REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |
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Pre-Effective Amendment No. |
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Post-Effective Amendment No. 34 |
/ X / |
and/or |
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |
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Amendment No. 98 |
/ X / |
(Check appropriate box or boxes.) |
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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, Executive Vice President, Chief Legal Officer and
Secretary The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202 |
(Name and Address of Agent for Service) |
Approximate Date of Proposed Public Offering |
Continuous |
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immediately upon filing pursuant to paragraph (b) of Rule 485 |
X |
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on May 1, 2022 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. |
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FEES AND EXPENSES |
Cross-Reference(s)
to Location in
Prospectus | ||
Charges for Early
Withdrawals |
If you surrender your Policy (or change to paid-up insurance or upon a partial
surrender) in the first fifteen Policy Years you will be assessed surrender
charges of up to 40% of scheduled premium paid toward your death
benefit. For example, if you surrender your Policy and the total amount of scheduled
premium you paid toward your death benefit was $100,000, you could pay a
surrender charge of up to $40,000.
Withdrawals of Excess Amount are subject to a $25 administrative charge
(currently waived) for each withdrawal request. |
Fee and Expense
Tables – Transaction
Fees (Administrative
Surrender Charge,
Premium Surrender
Charge and
Administrative
Charge for
Withdrawals)
Also see Other Benefits Available Under the Policy – Paid-Up Insurance and Policy Loans, Automatic Premium Loans, and Withdrawals –Withdrawals | ||
Transaction Charges |
In addition to surrender charges and withdrawal charges, you may also be
charged for other transactions, such as certain tax-related
charges, a front-end sales load, charges for transferring between
investment options, as well as charges for expedited delivery or
wire transfers. |
Fee and Expense
Tables – Transaction
Fees | ||
Ongoing Fees and
Expenses
(annual charges) |
In addition to the charges above, investment in the Policy is subject to ongoing
fees and expenses, including fees covering the cost of insurance and optional
benefits available under the Policy. These fees are based on information as of
December 31, 2021, may change from year to year, and are generally based on
characteristics of the insured (e.g., age, sex and rating
classification). You should review your Policy specifications page for specific rates applicable under
your Policy.
You bear the expenses associated with the Portfolios available under your
Policy, the range for which is shown in the following table: |
Fee and Expense
Tables – Periodic
Charges (Other than
Portfolio Operating
Expenses)
Fee and Expense
Tables – Annual
Portfolio Operating
Expenses | ||
Annual Fee |
Minimum* |
Maximum* | ||
Investment Options
( Portfolio company
fees and expenses) |
0.21% |
1.28% | ||
* As a percentage of Portfolio assets. | ||||
|
RISKS |
| ||
Risk of Loss |
You can lose money by investing in the Policy, including loss of principal. |
Risks of the Policy
–Investment Risk
and The Funds | ||
Not a Short-Term
Investment |
The Policy is not a short-term investment and is not appropriate for you if you
need ready access to cash. Surrender charges apply in the first
15 Policy Years
and the value of your Policy and death benefit will be reduced if you withdraw
money. In addition, short-term investment in the P olicy may subject you to
income taxes and tax penalties. |
Risks of the Policy –
Policy for Long-Term
Protection |
|
RISKS |
Cross-Reference(s)
to Location in
Prospectus | ||
Risks Associated
with Investment
Options |
Investment in the Policy is subject to the risk of poor investment performance
and can vary depending on the performance of the investment options ( Portfolios) available under the Policy. Each Portfolio will have its own unique
risks and you should review these investment options before making an
investment decision. |
Risks of the Policy –
Investment Risk
| ||
Insurance Company
Risks |
Investment in the Policy is subject to the risks related to Northwestern Mutual,
and any obligations, guarantees, or benefits are subject to the claims-paying
ability of Northwestern Mutual. More information about Northwestern Mutual,
including its financial strength ratings, is available upon request by calling
toll free (866) 424-2609. |
Risks of the Policy
–Investment Risk
Also see The Company section | ||
Policy Lapse |
Insufficient premium payments, poor investment results, withdrawals, unpaid
loans, or loan interest may cause your Policy to lapse, meaning you will no
longer have any life insurance coverage and death benefits will not be paid.
After lapse, you may reinstate the Policy subject to certain conditions described
in the Prospectus, including the payment of any premium required to keep the
Policy in force. |
Risks of the Policy –
Policy Lapse
Information About
the Policy –
Reinstatement | ||
|
RESTRICTIONS |
| ||
Investments |
Transfers from the Divisions must be in amounts greater than or equal to 1% of
assets in the Divisions, may be subject to charges, and are subject to the
Policy’s short-term and excessive trading policies. These short-term and excessive trading policies may trigger additional restrictions on your Policy. Currently, there is no charge when you transfer Invested Assets among Divisions .
However, we reserve the right to charge $25 for each transfer. You may invest
in up to 10 Divisions at a time.
Under certain circumstances Northwestern Mutual reserves the right to
remove a Portfolio or substitute another Portfolio or mutual fund for such
Portfolio. |
Information about
the Policy – Other
Policy Transactions
(Transfers Between
Divisions and Short-
Term and Excessive
Trading)
Information about
the Policy – Other
Policy Transactions
(Substitution of
Portfolio Shares and
Other Changes) | ||
Optional Benefits |
Optional benefits are subject to additional charges and payments made under
these benefits are generally subject to the same transaction fees
as other premium payments but may be treated differently for
other purposes (e.g., certain death benefit minimums). Optional
benefits are not available for all ages (or may terminate at
certain ages) and underwriting classifications. Because we no
longer issue the Policy, certain optional benefits may only be
available upon mutual agreement. We may stop offering an optional
benefit at any time. |
Information About
the Policy – Other
Benefits Available
Under the Policy | ||
|
TAXES |
| ||
Tax Implications |
You should consult with a tax professional to determine the tax implications of
an investment in, and payments received under, the Policy. There is no
additional tax benefit if the Policy is purchased through a tax-qualified plan or
individual retirement account (IRA). Withdrawals will generally be subject to
ordinary income tax, and may be subject to tax
penalties. |
Tax Considerations | ||
|
CONFLICTS OF INTEREST |
| ||
Investment
Professional
Compensation |
We no longer issue the Policy to new owners. The Policy was sold exclusively
through financial representatives of Northwestern Mutual’s affiliated broker-
dealer, who are compensated with a commission based on a percentage of
premium, and Northwestern Mutual may share revenue it earns on the Policy
with its affiliated broker-dealer. These financial representatives may have, or
had, a financial incentive to offer or recommend the Policy, or another policy
issued by Northwestern Mutual, over other investments. |
Distribution of the
Policy
Also see Deductions and Charges – Commissions Paid to Financial Representatives |
|
CONFLICTS OF INTEREST |
Cross-Reference(s)
to Location in
Prospectus | ||
Exchanges |
We no longer issue the Policy to new owners. Some financial representatives
may have a financial incentive to offer a policy issued by Northwestern Mutual
in place of one you already own. You should only exchange an existing policy if
you determine, after comparing the features, fees and risks of
both policies, that it is preferable to purchase a policy issued
by Northwestern Mutual (or any
other policy) rather than continue to own the existing policy.
|
None |
Charge |
When Charge is Deducted |
Maximum Guaranteed Charge |
Current Charge |
State Premium Tax
Charge |
Upon each Premium
Payment |
3.5% of the premium
(includes both “State
Premium Tax Charge” and
“Other Premium Expense
Charge”) |
2% of premiums1 |
Other Premium Expense
Charge2 |
Upon each Premium
Payment |
0.80% of premiums1 | |
Sales Load |
Upon each Premium
Payment |
4.5% of the premium |
4.5% of the premium |
Administrative Charge
for Withdrawals |
Upon a withdrawal of
Excess Amount |
$25 |
Currently waived |
Administrative Surrender
Charge |
Upon surrender, change
to paid-up insurance, or
partial surrender |
Same as current charge |
$216 plus $1.08 per $1,000 of Minimum
Guaranteed Death Benefit and Additional
Protection for the first Policy Year, graded down
linearly each year to zero at the beginning of the
tenth Policy Year |
Premium Surrender
Charge3 |
Upon surrender, change
to paid-up insurance, or
partial surrender before
payment of a scheduled
premium that is due at
the beginning of the
fifteenth Policy Year |
Same as current charge |
Up to 40% of the sum of an annual premium for
the Minimum Guaranteed Death Benefit
(exclusive of the Policy Fee and exclusive of any
charge for extra mortality) plus a term insurance
premium for the initial amount of Additional
Protection
Minimum: $0.26 per $1000 of Minimum
Guaranteed Death Benefit (for a female, Issue
Age 1, after the year 14 Premium Payment) plus
$0.08 per $1000 of Additional Protection
Maximum: $38.16 per $1000 of Minimum
Guaranteed Death Benefit plus $26.30 per $1000
of Additional Protection (for a male, Issue Age 75,
Premier Tobacco or Preferred Tobacco, after 5-10
years of Premium Payments)
Representative: $5.05 per $1000 of Minimum
Guaranteed Death Benefit plus $0.76 per $1000
of Additional Protection (for a male, Issue Age 35,
Premier Non-Tobacco or Preferred Non-Tobacco,
after 5-10 years of Premium Payments) |
Fee for Transfer of Assets |
Upon transfer of assets
among the Divisions |
$25 |
Currently waived |
Expedited Delivery
Charge4 |
When express mail
delivery is requested |
$50 per delivery (up to $75
for next day, a.m. delivery)
adjusted for inflation5 |
$15 per delivery (up to $45 for next day, a.m.
delivery) |
Wire Transfer Fee4 |
When a wire transfer is
requested |
$50 per transfer (up to $100
for international wires)
adjusted for inflation5 |
$25 per transfer (up to $50 for international wires) |
Charge |
When Charge is Deducted |
Maximum Guaranteed Charge |
Current Charge |
Charge for
Administrative Costs |
At Policy Date and
annually on the Policy
Anniversary |
$84 plus $0.12 per $1,000 of
both the Minimum
Guaranteed Death Benefit
and the Additional Protection |
$60 |
Charge for Issuance
Expenses |
At Policy Date and
annually on the Policy
Anniversary for each of
the first ten Policy Years |
Same as current amount |
$24 plus $0.12 per $1,000 of Minimum
Guaranteed Death Benefit and Additional
Protection |
Charge for Guarantee of
the Minimum
Guaranteed Death
Benefit |
At Policy Date and
annually on the Policy
Anniversary |
Same as current amount |
$0.12 per $1,000 of Minimum Guaranteed Death
Benefit |
Charge for Cost of
Insurance— Maximum
and Minimum2 Charge
for Cost of Insurance
Representative2 |
At Policy Date and
annually on the Policy
Anniversary |
Same as current amount |
Maximum: $1,000 per $1,000 of net amount at
risk (at age 99)3 Minimum: $0.69 per $1,000 of net amount at risk (for a female Insured age 10)3
Representative: $7.82 per $1,000 of net amount
at risk (for a male Insured age 55 in the Premier
Non-Tobacco or Preferred Non-Tobacco
underwriting classification)3 |
Charge for Mortality and
Expense Risks |
Daily |
Annual rate of .60% of the
assets of the Separate
Account |
Annual rate of .45% of the assets of the Separate
Account3 |
Charge for Waiver of
Premium Rider4 |
At Policy Date and
annually on the Policy
Anniversary to age 65 |
Same as current amount |
Maximum: 5.1% of premium (Issue Age 57)
Minimum: 1.3% of premium (Issue Age 0-9)
Representative: 2.5% of premium (Issue Age 35) |
Charge for Additional
Purchase Benefit4 |
At Policy Date and
annually on the Policy
Anniversary to age 40 |
Same as current amount |
Maximum: $2.21 per $1,000 of the benefit (Issue Age 38)5
Minimum: $0.54 per $1,000 of the benefit (Issue
Age 0)5 Representative: $0.54 per $1,000 of the benefit (the most common Issue Age is 0) |
Charge |
When Charge is Deducted |
Maximum Guaranteed Charge |
Current Charge |
Extra Premium for
Insureds Who Qualify as
Sub-Standard Risks4 |
At Policy Date and
annually on the Policy
Anniversary and with
each unscheduled
premium |
Same as current amount |
Up to $53.63 per $1,000 of Minimum Guaranteed
Death Benefit and Additional Protection plus up
to 37.2% of any (optional) additional premium6 Maximum: $53.63 per $1,000 of the Minimum Guaranteed Death Benefit and Additional Protection plus 10.3% of additional premium paid (for a male, Issue Age 75, Class 9 Non-Tobacco or Class 7 Tobacco, with additional premium paid at age 75) Minimum: $0.66 per $1,000 of the Minimum Guaranteed Death Benefit and Additional Protection plus 5.6% of additional premium paid (for a female, Issue Ages 0-3, Class 1 Non- Tobacco, with additional premium paid at ages 0-15) Representative: $3.76 per $1,000 of the Minimum Guaranteed Death Benefit and Additional Protection plus 11.0% of additional premium paid (for a male, Issue Age 35, Class 2 Non-Tobacco or Standard Plus Tobacco) |
Charge for Mortality and
Expense Risks and
Expenses for Loans7 |
Daily |
Annual rate of 1.00% of
Policy Debt |
When the Insured is Attained Age 99 and below: Annual rate of 0.90% of Policy Debt3; When the Insured is Attained Age 100 and above: Annual rate of 0.60% of Policy Debt3
|
|
Minimum |
Maximum |
Annual Portfolio Operating Expenses (expenses deducted from Portfolio assets, including management fees,
distribution (12b-1) fees, and other expenses as a percentage of average Portfolio assets) |
0.21% |
1.28% |
Annual Portfolio Operating Expenses After Contractual Fee Waiver or Reimbursement* |
0.19% |
1.12% |
Annual Premium |
Periodic Premium |
Annual Sum of Periodic
Premiums |
Annual Sum of Periodic Premiums
Minus the Annual Premium |
Annual Percentage Rate
(APR) |
MONTHLY PREMIUMS | ||||
$1,000.00 |
$86.80 |
$1,041.60 |
$41.60 |
9.00% |
5,000.00 |
432.00 |
5,184.00 |
184.00 |
7.97% |
10,000.00 |
863.50 |
10,362.00 |
362.00 |
7.84% |
QUARTERLY PREMIUMS | ||||
1,000.00 |
259.30 |
1,037.20 |
37.20 |
9.96% |
5,000.00 |
1,288.50 |
5,154.00 |
154.00 |
8.24% |
10,000.00 |
2,575.00 |
10,300.00 |
300.00 |
8.03% |
SEMIANNUAL PREMIUMS | ||||
1,000.00 |
510.95 |
1,021.90 |
21.90 |
8.96% |
5,000.00 |
2,549.35 |
5,098.70 |
98.70 |
8.06% |
10,000.00 |
5,097.35 |
10,194.70 |
194.70 |
7.94% |
Age at Issue |
Minimum
Guaranteed Death Benefit |
Premium for
Minimum Guaranteed Death
Benefit |
Additional
Protection |
Premium for
Additional Protection |
Total Premium
|
|
SELECT or PREMIER NON-TOBACCO or PREFERRED NON-TOBACCO |
||||
15 |
$200,000 |
$1,292 |
$200,000 |
$588 |
$1,880 |
35 |
200,000 |
2,610 |
200,000 |
1,010 |
3,620 |
55 |
200,000 |
6,618 |
200,000 |
3,320 |
9,938 |
|
STANDARD PLUS or STANDARD PLUS NON-TOBACCO | ||||
15 |
$200,000 |
$1,406 |
$200,000 |
$608 |
$2,014 |
35 |
200,000 |
2,874 |
200,000 |
1,118 |
3,992 |
55 |
200,000 |
7,196 |
200,000 |
4,428 |
11,624 |
|
STANDARD or PREMIER TOBACCO or PREFERRED TOBACCO | ||||
15 |
$200,000 |
$1,612 |
$200,000 |
$740 |
$2,352 |
35 |
200,000 |
3,362 |
200,000 |
1,310 |
4,672 |
55 |
200,000 |
8,650 |
200,000 |
6,380 |
15,030 |
Name of Benefit |
Purpose |
Is Benefit Standard or
Optional |
Brief Description of
Limitations/Restrictions |
Waiver of Premium Benefit |
Permits an Insured who has become totally
disabled to waive the payment of premiums due |
Optional |
•Not available for all ages and/or underwriting classifications •The disability must
result from an
accident or
sickness
•There is a charge for this benefit •If not elected at
issue, only
available upon
mutual agreement |
Additional Purchase Benefit |
Allows the Owner to purchase additional life
insurance protection without proof of insurability |
Optional |
•Not available for all ages and/or underwriting classifications •There is a charge
for this benefit
•If not elected at issue, only available upon mutual agreement |
Name of Benefit |
Purpose |
Is Benefit Standard or
Optional |
Brief Description of
Limitations/Restrictions |
Income Plans |
In lieu of a lump sum, the Death Benefit and
surrender proceeds may be payable in a monthly
(or less frequent) payments over a period of time |
Standard |
•Must be selected by owner •Payments are
subject to fixed
rates and not
investment
performance of the
Portfolios
•For death benefit proceeds, must be selected while the Insured is living or within 60 days after the death of the insured |
Right to Exchange for a Fixed
Benefit Policy |
Allows you to exchange your Policy for a life
insurance policy with benefits that do not vary with
the investment experience of the underlying
Portfolios |
Standard |
•Requires premium payments be paid •There may be a
cost associated
with exchange
•Exchange may have tax consequences |
Paid-up Insurance |
Under certain conditions allows the Owner to
change the Policy to a policy free of minimum
premium payment obligations |
Standard |
•Must be selected by owner before grace period if variable benefit paid-up insurance is elected •Election is
irrevocable and
requires minimum
Cash Value
•Policy Debt and charges continue •When in force as
Paid-up insurance,
no additional
premium is allowed
on the Policy, your
Death Benefit
option will be
irrevocably
changed and you
may not add
optional benefits to
the Policy |
Dollar Cost Averaging |
On a monthly basis, automatically transfers a
specific amount from the Government Money
Market Division into the other Divisions you have
selected |
Standard |
•Must be selected by owner |
Name of Benefit |
Purpose |
Is Benefit Standard or
Optional |
Brief Description of
Limitations/Restrictions |
Asset Allocation Models |
Allocation models are available that comprise a
combination of Divisions representing various asset
classes with various levels of risk tolerance. |
Standard |
•Must be selected
by owner
•Only one model is available at a time •Models are “static”
and therefore the
Owner must make
an affirmative
election to change
models
•Available models may change in the future |
Moderately Conservative |
This combination of Divisions has Portfolios that generally invest in
fixed income securities and a mix of equity securities with a
majority emphasis on fixed income investments in order to preserve
principal, provide liquidity and income and to seek modest
growth. |
Balanced |
This combination of Divisions has Portfolios that generally invest in a
mix of fixed income and equity securities in order to preserve
principal and pursue sustained long-term growth without the
volatility of high- risk investments. |
Aggressive |
This combination of Divisions has Portfolios that generally invest in a
mix of equity securities and some fixed income securities in order
to primarily pursue long-term growth while willing to accept the
volatility associated with high-risk investments.
|
Very Aggressive |
This combination of Divisions has Portfolios that invest in almost entirely in a variety of equity securities in order to achieve higher potential growth while assuming the risks and higher volatility associated with these securities. |
For Policies surrendered after payment at the beginning of year |
Premium Surrender Charge Percentage | |
Issue age 65 and under |
Issue age 75 | |
1 |
24% |
24% |
2 |
28% |
25.5% |
3 |
32% |
27% |
4 |
36% |
28.5% |
5 through 10 |
40% |
30% |
11 |
32% |
24% |
12 |
24% |
18% |
13 |
16% |
12% |
14 |
8% |
6% |
15 and later |
0% |
0% |
Investment
Objective |
Portfolio and Adviser/ Sub-adviser (if applicable) |
Current
Expenses |
Average Annual
Total Returns
(as of 12/31/2021) | |||
1 Year |
5 Year |
10 Year | ||||
Long-term growth of
capital; current income is
a secondary objective |
Growth Stock Portfolio2 |
Mason Street Advisors, LLC
(MSA)/T. Rowe Price
Associates, Inc. |
0.42% |
16.67% |
20.77% |
16.66% |
Long-term growth of
capital |
Focused Appreciation
Portfolio2 |
MSA/Loomis, Sayles &
Company, L.P. |
0.62%1 |
18.90% |
22.10% |
18.67% |
Long-term growth of
capital and income |
Large Cap Core Stock
Portfolio2 |
MSA/Wellington
Management Company LLP |
0.43%1 |
25.10% |
18.77% |
14.40% |
Long-term growth of
capital and income |
Large Cap Blend
Portfolio2 |
MSA/Fiduciary Management,
Inc. |
0.78%1 |
18.46% |
13.05% |
13.30% |
Investment results that
approximate the
performance of the
Standard & Poor’s 500®
Composite Stock Price
Index |
Index 500 Stock
Portfolio2 |
MSA/BlackRock Advisors, LLC |
0.19%1 |
28.45% |
18.22% |
16.30% |
Long-term growth of
capital; income is a
secondary objective |
Large Company Value
Portfolio2 |
MSA/American Century
Investment Management,
Inc. |
0.71%1 |
21.92% |
10.32% |
12.10% |
Long-term growth of
capital and income |
Domestic Equity
Portfolio2 |
MSA/Delaware Investments
Fund Advisers, a series of
Macquarie Investment
Management Business Trust |
0.49%1 |
22.71% |
10.54% |
12.71% |
Long-term growth of
capital and income |
Equity Income Portfolio2 |
MSA/T. Rowe Price
Associates, Inc |
0.57%1 |
25.70% |
11.16% |
11.93% |
Long-term growth of
capital |
Mid Cap Growth Stock
Portfolio2 |
MSA/Wellington
Management Company LLP |
0.52%1 |
10.18% |
15.41% |
12.23% |
Investment results that
approximate the
performance of the
Standard & Poor’s
MidCap 400® Stock Price
Index |
Index 400 Stock
Portfolio2 |
MSA/Northern trust
Investments, Inc. |
0.24%1 |
24.46% |
12.80% |
13.91% |
Long-term growth of
capital; current incomes is
a secondary objective |
Mid Cap Value Portfolio2 |
MSA/American Century
Investment Management,
Inc. |
0.72%1 |
23.27% |
9.55% |
13.02% |
Long-term growth of
capital |
Small Cap Growth Stock
Portfolio2 |
MSA/Wellington
Management Company LLP |
0.54% |
4.11% |
15.15% |
14.16% |
Investment results that
approximate the
performance of the
Standard & Poor’s
SmallCap 600® Index |
Index 600 Stock
Portfolio2 |
MSA/Northern Trust
Investments, Inc. |
0.27% |
26.22% |
12.05% |
14.08% |
Long-term growth of
capital |
Small Cap Value
Portfolio2 |
MSA/T. Rowe Price
Investment Management, Inc |
0.92%1 |
23.00% |
10.52% |
12.23% |
Long-term growth of
capital |
International Growth
Portfolio2 |
MSA/FIAM LLC |
0.61%1 |
15.92% |
16.28% |
10.54% |
Capital appreciation |
Research International
Core Portfolio2 |
MSA/Massachusetts
Financial Services Company |
0.73%1 |
12.07% |
12.54% |
8.62% |
Investment
Objective |
Portfolio and Adviser/ Sub-adviser (if applicable) |
Current
Expenses |
Average Annual
Total Returns
(as of 12/31/2021) | |||
1 Year |
5 Year |
10 Year | ||||
Long-term growth of
capital; any income
realized will be incidental |
International Equity
Portfolio2 |
MSA/Dodge & Cox |
0.68% |
5.00% |
3.54% |
4.88% |
Capital appreciation |
Emerging Markets Equity
Portfolio2 |
MSA/Aberdeen Asset
Managers Limited |
0.89%1 |
-4.55% |
9.99% |
5.00% |
Maximum current income
to the extent consistent
with liquidity and stability
of capital3 |
Government Money
Market Portfolio |
MSA/BlackRock Advisors, LLC |
0.33% |
0.01% |
0.88% |
0.48% |
Provide as high a level of
current income as is
consistent with prudent
investment risk |
Short-Term Bond
Portfolio2 |
MSA/T. Rowe Price
Associates, Inc |
0.38% |
-0.10% |
2.24% |
1.65% |
Provide as high a level of
total return consistent
with prudent investment
risk; a secondary
objective is to seek
preservation of
shareholders’ capital |
Select Bond Portfolio2 |
MSA/Allspring Global
Investments, LLC |
0.30%1 |
-1.59% |
3.79% |
3.07% |
Maximum total return,
consistent with
preservation of capital
and prudent investment
management |
Long-Term U.S.
Government Bond
Portfolio2 |
MSA/Pacific Investment
Management Company LLC |
0.67% |
-5.37% |
5.92% |
3.99% |
Pursue total return using
a strategy that seeks to
protect against U.S.
inflation |
Inflation Protection
Portfolio2 |
MSA/American Century
Investment Management,
Inc. |
0.53%1 |
6.61% |
5.14% |
2.93% |
High current income and
capital appreciation |
High Yield Bond
Portfolio2 |
MSA/Federated Investment
Management Company |
0.44% |
5.31% |
6.07% |
6.35% |
Maximum total return,
consistent with prudent
investment management |
Multi-Sector Bond
Portfolio2 |
MSA/Pacific Investment
Management Company LLC |
0.71%1 |
-0.08% |
5.28% |
5.08% |
Realize as high a level of
total return as is
consistent with prudent
investment risk, through
income and capital
appreciation |
Balanced Portfolio2 |
MSA |
0.52%1 |
7.56% |
9.06% |
7.86% |
Realize as high a level of
total return as is
consistent with
reasonable investment
risk |
Asset Allocation
Portfolio2 |
MSA |
0.60%1 |
10.45% |
10.64% |
9.25% |
Long-term growth of
capital |
Fidelity® VIP Mid Cap
Portfolio – Initial Class4 |
Fidelity Management &
Research Company LLC
(FMR)5 |
0.61% |
26.60% |
13.60% |
13.29% |
Long-term capital
appreciation |
Fidelity® VIP
Contrafund® Portfolio – Initial Class4 |
FMR5 |
0.60% |
27.83% |
20.17% |
16.64% |
Long-term growth of
capital by investing
primarily in securities of
companies that meet the
Portfolio’s environmental, social and governance criteria |
Sustainable Equity
Portfolio6 |
Neuberger Berman
Investment Advisers LLC |
0.89% |
23.48% |
15.72% |
14.36% |
Long-term growth of
capital |
U.S. Strategic Equity
Fund7 |
Russell Investment
Management LLC (RIM)8 |
0.84% |
20.40% |
16.22% |
15.08% |
Investment
Objective |
Portfolio and Adviser/ Sub-adviser (if applicable) |
Current
Expenses |
Average Annual
Total Returns
(as of 12/31/2021) | |||
1 Year |
5 Year |
10 Year | ||||
Long-term growth of
capital |
U.S. Small Cap Equity
Fund7 |
RIM8 |
1.12%1 |
25.79% |
12.14% |
12.39% |
Current income and long-
term growth of capital |
Global Real Estate
Securities Fund7 |
RIM8 |
0.91% |
27.19% |
9.11% |
9.25% |
Long-term growth of
capital |
International Developed
Markets Fund7 |
RIM8 |
1.02%1 |
12.66% |
8.56% |
7.83% |
Provide total return |
Strategic Bond Fund7 |
RIM8 |
0.67% |
-1.82% |
3.67% |
3.34% |
Current income and
moderate long-term
capital appreciation |
LifePoints® Variable
Target Portfolio Series
Moderate Strategy Fund7 |
RIM8 |
0.84%1 |
8.23% |
6.25% |
5.96% |
Above-average long-term
capital appreciation and a
moderate level of current
income |
LifePoints® Variable
Target Portfolio Series
Balanced Strategy Fund7 |
RIM8 |
0.92%1 |
13.04% |
8.15% |
7.67% |
High long-term capital
appreciation; and as a
secondary objective,
current income |
LifePoints® Variable
Target Portfolio Series
Growth Strategy Fund7 |
RIM8 |
0.98%1 |
17.44% |
10.11% |
9.02% |
High long-term capital
appreciation |
LifePoints® Variable
Target Portfolio Series
Equity Growth Strategy
Fund7 |
RIM8 |
1.00%1 |
19.61% |
10.60% |
9.72% |
Total return |
Commodity Return
Strategy Portfolio – Class
29 |
Credit Suisse Asset
Management, LLC |
0.78% |
28.46% |
N/A |
N/A |
Year |
Amount
|
2021 |
$555,779 |
2020 |
$631,328 |
2019 |
$834,668 |
Annual Report December 31, 2021
Northwestern Mutual Variable Life Account
Financial Statements
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of The Northwestern Mutual Life Insurance Company and the Policyowners of Northwestern Mutual Variable Life Account
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities of each of the divisions of Northwestern Mutual Variable Life Account indicated in the table below as of December 31, 2021, and the related statements of operations and of changes in net assets for each of the periods indicated in the table below, including the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the divisions of Northwestern Mutual Variable Life Account as of December 31, 2021, and the results of each of their operations and the changes in each of their net assets for the periods indicated in the table below, in conformity with accounting principles generally accepted in the United States of America.
Growth Stock Division (1) | Mid Cap Value Division (1) | Select Bond Division (1) | U.S. Strategic Equity Division (1) | |||
Focused Appreciation Division (1) | Small Cap Growth Stock Division (1) | Long-Term U.S. Government Bond Division (1) | U.S. Small Cap Equity Division (1) | |||
Large Cap Core Stock Division (1) | Index 600 Stock Division (1) | Inflation Protection Division (1) | International Developed Markets Division (1) | |||
Large Cap Blend Division (1) | Small Cap Value Division (1) | High Yield Bond Division (1) | Strategic Bond Division (1) | |||
Index 500 Stock Division (1) | International Growth Division (1) | Multi-Sector Bond Division (1) | Global Real Estate Securities Division (1) | |||
Large Company Value Division (1) | Research International Core Division (1) | Balanced Division (1) | LifePoints Moderate Strategy Division (1) | |||
Domestic Equity Division (1) | International Equity Division (1) | Asset Allocation Division (1) | LifePoints Balanced Strategy Division (1) | |||
Equity Income Division (1) | Emerging Markets Equity Division (1) | Fidelity VIP Mid Cap Division (1) | LifePoints Growth Strategy Division (1) | |||
Mid Cap Growth Stock Division (1) | Government Money Market Division (1) | Fidelity VIP Contrafund Division (1) | LifePoints Equity Growth Strategy Division (1) | |||
Index 400 Stock Division (1) | Short-Term Bond Division (1) | AMT Sustainable Equity Division (1) | Credit Suisse Trust Commodity Return Strategy Division (1) | |||
(1) Statement of operations for the year ended December 31, 2021 and statement of changes in net assets for the years ended December 31, 2021 and 2020 |
Basis for Opinions
These financial statements are the responsibility of The Northwestern Mutual Life Insurance Company management. Our responsibility is to express an opinion on the financial statements of each of the divisions of Northwestern Mutual Variable Life Account based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to each of the divisions of Northwestern Mutual Variable Life Account in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of investments owned as of December 31, 2021 by correspondence with the custodians and the transfer agents of the investee mutual funds. We believe that our audits provide a reasonable basis for our opinions.
/s/ PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
April 26, 2022
We have served as the auditor of one or more of the divisions of Northwestern Mutual Variable Life Account since 1984.
2
Northwestern Mutual Variable Life Account
Table of Contents
1 | ||||
9 | ||||
12 | ||||
22 |
Statements of Assets and Liabilities
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
December 31, 2021 (in thousands, except accumulation values)
Focused | Large Cap | |||||||||||||||||||||
Growth Stock | Appreciation | Core Stock | Large Cap | Index 500 | ||||||||||||||||||
Division | Division | Division | Blend Division | Stock Division | ||||||||||||||||||
Assets: |
||||||||||||||||||||||
Investments, at fair value (1) |
||||||||||||||||||||||
Northwestern Mutual Series Fund, Inc. | $ | 795,232 | $ | 325,534 | $ | 450,429 | $ | 16,050 | $ | 2,338,905 | ||||||||||||
Fidelity Variable Insurance Products Fund | - | - | - | - | - | |||||||||||||||||
Neuberger Berman Advisers Management Trust | - | - | - | - | - | |||||||||||||||||
Russell Investment Funds | - | - | - | - | - | |||||||||||||||||
Credit Suisse Trust | - | - | - | - | - | |||||||||||||||||
Due from Northwestern Mutual Life Insurance Company |
99 | 39 | - | - | 131 | |||||||||||||||||
Total Assets |
795,331 | 325,573 | 450,429 | 16,050 | 2,339,036 | |||||||||||||||||
Liabilities: |
||||||||||||||||||||||
Due to Northwestern Mutual Life Insurance Company |
- | - | 5 | - | - | |||||||||||||||||
Due to Participants |
- | - | - | - | - | |||||||||||||||||
Total Liabilities |
- | - | 5 | - | - | |||||||||||||||||
Total Net Assets |
$ | 795,331 | $ | 325,573 | $ | 450,424 | $ | 16,050 | $ | 2,339,036 | ||||||||||||
Net Assets: |
||||||||||||||||||||||
Variable Life Policies Issued |
||||||||||||||||||||||
Before October 11, 1995 |
||||||||||||||||||||||
Policyowners Equity |
$ | 63,920 | $ | 23,046 | $ | 48,408 | $ | 829 | $ | 305,197 | ||||||||||||
Northwestern Mutual Equity |
311 | 94 | 282 | 6 | 1,316 | |||||||||||||||||
Variable CompLife Policies Issued Between |
||||||||||||||||||||||
October 11, 1995 and December 31, 2008 (2) |
||||||||||||||||||||||
Policyowners Equity |
700,884 | 272,247 | 381,097 | 14,700 | 1,932,488 | |||||||||||||||||
Northwestern Mutual Equity |
5,089 | 2,309 | 3,003 | 128 | 13,551 | |||||||||||||||||
Variable Executive Life Policies Issued Between |
||||||||||||||||||||||
March 2, 1998 and December 31, 2008 (3) |
||||||||||||||||||||||
Policyowners Equity |
12,345 | 7,028 | 8,620 | 173 | 34,774 | |||||||||||||||||
Variable Joint Life Policies Issued Between |
||||||||||||||||||||||
December 10, 1998 and December 31, 2008 (4) |
||||||||||||||||||||||
Policyowners Equity |
12,782 | 20,849 | 9,014 | 214 | 51,710 | |||||||||||||||||
Total Net Assets |
$ | 795,331 | $ | 325,573 | $ | 450,424 | $ | 16,050 | $ | 2,339,036 | ||||||||||||
(1) |
Investments, at cost | $ | 553,371 | $ | 210,508 | $ | 310,737 | $ | 13,631 | $ | 1,035,993 | |||||||||||
Mutual Fund Shares Held | 196,693 | 75,372 | 203,906 | 11,580 | 286,035 | |||||||||||||||||
(2) |
Accumulation Unit Value | $ | 10.682204 | $ | 9.941660 | $ | 7.122039 | $ | 3.140250 | $ | 11.431009 | |||||||||||
Units Outstanding | 66,089 | 27,617 | 53,931 | 4,722 | 170,244 | |||||||||||||||||
(3) |
Accumulation Unit Value | $ | 152.095850 | $ | 108.543824 | $ | 100.458713 | $ | 27.701179 | $ | 270.376034 | |||||||||||
Units Outstanding | 81 | 65 | 86 | 6 | 129 | |||||||||||||||||
(4) |
Accumulation Unit Value | $ | 152.095850 | $ | 108.543824 | $ | 100.458713 | $ | 27.701179 | $ | 270.376034 | |||||||||||
Units Outstanding | 84 | 192 | 90 | 8 | 191 |
(a) | Amount is less than 500 |
The Accompanying Notes are an Integral Part of these Financial Statements.
F-1
Statements of Assets and Liabilities
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
December 31, 2021 (in thousands, except accumulation values)
Large | Mid Cap | |||||||||||||||||||||
Company | Domestic | Equity Income | Growth Stock | Index 400 | ||||||||||||||||||
Value Division | Equity Division | Division | Division | Stock Division | ||||||||||||||||||
Assets: |
||||||||||||||||||||||
Investments, at fair value (1) |
||||||||||||||||||||||
Northwestern Mutual Series Fund, Inc. | $ | 25,881 | $ | 248,411 | $ | 157,238 | $ | 718,967 | $ | 484,493 | ||||||||||||
Fidelity Variable Insurance Products Fund | - | - | - | - | - | |||||||||||||||||
Neuberger Berman Advisers Management Trust | - | - | - | - | - | |||||||||||||||||
Russell Investment Funds | - | - | - | - | - | |||||||||||||||||
Credit Suisse Trust | - | - | - | - | - | |||||||||||||||||
Due from Northwestern Mutual Life Insurance Company |
2 | 6 | - | - | 15 | |||||||||||||||||
Total Assets |
25,883 | 248,417 | 157,238 | 718,967 | 484,508 | |||||||||||||||||
Liabilities: |
||||||||||||||||||||||
Due to Northwestern Mutual Life Insurance Company |
- | - | 11 | 5 | - | |||||||||||||||||
Due to Participants |
- | - | - | - | - | |||||||||||||||||
Total Liabilities |
- | - | 11 | 5 | - | |||||||||||||||||
Total Net Assets |
$ | 25,883 | $ | 248,417 | $ | 157,227 | $ | 718,962 | $ | 484,508 | ||||||||||||
Net Assets: |
||||||||||||||||||||||
Variable Life Policies Issued |
||||||||||||||||||||||
Before October 11, 1995 |
||||||||||||||||||||||
Policyowners Equity |
$ | 1,691 | $ | 19,554 | $ | 11,890 | $ | 97,849 | $ | 24,463 | ||||||||||||
Northwestern Mutual Equity |
9 | 125 | 65 | 618 | 125 | |||||||||||||||||
Variable CompLife Policies Issued Between |
||||||||||||||||||||||
October 11, 1995 and December 31, 2008 (2) |
||||||||||||||||||||||
Policyowners Equity |
22,139 | 214,273 | 133,563 | 599,464 | 428,493 | |||||||||||||||||
Northwestern Mutual Equity |
190 | 2,008 | 1,222 | 4,745 | 3,405 | |||||||||||||||||
Variable Executive Life Policies Issued Between |
||||||||||||||||||||||
March 2, 1998 and December 31, 2008 (3) |
||||||||||||||||||||||
Policyowners Equity |
1,510 | 5,070 | 4,180 | 5,616 | 12,296 | |||||||||||||||||
Variable Joint Life Policies Issued Between |
||||||||||||||||||||||
December 10, 1998 and December 31, 2008 (4) |
||||||||||||||||||||||
Policyowners Equity |
344 | 7,387 | 6,307 | 10,670 | 15,726 | |||||||||||||||||
Total Net Assets |
$ | 25,883 | $ | 248,417 | $ | 157,227 | $ | 718,962 | $ | 484,508 | ||||||||||||
(1) |
Investments, at cost | $ | 21,923 | $ | 158,782 | $ | 126,457 | $ | 591,117 | $ | 324,473 | |||||||||||
Mutual Fund Shares Held | 21,694 | 128,444 | 78,072 | 182,711 | 188,299 | |||||||||||||||||
(2) |
Accumulation Unit Value | $ | 2.895333 | $ | 3.944337 | $ | 4.715128 | $ | 7.434766 | $ | 7.938833 | |||||||||||
Units Outstanding | 7,712 | 54,833 | 28,586 | 81,268 | 54,403 | |||||||||||||||||
(3) |
Accumulation Unit Value | $ | 25.131615 | $ | 43.518946 | $ | 51.480302 | $ | 213.536458 | $ | 93.570328 | |||||||||||
Units Outstanding | 60 | 117 | 81 | 26 | 131 | |||||||||||||||||
(4) |
Accumulation Unit Value | $ | 25.131615 | $ | 43.518946 | $ | 51.480302 | $ | 213.536458 | $ | 93.570328 | |||||||||||
Units Outstanding | 14 | 170 | 123 | 50 | 168 |
(a) | Amount is less than 500 |
The Accompanying Notes are an Integral Part of these Financial Statements.
F-2
Statements of Assets and Liabilities
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
December 31, 2021 (in thousands, except accumulation values)
Small Cap | International | |||||||||||||||||||||
Mid Cap Value | Growth Stock | Index 600 | Small Cap | Growth | ||||||||||||||||||
Division | Division | Stock Division | Value Division | Division | ||||||||||||||||||
Assets: |
||||||||||||||||||||||
Investments, at fair value (1) |
||||||||||||||||||||||
Northwestern Mutual Series Fund, Inc. | $ | 86,626 | $ | 420,480 | $ | 77,613 | $ | 247,791 | $ | 166,047 | ||||||||||||
Fidelity Variable Insurance Products Fund | - | - | - | - | - | |||||||||||||||||
Neuberger Berman Advisers Management Trust | - | - | - | - | - | |||||||||||||||||
Russell Investment Funds | - | - | - | - | - | |||||||||||||||||
Credit Suisse Trust | - | - | - | - | - | |||||||||||||||||
Due from Northwestern Mutual Life Insurance Company |
3 | 30 | 10 | 27 | 99 | |||||||||||||||||
Total Assets |
86,629 | 420,510 | 77,623 | 247,818 | 166,146 | |||||||||||||||||
Liabilities: |
||||||||||||||||||||||
Due to Northwestern Mutual Life Insurance Company |
- | - | - | - | - | |||||||||||||||||
Due to Participants |
- | 87 | - | - | - | |||||||||||||||||
Total Liabilities |
- | 87 | - | - | - | |||||||||||||||||
Total Net Assets |
$ | 86,629 | $ | 420,423 | $ | 77,623 | $ | 247,818 | $ | 166,146 | ||||||||||||
Net Assets: |
||||||||||||||||||||||
Variable Life Policies Issued |
||||||||||||||||||||||
Before October 11, 1995 |
||||||||||||||||||||||
Policyowners Equity |
$ | 4,520 | $ | 21,026 | $ | 5,555 | $ | 16,756 | $ | 9,296 | ||||||||||||
Northwestern Mutual Equity |
27 | 105 | 32 | 95 | 53 | |||||||||||||||||
Variable CompLife Policies Issued Between |
||||||||||||||||||||||
October 11, 1995 and December 31, 2008 (2) |
||||||||||||||||||||||
Policyowners Equity |
76,676 | 380,569 | 67,269 | 218,209 | 144,752 | |||||||||||||||||
Northwestern Mutual Equity |
686 | 3,173 | 553 | 2,015 | 1,325 | |||||||||||||||||
Variable Executive Life Policies Issued Between |
||||||||||||||||||||||
March 2, 1998 and December 31, 2008 (3) |
||||||||||||||||||||||
Policyowners Equity |
2,190 | 4,777 | 1,764 | 3,067 | 4,442 | |||||||||||||||||
Variable Joint Life Policies Issued Between |
||||||||||||||||||||||
December 10, 1998 and December 31, 2008 (4) |
||||||||||||||||||||||
Policyowners Equity |
2,530 | 10,773 | 2,450 | 7,676 | 6,278 | |||||||||||||||||
Total Net Assets |
$ | 86,629 | $ | 420,423 | $ | 77,623 | $ | 247,818 | $ | 166,146 | ||||||||||||
(1) |
Investments, at cost | $ | 71,516 | $ | 302,082 | $ | 59,262 | $ | 192,795 | $ | 97,696 | |||||||||||
Mutual Fund Shares Held | 43,378 | 130,503 | 42,021 | 96,080 | 69,186 | |||||||||||||||||
(2) |
Accumulation Unit Value | $ | 5.656306 | $ | 8.027417 | $ | 3.345869 | $ | 6.383645 | $ | 3.583669 | |||||||||||
Units Outstanding | 13,677 | 47,804 | 20,271 | 34,498 | 40,739 | |||||||||||||||||
(3) |
Accumulation Unit Value | $ | 61.756931 | $ | 108.425869 | $ | 38.363170 | $ | 70.431381 | $ | 39.539175 | |||||||||||
Units Outstanding | 35 | 44 | 46 | 44 | 112 | |||||||||||||||||
(4) |
Accumulation Unit Value | $ | 61.756931 | $ | 108.425869 | $ | 38.363170 | $ | 70.431381 | $ | 39.539175 | |||||||||||
Units Outstanding | 41 | 99 | 64 | 109 | 159 |
(a) | Amount is less than 500 |
The Accompanying Notes are an Integral Part of these Financial Statements.
F-3
Statements of Assets and Liabilities
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
December 31, 2021 (in thousands, except accumulation values)
Research | Emerging | Government | ||||||||||||||||||||
International | International | Markets Equity | Money Market | Short-Term | ||||||||||||||||||
Core Division | Equity Division | Division | Division | Bond Division | ||||||||||||||||||
Assets: |
||||||||||||||||||||||
Investments, at fair value (1) |
||||||||||||||||||||||
Northwestern Mutual Series Fund, Inc. | $ | 76,412 | $ | 520,092 | $ | 90,835 | $ | 173,841 | $ | 32,050 | ||||||||||||
Fidelity Variable Insurance Products Fund | - | - | - | - | - | |||||||||||||||||
Neuberger Berman Advisers Management Trust | - | - | - | - | - | |||||||||||||||||
Russell Investment Funds | - | - | - | - | - | |||||||||||||||||
Credit Suisse Trust | - | - | - | - | - | |||||||||||||||||
Due from Northwestern Mutual Life Insurance Company |
- | - | 5 | - | 3 | |||||||||||||||||
Total Assets |
76,412 | 520,092 | 90,840 | 173,841 | 32,053 | |||||||||||||||||
Liabilities: |
||||||||||||||||||||||
Due to Northwestern Mutual Life Insurance Company |
- | 25 | - | 532 | - | |||||||||||||||||
Due to Participants |
- | - | - | 1,278 | - | |||||||||||||||||
Total Liabilities |
- | 25 | - | 1,810 | - | |||||||||||||||||
Total Net Assets |
$ | 76,412 | $ | 520,067 | $ | 90,840 | $ | 172,031 | $ | 32,053 | ||||||||||||
Net Assets: |
||||||||||||||||||||||
Variable Life Policies Issued |
||||||||||||||||||||||
Before October 11, 1995 |
||||||||||||||||||||||
Policyowners Equity |
$ | 4,717 | $ | 61,268 | $ | 5,087 | $ | 13,941 | $ | 2,869 | ||||||||||||
Northwestern Mutual Equity |
30 | 621 | 35 | 124 | 13 | |||||||||||||||||
Variable CompLife Policies Issued Between |
||||||||||||||||||||||
October 11, 1995 and December 31, 2008 (2) |
||||||||||||||||||||||
Policyowners Equity |
65,690 | 432,081 | 78,568 | 138,391 | 24,517 | |||||||||||||||||
Northwestern Mutual Equity |
519 | 4,072 | 642 | 2,067 | 226 | |||||||||||||||||
Variable Executive Life Policies Issued Between |
||||||||||||||||||||||
March 2, 1998 and December 31, 2008 (3) |
||||||||||||||||||||||
Policyowners Equity |
2,776 | 9,031 | 2,765 | 10,569 | 2,362 | |||||||||||||||||
Variable Joint Life Policies Issued Between |
||||||||||||||||||||||
December 10, 1998 and December 31, 2008 (4) |
||||||||||||||||||||||
Policyowners Equity |
2,680 | 12,994 | 3,743 | 6,939 | 2,066 | |||||||||||||||||
Total Net Assets |
$ | 76,412 | $ | 520,067 | $ | 90,840 | $ | 172,031 | $ | 32,053 | ||||||||||||
(1) |
Investments, at cost | $ | 60,571 | $ | 574,483 | $ | 72,155 | $ | 173,841 | $ | 32,322 | |||||||||||
Mutual Fund Shares Held | 59,234 | 327,102 | 68,711 | 173,841 | 30,408 | |||||||||||||||||
(2) |
Accumulation Unit Value | $ | 1.833587 | $ | 3.746814 | $ | 1.267943 | $ | 1.559755 | $ | 1.119426 | |||||||||||
Units Outstanding | 36,109 | 116,406 | 62,471 | 90,061 | 22,103 | |||||||||||||||||
(3) |
Accumulation Unit Value | $ | 18.026460 | $ | 5.930327 | $ | 15.578805 | $ | 43.483468 | $ | 13.941366 | |||||||||||
Units Outstanding | 154 | 1,523 | 178 | 243 | 169 | |||||||||||||||||
(4) |
Accumulation Unit Value | $ | 18.026460 | $ | 5.930327 | $ | 15.578805 | $ | 43.483468 | $ | 13.941366 | |||||||||||
Units Outstanding | 149 | 2,191 | 240 | 160 | 148 |
(a) | Amount is less than 500 |
The Accompanying Notes are an Integral Part of these Financial Statements.
F-4
Statements of Assets and Liabilities
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
December 31, 2021 (in thousands, except accumulation values)
Long-Term U.S. | Inflation | |||||||||||||||||||||
Select Bond | Government | Protection | High Yield | Multi-Sector | ||||||||||||||||||
Division | Bond Division | Division | Bond Division | Bond Division | ||||||||||||||||||
Assets: |
||||||||||||||||||||||
Investments, at fair value (1) |
||||||||||||||||||||||
Northwestern Mutual Series Fund, Inc. | $ | 291,570 | $ | 16,864 | $ | 23,155 | $ | 128,122 | $ | 63,630 | ||||||||||||
Fidelity Variable Insurance Products Fund | - | - | - | - | - | |||||||||||||||||
Neuberger Berman Advisers Management Trust | - | - | - | - | - | |||||||||||||||||
Russell Investment Funds | - | - | - | - | - | |||||||||||||||||
Credit Suisse Trust | - | - | - | - | - | |||||||||||||||||
Due from Northwestern Mutual Life Insurance Company |
54 | - | 4 | 6 | 9 | |||||||||||||||||
Total Assets |
291,624 | 16,864 | 23,159 | 128,128 | 63,639 | |||||||||||||||||
Liabilities: |
||||||||||||||||||||||
Due to Northwestern Mutual Life Insurance Company |
- | 17 | - | - | - | |||||||||||||||||
Due to Participants |
- | - | - | - | - | |||||||||||||||||
Total Liabilities |
- | 17 | - | - | - | |||||||||||||||||
Total Net Assets |
$ | 291,624 | $ | 16,847 | $ | 23,159 | $ | 128,128 | $ | 63,639 | ||||||||||||
Net Assets: |
||||||||||||||||||||||
Variable Life Policies Issued |
||||||||||||||||||||||
Before October 11, 1995 |
||||||||||||||||||||||
Policyowners Equity |
$ | 22,427 | $ | 1,578 | $ | 1,963 | $ | 8,584 | $ | 3,881 | ||||||||||||
Northwestern Mutual Equity |
208 | 10 | 11 | 69 | 29 | |||||||||||||||||
Variable CompLife Policies Issued Between |
||||||||||||||||||||||
October 11, 1995 and December 31, 2008 (2) |
||||||||||||||||||||||
Policyowners Equity |
234,687 | 14,892 | 18,704 | 107,885 | 53,366 | |||||||||||||||||
Northwestern Mutual Equity |
2,375 | 155 | 150 | 897 | 426 | |||||||||||||||||
Variable Executive Life Policies Issued Between |
||||||||||||||||||||||
March 2, 1998 and December 31, 2008 (3) |
||||||||||||||||||||||
Policyowners Equity |
19,053 | 81 | 1,288 | 4,478 | 3,450 | |||||||||||||||||
Variable Joint Life Policies Issued Between |
||||||||||||||||||||||
December 10, 1998 and December 31, 2008 (4) |
||||||||||||||||||||||
Policyowners Equity |
12,874 | 131 | 1,043 | 6,215 | 2,487 | |||||||||||||||||
Total Net Assets |
$ | 291,624 | $ | 16,847 | $ | 23,159 | $ | 128,128 | $ | 63,639 | ||||||||||||
(1) |
Investments, at cost | $ | 298,221 | $ | 21,176 | $ | 21,554 | $ | 124,236 | $ | 62,357 | |||||||||||
Mutual Fund Shares Held | 232,141 | 17,960 | 18,118 | 170,829 | 56,560 | |||||||||||||||||
(2) |
Accumulation Unit Value | $ | 3.230152 | $ | 1.764661 | $ | 1.357159 | $ | 4.905909 | $ | 1.592560 | |||||||||||
Units Outstanding | 73,390 | 8,527 | 13,892 | 22,174 | 33,777 | |||||||||||||||||
(3) |
Accumulation Unit Value | $ | 263.835613 | $ | 25.468271 | $ | 18.278682 | $ | 66.738383 | $ | 22.416380 | |||||||||||
Units Outstanding | 72 | 3 | 70 | 67 | 154 | |||||||||||||||||
(4) |
Accumulation Unit Value | $ | 263.835613 | $ | 25.468271 | $ | 18.278682 | $ | 66.738383 | $ | 22.416380 | |||||||||||
Units Outstanding | 49 | 5 | 57 | 93 | 111 |
(a) | Amount is less than 500 |
The Accompanying Notes are an Integral Part of these Financial Statements.
F-5
Statements of Assets and Liabilities
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
December 31, 2021 (in thousands, except accumulation values)
Asset | Fidelity VIP | Fidelity VIP | AMT | |||||||||||||||||||
Balanced | Allocation | Mid Cap | Contrafund | Sustainable | ||||||||||||||||||
Division | Division | Division | Division | Equity Division | ||||||||||||||||||
Assets: |
||||||||||||||||||||||
Investments, at fair value (1) |
||||||||||||||||||||||
Northwestern Mutual Series Fund, Inc. | $ | 450,171 | $ | 65,833 | $ | - | $ | - | $ | - | ||||||||||||
Fidelity Variable Insurance Products Fund | - | - | 238,921 | 96,035 | - | |||||||||||||||||
Neuberger Berman Advisers Management Trust | - | - | - | - | 9,522 | |||||||||||||||||
Russell Investment Funds | - | - | - | - | - | |||||||||||||||||
Credit Suisse Trust | - | - | - | - | - | |||||||||||||||||
Due from Northwestern Mutual Life Insurance Company |
60 | - | 17 | - | - | |||||||||||||||||
Total Assets |
450,231 | 65,833 | 238,938 | 96,035 | 9,522 | |||||||||||||||||
Liabilities: |
||||||||||||||||||||||
Due to Northwestern Mutual Life Insurance Company |
- | - | - | 11 | 1 | |||||||||||||||||
Due to Participants |
- | - | - | - | - | |||||||||||||||||
Total Liabilities |
- | - | - | 11 | 1 | |||||||||||||||||
Total Net Assets |
$ | 450,231 | $ | 65,833 | $ | 238,938 | $ | 96,024 | $ | 9,521 | ||||||||||||
Net Assets: |
||||||||||||||||||||||
Variable Life Policies Issued |
||||||||||||||||||||||
Before October 11, 1995 |
||||||||||||||||||||||
Policyowners Equity |
$ | 200,522 | $ | 9,566 | $ | 19,587 | $ | 10,075 | $ | 647 | ||||||||||||
Northwestern Mutual Equity |
1,189 | 65 | 100 | 40 | 3 | |||||||||||||||||
Variable CompLife Policies Issued Between |
||||||||||||||||||||||
October 11, 1995 and December 31, 2008 (2) |
||||||||||||||||||||||
Policyowners Equity |
228,112 | 52,234 | 206,894 | 79,707 | 7,451 | |||||||||||||||||
Northwestern Mutual Equity |
2,366 | 469 | 1,957 | 636 | 55 | |||||||||||||||||
Variable Executive Life Policies Issued Between |
||||||||||||||||||||||
March 2, 1998 and December 31, 2008 (3) |
||||||||||||||||||||||
Policyowners Equity |
10,050 | 1,288 | 3,326 | 1,106 | 300 | |||||||||||||||||
Variable Joint Life Policies Issued Between |
||||||||||||||||||||||
December 10, 1998 and December 31, 2008 (4) |
||||||||||||||||||||||
Policyowners Equity |
7,992 | 2,211 | 7,074 | 4,460 | 1,065 | |||||||||||||||||
Total Net Assets |
$ | 450,231 | $ | 65,833 | $ | 238,938 | $ | 96,024 | $ | 9,521 | ||||||||||||
(1) |
Investments, at cost | $ | 409,444 | $ | 59,048 | $ | 200,249 | $ | 68,389 | $ | 6,765 | |||||||||||
Mutual Fund Shares Held | 286,004 | 49,573 | 5,803 | 1,767 | 257 | |||||||||||||||||
(2) |
Accumulation Unit Value | $ | 5.298608 | $ | 3.303784 | $ | 8.105508 | $ | 4.031040 | $ | 3.328113 | |||||||||||
Units Outstanding | 43,498 | 15,952 | 25,767 | 19,931 | 2,255 | |||||||||||||||||
(3) |
Accumulation Unit Value | $ | 298.595878 | $ | 36.450275 | $ | 88.496791 | $ | 45.041088 | $ | 36.931533 | |||||||||||
Units Outstanding | 34 | 35 | 38 | 25 | 8 | |||||||||||||||||
(4) |
Accumulation Unit Value | $ | 298.595878 | $ | 36.450275 | $ | 88.496791 | $ | 45.041088 | $ | 36.931533 | |||||||||||
Units Outstanding | 27 | 61 | 80 | 99 | 29 |
(a) | Amount is less than 500 |
The Accompanying Notes are an Integral Part of these Financial Statements.
F-6
Statements of Assets and Liabilities
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
December 31, 2021 (in thousands, except accumulation values)
International | Global Real | |||||||||||||||||||||
Developed | Estate | |||||||||||||||||||||
U.S. Strategic | U.S. Small Cap | Markets | Strategic Bond | Securities | ||||||||||||||||||
Equity Division | Equity Division | Division | Division | Division | ||||||||||||||||||
Assets: |
||||||||||||||||||||||
Investments, at fair value (1) |
||||||||||||||||||||||
Northwestern Mutual Series Fund, Inc. | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Fidelity Variable Insurance Products Fund | - | - | - | - | - | |||||||||||||||||
Neuberger Berman Advisers Management Trust | - | - | - | - | - | |||||||||||||||||
Russell Investment Funds | 319,164 | 137,278 | 146,038 | 90,871 | 210,209 | |||||||||||||||||
Credit Suisse Trust | - | - | - | - | - | |||||||||||||||||
Due from Northwestern Mutual Life Insurance Company |
- | 22 | - | 6 | 4 | |||||||||||||||||
Total Assets |
319,164 | 137,300 | 146,038 | 90,877 | 210,213 | |||||||||||||||||
Liabilities: |
||||||||||||||||||||||
Due to Northwestern Mutual Life Insurance Company |
2 | - | 12 | - | - | |||||||||||||||||
Due to Participants |
88 | 73 | 44 | - | 66 | |||||||||||||||||
Total Liabilities |
90 | 73 | 56 | - | 66 | |||||||||||||||||
Total Net Assets |
$ | 319,074 | $ | 137,227 | $ | 145,982 | $ | 90,877 | $ | 210,147 | ||||||||||||
Net Assets: |
||||||||||||||||||||||
Variable Life Policies Issued |
||||||||||||||||||||||
Before October 11, 1995 |
||||||||||||||||||||||
Policyowners Equity |
$ | 11,811 | $ | 6,737 | $ | 8,483 | $ | 5,481 | $ | 10,790 | ||||||||||||
Northwestern Mutual Equity |
62 | 38 | 67 | 61 | 69 | |||||||||||||||||
Variable CompLife Policies Issued Between |
||||||||||||||||||||||
October 11, 1995 and December 31, 2008 (2) |
||||||||||||||||||||||
Policyowners Equity |
277,646 | 121,357 | 125,749 | 68,796 | 184,918 | |||||||||||||||||
Northwestern Mutual Equity |
2,424 | 1,169 | 1,167 | 731 | 1,839 | |||||||||||||||||
Variable Executive Life Policies Issued Between |
||||||||||||||||||||||
March 2, 1998 and December 31, 2008 (3) |
||||||||||||||||||||||
Policyowners Equity |
14,459 | 3,832 | 6,405 | 12,908 | 4,751 | |||||||||||||||||
Variable Joint Life Policies Issued Between |
||||||||||||||||||||||
December 10, 1998 and December 31, 2008 (4) |
||||||||||||||||||||||
Policyowners Equity |
12,672 | 4,094 | 4,111 | 2,900 | 7,780 | |||||||||||||||||
Total Net Assets |
$ | 319,074 | $ | 137,227 | $ | 145,982 | $ | 90,877 | $ | 210,147 | ||||||||||||
(1) |
Investments, at cost | $ | 243,653 | $ | 126,122 | $ | 130,890 | $ | 91,825 | $ | 171,004 | |||||||||||
Mutual Fund Shares Held | 14,873 | 8,990 | 11,825 | 8,687 | 12,207 | |||||||||||||||||
(2) |
Accumulation Unit Value | $ | 3.725106 | $ | 4.493029 | $ | 2.411511 | $ | 2.605094 | $ | 6.481448 | |||||||||||
Units Outstanding | 75,185 | 27,270 | 52,629 | 26,689 | 28,814 | |||||||||||||||||
(3) |
Accumulation Unit Value | $ | 42.853358 | $ | 53.013410 | $ | 27.103303 | $ | 28.706174 | $ | 71.324137 | |||||||||||
Units Outstanding | 337 | 72 | 236 | 450 | 67 | |||||||||||||||||
(4) |
Accumulation Unit Value | $ | 42.853358 | $ | 53.013410 | $ | 27.103303 | $ | 28.706174 | $ | 71.324137 | |||||||||||
Units Outstanding | 296 | 77 | 152 | 101 | 109 |
(a) | Amount is less than 500 |
The Accompanying Notes are an Integral Part of these Financial Statements.
F-7
Statements of Assets and Liabilities
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
December 31, 2021 (in thousands, except accumulation values)
LifePoints | LifePoints | LifePoints | LifePoints | Credit Suisse | ||||||||||||||||||
Moderate | Balanced | Growth | Equity Growth | Trust Commodity | ||||||||||||||||||
Strategy | Strategy | Strategy | Strategy | Return Strategy | ||||||||||||||||||
Division | Division | Division | Division | Division | ||||||||||||||||||
Assets: |
||||||||||||||||||||||
Investments, at fair value (1) |
||||||||||||||||||||||
Northwestern Mutual Series Fund, Inc. | $ | - | $ | $ | - | $ | - | $ | - | |||||||||||||
Fidelity Variable Insurance Products Fund | - | - | - | - | - | |||||||||||||||||
Neuberger Berman Advisers Management Trust | - | - | - | - | - | |||||||||||||||||
Russell Investment Funds | 10,482 | 28,378 | 27,365 | 12,069 | - | |||||||||||||||||
Credit Suisse Trust | - | - | - | - | 35,841 | |||||||||||||||||
Due from Northwestern Mutual Life Insurance Company |
- | 8 | 5 | - | 1 | |||||||||||||||||
Total Assets |
10,482 | 28,386 | 27,370 | 12,069 | 35,842 | |||||||||||||||||
Liabilities: |
||||||||||||||||||||||
Due to Northwestern Mutual Life Insurance Company |
2 | - | - | 1 | - | |||||||||||||||||
Due to Participants |
- | - | - | - | - | |||||||||||||||||
Total Liabilities |
2 | - | - | 1 | - | |||||||||||||||||
Total Net Assets |
$ | 10,480 | $ | 28,386 | $ | 27,370 | $ | 12,068 | $ | 35,842 | ||||||||||||
Net Assets: |
||||||||||||||||||||||
Variable Life Policies Issued |
||||||||||||||||||||||
Before October 11, 1995 |
||||||||||||||||||||||
Policyowners Equity |
$ | 2,290 | $ | 4,788 | $ | 5,838 | $ | 1,706 | $ | 1,345 | ||||||||||||
Northwestern Mutual Equity |
14 | 42 | 37 | 4 | 11 | |||||||||||||||||
Variable CompLife Policies Issued Between |
||||||||||||||||||||||
October 11, 1995 and December 31, 2008 (2) |
||||||||||||||||||||||
Policyowners Equity |
6,680 | 19,803 | 20,729 | 8,461 | 31,392 | |||||||||||||||||
Northwestern Mutual Equity |
52 | 216 | 222 | 90 | 309 | |||||||||||||||||
Variable Executive Life Policies Issued Between |
||||||||||||||||||||||
March 2, 1998 and December 31, 2008 (3) |
||||||||||||||||||||||
Policyowners Equity |
1,443 | 2,758 | 12 | 532 | 1,181 | |||||||||||||||||
Variable Joint Life Policies Issued Between |
||||||||||||||||||||||
December 10, 1998 and December 31, 2008 (4) |
||||||||||||||||||||||
Policyowners Equity |
1 | 779 | 532 | 1,275 | 1,604 | |||||||||||||||||
Total Net Assets |
$ | 10,480 | $ | 28,386 | $ | 27,370 | $ | 12,068 | $ | 35,842 | ||||||||||||
(1) |
Investments, at cost | $ | 10,017 | $ | 27,224 | $ | 25,786 | $ | 11,223 | $ | 32,624 | |||||||||||
Mutual Fund Shares Held | 1,001 | 2,760 | 2,621 | 1,214 | 1,446 | |||||||||||||||||
(2) |
Accumulation Unit Value | $ | 1.638637 | $ | 1.866741 | $ | 2.054904 | $ | 2.150303 | $ | 6.295966 | |||||||||||
Units Outstanding | 4,108 | 10,724 | 10,195 | 3,977 | 5,035 | |||||||||||||||||
(3) |
Accumulation Unit Value | $ | 20.401736 | $ | 21.853460 | $ | 22.430026 | $ | 21.427646 | $ | 5.986523 | |||||||||||
Units Outstanding | 71 | 126 | 1 | 25 | 197 | |||||||||||||||||
(4) |
Accumulation Unit Value | $ | 20.401736 | $ | 21.853460 | $ | 22.430026 | $ | 21.427646 | $ | 5.986523 | |||||||||||
Units Outstanding | | (a) | 36 | 24 | 60 | 268 |
(a) | Amount is less than 500 |
The Accompanying Notes are an Integral Part of these Financial Statements.
F-8
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
For the Year Ended December 31, 2021 (in thousands)
Focused | ||||||||||||||||||||
Growth Stock | Appreciation | Large Cap Core | Large Cap | Index 500 | ||||||||||||||||
Division | Division | Stock Division | Blend Division | Stock Division | ||||||||||||||||
Income: |
||||||||||||||||||||
Dividend income |
$ | 28 | $ | 511 | $ | 3,298 | $ | 98 | $ | 26,049 | ||||||||||
Expenses: |
||||||||||||||||||||
Mortality and expense risk charges |
3,379 | 1,288 | 1,810 | 66 | 9,272 | |||||||||||||||
Taxes |
32 | 11 | 22 | - | 139 | |||||||||||||||
Total expenses |
3,411 | 1,299 | 1,832 | 66 | 9,411 | |||||||||||||||
Net investment income (loss) |
(3,383 | ) | (788 | ) | 1,466 | 32 | 16,638 | |||||||||||||
Realized gain (loss) on investments: |
||||||||||||||||||||
Realized gain (loss) on sale of fund shares |
21,202 | 11,656 | 9,652 | 433 | 67,434 | |||||||||||||||
Realized gain distribution |
31,976 | 30,983 | 30,159 | 932 | 53,453 | |||||||||||||||
Realized gains (losses) |
53,178 | 42,639 | 39,811 | 1,365 | 120,887 | |||||||||||||||
Change in unrealized appreciation/(depreciation) of investments during the period |
63,707 | 9,939 | 49,073 | 1,049 | 382,145 | |||||||||||||||
Net increase (decrease) in net assets resulting from operations |
$ | 113,502 | $ | 51,790 | $ | 90,350 | $ | 2,446 | $ | 519,670 | ||||||||||
Large | Mid Cap | |||||||||||||||||||
Company Value | Domestic | Equity Income | Growth Stock | Index 400 | ||||||||||||||||
Division | Equity Division | Division | Division | Stock Division | ||||||||||||||||
Income: |
||||||||||||||||||||
Dividend income |
$ | 255 | $ | 4,170 | $ | 3,030 | $ | 1,047 | $ | 4,197 | ||||||||||
Expenses: |
||||||||||||||||||||
Mortality and expense risk charges |
92 | 997 | 624 | 3,176 | 1,954 | |||||||||||||||
Taxes |
1 | 9 | 6 | 49 | 12 | |||||||||||||||
Total expenses |
93 | 1,006 | 630 | 3,225 | 1,966 | |||||||||||||||
Net investment income (loss) |
162 | 3,164 | 2,400 | (2,178 | ) | 2,231 | ||||||||||||||
Realized gain (loss) on investments: |
||||||||||||||||||||
Realized gain (loss) on sale of fund shares |
508 | 7,463 | 4,253 | 7,187 | 9,264 | |||||||||||||||
Realized gain distribution |
260 | 5,236 | - | 90,748 | 13,750 | |||||||||||||||
Realized gains (losses) |
768 | 12,699 | 4,253 | 97,935 | 23,014 | |||||||||||||||
Change in unrealized appreciation/(depreciation) of investments during the period |
3,289 | 30,194 | 25,253 | (30,710 | ) | 70,138 | ||||||||||||||
Net increase (decrease) in net assets resulting from operations |
$ | 4,219 | $ | 46,057 | $ | 31,906 | $ | 65,047 | $ | 95,383 | ||||||||||
Small Cap | International | |||||||||||||||||||
Mid Cap Value | Growth Stock | Index 600 | Small Cap | Growth | ||||||||||||||||
Division | Division | Stock Division | Value Division | Division | ||||||||||||||||
Income: |
||||||||||||||||||||
Dividend income |
$ | 933 | $ | 72 | $ | 550 | $ | 918 | $ | 833 | ||||||||||
Expenses: |
||||||||||||||||||||
Mortality and expense risk charges |
346 | 1,878 | 310 | 1,018 | 664 | |||||||||||||||
Taxes |
2 | 11 | 3 | 8 | 4 | |||||||||||||||
Total expenses |
348 | 1,889 | 313 | 1,026 | 668 | |||||||||||||||
Net investment income (loss) |
585 | (1,817 | ) | 237 | (108 | ) | 165 | |||||||||||||
Realized gain (loss) on investments: |
||||||||||||||||||||
Realized gain (loss) on sale of fund shares |
1,436 | 9,025 | 2,288 | 3,925 | 3,875 | |||||||||||||||
Realized gain distribution |
621 | 41,968 | 1,141 | 10,388 | 4,592 | |||||||||||||||
Realized gains (losses) |
2,057 | 50,993 | 3,429 | 14,313 | 8,467 | |||||||||||||||
Change in unrealized appreciation/(depreciation) of investments during the period |
13,560 | (33,648 | ) | 11,464 | 31,956 | 13,803 | ||||||||||||||
Net increase (decrease) in net assets resulting from operations |
$ | 16,202 | $ | 15,528 | $ | 15,130 | $ | 46,161 | $ | 22,435 | ||||||||||
The Accompanying Notes are an Integral Part of these Financial Statements.
F-9
Statements of Operations
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
For the Year Ended December 31, 2021 (in thousands)
Research | Emerging | Government | ||||||||||||||||||
International | International | Markets Equity | Money Market | Short-Term | ||||||||||||||||
Core Division | Equity Division | Division | Division | Bond Division | ||||||||||||||||
Income: |
||||||||||||||||||||
Dividend income |
$ | 817 | $ | 12,181 | $ | 487 | $ | 1 | $ | 563 | ||||||||||
Expenses: |
||||||||||||||||||||
Mortality and expense risk charges |
299 | 2,311 | 402 | 722 | 125 | |||||||||||||||
Taxes |
2 | 32 | 3 | 7 | 1 | |||||||||||||||
Total expenses |
301 | 2,343 | 405 | 729 | 126 | |||||||||||||||
Net investment income (loss) |
516 | 9,838 | 82 | (728 | ) | 437 | ||||||||||||||
Realized gain (loss) on investments: |
||||||||||||||||||||
Realized gain (loss) on sale of fund shares |
1,214 | (598 | ) | 1,915 | - | 267 | ||||||||||||||
Realized gain distribution |
1,139 | - | - | 12 | 60 | |||||||||||||||
Realized gains (losses) |
2,353 | (598 | ) | 1,915 | 12 | 327 | ||||||||||||||
Change in unrealized appreciation/(depreciation) of investments during the period |
4,839 | 13,555 | (6,954 | ) | - | (922 | ) | |||||||||||||
Net increase (decrease) in net assets resulting from operations |
$ | 7,708 | $ | 22,795 | $ | (4,957 | ) | $ | (716 | ) | $ | (158 | ) | |||||||
Long-Term U.S. | Inflation | |||||||||||||||||||
Select Bond | Government | Protection | High Yield | Multi-Sector | ||||||||||||||||
Division | Bond Division | Division | Bond Division | Bond Division | ||||||||||||||||
Income: |
||||||||||||||||||||
Dividend income |
$ | 6,100 | $ | 164 | $ | 199 | $ | 6,459 | $ | 1,341 | ||||||||||
Expenses: |
||||||||||||||||||||
Mortality and expense risk charges |
1,174 | 80 | 77 | 525 | 260 | |||||||||||||||
Taxes |
12 | 1 | 1 | 4 | 2 | |||||||||||||||
Total expenses |
1,186 | 81 | 78 | 529 | 262 | |||||||||||||||
Net investment income (loss) |
4,914 | 83 | 121 | 5,930 | 1,079 | |||||||||||||||
Realized gain (loss) on investments: |
||||||||||||||||||||
Realized gain (loss) on sale of fund shares |
709 | 160 | 506 | 781 | 711 | |||||||||||||||
Realized gain distribution |
13,231 | 3,174 | 53 | - | 558 | |||||||||||||||
Realized gains (losses) |
13,940 | 3,334 | 559 | 781 | 1,269 | |||||||||||||||
Change in unrealized appreciation/(depreciation) of investments during the period |
(24,783 | ) | (4,565 | ) | 553 | (795 | ) | (2,643 | ) | |||||||||||
Net increase (decrease) in net assets resulting from operations |
$ | (5,929 | ) | $ | (1,148 | ) | $ | 1,233 | $ | 5,916 | $ | (295 | ) | |||||||
Asset | Fidelity VIP | AMT | ||||||||||||||||||
Balanced | Allocation | Fidelity VIP Mid | Contrafund | Sustainable | ||||||||||||||||
Division | Division | Cap Division | Division | Equity Division | ||||||||||||||||
Income: |
||||||||||||||||||||
Dividend income |
$ | 10,978 | $ | 1,420 | $ | 1,374 | $ | 52 | $ | 34 | ||||||||||
Expenses: |
||||||||||||||||||||
Mortality and expense risk charges |
2,019 | 279 | 960 | 369 | 33 | |||||||||||||||
Taxes |
100 | 5 | 9 | 4 | - | |||||||||||||||
Total expenses |
2,119 | 284 | 969 | 373 | 33 | |||||||||||||||
Net investment income (loss) |
8,859 | 1,136 | 405 | (321 | ) | 1 | ||||||||||||||
Realized gain (loss) on investments: |
||||||||||||||||||||
Realized gain (loss) on sale of fund shares |
6,602 | 564 | 4,622 | 2,609 | 318 | |||||||||||||||
Realized gain distribution |
20,769 | 3,240 | 35,719 | 10,856 | 173 | |||||||||||||||
Realized gains (losses) |
27,371 | 3,804 | 40,341 | 13,465 | 491 | |||||||||||||||
Change in unrealized appreciation/(depreciation) of investments during the period |
(5,956 | ) | 1,148 | 7,619 | 7,551 | 1,253 | ||||||||||||||
Net increase (decrease) in net assets resulting from operations |
$ | 30,274 | $ | 6,088 | $ | 48,365 | $ | 20,695 | $ | 1,745 | ||||||||||
The Accompanying Notes are an Integral Part of these Financial Statements.
F-10
Statements of Operations
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
For the Year Ended December 31, 2021 (in thousands)
International | ||||||||||||||||
U.S. Strategic | U.S. Small Cap | Developed | Strategic Bond | |||||||||||||
Equity Division | Equity Division | Markets Division | Division | |||||||||||||
Income: |
||||||||||||||||
Dividend income |
$ | 1,719 | $ | 330 | $ | 3,655 | $ | 811 | ||||||||
Expenses: |
||||||||||||||||
Mortality and expense risk charges |
1,262 | 560 | 608 | 339 | ||||||||||||
Taxes |
6 | 3 | 4 | 3 | ||||||||||||
Total expenses |
1,268 | 563 | 612 | 342 | ||||||||||||
Net investment income (loss) |
451 | (233 | ) | 3,043 | 469 | |||||||||||
Realized gain (loss) on investments: |
||||||||||||||||
Realized gain (loss) on sale of fund shares |
11,395 | 4,322 | 396 | 89 | ||||||||||||
Realized gain distribution |
26,416 | 30,338 | 10,828 | 1,075 | ||||||||||||
Realized gains (losses) |
37,811 | 34,660 | 11,224 | 1,164 | ||||||||||||
Change in unrealized appreciation/(depreciation) of investments during the period |
16,539 | (6,361 | ) | 1,827 | (3,677 | ) | ||||||||||
Net increase (decrease) in net assets resulting from operations |
$ | 54,801 | $ | 28,066 | $ | 16,094 | $ | (2,044 | ) | |||||||
Global Real | LifePoints | LifePoints | ||||||||||||||
Estate | Moderate | LifePoints | Growth | |||||||||||||
Securities | Strategy | Balanced | Strategy | |||||||||||||
Division | Division | Strategy Division | Division | |||||||||||||
Income: |
||||||||||||||||
Dividend income |
$ | 9,302 | $ | 406 | $ | 1,304 | $ | 1,199 | ||||||||
Expenses: |
||||||||||||||||
Mortality and expense risk charges |
806 | 41 | 117 | 114 | ||||||||||||
Taxes |
5 | 1 | 3 | 3 | ||||||||||||
Total expenses |
811 | 42 | 120 | 117 | ||||||||||||
Net investment income (loss) |
8,491 | 364 | 1,184 | 1,082 | ||||||||||||
Realized gain (loss) on investments: |
||||||||||||||||
Realized gain (loss) on sale of fund shares |
233 | 29 | 632 | 185 | ||||||||||||
Realized gain distribution |
1,971 | 359 | 1,917 | 2,533 | ||||||||||||
Realized gains (losses) |
2,204 | 388 | 2,549 | 2,718 | ||||||||||||
Change in unrealized appreciation/(depreciation) of investments during the period |
33,891 | (126 | ) | (535 | ) | 52 | ||||||||||
Net increase (decrease) in net assets resulting from operations |
$ | 44,586 | $ | 626 | $ | 3,198 | $ | 3,852 | ||||||||
Credit Suisse | ||||||||||||||||
LifePoints | Trust | |||||||||||||||
Equity Growth | Commodity | |||||||||||||||
Strategy | Return Strategy | |||||||||||||||
Division | Division | |||||||||||||||
Income: |
||||||||||||||||
Dividend income |
$ | 569 | $ | 1,733 | ||||||||||||
Expenses: |
||||||||||||||||
Mortality and expense risk charges |
43 | 126 | ||||||||||||||
Taxes |
1 | 1 | ||||||||||||||
Total expenses |
44 | 127 | ||||||||||||||
Net investment income (loss) |
525 | 1,606 | ||||||||||||||
Realized gain (loss) on investments: |
||||||||||||||||
Realized gain (loss) on sale of fund shares |
125 | (75 | ) | |||||||||||||
Realized gain distribution |
924 | - | ||||||||||||||
Realized gains (losses) |
1,049 | (75 | ) | |||||||||||||
Change in unrealized appreciation/(depreciation) of investments during the period |
221 | 5,566 | ||||||||||||||
Net increase (decrease) in net assets resulting from operations |
$ | 1,795 | $ | 7,097 | ||||||||||||
The Accompanying Notes are an Integral Part of these Financial Statements.
F-11
Statements of Changes in Net Assets
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
(in thousands)
Growth Stock Division | Focused Appreciation Division | |||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | (3,383 | ) | $ | 1,168 | $ | (788 | ) | $ | 316 | ||||||||||
Net realized gains (losses) |
53,178 | 115,065 | 42,639 | 21,899 | ||||||||||||||||
Net change in unrealized appreciation/(depreciation) |
63,707 | 66,006 | 9,939 | 48,308 | ||||||||||||||||
Net increase (decrease) in net assets resulting from operations |
113,502 | 182,239 | 51,790 | 70,523 | ||||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
9,241 | 8,945 | 3,607 | 2,505 | ||||||||||||||||
Policy loans, surrenders and death benefits |
(19,799 | ) | (19,241 | ) | (6,488 | ) | (5,711 | ) | ||||||||||||
Mortality and other (net) |
(11,856 | ) | (11,060 | ) | (4,702 | ) | (4,574 | ) | ||||||||||||
Transfers from other divisions or sponsor |
62,782 | 109,104 | 23,564 | 33,699 | ||||||||||||||||
Transfers to other divisions or sponsor |
(71,073 | ) | (102,720 | ) | (26,960 | ) | (31,499 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | (30,705 | ) | (14,972 | ) | (10,979 | ) | (5,580 | ) | ||||||||||||
Net increase (decrease) in net assets |
82,797 | 167,267 | 40,811 | 64,943 | ||||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
712,534 | 545,267 | 284,762 | 219,819 | ||||||||||||||||
End of period |
$ | 795,331 | $ | 712,534 | $ | 325,573 | $ | 284,762 | ||||||||||||
Units issued during the period |
3,945 | 6,735 | 2,231 | 4,341 | ||||||||||||||||
Units redeemed during the period |
(6,361 | ) | (8,256 | ) | (3,242 | ) | (4,774 | ) | ||||||||||||
Net units issued (redeemed) during period |
(2,416 | ) | (1,521 | ) | (1,011 | ) | (433 | ) | ||||||||||||
Large Cap Core Stock Division | Large Cap Blend Division | |||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | 1,466 | $ | 2,183 | $ | 32 | $ | 547 | ||||||||||||
Net realized gains (losses) |
39,811 | 16,849 | 1,365 | 121 | ||||||||||||||||
Net change in unrealized appreciation/(depreciation) |
49,073 | 49,075 | 1,049 | 403 | ||||||||||||||||
Net increase (decrease) in net assets resulting from operations |
90,350 | 68,107 | 2,446 | 1,071 | ||||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
6,050 | 6,756 | 426 | 253 | ||||||||||||||||
Policy loans, surrenders and death benefits |
(10,487 | ) | (12,656 | ) | (348 | ) | (112 | ) | ||||||||||||
Mortality and other (net) |
(7,035 | ) | (6,597 | ) | (245 | ) | (225 | ) | ||||||||||||
Transfers from other divisions or sponsor |
22,702 | 35,070 | 2,072 | 1,743 | ||||||||||||||||
Transfers to other divisions or sponsor |
(24,633 | ) | (36,569 | ) | (2,071 | ) | (2,220 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | (13,403 | ) | (13,996 | ) | (166 | ) | (561 | ) | ||||||||||||
Net increase (decrease) in net assets |
76,947 | 54,111 | 2,280 | 510 | ||||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
373,477 | 319,366 | 13,770 | 13,260 | ||||||||||||||||
End of period |
$ | 450,424 | $ | 373,477 | $ | 16,050 | $ | 13,770 | ||||||||||||
Units issued during the period |
3,256 | 4,394 | 759 | 851 | ||||||||||||||||
Units redeemed during the period |
(4,954 | ) | (7,007 | ) | (846 | ) | (994 | ) | ||||||||||||
Net units issued (redeemed) during period |
(1,698 | ) | (2,613 | ) | (87 | ) | (143 | ) | ||||||||||||
The Accompanying Notes are an Integral Part of these Financial Statements.
F-12
Statements of Changes in Net Assets
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
(in thousands)
Index 500 Stock Division | Large Company Value Division | |||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | 16,638 | $ | 19,617 | $ | 162 | $ | 258 | ||||||||||||
Net realized gains (losses) |
120,887 | 85,248 | 768 | 62 | ||||||||||||||||
Net change in unrealized appreciation/(depreciation) |
382,145 | 178,806 | 3,289 | 242 | ||||||||||||||||
Net increase (decrease) in net assets resulting from operations |
519,670 | 283,671 | 4,219 | 562 | ||||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
30,333 | 29,410 | 515 | 407 | ||||||||||||||||
Policy loans, surrenders and death benefits |
(51,399 | ) | (47,475 | ) | (637 | ) | (673 | ) | ||||||||||||
Mortality and other (net) |
(33,458 | ) | (28,980 | ) | (319 | ) | (290 | ) | ||||||||||||
Transfers from other divisions or sponsor |
134,699 | 196,869 | 11,886 | 5,762 | ||||||||||||||||
Transfers to other divisions or sponsor |
(165,932 | ) | (205,143 | ) | (7,207 | ) | (3,955 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | (85,757 | ) | (55,319 | ) | 4,238 | 1,251 | ||||||||||||||
Net increase (decrease) in net assets |
433,913 | 228,352 | 8,457 | 1,813 | ||||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
1,905,123 | 1,676,771 | 17,426 | 15,613 | ||||||||||||||||
End of period |
$ | 2,339,036 | $ | 1,905,123 | $ | 25,883 | $ | 17,426 | ||||||||||||
Units issued during the period |
9,806 | 15,123 | 3,022 | 2,440 | ||||||||||||||||
Units redeemed during the period |
(14,773 | ) | (21,151 | ) | (1,521 | ) | (2,152 | ) | ||||||||||||
Net units issued (redeemed) during period |
(4,967 | ) | (6,028 | ) | 1,501 | 288 | ||||||||||||||
Domestic Equity Division | Equity Income Division | |||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | 3,164 | $ | 3,181 | $ | 2,400 | $ | 4,807 | ||||||||||||
Net realized gains (losses) |
12,699 | 13,520 | 4,253 | 8,275 | ||||||||||||||||
Net change in unrealized appreciation/(depreciation) |
30,194 | (17,278 | ) | 25,253 | (12,896 | ) | ||||||||||||||
Net increase (decrease) in net assets resulting from operations |
46,057 | (577 | ) | 31,906 | 186 | |||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
4,267 | 4,433 | 1,960 | 1,952 | ||||||||||||||||
Policy loans, surrenders and death benefits |
(6,043 | ) | (3,366 | ) | (2,861 | ) | (3,869 | ) | ||||||||||||
Mortality and other (net) |
(3,879 | ) | (3,678 | ) | (2,477 | ) | (2,164 | ) | ||||||||||||
Transfers from other divisions or sponsor |
16,885 | 23,506 | 15,731 | 18,700 | ||||||||||||||||
Transfers to other divisions or sponsor |
(21,766 | ) | (31,205 | ) | (16,855 | ) | (22,237 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | (10,536 | ) | (10,310 | ) | (4,502 | ) | (7,618 | ) | ||||||||||||
Net increase (decrease) in net assets |
35,521 | (10,887 | ) | 27,404 | (7,432 | ) | ||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
212,896 | 223,783 | 129,823 | 137,255 | ||||||||||||||||
End of period |
$ | 248,417 | $ | 212,896 | $ | 157,227 | $ | 129,823 | ||||||||||||
Units issued during the period |
3,626 | 5,499 | 2,961 | 4,209 | ||||||||||||||||
Units redeemed during the period |
(6,194 | ) | (8,204 | ) | (4,030 | ) | (5,902 | ) | ||||||||||||
Net units issued (redeemed) during period |
(2,568 | ) | (2,705 | ) | (1,069 | ) | (1,693 | ) | ||||||||||||
The Accompanying Notes are an Integral Part of these Financial Statements.
F-13
Statements of Changes in Net Assets
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
(in thousands)
Mid Cap Growth Stock Division | Index 400 Stock Division | |||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | (2,178 | ) | $ | (933 | ) | $ | 2,231 | $ | 3,154 | ||||||||||
Net realized gains (losses) |
97,935 | 28,029 | 23,014 | 18,307 | ||||||||||||||||
Net change in unrealized appreciation/(depreciation) |
(30,710 | ) | 106,964 | 70,138 | 23,388 | |||||||||||||||
Net increase (decrease) in net assets resulting from operations |
65,047 | 134,060 | 95,383 | 44,849 | ||||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
13,156 | 13,532 | 6,919 | 6,720 | ||||||||||||||||
Policy loans, surrenders and death benefits |
(19,857 | ) | (17,879 | ) | (11,545 | ) | (8,324 | ) | ||||||||||||
Mortality and other (net) |
(11,435 | ) | (10,781 | ) | (6,848 | ) | (5,912 | ) | ||||||||||||
Transfers from other divisions or sponsor |
26,488 | 43,825 | 48,241 | 59,241 | ||||||||||||||||
Transfers to other divisions or sponsor |
(31,142 | ) | (48,948 | ) | (51,270 | ) | (65,314 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | (22,790 | ) | (20,251 | ) | (14,503 | ) | (13,589 | ) | ||||||||||||
Net increase (decrease) in net assets |
42,257 | 113,809 | 80,880 | 31,260 | ||||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
676,705 | 562,896 | 403,628 | 372,368 | ||||||||||||||||
End of period |
$ | 718,962 | $ | 676,705 | $ | 484,508 | $ | 403,628 | ||||||||||||
Units issued during the period |
4,270 | 5,716 | 4,093 | 5,876 | ||||||||||||||||
Units redeemed during the period |
(6,913 | ) | (8,901 | ) | (5,807 | ) | (8,239 | ) | ||||||||||||
Net units issued (redeemed) during period |
(2,643 | ) | (3,185 | ) | (1,714 | ) | (2,363 | ) | ||||||||||||
Mid Cap Value Division | Small Cap Growth Stock Division | |||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | 585 | $ | 890 | $ | (1,817 | ) | $ | (1,042 | ) | ||||||||||
Net realized gains (losses) |
2,057 | 1,240 | 50,993 | 21,624 | ||||||||||||||||
Net change in unrealized appreciation/(depreciation) |
13,560 | (1,807 | ) | (33,648 | ) | 83,294 | ||||||||||||||
Net increase (decrease) in net assets resulting from operations |
16,202 | 323 | 15,528 | 103,876 | ||||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
1,240 | 1,525 | 5,602 | 6,639 | ||||||||||||||||
Policy loans, surrenders and death benefits |
(1,887 | ) | (2,209 | ) | (11,555 | ) | (8,864 | ) | ||||||||||||
Mortality and other (net) |
(1,354 | ) | (1,240 | ) | (6,388 | ) | (5,766 | ) | ||||||||||||
Transfers from other divisions or sponsor |
12,959 | 11,476 | 31,502 | 50,050 | ||||||||||||||||
Transfers to other divisions or sponsor |
(11,905 | ) | (14,942 | ) | (35,881 | ) | (54,923 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | (947 | ) | (5,390 | ) | (16,720 | ) | (12,864 | ) | ||||||||||||
Net increase (decrease) in net assets |
15,255 | (5,067 | ) | (1,192 | ) | 91,012 | ||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
71,374 | 76,441 | 421,615 | 330,603 | ||||||||||||||||
End of period |
$ | 86,629 | $ | 71,374 | $ | 420,423 | $ | 421,615 | ||||||||||||
Units issued during the period |
1,924 | 1,762 | 3,134 | 4,426 | ||||||||||||||||
Units redeemed during the period |
(2,001 | ) | (2,828 | ) | (5,040 | ) | (6,568 | ) | ||||||||||||
Net units issued (redeemed) during period |
(77 | ) | (1,066 | ) | (1,906 | ) | (2,142 | ) | ||||||||||||
The Accompanying Notes are an Integral Part of these Financial Statements.
F-14
Statements of Changes in Net Assets
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
(in thousands)
Index 600 Stock Division | Small Cap Value Division | |||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | 237 | $ | 617 | $ | (108 | ) | $ | 116 | |||||||||||
Net realized gains (losses) |
3,429 | 1,583 | 14,313 | 11,456 | ||||||||||||||||
Net change in unrealized appreciation/(depreciation) |
11,464 | 3,905 | 31,956 | 3,561 | ||||||||||||||||
Net increase (decrease) in net assets resulting from operations |
15,130 | 6,105 | 46,161 | 15,133 | ||||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
373 | 1,174 | 4,143 | 3,558 | ||||||||||||||||
Policy loans, surrenders and death benefits |
(2,005 | ) | (767 | ) | (5,087 | ) | (5,192 | ) | ||||||||||||
Mortality and other (net) |
(1,090 | ) | (918 | ) | (3,786 | ) | (3,115 | ) | ||||||||||||
Transfers from other divisions or sponsor |
24,128 | 21,161 | 13,536 | 10,124 | ||||||||||||||||
Transfers to other divisions or sponsor |
(17,625 | ) | (18,320 | ) | (15,008 | ) | (17,462 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | 3,781 | 2,330 | (6,202 | ) | (12,087 | ) | ||||||||||||||
Net increase (decrease) in net assets |
18,911 | 8,435 | 39,959 | 3,046 | ||||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
58,712 | 50,277 | 207,859 | 204,813 | ||||||||||||||||
End of period |
$ | 77,623 | $ | 58,712 | $ | 247,818 | $ | 207,859 | ||||||||||||
Units issued during the period |
4,806 | 5,970 | 2,847 | 3,055 | ||||||||||||||||
Units redeemed during the period |
(3,738 | ) | (4,668 | ) | (3,686 | ) | (5,626 | ) | ||||||||||||
Net units issued (redeemed) during period |
1,068 | 1,302 | (839 | ) | (2,571 | ) | ||||||||||||||
International Growth Division | Research International Core Division |
|||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | 165 | $ | 1,546 | $ | 516 | $ | 980 | ||||||||||||
Net realized gains (losses) |
8,467 | 2,071 | 2,353 | 1,421 | ||||||||||||||||
Net change in unrealized appreciation/(depreciation) |
13,803 | 17,483 | 4,839 | 5,081 | ||||||||||||||||
Net increase (decrease) in net assets resulting from operations |
22,435 | 21,100 | 7,708 | 7,482 | ||||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
2,962 | 3,786 | 1,429 | 667 | ||||||||||||||||
Policy loans, surrenders and death benefits |
(2,563 | ) | (3,258 | ) | (1,155 | ) | (1,325 | ) | ||||||||||||
Mortality and other (net) |
(2,422 | ) | (2,472 | ) | (1,082 | ) | (944 | ) | ||||||||||||
Transfers from other divisions or sponsor |
26,198 | 32,239 | 28,804 | 28,117 | ||||||||||||||||
Transfers to other divisions or sponsor |
(24,514 | ) | (30,326 | ) | (22,775 | ) | (24,159 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | (339 | ) | (31 | ) | 5,221 | 2,356 | ||||||||||||||
Net increase (decrease) in net assets |
22,096 | 21,069 | 12,929 | 9,838 | ||||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
144,050 | 122,981 | 63,483 | 53,645 | ||||||||||||||||
End of period |
$ | 166,146 | $ | 144,050 | $ | 76,412 | $ | 63,483 | ||||||||||||
Units issued during the period |
4,832 | 6,314 | 7,066 | 8,133 | ||||||||||||||||
Units redeemed during the period |
(4,720 | ) | (6,834 | ) | (4,423 | ) | (7,113 | ) | ||||||||||||
Net units issued (redeemed) during period |
112 | (520 | ) | 2,643 | 1,020 | |||||||||||||||
The Accompanying Notes are an Integral Part of these Financial Statements.
F-15
Statements of Changes in Net Assets
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
(in thousands)
International Equity Division | Emerging Markets Equity Division |
|||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | 9,838 | $ | 14,107 | $ | 82 | $ | 1,245 | ||||||||||||
Net realized gains (losses) |
(598 | ) | (3,882 | ) | 1,915 | 369 | ||||||||||||||
Net change in unrealized appreciation/(depreciation) |
13,555 | (27,537 | ) | (6,954 | ) | 17,071 | ||||||||||||||
Net increase (decrease) in net assets resulting from operations |
22,795 | (17,312 | ) | (4,957 | ) | 18,685 | ||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
17,200 | 18,249 | 901 | 1,402 | ||||||||||||||||
Policy loans, surrenders and death benefits |
(12,366 | ) | (12,466 | ) | (1,475 | ) | (1,293 | ) | ||||||||||||
Mortality and other (net) |
(8,796 | ) | (5,334 | ) | (1,327 | ) | (1,127 | ) | ||||||||||||
Transfers from other divisions or sponsor |
37,765 | 46,851 | 22,511 | 16,503 | ||||||||||||||||
Transfers to other divisions or sponsor |
(36,315 | ) | (56,584 | ) | (14,932 | ) | (13,302 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | (2,512 | ) | (9,284 | ) | 5,678 | 2,183 | ||||||||||||||
Net increase (decrease) in net assets |
20,283 | (26,596 | ) | 721 | 20,868 | |||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
499,784 | 526,380 | 90,119 | 69,251 | ||||||||||||||||
End of period |
$ | 520,067 | $ | 499,784 | $ | 90,840 | $ | 90,119 | ||||||||||||
Units issued during the period |
14,271 | 18,687 | 12,145 | 12,162 | ||||||||||||||||
Units redeemed during the period |
(14,604 | ) | (21,756 | ) | (8,348 | ) | (11,040 | ) | ||||||||||||
Net units issued (redeemed) during period |
(333 | ) | (3,069 | ) | 3,797 | 1,122 | ||||||||||||||
Government Money Market Division |
Short-Term Bond Division | |||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | (728 | ) | $ | (259 | ) | $ | 437 | $ | 566 | ||||||||||
Net realized gains (losses) |
12 | 1 | 327 | 318 | ||||||||||||||||
Net change in unrealized appreciation/(depreciation) |
- | - | (922 | ) | 219 | |||||||||||||||
Net increase (decrease) in net assets resulting from operations |
(716 | ) | (258 | ) | (158 | ) | 1,103 | |||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
34,347 | 35,425 | 468 | 133 | ||||||||||||||||
Policy loans, surrenders and death benefits |
(40,645 | ) | (24,977 | ) | (1,119 | ) | (840 | ) | ||||||||||||
Mortality and other (net) |
(4,709 | ) | (4,877 | ) | (552 | ) | (539 | ) | ||||||||||||
Transfers from other divisions or sponsor |
103,727 | 209,259 | 12,076 | 16,356 | ||||||||||||||||
Transfers to other divisions or sponsor |
(102,300 | ) | (184,392 | ) | (10,589 | ) | (14,626 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | (9,580 | ) | 30,438 | 284 | 484 | |||||||||||||||
Net increase (decrease) in net assets |
(10,296 | ) | 30,180 | 126 | 1,587 | |||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
182,327 | 152,147 | 31,927 | 30,340 | ||||||||||||||||
End of period |
$ | 172,031 | $ | 182,327 | $ | 32,053 | $ | 31,927 | ||||||||||||
Units issued during the period |
66,594 | 110,895 | 6,696 | 11,138 | ||||||||||||||||
Units redeemed during the period |
(71,434 | ) | (94,895 | ) | (6,801 | ) | (11,606 | ) | ||||||||||||
Net units issued (redeemed) during period |
(4,840 | ) | 16,000 | (105 | ) | (468 | ) | |||||||||||||
The Accompanying Notes are an Integral Part of these Financial Statements.
F-16
Statements of Changes in Net Assets
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
(in thousands)
Select Bond Division | Long-Term U.S. Government Bond Division |
|||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | 4,914 | $ | 6,905 | $ | 83 | $ | 234 | ||||||||||||
Net realized gains (losses) |
13,940 | 3,230 | 3,334 | 2,339 | ||||||||||||||||
Net change in unrealized appreciation/(depreciation) |
(24,783 | ) | 12,690 | (4,565 | ) | (253 | ) | |||||||||||||
Net increase (decrease) in net assets resulting from operations |
(5,929 | ) | 22,825 | (1,148 | ) | 2,320 | ||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
7,423 | 6,721 | 630 | 598 | ||||||||||||||||
Policy loans, surrenders and death benefits |
(7,126 | ) | (8,542 | ) | (764 | ) | (480 | ) | ||||||||||||
Mortality and other (net) |
(4,785 | ) | (5,508 | ) | (294 | ) | (363 | ) | ||||||||||||
Transfers from other divisions or sponsor |
77,145 | 136,521 | 3,578 | 11,308 | ||||||||||||||||
Transfers to other divisions or sponsor |
(73,839 | ) | (119,883 | ) | (4,927 | ) | (7,561 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | (1,182 | ) | 9,309 | (1,777 | ) | 3,502 | ||||||||||||||
Net increase (decrease) in net assets |
(7,111 | ) | 32,134 | (2,925 | ) | 5,822 | ||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
298,735 | 266,601 | 19,772 | 13,950 | ||||||||||||||||
End of period |
$ | 291,624 | $ | 298,735 | $ | 16,847 | $ | 19,772 | ||||||||||||
Units issued during the period |
9,347 | 12,059 | 1,961 | 6,175 | ||||||||||||||||
Units redeemed during the period |
(9,127 | ) | (9,726 | ) | (3,271 | ) | (4,252 | ) | ||||||||||||
Net units issued (redeemed) during period |
220 | 2,333 | (1,310 | ) | 1,923 | |||||||||||||||
Inflation Protection Division | High Yield Bond Division | |||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | 121 | $ | 239 | $ | 5,930 | $ | 6,240 | ||||||||||||
Net realized gains (losses) |
559 | 241 | 781 | 867 | ||||||||||||||||
Net change in unrealized appreciation/(depreciation) |
553 | 723 | (795 | ) | (314 | ) | ||||||||||||||
Net increase (decrease) in net assets resulting from operations |
1,233 | 1,203 | 5,916 | 6,793 | ||||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
453 | (105 | ) | 3,017 | 2,470 | |||||||||||||||
Policy loans, surrenders and death benefits |
(716 | ) | (770 | ) | (3,086 | ) | (3,527 | ) | ||||||||||||
Mortality and other (net) |
(324 | ) | (240 | ) | (2,105 | ) | (2,163 | ) | ||||||||||||
Transfers from other divisions or sponsor |
19,228 | 15,736 | 26,574 | 44,994 | ||||||||||||||||
Transfers to other divisions or sponsor |
(11,957 | ) | (12,463 | ) | (24,643 | ) | (46,217 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | 6,684 | 2,158 | (243 | ) | (4,443 | ) | ||||||||||||||
Net increase (decrease) in net assets |
7,917 | 3,361 | 5,673 | 2,350 | ||||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
15,242 | 11,881 | 122,455 | 120,105 | ||||||||||||||||
End of period |
$ | 23,159 | $ | 15,242 | $ | 128,128 | $ | 122,455 | ||||||||||||
Units issued during the period |
8,366 | 5,434 | 2,607 | 3,948 | ||||||||||||||||
Units redeemed during the period |
(3,731 | ) | (4,243 | ) | (3,100 | ) | (4,774 | ) | ||||||||||||
Net units issued (redeemed) during period |
4,635 | 1,191 | (493 | ) | (826 | ) | ||||||||||||||
The Accompanying Notes are an Integral Part of these Financial Statements.
F-17
Statements of Changes in Net Assets
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
(in thousands)
Multi-Sector Bond Division | Balanced Division | |||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | 1,079 | $ | 2,077 | $ | 8,859 | $ | 7,957 | ||||||||||||
Net realized gains (losses) |
1,269 | (31 | ) | 27,371 | 13,328 | |||||||||||||||
Net change in unrealized appreciation/(depreciation) |
(2,643 | ) | 1,141 | (5,956 | ) | 25,414 | ||||||||||||||
Net increase (decrease) in net assets resulting from operations |
(295 | ) | 3,187 | 30,274 | 46,699 | |||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
1,303 | 861 | 8,867 | 10,536 | ||||||||||||||||
Policy loans, surrenders and death benefits |
(1,543 | ) | (1,471 | ) | (19,384 | ) | (12,873 | ) | ||||||||||||
Mortality and other (net) |
(1,002 | ) | (980 | ) | (9,531 | ) | (9,190 | ) | ||||||||||||
Transfers from other divisions or sponsor |
18,260 | 18,075 | 27,815 | 43,404 | ||||||||||||||||
Transfers to other divisions or sponsor |
(14,909 | ) | (13,386 | ) | (24,795 | ) | (42,144 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | 2,109 | 3,099 | (17,028 | ) | (10,267 | ) | ||||||||||||||
Net increase (decrease) in net assets |
1,814 | 6,286 | 13,246 | 36,432 | ||||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
61,825 | 55,539 | 436,985 | 400,553 | ||||||||||||||||
End of period |
$ | 63,639 | $ | 61,825 | $ | 450,231 | $ | 436,985 | ||||||||||||
Units issued during the period |
6,649 | 9,477 | 3,809 | 4,994 | ||||||||||||||||
Units redeemed during the period |
(5,869 | ) | (8,702 | ) | (5,242 | ) | (5,749 | ) | ||||||||||||
Net units issued (redeemed) during period |
780 | 775 | (1,433 | ) | (755 | ) | ||||||||||||||
Asset Allocation Division | Fidelity VIP Mid Cap Division | |||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | 1,136 | $ | 1,081 | $ | 405 | $ | 291 | ||||||||||||
Net realized gains (losses) |
3,804 | 3,120 | 40,341 | 3,380 | ||||||||||||||||
Net change in unrealized appreciation/(depreciation) |
1,148 | 3,110 | 7,619 | 24,679 | ||||||||||||||||
Net increase (decrease) in net assets resulting from operations |
6,088 | 7,311 | 48,365 | 28,350 | ||||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
1,320 | 316 | 3,905 | 4,471 | ||||||||||||||||
Policy loans, surrenders and death benefits |
(1,900 | ) | (1,023 | ) | (5,629 | ) | (5,566 | ) | ||||||||||||
Mortality and other (net) |
(1,167 | ) | (1,202 | ) | (3,557 | ) | (3,078 | ) | ||||||||||||
Transfers from other divisions or sponsor |
1,881 | 3,750 | 14,201 | 11,681 | ||||||||||||||||
Transfers to other divisions or sponsor |
(2,385 | ) | (4,434 | ) | (13,546 | ) | (21,609 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | (2,251 | ) | (2,593 | ) | (4,626 | ) | (14,101 | ) | ||||||||||||
Net increase (decrease) in net assets |
3,837 | 4,718 | 43,739 | 14,249 | ||||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
61,996 | 57,278 | 195,199 | 180,950 | ||||||||||||||||
End of period |
$ | 65,833 | $ | 61,996 | $ | 238,938 | $ | 195,199 | ||||||||||||
Units issued during the period |
1,336 | 2,219 | 1,983 | 2,463 | ||||||||||||||||
Units redeemed during the period |
(1,955 | ) | (2,969 | ) | (2,647 | ) | (4,536 | ) | ||||||||||||
Net units issued (redeemed) during period |
(619 | ) | (750 | ) | (664 | ) | (2,073 | ) | ||||||||||||
The Accompanying Notes are an Integral Part of these Financial Statements.
F-18
Statements of Changes in Net Assets
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
(in thousands)
Fidelity VIP Contrafund Division |
AMT Sustainable Equity Division |
|||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | (321 | ) | $ | (132 | ) | $ | 1 | $ | 15 | ||||||||||
Net realized gains (losses) |
13,465 | 1,585 | 491 | 289 | ||||||||||||||||
Net change in unrealized appreciation/(depreciation) |
7,551 | 15,575 | 1,253 | 906 | ||||||||||||||||
Net increase (decrease) in net assets resulting from operations |
20,695 | 17,028 | 1,745 | 1,210 | ||||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
1,381 | 515 | 188 | 163 | ||||||||||||||||
Policy loans, surrenders and death benefits |
(2,765 | ) | (1,571 | ) | (42 | ) | (188 | ) | ||||||||||||
Mortality and other (net) |
(1,348 | ) | (1,058 | ) | (131 | ) | (132 | ) | ||||||||||||
Transfers from other divisions or sponsor |
12,459 | 17,846 | 3,138 | 2,649 | ||||||||||||||||
Transfers to other divisions or sponsor |
(10,272 | ) | (9,616 | ) | (2,755 | ) | (1,885 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | (545 | ) | 6,116 | 398 | 607 | |||||||||||||||
Net increase (decrease) in net assets |
20,150 | 23,144 | 2,143 | 1,817 | ||||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
75,874 | 52,730 | 7,378 | 5,561 | ||||||||||||||||
End of period |
$ | 96,024 | $ | 75,874 | $ | 9,521 | $ | 7,378 | ||||||||||||
Units issued during the period |
2,866 | 5,532 | 494 | 548 | ||||||||||||||||
Units redeemed during the period |
(3,148 | ) | (3,922 | ) | (254 | ) | (359 | ) | ||||||||||||
Net units issued (redeemed) during period |
(282 | ) | 1,610 | 240 | 189 | |||||||||||||||
U.S. Strategic Equity Division | U.S. Small Cap Equity Division |
|||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | 451 | $ | 78 | $ | (233 | ) | $ | (331 | ) | ||||||||||
Net realized gains (losses) |
37,811 | 3,683 | 34,660 | 1,870 | ||||||||||||||||
Net change in unrealized appreciation/(depreciation) |
16,539 | 49,436 | (6,361 | ) | 10,112 | |||||||||||||||
Net increase (decrease) in net assets resulting from operations |
54,801 | 53,197 | 28,066 | 11,651 | ||||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
3,484 | 5,065 | 2,887 | 2,692 | ||||||||||||||||
Policy loans, surrenders and death benefits |
(11,461 | ) | (7,098 | ) | (3,657 | ) | (3,165 | ) | ||||||||||||
Mortality and other (net) |
(4,662 | ) | (4,280 | ) | (2,102 | ) | (1,698 | ) | ||||||||||||
Transfers from other divisions or sponsor |
9,479 | 13,336 | 12,777 | 13,532 | ||||||||||||||||
Transfers to other divisions or sponsor |
(12,769 | ) | (17,898 | ) | (12,877 | ) | (15,571 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | (15,929 | ) | (10,875 | ) | (2,972 | ) | (4,210 | ) | ||||||||||||
Net increase (decrease) in net assets |
38,872 | 42,322 | 25,094 | 7,441 | ||||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
280,202 | 237,880 | 112,133 | 104,692 | ||||||||||||||||
End of period |
$ | 319,074 | $ | 280,202 | $ | 137,227 | $ | 112,133 | ||||||||||||
Units issued during the period |
3,615 | 4,675 | 2,452 | 2,504 | ||||||||||||||||
Units redeemed during the period |
(7,689 | ) | (8,194 | ) | (3,029 | ) | (3,705 | ) | ||||||||||||
Net units issued (redeemed) during period |
(4,074 | ) | (3,519 | ) | (577 | ) | (1,201 | ) | ||||||||||||
The Accompanying Notes are an Integral Part of these Financial Statements.
F-19
Statements of Changes in Net Assets
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
(in thousands)
International Developed Markets Division |
Strategic Bond Division | |||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | 3,043 | $ | 933 | $ | 469 | $ | 1,340 | ||||||||||||
Net realized gains (losses) |
11,224 | (2,733 | ) | 1,164 | 3,325 | |||||||||||||||
Net change in unrealized appreciation/(depreciation) |
1,827 | 6,925 | (3,677 | ) | 2,363 | |||||||||||||||
Net increase (decrease) in net assets resulting from operations |
16,094 | 5,125 | (2,044 | ) | 7,028 | |||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
3,860 | 3,584 | 2,380 | 1,779 | ||||||||||||||||
Policy loans, surrenders and death benefits |
(4,364 | ) | (2,620 | ) | (2,143 | ) | (2,269 | ) | ||||||||||||
Mortality and other (net) |
(2,336 | ) | (1,959 | ) | (1,575 | ) | (1,893 | ) | ||||||||||||
Transfers from other divisions or sponsor |
18,750 | 25,493 | 33,706 | 102,903 | ||||||||||||||||
Transfers to other divisions or sponsor |
(18,277 | ) | (28,759 | ) | (31,590 | ) | (103,654 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | (2,367 | ) | (4,261 | ) | 778 | (3,134 | ) | |||||||||||||
Net increase (decrease) in net assets |
13,727 | 864 | (1,266 | ) | 3,894 | |||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
132,255 | 131,391 | 92,143 | 88,249 | ||||||||||||||||
End of period |
$ | 145,982 | $ | 132,255 | $ | 90,877 | $ | 92,143 | ||||||||||||
Units issued during the period |
4,996 | 6,839 | 4,132 | 8,281 | ||||||||||||||||
Units redeemed during the period |
(5,837 | ) | (8,708 | ) | (4,319 | ) | (8,270 | ) | ||||||||||||
Net units issued (redeemed) during period |
(841 | ) | (1,869 | ) | (187 | ) | 11 | |||||||||||||
Global Real Estate Securities Division |
LifePoints Moderate Strategy Division |
|||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | 8,491 | $ | 1,729 | $ | 364 | $ | 109 | ||||||||||||
Net realized gains (losses) |
2,204 | (1,548 | ) | 388 | (201 | ) | ||||||||||||||
Net change in unrealized appreciation/(depreciation) |
33,891 | (11,356 | ) | (126 | ) | 487 | ||||||||||||||
Net increase (decrease) in net assets resulting from operations |
44,586 | (11,175 | ) | 626 | 395 | |||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
4,356 | 4,966 | 35 | 290 | ||||||||||||||||
Policy loans, surrenders and death benefits |
(4,737 | ) | (4,946 | ) | 157 | (223 | ) | |||||||||||||
Mortality and other (net) |
(3,089 | ) | (2,906 | ) | (175 | ) | (167 | ) | ||||||||||||
Transfers from other divisions or sponsor |
24,494 | 32,898 | 2,324 | 1,506 | ||||||||||||||||
Transfers to other divisions or sponsor |
(24,151 | ) | (36,893 | ) | (142 | ) | (1,645 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | (3,127 | ) | (6,881 | ) | 2,199 | (239 | ) | |||||||||||||
Net increase (decrease) in net assets |
41,459 | (18,056 | ) | 2,825 | 156 | |||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
168,688 | 186,744 | 7,655 | 7,499 | ||||||||||||||||
End of period |
$ | 210,147 | $ | 168,688 | $ | 10,480 | $ | 7,655 | ||||||||||||
Units issued during the period |
2,951 | 3,470 | 1,113 | 1,337 | ||||||||||||||||
Units redeemed during the period |
(3,260 | ) | (4,808 | ) | (545 | ) | (1,514 | ) | ||||||||||||
Net units issued (redeemed) during period |
(309 | ) | (1,338 | ) | 568 | (177 | ) | |||||||||||||
The Accompanying Notes are an Integral Part of these Financial Statements.
F-20
Statements of Changes in Net Assets
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
(in thousands)
LifePoints Balanced Strategy Division |
LifePoints Growth Strategy Division |
|||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | 1,184 | $ | 158 | $ | 1,082 | $ | 244 | ||||||||||||
Net realized gains (losses) |
2,549 | (237 | ) | 2,718 | (238 | ) | ||||||||||||||
Net change in unrealized appreciation/(depreciation) |
(535 | ) | 1,562 | 52 | 1,749 | |||||||||||||||
Net increase (decrease) in net assets resulting from operations |
3,198 | 1,483 | 3,852 | 1,755 | ||||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
825 | 408 | 110 | (128 | ) | |||||||||||||||
Policy loans, surrenders and death benefits |
(2,529 | ) | 270 | 38 | (574 | ) | ||||||||||||||
Mortality and other (net) |
(548 | ) | (434 | ) | (413 | ) | (405 | ) | ||||||||||||
Transfers from other divisions or sponsor |
7,523 | 3,077 | 1,473 | 1,031 | ||||||||||||||||
Transfers to other divisions or sponsor |
(5,134 | ) | (3,242 | ) | (397 | ) | (2,309 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | 137 | 79 | 811 | (2,385 | ) | |||||||||||||||
Net increase (decrease) in net assets |
3,335 | 1,562 | 4,663 | (630 | ) | |||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
25,051 | 23,489 | 22,707 | 23,337 | ||||||||||||||||
End of period |
$ | 28,386 | $ | 25,051 | $ | 27,370 | $ | 22,707 | ||||||||||||
Units issued during the period |
1,331 | 3,029 | 1,096 | 1,170 | ||||||||||||||||
Units redeemed during the period |
(1,526 | ) | (2,940 | ) | (1,036 | ) | (2,008 | ) | ||||||||||||
Net units issued (redeemed) during period |
(195 | ) | 89 | 60 | (838 | ) | ||||||||||||||
LifePoints Equity Growth Strategy Division |
Credit Suisse Trust Commodity Return Strategy Division |
|||||||||||||||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | 525 | $ | 175 | $ | 1,606 | $ | 1,061 | ||||||||||||
Net realized gains (losses) |
1,049 | (308 | ) | (75 | ) | (2,116 | ) | |||||||||||||
Net change in unrealized appreciation/(depreciation) |
221 | 298 | 5,566 | 949 | ||||||||||||||||
Net increase (decrease) in net assets resulting from operations |
1,795 | 165 | 7,097 | (106 | ) | |||||||||||||||
Policy Transactions: |
||||||||||||||||||||
Policy owners net payments |
(69 | ) | (446 | ) | 806 | 757 | ||||||||||||||
Policy loans, surrenders and death benefits |
400 | 435 | (912 | ) | (270 | ) | ||||||||||||||
Mortality and other (net) |
(144 | ) | (135 | ) | (484 | ) | (327 | ) | ||||||||||||
Transfers from other divisions or sponsor |
1,132 | 322 | 15,526 | 8,408 | ||||||||||||||||
Transfers to other divisions or sponsor |
(238 | ) | (3,435 | ) | (9,244 | ) | (6,800 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from contract transactions | 1,081 | (3,259 | ) | 5,692 | 1,768 | |||||||||||||||
Net increase (decrease) in net assets |
2,876 | (3,094 | ) | 12,789 | 1,662 | |||||||||||||||
Net Assets: |
||||||||||||||||||||
Beginning of period |
9,192 | 12,286 | 23,053 | 21,391 | ||||||||||||||||
End of period |
$ | 12,068 | $ | 9,192 | $ | 35,842 | $ | 23,053 | ||||||||||||
Units issued during the period |
621 | 394 | 3,031 | 2,354 | ||||||||||||||||
Units redeemed during the period |
(384 | ) | (2,354 | ) | (2,087 | ) | (1,963 | ) | ||||||||||||
Net units issued (redeemed) during period |
237 | (1,960 | ) | 944 | 391 | |||||||||||||||
The Accompanying Notes are an Integral Part of these Financial Statements.
F-21
Notes to Financial Statements
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 or sponsor) 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 Fund, 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 Funds should be read in conjunction with the financial statements of the Divisions. Each Division of the account indirectly bears exposure to the market, credit and liquidity risks of the Fund 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 policyowners existing at that date will continue to be recorded by the Account.
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, 2021, all of the Accounts investments are identified as Level 1 securities for valuation purposes under the Fair Value Measurement Topic of the FASB Accounting Standards Codification. Level 1 fair value is determined by unadjusted quoted prices in active markets for identical securities or derivatives. Level 2 fair value is determined by other significant observable inputs (including quoted prices for similar securities). Level 3 fair value is determined by significant unobservable inputs (including the Accounts own assumptions in determining fair value). There were no transfers between levels during the year. 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 exdate 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 policy dividends reinvested in the Account are reflected in Policyowners net payments in the accompanying financial statements. |
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 Measurement 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 Accounts 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 Mutuals 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, 2021 were as follows (amounts in thousands):
Fund Name | Purchases | Sales | ||||||||||
Growth Stock Division |
$ | 52,510 | $ | 54,714 | ||||||||
Focused Appreciation Division |
45,213 | 26,028 | ||||||||||
Large Cap Core Stock Division |
46,015 | 27,793 | ||||||||||
Large Cap Blend Division |
3,061 | 2,243 | ||||||||||
Index 500 Stock Division |
133,983 | 149,743 | ||||||||||
Large Company Value Division |
9,861 | 5,202 | ||||||||||
Domestic Equity Division |
17,598 | 19,710 | ||||||||||
Equity Income Division |
13,742 | 16,002 | ||||||||||
Mid Cap Growth Stock Division |
109,307 | 43,579 | ||||||||||
Index 400 Stock Division |
36,404 | 35,066 | ||||||||||
Mid Cap Value Division |
9,321 | 9,139 | ||||||||||
Small Cap Growth Stock Division |
57,004 | 33,605 | ||||||||||
Index 600 Stock Division |
14,260 | 9,116 | ||||||||||
Small Cap Value Division |
22,157 | 18,113 | ||||||||||
International Growth Division |
16,621 | 12,340 | ||||||||||
Research International Core Division |
13,515 | 6,655 | ||||||||||
International Equity Division |
38,011 | 30,601 |
F-22
Notes to Financial Statements
Fund Name | Purchases | Sales | ||||||||||
Emerging Markets Equity Division |
$ | 13,959 | $ | 8,229 | ||||||||
Government Money Market Division |
77,249 | 86,042 | ||||||||||
Short-Term Bond Division |
8,020 | 7,222 | ||||||||||
Select Bond Division |
46,367 | 29,430 | ||||||||||
Long-Term U.S. Government Bond Division |
7,081 | 5,579 | ||||||||||
Inflation Protection Bond Division |
11,597 | 4,745 | ||||||||||
High Yield Bond Division |
18,783 | 13,097 | ||||||||||
Multi-Sector Bond Division |
11,491 | 7,751 | ||||||||||
Balanced Division |
51,178 | 38,598 | ||||||||||
Asset Allocation Division |
8,073 | 5,961 | ||||||||||
Fidelity VIP Mid Cap Division |
47,812 | 16,349 | ||||||||||
Fidelity VIP Contrafund Division |
20,098 | 10,093 | ||||||||||
AMT Sustainable Equity Division |
1,674 | 1,103 | ||||||||||
U.S. Strategic Equity Division |
36,037 | 25,010 | ||||||||||
U.S. Small Cap Equity Division |
37,925 | 10,760 | ||||||||||
International Developed Markets Division |
22,458 | 10,855 | ||||||||||
Strategic Bond Division |
12,646 | 10,332 | ||||||||||
Global Real Estate Securities Division |
22,104 | 14,754 | ||||||||||
LifePoints Moderate Strategy Division |
3,797 | 877 | ||||||||||
LifePoints Balanced Strategy Division |
11,487 | 8,256 | ||||||||||
LifePoints Growth Strategy Division |
6,699 | 2,272 | ||||||||||
LifePoints Equity Growth Strategy Division |
3,519 | 990 | ||||||||||
Credit Suisse Trust Commodity Return Strategy Division |
12,252 | 4,956 |
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 on the statements of operations.
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 insureds 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.
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.
5. | COVID-19 |
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the value of the Accounts investments. Because of the uncertainties regarding the impact of COVID-19 on the global economy, and business operations, and securities markets, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Account and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
F-23
Notes to Financial Statements
6. Financial Highlights
As of the respective period end date: | For the respective period ended: | |||||||||||||||||||||||||||||||||||||||||||
Units Outstanding (000s) |
Unit Value, Lowest to Highest |
Net Assets (000s) |
Dividend Income as a % of Average Net Assets |
Expense Ratio, Lowest to Highest (1) |
Total Return Lowest to Highest (1) |
|||||||||||||||||||||||||||||||||||||||
Growth Stock Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
66,254 | $ | 10.682204 | to | $ | 152.095850 | $ | 795,331 | 0.00 | %(2) | 0.00% to 0.55% | 16.03 | % | to | 16.67 | % | ||||||||||||||||||||||||||||
2020 |
68,670 | 9.197199 | to | 130.365531 | 712,534 | 0.63 | 0.00 to 0.55 | 34.23 | to | 34.97 | ||||||||||||||||||||||||||||||||||
2019 |
70,191 | 6.844781 | to | 96.585761 | 545,267 | 0.66 | 0.00 to 0.55 | 28.98 | to | 29.68 | ||||||||||||||||||||||||||||||||||
2018 |
73,927 | 5.301752 | to | 74.477290 | 444,435 | 0.70 | 0.00 to 0.55 | 0.70 | to | 1.26 | ||||||||||||||||||||||||||||||||||
2017 |
75,993 | 5.259578 | to | 73.551913 | 455,218 | 0.86 | 0.00 to 0.55 | 23.59 | to | 24.27 | ||||||||||||||||||||||||||||||||||
Focused Appreciation Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
27,874 | $ | 9.941660 | to | $ | 108.543824 | $ | 325,573 | 0.16 | % | 0.00% to 0.55% | 18.25 | % | to | 18.90 | % | ||||||||||||||||||||||||||||
2020 |
28,885 | 8.398901 | to | 91.289389 | 284,762 | 0.55 | 0.00 to 0.55 | 31.82 | to | 32.55 | ||||||||||||||||||||||||||||||||||
2019 |
29,318 | 6.365138 | to | 68.873586 | 219,819 | 0.64 | 0.00 to 0.55 | 31.25 | to | 31.97 | ||||||||||||||||||||||||||||||||||
2018 |
31,537 | 4.844807 | to | 52.188290 | 181,353 | 0.49 | 0.00 to 0.55 | (2.87 | ) | to | (2.34 | ) | ||||||||||||||||||||||||||||||||
2017 |
32,539 | 4.983314 | to | 53.438372 | 191,961 | 0.72 | 0.00 to 0.55 | 32.89 | to | 33.62 | ||||||||||||||||||||||||||||||||||
Large Cap Core Stock Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
54,107 | $ | 7.122039 | to | $ | 100.458713 | $ | 450,424 | 0.80 | % | 0.00% to 0.55% | 24.42 | % | to | 25.10 | % | ||||||||||||||||||||||||||||
2020 |
55,805 | 5.718617 | to | 80.301917 | 373,477 | 1.12 | 0.00 to 0.55 | 22.07 | to | 22.74 | ||||||||||||||||||||||||||||||||||
2019 |
58,418 | 4.680129 | to | 65.424142 | 319,366 | 1.20 | 0.00 to 0.55 | 30.47 | to | 31.19 | ||||||||||||||||||||||||||||||||||
2018 |
61,022 | 3.583452 | to | 49.869208 | 255,743 | 1.51 | 0.00 to 0.55 | (6.55 | ) | to | (6.04 | ) | ||||||||||||||||||||||||||||||||
2017 |
63,131 | 3.831001 | to | 53.073917 | 282,834 | 1.76 | 0.00 to 0.55 | 24.19 | to | 24.87 | ||||||||||||||||||||||||||||||||||
Large Cap Blend Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
4,736 | $ | 3.140250 | to | $ | 27.701179 | $ | 16,050 | 0.66 | % | 0.00% to 0.55% | 17.81 | % | to | 18.46 | % | ||||||||||||||||||||||||||||
2020 |
4,823 | 2.662920 | to | 23.385328 | 13,770 | 5.08 | 0.00 to 0.55 | 9.45 | to | 10.05 | ||||||||||||||||||||||||||||||||||
2019 |
4,966 | 2.430590 | to | 21.249241 | 13,260 | 1.12 | 0.00 to 0.55 | 23.29 | to | 23.97 | ||||||||||||||||||||||||||||||||||
2018 |
5,369 | 1.969452 | to | 17.140701 | 11,780 | 0.78 | 0.00 to 0.55 | (4.53 | ) | to | (4.00 | ) | ||||||||||||||||||||||||||||||||
2017 |
5,549 | 2.060897 | to | 17.855817 | 12,473 | 0.92 | 0.00 to 0.55 | 18.38 | to | 19.02 | ||||||||||||||||||||||||||||||||||
Index 500 Stock Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
170,564 | $ | 11.431009 | to | $ | 270.376034 | $ | 2,339,036 | 1.22 | % | 0.00% to 0.55% | 27.75 | % | to | 28.45 | % | ||||||||||||||||||||||||||||
2020 |
175,531 | 8.939275 | to | 210.492951 | 1,905,123 | 1.63 | 0.00 to 0.55 | 17.53 | to | 18.18 | ||||||||||||||||||||||||||||||||||
2019 |
181,559 | 7.598098 | to | 178.109105 | 1,676,771 | 1.61 | 0.00 to 0.55 | 30.46 | to | 31.18 | ||||||||||||||||||||||||||||||||||
2018 |
186,899 | 5.818234 | to | 135.776139 | 1,326,361 | 1.60 | 0.00 to 0.55 | (5.10 | ) | to | (4.58 | ) | ||||||||||||||||||||||||||||||||
2017 |
191,990 | 6.124794 | to | 142.286114 | 1,445,616 | 1.76 | 0.00 to 0.55 | 20.85 | to | 21.52 | ||||||||||||||||||||||||||||||||||
Large Company Value Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
7,786 | $ | 2.895333 | to | $ | 25.131615 | $ | 25,883 | 1.13 | % | 0.00% to 0.55% | 21.25 | % | to | 21.92 | % | ||||||||||||||||||||||||||||
2020 |
6,285 | 2.385488 | to | 20.613433 | 17,426 | 2.21 | 0.00 to 0.55 | 2.07 | to | 2.64 | ||||||||||||||||||||||||||||||||||
2019 |
5,997 | 2.334690 | to | 20.083819 | 15,613 | 2.21 | 0.00 to 0.55 | 26.96 | to | 27.66 | ||||||||||||||||||||||||||||||||||
2018 |
6,176 | 1.837071 | to | 15.732361 | 12,933 | 1.78 | 0.00 to 0.55 | (8.43 | ) | to | (7.92 | ) | ||||||||||||||||||||||||||||||||
2017 |
6,091 | 2.004205 | to | 17.086312 | 13,497 | 2.00 | 0.00 to 0.55 | 10.49 | to | 11.10 | ||||||||||||||||||||||||||||||||||
Domestic Equity Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
55,120 | $ | 3.944337 | to | $ | 43.518946 | $ | 248,417 | 1.81 | % | 0.00% to 0.55% | 22.04 | % | to | 22.71 | % | ||||||||||||||||||||||||||||
2020 |
57,688 | 3.228727 | to | 35.463950 | 212,896 | 2.11 | 0.00 to 0.55 | 0.18 | to | 0.73 | ||||||||||||||||||||||||||||||||||
2019 |
60,393 | 3.219819 | to | 35.207252 | 223,783 | 1.83 | 0.00 to 0.55 | 20.11 | to | 20.77 | ||||||||||||||||||||||||||||||||||
2018 |
63,912 | 2.678096 | to | 29.152607 | 197,690 | 1.74 | 0.00 to 0.55 | (3.34 | ) | to | (2.81 | ) | ||||||||||||||||||||||||||||||||
2017 |
67,362 | 2.768059 | to | 29.996128 | 217,712 | 1.62 | 0.00 to 0.55 | 13.16 | to | 13.78 | ||||||||||||||||||||||||||||||||||
Equity Income Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
28,790 | $ | 4.715128 | to | $ | 51.480302 | $ | 157,227 | 2.06 | % | 0.00% to 0.55% | 25.01 | % | to | 25.70 | % | ||||||||||||||||||||||||||||
2020 |
29,859 | 3.767909 | to | 40.954303 | 129,823 | 4.65 | 0.00 to 0.55 | 0.65 | to | 1.20 | ||||||||||||||||||||||||||||||||||
2019 |
31,552 | 3.739921 | to | 40.467475 | 137,255 | 2.29 | 0.00 to 0.55 | 25.92 | to | 26.61 | ||||||||||||||||||||||||||||||||||
2018 |
34,607 | 2.967059 | to | 31.961107 | 119,195 | 2.01 | 0.00 to 0.55 | (9.84 | ) | to | (9.35 | ) | ||||||||||||||||||||||||||||||||
2017 |
35,456 | 3.287847 | to | 35.257091 | 135,832 | 2.20 | 0.00 to 0.55 | 15.61 | to | 16.24 |
(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.
(2) Ratio is less than 0.005%
F-24
Notes to Financial Statements
6. Financial Highlights
As of the respective period end date: | For the respective period ended: | |||||||||||||||||||||||||||||||||||||||||||
Units Outstanding (000s) |
Unit Value, Lowest to Highest |
Net Assets (000s) |
Dividend Income as a % of Average Net Assets |
Expense Ratio, Lowest to Highest (1) |
Total Return Lowest to Highest (1) |
|||||||||||||||||||||||||||||||||||||||
Mid Cap Growth Stock Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
81,344 | $ | 7.434766 | to | $ | 213.536458 | $ | 718,962 | 0.15 | % | 0.00% to 0.55% | 9.58 | % | to | 10.18 | % | ||||||||||||||||||||||||||||
2020 |
83,987 | 6.778346 | to | 193.811117 | 676,705 | 0.28 | 0.00 to 0.55 | 24.72 | to | 25.41 | ||||||||||||||||||||||||||||||||||
2019 |
87,172 | 5.429275 | to | 154.540637 | 562,896 | 0.18 | 0.00 to 0.55 | 32.29 | to | 33.01 | ||||||||||||||||||||||||||||||||||
2018 |
91,231 | 4.100122 | to | 116.184426 | 445,659 | 0.13 | 0.00 to 0.55 | (7.89 | ) | to | (7.38 | ) | ||||||||||||||||||||||||||||||||
2017 |
94,455 | 4.446849 | to | 125.441587 | 501,695 | 0.25 | 0.00 to 0.55 | 19.63 | to | 20.29 | ||||||||||||||||||||||||||||||||||
Index 400 Stock Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
54,702 | $ | 7.938833 | to | $ | 93.570328 | $ | 484,508 | 0.91 | % | 0.00% to 0.55% | 23.78 | % | to | 24.46 | % | ||||||||||||||||||||||||||||
2020 |
56,416 | 6.407252 | to | 75.180406 | 403,628 | 1.38 | 0.00 to 0.55 | 12.75 | to | 13.37 | ||||||||||||||||||||||||||||||||||
2019 |
58,779 | 5.677085 | to | 66.313755 | 372,368 | 1.21 | 0.00 to 0.55 | 25.20 | to | 25.88 | ||||||||||||||||||||||||||||||||||
2018 |
60,974 | 4.530052 | to | 52.678316 | 309,099 | 1.11 | 0.00 to 0.55 | (11.82 | ) | to | (11.33 | ) | ||||||||||||||||||||||||||||||||
2017 |
62,321 | 5.132177 | to | 59.411237 | 358,143 | 1.07 | 0.00 to 0.55 | 15.33 | to | 15.96 | ||||||||||||||||||||||||||||||||||
Mid Cap Value Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
13,753 | $ | 5.656306 | to | $ | 61.756931 | $ | 86,629 | 1.15 | % | 0.00% to 0.55% | 22.60 | % | to | 23.27 | % | ||||||||||||||||||||||||||||
2020 |
13,830 | 4.609170 | to | 50.098747 | 71,374 | 1.83 | 0.00 to 0.55 | 1.11 | to | 1.67 | ||||||||||||||||||||||||||||||||||
2019 |
14,896 | 4.554015 | to | 49.276848 | 76,441 | 1.61 | 0.00 to 0.55 | 28.50 | to | 29.21 | ||||||||||||||||||||||||||||||||||
2018 |
15,826 | 3.540449 | to | 38.138006 | 63,562 | 1.60 | 0.00 to 0.55 | (13.33 | ) | to | (12.85 | ) | ||||||||||||||||||||||||||||||||
2017 |
16,920 | 4.080949 | to | 43.762109 | 78,440 | 1.44 | 0.00 to 0.55 | 11.20 | to | 11.81 | ||||||||||||||||||||||||||||||||||
Small Cap Growth Stock Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
47,947 | $ | 8.027417 | to | $ | 108.425869 | $ | 420,423 | 0.02 | % | 0.00% to 0.55% | 3.54 | % | to | 4.11 | % | ||||||||||||||||||||||||||||
2020 |
49,853 | 7.745486 | to | 104.149054 | 421,615 | 0.11 | 0.00 to 0.55 | 32.74 | to | 33.47 | ||||||||||||||||||||||||||||||||||
2019 |
51,995 | 5.829238 | to | 78.030714 | 330,603 | 0.10 | 0.00 to 0.55 | 34.95 | to | 35.69 | ||||||||||||||||||||||||||||||||||
2018 |
54,724 | 4.315234 | to | 57.505467 | 257,677 | 0.00 | 0.00 to 0.55 | (12.19 | ) | to | (11.71 | ) | ||||||||||||||||||||||||||||||||
2017 |
56,874 | 4.909491 | to | 65.129570 | 305,351 | 0.11 | 0.00 to 0.55 | 20.94 | to | 21.61 | ||||||||||||||||||||||||||||||||||
Index 600 Stock Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
20,381 | $ | 3.345869 | to | $ | 38.363170 | $ | 77,623 | 0.76 | % | 0.00% to 0.55% | 25.53 | % | to | 26.22 | % | ||||||||||||||||||||||||||||
2020 |
19,313 | 2.662820 | to | 30.394793 | 58,712 | 1.79 | 0.00 to 0.55 | 10.32 | to | 10.93 | ||||||||||||||||||||||||||||||||||
2019 |
18,011 | 2.411252 | to | 27.399696 | 50,277 | 0.25 | 0.00 to 0.55 | 21.77 | to | 22.44 | ||||||||||||||||||||||||||||||||||
2018 |
17,485 | 1.978237 | to | 22.378619 | 40,272 | 1.41 | 0.00 to 0.55 | (9.28 | ) | to | (8.78 | ) | ||||||||||||||||||||||||||||||||
2017 |
15,104 | 2.178475 | to | 24.532713 | 38,659 | 1.86 | 0.00 to 0.55 | 12.31 | to | 12.93 | ||||||||||||||||||||||||||||||||||
Small Cap Value Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
34,651 | $ | 6.383645 | to | $ | 70.431381 | $ | 247,818 | 0.39 | % | 0.00% to 0.55% | 22.33 | % | to | 23.00 | % | ||||||||||||||||||||||||||||
2020 |
35,490 | 5.213261 | to | 57.260960 | 207,859 | 0.51 | 0.00 to 0.55 | 8.69 | to | 9.29 | ||||||||||||||||||||||||||||||||||
2019 |
38,061 | 4.791826 | to | 52.395678 | 204,813 | 0.47 | 0.00 to 0.55 | 25.20 | to | 25.89 | ||||||||||||||||||||||||||||||||||
2018 |
40,431 | 3.823467 | to | 41.620093 | 175,135 | 0.53 | 0.00 to 0.55 | (13.21 | ) | to | (12.73 | ) | ||||||||||||||||||||||||||||||||
2017 |
42,358 | 4.400993 | to | 47.690780 | 211,637 | 0.77 | 0.00 to 0.55 | 11.04 | to | 11.65 | ||||||||||||||||||||||||||||||||||
International Growth Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
41,010 | $ | 3.583669 | to | $ | 39.539175 | $ | 166,146 | 0.53 | % | 0.00% to 0.55% | 15.28 | % | to | 15.92 | % | ||||||||||||||||||||||||||||
2020 |
40,898 | 3.105508 | to | 34.110132 | 144,050 | 1.69 | 0.00 to 0.55 | 17.26 | to | 17.91 | ||||||||||||||||||||||||||||||||||
2019 |
41,418 | 2.645647 | to | 28.928599 | 122,981 | 1.25 | 0.00 to 0.55 | 34.07 | to | 34.80 | ||||||||||||||||||||||||||||||||||
2018 |
43,088 | 1.971431 | to | 21.459907 | 95,359 | 1.40 | 0.00 to 0.55 | (11.76 | ) | to | (11.28 | ) | ||||||||||||||||||||||||||||||||
2017 |
43,701 | 2.232113 | to | 24.188049 | 110,000 | 1.30 | 0.00 to 0.55 | 29.32 | to | 30.03 | ||||||||||||||||||||||||||||||||||
Research International Core Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
36,412 | $ | 1.833587 | to | $ | 18.026460 | $ | 76,412 | 1.14 | % | 0.00% to 0.55% | 11.46 | % | to | 12.07 | % | ||||||||||||||||||||||||||||
2020 |
33,769 | 1.643464 | to | 16.084924 | 63,483 | 2.26 | 0.00 to 0.55 | 12.84 | to | 13.46 | ||||||||||||||||||||||||||||||||||
2019 |
32,749 | 1.454984 | to | 14.176293 | 53,645 | 1.66 | 0.00 to 0.55 | 27.55 | to | 28.25 | ||||||||||||||||||||||||||||||||||
2018 |
27,318 | 1.139564 | to | 11.053328 | 36,026 | 1.66 | 0.00 to 0.55 | (14.14 | ) | to | (13.66 | ) | ||||||||||||||||||||||||||||||||
2017 |
25,545 | 1.325886 | to | 12.802534 | 39,047 | 1.68 | 0.00 to 0.55 | 27.51 | to | 28.21 |
(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.
F-25
Notes to Financial Statements
6. Financial Highlights
As of the respective period end date: | For the respective period ended: | |||||||||||||||||||||||||||||||||||||||||||
Units Outstanding (000s) |
Unit Value, Lowest to Highest |
Net Assets (000s) |
Dividend Income as a % of Average Net Assets |
Expense Ratio, Lowest to Highest (1) |
Total Return Lowest to Highest (1) |
|||||||||||||||||||||||||||||||||||||||
International Equity Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
120,120 | $ | 3.746814 | to | $ | 5.930327 | $ | 520,067 | 2.32 | % | 0.00% to 0.55% | 4.43 | % | to | 5.00 | % | ||||||||||||||||||||||||||||
2020 |
120,453 | 3.584281 | to | 5.647675 | 499,784 | 3.58 | 0.00 to 0.55 | (3.24 | ) | to | (2.71 | ) | ||||||||||||||||||||||||||||||||
2019 |
123,522 | 3.700743 | to | 5.804990 | 526,380 | 2.49 | 0.00 to 0.55 | 11.98 | to | 12.60 | ||||||||||||||||||||||||||||||||||
2018 |
128,969 | 3.301503 | to | 5.155553 | 489,960 | 2.50 | 0.00 to 0.55 | (15.87 | ) | to | (15.41 | ) | ||||||||||||||||||||||||||||||||
2017 |
132,108 | 3.920448 | to | 6.094491 | 598,133 | 2.35 | 0.00 to 0.55 | 21.63 | to | 22.30 | ||||||||||||||||||||||||||||||||||
Emerging Markets Equity Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
62,889 | $ | 1.267943 | to | $ | 15.578805 | $ | 90,840 | 0.51 | % | 0.00% to 0.55% | (5.07 | ) | % | to | (4.55 | ) | % | ||||||||||||||||||||||||||
2020 |
59,092 | 1.334398 | to | 16.321818 | 90,119 | 2.26 | 0.00 to 0.55 | 26.16 | to | 26.86 | ||||||||||||||||||||||||||||||||||
2019 |
57,970 | 1.056655 | to | 12.866468 | 69,251 | 1.11 | 0.00 to 0.55 | 19.94 | to | 20.60 | ||||||||||||||||||||||||||||||||||
2018 |
56,859 | 0.880106 | to | 10.668771 | 56,824 | 1.31 | 0.00 to 0.55 | (14.23 | ) | to | (13.75 | ) | ||||||||||||||||||||||||||||||||
2017 |
53,406 | 1.025080 | to | 12.370178 | 62,871 | 0.92 | 0.00 to 0.55 | 27.14 | to | 27.84 | ||||||||||||||||||||||||||||||||||
Government Money Market Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
90,464 | $ | 1.559755 | to | $ | 43.483468 | $ | 172,031 | 0.00 | %(2) | 0.00% to 0.55% | (0.54 | ) | % | to | 0.01 | % | |||||||||||||||||||||||||||
2020 |
95,304 | 1.566628 | to | 43.480109 | 182,327 | 0.26 | 0.00 to 0.55 | (0.24 | ) | to | 0.31 | |||||||||||||||||||||||||||||||||
2019 |
79,304 | 1.568812 | to | 43.345856 | 152,147 | 1.92 | 0.00 to 0.55 | 1.38 | to | 1.94 | ||||||||||||||||||||||||||||||||||
2018 |
78,642 | 1.545924 | to | 42.522150 | 154,530 | 1.53 | 0.00 to 0.55 | 0.97 | to | 1.53 | ||||||||||||||||||||||||||||||||||
2017 |
77,104 | 1.529296 | to | 41.875417 | 147,850 | 0.59 | 0.00 to 0.55 | 0.05 | to | 0.60 | ||||||||||||||||||||||||||||||||||
Short-Term Bond Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
22,420 | $ | 1.119426 | to | $ | 13.941366 | $ | 32,053 | 1.76 | % | 0.00% to 0.55% | (0.64 | ) | % | to | (0.10 | ) | % | ||||||||||||||||||||||||||
2020 |
22,525 | 1.125573 | to | 13.954768 | 31,927 | 2.30 | 0.00 to 0.55 | 3.72 | to | 4.29 | ||||||||||||||||||||||||||||||||||
2019 |
22,993 | 1.084100 | to | 13.380170 | 30,340 | 2.05 | 0.00 to 0.55 | 3.81 | to | 4.38 | ||||||||||||||||||||||||||||||||||
2018 |
16,642 | 1.043226 | to | 12.818134 | 24,893 | 1.54 | 0.00 to 0.55 | 0.81 | to | 1.36 | ||||||||||||||||||||||||||||||||||
2017 |
16,212 | 1.033965 | to | 12.646732 | 22,489 | 1.28 | 0.00 to 0.55 | 0.78 | to | 1.33 | ||||||||||||||||||||||||||||||||||
Select Bond Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
73,511 | $ | 3.230152 | to | $ | 263.835613 | $ | 291,624 | 2.09 | % | 0.00% to 0.55% | (2.12 | ) | % | to | (1.59 | ) | % | ||||||||||||||||||||||||||
2020 |
73,291 | 3.297004 | to | 268.089237 | 298,735 | 2.81 | 0.00 to 0.55 | 8.38 | to | 8.98 | ||||||||||||||||||||||||||||||||||
2019 |
70,958 | 3.038977 | to | 245.997917 | 266,601 | 2.77 | 0.00 to 0.55 | 8.06 | to | 8.65 | ||||||||||||||||||||||||||||||||||
2018 |
70,449 | 2.809628 | to | 226.413644 | 243,011 | 2.25 | 0.00 to 0.55 | (0.76 | ) | to | (0.21 | ) | ||||||||||||||||||||||||||||||||
2017 |
70,939 | 2.828365 | to | 226.897252 | 251,754 | 2.07 | 0.00 to 0.55 | 3.02 | to | 3.58 | ||||||||||||||||||||||||||||||||||
Long-Term U.S Government Bond Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
8,535 | $ | 1.764661 | to | $ | 25.468271 | $ | 16,847 | 0.92 | % | 0.00% to 0.55% | (5.89 | ) | % | to | (5.37 | ) | % | ||||||||||||||||||||||||||
2020 |
9,845 | 1.873219 | to | 26.913884 | 19,772 | 1.66 | 0.00 to 0.55 | 16.73 | to | 17.37 | ||||||||||||||||||||||||||||||||||
2019 |
7,922 | 1.603184 | to | 22.930587 | 13,950 | 2.20 | 0.00 to 0.55 | 12.55 | to | 13.17 | ||||||||||||||||||||||||||||||||||
2018 |
6,965 | 1.423026 | to | 20.262648 | 10,667 | 2.02 | 0.00 to 0.55 | (2.58 | ) | to | (2.04 | ) | ||||||||||||||||||||||||||||||||
2017 |
6,284 | 1.459300 | to | 20.685508 | 9,880 | 1.86 | 0.00 to 0.55 | 7.69 | to | 8.28 | ||||||||||||||||||||||||||||||||||
Inflation Protection Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
14,019 | $ | 1.357159 | to | $ | 18.278682 | $ | 23,159 | 0.99 | % | 0.00% to 0.55% | 6.02 | % | to | 6.61 | % | ||||||||||||||||||||||||||||
2020 |
9,384 | 1.278801 | to | 17.146141 | 15,242 | 2.12 | 0.00 to 0.55 | 8.97 | to | 9.57 | ||||||||||||||||||||||||||||||||||
2019 |
8,193 | 1.172363 | to | 15.648347 | 11,881 | 2.63 | 0.00 to 0.55 | 8.42 | to | 9.02 | ||||||||||||||||||||||||||||||||||
2018 |
8,142 | 1.080225 | to | 14.354000 | 10,811 | 2.09 | 0.00 to 0.55 | (3.14 | ) | to | (2.61 | ) | ||||||||||||||||||||||||||||||||
2017 |
7,799 | 1.114216 | to | 14.738894 | 10,493 | 0.69 | 0.00 to 0.55 | 3.01 | to | 3.58 | ||||||||||||||||||||||||||||||||||
High Yield Bond Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
22,334 | $ | 4.905909 | to | $ | 66.738383 | $ | 128,128 | 5.20 | % | 0.00% to 0.55% | 4.73 | % | to | 5.31 | % | ||||||||||||||||||||||||||||
2020 |
22,827 | 4.679675 | to | 63.375613 | 122,455 | 5.82 | 0.00 to 0.55 | 6.06 | to | 6.64 | ||||||||||||||||||||||||||||||||||
2019 |
23,653 | 4.407984 | to | 59.428074 | 120,105 | 5.49 | 0.00 to 0.55 | 14.34 | to | 14.97 | ||||||||||||||||||||||||||||||||||
2018 |
24,213 | 3.851321 | to | 51.690668 | 107,388 | 5.42 | 0.00 to 0.55 | (3.24 | ) | to | (2.71 | ) | ||||||||||||||||||||||||||||||||
2017 |
25,336 | 3.976385 | to | 53.128855 | 116,367 | 5.44 | 0.00 to 0.55 | 6.30 | to | 6.88 |
(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.
(2) Ratio is less than 0.005%
F-26
Notes to Financial Statements
6. Financial Highlights
As of the respective period end date: | For the respective period ended: | |||||||||||||||||||||||||||||||||||||||||||
Units Outstanding (000s) |
Unit Value, Lowest to Highest |
Net Assets (000s) |
Dividend Income as a % of Average Net Assets |
Expense Ratio, Lowest to Highest (1) |
Total Return Lowest to Highest (1) |
|||||||||||||||||||||||||||||||||||||||
Multi-Sector Bond Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
34,042 | $ | 1.592560 | to | $ | 22.416380 | $ | 63,639 | 2.13 | % | 0.00% to 0.55% | (0.62 | ) | % | to | (0.08 | ) | % | ||||||||||||||||||||||||||
2020 |
33,262 | 1.600950 | to | 22.433485 | 61,825 | 4.14 | 0.00 to 0.55 | 5.55 | to | 6.13 | ||||||||||||||||||||||||||||||||||
2019 |
32,487 | 1.515308 | to | 21.138053 | 55,539 | 4.66 | 0.00 to 0.55 | 13.42 | to | 14.04 | ||||||||||||||||||||||||||||||||||
2018 |
27,865 | 1.334721 | to | 18.535667 | 41,877 | 3.12 | 0.00 to 0.55 | (1.84 | ) | to | (1.30 | ) | ||||||||||||||||||||||||||||||||
2017 |
26,759 | 1.358433 | to | 18.780164 | 40,381 | 3.85 | 0.00 to 0.55 | 7.79 | to | 8.38 | ||||||||||||||||||||||||||||||||||
Balanced Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
43,559 | $ | 5.298608 | to | $ | 298.595878 | $ | 450,231 | 2.46 | % | 0.00% to 0.55% | 6.97 | % | to | 7.56 | % | ||||||||||||||||||||||||||||
2020 |
44,992 | 4.948376 | to | 277.610210 | 436,985 | 2.47 | 0.00 to 0.55 | 11.87 | to | 12.49 | ||||||||||||||||||||||||||||||||||
2019 |
45,747 | 4.418751 | to | 246.784874 | 400,553 | 2.30 | 0.00 to 0.55 | 17.28 | to | 17.92 | ||||||||||||||||||||||||||||||||||
2018 |
45,928 | 3.764026 | to | 209.277798 | 347,349 | 2.37 | 0.00 to 0.55 | (3.98 | ) | to | (3.45 | ) | ||||||||||||||||||||||||||||||||
2017 |
47,261 | 3.916267 | to | 216.761163 | 375,073 | 2.19 | 0.00 to 0.55 | 11.37 | to | 11.98 | ||||||||||||||||||||||||||||||||||
Asset Allocation Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
16,048 | $ | 3.303784 | to | $ | 36.450275 | $ | 65,833 | 2.20 | % | 0.00% to 0.55% | 9.85 | % | to | 10.45 | % | ||||||||||||||||||||||||||||
2020 |
16,667 | 3.004653 | to | 33.001529 | 61,996 | 2.36 | 0.00 to 0.55 | 12.81 | to | 13.43 | ||||||||||||||||||||||||||||||||||
2019 |
17,417 | 2.660780 | to | 29.093477 | 57,278 | 2.23 | 0.00 to 0.55 | 20.42 | to | 21.08 | ||||||||||||||||||||||||||||||||||
2018 |
17,585 | 2.207402 | to | 24.028105 | 48,341 | 1.99 | 0.00 to 0.55 | (5.40 | ) | to | (4.88 | ) | ||||||||||||||||||||||||||||||||
2017 |
18,186 | 2.331046 | to | 25.259678 | 53,600 | 2.07 | 0.00 to 0.55 | 14.25 | to | 14.87 | ||||||||||||||||||||||||||||||||||
Fidelity VIP Mid Cap Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
25,885 | $ | 8.105508 | to | $ | 88.496791 | $ | 238,938 | 0.62 | % | 0.00% to 0.55% | 24.92 | % | to | 25.60 | % | ||||||||||||||||||||||||||||
2020 |
26,549 | 6.482361 | to | 70.458211 | 195,199 | 0.62 | 0.00 to 0.55 | 17.42 | to | 18.07 | ||||||||||||||||||||||||||||||||||
2019 |
28,622 | 5.515184 | to | 59.676525 | 180,950 | 0.67 | 0.00 to 0.55 | 22.50 | to | 23.17 | ||||||||||||||||||||||||||||||||||
2018 |
30,730 | 4.497777 | to | 48.449732 | 159,036 | 0.40 | 0.00 to 0.55 | (15.24 | ) | to | (14.77 | ) | ||||||||||||||||||||||||||||||||
2017 |
31,890 | 5.301232 | to | 56.847028 | 195,568 | 0.49 | 0.00 to 0.55 | 19.88 | to | 20.54 | ||||||||||||||||||||||||||||||||||
Fidelity VIP Contrafund Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
20,055 | $ | 4.031040 | to | $ | 45.041088 | $ | 96,024 | 0.06 | % | 0.00% to 0.55% | 27.14 | % | to | 27.83 | % | ||||||||||||||||||||||||||||
2020 |
20,337 | 3.167508 | to | 35.233871 | 75,874 | 0.22 | 0.00 to 0.55 | 29.74 | to | 30.46 | ||||||||||||||||||||||||||||||||||
2019 |
18,727 | 2.438969 | to | 27.008170 | 52,730 | 0.22 | 0.00 to 0.55 | 30.56 | to | 31.27 | ||||||||||||||||||||||||||||||||||
2018 |
19,649 | 1.866274 | to | 20.573795 | 41,918 | 0.44 | 0.00 to 0.55 | (7.15 | ) | to | (6.64 | ) | ||||||||||||||||||||||||||||||||
2017 |
19,612 | 2.008049 | to | 22.036922 | 44,858 | 0.77 | 0.00 to 0.55 | 20.92 | to | 21.59 | ||||||||||||||||||||||||||||||||||
AMT Sustainable Equity Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
2,292 | $ | 3.328113 | to | $ | 36.931533 | $ | 9,521 | 0.39 | % | 0.00% to 0.55% | 22.80 | % | to | 23.48 | % | ||||||||||||||||||||||||||||
2020 |
2,052 | 2.707463 | to | 29.909730 | 7,378 | 0.64 | 0.00 to 0.55 | 18.91 | to | 19.56 | ||||||||||||||||||||||||||||||||||
2019 |
1,863 | 2.274699 | to | 25.016087 | 5,561 | 0.41 | 0.00 to 0.55 | 25.20 | to | 25.88 | ||||||||||||||||||||||||||||||||||
2018 |
2,134 | 1.815096 | to | 19.872228 | 5,073 | 0.51 | 0.00 to 0.55 | (6.23 | ) | to | (5.72 | ) | ||||||||||||||||||||||||||||||||
2017 |
2,092 | 1.933853 | to | 21.076980 | 5,287 | 0.51 | 0.00 to 0.55 | 17.78 | to | 18.43 | ||||||||||||||||||||||||||||||||||
U.S. Strategic Equity Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
75,818 | $ | 3.725106 | to | $ | 42.853358 | $ | 319,074 | 0.56 | % | 0.00% to 0.55% | 19.74 | % | to | 20.40 | % | ||||||||||||||||||||||||||||
2020 |
79,892 | 3.107894 | to | 35.592905 | 280,202 | 0.45 | 0.00 to 0.55 | 23.16 | to | 23.84 | ||||||||||||||||||||||||||||||||||
2019 |
83,411 | 2.520964 | to | 28.741505 | 237,880 | 1.07 | 0.00 to 0.55 | 29.55 | to | 30.26 | ||||||||||||||||||||||||||||||||||
2018 |
88,552 | 1.943977 | to | 22.064057 | 195,830 | 1.15 | 0.00 to 0.55 | (10.14 | ) | to | (9.64 | ) | ||||||||||||||||||||||||||||||||
2017 |
92,817 | 2.161152 | to | 24.418364 | 230,509 | 1.02 | 0.00 to 0.55 | 20.14 | to | 20.80 | ||||||||||||||||||||||||||||||||||
U.S. Small Cap Equity Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
27,419 | $ | 4.493029 | to | $ | 53.013410 | $ | 137,227 | 0.25 | % | 0.00% to 0.55% | 25.10 | % | to | 25.79 | % | ||||||||||||||||||||||||||||
2020 |
27,996 | 3.587903 | to | 42.144292 | 112,133 | 0.06 | 0.00 to 0.55 | 12.08 | to | 12.70 | ||||||||||||||||||||||||||||||||||
2019 |
29,197 | 3.197903 | to | 37.394611 | 104,692 | 0.56 | 0.00 to 0.55 | 22.40 | to | 23.07 | ||||||||||||||||||||||||||||||||||
2018 |
31,008 | 2.610168 | to | 30.385277 | 91,320 | 0.47 | 0.00 to 0.55 | (12.45 | ) | to | (11.97 | ) | ||||||||||||||||||||||||||||||||
2017 |
32,697 | 2.978626 | to | 34.518205 | 110,459 | 0.18 | 0.00 to 0.55 | 14.85 | to | 15.48 |
(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.
F-27
Notes to Financial Statements
6. Financial Highlights
As of the respective period end date: | For the respective period ended: | |||||||||||||||||||||||||||||||||||||||||||
Units Outstanding (000s) |
Unit Value, Lowest to Highest |
Net Assets (000s) |
Dividend Income as a % of Average Net Assets |
Expense Ratio, Lowest to Highest (1) |
Total Return Lowest to Highest (1) |
|||||||||||||||||||||||||||||||||||||||
International Developed Markets Division |
||||||||||||||||||||||||||||||||||||||||||||
2021 |
53,017 | $ | 2.411511 | to | $ | 27.103303 | $ | 145,982 | 2.54 | % | 0.00% to 0.55% | 12.04 | % | to | 12.66 | % | ||||||||||||||||||||||||||||
2020 |
53,858 | 2.150242 | to | 24.058667 | 132,255 | 1.25 | 0.00 to 0.55 | 4.50 | to | 5.08 | ||||||||||||||||||||||||||||||||||
2019 |
55,727 | 2.055606 | to | 22.896522 | 131,391 | 2.62 | 0.00 to 0.55 | 19.07 | to | 19.72 | ||||||||||||||||||||||||||||||||||
2018 |
58,409 | 1.724712 | to | 19.124827 | 116,077 | 1.72 | 0.00 to 0.55 | (15.34 | ) | to | (14.87 | ) | ||||||||||||||||||||||||||||||||
2017 |
59,631 | 2.035246 | to | 22.466466 | 141,472 | 2.65 | 0.00 to 0.55 | 24.29 | to | 24.98 | ||||||||||||||||||||||||||||||||||
Strategic Bond Division |
||||||||||||||||||||||||||||||||||||||||||||
2021 |
27,240 | $ | 2.605094 | to | $ | 28.706174 | $ | 90,877 | 0.91 | % | 0.00% to 0.55% | (2.36 | ) | % | to | (1.82 | ) | % | ||||||||||||||||||||||||||
2020 |
27,427 | 2.665278 | to | 29.237785 | 92,143 | 1.82 | 0.00 to 0.55 | 7.84 | to | 8.43 | ||||||||||||||||||||||||||||||||||
2019 |
27,416 | 2.469076 | to | 26.963899 | 88,249 | 2.75 | 0.00 to 0.55 | 8.60 | to | 9.19 | ||||||||||||||||||||||||||||||||||
2018 |
28,147 | 2.271363 | to | 24.693685 | 81,612 | 2.12 | 0.00 to 0.55 | (1.35 | ) | to | (0.81 | ) | ||||||||||||||||||||||||||||||||
2017 |
29,030 | 2.300337 | to | 24.895915 | 86,180 | 1.35 | 0.00 to 0.55 | 3.30 | to | 3.86 | ||||||||||||||||||||||||||||||||||
Global Real Estate Securities Division |
||||||||||||||||||||||||||||||||||||||||||||
2021 |
28,990 | $ | 6.481448 | to | $ | 71.324137 | $ | 210,147 | 4.86 | % | 0.00% to 0.55% | 26.50 | % | to | 27.19 | % | ||||||||||||||||||||||||||||
2020 |
29,299 | 5.118605 | to | 56.074809 | 168,688 | 1.53 | 0.00 to 0.55 | (5.70 | ) | to | (5.18 | ) | ||||||||||||||||||||||||||||||||
2019 |
30,637 | 5.422414 | to | 59.135972 | 186,744 | 5.05 | 0.00 to 0.55 | 20.98 | to | 21.64 | ||||||||||||||||||||||||||||||||||
2018 |
32,010 | 4.477782 | to | 48.615288 | 161,150 | 4.49 | 0.00 to 0.55 | (6.24 | ) | to | (5.73 | ) | ||||||||||||||||||||||||||||||||
2017 |
33,345 | 4.771257 | to | 51.568102 | 179,095 | 3.63 | 0.00 to 0.55 | 11.19 | to | 11.80 | ||||||||||||||||||||||||||||||||||
LifePoints Moderate Strategy Division |
||||||||||||||||||||||||||||||||||||||||||||
2021 |
4,179 | $ | 1.638637 | to | $ | 20.401736 | $ | 10,480 | 4.49 | % | 0.00% to 0.55% | 7.64 | % | to | 8.23 | % | ||||||||||||||||||||||||||||
2020 |
3,611 | 1.520808 | to | 18.849922 | 7,655 | 2.02 | 0.00 to 0.55 | 5.82 | to | 6.40 | ||||||||||||||||||||||||||||||||||
2019 |
3,788 | 1.435781 | to | 17.716081 | 7,499 | 1.21 | 0.00 to 0.55 | 11.93 | to | 12.54 | ||||||||||||||||||||||||||||||||||
2018 |
3,780 | 1.281521 | to | 15.741887 | 6,714 | 4.57 | 0.00 to 0.55 | (5.44 | ) | to | (4.92 | ) | ||||||||||||||||||||||||||||||||
2017 |
4,399 | 1.353996 | to | 16.557145 | 6,960 | 2.27 | 0.00 to 0.55 | 9.29 | to | 9.88 | ||||||||||||||||||||||||||||||||||
LifePoints Balanced Strategy Division |
||||||||||||||||||||||||||||||||||||||||||||
2021 |
10,886 | $ | 1.866741 | to | $ | 21.853460 | $ | 28,386 | 4.57 | % | 0.00% to 0.55% | 12.42 | % | to | 13.04 | % | ||||||||||||||||||||||||||||
2020 |
11,081 | 1.658834 | to | 19.332571 | 25,051 | 1.18 | 0.00 to 0.55 | 7.06 | to | 7.65 | ||||||||||||||||||||||||||||||||||
2019 |
10,992 | 1.547882 | to | 17.958473 | 23,489 | 1.59 | 0.00 to 0.55 | 15.81 | to | 16.45 | ||||||||||||||||||||||||||||||||||
2018 |
10,926 | 1.335190 | to | 15.421524 | 19,333 | 5.36 | 0.00 to 0.55 | (7.31 | ) | to | (6.80 | ) | ||||||||||||||||||||||||||||||||
2017 |
11,492 | 1.439016 | to | 16.545882 | 22,495 | 2.36 | 0.00 to 0.55 | 11.39 | to | 12.00 | ||||||||||||||||||||||||||||||||||
LifePoints Growth Strategy Division |
||||||||||||||||||||||||||||||||||||||||||||
2021 |
10,220 | $ | 2.054904 | to | $ | 22.430026 | $ | 27,370 | 4.75 | % | 0.00% to 0.55% | 16.80 | % | to | 17.44 | % | ||||||||||||||||||||||||||||
2020 |
10,160 | 1.757555 | to | 19.098502 | 22,707 | 1.67 | 0.00 to 0.55 | 9.15 | to | 9.75 | ||||||||||||||||||||||||||||||||||
2019 |
10,998 | 1.608669 | to | 17.402048 | 23,337 | 0.70 | 0.00 to 0.55 | 17.42 | to | 18.06 | ||||||||||||||||||||||||||||||||||
2018 |
11,759 | 1.368685 | to | 14.739598 | 21,011 | 4.93 | 0.00 to 0.55 | (8.55 | ) | to | (8.05 | ) | ||||||||||||||||||||||||||||||||
2017 |
11,847 | 1.495208 | to | 16.029490 | 22,139 | 3.19 | 0.00 to 0.55 | 15.02 | to | 15.65 | ||||||||||||||||||||||||||||||||||
LifePoints Equity Growth Strategy Division |
||||||||||||||||||||||||||||||||||||||||||||
2021 |
4,062 | $ | 2.150303 | to | $ | 21.427646 | $ | 12,068 | 5.29 | % | 0.00% to 0.55% | 18.96 | % | to | 19.61 | % | ||||||||||||||||||||||||||||
2020 |
3,825 | 1.805853 | to | 17.914598 | 9,192 | 2.42 | 0.00 to 0.55 | 7.66 | to | 8.26 | ||||||||||||||||||||||||||||||||||
2019 |
5,785 | 1.675624 | to | 16.548015 | 12,286 | 0.23 | 0.00 to 0.55 | 19.43 | to | 20.09 | ||||||||||||||||||||||||||||||||||
2018 |
6,734 | 1.401615 | to | 13.779890 | 11,597 | 4.92 | 0.00 to 0.55 | (9.95 | ) | to | (9.45 | ) | ||||||||||||||||||||||||||||||||
2017 |
6,907 | 1.554985 | to | 15.218716 | 13,330 | 3.38 | 0.00 to 0.55 | 16.91 | to | 17.55 | ||||||||||||||||||||||||||||||||||
Credit Suisse Trust Commodity Return Strategy Division |
|
|||||||||||||||||||||||||||||||||||||||||||
2021 |
5,500 | $ | 5.986523 | to | $ | 6.295966 | $ | 35,842 | 5.48 | % | 0.00% to 0.55% | 27.79 | % | to | 28.49 | % | ||||||||||||||||||||||||||||
2020 |
4,556 | 4.659188 | to | 4.922044 | 23,053 | 5.73 | 0.00 to 0.55 | (2.02 | ) | to | (1.48 | ) | ||||||||||||||||||||||||||||||||
2019 |
4,165 | 4.729147 | to | 5.018507 | 21,391 | 0.88 | 0.00 to 0.55 | 6.11 | to | 6.69 | ||||||||||||||||||||||||||||||||||
2018 |
4,165 | 4.432602 | to | 4.724979 | 20,036 | 2.52 | 0.00 to 0.55 | (12.14 | ) | to | (11.66 | ) | ||||||||||||||||||||||||||||||||
2017 |
3,845 | 5.017461 | to | 5.372638 | 21,122 | 9.04 | 0.00 to 0.55 | 0.96 | to | 1.52 |
(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.
F-28
The Northwestern Mutual
Life Insurance Company
Statutory Financial Statements and
Supplementary Information
December 31, 2021, 2020 and 2019
NM-1
Report of Independent Auditors
To the Board of Trustees of
The Northwestern Mutual Life Insurance Company
Opinions
We have audited the accompanying statutory financial statements of The Northwestern Mutual Life Insurance Company (the Company), which comprise the statutory statements of financial position as of December 31, 2021 and 2020, and the related statutory statements of operations, changes in surplus, and cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the financial statements).
Unmodified Opinion on Statutory Basis of Accounting
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in accordance with the accounting practices prescribed or permitted by the Office of the Commissioner of Insurance of the State of Wisconsin described in Note 1.
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 section of our report, the accompanying financial statements 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, 2021 and 2020, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2021.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. 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 financial statements, the 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 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.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting practices prescribed or permitted by the Office of the Commissioner of
PricewaterhouseCoopers LLP, 833 E. Michigan, Milwaukee, WI 53202
T: (414) 212 1600, www.pwc.com/us
NM-2
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.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Companys ability to continue as a going concern for one year after the date the financial statements are available to be issued.
Auditors Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with US GAAS, we:
| Exercise professional judgment and maintain professional skepticism throughout the audit. |
| Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. |
| Obtain an understanding of internal control relevant to the audit 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 Companys internal control. Accordingly, no such opinion is expressed. |
| Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. |
| Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Companys ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Milwaukee, Wisconsin
February 15, 2022
NM-3
The Northwestern Mutual Life Insurance Company
Statutory Statements of Financial Position
(in millions)
December 31, | ||||||||
2021 | 2020 | |||||||
Assets: |
||||||||
Bonds |
$ | 179,121 | $ | 166,324 | ||||
Mortgage loans |
47,844 | 41,568 | ||||||
Policy loans |
17,208 | 17,686 | ||||||
Common and preferred stocks |
4,242 | 5,083 | ||||||
Real estate |
3,113 | 2,959 | ||||||
Other investments |
29,184 | 24,942 | ||||||
Cash and short-term investments |
3,786 | 3,239 | ||||||
|
|
|
|
|
| |||
Total investments |
284,498 | 261,801 | ||||||
Due and accrued investment income |
2,042 | 2,522 | ||||||
Net deferred tax assets |
1,569 | 2,305 | ||||||
Deferred premium and other assets |
4,162 | 3,692 | ||||||
Separate account assets |
42,383 | 38,447 | ||||||
|
|
|
|
|
| |||
Total assets |
$ | 334,654 | $ | 308,767 | ||||
|
|
|
|
|
| |||
Liabilities and surplus: |
||||||||
Policy benefit reserves |
$ | 230,034 | $ | 217,365 | ||||
Deposit funds |
8,303 | 4,860 | ||||||
Policyowner dividends payable |
6,505 | 6,220 | ||||||
Interest maintenance reserve |
3,162 | 2,355 | ||||||
Asset valuation reserve |
7,733 | 7,362 | ||||||
Income taxes payable |
- | 231 | ||||||
Other liabilities |
7,251 | 6,970 | ||||||
Separate account liabilities |
42,383 | 38,447 | ||||||
|
|
|
|
|
| |||
Total liabilities |
305,371 | 283,810 | ||||||
Surplus: |
||||||||
Surplus notes |
4,475 | 3,573 | ||||||
Unassigned surplus |
24,808 | 21,384 | ||||||
|
|
|
|
|
| |||
Total surplus |
29,283 | 24,957 | ||||||
|
|
|
|
|
| |||
Total liabilities and surplus |
$ | 334,654 | $ | 308,767 | ||||
|
|
|
|
|
|
The accompanying notes are an integral part of these Statutory financial statements.
NM-4
The Northwestern Mutual Life Insurance Company
Statutory Statements of Operations
(in millions)
For the years ended | ||||||||||||
December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Revenue: |
||||||||||||
Premiums |
$ | 22,771 | $ | 19,323 | $ | 19,010 | ||||||
Net investment income |
10,447 | 11,078 | 10,149 | |||||||||
Other income |
814 | 723 | 696 | |||||||||
|
|
|
|
|
|
|
|
| ||||
Total revenue |
34,032 | 31,124 | 29,855 | |||||||||
|
|
|
|
|
|
|
|
| ||||
Benefits and expenses: |
||||||||||||
Benefit payments to policyowners and beneficiaries |
12,022 | 11,736 | 11,515 | |||||||||
Net additions to policy benefit reserves |
12,736 | 9,527 | 9,451 | |||||||||
Net transfers from separate accounts |
(805 | ) | (680 | ) | (783 | ) | ||||||
|
|
|
|
|
|
|
|
| ||||
Total benefits |
23,953 | 20,583 | 20,183 | |||||||||
Commissions and operating expenses |
4,048 | 3,502 | 3,306 | |||||||||
|
|
|
|
|
|
|
|
| ||||
Total benefits and expenses |
28,001 | 24,085 | 23,489 | |||||||||
|
|
|
|
|
|
|
|
| ||||
Gain from operations before dividends and taxes |
6,031 | 7,039 | 6,366 | |||||||||
Policyowner dividends |
6,522 | 6,235 | 5,999 | |||||||||
|
|
|
|
|
|
|
|
| ||||
(Loss) gain from operations before taxes |
(491 | ) | 804 | 367 | ||||||||
Income tax (benefit) expense |
(1,166 | ) | 277 | (199 | ) | |||||||
|
|
|
|
|
|
|
|
| ||||
Net gain from operations |
675 | 527 | 566 | |||||||||
Net realized capital gains (losses) |
303 | (102 | ) | 702 | ||||||||
|
|
|
|
|
|
|
|
| ||||
Net income |
$ | 978 | $ | 425 | $ | 1,268 | ||||||
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these Statutory financial statements.
NM-5
The Northwestern Mutual Life Insurance Company
Statutory Statements of Changes in Surplus
(in millions)
For the years ended | ||||||||||||
December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Beginning of year balance |
$ | 24,957 | $ | 24,216 | $ | 22,134 | ||||||
Net income |
978 | 425 | 1,268 | |||||||||
Change in net unrealized capital gains and losses |
3,489 | 799 | 1,141 | |||||||||
Change in net deferred tax assets |
(476 | ) | 807 | (130 | ) | |||||||
Change in nonadmitted assets |
(579 | ) | 228 | (143 | ) | |||||||
Change in asset valuation reserve |
(371 | ) | (1,159 | ) | (1,606 | ) | ||||||
Change in surplus notes |
902 | 5 | 620 | |||||||||
Other surplus changes |
383 | (364 | ) | 932 | ||||||||
|
|
|
|
|
|
|
|
| ||||
Net increase in surplus |
4,326 | 741 | 2,082 | |||||||||
|
|
|
|
|
|
|
|
| ||||
End of year balance |
$ | 29,283 | $ | 24,957 | $ | 24,216 | ||||||
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these Statutory financial statements.
NM-6
The Northwestern Mutual Life Insurance Company
Statutory Statements of Cash Flows
(in millions)
For the years ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Cash flows from operating activities: |
||||||||||||
Premiums and other income received |
$ | 17,146 | $ | 13,808 | $ | 13,864 | ||||||
Investment income received |
10,345 | 10,036 | 9,518 | |||||||||
Benefit and dividend payments to policyowners and beneficiaries |
(10,983 | ) | (10,537 | ) | (10,660 | ) | ||||||
Net transfers from separate accounts |
771 | 664 | 770 | |||||||||
Commissions, expenses and taxes paid |
(3,542 | ) | (3,809 | ) | (3,268 | ) | ||||||
|
|
|
|
|
|
|
|
| ||||
Net cash provided by operating activities |
13,737 | 10,162 | 10,224 | |||||||||
|
|
|
|
|
|
|
|
| ||||
Cash flows used in investing activities: |
||||||||||||
Proceeds from investments sold or matured: |
||||||||||||
Bonds |
53,499 | 60,747 | 41,841 | |||||||||
Mortgage loans |
2,868 | 3,301 | 3,078 | |||||||||
Common and preferred stocks |
2,741 | 4,046 | 5,461 | |||||||||
Real estate |
298 | 468 | 941 | |||||||||
Other investments |
4,213 | 3,063 | 2,235 | |||||||||
|
|
|
|
|
|
|
|
| ||||
Subtotal proceeds from investments |
63,619 | 71,625 | 53,556 | |||||||||
|
|
|
|
|
|
|
|
| ||||
Cost of investments acquired: |
||||||||||||
Bonds |
(65,845 | ) | (64,976 | ) | (47,219 | ) | ||||||
Mortgage loans |
(9,259 | ) | (5,008 | ) | (6,048 | ) | ||||||
Common and preferred stocks |
(1,083 | ) | (4,075 | ) | (3,832 | ) | ||||||
Real estate |
(247 | ) | (478 | ) | (841 | ) | ||||||
Other investments |
(4,303 | ) | (7,537 | ) | (5,634 | ) | ||||||
|
|
|
|
|
|
|
|
| ||||
Subtotal cost of investments acquired |
(80,737 | ) | (82,074 | ) | (63,574 | ) | ||||||
|
|
|
|
|
|
|
|
| ||||
Net inflows of policy loans |
746 | 492 | 168 | |||||||||
|
|
|
|
|
|
|
|
| ||||
Net cash applied to investing activities |
(16,372 | ) | (9,957 | ) | (9,850 | ) | ||||||
|
|
|
|
|
|
|
|
| ||||
Cash flows from financing and miscellaneous sources: |
||||||||||||
Surplus notes issuance |
897 | - | 596 | |||||||||
Net inflows (outflows) on deposit-type contracts |
2,877 | 724 | (232 | ) | ||||||||
Other cash applied |
(592 | ) | (98 | ) | (229 | ) | ||||||
|
|
|
|
|
|
|
|
| ||||
Net cash provided by financing and miscellaneous sources |
3,182 | 626 | 135 | |||||||||
|
|
|
|
|
|
|
|
| ||||
Net increase in cash and short-term investments |
547 | 831 | 509 | |||||||||
Cash and short-term investments, beginning of year |
3,239 | 2,408 | 1,899 | |||||||||
|
|
|
|
|
|
|
|
| ||||
Cash and short-term investments, end of year |
$ | 3,786 | $ | 3,239 | $ | 2,408 | ||||||
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these Statutory financial statements.
NM-7
The Northwestern Mutual Life Insurance Company
Statutory Statements of Cash Flows (supplemental)
(in millions)
For the years ended | ||||||||||||
December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Supplemental disclosures of cash flow information |
||||||||||||
Non-cash operating, investing and financing and miscellaneous sources not included in the statutory statements of cash flows: | ||||||||||||
Operating: |
||||||||||||
Dividends used to pay premiums and loans |
$ | 6,011 | $ | 5,779 | $ | 5,453 | ||||||
Capitalized interest and payment in-kind investment income |
848 | 895 | 870 | |||||||||
Other policyowner contract activity |
299 | 268 | 245 | |||||||||
Employee benefit and compensation plan expenses |
80 | 100 | 155 | |||||||||
Investing: |
||||||||||||
Bond refinancings and exchanges |
3,065 | 3,652 | 13,075 | |||||||||
Mortgage loan refinancings and transfers |
573 | 520 | 731 | |||||||||
Net policy loan activity |
335 | 285 | 316 | |||||||||
Other invested asset exchanges |
113 | 163 | 270 | |||||||||
Common stock exchanges |
4 | 22 | 105 | |||||||||
Net premium loan activity |
131 | 113 | 125 | |||||||||
Net asset transfers with affiliated entities |
94 | 434 | 199 | |||||||||
Real estate exchange |
27 | - | - | |||||||||
Financing and Miscellaneous: |
||||||||||||
Deposit-type contract deposits and interest credited |
567 | 556 | 505 | |||||||||
Surplus note exchange |
5 | 5 | 24 |
The accompanying notes are an integral part of these Statutory financial statements.
NM-8
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
1. | Basis of Presentation |
The accompanying statutory financial statements include the accounts of The Northwestern Mutual Life Insurance Company (the Company). The Company offers life, annuity and disability insurance products to the personal, business and estate markets throughout the United States of America.
In March 2020, the World Health Organization declared COVID-19, the disease caused by the novel coronavirus, a pandemic. The impact of COVID-19 has not significantly affected the Companys financial position through December 31, 2021. The economic environment and other potential impacts of COVID-19 will continue to be monitored by the Company.
As part of an affiliated reinsurance agreement, the Company assumes the risks associated with the long-term care policies issued by its wholly-owned subsidiary, Northwestern Long Term Care Insurance Company (NLTC). See Note 9 for more information regarding reinsurance and its impacts on the Companys statutory financial statements.
Reclassifications
Certain amounts in prior year statutory financial statement balances and footnote disclosures have been reclassified to conform to the current year presentation. See Note 5 for more information regarding this reclassification.
These statutory 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 or SAP), 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 U.S. 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 statutory statements of operations, are defined differently, (5) majority-owned subsidiaries are consolidated, (6) changes in deferred taxes are reported as a component of net income, (7) no deferral of realized investment gains and losses is permitted and (8) nonadmitted assets, required for the statutory basis of accounting, are included in total assets. The effects on the Companys statutory financial statements attributable to the differences between the statutory basis of accounting and GAAP are material.
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 Companys 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 and annuity policyowners, secured by the cash value of the related policies. Policy loans earn interest at either a fixed or variable rate, based on either an election that is made by the policyowner when applying for their policy or, for certain
NM-9
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
policies, as specified by the contract. If a variable rate is elected or specified by the contract, the rate will be reset annually. Policy loans are reported at the unpaid principal balance, which approximates fair value.
Cash and Short-term Investments
Short-term investments include securities that have 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 Companys employee and financial representative benefit plan obligations. All separate account assets are legally insulated from claims by the Companys 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 and certain variable universal life policyowners also have the option to invest in fixed-rate investment options, which are supported by the assets held in the Companys 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 Companys separate accounts and Note 8 for more information regarding the Companys employee and financial representative benefit plans.
Policy Benefit Reserves
Policy benefit reserves 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 Companys policy benefit reserves.
Deposit funds
Deposit funds include liabilities for funding agreements, supplementary contracts and income annuities without life contingencies, and amounts left on deposit with the Company by beneficiaries or policyowners. See Note 5 for more information regarding the Companys deposit funds.
Policyowner Dividends
All life and disability insurance policies and certain annuity policies issued by the Company are participating. All long-term care insurance policies issued by NLTC are also participating. Annually, the Companys Board of Trustees (at its discretion) approves the amount and allocation, if any, of dividends among groups of policies issued by the Company, based on managements recommendation. The payment of dividends on any particular policy is not guaranteed. Dividends are accrued and charged to operations when approved. The liability for policyowner dividends includes the estimated amount of annual and termination dividends. Termination dividends are additional dividends payable on whole life policies upon surrender, maturity or, for policies issued in one state, death. Depending on the type of policy they own, participating policyowners generally have the option to receive their dividends in cash, or use them as follows: reduce future premiums due, purchase additional insurance benefits, repay policy loans, or leave them on deposit with the Company to accumulate interest. Dividends used by policyowners to purchase additional insurance benefits or pay premiums are reported as premiums in the statutory statements of operations but are not included in premiums received or benefit and dividend payments to policyowners and beneficiaries in the statutory statements of cash flows. The Companys annual approval and declaration of policyowner dividends includes a guarantee of a minimum aggregate amount of annual dividends to be paid to policyowners as a group in the subsequent calendar year. If this guaranteed amount
NM-10
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
is greater than the aggregate of annual dividends paid to policyowners in the subsequent year, the difference is paid in the immediately succeeding calendar year. The fact that the Company guarantees a minimum aggregate payment of annual dividends in one year does not obligate the Company to declare a dividend in future years or to guarantee any portion of dividends that may be declared in future years.
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 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 net 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 Companys 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 statutory 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 contracts and income annuities without life contingencies are deposit-type transactions and are excluded from revenue in the statutory 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 Companys 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 repurchase agreements and interest expense related to the Companys surplus notes. Accrued investment income more than ninety days past due is a nonadmitted asset. 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. See Note 3 for more information regarding net investment income and repurchase agreements and Note 13 for more information regarding the Companys surplus notes.
Other Income
Other income primarily represents ceded reinsurance expense allowances and various insurance policy charges. Ceded reinsurance expense allowances are recognized as revenue when due. See Note 9 for more information regarding the Companys use of reinsurance.
Benefit Payments to Policyowners and Beneficiaries
Benefit payments to policyowners and beneficiaries include death, surrender, maturity, disability and long-term care benefits, as well as payments on supplementary contracts and income annuities that include life contingencies. Benefit payments on supplementary contracts and income annuities without life contingencies are deposit-type transactions and are excluded from benefits in the statutory statements of operations. Benefit payments are reported net of ceded reinsurance recoveries. See Note 9 for more information regarding the Companys use of reinsurance.
NM-11
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Commissions and Operating Expenses
Commissions and other operating expenses, including costs of acquiring new insurance policies, are generally charged to expense as incurred.
Federal Income Taxes
Current federal income taxes are charged or credited to operations based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year and any adjustments to such estimates from prior years. Deferred tax assets and liabilities represent the respective future tax recoveries or obligations associated with the accumulation of temporary differences between the tax and financial statement bases of the Companys assets and liabilities. Changes in deferred tax assets and liabilities related to unrealized capital gains and losses on investments are included in changes in net unrealized capital gains and losses in the statutory statements of changes in surplus. Other net changes in deferred tax assets and liabilities are reported as direct adjustments to surplus in the statutory statements of changes in surplus.
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.
A more likely than not standard is applied for financial statement recognition of contingent tax liabilities, whereby a liability is recorded only 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 charged or credited to operations 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 taxes or tax benefit.
See Note 10 for more information on the Companys income taxes.
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 using the straight-line method. IT equipment and operating software assets of $34 million and $27 million at December 31, 2021 and 2020, respectively, are included in other assets in the statutory statements of financial position and are net of accumulated depreciation of $60 million and $42 million, respectively. Non-operating software costs, net of accumulated depreciation, are nonadmitted assets and thereby excluded from assets and surplus in the statutory statements of financial position. These amounts were $423 million and $388 million at December 31, 2021 and 2020, respectively. Depreciation expense for IT equipment and software totaled $160 million, $153 million and $146 million for the years ended December 31, 2021, 2020 and 2019, 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 statutory statements of financial position. These amounts were $132 million and $117 million at December 31, 2021 and 2020, respectively. Depreciation expense for furniture, fixtures and equipment totaled $17 million, $14 million and $16 million for the years ended December 31, 2021, 2020 and 2019, respectively.
NM-12
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Corporate Owned Life Insurance
Through a wholly-owned subsidiary, the Company indirectly holds corporate-owned life insurance (COLI) to provide protection against key-person risk for certain qualified employees and to help fund certain future employee benefit expenses. See Note 3 for more information regarding COLI.
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 Companys financial representatives, furniture, fixtures, equipment and non-operating software (net of accumulated depreciation), derivatives, and certain equity-method investments in entities for which audits are not performed are excluded from assets and surplus in the statutory statements of financial position. Changes in nonadmitted assets are reported as a direct adjustment to surplus in the statutory statements of changes in surplus.
Foreign Currency Translation
All of the Companys insurance operations are conducted in the United States of America on a U.S. dollar-denominated basis. The Company invests in bonds, mortgage loans, equities, and other investments denominated in foreign currencies. Investments denominated in a foreign currency are remeasured to U.S. dollars at each reporting date using then-current foreign currency exchange rates. Translation gains or losses relating to fluctuations in exchange rates are reported as a change in net unrealized capital gains and losses until the related investment is sold, determined to be other-than-temporarily impaired or matures, at which time a realized capital gain or loss is reported. Transactions denominated in a foreign currency, such as receipt of foreign-denominated interest or dividends, are remeasured to U.S. dollars based on the actual exchange rate at the time of the transaction. See Note 4 for more information regarding the Companys use of derivatives to mitigate exposure to fluctuations in foreign currency exchange rates.
Accounting Pronouncement Adopted
During 2021, the Company adopted revisions to Statement of Statutory Accounting Principles (SSAP) 26R - Bonds. These revisions require the Company to account for the difference of proceeds received and par on bond tenders as prepayment fees which are reported in net investment income on the statutory statements of operations. Previously, the Company treated bond tenders as sales, reporting the difference between proceeds and par as realized capital gains (losses) on the statutory statements of operations and subject to deferral to the IMR. The Company adopted the revisions to SSAP 26R prospectively as of January 1, 2021 resulting in $218 million of tenders being included in net investment income on the statutory statements of operations during the year.
Subsequent Events
The Company has evaluated events subsequent to December 31, 2021 through February 15, 2022, the date these statutory financial statements were available to be issued. Based on this evaluation, it is the Companys opinion that other than described below, no other events subsequent to December 31, 2021 have occurred that are material to the Companys financial position at that date or the results of its operations for the year then ended.
As part of a Spread Lending strategy, the Company issued a $550 million funding agreement under the funding-agreement-backed note (FABN) program in January 2022. See Note 5 for more information regarding the Companys FABN program.
3. | Investments |
Bonds
The SVO of the NAIC Investment Analysis Office evaluates the credit quality of the Companys 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 statutory financial statements at amortized cost less any other-than-temporary impairment. Bonds rated 6 (lowest quality)
NM-13
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
are reported at the lower of amortized cost or fair value. SVO-identified exchange-traded fund investments are reported at 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 Companys investments in bonds.
Statement value and fair value of bonds at December 31, 2021 and 2020, summarized by asset categories required in the NAIC Annual Statement, were as follows:
December 31, 2021 |
Reconciliation to Fair Value | |||||||||||||||
Gross | Gross | |||||||||||||||
Statement | Unrealized | Unrealized | Fair | |||||||||||||
Value | Gains | Losses | Value | |||||||||||||
(in millions) | ||||||||||||||||
U.S. Government |
$ | 5,357 | $ | 115 | $ | (63 | ) | $ | 5,409 | |||||||
States, territories and possessions |
757 | 118 | (2 | ) | 873 | |||||||||||
Special revenue and assessments |
17,829 | 687 | (160 | ) | 18,356 | |||||||||||
All foreign governments |
5,135 | 262 | (47 | ) | 5,350 | |||||||||||
Hybrid securities |
591 | 45 | (1 | ) | 635 | |||||||||||
SVO-identified funds |
199 | - | - | 199 | ||||||||||||
Industrial and miscellaneous |
149,253 | 8,844 | (658 | ) | 157,439 | |||||||||||
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|
|
|
| |||||
Total bonds |
$ | 179,121 | $ | 10,071 | $ | (931 | ) | $ | 188,261 | |||||||
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December 31, 2020 |
Reconciliation to Fair Value | |||||||||||||||
Gross | Gross | |||||||||||||||
Statement | Unrealized | Unrealized | Fair | |||||||||||||
Value | Gains | Losses | Value | |||||||||||||
(in millions) | ||||||||||||||||
U.S. Government |
$ | 2,755 | $ | 168 | $ | (1 | ) | $ | 2,922 | |||||||
States, territories and possessions |
603 | 153 | - | 756 | ||||||||||||
Special revenue and assessments |
18,643 | 1,145 | (4 | ) | 19,784 | |||||||||||
All foreign governments |
4,927 | 577 | (4 | ) | 5,500 | |||||||||||
Hybrid securities |
976 | 69 | (4 | ) | 1,041 | |||||||||||
SVO-identified funds |
401 | - | - | 401 | ||||||||||||
Industrial and miscellaneous |
138,019 | 15,269 | (258 | ) | 153,030 | |||||||||||
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|
|
|
|
|
|
|
|
|
| |||||
Total bonds |
$ | 166,324 | $ | 17,381 | $ | (271 | ) | $ | 183,434 | |||||||
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|
Bonds classified by the NAIC as special revenue and assessments primarily consist of U.S. 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 public and private corporate entities and structured securities not issued by U.S. Government agencies.
NM-14
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Statement value of bonds by SVO rating category at December 31, 2021 and 2020 was as follows:
December 31, 2021 |
SVO Rating | |||||||||||||||||||||||||||
1 | 2 | 3 | 4 | 5 | 6 | Total | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
U.S. Government |
$ | 5,357 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 5,357 | ||||||||||||||
States, territories and possessions |
609 | 148 | - | - | - | - | 757 | |||||||||||||||||||||
Special revenue and assessments |
17,615 | 186 | 28 | - | - | - | 17,829 | |||||||||||||||||||||
All foreign governments |
1,662 | 3,266 | 162 | 37 | 8 | - | 5,135 | |||||||||||||||||||||
Hybrid securities |
- | 432 | 146 | 13 | - | - | 591 | |||||||||||||||||||||
SVO-identified funds |
- | 199 | - | - | - | - | 199 | |||||||||||||||||||||
Industrial and miscellaneous |
69,951 | 64,509 | 7,183 | 4,770 | 2,658 | 182 | 149,253 | |||||||||||||||||||||
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|
| ||||||||
Total bonds |
$ | 95,194 | $ | 68,740 | $ | 7,519 | $ | 4,820 | $ | 2,666 | $ | 182 | $ | 179,121 | ||||||||||||||
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December 31, 2020 |
SVO Rating | |||||||||||||||||||||||||||
1 | 2 | 3 | 4 | 5 | 6 | Total | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
U.S. Government |
$ | 2,755 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 2,755 | ||||||||||||||
States, territories and possessions |
527 | 76 | - | - | - | - | 603 | |||||||||||||||||||||
Special revenue and assessments |
18,435 | 178 | 30 | - | - | - | 18,643 | |||||||||||||||||||||
All foreign governments |
1,468 | 3,377 | 39 | 34 | 9 | - | 4,927 | |||||||||||||||||||||
Hybrid securities |
- | 768 | 172 | 35 | - | 1 | 976 | |||||||||||||||||||||
SVO-identified funds |
- | 401 | - | - | - | - | 401 | |||||||||||||||||||||
Industrial and miscellaneous |
59,331 | 61,398 | 8,797 | 5,208 | 3,160 | 125 | 138,019 | |||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Total bonds |
$ | 82,516 | $ | 66,198 | $ | 9,038 | $ | 5,277 | $ | 3,169 | $ | 126 | $ | 166,324 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on statement value, 92% and 89% of the Companys bond portfolio was rated investment grade (i.e., rated 1 or 2 by the SVO) at December 31, 2021 and 2020, respectively.
Statement value and fair value of structured securities at December 31, 2021 and 2020, aggregated by investment grade or below investment grade (i.e., rated 3, 4, 5 or 6 by the SVO), were as follows:
December 31, 2021 |
Investment Grade | Below Investment Grade | Total | |||||||||||||||||||||||||
Statement Value |
Fair Value | Statement Value |
Fair Value | Statement Value |
Fair Value | |||||||||||||||||||||||
(in millions) | (in millions) | (in millions) | ||||||||||||||||||||||||||
Residential mortgage-backed: |
||||||||||||||||||||||||||||
U.S. Government agencies |
$ | 15,221 | $ | 15,411 | $ | - | $ | - | $ | 15,221 | $ | 15,411 | ||||||||||||||||
Other prime |
660 | 663 | - | - | 660 | 663 | ||||||||||||||||||||||
Other below-prime |
888 | 885 | 1 | 1 | 889 | 886 | ||||||||||||||||||||||
Commercial mortgage-backed: |
||||||||||||||||||||||||||||
U.S. Government agencies |
78 | 80 | - | - | 78 | 80 | ||||||||||||||||||||||
Conduit |
5,050 | 5,109 | - | - | 5,050 | 5,109 | ||||||||||||||||||||||
Other asset-backed |
13,724 | 13,873 | 14 | 15 | 13,738 | 13,888 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Total structured securities |
$ | 35,621 | $ | 36,021 | $ | 15 | $ | 16 | $ | 35,636 | $ | 36,037 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM-15
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
December 31, 2020 |
Investment Grade | Below Investment Grade | Total | |||||||||||||||||||||||||
Statement Value |
Fair Value | Statement Value |
Fair Value | Statement Value |
Fair Value | |||||||||||||||||||||||
(in millions) | (in millions) | (in millions) | ||||||||||||||||||||||||||
Residential mortgage-backed: |
||||||||||||||||||||||||||||
U.S. Government agencies |
$ | 16,465 | $ | 17,191 | $ | - | $ | - | $ | 16,465 | $ | 17,191 | ||||||||||||||||
Other prime |
661 | 685 | 2 | 2 | 663 | 687 | ||||||||||||||||||||||
Other below-prime |
546 | 560 | 3 | 4 | 549 | 564 | ||||||||||||||||||||||
Commercial mortgage-backed: |
||||||||||||||||||||||||||||
U.S. Government agencies |
70 | 74 | - | - | 70 | 74 | ||||||||||||||||||||||
Conduit |
3,756 | 3,954 | - | - | 3,756 | 3,954 | ||||||||||||||||||||||
Other asset-backed |
10,705 | 11,038 | 39 | 43 | 10,744 | 11,081 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Total structured securities |
$ | 32,203 | $ | 33,502 | $ | 44 | $ | 49 | $ | 32,247 | $ | 33,551 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on statement value, over 99% of the Companys structured securities portfolio was rated as investment grade at each of December 31, 2021 and 2020. Based on statement value, the Companys investment in residential mortgage-backed securities issued by U.S. Government agencies at December 31, 2021 and 2020 was 8% and 10%, respectively, of total bond investments.
Statement value and fair value of bonds and short-term investments by contractual maturity at December 31, 2021 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 |
$ | 6,279 | $ | 6,314 | ||||
Due after one year through five years |
38,555 | 39,787 | ||||||
Due after five years through ten years |
51,446 | 53,318 | ||||||
Due after ten years |
85,640 | 91,641 | ||||||
|
|
|
|
|
| |||
Total |
$ | 181,920 | $ | 191,060 | ||||
|
|
|
|
|
|
Mortgage Loans
Mortgage loans consist solely of commercial mortgage loans underwritten and originated by the Company and are reported at the 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. Affiliated mortgage loan investments were $199 million and $134 million at December 31, 2021 and 2020, respectively.
NM-16
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
The statement value of mortgage loans by collateral property type and geographic location at December 31, 2021 and 2020 was as follows:
December 31, 2021 |
United States of America | |||||||||||||||||||||||
East | Midwest | South | West | Foreign | Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Apartment |
$ | 8,006 | $ | 2,577 | $ | 4,649 | $ | 9,388 | $ | - | $ | 24,620 | ||||||||||||
Office |
3,185 | 790 | 1,100 | 3,519 | - | 8,594 | ||||||||||||||||||
Retail |
2,237 | 506 | 1,472 | 1,851 | - | 6,066 | ||||||||||||||||||
Warehouse/Industrial |
1,635 | 688 | 412 | 1,871 | 171 | 4,777 | ||||||||||||||||||
Manufactured housing |
277 | 313 | 1,288 | 1,325 | 218 | 3,421 | ||||||||||||||||||
Other |
120 | 60 | 28 | 158 | - | 366 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total |
$ | 15,460 | $ | 4,934 | $ | 8,949 | $ | 18,112 | $ | 389 | $ | 47,844 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 |
United States of America | |||||||||||||||||||||||
East | Midwest | South | West | Foreign | Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Apartment |
$ | 6,479 | $ | 2,170 | $ | 3,416 | $ | 7,901 | $ | - | $ | 19,966 | ||||||||||||
Office |
3,552 | 871 | 1,127 | 3,192 | - | 8,742 | ||||||||||||||||||
Retail |
2,318 | 524 | 1,492 | 1,950 | - | 6,284 | ||||||||||||||||||
Warehouse/Industrial |
741 | 546 | 585 | 1,311 | 185 | 3,368 | ||||||||||||||||||
Manufactured housing |
283 | 317 | 1,118 | 898 | 231 | 2,847 | ||||||||||||||||||
Other |
124 | 60 | 27 | 150 | - | 361 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total |
$ | 13,497 | $ | 4,488 | $ | 7,765 | $ | 15,402 | $ | 416 | $ | 41,568 | ||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company has mortgage loans where co-lending or participation arrangements are in place with unaffiliated third parties. Mortgage loans with co-lending or participation arrangements totaled $3.2 billion and $3.3 billion at December 31, 2021 and 2020, respectively.
All mortgage loans were current on contractual interest and principal payments at each of December 31, 2021 and 2020. Interest rates and loan-to-value (LTV) ratio information for the Companys mortgage loans originated or refinanced during 2021 and 2020 is summarized below.
For mortgage loans originated or refinanced during: |
2021 | 2020 | ||||||
Minimum interest rate |
1.50 | % | 1.93 | % | ||||
Maximum interest rate |
7.15 | % | 5.50 | % | ||||
Weighted-average LTV |
56 | % | 57 | % | ||||
Maximum LTV |
74 | % | 71 | % |
LTV ratios are commonly used to assess the credit quality of commercial mortgage loans. A lower LTV ratio generally indicates a higher quality loan. At December 31, 2021 and 2020, the aggregate weighted-average LTV ratio for the mortgage loan portfolio was 52% and 54%, respectively.
NM-17
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
The statement value of mortgage loans by collateral property type and LTV ratio at December 31, 2021 and 2020 was as follows:
December 31, 2021 |
< 51% | 51%-70% | 71%-90% | > 90% | Total | |||||||||||||||
(in millions) | ||||||||||||||||||||
Apartment |
$ | 7,766 | $ | 16,240 | $ | 614 | $ | - | $ | 24,620 | ||||||||||
Office |
4,816 | 3,453 | 325 | - | 8,594 | |||||||||||||||
Retail |
1,750 | 3,655 | 416 | 245 | 6,066 | |||||||||||||||
Warehouse/Industrial |
2,154 | 2,623 | - | - | 4,777 | |||||||||||||||
Manufactured housing |
1,240 | 2,166 | 15 | - | 3,421 | |||||||||||||||
Other |
111 | 189 | - | 66 | 366 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total |
$ | 17,837 | $ | 28,326 | $ | 1,370 | $ | 311 | $ | 47,844 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 |
< 51% | 51%-70% | 71%-90% | > 90% | Total | |||||||||||||||
(in millions) | ||||||||||||||||||||
Apartment |
$ | 5,091 | $ | 14,268 | $ | 382 | $ | 225 | $ | 19,966 | ||||||||||
Office |
4,311 | 3,929 | 502 | - | 8,742 | |||||||||||||||
Retail |
1,797 | 3,230 | 1,141 | 116 | 6,284 | |||||||||||||||
Warehouse/Industrial |
1,836 | 1,214 | 318 | - | 3,368 | |||||||||||||||
Manufactured housing |
902 | 1,945 | - | - | 2,847 | |||||||||||||||
Other |
169 | 44 | 133 | 15 | 361 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total |
$ | 14,106 | $ | 24,630 | $ | 2,476 | $ | 356 | $ | 41,568 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2021 and 2020, the Company had no mortgage loans with an LTV ratio in excess of 100%.
The 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 due to 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 Companys 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 request 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, the statutory basis of accounting 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 recognized no capital losses related to troubled debt restructuring of mortgage loans for the years ended December 31, 2021, 2020 and 2019, respectively. The Company had no mortgage loans at either of December 31, 2021 or December 31, 2020 that were considered restructured.
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
NM-18
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
value of the mortgage loan to its net realizable value. Changes to mortgage loan valuation allowances are reported as a change in net unrealized capital gains and losses in the statutory 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, 2021 or 2020. The Company recognized other-than-temporary impairment losses on mortgage loans of $0 and $15 million for the years ended December 31, 2021 and 2020, respectively.
Common and Preferred Stocks
Common stocks are generally reported at fair value, with $4,067 million and $4,883 million included in the statutory statements of financial position at December 31, 2021 and 2020, 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 primarily determined using a sponsor valuation or market comparables approach. The equity method is generally used to report investments in common stock of unconsolidated subsidiaries.
Redeemable preferred stocks rated 1, 2 or 3 by the SVO are reported at amortized cost. Redeemable preferred stocks rated 4, 5 or 6 by the SVO are reported at the lower of amortized cost or fair value. Upon the adoption of certain revisions to SSAP 32RPreferred Stock in 2021, perpetual preferred stocks are reported at the lower of fair value or the currently effective call price for the stock. At December 31, 2021 and 2020, the statutory statements of financial position included $175 million and $200 million, respectively, of preferred stocks. The fair value for preferred stocks is primarily determined using a sponsor valuation or market comparables approach.
See Note 14 for more information regarding the fair value of the Companys investments in common and preferred stock.
Real Estate
Real estate investments are reported at cost, less any 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, 2021 and 2020 was as follows:
December 31, 2021 |
East | Midwest | South | West | Total | |||||||||||||||
(in millions) | ||||||||||||||||||||
Apartment |
$ | 315 | $ | 180 | $ | 283 | $ | 810 | $ | 1,588 | ||||||||||
Office |
211 | 672 | 52 | - | 935 | |||||||||||||||
Warehouse/Industrial |
257 | - | - | 202 | 459 | |||||||||||||||
Other |
16 | 10 | 105 | - | 131 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total |
$ | 799 | $ | 862 | $ | 440 | $ | 1,012 | $ | 3,113 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 |
East | Midwest | South | West | Total | |||||||||||||||
(in millions) | ||||||||||||||||||||
Apartment |
$ | 403 | $ | 187 | $ | 79 | $ | 833 | $ | 1,502 | ||||||||||
Office |
213 | 688 | 62 | - | 963 | |||||||||||||||
Warehouse/Industrial |
113 | - | - | 204 | 317 | |||||||||||||||
Other |
16 | 53 | 108 | - | 177 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total |
$ | 745 | $ | 928 | $ | 249 | $ | 1,037 | $ | 2,959 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM-19
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
The Companys home office properties are included above (Office/Midwest) and had an aggregate statement value of $672 million and $688 million at December 31, 2021 and 2020, respectively. The Companys 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 wholly-owned non-insurance investment holding companies organized as LLCs. 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 statutory statements of financial position using the equity method of accounting based on the Companys share of the underlying entities audited GAAP-basis equity.
The statement value of other investments held directly or indirectly by the Company at December 31, 2021 and 2020 was as follows:
December 31, | ||||||||
2021 | 2020 | |||||||
(in millions) | ||||||||
Securities partnerships and LLCs |
$ | 11,112 | $ | 9,615 | ||||
Bonds |
4,748 | 3,296 | ||||||
Real estate JVs, partnerships and LLCs |
3,989 | 3,435 | ||||||
Common and preferred stocks |
3,083 | 3,499 | ||||||
Cash and short-term investments |
1,964 | 1,100 | ||||||
COLI |
1,248 | 1,195 | ||||||
Wholly owned real estate |
1,171 | 1,197 | ||||||
Structured settlements |
770 | 790 | ||||||
Low income housing tax credit properties |
702 | 708 | ||||||
Derivative instruments |
629 | 358 | ||||||
Other net assets (liabilities) |
(232 | ) | (251 | ) | ||||
|
|
|
|
|
| |||
Total |
$ | 29,184 | $ | 24,942 | ||||
|
|
|
|
|
|
For securities partnerships and LLCs, bonds, common and preferred stocks, COLI, 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), structured settlements, and tax credit properties, the underlying entity generally reports these investments at cost, reduced where appropriate by depreciation or amortization. Tax credit properties had 13 years of unexpired credits at December 31, 2021 and 2020, respectively. The required holding period for tax credit properties is 15 years. The amount of tax credits and other tax benefits recognized during 2021 and 2020 were $150 million and $136 million, respectively. See Note 10 for more information regarding the Companys use of tax credits. See Note 4 for more information regarding the Companys use of derivatives.
NM-20
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Investments in Subsidiaries, Controlled and Affiliated Entities
The Companys investments in subsidiaries, controlled and affiliated entities (SCAs) are reported in the statutory statements of financial position using the equity method of accounting based on the Companys share of the underlying entities audited GAAP-basis equity. At December 31, 2021 and 2020, the value of wholly-owned SCA investments were as follows:
December 31, 2021 | December 31, 2020 | |||||||||||||||||||||||
Investment in SCA |
Nonadmitted Asset |
Statement Value |
Investment in SCA |
Nonadmitted Asset |
Statement Value | |||||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||||
NM Wealth Management Company |
$ | 275 | $ | - | $ | 275 | $ | 265 | $ | - | $ | 265 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total common stock SCAs 1 |
275 | - | 275 | 265 | - | 265 | ||||||||||||||||||
NML Securities Holdings, LLC |
13,533 | - | 13,533 | 11,016 | - | 11,016 | ||||||||||||||||||
NML Real Estate Holdings, LLC |
2,814 | - | 2,814 | 2,467 | - | 2,467 | ||||||||||||||||||
NM Investment Holdings, LLC |
1,383 | - | 1,383 | 1,371 | - | 1,371 | ||||||||||||||||||
QOZ Holding Company, LLC |
234 | 1 | 233 | 23 | - | 23 | ||||||||||||||||||
NM Pebble Valley, LLC |
224 | - | 224 | 93 | - | 93 | ||||||||||||||||||
NM Investment Services, LLC |
151 | - | 151 | 126 | - | 126 | ||||||||||||||||||
NM GP Holdings, LLC |
64 | 7 | 57 | 56 | 6 | 50 | ||||||||||||||||||
NM Investment Management Company, LLC |
64 | 64 | - | 3 | 3 | - | ||||||||||||||||||
Mason Street Advisors, LLC |
45 | 45 | - | 6 | 6 | - | ||||||||||||||||||
Wysh Financial Services, LLC |
15 | 3 | 12 | - | - | - | ||||||||||||||||||
NM-SAS, LLC |
11 | 7 | 4 | 12 | 7 | 5 | ||||||||||||||||||
NM Career Distribution Holdings, LLC |
3 | 3 | - | 2 | 2 | - | ||||||||||||||||||
GRO-SUB, LLC |
2 | 2 | - | 2 | 2 | - | ||||||||||||||||||
NM QOZ Fund II, LLC |
- | - | - | 45 | - | 45 | ||||||||||||||||||
NM QOZ FUND, LLC |
- | - | - | 16 | - | 16 | ||||||||||||||||||
GRO, LLC |
- | - | - | - | - | - | ||||||||||||||||||
Venture Studio Holdings, LLC |
- | - | - | - | - | - | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total other investment SCAs 2 |
18,543 | 132 | 18,411 | 15,238 | 26 | 15,212 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total investments in SCAs |
$ | 18,818 | $ | 132 | $ | 18,686 | $ | 15,503 | $ | 26 | $ | 15,477 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 | Reported in common and preferred stocks in the statutory statements of financial position. |
2 | Reported in other investments in the statutory statements of financial position. |
Investment filings for all common stock SCAs were submitted to the NAIC during 2021. In all cases, the NAIC accepted the statement value.
NM-21
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Net Investment Income
The sources of net investment income for the years ended December 31, 2021, 2020 and 2019 were as follows:
For the years ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(in millions) | ||||||||||||
Bonds |
$ | 6,286 | $ | 6,154 | $ | 6,400 | ||||||
Mortgage loans |
1,829 | 1,717 | 1,676 | |||||||||
Common and preferred stocks |
194 | 188 | 146 | |||||||||
Real estate |
279 | 279 | 288 | |||||||||
Other investments |
1,200 | 2,122 | 1,205 | |||||||||
Policy loans |
1,148 | 1,180 | 1,180 | |||||||||
Amortization of IMR |
422 | 255 | 133 | |||||||||
|
|
|
|
|
|
|
|
| ||||
Gross investment income |
11,358 | 11,895 | 11,028 | |||||||||
Less: investment expenses |
911 | 817 | 879 | |||||||||
|
|
|
|
|
|
|
|
| ||||
Net investment income |
$ | 10,447 | $ | 11,078 | $ | 10,149 | ||||||
|
|
|
|
|
|
|
|
|
For the years ended December 31, 2021, 2020 and 2019 bond investment income included $392 million, $82 million and $72 million of prepayment fees, respectively, generated as a result of 321, 127 and 108 securities, respectively, sold, disposed, tendered or otherwise redeemed as a result of a callable feature.
Realized 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 statutory 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.
Realized capital gains and losses for the years ended December 31, 2021, 2020 and 2019 were as follows:
For the year ended | For the year ended | For the year ended | ||||||||||||||||||||||||||||||||||
December 31, 2021 | December 31, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||
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 |
$ | 1,637 | $ | (395 | ) | $ | 1,242 | $ | 2,724 | $ | (861) | $ | 1,863 | $ | 1,094 | $ | (369 | ) | $ | 725 | ||||||||||||||||
Mortgage loans |
- | (2 | ) | (2 | ) | - | (22 | ) | (22 | ) | 8 | (3 | ) | 5 | ||||||||||||||||||||||
Common and preferred stocks |
494 | (39 | ) | 455 | 461 | (643 | ) | (182 | ) | 662 | (291 | ) | 371 | |||||||||||||||||||||||
Real estate |
153 | (42 | ) | 111 | 253 | - | 253 | 502 | (6 | ) | 496 | |||||||||||||||||||||||||
Other investments |
1,506 | (1,220 | ) | 286 | 1,350 | (1,302 | ) | 48 | 1,005 | (1,053 | ) | (48 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Subtotal |
$ | 3,790 | $ | (1,698 | ) | 2,092 | $ | 4,788 | $ | (2,828 | ) | 1,960 | $ | 3,271 | $ | (1,722 | ) | 1,549 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Less: IMR net gains (losses) before taxes |
|
1,556 | 2,064 | 674 | ||||||||||||||||||||||||||||||||
Less: Capital gains tax (benefit) expense |
|
233 | (2 | ) | 173 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
Net realized capital (losses) gains |
|
$ | 303 | $ | (102 | ) | $ | 702 | ||||||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
NM-22
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Realized capital gains and losses are generally the result of normal investment trading activity. Proceeds from the sale of bonds totaled $36 billion, $48 billion, and $30 billion for the years ended December 31, 2021, 2020 and 2019, respectively.
On a quarterly basis, the Company performs a review of bonds, mortgage loans, common and preferred stocks, real estate and other investments to identify investments that have experienced a decline in fair value that is considered to be 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 Companys 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 investments 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 issuers ability to remit all contractual interest and principal payments and the Companys ability and intent to hold the investment until the earlier of a recovery in value or maturity. The Companys 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 sector 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.
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 impairment 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 Companys 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 Companys partnership interest.
NM-23
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
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, 2021, 2020 and 2019 were as follows:
For the years ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Bonds, common and preferred stocks: | (in millions) | |||||||||||
Structured securities |
$ | - | $ | - | $ | (1 | ) | |||||
Foreign government |
- | (34 | ) | - | ||||||||
Consumer discretionary |
(44 | ) | (51 | ) | (84 | ) | ||||||
Industrials |
(20 | ) | (42 | ) | (9 | ) | ||||||
Energy |
- | (59 | ) | (44 | ) | |||||||
Basic materials |
- | - | (1 | ) | ||||||||
Other |
- | (13 | ) | - | ||||||||
|
|
|
|
|
|
|
|
| ||||
Subtotal |
(64 | ) | (199 | ) | (139 | ) | ||||||
Mortgage loans |
- | (15 | ) | - | ||||||||
Real estate |
(39 | ) | - | (6 | ) | |||||||
Other investments: |
||||||||||||
Securities partnerships |
(2 | ) | (6 | ) | (78 | ) | ||||||
Energy and transportation |
(6 | ) | - | - | ||||||||
|
|
|
|
|
|
|
|
| ||||
Subtotal |
(8 | ) | (6 | ) | (78 | ) | ||||||
|
|
|
|
|
|
|
|
| ||||
Total |
$ | (111 | ) | $ | (220 | ) | $ | (223 | ) | |||
|
|
|
|
|
|
|
|
|
In addition to the realized capital losses above, $61 million, $37 million and $0.2 million of other-than-temporary impairments were recorded by the Companys unconsolidated non-insurance subsidiaries for the years ended December 31, 2021, 2020 and 2019, respectively. The decline in the Companys equity in these subsidiaries resulting from these impairments is reported in changes in net unrealized capital gains and losses in the statutory statements of changes in surplus.
Unrealized Capital Gains and Losses
Unrealized capital gains and losses include changes in the fair value of common and some preferred stocks, other investments and currency translation adjustments on foreign-denominated bonds and mortgage loans and are reported net of any related changes in deferred taxes in the statutory statements of changes in surplus. Changes in the Companys equity-method share of the undistributed earnings of partnerships, JVs, LLCs and unconsolidated subsidiaries are also reported as changes in unrealized capital gains and losses. 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.
Changes in net unrealized capital gains and losses for the years ended December 31, 2021, 2020 and 2019 were as follows:
For the years ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(in millions) | ||||||||||||
Bonds |
$ | (470 | ) | $ | 606 | $ | 152 | |||||
Mortgage loans |
(10 | ) | 33 | 11 | ||||||||
Common and preferred stocks |
260 | 520 | 304 | |||||||||
Other investments |
3,969 | (251 | ) | 727 | ||||||||
|
|
|
|
|
|
|
|
| ||||
Subtotal |
3,749 | 908 | 1,194 | |||||||||
Change in deferred taxes |
(260 | ) | (109 | ) | (53 | ) | ||||||
|
|
|
|
|
|
|
|
| ||||
Change in net unrealized capital gains and losses |
$ | 3,489 | $ | 799 | $ | 1,141 | ||||||
|
|
|
|
|
|
|
|
|
NM-24
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Changes in net unrealized capital gains and losses for the years ended December 31, 2021, 2020 and 2019 included the reversal of previously unrealized capital gains of $(236) million, $(1,428) million and $(369) million, respectively, related to distributions of accumulated net earnings made to the Company from unconsolidated non-insurance subsidiaries.
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, 2021 and 2020 were as follows:
December 31, 2021 | ||||||||||||||||||||||||
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 |
$ | 29,396 | $ | 28,791 | $ | (605 | ) | $ | 7,072 | $ | 6,693 | $ | (379 | ) | ||||||||||
Structured Securities |
15,343 | 15,167 | (176 | ) | 1,613 | 1,560 | (53 | ) | ||||||||||||||||
Common and preferred stocks |
188 | 169 | (19 | ) | 62 | 49 | (13 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total |
$ | 44,927 | $ | 44,127 | $ | (800 | ) | $ | 8,747 | $ | 8,302 | $ | (445 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 | ||||||||||||||||||||||||
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 |
$ | 3,656 | $ | 3,533 | $ | (123) | $ | 2,917 | $ | 2,668 | $ | (249) | ||||||||||||
Structured Securities |
2,013 | 1,993 | $ | (20) | 627 | 622 | (5) | |||||||||||||||||
Common and preferred stocks |
150 | 131 | (19) | 159 | 123 | (36) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 5,819 | $ | 5,657 | $ | (162) | $ | 3,703 | $ | 3,413 | $ | (290) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
All of these bonds were current on contractual interest and principal payments at December 31, 2021. 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.
For securities without a full SVO credit analysis performed that are current on principal and interest the statutory basis of accounting allows the Company to assign a NAIC designation of 5* to such securities for reporting purposes. At December 31, 2021 and 2020, the statement and fair values of NAIC 5* securities were as follows:
December 31, | ||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||
Number of Securities |
Statement Value |
Fair Value |
Number of Securities |
Statement Value |
Fair Value | |||||||||||||||||||
($ in millions) | ($ in millions) | |||||||||||||||||||||||
Bonds | 72 | $ | 1,613 | $ | 1,641 | 51 | $ | 1,300 | $ | 1,279 | ||||||||||||||
Preferred stock |
2 | 8 | 8 | 9 | 127 | 155 | ||||||||||||||||||
Loan-backed and structured securities |
1 | - | - | 2 | 6 | 8 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total |
75 | $ | 1,621 | $ | 1,649 | 62 | $ | 1,433 | $ | 1,442 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM-25
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Repurchase Agreements
The Company participates in bilateral and tri-party repurchase programs with U.S. domiciled unaffiliated third parties. The agreements under these programs require the Company to sell securities and simultaneously agree to repurchase the same (or substantially the same) securities prior to the securities reaching their maturity. These repurchase agreements are intended to enhance the yield of the Companys investment portfolio. The agreements are accounted for as collateralized borrowings with the transferred security proceeds recorded as other liabilities in the statutory statements of financial position while the underlying securities continue to be recorded as investments by the Company. Investment earnings are recorded as net investment income and the difference between the transferred security proceeds and the amount at which the securities will be subsequently reacquired is amortized into net investment income as interest expense in the statutory statements of operations.
The Company manages counterparty and other risks associated with its repurchase program by adhering to guidelines that require counterparties to provide the Company with cash or other high-quality collateral of no less than 97% of the fair value of the securities on loan plus accrued interest and by setting conservative standards for the Companys reinvestment of cash collateral received. At December 31, 2021 and 2020, the liability to return the repurchase agreement cash collateral was $1.3 billion, and is reported as other liabilities in the statutory statements of financial position.
During 2021 and 2020, cash collateral received, and the corresponding liability to return that collateral, had the following characteristics:
For the quarter ended: |
Maximum Balance |
Ending Balance | ||||||
(in millions) | ||||||||
March 31, 2021 |
$ | 1,315 | $ | 1,287 | ||||
June 30, 2021 |
$ | 1,295 | $ | 1,292 | ||||
September 30, 2021 |
$ | 1,300 | $ | 1,280 | ||||
December 31, 2021 |
$ | 1,281 | $ | 1,277 | ||||
March 31, 2020 |
$ | 1,990 | $ | 1,862 | ||||
June 30, 2020 |
$ | 1,866 | $ | 1,278 | ||||
September 30, 2020 |
$ | 1,332 | $ | 1,319 | ||||
December 31, 2020 |
$ | 1,319 | $ | 1,315 |
During 2021 and 2020, securities sold under repurchase agreements included the following characteristics:
For the quarter ended: |
Maximum Balance (Fair Value) |
Ending Balance (Fair Value) |
Ending Balance (Statement Value) | |||||||||
(in millions) | ||||||||||||
March 31, 2021 |
$ | 1,350 | $ | 1,317 | $ | 1,287 | ||||||
June 30, 2021 |
$ | 1,329 | $ | 1,318 | $ | 1,292 | ||||||
September 30, 2021 |
$ | 1,334 | $ | 1,311 | $ | 1,280 | ||||||
December 31, 2021 |
$ | 1,316 | $ | 1,302 | $ | 1,277 | ||||||
March 31, 2020 |
$ | 2,033 | $ | 1,907 | $ | 1,862 | ||||||
June 30, 2020 |
$ | 1,911 | $ | 1,303 | $ | 1,278 | ||||||
September 30, 2020 |
$ | 1,367 | $ | 1,350 | $ | 1,319 | ||||||
December 31, 2020 |
$ | 1,353 | $ | 1,341 | $ | 1,315 |
NM-26
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
The repurchase agreements have overnight contractual maturities. Securities sold under the repurchase agreements consisted of U.S. Treasury securities and U.S. Government agency-issued residential mortgage-backed securities. All securities sold had NAIC ratings of 1.
The amortized cost, fair value and remaining term to maturity of reinvested repurchase agreement collateral held by the Company at December 31, 2021 and 2020 was as follows:
December 31, 2021 | December 31, 2020 | |||||||||||||||
Amortized Cost |
Fair Value | Amortized Cost |
Fair Value | |||||||||||||
(in millions) | (in millions) | |||||||||||||||
30 days or less |
$ | 259 | $ | 259 | $ | 554 | $ | 554 | ||||||||
31-60 days |
204 | 204 | 165 | 165 | ||||||||||||
61-90 days |
70 | 70 | 39 | 39 | ||||||||||||
91-120 days |
26 | 26 | 2 | 2 | ||||||||||||
121-180 days |
13 | 13 | 138 | 138 | ||||||||||||
181-365 days |
134 | 134 | 115 | 115 | ||||||||||||
1-2 years |
330 | 331 | 54 | 54 | ||||||||||||
2-3 years |
155 | 155 | 214 | 215 | ||||||||||||
Over 3 years |
91 | 91 | 46 | 46 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total |
$ | 1,282 | $ | 1,283 | $ | 1,327 | $ | 1,328 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
If the securities sold under the repurchase agreements or the reinvested collateral become less liquid, the Company has the liquidity resources within its general account available to meet potential cash demands when securities are required to be repurchased.
Restricted Assets
Certain of the Companys 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 repurchase agreements and derivative transactions.
At December 31, 2021 and 2020, 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 Companys derivative portfolio.
The statement value of restricted assets at December 31, 2021 and 2020, summarized by type of restriction, was as follows:
December 31, | ||||||||
2021 | 2020 | |||||||
(in millions) | ||||||||
Loaned securities - repurchase agreements |
$ | 1,277 | $ | 1,315 | ||||
Federal Home Loan Bank of Chicago pledged collateral |
3,705 | 1,359 | ||||||
Derivative transactions |
121 | 242 | ||||||
Federal Home Loan Bank of Chicago stock |
92 | 37 | ||||||
Securities on deposit with states |
3 | 4 | ||||||
|
|
|
|
|||||
Total restricted assets |
$ | 5,198 | $ | 2,957 | ||||
|
|
|
|
NM-27
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Collateral Assets Received
The statement and fair values of collateral received at December 31, 2021 and 2020 were as follows:
December 31,
2021 |
December 31,
2020 | |||||||||||||||
Statement Value |
Fair Value | Statement Value |
Fair Value | |||||||||||||
(in millions) | (in millions) | |||||||||||||||
Repurchase agreement collateral |
$ | 1,277 | $ | 1,302 | $ | 1,315 | $ | 1,341 | ||||||||
Derivative collateral |
898 | 898 | 154 | 154 | ||||||||||||
Mortgage loan escrow |
103 | 103 | 75 | 75 | ||||||||||||
Real estate escrow and security deposits |
4 | 4 | 4 | 4 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total collateral assets |
$ | 2,282 | $ | 2,307 | $ | 1,548 | $ | 1,574 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The Company received $0 and $1 million of derivative collateral related to the separate accounts at December 31, 2021 and 2020, respectively. The obligation to return this collateral is reported in separate account liabilities in the statutory statements of financial position. The obligation to return all other collateral received is reported as other liabilities in the statutory statements of financial position.
4. | Derivative Financial Instruments |
The Company enters into derivative transactions, generally to mitigate 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 executed in the over-the-counter market. A majority of the Companys over-the-counter derivatives are bilateral contracts between two counterparties. The Companys remaining over-the-counter derivatives are cleared and settled through central clearing exchanges.
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.
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.
NM-28
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
The fair value of collateral held by the Company under derivative support agreements at December 31, 2021 and 2020 was as follows:
December 31, | ||||||||
2021 | 2020 | |||||||
(in millions) | ||||||||
Bonds: |
||||||||
General Account |
$ | 36 | $ | 83 | ||||
Separate Accounts |
- | - | ||||||
|
|
|
|
|||||
Total bond collateral |
$ | 36 | $ | 83 | ||||
|
|
|
|
|||||
Cash: |
||||||||
General Account |
$ | 898 | $ | 153 | ||||
Separate Accounts |
- | 1 | ||||||
|
|
|
|
|||||
Total cash collateral |
$ | 898 | $ | 154 | ||||
|
|
|
|
Bond collateral held in the general account is not reported in the statutory statements of financial position. Cash collateral held in the general account is reported as cash and short-term investments in the statutory statements of financial position, while the Companys obligation to return the collateral is reported as other liabilities. Separate account cash collateral assets and related liabilities is reported in the separate account assets and liabilities, respectively, in the statutory statements of financial position.
The fair value of collateral posted by the Company at December 31, 2021 and 2020 was as follows:
December 31, | ||||||||
2021 | 2020 | |||||||
(in millions) | ||||||||
Bonds posted for derivative support agreements: |
||||||||
General Account |
$ | 39 | $ | 12 | ||||
Separate Accounts |
2 | - | ||||||
Bonds posted for futures agreements: |
||||||||
General Account |
41 | 92 | ||||||
Separate Accounts |
17 | 15 | ||||||
|
|
|
|
|
| |||
Total bond collateral |
$ | 99 | $ | 119 | ||||
|
|
|
|
|
| |||
Cash posted for derivative support agreements: |
||||||||
General Account |
$ | 13 | $ | 117 | ||||
Separate Accounts |
1 | - | ||||||
Cash posted for futures agreements: |
||||||||
General Account |
4 | 4 | ||||||
Separate Accounts |
4 | 2 | ||||||
|
|
|
|
|
| |||
Total cash collateral |
$ | 22 | $ | 123 | ||||
|
|
|
|
|
|
NM-29
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Bonds posted as collateral are reported as bonds and cash posted as collateral is reported as a receivable included in other investments in the statutory 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 or fair value hedges, with the related derivative instrument reported at amortized cost in the statutory statements of financial position. No component of these derivatives economic gain or loss was excluded from the assessment of hedge effectiveness.
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 Companys 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 fixed and variable interest rate bonds and fixed rate liabilities over a period of up to 12 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 30 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. Amounts received or paid on these contracts are reported as net investment income.
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 statutory 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.
The average fair value of outstanding derivative assets not designated as hedging instruments was $187 million and $142 million for the years ended December 31, 2021 and 2020, respectively. The average fair value of outstanding derivative liabilities not designated as hedging instruments was $38 million and $30 million for the years ended December 31, 2021 and 2020, respectively.
Interest rate caps and floors are used to mitigate the risk of a significant and sustained increase or decrease in interest rates for certain of the Companys debt instruments and insurance and annuity products. Interest rate caps and floors entitle the Company to pay or receive payments from a counterparty if market interest rates rise above or decline below a specified level. Amounts paid or 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 10 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.
NM-30
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Swaptions are used to mitigate the asset/liability management risk of a significant and sustained increase in interest rates for certain of the Companys 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 number of contracts at a specified price at a future date.
Fixed income forwards are used to gain exposure to the investment risk and return of mortgage-backed securities by utilizing to-be-announced (TBA) forward contracts. The Company also uses TBA forward contracts to hedge interest rate risk and participate in the mortgage-backed securities market in an efficient and cost-effective way. Additionally, pursuant to the Companys mortgage dollar roll program, TBAs or mortgage-backed securities are transferred to counterparties with a corresponding agreement to purchase a substantially similar security for later settlement. These transactions do not qualify as secured borrowings and are accounted for as derivatives.
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.
Foreign currency swaps are used to mitigate the foreign exchange risk for investments in bonds denominated in foreign currencies over a period of up to 15 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. Amounts received or paid on these contracts are reported as net investment income.
Equity and fixed income total return swaps are used to mitigate market risk for investments in portfolios of common stocks, other equity securities, and fixed income investments. Total return swaps obligate the Company and a counterparty to exchange amounts based on the difference between the return on a specified security, basket of securities or index and a specified short-term funding rate, plus or minus a spread, 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.
Warrants are acquired through the purchase of private bonds. Warrants provide the Company the right to purchase an underlying financial instrument at a given price and time. Changes in the value of the underlying financial instrument are reported as a change in unrealized capital gains or losses. When the warrant is exercised, the derivative is terminated, and the current value becomes the basis for the new financial instrument.
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
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
NM-31
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
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.
Interest rate swap replications are used to replicate a bond investment through the use of cash market instruments combined with an interest rate swap. Interest rate swaps obligate the Company and a counterparty to exchange amounts based on the difference between a variable interest rate and a specified fixed interest rate applied to the notional amount of the contract. Interest rate swap replications, including the derivative components, are reported at amortized cost.
The effects of the Companys use of derivative instruments on the statutory statements of financial position at December 31, 2021 and 2020 were as follows:
December 31, 2021 | ||||||||||||||||||||
Notional | Statement Value | Fair Value | ||||||||||||||||||
Amount | Assets | Liabilities | Assets | Liabilities | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Derivatives designated as hedging instruments: |
||||||||||||||||||||
Interest rate contracts: |
||||||||||||||||||||
Interest rate floors |
$ | 400 | $ | 1 | $ | - | $ | 14 | $ | - | ||||||||||
Interest rate swaps |
1,204 | - | - | 5 | (24 | ) | ||||||||||||||
Foreign exchange contracts: |
||||||||||||||||||||
Foreign currency swaps |
12,492 | 412 | (287 | ) | 788 | (147 | ) | |||||||||||||
Derivatives not designated as hedging instruments: |
||||||||||||||||||||
Interest rate contracts: |
||||||||||||||||||||
Interest rate caps |
1,596 | 15 | - | 15 | - | |||||||||||||||
Interest rate floors |
200 | 28 | - | 28 | - | |||||||||||||||
Interest rate swaps |
2,243 | 20 | (16 | ) | 20 | (16 | ) | |||||||||||||
Swaptions |
4,471 | 90 | - | 90 | - | |||||||||||||||
Fixed income futures |
9,534 | - | - | - | - | |||||||||||||||
Fixed income forwards |
1,750 | 2 | - | 2 | - | |||||||||||||||
Foreign exchange contracts: |
||||||||||||||||||||
Foreign currency forwards |
1,422 | 49 | (4 | ) | 49 | (4 | ) | |||||||||||||
Foreign currency swaps |
148 | 12 | (4 | ) | 12 | (4 | ) | |||||||||||||
Credit contracts: |
||||||||||||||||||||
Purchased credit default swaps |
- | - | - | - | - | |||||||||||||||
Warrants |
- | - | - | - | - | |||||||||||||||
Investment replications |
||||||||||||||||||||
Interest rate contracts: |
||||||||||||||||||||
Interest rate swaps |
6 | - | - | - | - | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Total derivatives |
$ | 629 | $ | (311 | ) | $ | 1,023 | $ | (195 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
NM-32
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
December 31, 2020 | ||||||||||||||||||||
Notional | Statement Value | Fair Value | ||||||||||||||||||
Amount | Assets | Liabilities | Assets | Liabilities | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Derivatives designated as hedging instruments: |
||||||||||||||||||||
Interest rate contracts: |
||||||||||||||||||||
Interest rate floors |
$ | 400 | $ | 2 | $ | - | $ | 32 | $ | - | ||||||||||
Interest rate swaps |
350 | - | - | 9 | - | |||||||||||||||
Foreign exchange contracts: |
||||||||||||||||||||
Foreign currency swaps |
11,592 | 258 | (599 | ) | 432 | (477 | ) | |||||||||||||
Derivatives not designated as hedging instruments: |
||||||||||||||||||||
Interest rate contracts: |
||||||||||||||||||||
Interest rate caps |
1,338 | 1 | - | 1 | - | |||||||||||||||
Interest rate floors |
200 | 35 | - | 35 | - | |||||||||||||||
Interest rate swaps |
168 | 8 | - | 8 | - | |||||||||||||||
Swaptions |
3,656 | 26 | - | 26 | - | |||||||||||||||
Fixed income futures |
12,536 | - | - | - | - | |||||||||||||||
Fixed income forwards |
2,295 | 15 | (1 | ) | 15 | (1 | ) | |||||||||||||
Foreign exchange contracts: |
||||||||||||||||||||
Foreign currency forwards |
1,771 | 4 | (16 | ) | 4 | (16 | ) | |||||||||||||
Foreign currency swaps |
132 | 9 | (6 | ) | 9 | (6 | ) | |||||||||||||
Credit contracts: |
||||||||||||||||||||
Purchased credit default swaps |
- | - | - | - | - | |||||||||||||||
Warrants |
- | - | - | - | - | |||||||||||||||
Investment replications |
||||||||||||||||||||
Interest rate contracts: |
||||||||||||||||||||
Interest rate swaps |
6 | - | - | - | - | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Total derivatives |
$ | 358 | $ | (622 | ) | $ | 571 | $ | (500 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
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 statutory statements of financial position.
NM-33
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
The effects of the Companys use of derivative instruments on the statutory statements of operations and changes in surplus for the years ended December 31, 2021, 2020 and 2019 were as follows:
For the year ended December 31, 2021 | ||||||||||||
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 |
$ | - | $ | - | $ | 11 | ||||||
Interest rate swaps |
- | - | 5 | |||||||||
Foreign exchange contracts: |
||||||||||||
Foreign currency swaps |
467 | 4 | 153 | |||||||||
Derivatives not designated as hedging instruments: |
||||||||||||
Interest rate contracts: |
||||||||||||
Interest rate caps |
12 | - | (2 | ) | ||||||||
Interest rate floors |
(7 | ) | - | 2 | ||||||||
Interest rate swaps |
(4 | ) | 1 | 3 | ||||||||
Swaptions |
27 | - | (9 | ) | ||||||||
Fixed income futures |
(44 | ) | 273 | - | ||||||||
Fixed income forwards |
(12 | ) | (5 | ) | - | |||||||
Foreign exchange contracts: |
||||||||||||
Foreign currency forwards |
58 | 13 | - | |||||||||
Foreign currency swaps |
5 | - | 2 | |||||||||
Equity contracts: |
||||||||||||
Equity total return swaps |
- | - | - | |||||||||
Equity index futures |
- | - | - | |||||||||
Credit contracts: |
||||||||||||
Purchased credit default swaps |
- | - | - | |||||||||
Warrants |
(2 | ) | - | - | ||||||||
Investment replications |
||||||||||||
Interest rate contracts: |
||||||||||||
Interest rate swaps |
- | - | - | |||||||||
Equity contracts: |
||||||||||||
Equity total return swaps |
- | - | - | |||||||||
|
|
|
|
|
|
|
|
| ||||
Total derivatives |
$ | 500 | $ | 286 | $ | 165 | ||||||
|
|
|
|
|
|
|
|
|
NM-34
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
For the year ended December 31, 2020 | ||||||||||||
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 |
$ | - | $ | - | $ | 15 | ||||||
Interest rate swaps |
- | - | 1 | |||||||||
Foreign exchange contracts: |
||||||||||||
Foreign currency swaps |
(641 | ) | 29 | 158 | ||||||||
Derivatives not designated as hedging instruments: |
||||||||||||
Interest rate contracts: |
||||||||||||
Interest rate caps |
- | - | (1 | ) | ||||||||
Interest rate floors |
9 | 27 | - | |||||||||
Interest rate swaps |
6 | - | 1 | |||||||||
Swaptions |
(3 | ) | - | (9 | ) | |||||||
Fixed income futures |
12 | (121 | ) | - | ||||||||
Fixed income forwards |
13 | 23 | - | |||||||||
Foreign exchange contracts: |
||||||||||||
Foreign currency forwards |
2 | (83 | ) | - | ||||||||
Foreign currency swaps |
(1 | ) | - | 2 | ||||||||
Equity contracts: |
||||||||||||
Equity total return swaps |
- | - | - | |||||||||
Equity index futures |
- | - | - | |||||||||
Credit contracts: |
||||||||||||
Purchased credit default swaps |
- | (1 | ) | - | ||||||||
Warrants |
(40 | ) | 117 | - | ||||||||
Investment replications |
||||||||||||
Interest rate contracts: |
||||||||||||
Interest rate swaps |
- | 5 | - | |||||||||
Equity contracts: |
||||||||||||
Equity total return swaps |
- | 52 | - | |||||||||
|
|
|
|
|
|
|
|
| ||||
Total derivatives |
$ | (643 | ) | $ | 48 | $ | 167 | |||||
|
|
|
|
|
|
|
|
|
NM-35
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
For the year ended December 31, 2019 | ||||||||||||
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 |
$ | - | $ | - | $ | 8 | ||||||
Interest rate swaps |
- | - | - | |||||||||
Foreign exchange contracts: |
||||||||||||
Foreign currency swaps |
(188 | ) | (3 | ) | 139 | |||||||
Derivatives not designated as hedging instruments: |
||||||||||||
Interest rate contracts: |
||||||||||||
Interest rate caps |
(3 | ) | - | (2 | ) | |||||||
Interest rate floors |
11 | - | (1 | ) | ||||||||
Interest rate swaps |
(9 | ) | 4 | 1 | ||||||||
Swaptions |
(34 | ) | - | (9 | ) | |||||||
Fixed income futures |
7 | (123 | ) | - | ||||||||
Fixed income forwards |
- | 4 | - | |||||||||
Foreign exchange contracts: |
||||||||||||
Foreign currency forwards |
(17 | ) | 46 | - | ||||||||
Foreign currency swaps |
(1 | ) | - | 1 | ||||||||
Equity contracts: |
||||||||||||
Equity total return swaps |
- | 68 | (9 | ) | ||||||||
Equity index futures |
- | - | - | |||||||||
Credit contracts: |
||||||||||||
Purchased credit default swaps |
- | - | - | |||||||||
Warrants |
26 | - | - | |||||||||
Investment replications |
||||||||||||
Interest rate contracts: |
||||||||||||
Interest rate swaps |
- | - | - | |||||||||
Equity contracts: |
||||||||||||
Equity total return swaps |
- | - | - | |||||||||
|
|
|
|
|
|
|
|
| ||||
Total derivatives |
$ | (208 | ) | $ | (4 | ) | $ | 128 | ||||
|
|
|
|
|
|
|
|
|
There were no changes in net unrealized gains or losses resulting from derivatives that no longer qualify for hedge accounting for the years ended December 31, 2021, 2020 and 2019.
NM-36
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
5. | Policy Benefit Reserves and Deposit Funds |
General account policy benefit reserves at December 31, 2021 and 2020 were as follows:
December 31, | ||||||||
2021 | 2020 | |||||||
(in millions) | ||||||||
Life insurance reserves |
$ | 205,037 | $ | 194,110 | ||||
Disability and long-term care active life reserves |
6,728 | 6,064 | ||||||
Disability and long-term care unpaid claims and claim reserves |
5,455 | 5,342 | ||||||
Annuity reserves |
12,814 | 11,849 | ||||||
|
|
|
|
|
| |||
Total policy benefit reserves |
$ | 230,034 | $ | 217,365 | ||||
|
|
|
|
|
|
See Note 9 for more information regarding the Companys use of reinsurance and the related impact on policy benefit reserves.
Life Insurance Reserves
Policy and contract reserves are determined in accordance with standard valuation methods approved by the OCI and are computed in accordance with standard actuarial methodology based on the Commissioners Reserve Valuation Method (CRVM) or the net level premium method. The reserves are based on assumptions for interest, mortality and other risks insured. Effective January 1, 2017, the OCI required a principles-based approach (PBR) for the calculation of its policy benefit reserves with a three-year phase-in period from the effective date. PBR requires reserves to be calculated using company experience assumptions with margin subject to a floor based on similar prescribed methods and assumptions used with existing in-force business. The Company adopted PBR for certain new life insurance products issued on or after July 1, 2019 and for all remaining life insurance policies issued on or after January 1, 2020.
Life insurance reserve calculations, using basic data, determine tabular interest, tabular cost, and tabular cost less actual reserves released. 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.
As of December 31, 2021, the Company had nearly $2.1 trillion of total life insurance in force, including $23 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 Companys 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.
Additional premiums or charges are assessed 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.
NM-37
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
At December 31, 2021 and 2020, the account and cash values related to the Companys general account life reserves were as follows:
Account Value | Cash Value | Reserves | ||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Subject to discretionary withdrawal, surrender values, or policy loans: |
||||||||||||||||||||||||
Universal life |
$ | 11,609 | $ | 8,449 | $ | 11,366 | $ | 8,185 | $ | 11,389 | $ | 8,211 | ||||||||||||
Universal life with secondary guarantees |
14 | 14 | 12 | 12 | 32 | 29 | ||||||||||||||||||
Other permanent cash value life insurance |
- | - | 177,829 | 171,031 | 182,118 | 174,799 | ||||||||||||||||||
Variable life |
- | - | - | - | 953 | 943 | ||||||||||||||||||
Variable universal life |
6 | 5 | 6 | 5 | 37 | 27 | ||||||||||||||||||
Not subject to discretionary withdrawal or no cash value: |
||||||||||||||||||||||||
Term policies without cash value |
- | - | - | - | 5,039 | 4,830 | ||||||||||||||||||
Accidental death benefits |
- | - | - | - | 10 | 11 | ||||||||||||||||||
Disability - active lives |
- | - | - | - | 971 | 1,100 | ||||||||||||||||||
Disability - disabled lives |
- | - | - | - | 1,475 | 1,297 | ||||||||||||||||||
Miscellaneous reserves |
- | - | - | - | 3,003 | 2,894 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total gross life reserves |
11,629 | 8,468 | 189,213 | 179,233 | 205,027 | 194,141 | ||||||||||||||||||
Reinsurance ceded |
- | - | - | - | 1,203 | 1,216 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total net life insurance |
$ | 11,629 | $ | 8,468 | $ | 189,213 | $ | 179,233 | $ | 203,824 | $ | 192,925 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2021 and 2020, the withdrawal characteristics of the Companys separate account life reserves were as follows:
Account Value | Cash Value | Reserves | ||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Subject to discretionary withdrawal, surrender values or policy loans: |
||||||||||||||||||||||||
Variable life |
$ | - | $ | - | $ | 10,251 | $ | 9,086 | $ | 9,350 | $ | 8,199 | ||||||||||||
Variable universal life |
1,817 | 1,375 | 1,718 | 1,308 | 1,687 | 1,287 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total gross life reserves |
$ | 1,817 | $ | 1,375 | $ | 11,969 | $ | 10,394 | $ | 11,037 | $ | 9,486 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Reinsurance ceded |
- | - | - | - | - | - | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total net life insurance |
$ | 1,817 | $ | 1,375 | $ | 11,969 | $ | 10,394 | $ | 11,037 | $ | 9,486 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM-38
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Following are amounts reported as net life insurance reserves in the Companys Annual Statement, which agree with the amounts reported as net life insurance reserves in the table above at December 31, 2021 and 2020.
December 31, | ||||||||
2021 | 2020 | |||||||
($ in millions) | ||||||||
From Life, Accident & Health Annual Statement: |
||||||||
Life insurance |
$ | 201,186 | $ | 190,270 | ||||
Accidental death benefits |
10 | 11 | ||||||
Disability - active lives |
971 | 1,100 | ||||||
Disability - disabled lives |
1,473 | 1,297 | ||||||
Miscellaneous reserves |
184 | 247 | ||||||
|
|
|
|
|
| |||
Subtotal net life insurance |
203,824 | 192,925 | ||||||
From Separate Accounts Annual Statement: |
||||||||
Life insurance |
11,037 | 9,486 | ||||||
|
|
|
|
|
| |||
Combined Total |
$ | 214,861 | $ | 202,411 | ||||
|
|
|
|
|
|
Annuity Reserves
For annuities and supplementary contracts, policy and contract reserves are calculated using Commissioners Annuity Reserve Valuation Method (CARVM), Valuation Manual Section 21 (VM-21) for variable annuity products and Actuarial Guideline 33 for all other products. Other deferred annuity reserves are based on policy value, with additional reserves held to reflect guarantees under these contracts. Immediate annuity reserves are based on the present value of expected benefit payments. Changes in future policy benefit reserves on supplementary contracts and income annuities without life contingencies are deposit-type transactions and are excluded from net additions to policy benefit reserves in the statutory statements of operations.
During 2020, valuation interest rate assumptions used in certain annuity reserve calculations were reviewed and updated, and the corresponding reserves were increased by $126 million. This was accounted for as a change in valuation basis and is included in other surplus changes in the statutory statements of changes in surplus.
Deposit Funds
Deposit fund liabilities at December 31, 2021 and 2020 were $8.3 billion and $4.9 billion, respectively. Liabilities related to spread lending were previously presented within policy benefit reserves on the statutory statements of financial position. Due to the increase in spread lending and related liabilities, the Company will now disclose deposit fund liabilities separate from policy benefit reserves on the statutory statements of financial position. Deposit funds primarily represent reserves for funding agreements, supplementary contracts and income annuities without life contingencies, and amounts left on deposit with the Company by beneficiaries or policyowners. Beneficiaries of the Companys life insurance policies can choose to receive their death benefit in a single lump sum payment or through a supplementary contract consisting of a series of scheduled payments. If the beneficiary does not affirmatively choose a supplementary contract, the proceeds are automatically paid to the beneficiary in a single lump sum.
Prior to November 1, 2013, beneficiaries of the Companys life insurance policies 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). Funds held on behalf of Northwestern Access Fund account holders are segmented in the Companys general account and are invested primarily in short-term, liquid investments and high quality corporate bonds. Northwestern Access Fund accounts are credited with interest at short-term market rates, with certain accounts subject to guaranteed minimum crediting rates.
NM-39
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
The total deposit fund liability for Northwestern Access Fund account balances held by the Company was $292 million and $310 million at December 31, 2021 and 2020, respectively. Accounts were credited with interest at annual rates ranging from 0.01% to 3.50% and 0.02% to 3.50% during 2021 and 2020, respectively. The crediting interest rates changed 13 times and 28 times during 2021 and 2020, respectively.
In May 2020, the Company became a member of the Federal Home Loan Bank of Chicago (FHLBC) and began issuing funding agreements to FHLBC in exchange for cash. Funding agreements are issued through the general account and the sales proceeds are invested as part of a spread lending strategy. The Company is required to pledge collateral to the FHLBC in the form of eligible securities when funding agreements are issued. Upon an event of default by the Company, the FHLBCs recovery on the collateral is limited to the outstanding amount of the Companys liability to the FHLBC.
At December 31, 2021 and 2020, the Company held $92 million and $37 million of FHLBC activity stock, respectively. The amount of collateral pledged to the FHLBC was as follows:
Statement Value (1) |
Fair Value (1) | |||||||
(in millions) | ||||||||
December 31, 2021 |
$ | 3,705 | $ | 3,948 | ||||
December 31, 2020 |
1,359 | 1,525 |
(1) | Includes amounts in excess of minimum requirements |
The maximum amount of collateral pledged to the FHLBC was as follows:
Statement Value |
Fair Value | Amount Borrowed at Time of Max Collateral |
||||||||||
(in millions) | ||||||||||||
December 31, 2021 |
$ | 3,711 | $ | 3,958 | $ | 1,952 | ||||||
December 31, 2020 |
1,359 | 1,525 | 886 |
The amount borrowed from FHLBC, in the form of funding agreements, was as follows:
December 31, | December 31, | |||||||
2021 | 2020 | |||||||
(in millions) | (in millions) | |||||||
Borrowed |
$ | 2,052 | $ | 886 | ||||
Deposit fund reserves |
$ | 2,052 | $ | 886 | ||||
Max borrowed during the year |
$ | 2,052 | $ | 886 | ||||
Borrowing capacity as determined by insurer |
$ | 8,000 | $ | 8,000 |
The Company does not have prepayment obligations for these funding agreements.
During December 2020, the Company established a $10 billion global FABN program. As part of this program, a special purpose entity issues medium term notes (Notes) to investors. Note proceeds are used to purchase funding agreements from the Company. The issued funding agreements have payment terms substantially identical to the Notes. As of December 31, 2021, the Company had issued and outstanding funding agreements of $2 billion under the FABN program.
NM-40
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Withdrawal Characteristics of Annuity Reserves and Deposit Funds
At December 31, 2021 and 2020, the withdrawal characteristics of the Companys general account and separate account annuity reserves and deposit funds were as follows:
General Account | Separate Account | Total | ||||||||||||||||||||||
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|
|
||||||||||||||||||||||
December 31, |
||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
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(in millions) |
||||||||||||||||||||||||
Individual Annuities |
||||||||||||||||||||||||
Subject to discretionary withdrawal |
||||||||||||||||||||||||
- with market value adjustment |
$ | 59 | $ | 70 | $ | - | $ | - | $ | 59 | $ | 70 | ||||||||||||
- at book value less surrender charge of 5% or more |
62 | 71 | - | - | 62 | 71 | ||||||||||||||||||
- at fair value |
- | - | 24,137 | 22,203 | 24,137 | 22,203 | ||||||||||||||||||
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|||||||||||||
Total with market value adjustment or at fair value |
121 | 141 | 24,137 | 22,203 | 24,258 | 22,344 | ||||||||||||||||||
- at book value without adjustment |
1,779 | 1,857 | - | - | 1,779 | 1,857 | ||||||||||||||||||
Not subject to discretionary withdrawal |
8,861 | 7,861 | 311 | 289 | 9,172 | 8,150 | ||||||||||||||||||
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|||||||||||||
Total gross individual annuities |
10,761 | 9,859 | 24,448 | 22,492 | 35,209 | 32,351 | ||||||||||||||||||
Reinsurance ceded |
- | - | - | - | - | - | ||||||||||||||||||
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|||||||||||||
Total net individual annuities |
$ | 10,761 | $ | 9,859 | $ | 24,448 | $ | 22,492 | $ | 35,209 | $ | 32,351 | ||||||||||||
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Group Annuities |
||||||||||||||||||||||||
Subject to discretionary withdrawal |
||||||||||||||||||||||||
- at fair value |
$ | - | $ | - | $ | 16 | $ | 19 | $ | 16 | $ | 19 | ||||||||||||
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|||||||||||||
Total with market value adjustment or at fair value |
- | - | 16 | 19 | 16 | 19 | ||||||||||||||||||
Not subject to discretionary withdrawal |
2,053 | 1,990 | 6,647 | 6,291 | 8,700 | 8,281 | ||||||||||||||||||
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|
|||||||||||||
Total gross group annuities |
2,053 | 1,990 | 6,663 | 6,310 | 8,716 | 8,300 | ||||||||||||||||||
Reinsurance ceded |
- | - | - | - | - | - | ||||||||||||||||||
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Total net group annuities |
$ | 2,053 | $ | 1,990 | $ | 6,663 | $ | 6,310 | $ | 8,716 | $ | 8,300 | ||||||||||||
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|||||||||||||
Deposit-Type Contracts |
||||||||||||||||||||||||
Subject to discretionary withdrawal |
||||||||||||||||||||||||
- with market value adjustment |
$ | 80 | $ | 95 | $ | - | $ | - | $ | 80 | $ | 95 | ||||||||||||
- at fair value |
- | - | 36 | 33 | 36 | 33 | ||||||||||||||||||
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|||||||||||||
Total with market value adjustment or at fair value |
80 | 95 | 36 | 33 | 116 | 128 | ||||||||||||||||||
- at book value without adjustment |
3,757 | 3,468 | - | - | 3,757 | 3,468 | ||||||||||||||||||
Not subject to discretionary withdrawal |
4,466 | 1,297 | - | - | 4,466 | 1,297 | ||||||||||||||||||
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|||||||||||||
Total gross deposit-type contracts |
8,303 | 4,860 | 36 | 33 | 8,339 | 4,893 | ||||||||||||||||||
Reinsurance ceded |
- | - | - | - | - | - | ||||||||||||||||||
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Total net deposit-type contracts |
$ | 8,303 | $ | 4,860 | $ | 36 | $ | 33 | $ | 8,339 | $ | 4,893 | ||||||||||||
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|||||||||||||
Total annuity reserves and deposit funds |
$ | 21,117 | $ | 16,709 | $ | 31,147 | $ | 28,835 | $ | 52,264 | $ | 45,544 | ||||||||||||
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Of the individual annuity reserves at book value less surrender charge of 5% or more noted above, the Company expects that $7 million will have less than a 5% surrender charge and be reported with the amounts at book value without adjustment in 2022.
NM-41
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
The following are amounts reported as net annuity reserves in the Companys Annual Statement, which agree with the amounts reported as net annuity reserves in the table above at December 31, 2021 and 2020.
December 31, | ||||||||
2021 | 2020 | |||||||
|
|
|||||||
($ in millions) | ||||||||
From Life, Accident & Health Annual Statement: |
||||||||
Annuities |
$ | 11,129 | $ | 10,300 | ||||
Supplementary contracts with life contingencies |
1,685 | 1,549 | ||||||
Deposit-type contracts |
8,303 | 4,860 | ||||||
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|
|||||
Subtotal net annuity reserves |
21,117 | 16,709 | ||||||
From Separate Accounts Annual Statement: |
||||||||
Annuities |
30,800 | 28,513 | ||||||
Supplementary contracts |
311 | 289 | ||||||
Other contract deposit funds |
36 | 33 | ||||||
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|
|||||
Subtotal net annuity reserves |
31,147 | 28,835 | ||||||
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|
|||||
Combined Total |
$ | 52,264 | $ | 45,544 | ||||
|
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|
|
Disability and Long-Term Care Reserves
Unpaid claims and claim reserves for disability and long-term care policies are based on the present value of expected benefit payments. The changes in reserves for unpaid claims, losses and loss adjustment expenses on disability and long-term care policies for the years ended December 31, 2021 and 2020 were as follows:
For the years ended | ||||||||
December 31, | ||||||||
2021 |
2020 |
|||||||
|
|
|||||||
(in millions) | ||||||||
Balance at January 1 |
$ | 5,342 | $ | 5,200 | ||||
Incurred related to: |
||||||||
Current year |
990 | 972 | ||||||
Prior years |
(125 | ) | (85) | |||||
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|
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|
|||||
Total incurred |
865 | 887 | ||||||
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|
|||||
Paid related to: |
||||||||
Current year |
(33 | ) | (41) | |||||
Prior years |
(719 | ) | (704) | |||||
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|
|||||
Total paid |
(752 | ) | (745) | |||||
|
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|
|||||
Balance at December 31 |
$ | 5,455 | $ | 5,342 | ||||
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|
|
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. In 2020, this change also included the impact of certain disability income assumption updates made to align assumptions with recent experience.
Active life reserves are based on the net level premium method for disability policies issued prior to 1987 and the two-year preliminary term method for those issued after 1987. Active life reserves are mean reserves for disability policies issued through 2000 and mid-terminal plus unearned premium reserves for
NM-42
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
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.
Additional Actuarial 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 in accordance with presently accepted actuarial standards and must include assumptions necessary to determine the adequacy of reserves under moderately adverse conditions. At December 31, 2021 and 2020, reserves required as a result of AAT were as follows:
December 31, | ||||||||
2021 | 2020 | |||||||
|
| |||||||
(in millions) | ||||||||
Annuities and deposit funds |
$ | 250 | $ | 320 | ||||
Life insurance |
2 | 2 | ||||||
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|
|
| |||
Total reserves |
$ | 252 | $ | 322 | ||||
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|
|
Statutory Minimum Reserves
The Company has the option to establish policy benefit reserves using a standard of valuation that produces higher reserves than those calculated according to the minimum standard provided in the statutory regulations. For contracts issued January 1, 2001 and later, excess reserves over the statutory minimums were $973 million and $665 million at December 31, 2021 and 2020, respectively.
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 statutory statements of financial position.
Deferred and uncollected premiums at December 31, 2021 and 2020 were as follows:
December 31, 2021 | December 31, 2020 | |||||||||||||||
Gross | Net | Gross | Net | |||||||||||||
|
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|
| |||||||||||||
(in millions) | (in millions) | |||||||||||||||
Ordinary new business |
$ | 453 | $ | 259 | $ | 369 | $ | 219 | ||||||||
Ordinary renewal |
3,056 | 2,397 | 2,919 | 2,321 | ||||||||||||
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|
|
|
|
|
| |||||
Total deferred and uncollected premiums |
$ | 3,509 | $ | 2,656 | $ | 3,288 | $ | 2,540 | ||||||||
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NM-43
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
7. | Separate Accounts |
Separate account liabilities at December 31, 2021 and 2020 were as follows:
Variable Life | Variable Annuities | Total | ||||||||||||||||||||||
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| ||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
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| |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Separate account reserves |
$ | 11,037 | $ | 9,486 | $ | 31,147 | $ | 28,835 | $ | 42,184 | $ | 38,321 | ||||||||||||
Non-policy liabilities |
199 | 126 | ||||||||||||||||||||||
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Total separate account liabilities |
$ | 42,383 | $ | 38,447 | ||||||||||||||||||||
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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. General account policy benefit reserves included $7 million and $6 million attributable to GMDB at December 31, 2021 and 2020, respectively.
Premiums and other considerations received from variable annuity and variable life insurance policyowners were $1.7 billion and $1.5 billion for the years ended December 31, 2021 and 2020, respectively. These amounts are reported as premiums in the statutory 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 net transfers to separate accounts in the statutory statements of operations. Following are amounts reported as transfers to and from separate accounts within the Companys Separate Account Annual Statement, which agree with the amounts reported as net transfers to (from) separate accounts within these statutory financial statements:
At and for the years ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
|
|
| ||||||||||
(in millions) | ||||||||||||
From Separate Account Annual Statement: |
||||||||||||
Transfers to separate accounts |
$ | 1,724 | $ | 1,467 | $ | 1,522 | ||||||
Transfers from separate accounts |
(2,529 | ) | (2,147 | ) | (2,305 | ) | ||||||
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| ||||
Net transfers from separate accounts |
$ | (805 | ) | $ | (680 | ) | $ | (783 | ) | |||
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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) and the Internal Revenue Code (Code), as well as nonqualified plans that provide benefits to certain participants in excess of limits set by ERISA and the Code for the qualified plans. The Companys 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, 2021 and 2020 and does not expect to make a contribution to the plans during 2022.
The Companys defined benefit pension plans for employees contains two different benefit formulas a formula based on the final average pay of the participant that was frozen as of December 31, 2013 and one that awards cash balance credits based on each participants age and years of service that became effective
NM-44
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
on January 1, 2014. Benefits accrued under the final average pay formula remain available to participants upon retirement. Accumulated cash balance credits earn interest based on market rates and are subject to a minimum crediting rate. The Companys defined benefit pension plans for financial representatives utilize a formula that is based on the participants estimated annual income earned over their career.
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. Participants are eligible for retirement health care coverage if they meet eligibility requirements for age and length of service and were either active or retired as of July 31, 2013 for employees and as of December 31, 2013 for financial representatives. Employees or financial representatives hired or contracted after the above dates are not eligible for coverage under the postretirement health plans. During 2020, the Company announced that beginning with employees retiring on or after January 1, 2022, the Company will no longer provide a subsidy for retiree health care coverage.
Medicare-eligible retirees and their dependents are offered health care options provided under an independent third-party health care marketplace (marketplace). Retirees and dependents that are not yet Medicare-eligible retain the historical health care benefits offered by the Company. Medicare-eligible retirees and dependents are provided with a pre-funded retiree health reimbursement account and access to third-party advisors to purchase health benefits through the marketplace. Non-Medicare-eligible retirees and dependents are provided premium assistance based on the retirees years of service with the Company. The Company pays the entire cost of retiree life insurance coverage.
Benefit Plan Assets
Aggregate plan assets of the defined benefit pension plans and postretirement benefit plans at December 31, 2021 and 2020, and changes in these assets for the years then ended, were as follows:
Defined Benefit Plans | Postretirement Benefit Plans | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
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| |||||||||||||
(in millions) | (in millions) | |||||||||||||||
Fair value of plan assets at January 1 |
$ | 6,158 | $ | 5,459 | $ | 94 | $ | 84 | ||||||||
Changes in plan assets: |
||||||||||||||||
Actual return on plan assets |
515 | 854 | 9 | 13 | ||||||||||||
Actual plan benefits paid |
(169 | ) | (155 | ) | (3 | ) | (3 | ) | ||||||||
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| |||||
Fair value of plan assets at December 31 |
$ | 6,504 | $ | 6,158 | $ | 100 | $ | 94 | ||||||||
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Plan assets consist of group annuity contracts issued by the Company that are funded by a Group Annuity Separate Account, 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-45
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
The target asset allocations and the actual allocation of the plans investments based on fair value at December 31, 2021 and 2020 were as follows:
Target Allocation |
Actual Allocation |
|||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Bonds |
74% | 64% | 70% | 60% | ||||||||||||
Equity investments |
25% | 35% | 28% | 37% | ||||||||||||
Other investments |
1% | 1% | 2% | 3% | ||||||||||||
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Total assets |
100% | 100% | 100% | 100% | ||||||||||||
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At each of December 31, 2021 and 2020, other investments were comprised of cash and short-term investments.
Benefit Plan Obligations
Aggregate projected benefit obligations (PBOs) of the defined benefit pension plans and postretirement benefit plans at December 31, 2021 and 2020 and changes in these obligations for the years then ended were as follows:
Defined Benefit Plans | Postretirement Benefit Plans | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(in millions) | (in millions) | |||||||||||||||
Projected benefit obligation at January 1 |
$ | 7,069 | $ | 6,050 | $ | 662 | $ | 743 | ||||||||
Changes in benefit obligation: |
||||||||||||||||
Service cost of benefits earned |
205 | 134 | 10 | 14 | ||||||||||||
Interest cost on projected obligations |
141 | 177 | 11 | 16 | ||||||||||||
Projected gross plan benefits paid |
(197 | ) | (181 | ) | (25 | ) | (23 | ) | ||||||||
Experience (gains)/losses |
(180 | ) | 889 | (30 | ) | 119 | ||||||||||
Plan amendments and other |
- | - | - | (207 | ) | |||||||||||
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| |||||
Projected benefit obligation at December 31 |
$ | 7,038 | $ | 7,069 | $ | 628 | $ | 662 | ||||||||
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The PBO represents the estimated net present value of estimated future benefit obligations. For defined benefit plans, the PBO includes assumptions for future compensation increases for active participants. The accumulated benefit obligation (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 $6.6 billion for the years ended December 31, 2021 and 2020. Experience (gains)/losses for each of the years ended December 31, 2021 and 2020 primarily reflect the impact of changes in the PBO discount rate.
Benefit Plan Assumptions
The assumptions used in estimating the projected benefit obligations at December 31, 2021 and 2020 and the net periodic benefit cost for the years ended December 31, 2021, 2020 and 2019 were as follows:
Defined Benefit Plans | Postretirement Benefit Plans | |||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||
Projected benefit obligation: |
||||||||||||||||||||||||
Weighted average discount rate |
2.77% | 2.44% | 2.72% | 2.37% | ||||||||||||||||||||
Annual increase in compensation |
3.75% | 3.75% | 3.75% | 3.75% | ||||||||||||||||||||
Cash balance plan interest crediting rate |
2.73% | 2.39% | n/a | n/a |
NM-46
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Defined Benefit Plans | Postretirement Benefit Plans | |||||||||||||||||||||||
2021 | 2020 | 2019 | 2021 | 2020 | 2019 | |||||||||||||||||||
Net periodic benefit cost: |
||||||||||||||||||||||||
Weighted average discount rate |
2.44% | 3.17% | 4.18% | 2.37% | 3.18% | 4.18% | ||||||||||||||||||
Annual increase in compensation |
3.75% | 3.75% | 3.75% | 3.75% | 3.75% | 3.75% | ||||||||||||||||||
Long-term rate of return on plan assets |
5.75% | 6.25% | 6.25% | 5.75% | 6.25% | 6.25% | ||||||||||||||||||
Cash balance plan interest crediting rate |
2.39% | 3.14% | 4.16% | n/a | n/a | n/a |
The expected long-term rate of return on plan assets is estimated in consideration of historical financial market performance, internal and third-party capital market expectations and the long-term target asset allocation.
The assumed annual increase in future retiree medical costs used in measuring the obligation for postretirement benefits were as follows:
December 31, | ||||||||
2021 | 2020 | |||||||
Assumed annual increase |
5.00% | 5.00% | ||||||
Ultimate rate of annual increase |
5.00% | 5.00% | ||||||
Year in which ultimate rate is reached |
2022 | 2021 |
Effective January 1, 2019, the Companys exposure to medical inflation will be limited to a maximum annual increase of 3%. In the event annual premiums increase greater than 3% plan participants are responsible for the balance of premiums which exceeded the 3% limit.
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, 2021 and 2020.
Defined Benefit Plans |
Postretirement Benefit Plans |
|||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
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(in millions) | (in millions) | |||||||||||||||
Fair value of plan assets |
$ | 6,504 | $ | 6,158 | $ | 100 | $ | 94 | ||||||||
Projected benefit obligation |
7,038 | 7,069 | 628 | 662 | ||||||||||||
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|||||||||
Funded status |
(534 | ) | (911 | ) | (528 | ) | (568 | ) | ||||||||
Nonadmitted asset |
(887 | ) | (463 | ) | - | - | ||||||||||
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|||||||||
Financial statement liability |
$ | (1,421 | ) | $ | (1,374 | ) | $ | (528 | ) | $ | (568 | ) | ||||
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The PBO for defined benefit plans above included $1,421 million related to unfunded non-qualified plans at December 31, 2021 and $1,374 million related to the underfunded qualified plan for financial representatives and unfunded non-qualified plans at December 31, 2020. In the aggregate, the fair value of qualified defined benefit plan assets represented 116% and 107% of the projected benefit obligations of these plans at December 31, 2021 and 2020, respectively.
Statutory accounting guidance requires 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 statutory statements of changes in surplus.
NM-47
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Aggregate defined benefit pension and postretirement plan surplus impacts were as follows for the years ended December 31, 2021 and 2020:
For the year ended December 31, 2021 | ||||||||||||||||||||
Defined Benefit Plans | Postretirement Benefit Plans | |||||||||||||||||||
Net experience gains (losses) |
Prior service (costs) credits |
Net initial asset |
Net experience gains (losses) |
Prior service (costs) credits |
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(in millions) | (in millions) | |||||||||||||||||||
Balance at January 1 |
$ | (1,617 | ) | $ | 140 | $ | 285 | $ | (168 | ) | $ | 185 | ||||||||
Amortization from surplus into net periodic benefit cost | 67 | (25 | ) | (27 | ) | 7 | (12 | ) | ||||||||||||
Changes in plan assets and benefit obligations recognized in surplus | 335 | - | - | 36 | - | |||||||||||||||
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Balance at December 31 |
$ | (1,215 | ) | $ | 115 | $ | 258 | $ | (125 | ) | $ | 173 | ||||||||
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For the year ended December 31, 2020 | ||||||||||||||||||||
Defined Benefit Plans | Postretirement Benefit Plans | |||||||||||||||||||
Net experience gains (losses) |
Prior service (costs) credits |
Net initial asset |
Net experience gains (losses) |
Prior service (costs) credits |
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(in millions) | (in millions) | |||||||||||||||||||
Balance at January 1 |
$ | (1,289 | ) | $ | 165 | $ | 299 | $ | (63 | ) | $ | (45 | ) | |||||||
Amortization from surplus into net periodic benefit cost |
56 | (25 | ) | (14 | ) | 4 | (4 | ) | ||||||||||||
Changes in plan assets and benefit obligations recognized in surplus |
(384 | ) | - | - | (109 | ) | 234 | |||||||||||||
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Balance at December 31 |
$ | (1,617 | ) | $ | 140 | $ | 285 | $ | (168 | ) | $ | 185 | ||||||||
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Benefit Plan Costs
The components of net periodic benefit cost for the years ended December 31, 2021, 2020 and 2019 were as follows:
Defined Benefit Plans | Postretirement Benefit Plans | |||||||||||||||||||||||
2021 | 2020 | 2019 | 2021 | 2020 | 2019 | |||||||||||||||||||
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(in millions) |
(in millions) | |||||||||||||||||||||||
Components of net periodic benefit cost: |
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Service cost of benefits earned |
$ | 205 | $ | 134 | $ | 129 | $ | 10 | $ | 14 | $ | 16 | ||||||||||||
Interest cost on projected obligations |
141 | 177 | 204 | 11 | 16 | 23 | ||||||||||||||||||
Amortization of experience losses |
67 | 56 | 53 | 7 | 4 | (1 | ) | |||||||||||||||||
Amortization of prior service (credits) costs |
(25 | ) | (25 | ) | (25 | ) | (12 | ) | (4 | ) | 5 | |||||||||||||
Amortization of initial net asset |
(27 | ) | (14 | ) | (15 | ) | - | - | - | |||||||||||||||
Expected return on plan assets |
(349 | ) | (336 | ) | (284 | ) | (5 | ) | (5 | ) | (4 | ) | ||||||||||||
Curtailment |
- | (1 | ) | - | - | 28 | - | |||||||||||||||||
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Net periodic benefit cost (credit) |
$ | 12 | $ | (9 | ) | $ | 62 | $ | 11 | $ | 53 | $ | 39 | |||||||||||
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NM-48
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
The expected benefit payments by the defined benefit plans and the postretirement benefit plans for the years 2022 through 2031 are as follows:
Defined Benefit Plans |
Postretirement Benefit Plans | |||||||
|
| |||||||
(in millions) | ||||||||
2022 |
$ | 189 | $ | 30 | ||||
2023 |
212 | 29 | ||||||
2024 |
222 | 28 | ||||||
2025 |
240 | 28 | ||||||
2026 |
249 | 27 | ||||||
2027-2031 |
1,382 | 133 | ||||||
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Total |
$ | 2,494 | $ | 275 | ||||
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The Company sponsors a contributory 401(k) plan for eligible employees, for which the Company may provide 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, 2021, 2020 and 2019, the Company expensed total contributions to these plans of $34 million, $57 million and $53 million, respectively. In lieu of making matching contributions to the employee 401(k) plan in 2021 and 2022, the Company has made additional contributions to the cash balance plan in 2021.
9. | Reinsurance |
The Company limits its exposure to life insurance death benefits by ceding coverage to various reinsurers. In 1999, the Company ceased reinsuring new individual disability policies, but has maintained a portion of the reinsurance ceded on policies issued prior to 1999. The Company cedes between 6080% of the morbidity risk on group disability and 60% of the mortality risk on group life policies.
As part of an affiliated reinsurance agreement, the Company assumes 100% of the net risk associated with NLTCs long-term care business. At December 31, 2021 and 2020, the net amount due from NLTC under this agreement was $48 million and $50 million, respectively.
Amounts in the statutory financial statements are reported net of the impact of reinsurance. Policy benefit reserves were reported net of ceded reserves of $1.7 billion at both December 31, 2021 and 2020. The Company has reinsured all risks disclosed in the statutory financial statements under Actuarial Guideline 48.
NM-49
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
The effects of reinsurance on premium revenue and total benefits for the years ended December 31, 2021, 2020 and 2019 were as follows:
For the years ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
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||||||||||
(in millions) | ||||||||||||
Direct premium revenue |
$ | 22,936 | $ | 19,501 | $ | 19,197 | ||||||
Premiums assumed |
830 | 800 | 763 | |||||||||
Premiums ceded |
(995 | ) | (978 | ) | (950 | ) | ||||||
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Premium revenue |
$ | 22,771 | $ | 19,323 | $ | 19,010 | ||||||
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Direct benefit expense |
$ | 23,975 | $ | 20,538 | $ | 20,158 | ||||||
Benefits assumed |
915 | 837 | 830 | |||||||||
Benefits ceded |
(937 | ) | (792 | ) | (805 | ) | ||||||
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Total benefits |
$ | 23,953 | $ | 20,583 | $ | 20,183 | ||||||
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In addition, the Company received $127 million, $133 million and $135 million in allowances from reinsurers for reimbursement of commissions and other expenses on ceded business for the years ended December 31, 2021, 2020 and 2019, respectively. These amounts are reported in other income in the statutory statements of operations. For the years ended December 31, 2021, 2020 and 2019, the Company incurred $130 million, $127 million and $136 million, respectively, in expense allowances on reinsurance assumed from NLTC.
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 reinsurers credit rating falls below a prescribed level. There were no reinsurance recoverables at December 31, 2021 and 2020 that were considered by the Company to be uncollectible. No reinsurance contracts were identified which require disclosure under paragraph 79-84 of SSAP No. 61RLife, Deposit-Type and Accident and Health Reinsurance.
10. | Federal Income Taxes |
The results of the Companys operations are consolidated with the following entities for purposes of filing the Companys consolidated federal income tax return:
Northwestern Mutual Investment Services, LLC | NM Harrisburg, Inc | |
NML Real Estate Holdings, LLC and subsidiaries | Mason Street Advisors, LLC | |
NML Securities Holdings, LLC and subsidiaries | NM GP Holdings, LLC and subsidiaries | |
Northwestern Mutual MU TLD Registry, LLC | NM Pebble Valley, LLC | |
Northwestern Mutual Wealth Management Company | Northwestern Mutual Registry, LLC | |
NM Investment Holdings, LLC | QOZ Holding Co, LLC and subsidiaries | |
GRO, LLC and GRO-SUB, LLC | NM Career Distrib. Holdings, LLC and subsidiaries | |
NM Investment Management Company, LLC | NM SAS, LLC and subsidiaries | |
Northwestern Long Term Care Ins. Co | Venture Studio Holdings, LLC and subsidiaries | |
Wysh Financial Services, 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.
NM-50
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
The components of current income tax expense (benefit) in the statutory statements of operations for the years ended December 31, 2021, 2020 and 2019 related to ordinary taxable income (loss) were as follows:
For the years ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
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(in millions) | ||||||||||||
Tax payable on ordinary income |
$ | (914 | ) | $ | 637 | $ | 103 | |||||
Low income housing tax credits |
(150 | ) | (136 | ) | (123 | ) | ||||||
Other tax credits |
(122 | ) | (71 | ) | (49 | ) | ||||||
Increase in contingent tax liabilities |
20 | (153 | ) | (130 | ) | |||||||
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Total current tax expense (benefit) |
$ | (1,166 | ) | $ | 277 | $ | (199 | ) | ||||
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In addition to current income tax benefit 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 $327 million, $433 million and $141 million was included in net IMR deferrals for the years ended December 31, 2021, 2020 and 2019, respectively. In addition, net realized capital gains and losses as reported in the statutory statements of operations included current tax expense (benefit) of $233 million, $(2) million and $173 million for the years ended December 31, 2021, 2020 and 2019, respectively.
The table below shows how the Companys income tax expense or benefit for the years ended December 31, 2021, 2020 and 2019 differs from the amount obtained by applying the statutory rate of 21% to gain from operations before taxes, including net realized capital gains (losses) before IMR and capital gain tax (benefit):
For the years ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
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| ||||||||||
(in millions) | ||||||||||||
Provision computed at statutory rate |
$ | 336 | $ | 580 | $ | 402 | ||||||
Adjustments to the statutory rate: |
||||||||||||
Subsidiary distributions |
(28 | ) | (283 | ) | (73 | ) | ||||||
Tax credits |
(270 | ) | (207 | ) | (172 | ) | ||||||
Amortization of IMR |
(89 | ) | (53 | ) | (28 | ) | ||||||
Dividends received deduction |
(41 | ) | (31 | ) | (33 | ) | ||||||
Employee benefits |
(22 | ) | (22 | ) | (12 | ) | ||||||
Deferred adjustments |
110 | (29 | ) | 183 | ||||||||
Other |
(127 | ) | (50 | ) | (21 | ) | ||||||
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| ||||
Total statutory income tax (benefit) expense |
$ | (131 | ) | $ | (95 | ) | $ | 246 | ||||
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| ||||
Federal income tax (benefit) expense reported on the statutory statements of operations |
$ | (1,166 | ) | $ | 277 | $ | (199 | ) | ||||
Capital gains tax expense, net of IMR transfers |
559 | 431 | 315 | |||||||||
Change in net deferred tax assets |
476 | (803 | ) | 130 | ||||||||
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Total statutory income tax (benefit) expense |
$ | (131 | ) | $ | (95 | ) | $ | 246 | ||||
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During the year, the Company may make payments to or receive refunds from the Internal Revenue Service (IRS) for federal income taxes that are applicable to current or previous tax years. The Company made or received net income tax payments, including subsidiaries, of $295 million, $679 million and $410 million to the IRS during the years ended December 31, 2021, 2020 and 2019, respectively.
NM-51
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Federal income taxes available for recoupment in the case of future tax losses are limited to amounts reported on previous tax returns. Total capital gain taxes paid for tax years 2021, 2020 and 2019 that are available for recoupment are $507 million, $597 million and $477 million, respectively.
Federal income tax returns for 2016 and prior years are closed as to further assessment of tax. In 2021, the Company amended its 2017 return and made certain tax method changes to its 2020 return. These actions resulted in a $984 million income tax benefit on the statutory statement of operations, offset by a $900 million reduction in net deferred tax assets on the statutory statement of changes in surplus, resulting in a net $84 million increase in total surplus for the year ended December 31, 2021. Income taxes payable in the statutory 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 are charged or credited to operations in the year that such determination is made by the company. For the years ended December 31, 2021 and 2020 contingent liabilities were as follows:
For the years ended December 31, |
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2021 | 2020 | |||||||
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(in millions) | ||||||||
Balance at January 1 |
$ | - | $ | 153 | ||||
Additions for tax positions of prior years |
20 | (153 | ) | |||||
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Balance at December 31 |
$ | 20 | $ | - | ||||
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Included in contingent tax liabilities at December 31, 2021 and 2020 were $0 million 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 may affect the effective tax rate in future periods. The Company has $20 million of tax positions for which the ultimate deductibility is not certain.
For the years ended December 31, 2021, 2020 and 2019, the Company recognized $0 million, $(15) million and $(3) million, respectively, of interest-related tax expense.
NM-52
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
The components of net deferred tax assets reported in the statutory statements of financial position at December 31, 2021 and 2020 were as follows:
December 31, | ||||||||||||||||||||
2021 | 2020 | Change | ||||||||||||||||||
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(in millions) | ||||||||||||||||||||
Deferred tax assets: |
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Policy acquisition costs |
$ | 1,142 | $ | 1,016 | $ | 126 | ||||||||||||||
Investments |
239 | 319 | (80 | ) | ||||||||||||||||
Policy benefit liabilities |
1,747 | 1,673 | 74 | |||||||||||||||||
Benefit plan obligations |
625 | 621 | 4 | |||||||||||||||||
Fixed Assets |
| 931 | (931 | ) | ||||||||||||||||
Other
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82
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83
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(1
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)
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Gross deferred tax assets |
3,835 | 4,643 | (808 | ) | ||||||||||||||||
Nonadmitted deferred tax assets
|
- | - | - | |||||||||||||||||
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Gross admitted deferred tax assets
|
|
3,835 |
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4,643 |
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(808 |
) | |||||||||||
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Deferred tax liabilities: |
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Investments |
1,185 | 986 | 199 | |||||||||||||||||
Other |
1,081 | 1,352 | (271 | ) | ||||||||||||||||
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Gross deferred tax liabilities
|
2,266 | 2,338 | (72 | ) | ||||||||||||||||
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Net deferred tax assets |
$ | 1,569 | $ | 2,305 | $ | (736 | ) | |||||||||||||
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The Company exceeded the minimum RBC level of 300%, which is necessary to apply the maximum admissibility thresholds, based on authorized control level RBC computed without net deferred tax assets at December 31, 2021 and 2020.
Significant components of the calculation of net admitted deferred tax assets at December 31, 2021 and 2020 were as follows (in millions):
December 31, 2021 | December 31, 2020 | Change | ||||||||||||||||||||||||||||||||||
|
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Ordinary | Capital | Total | Ordinary | Capital | Total | Ordinary | Capital | Total | ||||||||||||||||||||||||||||
Gross deferred tax assets | $ | 3,596 | $ | 239 | $ | 3,835 | $ | 4,324 | $ | 319 | $ | 4,643 | $ | (728 | ) | $ (80) | $ (808) | |||||||||||||||||||
Statutory valuation allowance adjustment | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
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Adjusted gross deferred tax assets | 3,596 | 239 | 3,835 | 4,324 | 319 | 4,643 | (728 | ) | (80 | ) | (808) | |||||||||||||||||||||||||
Deferred tax assets nonadmitted | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
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Subtotal net admitted deferred tax asset | 3,596 | 239 | 3,835 | 4,324 | 319 | 4,643 | (728 | ) | (80 | ) | (808) | |||||||||||||||||||||||||
Deferred tax liabilities | 1,081 | 1,185 | 2,266 | 1,352 | 986 | 2,338 | (271 | ) | 199 | (72) | ||||||||||||||||||||||||||
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Net admitted deferred tax asset/ (liability) | $ | 2,515 | $ | (946 | ) | $ | 1,569 | $ | 2,972 | $ | (667 | ) | $ | 2,305 | $ | (457 | ) | $ (279) | $ (736) | |||||||||||||||||
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NM-53
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
December 31, 2021 | December 31, 2020 |
|
Change |
| ||||||||||||||||||||||||||||||||
|
|
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Ordinary | Capital | Total | Ordinary | Capital | Total | Ordinary | Capital | Total | ||||||||||||||||||||||||||||
Federal income taxes paid in prior years recoverable through loss carrybacks | $ | - | $ | 96 | $ | 96 | $ | - | $ | 185 | $ | 185 | $ | - | $ | (89 | ) | $ | (89 | ) | ||||||||||||||||
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) | 1,720 | - | 1,720 | 2,599 | - | 2,599 | $ (879 | ) | $ | - | $ | (879 | ) | |||||||||||||||||||||||
Adjusted gross deferred tax assets (excluding the amount of deferred tax assets offset by gross deferred tax liabilities) | 1,876 | 143 | 2,019 | 1,725 | 134 | 1,859 | $ | 151 | $ | 9 | $ | 160 | ||||||||||||||||||||||||
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Total deferred tax assets admitted as the result of application of SSAP No. 101 | $ | 3,596 | $ | 239 | $ | 3,835 | $ | 4,324 | $ | 319 | $ | 4,643 | $ (728) | $ | (80 | ) | $ | (808 | ) | |||||||||||||||||
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a. Adjusted gross deferred tax assets expected to be realized following the balance sheet date | $ | 1,720 | $ | 2,599 | $ | (879 | ) | |||||||||||||||||||||||||||||
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b. Adjusted gross deferred tax assets allowed per limitation threshold | $ | 4,152 | $ | 3,394 | $ | 758 | ||||||||||||||||||||||||||||||
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Ratio percentage used to determine recovery period and threshold limitation amount | 1048% | 920% | ||||||||||||||||||||||||||||||||||
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Amount of adjusted capital and surplus used to determine recovery period and threshold limitation | $ | 27,680 | $ | 22,625 | ||||||||||||||||||||||||||||||||
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All gross deferred tax liabilities have been recognized at December 31, 2021 and 2020. The Company did not employ tax planning strategies in its valuation allowance assessment at either December 31, 2021 and 2020. At December 31, 2021 and 2020, the percentage of net ordinary deferred tax assets admitted as a result of tax planning strategies was 0% and 9%, respectively.
11. | Commitments and Contingencies Commitments |
In the normal course of its investment activities, the Company makes commitments to fund private equity investments, real estate acquisitions, mortgage loans and other investments. These forward commitments aggregated to $9.7 billion at December 31, 2021 and 2020, and were extended at market rates and terms.
Contingencies
The Company is engaged in various legal actions in the normal course of its insurance and investment 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 is probable and the amount of that adverse outcome is reasonably estimable, a loss is recognized and a related liability reported. Legal actions are subject to inherent uncertainties, and future events could change the Companys 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 Companys financial position at December 31, 2021.
NM-54
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Guarantees
In the normal course of business, the Company makes guarantees to third parties on behalf of wholly-owned subsidiaries (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 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 thirteen years at December 31, 2021.
Following is a summary of the guarantees provided by the Company that were outstanding at December 31, 2021 and 2020, including both the maximum potential exposure under the guarantees and the financial statement liability reported based on fair value of the guarantees.
December 31, 2021 | December 31, 2020 | |||||||||||||||||||||||
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 |
$ | 59 | $ | 1 | $ | 59 | $ | 1 | ||||||||||||||||
Guarantees of real estate obligations |
493 | 5 | 476 | 5 | ||||||||||||||||||||
Guarantees issued on behalf of wholly-owned subsidiaries |
89 | - | 106 | - | ||||||||||||||||||||
Guarantees on behalf of field loan support program |
37 | - | - | - | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total guarantees |
$ | 678 | $ | 6 | $ | 641 | $ | 6 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
No material 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.
12. | Related Party Transactions |
The Company has a capital support and guarantee of benefits agreement that requires it to maintain the capital and surplus (as defined) of NLTC at a minimum level based upon a formula applied to NLTCs earned premium and policy benefit reserves, or 150% of its company action level of RBC as prescribed by the NAIC, whichever is lower. In addition, NM guarantees NLTCs policyowners its ability to pay all policy benefits due and owed pursuant to contracts of insurance sold by NLTC during the term of the agreement. This agreement was most recently amended in 2020 to extend the length of the agreement through December 31, 2025 and increase the aggregate capital contribution limit from $200 million to $300 million. The Company contributed capital to NLTC of $15 million for each of the years ended December 31, 2021 and 2020. The Company has contributed a total of $220 million to NLTC through December 31, 2021. The Company reported a payable to NLTC of $59 million at December 31, 2021 and 2020, which is reported in other liabilities in the statutory statements of financial position at each of those dates. Intercompany balances are settled in cash, generally within thirty days of the respective reporting date.
NM-55
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
13. | Surplus Notes |
The following table summarizes the surplus notes issued by the Company and are outstanding at December 31, 2021:
Description |
Issue date | Principal amount |
Statement value |
Interest paid current year |
Cumulative interest paid |
Interest rate |
Maturity date |
|||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||
2010 Notes |
3/26/2010 | $ | 1,224 | $ | 1,224 | $ | 74 | $ | 1,157 | 6.063 | % | 3/30/2040 | ||||||||||||||||
2017 Notes |
9/26/2017 | 1,200 | 1,198 | 46 | 185 | 3.850 | % | 9/30/2047 | ||||||||||||||||||||
2019 Notes |
9/20/2019 | 1,347 | 1,156 | 49 | 99 | 3.625 | % | 9/30/2059 | ||||||||||||||||||||
2021 Notes |
3/22/2021 | 900 | 897 | 24 | 24 | 3.450 | % | 3/30/2051 | ||||||||||||||||||||
Total | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||
$ | 4,671 | $ | 4,475 | $ | 193 | $ | 1,465 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
On March 22, 2021 the Company issued surplus notes (2021 notes) with a principal balance of $900 million, bearing interest at 3.450% and having a maturity date of March 30, 2051. The 2021 notes were issued at an offering price of 99.652%, receiving net proceeds of $897 million.
Each series of notes was distributed pursuant to Rule 144A or Regulation S under the Securities Act of 1933, as amended. Interest on the 2010, 2017, and 2019 notes is payable semi-annually on March 30 and September 30 while interest on the 2021 notes is payable semi-annually on June 30 and December 30. All interest payments are subject to approval by the OCI. SAP requires recognition of interest expense on the notes upon OCI approval of semi-annual interest payments.
The notes are unsecured and subordinated to all present and future indebtedness, policy claims and other creditor claims of the Company and do not repay principal prior to maturity, with principal payment at maturity subject to the prior approval of the OCI. The notes are not redeemable at the option of any note holder but 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 0.20% (2017 and 2021 notes) and 0.25% (2010 and 2019 notes). The entire amount of the 2017, 2019, and 2021 notes are redeemable, at par, in the event of certain defined tax events.
No affiliates of the Company hold any portion of the notes, which are generally held of record at the Depository Trust Company by bank custodians on behalf of investors. No single investor holds 10% or more of the 2017, 2019, or 2021 notes. The largest holder of the 2010 notes is Nippon Life Insurance Company of Japan, which held $250 million in principal amount of notes at each of December 31, 2021 and 2020.
14. | Fair Value of Financial Instruments |
Certain of the Companys assets and liabilities are considered financial instruments as defined by Statement of Statutory Accounting Principles No. 100Revised, Fair Value Measurements (SSAP 100R). The Companys 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).
NM-56
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
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.
For financial instruments included in the scope of SSAP 100R, the statement value and fair value at December 31, 2021 and 2020 were as follows:
December 31, 2021 | ||||||||||||||||||||||||
Quoted prices in | Significant | Significant | Net | |||||||||||||||||||||
active markets | observable | unobservable | Asset | |||||||||||||||||||||
Statement | Fair | for identical assets | inputs | inputs | Value | |||||||||||||||||||
Value | Value | (level 1) | (level 2) | (level 3) | (NAV) | |||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
General account investment assets: |
||||||||||||||||||||||||
Bonds |
$ | 179,121 | $ | 188,261 | $ | 5,500 | $ | 165,145 | $ | 17,616 | $ | - | ||||||||||||
Mortgage loans |
47,844 | 50,089 | - | - | 50,089 | - | ||||||||||||||||||
Common and preferred stocks |
3,749 | 3,751 | 3,062 | 83 | 606 | - | ||||||||||||||||||
Policy loans |
17,208 | 17,208 | - | - | 17,208 | - | ||||||||||||||||||
Derivative assets |
629 | 1,023 | - | 1,023 | - | - | ||||||||||||||||||
Surplus note investments |
197 | 240 | - | 240 | - | - | ||||||||||||||||||
Cash and short-term investments |
3,786 | 3,786 | 987 | 2,799 | - | - | ||||||||||||||||||
Separate account assets |
42,383 | 42,383 | 37,493 | 3,642 | 758 | 490 | ||||||||||||||||||
General account liabilities: |
||||||||||||||||||||||||
Investment-type insurance reserves |
$ | 9,810 | $ | 9,728 | $ | - | $ | - | $ | 9,728 | $ | - | ||||||||||||
Liabilities for repurchase agreements |
1,277 | 1,277 | - | 1,277 | - | - | ||||||||||||||||||
Derivative liabilities |
311 | 195 | - | 195 | - | - | ||||||||||||||||||
Separate account liabilities |
42,383 | 42,383 | 37,493 | 3,642 | 758 | 490 |
NM-57
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
December 31, 2020 | ||||||||||||||||||||||||
Quoted prices in | Significant | Significant | Net | |||||||||||||||||||||
active markets | observable | unobservable | Asset | |||||||||||||||||||||
Statement | Fair | for identical assets | inputs | inputs | Value | |||||||||||||||||||
Value | Value | (level 1) | (level 2) | (level 3) | (NAV) | |||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
General account investment assets: |
||||||||||||||||||||||||
Bonds |
$ | 166,324 | $ | 183,434 | $ | 3,175 | $ | 162,956 | $ | 17,303 | $ | - | ||||||||||||
Mortgage loans |
41,568 | 45,155 | - | - | 45,155 | - | ||||||||||||||||||
Common and preferred stocks |
4,623 | 4,659 | 4,051 | 60 | 548 | - | ||||||||||||||||||
Policy loans |
17,686 | 17,686 | - | - | 17,686 | - | ||||||||||||||||||
Derivative assets |
358 | 571 | - | 571 | - | - | ||||||||||||||||||
Surplus note investments |
161 | 211 | - | 211 | - | - | ||||||||||||||||||
Cash and short-term investments |
3,239 | 3,239 | 614 | 2,625 | - | - | ||||||||||||||||||
Separate account assets |
38,447 | 38,447 | 34,519 | 3,172 | 711 | 45 | ||||||||||||||||||
General account liabilities: |
||||||||||||||||||||||||
Investment-type insurance reserves |
$ | 6,397 | $ | 6,445 | $ | - | $ | - | $ | 6,445 | $ | - | ||||||||||||
Liabilities for repurchase agreements |
1,315 | 1,315 | - | 1,315 | - | - | ||||||||||||||||||
Derivative liabilities |
622 | 500 | - | 500 | - | - | ||||||||||||||||||
Separate account liabilities |
38,447 | 38,447 | 34,519 | 3,172 | 711 | 45 |
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 Companys 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 Companys investments in mortgage loans.
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 primarily based on a sponsor valuation or market comparables approach utilizing unobservable inputs. See Note 3 for more information regarding the Companys investments in common and preferred stocks.
Policy Loans
See Note 2 for information regarding policy loans, for which the Company considers the unpaid principal balance to approximate fair value.
NM-58
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Derivative Instruments
The Companys 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, basis curves, foreign currency spot rates, foreign currency basis curves, option volatilities and credit spreads. Warrants classified as level 3 are generally privately-placed with fair value primarily based on a sponsor valuation or market comparables approach utilizing unobservable inputs. See Note 4 for more information regarding the Companys derivative investments.
Surplus Note Investments
The Company invests in surplus note issuances of other mutual insurance companies. These bond-like instruments 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.
Cash and Short-term Investments
Cash and short-term investments include cash deposit balances, money market mutual funds, short-term commercial paper and other highly-liquid debt instruments, for which the Company considers net asset value or amortized cost to approximate fair value.
Separate Account Assets and Liabilities
See Note 2 and Note 7 for information regarding the Companys separate accounts, for which fair value is primarily based 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 Companys underlying equity in the partnerships, which the Company considers to approximate fair value. Separate account assets for which fair value is determined by a Net Asset Value (NAV) are mutual funds for which the NAV is used as a practical expedient as allowed under SSAP 100R.
General Account Insurance Reserves
The Companys general account insurance liabilities defined as financial instruments under SSAP 100R 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.
Repurchase Agreement Liabilities
See Note 3 for information regarding repurchase agreement activity, for which the Company considers the liability to return collateral to approximate the fair value of collateral originally received.
NM-59
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
Assets and Liabilities Reported at Fair Value
The following tables summarize assets and liabilities measured and reported at fair value in the statutory statements of financial position at December 31, 2021 and 2020.
December 31, 2021 | ||||||||||||||||||||
Quoted prices in | Significant | Significant | Net | |||||||||||||||||
active markets | observable | unobservable | Asset | |||||||||||||||||
for identical assets | inputs | inputs | Value | |||||||||||||||||
(level 1) | (level 2) | (level 3) | (NAV) | Total | ||||||||||||||||
(in millions) | ||||||||||||||||||||
General account: |
||||||||||||||||||||
Bonds |
$ | 199 | $ | 4 | $ | 115 | $ | - | $ | 318 | ||||||||||
Common and preferred stocks |
3,063 | 5 | 606 | - | 3,674 | |||||||||||||||
Money market mutual funds |
848 | - | - | - | 848 | |||||||||||||||
Derivative assets |
- | 216 | - | - | 216 | |||||||||||||||
Derivative liabilities |
- | 24 | - | - | 24 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total general account |
$ | 4,110 | $ | 249 | $ | 721 | $ | - | $ | 5,080 | ||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
| ||||||
Separate accounts: |
||||||||||||||||||||
Mutual fund investments |
$ | 35,694 | $ | - | $ | - | $ | - | $ | 35,694 | ||||||||||
Other benefit plan assets/liabilities |
51 | 26 | 5 | 3 | 85 | |||||||||||||||
Pension and postretirement assets: |
||||||||||||||||||||
Bonds |
459 | 3,462 | 109 | - | 4,030 | |||||||||||||||
Common and preferred stock |
1,179 | 1 | 58 | 487 | 1,725 | |||||||||||||||
Cash and short-term securities |
92 | 147 | - | - | 239 | |||||||||||||||
Other assets/liabilities |
18 | 6 | 586 | - | 610 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Subtotal pension and postretirement assets |
1,748 | 3,616 | 753 | 487 | 6,604 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total separate accounts |
$ | 37,493 | $ | 3,642 | $ | 758 | $ | 490 | $ | 42,383 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 | ||||||||||||||||||||
Quoted prices in | Significant | Significant | Net | |||||||||||||||||
active markets | observable | unobservable | Asset | |||||||||||||||||
for identical assets | inputs | inputs | Value | |||||||||||||||||
(level 1) | (level 2) | (level 3) | (NAV) | Total | ||||||||||||||||
(in millions) | ||||||||||||||||||||
General account: |
||||||||||||||||||||
Bonds |
$ | 401 | $ | 30 | $ | 90 | $ | - | $ | 521 | ||||||||||
Common and preferred stocks |
4,051 | - | 390 | - | 4,441 | |||||||||||||||
Money market mutual funds |
309 | - | - | - | 309 | |||||||||||||||
Derivative assets |
- | 98 | - | - | 98 | |||||||||||||||
Derivative liabilities |
- | 23 | - | - | 23 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total general account |
$ | 4,761 | $ | 151 | $ | 480 | $ | - | $ | 5,392 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Separate accounts: |
||||||||||||||||||||
Mutual fund investments |
$ | 32,149 | $ | - | $ | - | $ | - | $ | 32,149 | ||||||||||
Other benefit plan assets/liabilities |
21 | 20 | 4 | - | 45 | |||||||||||||||
Pension and postretirement assets: |
||||||||||||||||||||
Bonds |
341 | 3,094 | 118 | - | 3,553 | |||||||||||||||
Common and preferred stock |
1,768 | 1 | 47 | 45 | 1,861 | |||||||||||||||
Cash and short-term securities |
50 | 52 | - | - | 102 | |||||||||||||||
Other assets/liabilities |
190 | 5 | 542 | - | 737 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Subtotal pension and postretirement assets |
2,349 | 3,152 | 707 | 45 | 6,253 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total separate accounts |
$ | 34,519 | $ | 3,172 | $ | 711 | $ | 45 | $ | 38,447 | ||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
NM-60
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
During 2021, transfers into Level 3 are the result of observable market data, such as public ratings, no longer being available and transfers out of Level 3 are the result of observable market data, including 3rd party vendor prices and public ratings, being available and utilized in the determination of the fair market value of the securities. There were no material asset transfers into or out of Level 3 during the year ended December 31, 2020.
The following tables summarize the changes in fair value of Level 3 financial instruments for the years ended December 31, 2021 and 2020.
For the year ended December 31, 2021 | General account common and preferred stock |
General account bonds |
Derivative assets |
Separate account assets | ||||||||||||
(in millions) | ||||||||||||||||
Fair value, beginning of period |
$ | 390 | $ | 90 | $ | - | $ | 711 | ||||||||
Realized gains/(losses) |
52 | (26) | - | 98 | ||||||||||||
Unrealized gains/(losses) |
49 | 10 | - | 123 | ||||||||||||
Issuances |
- | - | - | - | ||||||||||||
Purchases |
106 | 7 | - | 158 | ||||||||||||
Sales |
(101) | (34) | - | (336) | ||||||||||||
Settlements |
- | - | - | - | ||||||||||||
Net discount/premium |
4 | - | - | 1 | ||||||||||||
Transfers into level 3 |
106 | 68 | - | 3 | ||||||||||||
Transfers out of level 3 |
- | - | - | - | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Fair value, end of period |
$ | 606 | $ | 115 | $ | - | $ | 758 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2020 | General account common and preferred stock |
General account bonds |
Derivative assets |
Separate account assets | ||||||||||||
(in millions) | ||||||||||||||||
Fair value, beginning of period |
$ | 458 | $ | 5 | $ | - | $ | 617 | ||||||||
Realized gains/(losses) |
14 | (5) | - | 47 | ||||||||||||
Unrealized gains/(losses) |
(21) | (25) | - | 41 | ||||||||||||
Issuances |
- | - | - | - | ||||||||||||
Purchases |
58 | 5 | - | 137 | ||||||||||||
Sales |
(57) | - | - | (134) | ||||||||||||
Settlements |
- | - | - | - | ||||||||||||
Net discount/premium |
8 | - | - | 2 | ||||||||||||
Transfers into level 3 |
- | 110 | - | 7 | ||||||||||||
Transfers out of level 3 |
(70) | - | - | (6) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Fair value, end of period |
$ | 390 | $ | 90 | $ | - | $ | 711 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The fair values of Level 3 financial instruments are sensitive to changes in significant unobservable inputs. 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
NM-61
The Northwestern Mutual Life Insurance Company
Notes to the Statutory Financial Statements
December 31, 2021, 2020 and 2019
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 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 and derivatives, are primarily valued using a private equity sponsor valuation or market comparables approach. Both approaches rely on the use of multiples that are based on industry-specific comparable companies. Multiples are derived from the relationship of an entitys fair value to its book value or earnings before interest, taxes, depreciation and amortization (EBITDA). The use of EBITDA normalizes for company-specific differences in capital structure, taxation and fixed asset accounting. An increase in the multiple would result in an increase in the fair value of the investment. The opposite impact would occur if the multiple decreased.
NM-62
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 |
|
(a)(2) |
Resolution of Board of Trustees of The Northwestern
Mutual Life Insurance Company establishing the Account |
|
(b) |
Not Applicable |
|
(c) |
Distribution Agreement Between The Northwestern Life
Insurance Company and Northwestern Mutual Investment
Services, LLC, dated May 1, 2006 |
|
(d)(a) |
Form of Policies –
(i) Waiver of Premium Benefit
(ii) Additional Purchase Benefit |
Exhibits A(5)(a), A(5)(b), A(5)(c), and A(5)(d) to Form
S-6 Post-Effective Amendment No. 7 for Northwestern
Mutual Variable Life Account, File No. 33-89188, filed
May 31, 2001 |
(d)(b) |
Form of Policies – (Referenced to Exhibits 1.A.(5)(a), 1.A.(5)(b), 1.A.(13)(i), and 1.A.(13)(ii) filed with Form S-6 Registration Statement for Northwestern Mutual Variable Life Account, File No. 33-89188 on February 8, 1995)
(1)Variable Life Insurance Policy, QQ.VCL (sex distinct) (2)Variable Life Insurance Policy, QQ.VCL, including
an Amendment to Variable Whole Life with
Additional Protection. (Sex neutral: for employers)
(3)Forms of Optional Riders to Variable Whole Life Insurance Policy QQ.VCL: (i) Waiver of Premium Benefit (ii) Additional Purchase Benefit |
|
(e) |
Form of Life Insurance Application 90-1 L.I. (0198)
WISCONSIN and Application Supplement (1003) |
|
(f)(1) |
Restated Articles of Incorporation of The Northwestern
Mutual Life Insurance Company (adopted July 26, 1972)
|
|
(f)(2) |
Amendment Amended By-Laws of The Northwestern
Mutual Life Insurance Company dated December 4, 2002
|
|
(g)(1) |
Reinsurance Agreement dated December 19, 2013
between RGA Reinsurance Company and The
Northwestern Mutual Life Insurance Company |
|
(g)(2) |
Reinsurance Agreement dated December 19, 2013
between Munich American Reassurance Company and
The Northwestern Mutual Life Insurance Company |
|
(g)(3) |
Reinsurance Agreement dated December 22, 2015
between Munich American Reassurance Company and
The Northwestern Mutual Life Insurance Company |
|
(g)(4) |
Reinsurance Agreement dated November 7, 2013 between
Swiss Re Life & Health American Inc. and The
Northwestern Mutual Life Insurance Company |
Exhibit |
Description |
Filed Herewith/Incorporated Herein By Reference
To |
(g)(5) |
Reinsurance Agreement dated December 22, 2015
between Swiss Re Life & Health American Inc. and The
Northwestern Mutual Life Insurance Company |
|
(g)(6) |
Reinsurance Agreement dated December 23, 2013
between General Re Life Corporation and The
Northwestern Mutual Life Insurance Company |
|
(g)(7) |
Reinsurance Agreement dated December 22, 2013
between Hannover Life Reassurance Company of
American and The Northwestern Mutual Life Insurance
Company |
|
(g)(8) |
Reinsurance Agreement dated December 2, 2013 between
SCOR Global Life USA Reinsurance Company and The
Northwestern Mutual Life Insurance Company |
|
(h)(a)(1) |
Participation Agreement dated March 16, 1999 Among
Russell Insurance Funds, Russell Fund Distributors, Inc.
and The Northwestern Mutual Life Insurance Company |
|
(h)(a)(2) |
Amendment No. 1 dated December 17, 2020 to the
Participation Agreement dated March 16, 1999 Among
Russell Insurance Funds, Russell Fund Distributors, Inc.
and The Northwestern Mutual Life Insurance Company |
|
(h)(b)(1) |
Participation Agreement dated May 1, 2003 among
Variable Insurance Products Funds, Fidelity Distributors
Corporation and The Northwestern Mutual Life Insurance
Company |
|
(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 |
|
(h)(b)(3) |
Amendment No. 2 dated February 9, 2021 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 |
|
(h)(c)(1) |
Participation Agreement dated April 30, 2007 among
Neuberger Berman Advisers Management Trust,
Neuberger Berman Management Inc., and The
Northwestern Mutual Life Insurance Company |
|
(h)(c)(2) |
Amendment to Participation Agreement dated
January 4, 2021 among Neuberger Berman Advisers
Management Trust, Neuberger Berman BD LLC, and The
Northwestern Mutual Life Insurance Company |
|
(h)(d)(1) |
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 |
|
(h)(d)(2) |
Amendment to Participation Agreement dated
January 4, 2021 among Credit Suisse Trust, Credit Suisse
Asset Management, LLC, Credit Suisse Securities (USA)
LLC, and The Northwestern Mutual Life Insurance
Company |
|
(h)(e)(1) |
Administrative Services Agreement dated April 23, 2007
between The Northwestern Mutual Life Insurance
Company and Frank Russell Company |
|
(h)(f)(1) |
Service Agreement dated May 1, 2003 between Fidelity
Investments Institutional Operations Company, Inc. and
The Northwestern Mutual Life Insurance Company |
Exhibit |
Description |
Filed Herewith/Incorporated Herein By Reference
To |
(h)(f)(2) |
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 |
|
(h)(h)(1) |
Administrative Services Agreement dated
October 1, 2013 between Credit Suisse Securities (USA)
LLC and The Northwestern Mutual Life Company |
|
(i) |
Not Applicable |
|
(j)(a) |
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 |
|
(j)(b) |
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 |
|
(j)(c) |
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 |
|
(j)(d) |
Shareholder Information Agreement dated April 16, 2007
among Northwestern Mutual Series Fund, Inc. and The
Northwestern Mutual Life Insurance Company |
|
(j)(e) |
Shareholder Information Agreement dated
October 16, 2007 among Neuberger Berman Management
Inc. and The Northwestern Mutual Life Insurance
Company |
|
(j)(f) |
Shareholder Information Agreement dated
September 27, 2013 among Credit Suisse Securities
(USA) LLC and The Northwestern Mutual Life Insurance
Company |
|
(j)(g) |
Power of Attorney |
|
(j)(h) |
NMIS/NM Annuity Operations Admin Agreement |
|
(k) |
Opinion and Consent |
|
(l) |
Not Applicable |
|
(m) |
Not Applicable |
|
(n) |
Consent of PricewaterhouseCoopers LLP dated |
|
(o) |
Not Applicable |
|
(p) |
Not Applicable |
|
(q) |
Memorandum describing Issuance, Transfer and
Redemption Procedures |
Name |
Address |
Nicholas E. Brathwaite |
Founding Managing Partner Celesta Capital One California Street, Ste 1750 San Francisco, CA 94111 |
Name |
Address |
|
|
P. Russell Hardin |
President Robert W. Woodruff Foundation 191 Peachtree Street NE, Suite 3540 Atlanta, GA 30303 |
|
|
David P. Hollander |
Retired Principal, Global Insurance Sector Leader Ernst & Young, LLP 180 Golf House Road Haverford, PA 19041 |
|
|
Dale E. Jones |
Senior Advisor Diversified Search 1200 New Hampshire Avenue, NW Suite 820 Washington, DC 20036 |
|
|
Randolph W. Melville |
Retired Senior Vice President & General Manager West Division Frito-Lay North America 7901 Windrose Avenue, Unit 604 Plano, TX 75024 |
|
|
Jaime Montemayor |
Chief Digital and Technology Officer General Mills One General Mills Boulevard Minneapolis, MN 55426 |
|
|
Timothy H. Murphy |
Chief Administrative Officer Mastercard 2000 Purchase Street Purchase, NY 10577 |
|
|
Andrew N. Nunemaker |
Chief Executive Officer Groupware Technologies 3230 E. Kenwood Blvd Milwaukee, WI 53211 |
|
|
Anne M. Paradis |
Retired CEO MicroTek, Inc. 72 Reservation Road Sunderland, MA 01375 |
|
|
John E. Schlifske |
Chairman, President & CEO Northwestern Mutual 720 E. Wisconsin Avenue Milwaukee, WI 53202 |
|
|
Aarti S. Shah |
Retired Senior Vice President, Chief Information & Digital Officer Eli Lilly 13360 Sioux Trail Carmel, IN 46033 |
|
|
Name |
Address |
Mary Ellen Stanek |
Managing Director & Director of Asset Management Baird Advisors Robert W. Baird & Co. President-Baird Funds Inc. 777 E. Wisconsin Avenue 25th Floor Milwaukee, WI 53202 |
|
|
Ralph A. Weber |
Independent Arbitrator, Mediator & Advisor Weber Advising, LLC 8118 Brookside Place Wauwatosa, WI 53213 |
|
|
Benjamin F. Wilson |
Retired Chairman Beveridge & Diamond, P.C. 7825 Orchid Street, NW Washington, DC 20012 |
|
|
Juan C. Zarate |
Global Co-Managing Partner & Chief Strategy Officer K2 Integrity 1050 Connecticut Avenue, NW, Suite 680 Washington, DC 20036 |
John E. Schlifske |
Chairman, President & Chief Executive Officer |
Souheil Badran |
Executive Vice President & Chief Operating Officer |
Michael G. Carter |
Executive Vice President, Chief Financial Officer & Chief Risk Officer |
Timothy J. Gerend |
Executive Vice President & Chief Distribution Officer |
Aditi J. Gokhale |
Executive Vice President, Chief Strategy Officer and Head of Retail and Institutional Investments |
John M. Grogan |
Executive Vice President & Chief Insurance Officer |
Ronald P. Joelson |
Executive Vice President |
Todd M. Jones |
Vice President & Controller |
Raymond J. Manista |
Executive Vice President-Chief Legal Officer, Chief Compliance Officer & Secretary |
Christian W. Mitchell |
Executive Vice President & Chief Customer Officer |
Don J. Robertson |
Executive Vice President & Chief Human Resources Officer |
Neal Sample |
Executive Vice President & Chief Information Officer |
NORTHWESTERN MUTUAL CORPORATE STRUCTURE(1) (as of April 1, 2022) | ||
Legal Entity Name |
Domestic Jurisdiction |
Owner % |
Operating Subsidiaries |
|
|
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 |
|
|
1838938 Alberta Ltd.(2) |
Canada |
100.00 |
1890 Maple, LLC(2) |
Delaware |
100.00 |
3412 Exchange, LLC(2) |
Delaware |
100.00 |
45East11(2) |
Cayman Islands |
100.00 |
777 North Van Buren Apartments, LLC(2) |
Delaware |
100.00 |
777 North Van Buren Condominium Association, Inc.(2) |
Wisconsin |
100.00 |
777 North Van Buren Parking, LLC(2) |
Delaware |
100.00 |
777 North Van Buren Retail, LLC(2) |
Delaware |
100.00 |
AFE Brentwood Park, LLC(2) |
Delaware |
100.00 |
Amber, LLC(2) |
Delaware |
100.00 |
Artisan Garden Apartments, LLC(2) |
Delaware |
100.00 |
Baraboo, Inc.(2) |
Delaware |
100.00 |
Bayridge, LLC(2) |
Delaware |
100.00 |
BCC Cancer Venture, LP(2) |
Delaware |
100.00 |
Bishop Square, LLC(2) |
Delaware |
100.00 |
Bradford II SPE, LLC(2) |
Delaware |
100.00 |
Bradford Master Association Inc.(2) |
North Carolina |
100.00 |
Brandywine Distribution, LLC (2) |
Delaware |
100.00 |
Burgundy, LLC(2) |
Delaware |
100.00 |
Cedarstone, LLC(2) |
Delaware |
100.00 |
Chateau, LLC(2) |
Delaware |
100.00 |
Chelsea Ventures, LLC(2) |
Maryland |
100.00 |
C – Land Fund, LLC(2) |
Delaware |
100.00 |
Coral, Inc.(2) |
Delaware |
100.00 |
Cortona Holdings, LLC(2) |
Delaware |
100.00 |
Cream City Venture Capital, LLC(2) |
Delaware |
100.00 |
Crown Farm Partners, LLC(2) |
Maryland |
100.00 |
Dortmund, LLC(2) |
Delaware |
100.00 |
Ellington Residential, LLC(2) |
Maryland |
100.00 |
Fairfield Potomac Club, LLC(2) |
Delaware |
100.00 |
FB #2, LLC(2) |
Maryland |
100.00 |
FES, LLC(2) |
Delaware |
100.00 |
GRO, LLC(2) |
Delaware |
100.00 |
GRO-SUB, LLC(2) |
Delaware |
100.00 |
Hamptons PBG, LLC(2) |
Delaware |
100.00 |
Hazel, Inc.(2) |
Delaware |
100.00 |
Higgins, Inc.(2) |
Delaware |
100.00 |
Hobby, Inc.(2) |
Delaware |
100.00 |
Hollenberg 1, Inc.(2) |
Delaware |
100.00 |
Kristiana International Sales, Inc.(2) |
U.S. Virgin Islands |
100.00 |
Logan, Inc.(2) |
Delaware |
100.00 |
Los Alamitos Corporate Center Joint Venture, LLC(2) |
California |
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 |
Model Portfolios, LLC(2) |
Delaware |
100.00 |
NORTHWESTERN MUTUAL CORPORATE STRUCTURE(1) (as of April 1, 2022) | ||
Legal Entity Name |
Domestic Jurisdiction |
Owner % |
MPC Park 27 Industrial, LLC(2) |
Florida |
100.00 |
Network Office Cashiership, 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 Career Distribution Holdings, LLC(2) |
Delaware |
100.00 |
NM DFW Lewisville, LLC(2) |
Delaware |
100.00 |
NM Gen, LLC(2) |
Delaware |
100.00 |
NM GP Holdings, LLC(2) |
Delaware |
100.00 |
NM Green, LLC(2) |
Delaware |
100.00 |
NM GSB, LLC(2) |
New York |
100.00 |
NM Harrisburg, Inc.(2) |
Pennsylvania |
100.00 |
NM Imperial, LLC(2) |
Delaware |
100.00 |
NM Investment Holdings, LLC.(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 Pigeon Creek Holdings, Inc. (2) |
Canada |
100.00 |
NM Pioneer, LLC(2) |
Delaware |
100.00 |
NM QOZ Fund, LLC(2) |
Delaware |
100.00 |
NM QOZ Fund II, LLC(2) |
Delaware |
100.00 |
NM QOZ Fund III, LLC(2) |
Delaware |
100.00 |
NM QOZ Fund IV, 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 |
NM-808 West LLC(2) |
Delaware |
100.00 |
NMC JCAF VI CARRY LP(2) |
Delaware |
100.00 |
NMC V Equity Fund, LP(2) |
Delaware |
100.00 |
NMC V GP, LLC(2) |
Delaware |
100.00 |
NMC V Mezz Fund, LP(2) |
Delaware |
100.00 |
NMC VI Equity Fund, LP(2) |
Delaware |
100.00 |
NMC VI GP, LLC(2) |
Delaware |
100.00 |
NM-Hemlock, LLC(2) |
Delaware |
100.00 |
NM-Jasper, Inc. (2) |
Delaware |
100.00 |
NM-MNO, LLC(2) |
Delaware |
100.00 |
NM-Morristown, LLC(2) |
Delaware |
100.00 |
NM-Muse, LLCL(2) |
Delaware |
100.00 |
NM-Port Royal, LLC(2) |
Delaware |
100.00 |
NM-RESA, LLC(2) |
Delaware |
100.00 |
NM-Pulse, LLC(2) |
Delaware |
100.00 |
NM-SAS, LLC(2) |
Delaware |
100.00 |
NM-Skye, LLC(2) |
Delaware |
100.00 |
NM-Target Distribution Center 1, LLC(2) |
Delaware |
100.00 |
NM-Target Distribution Center 2, LLC(2) |
Delaware |
100.00 |
NM-Target Distribution Center Property Owner, LLC(2) |
Delaware |
100.00 |
NM-Target.com Distribution Center LLC(2) |
Delaware |
100.00 |
NM-West Hartford, LLC(2) |
Delaware |
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 |
NMLSP1, LLC(2) |
Delaware |
100.00 |
NMPE I GP, LLC(2) |
Delaware |
100.00 |
NORTHWESTERN MUTUAL CORPORATE STRUCTURE(1) (as of April 1, 2022) | ||
Legal Entity Name |
Domestic Jurisdiction |
Owner % |
NMRM Holdings, LLC(2) |
Delaware |
100.00 |
Northwestern Broadway Plaza, LLC(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 IV, 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 Mezzanine Fund IV, 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 Capital Strategic Equity Fund IV, LP(2) |
Delaware |
100.00 |
Northwestern Mutual MU TLD Registry, LLC(2) |
Delaware |
100.00 |
Northwestern Mutual Private Equity Co-Investment Fund I, LP(2) |
Delaware |
100.00 |
Northwestern Mutual Registry, LLC(2) |
Delaware |
100.00 |
Northwestern Mutual Series Fund, Inc.(3) |
Maryland |
100.00 |
NorthWoods Phase I, LLC(2) |
Delaware |
100.00 |
NorthWoods Phase II, LLC(2) |
Delaware |
100.00 |
NorthWoods Phase III, LLC(2) |
Delaware |
100.00 |
NWM ZOM GP, LLC(2) |
Delaware |
100.00 |
NYLV, LLC(2) |
Delaware |
100.00 |
Osprey Links Golf Course, LLC(2) |
Delaware |
100.00 |
Osprey Links, LLC(2) |
Delaware |
100.00 |
Plantation Oaks MHC-NM, LLC(2) |
Delaware |
100.00 |
QOZ Holding Company, LLC(2) |
Delaware |
100.00 |
RE Corp.(2) |
Delaware |
100.00 |
Regency NM Johns Creek, LLC(2) |
Delaware |
100.00 |
Regina International Sales, Inc.(2) |
U.S. Virgin Islands |
100.00 |
Ruhl Financial Group, LLC(2) |
Delaware |
100.00 |
Russet, Inc.(2) |
Delaware |
100.00 |
Scotty, LLC(2) |
Delaware |
100.00 |
Seattle Network Office, LLC(2) |
Delaware |
100.00 |
Seazen GP, LLC(2) |
Delaware |
100.00 |
Seazen Rocky Point, LP(2) |
Delaware |
100.00 |
Stadium and Arena Management, Inc.(2) |
Delaware |
100.00 |
Tapestry Condominium Owners Association, Inc.(2) |
Tennessee |
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(2) |
Delaware |
100.00 |
Walden OC, LLC(2) |
Delaware |
100.00 |
White Oaks, Inc.(2) |
Delaware |
100.00 |
Wysh Financial Services, LLC(2) |
Delaware |
100.00 |
Wysh Insurance Agency, LLC(2) |
Delaware |
100.00 |
Wysh Life and Health Insurance Company, LLC(2) |
Delaware |
100.00 |
Name |
Position |
Lori M. Brissette |
Vice President, Insurance and Annuity Client Services |
Laura Deaner |
Chief Information Security Officer |
Quentin Doll |
Vice President, Risk Product Line Lead |
Bradley L. Eull |
Secretary |
Don P. Gehrke |
Vice President, Retail Investment Operations, Chief Operations Officer |
Timothy J. Gerend |
Senior Vice President, Career Distribution |
Julie K. Flaa |
Vice President, Distribution Planning |
Betsy Heisler |
Vice President, Risk Products |
Tom Hendricks |
Vice President, IPS Qualified Programs |
Dean Hopp |
Vice President, IPS Investment Programs |
Madhusudan Kotian |
Chief Technology Officer |
Abim Kolawole |
Vice President, Promoting and Integration |
Susan Limbach |
Assistant Treasurer |
Mark McNulty |
NMIS Anti-Money Laundering Officer |
Alyssa Meyer |
Senior Director IPS Oversight and Controls |
Blaire Puls |
Variable Investment Product Consultant |
John C. Roberts |
Vice President, Distribution Performance |
Sarah R. Schneider |
Vice President, New Business |
Justin Stipan |
Senior Director Training and Implementation |
Rebecca Villegas |
Vice President, NMIS Compliance, Chief Compliance Officer |
Jarod Ward |
Treasurer |
Becki Williams |
Vice President, Advanced Markets |
Kamilah Williams-Kemp |
Vice President, New Business |
Terry R. Young |
Assistant Secretary |
By |
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY (Depositor) |
By: |
/s/ JOHN E. SCHLIFSKE |
|
John E. Schlifske, Chairman and Chief Executive Officer |
By: |
/s/ JOHN E. SCHLIFSKE |
|
John E. Schlifske, Chairman and Chief Executive Officer |
Signature |
Title |
/s/ JOHN E. SCHLIFSKE |
Chairman, Trustee and Chief Executive Officer; Principal Executive Officer |
John E. Schlifske | |
/s/ MICHAEL G. CARTER |
Executive Vice President and Chief Financial Officer and Principal Financial Officer |
Michael G. Carter | |
/s/ TODD JONES |
Vice President and Controller; Principal Accounting Officer |
Todd Jones |
Signature |
Title |
/s/ Nicholas E. Brathwaite* |
Trustee |
Nicholas E. Brathwaite |
|
/s/ P. Russell Hardin* |
Trustee |
P. Russell Hardin |
|
/s/ David P. Hollander* |
Trustee |
David P. Hollander |
|
/s/ Dale E. Jones* |
Trustee |
Dale E. Jones |
|
/s/ Randolph W. Melville* |
Trustee |
Randolph W. Melville |
|
/s/ Jaime Montemayor* |
Trustee |
Jaime Montemayor |
|
/s/ Timothy H. Murphy* |
Trustee |
Timothy H. Murphy |
|
/s/ Andrew N. Nunemaker* |
Trustee |
Andrew N. Nunemaker |
|
/s/ Anne M. Paradis* |
Trustee |
Anne M. Paradis |
|
/s/ John E. Schlifske* |
Trustee |
John E. Schlifske |
|
/s/ Aarti Shah* |
Trustee |
Aarti Shah |
|
/s/ Mary Ellen Stanek* |
Trustee |
Mary Ellen Stanek |
|
/s/ Ralph A. Weber* |
Trustee |
Ralph A. Weber |
|
/s/ Benjamin F. Wilson* |
Trustee |
Benjamin F. Wilson |
|
/s/ Juan C. Zarate* |
Trustee |
Juan C. Zarate |
|
*By: |
/s/ JOHN E. SCHLIFSKE |
|
John E. Schlifske, Attorney in fact, pursuant to Power of Attorney. |
Exhibit |
Description |
|
(k) |
Opinion and Consent of Chris K. Gawart, Esq. |
Filed herewith |
(n) |
Consent of PricewaterhouseCoopers LLP |
Filed herewith |
(q) |
Memorandum describing Issuance, Transfer and
Redemption Procedures |
Filed herewith |
Exhibit Q
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
(Variable CompLife®)
Description of Issuance, Transfer and Redemption Procedures for Variable Life Insurance Contracts Pursuant to Rule 6e-2(b)(12)(ii).
INTRODUCTION
1. Rule 6e-2(b)(12) under the Investment Company Act provides exemption from Sections 22(d), 22(e) and 27(c)(1) of the Act and Rule 22c-1 thereunder for variable life insurance policies which meet the conditions of the Rule. (Rule 6e-2 has not been amended to reflect the addition of Section 27(i).)
2. Rule 6c-3 provides exemptions for a registered variable life insurance separate account which registers under Section 8 of the Act, except for exemption from the registration requirements, under the same terms and conditions as a separate account claiming exemption under Rule 6e-2. Therefore a separate account that registers as contemplated by Rule 6c-3 may be required to include the materials referred to in Rule 6e-2(b)(12)(ii) as an exhibit to its registration statement filed under the Act. The purpose of this memorandum is to fulfill this requirement with respect to the variable life insurance policies (Policies) previously offered in connection with Northwestern Mutual Variable Life Account (Separate Account), a separate investment account of The Northwestern Mutual Life Insurance Company (Northwestern Mutual).
3. Assets held in the Separate Account consist entirely of interest in shares of various series (each a Portfolio, together the Portfolios) of the Northwestern Mutual Series Fund, Inc., the Russell Investment Funds (including series comprising the Russell Life Points® Variable Target Portfolio Series), the Fidelity® VIP Mid Cap Portfolio and Fidelity® VIP Contrafund® Portfolio, each a series of Fidelity Variable Insurance Products III and Fidelity
Variable Insurance Products II, respectively, the Neuberger Berman Advisers Management Trust Socially Responsive Portfolio, and the Credit Suisse Trust Commodity Return Strategy Portfolio, as well as any interest in shares of any other fund Northwestern Mutual may make available from time to time (collectively, the Funds). Shares of each series are valued daily as of the close of trading on the NYSE.
The defined terms used herein are the same as the defined terms in the Policy or prospectus, unless otherwise defined herein.
RULE 6e-2(b)(12)(ii)
4. Rule 6e-2(b)(12)(ii) provides exemptions from the sections and rule cited above to the extent necessary for compliance with . . . Rule 6e-2 or with insurance laws and regulations and established administrative procedures of the life insurer with respect to issuance, transfer and redemption procedures for variable life insurance contracts funded by the separate account including, but not limited to, premium rate structure and premium processing, insurance underwriting standards, and the particular benefit afforded by the contract . . . . The Rule thus recognizes that the established procedures of the insurance company itself, founded on the requirements of state insurance law, have a principal role in defining the requirements which apply for variable life insurance offered by the same company.
ISSUANCE PROCEDURES
A. Premium Rate Structure and Insurance Underwriting Standards
5. Premiums for the Policies, like premiums for Northwestern Mutuals established series of conventional, fixed benefit life insurance policies, will depend on the age, sex and insurance risk classification of the proposed insured, as well as the amount of insurance being purchased. Thus the price of the insurance will differ, reflecting established insurance procedures and state law, in order to fairly take into account the differences in risks. The premiums for a Policy will be set forth in the Policy itself. Premiums for Policies at illustrative
2
ages and amounts are included in the prospectus. The prospectus illustrations, like those in the prospectuses for variable life insurance policies offered by Northwestern Mutuals competitors, are based on premium rates for the best risk classification of nonsmokers, which Northwestern Mutual refers to as Premier NT and Preferred NT.
6. For the best risk classification of nonsmokers (Premier NT and Preferred NT) and the best risk classifications of smokers (Premier T and Preferred T), premiums are based on the 1980 Commissioners Standard Ordinary Smoker and Nonsmoker Mortality Tables. For other risk classifications, premiums are based on the 1980 Commissioners Standard Ordinary Mortality Table. The 1980 CSO Tables are used notwithstanding the reference to the 1958 Commissioners Standard Ordinary Mortality Table in the definition of sales load in Rule 6e-2(c)(4). Use of 1980 CSO Tables is required by state law in Wisconsin, Northwestern Mutuals domiciliary state, and in other states. The cost of insurance is lower under the 1980 CSO Tables reflecting improvements in longevity since the 1958 CSO Table was developed. Use of the 1980 CSO Table is permitted for contracts filed under Rule 6e-3(T).
7. As a mutual life insurance company organized in Wisconsin, Northwestern Mutual is also required to offer its insurance contracts as participating policies which share equitably in Northwestern Mutuals divisible surplus. The Policies accordingly have been designed on a participating basis and may pay dividends. Dividends provide the mechanism whereby the insurance companys policyholders share in the companys experience. Since the pricing assumptions which underlie life insurance policies can be quite conservative, actual experience as it emerges is often more favorable than what was assumed. The greater part of dividends paid under Northwestern Mutuals fixed benefit policies arises from investment rates of return which are greater than the assumed rates of 2% to 5.5% on the policies presently outstanding. This investment aspect of dividends does not relate to the Policies because the design of a variable life insurance policy provides a direct mechanism for reflection of investment results. The other factors for dividends, including the dividends for fixed benefit policies, are the mortality and expense results. While these provide less than one-half of the dividend amounts for fixed benefit policies, they will be the entire source of the dividends paid on the Policies.
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8. Notwithstanding the documented differences between male and female mortality rates, a 1983 decision of the U.S. Supreme Court1 has created legal liability issues for employers who purchase, or are otherwise involved in the purchases of, insurance products which are priced so as to reflect these differences. Similarly, the laws of individual states (currently only Montana) require that policies offered there use a sex-neutral pricing basis. The Policies will accordingly be offered on a sex-neutral pricing basis for use as required in such situations.
B. Procedures for Placing a Policy in Effect
9. Northwestern Mutual no longer issues the Policy.
C. Premium Processing for Existing Policies
10. The Policies are structured as annual premium contracts, even though semiannual, quarterly and monthly premium frequencies will be available. The net annual premium, after the deductions described in the prospectus, will be placed in the Separate Account on the Policy anniversary each year. The Policy anniversary will be the anniversary of the Policy Date. The amount of any dividend will be paid annually as of the Policy anniversary, and placed in the Account on that date, unless a Policy Owner has elected to use the dividend other than to either increase Policy Value or purchase variable paid-up additional insurance.
11. Because the net annual premium is placed in the Separate Account on each Policy anniversary, regardless of the premium frequency elected and regardless of the timeliness of premium payments, so long as the Policy does not lapse, the actual date on which a scheduled premium is received will not affect the Policys investment experience. Northwestern Mutual will transfer the net annual premium amount from the General Account to the Separate Account on each Policy anniversary. Receipt of a scheduled premium by
1 Arizona Governing Committee, Etc. v. Norris, 103 S. Ct. 3492 (1983).
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Northwestern Mutual represents a transaction between a Policy Owner and the General Account.
12. Unscheduled additional premiums may be paid at any time prior to the Policy anniversary nearest to the insureds 85th birthday, subject to our administrative practices, which may include evidence of insurability and Modified Endowment Contract (MEC) review. Any unscheduled premiums, less the deduction described in the prospectus, will be placed in the Separate Account as of the date received in good order by Northwestern Mutual at the Home Office or a Network Office if received before the close of trading on the NYSE that day. If received on or after the close of trading, premiums will be placed in the Separate Account on the next regular trading day.
13. Transactions between the Separate Account and the General Account will be effected as of the dates determined in accordance with the terms of the Policy but the transactions will not in all cases be physically processed on those dates. For example, as described below, the death of an insured will mark the date on which the Policy ceases to participate in the Separate Account, with interest being paid on Policy proceeds from that date until the Policy is settled, but several days may elapse before Northwestern Mutual receives notification. Because of the timing discrepancies the total assets of the Separate Account will not always exactly match the sum of the interests in the Separate Account represented by all of the Policies outstanding. An accounting routine has been established to reconcile these amounts at least once each year, as of December 31, and the amount of assets in the Separate Account will be adjusted as required.
14. Premiums paid more frequently than annually are increased to (1) reflect the time value of money at 8% interest and (2) cover the administrative costs to process additional payments. In some instances Northwestern Mutual may hold Premium amounts under established procedures if transaction instructions are not in good order in order to ascertain Policy Owner instructions or process the transaction in good order, which may include MEC review. Policy Owner may include an authorized representative of a Policy Owner, if allowable under applicable law.
15. Northwestern Mutual will monitor Policies and will attempt to notify a Policy Owner on a timely basis if the Policy Owners Policy is in jeopardy of becoming a MEC under the Internal Revenue Code. Depending on the instructions received, excess Premium may be reversed from the Policy and returned with interest within 60 days after the end of the Policy year in which they are paid. Excess payments the Policy Owner wants applied are applied to the Policy when instructions are received in good order. Policy Owner may include an authorized representative of a Policy Owner, if allowable under applicable law.
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TRANSFER PROCEDURES
A. Transfers
16. The Separate Account currently consists of 40 Divisions. All assets of each Division are invested in shares of the corresponding Portfolio. A Policy Owner may direct that accumulated amounts under the Policy be transferred from one Division to another, provided accumulated amounts remain in no more than ten Divisions at any one time. Where allowed by state law, the Policy reserves the right to charge an administrative fee for transfers. The amount of the fee will not exceed the corresponding expenses. No fee is presently contemplated. Transfer requests must be in amounts greater than or equal to 1% of Invested Assets. When a transfer is made from any Division, the resulting allocation of Invested Assets must be in whole percentages in all Divisions that have any Invested Assets as a result of the transfer. Transfers received by Northwestern Mutual at its Home Office in good order before the close of trading on the NYSE will receive same-day pricing. Transfers received by Northwestern Mutual at its Home Office in good order on or after the close of trading will be priced on the next regular trading day. If the effective date does not match the date the transfer instructions are due to be forwarded to the Home Office according to our procedures, the Home Office will contact the appropriate Field Supervision to resolve any discrepancies.
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B. Short Term and Excessive Trading
17. To deter short term and excessive trading, Northwestern Mutual has adopted and implemented policies and procedures which are designed to control abusive trading practices and seeks to apply these policies and procedures uniformly to all Policy Owners, except to the extent we are prevented from doing so under applicable state or federal law or regulation.. Any exceptions must be either expressly permitted by these policies and procedures or subject to an approval process described in them.
Among the steps Northwestern Mutual has taken to reduce the frequency and effect of these practices are monitoring trading activity and imposing trading restrictions, including (with certain exceptions as identified in the prospectus) the prohibition of more than twelve transfers (or multiple transfers on the same effective date) among Divisions under a single Policy during a Policy year. Further, a Policy Owner who is identified as having made a transfer in and out of the same Division (round trip transfer) in an amount in excess of $10,000 within fourteen calendar days will be restricted from making additional transfers if a total of three round trips are made within that same policy year or two round trip transfers are made within any subsequent year. The restriction will last until the next Policy Anniversary and the Policy Owner will be sent a letter informing him or her of the restriction. An Policy Owner who is identified as having made one or more round trip transfers within thirty calendar days aggregating more than one percent (1%) of the total assets of the Portfolio underlying a Division, excluding the Government Money Market Division and the Divisions corresponding to the Portfolios of the Russell Investment Fund LifePoints® Variable Target Portfolio Series, will be restricted from making additional transfers if a total of two round trips are made within that same Policy Year or one round trip transfer is made within any subsequent year. The restriction will last until the next Policy Anniversary and the Policy Owner will be sent a letter informing him or her of the restriction. Unless Northwestern Mutual believes a Policy Owners trading behavior is problematic, these limitations do not apply to automatic asset transfers, scheduled or systematic transactions involving portfolio rebalancing, dollar cost averaging, and interest sweeps, or to initial allocations, the use of asset allocation models or changes in future allocations. Once a Policy is restricted, Northwestern Mutual allows one additional transfer
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into the Government Money Market Division until the next Policy Anniversary Date. Limitations may be modified in accordance with our procedures to modify some of these limitations to allow for transfers that would not count against the total transfer limit as necessary to alleviate potential hardships to Policy Owners, such as transfers required as a result of a fund substitution, liquidation or merger.
These policies and procedures may change from time to time in Northwestern Mutuals sole discretion without notice; provided, however, Policy Owners will be given advance, written notice if the policies and procedures were revised to accommodate market timing. Additionally, the Funds may have their own policies and procedures described in their prospectuses that are designed to limit or restrict frequent trading. Such policies and procedures may provide for the imposition of a redemption fee and may require Northwestern Mutual to provide transaction information to the Fund.
Northwestern Mutual intends to monitor events and the effectiveness of its policies and procedures in order to identify whether instances of potentially abusive trading practices are occurring. However, Northwestern Mutual may not be able to identify all instances of abusive trading practices, nor completely eliminate the possibility of such activities, and there may be technological limitations on its ability to impose restrictions on the trading practices of Policy Owners.
REDEMPTION PROCEDURES
A. Surrenders, Partial Surrenders and Withdrawals for Cash Value
18. A Policy Owner may surrender the Policy for its cash value at any time upon request during the lifetime of the insured. Northwestern Mutual will determine the cash value for a surrender request on the same day it receives the request if the request is received at the Home Office in good order before the close of trading on the NYSE. Cash values for surrender requests received by Northwestern Mutual at its Home Office in good order on or after the close of trading will be determined on the next regular trading day.
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19. Northwestern Mutual will generally pay surrender proceeds within seven days of receipt of a Policy Owners written request, except under the circumstances described below in the Deferral of Determination and Payment section. At the election of a Policy Owner and in lieu of direct payment, surrender proceeds may be paid under a payment plan. The Policies set forth the terms and limitations for each plan, defines the persons who are entitled to make the selections and receive benefits, and refers to procedural rules.
20. When a surrender of a Policy is effected, Northwestern Mutual will pay the cash value out of the assets held in the General Account. An amount equal to the Invested Assets will be transferred from the Separate Account to the General Account as of the effective date of the surrender.
21. By administrative practice, Northwestern will permit a Policy Owner to surrender a part of the Policy. Calculations will be performed as if the Policy was split into two Policies, and one of them was surrendered. The Policy which continues in force must meet the regular minimum size requirements and will pay premiums based on the reduced amount of insurance.
22. A withdrawal of Policy Value may be made under certain conditions specified in the prospectus. The withdrawal may not be greater than the smaller of (1) the Excess Amount less the surrender charge or (2) an amount which would reduce the maximum loan value to less than any outstanding Policy loan. The minimum amount for withdrawals is $250 and no more than four withdrawals may be made in a Policy year. The Policy reserves the right to charge an administrative fee of up to $25 per withdrawal. No fee is presently charged.
23. Withdrawals will be made upon written or telephone request at Northwestern Mutuals Home Office. The maximum allowable withdrawal will be determined by reference to computations as of the close of business on the day the request is received. The check for the amount withdrawn will be mailed from the Home Office or emitted via ACH or wire transfer. Withdrawals from the Separate Account will generally be paid within seven days of
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receipt of a Policy Owners written request, except under the circumstances described below in the Deferral of Determination and Payment section.
B. Payment of Death Benefit
24. Northwestern Mutual will pay the death benefit to the beneficiary or other payee in accordance with the terms of the Policy following receipt at the Home Office of proof of the death of the insured. The amount of the Death Benefit paid will be determined as of the date of death. Northwestern Mutual may transfer Invested Assets into the Government Money Market division of the Separate Account upon notification of death of the Insured until the Death Benefit is paid in order to minimize breakage. Payment of the death benefit is subject to the suicide and incontestability provisions of the Policy and any applicable state law requirements. Payment will be made promptly and in any case within seven days after the last of the conditions is met, except under circumstances described below in the Deferral of Determination and Payment section.
25. The Death Benefit for a Policy on any date when premiums have been timely paid will be equal to the sum of (1) the minimum guaranteed death benefit of the Policy, (2) any Additional Protection, (3) any Excess Amount, (4) any variable benefit paid-up additions, and (5) the amount of any dividend accumulations and any dividend at death, less the amount of any Policy debt outstanding. The Death Benefit is adjusted to reflect any premium due if the insured dies during the grace period. The Death Benefit will not be less than the amount of insurance calculated by applying the Policy Value as a net single premium at the insureds attained age plus any variable paid-up additional insurance and any dividend accumulations and dividend at death, less the amount of any Policy debt outstanding.
26. Northwestern Mutual will pay the Death Benefit for a Policy out of assets held in its General Account. The beneficiary may receive the Death Benefit as a cash settlement either by electing to receive a lump sum or by electing an income plan as described in the prospectus. The amount payable will include interest from the date of death. An amount equal
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to the interest of the Policy in the Separate Account as of the date of death will be transferred from the Separate Account to the General Account.
C. Lapse and Reinstatement
27. The Policy provides a grace period of at least 31 days2 (or for longer periods if required by your state or as described in the prospectus) for payment of any premium not paid when due. If the premium is paid during the grace period, the policy values will not be affected by the delay in paying the premium. If the insured dies during the grace period, the death proceeds will be reduced by the amount of the unpaid premium as described in the description of the death benefit above.
28. If a periodic premium is not paid within the grace period, the policy will lapse unless the policy is eligible for premium suspension or a Policy Owner has the automatic premium loan provision in effect and there is sufficient value to pay the premium due where the premium is less than the maximum amount allowable. Northwestern Mutual will process premiums on the same day it receives the payment if the payment is received in good order at the Home Office before the close of trading on the NYSE. Payments received by Northwestern Mutual at its Home Office on or after the close of trading will be determined on the next regular trading day. If the cash value on the last day of the grace period is at least $1,000, the lapsed policy will continue in force as fixed benefit paid-up insurance. The amount of paid-up insurance will be determined by applying the amount of cash value, determined as of the last day of the grace period, as a net single premium at the attained age of the insured. If the cash value is less than $1,000 on the last day of the grace period, the Policy will be treated as surrendered.
2 In administering the Policies Northwestern Mutual intends to use a 66-day period, instead of 31 days, before the lapse routine is implemented. The longer period is used simply to reduce the volume of lapse and reinstatement transactions occasioned by miscalculation when a Policy Owner attempts to pay the overdue premium on the last day of the grace period. The 66-day period is used for Northwestern Mutuals fixed benefit insurance policies and will be administered consistently. When the 66 days have elapsed and the Policy lapses, the values will be computed as though the Policy had lapsed after the grace period of 31 days. Notwithstanding the postponement of internal procedures to reflect the fact of a lapse, the Policy does lapse upon the expiration of the grace period and the death benefit is determined accordingly if the insured dies thereafter regardless of whether the internal procedures have been implemented prior to the date of death.
11
29. In lieu of fixed benefit paid-up insurance a Policy Owner of a lapsed Policy may elect a variable benefit paid-up insurance if the Policy has a cash value of at least $5,000 on the last day of the grace period. As of the due date of the unpaid premium, the Policy Value is set equal to the cash value (including the value of any existing paid-up additions) plus the amount of any Policy loan outstanding. Any existing variable paid-up additional insurance is set at zero. The Policy loan then remains outstanding. The amount of variable paid-up insurance, at any time, is determined by applying its cash value plus the amount of any Policy loan as a net single premium at the attained age of the insured. If either of the above paid-up provisions goes into effect before a Policy Owner has paid the premium due at the beginning of the fifteenth year, Northwestern Mutual will deduct the appropriate surrender charge.
30. When a Policy lapses and fixed benefit paid-up insurance goes into effect, the Policy ceases to have any interest in the Separate Account. An amount equal to the interest of the Policy in the Separate Account, determined as of the last day of the grace period, will be transferred from the Separate Account to the General Account as of the last day of the grace period. All additional benefits such as Waiver of Premium and Additional Purchase benefit will terminate upon policy lapse to paid-up insurance.
31. A lapsed Policy may be reinstated while the insured is alive within three years (longer if required by state law) after the premium due date, provided a Policy Owner has not requested a surrender of the Policy. Reinstatement is conditional upon evidence of insurability and payment of the greater of (1) all unpaid minimum premiums plus interest at 5%, or (2) 110% of the increase in cash value which results from reinstatement plus unpaid premiums, with interest at 5%, for any optional riders attached to the Policy. Any premium or other payment due, including any applicable interest, will also be required. Northwestern Mutual may waive the requirement to provide satisfactory evidence of insurability if the reinstatement is applied for, and any premium or other payment due is paid, within 90 days after the premium due date and while the insured is alive. If Northwestern Mutual receives a request for reinstatement at the Home Office in good order before the close of trading on the NYSE, the reinstatement will be effective as of the close of trading that day. If the request is received in good order after the close of trading, the reinstatement will be effective on the next regular
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trading day. Investment experience will continue from the effective date of the reinstatement. Northwestern Mutual will calculate the cash amount required upon request. Upon reinstatement, the Policy Date will not change. In addition, the Policy will have the cash value, death benefit and loan value which it would have had if the Policy had not lapsed and if an annual 4% rate of investment earnings were credited for the period from the due date of the overdue premium to the effective date of reinstatement. The cash amount required to reinstate a Policy will be paid into the General Account and the amount required for the Separate Account reserve will be placed in the Separate Account as of the reinstatement effective date. Any Policy debt outstanding, with interest thereon, must be either repaid or reinstated.
D. Reinvestment after Surrender or Withdrawal
32. While a Policy Owner has no right to reinvestment after a surrender or withdrawal, Northwestern Mutual may permit such reinvestments in its sole discretion as described in the prospectus. A Policy Owner may make payments in the form of returned surrender or withdrawal proceeds in connection with a request to void a surrender or withdrawal if the request is received by Northwestern Mutual within a reasonable time after the surrender or withdrawal proceeds are mailed. The returned surrender or withdrawal proceeds will be reinvested at the unit value next determined for each Division after our receipt of the reinvestment request in good order at the Home Office, including, among other things, (1) the return of surrender or withdrawal proceeds, (2) satisfactory evidence of insurability, and (3) any Premium Payments due. Proceeds will be applied to the same Divisions from which the surrender or withdrawal was made. Depending on the underwriting classification of the Insured, Northwestern Mutual may not accept the reinvestment or may accept the reinvestment with different charges and expenses under the Policy. Northwestern Mutual may refuse to process reinvestments where it is not administratively feasible, where the reinvestment would result in your Policy failing to qualify as life insurance for federal tax purposes or for any other valid legal reason.
E. Exchange for a Fixed-Benefit Policy
33. A Policy Owner may exchange their Policy for a life insurance policy that does not vary with the investment experience of the Separate Account at any time if under certain
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circumstances a Fund changes its investment adviser or makes a material change to the investment policies of a Portfolio.
F. Policy Loans and Loan Repayments
34. The Policies provide that a Policy Owner may borrow from Northwestern Mutual using the Policy as collateral security. The maximum loan value is 90% of the cash value of the Policy. If a Policy loan is already outstanding, these limitations are applied to the amount of cash value which the Policy would have if there were no loan.
35. The Policy provides that loans will be made upon written request, or, in certain circumstances, by telephone. If Northwestern Mutual receives a request for a loan at the Home Office in good order before the close of trading on the NYSE, the loan will be effective as of the close of trading that day. If the request is received in good order on or after the close of trading, the loan will be effective on the next regular trading day. The date of the loan will be the trading date the request is received. The maximum loan value of the Policy will be determined by reference to computations at the close of business the preceding day after the request for the loan was submitted but before processing took place and interest will accrue on the loan from the effective date of the loan request. When a written loan request is completed by a Policy Owner, the Policy Owner can elect to have the proceeds sent via check, direct deposit to a specified bank account, or wire transfer. We presently charge a $25 fee for wire transfer requests.
36. A Policy Owner may elect an automatic premium loan feature whereby the loan value of the Policy will be available to pay any overdue premium. The feature may be elected or revoked at any time by written request.
37. Interest on a Policy loan accrues and is payable on a daily basis. Billed and unpaid interest is added to the principal. The Policy will terminate if the cash value of the Policy falls to zero, but written notice will be mailed to a Policy Owner at least 31 days before
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the termination date. The notice will state the amount which must be repaid to keep the Policy in force.
38. A Policy Owner may choose between two Policy loan interest rates. One is a fixed rate of 5% and the other is a variable rate based on a corporate bond index with an annual adjustment and minimum of 5%. The choice of rates is made on the application form and may be changed as of January 1 any year upon written request.
39. When a Policy loan is affected, the loan amount is taken from the Divisions of the Separate Account in proportion to the amounts in the Divisions. The amounts withdrawn from the Separate Account are credited with an earnings rate equal to the Policy loan interest rate in effect less an amount for expenses, including taxes. The amount deducted for expenses is disclosed in the prospectus. This earnings rate is in lieu of the investment experience of the Separate Account.
40. Loan repayments (and accrued interest) may be repaid, in whole or in part, at any time while the Insured is alive. If payment is received without specific instructions, it is applied to any premium due, with any remaining amount being applied to any outstanding loans. Payments in excess of outstanding debt and premiums due will be returned unless such amounts are deemed to be de minimis (currently ten or less days of interest due). Except as described below, if payments are received in good order before the close of trading on the NYSE, Northwestern Mutual will credit payments as of the date received and transfer them from the General Account to the Divisions, in proportion to the amounts in the Divisions as of the same date. If payments are received on or after the close of trading on the NYSE, Northwestern Mutual will credit payments as of the close of the next regular trading session of the NYSE and transfer them from the General Account to the Divisions, in proportion to the amounts in the Divisions, as of the date Northwestern Mutual credits the payment. Policy loan payments received within 34 days after the loan interest billing date will be credited as of the loan interest billing date. Automatic premium loans are effective as of the premium due date unless a loan payment is received between the premium due date and the date the automatic premium loan is made. Automatic premium loan payments received up to 66 days after the
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loan interest billing date will be credited as of the Policy Anniversary, depending on a Policy Owners premium payment schedule.
G. Deferral of Determination and Payment
41. Northwestern Mutual will ordinarily pay Policy benefits within seven days after all required documents are received at its Home Office. However, we may defer determination and payment of benefits if:
| the NYSE is closed, other than customary weekend and holiday closings, or trading on the NYSE is restricted as determined by the SEC; or |
| the SEC permits, by an order, the postponement of any payment for the protection of a Policy Owner; |
| the SEC determines that an emergency exists that would make the disposal of securities held in the Separate Account or the determination of their value not reasonably practicable; or |
| under SEC rules, the Government Money Market Portfolio suspends payments of redemption proceeds in connection with a liquidation of the Portfolio, we will delay the Portfolios portion of the payment of any transfer, partial surrender, surrender, or death benefit until the Portfolio is liquidated. |
42. When the Policy is in force as Fixed Paid-Up insurance, Northwestern Mutual may defer paying the Cash Value for up to six months from the date of surrender. If payment is deferred for 30 days or more, interest will be paid on the Cash Value at an annual effective rate of 4%. Northwestern Mutual may also defer payment of a Policy loan or withdrawal for up to six months.
43. If a Policy Owner submits a check or draft to our Home Office, Northwestern Mutual has the right to defer payment of the Death Benefit, surrender, withdrawals, loans, or payment plan proceeds until the check or draft has been honored.
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44. To the extent it is disclosed in the prospectus, Northwestern Mutual may defer payment of the Death Benefit if it legitimately needs time to determine the proper beneficiaries.
45. If mandated under applicable law, Northwestern Mutual may be required to freeze a Policy Owners Policy Value and thereby refuse to pay any requests for transfer, surrender, withdrawals, loans, or the Death Benefit, until instructions are received from the appropriate regulatory or other lawful authority. Northwestern Mutual may also be required to provide additional information about a Policy Owner, a Policy Owners Policy, and a Policy Owners trading activities to government regulators.
46. Payments payable under Northwestern Mutuals state escheatment procedures may be subject to different standards.
17
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