Table of Contents
Registration No. 002-89972
Registration No. 811-03989
| UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 |
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| FORM N-6 | ||||
| REGISTRATION STATEMENT UNDER THE SECURITIES | ||||
| ACT OF 1933 | / / | |||
| Pre-Effective Amendment No. | / / | |||
| Post-Effective Amendment No. 45 | / X / | |||
| and/or | ||||
| REGISTRATION STATEMENT UNDER THE INVESTMENT | ||||
| COMPANY ACT OF 1940 | / / | |||
| Amendment No. 62 | / X / | |||
| (Check appropriate box or boxes.) | ||||
| NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT | ||||
| (Exact Name of Registrant) | ||||
| THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY | ||||
| (Name of Depositor) | ||||
| 720 East Wisconsin Avenue, Milwaukee, Wisconsin | 53202 | |||
| (Address of Depositor’s Principal Executive Offices) | (Zip Code) | |||
Depositor’s Telephone Number, including Area Code 414-271-1444
RAYMOND J. MANISTA, General Counsel and Secretary
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
(Name and Address of Agent for Service)
Copy to:
Chad E. Fickett, Assistant General Counsel
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
414-665-1209
Approximate Date of Proposed Public Offering Continuous
It is proposed that this filing will become effective (check appropriate space)
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immediately upon filing pursuant to paragraph (b) of Rule 485 | |
| X |
on May 1, 2015 pursuant to paragraph (b) of Rule 485 | |
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60 days after filing pursuant to paragraph (a)(1) of Rule 485 | |
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on pursuant to paragraph (a)(1) of Rule 485 | |
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this post-effective amendment designates a new effective date for a | |
| previously filed post-effective amendment. |
Table of Contents
Prospectus
May 1, 2015
Variable Life
Whole Life
Extra Ordinary Life
Single Premium Life
Issued by The Northwestern Mutual Life Insurance Company
and the Northwestern Mutual Variable Life Account
This prospectus describes three Variable Life Insurance Policies (each a “Policy”, together the “Policies”). You may choose to invest your Net Premiums in up to six Divisions of the Northwestern Mutual Variable Life Account (the “Separate Account”), each of which invests in one of the corresponding Portfolios listed below:
Please note that the Policies and the Portfolios are not guaranteed to achieve their goals and
are not federally insured. The Policies and the Portfolios have not been endorsed by any bank or government agency and are subject to risks, including loss of the principal amount invested.
Each Policy is subject to the law of the state in which it is issued. Some of the terms of a Policy may differ from the terms of a Policy delivered in another state because of state specific legal requirements. Areas where state specific Policy provisions may apply include, but are not limited to:
| • | certain investment options and certain policy features; and |
| • | portfolio transfer rights. |
Please read carefully this prospectus and the accompanying prospectuses for the corresponding Portfolios and keep them for future reference. These prospectuses provide information that you should know before investing in the Policies. No person is authorized to make any representation in connection with the offering of the Policies other than those contained in these prospectuses.
The Securities and Exchange Commission (“SEC”) has not approved or disapproved the Policies or determined that this prospectus is accurate or complete. It is a criminal offense to state otherwise.
We no longer issue the three Policies described in this prospectus. The variable life policies we presently offer
are described in separate prospectuses.
Table of Contents
Table of Contents
Variable Life
| • | Whole Life |
| • | Extra Ordinary Life |
| • | Single Premium Life |
| Variable Life Prospectus | 1 |
Table of Contents
The following tables describe the fees and expenses that you will pay when owning or surrendering a Policy. See “Deductions and Charges” for a more detailed description.
This table describes the fees and expenses you will pay when you pay premiums, surrender the Policy or transfer amounts between the Divisions.
| Charge | When Charge is Deducted | Current Amount Deducted | Maximum Amount Deducted | |||||
| Whole Life and Extra Ordinary Life Policies |
Premium Taxes | When you pay premiums | 2% of the basic premium2 | 2% of the basic premium2 | ||||
| Sales Load | When you pay premiums | Year 1: 30% of basic premium2 Years 2-4: 10% of basic premium2 Years 5-on: Not more than 7% of basic premium2 |
Same as the current amount | |||||
| Charge for Issuance Expenses | When you pay premiums—first Policy Year only | Not more than $5 for each $1,000 of insurance | Same as the current amount | |||||
| Single Premium Life Policy | Administrative Charge | When we issue the Policy | $150 | $150 | ||||
| Surrender Charge | When you surrender the Policy during the first ten Policy Years | 0% | Not more than 9% of the premium paid for the Policy3 | |||||
| All Policies | Fee for Transfer of Assets | When you transfer assets among the Divisions | Currently waived | The fee will not exceed our administrative costs of transfers |
| 2 | Variable Life Prospectus |
Table of Contents
| Charge | When Charge is Deducted | Current Amount Deducted | Maximum Amount Deducted | |||||
| Whole Life and Extra Ordinary Life Policies | Extra Premium for Insureds Who Do Not Qualify as Select Risks | When you pay premiums | The amount depends on the underwriting classification | Same as current amount4; Variable Whole Life; Maximum: $52.70 per $1,000 of face amount; Variable Extra Ordinary Life Policies; Maximum: $58.71 per $1,000 of face amount | ||||
| All Policies | Expedited Delivery Charge5 | When express mail delivery is requested | $15 per delivery (up to $45 for next day, a.m. delivery) | $50 per delivery (up to $75 for next day, a.m. delivery) adjusted for inflation6 | ||||
| Wire Transfer Fee5 | When a wire transfer is requested | $25 per transfer (up to $50 for international wires) | $50 per transfer (up to $100 for international wires) adjusted for inflation6 |
| 1 | Some fees and expenses, such as fees applicable in Policy Years prior to your current Policy Year, may no longer apply because the Policies are no longer issued. |
| 2 | The basic premium for a Policy is the gross premium which would be payable if you paid the premium annually, less the annual deduction for administrative costs. See “Deductions and Charges” for more information. |
| 3 | This charge no longer applies because you have owned your Policy for longer than ten years. |
| 4 | This charge will vary depending on underwriting classification of the Insured. |
| 5 | This fee may increase over time to cover our administrative or other costs but will not exceed the maximum charge. We may discontinue this service at any time, with or without notice. |
| 6 | The maximum amount deducted is subject to a consumer price index adjustment in order to accommodate future increases in the costs associated with these requests. The maximum amount deducted will equal the maximum charge shown above multiplied by the CPI for the fourth month prior to the time of the charge, divided by the CPI for April, 2009. “CPI” means the Consumer Price Index for All Urban Consumers, United States City Average, All Items, as published by the United States Bureau of Labor Statistics. If the method for determining the CPI is changed, or it is no longer published, it will be replaced by some other index found by the Company to serve the same purpose. |
Periodic Charges (Other than Portfolio Operating Expenses)
These tables describe the fees and expenses, other than operating expenses for the Portfolios, that you will pay periodically during the time that you own a Policy. Please refer to the table specific to your Policy.
| Charge | When Charge is Deducted | Current Amount Deducted | Maximum Amount Deducted | |||
| Charge for Administrative Costs | Annually, on the Policy Anniversary | $35 | $35 | |||
| Charge for Death Benefit Guarantee | Annually, on the Policy Anniversary | 1 1⁄2% of the basic premium1 | 1 1⁄2% of the basic premium1 | |||
| Charge for Mortality and Expense Risks | Daily | Annual rate of .50% of the Separate Account Assets | Annual rate of .50% of the Separate Account Assets | |||
| Charge for Federal Income Taxes | Daily | Annual rate of .05% of the Separate Account Assets | A rate which reflects that portion of our actual tax expenses which is fairly allocable to the Policies | |||
| Cost of Insurance | Calculated at least annually on the Policy Anniversary | Maximum: $1,000 per $1,000 of net amount at risk (Attained Age 99)2
Minimum: $0.69 per $1,000 of net amount at risk (Attained Age 10 female)2
Representative: $8.71 per $1,000 of net amount at risk (Attained Age 53 male) |
Same as current amount, without the current dividend | |||
| Charge for Mortality and Expense Risks and Expenses for Loans3 | Daily | Annual rate of .85% of the borrowed amount | Annual rate of 1.00% of the borrowed amount |
| Variable Life Prospectus | 3 |
Table of Contents
| Charge | When Charge is Deducted | Current Amount Deducted | Maximum Amount Deducted | |||
| Waiver of Premium Benefit4 | Annually, on the Policy Anniversary, if this benefit is attached to your Policy and the Attained Age is less than 65 | Maximum: $2.05 per $1,000 of face amount (Issue Age 58)
Minimum: $0.13 per $1,000 of face amount (Issue Age 0-6)
Representative: $0.37 per $1,000 of face amount (Issue Age 35) |
Same as current amount | |||
| Additional Purchase Benefit5 | Annually, on the Policy Anniversary, if this benefit is attached to your Policy and the Attained Age is less than 40 | Maximum: $2.21 per $1,000 of Additional Purchase Benefit (Issue Age 38)5
Minimum: $0.54 per $1,000 of Additional Purchase Benefit (Issue Age 0)5
Representative: $0.54 per $1,000 of Additional Purchase Benefit (Issue Age 0) |
Same as current amount |
| 1 | The basic premium for a Policy is the gross premium which would be payable if you paid the premium annually, less the annual deduction for administrative costs. See “Deductions and Charges” for more information. |
| 2 | The Policy includes no provisions for explicit deductions or charges for the cost of insurance, but this cost is reflected in the table of Cash Values at the front of the Policy and in the table of net single premiums we use to determine the variable insurance amount. The variable insurance amount is used to calculate both the Death Benefit and the Cash Value. The cost of insurance is based on factors including but not limited to the Insured’s Attained Age, the 1980 CSO Mortality Table and the net insurance amount at risk. The net insurance amount at risk is the Death Benefit minus the sum of the Cash Value and any Policy Debt. The rates shown in the table may not be representative of the charge a particular Owner may pay. The amount you pay for the cost of insurance is effectively reduced by the dividends, if any, we currently pay on your Policy. You may ask your Financial Representative for the current dividend amount. Future dividends are not guaranteed. (See “Annual Dividends”). |
| 3 | The charge is applied to the Policy Debt. The charge shown is a loan interest spread that is deducted from the Invested Assets. We add unpaid interest to the amount of the loan. Interest on a Policy loan accrues and is payable on a daily basis at an annual effective rate of 8% or an alternative variable rate based on a bond yield index. The amount of the Policy loan will be transferred from the Divisions to our General Account and credited on a daily basis with an annual earnings rate equal to the Policy loan interest rate less the charge shown. |
| 4 | The charges shown in the table may not be representative of the charge that a particular Owner may pay. The charge does not vary by sex. Generally, the charge increases for older Issue Ages. In addition, higher rates may apply to substandard underwriting classifications. The charge for the Waiver of Premium Benefit is less for Extra Ordinary Life Policies than for Whole Life Policies, all other factors being equal. |
| 5 | The maximum benefit amount is $100,000. The charges shown in the table may not be representative of the charge that a particular Owner may pay. The charge does not vary by sex. The charge increases for older Issue Ages. |
| Charge | When Charge is Deducted | Current Amount Deducted | Maximum Amount Deducted | |||
| Charge for Mortality and Expense Risks | Daily | Annual rate of .50% of the Separate Account Assets | Annual rate of .50% of the Separate Account Assets | |||
| Charge for Federal Income Taxes | Daily | Annual rate of .05% of the Separate Account Assets | A rate which reflects that portion of our actual tax expenses which is fairly allocable to the Policies | |||
| Cost of Insurance | Calculated at least annually on the Policy Anniversary | Maximum: $1,000 per $1,000 of net amount at risk (Attained Age 99)1
Minimum: $0.85 per $1,000 of net amount at risk (Attained Age 15 female)1
Representative: $13.59 per $1,000 of net amount at risk (Attained Age 58 male) |
Same as current amount, without the current dividend | |||
| Charge for Mortality and Expense Risks and Expenses for Loans2 | Daily | Annual rate of .85% of the borrowed amount | Annual rate of 1.00% of the borrowed amount | |||
| Charge for Dividends3 | Annually, on the Policy Anniversary | Maximum: 17% of the gross annual premium4 | Same as current amount | |||
| Extra Premium for Extra Life Protection (after the expiry of the guaranteed period) | Annually, after the expiry of the guaranteed period, on the Policy Anniversary5 | Maximum: $283.64 per $1,000 of term insurance6 (Attained Age 99 male standard)
Minimum: $1.93 per $1,000 of term insurance6 (Attained Age 52 female select)
Representative: $5.11 per $1,000 of term insurance6 (Attained Age 62 male select) |
Maximum: $1,000 per $1,000 of term insurance, without the current dividend
Minimum: $6.27 per $1,000 of term insurance, without the current dividend |
| 4 | Variable Life Prospectus |
Table of Contents
| Charge | When Charge is Deducted | Current Amount Deducted | Maximum Amount Deducted | |||
| Charge for Administrative Costs | Annually, on the Policy Anniversary | $35 | $35 | |||
| Charge for Death Benefit Guarantee | Annually, on the Policy Anniversary | 1 1⁄2% of the basic premium7 | 1 1⁄2% of the basic premium7 | |||
| Waiver of Premium Benefit8 | Annually, on the Policy Anniversary, if this benefit is attached to your Policy and the Attained Age is less than 65 | Maximum: $1.48 per $1,000 of face amount (Issue Age 48)
Minimum: $0.10 per $1,000 of face amount (Issue Age 15)
Representative: $0.24 per $1,000 of face amount (Issue Age 35) |
Same as current amount | |||
| Additional Purchase Benefit9 | Annually, on the Policy Anniversary, if this benefit is attached to your Policy and the Attained Age is less than 40 | Maximum: $2.21 per $1,000 of Additional Purchase Benefit (Issue Age 38)9
Minimum: $1.06 per $1,000 of Additional Purchase Benefit (Issue Age 15)9
Representative: $1.33 per $1,000 of Additional Purchase Benefit (Issue Age 25)9 |
Same as current amount |
| 1 | The Policy includes no provisions for explicit deductions or charges for the cost of insurance, but this cost is reflected in the table of Cash Values at the front of the Policy and in the table of net single premiums we use to determine the variable insurance amount. The variable insurance amount is used to calculate both the Death Benefit and the Cash Value. The cost of insurance is based on factors including but not limited to the Insured’s Attained Age, the 1980 CSO Mortality Table and the net insurance amount at risk. The net insurance amount at risk is the Death Benefit minus the sum of the Cash Value and any Policy Debt. The rates shown in the table may not be representative of the charge a particular Owner may pay. The amount you pay for the cost of insurance is effectively reduced by the dividends, if any, we currently pay on your Policy. You may ask your Financial Representative for the current dividend amount. Future dividends are not guaranteed. (See “Annual Dividends”). |
| 2 | The charge is applied to the Policy Debt. The charge shown is a loan interest spread that is deducted from the Invested Assets. We add unpaid interest to the amount of the loan. Interest on a Policy loan accrues and is payable on a daily basis at an annual effective rate of 8% or an alternative variable rate based on a bond yield index. The amount of the Policy loan will be transferred from the Divisions to our General Account and credited on a daily basis with an annual earnings rate equal to the Policy loan interest rate less the charge shown. |
| 3 | This charge will vary by Issue Age of the Insured. |
| 4 | The charge for dividends is approximately 7% to 17% of the gross annual premium. |
| 5 | After the guaranteed period expires, if the sum of positive variable insurance amount plus the paid-up additions is less than the initial amount of Extra Life Protection, we may reduce the amount of term insurance for the Policy Year. Alternatively, you may choose to have the coverage maintained by paying a larger premium based on the term insurance rates described here. Your right to continue to purchase term insurance on this basis will terminate as of the first Policy Anniversary when you fail to pay the additional premium when due. |
| 6 | Estimated year-end dividends have the effect of reducing the term insurance amounts on which the charges are based. |
| 7 | The basic premium for a Policy is the gross premium which would be payable if you paid the premium annually, less the annual deduction for administrative costs. See “Deductions and Charges” for more information. |
| 8 | The charges shown in the table may not be representative of the charge that a particular Owner may pay. The charge does not vary by sex. Generally, the charge increases for older Issue Ages. In addition, higher rates may apply to substandard underwriting classifications. The charge for the Waiver of Premium benefit is less for Extra Ordinary Life Policies than for Whole Life Policies, all other factors being equal. |
| 9 | The maximum benefit amount is $100,000. The charges shown in the table may not be representative of the charge that a particular Owner may pay. The charge does not vary by sex. The charge increases for older Issue Ages. |
| Variable Life Prospectus | 5 |
Table of Contents
| Charge | When Charge is Deducted | Current Amount Deducted | Maximum Amount Deducted | |||
| Charge for Mortality and Expense Risks | Daily | Annual rate of .50% of the Separate Account assets | Annual rate of .50% of the Separate Account Assets | |||
| Charge for Federal Income Taxes | Daily | Annual rate of .05% of the Separate Account assets | A rate which reflects that portion of our actual tax expenses which is fairly allocable to the Policies | |||
| Cost of Insurance | Calculated at least annually on the Policy Anniversary | Maximum: $1,000 per $1,000 of net amount at risk (Attained Age 99)1
Minimum: $0.69 per $1,000 of net amount at risk (Attained Age 10 female)1
Representative: $17.54 per $1,000 of net amount at risk (Attained Age 61 male) |
Same as current amount, without the current dividend | |||
| Charge for Mortality and Expense Risks and Expenses for Loans2 | Daily | Annual rate of .85% of the borrowed amount | Annual rate of 1.00% of the borrowed amount |
| 1 | The Policy includes no provisions for explicit deductions or charges for the cost of insurance, but this cost is reflected in the table of Cash Values at the front of the Policy and in the table of net single premiums we use to determine the variable insurance amount. The variable insurance amount is used to calculate both the Death Benefit and the Cash Value. The cost of insurance is based on factors including but not limited to the Insured’s Attained Age, the 1980 CSO Mortality Table and the net insurance amount at risk. The net insurance amount at risk is the Death Benefit minus the sum of the Cash Value and any Policy Debt. The rates shown in the table may not be representative of the charge a particular Owner may pay. The amount you pay for the cost of insurance is effectively reduced by the dividends, if any, we currently pay on your Policy. You may ask your Financial Representative for the current dividend amount. Future dividends are not guaranteed. (See “Annual Dividends”). |
| 2 | The charge is applied to the Policy Debt. The charge shown is a loan interest spread that is deducted from the Invested Assets. We add unpaid interest to the amount of the loan. Interest on a Policy loan accrues and is payable on a daily basis at an annual effective rate of 8% or an alternative variable rate based on a bond yield index. The amount of the Policy loan will be transferred from the Divisions to our General Account and credited on a daily basis with an annual earnings rate equal to the Policy loan interest rate less the charge shown. |
Annual Portfolio Operating Expenses
The table below shows the range (minimum and maximum) of total operating expenses, including investment advisory fees, distribution (12b-1) fees and other expenses of the Portfolios that you may pay periodically during the time you own the Policy. The first line of this table lists expenses that do not reflect fee waivers or expense limits and reimbursements, nor do they reflect short-term trading redemption fees, if any, charged by the Portfolios. The information is based on operations for the year ended December 31, 2014. More details concerning these fees and expenses are contained in the attached prospectuses for the Funds.
| Minimum | Maximum | |||||||
| Range of Total Annual Portfolio Operating Expenses (expenses include investment advisory fees, distribution |
0.22 | % | 1.39 | % | ||||
| Range of Total Annual Portfolio Operating Expenses After Contractual Fee Waiver or Reimbursement** |
0.22 | % | 1.35 | % | ||||
| * | For certain Portfolios, certain expenses were reimbursed or fees waived during 2014. It is anticipated that these voluntary expense reimbursement and fee waiver arrangements will continue past the current year, although certain arrangements may be terminated at any time. After taking into account these arrangements and any contractual fee waiver or expense reimbursement arrangements, Annual Portfolio Operating Expenses would have ranged from a minimum of 0.22% to a maximum of 1.35%. |
| ** | The “Range of Total Annual Portfolio Operating Expenses After Contractual Fee Waiver or Reimbursement” line in the above table shows the minimum and maximum fees and expenses charged by all of the Portfolios after taking into account contractual fee waiver or reimbursement arrangements in place. Those contractual arrangements are designed to reduce Total Annual Portfolio Operating Expenses for Owners and will continue for at least one year from the date of this prospectus. For more information about which Portfolios currently have such contractual reimbursement or fee waiver arrangements in place, see the prospectuses of the underlying Funds. |
| 6 | Variable Life Prospectus |
Table of Contents
| Variable Life Prospectus | 7 |
Table of Contents
Northwestern Mutual Series Fund, Inc. (the “Series Fund”)
The principal investment adviser for the Portfolios of the Series Fund is Mason Street Advisors, LLC (“MSA”), our wholly-owned company. The investment advisory agreements for the respective Portfolios provide that MSA will provide services and bear certain expenses of the Series Fund. MSA employs a staff of investment professionals to manage the assets of the Series Fund and the other advisory clients of MSA. We provide related facilities and personnel, which MSA uses in performing its investment advisory functions. MSA has retained and oversees a number of asset management firms under investment sub-advisory agreements to provide day-to-day management of the Portfolios indicated below. Each such sub-adviser may be replaced without the approval of shareholders. Please see the attached prospectuses for the Series Fund for more information.
| Portfolio | Investment Objective | Sub-adviser (if applicable) | ||
| Growth Stock Portfolio | Long-term growth of capital; current income is a secondary objective | The Boston Company Asset Management, LLC | ||
| Focused Appreciation Portfolio | Long-term growth of capital | Janus Capital Management LLC | ||
| Large Cap Core Stock Portfolio | Long-term growth of capital and income | Fayez Sarofim & Co. | ||
| Large Cap Blend Portfolio | Long-term growth of capital and income | Fiduciary Management, Inc. | ||
| Index 500 Stock Portfolio | Investment results that approximate the performance of the Standard & Poor’s 500® Composite Stock Price Index | N/A | ||
| Large Company Value Portfolio | Long-term capital growth; income is a secondary objective | American Century Investment Management, Inc. | ||
| Domestic Equity Portfolio | Long-term growth of capital and income | Delaware Investments Fund Advisers, a series of Delaware Management Business Trust | ||
| Equity Income Portfolio | Long-term growth of capital and income | T. Rowe Price Associates, Inc. | ||
| Mid Cap Growth Stock Portfolio | Long-term growth of capital | William Blair & Company, L.L.C. | ||
| Index 400 Stock Portfolio | Investment results that approximate the performance of the S&P MidCap Stock Price 400® Index | N/A | ||
| Mid Cap Value Portfolio | Long-term capital growth; current income is a secondary objective | American Century Investment Management, Inc. |
| 8 | Variable Life Prospectus |
Table of Contents
| Portfolio | Investment Objective | Sub-adviser (if applicable) | ||
| Small Cap Growth Stock Portfolio | Long-term growth of capital | Wellington Management Company LLP | ||
| Index 600 Stock Portfolio | Investment results that approximate the performance of the Standard & Poor’s SmallCap 600® Index | N/A | ||
| Small Cap Value Portfolio | Long-term growth of capital | T. Rowe Price Associates, Inc. | ||
| International Growth Portfolio | Long-term growth of capital | Janus Capital Management LLC | ||
| Research International Core Portfolio | Capital appreciation | Massachusetts Financial Services Company | ||
| International Equity Portfolio | Long-term growth of capital; any income realized may be incidental | Templeton Investment Counsel, LLC | ||
| Emerging Markets Equity Portfolio | Capital appreciation | Massachusetts Financial Services Company | ||
| Money Market Portfolio | Maximum current income to the extent consistent with liquidity and stability of capital(1) |
BlackRock Advisors, LLC | ||
| Short-Term Bond Portfolio | To provide as high a level of current income as is consistent with prudent investment risk | T. Rowe Price Associates, Inc. | ||
| Select Bond Portfolio | To provide as high a level of total return as is consistent with prudent investment risk; a secondary objective is to seek preservation of shareholders’ capital | Wells Capital Management, Inc. | ||
| Long-Term U.S. Government Bond Portfolio | Maximum total return, consistent with preservation of capital and prudent investment management | Pacific Investment Management Company LLC | ||
| Inflation Protection Portfolio | Pursue total return using a strategy that seeks to protect against U.S. inflation | American Century Investment Management, Inc. | ||
| High Yield Bond Portfolio | High current income and capital appreciation(2) | Federated Investment Management Company | ||
| Multi-Sector Bond Portfolio | Maximum total return, consistent with prudent investment management | Pacific Investment Management Company LLC | ||
| Balanced Portfolio | To realize as high a level of total return as is consistent with prudent investment risk, through income and capital appreciation | N/A | ||
| Asset Allocation Portfolio | To realize as high a level of total return as is consistent with reasonable investment risk | N/A |
| (1) | Although the Money Market Portfolio seeks to preserve its value at $1.00 per share, it is possible to lose money by investing in the Money Market Portfolio. An investment in a money market portfolio is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any government agency. During extended periods of low interest rates, the yield of a money market portfolio may also become extremely low and possibly negative. |
| (2) | High yield bonds are commonly referred to as junk bonds. |
Fidelity® Variable Insurance Products
The Fidelity® VIP Mid Cap Portfolio and the Fidelity® VIP Contrafund® Portfolio are series of Variable Insurance Products Fund III and the Variable Insurance Products Fund II, respectively. The Separate Account buys Service Class 2 shares of the Portfolios, the investment adviser for which is the Fidelity Management & Research Company (FMR). The following affiliates of FMR also assist with foreign investments: Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Hong Kong) Limited, and Fidelity Management & Research (Japan) Inc.
| Portfolio | Investment Objective | Sub-adviser | ||
| VIP Mid Cap Portfolio | Long-term growth of capital | FMR Co., Inc. | ||
| VIP Contrafund® Portfolio | Long-term capital appreciation | FMR Co., Inc. |
| Variable Life Prospectus | 9 |
Table of Contents
Neuberger Berman Advisers Management Trust
The Neuberger Berman Advisers Management Trust Socially Responsive Portfolio is a series of the Neuberger Berman Advisers Management Trust. The Separate Account buys Class I shares of the Portfolio, the investment adviser for which is Neuberger Berman Management LLC.
| Portfolio | Investment Objective | Sub-adviser | ||
| Socially Responsive Portfolio | Long-term growth of capital by investing primarily in securities of companies that meet the Portfolio’s financial criteria and social policy | Neuberger Berman LLC |
The assets of each of the Portfolios comprising the Russell Investment Funds are invested by one or more investment management organizations researched and recommended by Frank Russell Company (“Russell”), and an affiliate of Russell, the Russell Investment Management Company (“RIMCo”). RIMCo is the investment adviser of the Russell Investment Funds.
| Portfolio | Investment Objective | |
| Multi-Style Equity Fund | Long-term growth of capital | |
| Aggressive Equity Fund | Long-term growth of capital | |
| Global Real Estate Securities Fund | Current income and long-term growth of capital | |
| Non-U.S. Fund | Long-term growth of capital | |
| Core Bond Fund | Current income and, as a secondary objective, capital appreciation | |
| LifePoints® Variable Target Portfolio Series Moderate Strategy Fund |
Current income and moderate long-term capital appreciation | |
| LifePoints® Variable Target Portfolio Series Balanced Strategy Fund |
Above-average long-term capital appreciation and a moderate level of current income | |
| LifePoints® Variable Target Portfolio Series Growth Strategy Fund |
High long-term capital appreciation; and as a secondary objective, current income | |
| LifePoints® Variable Target Portfolio Series Equity Growth Strategy Fund |
High long-term capital appreciation |
The Commodity Return Strategy Portfolio is a series of Credit Suisse Trust. The Separate Account buys shares of the Portfolio, the investment adviser for which is Credit Suisse Asset Management, LLC.
| Portfolio | Investment Objective | |
| Commodity Return Strategy Portfolio | Total Return |
| 10 | Variable Life Prospectus |
Table of Contents
Information About the Policies
| Variable Life Prospectus | 11 |
Table of Contents
Whole Life Policy The following table for Whole Life Policies shows representative premiums for male select, standard plus, and standard risks for various face amounts of insurance. Premiums you pay other than on an annual basis are increased to (1) reflect the time value of money, based on a 12% interest rate and (2) cover the administrative costs associated with additional Premium Payments. For example, two semi-annual payments will total more than an annual premium payment.
| Age at Issue |
Face Amount |
Annual Premium |
Monthly Premium |
Annual Sum of Monthly Premiums* |
Annual Sum of Monthly Premiums Minus the Annual Premium |
|||||||||||||||
| SELECT | ||||||||||||||||||||
| 15 |
$ | 50,000 | $ | 382.50 | $ | 33.60 | $ | 403.20 | $ | 20.70 | ||||||||||
| 35 |
100,000 | 1,536.00 | 135.10 | 1,621.20 | 85.20 | |||||||||||||||
| 55 |
100,000 | 3,766.00 | 331.10 | 3,973.20 | 207.20 | |||||||||||||||
| STANDARD PLUS | ||||||||||||||||||||
| 15 |
$ | 50,000 | $ | 406.00 | $ | 35.60 | $ | 427.20 | $ | 21.20 | ||||||||||
| 35 |
100,000 | 1,683.00 | 148.10 | 1,777.20 | 94.20 | |||||||||||||||
| 55 |
100,000 | 4,125.00 | 363.10 | 4,357.20 | 232.20 | |||||||||||||||
| STANDARD | ||||||||||||||||||||
| 15 |
$ | 50,000 | $ | 491.50 | $ | 43.10 | $ | 517.20 | $ | 25.70 | ||||||||||
| 35 |
100,000 | 1,912.00 | 168.10 | 2,017.20 | 105.20 | |||||||||||||||
| 55 |
100,000 | 4,587.00 | 404.10 | 4,849.20 | 262.20 | |||||||||||||||
| * | In some cases for policies with smaller premiums, the sum of 12 monthly premiums may be less than the sum of other periodic premium amounts due to lower administrative costs. |
Extra Ordinary Life Policy The following table for Extra Ordinary Life Policies shows representative annual premiums for male select, standard plus and standard risks for various amounts of insurance. Premiums you pay other than on an annual basis are increased to (1) reflect the time value of money, based on a 12% interest rate and (2) cover the administrative costs associated with additional Premium Payments. For example, two semi-annual payments will total more than an annual premium payment. The amounts of insurance shown in the table are the total amounts in effect when the Extra Ordinary Life Policy is issued, including both the guaranteed minimum death benefit noted in your Policy (“Minimum Death Benefit”), which we guarantee for the lifetime of the Insured, and the Extra Life Protection, which we guarantee for a shorter period. (See “Death Benefit” and “Extra Ordinary Life Policy”).
| Age at Issue |
Face Amount |
Annual Premium |
Monthly Premium |
Annual Sum of Monthly Premiums* |
Annual Sum of Monthly Premiums Minus the Annual Premium |
|||||||||||||||
| SELECT | ||||||||||||||||||||
| 15 |
$ | 50,000 | $ | 261.50 | $ | 23.10 | $ | 277.20 | $ | 15.70 | ||||||||||
| 35 |
100,000 | 1,014.00 | 89.10 | 1,069.20 | 55.20 | |||||||||||||||
| 55 |
100,000 | 2,612.00 | 230.10 | 2,761.20 | 149.20 | |||||||||||||||
| STANDARD PLUS | ||||||||||||||||||||
| 15 |
$ | 50,000 | $ | 285.00 | $ | 25.10 | $ | 301.20 | $ | 16.20 | ||||||||||
| 35 |
100,000 | 1,161.00 | 102.10 | 1,225.20 | 64.20 | |||||||||||||||
| 55 |
100,000 | 2,971.00 | 261.10 | 3,133.20 | 162.20 | |||||||||||||||
| STANDARD | ||||||||||||||||||||
| 15 |
$ | 50,000 | $ | 357.50 | $ | 31.60 | $ | 379.20 | $ | 21.70 | ||||||||||
| 35 |
100,000 | 1,377.00 | 121.10 | 1,453.20 | 76.20 | |||||||||||||||
| 55 |
100,000 | 3,425.00 | 301.10 | 3,613.20 | 188.20 | |||||||||||||||
| * | In some cases for policies with smaller premiums, the sum of 12 monthly premiums may be less than the sum of other periodic premium amounts due to lower administrative costs. |
| 12 | Variable Life Prospectus |
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| Variable Life Prospectus | 13 |
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| 14 | Variable Life Prospectus |
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| Variable Life Prospectus | 15 |
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| 16 | Variable Life Prospectus |
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| Variable Life Prospectus | 17 |
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| 18 | Variable Life Prospectus |
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| Variable Life Prospectus | 19 |
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| 20 | Variable Life Prospectus |
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| Variable Life Prospectus | 21 |
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| 22 | Variable Life Prospectus |
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| Variable Life Prospectus | 23 |
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| 24 | Variable Life Prospectus |
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| Variable Life Prospectus | 25 |
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| 26 | Variable Life Prospectus |
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| 28 | Variable Life Prospectus |
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| Variable Life Prospectus | 29 |
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| 30 | Variable Life Prospectus |
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| Variable Life Prospectus | 31 |
Table of Contents
More information about the Separate Account is included in a Statement of
Additional Information (“SAI”), which is dated the same day as this prospectus, is incorporated by reference into this prospectus, and is available free of charge from the Company. To request a free copy of the Separate Account’s SAI,
or current annual report, call us toll-free at 1-866-424-2609. Under certain circumstances you or your financial representative may be able to obtain these documents online at www.northwesternmutual.com. Information about the Separate Account
(including the SAI) can be reviewed and copied at the Public Reference Room of the SEC in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-551-8090. Reports and other information
about the Separate Account are available on the SEC’s Internet site at http://www.sec.gov, or they may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC, 100 F Street, NE, Washington,
DC
20549-0102.
Your Northwestern Mutual Financial Representative will provide you with illustrations for your Policy free of charge upon your request. The illustrations show how the Death Benefit, Invested Assets and cash surrender value for the Policy would vary based on hypothetical investment results. Your Northwestern Mutual Financial Representative will also respond to other inquiries you may have regarding the Policy, or you may contact the Variable Life Service Center at 1-866-424-2609.
Investment Company Act File No. 811-3989
| 32 | Variable Life Prospectus |
Table of Contents
STATEMENT OF ADDITIONAL INFORMATION
May 1, 2015
VARIABLE LIFE
Whole Life
Extra Ordinary Life
Single Premium Life
Issued by The Northwestern Mutual Life Insurance Company
and
Northwestern Mutual Variable Life Account
(Account)
We no longer issue the three Policies described in this Statement of Additional Information.
The Policies we currently offer are described in separate Prospectuses and
Statements of Additional Information.
This Statement of Additional Information (“SAI”) is not a prospectus, but supplements, and should be read in conjunction with the prospectus for the Policies identified above and dated the same date as this SAI. The prospectus may be obtained by writing The Northwestern Mutual Life Insurance Company (“Northwestern Mutual”), 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, or by calling telephone number 1-866-424-2609.
B-1
Table of Contents
| Page | ||||
| B-3 | ||||
| B-3 | ||||
| F-1 | ||||
| NM-1 | ||||
B-2
Table of Contents
The Policies are offered on a continuous basis exclusively through individuals who, in addition to being life insurance agents of Northwestern Mutual, are registered representatives of Northwestern Mutual Investment Services, LLC (“NMIS”). NMIS is our wholly-owned company. The principal business address of NMIS is 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
NMIS is the principal underwriter of the Policies for purposes of the federal securities laws. We paid the following amounts to NMIS with respect to sales of variable life insurance policies issued in connection with the Account during each of the last three fiscal years representing commission payments NMIS made to our agents and related benefits. None of these amounts was retained by NMIS and no amounts were paid to other underwriters or broker-dealers. We also paid additional amounts to NMIS in reimbursement for other expenses related to the distribution of variable life insurance policies
| Year |
Amount |
|||
| 2014 |
$5,607,850 | |||
| 2013 |
$9,032,836 | |||
| 2012 |
$12,321,208 | |||
NMIS also provides certain services related to the administration of payment plans under the Policies pursuant to an administrative services contract with Northwestern Mutual. In exchange for these services, NMIS receives compensation to cover the actual costs incurred by NMIS in performing these services.
The financial statements of the Account, and the related notes and report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, included in this Statement of Additional Information and the consolidated financial statements of Northwestern Mutual, and the related notes and report of PricewaterhouseCoopers LLP included in this Statement of Additional Information are so included in reliance on the reports of PricewaterhouseCoopers LLP given on the authority of said firm as experts in auditing and accounting. PricewaterhouseCoopers LLP provides audit services for the Account. The address of PricewaterhouseCoopers LLP is 100 East Wisconsin Avenue, Suite 1800, Milwaukee, Wisconsin 53202.
B-3
Table of Contents
Annual Report December 31, 2014
Northwestern Mutual Variable Life Account
Financial Statements
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Assets and Liabilities
December 31, 2014
(in thousands, except accumulation unit values)
| Growth Stock Division |
Focused Appreciation Division |
Large Cap Core Stock Division |
Large Cap Blend Division |
Index 500 Division |
||||||||||||||||
|
|
|
|||||||||||||||||||
| Assets: |
||||||||||||||||||||
| Investments, at value (1) |
||||||||||||||||||||
| Northwestern Mutual Series Fund, Inc. |
$ | 386,880 | $ | 122,803 | $ | 244,071 | $ | 8,194 | $ | 1,122,451 | ||||||||||
| Fidelity Variable Insurance Products |
- | - | - | - | - | |||||||||||||||
| Neuberger Berman Advisers Management Trust |
- | - | - | - | - | |||||||||||||||
| Russell Investment Funds |
- | - | - | - | - | |||||||||||||||
| Credit Suisse Trust |
- | - | - | - | - | |||||||||||||||
| Due from Northwestern Mutual Life Insurance Company |
45 | - | - | - | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Assets |
386,925 | 122,803 | 244,071 | 8,194 | 1,122,451 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Liabilities: |
||||||||||||||||||||
| Due to Northwestern Mutual Life Insurance Company |
- | 8 | 28 | 2 | 56 | |||||||||||||||
| Due to Participants |
- | - | - | - | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Liabilities |
- | 8 | 28 | 2 | 56 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Net Assets |
$ | 386,925 | $ | 122,795 | $ | 244,043 | $ | 8,192 | $ | 1,122,395 | ||||||||||
|
|
|
|||||||||||||||||||
| Net Assets: |
||||||||||||||||||||
| Variable Life Policies Issued: |
||||||||||||||||||||
| Before October 11, 1995 |
||||||||||||||||||||
| Policyowners’ Equity |
$ | 34,459 | $ | 7,639 | $ | 27,147 | $ | 402 | $ | 156,204 | ||||||||||
| Northwestern Mutual Equity |
455 | 81 | 421 | 4 | 1,761 | |||||||||||||||
| Variable CompLife Policies Issued Between October 11, 1995 and December 31, 2008 (2) |
||||||||||||||||||||
| Policyowners’ Equity |
329,431 | 104,279 | 200,779 | 7,165 | 883,779 | |||||||||||||||
| Northwestern Mutual Equity |
8,108 | 3,028 | 5,077 | 167 | 21,214 | |||||||||||||||
| Variable Executive Life Policies Issued Between March 2, 1998 and December 31, 2008 (3) |
||||||||||||||||||||
| Policyowners’ Equity |
6,969 | 3,877 | 5,715 | 340 | 22,363 | |||||||||||||||
| Variable Joint Life Policies Issued Between December 10, 1998 and December 31, 2008 (4) |
||||||||||||||||||||
| Policyowners’ Equity |
7,503 | 3,891 | 4,904 | 114 | 37,074 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Net Assets |
$ | 386,925 | $ | 122,795 | $ | 244,043 | $ | 8,192 | $ | 1,122,395 | ||||||||||
|
|
|
|||||||||||||||||||
| (1) Investments, at cost |
$ | 275,260 | $ | 88,344 | $ | 175,468 | $ | 6,917 | $ | 762,545 | ||||||||||
| Mutual Fund Shares Held |
134,567 | 46,622 | 147,654 | 7,290 | 282,307 | |||||||||||||||
| (2) Accumulation Unit Value |
$ | 3.949121 | $ | 3.141534 | $ | 2.981972 | $ | 1.577743 | $ | 4.519180 | ||||||||||
| Units Outstanding |
85,472 | 34,157 | 69,034 | 4,647 | 200,257 | |||||||||||||||
| (3) Accumulation Unit Value |
$ | 54.488126 | $ | 33.238141 | $ | 40.759702 | $ | 13.487127 | $ | 103.583087 | ||||||||||
| Units Outstanding |
128 | 117 | 140 | 25 | 216 | |||||||||||||||
| (4) Accumulation Unit Value |
$ | 54.488126 | $ | 33.238141 | $ | 40.759702 | $ | 13.487127 | $ | 103.583087 | ||||||||||
| Units Outstanding |
138 | 117 | 120 | 8 | 358 | |||||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-1 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Assets and Liabilities
December 31, 2014
(in thousands, except accumulation unit values)
| Large Company Value Division |
Domestic Equity Division |
Equity Income Division |
Mid Cap Growth Stock Division |
Index 400 Stock Division |
||||||||||||||||
|
|
|
|||||||||||||||||||
| Assets: |
||||||||||||||||||||
| Investments, at value (1) |
||||||||||||||||||||
| Northwestern Mutual Series Fund, Inc. |
$ | 11,443 | $ | 190,761 | $ | 123,136 | $ | 465,335 | $ | 290,566 | ||||||||||
| Fidelity Variable Insurance Products |
- | - | - | - | - | |||||||||||||||
| Neuberger Berman Advisers Management Trust |
- | - | - | - | - | |||||||||||||||
| Russell Investment Funds |
- | - | - | - | - | |||||||||||||||
| Credit Suisse Trust |
- | - | - | - | - | |||||||||||||||
| Due from Northwestern Mutual Life Insurance Company |
23 | 13 | 13 | - | 30 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Assets |
11,466 | 190,774 | 123,149 | 465,335 | 290,596 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Liabilities: |
||||||||||||||||||||
| Due to Northwestern Mutual Life Insurance Company |
- | - | - | 29 | - | |||||||||||||||
| Due to Participants |
- | - | - | - | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Liabilities |
- | - | - | 29 | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Net Assets |
$ | 11,466 | $ | 190,774 | $ | 123,149 | $ | 465,306 | $ | 290,596 | ||||||||||
|
|
|
|||||||||||||||||||
| Net Assets: |
||||||||||||||||||||
| Variable Life Policies Issued: |
||||||||||||||||||||
| Before October 11, 1995 |
||||||||||||||||||||
| Policyowners’ Equity |
$ | 829 | $ | 17,427 | $ | 10,182 | $ | 66,729 | $ | 14,890 | ||||||||||
| Northwestern Mutual Equity |
5 | 208 | 123 | 955 | 157 | |||||||||||||||
| Variable CompLife Policies Issued Between October 11, 1995 and December 31, 2008 (2) |
||||||||||||||||||||
| Policyowners’ Equity |
9,883 | 157,668 | 101,498 | 376,623 | 252,644 | |||||||||||||||
| Northwestern Mutual Equity |
224 | 4,545 | 2,658 | 9,236 | 6,244 | |||||||||||||||
| Variable Executive Life Policies Issued Between March 2, 1998 and December 31, 2008 (3) |
||||||||||||||||||||
| Policyowners’ Equity |
19 | 4,302 | 4,368 | 4,457 | 7,342 | |||||||||||||||
| Variable Joint Life Policies Issued Between December 10, 1998 and December 31, 2008 (4) |
||||||||||||||||||||
| Policyowners’ Equity |
506 | 6,624 | 4,320 | 7,306 | 9,319 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Net Assets |
$ | 11,466 | $ | 190,774 | $ | 123,149 | $ | 465,306 | $ | 290,596 | ||||||||||
|
|
|
|||||||||||||||||||
| (1) Investments, at cost |
$ | 10,157 | $ | 132,350 | $ | 88,589 | $ | 399,363 | $ | 212,838 | ||||||||||
| Mutual Fund Shares Held |
9,976 | 132,289 | 69,490 | 136,903 | 148,248 | |||||||||||||||
| (2) Accumulation Unit Value |
$ | 1.648404 | $ | 2.146602 | $ | 2.579506 | $ | 3.689747 | $ | 3.817251 | ||||||||||
| Units Outstanding |
6,131 | 75,568 | 40,378 | 104,577 | 67,822 | |||||||||||||||
| (3) Accumulation Unit Value |
$ | 13.865219 | $ | 22.950784 | $ | 27.291728 | $ | 102.693582 | $ | 43.598907 | ||||||||||
| Units Outstanding |
1 | 187 | 160 | 43 | 168 | |||||||||||||||
| (4) Accumulation Unit Value |
$ | 13.865219 | $ | 22.950784 | $ | 27.291728 | $ | 102.693582 | $ | 43.598907 | ||||||||||
| Units Outstanding |
37 | 289 | 158 | 71 | 214 | |||||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-2 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Assets and Liabilities
December 31, 2014
(in thousands, except accumulation unit values)
| Mid Cap Value Division |
Small Cap Growth Stock Division |
Index 600 Stock Division |
Small Cap Value Division |
International Growth Division |
||||||||||||||||
|
|
|
|||||||||||||||||||
| Assets: |
||||||||||||||||||||
| Investments, at value (1) |
||||||||||||||||||||
| Northwestern Mutual Series Fund, Inc. |
$ | 60,345 | $ | 255,432 | $ | 20,247 | $ | 174,576 | $ | 90,806 | ||||||||||
| Fidelity Variable Insurance Products |
- | - | - | - | - | |||||||||||||||
| Neuberger Berman Advisers Management Trust |
- | - | - | - | - | |||||||||||||||
| Russell Investment Funds |
- | - | - | - | - | |||||||||||||||
| Credit Suisse Trust |
- | - | - | - | - | |||||||||||||||
| Due from Northwestern Mutual Life Insurance Company |
5 | - | 1 | - | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Assets |
60,350 | 255,432 | 20,248 | 174,576 | 90,806 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Liabilities: |
||||||||||||||||||||
| Due to Northwestern Mutual Life Insurance Company |
- | 29 | - | 23 | 3 | |||||||||||||||
| Due to Participants |
- | - | - | - | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Liabilities |
- | 29 | - | 23 | 3 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Net Assets |
$ | 60,350 | $ | 255,403 | $ | 20,248 | $ | 174,553 | $ | 90,803 | ||||||||||
|
|
|
|||||||||||||||||||
| Net Assets: |
||||||||||||||||||||
| Variable Life Policies Issued: |
||||||||||||||||||||
| Before October 11, 1995 |
||||||||||||||||||||
| Policyowners’ Equity |
$ | 4,262 | $ | 11,971 | $ | 2,167 | $ | 13,587 | $ | 4,166 | ||||||||||
| Northwestern Mutual Equity |
47 | 134 | 25 | 164 | 63 | |||||||||||||||
| Variable CompLife Policies Issued Between October 11, 1995 and December 31, 2008 (2) |
||||||||||||||||||||
| Policyowners’ Equity |
51,344 | 225,037 | 16,611 | 146,621 | 76,999 | |||||||||||||||
| Northwestern Mutual Equity |
1,449 | 5,986 | 402 | 4,084 | 2,305 | |||||||||||||||
| Variable Executive Life Policies Issued Between March 2, 1998 and December 31, 2008 (3) |
||||||||||||||||||||
| Policyowners’ Equity |
1,186 | 4,375 | 695 | 3,388 | 4,023 | |||||||||||||||
| Variable Joint Life Policies Issued Between December 10, 1998 and December 31, 2008 (4) |
||||||||||||||||||||
| Policyowners’ Equity |
2,062 | 7,900 | 348 | 6,709 | 3,247 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Net Assets |
$ | 60,350 | $ | 255,403 | $ | 20,248 | $ | 174,553 | $ | 90,803 | ||||||||||
|
|
|
|||||||||||||||||||
| (1) Investments, at cost |
$ | 43,941 | $ | 201,781 | $ | 20,992 | $ | 121,939 | $ | 91,074 | ||||||||||
| Mutual Fund Shares Held |
34,074 | 102,378 | 17,380 | 73,229 | 67,514 | |||||||||||||||
| (2) Accumulation Unit Value |
$ | 3.042400 | $ | 3.633783 | $ | 1.587514 | $ | 3.191481 | $ | 1.832844 | ||||||||||
| Units Outstanding |
17,353 | 63,577 | 10,717 | 47,222 | 43,268 | |||||||||||||||
| (3) Accumulation Unit Value |
$ | 32.189353 | $ | 47.561777 | $ | 17.638780 | $ | 34.121874 | $ | 19.596007 | ||||||||||
| Units Outstanding |
37 | 92 | 39 | 99 | 205 | |||||||||||||||
| (4) Accumulation Unit Value |
$ | 32.189353 | $ | 47.561777 | $ | 17.638780 | $ | 34.121874 | $ | 19.596007 | ||||||||||
| Units Outstanding |
64 | 166 | 20 | 197 | 166 | |||||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-3 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Assets and Liabilities
December 31, 2014
(in thousands, except accumulation unit values)
| Research International Core Division |
International Equity Division |
Emerging Markets Equity Division |
Money Market Division |
Short-Term Bond Division |
||||||||||||||||
|
|
|
|||||||||||||||||||
| Assets: |
||||||||||||||||||||
| Investments, at value (1) |
||||||||||||||||||||
| Northwestern Mutual Series Fund, Inc. |
$ | 20,847 | $ | 525,038 | $ | 34,818 | $ | 166,462 | $ | 13,390 | ||||||||||
| Fidelity Variable Insurance Products |
- | - | - | - | - | |||||||||||||||
| Neuberger Berman Advisers Management Trust |
- | - | - | - | - | |||||||||||||||
| Russell Investment Funds |
- | - | - | - | - | |||||||||||||||
| Credit Suisse Trust |
- | - | - | - | - | |||||||||||||||
| Due from Northwestern Mutual Life Insurance Company |
13 | 80 | 25 | 10 | 2 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Assets |
20,860 | 525,118 | 34,843 | 166,472 | 13,392 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Liabilities: |
||||||||||||||||||||
| Due to Northwestern Mutual Life Insurance Company |
- | - | - | - | - | |||||||||||||||
| Due to Participants |
- | - | - | 648 | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Liabilities |
- | - | - | 648 | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Net Assets |
$ | 20,860 | $ | 525,118 | $ | 34,843 | $ | 165,824 | $ | 13,392 | ||||||||||
|
|
|
|||||||||||||||||||
| Net Assets: |
||||||||||||||||||||
| Variable Life Policies Issued: |
||||||||||||||||||||
| Before October 11, 1995 |
||||||||||||||||||||
| Policyowners’ Equity |
$ | 1,357 | $ | 63,071 | $ | 1,619 | $ | 11,807 | $ | 1,192 | ||||||||||
| Northwestern Mutual Equity |
31 | 1,014 | 30 | 219 | 14 | |||||||||||||||
| Variable CompLife Policies Issued Between October 11, 1995 and December 31, 2008 (2) |
||||||||||||||||||||
| Policyowners’ Equity |
17,065 | 422,389 | 28,641 | 116,846 | 10,874 | |||||||||||||||
| Northwestern Mutual Equity |
450 | 11,264 | 690 | 4,733 | 309 | |||||||||||||||
| Variable Executive Life Policies Issued Between March 2, 1998 and December 31, 2008 (3) |
||||||||||||||||||||
| Policyowners’ Equity |
1,351 | 12,793 | 2,527 | 12,485 | 243 | |||||||||||||||
| Variable Joint Life Policies Issued Between December 10, 1998 and December 31, 2008 (4) |
||||||||||||||||||||
| Policyowners’ Equity |
606 | 14,587 | 1,336 | 19,734 | 760 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Net Assets |
$ | 20,860 | $ | 525,118 | $ | 34,843 | $ | 165,824 | $ | 13,392 | ||||||||||
|
|
|
|||||||||||||||||||
| (1) Investments, at cost |
$ | 19,767 | $ | 500,388 | $ | 37,634 | $ | 166,462 | $ | 13,420 | ||||||||||
| Mutual Fund Shares Held |
23,111 | 295,963 | 37,600 | 166,462 | 13,026 | |||||||||||||||
| (2) Accumulation Unit Value |
$ | 1.071981 | $ | 3.229216 | $ | 0.849119 | $ | 1.538686 | $ | 1.010036 | ||||||||||
| Units Outstanding |
16,338 | 134,291 | 34,542 | 79,015 | 11,073 | |||||||||||||||
| (3) Accumulation Unit Value |
$ | 10.212438 | $ | 4.952849 | $ | 10.109813 | $ | 41.568533 | $ | 12.188479 | ||||||||||
| Units Outstanding |
132 | 2,583 | 250 | 316 | 20 | |||||||||||||||
| (4) Accumulation Unit Value |
$ | 10.212438 | $ | 4.952849 | $ | 10.109813 | $ | 41.568533 | $ | 12.188479 | ||||||||||
| Units Outstanding |
59 | 2,945 | 132 | 475 | 62 | |||||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-4 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Assets and Liabilities
December 31, 2014
(in thousands, except accumulation unit values)
| Select Bond Division |
Long-Term U.S. Government Bond Division |
Inflation Protection Division |
High Yield Bond Division |
Multi-Sector Bond Division |
||||||||||||||||
|
|
|
|||||||||||||||||||
| Assets: |
||||||||||||||||||||
| Investments, at value (1) |
||||||||||||||||||||
| Northwestern Mutual Series Fund, Inc. |
$ | 248,596 | $ | 6,936 | $ | 8,559 | $ | 106,148 | $ | 26,344 | ||||||||||
| Fidelity Variable Insurance Products |
- | - | - | - | - | |||||||||||||||
| Neuberger Berman Advisers Management Trust |
- | - | - | - | - | |||||||||||||||
| Russell Investment Funds |
- | - | - | - | - | |||||||||||||||
| Credit Suisse Trust |
- | - | - | - | - | |||||||||||||||
| Due from Northwestern Mutual Life Insurance Company |
19 | 8 | - | 6 | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Assets |
248,615 | 6,944 | 8,559 | 106,154 | 26,344 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Liabilities: |
||||||||||||||||||||
| Due to Northwestern Mutual Life Insurance Company |
- | - | - | - | - | |||||||||||||||
| Due to Participants |
- | - | - | - | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Liabilities |
- | - | - | - | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Net Assets |
$ | 248,615 | $ | 6,944 | $ | 8,559 | $ | 106,154 | $ | 26,344 | ||||||||||
|
|
|
|||||||||||||||||||
| Net Assets: |
||||||||||||||||||||
| Variable Life Policies Issued: |
||||||||||||||||||||
| Before October 11, 1995 |
||||||||||||||||||||
| Policyowners’ Equity |
$ | 23,802 | $ | 451 | $ | 755 | $ | 7,436 | $ | 1,474 | ||||||||||
| Northwestern Mutual Equity |
380 | 4 | 7 | 107 | 19 | |||||||||||||||
| Variable CompLife Policies Issued Between October 11, 1995 and December 31, 2008 (2) |
||||||||||||||||||||
| Policyowners’ Equity |
183,351 | 6,316 | 6,501 | 87,915 | 22,751 | |||||||||||||||
| Northwestern Mutual Equity |
5,320 | 159 | 159 | 2,280 | 625 | |||||||||||||||
| Variable Executive Life Policies Issued Between March 2, 1998 and December 31, 2008 (3) |
||||||||||||||||||||
| Policyowners’ Equity |
25,648 | 14 | 441 | 5,169 | 395 | |||||||||||||||
| Variable Joint Life Policies Issued Between December 10, 1998 and December 31, 2008 (4) |
||||||||||||||||||||
| Policyowners’ Equity |
10,114 | - | 696 | 3,247 | 1,080 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Net Assets |
$ | 248,615 | $ | 6,944 | $ | 8,559 | $ | 106,154 | $ | 26,344 | ||||||||||
|
|
|
|||||||||||||||||||
| (1) Investments, at cost |
$ | 246,963 | $ | 6,395 | $ | 9,042 | $ | 102,000 | $ | 26,878 | ||||||||||
| Mutual Fund Shares Held |
196,208 | 6,199 | 7,782 | 147,223 | 24,280 | |||||||||||||||
| (2) Accumulation Unit Value |
$ | 2.671248 | $ | 1.371509 | $ | 1.065002 | $ | 3.335950 | $ | 1.169486 | ||||||||||
| Units Outstanding |
70,630 | 4,721 | 6,254 | 27,038 | 19,988 | |||||||||||||||
| (3) Accumulation Unit Value |
$ | 211.428447 | $ | 19.181310 | $ | 13.899486 | $ | 43.976216 | $ | 15.951947 | ||||||||||
| Units Outstanding |
121 | 1 | 32 | 118 | 25 | |||||||||||||||
| (4) Accumulation Unit Value |
$ | 211.428447 | $ | 19.181310 | $ | 13.899486 | $ | 43.976216 | $ | 15.951947 | ||||||||||
| Units Outstanding |
48 | - | 50 | 74 | 68 | |||||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-5 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Assets and Liabilities
December 31, 2014
(in thousands, except accumulation unit values)
| Balanced Division |
Asset Allocation Division |
Fidelity VIP Mid Cap Division |
Fidelity VIP Contrafund Division |
Neuberger Berman AMT Socially Responsive Division |
||||||||||||||||
|
|
|
|||||||||||||||||||
| Assets: |
||||||||||||||||||||
| Investments, at value (1) |
||||||||||||||||||||
| Northwestern Mutual Series Fund, Inc. |
$ | 360,231 | $ | 47,340 | $ | - | $ | - | $ | - | ||||||||||
| Fidelity Variable Insurance Products |
- | - | 175,277 | 37,759 | - | |||||||||||||||
| Neuberger Berman Advisers Management Trust |
- | - | - | - | 4,590 | |||||||||||||||
| Russell Investment Funds |
- | - | - | - | - | |||||||||||||||
| Credit Suisse Trust |
- | - | - | - | - | |||||||||||||||
| Due from Northwestern Mutual Life Insurance Company |
3 | - | 37 | - | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Assets |
360,234 | 47,340 | 175,314 | 37,759 | 4,590 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Liabilities: |
||||||||||||||||||||
| Due to Northwestern Mutual Life Insurance Company |
- | 1 | - | 2 | - | |||||||||||||||
| Due to Participants |
- | - | - | - | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Liabilities |
- | 1 | - | 2 | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Net Assets |
$ | 360,234 | $ | 47,339 | $ | 175,314 | $ | 37,757 | $ | 4,590 | ||||||||||
|
|
|
|||||||||||||||||||
| Net Assets: |
||||||||||||||||||||
| Variable Life Policies Issued: |
||||||||||||||||||||
| Before October 11, 1995 |
||||||||||||||||||||
| Policyowners’ Equity |
$ | 162,634 | $ | 6,025 | $ | 15,323 | $ | 2,620 | $ | 298 | ||||||||||
| Northwestern Mutual Equity |
1,669 | 81 | 170 | 26 | 4 | |||||||||||||||
| Variable CompLife Policies Issued Between October 11, 1995 and December 31, 2008 (2) |
||||||||||||||||||||
| Policyowners’ Equity |
177,262 | 36,817 | 143,081 | 31,509 | 3,469 | |||||||||||||||
| Northwestern Mutual Equity |
4,757 | 1,066 | 4,173 | 755 | 89 | |||||||||||||||
| Variable Executive Life Policies Issued Between March 2, 1998 and December 31, 2008 (3) |
||||||||||||||||||||
| Policyowners’ Equity |
7,198 | 1,102 | 6,119 | 1,788 | 236 | |||||||||||||||
| Variable Joint Life Policies Issued Between December 10, 1998 and December 31, 2008 (4) |
||||||||||||||||||||
| Policyowners’ Equity |
6,714 | 2,248 | 6,448 | 1,059 | 494 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Net Assets |
$ | 360,234 | $ | 47,339 | $ | 175,314 | $ | 37,757 | $ | 4,590 | ||||||||||
|
|
|
|||||||||||||||||||
| (1) Investments, at cost |
$ | 361,987 | $ | 42,120 | $ | 143,230 | $ | 29,443 | $ | 3,680 | ||||||||||
| Mutual Fund Shares Held |
243,235 | 39,615 | 4,758 | 1,029 | 192 | |||||||||||||||
| (2) Accumulation Unit Value |
$ | 3.329658 | $ | 1.916252 | $ | 4.048702 | $ | 1.547371 | $ | 1.513495 | ||||||||||
| Units Outstanding |
54,667 | 19,769 | 36,371 | 20,851 | 2,351 | |||||||||||||||
| (3) Accumulation Unit Value |
$ | 181.830315 | $ | 20.487411 | $ | 42.835362 | $ | 16.754369 | $ | 16.275087 | ||||||||||
| Units Outstanding |
40 | 54 | 143 | 107 | 14 | |||||||||||||||
| (4) Accumulation Unit Value |
$ | 181.830315 | $ | 20.487411 | $ | 42.835362 | $ | 16.754369 | $ | 16.275087 | ||||||||||
| Units Outstanding |
37 | 110 | 151 | 63 | 30 | |||||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-6 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Assets and Liabilities
December 31, 2014
(in thousands, except accumulation unit values)
| Russell Multi-Style |
Russell Aggressive Equity Division |
Russell Non-U.S. |
Russell Core Bond Division |
Russell Global Real |
||||||||||||||||
|
|
|
|||||||||||||||||||
| Assets: |
||||||||||||||||||||
| Investments, at value (1) |
||||||||||||||||||||
| Northwestern Mutual Series Fund, Inc. |
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
| Fidelity Variable Insurance Products |
- | - | - | - | - | |||||||||||||||
| Neuberger Berman Advisers Management Trust |
- | - | - | - | - | |||||||||||||||
| Russell Investment Funds |
213,356 | 104,712 | 121,463 | 86,900 | 175,393 | |||||||||||||||
| Credit Suisse Trust |
- | - | - | - | - | |||||||||||||||
| Due from Northwestern Mutual Life Insurance Company |
6 | - | 13 | - | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Assets |
213,362 | 104,712 | 121,476 | 86,900 | 175,393 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Liabilities: |
||||||||||||||||||||
| Due to Northwestern Mutual Life Insurance Company |
- | 7 | - | 9 | 19 | |||||||||||||||
| Due to Participants |
- | - | - | - | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Liabilities |
- | 7 | - | 9 | 19 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Net Assets |
$ | 213,362 | $ | 104,705 | $ | 121,476 | $ | 86,891 | $ | 175,374 | ||||||||||
|
|
|
|||||||||||||||||||
| Net Assets: |
||||||||||||||||||||
| Variable Life Policies Issued: |
||||||||||||||||||||
| Before October 11, 1995 |
||||||||||||||||||||
| Policyowners’ Equity |
$ | 9,427 | $ | 7,060 | $ | 7,525 | $ | 5,478 | $ | 10,267 | ||||||||||
| Northwestern Mutual Equity |
113 | 80 | 114 | 111 | 122 | |||||||||||||||
| Variable CompLife Policies Issued Between October 11, 1995 and December 31, 2008 (2) |
||||||||||||||||||||
| Policyowners’ Equity |
178,429 | 88,540 | 100,170 | 62,217 | 148,325 | |||||||||||||||
| Northwestern Mutual Equity |
5,045 | 2,510 | 2,847 | 1,822 | 4,275 | |||||||||||||||
| Variable Executive Life Policies Issued Between March 2, 1998 and December 31, 2008 (3) |
||||||||||||||||||||
| Policyowners’ Equity |
11,656 | 3,409 | 6,695 | 13,488 | 6,013 | |||||||||||||||
| Variable Joint Life Policies Issued Between December 10, 1998 and December 31, 2008 (4) |
||||||||||||||||||||
| Policyowners’ Equity |
8,692 | 3,106 | 4,125 | 3,775 | 6,372 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Net Assets |
$ | 213,362 | $ | 104,705 | $ | 121,476 | $ | 86,891 | $ | 175,374 | ||||||||||
|
|
|
|||||||||||||||||||
| (1) Investments, at cost |
$ | 166,648 | $ | 89,475 | $ | 120,475 | $ | 85,014 | $ | 168,520 | ||||||||||
| Mutual Fund Shares Held |
11,781 | 6,751 | 10,525 | 8,152 | 11,222 | |||||||||||||||
| (2) Accumulation Unit Value |
$ | 1.621079 | $ | 2.373801 | $ | 1.633987 | $ | 2.180310 | $ | 4.188148 | ||||||||||
| Units Outstanding |
113,181 | 38,357 | 63,046 | 29,371 | 36,437 | |||||||||||||||
| (3) Accumulation Unit Value |
$ | 18.071559 | $ | 27.141282 | $ | 17.795979 | $ | 23.281628 | $ | 44.660949 | ||||||||||
| Units Outstanding |
645 | 126 | 376 | 579 | 135 | |||||||||||||||
| (4) Accumulation Unit Value |
$ | 18.071559 | $ | 27.141282 | $ | 17.795979 | $ | 23.281628 | $ | 44.660949 | ||||||||||
| Units Outstanding |
481 | 114 | 232 | 162 | 143 | |||||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-7 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Assets and Liabilities
December 31, 2014
(in thousands, except accumulation unit values)
| Russell LifePoints Moderate Strategy Division |
Russell LifePoints Balanced Strategy Division |
Russell LifePoints Growth Strategy Division |
Russell LifePoints Equity Growth Strategy Division |
Credit Suisse Trust Commodity Return Strategy Division |
||||||||||||||||
|
|
|
|||||||||||||||||||
| Assets: |
||||||||||||||||||||
| Investments, at value (1) |
||||||||||||||||||||
| Northwestern Mutual Series Fund, Inc. |
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
| Fidelity Variable Insurance Products |
- | - | - | - | - | |||||||||||||||
| Neuberger Berman Advisers Management Trust |
- | - | - | - | - | |||||||||||||||
| Russell Investment Funds |
3,327 | 17,114 | 20,167 | 8,766 | - | |||||||||||||||
| Credit Suisse Trust |
- | - | - | - | 15,925 | |||||||||||||||
| Due from Northwestern Mutual Life Insurance Company |
- | 3 | - | - | 9 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Assets |
3,327 | 17,117 | 20,167 | 8,766 | 15,934 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Liabilities: |
||||||||||||||||||||
| Due to Northwestern Mutual Life Insurance Company |
- | - | 41 | 4 | - | |||||||||||||||
| Due to Participants |
- | - | - | - | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Liabilities |
- | - | 41 | 4 | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Net Assets |
$ | 3,327 | $ | 17,117 | $ | 20,126 | $ | 8,762 | $ | 15,934 | ||||||||||
|
|
|
|||||||||||||||||||
| Net Assets: |
||||||||||||||||||||
| Variable Life Policies Issued: |
||||||||||||||||||||
| Before October 11, 1995 |
||||||||||||||||||||
| Policyowners’ Equity |
$ | 974 | $ | 2,522 | $ | 3,131 | $ | 776 | $ | 435 | ||||||||||
| Northwestern Mutual Equity |
11 | 36 | 44 | 11 | 9 | |||||||||||||||
| Variable CompLife Policies Issued Between October 11, 1995 and December 31, 2008 (2) |
||||||||||||||||||||
| Policyowners’ Equity |
2,194 | 13,835 | 16,181 | 7,070 | 13,370 | |||||||||||||||
| Northwestern Mutual Equity |
75 | 381 | 499 | 201 | 380 | |||||||||||||||
| Variable Executive Life Policies Issued Between March 2, 1998 and December 31, 2008 (3) |
||||||||||||||||||||
| Policyowners’ Equity |
49 | 6 | 1 | - | 1,126 | |||||||||||||||
| Variable Joint Life Policies Issued Between December 10, 1998 and December 31, 2008 (4) |
||||||||||||||||||||
| Policyowners’ Equity |
24 | 337 | 270 | 704 | 614 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Net Assets |
$ | 3,327 | $ | 17,117 | $ | 20,126 | $ | 8,762 | $ | 15,934 | ||||||||||
|
|
|
|||||||||||||||||||
| (1) Investments, at cost |
$ | 3,345 | $ | 16,353 | $ | 18,697 | $ | 7,789 | $ | 19,073 | ||||||||||
| Mutual Fund Shares Held |
318 | 1,646 | 2,003 | 927 | 3,051 | |||||||||||||||
| (2) Accumulation Unit Value |
$ | 1.179226 | $ | 1.222287 | $ | 1.235139 | $ | 1.258221 | $ | 6.387246 | ||||||||||
| Units Outstanding |
1,924 | 11,631 | 13,504 | 5,778 | 2,153 | |||||||||||||||
| (3) Accumulation Unit Value |
$ | 14.227181 | $ | 13.866173 | $ | 13.064429 | $ | 12.149681 | $ | 5.885213 | ||||||||||
| Units Outstanding |
3 | - | - | - | 191 | |||||||||||||||
| (4) Accumulation Unit Value |
$ | 14.227181 | $ | 13.866173 | $ | 13.064429 | $ | 12.149681 | $ | 5.885213 | ||||||||||
| Units Outstanding |
2 | 24 | 21 | 58 | 104 | |||||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-8 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Operations
For the Year Ended December 31, 2014
(in thousands)
| Growth Stock Division |
Focused Appreciation Division |
Large Cap Core Stock Division |
Large Cap Blend Division |
Index 500 Stock Division |
||||||||||||||||
|
|
|
|||||||||||||||||||
| Income: |
||||||||||||||||||||
| Dividend income |
$ | 2,222 | $ | 23 | $ | 3,583 | $ | 3 | $ | 16,996 | ||||||||||
| Expenses: |
||||||||||||||||||||
| Mortality and expense risk charges |
1,638 | 487 | 1,040 | 31 | 4,559 | |||||||||||||||
| Taxes |
17 | 4 | 14 | - | 75 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Expenses |
1,655 | 491 | 1,054 | 31 | 4,634 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Net investment income (loss) |
567 | (468) | 2,529 | (28) | 12,362 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Realized gain (loss) on investments: |
||||||||||||||||||||
| Realized gain (loss) on sale of fund shares |
6,541 | 3,222 | 4,482 | 299 | 12,668 | |||||||||||||||
| Realized gain distributions |
35,938 | 11,724 | 21,530 | 282 | 13,243 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Realized gains (losses) |
42,479 | 14,946 | 26,012 | 581 | 25,911 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Change in unrealized appreciation/(depreciation) of investments during the period |
(12,180) | (4,410) | (9,983) | 284 | 91,365 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Net increase (decrease) in net assets resulting from operations |
$ | 30,866 | $ | 10,068 | $ | 18,558 | $ | 837 | $ | 129,638 | ||||||||||
|
|
|
|||||||||||||||||||
| Large Company Value Division |
Domestic Equity Division |
Equity Income Division |
Mid Cap Growth Stock Division |
Index 400 Stock Division |
||||||||||||||||
|
|
|
|||||||||||||||||||
| Income: |
||||||||||||||||||||
| Dividend income |
$ | - | $ | 3,097 | $ | 1,487 | $ | 1,592 | $ | 2,803 | ||||||||||
| Expenses: |
||||||||||||||||||||
| Mortality and expense risk charges |
37 | 770 | 504 | 1,981 | 1,201 | |||||||||||||||
| Taxes |
- | 8 | 5 | 32 | 7 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Expenses |
37 | 778 | 509 | 2,013 | 1,208 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Net investment income (loss) |
(37) | 2,319 | 978 | (421) | 1,595 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Realized gain (loss) on investments: |
||||||||||||||||||||
| Realized gain (loss) on sale of fund shares |
346 | 2,166 | 1,875 | 5,594 | 7,262 | |||||||||||||||
| Realized gain distributions |
444 | - | 3,559 | 87,466 | 13,440 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Realized gains (losses) |
790 | 2,166 | 5,434 | 93,060 | 20,702 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Change in unrealized appreciation/(depreciation) of investments during the period |
284 | 18,290 | 1,702 | (57,841) | 2,033 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Net increase (decrease) in net assets resulting from operations |
$ | 1,037 | $ | 22,775 | $ | 8,114 | $ | 34,798 | $ | 24,330 | ||||||||||
|
|
|
|||||||||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-9 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Operations
For the Year Ended December 31, 2014
(in thousands)
| Mid Cap Value Division |
Small Cap Growth Stock Division |
Index 600 Stock Division |
Small Cap Value Division |
International Growth Division |
||||||||||||||||
|
|
|
|||||||||||||||||||
| Income: |
||||||||||||||||||||
| Dividend income |
$ | 544 | $ | - | $ | 284 | $ | 628 | $ | 1,261 | ||||||||||
| Expenses: |
||||||||||||||||||||
| Mortality and expense risk charges |
233 | 1,044 | 79 | 752 | 401 | |||||||||||||||
| Taxes |
2 | 6 | 1 | 7 | 2 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Expenses |
235 | 1,050 | 80 | 759 | 403 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Net investment income (loss) |
309 | (1,050) | 204 | (131) | 858 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Realized gain (loss) on investments: |
||||||||||||||||||||
| Realized gain (loss) on sale of fund shares |
454 | 4,487 | 674 | 4,982 | (636) | |||||||||||||||
| Realized gain distributions |
4,586 | 27,451 | 3,169 | 4,529 | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Realized gains (losses) |
5,040 | 31,938 | 3,843 | 9,511 | (636) | |||||||||||||||
|
|
|
|||||||||||||||||||
| Change in unrealized appreciation/(depreciation) of investments during the period |
2,912 | (11,529) | (3,135) | (9,904) | (4,954) | |||||||||||||||
|
|
|
|||||||||||||||||||
| Net increase (decrease) in net assets resulting from operations |
$ | 8,261 | $ | 19,359 | $ | 912 | $ | (524) | $ | (4,732) | ||||||||||
|
|
|
|||||||||||||||||||
| Research International Core Division |
International Equity Division |
Emerging Markets Equity Division |
Money Market Division |
Short-Term Bond Division |
||||||||||||||||
|
|
|
|||||||||||||||||||
| Income: |
||||||||||||||||||||
| Dividend income |
$ | 300 | $ | 10,956 | $ | 216 | $ | 119 | $ | 73 | ||||||||||
| Expenses: |
||||||||||||||||||||
| Mortality and expense risk charges |
84 | 2,477 | 139 | 628 | 50 | |||||||||||||||
| Taxes |
1 | 35 | 1 | 7 | 1 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Expenses |
85 | 2,512 | 140 | 635 | 51 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Net investment income (loss) |
215 | 8,444 | 76 | (516) | 22 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Realized gain (loss) on investments: |
||||||||||||||||||||
| Realized gain (loss) on sale of fund shares |
431 | 8,002 | 193 | - | 9 | |||||||||||||||
| Realized gain distributions |
128 | 38,609 | 12 | - | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Realized gains (losses) |
559 | 46,611 | 205 | - | 9 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Change in unrealized appreciation/(depreciation) of investments during the period |
(2,302) | (108,669) | (2,705) | - | (46) | |||||||||||||||
|
|
|
|||||||||||||||||||
| Net increase (decrease) in net assets resulting from operations |
$ | (1,528) | $ | (53,614) | $ | (2,424) | $ | (516) | $ | (15) | ||||||||||
|
|
|
|||||||||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-10 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Operations
For the Year Ended December 31, 2014
(in thousands)
| Select Bond Division |
Long-Term U.S. Government Bond Division |
Inflation Protection Division |
High Yield Bond Division |
Multi-Sector Bond Division |
||||||||||||||||
| Income: |
||||||||||||||||||||
| Dividend income |
$ | 4,970 | $ | 113 | $ | 46 | $ | 5,505 | $ | 660 | ||||||||||
| Expenses: |
||||||||||||||||||||
| Mortality and expense risk charges |
956 | 25 | 34 | 456 | 105 | |||||||||||||||
| Taxes |
12 | - | - | 4 | 1 | |||||||||||||||
| Total Expenses |
968 | 25 | 34 | 460 | 106 | |||||||||||||||
| Net investment income (loss) |
4,002 | 88 | 12 | 5,045 | 554 | |||||||||||||||
| Realized gain (loss) on investments: |
||||||||||||||||||||
| Realized gain (loss) on sale of fund shares |
1,331 | (267) | (273) | 839 | 141 | |||||||||||||||
| Realized gain distributions |
- | - | 83 | - | - | |||||||||||||||
| Realized gains (losses) |
1,331 | (267) | (190) | 839 | 141 | |||||||||||||||
| Change in unrealized appreciation/(depreciation) of investments during the period |
7,009 | 1,340 | 415 | (5,047) | (116) | |||||||||||||||
| Net increase (decrease) in net assets resulting from operations |
$ | 12,342 | $ | 1,161 | $ | 237 | $ | 837 | $ | 579 | ||||||||||
| Balanced Division |
Asset Allocation Division |
Fidelity VIP Mid Cap Division |
Fidelity VIP Contrafund Division |
Neuberger Berman AMT Socially Responsive Division |
||||||||||||||||
| Income: |
||||||||||||||||||||
| Dividend income |
$ | 8,291 | $ | 1,018 | $ | 33 | $ | 269 | $ | 16 | ||||||||||
| Expenses: |
||||||||||||||||||||
| Mortality and expense risk charges |
1,614 | 196 | 722 | 142 | 17 | |||||||||||||||
| Taxes |
82 | 3 | 8 | 1 | - | |||||||||||||||
| Total Expenses |
1,696 | 199 | 730 | 143 | 17 | |||||||||||||||
| Net investment income (loss) |
6,595 | 819 | (697) | 126 | (1) | |||||||||||||||
| Realized gain (loss) on investments: |
||||||||||||||||||||
| Realized gain (loss) on sale of fund shares |
(2,721) | 450 | 1,455 | 1,634 | 351 | |||||||||||||||
| Realized gain distributions |
28,444 | 4,184 | 4,047 | 749 | - | |||||||||||||||
| Realized gains (losses) |
25,723 | 4,634 | 5,502 | 2,383 | 351 | |||||||||||||||
| Change in unrealized appreciation/(depreciation) of investments during the period |
(14,678) | (3,302) | 4,538 | 1,090 | 66 | |||||||||||||||
| Net increase (decrease) in net assets resulting from operations |
$ | 17,640 | $ | 2,151 | $ | 9,343 | $ | 3,599 | $ | 416 | ||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-11 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Operations
For the Year Ended December 31, 2014
(in thousands)
| Russell Multi-Style Equity Division |
Russell Aggressive Equity Division |
Russell Non-U.S. Division |
Russell Core Bond Division |
Russell Global Real Estate Securities Division |
||||||||||||||||
|
|
|
|||||||||||||||||||
| Income: |
||||||||||||||||||||
| Dividend income |
$ | 2,398 | $ | 264 | $ | 2,536 | $ | 1,312 | $ | 5,490 | ||||||||||
| Expenses: |
||||||||||||||||||||
| Mortality and expense risk charges |
837 | 441 | 532 | 311 | 701 | |||||||||||||||
| Taxes |
5 | 3 | 4 | 3 | 5 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Expenses |
842 | 444 | 536 | 314 | 706 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Net investment income (loss) |
1,556 | (180) | 2,000 | 998 | 4,784 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Realized gain (loss) on investments: |
||||||||||||||||||||
| Realized gain (loss) on sale of fund shares |
6,219 | 1,779 | 966 | 319 | 1,408 | |||||||||||||||
| Realized gain distributions |
28,069 | 10,016 | - | 1,675 | 7,337 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Realized gains (losses) |
34,288 | 11,795 | 966 | 1,994 | 8,745 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Change in unrealized appreciation/(depreciation) of investments during the period |
(13,926) | (10,588) | (9,202) | 1,207 | 8,524 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Net increase (decrease) in net assets resulting from operations |
$ | 21,918 | $ | 1,027 | $ | (6,236) | $ | 4,199 | $ | 22,053 | ||||||||||
|
|
|
|||||||||||||||||||
| Russell LifePoints Moderate Strategy Division |
Russell LifePoints Balanced Strategy Division |
Russell LifePoints Growth Strategy Division |
Russell LifePoints Equity Growth Strategy Division |
Credit Suisse Trust Commodity Return Strategy Division |
||||||||||||||||
|
|
|
|||||||||||||||||||
| Income: |
||||||||||||||||||||
| Dividend income |
$ | 86 | $ | 483 | $ | 583 | $ | 283 | $ | - | ||||||||||
| Waiver Income |
- | - | - | - | 2 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Income |
86 | 483 | 583 | 283 | 2 | |||||||||||||||
| Expenses: |
||||||||||||||||||||
| Mortality and expense risk charges |
12 | 70 | 86 | 36 | 71 | |||||||||||||||
| Taxes |
- | 1 | 2 | - | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total Expenses |
12 | 71 | 88 | 36 | 71 | |||||||||||||||
| Less waived fees |
- | - | - | - | (14) | |||||||||||||||
|
|
|
|||||||||||||||||||
| Net Expenses |
12 | 71 | 88 | 36 | 57 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Net investment income (loss) |
74 | 412 | 495 | 247 | (55) | |||||||||||||||
|
|
|
|||||||||||||||||||
| Realized gain (loss) on investments: |
||||||||||||||||||||
| Realized gain (loss) on sale of fund shares |
58 | 379 | 303 | 99 | 73 | |||||||||||||||
| Realized gain distributions |
41 | 298 | 424 | 139 | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Realized gains (losses) |
99 | 677 | 727 | 238 | 73 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Change in unrealized appreciation/(depreciation) of investments during the period |
(60) | (489) | (624) | (229) | (3,407) | |||||||||||||||
|
|
|
|||||||||||||||||||
| Net increase (decrease) in net assets resulting from operations |
$ | 113 | $ | 600 | $ | 598 | $ | 256 | $ | (3,389) | ||||||||||
|
|
|
|||||||||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-12 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Changes in Net Assets
(in thousands)
| Growth Stock Division | Focused Appreciation Division |
|||||||||||||||
| Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 567 | $ | 761 | $ | (468) | $ | 59 | ||||||||
| Net realized gains (losses) |
42,479 | 26,883 | 14,946 | 2,826 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
(12,180) | 69,866 | (4,410) | 23,435 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | 30,866 | 97,510 | 10,068 | 26,320 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
16,464 | 17,907 | 5,808 | 6,168 | ||||||||||||
| Policy loans, surrenders and death benefits |
(19,999) | (20,110) | (5,800) | (6,020) | ||||||||||||
| Mortality and other (net) |
(7,770) | (7,299) | (2,453) | (2,289) | ||||||||||||
| Transfers from other divisions |
35,723 | 18,642 | 11,837 | 11,303 | ||||||||||||
| Transfers to other divisions |
(36,524) | (23,073) | (13,051) | (15,183) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | (12,106) | (13,933) | (3,659) | (6,021) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets |
18,760 | 83,577 | 6,409 | 20,299 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
368,165 | 284,588 | 116,386 | 96,087 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 386,925 | $ | 368,165 | $ | 122,795 | $ | 116,386 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
7,930 | 9,982 | 4,304 | 5,521 | ||||||||||||
| Units redeemed during the period |
(11,049) | (13,965) | (5,205) | (7,158) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
(3,119) | (3,983) | (901) | (1,637) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Large Cap Core Stock Division | Large Cap Blend Division | |||||||||||||||
| Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 2,529 | $ | 1,528 | $ | (28) | $ | 29 | ||||||||
| Net realized gains (losses) |
26,012 | 1,581 | 581 | 429 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
(9,983) | 49,353 | 284 | 829 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | 18,558 | 52,462 | 837 | 1,287 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
11,922 | 12,566 | 300 | 213 | ||||||||||||
| Policy loans, surrenders and death benefits |
(13,603) | (14,423) | (125) | (178) | ||||||||||||
| Mortality and other (net) |
(5,313) | (5,144) | (132) | (92) | ||||||||||||
| Transfers from other divisions |
19,392 | 9,870 | 2,725 | 2,754 | ||||||||||||
| Transfers to other divisions |
(20,795) | (13,352) | (1,570) | (1,442) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | (8,397) | (10,483) | 1,198 | 1,255 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets | 10,161 | 41,979 | 2,035 | 2,542 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
233,882 | 191,903 | 6,157 | 3,615 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 244,043 | $ | 233,882 | $ | 8,192 | $ | 6,157 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
7,017 | 7,972 | 1,722 | 1,532 | ||||||||||||
| Units redeemed during the period |
(9,376) | (11,575) | (919) | (680) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
(2,359) | (3,603) | 803 | 852 | ||||||||||||
|
|
|
|
|
|||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-13 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Changes in Net Assets
(in thousands)
| Index 500 Stock Division | Large Company Value Division |
|||||||||||||||
| Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 12,362 | $ | 12,463 | $ | (37) | $ | 79 | ||||||||
| Net realized gains (losses) |
25,911 | 23,308 | 790 | 493 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
91,365 | 208,382 | 284 | 870 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | 129,638 | 244,153 | 1,037 | 1,442 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
45,360 | 46,553 | 320 | 122 | ||||||||||||
| Policy loans, surrenders and death benefits |
(52,593) | (56,088) | (50) | (218) | ||||||||||||
| Mortality and other (net) |
(21,250) | (19,846) | (161) | (98) | ||||||||||||
| Transfers from other divisions |
113,171 | 84,237 | 4,781 | 4,785 | ||||||||||||
| Transfers to other divisions |
(100,733) | (75,741) | (2,046) | (1,560) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | (16,045) | (20,885) | 2,844 | 3,031 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets |
113,593 | 223,268 | 3,881 | 4,473 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
1,008,802 | 785,534 | 7,585 | 3,112 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 1,122,395 | $ | 1,008,802 | $ | 11,466 | $ | 7,585 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
21,063 | 25,004 | 2,862 | 3,218 | ||||||||||||
| Units redeemed during the period |
(23,844) | (29,019) | (937) | (1,274) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
(2,781) | (4,015) | 1,925 | 1,944 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Domestic Equity Division | Equity Income Division | |||||||||||||||
| Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 2,319 | $ | 1,953 | $ | 978 | $ | 1,001 | ||||||||
| Net realized gains (losses) |
2,166 | (43) | 5,434 | 674 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
18,290 | 42,071 | 1,702 | 25,112 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | 22,775 | 43,981 | 8,114 | 26,787 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
8,391 | 8,611 | 5,464 | 5,510 | ||||||||||||
| Policy loans, surrenders and death benefits |
(8,458) | (8,618) | (5,448) | (4,783) | ||||||||||||
| Mortality and other (net) |
(3,777) | (3,511) | (2,389) | (2,324) | ||||||||||||
| Transfers from other divisions |
14,632 | 10,450 | 36,104 | 28,760 | ||||||||||||
| Transfers to other divisions |
(15,246) | (13,084) | (36,775) | (26,171) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | (4,458) | (6,152) | (3,044) | 992 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets | 18,317 | 37,829 | 5,070 | 27,779 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
172,457 | 134,628 | 118,079 | 90,300 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 190,774 | $ | 172,457 | $ | 123,149 | $ | 118,079 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
8,598 | 10,133 | 6,746 | 8,784 | ||||||||||||
| Units redeemed during the period |
(10,287) | (12,440) | (7,617) | (8,263) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
(1,689) | (2,307) | (871) | 521 | ||||||||||||
|
|
|
|
|
|||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-14 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Changes in Net Assets
(in thousands)
| Mid Cap Growth Stock Division |
Index 400 Stock Division | |||||||||||||||
| Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | (421) | $ | (591) | $ | 1,595 | $ | 1,599 | ||||||||
| Net realized gains (losses) |
93,060 | 18,432 | 20,702 | 13,514 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
(57,841) | 73,842 | 2,033 | 54,212 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | 34,798 | 91,683 | 24,330 | 69,325 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
21,515 | 22,196 | 11,385 | 10,729 | ||||||||||||
| Policy loans, surrenders and death benefits |
(25,248) | (27,277) | (16,132) | (13,987) | ||||||||||||
| Mortality and other (net) |
(9,424) | (9,230) | (5,305) | (4,925) | ||||||||||||
| Transfers from other divisions |
20,093 | 19,133 | 62,611 | 39,075 | ||||||||||||
| Transfers to other divisions |
(25,349) | (22,182) | (65,706) | (34,548) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | (18,413) | (17,360) | (13,147) | (3,656) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets |
16,385 | 74,323 | 11,183 | 65,669 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
448,921 | 374,598 | 279,413 | 213,744 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 465,306 | $ | 448,921 | $ | 290,596 | $ | 279,413 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
9,212 | 11,187 | 7,642 | 9,937 | ||||||||||||
| Units redeemed during the period |
(13,457) | (15,991) | (10,817) | (10,904) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
(4,245) | (4,804) | (3,175) | (967) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Mid Cap Value Division | Small Cap Growth Stock Division |
|||||||||||||||
| Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 309 | $ | 247 | $ | (1,050) | $ | 127 | ||||||||
| Net realized gains (losses) |
5,040 | 349 | 31,938 | 4,094 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
2,912 | 11,079 | (11,529) | 64,636 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | 8,261 | 11,675 | 19,359 | 68,857 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
2,735 | 2,710 | 11,123 | 12,154 | ||||||||||||
| Policy loans, surrenders and death benefits |
(2,854) | (2,883) | (14,024) | (12,997) | ||||||||||||
| Mortality and other (net) |
(1,152) | (1,022) | (4,833) | (4,569) | ||||||||||||
| Transfers from other divisions |
9,848 | 7,488 | 30,350 | 17,758 | ||||||||||||
| Transfers to other divisions |
(7,824) | (5,963) | (33,208) | (19,635) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | 753 | 330 | (10,592) | (7,289) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets | 9,014 | 12,005 | 8,767 | 61,568 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
51,336 | 39,331 | 246,636 | 185,068 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 60,350 | $ | 51,336 | $ | 255,403 | $ | 246,636 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
3,304 | 3,228 | 6,914 | 8,260 | ||||||||||||
| Units redeemed during the period |
(3,043) | (3,212) | (9,629) | (10,665) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
261 | 16 | (2,715) | (2,405) | ||||||||||||
|
|
|
|
|
|||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-15 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Changes in Net Assets
(in thousands)
| Index 600 Stock Division | Small Cap Value Division | |||||||||||||||
| Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 204 | $ | 440 | $ | (131) | $ | 1,186 | ||||||||
| Net realized gains (losses) |
3,843 | 940 | 9,511 | 4,507 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
(3,135) | 2,223 | (9,904) | 38,712 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | 912 | 3,603 | (524) | 44,405 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
863 | 585 | 8,132 | 8,638 | ||||||||||||
| Policy loans, surrenders and death benefits |
(587) | (410) | (9,054) | (8,717) | ||||||||||||
| Mortality and other (net) |
(339) | (208) | (3,385) | (3,495) | ||||||||||||
| Transfers from other divisions |
8,942 | 11,460 | 14,172 | 16,147 | ||||||||||||
| Transfers to other divisions |
(6,362) | (4,417) | (19,575) | (16,164) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | 2,517 | 7,010 | (9,710) | (3,591) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets |
3,429 | 10,613 | (10,234) | 40,814 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
16,819 | 6,206 | 184,787 | 143,973 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 20,248 | $ | 16,819 | $ | 174,553 | $ | 184,787 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
4,295 | 6,483 | 5,119 | 7,449 | ||||||||||||
| Units redeemed during the period |
(2,892) | (2,020) | (7,567) | (8,471) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
1,403 | 4,463 | (2,448) | (1,022) | ||||||||||||
|
|
|
|
|
|||||||||||||
| International Growth Division | Research International Core Division |
|||||||||||||||
| Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 858 | $ | 885 | $ | 215 | $ | (44) | ||||||||
| Net realized gains (losses) |
(636) | (650) | 559 | 236 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
(4,954) | 15,636 | (2,302) | 2,435 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | (4,732) | 15,871 | (1,528) | 2,627 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
5,660 | 6,264 | 905 | 874 | ||||||||||||
| Policy loans, surrenders and death benefits |
(4,599) | (5,244) | (1,050) | (196) | ||||||||||||
| Mortality and other (net) |
(1,984) | (1,942) | (390) | (316) | ||||||||||||
| Transfers from other divisions |
17,644 | 15,020 | 9,476 | 8,888 | ||||||||||||
| Transfers to other divisions |
(19,217) | (14,779) | (5,722) | (4,941) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | (2,496) | (681) | 3,219 | 4,309 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets | (7,228) | 15,190 | 1,691 | 6,936 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
98,031 | 82,841 | 19,169 | 12,233 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 90,803 | $ | 98,031 | $ | 20,860 | $ | 19,169 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
7,159 | 7,831 | 5,563 | 6,065 | ||||||||||||
| Units redeemed during the period |
(8,179) | (7,964) | (3,140) | (2,347) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
(1,020) | (133) | 2,423 | 3,718 | ||||||||||||
|
|
|
|
|
|||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-16 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Changes in Net Assets
(in thousands)
| International Equity Division |
Emerging Markets Equity Division |
|||||||||||||||
| Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 8,444 | $ | 9,490 | $ | 76 | $ | 86 | ||||||||
| Net realized gains (losses) |
46,611 | 5,177 | 205 | 407 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
(108,669) | 88,525 | (2,705) | (1,882) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | (53,614) | 103,192 | (2,424) | (1,389) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
27,749 | 29,876 | 1,734 | 2,064 | ||||||||||||
| Policy loans, surrenders and death benefits |
(28,999) | (32,280) | (1,721) | (1,883) | ||||||||||||
| Mortality and other (net) |
(11,126) | (11,521) | (568) | (470) | ||||||||||||
| Transfers from other divisions |
79,349 | 55,104 | 16,865 | 19,420 | ||||||||||||
| Transfers to other divisions |
(81,497) | (55,596) | (9,497) | (8,757) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | (14,524) | (14,417) | 6,813 | 10,374 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets |
(68,138) | 88,775 | 4,389 | 8,985 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
593,256 | 504,481 | 30,454 | 21,469 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 525,118 | $ | 593,256 | $ | 34,843 | $ | 30,454 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
26,270 | 24,658 | 12,600 | 17,287 | ||||||||||||
| Units redeemed during the period |
(29,614) | (28,508) | (6,703) | (7,400) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
(3,344) | (3,850) | 5,897 | 9,887 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Money Market Division | Short-Term Bond Division | |||||||||||||||
| Year Ended December 31, 2014 |
Year Ended 2013 |
Year Ended 2014 |
Year Ended 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | (516) | $ | (471) | $ | 22 | $ | (21) | ||||||||
| Net realized gains (losses) |
- | - | 9 | 1 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
- | - | (46) | 39 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | (516) | (471) | (15) | 19 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
52,008 | 64,763 | 562 | 371 | ||||||||||||
| Policy loans, surrenders and death benefits |
(25,101) | (27,725) | (876) | (715) | ||||||||||||
| Mortality and other (net) |
(5,089) | (5,466) | (239) | (187) | ||||||||||||
| Transfers from other divisions |
147,165 | 137,550 | 6,927 | 7,512 | ||||||||||||
| Transfers to other divisions |
(172,809) | (168,425) | (3,549) | (3,378) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | (3,826) | 697 | 2,825 | 3,603 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets | (4,342) | 226 | 2,810 | 3,622 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
170,166 | 169,940 | 10,582 | 6,960 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 165,824 | $ | 170,166 | $ | 13,392 | $ | 10,582 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
80,985 | 82,988 | 5,788 | 6,713 | ||||||||||||
| Units redeemed during the period |
(83,425) | (85,306) | (3,709) | (3,532) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
(2,440) | (2,318) | 2,079 | 3,181 | ||||||||||||
|
|
|
|
|
|||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-17 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Changes in Net Assets
(in thousands)
| Select Bond Division | Long-Term U.S. Government Bond Division |
|||||||||||||||
| Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 4,002 | $ | 4,830 | $ | 88 | $ | (28) | ||||||||
| Net realized gains (losses) |
1,331 | 5,751 | (267) | (718) | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
7,009 | (17,205) | 1,340 | (211) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | 12,342 | (6,624) | 1,161 | (957) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
13,249 | 14,540 | 169 | 410 | ||||||||||||
| Policy loans, surrenders and death benefits |
(15,378) | (15,249) | (561) | (444) | ||||||||||||
| Mortality and other (net) |
(5,015) | (5,078) | (118) | (135) | ||||||||||||
| Transfers from other divisions |
141,385 | 104,940 | 4,423 | 3,693 | ||||||||||||
| Transfers to other divisions |
(142,710) | (115,861) | (3,006) | (5,624) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | (8,469) | (16,708) | 907 | (2,100) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets |
3,873 | (23,332) | 2,068 | (3,057) | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
244,742 | 268,074 | 4,876 | 7,933 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 248,615 | $ | 244,742 | $ | 6,944 | $ | 4,876 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
11,439 | 13,625 | 3,636 | 3,165 | ||||||||||||
| Units redeemed during the period |
(14,176) | (19,051) | (2,891) | (3,839) | ||||||||||||
|
|
|
|||||||||||||||
| Net units issued (redeemed) during period |
(2,737) | (5,426) | 745 | (674) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Inflation Protection Division | High Yield Bond Division | |||||||||||||||
| Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 12 | $ | 69 | $ | 5,045 | $ | 5,475 | ||||||||
| Net realized gains (losses) |
(190) | 79 | 839 | 1,291 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
415 | (1,087) | (5,047) | (1,181) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | 237 | (939) | 837 | 5,585 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
331 | 362 | 5,119 | 5,387 | ||||||||||||
| Policy loans, surrenders and death benefits |
(554) | (581) | (5,438) | (6,064) | ||||||||||||
| Mortality and other (net) |
(168) | (203) | (2,233) | (2,185) | ||||||||||||
| Transfers from other divisions |
4,580 | 6,912 | 22,054 | 17,601 | ||||||||||||
| Transfers to other divisions |
(4,455) | (7,633) | (21,223) | (19,556) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | (266) | (1,143) | (1,721) | (4,817) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets | (29) | (2,082) | (884) | 768 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
8,588 | 10,670 | 107,038 | 106,270 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 8,559 | $ | 8,588 | $ | 106,154 | $ | 107,038 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
2,743 | 3,546 | 4,029 | 4,777 | ||||||||||||
| Units redeemed during the period |
(3,104) | (4,629) | (4,473) | (5,884) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
(361) | (1,083) | (444) | (1,107) | ||||||||||||
|
|
|
|
|
|||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-18 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Changes in Net Assets
(in thousands)
| Multi-Sector Bond Division | Balanced Division | |||||||||||||||
| Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 554 | $ | 682 | $ | 6,595 | $ | 10,036 | ||||||||
| Net realized gains (losses) |
141 | 430 | 25,723 | 11,919 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
(116) | (1,610) | (14,678) | 15,646 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | 579 | (498) | 17,640 | 37,601 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
1,133 | 1,197 | 15,639 | 16,344 | ||||||||||||
| Policy loans, surrenders and death benefits |
(1,196) | (1,082) | (18,704) | (23,536) | ||||||||||||
| Mortality and other (net) |
(490) | (443) | (8,527) | (8,291) | ||||||||||||
| Transfers from other divisions |
7,315 | 11,363 | 96,430 | 56,503 | ||||||||||||
| Transfers to other divisions |
(2,915) | (7,491) | (96,270) | (55,676) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | 3,847 | 3,544 | (11,432) | (14,656) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets |
4,426 | 3,046 | 6,208 | 22,945 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
21,918 | 18,872 | 354,026 | 331,081 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 26,344 | $ | 21,918 | $ | 360,234 | $ | 354,026 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
6,278 | 10,007 | 6,850 | 7,120 | ||||||||||||
| Units redeemed during the period |
(3,523) | (7,378) | (7,513) | (9,043) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
2,755 | 2,629 | (663) | (1,923) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Asset Allocation Division | Fidelity VIP Mid Cap Division | |||||||||||||||
| Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 819 | $ | 1,217 | $ | (697) | $ | (212) | ||||||||
| Net realized gains (losses) |
4,634 | 98 | 5,502 | 19,927 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
(3,302) | 4,990 | 4,538 | 24,808 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | 2,151 | 6,305 | 9,343 | 44,523 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
2,317 | 2,050 | 8,187 | 8,242 | ||||||||||||
| Policy loans, surrenders and death benefits |
(3,446) | (2,883) | (8,634) | (7,592) | ||||||||||||
| Mortality and other (net) |
(1,076) | (998) | (3,449) | (3,211) | ||||||||||||
| Transfers from other divisions |
5,593 | 2,953 | 23,763 | 18,005 | ||||||||||||
| Transfers to other divisions |
(3,034) | (2,166) | (23,345) | (18,902) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | 354 | (1,044) | (3,478) | (3,458) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets | 2,505 | 5,261 | 5,865 | 41,065 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
44,834 | 39,573 | 169,449 | 128,384 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 47,339 | $ | 44,834 | $ | 175,314 | $ | 169,449 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
3,856 | 3,078 | 4,874 | 5,829 | ||||||||||||
| Units redeemed during the period |
(3,257) | (3,864) | (5,743) | (6,607) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
599 | (786) | (869) | (778) | ||||||||||||
|
|
|
|
|
|||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-19 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Changes in Net Assets
(in thousands)
| Fidelity VIP Contrafund Division | Neuberger Berman AMT Socially Responsive Division |
|||||||||||||||
| Year Ended 2014 |
Year Ended 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 126 | $ | 129 | $ | (1) | $ | 13 | ||||||||
| Net realized gains (losses) |
2,383 | 878 | 351 | 150 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
1,090 | 5,939 | 66 | 738 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | 3,599 | 6,946 | 416 | 901 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
1,314 | 1,438 | 212 | 145 | ||||||||||||
| Policy loans, surrenders and death benefits |
(1,620) | (805) | (260) | (264) | ||||||||||||
| Mortality and other (net) |
(623) | (464) | (83) | (58) | ||||||||||||
| Transfers from other divisions |
14,008 | 13,079 | 1,721 | 3,541 | ||||||||||||
| Transfers to other divisions |
(10,466) | (8,883) | (2,064) | (1,300) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | 2,613 | 4,365 | (474) | 2,064 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets |
6,212 | 11,311 | (58) | 2,965 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
31,545 | 20,234 | 4,648 | 1,683 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 37,757 | $ | 31,545 | $ | 4,590 | $ | 4,648 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
6,279 | 7,574 | 721 | 1,645 | ||||||||||||
| Units redeemed during the period |
(4,977) | (4,208) | (729) | (483) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
1,302 | 3,366 | (8) | 1,162 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Russell Multi-Style Equity Division |
Russell Aggressive Equity Division |
|||||||||||||||
| Year Ended 2014 |
Year Ended 2013 |
Year Ended 2014 |
Year Ended 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 1,556 | $ | 1,459 | $ | (180) | $ | 10 | ||||||||
| Net realized gains (losses) |
34,288 | 16,263 | 11,795 | 8,774 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
(13,926) | 32,859 | (10,588) | 22,279 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | 21,918 | 50,581 | 1,027 | 31,063 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
8,630 | 9,168 | 4,861 | 4,980 | ||||||||||||
| Policy loans, surrenders and death benefits |
(12,629) | (12,936) | (5,309) | (6,040) | ||||||||||||
| Mortality and other (net) |
(4,081) | (3,942) | (2,109) | (2,093) | ||||||||||||
| Transfers from other divisions |
11,926 | 8,571 | 10,675 | 8,683 | ||||||||||||
| Transfers to other divisions |
(13,990) | (11,935) | (13,697) | (8,074) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | (10,144) | (11,074) | (5,579) | (2,544) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets | 11,774 | 39,507 | (4,552) | 28,519 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
201,588 | 162,081 | 109,257 | 80,738 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 213,362 | $ | 201,588 | $ | 104,705 | $ | 109,257 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
10,643 | 12,565 | 4,270 | 5,419 | ||||||||||||
| Units redeemed during the period |
(15,679) | (19,240) | (6,216) | (6,849) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
(5,036) | (6,675) | (1,946) | (1,430) | ||||||||||||
|
|
|
|
|
|||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-20 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Changes in Net Assets
(in thousands)
| Russell Non-U.S. Division | Russell Core Bond Division | |||||||||||||||
| Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 2,000 | $ | 1,936 | $ | 998 | $ | 968 | ||||||||
| Net realized gains (losses) |
966 | 306 | 1,994 | 1,375 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
(9,202) | 21,730 | 1,207 | (3,998) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | (6,236) | 23,972 | 4,199 | (1,655) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
6,830 | 7,255 | 4,153 | 4,661 | ||||||||||||
| Policy loans, surrenders and death benefits |
(7,968) | (8,105) | (6,576) | (8,529) | ||||||||||||
| Mortality and other (net) |
(2,611) | (2,626) | (1,855) | (1,898) | ||||||||||||
| Transfers from other divisions |
13,509 | 9,902 | 27,291 | 20,129 | ||||||||||||
| Transfers to other divisions |
(16,209) | (11,904) | (26,330) | (26,632) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | (6,449) | (5,478) | (3,317) | (12,269) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets |
(12,685) | 18,494 | 882 | (13,924) | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
134,161 | 115,667 | 86,009 | 99,933 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 121,476 | $ | 134,161 | $ | 86,891 | $ | 86,009 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
7,389 | 8,807 | 5,632 | 6,210 | ||||||||||||
| Units redeemed during the period |
(9,611) | (11,348) | (6,927) | (9,484) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
(2,222) | (2,541) | (1,295) | (3,274) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Russell Global Real Estate Securities Division |
Russell LifePoints Moderate Strategy Division |
|||||||||||||||
| Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 4,784 | $ | 5,671 | $ | 74 | $ | 27 | ||||||||
| Net realized gains (losses) |
8,745 | 6,143 | 99 | 92 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
8,524 | (6,967) | (60) | 9 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | 22,053 | 4,847 | 113 | 128 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
8,395 | 9,046 | 130 | 78 | ||||||||||||
| Policy loans, surrenders and death benefits |
(9,064) | (9,485) | (344) | (13) | ||||||||||||
| Mortality and other (net) |
(3,414) | (3,214) | (61) | (35) | ||||||||||||
| Transfers from other divisions |
26,051 | 26,695 | 2,416 | 1,188 | ||||||||||||
| Transfers to other divisions |
(25,918) | (23,189) | (1,078) | (1,334) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | (3,950) | (147) | 1,063 | (116) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets | 18,103 | 4,700 | 1,176 | 12 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
157,271 | 152,571 | 2,151 | 2,139 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 175,374 | $ | 157,271 | $ | 3,327 | $ | 2,151 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
5,216 | 6,665 | 1,288 | 868 | ||||||||||||
| Units redeemed during the period |
(5,822) | (6,714) | (875) | (857) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
(606) | (49) | 413 | 11 | ||||||||||||
|
|
|
|
|
|||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-21 |
Table of Contents
Northwestern Mutual Variable Life Account
Statements of Changes in Net Assets
(in thousands)
| Russell LifePoints Balanced Strategy Division |
Russell LifePoints Growth Strategy Division |
|||||||||||||||
| Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 412 | $ | 226 | $ | 495 | $ | 272 | ||||||||
| Net realized gains (losses) |
677 | 465 | 727 | 320 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
(489) | 706 | (624) | 1,551 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | 600 | 1,397 | 598 | 2,143 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
606 | 487 | 945 | 784 | ||||||||||||
| Policy loans, surrenders and death benefits |
(551) | (1,053) | (520) | (1,411) | ||||||||||||
| Mortality and other (net) |
(327) | (257) | (416) | (350) | ||||||||||||
| Transfers from other divisions |
3,729 | 6,035 | 3,850 | 5,316 | ||||||||||||
| Transfers to other divisions |
(1,666) | (1,556) | (1,067) | (1,091) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | 1,791 | 3,656 | 2,792 | 3,248 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets |
2,391 | 5,053 | 3,390 | 5,391 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
14,726 | 9,673 | 16,736 | 11,345 | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 17,117 | $ | 14,726 | $ | 20,126 | $ | 16,736 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
3,484 | 4,776 | 3,362 | 4,260 | ||||||||||||
| Units redeemed during the period |
(1,773) | (1,999) | (1,578) | (1,823) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
1,711 | 2,777 | 1,784 | 2,437 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Russell LifePoints Equity Growth Strategy Division |
Credit Suisse Trust Commodity Return Strategy Division |
|||||||||||||||
| Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
Year Ended December 31, 2014 |
Period November 15 to December 31, 2013 |
|||||||||||||
|
|
|
|
|
|||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ | 247 | $ | 153 | $ | (55) | $ | (6) | ||||||||
| Net realized gains (losses) |
238 | 120 | 73 | 1 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) |
(229) | 954 | (3,407) | 259 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from operations | 256 | 1,227 | (3,389) | 254 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Policy Transactions: |
||||||||||||||||
| Policyowners’ net payments |
504 | 439 | 1,235 | 146 | ||||||||||||
| Policy loans, surrenders and death benefits |
(337) | 235 | (858) | 21 | ||||||||||||
| Mortality and other (net) |
(153) | (133) | (322) | (33) | ||||||||||||
| Transfers from other divisions |
320 | 1,755 | 10,338 | 15,625 | ||||||||||||
| Transfers to other divisions |
(52) | (670) | (6,635) | (448) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets resulting from policy transactions | 282 | 1,626 | 3,758 | 15,311 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net increase (decrease) in net assets | 538 | 2,853 | 369 | 15,565 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Beginning of period |
8,224 | 5,371 | 15,565 | - | ||||||||||||
|
|
|
|
|
|||||||||||||
| End of period |
$ | 8,762 | $ | 8,224 | $ | 15,934 | $ | 15,565 | ||||||||
|
|
|
|
|
|||||||||||||
| Units issued during the period |
631 | 2,161 | 1,557 | 2,038 | ||||||||||||
| Units redeemed during the period |
(423) | (746) | (1,072) | (75) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Net units issued (redeemed) during period |
208 | 1,415 | 485 | 1,963 | ||||||||||||
|
|
|
|
|
|||||||||||||
| The Accompanying Notes are an Integral Part of the Financial Statements. |
| F-22 |
Table of Contents
Northwestern Mutual Variable Life Account
Notes to Financial Statements
December 31, 2014
| 1. | Organization |
Northwestern Mutual Variable Life Account (“the Account”) is registered as a unit investment trust under the Investment Company Act of 1940 and is a segregated asset account of The Northwestern Mutual Life Insurance Company (“Northwestern Mutual”) used to fund variable life insurance policies (“the Policies”).
All assets of each Division of the Account are invested in shares of the corresponding Portfolio of Northwestern Mutual Series Fund, Inc., Fidelity Variable Insurance Products, Neuberger Berman Advisers Management Trust, Russell Investment Funds and Credit Suisse Trust (collectively known as “the Funds”). The Funds are open-end investment companies registered under the Investment Company Act of 1940. The financial statements for the Portfolios should be read in conjunction with the financial statements and footnotes of the Divisions. Each Division of the account indirectly bears exposure to the market credit and liquidity risks of the Portfolio in which it invests.
New sales of the Policies which invest in the Account were discontinued for Variable CompLife, Variable Executive Life, and Variable Joint Life policies in 2008, Variable Life was discontinued in 1995. However, premium payments made by policy owners existing at that date will continue to be recorded by the Account.
On September 18, 2013, the Securities Exchange Commission approved an application from Northwestern Mutual on behalf of the Account permitting Northwestern Mutual to automatically transfer all remaining policy values in the Northwestern Mutual Commodities Return Strategy Division to the Credit Suisse Trust Commodity Return Strategy Division. The transfer was executed on November 15, 2013 and is included in the Statement of Changes in Net Assets as part of the transfers from other divisions or sponsor line item. Additionally, Northwestern Mutual will periodically reimburse policyowners for the additional operating expenses of the Credit Suisse Trust Commodity Return Strategy Division. Refer to note 4 - Expenses and Related Party Transactions footnote.
| 2. | Significant Accounting Policies |
| A. | Use of Estimates – The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America 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 increases and decreases in net assets for use in estimates. Actual results could differ from those estimates. |
| B. | Investment Valuation – The shares are valued at the Funds’ offering and redemption prices per share. As of December 31, 2014, all of the Account’s investments are identified as Level 1 securities for valuation purposes under the Fair Value Measurement Topic of the FASB Accounting Standards Codification. Level 1 securities are valued at fair value as determined by quoted prices in active markets for identical securities. All changes in fair value are recorded as change in unrealized appreciation/(depreciation) of investments during the period in the statements of operations of the applicable Division. |
| C. | Investment Income, Securities Transactions and Policy 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. Dividend income and distributions of net realized gains from the Funds are recorded on the ex–date of the dividends. Dividends and distributions received are reinvested in additional shares of the respective portfolios of the Funds. The Policies are eligible to receive policy dividends from Northwestern Mutual. Any dividends reinvested in the Account are reflected in Policyowners’ net payments in the accompanying financial statements. |
| F-23 | ||
Table of Contents
Northwestern Mutual Variable Life Account
Notes to Financial Statements
December 31, 2014
| 2. | Significant Accounting Policies (continued) |
| D. | Due to Participants – Upon notification of death of the policyowner, a liability is recorded and is included in Due to Participants in the accompanying financial statements. This liability is identified as Level 1 for valuation purposes under the Fair Value Meaurements and Disclosures Topic of the FASB Accounting Standards Codification. |
| E. | Taxes – Northwestern Mutual is taxed as a “life insurance company” under the Internal Revenue Code. The Policies, which are funded in the Account, are taxed as part of the operations of Northwestern Mutual. The Policies provide that a charge for taxes may be made against the assets of the Account. Currently, for Variable Life policies issued before October 11, 1995, Northwestern Mutual charges the Account at an annual rate of 0.05% of the Account’s net assets and reserves the right to increase, decrease or eliminate the charge for taxes in the future. Currently, for Variable CompLife policies issued on or after October 11, 1995, Variable Executive Life policies issued on or after March 2, 1998, and Variable Joint Life policies issued on or after December 10, 1998, there is no charge being made against the assets of the Account for federal income taxes, but Northwestern Mutual reserves the right to charge for taxes in the future. |
| F. | Premium Payments – For Variable Life and Variable CompLife policies, the Account is credited for the policyowners’ net annual premiums at the respective policy anniversary dates regardless of when policyowners actually pay their premiums. Northwestern Mutual’s equity represents any unpaid portion of net annual premiums. |
| 3. | Purchases and Sales of Investments |
Purchases and sales of the Funds’ shares for the year ended December 31, 2014 were as follows: (in thousands)
| Division |
Purchases | Sales | ||||||
| Growth Stock |
$ | 55,464 | $ | 31,124 | ||||
| Focused Appreciation |
19,717 | 12,105 | ||||||
| Large Cap Core Stock |
37,711 | 22,048 | ||||||
| Large Cap Blend |
2,757 | 1,303 | ||||||
| Index 500 Stock |
92,649 | 83,060 | ||||||
| Large Company Value |
5,192 | 1,970 | ||||||
| Domestic Equity |
14,668 | 16,794 | ||||||
| Equity Income |
15,161 | 13,664 | ||||||
| Mid Cap Growth Stock |
106,630 | 38,010 | ||||||
| Index 400 Stock |
31,691 | 29,843 | ||||||
| Mid Cap Value |
12,727 | 7,082 | ||||||
| Small Cap Growth Stock |
40,851 | 25,017 | ||||||
| Index 600 Stock |
9,918 | 4,030 | ||||||
| Small Cap Value |
13,896 | 19,168 | ||||||
| International Growth |
9,757 | 11,391 | ||||||
| Research International Core |
6,258 | 2,697 | ||||||
| International Equity |
79,250 | 46,780 | ||||||
| Emerging Markets Equity |
11,024 | 4,143 | ||||||
| Money Market |
70,081 | 73,901 | ||||||
| Short-Term Bond |
6,783 | 3,937 | ||||||
| Select Bond |
29,006 | 33,398 | ||||||
| Long-Term U.S. Government Bond |
4,571 | 3,582 | ||||||
| Inflation Protection |
3,021 | 3,189 | ||||||
| High Yield Bond |
14,694 | 11,377 | ||||||
| Multi-Sector Bond |
7,817 | 3,414 | ||||||
| Balanced |
56,956 | 33,870 | ||||||
| F-24 | ||
Table of Contents
Northwestern Mutual Variable Life Account
Notes to Financial Statements
December 31, 2014
| 3. | Purchases and Sales of Investments (continued) |
| Division |
Purchases | Sales | ||||||
| Asset Allocation |
$ | 11,992 | $ | 6,639 | ||||
| Fidelity VIP Mid Cap |
16,467 | 16,626 | ||||||
| Fidelity VIP Contrafund |
9,140 | 5,652 | ||||||
| Neuberger Berman AMT Socially Responsive |
1,071 | 1,545 | ||||||
| Russell Multi-Style Equity |
40,600 | 21,122 | ||||||
| Russell Aggressive Equity |
17,084 | 12,976 | ||||||
| Russell Non-U.S. |
10,617 | 15,083 | ||||||
| Russell Core Bond |
12,137 | 12,771 | ||||||
| Russell Global Real Estate Securities |
25,936 | 17,744 | ||||||
| Russell LifePoints Moderate Strategy |
2,678 | 1,500 | ||||||
| Russell LifePoints Balanced Strategy |
5,533 | 3,033 | ||||||
| Russell LifePoints Growth Strategy |
5,751 | 1,998 | ||||||
| Russell LifePoints Equity Growth Strategy |
1,149 | 479 | ||||||
| Credit Suisse Trust Commodity Return Strategy |
7,174 | 3,475 | ||||||
| 4. | Expenses and Related Party Transactions |
A deduction for mortality and expense risks is paid to Northwestern Mutual. Mortality risk is the risk that insureds may not live as long as estimated. Expense risk is the risk that expenses of issuing and administering the Policies may exceed the estimated costs.
For Variable Life and Variable CompLife policies, the deduction is determined daily at an annual rate of 0.50% and 0.45%, respectively, of the net assets of the Account. These charges are reflected as a reduction in invested assets and are included in Mortality and expense risk charges in the accompanying financial statements.
A deduction for the mortality and expense risks for Variable Executive Life policies is determined monthly at an annual rate of 0.48% of the amount invested in the Account for the Policy for the first ten Policy years, and 0.05% thereafter for policies with the Cash Value Amendment, or 0.03% thereafter for the policies without the Cash Value Amendment. A deduction for the mortality and expense risks for Variable Joint Life policies is determined monthly at an annual rate of 0.00% of the amount invested in the Account. Additional Variable Joint Life mortality and expense risks deductions are determined annually and are paid to Northwestern Mutual for the first ten Policy years based on the age of the insured individuals at the time the policy was issued.
Additional mortality costs are deducted from the Policies annually for Variable Life and Variable CompLife policies, and monthly for Variable Executive Life and Variable Joint Life policies, and are paid to Northwestern Mutual to cover the cost of providing insurance protection. For Variable Life and Variable CompLife policies, this cost is actuarially calculated based upon the insured’s age, the 1980 Commissioners Standard Ordinary Mortality Table and the amount of insurance provided under the policy. For Variable Executive Life and Variable Joint Life policies, the cost reflects expected mortality costs based upon actual experience.
Certain deductions are also made from the annual, single or other premiums before amounts are allocated to the Account. These deductions are for sales load, administrative expenses, taxes and a risk charge for the guaranteed minimum death benefit among other charges which are detailed in the Prospectus.
| F-25 | ||
Table of Contents
Northwestern Mutual Variable Life Account
Notes to Financial Statements
December 31, 2014
| 4. | Expenses and Related Party Transactions (continued) |
Mortality and expense risks deductions for Variable Executive Life and Variable Joint Life policies, as well as the noted additional mortality costs and other deductions for each of the products are reflected as a reduction in units and are included in Mortality and other in the accompanying financial statements.
The net operating expenses of the Credit Suisse Trust Commodity Return Strategy Portfolio are limited to 1.05% of average net assets through November 15, 2015 by Credit Suisse Trust and Credit Suisse Asset Management, LLC. Pursuant to the substitution order of the Securities and Exchange Commission, effective November 15, 2013 through November 15, 2015, Northwestern Mutual will periodically reimburse policyowners to the extent the net operating expenses of the Credit Suisse Trust Commodity Return Strategy Portfolio exceed that of the fee waiver agreement of 0.95% of the Northwestern Mutual Commodities Return Strategy Portfolio which was in place at the time of the substitution.
| F-26 | ||
Table of Contents
Northwestern Mutual Variable Life Account
Notes to Financial Statements
December 31, 2014
| 5. | Financial Highlights |
(For a unit outstanding during the period)
| As of the respective period end date: | For the respective period ended: | |||||||||||||||||||||||||||||||||||||||||||||||||
| Division | Units Outstanding (000’s) |
Unit Value, Lowest to Highest |
Net Assets (000’s) |
Dividend Income as a % of Average Net Assets |
Expense Ratio, Lowest to |
Total Return, Lowest to Highest(1) |
||||||||||||||||||||||||||||||||||||||||||||
| Growth Stock |
||||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
85,738 | $ | 3.949121 | to | $ | 54.488126 | $ | 386,925 | 0.59 | % | 0.00 | % | to | 0.55 | % | 8.43 | % | to | 9.02 | % | ||||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
88,857 | 3.638539 | to | 49.977915 | 368,165 | 0.68 | 0.00 | to | 0.55 | 35.12 | to | 35.86 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
92,840 | 2.690097 | to | 36.785012 | 284,588 | 0.57 | 0.00 | to | 0.55 | 12.32 | to | 12.94 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
97,893 | 2.392591 | to | 32.569595 | 269,305 | 0.78 | 0.00 | to | 0.55 | (1.84 | ) | to | (1.30 | ) | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
101,987 | 2.434967 | to | 32.998214 | 288,701 | 0.82 | 0.00 | to | 0.55 | 11.76 | to | 12.37 | ||||||||||||||||||||||||||||||||||||||
| Focused Appreciation |
||||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
34,391 | $ | 3.141534 | to | $ | 33.238141 | $ | 122,795 | 0.02 | % | 0.00 | % | to | 0.55 | % | 8.84 | % | to | 9.43 | % | ||||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
35,292 | 2.883615 | to | 30.372615 | 116,386 | 0.48 | 0.00 | to | 0.55 | 28.30 | to | 29.01 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
36,929 | 2.245328 | to | 23.543734 | 96,087 | 0.27 | 0.00 | to | 0.55 | 19.48 | to | 20.14 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
39,237 | 1.877354 | to | 19.596705 | 85,938 | 0.18 | 0.00 | to | 0.55 | (6.61 | ) | to | (6.10 | ) | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
41,221 | 2.008299 | to | 20.869750 | 97,863 | 0.00 | 0.00 | to | 0.55 | 8.73 | to | 9.33 | ||||||||||||||||||||||||||||||||||||||
| Large Cap Core Stock |
||||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
69,294 | $ | 2.981972 | to | $ | 40.759702 | $ | 244,043 | 1.49 | % | 0.00 | % | to | 0.55 | % | 7.97 | % | to | 8.56 | % | ||||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
71,653 | 2.759081 | to | 37.544148 | 233,882 | 1.15 | 0.00 | to | 0.55 | 27.88 | to | 28.58 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
75,256 | 2.155410 | to | 29.198468 | 191,903 | 1.20 | 0.00 | to | 0.55 | 11.02 | to | 11.63 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
78,553 | 1.939589 | to | 26.156583 | 182,605 | 1.14 | 0.00 | to | 0.55 | (1.75 | ) | to | (1.21 | ) | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
80,904 | 1.972165 | to | 26.477036 | 192,996 | 1.20 | 0.00 | to | 0.55 | 12.29 | to | 12.91 | ||||||||||||||||||||||||||||||||||||||
| Large Cap Blend |
||||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
4,680 | $ | 1.577743 | to | $ | 13.487127 | $ | 8,192 | 0.04 | % | 0.00 | % | to | 0.55 | % | 11.96 | % | to | 12.58 | % | ||||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
3,877 | 1.407785 | to | 11.980322 | 6,157 | 0.99 | 0.00 | to | 0.55 | 30.14 | to | 30.86 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
3,025 | 1.080633 | to | 9.155103 | 3,615 | 0.92 | 0.00 | to | 0.55 | 14.57 | to | 15.20 | ||||||||||||||||||||||||||||||||||||||
| Period Ended 12/31/11 (2) |
3,204 | 0.942304 | to | 7.947227 | 3,113 | 2.05 | 0.00 | to | 0.55 | (5.82 | ) | to | (5.56 | ) | ||||||||||||||||||||||||||||||||||||
| Index 500 Stock |
||||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
200,831 | $ | 4.519180 | to | $ | 103.583087 | $ | 1,122,395 | 1.60 | % | 0.00 | % | to | 0.55 | % | 12.84 | % | to | 13.46 | % | ||||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
203,612 | 4.001083 | to | 91.297175 | 1,008,802 | 1.82 | 0.00 | to | 0.55 | 31.33 | to | 32.05 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
207,627 | 3.043500 | to | 69.136117 | 785,534 | 1.77 | 0.00 | to | 0.55 | 15.12 | to | 15.76 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
214,351 | 2.641136 | to | 59.726031 | 713,800 | 1.66 | 0.00 | to | 0.55 | 1.39 | to | 1.95 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
220,539 | 2.602259 | to | 58.583796 | 730,891 | 2.02 | 0.00 | to | 0.55 | 14.27 | to | 14.89 | ||||||||||||||||||||||||||||||||||||||
| Large Company Value |
||||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
6,169 | $ | 1.648404 | to | $ | 13.865219 | $ | 11,466 | 0.00 | % | 0.00 | % | to | 0.55 | % | 12.41 | % | to | 13.03 | % | ||||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
4,244 | 1.464939 | to | 12.266796 | 7,585 | 1.75 | 0.00 | to | 0.55 | 30.57 | to | 31.29 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
2,300 | 1.120811 | to | 9.343226 | 3,112 | 1.90 | 0.00 | to | 0.55 | 15.83 | to | 16.47 | ||||||||||||||||||||||||||||||||||||||
| Period Ended 12/31/11 (2) |
2,622 | 0.966635 | to | 8.021755 | 2,593 | 4.57 | 0.00 | to | 0.55 | (3.38 | ) | to | (3.12 | ) | ||||||||||||||||||||||||||||||||||||
| Domestic Equity |
||||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
76,044 | $ | 2.146602 | to | $ | 22.950784 | $ | 190,774 | 1.70 | % | 0.00 | % | to | 0.55 | % | 13.25 | % | to | 13.87 | % | ||||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
77,733 | 1.893569 | to | 20.154766 | 172,457 | 1.68 | 0.00 | to | 0.55 | 33.29 | to | 34.03 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
80,040 | 1.419182 | to | 15.037814 | 134,628 | 2.16 | 0.00 | to | 0.55 | 13.72 | to | 14.35 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
88,764 | 1.246743 | to | 13.151218 | 131,130 | 2.09 | 0.00 | to | 0.55 | 0.36 | to | 0.91 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
90,355 | 1.241092 | to | 13.033112 | 134,632 | 2.28 | 0.00 | to | 0.55 | 13.99 | to | 14.62 | ||||||||||||||||||||||||||||||||||||||
| Equity Income |
||||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
40,696 | $ | 2.579506 | to | $ | 27.291728 | $ | 123,149 | 1.23 | % | 0.00 | % | to | 0.55 | % | 6.84 | % | to | 7.43 | % | ||||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
41,567 | 2.411872 | to | 25.403806 | 118,079 | 1.36 | 0.00 | to | 0.55 | 29.23 | to | 29.94 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
41,046 | 1.864547 | to | 19.550985 | 90,300 | 1.53 | 0.00 | to | 0.55 | 16.59 | to | 17.23 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
40,660 | 1.597678 | to | 16.677245 | 76,853 | 1.50 | 0.00 | to | 0.55 | (1.46 | ) | to | (0.92 | ) | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
38,980 | 1.619759 | to | 16.832155 | 73,840 | 1.70 | 0.00 | to | 0.55 | 14.70 | to | 15.33 | ||||||||||||||||||||||||||||||||||||||
| Mid Cap Growth Stock |
||||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
104,691 | $ | 3.689747 | to | $ | 102.693582 | $ | 465,306 | 0.36 | % | 0.00 | % | to | 0.55 | % | 7.90 | % | to | 8.49 | % | ||||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
108,936 | 3.416219 | to | 94.654719 | 448,921 | 0.31 | 0.00 | to | 0.55 | 24.85 | to | 25.53 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
113,740 | 2.733618 | to | 75.402575 | 374,598 | 0.12 | 0.00 | to | 0.55 | 11.35 | to | 11.97 | ||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
121,498 | 2.452507 | to | 67.344023 | 358,497 | 0.23 | 0.00 | to | 0.55 | (6.69 | ) | to | (6.18 | ) | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
127,814 | 2.625759 | to | 71.778944 | 404,074 | 0.28 | 0.00 | to | 0.55 | 23.18 | to | 23.86 | ||||||||||||||||||||||||||||||||||||||
| (1) | Total return includes deductions for management and other expenses; it excludes deductions for sales loads and other charges, which are a reduction in units. The expense ratios further reflect only those expenses which impact total return. For additional information regarding all expenses assessed, refer to the accompanying notes. Returns are not annualized for periods less than one year. |
| (2) | Divisions commenced operations on June 30, 2011. |
| F-27 | ||
Table of Contents
Northwestern Mutual Variable Life Account
Notes to Financial Statements
December 31, 2014
| As of the respective period end date: | For the respective period ended: | |||||||||||||||||||||||||||||||||||||||||||||||
| Division | Units (000’s) |
Unit Value, Lowest to Highest |
Net Assets (000’s) |
Dividend Income as a % of Average Net Assets |
Expense Ratio, Lowest to Highest(1) |
Total Return, Lowest to Highest(1) |
||||||||||||||||||||||||||||||||||||||||||
| Index 400 Stock |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
68,204 | $ | 3.817251 | to | $ | 43.598907 | $ | 290,596 | 0.98 | % | 0.00 | % | to | 0.55 | % | 8.82 | % | to | 9.42 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
71,379 | 3.504450 | to | 39.846886 | 279,413 | 1.06 | 0.00 | to | 0.55 | 32.44 | to | 33.16 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
72,346 | 2.643527 | to | 29.923387 | 213,744 | 0.91 | 0.00 | to | 0.55 | 17.00 | to | 17.64 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
77,580 | 2.257202 | to | 25.435391 | 195,635 | 0.86 | 0.00 | to | 0.55 | (2.46 | ) | to | (1.92 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
80,664 | 2.311836 | to | 25.934506 | 208,521 | 1.09 | 0.00 | to | 0.55 | 25.60 | to | 26.29 | ||||||||||||||||||||||||||||||||||||
| Mid Cap Value |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
17,454 | $ | 3.042400 | to | $ | 32.189353 | $ | 60,350 | 0.99 | % | 0.00 | % | to | 0.55 | % | 16.05 | % | to | 16.69 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
17,193 | 2.618947 | to | 27.585004 | 51,336 | 0.96 | 0.00 | to | 0.55 | 29.53 | to | 30.24 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
17,177 | 2.019864 | to | 21.179677 | 39,331 | 1.34 | 0.00 | to | 0.55 | 15.93 | to | 16.57 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
18,430 | 1.740555 | to | 18.168731 | 37,334 | 1.74 | 0.00 | to | 0.55 | (1.15 | ) | to | (0.61 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
19,018 | 1.759035 | to | 18.279525 | 39,839 | 1.41 | 0.00 | to | 0.55 | 19.27 | to | 19.93 | ||||||||||||||||||||||||||||||||||||
| Small Cap Growth Stock |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
63,835 | $ | 3.633783 | to | $ | 47.561777 | $ | 255,403 | 0.00 | % | 0.00 | % | to | 0.55 | % | 8.06 | % | to | 8.66 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
66,550 | 3.359376 | to | 43.773190 | 246,636 | 0.49 | 0.00 | to | 0.55 | 37.84 | to | 38.60 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
68,955 | 2.434726 | to | 31.582975 | 185,068 | 0.00 | 0.00 | to | 0.55 | 8.88 | to | 9.48 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
74,363 | 2.233915 | to | 28.847575 | 183,624 | 0.35 | 0.00 | to | 0.55 | (3.31 | ) | to | (2.78 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
78,328 | 2.308077 | to | 29.671998 | 201,112 | 0.75 | 0.00 | to | 0.55 | 25.16 | to | 25.85 | ||||||||||||||||||||||||||||||||||||
| Index 600 Stock |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
10,776 | $ | 1.587514 | to | $ | 17.638780 | $ | 20,248 | 1.53 | % | 0.00 | % | to | 0.55 | % | 4.76 | % | to | 5.34 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
9,373 | 1.513818 | to | 16.744685 | 16,819 | 4.29 | 0.00 | to | 0.55 | 39.90 | to | 40.67 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
4,910 | 1.081019 | to | 11.903891 | 6,206 | 3.11 | 0.00 | to | 0.55 | 15.16 | to | 15.80 | ||||||||||||||||||||||||||||||||||||
| Period Ended 12/31/11 (2) |
1,384 | 0.937768 | to | 10.280016 | 1,719 | 2.07 | 0.00 | to | 0.55 | (6.27 | ) | to | (6.01 | ) | ||||||||||||||||||||||||||||||||||
| Small Cap Value |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
47,518 | $ | 3.191481 | to | $ | 34.121874 | $ | 174,553 | 0.36 | % | 0.00 | % | to | 0.55 | % | (0.33 | )% | to | 0.22 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
49,966 | 3.198795 | to | 34.046809 | 184,787 | 1.14 | 0.00 | to | 0.55 | 31.04 | to | 31.76 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
50,988 | 2.438620 | to | 25.839588 | 143,973 | 0.37 | 0.00 | to | 0.55 | 15.69 | to | 16.33 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
55,277 | 2.105813 | to | 22.212770 | 134,980 | 0.60 | 0.00 | to | 0.55 | (1.90 | ) | to | (1.36 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
57,649 | 2.144514 | to | 22.519799 | 144,009 | 1.09 | 0.00 | to | 0.55 | 21.28 | to | 21.95 | ||||||||||||||||||||||||||||||||||||
| International Growth |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
43,639 | $ | 1.832844 | to | $ | 19.596007 | $ | 90,803 | 1.30 | % | 0.00 | % | to | 0.55 | % | (5.04 | )% | to | (4.52 | )% | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
44,659 | 1.928280 | to | 20.524033 | 98,031 | 1.40 | 0.00 | to | 0.55 | 19.15 | to | 19.81 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
44,792 | 1.616718 | to | 17.130842 | 82,841 | 1.33 | 0.00 | to | 0.55 | 17.34 | to | 17.99 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
48,394 | 1.376437 | to | 14.519220 | 76,140 | 1.13 | 0.00 | to | 0.55 | (13.64 | ) | to | (13.17 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
49,762 | 1.592294 | to | 16.720938 | 94,974 | 0.92 | 0.00 | to | 0.55 | 15.79 | to | 16.43 | ||||||||||||||||||||||||||||||||||||
| Research International Core |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
16,529 | $ | 1.071981 | to | $ | 10.212438 | $ | 20,860 | 1.45 | % | 0.00 | % | to | 0.55 | % | (7.22 | )% | to | (6.71 | )% | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
14,106 | 1.154295 | to | 10.947312 | 19,169 | 0.13 | 0.00 | to | 0.55 | 18.27 | to | 18.92 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
10,388 | 0.975017 | to | 9.205651 | 12,233 | 1.72 | 0.00 | to | 0.55 | 16.12 | to | 16.76 | ||||||||||||||||||||||||||||||||||||
| Period Ended 12/31/11 (2) |
3,559 | 0.838851 | to | 7.884380 | 3,688 | 4.07 | 0.00 | to | 0.55 | (16.16 | ) | to | (15.93 | ) | ||||||||||||||||||||||||||||||||||
| International Equity |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
139,819 | $ | 3.229216 | to | $ | 4.952849 | $ | 525,118 | 1.91 | % | 0.00 | % | to | 0.55 | % | (9.30 | )% | to | (8.80 | )% | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
143,163 | 3.556947 | to | 5.431053 | 593,256 | 2.19 | 0.00 | to | 0.55 | 20.71 | to | 21.38 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
147,013 | 2.943691 | to | 4.474566 | 504,481 | 2.59 | 0.00 | to | 0.55 | 20.85 | to | 21.52 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
154,709 | 2.433405 | to | 3.682261 | 438,760 | 2.10 | 0.00 | to | 0.55 | (10.59 | ) | to | (10.10 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
159,931 | 2.718891 | to | 4.095847 | 508,723 | 3.01 | 0.00 | to | 0.55 | 7.08 | to | 7.67 | ||||||||||||||||||||||||||||||||||||
| Emerging Markets Equity |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
34,924 | $ | 0.849119 | to | $ | 10.109813 | $ | 34,843 | 0.63 | % | 0.00 | % | to | 0.55 | % | (6.76 | )% | to | (6.25 | )% | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
29,027 | 0.909813 | to | 10.783888 | 30,454 | 0.75 | 0.00 | to | 0.55 | (5.67 | ) | to | (5.15 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
19,140 | 0.963548 | to | 11.369632 | 21,469 | 0.15 | 0.00 | to | 0.55 | 18.18 | to | 18.83 | ||||||||||||||||||||||||||||||||||||
| Period Ended 12/31/11 (2) |
7,995 | 0.814525 | to | 9.567929 | 7,498 | 2.54 | 0.00 | to | 0.55 | (18.59 | ) | to | (18.36 | ) | ||||||||||||||||||||||||||||||||||
| Money Market |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
79,806 | $ | 1.538686 | to | $ | 41.568533 | $ | 165,824 | 0.07 | % | 0.00 | % | to | 0.55 | % | (0.48 | )% | to | 0.07 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
82,246 | 1.544536 | to | 41.539003 | 170,166 | 0.10 | 0.00 | to | 0.55 | (0.45 | ) | to | 0.10 | |||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
84,564 | 1.549943 | to | 41.497953 | 169,940 | 0.14 | 0.00 | to | 0.55 | (0.41 | ) | to | 0.15 | |||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
85,415 | 1.554696 | to | 41.437528 | 166,908 | 0.14 | 0.00 | to | 0.55 | (0.41 | ) | to | 0.14 | |||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
86,934 | 1.559508 | to | 41.380226 | 169,116 | 0.29 | 0.00 | to | 0.55 | (0.25 | ) | to | 0.29 | |||||||||||||||||||||||||||||||||||
| (1) | Total return includes deductions for management and other expenses; it excludes deductions for sales loads and other charges, which are a reduction in units. The expense ratios further reflect only those expenses which impact total return. For additional information regarding all expenses assessed, refer to the accompanying notes. Returns are not annualized for periods less than one year. |
| (2) | Divisions commenced operations on June 30, 2011. |
| F-28 |
Table of Contents
Northwestern Mutual Variable Life Account
Notes to Financial Statements
December 31, 2014
| As of the respective period end date: | For the respective period ended: | |||||||||||||||||||||||||||||||||||||||||||||||
| Division | Units (000’s) |
Unit Value, Lowest to Highest |
Net Assets (000’s) |
Dividend Income as a % of Average Net Assets |
Expense Ratio, Lowest to Highest(1) |
Total Return, Lowest to Highest(1) |
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| Short-Term Bond |
||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
11,155 | $ | 1.010036 | to | $ | 12.188479 | $ | 13,392 | 0.60 | % | 0.00 | % | to | 0.55 | % | (0.17 | )% | to | 0.385 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
9,076 | 1.010673 | to | 12.142453 | 10,582 | 0.17 | 0.00 | to | 0.55 | 0.00 (4) | to | 0.55 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
5,895 | 1.009629 | to | 12.076410 | 6,960 | 1.43 | 0.00 | to | 0.55 | 1.51 | to | 2.07 | ||||||||||||||||||||||||||||||||||||
| Period Ended 12/31/11 (2) |
3,159 | 0.993622 | to | 11.832025 | 3,681 | 4.36 | 0.00 | to | 0.55 | (0.69 | ) | to | (0.42 | ) | ||||||||||||||||||||||||||||||||||
| Select Bond |
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| Year Ended 12/31/14 |
70,799 | $ | 2.671248 | to | $ | 211.428447 | $ | 248,615 | 2.02 | % | 0.00 | % | to | 0.55 | % | 4.99 | % | to | 5.56 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
73,536 | 2.541856 | to | 200.286369 | 244,742 | 2.31 | 0.00 | to | 0.55 | (2.69 | ) | to | (2.16 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
78,962 | 2.609587 | to | 204.702189 | 268,074 | 2.69 | 0.00 | to | 0.55 | 4.39 | to | 4.96 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
77,091 | 2.497424 | to | 195.021673 | 251,418 | 3.32 | 0.00 | to | 0.55 | 6.58 | to | 7.16 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
78,164 | 2.341027 | to | 181.992325 | 238,805 | 3.75 | 0.00 | to | 0.55 | 6.00 | to | 6.59 | ||||||||||||||||||||||||||||||||||||
| Long-Term U.S Government Bond |
||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
4,722 | $ | 1.371509 | to | $ | 19.181310 | $ | 6,944 | 2.01 | % | 0.00 | % | to | 0.55 | % | 23.05 | % | to | 23.73 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
3,977 | 1.113443 | to | 15.502339 | 4,876 | 0.02 | 0.00 | to | 0.55 | (13.75 | ) | to | (13.27 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
4,651 | 1.289646 | to | 17.875038 | 7,933 | 1.85 | 0.00 | to | 0.55 | 3.18 | to | 3.75 | ||||||||||||||||||||||||||||||||||||
| Period Ended 12/31/11 (2) |
3,537 | 1.248644 | to | 17.228764 | 6,776 | 8.82 | 0.00 | to | 0.55 | 24.80 | to | 25.15 | ||||||||||||||||||||||||||||||||||||
| Inflation Protection |
||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
6,336 | $ | 1.065002 | to | $ | 13.899486 | $ | 8,559 | 1.08 | % | 0.00 | % | to | 0.55 | % | 2.57 | % | to | 3.14 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
6,697 | 1.037245 | to | 13.476716 | 8,588 | 1.08 | 0.00 | to | 0.55 | (8.83 | ) | to | (8.33 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
7,780 | 1.136621 | to | 14.701699 | 10,670 | 2.68 | 0.00 | to | 0.55 | 6.76 | to | 7.35 | ||||||||||||||||||||||||||||||||||||
| Period Ended 12/31/11 (2) |
3,641 | 1.063572 | to | 13.694886 | 4,815 | 0.03 | 0.00 | to | 0.55 | 6.30 | to | 6.60 | ||||||||||||||||||||||||||||||||||||
| High Yield Bond |
||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
27,230 | $ | 3.335950 | to | $ | 43.976216 | $ | 106,154 | 5.04 | % | 0.00 | % | to | 0.55 | % | 0.62 | % | to | 1.18 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
27,674 | 3.312039 | to | 43.465300 | 107,038 | 5.57 | 0.00 | to | 0.55 | 5.26 | to | 5.84 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
28,781 | 3.143457 | to | 41.068270 | 106,270 | 6.24 | 0.00 | to | 0.55 | 13.26 | to | 13.89 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
29,124 | 2.772582 | to | 36.059875 | 94,728 | 6.97 | 0.00 | to | 0.55 | 4.02 | to | 4.59 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
29,475 | 2.662698 | to | 34.475967 | 92,381 | 7.13 | 0.00 | to | 0.55 | 13.93 | to | 14.56 | ||||||||||||||||||||||||||||||||||||
| Multi-Sector Bond |
||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
20,081 | $ | 1.169486 | to | $ | 15.951947 | $ | 26,344 | 2.65 | % | 0.00 | % | to | 0.55 | % | 2.68 | % | to | 3.25 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
17,326 | 1.137785 | to | 15.449941 | 21,918 | 3.56 | 0.00 | to | 0.55 | (2.12 | ) | to | (1.58 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
14,697 | 1.161278 | to | 15.698283 | 18,872 | 0.46 | 0.00 | to | 0.55 | 14.31 | to | 14.94 | ||||||||||||||||||||||||||||||||||||
| Period Ended 12/31/11 (2) |
4,150 | 1.014872 | to | 13.657358 | 4,850 | 16.21 | 0.00 | to | 0.55 | 1.44 | to | 1.71 | ||||||||||||||||||||||||||||||||||||
| Balanced |
||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
54,744 | $ | 3.329658 | to | $ | 181.830315 | $ | 360,234 | 2.31 | % | 0.00 | % | to | 0.55 | % | 4.99 | % | to | 5.56 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
55,407 | 3.168393 | to | 172.248875 | 354,026 | 3.38 | 0.00 | to | 0.55 | 11.47 | to | 12.08 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
57,330 | 2.839508 | to | 153.677764 | 331,081 | 0.23 | 0.00 | to | 0.55 | 9.09 | to | 9.69 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
61,456 | 2.600265 | to | 140.096515 | 318,825 | 2.75 | 0.00 | to | 0.55 | 1.55 | to | 2.11 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
63,195 | 2.557927 | to | 137.200077 | 323,249 | 2.12 | 0.00 | to | 0.55 | 11.34 | to | 11.96 | ||||||||||||||||||||||||||||||||||||
| Asset Allocation |
||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
19,933 | $ | 1.916252 | to | $ | 20.487411 | $ | 47,339 | 2.15 | % | 0.00 | % | to | 0.55 | % | 4.57 | % | to | 5.15 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
19,334 | 1.830603 | to | 19.484028 | 44,834 | 3.32 | 0.00 | to | 0.55 | 16.03 | to | 16.67 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
20,120 | 1.576122 | to | 16.700324 | 39,573 | 0.23 | 0.00 | to | 0.55 | 10.41 | to | 11.02 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
22,441 | 1.426114 | to | 15.042893 | 39,577 | 2.41 | 0.00 | to | 0.55 | (0.62 | ) | to | (0.08 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
22,865 | 1.433617 | to | 15.054442 | 40,860 | 2.92 | 0.00 | to | 0.55 | 12.39 | to | 13.01 | ||||||||||||||||||||||||||||||||||||
| Fidelity VIP Mid Cap |
||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
36,665 | $ | 4.048702 | to | $ | 42.835362 | $ | 175,314 | 0.02 | % | 0.00 | % | to | 0.55 | % | 5.45 | % | to | 6.03 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
37,534 | 3.835558 | to | 40.398542 | 169,449 | 0.28 | 0.00 | to | 0.55 | 35.13 | to | 35.87 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
38,312 | 2.835677 | to | 29.733518 | 128,384 | 0.39 | 0.00 | to | 0.55 | 13.93 | to | 14.56 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
40,656 | 2.486413 | to | 25.953961 | 120,934 | 0.02 | 0.00 | to | 0.55 | (11.34 | ) | to | (10.85 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
41,434 | 2.801620 | to | 29.113348 | 140,666 | 0.13 | 0.00 | to | 0.55 | 27.87 | to | 28.57 | ||||||||||||||||||||||||||||||||||||
| Fidelity VIP Contrafund |
||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
21,021 | $ | 1.547371 | to | $ | 16.754369 | $ | 37,757 | 0.78 | % | 0.00 | % | to | 0.55 | % | 11.04 | % | to | 11.65 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
19,719 | 1.392090 | to | 15.005573 | 31,545 | 0.90 | 0.00 | to | 0.55 | 30.24 | to | 30.95 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
16,353 | 1.067828 | to | 11.458810 | 20,234 | 1.49 | 0.00 | to | 0.55 | 15.50 | to | 16.14 | ||||||||||||||||||||||||||||||||||||
| Period Ended 12/31/11 (2) |
5,922 | 0.923581 | to | 9.866342 | 6,530 | 2.81 | 0.00 | to | 0.55 | (7.69 | ) | to | (7.43 | ) | ||||||||||||||||||||||||||||||||||
| (1) | Total return includes deductions for management and other expenses; it excludes deductions for sales loads and other charges, which are a reduction in units. The expense ratios further reflect only those expenses which impact total return. For additional information regarding all expenses assessed, refer to the accompanying notes. Returns are not annualized for periods less than one year. |
| (2) | Divisions commenced operations on June 30, 2011. |
| (4) | Ratio is less than 0.005%. |
| F-29 | ||
Table of Contents
Northwestern Mutual Variable Life Account
Notes to Financial Statements
December 31, 2014
| As of the respective period end date: | For the respective period ended: | |||||||||||||||||||||||||||||||||||||||||||||||
| Division | Units (000’s) |
Unit Value, Lowest to Highest |
Net Assets (000’s) |
Dividend Income as a % of Average Net Assets |
Expense Ratio, Lowest to Highest(1) |
Total Return, Lowest to Highest(1) |
||||||||||||||||||||||||||||||||||||||||||
| Neuberger Berman AMT Socially Responsive |
|
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| Year Ended 12/31/14 |
2,395 | $ | 1.513495 | to | $ | 16.275087 | $ | 4,590 | 0.37 | % | 0.00 | % | to | 0.55 | % | 9.78 | % | to | 10.38 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
2,403 | 1.377320 | to | 14.744385 | 4,648 | 0.79 | 0.00 | to | 0.55 | 36.85 | to | 37.60 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
1,241 | 1.005443 | to | 10.715212 | 1,683 | 0.25 | 0.00 | to | 0.55 | 10.37 | to | 10.98 | ||||||||||||||||||||||||||||||||||||
| Period Ended 12/31/11 (2) |
606 | 0.910063 | to | 9.655117 | 688 | 0.90 | 0.00 | to | 0.55 | (9.04 | ) | to | (8.79 | ) | ||||||||||||||||||||||||||||||||||
| Russell Multi-Style Equity |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
114,307 | $ | 1.621079 | to | $ | 18.071559 | $ | 213,362 | 1.16 | % | 0.00 | % | to | 0.55 | % | 11.09 | % | to | 11.70 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
119,343 | 1.457823 | to | 16.178812 | 201,588 | 1.21 | 0.00 | to | 0.55 | 32.19 | to | 32.92 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
126,018 | 1.101694 | to | 12.171877 | 162,081 | 1.12 | 0.00 | to | 0.55 | 15.05 | to | 15.69 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
139,483 | 0.956587 | to | 10.521100 | 157,923 | 0.97 | 0.00 | to | 0.55 | (2.08 | ) | to | (1.55 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
145,784 | 0.975990 | to | 10.686543 | 173,508 | 0.91 | 0.00 | to | 0.55 | 15.82 | to | 16.46 | ||||||||||||||||||||||||||||||||||||
| Russell Aggressive Equity |
|
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| Year Ended 12/31/14 |
38,597 | $ | 2.373801 | to | $ | 27.141282 | $ | 104,705 | 0.25 | % | 0.00 | % | to | 0.55 | % | 1.00 | % | to | 1.56 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
40,543 | 2.347887 | to | 26.724835 | 109,257 | 0.43 | 0.00 | to | 0.55 | 39.24 | to | 40.00 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
41,973 | 1.684569 | to | 19.088862 | 80,738 | 1.07 | 0.00 | to | 0.55 | 15.20 | to | 15.84 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
46,544 | 1.460862 | to | 16.479338 | 77,885 | 0.49 | 0.00 | to | 0.55 | (4.72 | ) | to | (4.20 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
48,091 | 1.531783 | to | 17.202203 | 85,253 | 0.47 | 0.00 | to | 0.55 | 24.20 | to | 24.88 | ||||||||||||||||||||||||||||||||||||
| Russell Non-U.S. |
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| Year Ended 12/31/14 |
63,654 | $ | 1.633987 | to | $ | 17.795979 | $ | 121,476 | 1.95 | % | 0.00 | % | to | 0.55 | % | (4.97 | )% | to | (4.45 | )% | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
65,876 | 1.717753 | to | 18.624500 | 134,161 | 2.00 | 0.00 | to | 0.55 | 21.24 | to | 21.91 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
68,417 | 1.415380 | to | 15.277391 | 115,667 | 1.77 | 0.00 | to | 0.55 | 19.16 | to | 19.81 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
74,999 | 1.186647 | to | 12.750860 | 107,050 | 1.66 | 0.00 | to | 0.55 | (13.36 | ) | to | (12.88 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
77,992 | 1.368210 | to | 14.635995 | 131,861 | 0.93 | 0.00 | to | 0.55 | 10.81 | to | 11.42 | ||||||||||||||||||||||||||||||||||||
| Russell Core Bond |
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| Year Ended 12/31/14 |
30,112 | $ | 2.180310 | to | $ | 23.281628 | $ | 86,891 | 1.55 | % | 0.00 | % | to | 0.55 | % | 4.88 | % | to | 5.45 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
31,407 | 2.076847 | to | 22.077570 | 86,009 | 1.44 | 0.00 | to | 0.55 | (1.99 | ) | to | (1.45 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
34,681 | 2.116915 | to | 22.402721 | 99,933 | 2.33 | 0.00 | to | 0.55 | 7.78 | to | 8.38 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
34,913 | 1.962151 | to | 20.671320 | 96,920 | 3.19 | 0.00 | to | 0.55 | 4.11 | to | 4.68 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
34,612 | 1.882787 | to | 19.746605 | 98,149 | 3.79 | 0.00 | to | 0.55 | 9.42 | to | 10.02 | ||||||||||||||||||||||||||||||||||||
| Russell Global Real Estate Securities |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
36,715 | $ | 4.188148 | to | $ | 44.660949 | $ | 175,374 | 3.26 | % | 0.00 | % | to | 0.55 | % | 14.12 | % | to | 14.75 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
37,321 | 3.666253 | to | 38.920595 | 157,271 | 4.00 | 0.00 | to | 0.55 | 3.08 | to | 3.65 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
37,370 | 3.553123 | to | 37.550773 | 152,571 | 5.00 | 0.00 | to | 0.55 | 26.86 | to | 27.56 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/11 |
38,799 | 2.798128 | to | 29.438654 | 124,861 | 2.25 | 0.00 | to | 0.55 | (7.56 | ) | to | (7.05 | ) | ||||||||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
39,697 | 3.023867 | to | 31.671345 | 139,710 | 2.23 | 0.00 | to | 0.55 | 22.25 | to | 22.92 | ||||||||||||||||||||||||||||||||||||
| Russell LifePoints Moderate Strategy |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
1,929 | $ | 1.179226 | to | $ | 14.227181 | $ | 3,327 | 3.33 | % | 0.00 | % | to | 0.55 | % | 4.28 | % | to | 4.85 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
1,516 | 1.129701 | to | 13.568584 | 2,151 | 1.69 | 0.00 | to | 0.55 | 6.20 | to | 6.79 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
1,505 | 1.062654 | to | 12.706153 | 2,139 | 3.29 | 0.00 | to | 0.55 | 10.46 | to | 11.07 | ||||||||||||||||||||||||||||||||||||
| Period Ended 12/31/11 (2) |
320 | 0.961095 | to | 11.440046 | 332 | 3.14 | 0.00 | to | 0.55 | (3.94 | ) | to | (3.67 | ) | ||||||||||||||||||||||||||||||||||
| Russell LifePoints Balanced Strategy |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
11,655 | $ | 1.222287 | to | $ | 13.866173 | $ | 17,117 | 2.98 | % | 0.00 | % | to | 0.55 | % | 4.04 | % | to | 4.61 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
9,944 | 1.173673 | to | 13.255096 | 14,726 | 2.18 | 0.00 | to | 0.55 | 11.81 | to | 12.43 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
7,167 | 1.048620 | to | 11.789785 | 9,673 | 2.60 | 0.00 | to | 0.55 | 12.34 | to | 12.96 | ||||||||||||||||||||||||||||||||||||
| Period Ended 12/31/11 (2) |
3,296 | 0.932549 | to | 10.437591 | 4,082 | 3.47 | 0.00 | to | 0.55 | (6.79 | ) | to | (6.53 | ) | ||||||||||||||||||||||||||||||||||
| Russell LifePoints Growth Strategy |
||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
13,525 | $ | 1.235139 | to | $ | 13.064429 | $ | 20,126 | 3.03 | % | 0.00 | % | to | 0.55 | % | 3.19 | % | to | 3.76 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
11,741 | 1.195791 | to | 12.591524 | 16,736 | 2.32 | 0.00 | to | 0.55 | 15.92 | to | 16.56 | ||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
9,304 | 1.030529 | to | 10.802768 | 11,345 | 2.26 | 0.00 | to | 0.55 | 13.59 | to | 14.22 | ||||||||||||||||||||||||||||||||||||
| Period Ended 12/31/11 (2) |
1,932 | 0.906329 | to | 9.458077 | 3,034 | 3.58 | 0.00 | to | 0.55 | (9.41 | ) | to | (9.16 | ) | ||||||||||||||||||||||||||||||||||
| Russell LifePoints Equity Growth Strategy |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
5,836 | $ | 1.258221 | to | $ | 12.149681 | $ | 8,762 | 3.29 | % | 0.00 | % | to | 0.55 | % | 2.92 | % | to | 3.48 | % | ||||||||||||||||||||||||||||
| Year Ended 12/31/13 |
5,628 | $ | 1.221337 | to | $ | 11.740704 | $ | 8,224 | 2.59 | 0.00 | to | 0.55 | 19.16 | to | 19.81 | |||||||||||||||||||||||||||||||||
| Year Ended 12/31/12 |
4,213 | 1.023971 | to | 9.799317 | 5,371 | 1.87 | 0.00 | to | 0.55 | 15.04 | to | 15.68 | ||||||||||||||||||||||||||||||||||||
| Period Ended 12/31/11 (2) |
1,131 | 0.889198 | to | 8.471141 | 1,453 | 3.08 | 0.00 | to | 0.55 | (11.12 | ) | to | (10.88 | ) | ||||||||||||||||||||||||||||||||||
| Credit Suisse Trust Commodity Return Strategy |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended 12/31/14 |
2,448 | $ | 5.885213 | to | $ | 6.387246 | $ | 15,934 | 0.00 | % | 0.00 | % | to | 0.55 | % | (17.39 | )% | to | (16.94 | )% | ||||||||||||||||||||||||||||
| Period Ended 12/31/13 (3) |
1,963 | 7.085099 | to | 7.724122 | 15,565 | 0.00 | 0.00 | to | 0.55 | 1.72 | to | 1.79 | ||||||||||||||||||||||||||||||||||||
| (1) | Total return includes deductions for management and other expenses; it excludes deductions for sales loads and other charges, which are a reduction in units. The expense ratios further reflect only those expenses which impact total return. For additional information regarding all expenses assessed, refer to the accompanying notes. Returns are not annualized for periods less than one year. |
| (2) | Divisions commenced operations on June 30, 2011. |
| (3) | Division commenced operations on November 15, 2013. |
| F-30 |
Table of Contents
Report of Independent Registered Public Accounting Firm
To The Northwestern Mutual Life Insurance Company Board of Trustees and
Policyowners of the Northwestern Mutual Variable Life Account
In our opinion, the accompanying statements of assets and liabilities and the related statements of operations and of changes in net assets present fairly, in all material respects, the financial position of the Northwestern Mutual Variable Life Account and its Growth Stock Division, Focused Appreciation Division, Large Cap Core Stock Division, Large Cap Blend Division, Index 500 Stock Division, Large Company Value Division, Domestic Equity Division, Equity Income Division, Mid Cap Growth Stock Division, Index 400 Stock Division, Mid Cap Value Division, Small Cap Growth Stock Division, Index 600 Stock Division, Small Cap Value Division, International Growth Division, Research International Core Division, International Equity Division, Emerging Markets Equity Division, Money Market Division, Short-Term Bond Division, Select Bond Division, Long-Term U.S. Government Bond Division, Inflation Protection Division, High Yield Bond Division, Multi-Sector Bond Division, Balanced Division, Asset Allocation Division, Fidelity VIP Mid Cap Division, Fidelity VIP Contrafund Division, Neuberger Berman AMT Socially Responsive Division, Russell Multi-Style Equity Division, Russell Aggressive Equity Division, Russell Non-U.S. Division, Russell Core Bond Division, Russell Global Real Estate Securities Division, Russell LifePoints Moderate Strategy Division, Russell LifePoints Balanced Strategy Division, Russell LifePoints Growth Strategy Division, Russell LifePoints Equity Growth Strategy Division, Credit Suisse Trust Commodity Return Strategy Division, at December 31, 2014, and the results of their operations and the changes in their net assets for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. 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 the standards of the Public Company Accounting Oversight Board (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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of investments owned at December 31, 2014 by correspondence with Northwestern Mutual Series Fund, Inc., Fidelity Variable Insurance Products, Neuberger Berman Advisers Management Trust, the Russell Investment Funds and Credit Suisse Trust, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
April 27, 2015
| F-31 |
Table of Contents
The Northwestern Mutual
Life Insurance Company
Consolidated Financial Statements
December 31, 2014, 2013 and 2012
NM-1
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Financial Position
(in millions)
| December 31, | ||||||||
| 2014 | 2013 | |||||||
| Assets: |
||||||||
| Bonds |
$ | 128,126 | $ | 122,331 | ||||
| Mortgage loans |
29,341 | 26,845 | ||||||
| Policy loans |
16,756 | 16,306 | ||||||
| Common and preferred stocks |
3,713 | 2,965 | ||||||
| Real estate |
1,610 | 1,506 | ||||||
| Other investments |
12,827 | 12,184 | ||||||
| Cash and short-term investments |
2,588 | 2,262 | ||||||
|
|
|
|
|
|||||
| Total investments |
194,961 | 184,399 | ||||||
| Due and accrued investment income |
1,902 | 1,840 | ||||||
| Net deferred tax assets |
3,055 | 2,647 | ||||||
| Deferred premium and other assets |
2,959 | 2,877 | ||||||
| Separate account assets |
27,056 | 25,343 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 229,933 | $ | 217,106 | ||||
|
|
|
|
|
|||||
| Liabilities and surplus: |
||||||||
| Reserves for policy benefits |
$ | 167,508 | $ | 158,581 | ||||
| Policyowner dividends payable |
5,510 | 5,210 | ||||||
| Interest maintenance reserve |
1,043 | 1,194 | ||||||
| Asset valuation reserve |
3,544 | 3,358 | ||||||
| Income taxes payable |
322 | 550 | ||||||
| Other liabilities |
5,896 | 5,671 | ||||||
| Separate account liabilities |
27,056 | 25,343 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
210,879 | 199,907 | ||||||
| Surplus: |
||||||||
| Surplus notes |
1,750 | 1,750 | ||||||
| Unassigned surplus |
17,304 | 15,449 | ||||||
|
|
|
|
|
|||||
| Total surplus |
19,054 | 17,199 | ||||||
|
|
|
|
|
|||||
| Total liabilities and surplus |
$ | 229,933 | $ | 217,106 | ||||
|
|
|
|
|
|||||
The accompanying notes are an integral part of these consolidated financial statements.
NM-2
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Operations
(in millions)
| For the years ended | ||||||||||||
| December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Revenue: | ||||||||||||
| Premiums |
$ | 17,001 | $ | 16,599 | $ | 15,394 | ||||||
| Net investment income |
9,104 | 8,693 | 8,625 | |||||||||
| Other income |
602 | 566 | 550 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total revenue |
26,707 | 25,858 | 24,569 | |||||||||
|
|
|
|
|
|
|
|||||||
| Benefits and expenses: |
||||||||||||
| Benefit payments to policyowners and beneficiaries |
8,396 | 7,898 | 7,250 | |||||||||
| Net additions to policy benefit reserves |
8,910 | 9,018 | 8,561 | |||||||||
| Net transfers to separate accounts |
501 | 542 | 492 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total benefits |
17,807 | 17,458 | 16,303 | |||||||||
| Commissions and operating expenses |
2,831 | 2,680 | 2,609 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total benefits and expenses |
20,638 | 20,138 | 18,912 | |||||||||
|
|
|
|
|
|
|
|||||||
| Gain from operations before dividends and taxes |
6,069 | 5,720 | 5,657 | |||||||||
| Policyowner dividends |
5,511 | 5,212 | 5,045 | |||||||||
|
|
|
|
|
|
|
|||||||
| Gain from operations before taxes |
558 | 508 | 612 | |||||||||
| Income tax expense (benefit) |
22 | (18 | ) | 37 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net gain from operations |
536 | 526 | 575 | |||||||||
| Net realized capital gains |
143 | 276 | 208 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net income |
$ | 679 | $ | 802 | $ | 783 | ||||||
|
|
|
|
|
|
|
|||||||
The accompanying notes are an integral part of these consolidated financial statements.
NM-3
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
| For the years ended | ||||||||||||
| December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Beginning of year balance |
$ | 17,199 | $ | 16,176 | $ | 14,813 | ||||||
| Net income |
679 | 802 | 783 | |||||||||
| Change in net unrealized capital gains |
1,246 | 346 | 379 | |||||||||
| Change in net deferred tax assets |
271 | 237 | 315 | |||||||||
| Change in nonadmitted assets and other |
(155 | ) | (58 | ) | (173 | ) | ||||||
| Change in asset valuation reserve |
(186 | ) | (142 | ) | 133 | |||||||
| Change in reserve valuation basis |
- | - | (59 | ) | ||||||||
| Change in accounting principle |
- | (162 | ) | (15 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net increase in surplus |
1,855 | 1,023 | 1,363 | |||||||||
|
|
|
|
|
|
|
|||||||
| End of year balance |
$ | 19,054 | $ | 17,199 | $ | 16,176 | ||||||
|
|
|
|
|
|
|
|||||||
The accompanying notes are an integral part of these consolidated financial statements.
NM-4
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Cash Flows
(in millions)
| For the years ended | ||||||||||||
| December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Cash flows from operating activities: |
||||||||||||
| Premiums and other income received |
$ | 12,700 | $ | 12,243 | $ | 11,211 | ||||||
| Investment income received |
9,014 | 8,827 | 8,901 | |||||||||
| Benefit payments to policyowners and beneficiaries |
(8,742 | ) | (8,215 | ) | (7,702 | ) | ||||||
| Net transfers to separate accounts |
(492 | ) | (527 | ) | (474 | ) | ||||||
| Commissions, expenses and taxes paid |
(3,247 | ) | (2,802 | ) | (3,118 | ) | ||||||
|
|
|
|||||||||||
| Net cash provided by operating activities |
9,233 | 9,526 | 8,818 | |||||||||
|
|
|
|||||||||||
| Cash flows from investing activities: |
||||||||||||
| Proceeds from investments sold or matured: |
||||||||||||
| Bonds |
33,516 | 36,567 | 33,733 | |||||||||
| Common and preferred stocks |
2,898 | 4,305 | 7,277 | |||||||||
| Mortgage loans |
1,501 | 2,169 | 2,707 | |||||||||
| Real estate |
76 | 83 | 570 | |||||||||
| Other investments |
1,676 | 1,268 | 1,706 | |||||||||
|
|
|
|||||||||||
| Subtotal proceeds from investments |
39,667 | 44,392 | 45,993 | |||||||||
|
|
|
|||||||||||
| Cost of investments acquired: |
||||||||||||
| Bonds |
38,857 | 43,758 | 44,102 | |||||||||
| Common and preferred stocks |
3,394 | 3,018 | 3,690 | |||||||||
| Mortgage loans |
4,008 | 4,670 | 4,040 | |||||||||
| Real estate |
187 | 290 | 192 | |||||||||
| Other investments |
2,002 | 1,856 | 1,731 | |||||||||
|
|
|
|||||||||||
| Subtotal cost of investments acquired |
48,448 | 53,592 | 53,755 | |||||||||
|
|
|
|||||||||||
| Disbursement of policy loans, net of repayments |
450 | 517 | 642 | |||||||||
|
|
|
|||||||||||
| Net cash applied to investing activities |
(9,231 | ) | (9,717 | ) | (8,404 | ) | ||||||
|
|
|
|||||||||||
| Cash flows from financing and miscellaneous sources: |
||||||||||||
| Net inflows on deposit-type contracts |
56 | 93 | 113 | |||||||||
| Other cash provided (applied) |
268 | (33 | ) | (555 | ) | |||||||
|
|
|
|||||||||||
| Net cash provided by (applied to) financing and miscellaneous sources |
324 | 60 | (442 | ) | ||||||||
|
|
|
|||||||||||
| Net increase (decrease) in cash and short-term investments |
326 | (131 | ) | (28 | ) | |||||||
| Cash and short-term investments, beginning of year |
2,262 | 2,393 | 2,421 | |||||||||
|
|
|
|||||||||||
| Cash and short-term investments, end of year |
$ | 2,588 | $ | 2,262 | $ | 2,393 | ||||||
|
|
|
|||||||||||
| Supplemental disclosures of cash flow information |
||||||||||||
| Non-cash investing activities not included above: |
||||||||||||
| Bond forward commitments |
$ | 12,590 | $ | 17,482 | $ | 17,139 | ||||||
| Bond refinancings and exchanges |
1,713 | 2,156 | 1,842 | |||||||||
| Mortgage loan refinancings |
889 | 831 | 1,089 | |||||||||
| Transfers with affiliated entities |
344 | 911 | - | |||||||||
| Common stock exchanges |
61 | 81 | 110 | |||||||||
| Other invested asset exchanges |
37 | - | - | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
NM-5
Table of Contents
The Northwestern Mutual Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
| 1. | Basis of Presentation |
The accompanying consolidated statutory financial statements include the accounts of The Northwestern Mutual Life Insurance Company and its wholly-owned subsidiary, Northwestern Long Term Care Insurance Company (together, “the Company”). All intercompany balances and transactions have been eliminated. The Company offers life, annuity, disability and long-term care insurance products to the personal, business and estate markets throughout the United States of America.
These financial statements were prepared in accordance with accounting practices prescribed or permitted by the Office of the Commissioner of Insurance of the State of Wisconsin (“statutory basis of accounting”), which are based on the Accounting Practices and Procedures Manual of the National Association of Insurance Commissioners (“NAIC”). Financial statements prepared on the statutory basis of accounting differ from financial statements prepared in accordance with generally accepted accounting principles (“GAAP”), primarily because on a GAAP basis: (1) certain policy acquisition costs are deferred and amortized, (2) most bond and preferred stock investments are reported at fair value, (3) policy benefit reserves are established using different actuarial methods and assumptions, (4) deposit-type contracts, for which premiums, benefits and reserve changes are not included in revenue or benefits as reported in the statements of operations, are defined differently, (5) majority-owned, non-insurance subsidiaries are consolidated, (6) changes in deferred taxes are reported as a component of net income and (7) no deferral of realized investment gains and losses is permitted. The effects on the Company’s financial statements attributable to the differences between the statutory basis of accounting and GAAP are material.
Reclassifications
Certain amounts in prior year financial statement balances and footnote disclosures have been reclassified to conform to the current year presentation.
| 2. | Summary of Significant Accounting Policies |
The preparation of financial statements in accordance with the statutory basis of accounting requires the Company to make estimates or assumptions about the future 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 annual periods presented. Actual future results could differ from these estimates and assumptions.
Investments
See Notes 3, 4 and 14 regarding the statement value and fair value of the Company’s investments in bonds, mortgage loans, common and preferred stocks, real estate and other investments, including derivative instruments.
Policy Loans
Policy loans represent amounts borrowed from the Company by life insurance policyowners, secured by the cash value of the related policies, and are reported at the unpaid principal balance. Policy loans earn interest at either a fixed rate or at a variable rate based on an election that is made by the policyowner when applying for their policy. If a variable rate is elected, it is reset annually subsequent to funding of the policy loan. Some policies with a fixed rate loan provision permit the Company, at its discretion, to set the interest rate below that specified by the policy. Annual interest rates on policy loans ranged from 4.25% to 8.00% for loans outstanding at December 31, 2014. Policy loans have no stated maturity date, with repayment of principal made at the discretion of the policyowner. Policyowner dividends available on the portion of life insurance cash values that serve as collateral for policy loans are generally determined using the “direct
NM-6
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
recognition method,” whereby dividends on the loaned portion of such policies are calculated with reference to the interest rate charged on the policy loan. The Company considers the unpaid principal balance of policy loans to approximate fair value.
Cash and Short-term Investments
Cash and short-term investments include securities that had maturities of one year or less at purchase, primarily money market funds and short-term commercial paper. These investments are reported at amortized cost, which approximates fair value.
Separate Accounts
Separate account assets and related reserve liabilities represent the segregation of balances attributable to variable life insurance and variable annuity products, as well as a group annuity separate account used to fund certain of the Company’s employee and financial representative benefit plan obligations. All separate account assets are legally insulated from claims by the Company’s general account policyowners and creditors. Variable product policyowners bear the investment performance risk associated with these products. Separate account assets related to variable products are invested at the direction of the policyowner in a variety of mutual fund options. Variable annuity policyowners also have the option to invest in stated-rate investment options through the Company’s general account. Separate account assets are generally reported at fair value primarily based on quoted market prices for the underlying investment securities. See Note 7 and Note 14 for more information regarding the Company’s separate accounts and Note 8 for more information regarding the Company’s employee and financial representative benefit plans.
Reserves for Policy Benefits
Reserves for policy benefits generally represent the net present value of future policy benefits less future policy premiums, calculated using actuarial methods, mortality and morbidity experience tables and valuation interest rates prescribed or permitted by the Office of the Commissioner of Insurance of the State of Wisconsin (“OCI”). These actuarial tables and methods include assumptions regarding future mortality and morbidity experience. Actual future experience could differ from the assumptions used to make these reserve estimates. See Note 5 and Note 14 for more information regarding the Company’s reserves for policy benefits.
Policyowner Dividends
All life, disability and long-term care insurance policies and certain annuity policies issued by the Company are participating. Annually, the Company’s Board of Trustees approves dividends payable on participating policies during the subsequent fiscal year, which are accrued and charged to operations when approved. Depending on the type of policy they own, participating policyowners generally have the option to receive their dividends in cash, use them to reduce future premiums due, use them to purchase additional insurance benefits or leave them on deposit with the Company to accumulate interest. Dividends used by policyowners to purchase additional insurance benefits are reported as premiums in the consolidated statements of operations but are not included in premiums received or benefit payments in the consolidated statements of cash flows. The Company’s annual approval and declaration of policyowner dividends includes a guarantee of a minimum aggregate amount of dividends to be paid to policyowners as a group in the subsequent calendar year. If this guaranteed amount is greater than the aggregate of actual dividends paid to policyowners in the subsequent year, the difference is paid in the immediately succeeding calendar year.
Interest Maintenance Reserve
The Company is required to maintain an interest maintenance reserve (“IMR”). The IMR is used to defer realized capital gains and losses, net of any income tax, on fixed income investments and
NM-7
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
derivatives that are attributable to changes in market interest rates, including both changes in risk-free market interest rates and market credit spreads. Net realized capital gains and losses deferred to the IMR are amortized into investment income over the estimated remaining term to maturity of the investment sold or the asset/liability hedged by an interest rate-related derivative instrument.
Asset Valuation Reserve
The Company is required to maintain an asset valuation reserve (“AVR”). The AVR represents a reserve for invested asset valuation using a formula prescribed by the NAIC. The AVR is intended to protect surplus by absorbing declines in the value of the Company’s investments that are not related to changes in interest rates. Increases or decreases in the AVR are reported as direct adjustments to surplus in the consolidated statements of changes in surplus.
Premium Revenue
Most life insurance premiums are recognized as revenue at the beginning of each respective policy year. Universal life insurance and annuity premiums are recognized as revenue when received. Considerations received on supplementary annuity contracts without life contingencies are deposit-type transactions and are excluded from revenue in the consolidated statements of operations. Disability and long-term care insurance premiums are recognized as revenue when due. Premium revenue is reported net of ceded reinsurance. See Note 9 for more information regarding the Company’s use of reinsurance.
Net Investment Income
Net investment income primarily represents interest, dividends and prepayment fees received or accrued on bonds, mortgage loans, common and preferred stocks, policy loans and other investments. Net investment income also includes dividends and distributions paid to the Company from the accumulated earnings of joint ventures, partnerships and unconsolidated non-insurance subsidiaries. Net investment income is reduced by investment management expenses, real estate depreciation, interest costs associated with securities lending and interest expense related to the Company’s surplus notes. See Note 3 for more information regarding net investment income and Note 13 for more information regarding the Company’s surplus notes.
Other Income
Other income primarily represents ceded reinsurance expense allowances and various insurance policy charges. Ceded reinsurance expense allowance is recognized as revenue when due. See Note 9 for more information regarding the Company’s use of reinsurance.
Benefit Payments to Policyowners and Beneficiaries
Benefit payments to policyowners and beneficiaries include death, surrender, disability and long-term care benefits, as well as matured endowments and payments on supplementary annuity contracts that include life contingencies. Benefit payments on supplementary annuity contracts without life contingencies are deposit-type transactions and excluded from benefits in the consolidated statements of operations. Benefit payments are reported net of ceded reinsurance recoveries. See Note 9 for more information regarding the Company’s use of reinsurance.
Commissions and Operating Expenses
Commissions and other operating costs, including costs of acquiring new insurance policies, are generally charged to expense as incurred.
Information Technology Equipment and Software
The cost of information technology (“IT”) equipment and operating system software is generally capitalized and depreciated over three years using the straight-line method. Non-operating system software is generally capitalized and depreciated over a maximum of five years. IT equipment and operating software assets of $29 million and $41 million at December 31, 2014 and 2013,
NM-8
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
respectively, are included in other assets in the consolidated statements of financial position and are net of accumulated depreciation of $280 million and $256 million, respectively. Non-operating software costs, net of accumulated depreciation, are nonadmitted assets and thereby excluded from assets and surplus in the consolidated statements of financial position. These amounts were $151 million and $132 million at December 31, 2014 and 2013, respectively. Depreciation expense for IT equipment and software totaled $74 million, $70 million and $67 million for the years ended December 31, 2014, 2013 and 2012, respectively.
Furniture, Fixtures and Equipment
The cost of furniture, fixtures and equipment, including leasehold improvements, is generally capitalized and depreciated over the useful life of the assets using the straight-line method. Furniture, fixtures and equipment, net of accumulated depreciation, are nonadmitted assets and thereby excluded from assets and surplus in the consolidated statements of financial position. These amounts were $74 million and $79 million at December 31, 2014 and 2013, respectively. Depreciation expense for furniture, fixtures and equipment totaled $8 million, $7 million and $7 million for the years ended December 31, 2014, 2013 and 2012, respectively.
Investment Capital Gains and Losses
Realized capital gains and losses are recognized based upon specific identification of investments sold. Realized capital losses also include valuation adjustments for impairment of bonds, mortgage loans, common and preferred stocks, real estate and other investments that have experienced a decline in fair value that the Company considers to be “other than temporary.” Realized capital gains and losses as reported in the consolidated statements of operations are net of any capital gains tax (or benefit) and exclude any deferrals to the IMR of interest rate-related capital gains or losses. See Note 3 for more information regarding realized capital gains and losses, including other-than-temporary valuation adjustments.
Unrealized capital gains and losses include changes in the fair value of common stocks and other equity investments and currency translation adjustments on foreign-denominated bonds and are reported net of any related changes in deferred taxes. Other changes in the Company’s equity method share of the accumulated earnings of joint ventures, partnerships and unconsolidated, non-insurance subsidiaries are also reported as changes in unrealized capital gains and losses. Changes in unrealized capital gains and losses are reported in the consolidated statements of changes in surplus. See Note 3 for more information regarding unrealized capital gains and losses.
Nonadmitted Assets
Certain assets are designated as “nonadmitted” on the statutory basis of accounting. Such assets, principally related to defined benefit pension funding, amounts advanced to or due from the Company’s financial representatives, furniture, fixtures, equipment and non-operating software (net of accumulated depreciation), deferred tax assets in excess of statutory limits and certain equity-method investments for which audits are not performed are excluded from assets and surplus in the consolidated statements of financial position. Changes in nonadmitted assets are reported as a direct adjustment to surplus in the consolidated statements of changes in surplus.
Foreign Currency Translation
All of the Company’s insurance operations are conducted in the United States of America on a U.S. dollar-denominated basis. The Company does make bond, mortgage loan, equity and other investments that are denominated in a foreign currency or issued by an entity doing business in another country. Investments denominated in a foreign currency are translated to U.S. dollars at each reporting date using then-current market foreign currency exchange rates. Translation gains or losses relating to fluctuations in market exchange rates are reported as a change in unrealized capital gains and losses until the related investment security is sold or matures, at which time a
NM-9
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
realized capital gain or loss is reported. Transactions denominated in a foreign currency, such as receipt of foreign-denominated interest or dividends, are translated to U.S. dollars based on the actual exchange rate at the time of the transaction. See Note 4 for more information regarding the Company’s use of derivatives to mitigate exposure to fluctuations in foreign currency exchange rates.
Subsequent Events
The Company has evaluated events subsequent to December 31, 2014 through February 24, 2015, the date these consolidated financial statements were available to be issued. Based on this evaluation, it is the Company’s opinion that no events subsequent to December 31, 2014 have occurred that are material to the Company’s financial position at that date or the results of its operations for the year then ended.
| 3. | Investments |
Bonds
The Securities Valuation Office (“SVO”) of the NAIC evaluates the credit quality of the Company’s bond investments and issues related credit ratings. Bonds rated at “1” (highest quality), “2” (high quality), “3” (medium quality), “4” (low quality) or “5” (lower quality) are reported in the financial statements at amortized cost, less any valuation adjustment. Bonds rated “6” (lowest quality) are reported at the lower of amortized cost or fair value. The interest method is used to amortize any purchase premium or discount, including estimates of future prepayments that are obtained from independent sources. Prepayment assumptions are updated at least annually, with the retrospective method used to adjust net investment income for changes in the estimated yield to maturity.
The disclosure of fair value for bonds is primarily based on independent pricing services or internally-developed pricing models utilizing observable market data. See Note 14 for more information regarding the fair value of the Company’s investments in bonds.
Statement value and fair value of bonds at December 31, 2014 and 2013, summarized by asset categories required in the NAIC Annual Statement, were as follows:
| December 31, 2014 |
Reconciliation to Fair Value | |||||||||||||||
| Gross | Gross | |||||||||||||||
| Statement | Unrealized | Unrealized | Fair | |||||||||||||
| Value | Gains | Losses | Value | |||||||||||||
| (in millions) | ||||||||||||||||
| U.S. Government |
$ | 4,493 | $ | 785 | $ | (1) | $ | 5,277 | ||||||||
| States, territories and possessions |
694 | 137 | (1) | 830 | ||||||||||||
| Special revenue and assessments |
29,145 | 1,275 | (109) | 30,311 | ||||||||||||
| All foreign governments |
522 | 65 | (5) | 582 | ||||||||||||
| Hybrid securities |
323 | 33 | (25) | 331 | ||||||||||||
| Industrial and miscellaneous |
92,949 | 5,809 | (842) | 97,916 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total bonds |
$ | 128,126 | $ | 8,104 | $ | (983) | $ | 135,247 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
NM-10
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
| December 31, 2013 |
Reconciliation to Fair Value | |||||||||||||||
| Gross | Gross | |||||||||||||||
| Statement | Unrealized | Unrealized | Fair | |||||||||||||
| Value | Gains | Losses | Value | |||||||||||||
| (in millions) | ||||||||||||||||
| U.S. Government |
$ | 6,582 | $ | 626 | $ | (46) | $ | 7,162 | ||||||||
| States, territories and possessions |
694 | 51 | (7) | 738 | ||||||||||||
| Special revenue and assessments |
27,179 | 595 | (639) | 27,135 | ||||||||||||
| All foreign governments |
328 | 39 | (4) | 363 | ||||||||||||
| Hybrid securities |
292 | 26 | (28) | 290 | ||||||||||||
| Industrial and miscellaneous |
87,256 | 5,154 | (1,070) | 91,340 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total bonds |
$ | 122,331 | $ | 6,491 | $ | (1,794) | $ | 127,028 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Bonds classified by the NAIC as “special revenue and assessments” consist primarily of government agency-issued residential mortgage-backed securities and municipal bonds issued by political subdivisions to finance specific public projects. Bonds classified as “industrial and miscellaneous” consist primarily of notes issued by corporate entities, private utilities and structured securities not issued by government agencies.
Statement value of bonds by SVO rating category at December 31, 2014 and 2013 was as follows:
| December 31, 2014 | SVO Rating | |||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| 1 | 2 | 3 | 4 | 5 | 6 | Total | ||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||
| U.S. Government |
$ | 4,493 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 4,493 | ||||||||||||||
| States, territories and possessions |
694 | - | - | - | - | - | 694 | |||||||||||||||||||||
| Special revenue and assessments |
29,104 | 23 | - | - | 18 | - | 29,145 | |||||||||||||||||||||
| All foreign governments |
250 | 259 | 13 | - | - | - | 522 | |||||||||||||||||||||
| Hybrid securities |
138 | 143 | 42 | - | - | - | 323 | |||||||||||||||||||||
| Industrial and miscellaneous |
40,763 | 38,988 | 6,507 | 4,924 | 1,754 | 13 | 92,949 | |||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| Total bonds |
$ | 75,442 | $ | 39,413 | $ | 6,562 | $ | 4,924 | $ | 1,772 | $ | 13 | $ | 128,126 | ||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| December 31, 2013 | SVO Rating | |||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| 1 | 2 | 3 | 4 | 5 | 6 | Total | ||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||
| U.S. Government |
$ | 6,582 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 6,582 | ||||||||||||||
| States, territories and possessions |
694 | - | - | - | - | - | 694 | |||||||||||||||||||||
| Special revenue and assessments |
27,115 | 46 | - | - | 18 | - | 27,179 | |||||||||||||||||||||
| All foreign governments |
289 | 39 | - | - | - | - | 328 | |||||||||||||||||||||
| Hybrid securities |
121 | 156 | 7 | 8 | - | - | 292 | |||||||||||||||||||||
| Industrial and miscellaneous |
39,176 | 36,595 | 5,799 | 3,971 | 1,648 | 67 | 87,256 | |||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| Total bonds |
$ | 73,977 | $ | 36,836 | $ | 5,806 | $ | 3,979 | $ | 1,666 | $ | 67 | $ | 122,331 | ||||||||||||||
|
|
|
|||||||||||||||||||||||||||
NM-11
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
Based on statement value, 90% and 91% of the Company’s bond portfolio was rated either 1 or 2 (i.e., rated as “investment grade”) by the SVO at December 31, 2014 and 2013, respectively.
The Company’s investments in “structured securities” include a significant concentration in residential mortgage-backed securities issued by government agencies. Statement value and fair value of structured securities at December 31, 2014 and 2013, aggregated by investment grade or “below investment grade” (i.e., rated 3, 4, 5 or 6 by the SVO), were as follows:
| December 31, 2014 | Investment Grade | Below Investment Grade | Total | |||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Statement Value |
Fair Value | Statement Value |
Fair Value | Statement Value |
Fair Value | |||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||
| Residential mortgage-backed: |
||||||||||||||||||||||||
| Government agencies |
$ | 26,894 | $ | 27,616 | $ | - | $ | - | $ | 26,894 | $ | 27,616 | ||||||||||||
| Other prime |
503 | 509 | 1 | 1 | 504 | 510 | ||||||||||||||||||
| Other below-prime |
39 | 42 | 16 | 19 | 55 | 61 | ||||||||||||||||||
| Commercial mortgage-backed: |
||||||||||||||||||||||||
| Government agencies |
277 | 297 | - | - | 277 | 297 | ||||||||||||||||||
| Conduit |
1,964 | 2,011 | 39 | 33 | 2,003 | 2,044 | ||||||||||||||||||
| Re-REMIC |
377 | 394 | 3 | 6 | 380 | 400 | ||||||||||||||||||
| Other commercial mortgage-backed |
60 | 65 | 4 | 5 | 64 | 70 | ||||||||||||||||||
| Other asset-backed |
5,105 | 5,311 | 49 | 54 | 5,154 | 5,365 | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Total structured securities |
$ | 35,219 | $ | 36,245 | $ | 112 | $ | 118 | $ | 35,331 | $ | 36,363 | ||||||||||||
|
|
|
|||||||||||||||||||||||
| December 31, 2013 | Investment Grade | Below Investment Grade | Total | |||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Statement Value |
Fair Value | Statement Value |
Fair Value | Statement Value |
Fair Value | |||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||
| Residential mortgage-backed: |
||||||||||||||||||||||||
| Government agencies |
$ | 25,526 | $ | 25,405 | $ | - | $ | - | $ | 25,526 | $ | 25,405 | ||||||||||||
| Other prime |
385 | 386 | 2 | 2 | 387 | 388 | ||||||||||||||||||
| Other below-prime |
79 | 81 | 22 | 25 | 101 | 106 | ||||||||||||||||||
| Commercial mortgage-backed: |
||||||||||||||||||||||||
| Government agencies |
534 | 549 | - | - | 534 | 549 | ||||||||||||||||||
| Conduit |
2,000 | 2,035 | 129 | 120 | 2,129 | 2,155 | ||||||||||||||||||
| Re-REMIC |
500 | 529 | 5 | 8 | 505 | 537 | ||||||||||||||||||
| Other commercial mortgage-backed |
68 | 75 | 19 | 19 | 87 | 94 | ||||||||||||||||||
| Other asset-backed |
4,989 | 5,186 | 116 | 122 | 5,105 | 5,308 | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Total structured securities |
$ | 34,081 | $ | 34,246 | $ | 293 | $ | 296 | $ | 34,374 | $ | 34,542 | ||||||||||||
|
|
|
|||||||||||||||||||||||
Based on statement value, 99% of the Company’s structured securities portfolio was rated as investment grade at each of December 31, 2014 and 2013.
NM-12
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
The Company’s bond portfolio includes securities that are classified as structured notes, as defined by the Purposes and Procedures Manual of the SVO. At December 31, 2014, the Company’s structured note investments included a treasury inflation protected (“TIP”) security and nine securities with step-up coupon provisions. At December 31, 2014, the TIP security had a statement value and fair value of $89 million and $127 million, respectively, while the securities with step-up provisions had aggregate statement values and fair values of $30 million and $23 million, respectively. None of these securities have provisions linked to real estate prices, indices or asset values.
Statement value and fair value of bonds by contractual maturity at December 31, 2014 are summarized below. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment fees.
| Statement | Fair | |||||||
| Value | Value | |||||||
| (in millions) | ||||||||
| Due in one year or less |
$ | 3,353 | $ | 3,407 | ||||
| Due after one year through five years |
29,922 | 31,681 | ||||||
| Due after five years through ten years |
37,631 | 38,642 | ||||||
| Due after ten years |
21,889 | 25,154 | ||||||
|
|
|
|
|
|||||
| Subtotal |
92,795 | 98,884 | ||||||
| Structured securities |
35,331 | 36,363 | ||||||
|
|
|
|
|
|||||
| Total bonds |
$ | 128,126 | $ | 135,247 | ||||
|
|
|
|
|
|||||
Mortgage Loans
Mortgage loans consist solely of commercial mortgage loans underwritten and originated by the Company and are reported at unpaid principal balance, less any valuation adjustments or unamortized commitment or origination fees. Such fees are generally deferred upon receipt and amortized into net investment income over the life of the loan using the interest method.
The statement value of mortgage loans by collateral property type and geographic location at December 31, 2014 and 2013 was as follows:
| December 31, 2014 | United States of America | |||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| East | Midwest | South | West | Canada | Total | |||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||
| Apartment |
$ | 2,708 | $ | 452 | $ | 1,918 | $ | 3,438 | $ | - | $ | 8,516 | ||||||||||||
| Office |
2,950 | 792 | 1,575 | 3,559 | - | 8,876 | ||||||||||||||||||
| Retail |
3,008 | 780 | 2,337 | 2,253 | - | 8,378 | ||||||||||||||||||
| Warehouse/Industrial |
473 | 190 | 437 | 1,047 | 255 | 2,402 | ||||||||||||||||||
| Other |
317 | 145 | 450 | 257 | - | 1,169 | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Total |
$ | 9,456 | $ | 2,359 | $ | 6,717 | $ | 10,554 | $ | 255 | $ | 29,341 | ||||||||||||
|
|
|
|||||||||||||||||||||||
NM-13
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
| December 31, 2013 | United States of America | |||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| East | Midwest | South | West | Canada | Total | |||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||
| Apartment |
$ | 2,268 | $ | 357 | $ | 1,754 | $ | 3,198 | $ | - | $ | 7,577 | ||||||||||||
| Office |
2,513 | 599 | 1,673 | 3,549 | - | 8,334 | ||||||||||||||||||
| Retail |
2,961 | 815 | 2,265 | 1,989 | - | 8,030 | ||||||||||||||||||
| Warehouse/Industrial |
438 | 213 | 374 | 1,047 | - | 2,072 | ||||||||||||||||||
| Other |
145 | 139 | 299 | 249 | - | 832 | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Total |
$ | 8,325 | $ | 2,123 | $ | 6,365 | $ | 10,032 | $ | - | $ | 26,845 | ||||||||||||
|
|
|
|||||||||||||||||||||||
The statement value of mortgage loans by contractual maturity at December 31, 2014 is summarized below. Actual maturities may differ from contractual maturities because certain borrowers have the right to prepay obligations with or without prepayment fees.
| Statement Value |
||||
| (in millions) | ||||
| Due in one year or less |
$ | 1,217 | ||
| Due after one year through two years |
2,289 | |||
| Due after two years through five years |
5,684 | |||
| Due after five years through eight years |
8,104 | |||
| Due after eight years |
12,047 | |||
|
|
|
|||
| Total |
$ | 29,341 | ||
|
|
|
|||
All mortgage loans were current on contractual interest and principal payments at each of December 31, 2014 and 2013. The maximum and minimum interest rates for mortgage loans originated during 2014 were 6.10% and 2.58%, respectively, while these rates during 2013 were 6.50% and 3.00%, respectively. The aggregate weighted-average ratio of amounts loaned to the fair value of collateral (“loan-to-value ratio”) for mortgage loans originated or refinanced during 2014 and 2013 was 61% and 59%, respectively, with a maximum of 100% for any single loan during each of 2014 and 2013. Loans with a 100% loan-to-value (“LTV”) ratio at origination are made on a very limited basis and generally represent construction loans on build-to-suit properties. These loans are expected to be refinanced with conventional mortgage loans having a LTV ratio between 50% and 70% upon completion of construction. At December 31, 2014 and 2013, the aggregate weighted-average LTV ratio for the mortgage loan portfolio was 54% and 55%, respectively.
NM-14
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
LTV ratios are commonly used to assess the credit quality of commercial mortgage loans. A smaller LTV ratio generally indicates a higher quality loan. The statement value of mortgage loans by collateral property type and LTV ratio at December 31, 2014 and 2013 was as follows:
| December 31, 2014 | < 51% | 51%-70% | 71%-90% | > 90% | Total | |||||||||||||||
|
|
|
|||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Apartment |
$ | 3,398 | $ | 4,944 | $ | 110 | $ | 64 | $ | 8,516 | ||||||||||
| Office |
2,854 | 5,524 | 280 | 218 | 8,876 | |||||||||||||||
| Retail |
3,933 | 4,050 | 343 | 52 | 8,378 | |||||||||||||||
| Warehouse/Industrial |
561 | 1,557 | 190 | 94 | 2,402 | |||||||||||||||
| Other |
218 | 847 | 32 | 72 | 1,169 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total |
$ | 10,964 | $ | 16,922 | $ | 955 | $ | 500 | $ | 29,341 | ||||||||||
|
|
|
|||||||||||||||||||
| December 31, 2013 | < 51% | 51%-70% | 71%-90% | > 90% | Total | |||||||||||||||
|
|
|
|||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Apartment |
$ | 2,204 | $ | 4,826 | $ | 376 | $ | 171 | $ | 7,577 | ||||||||||
| Office |
2,295 | 5,428 | 546 | 65 | 8,334 | |||||||||||||||
| Retail |
3,121 | 4,465 | 392 | 52 | 8,030 | |||||||||||||||
| Warehouse/Industrial |
407 | 1,330 | 251 | 84 | 2,072 | |||||||||||||||
| Other |
132 | 600 | 61 | 39 | 832 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total |
$ | 8,159 | $ | 16,649 | $ | 1,626 | $ | 411 | $ | 26,845 | ||||||||||
|
|
|
|||||||||||||||||||
The aggregate statement value of mortgage loans with LTV ratios in excess of 100% was $56 million and $95 million at December 31, 2014 and 2013, respectively.
The estimated fair value of the collateral securing each commercial mortgage loan is updated at least annually by the Company. More frequent updates are performed if deemed necessary by changes in market capitalization rates, borrower financial strength and/or property operating performance. Fair value of the collateral is estimated using the income capitalization approach based on stabilized property income and market capitalization rates. Stabilized property income is derived from actual property financial statements adjusted for non-recurring items, normalized market vacancy and lease rollover, among other factors. Other collateral, such as excess land and additional capital required to maintain property income, is also factored into fair value estimates. Both private market transactions and public market alternatives are considered in determining appropriate market capitalization rates. See Note 14 for more information regarding the fair value of the Company’s investments in mortgage loans.
In the normal course of business, the Company may refinance or otherwise modify the terms of an existing mortgage loan, typically in reaction to a proposal by the borrower. These modifications can include a partial repayment of outstanding loan principal, changes to interest rates, extensions of loan maturity and/or changes to loan covenants. When such modifications are made, statutory accounting guidance requires that the new terms of the loan be evaluated to determine whether the modification qualifies as a “troubled debt restructuring.” If new terms are extended to a borrower that are less favorable to the Company than those currently being offered to new borrowers under similar circumstances in an arms-length transaction, a realized capital loss is reported for the estimated amount of the economic concessions made and the reported value of the mortgage loan is reduced. The Company reported $0, $0 and $9 million of realized capital losses related to troubled debt restructuring of mortgage loans for the years ended December 31, 2014, 2013 and 2012, respectively. At December 31, 2014 and 2013, the Company had $30 million and $66 million, respectively, of principal outstanding on mortgage loans that were considered “restructured.”
NM-15
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
In circumstances where the Company has deemed it probable that it will be unable to collect all contractual principal and interest on a mortgage loan, a valuation allowance is established to reduce the statement value of the mortgage loan to its net realizable value. Changes to mortgage loan valuation allowances are reported as a change in unrealized capital gains and losses in the consolidated statements of changes in surplus. If the Company later determines that the decline in value is other than temporary, a realized capital loss is reported, and any temporary valuation allowance is reversed. The Company had no mortgage loan valuation allowance at December 31, 2014. The Company reported a $3 million mortgage loan valuation allowance at December 31, 2013 on two mortgages with an aggregate statement value of $23 million.
Common and Preferred Stocks
Common stocks are generally reported at fair value, with $3.5 billion and $2.4 billion included in the consolidated statements of financial position at December 31, 2014 and 2013, respectively. The fair value for publicly-traded common stocks is primarily based on quoted market prices. For private common stocks without quoted market prices, fair value is based upon internally-developed pricing models and external pricing sources. The equity method is generally used to report investments in common stock of unconsolidated non-insurance subsidiaries. Common and preferred stocks as reported in the consolidated statements of financial position do not include $3 million of equity in unconsolidated subsidiaries that was nonadmitted at December 31, 2014 and 2013. See Note 14 for more information regarding the fair value of the Company’s investments in common stock.
Preferred stocks rated 1, 2 or 3 by the SVO are reported at amortized cost. Preferred stocks rated 4, 5 or 6 by the SVO are reported at the lower of amortized cost or fair value. At December 31, 2014 and 2013, the consolidated statements of financial position included $175 million and $553 million, respectively, of preferred stocks. The fair value for preferred stocks is primarily based on internally-developed pricing models. See Note 11 regarding the Company’s investments in Russell preferred stock and Note 14 for more information regarding the fair value of the Company’s investments in preferred stock.
Real Estate
Real estate investments are reported at cost, less any valuation adjustments, encumbrances and accumulated depreciation of buildings and other improvements. Depreciation of real estate investments is recorded using a straight-line method over the estimated useful lives of the improvements. Fair value of real estate is estimated primarily based on the capitalization of stabilized net operating income.
The statement value of real estate investments by property type and U.S. geographic location at December 31, 2014 and 2013 was as follows:
| December 31, 2014 | East | Midwest | South | West | Total | |||||||||||||||
|
|
|
|||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Apartment |
$ | 300 | $ | 27 | $ | 92 | $ | 253 | $ | 672 | ||||||||||
| Office |
65 | 441 | 108 | 39 | 653 | |||||||||||||||
| Warehouse/Industrial |
40 | 30 | - | 171 | 241 | |||||||||||||||
| Other |
12 | - | - | 32 | 44 | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total |
$ | 417 | $ | 498 | $ | 200 | $ | 495 | $ | 1,610 | ||||||||||
|
|
|
|||||||||||||||||||
NM-16
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
| December 31, 2013 | East | Midwest | South | West | Total | |||||||||||||||
|
|
|
|||||||||||||||||||
|
(in millions) |
||||||||||||||||||||
| Apartment |
$ | 267 | $ | 27 | $ | 57 | $ | 257 | $ | 608 | ||||||||||
| Office |
66 | 407 | 101 | 42 | 616 | |||||||||||||||
| Warehouse/Industrial |
41 | 18 | - | 167 | 226 | |||||||||||||||
| Other |
51 | - | 5 | - | 56 | |||||||||||||||
|
|
|
|||||||||||||||||||
|
Total |
$ |
425 |
|
$ | 452 | $ | 163 | $ | 466 | $ | 1,506 | |||||||||
|
|
|
|||||||||||||||||||
The Company’s home office properties are included above (Office/Midwest) and had an aggregate statement value of $331 million and $296 million at December 31, 2014 and 2013, respectively. These amounts include $32 million and $12 million at December 31, 2014 and 2013, respectively, related to a new office tower in Milwaukee, Wisconsin, that is scheduled for completion and occupancy in 2017 with an estimated total design and construction cost of approximately $450 million. The Company’s other investments in real estate are held for the production of income.
Other Investments
Other investments primarily represent investments that are made through ownership interests in partnerships, joint ventures (“JVs”) and limited liability companies (“LLCs”). In some cases, these ownership interests are held directly by the Company, while in other cases these investments are held indirectly through a wholly-owned non-insurance investment holding company organized as a limited liability company. The statement value of other investments held directly or indirectly by the Company at December 31, 2014 and 2013 was as follows:
| December 31, | ||||||||
|
2014 |
2013 | |||||||
|
|
|
|||||||
|
(in millions) |
||||||||
| Securities partnerships and LLCs |
$ | 4,281 | $ | 4,255 | ||||
| Bonds |
3,421 | 2,099 | ||||||
| Real estate JVs, partnerships and LLCs |
1,661 | 1,814 | ||||||
| Common and preferred stocks |
869 | 1,208 | ||||||
| Real estate |
769 | 826 | ||||||
| Cash and short-term investments |
559 | 129 | ||||||
| Low income housing tax credit properties |
474 | 443 | ||||||
| Derivative instruments |
330 | 186 | ||||||
| Leveraged leases |
230 | 234 | ||||||
| Other assets, net |
233 | 990 | ||||||
|
|
|
|||||||
|
Total |
$ |
12,827 |
|
$ | 12,184 | |||
|
|
|
|||||||
The aggregate statement value of other investments held indirectly through non-insurance investment holding companies was $7.4 billion and $6.2 billion at December 31, 2014 and 2013, respectively. Whether held directly by the Company or indirectly through its investment holding companies, securities or real estate partnerships, JVs, and LLCs are reported in the consolidated statements of financial position using the equity method of accounting based on the Company’s share of the underlying entities’ audited GAAP-basis equity. Other investments as reported in the consolidated statements of financial position do not include $83 million and $187 million of nonadmitted assets consisting primarily of equity in unconsolidated subsidiaries at December 31, 2014 and 2013, respectively. For securities partnerships and LLCs, bonds, common and preferred
NM-17
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
stocks, cash and short-term investments and derivative instruments, the underlying entity generally reports these investments at fair value. For real estate-related investments (including JVs, partnerships and LLCs), tax credit properties and leveraged leases, the underlying entity generally reports these investments at cost, reduced where appropriate by depreciation or amortization. Tax credit properties had 14 years and 13 years of unexpired credits at December 31, 2014 and 2013, respectively. The required holding period for tax credit properties is 15 years.
At December 31, 2014 and 2013, oil and gas investments were recorded using the equity method of accounting. However, the statement value of these investments was nonadmitted from assets and surplus in the consolidated statements of financial position as audits were not performed for these investments. During 2013, the Company discontinued the use of a permitted practice related to the valuation of oil and gas investments and reported a $38 million decrease in the statement value of these investments in the consolidated statements of changes in surplus for the year ended December 31, 2013 as a change in accounting principle.
See Note 4 for more information regarding the Company’s use of derivatives.
Net Investment Income
The sources of net investment income for the years ended December 31, 2014, 2013 and 2012 were as follows:
| For the years ended December 31, | ||||||||||||
|
2014 |
2013 | 2012 | ||||||||||
| (in millions) | ||||||||||||
| Bonds |
$ | 5,641 | $ | 5,500 | $ | 5,398 | ||||||
| Mortgage loans |
1,471 | 1,412 | 1,453 | |||||||||
| Policy loans |
1,121 | 1,089 | 1,056 | |||||||||
| Common and preferred stocks |
128 | 178 | 226 | |||||||||
| Real estate |
196 | 176 | 195 | |||||||||
| Derivative instruments |
32 | 30 | 29 | |||||||||
| Other investments |
815 | 617 | 653 | |||||||||
| Amortization of IMR |
275 | 262 | 189 | |||||||||
|
|
|
|
|
|
|
|||||||
| Gross investment income |
|
9,679 |
|
9,264 | 9,199 | |||||||
| Less: investment expenses |
575 | 571 | 574 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Net investment income |
$ |
9,104 |
|
$ | 8,693 | $ | 8,625 | |||||
|
|
|
|
|
|
|
|||||||
Accrued investment income more than ninety days past due is a nonadmitted asset. Changes in the nonadmitted amount are reported as a direct adjustment to surplus in the consolidated statements of changes in surplus. Accrued investment income that is ultimately deemed uncollectible is included as a reduction of net investment income in the period that such determination is made.
NM-18
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
Realized Capital Gains and Losses
Realized capital gains and losses for the years ended December 31, 2014, 2013 and 2012 were as follows:
| For the year ended | For the year ended | For the year ended | ||||||||||||||||||||||||||||||||||
| December 31, 2014 | December 31, 2013 | December 31, 2012 | ||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||
| 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) | (in millions) | (in millions) | ||||||||||||||||||||||||||||||||||
| Bonds |
$ | 735 | $ | (326 | ) | $ | 409 | $ | 772 | $ | (463 | ) | $ | 309 | $ | 786 | $ | (397 | ) | $ | 389 | |||||||||||||||
| Common and preferred stocks |
391 | (98 | ) | 293 | 583 | (64 | ) | 519 | 756 | (361 | ) | 395 | ||||||||||||||||||||||||
| Mortgage loans |
9 | (3 | ) | 6 | - | - | - | - | (9 | ) | (9 | ) | ||||||||||||||||||||||||
| Real estate |
23 | (1 | ) | 22 | 35 | - | 35 | 375 | (69 | ) | 306 | |||||||||||||||||||||||||
| Other investments |
220 | (492 | ) | (272 | ) | 178 | (230 | ) | (52 | ) | 237 | (315 | ) | (78 | ) | |||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||
| Subtotal |
$ | 1,378 | $ | (920 | ) | 458 | $ | 1,568 | $ | (757 | ) | 811 | $ | 2,154 | $ | (1,151 | ) | 1,003 | ||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Less: IMR net gains (before taxes) |
192 | 356 | 463 | |||||||||||||||||||||||||||||||||
| Less: Capital gains tax |
123 | 179 | 332 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Net realized capital gains (losses) |
$ | 143 | $ | 276 | $ | 208 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Realized capital gains and losses are generally the result of normal investment trading activity. Realized capital gains from real estate investments for the year ended December 31, 2012 included a $297 million pretax gain from the sale of a single commercial office property in Seattle, Washington. Proceeds from the sale of bonds totaled $24 billion at each of the years ended December 31, 2014, 2013 and 2012.
On a quarterly basis, the Company performs a review of bonds, mortgage loans, common and preferred stocks, real estate and other investments to identify those that have experienced a decline in fair value that is “other than temporary.” Factors considered include the duration and extent to which fair value was less than cost, the financial condition and near-term financial prospects of the issuer and the Company’s ability and intent to hold the investment for a period of time sufficient to allow for an anticipated recovery in value. If the decline in an investment’s fair value is considered to be other than temporary, the statement value of the investment is generally written down to fair value and a realized capital loss is reported.
For fixed income investments, the review focuses on the issuer’s ability to remit all contractual interest and principal payments and the Company’s ability and intent to hold the investment until the earlier of a recovery in value or maturity. The Company’s intent and ability to hold an investment takes into consideration broad portfolio management parameters such as expected net cash flows and liquidity targets, asset/liability duration management and issuer and industry segment credit exposures. Mortgage loans considered to have experienced an other-than-temporary decline in value are written down to net realizable value based on the appraised value of the collateral property.
NM-19
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
For equity securities, greater weight and consideration is given to the duration and extent of the decline in fair value and the likelihood that the fair value of the security will recover in the foreseeable future. A real estate equity investment is evaluated for an other-than-temporary valuation adjustment when the fair value of the property is lower than its depreciated cost.
For real estate and other investments that represent ownership interests in partnerships, JVs and LLCs, the review focuses on the likelihood that the Company will ultimately recover its initial investment, adjusted for its share of subsequent net earnings and/or distributions. The Company’s review of securities partnerships will generally defer to GAAP-basis impairment reviews performed by the general partner absent compelling evidence of a permanent impairment of the Company’s partnership interest.
Realized capital losses related to declines in fair value of investments that were considered to be other than temporary for the years ended December 31, 2014, 2013 and 2012 were as follows:
| For the years ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
|
|
|
|||||||||||
| (in millions) | ||||||||||||
| Bonds, common and preferred stocks: |
||||||||||||
| Structured securities |
$ | (1 | ) | $ | (14 | ) | $ | (36 | ) | |||
| Financial services |
(4 | ) | (3 | ) | (42 | ) | ||||||
| Consumer discretionary |
(51 | ) | (9 | ) | (26 | ) | ||||||
| Industrials |
(1 | ) | (14 | ) | (35 | ) | ||||||
| Energy |
- | - | (30 | ) | ||||||||
| Other |
(3 | ) | (11 | ) | (30 | ) | ||||||
|
|
|
|||||||||||
| Subtotal |
(60 | ) | (51 | ) | (199 | ) | ||||||
| Other investments: |
||||||||||||
| Real estate and RE funds |
(40 | ) | (9 | ) | (59 | ) | ||||||
| Mortgage loans |
- | - | (9 | ) | ||||||||
| Securities partnerships |
- | (6 | ) | - | ||||||||
|
|
|
|||||||||||
| Subtotal |
(40 | ) | (15 | ) | (68 | ) | ||||||
|
|
|
|||||||||||
| Total |
$ | (100 | ) | $ | (66 | ) | $ | (267 | ) | |||
|
|
|
|||||||||||
In addition to the realized capital losses above, $41 million, $45 million and $42 million of other-than-temporary valuation adjustments were recorded by the Company’s unconsolidated non-insurance subsidiaries for the years ended December 31, 2014, 2013 and 2012, respectively. The decline in the Company’s equity in these subsidiaries resulting from these valuation adjustments is reported in changes in net unrealized capital gains and losses in the consolidated statements of changes in surplus.
Other-than-temporary valuation adjustments on structured securities for the years ended December 31, 2014, 2013 and 2012, including the circumstances of the adjustment, were as follows:
| For the years ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
|
|
|
|||||||||||
| (in millions) | ||||||||||||
| Intent to sell |
$ | - | $ | - | $ | - | ||||||
| Present value of cash flows expected to be collected is less than amortized cost basis |
(1 | ) | (14 | ) | (36 | ) | ||||||
|
|
|
|||||||||||
| Total |
$ | (1 | ) | $ | (14 | ) | $ | (36 | ) | |||
|
|
|
|||||||||||
NM-20
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
At December 31, 2014, the Company continued to hold structured securities with aggregate statement values and fair values of $32 million and $52 million, respectively, for which other-than-temporary valuation adjustments totaling $141 million had been recognized since the adoption of Statement of Statutory Accounting Principle No. 43R, Loan-backed and Structured Securities (“SSAP 43R”) during 2009. These valuation adjustments were necessary because the present value of expected cash flows was less than the amortized cost of the security.
Unrealized Capital Gains and Losses
Changes in net unrealized capital gains and losses for the years ended December 31, 2014, 2013 and 2012 were as follows:
| For the years ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
|
|
|
|||||||||||
| (in millions) | ||||||||||||
| Bonds |
$ | (194 | ) | $ | 61 | $ | 165 | |||||
| Common and preferred stocks |
(84 | ) | 52 | 10 | ||||||||
| Other investments |
1,494 | 331 | 279 | |||||||||
|
|
|
|||||||||||
| Subtotal |
1,216 | 444 | 454 | |||||||||
| Change in deferred taxes |
30 | (98 | ) | (75 | ) | |||||||
|
|
|
|||||||||||
| Change in net unrealized capital gains and losses |
$ | 1,246 | $ | 346 | $ | 379 | ||||||
|
|
|
|||||||||||
Unrealized capital gains and losses include changes in the fair value of common stocks and other investments and currency translation adjustments on foreign-denominated bonds. Other changes in the Company’s equity-method share of the undistributed earnings of partnerships, JVs, LLCs and unconsolidated non-insurance subsidiaries are also reported as changes in unrealized capital gains and losses. Unrealized capital gains and losses reported from other investments for the year ended December 31, 2014 included an after tax gain of $1.1 billion from the sale of its investment in Frank Russell Company (“Russell”) as the Company’s common stock investment in Russell was held by a subsidiary at the time of the sale. See Note 11 for more information regarding the sale of Russell. Change in net unrealized capital gains (losses) for the years ended December 31, 2014, 2013 and 2012 included net losses of $(312) million, $(292) million and $(323) million, respectively, related to distributions of accumulated net earnings made to the Company from unconsolidated non-insurance subsidiaries. The Company’s share of the earnings or losses of these subsidiaries is reported as a change in unrealized capital gains and losses when earned under the equity method of accounting. If net earnings are distributed to the Company in the form of dividends, net investment income is recognized in the amount of the distribution and the previously unrealized net capital gains are reversed.
The amortized cost and fair value of bonds and common and preferred stocks for which fair value declined and remained below cost at December 31, 2014 and 2013 were as follows:
| December 31, 2014 | ||||||||||||||||||||||||
| Decline For Less Than 12 Months | Decline For Greater Than 12 Months | |||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Amortized Cost |
Fair Value | Difference | Amortized Cost |
Fair Value | Difference | |||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||
| Bonds |
$ | 17,254 | $ | 16,523 | $ | (731 | ) | $ | 11,387 | $ | 10,984 | $ | (403 | ) | ||||||||||
| Common and preferred stocks |
845 | 748 | (97 | ) | 27 | 19 | (8 | ) | ||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Total |
$ | 18,099 | $ | 17,271 | $ | (828 | ) | $ | 11,414 | $ | 11,003 | $ | (411 | ) | ||||||||||
|
|
|
|||||||||||||||||||||||
NM-21
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
| December 31, 2013 | ||||||||||||||||||||||||
| Decline For Less Than 12 Months | Decline For Greater Than 12 Months | |||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Amortized Cost |
Fair Value | Difference | Amortized Cost |
Fair Value | Difference | |||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||
| Bonds |
$ | 38,433 | $ | 36,949 | $ | (1,484 | ) | $ | 3,305 | $ | 2,946 | $ | (359 | ) | ||||||||||
| Common and preferred stocks |
170 | 152 | (18 | ) | 23 | 19 | (4 | ) | ||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Total |
$ | 38,603 | $ | 37,101 | $ | (1,502 | ) | $ | 3,328 | $ | 2,965 | $ | (363 | ) | ||||||||||
|
|
|
|||||||||||||||||||||||
Based on the results of the impairment review process described above, the Company considers these declines in fair value to be temporary based on current facts and circumstances at December 31, 2014.
At December 31, 2014 and 2013, unrealized capital losses on structured securities in a loss position for greater than 12 months was $149 million and $213 million, respectively, while unrealized capital losses on structured securities in a loss position for less than 12 months was $7 million and $531 million, respectively.
Securities Lending
The Company participates in securities lending programs whereby general account investment securities are loaned to third parties, primarily major brokerage firms. These lending programs are intended to enhance the yield of the Company’s investment portfolio.
At December 31, 2014 and 2013, the aggregate statement value of general account loaned securities was $845 million and $704 million, respectively, while the aggregate fair value of these loaned securities was $932 million and $705 million, respectively. All of the securities on loan at December 31, 2014 and 2013 were bonds and were loaned with open terms. The offsetting liability of $954 million and $725 million, reflecting the obligation to return the collateral, is reported in other liabilities in the consolidated statements of financial position at December 31, 2014 and 2013, respectively. There were no securities on loan within the separate accounts at either December 31, 2014 or 2013.
The Company manages counterparty and other risks associated with its securities lending program by adhering to guidelines that require counterparties to provide the Company with cash or other high-quality collateral of no less than 102% of the market value of the securities on loan plus accrued interest and by setting conservative standards for the Company’s reinvestment of cash collateral received. At December 31, 2014 and 2013, reinvested securities lending collateral held by the Company was $962 million and $733 million, respectively, which is reported at amortized cost.
NM-22
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
The amortized cost, fair value and remaining term to maturity of reinvested securities lending collateral held by the Company at December 31, 2014 and 2013 were as follows:
| December 31, | ||||||||||||||||
| 2014 | 2013 | |||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||
|
|
|
|
|
|||||||||||||
| (in millions) | ||||||||||||||||
| 30 days or less |
$ | 401 | $ | 401 | $ | 213 | $ | 213 | ||||||||
| 31-60 days |
132 | 132 | 67 | 67 | ||||||||||||
| 61-90 days |
77 | 77 | 2 | 2 | ||||||||||||
| 91-120 days |
20 | 20 | 77 | 77 | ||||||||||||
| 121-180 days |
164 | 164 | 49 | 49 | ||||||||||||
| 181-365 days |
90 | 90 | 18 | 18 | ||||||||||||
| 1-2 years |
78 | 78 | 185 | 185 | ||||||||||||
| 2-3 years |
- | - | 52 | 52 | ||||||||||||
| Greater than 3 years |
- | - | 70 | 70 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Total |
$ | 962 | $ | 962 | $ | 733 | $ | 733 | ||||||||
|
|
|
|
|
|||||||||||||
At December 31, 2014, the consolidated statements of financial position included $430 million in bonds and $532 million in cash and short-term investments related to the collateral assets summarized above. At December 31, 2013, the consolidated statements of financial position included $457 million in bonds and $276 million in cash and short-term investments related to these collateral assets.
Restricted Assets
Certain of the Company’s investments are either pledged as collateral or are otherwise held beyond the exclusive control of the Company (“restricted assets”). These restrictions are generally the result of collateral support agreements with counterparties in connection with securities lending and derivative transactions.
At December 31, 2014 and 2013, collateral held by counterparties was primarily in the form of cash, short-term investments and bonds, including U.S. Government securities. See Note 4 for more information regarding the Company’s derivative portfolio.
The statement value of restricted assets at December 31, 2014 and 2013, summarized by type of restriction, was as follows:
| December 31, | ||||||||
| 2014 | 2013 | |||||||
|
|
|
|||||||
| Securities lending |
$ | 845 | $ | 704 | ||||
| Derivative transactions |
68 | 8 | ||||||
| Reverse repurchase agreement |
25 | - | ||||||
| Securities on deposit with states |
7 | 7 | ||||||
|
|
|
|||||||
| Total restricted assets |
$ | 945 | $ | 719 | ||||
|
|
|
|||||||
NM-23
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
| 4. | Derivative Financial Instruments |
The Company enters into derivative transactions, generally to mitigate (or “hedge”) the risk to its assets, liabilities and surplus from fluctuations in interest rates, foreign currency exchange rates, credit conditions and other market risks. Derivatives may be exchange traded, cleared, or contracted in the over-the-counter market. A majority of the Company’s over-the-counter derivatives are bilateral contracts between two counterparties. The Company’s remaining over-the-counter derivatives are cleared and settled through central clearing facilities.
Derivatives that are designated as hedges for accounting purposes and meet the qualifications for statutory hedge accounting are reported on a basis consistent with the asset or liability being hedged (i.e., at amortized cost or fair value). Derivatives that are used to mitigate risk but are not designated as hedges for accounting purposes or otherwise do not meet the qualifications for statutory hedge accounting are reported at fair value.
To qualify for hedge accounting, the hedge relationship must be designated and formally documented at inception. This documentation details the risk management objective and strategy for the hedge, the derivative used in the hedge and the methodology for assessing hedge effectiveness. The hedge must also be “highly effective,” with an assessment of its effectiveness performed both at inception and on an ongoing basis over the life of the hedge.
In addition to hedging, the Company may use derivatives for the purpose of investment replication. A replication is a derivative transaction that, when entered into in conjunction with other cash market investments, replicates the risk and reward characteristics of otherwise permissible investment positions. Derivatives used as part of a replication are reported on a basis consistent with the investment position being replicated (i.e., at amortized cost or fair value).
The Company may also use derivatives for income generation purposes. These instruments are reported on a basis consistent with the accounting treatment that would be used for the covering asset or underlying interest to which the derivative relates (i.e., at amortized cost or fair value). The premium received by the Company at the inception of the contract is deferred until the contract matures or is exercised by the counterparty or amortized over the life of the contract if the term of the derivative is greater than one year.
The fair value of derivative instruments is based on quoted market prices when available. In the absence of quoted market prices, fair value is estimated using industry-standard models utilizing market observable inputs.
Derivative transactions expose the Company to the risk that a counterparty may not be able to fulfill its obligations under the contract. The Company manages this risk by dealing only with counterparties that maintain a minimum credit rating, by performing ongoing review of counterparties’ credit standing and by adhering to established limits for credit exposure to any single counterparty. The Company also utilizes collateral support arrangements that require the daily exchange of collateral assets if counterparty credit exposure exceeds certain limits. The Company does not offset the statement values for derivatives executed with the same counterparty, even if a master netting arrangement is in place. The Company also does not offset the right to claim collateral against the obligation to return such collateral.
The Company held $368 million and $160 million of collateral under its derivative collateral support arrangements at December 31, 2014 and 2013, respectively, including $26 million and $8 million, respectively, of derivative collateral related to the separate accounts. The collateral held in the general account is reported as cash and short-term investments in the consolidated statements of financial position, while the Company’s obligation to return the collateral is reported as other
NM-24
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
liabilities. The collateral asset and related liability for collateral held by the separate accounts is reported in the separate account assets and liabilities, respectively in the consolidated statements of financial position.
The Company’s derivative counterparties held $68 million and $8 million of bond collateral and $6 million and $11 million of cash collateral under these arrangements at December 31, 2014 and 2013, respectively. Bonds posted as collateral are reported as bonds and cash posted as collateral is reported as other investments in the consolidated statements of financial position.
The Company has no embedded credit derivatives that expose it to the possibility of being required to make future payments.
Hedging - Designated as Hedging Instruments
The Company designates and accounts for the following derivative types as cash flow hedges, with the related derivative instrument reported at amortized cost in the consolidated statements of financial position. No component of these derivatives’ economic gain or loss was excluded from the assessment of hedge effectiveness. For the years ended December 31, 2014, 2013 and 2012, there were no gains or losses recorded with respect to derivatives that ceased to qualify for cash flow hedge accounting or for which the Company removed the cash flow hedge accounting designation.
Interest rate floors are used to mitigate the asset/liability management risk of a significant and sustained decrease in interest rates for certain of the Company’s insurance products. Interest rate floors entitle the Company to receive payments from a counterparty if market interest rates decline below a specified level. Amounts received on these contracts are reported as net investment income.
Interest rate swaps are used to mitigate interest rate risk for investments in variable interest rate and fixed interest rate bonds over a period of up to ten years. Interest rate swaps obligate the Company and a counterparty to exchange amounts based on the difference between a variable interest rate index and a specified fixed rate of interest applied to the notional amount of the contract. Amounts received or paid on these contracts are reported as net investment income.
Foreign currency swaps are used to mitigate the foreign exchange risk for investments in bonds and mortgage loans denominated in foreign currencies over a period of up to thirty years. Foreign currency swaps obligate the Company and a counterparty to exchange the foreign currency-denominated interest and principal payments receivable on foreign bonds and mortgage loans for U.S. dollar-denominated payments based on currency exchange rates specified at trade inception. Foreign exchange gains or losses on these contracts are reported as a change in unrealized capital gains or losses until the maturity or termination of the contract, at which time a realized capital gain or loss is recognized.
Hedging - Not Designated as Hedging Instruments
The Company enters into other derivative transactions that mitigate economic risks but are not designated as a hedge for accounting purposes or otherwise do not qualify for statutory hedge accounting. These instruments are reported in the consolidated statements of financial position at fair value. Changes in the fair value of these instruments are reported as a change in unrealized capital gains or losses until the maturity or termination of the contract, at which time a realized capital gain or loss is recognized.
Interest rate floors are used to mitigate the asset/liability management risk of a significant and sustained decrease in interest rates for certain of the Company’s insurance products. Interest rate floors entitle the Company to receive payments from a counterparty if market interest rates decline below a specified level. Amounts received on these contracts are reported as net investment income.
NM-25
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
Interest rate swaps are used to mitigate interest rate risk for investments in variable interest rate and fixed interest rate bonds over a period of up to ten years. Interest rate swaps obligate the Company and a counterparty to exchange amounts based on the difference between a variable interest rate index and a specified fixed rate of interest applied to the notional amount of the contract. Amounts received or paid on these contracts are reported as net investment income.
Swaptions are used to mitigate the asset/liability management risk of a significant and sustained increase in interest rates for certain of the Company’s insurance products. Swaptions provide the Company an option to enter into an interest rate swap with a counterparty on specified terms.
Fixed income futures are used to mitigate interest rate risk for investments in portfolios of fixed income securities. Fixed income futures obligate the Company to sell to or buy from a counterparty a specified bond at a specified price at a future date.
Foreign currency forwards are used to mitigate the foreign exchange risk for investments in bonds denominated in foreign currencies or common stock or other equity investments in companies operating in foreign countries. Foreign currency forwards obligate the Company to pay to or receive from a counterparty a specified amount of a foreign currency at a future date.
Equity total return swaps are used to mitigate market risk for investments in portfolios of common stocks and other equity securities. Equity total return swaps obligate the Company and a counterparty to exchange amounts based on the difference between a variable equity index return and a specified fixed rate of return applied to the notional amount of the contract.
Equity index futures are used to mitigate market risk for investments in portfolios of common stock. Equity index futures obligate the Company to pay to or receive from a counterparty an amount based on a specified equity market index as of a future date applied to the notional amount of the contract.
Purchased credit default swaps are used to mitigate the credit risk for investments in bonds issued by specific bond issuers. Credit default swaps provide the Company an option to put a specific bond to a counterparty at par in the event of a “credit event” encountered by the bond issuer. A credit event is generally defined as a bankruptcy, failure to make required payments or acceleration of issuer obligations under the terms of the bond.
Investment Replications
Interest rate swap replications are used to replicate a bond investment through the use of cash market instruments combined with interest rate swaps. Interest rate swap replications, including the derivative components, are reported at amortized cost. The Company did not have any open contracts during 2014 or 2013.
Equity total return swap replications are used in conjunction with the purchase of cash market instruments to replicate investment in portfolios of common stocks and other equity securities. Equity total return swaps obligate the Company and a counterparty to exchange amounts based on the difference between a variable equity index return and a specified fixed rate of return applied to the notional amount of the contract. Equity total return swaps are reported at fair value, with changes in fair value reported as a change in unrealized capital gains or losses until the maturity or termination of the contract, at which time a realized capital gain or loss is recognized. The average fair value of open contracts was $2 million and $4 million during 2014 and 2013, respectively.
NM-26
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
The effects of the Company’s use of derivative instruments on the consolidated statements of financial position at December 31, 2014 and 2013 were as follows:
| December 31, 2014 | ||||||||||||||||||||
| Notional | Statement Value | Fair Value | ||||||||||||||||||
| Amount | Assets | Liabilities | Assets | Liabilities | ||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Derivatives designated as hedging instruments: |
||||||||||||||||||||
| Interest rate contracts: |
||||||||||||||||||||
| Interest rate floors |
$ | 950 | $ | 7 | $ | - | $ | 78 | $ | - | ||||||||||
| Interest rate swaps |
52 | - | - | 7 | - | |||||||||||||||
| Foreign exchange contracts: |
||||||||||||||||||||
| Foreign currency swaps |
2,231 | 164 | (15 | ) | 144 | (11 | ) | |||||||||||||
| Derivatives not designated as hedging instruments: |
||||||||||||||||||||
| Interest rate contracts: |
||||||||||||||||||||
| Interest rate floors |
200 | 16 | - | 16 | - | |||||||||||||||
| Interest rate swaps |
291 | - | (5 | ) | - | (5 | ) | |||||||||||||
| Swaptions |
2,870 | 69 | - | 69 | - | |||||||||||||||
| Fixed income futures |
2,490 | - | - | - | - | |||||||||||||||
| Foreign exchange contracts: |
||||||||||||||||||||
| Foreign currency forwards |
1,591 | 72 | (4 | ) | 72 | (4 | ) | |||||||||||||
| Equity contracts: |
||||||||||||||||||||
| Equity total return swaps |
455 | 2 | (2 | ) | 2 | (2 | ) | |||||||||||||
| Equity index futures |
165 | - | - | - | - | |||||||||||||||
| Credit contracts: |
||||||||||||||||||||
| Purchased credit default swaps |
103 | - | (1 | ) | - | (1 | ) | |||||||||||||
| Investment replications: |
||||||||||||||||||||
| Interest rate contracts: |
||||||||||||||||||||
| Interest rate swaps |
- | - | - | - | - | |||||||||||||||
| Equity contracts: |
||||||||||||||||||||
| Equity total return swaps |
- | - | - | - | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total derivatives |
$ | 330 | $ | (27 | ) | $ | 388 | $ | (23 | ) | ||||||||||
|
|
|
|||||||||||||||||||
NM-27
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
| December 31, 2013 | ||||||||||||||||||||
| Notional | Statement Value | Fair Value | ||||||||||||||||||
| Amount | Assets | Liabilities | Assets | Liabilities | ||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Derivatives designated as hedging instruments: |
||||||||||||||||||||
| Interest rate contracts: |
||||||||||||||||||||
| Interest rate floors |
$ | 950 | $ | 9 | $ | - | $ | 79 | $ | - | ||||||||||
| Interest rate swaps |
92 | - | - | 10 | (1 | ) | ||||||||||||||
| Foreign exchange contracts: |
||||||||||||||||||||
| Foreign currency swaps |
1,240 | 26 | (76 | ) | 23 | (59 | ) | |||||||||||||
| Derivatives not designated as hedging instruments: |
||||||||||||||||||||
| Interest rate contracts: |
||||||||||||||||||||
| Interest rate floors |
- | - | - | - | - | |||||||||||||||
| Interest rate swaps |
- | - | - | - | - | |||||||||||||||
| Swaptions |
2,660 | 129 | - | 129 | - | |||||||||||||||
| Fixed income futures |
808 | - | - | - | - | |||||||||||||||
| Foreign exchange contracts: |
||||||||||||||||||||
| Foreign currency forwards |
2,061 | 20 | (42 | ) | 20 | (42 | ) | |||||||||||||
| Equity contracts: |
||||||||||||||||||||
| Equity total return swaps |
104 | - | (2 | ) | - | (2 | ) | |||||||||||||
| Equity index futures |
- | - | - | - | - | |||||||||||||||
| Credit contracts: |
||||||||||||||||||||
| Purchased credit default swaps |
113 | - | (1 | ) | - | (1 | ) | |||||||||||||
| Investment replications: |
||||||||||||||||||||
| Interest rate contracts: |
||||||||||||||||||||
| Interest rate swaps |
- | - | - | - | - | |||||||||||||||
| Equity contracts: |
||||||||||||||||||||
| Equity total return swaps |
106 | 2 | - | 2 | - | |||||||||||||||
|
|
|
|||||||||||||||||||
| Total derivatives |
$ | 186 | $ | (121 | ) | $ | 263 | $ | (105 | ) | ||||||||||
|
|
|
|||||||||||||||||||
The notional amounts shown above are used to denominate the derivative contracts and do not represent amounts exchanged between the Company and the derivative counterparties. Derivative instruments are reported as other investments or other liabilities in the consolidated statements of financial position.
NM-28
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
The effects of the Company’s use of derivative instruments on the consolidated statements of operations and changes in surplus for the years ended December 31, 2014, 2013 and 2012 were as follows:
| For the year ended December 31, 2014 | ||||||||||||
| Change in Net Unrealized Capital Gains (Losses) |
Net Realized Capital Gains (Losses) |
Net Investment Income |
||||||||||
| (in millions) | ||||||||||||
| Derivatives designated as hedging instruments: |
||||||||||||
| Interest rate contracts: |
||||||||||||
| Interest rate floors |
$ | - | $ | - | $ | 27 | ||||||
| Interest rate swaps |
- | - | 3 | |||||||||
| Foreign exchange contracts: |
||||||||||||
| Foreign currency swaps |
200 | (13 | ) | 12 | ||||||||
| Derivatives not designated as hedging instruments: |
||||||||||||
| Interest rate contracts: |
||||||||||||
| Interest rate floors |
10 | - | - | |||||||||
| Interest rate swaps |
(5 | ) | - | (1 | ) | |||||||
| Swaptions |
(67 | ) | - | (8 | ) | |||||||
| Fixed income futures |
(56 | ) | (220 | ) | - | |||||||
| Foreign exchange contracts: |
||||||||||||
| Foreign currency forwards |
90 | 13 | - | |||||||||
| Equity contracts: |
||||||||||||
| Equity total return swaps |
(2 | ) | (14 | ) | - | |||||||
| Equity index futures |
(2 | ) | 4 | - | ||||||||
| Credit contracts: |
||||||||||||
| Purchased credit default swaps |
- | - | (1 | ) | ||||||||
| Investment replications: |
||||||||||||
| Interest rate contracts: |
||||||||||||
| Interest rate swaps |
- | - | - | |||||||||
| Equity contracts: |
||||||||||||
| Equity total return swaps |
1 | 13 | - | |||||||||
|
|
|
|||||||||||
| Total derivatives |
$ | 169 | $ | (217 | ) | $ | 32 | |||||
|
|
|
|||||||||||
NM-29
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
| For the year ended December 31, 2013 | ||||||||||||
| Change in Net Unrealized Capital Gains (Losses) |
Net Realized Capital Gains (Losses) |
Net Investment Income |
||||||||||
| (in millions) | ||||||||||||
| Derivatives designated as hedging instruments: |
||||||||||||
| Interest rate contracts: |
||||||||||||
| Interest rate floors |
$ | - | $ | - | $ | 28 | ||||||
| Interest rate swaps |
- | - | 3 | |||||||||
| Foreign exchange contracts: |
||||||||||||
| Foreign currency swaps |
28 | (9 | ) | 8 | ||||||||
| Derivatives not designated as hedging instruments: |
||||||||||||
| Interest rate contracts: |
||||||||||||
| Interest rate floors |
- | - | - | |||||||||
| Interest rate swaps |
- | - | - | |||||||||
| Swaptions |
46 | - | (7 | ) | ||||||||
| Fixed income futures |
(5 | ) | 21 | - | ||||||||
| Foreign exchange contracts: |
||||||||||||
| Foreign currency forwards |
(3 | ) | (1 | ) | - | |||||||
| Equity contracts: |
||||||||||||
| Equity total return swaps |
(1 | ) | (31 | ) | - | |||||||
| Equity index futures |
- | (2 | ) | - | ||||||||
| Credit contracts: |
||||||||||||
| Purchased credit default swaps |
1 | - | (2 | ) | ||||||||
| Investment replications: |
||||||||||||
| Interest rate contracts: |
||||||||||||
| Interest rate swaps |
- | - | - | |||||||||
| Equity contracts: |
||||||||||||
| Equity total return swaps |
(1 | ) | 51 | - | ||||||||
|
|
|
|||||||||||
| Total derivatives |
$ | 65 | $ | 29 | $ | 30 | ||||||
|
|
|
|||||||||||
NM-30
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
| For the year ended December 31, 2012 | ||||||||||||
|
|
|
|||||||||||
| Change in Net Unrealized Capital Gains (Losses) |
Net Realized Capital Gains (Losses) |
Net Investment Income |
||||||||||
|
|
|
|||||||||||
| (in millions) | ||||||||||||
| Derivatives designated as hedging instruments: |
||||||||||||
| Interest rate contracts: |
||||||||||||
| Interest rate floors |
$ | - | $ | - | $ | 30 | ||||||
| Interest rate swaps |
- | - | - | |||||||||
| Foreign exchange contracts: |
||||||||||||
| Foreign currency swaps |
(22 | ) | - | 4 | ||||||||
| Derivatives not designated as hedging instruments: |
||||||||||||
| Interest rate contracts: |
||||||||||||
| Interest rate floors |
- | - | - | |||||||||
| Interest rate swaps |
- | - | - | |||||||||
| Swaptions |
(25 | ) | - | (7 | ) | |||||||
| Fixed income futures |
45 | (131 | ) | - | ||||||||
| Foreign exchange contracts: |
||||||||||||
| Foreign currency forwards |
(50 | ) | 24 | - | ||||||||
| Equity contracts: |
||||||||||||
| Equity total return swaps |
(1 | ) | (11 | ) | - | |||||||
| Equity index futures |
- | (5 | ) | - | ||||||||
| Credit contracts: |
||||||||||||
| Purchased credit default swaps |
(1 | ) | - | (2 | ) | |||||||
| Investment replications: |
||||||||||||
| Interest rate contracts: |
||||||||||||
| Interest rate swaps |
- | 7 | 4 | |||||||||
| Equity contracts: |
||||||||||||
| Equity total return swaps |
2 | 33 | - | |||||||||
|
|
|
|||||||||||
| Total derivatives |
$ | (52 | ) | $ | (83 | ) | $ | 29 | ||||
|
|
|
|||||||||||
NM-31
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
| 5. | Reserves for Policy Benefits |
General account reserves for policy benefits at December 31, 2014 and 2013 were as follows:
| December 31, | ||||||||
| 2014 | 2013 | |||||||
| (in millions) | ||||||||
| Life insurance reserves |
$ | 148,897 | $ | 141,175 | ||||
| Annuity reserves |
6,767 | 6,199 | ||||||
| Disability and long-term care unpaid claims and claim reserves |
4,667 | 4,544 | ||||||
| Disability and long-term care active life reserves |
4,506 | 4,047 | ||||||
| Deposit funds |
2,671 | 2,616 | ||||||
|
|
|
|
|
|||||
| Total reserves for policy benefits |
$ | 167,508 | $ | 158,581 | ||||
|
|
|
|
|
|||||
See Note 9 for more information regarding the Company’s use of reinsurance and the related impact on policy benefit reserves.
Life Insurance Reserves
Life insurance reserves on substantially all policies issued since 1978 are based on the Commissioner’s Reserve Valuation Method (“CRVM”) using the 1958, 1980 or 2001 CSO mortality tables with valuation interest rates ranging from 3.50% to 5.50%. Other life insurance reserves are primarily based on the net level premium method, using various mortality tables at interest rates ranging from 2.00% to 4.50%. As of December 31, 2014, the Company had $1.5 trillion of total life insurance in force, including $12.4 billion of life insurance in force for which gross premiums were less than net premiums according to the standard valuation methods and assumptions prescribed by the OCI. Gross premiums are calculated using mortality tables that reflect both the Company’s actual experience and the potential transfer of risk to reinsurers. Net premiums are determined in the calculation of statutory reserves, which must be based on industry-standard mortality tables.
Tabular cost has been determined from the basic data for the calculation of policy reserves. Tabular cost less actual reserves released has been determined from the basic data for the calculation of reserves and reserves released. Tabular interest has been determined from the basic data for the calculation of policy reserves. Tabular interest on funds not involving life contingencies is calculated as the product of the valuation interest rate times the mean of the amount of funds subject to such rate held at the beginning and end of the year of valuation.
Additional premiums are charged for substandard lives on policies issued after January 1, 1956. Net level premium or CRVM mean reserves for these policies are based on multiples of mortality tables or one-half the net flat or other extra mortality charge. The Company waives deduction of fractional premiums upon death of an insured and returns any portion of the final premium beyond the date of death. Cash values are not promised in excess of the legally computed reserves.
Each year, the Company must perform asset adequacy testing (“AAT”) to demonstrate that reserves make adequate provision for the anticipated cash flows required by contractual obligations and related expenses, in light of assets held for the reserves. Asset adequacy testing is performed
NM-32
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
in accordance with presently accepted actuarial standards and must include assumptions necessary to determine the adequacy of reserves under moderately adverse conditions. This testing resulted in increases in certain life insurance reserves of $0, $0 and $1 million for the years ended December 31, 2014, 2013 and 2012, respectively. These reserve increases were reported as net additions to policy benefit reserves in the consolidated statements of operations.
Annuity Reserves
Deferred annuity reserves on policies issued since 1985 are based primarily on the Commissioner’s Annuity Reserve Valuation Method (“CARVM”) using the Annuity 2000 or 2012 Individual Annuity Reserve mortality tables with valuation interest rates ranging from 3.50% to 6.25%. Other deferred annuity reserves are based on policy value, with additional reserves held to reflect guarantees under these contracts. Immediate annuity reserves on policies issued since 1985 are based on the present value of expected benefit payments using either the 1983 Individual Annuity “a”, Annuity 2000 or 2012 Individual Annuity Reserve mortality tables with valuation interest rates ranging from 3.50% to 7.50%. Changes in future policy benefit reserves on supplementary contracts without life contingencies are deposit-type transactions and excluded from net additions to policy benefit reserves in the consolidated statements of operations.
At December 31, 2014 and 2013, the withdrawal characteristics of the Company’s general account and separate account annuity reserves and deposit funds were as follows:
| December 31, | ||||||||||||||||||||||||
|
General Account |
Separate Accounts | Total | ||||||||||||||||||||||
|
2014 |
2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
|
(in millions) |
||||||||||||||||||||||||
| Subject to discretionary withdrawal |
||||||||||||||||||||||||
| - with market value adjustment |
$ | 497 | $ | 689 | $ | - | $ | - | $ | 497 | $ | 689 | ||||||||||||
| - at book value less surrender charge of 5% or more |
362 | 502 | - | - | 362 | 502 | ||||||||||||||||||
| - at fair value |
- | - | 16,161 | 15,008 | 16,161 | 15,008 | ||||||||||||||||||
| - at book value without adjustment |
4,444 | 4,350 | - | - | 4,444 | 4,350 | ||||||||||||||||||
| Not subject to discretionary withdrawal |
4,135 | 3,274 | 4,549 | 4,174 | 8,684 | 7,448 | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Total annuity reserves and deposit funds |
$ | 9,438 | $ | 8,815 | $ | 20,710 | $ | 19,182 | $ | 30,148 | $ | 27,997 | ||||||||||||
|
|
|
|||||||||||||||||||||||
Asset adequacy testing resulted in increases in annuity reserves of $54 million, $0 and $13 million for the years ended December 31, 2014, 2013 and 2012, respectively. These reserve increases were reported as net additions to policy benefit reserves in the consolidated statements of operations.
Disability and Long-Term Care Reserves
Unpaid claims and claim reserves for disability policies are based on the present value of expected benefit payments, primarily using the 1985 Commissioner’s Individual Disability Table A (“CIDA”) modified for Company experience, with valuation interest rates ranging from 3.00% to 5.50%. Unpaid claims and claim reserves for long-term care policies are based on the present value of expected benefit payments using industry-based morbidity experience with valuation interest rates ranging from 3.50% to 4.50%.
NM-33
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
Reserves for unpaid claims, losses and loss adjustment expenses on disability and long-term care policies were $4.7 billion and $4.5 billion at December 31, 2014 and 2013, respectively. Changes in these reserves for the years ended December 31, 2014 and 2013 were as follows:
| For the years ended December 31, |
||||||||
| 2014 | 2013 | |||||||
| (in millions) | ||||||||
| Balance at January 1 |
$ | 4,544 | $ | 4,422 | ||||
| Incurred related to: |
||||||||
| Current year |
707 | 670 | ||||||
| Prior years |
3 | 20 | ||||||
|
|
|
|||||||
| Total incurred |
710 | 690 | ||||||
|
|
|
|||||||
| Paid related to: |
||||||||
| Current year |
(23 | ) | (22 | ) | ||||
| Prior years |
(564 | ) | (546 | ) | ||||
|
|
|
|||||||
| Total paid |
(587 | ) | (568 | ) | ||||
|
|
|
|||||||
| Balance at December 31 |
$ | 4,667 | $ | 4,544 | ||||
|
|
|
|||||||
Changes in reserves for incurred claims related to prior years are generally the result of differences between assumed claim experience at the time reserves were originally estimated and subsequent actual claim experience.
Active life reserves for disability policies issued prior to 1987 are based on the net level premium method, using the 1964 Commissioner’s Disability Table for morbidity with valuation interest rates ranging from 3.00% to 4.00%. Active life reserves for disability policies issued since 1987 are primarily based on the two-year preliminary term method using the 1985 CIDA for morbidity. Policies issued between 1987 and 2012 are based on a valuation interest rate of 4.00% while those issued after 2012 are based on a valuation interest rate of 3.50%. Active life reserves are mean reserves for disability policies issued through 2000 and mid-terminal plus unearned premium reserves for policies issued after 2000.
Active life reserves for long-term care policies consist of mid-terminal reserves and unearned premiums. Mid-terminal reserves are based on the one-year preliminary term method and industry-based morbidity experience. For policies issued prior to March 2002, reserves are based on a 4.00% valuation interest rate and total terminations based on the 1983 Individual Annuity Mortality table without lapses. For policies issued since March 2002, minimum reserves are based on valuation interest rates ranging from 3.50% to 4.50% and total terminations based on the 1994 Group Annuity Mortality table with lapses. For policies issued from March 2002 through September 2010, a separate calculation is performed using valuation interest rates ranging from 4.87% to 5.60% and assuming no lapses. Reserves from the separate calculation are compared in the aggregate to the minimum reserves as calculated above and the greater of the two is reported.
For long-term care reserve valuations prior to 2012, the Company utilized the 1983 Individual Annuity Mortality table, the 1983 Group Annuity Mortality table, or the 1994 Group Annuity Mortality table for the calculation of minimum reserves for policies. At January 1, 2012, use of the 1983 Group Annuity Mortality table to calculate minimum reserves for policies issued from March 2002 through 2004 was replaced with a calculation using only the 1994 Group Annuity Mortality
NM-34
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
table and assumptions regarding interest rates and claim costs were adjusted to reflect more recent expectations. These changes in reserve valuation bases resulted in a $59 million increase in reserves that was reported as a direct decrease to surplus in the consolidated statements of changes in surplus for the year ended December 31, 2012.
Asset adequacy testing resulted in increases in long-term care reserves of $0, $100 million and $165 million for the years ended December 31, 2014, 2013 and 2012, respectively. These reserve increases were reported as net additions to policy benefit reserves in the consolidated statements of operations.
Deposit Funds
Deposit funds primarily represent reserves for supplementary annuity contracts without life contingencies and amounts left on deposit with the Company by beneficiaries or policyowners. Beneficiaries of the Company’s life insurance policies can choose to receive their death benefit in a single lump sum payment or through a payment plan consisting of a series of scheduled payments. Prior to November 1, 2013, beneficiaries also could choose to receive their death benefit by deposit of the proceeds (if $20,000 or more) into an interest-bearing retained asset account (“Northwestern Access Fund”). As of that date, the Northwestern Access Fund was eliminated as an option for receiving death benefits. If the beneficiary does not affirmatively choose a payment plan, the proceeds are automatically paid to the beneficiary in a single lump sum. If the beneficiary chose a Northwestern Access Fund account prior to November 1, 2013, the beneficiary received negotiable drafts that they can use to access the balance in this account at their discretion.
The total reserve liability for Northwestern Access Fund account balances held by the Company on behalf of beneficiaries was $530 million and $695 million at December 31, 2014 and 2013, respectively. Funds held on behalf of Northwestern Access Fund account holders are segmented in the Company’s general account and are invested primarily in short-term, liquid investments.
Northwestern Access Fund accounts are credited with interest at short-term market rates, with certain accounts subject to guaranteed minimum crediting rates. Northwestern Access Fund accounts were credited with interest at annual rates ranging from 0.01% to 3.50% during both 2014 and 2013. The Company does not charge beneficiaries any fees to maintain a Northwestern Access Fund account. Fees may be assessed for special account services such as stop-payment requests, drafts returned for insufficient funds or wire transfers.
| 6. | Premium and Annuity Considerations Deferred and Uncollected |
Gross deferred and uncollected insurance premiums represent life insurance premiums due to be received from policyowners through the next respective policy anniversary dates. Net deferred and uncollected premiums represent only the portion of gross premiums related to mortality charges and interest and are reported in deferred premium and other assets in the consolidated statements of financial position.
Deferred and uncollected premiums at December 31, 2014 and 2013 were as follows:
| December 31, 2014 | December 31, 2013 | |||||||||||||||||
|
Gross |
Net | Gross | Net | |||||||||||||||
|
(in millions) |
||||||||||||||||||
| Ordinary new business |
$ | 223 | $ | 84 | $ | 224 | $ | 86 | ||||||||||
| Ordinary renewal |
2,366 | 1,931 | 2,278 | 1,861 | ||||||||||||||
|
|
|
|
|
|||||||||||||||
| Total deferred and uncollected premiums |
$ | 2,589 | $ | 2,015 | $ | 2,502 | $ | 1,947 | ||||||||||
|
|
|
|
|
|||||||||||||||
NM-35
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
| 7. | Separate Accounts |
Separate account liabilities by withdrawal characteristic at December 31, 2014 and 2013 were as follows:
| Variable Life | Variable Annuities | Total | ||||||||||||||||||||||||||
|
December 31, |
||||||||||||||||||||||||||||
|
2014 |
2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||
|
(in millions) |
||||||||||||||||||||||||||||
| Subject to discretionary withdrawal |
$ | 6,252 | $ | 6,009 | $ | 16,161 | $ | 15,008 | $ | 22,413 | $ | 21,017 | ||||||||||||||||
| Not subject to discretionary withdrawal |
- | - | 4,549 | 4,174 | 4,549 | 4,174 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Total separate account reserves |
$ | 6,252 | $ | 6,009 | $ | 20,710 | $ | 19,182 | 26,962 | 25,191 | ||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||
| Non-policy liabilities |
94 | 152 | ||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| Total separate account liabilities |
$ | 27,056 | $ | 25,343 | ||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
While separate account liability values are not guaranteed by the Company, variable annuity and variable life insurance products do include guaranteed minimum death benefits (“GMDB”) underwritten by the Company. The maximum potential cost of these guarantees at December 31, 2014 and 2013 was $86 million and $42 million, respectively, which represents the aggregate difference between guaranteed values and otherwise available values for all variable products for which the guaranteed value was greater at the respective reporting dates. These benefits are only available upon the death of the annuitant or insured, and reserves for these benefits are based upon NAIC-prescribed actuarial methods that take into account, among other factors, the likelihood of death based on standard mortality tables. General account reserves for policy benefits included $12 million and $10 million attributable to GMDB at December 31, 2014 and 2013, respectively.
Premiums and other considerations received from variable annuity and variable life insurance policyowners were $2.0 billion, $1.9 billion and $1.8 billion for the years ended December 31, 2014, 2013 and 2012, respectively. These amounts are reported as premiums in the consolidated statements of operations. The subsequent transfer of these premiums to the separate accounts, net of amounts received from the separate accounts to provide for policy benefit payments to variable product policyowners, is reported as transfers to separate accounts in the consolidated statements of operations.
Following are amounts reported as transfers to and from separate accounts in the summary of operations of the Company’s Separate Account Annual Statement, which agree with the amounts reported as net transfers to separate accounts in the consolidated statements of operations for the years ended December 31, 2014, 2013 and 2012.
| For the years ended December 31, | ||||||||||||
|
2014 |
2013 | 2012 | ||||||||||
|
(in millions) |
||||||||||||
| From Separate Account Annual Statement: |
||||||||||||
| Transfers to separate accounts |
$ | 2,176 | $ | 2,120 | $ | 1,982 | ||||||
| Transfers from separate accounts |
(1,675 | ) | (1,578 | ) | (1,490) | |||||||
|
|
|
|||||||||||
| Net transfers to separate accounts |
$ | 501 | $ | 542 | $ | 492 | ||||||
|
|
|
|||||||||||
NM-36
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
| 8. | Employee and Financial Representative Benefit Plans |
The Company provides defined pension benefits for all eligible employees and financial representatives. This includes sponsorship of noncontributory defined benefit pension plans that are “qualified” under the terms of the Employee Retirement Income Security Act (“ERISA”), as well as “nonqualified” plans that provide benefits to certain participants in excess of limits set by ERISA for the qualified plans. The Company’s funding policy for the qualified plans is to make annual contributions that are no less than the minimum amount needed to comply with the requirements of ERISA and no greater than the maximum amount deductible for federal income tax purposes. The Company made no contributions to the qualified retirement plans during either of the years ended December 31, 2014 and 2013 and does not expect to make a contribution to the plans during 2015.
In addition to defined pension benefits, the Company provides certain health care and life insurance benefits (“postretirement benefits”) to retired employees, retired financial representatives and their eligible dependents. The Company pays the entire cost of retiree life insurance coverage, while retirees pay premiums to offset a portion of the cost of the medical plan.
Benefit Plan Accounting Changes
Effective January 1, 2013, the Company adopted Statement of Statutory Accounting Principle No. 92, Accounting for Postretirement Benefits Other Than Pensions, A Replacement of SSAP No. 14 (“SSAP 92”) and Statement of Statutory Accounting Principle No. 102, Accounting for Pensions, A Replacement of SSAP No. 89 (“SSAP 102”). These new standards require that estimates of projected benefit obligation (“PBO”) and accumulated benefit obligation (“ABO”) include future benefit obligations for non-vested participants. The new standards also required that the Company’s surplus, as reported in the consolidated statements of financial position, fully reflect any net liability related to the plans’ PBO, reduced by the fair value of any plan assets, including previously unrecognized net experience losses, prior service costs and initial net assets (“unrecognized items”).
On January 1, 2013, the recognition of benefits for non-vested participants and unrecognized items created additional net defined benefit pension and postretirement plan liabilities of $1.2 billion and $0.5 billion, respectively. However, SSAPs 92 and 102 permitted the Company to recognize these liabilities and the corresponding decrease in surplus over a period of up to ten years, subject to minimum recognition requirements. The Company elected to utilize this deferral option as of January 1, 2013, at which time the related “transition liability” was $618 million.
NM-37
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
The table below summarizes the net surplus impact related to the adoption of these new accounting standards on January 1, 2013, excluding any deferred tax impact.
| Defined Benefit Plans |
Postretirement Benefit Plans |
Total | ||||||||||
| (in millions) | ||||||||||||
| Minimum surplus reduction recognized: |
||||||||||||
| 10% of calculated surplus impact |
$ | 149 | $ | 48 | $ | 197 | ||||||
| Annual amortization of unrecognized items |
797 | - | 797 | |||||||||
| Difference between unfunded ABO and accrued benefit cost |
84 | - | 84 | |||||||||
|
|
|
|
|
|
|
|||||||
| Surplus reduction recognized at adoption |
1,030 | 48 | 1,078 | |||||||||
| Reversal of: |
||||||||||||
| Additional minimum liability |
(73 | ) | - | (73 | ) | |||||||
| Nonadmitted asset relating to funded plans |
(881 | ) | - | (881 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net reduction to surplus at adoption |
$ | 76 | $ | 48 | $ | 124 | ||||||
|
|
|
|
|
|
|
|||||||
Prior to the adoption of SSAPs 92 and 102, an additional minimum liability (“AML”) was required if a plan’s ABO exceeded plan assets or related financial statement liabilities. The AML is no longer required under the new accounting standards. The impact of the elimination of the AML was reported as a direct increase to surplus in the consolidated statements of changes in surplus for the year ended December 31, 2013. Any net pension assets for funded plans are nonadmitted and are thereby excluded from assets and surplus in the consolidated statements of financial position. Pension assets that were nonadmitted prior to the adoption of SSAPs 92 and 102 were included in the initial surplus impact upon adoption. At December 31, 2013, the net reduction to surplus of $124 million was reported as a change in accounting principle in the consolidated statements of changes in surplus.
Benefit Plan Amendments
During 2013, the Company’s Board of Trustees approved certain prospective amendments to defined pension benefits and postretirement benefits that became effective on January 1, 2014. These changes included an amendment of the benefit formula for both the qualified employee defined benefit pension plan and a related nonqualified employee defined benefit pension plan to a cash balance formula. The accrued benefits for each participant as of December 31, 2013 were frozen and remain available to participants upon retirement. In addition, a second nonqualified employee defined benefit pension plan was terminated, with accrued benefits as of January 1, 2014 also available to eligible participants upon retirement. Beginning in 2014, the Company provides eligible participants with cash balance credits based on each participant’s age and years of service. Participants will also receive investment earnings on their cash balances based on market interest rates and subject to a minimum crediting rate.
These amendments also included a change to benefits provided to most participants in the employee postretirement medical plan that will limit the Company’s exposure to a maximum 3% annual medical inflation rate for benefits. Any annual increase in medical costs in excess of 3% will be passed on to the plan’s participants in the form of increased plan premiums beginning January 1, 2019. This amendment to the postretirement medical plan did not impact any plan participant age 65 or older on January 1, 2014. Postretirement medical plan changes also eliminated coverage under the plan for employees hired after December 31, 2013.
NM-38
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
During 2013, the Company announced certain prospective amendments to the defined pension and postretirement benefits to be provided to financial representatives for service beginning on January 1, 2014. These changes included the elimination of cost of living adjustments for financial representatives enrolled in the plan after December 31, 2013. In addition, the postretirement medical plan for financial representatives was amended to limit the Company’s exposure to a maximum 3% annual medical inflation rate for benefits. Any annual increase in medical costs in excess of 3% will be passed on to participants in the form of increased plan premiums beginning January 1, 2019. This amendment to the postretirement medical plan did not impact any plan participant age 65 or older on January 1, 2014. Postretirement medical plan changes for financial representatives also eliminated coverage under the plan for financial representatives that enter into contracts with the Company after December 31, 2013.
In conjunction with the changes made to the Company’s defined benefit and postretirement benefit plans, an amendment to the employee contributory 401(k) plan was also approved that increased the Company’s matching contribution from a maximum of 3% of participant’s pay to a maximum of 4% of participant’s pay. In addition, the definition of pay was expanded to include annual incentive pay in addition to base salary. These changes were also effective January 1, 2014.
Benefit Plan Assets
Aggregate plan assets of the defined benefit pension plans and postretirement benefit plans at December 31, 2014 and 2013, and changes in these assets for the years then ended, were as follows:
| Defined Benefit Plans | Postretirement Benefit Plans | |||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||
| (in millions) | ||||||||||||||||||
| Fair value of plan assets at January 1 |
$ | 3,913 | $ | 3,545 | $ | 74 | $ | 70 | ||||||||||
| Changes in plan assets: |
||||||||||||||||||
| Actual return on plan assets |
433 | 453 | 8 | 9 | ||||||||||||||
| Company contributions |
- | - | - | - | ||||||||||||||
| Actual plan benefits paid |
(95 | ) | (85 | ) | (5 | ) | (5 | ) | ||||||||||
|
|
|
|
|
|||||||||||||||
| Fair value of plan assets at December 31 |
$ | 4,251 | $ | 3,913 | $ | 77 | $ | 74 | ||||||||||
|
|
|
|
|
|||||||||||||||
Plan assets consist of a share of a group annuity separate account (“GASA”) issued by the Company, which primarily invests in a diversified portfolio of public and private common stocks and corporate, government and mortgage-backed debt securities. The overall investment objective of the plans is to maximize long-term total rate of return, consistent with prudent standards for investment and asset/liability risk management and in accordance with ERISA requirements. Plan investments are managed with a long-term perspective and for the sole benefit of the plans’ participants.
Plan asset allocations are rebalanced regularly to maintain holdings within desired asset allocation ranges and to reposition the portfolio based upon perceived market opportunities and risks. Diversification, both by and within asset classes, is a primary risk management consideration. Assets are invested across various asset classes, sectors, industries and geographies. The measurement date for plan assets was December 31 of the respective period with the fair value of plan assets primarily based on quoted market prices.
NM-39
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
The target asset allocations and the actual allocation of the plans’ investments based on fair value at December 31, 2014 and 2013 were as follows:
| Target | Actual | |||||||||||||||||
| Allocation | Allocation | |||||||||||||||||
|
2014 |
2013 | 2014 | 2013 | |||||||||||||||
| Bonds |
49% | 50% | 50% | 49% | ||||||||||||||
| Equity securities |
50% | 49% | 46% | 45% | ||||||||||||||
| Other investments |
1% | 1% | 4% | 6% | ||||||||||||||
|
|
|
|
|
|||||||||||||||
| Total assets |
100% | 100% | 100% | 100% | ||||||||||||||
|
|
|
|
|
|||||||||||||||
At each of December 31, 2014 and 2013, other investments are comprised of cash and short-term investments.
Benefit Plan Obligations
Aggregate PBOs of the defined benefit pension plans and postretirement benefit plans at December 31, 2014 and 2013 and changes in these obligations for the years then ended were as follows:
| Defined Benefit Plans | Postretirement Benefit Plans | |||||||||||||||||
| 2014 |
2013 |
2014 | 2013 | |||||||||||||||
|
(in millions) |
||||||||||||||||||
| Projected benefit obligation at January 1 |
$ | 3,663 | $ | 4,295 | $ | 687 | $ | 537 | ||||||||||
| Non-vested liability |
- | 65 | - | 340 | ||||||||||||||
|
|
|
|
|
|||||||||||||||
| Adjusted projected benefit obligation at January 1 |
3,663 | 4,360 | 687 | 877 | ||||||||||||||
| Changes in benefit obligation: |
||||||||||||||||||
| Service cost of benefits earned |
93 | 166 | 19 | 27 | ||||||||||||||
| Interest cost on projected obligations |
180 | 161 | 31 | 30 | ||||||||||||||
| Projected gross plan benefits paid |
(111 | ) | (105 | ) | (26 | ) | (24 | ) | ||||||||||
| Projected Medicare Part D reimbursement |
- | - | 2 | 2 | ||||||||||||||
| Experience (gains)/losses |
784 | (547 | ) | 112 | (99 | ) | ||||||||||||
| Plan amendments |
- | (372 | ) | - | (126 | ) | ||||||||||||
|
|
|
|
|
|||||||||||||||
| Projected benefit obligation at December 31 |
$ | 4,609 | $ | 3,663 | $ | 825 | $ | 687 | ||||||||||
|
|
|
|
|
|||||||||||||||
The PBO represents the estimated net present value of estimated future benefit obligations. For defined benefit plans, PBO includes assumptions for future compensation increases for active participants. The ABO is similar to the PBO, but is based only on current compensation with no assumption of future compensation increases. The aggregate ABO for the defined benefit plans was $4.3 billion and $3.4 billion at December 31, 2014 and 2013, respectively. Experience (gains)/losses for the years ended December 31, 2014 and 2013 primarily reflect the impact of changes in the PBO discount rate.
NM-40
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
Benefit Plan Assumptions
The assumptions used in estimating the projected benefit obligations at December 31, 2014, 2013 and 2012 and the net periodic benefit cost for the years then ended were as follows:
| Defined Benefit Plans | Postretirement Benefit Plans | |||||||||||||||||||||||||
| 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | |||||||||||||||||||||
| Projected benefit obligation: |
||||||||||||||||||||||||||
| Discount rate |
4.00% | 5.00% | 4.00% | 4.00% | 5.00% | 4.00% | ||||||||||||||||||||
| Annual increase in compensation |
3.75% | 3.75% | 3.75% | 3.75% | 3.75% | 3.75% | ||||||||||||||||||||
| Net periodic benefit cost: |
||||||||||||||||||||||||||
| Discount rate |
5.00% | 4.00% | 4.50% | 5.00% | 4.00% | 4.50% | ||||||||||||||||||||
| Annual increase in compensation |
3.75% | 3.75% | 3.75% | 3.75% | 3.75% | 3.75% | ||||||||||||||||||||
| Long-term rate of return on plan assets |
6.50% | 6.75% | 7.50% | 6.50% | 6.75% | 7.50% | ||||||||||||||||||||
The expected long-term rate of return on plan assets is estimated in consideration of historical financial market performance, third-party capital market expectations and the long-term target asset allocation.
The PBO for postretirement benefits at December 31, 2014 assumed an annual increase in future retiree medical costs of 7.5%, grading down to 5.0% over five years and remaining level thereafter. At December 31, 2013, the comparable assumption was for an annual increase in future retiree medical costs of 6.5% grading down to 5.0% over three years and remaining level thereafter. A greater increase in the assumed health care cost trend of 1.0% in each year would increase the accumulated postretirement benefit obligation at December 31, 2014 by $49 million and net periodic postretirement benefit expense for the year ended December 31, 2014 by $3 million. A decrease in the assumed health care cost trend of 1.0% in each year would reduce the accumulated postretirement benefit obligation as of December 31, 2014 and net periodic postretirement benefit expense for the year ended December 31, 2014 by the same amounts.
During 2010, the Patient Protection and Affordable Care Act (“PPACA”) and the Health Care and Education Reconciliation Act of 2010, which amended certain provisions of the PPACA, were enacted. The new laws created an excise tax beginning in 2018 on health plans that have an aggregate value to the participants greater than a threshold amount. Recent changes to the Company’s postretirement health plans are expected to keep the aggregate value of the plans below the excise tax threshold. The new laws also revoked the non-taxable status of the prescription drug subsidies offered to companies that maintain retiree health plans that are actuarially equivalent to the Medicare Part D benefit.
NM-41
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
Benefit Plan Funded Status
Following is an aggregate reconciliation of the funded status of the plans to the related financial statement liabilities reported by the Company at December 31, 2014 and 2013:
| Defined | Postretirement | |||||||||||||||
| Benefit Plans | Benefit Plans | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
|
|
|
|
|
|||||||||||||
| (in millions) | ||||||||||||||||
| Fair value of plan assets |
$ | 4,251 | $ | 3,913 | $ | 77 | $ | 74 | ||||||||
| Projected benefit obligation |
4,609 | 3,663 | 825 | 687 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Funded status |
(358 | ) | 250 | (748 | ) | (613 | ) | |||||||||
| Unrecognized net experience losses |
- | 27 | 1 | 74 | ||||||||||||
| Unrecognized prior service costs/(credits) |
- | 4 | 76 | 106 | ||||||||||||
| Nonadmitted asset |
(459 | ) | (947 | ) | - | - | ||||||||||
|
|
|
|
|
|||||||||||||
| Financial statement liability |
$ | (817 | ) | $ | (666 | ) | $ | (671 | ) | $ | (433 | ) | ||||
|
|
|
|
|
|||||||||||||
The PBO for defined benefit plans above included $817 million and $698 million related to nonqualified, unfunded plans at December 31, 2014 and 2013, respectively. In the aggregate, the fair value of qualified defined benefit plan assets represented 112% and 132% of the projected benefit obligations of these plans at December 31, 2014 and 2013, respectively.
Net experience gains or losses represent cumulative amounts by which actual plan experience for return on plan assets or growth in PBO have varied from related assumptions. Prior to the adoption of SSAPs 92 and 102, these differences accumulated without recognition in the Company’s financial statements unless they exceeded certain limits.
Prior service costs/(credits) represent the value of benefits granted or rescinded based on services rendered in prior periods. These costs/(credits) are recognized as components of net periodic benefit cost on a straight line basis over the anticipated future service period of the participants.
NM-42
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
SSAPs 92 and 102 require that changes in plan funded status be recognized immediately as a direct adjustment to surplus, subject to limitations such as admissibility of net pension assets. These adjustments are included in changes in nonadmitted assets and other in the consolidated statements of changes in surplus. Apart from the initial adoption impacts of SSAPs 92 and 102, aggregate defined benefit pension and postretirement plan surplus impacts were as follows for the years ended December 31, 2014 and 2013:
| Defined | Postretirement | |||||||||||||||||||||||
| Benefit Plans | Benefit Plans | Total | ||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||
| Changes in plan assets and benefit obligations recognized in surplus |
||||||||||||||||||||||||
| Net experience gains/(losses) |
$ | (639 | ) | $ | 602 | $ | (181 | ) | $ | 17 | $ | (820 | ) | $ | 619 | |||||||||
| Prior service (costs)/credits |
(4 | ) | 384 | (30 | ) | (75 | ) | (34 | ) | 309 | ||||||||||||||
| Initial net asset |
- | 4 | - | - | - | 4 | ||||||||||||||||||
| Amounts amortized from surplus into net periodic benefit cost: |
||||||||||||||||||||||||
| Net experience losses |
$ | 25 | $ | 92 | $ | 1 | $ | 5 | $ | 26 | $ | 97 | ||||||||||||
| Prior service costs/(credits) |
(14 | ) | (11 | ) | 12 | 13 | (2 | ) | 2 | |||||||||||||||
| Initial net asset |
(17 | ) | (71 | ) | - | - | (17 | ) | (71 | ) | ||||||||||||||
Net experience gains/(losses) primarily reflect the impacts of any changes to plan assumptions (e.g., discount rate) that are applied to the calculation of PBO estimates. Total defined benefit pension and postretirement plan net experience gains/(losses) recognized in surplus but not yet amortized into net periodic benefit cost were $(1.4) billion and $(0.2) billion at December 31, 2014, respectively and $(745) million and $4 million at December 31, 2013, respectively.
The recognition of a prior service credit during 2013 primarily reflects the impact of adopting the various plan amendments. Total defined benefit and postretirement plan prior service (costs)/credits recognized in surplus but not yet amortized into net periodic benefit cost were $293 million and $109 million at December 31, 2014, respectively, and $311 million and $(91) million at December 31, 2013, respectively. The total initial net asset recognized in surplus but not yet amortized into net periodic benefit cost was $387 million and $404 million at December 31, 2014 and 2013, respectively.
SSAPs 92 and 102 require minimum annual amortization and, in certain circumstances, additional recognition of the transition liability into surplus. For the years ended December 31, 2014 and 2013, transition liabilities of $134 million and $407 million, respectively, were reported as direct reductions to surplus in the consolidated statements of changes in surplus. The remaining unamortized transition liability was $77 million and $211 million at December 31, 2014 and 2013, respectively, and represents the total of all remaining unrecognized items. This remaining transition liability is expected to be amortized as annual direct reductions to surplus of approximately $48 million and $29 million during 2015 and 2016, respectively. It is expected that the transition liability will be fully amortized by December 31, 2016.
NM-43
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
Benefit Plan Costs
The components of net periodic benefit cost for the years ended December 31, 2014, 2013 and 2012 were as follows:
| Defined Benefit Plans | Postretirement Benefit Plans | |||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | |||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||
| Components of net periodic benefit cost: |
||||||||||||||||||||||||
| Service cost of benefits earned |
$ | 93 | $ | 166 | $ | 131 | $ | 19 | $ | 27 | $ | 38 | ||||||||||||
| Interest cost on projected obligations |
180 | 161 | 166 | 31 | 30 | 21 | ||||||||||||||||||
| Amortization of experience losses |
25 | 92 | 88 | 1 | 5 | 6 | ||||||||||||||||||
| Amortization of prior service costs/(credits) |
(14 | ) | (11 | ) | - | 12 | 13 | - | ||||||||||||||||
| Amortization of initial net asset |
(17 | ) | (71 | ) | (40 | ) | - | - | - | |||||||||||||||
| Curtailment and other |
- | 11 | - | - | - | - | ||||||||||||||||||
| Expected return on plan assets |
(251 | ) | (239 | ) | (230 | ) | (5 | ) | (4 | ) | (5 | ) | ||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Net periodic benefit cost |
$ | 16 | $ | 109 | $ | 115 | $ | 58 | $ | 71 | $ | 60 | ||||||||||||
|
|
|
|
|
|||||||||||||||||||||
The Company expects to increase/(decrease) periodic benefit costs through the amortization of $65 million, $(14) million and $(41) million of defined benefit plan net experience losses, prior service credits and initial assets, respectively, into net periodic benefit cost during 2015. Amortization of postretirement plan net experience losses of $6 million and prior service costs of $12 million are also expected to increase net periodic benefit cost during 2015.
The expected benefit payments by the defined benefit plans and the postretirement benefit plans for the years 2015 through 2024 are as follows:
| Defined Benefit Plans |
Postretirement Benefit Plans |
|||||||
| (in millions) | ||||||||
| 2015 |
$ | 133 | $ | 24 | ||||
| 2016 |
147 | 27 | ||||||
| 2017 |
163 | 30 | ||||||
| 2018 |
180 | 34 | ||||||
| 2019 |
199 | 37 | ||||||
| 2020-2024 |
1,357 | 238 | ||||||
|
|
|
|
|
|||||
| Total |
$ | 2,179 | $ | 390 | ||||
|
|
|
|
|
|||||
The Company sponsors a contributory 401(k) plan for eligible employees, for which the Company provides a matching contribution, and a noncontributory defined contribution plan for financial representatives. In addition, the Company sponsors nonqualified plans that provide related benefits to certain participants in excess of limits set by ERISA for qualified defined contribution plans. For the years ended December 31, 2014, 2013 and 2012, the Company expensed total contributions to these plans of $43 million, $35 million and $33 million, respectively.
NM-44
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
| 9. | Reinsurance |
The Company limits its exposure to life insurance death benefits by ceding insurance coverage to various reinsurers. The Company retains a maximum of $40 million of individual life coverage and a maximum of $60 million of joint life coverage for any single mortality risk. The Company participated in a life insurance catastrophic risk sharing pool for the years ended December 31, 2013 and 2012. The Company discontinued its participation in this risk sharing pool during 2014.
The Company cedes 60% of the morbidity risk on group disability plans. The Company ceased reinsuring new individual disability policies in 1999 and new long-term care policies in 2002 but has maintained a portion of the reinsurance ceded on policies issued prior to those dates.
Amounts in the consolidated financial statements are reported net of the impact of reinsurance. Reserves for policy benefits at each of December 31, 2014 and 2013 were reported net of ceded reserves of $1.7 billion.
The effects of reinsurance on premium revenue and benefit expense for the years ended December 31, 2014, 2013 and 2012 were as follows:
| For the year ended December 31, | ||||||||||||
|
|
|
|||||||||||
| 2014 | 2013 | 2012 | ||||||||||
|
|
|
|||||||||||
| (in millions) | ||||||||||||
| Direct premium revenue |
$ | 17,894 | $ | 17,481 | $ | 16,258 | ||||||
| Premiums ceded |
(893 | ) | (882 | ) | (864 | ) | ||||||
|
|
|
|||||||||||
| Net premium revenue |
$ | 17,001 | $ | 16,599 | $ | 15,394 | ||||||
|
|
|
|||||||||||
| Direct benefit expense |
$ | 18,425 | $ | 18,125 | $ | 16,906 | ||||||
| Benefits ceded |
(618 | ) | (667 | ) | (603 | ) | ||||||
|
|
|
|||||||||||
| Net benefit expense |
$ | 17,807 | $ | 17,458 | $ | 16,303 | ||||||
|
|
|
|||||||||||
In addition, the Company received $161 million, $164 million and $166 million in allowances from reinsurers for reimbursement of commissions and other expenses on ceded business for the years ended December 31, 2014, 2013 and 2012, respectively. These amounts are reported in other income in the consolidated statements 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. The Company mitigates this counterparty risk by dealing only with reinsurers that meet its financial strength standards while adhering to concentration limits for counterparty exposure to any single reinsurer. Most significant reinsurance treaties contain financial protection provisions that take effect if a reinsurer’s credit rating falls below a prescribed level. There were no reinsurance recoverables at December 31, 2014 and 2013 that were considered by the Company to be uncollectible.
Effective October 1, 2014, The Northwestern Mutual Life Insurance Company and Northwestern Long Term Care Insurance Company entered into an affiliated reinsurance agreement. Under this agreement, Northwestern Long Term Care Insurance Company ceded 100% of the net risks associated with its in-force long-term care policies and future issuances of long-term care policies to The Northwestern Mutual Life Insurance Company. All financial statement impacts of this transaction were eliminated upon consolidation of the two entities.
NM-45
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
| 10. | Income Taxes |
The Company files a consolidated federal income tax return including the following subsidiaries:
| Northwestern Mutual Investment Services, LLC |
Northwestern Mutual Capital, LLC | |
| NML Real Estate Holdings, LLC and subsidiaries |
Bradford, Inc. and subsidiaries | |
| NML Securities Holdings, LLC and subsidiaries |
Mason Street Advisors, LLC | |
| Northwestern Mutual MU TLD Registry, LLC |
NM GP Holdings, LLC and subsidiaries | |
| Northwestern Mutual Wealth Management Company |
NM Pebble Valley, LLC | |
| NM Investment Holdings, LLC |
Northwestern Mutual Registry, LLC | |
| Northwestern Mutual Real Estate Investments, LLC |
The Company collects from or refunds to these subsidiaries their share of consolidated federal income taxes determined pursuant to written tax-sharing agreements, which generally require that these subsidiaries determine their share of consolidated tax payments or refunds as if each subsidiary filed a separate federal income tax return on a stand-alone basis.
The components of current income tax expense in the consolidated statements of operations for the years ended December 31, 2014, 2013 and 2012 related to “ordinary” taxable income or loss were as follows:
| For the year ended December 31, | ||||||||||||
|
|
|
|||||||||||
| 2014 | 2013 | 2012 | ||||||||||
|
|
|
|||||||||||
| (in millions) | ||||||||||||
| Tax payable on ordinary income |
$ | 200 | $ | 80 | $ | 162 | ||||||
| Tax credits |
(142 | ) | (131 | ) | (116 | ) | ||||||
| Increase (decrease) in contingent tax liabilities |
(36 | ) | 33 | (9 | ) | |||||||
|
|
|
|||||||||||
| Total current tax expense (benefit) |
$ | 22 | $ | (18 | ) | $ | 37 | |||||
|
|
|
|||||||||||
In addition to current income tax expense related to ordinary taxable income or loss as summarized above, the Company is subject to federal income tax on “capital” gains and losses that generally result from investment transactions. Investment capital gains and losses resulting from changes in market interest rates or credit spreads are deferred to the IMR net of any related tax expense or benefit. Current tax expense of $86 million, $124 million and $171 million was included in net IMR deferrals for the years ended December 31, 2014, 2013 and 2012, respectively. In addition, net realized capital gains and losses as reported in the consolidated statements of operations included current tax expense of $123 million, $179 million and $332 million for the years ended December 31, 2014, 2013 and 2012, respectively.
The Company’s taxable income can vary significantly from pretax income as reported in the consolidated statements of operations due to temporary and permanent differences in revenue recognition and expense deduction between the tax and statutory financial statement bases of reporting. The Company’s financial statement effective tax rates were (4)%, 8% and 14% for the years ended December 31, 2014, 2013 and 2012, respectively.
The effective tax rate above is not the rate of tax applied to the Company’s federal taxable income or loss by the Internal Revenue Service (“IRS”). It is a financial statement relationship that represents the ratio between the sum of total tax expense or benefit incurred, including current tax expense or benefit on realized capital gains and losses and changes in deferred taxes not related to unrealized capital gains and losses on investments, to the sum of gain from operations before taxes and pretax net realized capital gains or losses. These financial statement effective rates were
NM-46
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
different than the applicable federal income tax rate of 35% due primarily to net investment income eligible for the dividends received deduction, amortization of the IMR, benefit plan obligations and tax loss carryforward credits and refunds to subsidiaries for prior year losses under intercompany tax sharing agreements.
The Company made payments to the IRS for federal income taxes of $480 million, $526 million and $840 million during the years ended December 31, 2014, 2013 and 2012, respectively. Total federal income taxes paid, including refunds or overpayments applied, for tax years 2014, 2013 and 2012 of $602 million, $585 million and $842 million, respectively, are available as of December 31, 2014 for refund claims in the event of future tax losses.
Federal income tax returns for 2009 and prior years are closed as to further assessment of tax. Income taxes payable in the consolidated statements of financial position represents an estimate of taxes payable, including additional taxes that may become due with respect to tax years that remained open to examination by the IRS (“contingent tax liabilities”) at the respective reporting date.
Changes in contingent tax liabilities for the years ended December 31, 2014 and 2013 were as follows:
| 2014 | 2013 | |||||||
| (in millions) | ||||||||
| Balance at beginning of year |
$ | 467 | $ | 434 | ||||
| Additions for tax positions of prior years |
- | 33 | ||||||
| Reductions for tax positions of prior years |
(36 | ) | - | |||||
|
|
|
|
|
|||||
| Balance at end of year |
$ | 431 | $ | 467 | ||||
|
|
|
|
|
|||||
Included in contingent tax liabilities at December 31, 2014 and 2013 were $395 million and $408 million, respectively, of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of the deductions. Because of the impact of deferred taxes for amounts other than interest, the timing of the ultimate deduction would not affect the effective tax rate in future periods. Also included in the December 31, 2014 balance are $14 million of tax positions for which the ultimate deductibility is not certain. The ultimate resolution of these tax positions could have an impact on the effective tax rate in future periods.
A “more likely than not” standard is applied for financial statement recognition of contingent tax liabilities, whereby a liability is only recorded if the Company believes that there is a greater than 50% likelihood that the related tax position will not be sustained upon examination. In cases where liability recognition is appropriate, a best estimate of the ultimate tax liability is made. If this estimate represents 50% or less of the total amount of the tax contingency, the best estimate is established as a liability. If this best estimate represents more than 50% of the total tax contingency, the total amount is established as a liability. Changes in contingent tax liabilities are included in tax expense in the year that such determination is made by the Company.
The Company reports interest accrued or released related to contingent tax liabilities in current income tax expense. For the years ended December 31, 2014, 2013 and 2012, the Company recognized $(15) million, $8 million and $(16) million, respectively, of interest-related tax expense (benefit). Contingent tax liabilities included $22 million and $37 million for the payment of interest at December 31, 2014 and 2013, respectively.
NM-47
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
Deferred tax assets and liabilities represent the future tax recoveries or obligations associated with the accumulation of temporary differences between the tax and financial statement bases of the Company’s assets and liabilities. The statutory basis of accounting limits the amount of gross deferred tax assets that can be admitted to surplus to those for which ultimate recoverability can be demonstrated. This limit is based on a calculation that considers available tax loss carryback and carryforward capacity, the expected timing of reversal for accumulated temporary differences, gross deferred tax liabilities and the level of Company surplus.
The components of net deferred tax assets reported in the consolidated statements of financial position at December 31, 2014 and 2013 were as follows:
| December 31, | ||||||||||||
|
|
|
|||||||||||
| 2014 | 2013 | Change | ||||||||||
|
|
|
|||||||||||
| (in millions) | - | |||||||||||
| Deferred tax assets: |
||||||||||||
| Policy acquisition costs |
$ | 1,192 | $ | 1,146 | $ | 46 | ||||||
| Investments |
390 | 426 | (36 | ) | ||||||||
| Policy benefit liabilities |
2,194 | 2,099 | 95 | |||||||||
| Benefit plan obligations |
827 | 679 | 148 | |||||||||
| Other |
110 | 100 | 10 | |||||||||
|
|
|
|||||||||||
| Gross deferred tax assets |
4,713 | 4,450 | 263 | |||||||||
| Nonadmitted deferred tax assets |
(9 | ) | (117 | ) | 108 | |||||||
|
|
|
|||||||||||
| Gross admitted deferred tax assets |
4,704 | 4,333 | 371 | |||||||||
|
|
|
|||||||||||
| Deferred tax liabilities: |
||||||||||||
| Investments |
892 | 926 | (34 | ) | ||||||||
| Other |
757 | 760 | (3 | ) | ||||||||
|
|
|
|||||||||||
| Gross deferred tax liabilities |
1,649 | 1,686 | (37 | ) | ||||||||
|
|
|
|||||||||||
| Net deferred tax assets |
$ | 3,055 | $ | 2,647 | $ | 408 | ||||||
|
|
|
|||||||||||
Changes in deferred tax assets and liabilities related to unrealized capital gains and losses on investments are included in changes in unrealized capital gains and losses in the consolidated statements of changes in surplus. Other net changes in deferred tax assets and liabilities are reported as direct adjustments to surplus in the consolidated statements of changes in surplus.
Gross deferred tax assets at December 31, 2014 and 2013 included $4.3 billion and $4.0 billion, respectively, related to temporary differences that were ordinary in nature and $0.4 billion and $0.4 billion, respectively, related to temporary differences that were capital in nature. Gross deferred tax liabilities at December 31, 2014 and 2013 included $0.8 billion and $0.8 billion, respectively, related to temporary differences that were ordinary in nature and $0.9 billion and $0.9 billion, respectively, related to temporary differences that were capital in nature. All gross deferred tax liabilities have been recognized at December 31, 2014 and 2013. The Company did not assume any benefit from future tax planning strategies in its valuation of gross deferred tax assets at either December 31, 2014 or 2013.
The Company exceeded the minimum risk-based capital (“RBC”) level of 300% based on authorized control level RBC computed without net deferred tax assets at December 31, 2014 and 2013 and expects to exceed this minimum during 2015.
NM-48
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
Significant components of the calculation of net deferred tax assets at December 31, 2014 and 2013 were as follows (in millions):
| December 31, 2014 | December 31, 2013 | Change | ||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||
| Ordinary | Capital | Total | Ordinary | Capital | Total | Ordinary | Capital | Total | ||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||
| Gross deferred tax assets |
$ | 4,323 | $ | 390 | $ | 4,713 | $ | 4,024 | $ | 426 | $ | 4,450 | $ | 299 | $ | (36 | ) | $ | 263 | |||||||||||||||||
| Statutory valuation allowance adjustment |
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||
| Adjusted gross deferred tax assets |
4,323 | 390 | 4,713 | 4,024 | 426 | 4,450 | 299 | (36 | ) | 263 | ||||||||||||||||||||||||||
| Deferred tax assets nonadmitted |
9 | - | 9 | 117 | - | 117 | (108 | ) | - | (108 | ) | |||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||
| Subtotal net admitted deferred tax asset |
4,314 | 390 | 4,704 | 3,907 | 426 | 4,333 | 407 | (36 | ) | 371 | ||||||||||||||||||||||||||
| Deferred tax liabilities |
757 | 892 | 1,649 | 760 | 926 | 1,686 | (3 | ) | (34 | ) | (37 | ) | ||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||
| Net admitted deferred tax asset/(liability) |
$ | 3,557 | $ | (502 | ) | $ | 3,055 | $ | 3,147 | $ | (500 | ) | $ | 2,647 | $ | 410 | $ | (2 | ) | $ | 408 | |||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||
| December 31, 2014 | December 31, 2013 | Change | ||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||
| Ordinary | Capital | Total | Ordinary | Capital | Total | Ordinary | Capital | Total | ||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||
| Federal income taxes paid in prior years recoverable through loss carrybacks |
$ | 1,868 | $ | 266 | $ | 2,134 | $ | 2,029 | $ | 298 | $ | 2,327 | $ | (161 | ) | $ | (32 | ) | $ | (193 | ) | |||||||||||||||
| Adjusted gross deferred tax assets expected to be realized (excluding the amount of deferred tax assets above) after application of the threshold limitation (lesser of a. or b. below) |
1,288 | - | 1,288 | 902 | - | 902 | 386 | - | 386 | |||||||||||||||||||||||||||
| Adjusted gross deferred tax assets (excluding the amount of deferred tax assets offset by gross deferred tax liabilities) |
1,158 | 124 | 1,282 | 976 | 128 | 1,104 | 182 | (4 | ) | 178 | ||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||
| Total deferred tax assets admitted as the result of application of SSAP No. 101 |
$ | 4,314 | $ | 390 | $ | 4,704 | $ | 3,907 | $ | 426 | $ | 4,333 | $ | 407 | $ | (36 | ) | $ | 371 | |||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||
| a. Adjusted gross deferred tax assets expected to be realized following the balance sheet date |
$ | 1,288 | $ | 902 | $ | 386 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| b. Adjusted gross deferred tax assets allowed per limitation threshold |
$ | 2,408 | $ | 2,211 | $ | 197 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Ratio percentage used to detemine recovery period and threshold limitation amount |
1144 | % | 1106 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| Amount of adjusted capital and surplus used to determine recovery period and threshold limitation |
$ | 16,055 | $ | 14,738 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| 11. | Frank Russell Company |
On December 2, 2014, the Company sold its entire investment in Russell common and preferred stock to a third party. Prior to this sale, the Company was the majority shareholder of Russell, a worldwide provider of investment products and services. The Company’s common stock investment in Russell was held in a wholly-owned non-insurance subsidiary and represented 92.6% of Russell’s outstanding common stock at December 31, 2013. Upon the sale, the Company’s wholly-owned subsidiary reported an after-tax gain of $1.1 billion from the sale of its common stock investment in Russell, which was reported by the Company as an unrealized capital gain in the consolidated statements of changes in surplus for the year ended December 31, 2014.
NM-49
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
The statement value of the Company’s various investments in securities issued by Russell at December 31, 2013 were as follows. The common stock investment in Russell is reported as other investments in the consolidated statements of financial position at that date.
| December 31, 2013 |
||||
| (in millions) | ||||
| Common stock |
$ | 418 | ||
| Senior preferred stock |
350 | |||
| Junior preferred stock |
42 | |||
| Warrants |
2 | |||
|
|
|
|||
| Total |
$ | 812 | ||
|
|
|
|||
At December 31, 2013, the common stock investment in Russell was valued using a practice permitted by the OCI, based on the Company’s share of Russell’s audited GAAP-basis equity exclusive of any adjustment for unamortized acquisition goodwill in Russell’s GAAP-basis financial statements. Under Statement of Statutory Accounting Principle No. 97, Investments in Subsidiary, Controlled and Affiliated Entities, A Replacement of SSAP No. 88 (“SSAP 97”), the statutory equity method valuation of the Russell investment would be required to be reduced by its share of Russell’s GAAP goodwill. If the Company had not received permission for this alternative accounting treatment, surplus as reported in the consolidated statements of financial position would have been lower by $795 million at December 31, 2013.
Russell distributed $0 and $69 million in common stock dividends to the Company’s wholly-owned subsidiary during the years ended December 31, 2014, and 2013, respectively. The $69 million dividend remained undistributed to the Company at December 31, 2013. During 2014, this dividend was distributed by the wholly-owned subsidiary and reported as net investment income by the Company for the year ended December 31, 2014. During 2012, the common stock investment in Russell was held directly by the Company, and Russell distributed $23 million to the Company that was reported as net investment income for the year ended December 31, 2012.
Prior to the sale of Russell, the Company held $350 million of perpetual senior preferred stock issued by Russell, paying dividends at a rate of 8.00%. Upon the sale of Russell, the senior preferred stock was retired for consideration equal to the Company’s statutory statement value. The Company earned $27 million, $28 million, and $28 million in dividends from Russell senior preferred stock for the years ended December 31, 2014, 2013 and 2012, respectively.
Prior to the sale of Russell, the Company also held $44 million of junior preferred stock, including detachable warrants, issued by Russell and paying dividends at a rate of 10.00%. Upon the sale of Russell, the junior preferred stock was retired for consideration equal to the Company’s statutory statement value. The Company exercised the warrants as part of the sale transaction and recorded an after-tax realized capital gain of $27 million for the year ended December 31, 2014. The Company earned $4 million in dividends on Russell junior preferred stock for each of the years ended December 31, 2014, 2013 and 2012.
| 12. | Contingencies and Guarantees |
In the normal course of business, the Company makes guarantees to third parties on behalf of affiliates (e.g., debt guarantees) and financial representatives (e.g., the guarantee of office lease payments), or directly to financial representatives (e.g., future minimum compensation payments). If the financial representatives are not able to meet their obligations or these minimum compensation thresholds are not otherwise met, the Company would be required to make payments
NM-50
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
to fulfill its guarantees. For certain of these guarantees, the Company has the right to pursue recovery of payments made under the agreements. The terms of these guarantees range from less than one year to twenty-five years at December 31, 2014.
Following is a summary of the guarantees provided by the Company that were outstanding at December 31, 2014 and 2013, including both the maximum potential exposure under the guarantees and the financial statement liability reported based on estimated fair value of the guarantees.
| December 31, 2014 | December 31, 2013 | |||||||||||||||
| Nature of guarantee | Maximum potential amount of future payments |
Financial statement liability |
Maximum potential amount of future payments |
Financial statement liability |
||||||||||||
|
|
|
|
||||||||||||||
| (in millions) | (in millions) | |||||||||||||||
| Guarantees of future minimum compensation - financial representatives | $ | 128 | $ | 1 | $ | 123 | $ | 2 | ||||||||
| Guarantees of real estate obligations |
388 | 4 | 403 | 4 | ||||||||||||
| Guarantees of obligations of affiliates |
- | - | 102 | - | ||||||||||||
| Guarantees issued on behalf of wholly-owned subsidiaries |
- | - | 2 | - | ||||||||||||
|
|
|
|
|
|||||||||||||
| Total contingencies and guarantees |
$ | 516 | $ | 5 | $ | 630 | $ | 6 | ||||||||
|
|
|
|
|
|||||||||||||
No payments have been required under these guarantees to date, and the Company believes the probability that it will be required to perform under these guarantees in the future is remote. Performance under these guarantees would require the Company to recognize additional operating expense or increase the amount of its equity investment in the affiliate or subsidiary on behalf of which the guarantee was made.
In the normal course of its investment activities, the Company makes commitments to fund private equity investments, real estate, mortgage loans and other investments. These forward commitments aggregated to $5.5 billion at December 31, 2014 and were extended at market rates and terms.
The Company is engaged in various legal actions in the normal course of its investment and insurance operations. The status of these legal actions is actively monitored by the Company. If the Company believes, based on available information, that an adverse outcome upon resolution of a given legal action was probable and the amount of that adverse outcome was reasonably estimable, a loss is recognized and a related liability reported. Legal actions are subject to inherent uncertainties, and future events could change the Company’s assessment of the probability or estimated amount of potential losses from pending or threatened legal actions. Based on available information, it is the opinion of the Company that the ultimate resolution of pending or threatened legal actions, both individually and in the aggregate, will not result in losses that would have a material effect on the Company’s financial position at December 31, 2014.
NM-51
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
| 13. | Surplus Notes |
On March 26, 2010, the Company issued surplus notes (“notes”) with a principal balance of $1.75 billion, bearing interest at 6.063% and having a maturity date of March 30, 2040. The notes were issued at par and distributed pursuant to Rule 144A under the Securities Act of 1933, as amended. Interest on the notes is payable semi-annually on March 30 and September 30, subject to approval by the OCI. The statutory basis of accounting requires that the Company only recognize interest expense on the notes when and to the extent that the OCI has approved the semi-annual interest payment. The Company recognized $106 million in interest expense on the notes for each of the years ended December 31, 2014, 2013 and 2012, which is reported as a reduction of net investment income in the consolidated statements of operations. A total of $479 million in interest has been paid on the notes from their issuance through December 31, 2014.
The notes are unsecured and subordinated to all present and future indebtedness, policy claims and other creditor claims of the Company. The notes do not repay principal prior to maturity and principal payment at maturity is subject to the prior approval of the OCI. The notes are not redeemable at the option of any note holder. The notes are redeemable, in whole or in part, at the option of the Company at any time, subject to the prior approval of the OCI, at a “make whole” redemption price equal to the greater of the principal amount of the notes to be redeemed or the sum of the present value of the remaining scheduled payments of principal and interest on the notes to be redeemed, excluding accrued interest as of the date on which the notes are to be redeemed, discounted on a semi-annual basis at a defined U.S. Treasury rate plus 0.25%.
No affiliates of the Company hold any portion of the notes. The notes are generally held of record at the Depositary Trust Company by bank custodians on behalf of investors. The largest holder of the notes was Nippon Life Insurance Company of Japan, which held $250 million in face amount of notes at each of December 31, 2014 and 2013.
| 14. | Fair Value of Financial Instruments |
Certain of the Company’s assets and liabilities are considered “financial instruments” as defined by Statement of Statutory Principles No. 100, Fair Value Measurements (“SSAP 100”). The Company’s estimation of fair value for financial instruments uses a hierarchy that, where possible, makes use of quoted market prices from active and transparent markets for assets that are identical to those being valued, typically obtained from independent pricing services (“level 1”). In the absence of quoted market prices for identical assets, fair value is estimated by these pricing services using relevant and observable market-based inputs for substantially similar securities (“level 2”). Financial instruments for which no quoted market prices or observable inputs are available are generally valued using internally-developed pricing models or indicative (i.e., non-binding) quotes from independent securities brokers (“level 3”).
The Company actively monitors fair value estimates received from independent pricing services at each financial reporting date, including analysis of valuation changes for individual securities compared to overall market trends and validation on an exception basis with internally-developed pricing models. The Company also performs periodic reviews of the information sources, inputs and methods used by its independent pricing services, including an evaluation of their control processes. Where necessary, the Company will challenge third-party valuations or methods and require more observable inputs or different methodologies.
NM-52
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
For financial instruments included in the scope of SSAP 100, the statement value and fair value at December 31, 2014 and 2013 were as follows:
| December 31, 2014 | ||||||||||||||||||||
| Quoted prices in | Significant | Significant | ||||||||||||||||||
| active markets | observable | unobservable | ||||||||||||||||||
| Statement | Fair | for identical assets | inputs | inputs | ||||||||||||||||
| Value | Value | (level 1) | (level 2) | (level 3) | ||||||||||||||||
|
|
|
|
|
|||||||||||||||||
| (in millions) | ||||||||||||||||||||
| General account investment assets: |
||||||||||||||||||||
| Bonds |
$ | 128,126 | $ | 135,247 | $ | 3,234 | $ | 128,505 | $ | 3,508 | ||||||||||
| Mortgage loans |
29,341 | 31,247 | - | - | 31,247 | |||||||||||||||
| Policy loans |
16,756 | 16,756 | - | - | 16,756 | |||||||||||||||
| Common and preferred stocks |
3,583 | 3,613 | 2,970 | 77 | 566 | |||||||||||||||
| Derivative assets |
330 | 388 | - | 388 | - | |||||||||||||||
| Surplus note investments |
160 | 211 | - | 179 | 32 | |||||||||||||||
| Collateral loans |
40 | 40 | - | - | 40 | |||||||||||||||
| Cash and short-term investments |
2,588 | 2,588 | 708 | 1,880 | - | |||||||||||||||
| Separate account assets |
27,056 | 27,056 | 24,462 | 2,221 | 373 | |||||||||||||||
| General account liabilities: |
||||||||||||||||||||
| Investment-type insurance reserves |
$ | 5,220 | $ | 5,058 | $ | - | $ | - | $ | 5,058 | ||||||||||
| Liabilities for securities lending |
954 | 954 | - | 954 | - | |||||||||||||||
| Derivative liabilities |
27 | 23 | - | 23 | - | |||||||||||||||
| Separate account liabilities |
27,056 | 27,056 | 24,462 | 2,221 | 373 | |||||||||||||||
| December 31, 2013 | ||||||||||||||||||||
| Quoted prices in | Significant | Significant | ||||||||||||||||||
| active markets | observable | unobservable | ||||||||||||||||||
| Statement | Fair | for identical assets | inputs | inputs | ||||||||||||||||
| Value | Value | (level 1) | (level 2) | (level 3) | ||||||||||||||||
|
|
|
|
|
|||||||||||||||||
| (in millions) | ||||||||||||||||||||
| General account investment assets: |
||||||||||||||||||||
| Bonds |
$ | 122,331 | $ | 127,028 | $ | 4,342 | $ | 119,059 | $ | 3,627 | ||||||||||
| Mortgage loans |
26,845 | 28,094 | - | - | 28,094 | |||||||||||||||
| Policy loans |
16,306 | 16,306 | - | - | 16,306 | |||||||||||||||
| Common and preferred stocks |
2,831 | 2,856 | 1,691 | 99 | 1,066 | |||||||||||||||
| Derivative assets |
186 | 263 | - | 263 | - | |||||||||||||||
| Surplus note investments |
127 | 158 | - | 158 | - | |||||||||||||||
| Collateral loans |
41 | 41 | - | - | 41 | |||||||||||||||
| Cash and short-term investments |
2,262 | 2,262 | 576 | 1,686 | - | |||||||||||||||
| Separate account assets |
25,343 | 25,343 | 23,115 | 1,843 | 385 | |||||||||||||||
| General account liabilities: |
||||||||||||||||||||
| Investment-type insurance reserves |
$ | 5,453 | $ | 5,106 | $ | - | $ | - | $ | 5,106 | ||||||||||
| Liabilities for securities lending |
725 | 725 | - | 725 | - | |||||||||||||||
| Derivative liabilities |
121 | 105 | - | 105 | - | |||||||||||||||
| Separate account liabilities |
25,343 | 25,343 | 23,115 | 1,843 | 385 | |||||||||||||||
NM-53
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
Bonds
Bonds classified as level 1 financial instruments are generally limited to U.S. Treasury securities. Most bonds, including U.S. and foreign public and private corporate bonds, municipal bonds and structured securities, are classified as level 2 financial instruments and are valued based on prices obtained from independent pricing services or internally-developed pricing models using observable inputs. Typical market-observable inputs include benchmark yields, reported trades, issuer spreads, bids, offers, benchmark securities, estimated cash flows and prepayment speeds. Level 3 bonds are typically privately-placed and relatively illiquid, with fair value based on non-binding broker quotes or internally-developed pricing models utilizing unobservable inputs. See Note 3 for more information regarding the Company’s investments in bonds.
Mortgage Loans
Mortgage loans consist solely of commercial mortgage loans underwritten and originated by the Company. Fair value of these loans is estimated using a discounted cash flow approach based on market interest rates for commercial mortgage debt with comparable credit risk and maturity. See Note 3 for more information regarding the Company’s investments in mortgage loans.
Policy Loans
See Note 2 for information regarding policy loans, for which the Company considers the unpaid principal balance to approximate fair value.
Common and Preferred Stock
Common and preferred stocks classified as level 1 financial instruments are limited to those actively traded on a U.S. or foreign stock exchange. Level 2 securities are stocks for which market quotes are available but are not considered to be actively traded. Common and preferred stocks classified as level 3 are generally privately-placed with fair value based on internally-developed pricing models utilizing unobservable inputs. See Note 3 for more information regarding the Company’s investments in common and preferred stocks.
Derivative Instruments
The Company’s derivative investments are generally traded in over-the-counter markets with fair value estimated using industry-standard models with market-observable inputs such as swap yield curves, London Interbank Offered Rate (“LIBOR”) basis curves, foreign currency spot rates, foreign currency basis curves, option volatilities and credit spreads.
Cash and Short-term Investments
Cash and short-term investments include cash deposit balances, money market funds, short-term commercial paper and other highly-liquid debt instruments, for which the Company considers amortized cost to approximate fair value.
Separate Account Assets and Liabilities
See Note 2 and Note 7 for information regarding the Company’s separate accounts, for which fair value is based primarily on quoted market prices for the related common stocks, preferred stocks, bonds, derivative instruments and other investments. Separate account assets classified as level 3 financial instruments are primarily securities partnership investments that are valued based on the Company’s underlying equity in the partnerships, which the Company considers to approximate fair value.
NM-54
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
General Account Insurance Reserves
The Company’s general account insurance liabilities defined as financial instruments under SSAP 100 are limited to “investment-type” products such as fixed-rate annuity policies, supplementary contracts without life contingencies and amounts left on deposit. The fair value of investment-type insurance reserves is estimated based on future cash flows discounted at market interest rates for similar instruments with comparable maturities.
Securities Lending Liabilities
See Note 3 for information regarding securities lending activity, for which the Company considers the liability to return collateral to approximate the fair value of collateral originally received.
Assets and Liabilities Reported at Fair Value
The following tables summarize assets and liabilities measured and reported at fair value in the consolidated statements of financial position at December 31, 2014 and 2013.
| December 31, 2014 | ||||||||||||||||
| Quoted prices in (level 1) |
Significant observable inputs (level 2) |
Significant (level 3) |
Total | |||||||||||||
| (in millions) | ||||||||||||||||
| General account: |
||||||||||||||||
| Common and preferred stocks |
$ | 2,971 | $ | - | $ | 443 | $ | 3,414 | ||||||||
| Bonds |
- | 14 | - | 14 | ||||||||||||
| Derivative assets at fair value |
- | 158 | - | 158 | ||||||||||||
| Derivative liabilities at fair value |
- | (12 | ) | - | (12 | ) | ||||||||||
|
|
|
|||||||||||||||
| Total general account |
$ | 2,971 | $ | 160 | $ | 443 | $ | 3,574 | ||||||||
|
|
|
|||||||||||||||
| Separate accounts: |
||||||||||||||||
| Mutual fund investments |
22,663 | - | - | 22,663 | ||||||||||||
| Other benefit plan assets/liabilities |
43 | 19 | 3 | 65 | ||||||||||||
| Pension and postretirement assets: |
||||||||||||||||
| Bonds |
244 | 1,908 | 74 | 2,226 | ||||||||||||
| Common and preferred stock |
1,503 | 5 | 20 | 1,528 | ||||||||||||
| Cash and short-term securities |
10 | 257 | - | 267 | ||||||||||||
| Other assets/liabilities |
- | 31 | 276 | 307 | ||||||||||||
|
|
|
|||||||||||||||
| Subtotal pension and postretirement assets |
1,757 | 2,201 | 370 | 4,328 | ||||||||||||
|
|
|
|||||||||||||||
| Total separate accounts |
$ | 24,463 | $ | 2,220 | $ | 373 | $ | 27,056 | ||||||||
|
|
|
|||||||||||||||
NM-55
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
| December 31, 2013 | ||||||||||||||||
| Quoted prices in active markets |
Significant observable inputs (level 2) |
Significant (level 3) |
Total | |||||||||||||
| (in millions) | ||||||||||||||||
| General account: |
||||||||||||||||
| Common and preferred stocks |
$ | 1,691 | $ | - | $ | 606 | $ | 2,297 | ||||||||
| Bonds |
- | 24 | 7 | 31 | ||||||||||||
| Derivative assets at fair value |
- | 151 | - | 151 | ||||||||||||
| Derivative liabilities at fair value |
- | (45 | ) | - | (45 | ) | ||||||||||
|
|
|
|||||||||||||||
| Total general account |
$ | 1,691 | $ | 130 | $ | 613 | $ | 2,434 | ||||||||
|
|
|
|||||||||||||||
| Separate accounts: |
||||||||||||||||
| Mutual fund investments |
21,248 | - | - | 21,248 | ||||||||||||
| Other benefit plan assets/liabilities |
91 | 14 | 3 | 108 | ||||||||||||
| Pension and postretirement assets: |
||||||||||||||||
| Bonds |
234 | 1,678 | 74 | 1,986 | ||||||||||||
| Common and preferred stock |
1,534 | 6 | 30 | 1,570 | ||||||||||||
| Cash and short-term securities |
15 | 133 | - | 148 | ||||||||||||
| Other assets/liabilities |
(7 | ) | 12 | 278 | 283 | |||||||||||
|
|
|
|||||||||||||||
| Subtotal pension and postretirement assets |
1,776 | 1,829 | 382 | 3,987 | ||||||||||||
|
|
|
|||||||||||||||
| Total separate accounts |
$ | 23,115 | $ | 1,843 | $ | 385 | $ | 25,343 | ||||||||
|
|
|
|||||||||||||||
The Company may reclassify assets reported at fair value between levels of the fair value hierarchy if appropriate based on changes in the quality of valuation inputs available during a reporting period. There were no material asset transfers between Level 1 and Level 2 or between Level 2 and Level 3 during the years ended December 31, 2014 or 2013.
NM-56
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
The following tables summarize the changes in fair value of level 3 financial instruments for the years ended December 31, 2014 and 2013.
| Separate account pension and postretirement | ||||||||||||||||||||||||||||
| For the year ended December 31, 2014 |
General account common and preferred stock |
General account bonds |
Separate account other benefit plan assets |
Bonds | Common and preferred stocks |
Other assets/liabilties |
Total | |||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||
| Fair value, beginning of period |
$ | 606 | $ | 7 | $ | 3 | $ | 74 | $ | 30 | $ | 278 | $ | 998 | ||||||||||||||
| Realized gains/(losses) |
128 | - | - | 1 | 16 | 28 | 173 | |||||||||||||||||||||
| Unrealized gains/(losses) |
15 | 2 | - | (7 | ) | (5 | ) | (2 | ) | 3 | ||||||||||||||||||
| Issuances |
- | - | - | - | - | - | - | |||||||||||||||||||||
| Purchases |
14 | - | - | 28 | 2 | 44 | 88 | |||||||||||||||||||||
| Sales |
(301 | ) | - | - | (1 | ) | (24 | ) | (73 | ) | (399 | ) | ||||||||||||||||
| Settlements |
(4 | ) | (7 | ) | - | (28 | ) | 1 | - | (38 | ) | |||||||||||||||||
| Net discount/premium |
- | 1 | - | 2 | - | - | 3 | |||||||||||||||||||||
| Transfers into Level 3 |
- | - | - | 10 | - | 2 | 12 | |||||||||||||||||||||
| Transfers out of Level 3 |
(15 | ) | (3 | ) | - | (5 | ) | - | (1 | ) | (24 | ) | ||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| Fair value, end of period |
$ | 443 | $ | - | $ | 3 | $ | 74 | $ | 20 | $ | 276 | $ | 816 | ||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| Separate account pension and postretirement | ||||||||||||||||||||||||||||
| For the year ended December 31, 2013 |
General account common and preferred stock |
General account bonds |
Separate account other benefit plan assets |
Bonds | Common and preferred stocks |
Other assets/liabilties |
Total | |||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||
| Fair value, beginning of period |
$ | 609 | $ | 67 | $ | 3 | $ | 28 | $ | 16 | $ | 246 | $ | 969 | ||||||||||||||
| Realized gains/(losses) |
40 | (2 | ) | - | - | - | 10 | 48 | ||||||||||||||||||||
| Unrealized gains/(losses) |
45 | 29 | - | 1 | 5 | 26 | 106 | |||||||||||||||||||||
| Issuances |
- | - | - | - | - | - | - | |||||||||||||||||||||
| Purchases |
42 | - | - | 16 | 7 | 44 | 109 | |||||||||||||||||||||
| Sales |
(74 | ) | (24 | ) | - | (3 | ) | - | (48 | ) | (149 | ) | ||||||||||||||||
| Settlements |
(64 | ) | (63 | ) | - | (7 | ) | - | - | (134 | ) | |||||||||||||||||
| Net discount/premium |
- | - | - | - | - | - | - | |||||||||||||||||||||
| Transfers into Level 3 |
18 | 5 | - | 43 | 2 | - | 68 | |||||||||||||||||||||
| Transfers out of Level 3 |
(10 | ) | (5 | ) | - | (4 | ) | - | - | (19 | ) | |||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| Fair value, end of period |
$ | 606 | $ | 7 | $ | 3 | $ | 74 | $ | 30 | $ | 278 | $ | 998 | ||||||||||||||
|
|
|
|||||||||||||||||||||||||||
NM-57
Table of Contents
The Northwestern Mutual Life Insurance Company
Consolidated Statements of Changes in Surplus
(in millions)
The estimated fair values of level 3 financial instruments are sensitive to changes in significant unobservable inputs. The following table presents certain quantitative information about the unobservable inputs used to estimate fair value measurement for general account bonds and privately-placed common and preferred stocks classified as level 3 financial instruments at December 31, 2014.
| Fair value (in millions) |
Valuation techniques |
Significant unobservable inputs |
Range | Weighted average |
||||||||||||||
| Bonds |
$ 74 | Broker quotes | Quoted prices 1 | 58.00 | 108.53 | 92.13 | ||||||||||||
| Discounted cash flows | Credit spreads 2 | 156.00 | 1,321.10 | 892.74 | ||||||||||||||
| Common and preferred stocks |
$ 463 | Sponsor valuations | EBITDA multiples | 1.20 X | 12.94 X | 8.24 X | ||||||||||||
| Market comparables | EBITDA multiples | 4.13 X | 18.51 X | 9.22 X | ||||||||||||||
| Market comparables | Book Value multiples | 0.51 X | 2.23 X | 1.17 X | ||||||||||||||
1 - Presented as a price per hundred dollars of par
2 - Presented in basis points
Level 3 bonds are valued using a combination of discounted cash flows and indicative quotes from independent securities brokers based on market comparable companies. The most significant unobservable input in the discounted cash flow analysis is the discount rate. This rate is estimated based upon a risk-free market interest rate (U.S. Treasury with comparable maturity) plus a credit spread adjustment based on the estimated credit rating of the issuer. In general, issuers with lower credit ratings have higher credit spreads. A decrease in the credit spread adjustment would increase the estimated fair value of the investment as the future expected cash flows are discounted at a lower rate. The opposite impact would occur if credit spread adjustments increase.
Level 3 privately-placed common and preferred stocks are valued using a market comparables approach. This valuation methodology relies on the use of multiples that are based on industry-specific comparable companies. Multiples are derived from the relationship of an entity’s estimated fair value to its book value or earnings before interest, taxes, depreciation and amortization (“EBITDA”). EBITDA is normalized for company-specific differences in capital structure, taxation and fixed asset accounting. An increase in the multiple would result in an increase in the estimated fair value of the investment. The opposite impact would occur if the multiple decreased.
NM-58
Table of Contents
Independent Auditor’s Report
To the Board of Trustees and Policyowners of
The Northwestern Mutual Life Insurance Company
We have audited the accompanying consolidated statutory financial statements of The Northwestern Mutual Life Insurance Company and its subsidiary (the “Company), which are comprised of the consolidated statutory statements of financial position as of December 31, 2014 and 2013, and the related consolidated statutory statements of operations, and of changes in surplus, and of cash flows for each of the three years ended December 31, 2014.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the accounting practices prescribed or permitted by the Office of the Commissioner of Insurance of the State of Wisconsin. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles
As described in Note 1 to the consolidated financial statements, the consolidated financial statements are prepared by the Company on the basis of the accounting practices prescribed or permitted by the Office of the Commissioner of Insurance of the State of Wisconsin, which is a basis of accounting other than accounting principles generally accepted in the United States of America.
The effects on the consolidated financial statements of the variances between the statutory basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.
NM-59
Table of Contents
Adverse Opinion on U.S. Generally Accepted Accounting Principles
In our opinion, because of the significance of the matter discussed in the “Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles” paragraph, the consolidated financial statements referred to above do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2014 and 2013, or the results of their operations or their cash flows for each of the three years then ended.
Opinion on Statutory Basis of Accounting
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years then ended, in accordance with the accounting practices prescribed or permitted by the Office of the Insurance Commissioner of the State of Wisconsin described in Note 1.
Emphasis of Matter
As discussed in Note 8 to the consolidated financial statements, the Company has changed its method of accounting for pension and postretirement benefits in 2013. Our opinion is not modified with respect to this matter.
February 24, 2015
NM-60
Table of Contents
PART C
OTHER INFORMATION
Item 26. Exhibits
| Exhibit |
Description |
Filed Herewith/Incorporated Herein By Reference To | ||
| (a)(1) | Resolution of the Board of Trustees of The Northwestern Mutual Life Insurance Company amending Northwestern Mutual Variable Life Account Operating Authority | Exhibit (a)(1) to Form N-6 Post-Effective Amendment No. 30 for Northwestern Mutual Variable Life Account, File No. 2-89972, filed February 21, 2006 | ||
| (a)(2) | Resolution of Board of Trustees of The Northwestern Mutual Life Insurance Company establishing the Account
|
Exhibit A(1) to Form S-6 Registration Statement for Northwestern Mutual Variable Life Account, File No. 333-36865, filed on October 1, 1997
| ||
| (b) | Not Applicable | |||
| (c) | Distribution Agreement Between The Northwestern Life Insurance Company and Northwestern Mutual Investment Services, LLC, dated May 1, 2006 | Exhibit (c) to Form N-6 Registration Statement for Northwestern Mutual Variable Life Account II, File No. 333-136124, filed on July 28, 2006 | ||
| (d)(1) | Form of Policies – (1) Extra Ordinary Variable Life Insurance Policy (Variable Whole Life Policy with Extra Life Protection), MM17, with application (2) Extra Ordinary Variable Life Insurance Policy (Variable Whole Life Policy with Extra Life Protection), MP17, with application (for employers) (3) Single Premium Variable Whole Life Insurance Policy, MM16, with application (4) Single Premium Variable Whole Life Insurance Policy, MP16, with application (for employers) (5) Form of notice of short-term cancellation right (6) Forms of Optional Riders: (i) Waiver of Premium Benefit (ii) Accidental Death Benefit (iii) Additional Purchase Benefit (iv) Term Insurance Benefit (7) Form of Amendment to Variable Life and Variable EOL Form MM.305.(0593) (8) Form of Amendment to Single Premium Variable Life Form MM.306.(0593) (9) Form of Amendment to Variable Whole Life Form MM.305.(0594) (10) Form of Amendment to Variable Whole Life Form MM.305.(0594) (11) Form of Amendment to Variable Single Premium Life Form MM.306.(0594) |
Exhibits (d)(1), (d)(2), (d)(3), (d)(4), (d)(5), (d)(6), (d)(7), (d)(8), (d)(9), (d)(10) and (d)(11) to Form N-6 Post-Effective Amendment No. 26 for Northwestern Mutual Variable Life Account, File No. 2-89972, filed on February 28, 2003 | ||
| (d)(2) | Amendment to Variable Life and Variable EOL Policy | Exhibit A(5)(a) to Form S-6 Post-Effective Amendment No. 21 for Northwestern Mutual Variable Life Account, File No. 2-89972, filed February 25, 1999 | ||
| (e) | Form of Life Insurance Application 90-1 JCL (0198) WISCONSIN and Application Supplement (1003) | Exhibit (e) to Form N-6 Post-Effective Amendment No. 9 for Northwestern Mutual Variable Life Account, File No. 333-59103, filed April 28, 2005 | ||
| (f)(1) | Restated Articles of Incorporation of The Northwestern Mutual Life Insurance Company (adopted July 26, 1972) | Exhibit A(6)(a) to Form S-6 Post-Effective Amendment No. 18 for Northwestern Mutual Variable Life Account, File No. 2-89972, filed April 26, 1996 | ||
| (f)(2) | Amended By-Laws of The Northwestern Mutual Life Insurance Company dated December 4, 2002 | Exhibit (f) to Form N-6 Post-Effective Amendment No. 6 for Northwestern Mutual Variable Life Account, File No. 333-59103, filed February 28, 2003 | ||
| (g) | Form of Reinsurance Agreement | Exhibit (g) to Form N-6 Post-Effective Amendment No. 6 for Northwestern Mutual Variable Life Account, File No. 333-59103, filed February 28, 2003 | ||
| (h)(a)(1) | Participation Agreement dated March 16, 1999 Among Russell Insurance Funds, Russell Fund Distributors, Inc. and The Northwestern Mutual Life Insurance Company | Exhibit (b)(8)(a) to Form N-4 Post-Effective Amendment No. 66 for NML Variable Annuity Account B, File No. 2-29240, filed on April 28, 2005 | ||
| (h)(a)(2) | Amendment No. 1 dated August 7, 2000 to the Participation Agreement dated March 16, 1999 Among Russell Insurance Funds, Russell Fund Distributors, Inc. and The Northwestern Mutual Life Insurance Company | Exhibit (h)1(a)(2) to Form N-6 Registration Statement for Northwestern Mutual Variable Life Account II, File No. 333-136124, filed on July 28, 2006 |
C-1
Table of Contents
| (h)(a)(3) |
Amendment No. 2 dated October 13, 2006 to Participation Agreements dated March 16, 1999 and August 7, 2000, respectively, by and among The Northwestern Mutual Life Insurance Company, Russell Investment Funds, f/k/a “Russell Insurance Funds,” and Russell Fund Distributors, Inc. | Exhibit (h)1(a)(3) to Form N-6 Pre-Effective Amendment No. 1, for Northwestern Mutual Variable Life Account II, File No. 333-136124, filed December 13, 2006 | ||
| (h)(a)(4) |
Amendment No. 3 dated August 29, 2007 to Participation Agreements dated March 16, 1999, August 7, 2000, and October 13, 2006, respectively, by and among The Northwestern Mutual Life Insurance Company, Russell Investment Funds, f/k/a “Russell Insurance Funds,” and Russell Fund Distributors, Inc. | Exhibit (h)(a)(4) to Form N-6 Post-Effective Amendment No. 41 for Northwestern Mutual Variable Life Account, File No. 002-89972, filed on April 25, 2013 | ||
| (h)(b)(1) |
Participation Agreement dated May 1, 2003 among Variable Insurance Products Funds, Fidelity Distributors Corporation and The Northwestern Mutual Life Insurance Company | Exhibit (b)(8)(b) to Form N-4 Post-Effective Amendment No. 66 for NML Variable Annuity Account B, File No. 2-29240, filed on April 28, 2005 | ||
| (h)(b)(2) |
Amendment No. 1 dated October 18, 2006 to Participation Agreement dated May 1, 2003, by and among The Northwestern Mutual Life Insurance Company, Fidelity Distributors Corporation, and each of Variable Insurance Products Fund, Variable Insurance Products Fund II, and Variable Insurance Products Fund III | Exhibit (h)1(b)(2) to Form N-6 Pre-Effective Amendment No. 1, for Northwestern Mutual Variable Life Account II,
File No. 333-136124, filed December 13, 2006 | ||
| (h)(b)(3) |
Participation Agreement dated April 30, 2007 among Neuberger Berman Advisers Management Trust, Neuberger Berman Management Inc., and The Northwestern Mutual Life Insurance Company | Exhibit (h)(e) to Form N-6 Post-Effective Amendment No. 39, for Northwestern Mutual Variable Life Account, File No. 002-89972, filed on April 30, 2012 | ||
| (h)(b)(4) |
Participation Agreement dated September 27, 2013 among Credit Suisse Trust, Credit Suisse Asset Management, LLC, Credit Suisse Securities (USA) LLC, and The Northwestern Mutual Life Insurance Company | Exhibit (h)(b)(4) to Form N-6 Post-Effective Amendment No. 10 for Northwestern Mutual Variable Life Account II,
File No. 333-136124, filed on October 1, 2013 | ||
| (h)(b)(5) |
Form of Amendment to Participation Agreement Regarding Rule 498 | Exhibit (h)(b)(5) to Form N-6 Post-Effective Amendment No. 10 for Northwestern Mutual Variable Life Account II,
File No. 333-136124, filed on October 1, 2013 | ||
| (h)(c)(1) |
Administrative Service Fee Agreement dated February 28, 1999 between The Northwestern Mutual Life Insurance Company and Frank Russell Company | Exhibit (b)(8)(c) to Form N-4 Post-Effective Amendment No. 66 for NML Variable Annuity Account B, File No. 2-29240, filed on April 28, 2005 | ||
| (h)(c)(2) |
Service Agreement dated May 1, 2003 between Fidelity Investments Institutional Operations Company, Inc. and The Northwestern Mutual Life Insurance Company | Exhibit (b)(8)(c)(2) to Form N-4 Pre-Effective Amendment No. 1 for NML Variable Annuity Account A, File No. 333-133380, filed on August 8, 2006 | ||
| (h)(c)(3) |
Amendment dated August 1, 2004 to the Service Agreement dated May 1, 2003 between Fidelity Investments Institutional Operations Company, Inc. and The Northwestern Mutual Life Insurance Company | Exhibit (b)(8)(c)(3) to Form N-4 Pre-Effective Amendment No. 1 for NML Variable Annuity Account A, File No. 333-133380, filed on August 8, 2006 | ||
| (h)(c)(4) |
Form of Administrative Services Agreement | Exhibit (h)(c)(2) to Form N-6 Post-Effective Amendment No. 39, for Northwestern Mutual Variable Life Account, File No. 002-89972, filed on April 30, 2012 | ||
| (i) |
Not Applicable
|
|||
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Table of Contents
| (j)(a) |
Agreement entered into on February 13, 1984 among Northwestern Mutual Variable Life Account, The Northwestern Mutual Life Insurance Company and NML Equity Services, Inc. (n/k/a Northwestern Mutual Investment Services, LLC) | Exhibit A(8) to Form S-6 Registration Statement for Northwestern Mutual Variable Life Account, File No. 333-36865, filed October 1, 1997 | ||
| (j)(b) |
Shareholder Information Agreement dated April 13, 2007 among Russell Investment Management Company on behalf of Russell Investment Funds and The Northwestern Mutual Life Insurance Company | Exhibit (j)(b) to Form N-6 Post-Effective Amendment No. 39, for Northwestern Mutual Variable Life Account, File No. 002-89972, filed on April 30, 2012 | ||
| (j)(c) |
Amendment No. 1 dated October 20, 2008 to Shareholder Information Agreement dated April 13, 2007 among Russell Fund Services Company on behalf of Russell Investment Funds and The Northwestern Mutual Life Insurance Company | Exhibit (j)(c) to Form N-6 Post-Effective Amendment No. 39, for Northwestern Mutual Variable Life Account, File No. 002-89972, filed on April 30, 2012 | ||
| (j)(d) |
Shareholder Information Agreement dated April 13, 2007 among Fidelity Distributors Corporation on behalf of Fidelity® Variable Insurance Products Fund and The Northwestern Mutual Life Insurance Company | Exhibit (j)(d) to Form N-6 Post-Effective Amendment No. 39, for Northwestern Mutual Variable Life Account, File No. 002-89972, filed on April 30, 2012 | ||
| (j)(e) |
Shareholder Information Agreement dated April 16, 2007 among Northwestern Mutual Series Fund, Inc. and The Northwestern Mutual Life Insurance Company | Exhibit (j)(e) to Form N-6 Post-Effective Amendment No. 39, for Northwestern Mutual Variable Life Account, File No. 002-89972, filed on April 30, 2012 | ||
| (j)(f) |
Shareholder Information Agreement dated October 16, 2007 among Neuberger Berman Management Inc. and The Northwestern Mutual Life Insurance Company | Exhibit (j)(f) to Form N-6 Post-Effective Amendment No. 39, for Northwestern Mutual Variable Life Account, File No. 002-89972, filed on April 30, 2012 | ||
| (j)(g) |
Shareholder Information Agreement dated September 27, 2013 among Credit Suisse Securities (USA) LLC and The Northwestern Mutual Life Insurance Company | Exhibit (j)(f) to Form N-6 Post-Effective Amendment No. 10 for Northwestern Mutual Variable Life Account II, File No. 333-136124, filed on October 1, 2013 | ||
| (j)(h) |
Power of Attorney
|
Filed herewith | ||
| (j)(i) |
NMIS/NM Annuity Operations Admin Agreement | Exhibit (b)(8)(i) to Form N-4 Post-Effective Amendment No. 19 for NML Variable Annuity Account A, File No. 333-72913, filed on April 22, 2008 | ||
| (k) |
Opinion and Consent of Raymond J. Manista, Esq. dated April 27, 2015 | Filed herewith | ||
| (l) |
Not Applicable | |||
| (m) |
Not Applicable | |||
| (n) |
Consent of PricewaterhouseCoopers LLP dated April 27, 2015 | Filed herewith | ||
| (o) |
Not Applicable | |||
| (p) |
Not Applicable | |||
| (q) |
Memorandum describing Issuance, Transfer and Redemption Procedures
|
Filed herewith |
Item 27. Directors and Officers of the Depositor
The following lists include all of the Trustees, executive officers and other officers of The Northwestern Mutual Life Insurance Company without regard to their activities relating to variable life insurance policies or their authority to act or their status as “officers” as that term is used for certain purposes of the federal securities laws and rules thereunder.
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Table of Contents
TRUSTEES – As of April 1, 2015
| Name | Address | |||
| John N. Balboni |
Senior Vice President & CIO International Paper 6400 Poplar Avenue Memphis, TN 38197 | |||
| David J. Drury |
Owner & CEO Poblocki Sign Company LLC 922 South 70th Street Milwaukee, WI 53214 | |||
| Connie K. Duckworth |
President & Chairman of the Board ARZU 77 Stone Gate Lane Lake Forest, IL 60045 | |||
| James P. Hackett |
President & CEO Steelcase, Inc. 901 - 44th Street Grand Rapids, MI 49508 | |||
| P. Russell Hardin |
President Robert W. Woodruff Foundation 191 Peachtree Street NE, Suite 3540 Atlanta, GA 30303 | |||
| Hans Helmerich |
President & CEO Helmerich & Payne, Inc. 1437 S. Boulder Avenue Tulsa, OK 74119-3609 | |||
| Dale E. Jones |
Vice Chairman Heidrick & Struggles 2001 Pennsylvania Avenue, NW Suite 800 Washington, DC 20006 | |||
| Margery Kraus |
President & CEO APCO Worldwide 700 12th Street, NW Suite 800 Washington, DC 20005 | |||
| David J. Lubar |
President Lubar & Co. 700 N. Water Street Suite 1200 Milwaukee, WI 53202 | |||
| Ulice Payne, Jr. |
President & CEO Addison-Clifton, LLC 13555 Bishops Court Suite 245 Brookfield, WI 53005 | |||
| John E. Schlifske |
Chairman, President, & CEO Northwestern Mutual 720 E. Wisconsin Avenue Milwaukee, WI 53202 | |||
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Table of Contents
| Mary Ellen Stanek |
Managing Director & Chief Investment Officer Baird Advisors Robert W. Baird & Co. President-Baird Funds Inc. 777 E. Wisconsin Avenue 21st Floor Milwaukee, WI 53202 | |||
| S. Scott Voynich |
Managing Partner Robinson, Grimes & Company, PC 5637 Whitesville Road (31904) P. O. Box 4299 (31914) Columbus, GA | |||
| Ralph A. Weber |
Founding Member Gass, Weber, Mullins, LLC 309 North Water Street Suite 700 Milwaukee, WI 53202 | |||
| Barry L. Williams |
Retired Managing General Partner Williams Pacific Ventures, Inc. 4 Embarcadero Center, Suite 3700 San Francisco, CA 94111 | |||
| Benjamin F. Wilson |
Managing Principal Beveridge & Diamond, P.C. 1350 I Street, NW Suite 700 Washington, DC 20005 | |||
| Edward J. Zore |
Retired Chairman Northwestern Mutual 777 E. Wisconsin Suite 3005 Milwaukee, WI 53202 | |||
EXECUTIVE OFFICERS – As of April 1, 2015
| John E. Schlifske |
Chairman of the Board & Chief Executive Officer | |
| Leslie Barbi |
Senior Vice President (Public Investments) | |
| Rebekah B. Barsch |
Vice President (Planning and Sales) | |
| Blaise C. Beaulier |
Vice President (Enterprise Projects & Support) | |
| Sandra L. Botcher |
Vice President (Facility Operations) | |
| Michael G. Carter |
Executive Vice President & Chief Financial Officer | |
| Eric P. Christophersen |
Vice President (Wealth Management) | |
| Joann M. Eisenhart |
Senior Vice President (Human Resources) | |
| Christina H. Fiasca |
Vice President (Product Finance) | |
| Timothy J. Gerend |
Senior Vice President (Agencies) | |
| Kimberley Goode |
Vice President (Communications & Corporate Affairs) | |
| Karl G. Gouverneur |
Vice President & Chief Technology Officer | |
| John M. Grogan |
Senior Vice President (Insurance and Investment Products) | |
| Thomas C. Guay |
Vice President (Field Rewards) | |
| Gary M. Hewitt |
Vice President (Investment Risk Management) | |
| Meg E. Jansky |
Vice President – Field Integration | |
| Ronald P. Joelson |
Executive Vice President & Chief Investment Officer | |
| Todd Jones |
Vice President & Controller | |
| John L. Kordsmeier |
Vice President (Strategic Philanthropy & Community Relations) | |
| Jeffrey J. Lueken |
Senior Vice President (Private Securities) |
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Table of Contents
| Stephanie A. Lyons |
Vice President – Enterprise Risk Assurance | |
| Raymond J. Manista |
Senior Vice President, General Counsel & Secretary | |
| Steven C. Mannebach |
Vice President (Field Growth & Development) | |
| Christian W. Mitchell |
Vice President (Corporate Strategy) | |
| Gregory C. Oberland |
President | |
| Steven M. Radke |
Vice President (Government Relations) | |
| David R. Remstad |
Senior Vice President & Chief Actuary | |
| Bethany M. Rodenhuis |
Senior Vice President (Field Strategy & Services) | |
| Tammy M. Roou |
Vice President & Chief Risk Officer | |
| Timothy G. Schaefer |
Executive Vice President (Operations & Technology) | |
| Calvin R. Schmidt |
Senior Vice President (Integrated Customer Operations) | |
| Sarah R. Schneider |
Vice President (New Business) | |
| Todd M. Schoon |
Senior Vice President (Field Relations) | |
| Sarah E. Schott |
Vice President (Enterprise Compliance) | |
| David W. Simbro |
Senior Vice President (Life & Annuity Product) | |
| Steve P. Sperka |
Vice President (Disability Income) | |
| David G. Stoeffel |
Vice President (Investment Services) | |
| Kamilah D. Williams-Kemp |
Vice President (Long Term Care) | |
| Conrad C. York |
Vice President (Marketing) | |
| Thomas D. Zale |
Vice President (Real Estate) | |
| Todd O. Zinkgraf |
Vice President (Enterprise Solutions) |
OTHER OFFICERS – As of December 1, 2014
|
Employee
|
Title
| |
|
|
||
| Lisa C. Gandrud |
Senior Actuary | |
| Gregory A. Gurlik |
Senior Actuary | |
| James R. Lodermeier |
VP-Actuary | |
| Ted A. Matchulat |
Director-Product Compliance | |
| Bryan D. Miller |
Senior Actuary | |
| Chris G. Trost |
Senior Actuary | |
| P. Andrew Ware |
VP-Actuary | |
|
|
||
| Somayajulu Durvasula |
Director-Network Office Transition | |
| Mark J. Gmach |
Regional VP | |
| Laila V. Hick |
VP-Agency Development | |
| Jason R. Handal |
Regional VP | |
| Arthur J. Mees |
Regional VP | |
| Timothy Nelson |
Regional VP | |
| Michael E. Pritzl |
VP-Managing Director Relations | |
| John C. Roberts |
VP-Targeted Office Support | |
|
|
||
| Anne A. Frigo |
Director-Insurance Product Compliance | |
| Ricky J. Frank |
Director-Systems | |
| Robert J. Johnson |
Director-Compliance | |
| Gregory S. Leslie |
Director-Variable Product Compliance | |
| Randy M. Pavlick |
VP-Managed Investments Compliance | |
| Jeffrey P. Schloemer |
Director-Compliance | |
| Rebecca Villegas |
Director-Compliance | |
|
|
||
| Kevin J. Abitz |
Director-Corporate Reporting | |
| Lisa M. Belli-Fuchs |
Director-Reporting & Systems Administration | |
| Barbara E. Courtney |
Director-Mutual Fund Accounting | |
| Michelle A. Hinze |
Director-Accounting Operations | |
| Todd C. Kuzminski |
Director-Investment Accounting | |
| K. David Nunley |
VP-Tax | |
| David E. Willert |
Director-Federal Tax | |
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Table of Contents
|
Employee
|
Title
| |
| Rick T. Zehner |
VP-Research & Special Projects | |
|
|
||
| Mark McNulty |
Director-Field Distribution Policies & Administration | |
| Daniel A. Riedl |
VP-Field Distribution Policies & Administration | |
|
|
||
| Cynthia A. Criss |
Director-Field Recruitment | |
| David A. Eurich |
Director-Field Training | |
| Sarah L. N. Koenig |
Director-Horizontal Growth | |
| Cindy S. Prater |
Director-Practice Management | |
|
|
||
| Arleen J. Llewellyn |
Director-FR Engagement & Selection | |
| Paul J. Steffen |
VP-Agency Development | |
|
|
||
| Lisa A. Cadotte |
Director-Field System Financial Management | |
| Michael R. Fasciotti |
Director-Field Real Estate | |
| Richard P. Snyder |
Director-Field Compensation | |
|
|
||
| Brenda J. Antkowski |
Director-Network Office Operations | |
| Meg E. Jansky |
VP-Field Services & Support | |
| Kevin J. Konopa |
Director-Client Management | |
| Joanne M. Migliaccio |
Director-Field Services & Support | |
| David J. Writz |
Director-Field Technology | |
|
|
||
| Karen A. Molloy |
VP-Treasurer | |
| Deborah A. Schultz |
VP-Financial Management | |
|
|
||
| Pency P. Byhardt |
Vice President-Annuity Operations | |
| Don P. Gehrke |
Director-Retail Investment Operations | |
| Dennis P. Goyette |
Director-Annuity Customer Service | |
| Linda A. Schaefer |
Director-Document Shared Services | |
| Lori A. Torner |
Director-Retail Investment Operations | |
|
|
||
| R. David Ells |
VP-Investment Strategy | |
|
|
||
| Karla J. Adams |
Director-Investment Risk Management | |
| James A. Brewer |
Director-Investment Planning | |
| David A. Escamilla |
Director-Investment Information | |
| Donald Forecki |
Director-Investment Operations, Asst. Secretary | |
| Michael S. Treptow |
Director-Investment Performance Management | |
|
|
||
| Mark J. Backe |
VP-Insurance & Operations Counsel & Asst. Secretary | |
| Joanne M. Breese-Jaeck |
Asst. General Counsel & Asst. Secretary | |
| Christopher W. Brownell |
Asst. General Counsel & Asst. Secretary | |
| Michael S. Bula |
Asst. General Counsel & Asst. Secretary | |
| Thomas B. Christenson |
Asst. General Counsel & Asst. Secretary | |
| Michael J. Conmey |
Asst. General Counsel & Asst. Secretary | |
| Mark S. Diestelmeier |
Asst. General Counsel & Asst. Secretary | |
| John E. Dunn |
VP & Investment Products & Services Counsel & Asst. Secretary | |
| James R. Eben |
Asst. General Counsel & Asst. Secretary | |
| Bradley L. Eull |
Asst. General Counsel & Asst. Secretary | |
| Chad E. Fickett |
Asst. General Counsel & Asst. Secretary | |
| James C. Frasher |
Asst. General Counsel & Asst. Secretary | |
| Sheila M. Gavin |
Asst. General Counsel & Asst. Secretary | |
| Chris K. Gawart |
Asst. General Counsel & Asst. Secretary | |
| Matthew D. Heinke |
Asst. General Counsel & Asst. Secretary | |
| Steven J. LaFore |
Asst. General Counsel & Asst. Secretary | |
| Lisa A. Leister |
Asst. General Counsel & Asst. Secretary | |
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Table of Contents
|
Employee
|
Title
| |
| Kim W. Lunn |
Asst. General Counsel & Asst. Secretary | |
| Michael J. Mazza |
Asst. General Counsel & Asst. Secretary | |
| Lesli H. McLinden |
Asst. General Counsel & Asst. Secretary | |
| William C. Pickering |
Asst. General Counsel & Asst. Secretary | |
| Nora M. Platt |
Asst. General Counsel & Asst. Secretary | |
| Zhibin Ren |
Asst. General Counsel & Asst. Secretary | |
| Peter K. Richardson |
Asst. General Counsel & Asst. Secretary | |
| Monica Riederer |
Asst. General Counsel & Asst. Secretary | |
| Rodd Schneider |
VP & Litigation and Distribution Counsel & Asst. Secretary | |
| Paul W. Scott |
Asst. General Counsel & Asst. Secretary | |
| John M. Thompson |
Asst. General Counsel & Asst. Secretary | |
| John W. Warren |
Asst. General Counsel & Asst. Secretary | |
| Terry R. Young |
Asst. General Counsel & Asst. Secretary | |
| Michael W. Zielinski |
Asst. General Counsel & Asst. Secretary | |
|
|
||
| Gregory A. Jaeck |
Director-Annuity & Income Markets | |
| Jason T. Klawonn |
VP-Advanced Markets | |
| Todd L. Laszewski |
Director-Life Product Development | |
| William Brian Henning |
Director-Competitive Intelligence | |
| Jane Ann Schiltz |
Director-LP Planning & Project Support | |
|
|
||
| Thomas R. Anderson |
Director-Advanced Planning | |
| Candace M. Damon |
Director-Strategic Productivity | |
| Angela M. DiCastri |
Director-Retirement Markets | |
| Ruthann M. Driscoll |
Director-Advanced Planning | |
| Kenneth P. Elbert |
Director-Advanced Planning | |
| Matthew K. Fleming |
Director-Planning & Product Insurance Consultation | |
| Stephen J. Frankl |
Regional Sales Director | |
| William F. Grady, IV |
Director-Advanced Planning | |
| Terence J. Holahan |
Director-Planning & Sales Education & Development | |
| Emily J. Holbrook |
Director-Young Personal Market | |
| Patrick J. Horning |
Director-Advanced Planning | |
| William R. Hughes |
Director-Advanced Planning | |
| Martha M. Kendler |
Director-Business Market Division | |
| Amy Kiiskila |
Director-Advanced Planning | |
| Shawn P. Mauser |
Regional Sales Director | |
| John E. Muth |
Director-Advanced Planning | |
| Elizabeth Ridley |
Director-Market Strategy, Education & Promotion | |
| Faith B. Rodenkirk |
Director-Business Market Development | |
| Andrew J. Smalley |
Director-Sales Promotion & Integration | |
| Michael C. Soyka |
Regional Sales Director | |
| William H. Taylor |
VP-Financial Planning & Sales Support | |
| Janine L. Wagner |
Director-Planning & Product Insurance Consultation | |
| Stephanie Wilcox |
Director-Planning & Sales Admin/Integration | |
| Brian D. Wilson |
VP-National Sales | |
| John K. Wilson |
Regional Sales Director | |
| Stanford A. Wynn |
Director-Advanced Planning | |
|
|
||
| Angela N. Bickler |
Director-Policyowner Services | |
| James LeMere |
Director-Policyowner Services | |
| Travis T. Piotrowski |
VP-Policyowner Services | |
| Sandra K. Scott |
Director-Life Benefits | |
| Carol A. Stilwell |
Director-Policyowner Services | |
| Natalie J. Versnik |
Director-Policyowner Services | |
|
|
||
| Mark J. McLennon |
VP-IPS Business Development | |
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Table of Contents
The business addresses for all of the executive officers and other officers is 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
Item 28. Persons Controlled By or Under Common Control with the Depositor or Registrant
The subsidiaries of The Northwestern Mutual Life Insurance Company (“Northwestern Mutual”), as of April 1, 2015 are shown below. In addition to the subsidiaries shown below, the following separate investment accounts (which include the Registrant) may be deemed to be either controlled by, or under common control with, Northwestern Mutual:
| 1. | NML Variable Annuity Account A |
| 2. | NML Variable Annuity Account B |
| 3. | NML Variable Annuity Account C |
| 4. | Northwestern Mutual Variable Life Account |
| 5. | Northwestern Mutual Variable Life Account II |
Northwestern Mutual Series Fund, Inc. (the “Funds”), shown below as a subsidiary of Northwestern Mutual, is an investment company, registered under the Investment Company Act of 1940, offering shares to the separate accounts identified above; and the shares of the Funds held in connection with certain of the accounts are voted by Northwestern Mutual in accordance with voting instructions obtained from the persons who own, or are receiving payments under, variable annuity contracts or variable life insurance policies issued in connection with the separate accounts, or in the same proportions as the shares which are so voted.
| NORTHWESTERN MUTUAL CORPORATE STRUCTURE(1) (as of April 1, 2015)
| ||||
| Legal Entity Name | Domestic Jurisdiction | Owner % | ||
| Operating Subsidiaries |
||||
| Northwestern Mutual Capital Limited(2) |
United Kingdom | 100.00 | ||
| Mason Street Advisors, LLC(2) |
Delaware | 100.00 | ||
| Northwestern Long Term Care Insurance Company(2) |
Wisconsin | 100.00 | ||
| Northwestern Mutual Investment Management Company, LLC(2) |
Delaware | 100.00 | ||
| Northwestern Mutual Investment Services, LLC(2) |
Wisconsin | 100.00 | ||
| Northwestern Mutual Wealth Management Company(2) |
United States | 100.00 | ||
| All Other Subsidiaries |
||||
| 31 Ogden, LLC(2) |
Delaware | 100.00 | ||
| 3412 Exchange, LLC(2) |
Delaware | 100.00 | ||
| AFE Brentwood Park, LLC(2) |
Delaware | 100.00 | ||
| AMLI at Perimeter Gardens, LLC(2) |
Delaware | 100.00 | ||
| Amber, LLC(2) |
Delaware | 100.00 | ||
| Arbor Lake Village Apartments Limited Liability Company(2) |
Delaware | 100.00 | ||
| Baraboo, Inc.(2) |
Delaware | 100.00 | ||
| Bayridge, LLC(2) |
Delaware | 100.00 | ||
| Bishop Square, LLC(2) |
Delaware | 100.00 | ||
| Bradford, Inc.(2) |
Delaware | 100.00 | ||
| Brendan International Sales, Inc.(2) |
U.S. Virgin Islands | 100.00 | ||
| Burgundy, LLC(2) |
Delaware | 100.00 | ||
| C – Land Fund, LLC(2) |
Delaware | 100.00 | ||
| Chateau, LLC(2) |
Delaware | 100.00 | ||
| Coral, Inc.(2) |
Delaware | 100.00 | ||
| Cortona Holdings, LLC(2) |
Delaware | 100.00 | ||
| Crosland Denver Highway 16, LLC(2) |
North Carolina | 100.00 | ||
| Crosland Greens, LLC(2) |
North Carolina | 100.00 | ||
| Fairfield West Deer Park LLC(2) |
Delaware | 100.00 | ||
| Hazel, Inc.(2) |
Delaware | 100.00 | ||
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Table of Contents
| NORTHWESTERN MUTUAL CORPORATE STRUCTURE(1) (as of April 1, 2015)
| ||||
| Higgins, Inc.(2) |
Delaware | 100.00 | ||
| Hobby, Inc.(2) |
Delaware | 100.00 | ||
| Hollenberg 1, Inc.(2) |
Delaware | 100.00 | ||
| Jacksonville Concourse II, LLC(2) |
Delaware | 100.00 | ||
| Jacksonville Concourse III, LLC(2) |
Delaware | 100.00 | ||
| Jacksonville Concourse, LLC(2) |
Delaware | 100.00 | ||
| Juleen, LLC(2) |
Delaware | 100.00 | ||
| Justin International FSC, Inc.(2) |
U.S. Virgin Islands | 100.00 | ||
| Klode, Inc.(2) |
Delaware | 100.00 | ||
| Kristiana International Sales, Inc.(2) |
U.S. Virgin Islands | 100.00 | ||
| Logan, Inc.(2) |
Delaware | 100.00 | ||
| Maroon, Inc.(2) |
Delaware | 100.00 | ||
| Mason & Marshall, Inc.(2) |
Delaware | 100.00 | ||
| Millbrook Apartments Associates L.L.C.(2) |
Virginia | 100.00 | ||
| Mitchell, Inc.(2) |
Delaware | 100.00 | ||
| Model Portfolios, LLC(2) |
Delaware | 100.00 | ||
| Nicolet, Inc.(2) |
Delaware | 100.00 | ||
| NM BSA, LLC(2) |
Delaware | 100.00 | ||
| NM Cancer Center GP, LLC(2) |
Delaware | 100.00 | ||
| NM DFW Lewisville, LLC(2) |
Delaware | 100.00 | ||
| NM GP Holdings, LLC(2) |
Delaware | 100.00 | ||
| NM Harrisburg, Inc.(2) |
Pennsylvania | 100.00 | ||
| NM Imperial, LLC(2) |
Delaware | 100.00 | ||
| NM Investment Holdings, Inc.(2) |
Delaware | 100.00 | ||
| NM Lion, LLC(2) |
Delaware | 100.00 | ||
| NM Majestic Holdings, LLC(2) |
Delaware | 100.00 | ||
| NM Neptune, LLC(2) |
Delaware | 100.00 | ||
| NM Pebble Valley LLC(2) |
Delaware | 100.00 | ||
| NM RE Funds, LLC(2) |
Delaware | 100.00 | ||
| NM Regal, LLC(2) |
Delaware | 100.00 | ||
| NM Twin Creeks GP, LLC(2) |
Delaware | 100.00 | ||
| NML Clubs Associated, Inc.(2) |
Wisconsin | 100.00 | ||
| NML Development Corporation(2) |
Delaware | 100.00 | ||
| NML Real Estate Holdings, LLC(2) |
Wisconsin | 100.00 | ||
| NML Securities Holdings, LLC(2) |
Wisconsin | 100.00 | ||
| NMRM Holdings, LLC(2) |
Delaware | 100.00 | ||
| North Van Buren, Inc.(2) |
Delaware | 100.00 | ||
| Northwestern Ellis Company(2) |
Nova Scotia | 100.00 | ||
| Northwestern Mutual Capital GP II, LLC(2) |
Delaware | 100.00 | ||
| Northwestern Mutual Capital GP III, LLC(2) |
Delaware | 100.00 | ||
| Northwestern Mutual Capital GP, LLC(2) |
Delaware | 100.00 | ||
| Northwestern Mutual Capital Mezzanine Fund II, LP(2) |
Delaware | 100.00 | ||
| Northwestern Mutual Capital Mezzanine Fund III, LP(2) |
Delaware | 100.00 | ||
| Northwestern Mutual Capital Strategic Equity Fund II, LP(2) |
Delaware | 100.00 | ||
| Northwestern Mutual Capital Strategic Equity Fund III, LP(2) |
Delaware | 100.00 | ||
| Northwestern Mutual MU TLD Registry, LLC(2) |
Delaware | 100.00 | ||
| Northwestern Mutual Registry, LLC(2) |
Delaware | 100.00 | ||
| Northwestern Mutual Series Fund, Inc.(4) |
Maryland | 100.00 | ||
| NorthWoods Phase I, LLC |
Delaware | 100.00 | ||
| Olive, Inc.(2) |
Delaware | 100.00 | ||
| Osprey Links Golf Course, LLC(2) |
Delaware | 100.00 | ||
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| NORTHWESTERN MUTUAL CORPORATE STRUCTURE(1) (as of April 1, 2015)
| ||||
| Osprey Links, LLC(2) |
Delaware |
100.00 | ||
| Park Ridge Corporate Center, LLC(2) |
Delaware |
100.00 | ||
| Piedmont Center, 1-4 LLC(2) |
Delaware |
100.00 | ||
| Piedmont Center, 15 LLC(2) |
Delaware |
100.00 | ||
| Plantation Oaks MHC-NM, LLC(2) |
Delaware |
100.00 | ||
| RE Corp.(2) |
Delaware |
100.00 | ||
| Regina International Sales, Inc.(2) |
U.S. Virgin Islands |
100.00 | ||
| Russet, Inc.(2) |
Delaware |
100.00 | ||
| Scotty, LLC(2) |
Delaware |
100.00 | ||
| Solar Resources, Inc.(2) |
Wisconsin |
100.00 | ||
| Stadium and Arena Management, Inc.(2) |
Delaware |
100.00 | ||
| Tupelo, Inc.(2) |
Delaware |
100.00 | ||
| Two Con Holdings, LLC(2) |
Delaware |
100.00 | ||
| Two Con SPE, LLC(2) |
Delaware |
100.00 | ||
| Two Con, LLC(2) |
Delaware |
100.00 | ||
| Ventura Lakes MHC-NM, LLC |
Delaware |
100.00 | ||
| Walden OC, LLC(2) |
Delaware |
100.00 | ||
| Warren Corporate Center, LLC(2) |
Delaware |
100.00 | ||
| West Huron Joint Venture(2) |
Washington |
100.00 | ||
| White Oaks, Inc.(2) |
Delaware |
100.00 | ||
| Windwood Drive Ann Arbor, LLC(2) |
Delaware |
100.00 | ||
| (1) | Certain subsidiaries are omitted on the basis that, considered in the aggregate at year end 2014, they did not constitute a significant subsidiary as defined by Regulation S-X. Certain investment partnerships and limited liability companies that hold real estate assets of The Northwestern Mutual Life Insurance Company are not represented. |
| (2) | Subsidiary included in the consolidated financial statements. |
| (3) | Subsidiary files separate financial statements. The Subsidiary is held by Northwestern Mutual through NM Investment Holdings, LLC. |
| (4) | Growth Stock Portfolio, Focused Appreciation Portfolio, Large Cap Core Stock Portfolio, Large Cap Blend Portfolio, Index 500 Stock Portfolio, Large Company Value Portfolio, Domestic Equity Portfolio, Equity Income Portfolio, Mid Cap Growth Stock Portfolio, Index 400 Stock Portfolio, Mid Cap Value Portfolio, Small Cap Growth Stock Portfolio, Index 600 Stock Portfolio, Small Cap Value Portfolio, International Growth Portfolio, Research International Core Portfolio, International Equity Portfolio, Emerging Markets Equity Portfolio, Money Market Portfolio, Short-Term Bond Portfolio, Select Bond Portfolio, Long-Term U.S. Government Bond Portfolio, Inflation Protection Portfolio, High Yield Bond Portfolio, Multi-Sector Bond Portfolio, Balanced Portfolio, Asset Allocation Portfolio. |
Item 29. Indemnification
(a) That portion of the By-laws of the Depositor, Northwestern Mutual, relating to indemnification of Trustees and officers is set forth in full in Article VII of the By-laws of Northwestern Mutual, amended by resolution and previously filed as Exhibit A(6)(b) to the registration statement of Northwestern Mutual Variable Life Account (File No. 333-59103) on July 15, 1998.
(b) Section 10 of the Distribution Agreement dated May 1, 2006 between Northwestern Mutual and Northwestern Mutual Investment Services, LLC (“NMIS”) provides substantially as follows:
B. Indemnification by Company. The Company agrees to indemnify, defend and hold harmless NMIS, its successors and assigns, and their respective officers, directors, and employees (together referred to as “NMIS Related Persons”), from any and all joint or several losses, claims,
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damages or liabilities (including any reasonable investigative, legal and other expenses incurred in connection with, and any amounts paid in settlement of, any action, suit or proceeding or any claim asserted), to which NMIS and/or any NMIS Related Persons may become subject, under any law, regulation or NASD rule, at common law or otherwise, that arises out of or are based upon (i) any breach of this Agreement by the Company and (ii) any untrue statement of or omission to state a material fact (except for information supplied by or on behalf of NMIS or for which NMIS is responsible) contained in any Registration Statement, Contract prospectus, SAI or supplement thereto or in any Marketing Material.
This indemnification shall be in addition to any liability that the Company may otherwise have; provided, however, that no person shall be entitled to indemnification pursuant to this provision for any loss, claim, damage or liability due to the willful misfeasance, bad faith or gross negligence or reckless disregard of duty by the person seeking indemnification.
C. Indemnification by NMIS. NMIS agrees to indemnify, defend and hold harmless the Company, its successors and assigns, and their respective officers, trustees or directors, and employees (together referred to as “Company Related Persons”), from any and all joint or several losses, claims, damages or liabilities (including any reasonable investigative, legal and other expenses incurred in connection with, and any amounts paid in settlement of, any action, suit or proceeding or any claim asserted), to which the Company and/or any Company Related Persons may become subject, under any law, regulation or NASD rule, at common law or otherwise, that arises out of or are based upon (i) any breach of this Agreement by NMIS and (ii) any untrue statement of or omission to state a material fact (except for information supplied by or on behalf of the Company or for which the Company is responsible) contained in any Registration Statement, Contract prospectus, SAI or supplement thereto or in any Marketing Material, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon information furnished in writing by NMIS to the Company specifically for use in the preparation of the aforesaid material.
This indemnification shall be in addition to any liability that NMIS may otherwise have; provided however, that no person shall be entitled to indemnification pursuant to this provision for any loss, claim, damage or liability due to the willful misfeasance, bad faith or gross negligence or reckless disregard of duty by the person seeking indemnification.
D. Indemnification Generally. Any person seeking indemnification under this section shall promptly notify the indemnifying party in writing after receiving notice of the commencement of any action as to which a claim for indemnification will be made; provided, however, that failure to so notify the indemnifying party shall not relieve such party from any liability which it may have to such person otherwise than on account of this section.
The indemnifying party shall be entitled to participate in the defense of the indemnified person but such participation will not relieve such indemnifying party of the obligation to reimburse the indemnified party for reasonable legal and other expenses incurred by such party in defending himself, herself or itself.
Item 30. Principal Underwriters
(a) NMIS is the principal underwriter of the securities of the Registrant. NMIS is also the principal underwriter for the NML Variable Annuity Account A (811-21887), the NML Variable Annuity Account B (811-1668), the NML Variable Annuity Account C (811-21886), and the Northwestern Mutual Variable Life Account II (811-21933).
(b) As of April 1, 2015, the directors and officers of NMIS are as follows:
| Name |
Position | |||
| Jason T. Anderson |
Assistant Treasurer | |||
| Rebekah B. Barsch |
Vice President, Planning and Sales | |||
| Pency P. Byhardt |
Vice President, Annuity Operations | |||
| Michael G. Carter |
Director | |||
| Linda C. Donahue |
NMIS Anti-Money Laundering (AML) Officer | |||
| Bradley L. Eull |
Secretary | |||
| Christina H. Fiasca |
Vice President, Product Finance | |||
| Don P. Gehrke |
Director, Retail Investment Operations |
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| Timothy J. Gerend |
Director, Senior Vice President, Agencies | |||
| John M. Grogan |
Director, Senior Vice President, Insurance and Investment Products | |||
| Thomas C. Guay |
Vice President, Field Rewards | |||
| David P. Harley |
Director, Investment Services | |||
| Andrew E. Iggens |
Assistant Treasurer | |||
| Ronald P. Joelson |
Director | |||
| Jennifer W. Murphy |
Director, NMIS Home Office Supervision/Administration | |||
| Jeffrey J. Niehaus |
Director, Business Retirement Markets | |||
| K. David Nunley |
Assistant Treasurer | |||
| Gregory C. Oberland |
Executive Officer, Agencies, Sales and Marketing | |||
| Jennifer O’Leary |
Treasurer and Financial and Operations Principal | |||
| Travis T. Piotrowski |
Vice President, Policyowner Services | |||
| Monica M. Riederer |
Assistant Secretary | |||
| Daniel A. Riedl |
Vice President, Chief Operating Officer | |||
| Bethany M. Rodenhuis |
Senior Vice President, Agencies Strategy and Services | |||
| Calvin R. Schmidt |
Director, Senior Vice President, Integrated Operations | |||
| Sarah R. Schneider |
Vice President, New Business | |||
| Todd M. Schoon |
Senior Vice President, Field Relations | |||
| Sarah E. Schott |
Vice President, Compliance/Best Practices | |||
| David W. Simbro |
Senior Vice President, Life and Annuity Product | |||
| Todd W. Smasal |
Director, Human Resources | |||
| David G. Stoeffel |
Director, President and Chief Executive Officer | |||
| Kellen A. Thiel |
Director, Investment Products | |||
| Jeffrey B. Williams |
Vice President, NMIS Compliance, and Chief Compliance Officer | |||
| Brian D. Wilson |
Vice President, National Sales |
The address for each director and officer of NMIS is 611 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
(c) NMIS, the principal underwriter, received $5,607,850 of commissions and other compensation, directly or indirectly, from Registrant during the last fiscal year.
Item 31. Location of Accounts and Records
All accounts, books or other documents required to be maintained in connection with the Registrant’s operations are maintained in the physical possession of Northwestern Mutual at 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
Item 32. Management Services
There are no management-related service contracts, other than those referred to in Part A or Part B of this Registration Statement, under which management-related services are provided to the Registrant and pursuant to which total payments of $5,000 or more were made during any of the last three fiscal years.
Item 33. Fee Representation
The Northwestern Mutual Life Insurance Company hereby represents that the fees and charges deducted under the variable life insurance policies which are the subject of this registration statement, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the insurance company under the policies.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the Investment Company Act of 1940, the Registrant, Northwestern Mutual Variable Life Account, certifies that it meets all of the requirements for effectiveness of this Amended Registration pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amended Registration Statement to be signed on its behalf, in the City of Milwaukee, and State of Wisconsin, on the 27th day of April, 2015.
| NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT (Registrant) | ||
| By |
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY (Depositor) | |||
| Attest: |
/s/ RAYMOND J. MANISTA |
By: |
/s/ JOHN E. SCHLIFSKE | |||
| Raymond J. Manista, |
John E. Schlifske, | |||||
| General Counsel and Secretary |
President and Chief Executive Officer |
Pursuant to the requirements of the Securities Act of 1933, this Amended Registration Statement has been signed by the Depositor on the 27th day of April, 2015.
| THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY (Depositor) |
| Attest: |
/s/ RAYMOND J. MANISTA |
By: |
/s/ JOHN E. SCHLIFSKE | |||
| Raymond J. Manista, |
John E. Schlifske, | |||||
| General Counsel and Secretary |
President and Chief Executive Officer |
Pursuant to the requirements of the Securities Act of 1933, this Amended Registration Statement has been signed below by the following persons in the capacities with the Depositor and on the dates indicated:
| Signature |
Title | |||
| Chairman, Trustee and | ||||
| /s/ JOHN E. SCHLIFSKE |
Chief Executive Officer; | |||
| John E. Schlifske |
Principal Executive Officer | |||
| /s/ MICHAEL G. CARTER |
Chief Financial Officer and | |||
| Michael G. Carter |
Principal Financial Officer | |||
| /s/ TODD JONES |
Vice President and Controller; | |||
| Todd Jones |
Principal Accounting Officer | |||
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| /s/ John N. Balboni* |
Trustee | |||
| John N. Balboni |
||||
| /s/ David J. Drury* |
Trustee | |||
| David J. Drury |
||||
| /s/ Connie K. Duckworth* |
Trustee | |||
| Connie K. Duckworth |
||||
| /s/ James P. Hackett* |
Trustee | |||
| James P. Hackett |
||||
| /s/ P. Russell Hardin* |
Trustee | |||
| P. Russell Hardin |
||||
| /s/ Hans Helmerich* |
Trustee | |||
| Hans Helmerich |
||||
| /s/ Dale E. Jones* |
Trustee | |||
| Dale E. Jones |
||||
| /s/ Margery Kraus* |
Trustee | |||
| Margery Kraus |
||||
| /s/ David J. Lubar* |
Trustee | |||
| David J. Lubar |
||||
| /s/ Ulice Payne, Jr.* |
Trustee | |||
| Ulice Payne, Jr. |
||||
| /s/ John E. Schlifske* |
Trustee | |||
| John E. Schlifske |
||||
| /s/ Mary Ellen Stanek* |
Trustee | |||
| Mary Ellen Stanek |
||||
| /s/ S. Scott Voynich* |
Trustee | |||
| S. Scott Voynich |
||||
| /s/ Ralph A. Weber* |
Trustee | |||
| Ralph A. Weber |
||||
| /s/ Barry L. Williams* |
Trustee | |||
| Barry L. Williams |
||||
| /s/ Benjamin F. Wilson* |
Trustee | |||
| Benjamin F. Wilson |
||||
| /s/ Edward J. Zore* |
Trustee | |||
| Edward J. Zore |
||||
| *By: |
|
/s/ JOHN E. SCHLIFSKE | ||
| John E. Schlifske, Attorney in fact, pursuant to the Power of Attorney filed herewith. |
Each of the signatures is affixed as of April 27, 2015.
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EXHIBIT INDEX
EXHIBITS FILED WITH FORM N-6
POST-EFFECTIVE AMENDMENT NO. 45 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FOR
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
|
Exhibit |
Description | |||||||
| (j)(h) | Power of Attorney |
Filed herewith | ||||||
| (k) | Opinion and Consent of Raymond J. Manista, Esq. dated April 27, 2015 |
Filed herewith | ||||||
| (n) | Consent of PricewaterhouseCoopers LLP dated April 27, 2015 |
Filed herewith | ||||||
| (q) | Memorandum describing Issuance, Transfer and Redemption Procedures |
Filed herewith |
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