committee, to execute and deliver such instruments and to do such acts and things as may be necessary or desirable to carry out the purpose and intent of the foregoing resolution in the form or substantially the form as adopted, including, without limitation, determination of the terms and conditions of the Contracts; determination of the state or states in which appropriate action shall be taken to obtain the requisite qualification, registration and/or authorization for the sale of the Contracts as such officers may deem advisable; performance on behalf of the Company of any and all such acts as they may deem necessary or advisable to comply with applicable securities, insurance and other laws of any such states and in connection therewith to execute and file all requisite documents, including, but not limited to, contracts, applications, reports, surety bonds, and irrevocable consents and appointments of attorneys for service of process; and execution of such Contracts on behalf of the Company as may be necessary or desirable to efficiently engage in the sale and distribution of the Contracts including, without limitation, such contracts for custodial, safekeeping, transfer, accounting, legal or disbursing services as may be necessary or desirable. The execution by such officers of any document or the performance of any act in connection with the foregoing matters shall conclusively establish their authority therefor from the Company and the approval and ratification by the Company of the documents so executed and the actions so taken. 8. The name of Account C is hereby changed to "NML Variable Annuity Account C". 9. To the extent that this resolution is inconsistent with the resolution which established Account C, this resolution shall control. In all other respects, the resolution which established Account C shall remain in full force and effect. 71 EX-21.1 4 SUBSIDIARIES OF THE NORTHWESTERN MUTUAL LIFE INS. 1 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K EXHIBIT 21.1 SUBSIDIARIES OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY (as of December 31, 1999) The following sets forth the name and jurisdiction of incorporation of the subsidiaries of The Northwestern Mutual Life Insurance Company.
Name of Subsidiary Jurisdiction of Incorporation - - - - - - - - - - - - - - - - - ------------------ ----------------------------- Alexandra International Sales, Inc. U.S. Virgin Islands Amber, Inc. Delaware Baird Financial Corporation Wisconsin Baraboo, Inc. Delaware Bayridge, Inc. Delaware Bradford, Inc. Delaware Brendan International Sales, Inc. U.S. Virgin Islands Brian International Sales, Inc. U.S. Virgin Islands Buffalo Promotions, Inc. Texas Burgundy, Inc. Delaware Carlisle Ventures, Inc. Delaware Cass Corporation Delaware Chateau, Inc. Delaware Coral, Inc. Delaware Diversey, Inc. Delaware Eiger Corporation Wisconsin Elderwood International Sales, Inc. U.S. Virgin Islands Elizabeth International Sales, Inc. U.S. Virgin Islands Frank Russell Company Washington Greenway Sports, Inc. Texas Hazel, Inc. Delaware Higgins, Inc. Delaware Highbrook International Sales, Inc. U.S. Virgin Islands Hobby, Inc. Delaware INV Corp. Delaware Jack International Sales, Inc. U.S. Virgin Islands Justin International FSC, Inc. U.S. Virgin Islands KerryAnne International Sales, Inc. U.S. Virgin Islands Klode, Inc. Delaware Kristiana International Sales, Inc. U.S. Virgin Islands Lake Bluff, Inc. Delaware Larkin, Inc. Delaware Logan, Inc. Delaware Lydell, Inc. Delaware Mallon International Sales, Inc. U.S. Virgin Islands Marina Pacific, Ltd. California Maroon, Inc. Delaware Mason & Marshall, Inc. Delaware Mason Street Funds, Inc. Maryland Mitchell, Inc. Delaware NML-CBO, LLC Delaware NML Development Corporation Delaware NML/Mid-Atlantic, Inc. New Jersey NML Real Estate Holdings, LLC Wisconsin NML Securities Holdings, LLC Wisconsin
72 2 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K NML/Tallahassee, Inc. Florida NW Greenway #1, Inc. Texas NW Greenway #9, Inc. Texas NW Pipeline, Inc. Texas Nicolet, Inc. Delaware North Van Buren, Inc. Delaware Northwestern Financial Group, L.L.C. Wisconsin Northwestern Foreign Holdings B.V. Netherlands Northwestern International Holdings, Inc. Delaware Northwestern Investment Management Company Wisconsin Northwestern Long Term Care Insurance Company Illinois Northwestern Mutual Investment Services, LLC Wisconsin Northwestern Mutual Las Vegas, Inc. Nevada Northwestern Mutual Life International, Inc. Delaware Northwestern Mutual Series Fund, Inc. Maryland Northwestern Reinsurance Holdings N.V. Netherlands Olive, Inc. Delaware PBClub, Inc. Delaware Painted Rock Development Corporation Arizona Park Forest Northeast, Inc. Delaware Pembrook, Inc. Delaware RE Corporation Delaware Regina International Sales, Inc. U.S. Virgin Islands Robert W. Baird & Co. Incorporated Wisconsin Rocket Sports, Inc. Texas Russet, Inc. Delaware Ryan, Inc. Delaware Saskatoon Centre, Limited Ontario, Canada Sean International Sales, Inc. U.S. Virgin Islands Solar Resources, Inc. Wisconsin Stadium and Arena Management, Inc. Delaware Summit Sports, Inc. Texas The Grand Avenue Corporation Wisconsin Travers International Sales, Inc. U.S. Virgin Islands Tupelo, Inc. Delaware White Oaks, Inc. Delaware
Certain non-insurance subsidiaries are omitted on the basis that, considered in the aggregate, they did not constitute a significant subsidiary as defined by Regulation S-X at December 31, 1999. 73 EX-24.1 5 POWER OF ATTORNEY 1 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K EXHIBIT 24.1 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, 1999 to be filed under the Securities Exchange Act of 1934 and to any instrument or document 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 28th day of July, 1999. R. QUINTUS ANDERSON Trustee ------------------------------------ R. Quintus Anderson EDWARD E. BARR Trustee ------------------------------------ Edward E. Barr GORDON T. BEAHAM, III Trustee ------------------------------------ Gordon T. Beaham, III ROBERT C. BUCHANAN Trustee ------------------------------------ Robert C. Buchanan ROBERT E. CARLSON Trustee ------------------------------------ Robert E. Carlson GEORGE A. DICKERMAN Trustee ------------------------------------ George A. Dickerman PIERRE S. DU PONT Trustee ------------------------------------ Pierre S. Du Pont JAMES D. ERICSON Trustee ------------------------------------ James D. Ericson J. E. GALLEGOS Trustee ------------------------------------ J. E. Gallegos STEPHEN N. GRAFF Trustee ------------------------------------ Stephen N. Graff PATRICIA ALBJERG GRAHAM Trustee ------------------------------------ Patricia Albjerg Graham 74 2 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FORM 10-K STEPHEN F. KELLER Trustee ------------------------------------ Stephen F. Keller BARBARA A. KING Trustee ------------------------------------ Barbara A. King J. THOMAS LEWIS Trustee ------------------------------------ J. Thomas Lewis DANIEL F. McKEITHAN, JR. Trustee ------------------------------------ Daniel F. McKeithan, Jr. GUY A. OSBORN Trustee ------------------------------------ Guy A. Osborn TIMOTHY D. PROCTOR Trustee ------------------------------------ Timothy D. Proctor 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. PETER M. SOMMERHAUSER Trustee ------------------------------------ Peter M. Sommerhauser 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 75 EX-27.1 6 FINANCIAL DATA SCHEDULE
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NML VARIABLE ANNUITY ACCOUNT A DECEMBER 31, 1999 FINANCIAL STATEMENTS AND IS QUALIFIED IN IS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 0000790162 NML VARIABLE ANNUITY ACCOUNT A 1,000 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 558,910 785,267 2,341 0 0 787,608 0 0 3,403 3,403 784,204 0 0 0 0 0 0 0 0 784,204 56,820 0 0 8,724 48,096 51,300 9,271 108,667 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-27.2 7 FINANCIAL DATA SCHEDULE
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NML VARIABLE ANNUITY ACCOUNT C DECEMBER 31, 1999 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000790163 NML VARIABLE ANNUITY ACCOUNT C 1,000 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 515,437 720,484 1,427 0 0 721,910 0 0 1,194 1,194 720,716 0 0 0 0 0 0 0 0 720,716 43,815 0 0 3,445 40,369 41,106 36,857 118,332 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-27.3 8 FINANCIAL DATA SCHEDULE
7 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY DECEMBER 31, 1999 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 0000073076 The Northwestern Mutual Life Insurance Company 1,000 US DOLLARS YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 1 0 0 36,792 7,108 13,416 1,666 71,522 1,159 0 0 85,985 59,108 1,746 0 3,100 0 0 0 0 5,069 85,985 8,344 4,766 0 970 9,008 1,287 3,091 694 203 491 0 846 0 1,337 0 0 0 0 0 0 0 0 0
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