485BPOS 1 d413416d485bpos.htm NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT (VEL) NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT (VEL)
Table of Contents
Filed with the Securities and Exchange Commission on April 26, 2023
Registration No. 333-36865
Registration No. 811-03989
UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-6 
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
/ /
Pre-Effective Amendment No.  
/ /
Post-Effective Amendment No. 38
/ X /
and/or
 
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
/ /
Amendment No. 103
/ X /
(Check appropriate box or boxes.)
 
 
Northwestern Mutual Variable Life Account
(Exact Name of Registrant)
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
(Name of Depositor)
720 East Wisconsin Avenue, Milwaukee, Wisconsin
53202
(Address of Depositor’s Principal Executive Offices)
(Zip Code)
 
Depositor’s Telephone Number, including Area Code
414-271-1444
 
Raymond J. Manista, 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)
Copy to:
Chad E. Fickett, Assistant General Counsel and Assistant Secretary

The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
414-665-1209 
Approximate Date of Proposed Public Offering
Continuous
It is proposed that this filing will become effective (check appropriate space) 
 
 
immediately upon filing pursuant to paragraph (b) of Rule 485
X
 
on May 1, 2023 pursuant to paragraph (b) of Rule 485
 
 
60 days after filing pursuant to paragraph (a)(1) of Rule 485
 
 
on ________ pursuant to paragraph (a)(1) of Rule 485
 
 
this post-effective amendment designates a new effective date for a previously filed post-effective amendment.
Title of Securities Being Registered: Interests in the Northwestern Mutual Variable Life Account under flexible premium variable life insurance policies.

Table of Contents
Variable Executive Life
Issued by The Northwestern Mutual Life Insurance Company and Northwestern Mutual Variable Life Account
Prospectus May 1, 2023
This prospectus (the "Prospectus") describes a flexible premium variable life insurance policy (the "Policy"). You may choose to invest your Net Premiums in up to 30 Divisions of the Northwestern Mutual Variable Life Account (the "Separate Account"), each of which invests in one of the corresponding Portfolios listed below:
Northwestern Mutual Series Fund, Inc.
- Growth Stock Portfolio
- Focused Appreciation Portfolio
- Large Cap Core Stock Portfolio
- Large Cap Blend Portfolio
- Index 500 Stock Portfolio
- Large Company Value Portfolio
- Domestic Equity Portfolio
- Equity Income Portfolio
- Mid Cap Growth Stock Portfolio
- Index 400 Stock Portfolio
- Mid Cap Value Portfolio
- Small Cap Growth Stock Portfolio
- Index 600 Stock Portfolio
- Small Cap Value Portfolio
- International Growth Portfolio
- Research International Core Portfolio
- International Equity Portfolio
- Emerging Markets Equity Portfolio
- Government Money Market Portfolio
- Short-Term Bond Portfolio
- Select Bond Portfolio
- Long-Term U.S. Government Bond Portfolio
- Inflation Protection Portfolio
- High Yield Bond Portfolio
- Multi-Sector Bond Portfolio
- Balanced Portfolio
- Asset Allocation Portfolio
Fidelity® Variable Insurance Products
- VIP Mid Cap Portfolio
- VIP Contrafund® Portfolio
Neuberger Berman Advisers Management Trust
- Sustainable Equity Portfolio
Russell Investment Funds
- U.S. Strategic Equity Fund
- U.S. Small Cap Equity Fund
- Global Real Estate Securities Fund
- International Developed Markets Fund
- Strategic Bond Fund
Russell Investment Funds LifePoints® Variable Target Portfolio Series
- Moderate Strategy Fund
- Balanced Strategy Fund
- Growth Strategy Fund
- Equity Growth Strategy Fund
Credit Suisse Trust
- Commodity Return Strategy Portfolio
Please note that the Policy and the Portfolios are not guaranteed to achieve their goals and are not federally insured. The Policy and the Portfolios have not been endorsed by any bank or government agency and are subject to risks, including loss of the principal amount invested.
This Policy is subject to the law of the state in which it is issued. Some of the terms of the Policy may differ from the terms of the Policy delivered in another state because of state specific legal requirements but all material state variations are described in this Prospectus. Unless clear from their context or otherwise appropriate, all of the capitalized terms used in this Prospectus are defined at the end of this Prospectus in the Glossary of terms. “Northwestern Mutual,” “Company,” “we,” “us,” and “our” in this Prospectus mean The Northwestern Mutual Life Insurance Company.
Please carefully read this Prospectus and any accompanying prospectuses for the corresponding Portfolios and keep them for future reference. This Prospectus provides information that you should know before investing in the Policy. No person is authorized to make any representation in connection with the offering of the Policy other than those contained in this Prospectus.
The Securities and Exchange Commission (“SEC”) has not approved or disapproved the Policy or determined that this Prospectus is accurate or complete. It is a criminal offense to state otherwise.
We no longer issue the Policy described in this Prospectus. The variable life insurance policies we presently offer are described in separate prospectuses.
Additional information about certain investment products, including variable life insurance policies, has been prepared by the SEC’S Staff and is available at www.investor.gov.
As permitted by regulations adopted by the SEC, paper copies of your underlying Portfolios’ shareholder reports are not currently being sent by mail unless you specifically request paper copies of the reports from us. Instead, your Portfolio annual and semi-annual reports will be made available on www.nmfundreports.com and you will be notified by mail each time a report is posted and provided with a link to access the report for each Portfolio. If you already elected to receive shareholder reports electronically, you will not be affected by this change, will continue to receive reports electronically and you need not take any action. You may elect to receive shareholder reports (and other communications) electronically by signing up for eDelivery at www.NorthwesternMutual.com/eDelivery. You may elect to receive all future reports in paper free of charge. You can inform us that you wish to continue receiving paper copies of your shareholder reports by calling (866) 910-1232. Your election to receive shareholder reports in paper will apply to all future reports for all Portfolios available under your Policy.
 
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Important Information You Should Consider About the Policy 
 
FEES AND EXPENSES
Cross-Reference(s)
to Location in
Prospectus
Charges for Early
Withdrawals
Withdrawals are subject to a $25 service charge (currently waived) for each
withdrawal request.
Fee and Expense
Tables – Transaction
Fees (Fee for
Transfer of Assets,
Withdrawals or
Change of Specified
Amount)
Transaction Charges
In addition to 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, changes to your death benefit
option or Specified Amount, 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, 2022, 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. The value of your Policy and death benefit will be
reduced if you withdraw money. In addition, short-term investment in the
Policy may subject you to income taxes and tax penalties.
Risks of the Policy –
Policy for Long-Term
Protection
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) 464-3800.
Risks of the Policy
–Investment Risk
and the
Northwestern
Mutual section
Variable Executive Life Prospectus
1
 
RISKS
Cross-Reference(s)
to Location in
Prospectus
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 the minimum payment amount,
required to keep the Policy in force.
Risks of the Policy –
Policy Lapse
Information About
the Policy –
Termination and
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 accumulated amounts among
Divisions . However, we reserve the right to charge $25 for each transfer after
12 transfers in a Policy Year. You may invest in up to 30 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
Information about
the Policy– Other
Policy Transactions
(Transfers and
Short-Term and
Excessive Trading)
 
Fee and Expense
Tables –
Transactions Fees
(Fee for Transfer of
Assets, Withdrawals
or Change of
Specified Amount)
 
Information about
the Policy – Other
Policy Transactions
(Substitution of
Portfolio Shares and
Other Changes)
Optional Benefits
If available, 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. 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. Your 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 your 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 Charges
and Expenses –
Commissions Paid to
Financial
Representatives
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
Variable Executive Life Prospectus
2
Overview of the Policy
What is the Policy, and what is it designed to do?
The Policy is a flexible premium variable universal life insurance policy generally for use with non-tax qualified executive benefit plans, the purpose of which is primarily to provide life insurance protection (i.e., a death benefit) while providing the long-term accumulation of assets through allocations to a variety of Divisions. The Policy may be appropriate if you have a long-term investment horizon and is not intended for short-term investment, and is therefore not appropriate for people who may need to make early or frequent withdrawals or who intend to engage in frequent trading. You may want to consult your financial or tax advisor.
In exchange for your Premium Payments, upon the death of the Insured , we will pay the Death Benefit to your beneficiary based on one of three death benefit options available under the Policy. Subject to certain limitations, you can change the Death Benefit option you selected. (See “Death Benefit – Death Benefit Changes" in the Prospectus for more information.)
How are Premium Payments treated under the Policy?
We no longer issue the Policy to new owners. Current owners must make sufficient Premium Payments to keep the Policy in force. There is no required schedule or amount of Premium Payments but the investment results of the Divisions to which your Net Premium(s) is allocated will affect the Premium Payments you are required to make to keep your Policy in force.
When a Premium Payment is received in Good Order at our Home Office after the Policy is in-force, we deduct a premium tax charge, federal deferred acquisition cost charge and sales load to cover taxes and acquisition and distribution expenses, respectively, and the remaining amount, known as the Net Premium(s), is allocated among the Divisions , according to your current allocation instructions in the Application or supplement to the Application.
Investments in the Policy’s Divisions are held in the Separate Account which is an account separate from our General Account assets. We have established a segment within the Separate Account to receive and invest Net Premium(s) for the Policy. Currently, the Policy segment is divided into over 40 Separate Account Divisions. Each Division purchases shares in a corresponding Portfolio. Information about each corresponding Portfolio is provided at the back of this document. See APPENDIX A: Portfolios Available under Your Policy.
Payment of insufficient premiums may result in the Policy terminating or lapsing.
Q. What are the primary features and options that the Variable Executive Life Policy offers?
A.
Choice of Death Benefit Options. You may choose among three Death Benefit options, a death benefit based on the Specified Amount (Option A), on the Specified Amount plus Policy Value (Option B) or on the Specified Amount plus Premiums Paid (Option C). In addition to the three Death Benefit Options, there is also a Minimum Death Benefit that may be applied. See the Death Benefit section in the Prospectus for more information.
B.
Surrenders and Withdrawals. You may surrender your Policy, and we will pay you its Cash Value (Policy Value less any Policy Debt). You may also withdraw a part of the Policy Value. A withdrawal reduces the Policy Value, may reduce the Specified Amount of the Policy and therefore the Death Benefit, may impact the Death Benefit Guarantee, and may increase the risk that the Policy will terminate or lapse. Withdrawals are subject to charges and may have adverse tax consequences.
C.
Loans. You may take a loan on the Policy that when added to existing Policy Debt does not exceed the Loan Value of the Policy. The Policy secures the loan. Taking a loan will reduce Cash Value and the Death Benefit, may have adverse tax consequences and will increase the risk that your Policy may terminate or lapse.
D.
Transfers. Generally, you may transfer accumulated amounts among the Divisions. We also offer four asset allocation models and two automated transfer programs: Dollar Cost Averaging and Portfolio Rebalancing.
E.
Collateral Assignment. Subject to our approval, you may generally assign the Policy as collateral for a loan or other obligation.
F.
Tax Treatment. You are generally not taxed on the Policy’s earnings until you withdraw Policy Value from your Policy. This is known as tax deferral.
G.
Additional Benefits. There are additional benefits you may add to your Policy. An additional charge may apply if you elect an additional benefit. The additional benefits available with this Policy are listed in the “Other Benefits Available under the Policy” section of the Prospectus, and include the following:
•
Income Plans – In lieu of a lump sum payment, the Death Benefit and surrender proceeds may be payable in monthly (or less frequent) payments over a period of time
•
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
Variable Executive Life Prospectus
3
•
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
•
Portfolio Rebalancing – Automatically rebalances the Divisions you select (either monthly, quarterly, semi-annually or annually) to maintain your chosen allocations among the Divisions
•
Allocation Models – Models are available that comprise a combination of Divisions representing various asset classes with various levels of risk tolerance
Fee and Expense Tables
The following tables describe the fees and expenses that are payable when you buy, own, surrender or make withdrawals from the Policy. Please refer to your Policy specifications page for information about the specific fees you will pay each year based on the options you have elected.
Transaction Fees
The table below describes the fees and expenses that are payable when you make Premium Payments, make withdrawals, transfer Invested Assets among investment options, or make certain changes to the Policy. Certain fees applicable to your Policy may depend on your Policy Anniversary. Please see “Policy Anniversary” in the Glossary of Terms to help you understand how it will affect the charges applicable to your Policy. 
Charge
When Charge is Deducted
Maximum Guaranteed Charge
Current Charge
Premium Tax Charge
Upon each Premium
Payment
3.6% of the premium
(includes both “Premium Tax
Charge” and “Federal
Deferred Acquisition Cost
Charge”)
2% of premium1
Federal Deferred
Acquisition Cost Charge2
Upon each Premium
Payment
0.80% of Premium Payment
Sales Load
Upon each Premium
Payment
Same as current amount
Up to 15% of Target Premium for the first Policy
Year; up to 6.8% of Target Premium for Policy
Years 2-6; up to 3% of Target Premium thereafter
and on all premiums in excess of Target Premium3
Fee for Transfer of
Assets, Withdrawals or
Change of Specified
Amount
When you make more
than 12 transfers of
assets among the
Separate Account
Divisions in a Policy Year,
make withdrawals or
change the Specified
Amount more than once
in a Policy Year
$25
Currently waived
Fee for Change in the
Death Benefit Option
Upon a change in the
Death Benefit option
$250
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)
1
See “Information about the Policy—Premiums” for more information.
2
This charge was previously referred to as the “OBRA Expense Charge” or “Other Premium Expense Charge.” Due to a 1990 federal tax law change under the Omnibus Budget Reconciliation Act of 1990 (“OBRA”), as amended, insurance companies are generally required to capitalize and amortize certain acquisition expenses rather than currently deduct such expenses. Due to this capitalization and amortization, the corporate income tax burden on insurance companies has been affected. This charge compensates us for the additional corporate income tax burden resulting from OBRA.
3
The Target Premium is a hypothetical annual premium, which varies based on factors including but not limited to the Specified Amount and the Issue Age and sex of the Insured. Increases and decreases in the Specified Amount will be reflected in the Target Premium. Please see “Target Premium” in the Glossaryof Terms.
4
This fee may increase over time to cover our administrative or other costs but will not exceed the maximum charge. We may discontinue this service at any time, with or without notice.
Variable Executive Life Prospectus
4
5
The Maximum Guaranteed Charges are subject to a consumer price index adjustment in order to accommodate future increases in the costs associated with these requests. The maximum charge will equal the Maximum Guaranteed Charge shown above multiplied by the CPI for the fourth month prior to the time of the charge, divided by the CPI for April, 2009. “CPI” means the Consumer Price Index for All Urban Consumers, United States City Average, All Items, as published by the United States Bureau of Labor Statistics. If the method for determining the CPI is changed, or it is no longer published, it will be replaced by some other index found by the Company to serve the same purpose.
Periodic Charges (Other than Portfolio Operating Expenses)1
The table below describes the fees and expenses, other than operating expenses for the Portfolios that you will pay periodically during the time that you own the Policy. Certain fees applicable to your Policy may depend on your Policy Anniversary. Please see “Policy Anniversary” in the Glossary of Terms to help you understand how they will affect the charges applicable to your Policy. 
Charge
When Charge is Deducted
Maximum Guaranteed Charge
Current Charge
Monthly Policy Charge—Cost of Insurance Charge2
Maximum Charge3
Monthly, on each
Monthly Processing Date
Same as current amount
$83 (monthly) per $1,000 of net amount at risk
Minimum Charge4
Monthly, on each
Monthly Processing Date
$0.08 per $1,000 of net
amount at risk
$0.02 (monthly) per $1,000 of net amount at risk
Charge for Insured Issue
Age 43, sex-neutral basis,
Non-Tobacco Guaranteed
Issue underwriting
classification in the
twenty-third Policy Year
(varies by Policy Year)5
Monthly, on each
Monthly Processing Date
$2 (monthly) per $1,000 of
net amount at risk in the
twenty-third Policy Year5
$0.59 (monthly) per $1,000 of net amount at risk
in the twenty-third Policy Year5
Monthly Policy
Charge—Mortality and
Expense Risk Charge6
Monthly, on each
Monthly Processing Date
0.90% annually (monthly rate
of 0.075%) of Policy Value,
less any Policy Debt
0.62% annually (monthly rate of 0.05167%) of
Policy Value less any Policy Debt for the first ten
Policy Years and 0.19% (monthly rate of
0.01583%) thereafter
Monthly Policy
Charge— Administrative
Charge
Monthly, on each
Monthly Processing Date
$15 (monthly) for the first
Policy Year; $10 (monthly)
thereafter
$8 (monthly)
Charge for Expenses and
Taxes Associated with
Any Policy Debt7
Monthly, on each
Monthly Processing Date
when there is Policy Debt
2% annually (monthly rate of
0.16667%) of Policy Debt
0.80% annually (monthly rate of 0.06667%) of
Policy Debt for the first ten Policy Years; 0.25%
annually (monthly rate of 0.02083%) thereafter
1
All charges in the table expressed in dollars have been rounded to the nearest dollar, where appropriate, and all amounts that would round to zero have been rounded to the nearest penny or less, as necessary.
2
The cost of insurance rates shown in the table may not be representative of the charge that a particular Owner may pay. The cost of insurance charge is determined by multiplying the net amount at risk by the cost of insurance rate. The net amount at risk is the difference between the Death Benefit and the Policy Value. The cost of insurance rate reflects factors including but not limited to the Issue Age, sex and underwriting classification of the Insured, the Policy Date, the Policy Year and the presence of the Cash Value Amendment if this applies. Please request an illustration from your Financial Representative for personalized information, including the particular charges applicable to your Policy. (See “Illustrations”).
3
The maximum Cost of Insurance Charge assumes that the Insured has the following characteristics: Attained Age 100 and substandard underwriting classification. The maximum Cost of Insurance Charge shown may also apply to other combinations of Policy Year and Insured characteristics.
4
The minimum Cost of Insurance Charge assumes that the Policy is in the first Policy Year, and that the Insured has the following characteristics: Female, Issue Age 18, Premier Non-Tobacco underwriting classification. The minimum Cost of Insurance Charge shown may also apply to other combinations of Policy Year and Insured characteristics.
5
Generally, the cost of insurance rate will increase each Policy Year. The maximum guaranteed Cost of Insurance Charge may vary by state of issue.
6
The current Monthly Mortality and Expense Risk Charge may be lower if the Policy was issued without the Cash Value Amendment. The vast majority of Policies are issued with the Cash Value Amendment. For Policies issued without the Cash Value Amendment, your current Monthly Mortality and Expense Risk Charge is 0.62% (0.05167% monthly rate) for Policy Years 1-10 and 0.17% (0.01417% monthly rate) for Policy Years 11+.
7
The charge is applied to the Policy Debt. It is in addition to the interest charged on any Policy loan and is deducted from Invested Assets. We add unpaid interest to the amount of the loan. Interest on a Policy loan accrues and is payable on a daily basis at an annual effective rate of 5%. The amount of the Policy loan will be transferred from the Divisions to our General Account and credited on a daily basis with an annual earnings rate equal to the 5% Policy loan interest rate. When the insured is at or above Attained Age 100, the current Charge for Expenses and Taxes Associated with Any Policy Debt is 0.00%.
Variable Executive Life Prospectus
5
Annual Portfolio Operating Expenses
The table below shows the range (minimum and maximum) of total operating expenses charged by the Portfolios that you may pay periodically during the time you own your Policy. The table below is based on information as of December 31, 2022 and may change from year to year. A complete list of the Portfolios available under your Policy, including their annual expenses, may be found at the back of this document. 
 
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*
0.20%
1.11%
*
The “Annual Portfolio Operating Expenses After Contractual Fee Waiver or Reimbursement” line in the above table shows the minimum and maximum fees and expenses charged by all of the Portfolios after taking into account contractual fee waiver or reimbursement arrangements in place. Those contractual arrangements are designed to reduce Portfolio Operating Expenses.
For more information about voluntary fee waivers that may be in place, see the “Charges and Expenses” section.
Variable Executive Life Prospectus
6
Risks of the Policy
Policy for Long-Term Protection Your Policy is designed to serve your long-term life insurance protection need. It is not suitable for short-term life insurance protection nor for short-term investing. The value of your Policy and Death Benefit will be reduced if you withdraw money. In addition, short-term investment in the Policy may subject you to income taxes and tax penalties.
Investment Risk Policy amounts in the Divisions will fluctuate with the performance of the Portfolios you choose. Amounts you allocate among the Divisions may grow in value, decline in value, or grow less than you expect depending on the investment performance of the corresponding Portfolios. These assets are not guaranteed and you can lose money. You may be required to pay more premiums than originally planned in order to keep the Policy in force.
A comprehensive discussion of the investment objectives and risks of each Portfolio may be found in each Portfolio’s prospectus. There is no assurance that any Portfolio will achieve its stated investment objective. The Policy is not designed for frequent or short-term trading.
Insurance Default Risk Because certain guarantees under the Policy are guaranteed by the Company’s General Account assets, the ability to make good on these guarantees depends on the financial strength and claims-paying ability of the Company. Therefore, guaranteed benefits outside of the Separate Account, are subject to the risk of default to the extent the Company is unable to satisfy some or all of these guarantees.
Policy Lapse Insufficient Premiums, 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. If, on a Monthly Processing Date, the Cash Value is not enough to pay the Monthly Policy Charge, your Policy will enter a 61-day grace period. If your Policy enters a grace period, we will notify you that the Policy will lapse at the end of the grace period unless you make a sufficient payment. Your Policy may be reinstated within three years (or longer if required by state law) after it has lapsed, subject to certain conditions.
Policy Loan Risks A Policy loan, whether or not repaid, will affect the value of your Policy over time because the amounts borrowed do not participate in the investment performance of the Divisions; in addition, a charge is deducted from your Policy Value while there is Policy Debt. The Death Benefit is reduced by the amount of any outstanding Policy Debt. If you surrender the Policy or allow it to lapse while Policy Debt is outstanding, the amount of Policy Debt is extinguished by applying the Policy Value to repay it. If the Policy Debt exceeds the cost basis in the contract, we are required to report the extinguishment to you and the IRS on an IRS Form 1099-R. Policy Debt reduces the Cash Value and increases the risk that your Policy will lapse.
Limitations on Access to Your Values Accessing your Policy’s value may have tax consequences. You should not purchase the Policy if you intend to surrender all or part of your Policy in the near future. You may make withdrawals subject to limitations on the amount that may be withdrawn. (See “Withdrawals”). A withdrawal will reduce the Policy Value and Death Benefit. The minimum amount of a withdrawal is $250.
 
Following a withdrawal, remaining Policy Value (less Policy Debt outstanding) must be at least three times the current monthly charges.
Adverse Tax Consequences Our understanding of the principal tax considerations for the Policy under current tax law is set forth in this Prospectus. A surrender, loan, or withdrawal may have tax consequences. There are areas of some uncertainty under current law, and we do not address the likelihood of future changes in the law or interpretations thereof. Among other risks, your Policy may become a modified endowment contract. A modified endowment contract (“MEC”) is a life insurance contract that is taxed less favorably on lifetime distributions than other life insurance contracts because the contract is considered too investment oriented. Generally, a Policy may be classified as a MEC if cumulative premiums paid during a seven-pay period exceed a “seven-pay” limit defined in the Internal Revenue Code. Distributions, including loans, from a Policy classified as a MEC are taxable to the extent of the gain in the Policy and may be subject to an additional 10% penalty tax if taken before the Owner attains age 59½. Moreover, excessive Policy loans could cause a Policy to terminate with insufficient value to pay the tax due upon termination. Death Benefit proceeds may be subject to state and/or inheritance taxes. (See “Tax Considerations”).
Risk of an Increase in Current Fees and Expenses Certain insurance charges are currently assessed at less than their maximum levels. We may increase these current charges in the future up to the guaranteed maximum levels , based on the Company’s emerging experience or future expectations, as determined in its sole discretion, with respect to, but not limited to, mortality, expenses, reinsurance costs, taxes, persistency, capital requirements, reserve requirements, and changes in applicable laws. Although some Funds may have expense limitation agreements, the operating expenses of the Portfolios are not guaranteed and may increase or decrease over time. If fees and expenses are increased, you may need to increase the amount and/or frequency of Premium Payments to keep the Policy in force.
7
Cybersecurity and Certain Business Continuity Risks The Company has administrative, technical and physical safeguards in place with respect to information security, nevertheless, our variable product business is potentially susceptible to operational and information security risks resulting from a cyber-attack as it is highly dependent upon the effective operation of our computer systems and those of our business partners. These risks include, among other things, the theft, misuse, corruption and destruction of data maintained online or digitally, denial of service on websites and other operational disruption and unauthorized release of confidential customer information. Cyber-attacks affecting us, the Portfolios, intermediaries and other affiliated or third-party service providers may adversely affect us and your Policy Value. For instance, cyber-attacks may interfere with our processing of contract transactions (including the processing of orders through our website, if available, or with the Portfolios), impact our ability to calculate values, cause the release and possible destruction of confidential customer or business information, impede order processing, subject us and/or our service providers and intermediaries to regulatory fines and financial losses and/or cause reputational damage. Cybersecurity risks may also impact the issuers of securities in which the Portfolios invest, which may cause the Portfolios to lose value. The risk of cyber-attacks may be higher during periods of geopolitical turmoil (such as the Russian invasion of Ukraine and the responses by the United States and other governments). There can be no assurance that we or the Portfolios or our service providers will avoid losses affecting your Policy due to cyber-attacks or information security breaches in the future.
Other disruptive events, including (but not limited to) natural or man-made disasters and public health crises or pandemics (such as coronavirus COVID-19), may also adversely affect our ability to conduct business, including if our employees or the employees of intermediaries or other affiliated or third-party service providers are unable to perform their responsibilities as a result of any such event. Such disruptions to our business operations can interfere with issuance or our processing of transactions (including the processing of orders through our website or with the Portfolios), may interfere with our ability to receive, pickup and process mail and messages, impact our ability to calculate values, or cause other operational or system issues. Furthermore, these disruptions may persist even if our employees or the employees of intermediaries or other affiliate or third-party service providers are able to work remotely. These events may also impact the issuers of securities in which the Portfolios invest, which may cause the Portfolios to lose value. There can be no assurance that the Company, the Portfolios or our service providers will avoid losses affecting your Policy due to a disaster or other catastrophe.
8
Northwestern Mutual
The Northwestern Mutual Life Insurance Company is a mutual life insurance company organized by a special act of the Wisconsin Legislature in 1857. It is licensed to conduct a conventional life insurance business in the District of Columbia and in all states of the United States. Its total assets were over $340 billion as of December 31, 2022. The Home Office of Northwestern Mutual is located at 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
General Account assets are used to guarantee the payment of certain benefits under the Policy, including death benefits. To the extent that we are required to pay you amounts under these benefits that are in addition to assets in the Separate Account, such amounts will come from General Account assets. Thus, Owners must look to the strength of the Company and its General Account with regard to guarantees under the Policy. The General Account is exposed to the risks normally associated with the operation of a life insurance company, including insurance pricing, asset liability management and interest rate risk, operational risks, and the investment risks of a portfolio of securities that consists largely, though not exclusively, of fixed-income securities. Some of the risks associated with such a portfolio include interest rate, option, liquidity, and credit risk. The financial statements contained in the Statement of Additional Information include a further discussion of risks inherent within the General Account investments. The assets in the General Account are subject to the claims of the Company’s general creditors.
The Separate Account
We established the Separate Account by action of our Trustees on November 23, 1983, in accordance with the provisions of Wisconsin insurance law. The Separate Account is registered with the SEC as a unit investment trust under the Investment Company Act of 1940 (the “1940 Act”). We own the assets in the Separate Account and we are obligated to pay all benefits under the Policy. We may use the Separate Account to support other variable life insurance policies we issue. We have divided the Separate Account into Divisions, each of which invests in shares of one Portfolio of the Funds.
Under Wisconsin law, Separate Account assets are held separate from our other assets and are not part of our General Account. Income, gains, and losses, whether or not realized, from assets allocated to the Separate Account will be credited to or charged against the Separate Account without regard to our other income, gains, or losses. Income, gains, and losses credited to, or charged against, a Division reflect that Division’s own investment performance and not the investment performance of our other assets. We may not use the Separate Account’s assets to pay any of our liabilities other than those arising from the Policies and any other variable life insurance Policies funded by the Separate Account. We may, however, use all of our assets (except those held in certain other separate accounts) to satisfy our obligations under your Policy.
Where permitted by law and subject to any required regulatory approvals or votes by Owners, we reserve the right to:
•
operate the Separate Account or a Division either as a unit investment trust or a management investment company under the 1940 Act, or in any other form permitted by law, if deemed by the Company to be in the best interest of Owners;
•
invest current and future assets of a Division in securities of another Portfolio as a substitute for shares of a Portfolio (or another share class of an existing Portfolio) already purchased or to be purchased;
•
transfer cash from time to time between the General Account and the Separate Account as deemed necessary or appropriate and consistent with the terms of the Policy, including but not limited to transfers for the deduction of charges and in support of payment options;
•
on behalf of the Company, transfer assets of the Separate Account in excess of reserve requirements (only for accrued fees and charges or any seed capital) applicable to the Policies supported by the Separate Account to the General Account (Invested Assets remaining in the Separate Account necessary to fulfill its obligations under the Policy are not subject to claims against or losses in the General Account);
•
register or deregister the Separate Account under the 1940 Act or change its classification under that Act;
•
create new separate accounts;
•
add, delete or make changes to the securities and other assets held or purchased by the Separate Account;
•
restrict or eliminate any voting rights of Owners or other persons having voting rights as to the Separate Account; and
•
make any changes to the Separate Account to conform with, or required by any change in, federal tax law, the 1940 Act and regulations promulgated thereunder, or any other applicable federal or state laws.
In the event that we take any of these actions, we may make an appropriate endorsement of your Policy and take other actions necessary to comply with applicable law.
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9
The Funds
A variety of investment options are made available under the Policy for the allocation of your premiums. However, the Company does not endorse or recommend any particular option, nor does it provide investment advice. You are responsible for choosing your investment options and should make your choices based on your individual situation and risk tolerances. After making your initial allocation decisions, you should monitor your allocations and periodically review the options you select and the amounts allocated to each to ensure your selections continue to be appropriate. The amounts you invest in a particular Division are not guaranteed and, because both principal and any return on the investment are subject to market risk, you can lose money.
The assets of each Division are invested in a corresponding Portfolio that is a series of one of the following mutual funds: Northwestern Mutual Series Fund, Inc.; Fidelity® Variable Insurance Products; Neuberger Berman Advisers Management Trust; Russell Investment Funds; and Credit Suisse Trust. The Separate Account buys shares of the Portfolios at their respective net asset values without sales charge. The Portfolios are available for investment only by separate accounts supporting variable insurance products and are not publicly traded. Their performance can differ substantially from publicly traded mutual funds with similar names. The specific Portfolios available under your Policy may change from time to time, and not all Portfolios in which assets of the Separate Account are invested may be available under your Policy. Your ability to invest in a Portfolio may be affected by the actions of such Portfolio, such as when a Portfolio closes.
There is no assurance that any of the Portfolios will achieve its stated objective(s). You can find more detailed information about the Portfolios, including its (i) name, (ii) investment objective(s), (iii) investment adviser, (iv) current expenses, and (v) performance, in Appendix A to this Prospectus. Each Portfolio has a prospectus that contains more detailed information about the Portfolio. Read the prospectuses for the Portfolios carefully before investing. You can find these documents online at www.nmprospectus.com, by calling (866) 464-3800 or by sending an email request to vavldocrequest@northwesternmutual.com. Note: A summary prospectus for a Portfolio contains information on its first page about how to obtain a copy of the full Portfolio statutory prospectus. You can also visit www.nmprospectus.com to obtain these documents.
Payments We Receive
The Policy makes available both proprietary and non-proprietary Portfolios. The Series Fund is a proprietary Fund that has been included in part because it is managed by a subsidiary of the Company. For non-proprietary Portfolios offered through this Policy, we consider during the selection process whether a Portfolio’s investment adviser or an affiliate will make payments to us or our affiliates. Other factors we consider during the selection process include asset class coverage, management style, sector coverage, the strength of the investment adviser’s or sub-adviser’s reputation and tenure, brand recognition, performance, and the capability and qualification of each investment firm. We review the Portfolios periodically and may remove a Portfolio or limit its availability to new premiums and/or transfers of accumulated amounts if we determine that the Portfolio no longer meets one or more of the selection criteria, and/or if the Portfolio has not attracted significant allocations from Owners.
We do not provide any investment advice and do not recommend or endorse any particular Portfolio. You bear the risk of any decline in the Policy Value of your Policy resulting from the performance of the Portfolios you have chosen.
Owners, through their indirect investment in the Portfolios, bear the costs of the investment advisory or management fees that the Portfolios pay to their respective investment advisors (see the Portfolios’ prospectuses for more information). As described above, an investment adviser of a Portfolio, or its affiliates, may make payments to the Company and/or certain of our affiliates. However, the amount of such payments is not determinative as to whether a Portfolio is available through the Policy. These payments may be derived, in whole or in part, from the advisory fee deducted from Portfolio assets. The amount of the compensation is based on a percentage of assets of the Portfolios attributable to the Policies and certain other variable insurance products that the Company issues. The percentages differ and some investment advisers (or other affiliates) may pay more than others. The percentages currently range up to 0.20%. These payments are made for various purposes, including payment of services incurred by the Company and/or its affiliates in promoting and marketing the Policies and Portfolios. The Company and its affiliates may profit from these payments.
While not currently the case, certain Portfolios available under the Policy may adopt a Distribution (and/or Shareholder Servicing) Plan under Rule 12b-1 of the 1940 Act, which is described in more detail in the Portfolios’ prospectuses. The payments, which may be up to 0.25%, would be deducted from assets of the Portfolios and are paid to our distributor, Northwestern Mutual Investment Services, LLC. These payments would decrease such Portfolio’s investment return. We would also consider the receipt of these payments generally to be a positive factor when selecting Portfolios.
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10
Additionally, an investment adviser or sub-adviser of a Portfolio (or of an underlying fund in which a Portfolio invests) or its affiliates may provide the Company with wholesaling services that assist in the distribution of the Policies and may pay the Company and/or certain of our affiliates amounts to participate in sales meetings. These amounts may be significant and may provide the investment adviser or sub-adviser (or their affiliate) with increased access to persons involved in the distribution of the Policies.
Information About the Policy
We are no longer issuing this Policy.
This prospectus describes the material provisions of the Policy. You should consult your Policy for more information about its terms and conditions, and for any state specific variations that may apply to your Policy.
Availability Limitations
We have designed the Variable Executive Life Policy for use with non-tax qualified executive benefit plans. We offered the Policy for use with corporate-sponsored plans where the first year premium for the plan was at least $25,000. In addition, we offered this Policy where no corporate sponsor was involved and the first year premium for each Policy was at least $25,000. We permitted exceptions in some cases approved by our Home Office. The Specified Amount must be at least $50,000.
Premiums
The Policy permits you to pay premiums at any time before the Policy Anniversary that is nearest the Insured’s 95th birthday and in any amounts within the limits described in this section.
We used the Specified Amount you selected when you purchased the Policy to determine the minimum initial premium required to put the Policy in force. The minimum initial premium varies with factors including but not limited to the issue age, sex, and underwriting classification of the Insured.
After a Policy is issued, there are no minimum premiums, except that we will not accept a premium of less than $25. The Policy will remain in force during the Insured’s lifetime so long as the Policy Value, less the amount of any Policy Debt, is sufficient to pay the monthly cost of insurance charge and other current charges. If there is Policy Debt, payments at our Home Office will be treated as payments to reduce Policy Debt unless designated as Premium Payments.
For certain group Policies, if allowable under applicable law and in the absence of contrary instructions, under certain circumstances Premium Payments made on behalf of your group may be allocated among the group’s Policies in proportion to the most recent Premium Payment allocation instructions provided by the payor on behalf of your group.
The Policy sets no maximum on premiums, but we will accept a premium that would increase the net amount at risk only if the insurance, as increased, will be within our issue limits, the Insured meets our insurability requirements and we receive the premium prior to the Policy anniversary nearest the Insured’s 75th birthday. We will not accept a premium if it would disqualify the Policy as life insurance for federal income tax purposes. We will accept a premium, however, even if it would cause the Policy to be classified as a MEC. (See “Tax Considerations”).
You may send Premium Payments to our Home Office or to a payment center designated by us. All payments must be made in U.S. Dollars payable through a U.S. financial institution. We accept Premium Payments by check or electronic funds transfer (“EFT”). Net Premiums are placed in the Separate Account on the date we receive your Premium Payment in Good Order at our Home Office and are credited at the Unit Value determined as of the date of receipt. Premiums received before the close of trading (typically, 4:00 p.m. Eastern Time) on the NYSE on a Valuation Date are deemed to be received and credited on that Valuation Date. If received on or after the close of trading on a Valuation Date, or on a day other than a Valuation Date, they are deemed to be received and credited on the next Valuation Date. If your payment is not in Good Order, either we or your Financial Representative may notify you in writing, by telephone or by email in an effort to conform your payment to our then-current requirements. We generally will not accept cash, money orders, traveler’s checks or “starter” checks; however, in limited circumstances, we may accept some cash equivalents in accord with our anti-money laundering procedures. If you make a Premium Payment with a check or bank draft and, for whatever reason, it is later returned unpaid or uncollected, or if a Premium Payment by EFT is reversed, we reserve the right to reverse the transaction. We also reserve the right to recover any resulting losses incurred by us by withdrawing a sufficient amount of Policy Value.
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11
We accept Premium Payments via our website if eligible. Electronic payments via our website must be made in accordance with our current procedures. However, we are not required to accept electronic payments, and we will not be responsible for losses resulting from transactions based on unauthorized electronic payments, provided we follow procedures reasonably designed to verify the authenticity of electronic payments. For more information on electronic payments see “Owner Inquiries”. We reserve the right to limit, modify, suspend or terminate the ability to make payments via our website at any time.
We have the right to limit or refund a Premium Payment or make distributions from the Policy as necessary to continue to qualify the Policy as life insurance under federal tax law, including the classification of your Policy as a modified endowment contract. If mandated under applicable law, we may be required to reject a Premium Payment. We may accept a premium at the direction of the Owner, however, even if it would cause the Policy to be classified as a modified endowment contract. If we receive a Premium Payment before its due date in circumstances where allocating such Premium to your Policy could result in your Policy failing to qualify as life insurance or being classified as a modified endowment contract, or where the Premium Payment was intended to be applied as of its due date, depending on your or your Financial Representative’s instructions we may hold the Premium or partial Premium Payment in a non-interest bearing account until its due date, at which time we will allocate your payment to the Divisions. Excess payment amounts are applied once instructions are received in Good Order.
We may also be required to provide information about you and your account to government regulators. Although we do not anticipate delays in our receipt and processing of premiums, we may experience such delays to the extent premiums are not received at our Home Office on a timely basis. Such delays could result in delays in the allocation of premiums. (See “Allocating Premiums to the Separate Account”).
Allocating Premiums to the Separate Account
Net Premiums are allocated into the Divisions as you directed in the Application for your Policy or in subsequent requests to change your allocations. You may invest in up to 30 Divisions at a time. You may change your allocation for future Net Premiums at any time. The change will be effective on the Valuation Date on or next following the date we receive your request in Good Order at our Home Office. Requests received before the close of trading (typically, 4:00 p.m. Eastern Time) on the NYSE on a Valuation Date are deemed to be received and effective on that Valuation Date. If received on or after the close of trading on a Valuation Date, or a day other than a Valuation Date, requests are deemed to be received and effective on the next Valuation Date. If your request is not in Good Order, we will continue to credit Net Premiums to your Policy according to the allocation instructions then in effect and either we or your Financial Representative may notify you in writing, by telephone or by email in an effort to conform your request with our then-current requirements.
In order to take full advantage of these features, you should carefully consider, on a continuing basis, which investment options are best suited to your long-term investment needs. Investment returns from amounts allocated to the Divisions will vary with the investment performance of the Divisions and will be reduced by Policy charges. You bear the entire investment risk for amounts you allocate to the Divisions. You should periodically review your allocation instructions in light of market conditions and your overall life insurance and financial objectives. Your Financial Representative may provide us with instructions on your behalf involving the allocation of accumulated amounts among available Divisions, subject to our rules and requirements, including the restrictions on short-term and excessive trading.
You may request allocation changes in writing (including via facsimile or, under limited circumstances, by email) or by calling Advanced Markets Operations at (866) 464-3800. Where allowable by applicable law, a Policy Owner’s Financial Representative may provide us with allocation changes on behalf of a Policy Owner subject to our current procedures, rules and requirements. You may also submit allocation instructions via the Internet at www.northwesternmutual.com (“Electronic Instructions”) in accordance with our then-current Internet procedures provided you have properly authorized us to accept Electronic Instructions in advance of your request. For more information see “Owner Inquiries.” Please note that we are not required to accept Electronic Instructions and we will not be responsible for losses resulting from transactions based on unauthorized Electronic Instructions, provided we follow procedures reasonably designed to verify the authenticity of Electronic Instructions. We reserve the right to limit, modify, suspend or terminate the ability to make requests via Electronic Instructions.
Policy Value
The Policy Value is the cumulative amount invested, less withdrawals, adjusted for daily investment results and interest on Policy Debt, and reduced by the current monthly charges for the cost of insurance and other expenses. It is also equal to the sum of Invested Assets and Policy Debt.
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12
Cash Value
You may surrender a Policy for the Cash Value at any time during the lifetime of the Insured. The Cash Value for the Policy will change daily in response to investment results. No minimum Cash Value is guaranteed. The Cash Value is equal to the Policy Value reduced by any Policy Debt outstanding.
We determine the Cash Value for a Policy at the end of each valuation period (typically, 4:00 p.m. Eastern Time each business day). Each business day, together with any non-business days before it, is a valuation period. A business day is any day on which the NYSE is open for trading. In accordance with the requirements of the 1940 Act, we may also determine the Cash Value for a Policy on any other day on which there is sufficient trading in securities to materially affect the value of the securities held by the Portfolios.
The Company currently permits surrender proceeds to be paid under an Income Plan requested by an Owner at the time of surrender. Available Income Plans include an interest income plan, installment income plans, and life income plans. The Company may offer additional Income Plans. (See “Other Benefits Available Under the Policy –Income Plans”).
Policies with the Cash Value Amendment The Cash Value of the Policy was increased in the first, second, and third Policy Years. The increase in Cash Value in the first three Policy years was (c) multiplied by the sum of (a) plus (b), where: (a) was the cumulative sales load deducted from premiums paid to date, (b) was 4% of the sum of premiums paid to date, and (c) was an adjustment factor equal to 100.00% in the first Policy Year, 66.67% in the second Policy Year, and 33.33% in the third Policy Year. Certain charges may be higher for Policies with the Cash Value Amendment. See “Charges and Expenses—Charges Against the Policy Value” for more information.
Death Benefit
Death Benefit Options The Policy provides for three Death Benefit options:
•
Specified Amount (Option A)
•
Specified Amount plus Policy Value (Option B), (see “Policy Value” above)
•
Specified Amount plus Premiums Paid (Option C)
The option you choose on your Application will generally depend on whether you prefer an increasing Death Benefit or a larger Policy Value, but in each case the Death Benefit will be at least the Minimum Death Benefit required for your Policy to qualify as life insurance under federal tax law. You selected the Specified Amount when you purchased the Policy you may make changes, generally upon written request, subject to our approval. Owners must look to the financial strength of the Company and its General Account with regard to guarantees under the Policy.
Under any of the Death Benefit options, the Death Benefit will be equal to the Policy Value at all times on and after the Policy Anniversary nearest the 100th birthday of the Insured. The investment performance of the Portfolios, as well as the charges and expenses under your Policy, may decrease your Policy Value and/or your Death Benefit.
The Death Benefit will be paid on the death of the Insured while the Policy is in force. The amount payable will be reduced by the amount of any Policy Debt and any Monthly Policy Charges due and unpaid if the death occurs during a grace period. (See “Termination and Reinstatement”). Subject to the terms and conditions of the Policy and any applicable Income Plan, Death Benefit proceeds will usually be paid to a beneficiary or other payee within seven days after we receive all satisfactory proof of the death of the Insured is received in our Home Office. The amount of proceeds will be determined as of the date of death. We will pay interest on the proceeds from that date until payment is made. However, we may postpone payment after proof of death whenever the NYSE is closed or restricted (other than on customary weekend and holidays) or if the SEC permits such a delay by rule, order or declaration. During any such postponement, proceeds will be held in our General account and are subject to the claims of our creditors.
Minimum Death Benefit The Minimum Death Benefit is the amount required to maintain the Policy as life insurance for Federal income tax purposes. Under any of the Death Benefit options, we will increase the Death Benefit if necessary to meet this requirement.
A Policy must satisfy one of two testing methods to qualify as life insurance for federal income tax purposes: the Guideline Premium/ Cash Value Corridor Test or the Cash Value Accumulation Test. Both tests require the Policy to meet minimum ratios, or multiples, of Death Benefit to the Policy Value. The minimum multiple decreases as the age of the Insured advances. You made the choice of testing methods when you purchased a Policy and it may not be changed. For the Guideline Premium/Cash Value Corridor Test the minimum multiples of Death Benefit to the Policy Value are shown in the following table.
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Guideline Premium/Cash Value  
Attained Age
Policy Value %
Attained Age
Policy Value %
40 or under
250
61
128
41
243
62
126
42
236
63
124
43
229
64
122
44
222
65
120
45
215
66
119
46
209
67
118
47
203
68
117
48
197
69
116
49
191
70
116
50
185
71
113
51
178
72
111
52
171
73
109
53
164
74
107
54
157
75-90
105
55
150
91
104
56
146
92
103
57
142
93
102
58
138
94
101
59
134
95 or over
100
60
130
 
 
For the Cash Value Accumulation Test, the minimum multiples of Death Benefit to the Policy Value are calculated using net single premiums based on the the Insured, the Policy’s underwriting classification and a 4% interest rate.
The Guideline Premium/Cash Value Corridor Test has lower minimum multiples than the Cash Value Accumulation Test, usually resulting in better Cash Value accumulation for a given amount of premium and Specified Amount. This is
because the Guideline Premium/Cash Value Corridor Test generally requires a lower Death Benefit and therefore a lower cost of insurance charge. But the Guideline Premium/Cash Value Corridor Test limits the amount of premium that may be paid in each Policy Year. The Cash Value Accumulation Test has no such annual limitation, and allows more premium to be paid during the early Policy Years.
Death Benefit Changes You may change the Death Benefit option, or increase or decrease the Specified Amount, subject to our approval. Changes are subject to insurability requirements and issue limits. We will not permit a change if it results in a Specified Amount less than what we would issue on that date for similar policies. For additional requirements see “Modifying the Policy.”
If your request is received in Good Order at our Home Office before the close of trading (typically, 4:00 p.m. Eastern Time) on the NYSE on a Monthly Processing Date, a change in the Death Benefit option or an increase or decrease in the Specified Amount, will be effective on that date. If the written request is not received on a Monthly Processing Date, or is received on or after the close of trading on a Monthly Processing Date, it will be effective on the next Monthly Processing Date. If your request is not in Good Order, either we or your Financial Representative may notify you in writing, by telephone or by email in an effort to conform your request to our then-current requirements.
Administrative charges of up to $250 for a change in the Death Benefit option, and up to $25 per change for more than one change in the Specified Amount in a Policy Year, may apply. We will deduct any such charges from the Policy Value. We are currently waiving these charges.
A change in the Death Benefit option, or an increase or decrease in the Specified Amount, may have important tax effects. (See “Tax Considerations”). The cost of insurance charge will increase if a change results in a larger net amount at risk. (See “Charges and Expenses—Charges Against the Policy Value”).
Other Benefits Available Under the Policy
In addition to the standard death benefits associated with your Policy, other standard and/or optional benefits may also be available to you. The following table(s) summarize information about those benefits. If applicable, information about the fees associated with each benefit included in the table may be found in the Fee and Expense Tables.
 
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14
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
•Any proceeds add
to increase
monthly payments
may be subject to
additional charges
or taxes
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
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
Portfolio Rebalancing
Automatically rebalances the Divisions you select
(either monthly, quarterly, semi-annually or
annually) to maintain your chosen allocations
among the Divisions
Standard
•Must be selected
by owner
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
 
Income Plans If an Income Plan was not previously elected by the Owner and in lieu of a lump sum payment, the Company currently permits the Death Benefit, less any Policy Debt, to be paid under an Income Plan selected by your beneficiary after the death of the Insured. Surrender proceeds may also be payable under an Income Plan selected by the Owner.
Available Income Plans include an interest income plan, installment income plans, and life income plans. The Company may offer additional Income Plans. Generally, (1) an interest income plan accrues interest on the Death Benefit, the interest may be received monthly, and any remaining proceeds or interest may be withdrawn at any time; (2) an installment income plan pays the Death Benefit in installments for a fixed period of time, and any remaining proceeds may be withdrawn at any time; and (3) a life income plan makes payments monthly for a chosen period and after that, for the life of the person on whose life the
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payments are based (or two persons if the joint option is selected). If available, any proceeds added to increase the amount payable under a monthly income plan may be subject to a 2.00% expense charge plus any applicable state premium tax. The choice of Income Plans will vary depending on financial situation and the amount of income desired monthly for a chosen time period. The Owner may elect the Income Plan while the Insured is living or, if the Insured is not the Owner, during the first 60 days after the Insured’s date of death. An Income Plan that is elected by the Owner will take effect on the date of death of the Insured if the notice of election is received in our Home Office while the Insured is living. In all other cases, the Income Plan will take effect on the date of receipt of the notice of election. If no Income Plan is elected, the benefit is paid to the beneficiary with interest based on rates declared by the Company or as required by applicable state law on the date of death of the Insured. Payments under these plans are from our General Account, and are subject to the claims of our creditors. Please see the “Northwestern Mutual” section for more information regarding our General Account and guarantees under your Policy.
Example: John Doe was the owner and insured of a policy and had elected an installment income plan. Upon his death, in lieu of paying life insurance proceeds from the policy to his wife Jane, his beneficiary, in a lump sum, the Company made reduced amounts of monthly payments to her spread out over a ten year period while the remaining balance earned interest.
Right to Exchange for a Fixed Benefit Policy You may exchange your Policy for a life insurance policy with benefits that do not vary with the investment experience of the Separate Account (“Fixed Benefit Policy”) if, at any time, a Fund changes its investment adviser, if there is a material change in the investment policies of a Portfolio, or the Portfolio is substituted for another portfolio (see “Substitution Portfolio Shares and Other Changes”). You will be given notice of any such change and will have 60 days to make the exchange. We may require evidence of insurability and there may be a cost associated with the exchange. Depending on the timing and the individual circumstances surrounding the exchange, the Fixed Benefit Policy is on the life of the same Insured and will have a Death Benefit at least as great as the initial Death Benefit of your Policy (assuming no decrease in Specified Amount prior to the exchange). The exchange may be subject to an equitable cash adjustment, which recognizes the investment performance of the Policy through the effective date of the exchange, and may have tax consequences. An exchange is effective when we receive a proper written request, as well as the Policy, and any amount due on the exchange.
Example: John Doe is the owner and insured of a variable executive life policy and is informed that one of the underlying portfolios in his Policy will be substituted for a different portfolio. Upon notice, John decides he would rather own a policy that is not subject to the investment experience of the underlying portfolios in which the separate account divisions that support his policy invest and would rather own a policy that earns a fixed rate of interest. Subject to the Company’s requirements, John has up to 60 days to exchange his variable policy for a fixed policy.
Dollar-Cost Averaging With Dollar-Cost Averaging, you can arrange to have a regular amount of money (either a fixed dollar amount or a fractional amount) automatically transferred monthly from the Government Money Market Division into the Division(s) you have chosen. Transfers will end either when the amount in the Government Money Market Division is depleted or when you submit a request to our Home Office to stop such transfers, whichever is earlier. You may request changes in writing (including via facsimile or, under limited circumstances, by email) or by calling Advanced Markets Operations at 1-866-464-3800. Where allowable by applicable law, a Policy Owner’s Financial Representative may provide us with requests on behalf of a Policy Owner subject to our current procedures, rules and requirements. You may also submit changes via the Internet at www.northwesternmutual.com (“Electronic Instructions”) in accordance with our then-current Internet procedures provided you have properly authorized us to accept Electronic Instructions in advance of your request. There is no charge for the Dollar-Cost Averaging. We reserve the right to modify or terminate the Dollar-Cost Averaging Plan at any time.
Dollar-cost averaging does not ensure a profit or protect against loss in a declining market. Carefully consider your willingness to continue payments during periods of low prices. You should consult your Financial Representative before deciding whether to elect DCA.
Portfolio Rebalancing Over time, portfolio rebalancing helps you maintain your allocations among the Divisions you have chosen. If you elect portfolio rebalancing, your Invested Assets are periodically rebalanced in accordance with our procedures to return your allocation to the percentages you specify. Portfolio rebalancing may reduce the amount of Policy Value allocated to better performing Divisions.
You may choose to rebalance monthly, quarterly, semi-annually or annually. We do not charge a transfer fee for portfolio rebalancing. Subject to any limitations imposed by our short-term and excessive trading policies and procedures, you may also elect portfolio rebalancing and modify or terminate your election at any time by submitting a request to our Home Office. You may request changes in writing (including via facsimile or, under limited circumstances, by email) or by calling Advanced Markets Operations at 1-866-464-3800. You may also submit changes via the Internet at www.northwesternmutual.com (“Electronic Instructions”) in accordance with our then-current Internet procedures provided you have properly authorized us to accept Electronic Instructions in advance of your request. If you make transfers through our website, your portfolio rebalancing will end and you will need to make a new election if you want portfolio rebalancing to continue. We may modify, limit, suspend or discontinue this feature at any time.
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Asset Allocation Models The Company currently makes available allocation models at no extra charge for amounts invested in the Divisions. An Owner can select only one model at a time. Each of the four models currently available (Moderately Conservative, Balanced, Aggressive, Very Aggressive) is comprised of a combination of Divisions that hold Portfolios representing various asset classes with various levels of risk tolerance. Generally, the four models can be characterized as follows: 
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.
An Owner may only select a model which is currently available. Any investment allocations outside of an Owner’s original model must be made by the Owner, and will not be made by the Company. The Company does not provide investment advice regarding whether a model should be revised or whether it remains appropriate to invest in accordance with any particular model due to performance, a change in an Owner’s investment needs or for other reasons. If an Owner wishes to remove Portfolios from an Owner’s model and/or change allocations to a current model, the Owner may do so by notifying us in writing, contacting their Financial Representative or by calling Advanced Markets Operations at (866) 464-3800. There will be no automatic rebalancing to these models unless the Owner chooses the automatic rebalancing option. Please note that investment in a model does not eliminate the risk of loss and it does not protect against losses in a declining market. An Owner should contact their Financial Representative for more information about available allocation models (including the specific asset mixes of available models) and whether investment in a model is appropriate for them.
Available models may change from time to time. The Company reserves the right to modify, suspend, or terminate any asset allocation model at any time without affecting an Owner’s current allocation, except in limited circumstances involving a Substitution or the elimination of a Portfolio as an investment option under the Policy (see "Substitution of Portfolio Shares and Other Changes" below for more information regarding the substitution of a Portfolio) . In that case, allocations in a Portfolio within a model (Original Portfolio) will be transferred to a different Portfolio if the Original Portfolio becomes no longer available (e.g., a substitution, merger, or liquidation), in which case the Company will send written notice in advance of such event. If an Owner is invested in a model that is no longer offered and initiates a change outside of the original model allocations, the Owner will not be able to select the original model (see “Transfers” above for more information about how to change portfolio allocations).
Please note that investment according to an allocation model may result in an increase in assets allocated to Portfolios managed by an investment adviser affiliated with the Company, and therefore a corresponding increase in Portfolio management fees collected by such adviser and may present a conflict of interest.
Surrenders and Withdrawals of Policy Value
Surrenders You may surrender your Policy for the Cash Value at any time while the Insured is alive and the Policy is in force. Where allowable by applicable law, a Policy Owner’s Financial Representative may provide us with surrender instructions on behalf of a Policy Owner subject to our current procedures, rules and requirements. The Cash Value will change daily in response to the investment performance of the Divisions in which you are invested. Written requests for surrender will be effective when received in Good Order at the Home Office. Requests received before the close of trading (typically, 4:00 p.m. Eastern Time) on the NYSE on a Valuation Date are deemed to be received and effective on that Valuation Date. If received on or after the close of trading on a Valuation Date, or a day other than a Valuation Date, requests are deemed to be received and effective on the next Valuation Date. If your request is not in Good Order, either we or your Financial Representative may notify you in writing, by telephone or by email in an effort to conform your request to our then-current requirements.
We do not guarantee any minimum Cash Value. We may require you to return your Policy to our Home Office when you request a surrender of the Policy. We will pay surrender proceeds in a lump sum or under an Income Plan option you select. (See “Income Plans”). Surrendering your Policy may have tax consequences. (See “Tax Considerations”).
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Withdrawals You may make a withdrawal of Policy Value. A withdrawal may not reduce the loan value to less than any Policy Debt outstanding. The loan value is 90% of the sum of the Cash Value and any existing Policy Debt on the date of the loan. A withdrawal amount may not reduce the Specified Amount to less than the minimum amount we would issue at the time of the withdrawal. Following a withdrawal, the remaining Policy Value, less any Policy Debt outstanding, must be at least three times the current monthly charges for the cost of insurance and other expenses. The minimum amount for withdrawals is $250. We permit up to four withdrawals in a Policy Year. An administrative charge of up to $25 may apply, but we are currently waiving this charge. Where allowable by applicable law, a Policy Owner’s Financial Representative may provide us with surrender instructions on behalf of a Policy Owner subject to our current procedures, rules and requirements. Written requests for withdrawals will be effective when received in Good Order at the Home Office. Requests received before the close of trading (typically, 4:00 p.m. Eastern Time) on the NYSE on a Valuation Date are deemed to be received and effective on that Valuation Date. If received on or after the close of trading on a Valuation Date, or a day other than a Valuation Date, requests are deemed to be received and effective on the next Valuation Date. If your request is not in Good Order, either we or your Financial Representative may notify you in writing, by telephone or by email in an effort to conform your request to our then-current requirements.
A withdrawal of Policy Value decreases the Death Benefit and may also decrease the Specified Amount. The amount of the decrease depends on the Death Benefit option and the amount of any prior increases in Death Benefit required to meet the definitional requirements for life insurance for federal income tax purposes. In some situations, the Death Benefit may decrease by more than the amount of the withdrawal.
We will take the amount withdrawn from Policy Value from the Divisions in proportion to the amounts in the Divisions. The Policy makes no provision for repayment of amounts withdrawn. A withdrawal of Policy Value may have important tax consequences. (See “Tax Considerations”).
Policy Loans
Described below are certain terms and conditions that apply when you borrow amounts under the Policy. Policy loans are secured by your Policy Value. For information on the tax treatment of loans, see “Tax Considerations” and consult with your tax advisor.
You may borrow from the Company an amount that, when added to existing Policy Debt, is not more than the loan value. The loan value is 90% of the sum of the Cash Value and any existing Policy Debt on the date of the loan. We normally pay the loan proceeds within seven days after we receive a proper loan request at our Home Office. We may postpone payments of loans under certain conditions described in the “Deferral of Determination and Payment” section of this prospectus. There is a charge for the expenses and taxes associated with Policy Debt. (See “Charges and Expenses—Charges Against the Policy Value”).
Loan requests can be made in writing (including via facsimile or, under limited circumstances, by email). Eligible Owners may also submit loan requests by calling Advanced Markets Operations at 1-866-464-3800. Where allowable by applicable law, a Policy Owner’s Financial Representative may provide us with policy loan instructions on behalf of a Policy Owner subject to our current procedures, rules and requirements. They will be processed based on the date and time they are received in the Home Office. Requests will be effective on the Valuation Date on or next following the date we receive your request in Good Order at our Home Office. Requests received before the close of trading (typically, 4:00 p.m. Eastern Time) on the NYSE on a Valuation Date are deemed to be received and effective on that Valuation Date. If received on or after the close of trading on a Valuation Date, or a day other than a Valuation Date, requests are deemed to be received and effective on the next Valuation Date. If your request is not in Good Order, either we or your Financial Representative may notify you in writing, by telephone or by email in an effort to conform your request to our then-current requirements. Based on our administrative procedures, you may have the option of receiving funds via wire transfer or priority mail, and we may charge a fee for this service to cover our administrative costs.
Interest on a Policy loan accrues on a daily basis at an annual effective, fixed rate of 5%. Interest is due and payable on each Policy Anniversary. We add unpaid interest to the amount of the loan at an annual effective, fixed rate of interest of 5%. If, on any Monthly Processing Date, the amount of the loan plus the monthly charges for the cost of insurance and other expenses exceeds the Policy Value, the Policy will enter the grace period. (See “Termination and Reinstatement”). We will send you a notice at least 61 days before the termination date. The notice will show how much you must pay to keep the Policy in force.
We will take the amount of a Policy loan from the Divisions in proportion to the amounts in the Divisions. We will transfer the amounts withdrawn to our General Account and will credit them on a daily basis with your accrued loan interest (i.e., an annual earnings rate equal to the 5% Policy loan interest rate). A Policy loan, even if you repay it, will have a permanent effect on the Policy Value because the amounts borrowed will not participate in the Separate Account’s investment results while the loan is outstanding. The effect may be either favorable or unfavorable depending on whether the earnings rate credited to the loan amount is higher or lower than the investment performance of the unborrowed amounts left in the Divisions.
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The Death Benefit will also be reduced by the amount of any Policy Debt outstanding. If you surrender or exchange the Policy or allow it to lapse while Policy Debt is outstanding, the amount of the loan, is extinguished by applying the Policy Value to repay it. Under the Internal Revenue Code, this transaction is a distribution from the life insurance policy. If the Policy Debt exceeds the investment in the contract, Northwestern Mutual is required to report the extinguishment to you and the IRS on an IRS Form 1099-R.
You may repay a Policy loan, and any accrued interest outstanding, in whole or in part, at any time while the Insured is alive. If there is Policy Debt, payments at our Home Office will be treated as payments to reduce Policy Debt unless designated as Premium Payments. If we receive your payment before the close of trading on the NYSE, we will credit payments as of the date we receive them and will transfer those amounts from our General Account to the Divisions, in proportion to the premium allocation in effect, as of the same date. If we receive your payment on or after the close of trading on the NYSE, we will process the order using the value of the units in the Divisions determined at the close of the next regular trading session of the NYSE. Loan repayments are not subject to transaction fees. A Policy loan or unpaid interest may have important tax consequences. (See “Tax Considerations”).
Termination and Reinstatement
If the Policy Value, less any Policy Debt outstanding, is less than the monthly charges for the cost of insurance and other expenses on any Monthly Processing Date, we allow a grace period of 61 days for a Premium Payment to keep the Policy in force. The grace period begins on the date that we send you a notice. The notice will state the minimum amount of premium required to keep the Policy in force and the date by which you must pay the premium. The Policy will terminate with no value unless you pay the required amount before the grace period expires. Payments to keep the Policy in force received in Good Order at our Home Office before the close of trading (generally, 4:00 p.m. Eastern Time) on the NYSE on a Valuation Date are deemed to be received and effective on that Valuation Date. If received on or after the close of trading on a Valuation Date, or a day other than a Valuation Date, payments are deemed to be received and effective on the next Valuation Date. If your payment is not in Good Order, either we or your Financial Representative may notify you in writing, by telephone or by email in an effort to conform your payment to our then-current requirements.
After a Policy has terminated, you may reinstate it within one year (or longer if required under state law) following the termination date, subject to our approval and satisfaction of our current underwriting requirements. To reinstate the Policy, you must make a payment equal to an amount that will cover all Monthly Policy Charges that were due and unpaid before the end of the grace period and three times the Monthly Policy Charge due on the effective date of the reinstatement. If we approve the Application for reinstatement, and the Application was received at our Home Office before the close of trading (typically, 4:00 p.m. Eastern Time) on the NYSE on a Monthly Processing Date, the effective date of the reinstated Policy will be that date. If the Application is not received on a Monthly Processing Date, or was received on or after the close of trading on the NYSE on a Monthly Processing Date, the reinstated Policy will be effective on the next Monthly Processing Date. Applications must be received in Good Order to be processed. If your request is not in Good Order, either we or your Financial Representative may notify you in writing, by telephone or by email in an effort to conform your request to our then-current requirements. Any Policy Debt that was outstanding when the Policy terminated will be reinstated.
Upon reinstatement, your Policy Date will not change. Therefore, fees and charges that vary by Policy year will take into account the period of time your Policy was terminated. The Policy Value when a Policy is reinstated is equal to the premium paid, less Premium Expense Charges, less the sum of all monthly charges for the cost of insurance and other expenses that were due and unpaid before the end of the grace period, less the monthly charges due on the effective date of the reinstatement. Please note that premium paid upon reinstatement will not include any interest from the date of the lapse. Any Policy Debt on the date of termination will also be reinstated and added to the Policy Value. We will allocate the Policy Value less Policy Debt among the Divisions based on the allocations for premiums currently in effect.
A reinstatement may have important tax consequences. If you contemplate any such transaction you should consult a qualified tax adviser.
COVID-19  Please note that the state in which your Policy was issued or delivered may require or provide for a longer Policy grace period, allow for the deferral of premium payments, provide for greater allowances to exercise certain contractual rights or benefits, or impose restrictions against Policy lapse or termination in recognition of financial hardships posed by the COVID-19 crisis, and the Company may offer additional accommodations beyond minimum state requirements as appropriate. Additional extensions of your Policy's grace period, deferrals of premium payments, greater allowances to exercise certain contractual rights and/or restrictions on Policy lapse may apply in the future but are not guaranteed. Please contact the Company at (866) 464-3800 for further information.
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Other Policy Transactions
Transfer Between Divisions Subject to the short-term and excessive trading limitations described below, you may transfer accumulated amounts from one Division to another so long as you are invested in no more than 30 Divisions at a time. Transfer requests will be effective on the Valuation Date on or next following the date we receive your request in Good Order at our Home Office. Requests received before the close of trading (typically, 4:00 p.m. Eastern Time) on the NYSE on a Valuation Date are deemed to be received and effective on that Valuation Date. If received on or after the close of trading on a Valuation Date, or a day other than a Valuation Date, requests are deemed to be received and effective on the next Valuation Date. If your request is not in Good Order, either we or your Financial Representative may notify you in writing, by telephone or by email in an effort to conform your request to our then-current requirements.
In order to take full advantage of these features, you should carefully consider, on a continuing basis, which investment options are best suited to your long-term investment needs. Although no fee is currently charged, we reserve the right where allowed by state law to charge a transfer fee of $25. We would deduct this charge from each Division in proportion to the amounts in each Division after the transfer. See “Charges and Expenses” for more information. In addition, certain Portfolios in which the Divisions invest may impose redemption fees. These fees are described in the Portfolios’ prospectuses. Where allowed by state law, the Company reserves the right to impose a minimum and/or maximum size on transfer amounts. Transfer requests must be in amounts greater than or equal to 1% of Invested Assets or the request will not be processed. Your Financial Representative may provide us with instructions on your behalf involving the transfer of accumulated amounts among available Divisions, subject to our rules and requirements, including the restrictions on short-term and excessive trading discussed below.
You may request transfers in writing (including via facsimile or, under limited circumstances, by email) or by calling (866) 464-3800. You may also submit transfer instructions via the Internet at (www.northwesternmutual.com) in accordance with our then-current Internet procedures provided you have properly authorized us to accept Electronic Instructions in advance of your request. For more information see “Owner Inquiries.” Please note that we are not required to accept Electronic Instructions and we will not be responsible for losses resulting from transactions based on unauthorized Electronic Instructions, provided we follow procedures reasonably designed to verify the authenticity of Electronic Instructions. We reserve the right to limit, modify, suspend or terminate the ability to make transfers via Electronic Instructions.
Short-Term and Excessive Trading Short-term and excessive trading (sometimes referred to as “market timing”) may present risks to a Portfolio’s long-term investors, such as Owners and other persons who may have material rights under the Policy (e.g., beneficiaries), because it can, among other things, disrupt Portfolio investment strategies, increase Portfolio transaction and administrative costs, require higher than normal levels of cash reserves to fund unusually large or unexpected redemptions, and adversely affect investment performance. These risks may be greater for Portfolios that invest in securities that may be more vulnerable to arbitrage trading including foreign securities and thinly traded securities, such as small cap stocks and non-investment grade bonds. These types of trading activities also may dilute the value of long-term investors’ interests in a Portfolio if it calculates its net asset value using closing prices that are no longer accurate. Accordingly, we discourage market timing activities.
To deter short-term and excessive trading, we have adopted and implemented policies and procedures which are designed to control abusive trading practices. We seek to apply these policies and procedures uniformly to all Owners. Any exceptions must be either expressly permitted by our policies and procedures or subject to an approval process described in them. We may also be prevented from uniformly applying these policies and procedures under applicable state or federal law or regulation. Because exceptions are permitted, it is possible that investors may be treated differently and, as a result, some may be allowed to engage in trading activity that might be viewed as market timing.
Among the steps we have taken to reduce the frequency and effect of these practices are monitoring trading activity and imposing trading restrictions, including the prohibition of more than twelve transfers among Divisions under a single Policy during a Policy Year. Multiple transfers with the same effective date made by the same Owner will be counted as a single transfer for purposes of applying the twelve transfer limitation. Further, a Policy Owner who is identified as having made a transfer in and out of the same Division, excluding the Government Money Market 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 Owner who is identified as having made one round trip transfer 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 Funds 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 we believe your trading behavior to be inconsistent with these short-term and excessive trading policies, these limitations will not apply to automatic asset transfers, scheduled or systematic transactions involving portfolio rebalancing, dollar cost averaging, initial allocations or changes in future allocations, to the extent these features are available under your Policy. Once a Policy is restricted, we will allow one additional transfer into the Government
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Money Market Division until the next Policy Anniversary. Additionally, in accordance with our procedures, we may modify some of these limitations to allow for transfers that would not count against the total transfer limit but only as necessary to alleviate any potential hardships to Owners (e.g., in situations involving a substitution of an underlying fund).
Policies such as this (or other Policies supported by the Separate Account) may be purchased by a corporation or other entity as a means to informally fund the liabilities created by the entity’s employee benefit or similar plan. These Policies may be aggregately managed to match liabilities under such plans. Policies sold under these circumstances may be subject to special transfer restrictions. Namely, transactions involving portfolio rebalancing programs may be exempt from the twelve transfers per Policy year limitation where: (1) the purpose of the portfolio rebalancing program is to match the Policy to the entity’s employee benefit or similar plan; (2) the portfolio rebalancing program adequately protects against short-term or excessive trading; and (3) the portfolio rebalancing program is managed by a third party administrator that meets our requirements. We reserve the right to monitor or limit transactions involving portfolio rebalancing programs where we believe such transactions may be potentially harmful to a Portfolio.
We may change these policies and procedures from time to time in our sole discretion without notice; provided, however, Owners will be given advance, written notice if the policies and procedures are 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 may be different from our policies and procedures, and may be more or less restrictive. As the Funds may accept purchase payments from other investors, including other insurance company separate accounts on behalf of their variable product customers and retirement plans, we cannot guarantee that the Funds will not be harmed by any abusive market timing activity relating to the retirement plans and/or other insurance companies that may invest in the Funds. The Funds’ policies and procedures may provide for the imposition of a redemption fee and may require us to provide transaction information to the Fund (including an Owner’s tax identification number) and to restrict or prohibit transfers and other transactions that involve the purchase of shares of a Portfolio. In the event a Fund instructs us to restrict or prohibit transfers or other transactions involving shares of a Portfolio, you may not be able to make additional purchases in a Division until the restriction or prohibition ends. If you submit a request that includes a purchase or transfer into such a restricted Division, we will consider the request “not in Good Order” and it will not be processed. You may, however, submit a new transfer request.
If we believe your trading activity is in violation of, or inconsistent with, our policies and procedures or otherwise is potentially disruptive to the interests of other investors, you may be asked to stop such activities and future investments, and allocations or transfers by you may be rejected without prior notice. Because we retain discretion to determine what action is appropriate in a given situation, investors may be treated differently and some may be allowed to engage in activities that might be viewed as market timing.
We intend to monitor events and the effectiveness of our policies and procedures in order to identify whether instances of potentially abusive trading practices are occurring. However, we 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 our ability to impose restrictions on the trading practices of Owners.
Substitution of Portfolio Shares and Other Changes If, in our judgment, one or more Portfolios become unsuitable for continued use with the Policy because of a change in investment objectives or restrictions, for each such Portfolio we may substitute shares of another Portfolio or another mutual fund. We may also substitute a class of shares of an existing Portfolio for a different class of the same Portfolio if allowable under applicable law. Any substitution of shares will be subject to any required approval of the SEC, the Wisconsin Commissioner of Insurance or other regulatory authority. We have also reserved the right, subject to applicable federal and state law, to operate the Separate Account or any of its Divisions as a management company under the 1940 Act, or in any other form permitted, or to terminate registration of the Separate Account if registration is no longer required, and to change the provisions of the Policies to comply with any applicable laws.
Charges and Expenses
Premium Expense Charges We deduct a charge from each premium for state premium taxes (Premium Tax Charge) and a portion of our federal corporate income taxes attributable to policy acquisition expenses. Premium taxes vary from state to state and currently range from 0.0% to 3.6% of life insurance premiums. Some jurisdictions within a state may charge an additional premium tax in certain circumstances. Currently, we charge 2.00% regardless of the state (or other jurisdiction) in which you live. We reserve the right to deduct a higher or lower amount or percentage from Premium Payments in the future to cover these taxes. The amount deducted may be more or less than the total percentage charged by your state (and/or other jurisdiction) of residence.
Due to a 1990 federal tax law change under the Omnibus Budget Reconciliation Act of 1990, as amended (“OBRA”), insurance companies are generally required to capitalize and amortize certain acquisition expenses rather than currently deducting such expenses. Due to this capitalization and amortization, the corporate income tax burden on insurance companies has been affected. We currently make a charge against each Premium Payment to compensate us for the additional corporate tax burden.
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Your current charge is 0.80% of each Premium Payment. We believe that this charge does not exceed a reasonable estimate of an increase in our federal income taxes resulting from a change in the Internal Revenue Code relating to deferred acquisition costs. The Premium Tax Charge and the Federal Deferred Acquisition Cost Charge may each vary in amount.
We generally deduct a sales load from each premium. We expect to recover our expenses of selling and advertising (“distribution expenses”) from this amount. Except as described below, the charge is 15% of premiums up to the Target Premium paid during the first Policy Year, 6.8% of premiums up to the Target Premium paid during each of Policy Years 2-6, and 3% of all other premiums. The amount we deduct for costs in a Policy Year is not specifically related to distribution expenses incurred in that year. To the extent that distribution expenses exceed the amounts deducted, we will pay the expenses from our other assets. These assets may include, among other things, any gain realized from the monthly charge against the Policy Value for the mortality and expense risks we have assumed, as described below. To the extent that the amounts deducted for distribution expenses exceed the amounts needed, we will realize a gain.
In certain cases involving a group of Policies purchased by an employer, where large amounts of aggregate first year premium were anticipated, we may have waived the sales load for those Policies in the group representing anticipated first year premiums in excess of an aggregate amount we determined.
Charges Against the Policy Value We deduct a Monthly Policy Charge from the Policy Value on each Monthly Processing Date. The Monthly Policy Charge includes the Cost of Insurance Charge, the Mortality and Expense Risk Charge, and the Monthly Administrative Charge. These three components of the Monthly Policy Charge are described in the following three paragraphs.
As part of the Monthly Policy Charge, we deduct a Cost of Insurance Charge. We determine the amount by multiplying the net amount at risk by the cost of insurance rate. The net amount at risk is the difference between the Death Benefit and the Policy Value. The net amount at risk will be affected by investment performance, the amount and timing of premiums, and the charges and expenses for the Policy. The cost of insurance rate reflects factors including but not limited to the Issue Age, sex and underwriting classification of the Insured, Policy Date, Policy Year and presence of the Cash Value Amendment (if applicable). (See “Cash Value”). The maximum cost of insurance rates are included in the Policy. The cost of insurance charge covers the cost of mortality and some expenses. We may realize gain from this charge to the extent the charge exceeds our costs attributable to the charge, in which case the gain may be used for any Company purpose.
The second part of the Monthly Policy Charge is the Mortality and Expense Risk Charge. The maximum amount of the charge is equal to an annual rate of 0.90% (0.07500% monthly rate) of the Policy Value, less any Policy Debt. For Policies with the Cash Value Amendment (see “Cash Value”) the charge is equal to an annual rate of 0.62% (monthly rate of 0.05167%) of Policy Value less any Policy Debt for the first ten Policy Years and 0.19% (monthly rate of 0.01583%) thereafter. For Policies without the Cash Value Amendment (See “Cash Value”), the charge is equal to an annual rate of 0.62% (monthly rate of 0.05197%) of Policy Value less any Policy Debt for the first ten Policy Years and 0.17% (monthly rate of 0.01417%) thereafter. The mortality risk is the risk that the Insured may not live as long as we estimated. The expense risk includes the risk that expenses of issuing and administering the Policies may exceed the estimated costs, including other costs such as those related to marketing and distribution. We will realize a gain from this charge to the extent it is not needed to provide benefits and pay expenses under the Policies, in which case the gain may be used for any Company purpose.
The third part of the Monthly Policy Charge is the Monthly Administrative Charge of not more than $15 monthly for the first Policy Year and $10 monthly thereafter. This charge is $8 monthly. This charge is for administrative expenses, including costs of premium collection, processing claims, keeping records and communicating with Owners. We do not expect to profit from this charge.
In addition to the Monthly Policy Charge, we deduct a charge for the expenses and taxes associated with the Policy Debt, if any. The aggregate charge when the Insured is Attained Age 99 and below, the current annual rate of 0.80% (0.06667% monthly rate) of the Policy Debt for the first 10 Policy Years and 0.25% (0.02083% monthly rate) thereafter. The aggregate charge when the Insured is Attained Age 100 and above is at the current annual rate of 0.00% annually of the Policy Debt.
The Policy provides for transaction fees to be deducted from the Policy Value on the dates on which transactions take place. These charges are $25 per change for more than one change in the Specified Amount in a Policy Year, $25 per withdrawal and $25 per transfer of assets among the Divisions if more than twelve transfers take place in a Policy Year. The fee for a change in the Death Benefit option is $250. Currently we are waiving all of these fees.
You may have the option of receiving funds via wire transfer or priority mail. Currently, a fee of $25 is charged for wire transfers (up to $50 for international wires) and a $15 fee (up to $45 for next day, a.m. delivery) for priority mail. These fees are to cover our administrative costs or other expenses. We may discontinue the availability of these options at any time, with or without notice.
We will apportion deductions from the Policy Value among the Divisions in proportion to the amounts invested in the Divisions. For policies with the Monthly Charges From One Division Amendment, you may elect to have Cost of Insurance Charges, Mortality and Expense Risk Charges, Monthly Administrative Charges, and charges for expenses and taxes associated with the Policy Debt, if any, deducted from one Division. If a written request to have monthly charges deducted from one Division is
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received in Good Order at our Home Office before the close of trading (typically, 4:00 p.m. Eastern Time) on the NYSE on a Monthly Processing Date, the change will be effective on that date. If the written request is not received on a Monthly Processing Date, or is received on or after the close of trading on a Monthly Processing Date, it will be effective on the next Monthly Processing Date. We reserve the right to determine which Divisions to make available for this election. Currently, the Government Money Market Division is available for this election. If on a Monthly Processing Date the amount in the specified Division is not sufficient to pay these charges, the remainder of these charges will be deducted from each Division in proportion to the amounts invested in each Division. This election will remain in effect until we receive written instructions to the contrary. Pursuant to our administrative procedures, in some circumstances your Financial Representative may provide us with written instructions on your behalf regarding requests to have monthly charges deducted from one division.
All charges in this section expressed in dollars have been rounded to the nearest dollar, where appropriate, and all amounts that would round to zero have been rounded to the nearest penny or less, as necessary.
Expenses of the Portfolios The investment performance of each Division reflects all expenses borne by the corresponding Portfolio. For certain Portfolios, certain expenses may have been reimbursed or fees may have been waived during 2022 in addition to any contractual fee waiver or reimbursements. It is anticipated that any such voluntary expense reimbursement and fee waiver arrangements would continue past the current year, although certain arrangements may be terminated at any time. After taking into account these arrangements, as well as any contractual fee waiver or expense reimbursement arrangements, Annual Portfolio Operating Expenses would have ranged from a minimum of 0.20% to a maximum of 1.11%. (See “Fee and Expense Tables—Annual Portfolio Operating Expenses” and Appendix A).
Policies Issued Prior to November 8, 1999 For Policies issued prior to November 8, 1999, and for Policies issued after that date in states where the Policy form providing for deductions for sales costs as described above had not been approved at the time of policy issuance, the deduction from premiums for sales costs is 15% of premiums paid during the first Policy Year up to the Target Premium and 3% of all other premiums.
Commissions Paid to Financial Representatives  The maximum commission payable to the registered representative who sold the Policy is 15% of Premium Payments up to the Target Premium and 2.75% of Premium Payments in excess of that amount during the first Policy Year; 5.75% of Premium Payments up to the Target Premium and 2.75% of Premium Payments in excess of that amount paid in Policy Years 2-6; and 2.75% of Premium Payments thereafter. In addition, a commission of 0.20% of Policy Value less any Policy Debt is paid at the end of Policy Years 6 and later. Registered representatives may receive less than the maximum commission or no commission in certain circumstances according to pre-established guidelines. We may also pay new registered representatives differently during a training period. The entire amount of sales commissions paid to registered representatives is passed through Northwestern Mutual Investment Services, LLC (“NMIS”), our wholly-owned company, to the registered representative who sold the Policy and to his or her managers. The Company pays compensation and bonuses for the management team of NMIS, and other expenses of distributing the Policies.
Modifying the Policy
Any Policy change that you request is subject to our then current insurability and processing requirements. Processing requirements may include, for example, completion of certain forms and satisfying certain evidentiary requirements.
If the Policy is changed or modified, we may make appropriate endorsements to the Policy, and we may require you to send your Policy to our Home Office for endorsement. Any modification or waiver of our rights or requirements under the Policy must be in writing and signed by an officer of the Company. No agent or other person may bind us by waiving or changing any provision contained in the Policy.
Upon notice to you, we may modify the Policy:
•
to conform the Policy, our operations, or the Separate Account’s operations to the requirements of any law (including any regulation issued by a government agency) to which the Policy, the Company, or the Separate Account is subject;
•
to ensure continued qualification of the Policy as a life insurance contract under the federal tax laws; or
•
to reflect a change in the Separate Account’s operation.
Other Policy Provisions
Owner The Owner is identified in the Policy. The Owner may exercise all rights under the Policy while the Insured is living. Ownership may be transferred to another. We must receive written proof of the transfer at our Home Office. “You” in this prospectus means the Owner or prospective purchaser of a Policy. Generally, only Owners are entitled to important information about the Policy. Other persons, such as beneficiaries or payors, are entitled to only limited information.
Beneficiary The beneficiary is the person to whom the Death Benefit is payable. The beneficiary is named in the Application. You may change the beneficiary in accordance with the Policy provisions.
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Incontestability We will not contest a Policy after it has been in force during the lifetime of the Insured for two years from the Date of Issue or two years from the effective date of a reinstatement. We will not contest an increase in the amount of insurance that was subject to insurability requirements after the increased amount has been in force during the lifetime of the Insured for two years from the date of issuance of the increase. After the two year period, to the extent permitted by state law we may rescind the Policy if the application contains a fraudulent misstatement.
Suicide If the Insured dies by suicide within one year from the Date of Issue, the Policy will terminate and the amount payable under the Policy will be limited to the premiums paid, less the amount of any Policy Debt and withdrawals. If the Insured dies by suicide within one year of the date of an increase in the amount of insurance, which was subject to insurability requirements, the amount payable with respect to the increase will be limited to the amounts charged for the cost of insurance and other expenses attributable to the increase.
Misstatement of Age or Sex If the age or sex of the Insured has been misstated, the Death Benefit and Policy Value will be modified by recalculating the charges for cost of insurance and other expenses based on the correct age and sex.
Collateral Assignment You may assign a Policy as collateral security. We are not responsible for the validity or effect of a collateral assignment and will not be deemed to know of an assignment before receipt of the assignment in writing at our Home Office.
Deferral of Determination and Payment We will ordinarily pay Policy benefits within seven days after we receive all required documents at our Home Office. However, we may defer determination and payment of benefits during any period when it is not reasonably practicable to value securities because the NYSE is closed, or the SEC, by order, either has determined that an emergency exists or permits deferral of the determination and payment of benefits for the protection of Owners. If, under SEC rules, the Government Money Market Portfolio suspends payments of redemption proceeds in connection with a liquidation of the Portfolio, we will delay payment of any transfer, partial surrender, surrender, death benefit from the Government Money Market Division until the Portfolio is liquidated.
If you have submitted a check or draft to our Home Office, we have the right to defer payment of surrender, withdrawal, Death Benefit or loan proceeds or Income Plan benefits until the check or draft has been honored.
If mandated under applicable law, we may be required to block an Owner’s account and thereby refuse to pay any requests for transfer, withdrawal, surrender, loans, or Death Benefits, until instructions are received from the appropriate regulator. We may also be required to provide additional information about an Owner and an Owner’s account to government regulators.
Dividends This Policy is eligible to share in the divisible surplus, if any, of the Company. Each year we determine, in our sole discretion, the amount and appropriate allocation of divisible surplus. Divisible surplus allocated to your Policy is referred to as a “dividend.” The Policy’s share, if any, will be credited as an annual dividend on the Policy Anniversary.
There is no guaranteed method or formula for the determination or allocation of divisible surplus. The Company’s approach is subject to change. There is no guarantee of divisible surplus. Even if there is a divisible surplus, the payment of a dividend on the Policy is not guaranteed. It is not expected that any dividends will be payable on the Policy.
We will credit annual dividends, if any, in cash or you may use them to increase the Policy Value. If you do not provide direction as to the use of dividends, we will use them to increase the Policy Value. Dividends used to increase the Policy Value will be allocated of Net Premiums then in effect.
Voting Rights
As long as the Separate Account continues to be registered as a unit investment trust under the 1940 Act, and as long as Separate Account assets of a particular Division are invested in shares of a given Portfolio, we will vote the shares of that Portfolio held in the Separate Account in accordance with instructions we receive from Owners. Periodic reports relating to the Portfolios, proxy material and a form on which one can give instructions with respect to the proportion of shares of the Portfolio held in the Separate Account corresponding to the Owner’s Policy Value, will be made available to the Owner(s). We will vote shares for which no instructions have been received in the same proportion as the shares for which instructions have been received from Owners. The effect of such proportional voting is that a small number of Owners may control the outcome of a particular vote.
We may, if required by state insurance regulations, disregard voting instructions which would require shares to be voted for a change in the sub-classification or investment objectives of a Portfolio, or to approve or disapprove an investment advisory agreement for a Portfolio. We may also disregard voting instructions that would require changes in the investment policy or investment adviser for a Portfolio, provided that we reasonably determine to take this action in accordance with applicable federal law. If we disregard voting instructions, we will include a summary of the action and reasons therefore in the next annual report to Policy Owners.
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Reports and Financial Statements
At least once each Policy Year you will receive a statement showing the Death Benefit, Cash Value, Policy Value and any Policy loan, including loan interest. We will also send you a confirmation statement when you transfer among Divisions, make a withdrawal, take a Policy loan, or surrender the Policy. These statements will show your apportioned amounts among the Divisions.
Semi-annually, we will send you reports containing financial information, performance information and schedules of investments for the Portfolios underlying the Divisions to which your Invested Assets are allocated. We may also provide you with a notice informing you where you may obtain these reports in lieu of sending you these reports in paper. Because each Division invests exclusively in the shares of an underlying Portfolio, the performance information for a Division and its corresponding Portfolio will generally be the same except that if the Policy level charges were reflected in this performance information, the results would be lower. Current historical performance information, updated on a monthly and quarterly basis, is available at www.northwesternmutual.com/prospectuses-performance-and-reports. The financial statements of the Company and the Separate Account appear in the Statement of Additional Information. To receive a copy of the Annual Report, Semi-Annual Report and/or Statement of Additional Information (containing such financial statements), call (866) 464-3800. Certain reports and other information can be obtained on our website at www.nmprospectus.com.
Householding
To reduce costs, we may send only a single copy of the same disclosure document(s) (such as prospectuses, prospectus supplements, reports, announcements, proxy statements, notices, and information statements) to each consenting household (rather than sending copies to each Owner residing in a household). If you are or become a member of such a household, you can revoke your consent to “householding” at any time, and can begin receiving your own copy of such disclosure documents by calling (866) 464-3800.
Abandoned Property Requirements
Every state has unclaimed property laws which generally declare insurance contracts/policies to be abandoned after a period of inactivity of three to five years from the Policy's maturity date, the date the death benefit is due and payable, or in some states, the date the insurer learns of the death of the insured. For example, if the payment of the death benefit has been triggered, but, if after a thorough search, we are still unable to locate the beneficiary, or if the beneficiary does not come forward to claim the death benefit proceeds in a timely manner, the death benefit proceeds will be paid to the abandoned property division or unclaimed property office of the state in which the beneficiary or you last resided, as shown on our books and records, or to our state of domicile. This “escheatment” is revocable, however, and the state is obligated to pay the death benefit proceeds (without interest) if your beneficiary steps forward to claim them with the proper documentation. To prevent such escheatment, it is important that you update your beneficiary designations, including addresses, if and as they change. Please contact your Financial Representative or call (866) 464-3800 for assistance in making such changes.
Legal Proceedings
Northwestern Mutual, like other life insurance companies, is generally involved in litigation at any given time. Although the outcome of any litigation cannot be predicted with certainty, we believe that, as of the date of this Prospectus, there are no pending or threatened lawsuits that will have a materially adverse impact on the ability of Northwestern Mutual to meet its obligations under the Policy, on the Separate Account, or on Northwestern Mutual Investment Services, LLC, the principal underwriter for the Separate Account, and its ability to perform its duties as underwriter for the Separate Account.
Speculative Investing
This Policy, or any of its riders, should not be used for any type of speculative collective investment scheme (including, for example, arbitrage). Your Policy is not intended to be traded on any stock exchange or secondary market, and attempts to engage in such trading may violate state and/or federal law.
Owner Inquiries
With your ID and password, you can visit our website www.northwesternmutual.com to access performance information, forms for routine service, and daily Policy and unit values for Policies you own. Eligible Owners may also set up certain electronic payments, transfer accumulated amounts among Divisions and change the allocation of future contributions online, subject to
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our administrative procedures. For enrollment information, please visit our website www.northwesternmutual.com. Please note that electronic devices may not always be available. Any electronic device, whether it is yours, your service provider’s, your agent’s or ours, can experience outages or slowdowns for a variety of reasons, which may delay or prevent our processing of your request or payment.
Although we have taken precautions to limit these problems, we cannot promise complete reliability under all circumstances. If you are experiencing problems, you should make your request or payment in writing at our Home Office. Electronic requests or payments are deemed to be received by us upon receipt at the electronic location designated by us in our procedures. If you have questions about making a surrender, please call your Financial Representative or Advanced Markets Operations at 1-866-464-3800 between 7:30 a.m. and 5:00 p.m. Central Time Monday-Friday. To file a claim, please call your Financial Representative or Life Benefits at 1-800-635-8855.
Illustrations
Your Northwestern Mutual Financial Representative will provide you an illustration for your Policy upon your request. The illustrations show how the Death Benefit and Cash Value for a Policy would vary based on hypothetical investment results. The illustrations will be based on the information you give us about the Insured person and will reflect such factors as the Specified Amount, Death Benefit option and Premium Payments that you select. These should be based upon realistic expectations given your own individual situation.
Illustrations for variable life insurance policies do not project or predict investment results. The illustrated values assume that non-guaranteed elements such as Policy charges and level investment returns will not change. Given the volatility of the securities markets over time, the illustrated scenario is unlikely to occur and the Policy’s actual Cash Value, Death Benefit, and certain expenses (which will vary with the investment performance of the Portfolios) will be more or less than those illustrated. In addition, the actual timing and amounts of payments, deductions, expenses and any values removed from the Policy will also impact product performance. Due to these variations, even a Portfolio that averaged the same return as illustrated will produce values which will be more or less than those which were illustrated.
Tax Considerations
General The following discussion provides a general description of federal tax considerations relating to the Policy. The discussion is based on current provisions of the Internal Revenue Code (“Code”) as currently interpreted by the Treasury Department and the Internal Revenue Service (“IRS”). The discussion is not exhaustive, it does not address the likelihood of future changes in federal tax law or interpretations thereof, and it does not address state or local tax considerations, which may be significant in the purchase and ownership of a Policy.
Depending on the circumstances, the exchange of a Policy, a Policy loan (including the addition of unpaid loan interest to a Policy loan), or a change in ownership or an assignment of the Policy, or an interest in the Policy, may have federal income tax consequences. In addition, federal, state and local transfer, estate, inheritance, and other tax consequences of Policy ownership, premium payments and receipt of Policy proceeds depend on the circumstances of each Owner or beneficiary. If you contemplate any such transaction you should consult a qualified tax adviser.
This tax discussion is intended to describe the tax consequences associated with your Policy. It does not constitute legal or tax advice, and is not intended to be used and cannot be used to avoid any penalties that may be imposed on a taxpayer. Taxpayers should seek advice based on their particular circumstances from an independent tax advisor.
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 tax penalties.
Life Insurance Qualification Section 7702 of the Code defines life insurance for federal income tax purposes. Under Section 7702, a Policy will generally be treated as life insurance for federal tax purposes if at all times it meets either a guideline premium test or a cash value accumulation test. We have designed your Policy to comply with only the cash value accumulation test. We may take any action that may be necessary for the Policy to qualify as life insurance for tax purposes.
The definitional tests under the Code are based on the Commissioner’s Standard Ordinary (CSO) mortality tables in effect when the Policies were issued. For Policies issued or materially changed after 2019, the tests must be based on the 2017 CSO mortality tables. Because Policies issued based on the 1980 CSO or 2001 CSO mortality tables may not satisfy the definitional tests using the 2017 CSO mortality tables, certain changes to those Policies will not be permitted (as defined by IRS Notice 2016-63). Special safe harbor calculation rules apply to life insurance after the Insured attains age 100. See IRS Rev. Proc. 2018-20.
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As provided by Section 817(h) of the Code, the Secretary of the Treasury has set standards for diversification of the investments underlying variable life insurance policies. Failure to meet the diversification requirements would disqualify your Policy as life insurance for purposes of Section 7702 of the Code. We believe that your Policy complies with the provisions of Sections 7702 and 817(h) of the Code, but the application of these rules is not entirely clear. We may make changes to your Policy if necessary for the Policy to qualify as life insurance for tax purposes.
IRS Rev. Ruls. 2003-91 and 2003-92 provide guidance on when an Owner’s control of Separate Account assets will cause the Owner, and not the life insurance company, to be treated as the owner of those assets. Important indicators of investor control are the ability of the Owner to select the investment advisor, the investment strategy or the particular investments of the Separate Account. If the Owner of a Policy were treated as the owner of the assets held in the Separate Account, the income and gains related to those assets would be included in the Owner’s gross income for federal income tax purposes. We believe that we own the assets of the Separate Account under current federal income tax law. We reserve the right to make modifications to the Policy, as necessary and appropriate under applicable law and the terms of the Policy, to prevent an Owner from being treated as the Owner of the Separate Account assets supporting the Policy.
Tax Treatment of Life Insurance While your Policy is in force, increases in the Policy Value due to investment experience are not subject to federal income tax until there is a distribution as defined by the Code. The Death Benefit received by a beneficiary will generally not be subject to federal income tax.
So long as your Policy is not classified as a MEC (see “Modified Endowment Contract”), the proceeds from a surrender or withdrawal will generally be taxable only to the extent that the proceeds exceed the Investment in the Contract, which is defined by Code §72(e)(6) and sometimes called the (“Cost Basis”) of the Policy. The Cost Basis of the Policy is generally equal to the premiums and other consideration paid for the contract less any amounts previously received as tax-free distributions. Dividends paid in cash, if any, are generally taxed as withdrawals with a resulting reduction in Cost Basis. However, dividends used to increase Policy Value are generally not taxable. In certain circumstances, a withdrawal of Cash Value during the first 15 Policy Years may be taxable to the extent that the Cash Value exceeds the Cost Basis of the Policy. This means that the amount withdrawn may be taxable even if that amount is less than the Cost Basis of the Policy.
Unless the Policy is a MEC, a loan received under your Policy will not be treated as a distribution subject to current federal income tax. If the Policy remains in force until the death of the Insured or, in the case of joint life insurance, the second death, the Policy Debt will be repaid from the Death Benefit. However, if the Policy terminates by any method other than death, the Policy Debt will be repaid from the Cash Value of the Policy, and the total Cash Value, including the total amount of the Policy Debt, will be taxable to the extent it exceeds the Cost Basis of the Policy. If the extended term insurance nonforfeiture option is available in your Policy, and it lapses to extended term insurance, the Policy Debt will be repaid from Cash Value of the Policy and the Policy Debt repayment will be treated as income and taxable to the extent it exceeds Policy’s Cost Basis.
Caution must be used when taking cash out of a Policy through Policy loans. If interest is not paid annually, it is added to the principal amount and the total Policy Debt will continue to increase for as long as the loan is maintained on the Policy. In extreme situations, Owners can face what is called the “surrender squeeze.” The surrender squeeze occurs if the Policy Debt becomes too large when compared to the unborrowed Cash Value remaining in the Policy, thereby causing the Policy to lapse. (See the “Policy Loans” section for more details). As described above, if your Policy lapses with outstanding Policy Debt, you will have an income tax liability to the extent the Policy Debt exceeds the Policy Cost Basis. This means that you may have to pay income tax for a year in which you did not receive any cash from the Policy.
Interest paid by individual Owners of a Policy will ordinarily not be deductible. You should consult a qualified tax advisor as to the deductibility of interest paid, or accrued, by business Owners of a Policy. (See “Business-Owned Life Insurance”).
Subject to the agreement of the Company, and the Owner meeting any conditions set by the Company, a Policy may be exchanged tax-free for another life insurance policy covering the same Insured (or, in the case of joint life insurance, covering the Insureds or a surviving Insured) or an annuity contract with the same owner (or, in the case of an annuity owned by a non-natural owner, if the annuitant is the same as the life insurance policy insured). The Code also allows certain policies to be exchanged for stand-alone and certain combination long-term care policies on a tax-free basis. Policies that are exchanged for life insurance policies after 2019 may only be exchanged for life insurance policies using 2017 CSO mortality tables. Any cash received or loan repaid in an exchange will be taxed to the extent of the gain in the Policy (i.e., on gain-first basis).
Ownership of a Policy, or an interest in the Policy, may be transferred. If the transfer is for valuable consideration, itis taxable to the extent the proceeds or fair market value of property received exceed the basis of the Policy. The transfer of a Policy with a loan in excess of Policy’s basis is considered a sale to the extent of the loan, and the loan is treated as “sales proceeds” paid to the transferor. The basis used to determine the gain or loss when a Policy, or an interest in a Policy, is transferred may be different than the Cost Basis used to determine the taxable amount for Policy distributions and/or surrenders.
The general rule is that if a Policy, or an interest in a Policy were transferred for valuable consideration, the death benefit may be taxable as ordinary income to the extent it exceeds the sum of the purchase price and subsequent premiums paid by the new owner. However, the death benefit may not be taxable if both of the following criteria are satisfied:
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1.
The transfer was not a “Reportable Policy Sale”, and
2.
Either:
a.)
The transferee is the insured, a partner of the insured, a partnership in which the insured is a partner, or a corporation in which the insured is a shareholder or officer, or
b.)
The transferee’s basis for determining gain or loss in determined, in whole or in part, by reference to the Transferor’s basis.
Generally, a Reportable Policy Sale is defined by Code section 101(a)(3), which was enacted in 2017 as part of the Tax Cuts and Jobs Act. A Reportable Policy Sale occurs when a Policy or an interest in the Policy is transferred, directly or indirectly, for valuable consideration and the acquirer does not have a “substantial family, business, or financial relationship with the insured apart from the acquirer’s interest in” the Policy. An example of an indirect transfer is an acquisition of an interest in a partnership that owns the Policy. If a Reportable Policy Sale occurs, the acquirer and the insurance company are required to send information about the sale to the IRS and the transferor.
Whether the death benefit of any particular policy will be subject to income taxation because of transfers prior to the insured’s death will depend on specific facts. You should seek qualified tax advice if you plan a transfer of an interest in a life insurance policy.
Where the Policy cash value is distributed as periodic payments under a payment plan, part or all of the taxable payments may be subject to an additional 3.8% Medicare tax. The tax will be assessed on the Owner’s net investment income for the year to the extent that the Owner’s adjusted gross income (with slight modifications) exceeds $250,000 (married filing jointly or surviving spouse), $125,000 (married filing separately) or $200,000 (other filers) (not indexed). Under final regulations issued by the IRS, “net investment income” may, among other things, include the transfer of a life insurance policy that constitutes a sale, interest paid on the Death Benefit and taxable distributions from life insurance policies held in arrangements that constitute “passive activities”. You should seek qualified tax advice.
Modified Endowment Contracts (MEC)  A modified endowment contract (“MEC”) is a type of life insurance contract that is taxed less favorably on lifetime distributions than other life insurance contracts. A MEC has less-favorable tax treatment because it is considered to be too investment oriented. Generally, a Policy will be classified as a MEC if the cumulative premiums paid during the first seven Policy Years after issue or after a “material change” (described below), exceed the policy’s “seven-pay” limit. The seven-year time period is commonly referred to as the “seven-pay period”. Code Section 7702A defines the seven-pay limit as the sum of the premiums paid (net of expense and administrative charges) that would have to be paid in order for the Policy to be fully paid-up after seven level annual payments, based on defined interest and mortality assumptions. If premiums in excess of the seven-pay limit are paid during a seven-pay period, a Policy will be a MEC. However, a policy will not be a MEC if the excess premiums are refunded, with interest, within 60 days after the end of the Policy Year in which they are paid. For purposes of measuring this 60-day refund period, the term “Policy Year” refers to the year that starts on the date of a material change if that date is different than the Policy Date. If excess premium is refunded, all Policy values are recalculated as though the excess premium had never been paid.
A policy can also become a MEC if the benefits under the Policy are reduced during the seven-pay period. If such a reduction occurs during a seven-pay period, the seven-pay premium limit will be redetermined based on the reduced level of benefits. All premiums paid during the seven-pay period must be retroactively tested against the new, lower, seven-pay limit. If the premiums previously paid are greater than the recalculated seven-pay limit, the Policy will become a MEC. This means that a reduction of Policy benefits can result in a MEC because of premiums paid in prior years even if those premiums did not exceed the policy’s seven-pay limit at the time they were paid. A reduction in benefits includes a decrease in the amount of coverage, the termination or reduction of certain riders, a withdrawal or any other action resulting in a surrender of Cash Value to you according to the terms of the Policy, an election for the Paid-up insurance option or, in some cases, a lapsing of the Policy where the Policy is not reinstated within 90 days. In the case of joint life Policies, the reduction test must be applied during the lifetime of either Insured rather than only during seven-pay periods. Additionally, in the case of joint life policies, all premiums paid since the policy were issued are retroactively tested against the new MEC limit.
A life insurance policy which is received in exchange for a MEC will also be considered a MEC.
Whenever there is a “material change” under a Policy, it will generally be treated as a new contract for purposes of determining whether the Policy is a MEC. This means that a new seven-pay period begins with a new seven-pay limit. The new seven-pay limit is determined by taking into account the Cash Value of the Policy at the time of such change. A material change could occur as a result of certain changes to the benefits or terms of the Policy, such as a change in a death benefit option or a change in the Insured(s), if allowable under your Policy. A material change could occur as a result of an increase in the death benefit, the addition of a benefit or the payment of a premium after the seven-pay period, which could be considered “unnecessary” under the Code.
If a Policy is a MEC, any distribution from the Policy will be treated as a distribution of gain first, subject to ordinary income taxation. Distributions for this purpose include a loan, a withdrawal of Cash Value or a surrender of the Policy, and dividends paid in cash. Distributions taken within the two-year period prior to the Policy becoming a MEC may also be taxed under the
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MEC tax rules. The Policy Cost Basis is increased to the extent a loan is a taxable distribution from a MEC. For these purposes, the term “loan”, includes an increase in Policy Debt due to accrued but unpaid loan interest, or an assignment or pledge of the policy to secure a loan. For purposes of determining the taxable portion of any distribution, all MECs issued by Northwestern Mutual to the same Owner (excluding certain qualified plans) during any calendar year are to be aggregated. The Secretary of the Treasury has authority to prescribe additional rules to prevent avoidance of gain-first taxation on distributions from MECs.
A 10% penalty tax will apply to the taxable portion of a distribution from a MEC. The penalty tax will not, however, apply to distributions (i) to taxpayers 59  1∕2 years of age or older, (ii) in the case of a disability (as defined in the Code) or (iii) received as part of a series of substantially equal periodic annuity payments for the life (or life expectancy) of the taxpayer or the joint lives (or joint life expectancies) of the taxpayer and the taxpayer’s beneficiaries. The exceptions generally do not apply to life insurance policies owned by corporations or other entities.
Business-Owned Life Insurance Business-owned life insurance may be subject to certain additional rules. Section 101(j) of the Code provides that a portion of the Death Benefit payable under business-owned life insurance in which the business is also the beneficiary will be taxable to the extent it exceeds the premiums or other consideration the business paid for the policy. This rule will not apply if (i) the Insured is an eligible employee and (ii) certain notice and consent requirements are satisfied before the policy is issued. Generally, an eligible employee is someone who was an employee at any time during the 12-month period before death, a director, a person who owns more than 5% of the business, an employee earning more than $120,000 annually(increased for cost of living), one of the highest 5 paid offers or an employee who is among the highest paid 35% of employees. The law also imposes an annual reporting and record-keeping obligation on the employer. Increases in Policy or Cash Value may also be subject to tax under the corporation alternative minimum tax provisions.
Section 264(a)(1) of the Code generally disallows a deduction for premiums paid on Policies by anyone who is directly or indirectly a beneficiary under the Policy. Interest on debt that is related to or is incurred to purchase or carry life insurance might be deductible in certain, limited, circumstances set forth in Code Section 264. For example, interest paid or accrued for up to an aggregate of $50,000 of indebtedness with respect to life insurance covering a “key person” may be deductible. Generally, a key person is defined as an officer or a 20% owner. However, the number of key persons will be limited to the greater of (a) five individuals, or (b) the lesser of 5% of the total officers and employees of the taxpayer or 20 individuals. Deductible interest for these Policies will be subject to limits based on current market rates.
In addition, if a business owns life insurance with cash value, Section 264(f) may disallow a portion of a business’s non-life insurance related interest deduction. The disallowance is based on a ratio that compares the amount of unborrowed life insurance Cash Surrender Value (as defined by Code §264(f)) to the adjusted basis of other business assets. Certain policies may be excluded from the disallowance calculation. These include policies held by natural persons unless the business is a direct or indirect beneficiary under the policy and policies owned by a business and insuring an individual who at the time the policy is issued is an employee, director, officer or 20% owner (as well as joint policies insuring 20% owners and their spouses). The IRS has ruled that a policy received in a tax-free exchange is newly issued for this purpose.
The IRS has ruled privately that losses in business-owned life insurance could be deducted upon the surrender of the policy if there was no reasonable prospect of recovery, but that the losses would be calculated by reducing the basis of the policy by the annual cost of the insurance protection provided by the policy. Private rulings apply only to the taxpayer who receives the ruling but may be indicative of the IRS’s thinking on an issue.
Special rules under the Code govern how life insurance companies calculate income tax deductions. Under these rules the annual increase in the cash value of life insurance policies owned by life insurance companies may limit the company’s deductions, resulting in an overall increase in its taxable income.
Split Dollar Arrangements Life insurance purchased under a split dollar arrangement is subject to special tax rules. Treasury regulations regarding the taxation of split dollar arrangements apply only to arrangements entered into or materially changed after September 17, 2003. The regulations provide that such split dollar arrangements must be taxed under one of two mutually exclusive tax regimes depending on the ownership of the underlying life insurance policy. Collateral assignment split dollar arrangements, in which the employee owns the policy, must be taxed under a loan regime. Where such an arrangement imposes a below market interest rate or no interest rate, the employee is taxed on the imputed interest under Section 7872 of the Code. Endorsement split dollar arrangements, in which the employer owns the policy, must be taxed under an economic benefit regime. Under this regime, the employee is taxed each year on (i) the value of the current life insurance protection provided to the employee, (ii) the increase in the amount of policy Cash Value to which the employee has current access, and (iii) the value of any other economic benefits provided to the employee during the taxable year.
Under the Sarbanes-Oxley Act of 2002, it is a criminal offense for an employer with publicly traded stock to extend or arrange a personal loan to a director or executive officer after July 30, 2002. One issue that has not been clarified is whether each premium paid by such an employer under a split dollar arrangement with a director or executive officer is a personal loan subject to this law.
Variable Executive Life Prospectus
29
Section 409A of the Code imposes requirements for nonqualified deferred compensation plans with regard to the timing of deferrals, distribution triggers, funding mechanisms and reporting requirements. Nonqualified deferred compensation plans that fail to meet these conditions are taxed currently on all compensation previously deferred and interest earned thereon and are assessed an additional 20% penalty. The law does not limit the use of life insurance as an informal funding mechanism for nonqualified deferred compensation plans, but IRS Notice 2007-34 treats certain split dollar arrangements as nonqualified deferred compensation plans that must comply with the new rules.
Valuation of Life Insurance Special valuation rules apply to to life insurance contracts distributed from a qualified plan to a participant or transferred by an employer to an employee. IRS Rev. Proc. 2005-25 provides safe harbor formulas for valuing variable insurance. Generally, the safe harbor value is the greater of (i) the sum of the interpolated terminal reserve, any unearned premiums, and a pro rata portion of the estimated dividends for the Policy Year; or (ii) the cash value without reduction for surrender charges (but adjusted by a surrender factor for policies distributed from qualified plans) multiplied by a factor specified in Rev. Proc. 2005-25. These rules do not apply to split dollar arrangements entered into on or before September 17, 2003 and not materially modified thereafter.
Other Tax Considerations Under Code Section 6011, taxpayers are required to annually report all “reportable transactions”. Regulations under Code Section 6011 provide a list of several types of reportable transactions, some of which may involve life insurance policies. For example, in some circumstances a reportable transaction might exist if life insurance is owned by a welfare benefit plan. “Reportable transactions” also include transactions that create significant differences between the amount of any item for purposes of determining income, gain, expense or loss for tax purposes differs by more than $10 million, on a gross basis, from the amount of the item for purposes for book purposes. However, Rev. Proc. 2004-67 held that the purchase of life insurance policies that creates such a difference does not, by itself, constitute a “reportable transaction.” The rules related to reportable transactions are complicated and you should consult a qualified tax advisor before purchasing any insurance policy as part of a transaction.
Distribution of the Policy
We sell the Policy through our Financial Representatives who also are registered representatives of Northwestern Mutual Investment Services, LLC (“NMIS”). NMIS, our wholly-owned company, was organized under Wisconsin law in 1998 and is located at 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202. NMIS is a registered broker-dealer under the Securities Exchange Act of 1934, an investment adviser registered with the SEC, and is a member of the Financial Industry Regulatory Authority (FINRA) and SIPC. You may obtain information about SIPC, including the SIPC brochure, by contacting SIPC at 202-371-3800 or visiting its website at SIPC.org. NMIS is the principal underwriter and distributor of the Policy and has entered into a Distribution Agreement with us.
Northwestern Mutual variable insurance and annuity products are available exclusively through NMIS and its registered representatives and cannot be held with or transferred to an unaffiliated broker-dealer. Except in limited circumstances, NMIS registered representatives are required to offer Northwestern Mutual variable insurance and annuity products. The amount and timing of sales compensation paid by insurance companies varies. The commissions, benefits, and other sales compensation that NMIS and its registered representatives receive for the sale of a Northwestern Mutual variable insurance or annuity product might be more or less than that received for the sale of a comparable product from another company. (See Charges and Expenses—Commissions Paid to Financial Representatives).
Because registered representatives of NMIS are also our appointed agents, they may be eligible for various cash benefits, such as bonuses, insurance benefits, retirement benefits, and non-cash compensation programs that we offer, such as conferences, achievement recognition, prizes, and awards. In addition, registered representatives of NMIS who meet certain productivity, persistency, and length of service standards and/or their managers may be eligible for additional compensation. For example, registered representatives who meet certain annual sales production requirements with respect to their sales of Northwestern Mutual insurance and annuity products can qualify to receive additional cash compensation for their other sales of investment products and services. Sales of the Policies help registered representatives and/or their managers qualify for such compensation and benefits. Certain registered representatives of NMIS may receive other payments from us for the recruitment, training, development, and supervision of financial representatives, production of promotional literature and similar services.
Commissions and other incentives and payments described above are not charged directly to Owners or to the Separate Account. We intend to recoup commissions and other sales expenses through fees and charges deducted under the Policy. NMIS registered representatives receive ongoing servicing compensation related to the Policies, but may be ineligible to receive ongoing servicing compensation paid by issuers of other investment products for certain smaller accounts.
Variable Executive Life Prospectus
30
Glossary of Terms
APPLICATION
The form completed by the applicant when applying for coverage under the Policy. This includes any:
1. amendments or endorsements;
2. supplemental Applications;
3. reinstatement Applications; and
4. Policy change Applications.
ATTAINED AGE
The Insured’s Issue Age listed in the Policy, plus the number of complete Policy Years that have elapsed since the Policy Date.
CASH VALUE
The amount available in cash if the Policy is surrendered. Please note that in certain contexts outside of the Prospectus, such as sales literature, notices and/or other materials, the term Accumulated Value After Loan or Net Accumulated Value may be used to describe your Cash Value, as appropriate.
COMPANY
The Northwestern Mutual Life Insurance Company.
DATE OF ISSUE
The date on which insurance coverage takes effect as shown in the Policy.
DEATH BENEFIT
The gross amount payable to the Beneficiary upon the death of the Insured, before the deduction of Policy Debt and other adjustments.
DIVISION
A subdivision of the Separate Account. We invest each Division’s assets exclusively in shares of one Portfolio.
FINANCIAL REPRESENTATIVE
An individual who is authorized to sell you the Policy and who is both licensed as a Northwestern Mutual insurance agent and registered as a representative of our affiliate, Northwestern Mutual Investment Services, LLC, the principal underwriter of the Policy.
FUND
Each Fund is registered under the 1940 Act as an open-end management investment company or as a unit investment trust, or is not required to be registered under the Act. Each Portfolio of the Funds is available as an investment option under the Policy. The assets of each of the Divisions of the Separate Account are used to purchase shares of the corresponding Portfolio of a Fund.
GENERAL ACCOUNT
All assets of the Company, other than those held in the Separate Account or in other separate accounts that have been or may be established by the Company.
GOOD ORDER
Your request or payment meets all the current requirements necessary for us to process it. For certain requests this may include, as applicable, the return of proceeds, evidence of insurability, underwriting, MEC-limit (or insurance qualification) requirements, any premium payments due, instructions as to payment due dates, or proper completion of certain Northwestern Mutual forms.
HOME OFFICE
Our office at 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202-4797.
INCOME PLAN
An optional method of receiving the Death Benefit, maturity benefit, surrender proceeds or withdrawal proceeds of an insurance policy or annuity contract through a series of periodic payments. An Income Plan may also be known as a “payment plan.”
INSURED
The person named as the Insured on the Application and in the Policy.
INVESTED ASSETS
The sum of all amounts in the Divisions of the Separate Account.
ISSUE AGE
The Insured’s age on his or her birthday nearest the Policy Date.
Variable Executive Life Prospectus
31
MEC
Modified endowment contract as described in Section 7702A of the Internal Revenue Code. A modified endowment contract is a type of life insurance contract that is considered too investment oriented and is taxed less favorably on lifetime distributions than other life insurance contracts. See the “Tax Considerations” section for more detailed information.
MONTHLY PROCESSING DATE
The first Monthly Processing Date is the Policy Date; thereafter, the Monthly Processing Date is the same day of each month as the Policy Date. If the Monthly Processing Date would otherwise fall on the 29th, 30th or 31st of the month, monthly processing will occur on that day or on the last day of the month if the month does not have that day.
NET PREMIUM
The amount of Premium Payment remaining after premium charges have been deducted.
NORTHWESTERN MUTUAL
The Northwestern Mutual Life Insurance Company.
NYSE
New York Stock Exchange.
OWNER (You, Your)
The person named in the Application as the Owner, or the person who becomes Owner of a Policy by transfer or succession.
POLICY ANNIVERSARY
The same day and month as the Policy Date in each year following the first Policy Year.
POLICY DATE
The date shown in the Policy from which the following are computed, among other things:
1. Policy Year;
2. Policy Anniversary;
3. the Issue Age of Insured; and
4. the Attained Age of the Insured.
POLICY DEBT
The total amount of all outstanding Policy loans, including both principal and accrued interest.
POLICY VALUE
The cumulative amount invested, less withdrawals, adjusted for investment results and interest on Policy Debt, and reduced by the monthly charges for the cost of insurance and other expenses. It is also equal to the sum of Invested Assets and Policy Debt. Please note that in certain contexts outside of the Prospectus, such as sales literature, notices and/or other materials, the term Accumulated Value may be used in place of Policy Value. In some circumstances, the term Accumulated Value After Loan may be used to describe your Policy Value after deductions for an outstanding loan, as appropriate.
POLICY YEAR
A year that starts on the Policy Date or on a Policy Anniversary.
PORTFOLIO
A series of a Fund available for investment under the Policy which corresponds to a particular Division of the Separate Account.
PREMIUM PAYMENTS
All payments you make under the Policy other than loan repayments and transaction charges.
SEPARATE ACCOUNT
Northwestern Mutual Variable Life Account.
SPECIFIED AMOUNT
The amount you select, subject to minimums and underwriting requirements we establish, used in determining the insurance coverage on an Insured’s life.
TARGET PREMIUM
An amount based on the Specified Amount and the Issue Age and sex of the Insured, used to compute the sales load and commissions.
UNIT
An accounting unit of measure representing the value in one or more Divisions of the Separate Account.
UNIT VALUE
The value of a particular Unit at a particular time. Unit Value is analogous to, but not the same as, the share price of a Portfolio in which a Division invests. It may fluctuate from one Valuation Period to the next.
Variable Executive Life Prospectus
32
VALUATION DATE
Any day the NYSE is open for trading, except for any days specified in the Policy’s prospectus and any day that a Division’s corresponding investment option does not value its shares. A Valuation Date ends when the NYSE closes.
Variable Executive Life Prospectus
33
Appendix A—Portfolios Available under Your Policy
The following is a list of Portfolios available under your Policy. More information about the Portfolios is available in the prospectuses for the Portfolios, which may be amended from time to time and can be found online at www.nmprospectus.com. You can also request this information at no cost by calling (866) 464-3800 or by sending an email request to vavldocrequest@northwesternmutual.com.
The current expenses and performance information below reflects fees and expenses of the Portfolios, but do not reflect the other fees and expenses that your Policy may charge. Expenses would be higher and performance would be lower if these other charges were included. Each Portfolio’s past performance is not necessarily an indication of future performance. 
Investment
Objective
Portfolio and Adviser/
Sub-adviser (if applicable)
Current
Expenses
Average Annual
Total Returns
(as of 12/31/2022)
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.
0.43%
-38.70%
4.86%
9.75%
Long-term growth of
capital
Focused Appreciation
Portfolio2
MSA/Loomis, Sayles &
Company, L.P.
0.62%1
-27.83%
7.95%
12.77%
Long-term growth of
capital and income
Large Cap Core Stock
Portfolio2
MSA/Wellington
Management Company LLP
0.44%1
-18.88%
8.95%
10.81%
Long-term growth of
capital and income
Large Cap Blend
Portfolio2
MSA/Fiduciary Management,
Inc.
0.74%1
-13.78%
5.99%
10.06%
Investment results that
approximate the
performance of the
Standard & Poor’s 500®
Composite Stock Price
Index
Index 500 Stock
Portfolio2
MSA/BlackRock Advisors, LLC
0.20%1
-18.28%
9.20%
12.32%
Long-term growth of
capital; income is a
secondary objective
Large Company Value
Portfolio2
MSA/American Century
Investment Management,
Inc.
0.75%1
-0.34%
7.95%
10.36%
Long-term growth of
capital and income
Domestic Equity
Portfolio2
MSA/Delaware Investments
Fund Advisers, a series of
Macquarie Investment
Management Business Trust
0.50%1
-2.99%
7.08%
10.87%
Long-term growth of
capital and income
Equity Income Portfolio2
MSA/T. Rowe Price
Associates, Inc
0.57%1
-3.22%
7.16%
9.81%
Long-term growth of
capital
Mid Cap Growth Stock
Portfolio2
MSA/Wellington
Management Company LLP
0.53%1
-23.77%
5.35%
8.00%
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.
0.25%1
-13.26%
6.44%
10.49%
Long-term growth of
capital; current incomes is
a secondary objective
Mid Cap Value Portfolio2
MSA/American Century
Investment Management,
Inc.
0.72%1
-1.15%
6.88%
11.17%
Long-term growth of
capital
Small Cap Growth Stock
Portfolio2
MSA/Wellington
Management Company LLP
0.56%
-28.49%
3.55%
9.40%
Investment results that
approximate the
performance of the
Standard & Poor’s
SmallCap 600® Index
Index 600 Stock
Portfolio2
MSA/Northern Trust
Investments, Inc.
0.28%
-16.37%
5.51%
10.42%
Long-term growth of
capital
Small Cap Value
Portfolio2
MSA/T. Rowe Price
Investment Management, Inc
0.91%1
-18.53%
3.77%
8.30%
Long-term growth of
capital
International Growth
Portfolio2
MSA/FIAM LLC
0.62%
-23.13%
4.67%
5.90%
Capital appreciation
Research International
Core Portfolio2
MSA/Massachusetts
Financial Services Company
0.75%1
-17.16%
3.13%
4.96%
Variable Executive Life Prospectus
34
Investment
Objective
Portfolio and Adviser/
Sub-adviser (if applicable)
Current
Expenses
Average Annual
Total Returns
(as of 12/31/2022)
1 Year
5 Year
10 Year
Long-term growth of
capital and income
International Equity
Portfolio2
MSA/Dodge & Cox
0.69%
-6.83%
-1.94%
2.13%
Capital appreciation
Emerging Markets Equity
Portfolio2
MSA/abrdn Investments
Limited
0.90%1
-25.28%
-1.21%
0.24%
Maximum current income
to the extent consistent
with liquidity and stability
of capital3
Government Money
Market Portfolio
MSA/BlackRock Advisors, LLC
0.33%1
1.36%
1.03%
0.60%
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%
-4.52%
1.03%
0.98%
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
0.32%1
-13.33%
0.16%
1.11%
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
0.98%1
-29.53%
-2.80%
0.04%
Pursue total return using
a strategy that seeks to
protect against U.S.
inflation
Inflation Protection
Portfolio2
MSA/American Century
Investment Management,
Inc.
0.55%1
-12.96%
1.54%
0.79%
High current income and
capital appreciation
High Yield Bond
Portfolio2
MSA/Federated Investment
Management Company
0.45%
-11.33%
2.18%
3.72%
Maximum total return,
consistent with prudent
investment management
Multi-Sector Bond
Portfolio2
MSA/Pacific Investment
Management Company LLC
0.72%1
-15.39%
0.20%
1.91%
Realize as high a level of
total return as is
consistent with prudent
investment risk, through
income and capital
appreciation
Balanced Portfolio2
MSA
0.50%1
-14.14%
3.41%
5.25%
Realize as high a level of
total return as is
consistent with
reasonable investment
risk
Asset Allocation
Portfolio2
MSA
0.58%1
-14.83%
4.21%
6.40%
Long-term growth of
capital
Fidelity® VIP Mid Cap
Portfolio – Initial Class4
Fidelity Management &
Research Company LLC
(FMR)5
0.61%
-14.74%
5.95%
9.96%
Long-term capital
appreciation
Fidelity® VIP Contrafund®
Portfolio – Initial Class4
FMR5
0.60%
-26.31%
8.66%
11.43%
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
0.93%
-18.45%
7.40%
10.89%
Long-term growth of
capital
U.S. Strategic Equity
Fund7
Russell Investment
Management LLC (RIM)8
0.96%
-20.86%
6.79%
10.79%
Long-term growth of
capital
U.S. Small Cap Equity
Fund7
RIM8
1.11%1
-15.96%
5.24%
8.85%
Variable Executive Life Prospectus
35
Investment
Objective
Portfolio and Adviser/
Sub-adviser (if applicable)
Current
Expenses
Average Annual
Total Returns
(as of 12/31/2022)
1 Year
5 Year
10 Year
Current income and long-
term growth of capital
Global Real Estate
Securities Fund7
RIM8
0.91%
-26.77%
0.26%
3.36%
Long-term growth of
capital
International Developed
Markets Fund7
RIM8
1.03%1
-13.04%
0.96%
4.43%
Provide total return
Strategic Bond Fund7
RIM8
0.67%
-14.28%
-0.23%
0.94%
Current income and
moderate long-term
capital appreciation
LifePoints® Variable
Target Portfolio Series
Moderate Strategy Fund7
RIM8
0.83%1
-15.65%
0.77%
3.08%
Above-average long-term
capital appreciation and a
moderate level of current
income
LifePoints® Variable
Target Portfolio Series
Balanced Strategy Fund7
RIM8
0.91%1
-16.35%
2.01%
4.48%
High long-term capital
appreciation; and as a
secondary objective,
current income
LifePoints® Variable
Target Portfolio Series
Growth Strategy Fund7
RIM8
0.97%1
-17.20%
2.99%
5.57%
High long-term capital
appreciation
LifePoints® Variable
Target Portfolio Series
Equity Growth Strategy
Fund7
RIM8
0.99%1
-17.68%
3.00%
6.05%
Total return
Commodity Return
Strategy Portfolio – Class
29
Credit Suisse Asset
Management, LLC
0.77%
16.34%
N/A
N/A
1
This reflects an expense reimbursement and/or fee waiver arrangement that is in place and reported in the Portfolio’s registration statement. This agreement may be terminated in the future and, therefore, the expense figures shown reflect temporary fee reductions.
2
A series of Northwestern Mutual Series Fund, Inc., for which MSA, our wholly-owned company, serves as investment adviser.
3
Although the Government Money Market Portfolio seeks to preserve its value at $1.00 per share, it is possible to lose money by investing in the Government Money Market Portfolio. An investment in a money market portfolio is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any government agency. During extended periods of low interest rates, the yield of a money market portfolio may also become extremely low and possibly negative.
4
The Fidelity® VIP Mid Cap Portfolio and the Fidelity® VIP Contrafund® Portfolio are series of Variable Insurance Products Fund III and the Variable Insurance Products Fund II, respectively.
5
The following affiliates of Fidelity Management & Research Company also assist with foreign investments for each Portfolio: Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Hong Kong) Limited, and Fidelity Management & Research (Japan) Inc.
6
A series of Neuberger Berman Advisers Management Trust.
7
A series of Russell Investment Funds.
8
Assets of each Portfolio are invested by one or more investment management organizations researched and recommended by Russell Investment Management LLC, the investment adviser for the Russell Investment Funds.
9
A series of Credit Suisse Trust.
Variable Executive Life Prospectus
36
Additional Information
More information about your Policy and Separate Account is included in a Statement of Additional Information (“SAI”), which is dated the same day as this Prospectus, is incorporated by reference into this Prospectus, and is available free of charge from the Company. To request a free copy of the Separate Account’s SAI, or current annual report, or to request other information about the Policy or to make investor inquiries, call (866) 464-3800. Under certain circumstances you or your Financial Representative may be able to obtain these documents online at www.nmprospectus.com. Reports and other information about the Separate Account are available on the SEC’s Internet site at www.sec.gov, or they may be obtained, upon payment of a duplicating fee, by electronic request at the following email address: publicinfo@sec.gov.
Edgar Contract Identifier C000031362
Variable Executive Life Prospectus
37

Table of Contents
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
(Account)
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
(Depositor)
720 EAST WISCONSIN AVENUE
MILWAUKEE, WI 53202
1-866-464-3800
STATEMENT OF ADDITIONAL INFORMATION
Variable Executive Life
We no longer issue the Policy described in this Statement of Additional Information.
The Policies we currently offer are described in separate Prospectuses and
Statements of Additional Information.
This Statement of Additional Information (“SAI”) contains additional information regarding the Variable Executive Life insurance policy (the “Policy”) offered by The Northwestern Mutual Life Insurance Company (“Northwestern Mutual”). This SAI is not a prospectus, and should be read together with the prospectus for the Policy (the “Prospectus”) dated May 1, 2023. You may obtain a copy of the Prospectus by writing or calling Northwestern Mutual at the address or phone number shown above, or by visiting www.nmprospectus.com. Capitalized terms in this SAI have the same meanings as in the Prospectus for the Policy.
The date of this Statement of Additional Information is May 1, 2023.
B-1
Table of Contents 
 
Page
B-3
B-3
FINANCIAL STATEMENTS OF THE ACCOUNT
F-1
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL
NM-1
B-2
DISTRIBUTION OF THE POLICY
The Policy is offered on a continuous basis exclusively through individuals who, in addition to being life insurance agents of Northwestern Mutual, are registered representatives of Northwestern Mutual Investment Services, LLC (“NMIS”). NMIS is our wholly-owned company. The principal business address of NMIS is 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
NMIS is the principal underwriter of the Policies for purposes of the federal securities laws. We paid the following amounts to NMIS with respect to sales of variable life insurance policies issued in connection with the Account during the last three fiscal years representing commission payments NMIS made to our agents and related benefits. None of these amounts was retained by NMIS and no amounts were paid to other underwriters or broker-dealers.  
Year
Amount
2022
$499,080
2021
$555,779
2020
$631,328
NMIS also provides certain services related to the administration of payment plans under the Policy pursuant to an administrative services contract with Northwestern Mutual. In exchange for these services, NMIS receives compensation to cover the actual costs incurred by NMIS in performing these services.
EXPERTS
The statutory financial statements of The Northwestern Mutual Life Insurance Company as of December 31, 2022 and 2021 and for each of the three years in the period ended December 31, 2022, and the financial statements of Northwestern Mutual Variable Life Account as of December 31, 2022 and for the periods indicated, included in this Statement of Additional Information constituting part of this Registration Statement, have been so included in reliance on the reports of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. The address of PricewaterhouseCoopers LLP is 833 East Michigan Street, Suite 1200, Milwaukee, Wisconsin 53202.
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Annual Report December 31, 2022

Northwestern Mutual Variable Life Account

Financial Statements

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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, 2022, 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, 2022, 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, 2022 and statement of changes in net assets for the years ended December 31, 2022 and 2021

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.

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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, 2022 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, 2023

We have served as the auditor of one or more of the divisions of Northwestern Mutual Variable Life Account since 1984.

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Northwestern Mutual Variable Life Account

Table of Contents

 

Statements of Assets and Liabilities

      1  

Statements of Operations

      9  

Statements of Changes in Net Assets

      12  

Notes to Financial Statements

      22  

Table of Contents

Statements of Assets and Liabilities

NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT

December 31, 2022 (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.    $ 473,544      $ 233,109      $ 355,171      $ 13,484      $ 1,870,243  
  Fidelity Variable Insurance Products Fund      -        -        -        -        -  
  Neuberger Berman Advisers Management Trust      -        -        -        -        -  
  Russell Investment Funds      -        -        -        -        -  
  Credit Suisse Trust      -        -        -        -        -  

Due from Northwestern Mutual Life Insurance Company

      9        24        -        15        126  
 

Total Assets

      473,553        233,133        355,171        13,499        1,870,369  

Liabilities:

               

Due to Northwestern Mutual Life Insurance Company

      -        -        40        -        -  

Due to Participants

      -        -        -        -        -  
 

Total Liabilities

      -        -        40        -        -  

Total Net Assets

    $ 473,553      $ 233,133      $ 355,131      $ 13,499      $ 1,870,369  
          

Net Assets:

               

Variable Life Policies Issued

               
 

Before October 11, 1995

               
 

Policyowners’ Equity

    $ 37,829      $ 15,536      $ 37,698      $ 642      $ 241,929  
 

Northwestern Mutual Equity

      298        86        273        5        1,284  

Variable CompLife Policies Issued Between

               
 

October 11, 1995 and December 31, 2008 (2)

               
 

Policyowners’ Equity

      416,506        196,419        301,383        12,333        1,543,264  
 

Northwestern Mutual Equity

      3,918        1,890        2,843        116        12,562  

Variable Executive Life Policies Issued Between

               
 

March 2, 1998 and December 31, 2008 (3)

               
 

Policyowners’ Equity

      7,221        4,277        5,996        179        28,456  

Variable Joint Life Policies Issued Between

               
 

December 10, 1998 and December 31, 2008 (4)

               
 

Policyowners’ Equity

      7,781        14,925        6,938        224        42,874  

Total Net Assets

    $ 473,553      $ 233,133      $ 355,131      $ 13,499      $ 1,870,369  
          

(1)

   Investments, at cost    $ 637,299      $ 244,256      $ 376,827      $ 14,734      $ 1,120,560  
  Mutual Fund Shares Held      231,789        85,607        246,304        12,474        293,142  

(2)

   Accumulation Unit Value    $ 6.519135      $ 7.143158      $ 5.751529      $ 2.695547      $ 9.299270  
  Units Outstanding      64,490        27,762        52,895        4,618        167,306  

(3)

   Accumulation Unit Value    $ 93.238655      $ 78.340181      $ 81.491845      $ 23.885115      $ 220.942531  
  Units Outstanding      77        55        74        7        129  

(4)

   Accumulation Unit Value    $ 93.238655      $ 78.340181      $ 81.491845      $ 23.885115      $ 220.942531  
  Units Outstanding      83        191        85        9        194  

 

(a)

Amount is less than 500

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

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Table of Contents

Statements of Assets and Liabilities

NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT

December 31, 2022 (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.    $ 30,763      $ 235,717      $ 151,848      $ 533,542      $ 411,862  
  Fidelity Variable Insurance Products Fund      -        -        -        -        -  
  Neuberger Berman Advisers Management Trust      -        -        -        -        -  
  Russell Investment Funds      -        -        -        -        -  
  Credit Suisse Trust      -        -        -        -        -  

Due from Northwestern Mutual Life Insurance Company

      1        23        1        -        7  
 

Total Assets

      30,764        235,740        151,849        533,542        411,869  

Liabilities:

               

Due to Northwestern Mutual Life Insurance Company

      -        -        -        36        -  

Due to Participants

      -        -        -        -        -  
 

Total Liabilities

      -        -        -        36        -  

Total Net Assets

    $ 30,764      $ 235,740      $ 151,849      $ 533,506      $ 411,869  
          

Net Assets:

               

Variable Life Policies Issued

               
 

Before October 11, 1995

               
 

Policyowners’ Equity

    $ 2,003      $ 18,601      $ 11,842      $ 72,220      $ 19,938  
 

Northwestern Mutual Equity

      11        122        68        596        114  

Variable CompLife Policies Issued Between

               
 

October 11, 1995 and December 31, 2008 (2)

               
 

Policyowners’ Equity

      26,480        203,413        128,621        444,341        365,242  
 

Northwestern Mutual Equity

      240        2,125        1,258        4,329        3,308  

Variable Executive Life Policies Issued Between

               
 

March 2, 1998 and December 31, 2008 (3)

               
 

Policyowners’ Equity

      1,583        4,293        3,953        4,169        10,008  

Variable Joint Life Policies Issued Between

               
 

December 10, 1998 and December 31, 2008 (4)

               
 

Policyowners’ Equity

      447        7,186        6,107        7,851        13,259  

Total Net Assets

    $ 30,764      $ 235,740      $ 151,849      $ 533,506      $ 411,869  
          

(1)

   Investments, at cost    $ 33,415      $ 188,190      $ 148,863      $ 627,086      $ 369,033  
  Mutual Fund Shares Held      33,329        144,523        89,851        196,734        208,961  

(2)

   Accumulation Unit Value    $ 2.872695      $ 3.809453      $ 4.542924      $ 5.642367      $ 6.851532  
  Units Outstanding      9,301        53,955        28,589        79,518        53,791  

(3)

   Accumulation Unit Value    $ 25.046912      $ 42.219400      $ 49.822897      $ 162.785136      $ 81.117713  
  Units Outstanding      63        102        79        26        123  

(4)

   Accumulation Unit Value    $ 25.046912      $ 42.219400      $ 49.822897      $ 162.785136      $ 81.117713  
  Units Outstanding      18        170        123        48        163  

 

(a)

Amount is less than 500

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

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Statements of Assets and Liabilities

NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT

December 31, 2022 (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.    $ 87,500      $ 293,167      $ 67,290      $ 198,700      $ 125,424  
  Fidelity Variable Insurance Products Fund      -        -        -        -        -  
  Neuberger Berman Advisers Management Trust      -        -        -        -        -  
  Russell Investment Funds      -        -        -        -        -  
  Credit Suisse Trust      -        -        -        -        -  

Due from Northwestern Mutual Life Insurance Company

      -        40        10        16        16  
 

Total Assets

      87,500        293,207        67,300        198,716        125,440  

Liabilities:

               

Due to Northwestern Mutual Life Insurance Company

      5        -        -        -        -  

Due to Participants

      -        -        -        -        -  
 

Total Liabilities

      5        -        -        -        -  

Total Net Assets

    $ 87,495      $ 293,207      $ 67,300      $ 198,716      $ 125,440  
          

Net Assets:

               

Variable Life Policies Issued

               
 

Before October 11, 1995

               
 

Policyowners’ Equity

    $ 4,954      $ 14,660      $ 4,625      $ 12,978      $ 6,629  
 

Northwestern Mutual Equity

      30        101        31        92        48  

Variable CompLife Policies Issued Between

               
 

October 11, 1995 and December 31, 2008 (2)

               
 

Policyowners’ Equity

      76,755        265,223        58,381        175,081        109,160  
 

Northwestern Mutual Equity

      733        2,678        527        1,816        1,174  

Variable Executive Life Policies Issued Between

               
 

March 2, 1998 and December 31, 2008 (3)

               
 

Policyowners’ Equity

      2,415        3,112        1,436        2,573        3,595  

Variable Joint Life Policies Issued Between

               
 

December 10, 1998 and December 31, 2008 (4)

               
 

Policyowners’ Equity

      2,608        7,433        2,300        6,176        4,834  

Total Net Assets

    $ 87,495      $ 293,207      $ 67,300      $ 198,716      $ 125,440  
          

(1)

   Investments, at cost    $ 87,791      $ 351,633      $ 69,160      $ 220,117      $ 111,339  
  Mutual Fund Shares Held      53,353        154,787        48,410        109,718        77,137  

(2)

   Accumulation Unit Value    $ 5.566271      $ 5.714778      $ 2.785729      $ 5.177211      $ 2.742354  
  Units Outstanding      13,921        46,879        21,146        34,168        40,234  

(3)

   Accumulation Unit Value    $ 61.046817      $ 77.536313      $ 32.084276      $ 57.377496      $ 30.392880  
  Units Outstanding      40        40        45        45        118  

(4)

   Accumulation Unit Value    $ 61.046817      $ 77.536313      $ 32.084276      $ 57.377496      $ 30.392880  
  Units Outstanding      43        96        72        108        159  

 

(a)

Amount is less than 500

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

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Statements of Assets and Liabilities

NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT

December 31, 2022 (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.    $ 64,670      $ 480,870      $ 69,404      $ 184,961      $ 33,473  
  Fidelity Variable Insurance Products Fund      -        -        -        -        -  
  Neuberger Berman Advisers Management Trust      -        -        -        -        -  
  Russell Investment Funds      -        -        -        -        -  
  Credit Suisse Trust      -        -        -        -        -  

Due from Northwestern Mutual Life Insurance Company

      5        251        45        -        3  
 

Total Assets

      64,675        481,121        69,449        184,961        33,476  

Liabilities:

               

Due to Northwestern Mutual Life Insurance Company

      -        -        -        258        -  

Due to Participants

      -        -        -        -        -  
 

Total Liabilities

      -        -        -        258        -  

Total Net Assets

    $ 64,675      $ 481,121      $ 69,449      $ 184,703      $ 33,476  
          

Net Assets:

               

Variable Life Policies Issued

               
 

Before October 11, 1995

               
 

Policyowners’ Equity

    $ 3,929      $ 56,188      $ 3,740      $ 17,187      $ 3,293  
 

Northwestern Mutual Equity

      30        598        33        152        18  

Variable CompLife Policies Issued Between

               
 

October 11, 1995 and December 31, 2008 (2)

               
 

Policyowners’ Equity

      55,520        400,073        59,593        144,129        25,739  
 

Northwestern Mutual Equity

      491        4,357        560        2,136        243  

Variable Executive Life Policies Issued Between

               
 

March 2, 1998 and December 31, 2008 (3)

               
 

Policyowners’ Equity

      2,223        7,791        2,322        13,860        2,060  

Variable Joint Life Policies Issued Between

               
 

December 10, 1998 and December 31, 2008 (4)

               
 

Policyowners’ Equity

      2,482        12,114        3,201        7,239        2,123  

Total Net Assets

    $ 64,675      $ 481,121      $ 69,449      $ 184,703      $ 33,476  
          

(1)

   Investments, at cost    $ 67,278      $ 592,719      $ 80,552      $ 184,961      $ 35,574  
  Mutual Fund Shares Held      65,722        343,233        77,633        184,961        33,811  

(2)

   Accumulation Unit Value    $ 1.512130      $ 3.475261      $ 0.943204      $ 1.573979      $ 1.064107  
  Units Outstanding      37,041        116,374        63,775        92,927        24,417  

(3)

   Accumulation Unit Value    $ 14.933069      $ 5.525225      $ 11.640958      $ 44.076838      $ 13.311816  
  Units Outstanding      149        1,410        199        314        155  

(4)

   Accumulation Unit Value    $ 14.933069      $ 5.525225      $ 11.640958      $ 44.076838      $ 13.311816  
  Units Outstanding      166        2,193        275        164        159  

 

(a)

Amount is less than 500

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

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Table of Contents

Statements of Assets and Liabilities

NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT

December 31, 2022 (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.    $ 252,579      $ 13,105      $ 18,175      $ 107,713      $ 52,582  
  Fidelity Variable Insurance Products Fund      -        -        -        -        -  
  Neuberger Berman Advisers Management Trust      -        -        -        -        -  
  Russell Investment Funds      -        -        -        -        -  
  Credit Suisse Trust      -        -        -        -        -  

Due from Northwestern Mutual Life Insurance Company

      160        10        3        -        12  
 

Total Assets

      252,739        13,115        18,178        107,713        52,594  

Liabilities:

               

Due to Northwestern Mutual Life Insurance Company

      -        -        -        7        -  

Due to Participants

      -        -        -        -        -  
 

Total Liabilities

      -        -        -        7        -  

Total Net Assets

    $ 252,739      $ 13,115      $ 18,178      $ 107,706      $ 52,594  
          

Net Assets:

               

Variable Life Policies Issued

               
 

Before October 11, 1995

               
 

Policyowners’ Equity

    $ 20,139      $ 873      $ 1,470      $ 7,302      $ 2,777  
 

Northwestern Mutual Equity

      200        11        12        69        23  

Variable CompLife Policies Issued Between

               
 

October 11, 1995 and December 31, 2008 (2)

               
 

Policyowners’ Equity

      201,622        11,560        14,578        93,168        44,559  
 

Northwestern Mutual Equity

      2,312        155        124        886        391  

Variable Executive Life Policies Issued Between

               
 

March 2, 1998 and December 31, 2008 (3)

               
 

Policyowners’ Equity

      16,894        142        1,057        4,128        2,541  

Variable Joint Life Policies Issued Between

               
 

December 10, 1998 and December 31, 2008 (4)

               
 

Policyowners’ Equity

      11,572        374        937        2,153        2,303  

Total Net Assets

    $ 252,739      $ 13,115      $ 18,178      $ 107,706      $ 52,594  
          

(1)

   Investments, at cost    $ 301,715      $ 20,748      $ 20,856      $ 123,309      $ 62,273  
  Mutual Fund Shares Held      236,497        20,162        17,326        171,792        57,719  

(2)

   Accumulation Unit Value    $ 2.787014      $ 1.238002      $ 1.175952      $ 4.330519      $ 1.341429  
  Units Outstanding      73,173        9,463        12,502        21,719        33,509  

(3)

   Accumulation Unit Value    $ 228.662825      $ 17.947739      $ 15.909250      $ 59.175445      $ 18.966369  
  Units Outstanding      74        8        66        70        134  

(4)

   Accumulation Unit Value    $ 228.662825      $ 17.947739      $ 15.909250      $ 59.175445      $ 18.966369  
  Units Outstanding      51        21        59        36        121  

 

(a)

Amount is less than 500

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

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Table of Contents

Statements of Assets and Liabilities

NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT

December 31, 2022 (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.    $ 377,096      $ 54,218      $ -      $ -      $ -  
  Fidelity Variable Insurance Products Fund      -        -        198,102        68,132        -  
  Neuberger Berman Advisers Management Trust      -        -        -        -        7,724  
  Russell Investment Funds      -        -        -        -        -  
  Credit Suisse Trust      -        -        -        -        -  

Due from Northwestern Mutual Life Insurance Company

      15        -        3        5        -  
 

Total Assets

      377,111        54,218        198,105        68,137        7,724  

Liabilities:

               

Due to Northwestern Mutual Life Insurance Company

      -        7        -        -        -  

Due to Participants

      -        -        -        -        -  
 

Total Liabilities

      -        7        -        -        -  

Total Net Assets

    $ 377,111      $ 54,211      $ 198,105      $ 68,137      $ 7,724  
          

Net Assets:

               

Variable Life Policies Issued

               
 

Before October 11, 1995

               
 

Policyowners’ Equity

    $ 166,292      $ 8,030      $ 15,675      $ 6,920      $ 495  
 

Northwestern Mutual Equity

      1,152        64        96        39        3  

Variable CompLife Policies Issued Between

               
 

October 11, 1995 and December 31, 2008 (2)

               
 

Policyowners’ Equity

      192,694        42,800        172,116        56,175        6,017  
 

Northwestern Mutual Equity

      2,258        418        1,845        541        51  

Variable Executive Life Policies Issued Between

               
 

March 2, 1998 and December 31, 2008 (3)

               
 

Policyowners’ Equity

      8,052        1,061        2,496        967        289  

Variable Joint Life Policies Issued Between

               
 

December 10, 1998 and December 31, 2008 (4)

               
 

Policyowners’ Equity

      6,663        1,838        5,877        3,495        869  

Total Net Assets

    $ 377,111      $ 54,211      $ 198,105      $ 68,137      $ 7,724  
          

(1)

   Investments, at cost    $ 440,700      $ 62,347      $ 210,154      $ 70,954      $ 7,758  
  Mutual Fund Shares Held      311,908        53,469        6,054        1,799        288  

(2)

   Accumulation Unit Value    $ 4.529277      $ 2.801154      $ 6.879567      $ 2.957075      $ 2.701399  
  Units Outstanding      43,043        15,429        25,287        19,180        2,246  

(3)

   Accumulation Unit Value    $ 256.387829      $ 31.043666      $ 75.449401      $ 33.189569      $ 30.111716  
  Units Outstanding      31        34        33        29        10  

(4)

   Accumulation Unit Value    $ 256.387829      $ 31.043666      $ 75.449401      $ 33.189569      $ 30.111716  
  Units Outstanding      26        59        78        105        29  

 

(a)

Amount is less than 500

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

F-6

Table of Contents

Statements of Assets and Liabilities

NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT

December 31, 2022 (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      246,234        112,905        127,063        77,559        153,356  
  Credit Suisse Trust      -        -        -        -        -  

Due from Northwestern Mutual Life Insurance Company

      4        -        2        29        25  
 

Total Assets

      246,238        112,905        127,065        77,588        153,381  

Liabilities:

               

Due to Northwestern Mutual Life Insurance Company

      -        6        -        -        -  

Due to Participants

      -        -        -        -        -  
 

Total Liabilities

      -        6        -        -        -  

Total Net Assets

    $ 246,238      $ 112,899      $ 127,065      $ 77,588      $ 153,381  
          

Net Assets:

               

Variable Life Policies Issued

               
 

Before October 11, 1995

               
 

Policyowners’ Equity

    $ 9,004      $ 5,322      $ 7,248      $ 4,667      $ 7,938  
 

Northwestern Mutual Equity

      58        34        64        58        67  

Variable CompLife Policies Issued Between

               
 

October 11, 1995 and December 31, 2008 (2)

               
 

Policyowners’ Equity

      214,277        100,022        109,219        58,820        134,615  
 

Northwestern Mutual Equity

      2,175        1,110        1,162        680        1,548  

Variable Executive Life Policies Issued Between

               
 

March 2, 1998 and December 31, 2008 (3)

               
 

Policyowners’ Equity

      11,224        2,979        5,610        10,572        3,398  

Variable Joint Life Policies Issued Between

               
 

December 10, 1998 and December 31, 2008 (4)

               
 

Policyowners’ Equity

      9,500        3,432        3,762        2,791        5,815  

Total Net Assets

    $ 246,238      $ 112,899      $ 127,065      $ 77,588      $ 153,381  
          

(1)

   Investments, at cost    $ 261,493      $ 127,905      $ 132,623      $ 92,788      $ 175,063  
  Mutual Fund Shares Held      15,764        8,989        12,055        8,874        12,428  

(2)

   Accumulation Unit Value    $ 2.934959      $ 3.759233      $ 2.087569      $ 2.223157      $ 4.725257  
  Units Outstanding      73,749        26,902        52,875        26,764        28,816  

(3)

   Accumulation Unit Value    $ 33.915304      $ 44.554659      $ 23.567997      $ 24.607660      $ 52.232355  
  Units Outstanding      331        67        238        430        65  

(4)

   Accumulation Unit Value    $ 33.915304      $ 44.554659      $ 23.567997      $ 24.607660      $ 52.232355  
  Units Outstanding      280        77        160        113        111  
(a)

Amount is less than 500

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

F-7

Table of Contents

Statements of Assets and Liabilities

NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT

December 31, 2022 (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      7,814       22,112        22,174        9,927        -  
  Credit Suisse Trust      -       -        -        -        42,476  

Due from Northwestern Mutual Life Insurance Company

      -       4        7        -        -  
 

Total Assets

      7,814       22,116        22,181        9,927        42,476  

Liabilities:

              

Due to Northwestern Mutual Life Insurance Company

      3       -        -        3        29  

Due to Participants

      -       -        -        -        -  
 

Total Liabilities

      3       -        -        3        29  

Total Net Assets

    $ 7,811     $ 22,116      $ 22,181      $ 9,924      $ 42,447  
          

Net Assets:

              

Variable Life Policies Issued

              
 

Before October 11, 1995

              
 

Policyowners’ Equity

    $ 1,735     $ 3,658      $ 4,869      $ 1,206      $ 2,109  
 

Northwestern Mutual Equity

      14       42        38        4        19  

Variable CompLife Policies Issued Between

              
 

October 11, 1995 and December 31, 2008 (2)

              
 

Policyowners’ Equity

      5,077       15,656        17,001        7,079        37,112  
 

Northwestern Mutual Equity

      48       193        199        85        375  

Variable Executive Life Policies Issued Between

              
 

March 2, 1998 and December 31, 2008 (3)

              
 

Policyowners’ Equity

      936       1,920        10        503        1,022  

Variable Joint Life Policies Issued Between

              
 

December 10, 1998 and December 31, 2008 (4)

              
 

Policyowners’ Equity

      1       647        64        1,047        1,810  

Total Net Assets

    $ 7,811     $ 22,116      $ 22,181      $ 9,924      $ 42,447  
          

(1)

   Investments, at cost    $ 9,138     $ 26,332      $ 26,527      $ 11,782      $ 41,129  
  Mutual Fund Shares Held      924       2,706        2,717        1,288        1,732  

(2)

   Accumulation Unit Value    $ 1.375959     $ 1.554499      $ 1.693764      $ 1.762210      $ 7.292246  
  Units Outstanding      3,724       10,196        10,155        4,066        5,141  

(3)

   Accumulation Unit Value    $ 17.208370     $ 18.279960      $ 18.571091      $ 17.639237      $ 6.964941  
  Units Outstanding      54       105        1        28        147  

(4)

   Accumulation Unit Value    $ 17.208370     $ 18.279960      $ 18.571091      $ 17.639237      $ 6.964941  
  Units Outstanding      - (a)      35        4        59        260  

 

(a) 

Amount is less than 500

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

F-8

Table of Contents

Statements of Operations

NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT

For the Year Ended December 31, 2022 (in thousands)

 

           Focused                    
     Growth Stock     Appreciation     Large Cap Core     Large Cap     Index 500  
     Division     Division     Stock Division     Blend Division     Stock Division  

Income:

           

Dividend income

    $ -     $ 35     $ 3,355     $ 88     $ 24,813  

Expenses:

           

Mortality and expense risk charges

      2,519       1,057       1,673       61       8,767  

Taxes

      23       9       21       -       131  

Total expenses

      2,542       1,066       1,694       61       8,898  

Net investment income (loss)

      (2,542 )      (1,031 )      1,661       27       15,915  

Realized gain (loss) on investments:

           

Realized gain (loss) on sale of fund shares

      5,697       6,007       4,708       181       40,326  

Realized gain distribution

      95,552       30,117       68,855       1,186       63,047  

Realized gains (losses)

      101,249       36,124       73,563       1,367       103,373  

Change in unrealized appreciation/(depreciation) of investments during the period

      (405,616 )      (126,173 )      (161,349 )      (3,669 )      (553,228 ) 

Net increase (decrease) in net assets resulting from operations

    $ (306,909 )    $ (91,080 )    $ (86,125 )    $ (2,275 )    $ (433,940 ) 
        
     Large                 Mid Cap        
     Company Value     Domestic     Equity Income     Growth Stock     Index 400  
     Division     Equity Division     Division     Division     Stock Division  

Income:

           

Dividend income

    $ 905     $ 3,944     $ 3,105     $ 847     $ 4,596  

Expenses:

           

Mortality and expense risk charges

      116       1,005       646       2,559       1,802  

Taxes

      1       9       6       39       11  

Total expenses

      117       1,014       652       2,598       1,813  

Net investment income (loss)

      788       2,930       2,453       (1,751 )      2,783  

Realized gain (loss) on investments:

           

Realized gain (loss) on sale of fund shares

      379       4,899       2,686       (985 )      4,899  

Realized gain distribution

      5,350       25,759       16,915       51,787       43,427  

Realized gains (losses)

      5,729       30,658       19,601       50,802       48,326  

Change in unrealized appreciation/(depreciation) of investments during the period

      (6,610 )      (42,102 )      (27,796 )      (221,395 )      (117,191 ) 

Net increase (decrease) in net assets resulting from operations

    $ (93 )    $ (8,514 )    $ (5,742 )    $ (172,344 )    $ (66,082 ) 
        
           Small Cap                 International  
     Mid Cap Value     Growth Stock     Index 600     Small Cap     Growth  
     Division     Division     Stock Division     Value Division     Division  

Income:

           

Dividend income

    $ 1,634     $ -     $ 681     $ 554     $ 730  

Expenses:

           

Mortality and expense risk charges

      366       1,393       293       917       548  

Taxes

      3       8       2       7       4  

Total expenses

      369       1,401       295       924       552  

Net investment income (loss)

      1,265       (1,401 )      386       (370 )      178  

Realized gain (loss) on investments:

           

Realized gain (loss) on sale of fund shares

      408       3,484       901       2,340       1,836  

Realized gain distribution

      12,574       54,508       5,922       27,756       13,521  

Realized gains (losses)

      12,982       57,992       6,823       30,096       15,357  

Change in unrealized appreciation/(depreciation) of investments during the period

      (15,400 )      (176,864 )      (20,221 )      (76,413 )      (54,266 ) 

Net increase (decrease) in net assets resulting from operations

    $ (1,153 )    $ (120,273 )    $ (13,012 )    $ (46,687 )    $ (38,731 ) 
        

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

F-9

Table of Contents

Statements of Operations

NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT

For the Year Ended December 31, 2022 (in thousands)

 

     Research           Emerging     Government        
     International     International     Markets Equity     Money Market     Short-Term  
     Core Division     Equity Division     Division     Division     Bond Division  

Income:

           

Dividend income

    $ 1,415     $ 11,571     $ 889     $ 2,471     $ 453  

Expenses:

           

Mortality and expense risk charges

      271       2,103       305       724       123  

Taxes

      2       28       2       7       2  

Total expenses

      273       2,131       307       731       125  

Net investment income (loss)

      1,142       9,440       582       1,740       328  

Realized gain (loss) on investments:

           

Realized gain (loss) on sale of fund shares

      616       (2,342 )      363       -       (140 ) 

Realized gain distribution

      3,387       12,958       5,576       3       68  

Realized gains (losses)

      4,003       10,616       5,939       3       (72 ) 

Change in unrealized appreciation/(depreciation) of investments during the period

      (18,449 )      (57,459 )      (29,829 )      -       (1,829 ) 

Net increase (decrease) in net assets resulting from operations

    $ (13,304 )    $ (37,403 )    $ (23,308 )    $ 1,743     $ (1,573 ) 
        
           Long-Term U.S.     Inflation              
     Select Bond     Government     Protection     High Yield     Multi-Sector  
     Division     Bond Division     Division     Bond Division     Bond Division  

Income:

           

Dividend income

    $ 4,525     $ 233     $ 663     $ 6,374     $ 2,171  

Expenses:

           

Mortality and expense risk charges

      1,056       62       83       477       222  

Taxes

      10       1       1       4       1  

Total expenses

      1,066       63       84       481       223  

Net investment income (loss)

      3,459       170       579       5,893       1,948  

Realized gain (loss) on investments:

           

Realized gain (loss) on sale of fund shares

      (1,218 )      (1,993 )      262       (953 )      (892 ) 

Realized gain distribution

      347       -       443       -       21  

Realized gains (losses)

      (871 )      (1,993 )      705       (953 )      (871 ) 

Change in unrealized appreciation/(depreciation) of investments during the period

      (42,485 )      (3,331 )      (4,282 )      (19,481 )      (10,963 ) 

Net increase (decrease) in net assets resulting from operations

    $ (39,897 )    $ (5,154 )    $ (2,998 )    $ (14,541 )    $ (9,886 ) 
        
           Asset           Fidelity VIP     AMT  
     Balanced     Allocation     Fidelity VIP Mid     Contrafund     Sustainable  
     Division     Division     Cap Division     Division     Equity Division  

Income:

           

Dividend income

    $ 14,789     $ 1,616     $ 1,029     $ 383     $ 36  

Expenses:

           

Mortality and expense risk charges

      1,786       246       885       321       31  

Taxes

      88       4       8       4       -  

Total expenses

      1,874       250       893       325       31  

Net investment income (loss)

      12,915       1,366       136       58       5  

Realized gain (loss) on investments:

           

Realized gain (loss) on sale of fund shares

      920       (460 )      1,225       1,342       229  

Realized gain distribution

      25,315       4,032       13,427       3,617       758  

Realized gains (losses)

      26,235       3,572       14,652       4,959       987  

Change in unrealized appreciation/(depreciation) of investments during the period

      (104,331 )      (14,915 )      (50,724 )      (30,468 )      (2,790 ) 

Net increase (decrease) in net assets resulting from operations

    $ (65,181 )    $ (9,977 )    $ (35,936 )    $ (25,451 )    $ (1,798 ) 
        

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

F-10

Table of Contents

Statements of Operations

NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT

For the Year Ended December 31, 2022 (in thousands)

 

                 International        
     U.S. Strategic     U.S. Small Cap     Developed     Strategic Bond  
     Equity Division     Equity Division     Markets Division     Division  

Income:

         

Dividend income

    $ 1,585     $ 229     $ -     $ 1,968  

Expenses:

         

Mortality and expense risk charges

      1,099       502       534       303  

Taxes

      5       3       4       2  

Total expenses

      1,104       505       538       305  

Net investment income (loss)

      481       (276 )      (538 )      1,663  

Realized gain (loss) on investments:

         

Realized gain (loss) on sale of fund shares

      3,087       1,648       (806 )      (639 ) 

Realized gain distribution

      19,975       2,433       2,490       51  

Realized gains (losses)

      23,062       4,081       1,684       (588 ) 

Change in unrealized appreciation/(depreciation) of investments during the period

      (90,770 )      (26,155 )      (20,709 )      (14,276 ) 

Net increase (decrease) in net assets resulting from operations

    $ (67,227 )    $ (22,350 )    $ (19,563 )    $ (13,201 ) 
        
     Global Real     LifePoints     LifePoints     LifePoints  
     Estate     Moderate     Balanced     Growth  
     Securities     Strategy     Strategy     Strategy  
     Division     Division     Division     Division  

Income:

         

Dividend income

    $ 2,182     $ 152     $ 418     $ 309  

Expenses:

         

Mortality and expense risk charges

      735       34       97       107  

Taxes

      5       1       2       3  

Total expenses

      740       35       99       110  

Net investment income (loss)

      1,442       117       319       199  

Realized gain (loss) on investments:

         

Realized gain (loss) on sale of fund shares

      1,112       (155 )      (476 )      (228 ) 

Realized gain distribution

      1,516       236       863       1,100  

Realized gains (losses)

      2,628       81       387       872  

Change in unrealized appreciation/(depreciation) of investments during the period

      (60,912 )      (1,788 )      (5,374 )      (5,931 ) 

Net increase (decrease) in net assets resulting from operations

    $ (56,842 )    $ (1,590 )    $ (4,668 )    $ (4,860 ) 
        
           Credit Suisse              
     LifePoints     Trust              
     Equity Growth     Commodity              
     Strategy     Return Strategy              
     Division     Division              

Income:

         

Dividend income

    $ 127     $ 7,070      

Expenses:

         

Mortality and expense risk charges

      40       189      

Taxes

      1       1      

Total expenses

      41       190      

Net investment income (loss)

      86       6,880      

Realized gain (loss) on investments:

         

Realized gain (loss) on sale of fund shares

      (90 )      502      

Realized gain distribution

      520       -      

Realized gains (losses)

      430       502      

Change in unrealized appreciation/(depreciation) of investments during the period

      (2,701 )      (1,871 )     

Net increase (decrease) in net assets resulting from operations

    $ (2,185 )    $ 5,511      
            

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

F-11

Table of Contents

Statements of Changes in Net Assets

NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT

(in thousands)

 

     Growth Stock Division            Focused Appreciation Division  
     Year Ended
December 31,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ (2,542 )    $ (3,383 )       $ (1,031 )    $ (788 ) 

Net realized gains (losses)

      101,249       53,178          36,124       42,639  

Net change in unrealized appreciation/(depreciation)

      (405,616 )      63,707          (126,173 )      9,939  

Net increase (decrease) in net assets resulting from operations

      (306,909 )      113,502          (91,080 )      51,790  

Policy Transactions:

            

Policy owners’ net payments

      12,453       9,241          5,060       3,607  

Policy loans, surrenders and death benefits

      (14,304 )      (19,799 )         (5,627 )      (6,488 ) 

Mortality and other (net)

      (9,617 )      (11,856 )         (4,289 )      (4,702 ) 

Transfers from other divisions or sponsor

      10,573       62,782          18,740       23,564  

Transfers to other divisions or sponsor

      (13,974 )      (71,073 )         (15,244 )      (26,960 ) 
Net increase (decrease) in net assets resulting from contract transactions      (14,869 )      (30,705 )         (1,360 )      (10,979 ) 

Net increase (decrease) in net assets

      (321,778 )      82,797          (92,440 )      40,811  

Net Assets:

            

Beginning of period

      795,331       712,534          325,573       284,762  

End of period

    $ 473,553     $ 795,331        $ 233,133     $ 325,573  
                   

Units issued during the period

      3,411       3,945          2,757       2,231  

Units redeemed during the period

      (5,015 )      (6,361 )         (2,623 )      (3,242 ) 

Net units issued (redeemed) during period

      (1,604 )      (2,416 )         134       (1,011 ) 
                   
     Large Cap Core Stock Division            Large Cap Blend Division  
     Year Ended
December 31,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ 1,661     $ 1,466        $ 27     $ 32  

Net realized gains (losses)

      73,563       39,811          1,367       1,365  

Net change in unrealized appreciation/(depreciation)

      (161,349 )      49,073          (3,669 )      1,049  

Net increase (decrease) in net assets resulting from operations

      (86,125 )      90,350          (2,275 )      2,446  

Policy Transactions:

            

Policy owners’ net payments

      7,963       6,050          269       426  

Policy loans, surrenders and death benefits

      (8,785 )      (10,487 )         (582 )      (348 ) 

Mortality and other (net)

      (7,266 )      (7,035 )         (255 )      (245 ) 

Transfers from other divisions or sponsor

      5,577       22,702          1,908       2,072  

Transfers to other divisions or sponsor

      (6,657 )      (24,633 )         (1,616 )      (2,071 ) 
Net increase (decrease) in net assets resulting from contract transactions      (9,168 )      (13,403 )         (276 )      (166 ) 

Net increase (decrease) in net assets

      (95,293 )      76,947          (2,551 )      2,280  

Net Assets:

            

Beginning of period

      450,424       373,477          16,050       13,770  

End of period

    $ 355,131     $ 450,424        $ 13,499     $ 16,050  
                   

Units issued during the period

      2,786       3,256          831       759  

Units redeemed during the period

      (3,839 )      (4,954 )         (933 )      (846 ) 

Net units issued (redeemed) during period

      (1,053 )      (1,698 )         (102 )      (87 ) 
                   

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

F-12

Table of Contents

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,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ 15,915     $ 16,638        $ 788     $ 162  

Net realized gains (losses)

      103,373       120,887          5,729       768  

Net change in unrealized appreciation/(depreciation)

      (553,228 )      382,145          (6,610 )      3,289  

Net increase (decrease) in net assets resulting from operations

      (433,940 )      519,670          (93 )      4,219  

Policy Transactions:

            

Policy owners’ net payments

      36,671       30,333          527       515  

Policy loans, surrenders and death benefits

      (42,810 )      (51,399 )         (747 )      (637 ) 

Mortality and other (net)

      (34,158 )      (33,458 )         (484 )      (319 ) 

Transfers from other divisions or sponsor

      64,356       134,699          11,194       11,886  

Transfers to other divisions or sponsor

      (58,786 )      (165,932 )         (5,516 )      (7,207 ) 
Net increase (decrease) in net assets resulting from contract transactions      (34,727 )      (85,757 )         4,974       4,238  

Net increase (decrease) in net assets

      (468,667 )      433,913          4,881       8,457  

Net Assets:

            

Beginning of period

      2,339,036       1,905,123          25,883       17,426  

End of period

    $ 1,870,369     $ 2,339,036        $ 30,764     $ 25,883  
                   

Units issued during the period

      9,253       9,806          3,420       3,022  

Units redeemed during the period

      (12,188 )      (14,773 )         (1,824 )      (1,521 ) 

Net units issued (redeemed) during period

      (2,935 )      (4,967 )         1,596       1,501  
                   
     Domestic Equity Division            Equity Income Division  
     Year Ended
December 31,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ 2,930     $ 3,164        $ 2,453     $ 2,400  

Net realized gains (losses)

      30,658       12,699          19,601       4,253  

Net change in unrealized appreciation/(depreciation)

      (42,102 )      30,194          (27,796 )      25,253  

Net increase (decrease) in net assets resulting from operations

      (8,514 )      46,057          (5,742 )      31,906  

Policy Transactions:

            

Policy owners’ net payments

      5,592       4,267          3,236       1,960  

Policy loans, surrenders and death benefits

      (4,722 )      (6,043 )         (3,068 )      (2,861 ) 

Mortality and other (net)

      (4,366 )      (3,879 )         (2,818 )      (2,477 ) 

Transfers from other divisions or sponsor

      8,234       16,885          15,490       15,731  

Transfers to other divisions or sponsor

      (8,901 )      (21,766 )         (12,476 )      (16,855 ) 
Net increase (decrease) in net assets resulting from contract transactions      (4,163 )      (10,536 )         364       (4,502 ) 

Net increase (decrease) in net assets

      (12,677 )      35,521          (5,378 )      27,404  

Net Assets:

            

Beginning of period

      248,417       212,896          157,227       129,823  

End of period

    $ 235,740     $ 248,417        $ 151,849     $ 157,227  
                   

Units issued during the period

      3,201       3,626          3,379       2,961  

Units redeemed during the period

      (4,094 )      (6,194 )         (3,378 )      (4,030 ) 

Net units issued (redeemed) during period

      (893 )      (2,568 )         1       (1,069 ) 
                   

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

F-13

Table of Contents

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,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ (1,751 )    $ (2,178 )       $ 2,783     $ 2,231  

Net realized gains (losses)

      50,802       97,935          48,326       23,014  

Net change in unrealized appreciation/(depreciation)

      (221,395 )      (30,710 )         (117,191 )      70,138  

Net increase (decrease) in net assets resulting from operations

      (172,344 )      65,047          (66,082 )      95,383  

Policy Transactions:

            

Policy owners’ net payments

      14,264       13,156          8,749       6,919  

Policy loans, surrenders and death benefits

      (12,947 )      (19,857 )         (7,849 )      (11,545 ) 

Mortality and other (net)

      (10,432 )      (11,435 )         (6,885 )      (6,848 ) 

Transfers from other divisions or sponsor

      4,867       26,488          16,186       48,241  

Transfers to other divisions or sponsor

      (8,864 )      (31,142 )         (16,758 )      (51,270 ) 
Net increase (decrease) in net assets resulting from contract transactions      (13,112 )      (22,790 )         (6,557 )      (14,503 ) 

Net increase (decrease) in net assets

      (185,456 )      42,257          (72,639 )      80,880  

Net Assets:

            

Beginning of period

      718,962       676,705          484,508       403,628  

End of period

    $ 533,506     $ 718,962        $ 411,869     $ 484,508  
                   

Units issued during the period

      4,107       4,270          3,114       4,093  

Units redeemed during the period

      (5,859 )      (6,913 )         (3,739 )      (5,807 ) 

Net units issued (redeemed) during period

      (1,752 )      (2,643 )         (625 )      (1,714 ) 
                   
     Mid Cap Value Division            Small Cap Growth Stock
Division		  
     Year Ended
December 31,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ 1,265     $ 585        $ (1,401 )    $ (1,817 ) 

Net realized gains (losses)

      12,982       2,057          57,992       50,993  

Net change in unrealized appreciation/(depreciation)

      (15,400 )      13,560          (176,864 )      (33,648 ) 

Net increase (decrease) in net assets resulting from operations

      (1,153 )      16,202          (120,273 )      15,528  

Policy Transactions:

            

Policy owners’ net payments

      1,875       1,240          7,997       5,602  

Policy loans, surrenders and death benefits

      (2,020 )      (1,887 )         (8,128 )      (11,555 ) 

Mortality and other (net)

      (1,551 )      (1,354 )         (5,264 )      (6,388 ) 

Transfers from other divisions or sponsor

      10,650       12,959          7,763       31,502  

Transfers to other divisions or sponsor

      (6,935 )      (11,905 )         (9,311 )      (35,881 ) 
Net increase (decrease) in net assets resulting from contract transactions      2,019       (947 )         (6,943 )      (16,720 ) 

Net increase (decrease) in net assets

      866       15,255          (127,216 )      (1,192 ) 

Net Assets:

            

Beginning of period

      86,629       71,374          420,423       421,615  

End of period

    $ 87,495     $ 86,629        $ 293,207     $ 420,423  
                   

Units issued during the period

      1,773       1,924          2,865       3,134  

Units redeemed during the period

      (1,522 )      (2,001 )         (3,797 )      (5,040 ) 

Net units issued (redeemed) during period

      251       (77 )         (932 )      (1,906 ) 
                   

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

F-14

Table of Contents

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,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ 386     $ 237        $ (370 )    $ (108 ) 

Net realized gains (losses)

      6,823       3,429          30,096       14,313  

Net change in unrealized appreciation/(depreciation)

      (20,221 )      11,464          (76,413 )      31,956  

Net increase (decrease) in net assets resulting from operations

      (13,012 )      15,130          (46,687 )      46,161  

Policy Transactions:

            

Policy owners’ net payments

      1,488       373          4,839       4,143  

Policy loans, surrenders and death benefits

      (780 )      (2,005 )         (3,805 )      (5,087 ) 

Mortality and other (net)

      (1,142 )      (1,090 )         (3,685 )      (3,786 ) 

Transfers from other divisions or sponsor

      8,735       24,128          8,886       13,536  

Transfers to other divisions or sponsor

      (5,612 )      (17,625 )         (8,650 )      (15,008 ) 
Net increase (decrease) in net assets resulting from contract transactions      2,689       3,781          (2,415 )      (6,202 ) 

Net increase (decrease) in net assets

      (10,323 )      18,911          (49,102 )      39,959  

Net Assets:

            

Beginning of period

      77,623       58,712          247,818       207,859  

End of period

    $ 67,300     $ 77,623        $ 198,716     $ 247,818  
                   

Units issued during the period

      2,977       4,806          2,840       2,847  

Units redeemed during the period

      (2,095 )      (3,738 )         (3,170 )      (3,686 ) 

Net units issued (redeemed) during period

      882       1,068          (330 )      (839 ) 
                   
     International Growth Division            Research International Core
Division		  
     Year Ended
December 31,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ 178     $ 165        $ 1,142     $ 516  

Net realized gains (losses)

      15,357       8,467          4,003       2,353  

Net change in unrealized appreciation/(depreciation)

      (54,266 )      13,803          (18,449 )      4,839  

Net increase (decrease) in net assets resulting from operations

      (38,731 )      22,435          (13,304 )      7,708  

Policy Transactions:

            

Policy owners’ net payments

      4,181       2,962          1,358       1,429  

Policy loans, surrenders and death benefits

      (3,265 )      (2,563 )         (1,584 )      (1,155 ) 

Mortality and other (net)

      (2,224 )      (2,422 )         (1,116 )      (1,082 ) 

Transfers from other divisions or sponsor

      8,383       26,198          13,258       28,804  

Transfers to other divisions or sponsor

      (9,050 )      (24,514 )         (10,349 )      (22,775 ) 
Net increase (decrease) in net assets resulting from contract transactions      (1,975 )      (339 )         1,567       5,221  

Net increase (decrease) in net assets

      (40,706 )      22,096          (11,737 )      12,929  

Net Assets:

            

Beginning of period

      166,146       144,050          76,412       63,483  

End of period

    $ 125,440     $ 166,146        $ 64,675     $ 76,412  
                   

Units issued during the period

      3,132       4,832          4,936       7,066  

Units redeemed during the period

      (3,631 )      (4,720 )         (3,992 )      (4,423 ) 

Net units issued (redeemed) during period

      (499 )      112          944       2,643  
                   

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

F-15

Table of Contents

Statements of Changes in Net Assets

NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT

(in thousands)

 

     International Equity Division            Emerging Markets Equity
Division		  
     Year Ended
December 31,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ 9,440     $ 9,838        $ 582     $ 82  

Net realized gains (losses)

      10,616       (598 )         5,939       1,915  

Net change in unrealized appreciation/(depreciation)

      (57,459 )      13,555          (29,829 )      (6,954 ) 

Net increase (decrease) in net assets resulting from operations

      (37,403 )      22,795          (23,308 )      (4,957 ) 

Policy Transactions:

            

Policy owners’ net payments

      18,493       17,200          2,337       901  

Policy loans, surrenders and death benefits

      (9,992 )      (12,366 )         (1,663 )      (1,475 ) 

Mortality and other (net)

      (8,612 )      (8,796 )         (1,059 )      (1,327 ) 

Transfers from other divisions or sponsor

      13,315       37,765          11,996       22,511  

Transfers to other divisions or sponsor

      (14,747 )      (36,315 )         (9,694 )      (14,932 ) 
Net increase (decrease) in net assets resulting from contract transactions      (1,543 )      (2,512 )         1,917       5,678  

Net increase (decrease) in net assets

      (38,946 )      20,283          (21,391 )      721  

Net Assets:

            

Beginning of period

      520,067       499,784          90,840       90,119  

End of period

    $ 481,121     $ 520,067        $ 69,449     $ 90,840  
                   

Units issued during the period

      10,331       14,271          8,441       12,145  

Units redeemed during the period

      (10,474 )      (14,604 )         (7,081 )      (8,348 ) 

Net units issued (redeemed) during period

      (143 )      (333 )         1,360       3,797  
                   
     Government Money Market
Division		            Short-Term Bond Division  
     Year Ended
December 31,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ 1,740     $ (728 )       $ 328     $ 437  

Net realized gains (losses)

      3       12          (72 )      327  

Net change in unrealized appreciation/(depreciation)

      -       -          (1,829 )      (922 ) 

Net increase (decrease) in net assets resulting from operations

      1,743       (716 )         (1,573 )      (158 ) 

Policy Transactions:

            

Policy owners’ net payments

      39,432       34,347          948       468  

Policy loans, surrenders and death benefits

      (9,485 )      (40,645 )         (898 )      (1,119 ) 

Mortality and other (net)

      (4,657 )      (4,709 )         (567 )      (552 ) 

Transfers from other divisions or sponsor

      65,248       103,727          12,778       12,076  

Transfers to other divisions or sponsor

      (79,609 )      (102,300 )         (9,265 )      (10,589 ) 
Net increase (decrease) in net assets resulting from contract transactions      10,929       (9,580 )         2,996       284  

Net increase (decrease) in net assets

      12,672       (10,296 )         1,423       126  

Net Assets:

            

Beginning of period

      172,031       182,327          32,053       31,927  

End of period

    $ 184,703     $ 172,031        $ 33,476     $ 32,053  
                   

Units issued during the period

      60,130       66,594          7,410       6,696  

Units redeemed during the period

      (57,189 )      (71,434 )         (5,099 )      (6,801 ) 

Net units issued (redeemed) during period

      2,941       (4,840 )         2,311       (105 ) 
                   

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

F-16

Table of Contents

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,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ 3,459     $ 4,914        $ 170     $ 83  

Net realized gains (losses)

      (871 )      13,940          (1,993 )      3,334  

Net change in unrealized appreciation/(depreciation)

      (42,485 )      (24,783 )         (3,331 )      (4,565 ) 

Net increase (decrease) in net assets resulting from operations

      (39,897 )      (5,929 )         (5,154 )      (1,148 ) 

Policy Transactions:

            

Policy owners’ net payments

      9,489       7,423          538       630  

Policy loans, surrenders and death benefits

      (6,748 )      (7,126 )         (329 )      (764 ) 

Mortality and other (net)

      (3,942 )      (4,785 )         (274 )      (294 ) 

Transfers from other divisions or sponsor

      21,392       77,145          5,275       3,578  

Transfers to other divisions or sponsor

      (19,179 )      (73,839 )         (3,788 )      (4,927 ) 
Net increase (decrease) in net assets resulting from contract transactions      1,012       (1,182 )         1,422       (1,777 ) 

Net increase (decrease) in net assets

      (38,885 )      (7,111 )         (3,732 )      (2,925 ) 

Net Assets:

            

Beginning of period

      291,624       298,735          16,847       19,772  

End of period

    $ 252,739     $ 291,624        $ 13,115     $ 16,847  
                   

Units issued during the period

      6,830       9,347          3,329       1,961  

Units redeemed during the period

      (7,043 )      (9,127 )         (2,372 )      (3,271 ) 

Net units issued (redeemed) during period

      (213 )      220          957       (1,310 ) 
                   
     Inflation Protection Division            High Yield Bond Division  
     Year Ended
December 31,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ 579     $ 121        $ 5,893     $ 5,930  

Net realized gains (losses)

      705       559          (953 )      781  

Net change in unrealized appreciation/(depreciation)

      (4,282 )      553          (19,481 )      (795 ) 

Net increase (decrease) in net assets resulting from operations

      (2,998 )      1,233          (14,541 )      5,916  

Policy Transactions:

            

Policy owners’ net payments

      586       453          2,820       3,017  

Policy loans, surrenders and death benefits

      (653 )      (716 )         (3,369 )      (3,086 ) 

Mortality and other (net)

      (369 )      (324 )         (2,109 )      (2,105 ) 

Transfers from other divisions or sponsor

      7,680       19,228          9,627       26,574  

Transfers to other divisions or sponsor

      (9,227 )      (11,957 )         (12,850 )      (24,643 ) 
Net increase (decrease) in net assets resulting from contract transactions      (1,983 )      6,684          (5,881 )      (243 ) 

Net increase (decrease) in net assets

      (4,981 )      7,917          (20,422 )      5,673  

Net Assets:

            

Beginning of period

      23,159       15,242          128,128       122,455  

End of period

    $ 18,178     $ 23,159        $ 107,706     $ 128,128  
                   

Units issued during the period

      3,573       8,366          1,946       2,607  

Units redeemed during the period

      (4,965 )      (3,731 )         (2,455 )      (3,100 ) 

Net units issued (redeemed) during period

      (1,392 )      4,635          (509 )      (493 ) 
                   

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

F-17

Table of Contents

Statements of Changes in Net Assets

NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT

(in thousands)

 

     Multi-Sector Bond Division            Balanced Division  
     Year Ended
December 31,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ 1,948     $ 1,079        $ 12,915     $ 8,859  

Net realized gains (losses)

      (871 )      1,269          26,235       27,371  

Net change in unrealized appreciation/(depreciation)

      (10,963 )      (2,643 )         (104,331 )      (5,956 ) 

Net increase (decrease) in net assets resulting from operations

      (9,886 )      (295 )         (65,181 )      30,274  

Policy Transactions:

            

Policy owners’ net payments

      1,539       1,303          11,313       8,867  

Policy loans, surrenders and death benefits

      (1,201 )      (1,543 )         (10,110 )      (19,384 ) 

Mortality and other (net)

      (921 )      (1,002 )         (9,461 )      (9,531 ) 

Transfers from other divisions or sponsor

      13,456       18,260          6,851       27,815  

Transfers to other divisions or sponsor

      (14,032 )      (14,909 )         (6,532 )      (24,795 ) 
Net increase (decrease) in net assets resulting from contract transactions      (1,159 )      2,109          (7,939 )      (17,028 ) 

Net increase (decrease) in net assets

      (11,045 )      1,814          (73,120 )      13,246  

Net Assets:

            

Beginning of period

      63,639       61,825          450,231       436,985  

End of period

    $ 52,594     $ 63,639        $ 377,111     $ 450,231  
                   

Units issued during the period

      4,928       6,649          3,410       3,809  

Units redeemed during the period

      (5,206 )      (5,869 )         (3,869 )      (5,242 ) 

Net units issued (redeemed) during period

      (278 )      780          (459 )      (1,433 ) 
                   
     Asset Allocation Division            Fidelity VIP Mid Cap Division  
     Year Ended
December 31,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ 1,366     $ 1,136        $ 136     $ 405  

Net realized gains (losses)

      3,572       3,804          14,652       40,341  

Net change in unrealized appreciation/(depreciation)

      (14,915 )      1,148          (50,724 )      7,619  

Net increase (decrease) in net assets resulting from operations

      (9,977 )      6,088          (35,936 )      48,365  

Policy Transactions:

            

Policy owners’ net payments

      1,521       1,320          5,226       3,905  

Policy loans, surrenders and death benefits

      (1,554 )      (1,900 )         (4,209 )      (5,629 ) 

Mortality and other (net)

      (1,146 )      (1,167 )         (3,563 )      (3,557 ) 

Transfers from other divisions or sponsor

      595       1,881          8,808       14,201  

Transfers to other divisions or sponsor

      (1,061 )      (2,385 )         (11,159 )      (13,546 ) 
Net increase (decrease) in net assets resulting from contract transactions      (1,645 )      (2,251 )         (4,897 )      (4,626 ) 

Net increase (decrease) in net assets

      (11,622 )      3,837          (40,833 )      43,739  

Net Assets:

            

Beginning of period

      65,833       61,996          238,938       195,199  

End of period

    $ 54,211     $ 65,833        $ 198,105     $ 238,938  
                   

Units issued during the period

      900       1,336          1,657       1,983  

Units redeemed during the period

      (1,426 )      (1,955 )         (2,144 )      (2,647 ) 

Net units issued (redeemed) during period

      (526 )      (619 )         (487 )      (664 ) 
                   

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

F-18

Table of Contents

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,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ 58     $ (321 )       $ 5     $ 1  

Net realized gains (losses)

      4,959       13,465          987       491  

Net change in unrealized appreciation/(depreciation)

      (30,468 )      7,551          (2,790 )      1,253  

Net increase (decrease) in net assets resulting from operations

      (25,451 )      20,695          (1,798 )      1,745  

Policy Transactions:

            

Policy owners’ net payments

      1,853       1,381          185       188  

Policy loans, surrenders and death benefits

      (1,639 )      (2,765 )         (9 )      (42 ) 

Mortality and other (net)

      (1,288 )      (1,348 )         (146 )      (131 ) 

Transfers from other divisions or sponsor

      9,535       12,459          2,407       3,138  

Transfers to other divisions or sponsor

      (10,897 )      (10,272 )         (2,436 )      (2,755 ) 
Net increase (decrease) in net assets resulting from contract transactions      (2,436 )      (545 )         1       398  

Net increase (decrease) in net assets

      (27,887 )      20,150          (1,797 )      2,143  

Net Assets:

            

Beginning of period

      96,024       75,874          9,521       7,378  

End of period

    $ 68,137     $ 96,024        $ 7,724     $ 9,521  
                   

Units issued during the period

      2,000       2,866          331       494  

Units redeemed during the period

      (2,741 )      (3,148 )         (338 )      (254 ) 

Net units issued (redeemed) during period

      (741 )      (282 )         (7 )      240  
                   
     U.S. Strategic Equity Division            U.S. Small Cap Equity
Division		  
     Year Ended
December 31,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ 481     $ 451        $ (276 )    $ (233 ) 

Net realized gains (losses)

      23,062       37,811          4,081       34,660  

Net change in unrealized appreciation/(depreciation)

      (90,770 )      16,539          (26,155 )      (6,361 ) 

Net increase (decrease) in net assets resulting from operations

      (67,227 )      54,801          (22,350 )      28,066  

Policy Transactions:

            

Policy owners’ net payments

      5,266       3,484          3,131       2,887  

Policy loans, surrenders and death benefits

      (5,052 )      (11,461 )         (2,211 )      (3,657 ) 

Mortality and other (net)

      (4,490 )      (4,662 )         (2,046 )      (2,102 ) 

Transfers from other divisions or sponsor

      2,429       9,479          2,743       12,777  

Transfers to other divisions or sponsor

      (3,762 )      (12,769 )         (3,595 )      (12,877 ) 
Net increase (decrease) in net assets resulting from contract transactions      (5,609 )      (15,929 )         (1,978 )      (2,972 ) 

Net increase (decrease) in net assets

      (72,836 )      38,872          (24,328 )      25,094  

Net Assets:

            

Beginning of period

      319,074       280,202          137,227       112,133  

End of period

    $ 246,238     $ 319,074        $ 112,899     $ 137,227  
                   

Units issued during the period

      3,301       3,615          1,680       2,452  

Units redeemed during the period

      (4,759 )      (7,689 )         (2,053 )      (3,029 ) 

Net units issued (redeemed) during period

      (1,458 )      (4,074 )         (373 )      (577 ) 
                   

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

F-19

Table of Contents

Statements of Changes in Net Assets

NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT

(in thousands)

 

     International Developed
Markets Division		            Strategic Bond Division  
     Year Ended
December 31,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ (538 )    $ 3,043        $ 1,663     $ 469  

Net realized gains (losses)

      1,684       11,224          (588 )      1,164  

Net change in unrealized appreciation/(depreciation)

      (20,709 )      1,827          (14,276 )      (3,677 ) 

Net increase (decrease) in net assets resulting from operations

      (19,563 )      16,094          (13,201 )      (2,044 ) 

Policy Transactions:

            

Policy owners’ net payments

      4,383       3,860          2,533       2,380  

Policy loans, surrenders and death benefits

      (2,655 )      (4,364 )         (1,062 )      (2,143 ) 

Mortality and other (net)

      (2,254 )      (2,336 )         (1,462 )      (1,575 ) 

Transfers from other divisions or sponsor

      8,846       18,750          11,587       33,706  

Transfers to other divisions or sponsor

      (7,674 )      (18,277 )         (11,684 )      (31,590 ) 
Net increase (decrease) in net assets resulting from contract transactions      646       (2,367 )         (88 )      778  

Net increase (decrease) in net assets

      (18,917 )      13,727          (13,289 )      (1,266 ) 

Net Assets:

            

Beginning of period

      145,982       132,255          90,877       92,143  

End of period

    $ 127,065     $ 145,982        $ 77,588     $ 90,877  
                   

Units issued during the period

      4,855       4,996          3,350       4,132  

Units redeemed during the period

      (4,599 )      (5,837 )         (3,283 )      (4,319 ) 

Net units issued (redeemed) during period

      256       (841 )         67       (187 ) 
                   
     Global Real Estate Securities
Division		            LifePoints Moderate Strategy
Division		  
     Year Ended
December 31,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ 1,442     $ 8,491        $ 117     $ 364  

Net realized gains (losses)

      2,628       2,204          81       388  

Net change in unrealized appreciation/(depreciation)

      (60,912 )      33,891          (1,788 )      (126 ) 

Net increase (decrease) in net assets resulting from operations

      (56,842 )      44,586          (1,590 )      626  

Policy Transactions:

            

Policy owners’ net payments

      5,123       4,356          231       35  

Policy loans, surrenders and death benefits

      (3,012 )      (4,737 )         (49 )      157  

Mortality and other (net)

      (2,977 )      (3,089 )         (177 )      (175 ) 

Transfers from other divisions or sponsor

      10,628       24,494          216       2,324  

Transfers to other divisions or sponsor

      (9,686 )      (24,151 )         (1,300 )      (142 ) 
Net increase (decrease) in net assets resulting from contract transactions      76       (3,127 )         (1,079 )      2,199  

Net increase (decrease) in net assets

      (56,766 )      41,459          (2,669 )      2,825  

Net Assets:

            

Beginning of period

      210,147       168,688          10,480       7,655  

End of period

    $ 153,381     $ 210,147        $ 7,811     $ 10,480  
                   

Units issued during the period

      2,529       2,951          274       1,113  

Units redeemed during the period

      (2,527 )      (3,260 )         (675 )      (545 ) 

Net units issued (redeemed) during period

      2       (309 )         (401 )      568  
                   

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

F-20

Table of Contents

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,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ 319     $ 1,184        $ 199     $ 1,082  

Net realized gains (losses)

      387       2,549          872       2,718  

Net change in unrealized appreciation/(depreciation)

      (5,374 )      (535 )         (5,931 )      52  

Net increase (decrease) in net assets resulting from operations

      (4,668 )      3,198          (4,860 )      3,852  

Policy Transactions:

            

Policy owners’ net payments

      650       825          526       110  

Policy loans, surrenders and death benefits

      (1,107 )      (2,529 )         (172 )      38  

Mortality and other (net)

      (505 )      (548 )         (460 )      (413 ) 

Transfers from other divisions or sponsor

      1,123       7,523          442       1,473  

Transfers to other divisions or sponsor

      (1,763 )      (5,134 )         (665 )      (397 ) 
Net increase (decrease) in net assets resulting from contract transactions      (1,602 )      137          (329 )      811  

Net increase (decrease) in net assets

      (6,270 )      3,335          (5,189 )      4,663  

Net Assets:

            

Beginning of period

      28,386       25,051          27,370       22,707  

End of period

    $ 22,116     $ 28,386        $ 22,181     $ 27,370  
                   

Units issued during the period

      942       1,331          579       1,096  

Units redeemed during the period

      (1,492 )      (1,526 )         (639 )      (1,036 ) 

Net units issued (redeemed) during period

      (550 )      (195 )         (60 )      60  
                   
     LifePoints Equity Growth
Strategy Division		            Credit Suisse Trust
Commodity Return Strategy
Division		  
     Year Ended
December 31,
2022		     Year Ended
December 31,
2021		            Year Ended
December 31,
2022		     Year Ended
December 31,
2021		  

Operations:

            

Net investment income (loss)

    $ 86     $ 525        $ 6,880     $ 1,606  

Net realized gains (losses)

      430       1,049          502       (75 ) 

Net change in unrealized appreciation/(depreciation)

      (2,701 )      221          (1,871 )      5,566  

Net increase (decrease) in net assets resulting from operations

      (2,185 )      1,795          5,511       7,097  

Policy Transactions:

            

Policy owners’ net payments

      331       (69 )         1,198       806  

Policy loans, surrenders and death benefits

      (5 )      400          (851 )      (912 ) 

Mortality and other (net)

      (153 )      (144 )         (824 )      (484 ) 

Transfers from other divisions or sponsor

      531       1,132          15,515       15,526  

Transfers to other divisions or sponsor

      (663 )      (238 )         (13,944 )      (9,244 ) 
Net increase (decrease) in net assets resulting from contract transactions      41       1,081          1,094       5,692  

Net increase (decrease) in net assets

      (2,144 )      2,876          6,605       12,789  

Net Assets:

            

Beginning of period

      12,068       9,192          35,842       23,053  

End of period

    $ 9,924     $ 12,068        $ 42,447     $ 35,842  
                   

Units issued during the period

      235       621          2,042       3,031  

Units redeemed during the period

      (144 )      (384 )         (1,994 )      (2,087 ) 

Net units issued (redeemed) during period

      91       237          48       944  
                   

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

F-21

Table of Contents

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, 2022, all of the Account’s investments are identified as Level 1 securities for valuation purposes under the Fair Value Measurement Topic of the FASB Accounting Standards Codification. Level 1 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 Account’s 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 ex–date of the dividends. Dividends and distributions received are reinvested in additional shares of the respective portfolios of the Funds. The Policies are eligible to receive policy dividends from Northwestern Mutual. Any 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 Account’s net assets and reserves the right to increase, decrease or eliminate the charge for taxes in the future. Currently, for Variable CompLife policies issued on or after October 11, 1995, Variable Executive Life policies issued on or after March 2, 1998, and Variable Joint Life policies issued on or after December 10, 1998, there is no charge being made against the assets of the Account for federal income taxes, but Northwestern Mutual reserves the right to charge for taxes in the future.

 

  F.

Premium Payments – For Variable Life and Variable CompLife policies, the Account is credited for the policyowners’ net annual premiums at the respective policy anniversary dates regardless of when policyowners actually pay their premiums. Northwestern Mutual’s equity represents any unpaid portion of net annual premiums.

 

3.

Purchases and Sales of Investments

Purchases and sales of the Funds’ shares for the year ended December 31, 2022 were as follows (amounts in thousands):

 

    Fund Name    Purchases                    Sales  

Growth Stock Division

    $ 110,859         $ 32,627  

Focused Appreciation Division

      46,724           18,983  

Large Cap Core Stock Division

      82,786           21,404  

Large Cap Blend Division

      3,298           2,377  

Index 500 Stock Division

      145,947           101,707  

Large Company Value Division

      15,690           4,576  

Domestic Equity Division

      38,242           13,733  

Equity Income Division

      32,366           12,647  

Mid Cap Growth Stock Division

      66,237           29,282  

Index 400 Stock Division

      60,974           21,313  

Mid Cap Value Division

      23,882           8,016  

Small Cap Growth Stock Division

      65,126           19,059  

Index 600 Stock Division

      13,778           4,780  

Small Cap Value Division

      38,822           13,840  

International Growth Division

      20,064           8,256  

Research International Core Division

      11,521           5,431  

International Equity Division

      45,289           24,710  

 

F-22

Table of Contents

Notes to Financial Statements

 

    Fund Name    Purchases                    Sales  

Emerging Markets Equity Division

    $ 13,100         $ 5,065  

Government Money Market Division

      63,723           52,602  

Short-Term Bond Division

      9,248           5,856  

Select Bond Division

      22,864           18,152  

Long-Term U.S. Government Bond Division

      5,898           4,332  

Inflation Protection Bond Division

      4,924           5,884  

High Yield Bond Division

      16,722           16,696  

Multi-Sector Bond Division

      9,553           8,745  

Balanced Division

      53,558           23,222  

Asset Allocation Division

      7,506           3,746  

Fidelity VIP Mid Cap Division

      22,057           13,377  

Fidelity VIP Contrafund Division

      9,308           8,085  

AMT Sustainable Equity Division

      1,552           788  

U.S. Strategic Equity Division

      28,206           13,453  

U.S. Small Cap Equity Division

      6,928           6,794  

International Developed Markets Division

      10,150           7,610  

Strategic Bond Division

      8,429           6,826  

Global Real Estate Securities Division

      12,775           9,828  

LifePoints Moderate Strategy Division

      832           1,557  

LifePoints Balanced Strategy Division

      2,822           3,239  

LifePoints Growth Strategy Division

      2,446           1,477  

LifePoints Equity Growth Strategy Division

      1,393           743  

Credit Suisse Trust Commodity Return Strategy Division

      18,511           10,507  

 

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 insured’s age, the 1980 Commissioners Standard Ordinary Mortality Table and the amount of insurance provided under the policy. For Variable Executive Life and Variable Joint Life policies, the cost reflects expected mortality costs based upon actual experience.

Certain deductions are also made from the annual, single or other premiums before amounts are allocated to the Account. These deductions are for sales load, administrative expenses, taxes and a risk charge for the guaranteed minimum death benefit among other charges which are detailed in the Prospectus.

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.

Subsequent Events

On March 19, 2023, UBS Group AG (“UBS”) and Credit Suisse Group AG (“Credit Suisse”) announced that they reached an agreement pursuant to which Credit Suisse will merge with UBS, with UBS as the surviving entity (the “Merger”). No immediate changes to the Commodity Return Strategy Portfolio’s investment strategy or its portfolio managers are currently anticipated in connection with the Merger.

 

F-23

Table of Contents

Notes to Financial Statements

 

6. Financial Highlights

 

    

As of the respective period end date:

           

For the respective period ended:

 
      Units
Outstanding
(000’s)		      Unit Value,
Lowest to Highest		      Net Assets
(000’s)		              Dividend
Income as
a % of
Average
Net Assets
     Expense Ratio,
Lowest to
Highest (1)		    Total Return Lowest to
Highest (1)		         

Growth Stock Division

 

                                 

2022

      64,650      $ 6.519135      to    $ 93.238655      $ 473,553           0.00 %    0.00% to 0.55%      (39.03 )    %    to      (38.70 )      %  

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          

Focused Appreciation Division

 

                                 

2022

      28,008      $ 7.143158      to    $ 78.340181      $ 233,133           0.01 %    0.00% to 0.55%      (28.22 )    %    to      (27.83 )      %  

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 )         

Large Cap Core Stock Division

 

                                 

2022

      53,054      $ 5.751529      to    $ 81.491845      $ 355,131           0.88 %    0.00% to 0.55%      (19.32 )    %    to      (18.88 )      %  

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 )         

Large Cap Blend Division

 

                                 

2022

      4,634      $ 2.695547      to    $ 23.885115      $ 13,499           0.63 %    0.00% to 0.55%      (14.25 )    %    to      (13.78 )      %  

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 )         

Index 500 Stock Division

 

                                 

2022

      167,629      $ 9.299270      to    $ 220.942531      $ 1,870,369           1.25 %    0.00% to 0.55%      (18.73 )    %    to      (18.28 )      %  

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 )         

Large Company Value Division

 

                                 

2022

      9,382      $ 2.872695      to    $ 25.046912      $ 30,764           3.24 %    0.00% to 0.55%      (0.88 )    %    to      (0.34 )      %  

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 )         

Domestic Equity Division

 

                                 

2022

      54,227      $ 3.809453      to    $ 42.219400      $ 235,740           1.69 %    0.00% to 0.55%      (3.52 )    %    to      (2.99 )      %  

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 )         

Equity Income Division

 

                                 

2022

      28,791      $ 4.542924      to    $ 49.822897      $ 151,849           2.03 %    0.00% to 0.55%      (3.75 )    %    to      (3.22 )      %  

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 )         

(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

Table of Contents

Notes to Financial Statements

 

6. Financial Highlights

 

    

As of the respective period end date:

           

For the respective period ended:

 
      Units
Outstanding
(000’s)		      Unit Value,
Lowest to Highest		      Net Assets
(000’s)		              Dividend
Income as
a % of
Average
Net Assets		     Expense Ratio,
Lowest to
Highest (1)		    Total Return Lowest to
Highest (1)		         

Mid Cap Growth Stock Division

 

                                 

2022

      79,592      $ 5.642367      to    $ 162.785136      $ 533,506           0.15 %    0.00% to 0.55%      (24.18 )    %    to      (23.77 )      %  

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 )         

Index 400 Stock Division

 

                                 

2022

      54,077      $ 6.851532      to    $ 81.117713      $ 411,869           1.09 %    0.00% to 0.55%      (13.78 )    %    to      (13.31 )      %  

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 )         

Mid Cap Value Division

 

                                 

2022

      14,004      $ 5.566271      to    $ 61.046817      $ 87,495           1.90 %    0.00% to 0.55%      (1.69 )    %    to      (1.15 )      %  

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 )         

Small Cap Growth Stock Division

 

                                 

2022

      47,015      $ 5.714778      to    $ 77.536313      $ 293,207           0.00 %    0.00% to 0.55%      (28.88 )    %    to      (28.49 )      %  

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 )         

Index 600 Stock Division

 

                                 

2022

      21,263      $ 2.785729      to    $ 32.084276      $ 67,300           0.99 %    0.00% to 0.55%      (16.82 )    %    to      (16.37 )      %  

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 )         

Small Cap Value Division

 

                                 

2022

      34,321      $ 5.177211      to    $ 57.377496      $ 198,716           0.26 %    0.00% to 0.55%      (18.98 )    %    to      (18.53 )      %  

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 )         

International Growth Division

 

                                 

2022

      40,511      $ 2.742354      to    $ 30.392880      $ 125,440           0.56 %    0.00% to 0.55%      (23.55 )    %    to      (23.13 )      %  

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 )         

Research International Core Division

 

                                 

2022

      37,356      $ 1.512130      to    $ 14.933069      $ 64,675           2.20 %    0.00% to 0.55%      (17.61 )    %    to      (17.16 )      %  

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 )         

(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

Table of Contents

Notes to Financial Statements

 

6. Financial Highlights

 

     As of the respective period end date:            

For the respective period ended:

 
      Units
Outstanding
(000’s)		      Unit Value,
Lowest to Highest		      Net Assets
(000’s)		              Dividend
Income as
a % of
Average
Net Assets		     Expense Ratio,
Lowest to
Highest (1)		    Total Return Lowest to
Highest (1)		         

International Equity Division

 

                                 

2022

      119,977      $ 3.475261      to    $ 5.525225      $ 481,121           2.40 %    0.00% to 0.55%      (7.34 )    %    to      (6.83 )      %  

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 )         

Emerging Markets Equity Division

 

                                 

2022

      64,249      $ 0.943204      to    $ 11.640958      $ 69,449           1.22 %    0.00% to 0.55%      (25.69 )    %    to      (25.28 )      %  

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 )         

Government Money Market Division

 

                                 

2022

      93,405      $ 1.573979      to    $ 44.076838      $ 184,703           1.37 %    0.00% to 0.55%      0.81     %    to      1.36       %  

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          

Short-Term Bond Division

 

                                 

2022

      24,731      $ 1.064107      to    $ 13.311816      $ 33,476           1.43 %    0.00% to 0.55%      (5.04 )    %    to      (4.52 )      %  

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          

Select Bond Division

 

                                 

2022

      73,298      $ 2.787014      to    $ 228.662825      $ 252,739           1.73 %    0.00% to 0.55%      (13.80 )    %    to      (13.33 )      %  

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 )         

Long-Term U.S Government Bond Division

 

                              

2022

      9,492      $ 1.238002      to    $ 17.947739      $ 13,115           1.69 %    0.00% to 0.55%      (29.91 )    %    to      (29.53 )      %  

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 )         

Inflation Protection Division

 

                                 

2022

      12,627      $ 1.175952      to    $ 15.909250      $ 18,178           3.25 %    0.00% to 0.55%      (13.44 )    %    to      (12.96 )      %  

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 )         

High Yield Bond Division

 

                                 

2022

      21,825      $ 4.330519      to    $ 59.175445      $ 107,706           5.65 %    0.00% to 0.55%      (11.82 )    %    to      (11.33 )      %  

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 )         

(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

Table of Contents

Notes to Financial Statements

 

6. Financial Highlights

 

    

As of the respective period end date:

           

For the respective period ended:

 
      Units
Outstanding
(000’s)		      Unit Value,
Lowest to Highest		      Net Assets
(000’s)		              Dividend
Income as
a % of
Average
Net Assets		     Expense Ratio,
Lowest to
Highest (1)		    Total Return Lowest to
Highest (1)		         

Multi-Sector Bond Division

 

                                 

2022

      33,764      $ 1.341429      to    $ 18.966369      $ 52,594           4.03 %    0.00% to 0.55%      (15.85 )    %    to      (15.39 )      %  

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 )         

Balanced Division

 

                                 

2022

      43,100      $ 4.529277      to    $ 256.387829      $ 377,111           3.76 %    0.00% to 0.55%      (14.60 )    %    to      (14.14 )      %  

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 )         

Asset Allocation Division

 

                                 

2022

      15,522      $ 2.801154      to    $ 31.043666      $ 54,211           2.85 %    0.00% to 0.55%      (15.30 )    %    to      (14.83 )      %  

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 )         

Fidelity VIP Mid Cap Division

 

                                 

2022

      25,398      $ 6.879567      to    $ 75.449401      $ 198,105           0.51 %    0.00% to 0.55%      (15.21 )    %    to      (14.74 )      %  

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 )         

Fidelity VIP Contrafund Division

 

                                 

2022

      19,314      $ 2.957075      to    $ 33.189569      $ 68,137           0.51 %    0.00% to 0.55%      (26.72 )    %    to      (26.31 )      %  

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 )         

AMT Sustainable Equity Division

 

                                 

2022

      2,285      $ 2.701399      to    $ 30.111716      $ 7,724           0.44 %    0.00% to 0.55%      (18.91 )    %    to      (18.47 )      %  

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 )         

U.S. Strategic Equity Division

 

                                 

2022

      74,360      $ 2.934959      to    $ 33.915304      $ 246,238           0.60 %    0.00% to 0.55%      (21.29 )    %    to      (20.86 )      %  

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 )         

U.S. Small Cap Equity Division

 

                                 

2022

      27,046      $ 3.759233      to    $ 44.554659      $ 112,899           0.19 %    0.00% to 0.55%      (16.41 )    %    to      (15.96 )      %  

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 )         

(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

Table of Contents

Notes to Financial Statements

 

6. Financial Highlights

 

    

As of the respective period end date:

           

For the respective period ended:

 
      Units
Outstanding
(000’s)		      Unit Value,
Lowest to Highest		      Net Assets
(000’s)		              Dividend
Income as
a % of
Average
Net Assets		     Expense Ratio,
Lowest to
Highest (1)		    Total Return Lowest to
Highest (1)		         

International Developed Markets Division

 

                              

2022

      53,273      $ 2.087569      to    $ 23.567997      $ 127,065           0.00 %    0.00% to 0.55%      (13.52 )    %    to      (13.04 )      %  

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 )         

Strategic Bond Division

 

                                 

2022

      27,307      $ 2.223157      to    $ 24.607660      $ 77,588           2.44 %    0.00% to 0.55%      (14.75 )    %    to      (14.28 )      %  

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 )         

Global Real Estate Securities Division

 

                                 

2022

      28,992      $ 4.725257      to    $ 52.232355      $ 153,381           1.27 %    0.00% to 0.55%      (27.17 )    %    to      (26.77 )      %  

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 )         

LifePoints Moderate Strategy Division

 

                                 

2022

      3,778      $ 1.375959      to    $ 17.208370      $ 7,811           1.79 %    0.00% to 0.55%      (16.11 )    %    to      (15.65 )      %  

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 )         

LifePoints Balanced Strategy Division

 

                                 

2022

      10,336      $ 1.554499      to    $ 18.279960      $ 22,116           1.75 %    0.00% to 0.55%      (16.81 )    %    to      (16.35 )      %  

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 )         

LifePoints Growth Strategy Division

 

                                 

2022

      10,160      $ 1.693764      to    $ 18.571091      $ 22,181           1.32 %    0.00% to 0.55%      (17.66 )    %    to      (17.20 )      %  

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 )         

LifePoints Equity Growth Strategy Division

 

                              

2022

      4,153      $ 1.762210      to    $ 17.639237      $ 9,924           1.23 %    0.00% to 0.55%      (18.13 )    %    to      (17.68 )      %  

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 )         

Credit Suisse Trust Commodity Return Strategy Division

 

                        

2022

      5,548      $ 6.964941      to    $ 7.292246      $ 42,447           15.73 %    0.00% to 0.55%      15.71     %    to      16.34       %  

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 )         

(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

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The Northwestern Mutual

Life Insurance Company

Statutory Financial Statements and

Supplementary Information

December 31, 2022, 2021 and 2020

 

NM-1

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LOGO

 

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, 2022 and 2021 and the related statutory statements of operations, changes in surplus, and of cash flows for each of the three years in the period ended December 31, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, 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, 2022 and 2021, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2022.

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.

PricewaterhouseCoopers LLP, 833 E. Michigan, Milwaukee, WI 53202

T: (414) 212 1600, www.pwc.com/us

 

NM-2

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LOGO

 

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 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 Company’s 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 Company’s 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 Company’s 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.

 

LOGO

Milwaukee, Wisconsin

February 15, 2023

 

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The Northwestern Mutual Life Insurance Company

Statutory Statements of Financial Position

(in millions)

 

 

     December 31,
             2022                   2021        

Assets:

     

Bonds

        $ 187,268         $ 179,121    

Mortgage loans

      51,798       47,844  

Policy loans

      17,653       17,208  

Common and preferred stocks

      2,539       4,242  

Real estate

      2,906       3,113  

Other investments

      30,108       29,184  

Cash and short-term investments

      4,476       3,786  
  

 

 

 

  

 

 

 

Total investments

      296,748       284,498  

Due and accrued investment income

      2,262       2,042  

Net deferred tax assets

      2,109       1,569  

Deferred premium and other assets

      4,990       4,162  

Separate account assets

      34,281       42,383  
  

 

 

 

  

 

 

 

Total assets

      $ 340,390       $ 334,654  
  

 

 

 

  

 

 

 

Liabilities and surplus:

     

Policy benefit reserves

      $ 242,443       $ 230,034  

Deposit funds

      10,987       8,303  

Policyowner dividends payable

      6,820       6,505  

Interest maintenance reserve

      (212 )      3,162  

Asset valuation reserve

      7,176       7,733  

Other liabilities

      9,010       7,251  

Separate account liabilities

      34,281       42,383  
  

 

 

 

  

 

 

 

Total liabilities

      310,505       305,371  

Surplus:

     

Surplus notes

      4,480       4,475  

Unassigned surplus

      25,405       24,808  
  

 

 

 

  

 

 

 

Total surplus

      29,885       29,283  
  

 

 

 

  

 

 

 

Total liabilities and surplus

      $ 340,390       $ 334,654  
  

 

 

 

  

 

 

 

 

The accompanying notes are an integral part of these Statutory financial statements.

NM-4

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The Northwestern Mutual Life Insurance Company

Statutory Statements of Operations

(in millions)

 

 

    For the years ended
   

 

December 31,

          2022               2021               2020      

Revenue:

      

Premiums

     $ 22,288         $ 22,771         $ 19,323    

Net investment income

     11,768       10,447       11,078  

Other income

     840       814       723  
 

 

 

 

  

 

 

 

  

 

 

 

Total revenue

     34,896       34,032       31,124  
 

 

 

 

  

 

 

 

  

 

 

 

Benefits and expenses:

      

Benefit payments to policyowners and beneficiaries

     11,707       12,022       11,736  

Net additions to policy benefit reserves

     12,224       12,736       9,527  

Net transfers from separate accounts

     (490 )      (805 )      (680 ) 
 

 

 

 

  

 

 

 

  

 

 

 

Total benefits

     23,441       23,953       20,583  

Commissions and operating expenses

     4,158       4,048       3,502  
 

 

 

 

  

 

 

 

  

 

 

 

Total benefits and expenses

     27,599       28,001       24,085  
 

 

 

 

  

 

 

 

  

 

 

 

Gain from operations before dividends and taxes

     7,297       6,031       7,039  

Policyowner dividends

     6,833       6,522       6,235  
 

 

 

 

  

 

 

 

  

 

 

 

Gain (loss) from operations before taxes

     464       (491 )      804  

Income tax (benefit) expense

     (160 )      (1,166 )      277  
 

 

 

 

  

 

 

 

  

 

 

 

Net gain from operations

     624       675       527  

Net realized capital gains (losses)

     288       303       (102 ) 
 

 

 

 

  

 

 

 

  

 

 

 

Net income

     $ 912       $ 978       $ 425  
 

 

 

 

  

 

 

 

  

 

 

 

 

The accompanying notes are an integral part of these Statutory financial statements.

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The Northwestern Mutual Life Insurance Company

Statutory Statements of Changes in Surplus

(in millions)

 

 

     For the years ended
     December 31,
           2022               2021               2020      

Beginning of year balance

      $ 29,283       $ 24,957       $ 24,216  

Net income

      912       978       425  

Change in net unrealized capital gains and losses

      (1,549 )      3,489       799  

Change in net deferred tax assets

      470       (476 )      807  

Change in nonadmitted assets

      (71 )      (579 )      228  

Change in asset valuation reserve

      557       (371 )      (1,159 ) 

Change in surplus notes

      5       902       5  

Other surplus changes

      278       383       (364 ) 
  

 

 

 

  

 

 

 

  

 

 

 

Net increase in surplus

      602       4,326       741  
  

 

 

 

  

 

 

 

  

 

 

 

End of year balance

      $ 29,885         $ 29,283         $ 24,957    
  

 

 

 

  

 

 

 

  

 

 

 

 

The accompanying notes are an integral part of these Statutory financial statements.

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The Northwestern Mutual Life Insurance Company

Statutory Statements of Cash Flows

(in millions)

 

 

     For the years ended
December 31,
     2022   2021   2020

Cash flows from operating activities:

       

Premiums and other income received

      $ 16,296       $ 17,146       $ 13,808  

Investment income received

      10,911       10,345       10,036  

Benefit and dividend payments to policyowners and beneficiaries

      (10,703 )      (10,983 )      (10,537 ) 

Net transfers from separate accounts

      446       771       664  

Commissions, expenses and taxes paid

      (3,768 )      (3,542 )      (3,809 ) 
  

 

 

 

  

 

 

 

  

 

 

 

Net cash provided by operating activities

      13,182       13,737       10,162  
  

 

 

 

  

 

 

 

  

 

 

 

Cash flows applied to investing activities:

       

Proceeds from investments sold or matured:

       

Bonds

      40,363       53,499       60,747  

Mortgage loans

      3,368       2,868       3,301  

Common and preferred stocks

      2,241       2,741       4,046  

Real estate

      67       298       468  

Other investments

      4,536       4,213       3,063  
  

 

 

 

  

 

 

 

  

 

 

 

Subtotal proceeds from investments

      50,575       63,619       71,625  
  

 

 

 

  

 

 

 

  

 

 

 

Cost of investments acquired:

       

Bonds

      (51,983 )      (65,845 )      (64,976 ) 

Mortgage loans

      (6,679 )      (9,259 )      (5,008 ) 

Common and preferred stocks

      (1,013 )      (1,083 )      (4,075 ) 

Real estate

      (27 )      (247 )      (478 ) 

Other investments

      (6,202 )      (4,303 )      (7,537 ) 
  

 

 

 

  

 

 

 

  

 

 

 

Subtotal cost of investments acquired

      (65,904 )      (80,737 )      (82,074 ) 
  

 

 

 

  

 

 

 

  

 

 

 

Net (outflows) inflows of policy loans

      (152 )      746       492  
  

 

 

 

  

 

 

 

  

 

 

 

Net cash applied to investing activities

      (15,481 )      (16,372 )      (9,957 ) 
  

 

 

 

  

 

 

 

  

 

 

 

Cash flows from financing and miscellaneous sources:

       

Surplus notes issuance

      -       897       -  

Net inflows on deposit-type contracts

      2,239       2,877       724  

Other cash applied

      750       (592 )      (98 ) 
  

 

 

 

  

 

 

 

  

 

 

 

Net cash provided by financing and miscellaneous sources

      2,989       3,182       626  
  

 

 

 

  

 

 

 

  

 

 

 

Net increase in cash and short-term investments

      690       547       831  

Cash and short-term investments, beginning of year

      3,786       3,239       2,408  
  

 

 

 

  

 

 

 

  

 

 

 

Cash and short-term investments, end of year

      $ 4,476         $ 3,786         $ 3,239    
  

 

 

 

  

 

 

 

  

 

 

 

 

The accompanying notes are an integral part of these Statutory financial statements.

NM-7

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The Northwestern Mutual Life Insurance Company

Statutory Statements of Cash Flows (supplemental)

(in millions)

 

 

     For the years ended  
     December 31,  
           2022                  2021                  2020        

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

      $     6,277        $     6,011        $     5,779  

Capitalized interest and payment in-kind investment income

      835        848        895  

Other policyowner contract activity

      345        299        268  

Employee benefit and compensation plan expenses

      178        80        100  

Investing:

         

Bond refinancings and exchanges

      2,257        3,065        3,652  

Mortgage loan refinancings and transfers

      1,343        573        520  

Net asset transfers with affiliated entities

      1,088        94        434  

Net policy loan activity

      316        335        285  

Net premium loan activity

      115        131        113  

Common stock exchanges

      9        4        22  

Other invested asset exchanges

      6        113        163  

Real estate exchange

      -        27        -  

Financing and Miscellaneous:

         

Deposit-type contract deposits and interest credited

      444        567        556  

Surplus note exchange

      5        5        5  

 

The accompanying notes are an integral part of these Statutory financial statements.

NM-8

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The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

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.

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 Company’s statutory financial statements.

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 Company’s statutory financial statements attributable to the differences between the statutory basis of accounting and GAAP are material.

Permitted Accounting Practice

The Company has been granted a permitted accounting practice from the Commissioner of Insurance of the State of Wisconsin that allows for the admissibility of a net negative interest maintenance reserve (IMR) balance. This permitted practice is effective December 31, 2022 until further notice and is subject to certain conditions, which have been met by the Company. If the Company’s negative IMR were to be disallowed, the IMR liability would increase by $212 million and statutory surplus would decrease by $212 million as of December 31, 2022. Net income would not be impacted by the permitted practice for the year ended December 31, 2022. The Company’s net income and statutory surplus were not impacted by the permitted practice as of and for the years ended December 31, 2021 and 2020.

As of December 31, 2022, if the Company had not used the above permitted practice that differs from NAIC SAP a risk based capital regulatory event would not have been triggered. The impact on net income and surplus is shown in the following table.

 

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The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

A reconciliation of the Company’s net income and surplus between NAIC SAP and practices prescribed and permitted by the state of Wisconsin is shown below:

 

     For the year ended
December 31,		  
           2022        
     (in millions)  

Net Income, Wisconsin State Basis

        $ 912    

State Permitted Practices:

   

Allowance of net negative IMR

      -  
  

 

 

  

Net Income, NAIC SAP

        $ 912  
  

 

 

  
     December 31,  
           2022        
     (in millions)  

Statutory Surplus, Wisconsin State Basis

        $ 29,885  

State Permitted Practices:

   

Allowance of net negative IMR

      (212 ) 
  

 

 

  

Statutory Surplus, NAIC SAP

        $ 29,673  
  

 

 

  

 

2.

Summary of Significant Accounting Policies

The preparation of financial statements in accordance with the statutory basis of accounting requires the Company to make estimates or assumptions about the future that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the annual periods presented. Actual future results could differ from these estimates and assumptions.

Investments

See Notes 3, 4 and 14 regarding the statement value and fair value of the Company’s investments in bonds, mortgage loans, common and preferred stocks, real estate and other investments, including derivative instruments.

Policy Loans

Policy loans represent amounts borrowed from the Company by life insurance 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 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.

 

NM-10

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

Separate Accounts

Separate account assets and related reserve liabilities represent the segregation of balances attributable to variable life insurance and variable annuity products, as well as a group annuity separate account used to fund certain of the Company’s employee and financial representative benefit plan obligations. All separate account assets are legally insulated from claims by the Company’s general account policyowners and creditors. Variable product policyowners bear the investment performance risk associated with these products. Separate account assets related to variable products are invested at the direction of the policyowner in a variety of mutual fund options. Variable annuity 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 Company’s general account. Separate account assets are generally reported at fair value primarily based on quoted market prices for the underlying investment securities. See Note 7 and Note 14 for more information regarding the Company’s separate accounts and Note 8 for more information regarding the Company’s employee and financial representative benefit plans.

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 Company’s 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 Company’s 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 Company’s 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 management’s 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 Company’s 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 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.

 

NM-11

Table of Contents

Interest Maintenance Reserve

The Company is required to maintain an 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 hedged item. See Note 1 for disclosure of the impact of the Company’s application of a permitted accounting practice for IMR.

Asset Valuation Reserve

The Company is required to maintain an asset valuation reserve (AVR). The AVR represents a reserve for invested asset valuation using a formula prescribed by the NAIC. The AVR is intended to protect surplus by absorbing declines in the value of the Company’s investments that are not related to changes in interest rates. Increases or decreases in the AVR are reported as direct adjustments to surplus in the 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 Company’s use of reinsurance.

Net Investment Income

Net investment income primarily represents interest, dividends and prepayment fees received or accrued on bonds, mortgage loans, common and preferred stocks, policy loans and other investments. Net investment income also includes dividends and distributions paid to the Company from the accumulated earnings of joint ventures, partnerships and unconsolidated non-insurance subsidiaries. Net investment income is reduced by investment management expenses, real estate depreciation, interest costs associated with repurchase agreements and interest expense related to the Company’s 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 Company’s 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 Company’s 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 Company’s use of reinsurance.

Commissions and Operating Expenses

Commissions and other operating expenses, including costs of acquiring new insurance policies, are generally charged to expense as incurred.

 

12

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

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 Company’s 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 Company’s 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 $28 million and $34 million at December 31, 2022 and 2021, respectively, are included in other assets in the statutory statements of financial position and are net of accumulated depreciation of $78 million and $60 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 $469 million and $423 million at December 31, 2022 and 2021, respectively. Depreciation expense for IT equipment and software totaled $179 million, $160 million and $153 million for the years ended December 31, 2022, 2021 and 2020, 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 $116 million and $132 million at December 31, 2022 and 2021, respectively. Depreciation expense for furniture, fixtures and equipment totaled $18 million, $17 million and $14 million for the years ended December 31, 2022, 2021 and 2020, respectively.

 

NM-13

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

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 Company’s financial representatives, furniture, fixtures, equipment and non-operating software (net of accumulated depreciation), derivatives, prepaid expense, 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 Company’s 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 Company’s 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 $2 million and $218 million of tenders being included in net investment income on the statutory statements of operations for the years ended December 31, 2022 and 2021, respectively.

Subsequent Events

The Company has evaluated events subsequent to December 31, 2022 through February 15, 2023, the date these statutory financial statements were available to be issued. Based on this evaluation, it is the Company’s opinion that no events subsequent to December 31, 2022 have occurred that are material to the Company’s financial position at that date or the results of its operations for the year then ended.

 

3.

Investments

Bonds

The Securities Valuation Office (SVO) of the NAIC Investment Analysis Office evaluates the credit quality of the Company’s bond investments and issues related designations. Bonds designated as “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 designated “6” (lowest quality) are reported at the lower of amortized cost or fair value. SVO-identified funds include certain SVO approved bond exchange-traded fund investments and are reported at fair value. The interest method is used to amortize any purchase premium or discount, including estimates

 

NM-14

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

of future prepayments that are obtained from independent sources. Prepayment assumptions are updated at least annually, with the retrospective method used to adjust net investment income for changes in the estimated yield to maturity.

The disclosure of fair value for bonds is primarily based on independent pricing services or internally-developed pricing models utilizing observable market data. See Note 14 for more information regarding the fair value of the Company’s investments in bonds.

The statement value and fair value of bonds at December 31, 2022 and 2021, summarized by asset categories required in the NAIC Annual Statement, were as follows:

 

December 31, 2022

    Reconciliation to Fair Value
         Gross   Gross    
     Statement   Unrealized   Unrealized   Fair
     Value   Gains   Losses   Value
                  
     (in millions)

U.S. Government

        $ 5,027           $ 37           $ (400 )          $ 4,664    

States, territories and possessions

      1,131       10       (95 )      1,046  

Special revenue and assessments

      17,951       51       (2,467 )      15,535  

All foreign governments

      2,465       6       (318 )      2,153  

Hybrid securities

      436       4       (32 )      408  

SVO-identified funds

      -       -       -       -  

Industrial and miscellaneous

            160,258             439       (18,389 )          142,308  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total bonds

        $ 187,268         $ 547         $ (21,701 )        $ 166,114  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

 

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  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total bonds

        $ 179,121         $ 10,071         $ (931 )        $ 188,261  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

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-15

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

Statement value of bonds by SVO designation category at December 31, 2022 and 2021 was as follows:

 

December 31, 2022

    SVO Designation
     1   2   3   4   5   6   Total
     (in millions)

U.S. Government

        $ 5,027           $ -           $ -           $ -           $ -           $ -           $ 5,027    

States, territories and possessions

      936       195       -       -       -       -       1,131  

Special revenue and assessments

      17,843       83       25       -       -       -       17,951  

All foreign governments

      964       1,473       21       7       -       -       2,465  

Hybrid securities

      -       342       94       -       -       -       436  

SVO-identified funds

      -       -       -       -       -       -       -  

Industrial and miscellaneous

      81,328       65,656       5,740       4,485       2,890       159       160,258  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total bonds

        $ 106,098         $ 67,749         $ 5,880         $ 4,492         $ 2,890         $ 159         $ 187,268  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

 

December 31, 2021

    SVO Designation
     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  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total bonds

        $ 95,194         $ 68,740         $ 7,519         $ 4,820         $ 2,666         $ 182         $ 179,121  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Based on statement value, 93% and 92% of the Company’s bond portfolio was designated investment grade (i.e., designated 1 or 2 by the SVO) at December 31, 2022 and 2021, respectively.

Statement value and fair value of structured securities at December 31, 2022 and 2021, aggregated by investment grade or below investment grade (i.e., designated 3, 4, 5 or 6 by the SVO), were as follows:

 

December 31, 2022

    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

        $ 14,176                 $ 12,270                 $ -              $ -           $ 14,176                 $ 12,270          

Other prime

      209       192       -          -       209       192  

Other below-prime

      1,578       1,432       2          2       1,580       1,434  

Commercial mortgage-backed:

                

U.S. Government agencies

      72       65       -          -       72       65  

Conduit

      5,672       5,185       26          20       5,698       5,205  

Other asset-backed

      16,905       16,035       137          115       17,042       16,150  
  

 

 

 

  

 

 

 

  

 

 

 

     

 

 

 

  

 

 

 

  

 

 

 

Total structured securities

        $ 38,612         $ 35,179         $ 165            $ 137         $ 38,777         $ 35,316  
  

 

 

 

  

 

 

 

  

 

 

 

     

 

 

 

  

 

 

 

  

 

 

 

 

NM-16

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

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    
 

 

 

 

  

 

 

 

  

 

 

 

    

 

 

 

  

 

 

 

  

 

 

 

Based on statement value, over 99% of the Company’s structured securities portfolio was designated as investment grade at each of December 31, 2022 and 2021. Based on statement value, the Company’s investment in residential mortgage-backed securities issued by U.S. Government agencies was 8% of total bond investments at each of December 31, 2022 and 2021.

Statement value and fair value of bonds and short-term investments by contractual maturity at December 31, 2022 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

        $ 7,642          $ 7,630  

Due after one year through five years

      42,236        40,003  

Due after five years through ten years

      53,839        48,141  

Due after ten years

      87,485        74,274  
  

 

 

 

   

 

 

 

Total

        $ 191,202            $ 170,048    
  

 

 

 

   

 

 

 

Mortgage Loans

Mortgage loans consist primarily 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 $161 million and $199 million at December 31, 2022 and 2021, respectively.

 

NM-17

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

The statement value of mortgage loans by collateral property type and geographic location at December 31, 2022 and 2021 was as follows:

 

December 31, 2022

    United States of America        
           East               Midwest               South               West               Foreign               Total      
                          
     (in millions)

Apartment

        $ 8,483         $ 2,844         $ 5,752         $ 10,336         $ -         $ 27,415  

Office

      3,187       579       1,019       3,540       -       8,325  

Retail

      1,896       495       1,232       1,505       -       5,128  

Warehouse/Industrial

      2,044       1,125       420       2,582       147       6,318  

Manufactured housing

      286       309       1,652       1,595       204       4,046  

Other

      174       211       27       154       -       566  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total

        $ 16,070           $ 5,563           $ 10,102           $ 19,712           $ 351           $ 51,798    
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

 

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    
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

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 $2.9 billion and $3.2 billion at December 31, 2022 and 2021, respectively.

Interest rates and loan-to-value (LTV) ratio information for the Company’s mortgage loans originated or refinanced during 2022 and 2021 is summarized below.

 

For mortgage loans originated or refinanced during:

          2022               2021      

Minimum interest rate

      2.37 %      1.50 % 

Maximum interest rate

      7.38 %      7.15 % 

Weighted-average LTV

      54 %      56 % 

Maximum LTV

      69 %      74 % 

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, 2022 and 2021, the aggregate weighted-average LTV ratio for the mortgage loan portfolio was 53% and 52%, respectively.

 

NM-18

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

The statement value of mortgage loans by collateral property type and LTV ratio at December 31, 2022 and 2021 was as follows:

 

December 31, 2022

          < 51%               51%-70%               71%-90%                > 90%               Total      
                       
    

 

(in millions)

Apartment

      $ 10,631       $ 15,340       $ 1,408        $ 36       $ 27,415  

Office

      3,549       3,606       805        365       8,325  

Retail

      1,476       2,686       627        339       5,128  

Warehouse/Industrial

      2,631       3,664       23        -       6,318  

Manufactured housing

      2,466       1,580       -        -       4,046  

Other

      325       176       -        65       566  
  

 

 

 

  

 

 

 

  

 

 

 

   

 

 

 

  

 

 

 

Total

      $ 21,078         $ 27,052         $ 2,863          $ 805         $ 51,798    
  

 

 

 

  

 

 

 

  

 

 

 

   

 

 

 

  

 

 

 

 

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    
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

The aggregate statement value of mortgage loans with LTV in excess of 100% was $272 million at December 31, 2022. At December 31, 2021, 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 Company’s investments in mortgage loans.

In the normal course of business, the Company may refinance or otherwise modify the terms of an existing mortgage loan, typically in reaction to a 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, 2022, 2021 and 2020,

 

NM-19

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

respectively. The Company had no mortgage loans at either of December 31, 2022 or December 31, 2021 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 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, 2022 or 2021. The Company had one mortgage loan that went into default during 2022 and is in the process of foreclosure at December 31, 2022 while all loans were performing during 2021. The Company recognized other-than-temporary impairment losses on mortgage loans of $25 million and $0 for the years ended December 31, 2022 and 2021, respectively.

Common and Preferred Stocks

Common stocks are generally reported at fair value, with $2,361 million and $4,067 million included in the statutory statements of financial position at December 31, 2022 and 2021, 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 designated 1, 2 or 3 by the SVO are reported at amortized cost. Redeemable preferred stocks designated 4, 5 or 6 by the SVO are reported at the lower of amortized cost or fair value. Perpetual preferred stocks are reported at the lower of fair value or the currently effective call price for the stock. At December 31, 2022 and 2021, the statutory statements of financial position included $178 million and $175 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 Company’s 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 or the present value of future cash flows generated by the property.

The statement value of real estate investments by property type and U.S. geographic location at December 31, 2022 and 2021 was as follows:

 

December 31, 2022

          East               Midwest               South               West               Total      
                      
                      
     (in millions)

Apartment

      $ 308       $ 172       $ 275       $ 745       $ 1,500  

Office

      208       558       50       -       816  

Warehouse/Industrial

      254       -       -       203       457  

Other

      16       15       102       -       133  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total

      $ 786         $ 745         $ 427         $ 948         $ 2,906    
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

 

NM-20

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

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     
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

The Company’s home office properties are included above (Office/Midwest) and had an aggregate statement value of $558 million and $672 million at December 31, 2022 and 2021, respectively. The Company’s other investments in real estate are held for the production of income.

Other Investments

Other investments primarily represent investments that are made through ownership interests in partnerships, joint ventures (JVs) and limited liability companies (LLCs). In some cases, these ownership interests are held directly by the Company, while in other cases these investments are held indirectly through 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 Company’s 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, 2022 and 2021 was as follows:

 

     December 31,
           2022               2021      
          
     (in millions)

Securities partnerships and LLCs

      $ 12,075       $ 11,112  

Bonds

      4,470       4,748  

Real estate JVs, partnerships and LLCs

      3,453       3,989  

Common and preferred stocks

      3,384       3,083  

Derivative instruments

      1,680       629  

Wholly owned real estate

      1,070       1,171  

COLI

      1,037       1,248  

Cash and short-term investments

      795       1,964  

Structured settlements

      749       770  

Low income housing tax credit properties

      721       702  

Other net assets (liabilities)

      674       (232 ) 
  

 

 

 

  

 

 

 

Total

      $ 30,108         $ 29,184    
  

 

 

 

  

 

 

 

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, 2022 and 2021, respectively. The required holding period for tax credit properties is 15

 

NM-21

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

years. The amount of tax credits and other tax benefits recognized during 2022 and 2021 were $161 million and $150 million, respectively. See Note 10 for more information regarding the Company’s use of tax credits. See Note 4 for more information regarding the Company’s use of derivatives.

Investments in Subsidiaries, Controlled and Affiliated Entities

The Company’s 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 Company’s share of the underlying entities’ audited GAAP-basis equity. At December 31, 2022 and 2021, the value of wholly-owned SCA investments were as follows:

 

     December 31, 2022   December 31, 2021
         Investment in    
SCA		       Nonadmitted    
Asset		       Statement    
Value		       Investment in    
SCA		       Nonadmitted    
Asset		       Statement    
Value
         (in millions)                   (in millions)            

NM Wealth Management Company

      $ 252       $ -       $ 252       $ 275       $ -       $ 275  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total common stock SCAs 1

      252       -       252       275       -       275  

NML Securities Holdings, LLC

      13,299       -       13,299       13,533       -       13,533  

NML Real Estate Holdings, LLC

      2,145       -       2,145       2,814       -       2,814  

NM Investment Holdings, LLC

      1,335       -       1,335       1,383       -       1,383  

QOZ Holding Company, LLC

      389       -       389       234       1       233  

NM Investment Services, LLC

      170       -       170       151       -       151  

NM Investment Management Company, LLC

      130       130       -       64       64       -  

NM Pebble Valley, LLC

      90       -       90       224       -       224  

Mason Street Advisors, LLC

      79       79       -       45       45       -  

Wysh Holdings, LLC

      68       3       65       15       3       12  

NM GP Holdings, LLC

      67       15       52       64       7       57  

Lake Emily Holdings, LLC

      64       -       64       -       -       -  

NM-SAS, LLC

      9       6       3       11       7       4  

GRO-SUB, LLC

      2       2       -       2       2       -  

NM Career Distribution Holdings, LLC

      1       1       -       3       3       -  

NMU Holdings, LLC

      -       -       -       -       -       -  

GRO, LLC

      -       -       -       -       -       -  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total other investment SCAs 2

      17,848       236       17,612       18,543       132       18,411  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total investments in SCAs

      $ 18,100         $ 236         $ 17,864         $ 18,818         $ 132         $ 18,686    
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

 

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 2022. In all cases, the NAIC accepted the statement value.

 

NM-22

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

Net Investment Income

The sources of net investment income for the years ended December 31, 2022, 2021 and 2020 were as follows:

 

     For the years ended December 31,
           2022               2021               2020      
         (in millions)    

Bonds

      $ 6,566       $ 6,286       $ 6,154  

Mortgage loans

      1,899       1,829       1,717  

Common and preferred stocks

      183       194       188  

Real estate

      310       279       279  

Other investments

      2,351       1,200       2,122  

Policy loans

      1,143       1,148       1,180  

Amortization of IMR

      292       422       255  
  

 

 

 

  

 

 

 

  

 

 

 

Gross investment income

      12,744       11,358       11,895  

Less: investment expenses

      976       911       817  
  

 

 

 

  

 

 

 

  

 

 

 

Net investment income

      $ 11,768         $ 10,447         $ 11,078    
  

 

 

 

  

 

 

 

  

 

 

 

For the years ended December 31, 2022, 2021 and 2020 bond investment income included $51 million, $392 million and $82 million of prepayment fees, respectively, generated as a result of 175, 321 and 127 securities, respectively, 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, 2022, 2021 and 2020 were as follows:

 

     For the year ended   For the year ended   For the year ended
     December 31, 2022   December 31, 2021   December 31, 2020
             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

      $ 241       $ (3,614 )      $ (3,373 )      $ 1,637       $ (395)       $ 1,242       $ 2,724       $ (861 )      $ 1,863  

Mortgage loans

      -       (28 )      (28 )      -       (2 )      (2 )      -       (22 )      (22 ) 

Common and preferred stocks

      395       (112 )      283       494       (39 )      455       461       (643 )      (182 ) 

Real estate

      23       (99 )      (76 )      153       (42 )      111       253       -       253  

Other investments

      2,154       (2,403 )      (249 )      1,506       (1,220 )      286       1,350       (1,302 )      48  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Subtotal

      $ 2,813           $ (6,256 )            (3,443 )          $ 3,790           $ (1,698 )            2,092           $ 4,788           $ (2,828 )          1,960      
  

 

 

 

  

 

 

 

    

 

 

 

  

 

 

 

    

 

 

 

  

 

 

 

  

Less: IMR net gains (losses) before taxes

 

     (3,902 )          1,556           2,064  

Less: Capital gains tax expense (benefit)

 

     171           233           (2 ) 
 

 

 

 

      

 

 

 

      

 

 

 

Net realized capital gains (losses)

 

     $ 288         $ 303         $ (102 ) 
      

 

 

 

      

 

 

 

      

 

 

 

 

NM-23

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

Realized capital gains and losses are generally the result of normal investment trading activity. Proceeds from the sale of bonds totaled $28 billion, $36 billion, and $48 billion for the years ended December 31, 2022, 2021 and 2020, 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 Company’s ability and intent to hold the investment for a period of time sufficient to allow for an anticipated recovery in value. If the decline in an investment’s fair value is considered to be other-than-temporary, the statement value of the investment is generally written down to fair value and a realized capital loss is reported.

For fixed income investments, the review focuses on the issuer’s ability to remit all contractual interest and principal payments and the Company’s ability and intent to hold the investment until the earlier of a recovery in value or maturity. The Company’s intent and ability to hold an investment takes into consideration broad portfolio management parameters such as expected net cash flows and liquidity targets, asset/liability duration management and issuer and industry 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 Company’s review of securities partnerships will generally defer to GAAP-basis impairment reviews performed by the general partner absent compelling evidence of a permanent impairment of the Company’s partnership interest.

 

NM-24

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

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, 2022, 2021 and 2020 were as follows:

 

     For the years ended December 31,
             2022                   2021                   2020        
Bonds, common and preferred stocks:        (in millions)    

Structured securities

      $ -       $ -       $ -  

Foreign government

      -       -       (34 ) 

Consumer discretionary

      (66 )      (44 )      (51 ) 

Industrials

      (40 )      (20 )      (42 ) 

Energy

      (3 )      -       (59 ) 

Other

      (15 )      -       (13 ) 
  

 

 

 

  

 

 

 

  

 

 

 

Subtotal

      (124 )      (64 )      (199 ) 

Mortgage loans

      (25 )      -       (15 ) 

Real estate

      (99 )      (39 )      -  

Other investments:

       

Securities partnerships

      -       (2 )      (6 ) 

Energy and transportation

      -       (6 )      -  
  

 

 

 

  

 

 

 

  

 

 

 

Subtotal

      -       (8 )      (6 ) 
  

 

 

 

  

 

 

 

  

 

 

 

Total

      $ (248 )        $ (111 )        $ (220 )   
  

 

 

 

  

 

 

 

  

 

 

 

In addition to the realized capital losses above, $11 million, $61 million and $37 million of other-than-temporary impairments were recorded by the Company’s unconsolidated non-insurance subsidiaries for the years ended December 31, 2022, 2021 and 2020, respectively. The decline in the Company’s 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 Company’s 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.

 

NM-25

Table of Contents

Changes in net unrealized capital gains and losses for the years ended December 31, 2022, 2021 and 2020 were as follows:

 

     For the years ended December 31,
             2022                   2021                   2020        
              
     (in millions)

Bonds

      $ (1,016 )      $ (470 )      $ 606  

Mortgage loans

      (20 )      (10 )      33  

Common and preferred stocks

      (728 )      260       520  

Other investments

      81       3,969       (251 ) 
  

 

 

 

  

 

 

 

  

 

 

 

Subtotal

      (1,683 )      3,749       908  

Change in deferred taxes

      134       (260 )      (109 ) 
  

 

 

 

  

 

 

 

  

 

 

 

Change in net unrealized capital gains and losses

      $ (1,549 )      $ 3,489       $ 799  
  

 

 

 

  

 

 

 

  

 

 

 

Changes in net unrealized capital gains and losses for the years ended December 31, 2022, 2021 and 2020 included the reversal of previously unrealized capital gains of $(1,461) million, $(236) million and $(1,428) 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, 2022 and 2021 were as follows:

 

     December 31, 2022
     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

      $ 88,076        $ 78,708        $ (9,368 )       $ 50,675        $ 40,648        $ (10,027 ) 

Structured Securities

      21,529        20,241        (1,288 )       15,104        12,900        (2,204 ) 

Common and preferred stocks

      601        524        (77 )       37        26        (11 ) 
  

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

Total

      $ 110,206        $ 99,473        $ (10,733 )       $ 65,816        $ 53,574        $ (12,242 ) 
  

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

 

     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)  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

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 “5GI” to such securities

 

26

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The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

for reporting purposes. At December 31, 2022 and 2021, the statement and fair values of NAIC 5GI securities were as follows:

 

    December 31,
    2022   2021
            Number of        
Securities		         Statement      
Value		   Fair
      Value      		         Number of      
Securities		       Statement    
Value		   Fair
      Value      
                         
    ($ in millions)   ($ in millions)
Bonds     94     $ 2,123     $ 1,820       72     $ 1,613     $ 1,641  

Preferred stock

     2       13       13       28         8  

Loan-backed and structured securities

     1       —       —       1       —       —  
 

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total

   $ 97     $ 2,136     $ 1,833       75     $ 1,621     $ 1,649  
 

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

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 Company’s 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 Company’s reinvestment of cash collateral received.

Cash collateral received, and the liability to return that collateral which is included within other liabilities in the statutory statements of financial position, had the following characteristics during 2022 and 2021:

 

For the quarter ended:

          Maximum      
Balance		       Ending Balance   
     (in millions)  

March 31, 2022

      $ 1,277          $ 1,243    

June 30, 2022

      $ 2,032        $ 2,032  

September 30, 2022

      $ 2,352        $ 2,300  

December 31, 2022

      $ 2,316        $ 2,295  

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  

 

NM-27

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

During 2022 and 2021, 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, 2022

     $ 1,311         $ 1,273         $ 1,243    

June 30, 2022

     $ 2,080       $ 2,073       $ 2,032  

September 30, 2022

     $ 2,406       $ 2,340       $ 2,300  

December 31, 2022

     $ 2,372       $ 2,336       $ 2,295  

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  

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 designations of 1.

The amortized cost, fair value and remaining term to maturity of reinvested repurchase agreement collateral held by the Company at December 31, 2022 and 2021 was as follows:

 

     December 31, 2022    December 31, 2021
     Amortized
Cost		    Fair Value    Amortized
Cost		    Fair Value
                     
     (in millions)    (in millions)

30 days or less

      $ 420        $ 420        $ 259        $ 259  

31-60 days

      345        345        204        204  

61-90 days

      372        372        70        70  

91-120 days

      27        27        26        26  

121-180 days

      23        22        13        13  

181-365 days

      391        390        134        134  

1-2 years

      251        250        330        331  

2-3 years

      223        223        155        155  

Over 3 years

      245        240        91        91  
  

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

Total

      $ 2,297          $ 2,289          $ 1,282          $ 1,283    
  

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

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 Company’s investments are either pledged as collateral or are otherwise held beyond the exclusive control of the Company (“restricted assets”). These restrictions are generally the result of collateral support agreements with counterparties in connection with repurchase agreements and derivative transactions.

 

NM-28

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

At December 31, 2022 and 2021, collateral held by counterparties was primarily in the form of cash, short-term investments and bonds, including U.S. Government securities. See Note 4 for more information regarding the Company’s derivative portfolio.

The statement value of restricted assets at December 31, 2022 and 2021, summarized by type of restriction, was as follows:

 

                 December 31,               
     2022      2021  
               
     (in millions)  

Loaned securities - repurchase agreements

      $ 2,295        $ 1,277  

Federal Home Loan Bank of Chicago pledged collateral

      4,681        3,705  

Derivative transactions

      504        121  

Federal Home Loan Bank of Chicago stock

      121        92  

Securities on deposit with states

      3        3  
  

 

 

     

 

 

  

Total restricted assets

      $ 7,604        $ 5,198  
  

 

 

     

 

 

  

Collateral Assets Received

The statement and fair values of collateral received at December 31, 2022 and 2021 were as follows:

 

                December 31,             
2022		               December 31,             
2021
    Statement
Value		   Fair Value   Statement
Value		   Fair Value
                 
    (in millions)   (in millions)

Repurchase agreement collateral

     $ 2,295       $ 2,336       $ 1,277       $ 1,302  

Derivative collateral

     2,141       2,141       898       898  

Mortgage loan escrow

     101       101       103       103  

Real estate escrow and security deposits

     4       4       4       4  
 

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total collateral assets

     $ 4,541       $ 4,582       $ 2,282       $ 2,307  
 

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

The company had not received any derivative collateral related to the separate accounts at December 31, 2022 or 2021. 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 Company’s over-the-counter derivatives are bilateral contracts between two counterparties. The Company’s remaining over-the-counter derivatives are cleared and settled through central clearing 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

 

NM-29

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

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.

The fair value of collateral held by the Company under derivative support agreements at December 31, 2022 and 2021 was as follows:

 

                 December 31,               
         2022              2021      
               
     (in millions)  

Bonds:

      

General Account

    $ 108      $ 36  

Separate Accounts

      -        -  
  

 

 

     

 

 

  

Total bond collateral

    $ 108      $ 36  
  

 

 

     

 

 

  

Cash:

      

General Account

    $ 2,141      $ 898  

Separate Accounts

      -        -  
  

 

 

     

 

 

  

Total cash collateral

    $ 2,141      $ 898  
  

 

 

     

 

 

  

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 Company’s 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.

 

NM-30

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

The fair value of collateral posted by the Company at December 31, 2022 and 2021 was as follows:

 

                 December 31,             
     2022   2021
          
     (in millions)

Bonds posted for derivative support agreements:

     

General Account

      $ 69         $ 39    

Separate Accounts

      2       2  

Bonds posted for futures agreements:

     

General Account

      221       41  

Separate Accounts

      15       17  
  

 

 

 

  

 

 

 

    Total bond collateral

      $ 307       $ 99  
  

 

 

 

  

 

 

 

Cash posted for derivative support agreements:

     

General Account

      $ 187       $ 13  

Separate Accounts

      2       1  

Cash posted for futures agreements:

     

General Account

      -       4  

Separate Accounts

      8       4  
  

 

 

 

  

 

 

 

    Total cash collateral

      $ 197       $ 22  
  

 

 

 

  

 

 

 

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 Company’s insurance products. Interest rate floors entitle the Company to receive payments from a counterparty if market interest rates decline below a specified level. Amounts received on these contracts are reported as net investment income.

Interest rate swaps are used to mitigate interest rate risk for investments in 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

 

NM-31

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

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 $411 million and $187 million for the years ended December 31, 2022 and 2021, respectively. The average fair value of outstanding derivative liabilities not designated as hedging instruments was $139 million and $38 million for the years ended December 31, 2022 and 2021, 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 Company’s 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.

Swaptions are used to mitigate the asset/liability management risk of a significant and sustained increase in interest rates for certain of the Company’s insurance products. Swaptions provide the Company an option to enter into an interest rate swap with a counterparty on specified terms.

Fixed income futures are used to mitigate interest rate risk for investments in portfolios of fixed income securities. Fixed income futures obligate the Company to sell to or buy from a counterparty a specified 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 Company’s 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.

 

NM-32

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

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.

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 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.

 

NM-33

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

The effects of the Company’s use of derivative instruments on the statutory statements of financial position at December 31, 2022 and 2021 were as follows:

 

     December 31, 2022
           Notional                      Statement Value                            Fair Value             
     Amount    Assets    Liabilities   Assets    Liabilities
               (in millions)         

Derivatives designated as hedging instruments:

              

Interest rate contracts:

              

Interest rate floors

    $ 300      $ 1      $ -     $ 1      $ -  

Interest rate swaps

      1,947        -        -       -        (162 ) 

Foreign exchange contracts:

              

Foreign currency swaps

      13,623        1,199        (46 )      1,862        (58 ) 

Derivatives not designated as hedging instruments:

              

Interest rate contracts:

              

Interest rate caps

      1,705        51        -       51        -  

Interest rate floors

      1,806        21        (3 )      21        (3 ) 

Interest rate swaps

      4,666        151        (162 )      151        (162 ) 

Swaptions

      4,635        242        -       242        -  

Fixed income futures

      10,369        -        -       -        -  

Fixed income forwards

      469        1        (7 )      1        (7 ) 

Foreign exchange contracts:

              

Foreign currency forwards

      -        -        -       -        -  

Foreign currency swaps

      144        14        (1 )      14        (1 ) 

Investment replications

              

Interest rate contracts:

              

Interest rate swaps

      6        -        -       1        -  
     

 

 

 

   

 

 

 

  

 

 

 

   

 

 

 

Total derivatives

         $ 1,680        $ (219 )      $ 2,344        $ (393 ) 
     

 

 

 

   

 

 

 

  

 

 

 

   

 

 

 

 

NM-34

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

     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 ) 

Investment replications

              

Interest rate contracts:

              

Interest rate swaps

      6        -        -       -        -  
     

 

 

 

   

 

 

 

  

 

 

 

   

 

 

 

Total derivatives

         $ 629        $ (311 )      $ 1,023        $ (195 ) 
     

 

 

 

   

 

 

 

  

 

 

 

   

 

 

 

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-35

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

The effects of the Company’s use of derivative instruments on the statutory statements of operations and changes in surplus for the years ended December 31, 2022, 2021 and 2020 were as follows:

 

     For the year ended December 31, 2022
         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

    $ -     $ -     $ 3  

Interest rate swaps

      -       -       (12 ) 

Foreign exchange contracts:

       

Foreign currency swaps

      1,027       65       190  

Derivatives not designated as hedging instruments:

       

Interest rate contracts:

       

Interest rate caps

      36       -       (2 ) 

Interest rate floors

      (17 )      -       -  

Interest rate swaps

      (15 )      -       -  

Swaptions

      139       -       (10 ) 

Fixed income futures

      (57 )      (652 )      -  

Fixed income forwards

      (8 )      (91 )      -  

Foreign exchange contracts:

       

Foreign currency forwards

      (46 )      49       -  

Foreign currency swaps

      5       4       2  

Credit contracts:

       

Purchased credit default swaps

      -       -       -  

Warrants

      -       -       -  

Investment replications

       

Interest rate contracts:

       

Interest rate swaps

      -       -       -  

Equity contracts:

       

Equity total return swaps

      -       -       -  
  

 

 

 

  

 

 

 

  

 

 

 

Total derivatives

      $ 1,064       $ (625 )      $ 171  
  

 

 

 

  

 

 

 

  

 

 

 

 

NM-36

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

     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  

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-37

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

     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  

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  
  

 

 

 

  

 

 

 

  

 

 

 

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, 2022, 2021 and 2020.

 

NM-38

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

5.

Policy Benefit Reserves and Deposit Funds

General account policy benefit reserves at December 31, 2022 and 2021 were as follows:

 

     December 31,
           2022                2021      
           
     (in millions)

Life insurance reserves

      $ 215,691        $ 205,037  

Disability and long-term care active life reserves

      7,564        6,728  

Disability and long-term care unpaid claims and claim reserves

      5,528        5,455  

Annuity reserves

      13,660        12,814  
  

 

 

 

   

 

 

 

Total policy benefit reserves

      $     242,443          $   230,034  
  

 

 

 

   

 

 

 

See Note 9 for more information regarding the Company’s 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, 2022, the Company had $2.2 trillion of total life insurance in force, including $20 billion of life insurance in force for which gross premiums were less than net premiums according to the standard valuation methods and assumptions prescribed by the OCI. Gross premiums are calculated using mortality tables that reflect both the Company’s actual experience and the potential transfer of risk to reinsurers. Net premiums are determined in the calculation of statutory reserves, which must be based on industry-standard mortality tables.

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-39

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

At December 31, 2022 and 2021, the account and cash values related to the Company’s general account life reserves were as follows:

 

     Account Value    Cash Value    Reserves
                               
    

 

    December 31,   

 

   

 

   

 

           2022                2021                2022                2021                2022                2021      
                               
               (in millions)          

Subject to discretionary withdrawal, surrender values, or policy loans:

                  

Universal life

      $ 13,692        $ 11,609        $ 13,479        $ 11,366        $ 13,500        $ 11,389  

Universal life with secondary guarantees

      13        14        12        12        34        32  

Other permanent cash value life insurance

      -        -        185,111        177,829        190,196        182,118  

Variable life

      -        -        -        -        973        953  

Variable universal life

      8        6        7        6        43        37  

Not subject to discretionary withdrawal or no cash value:

                  

Term policies without cash value

      -        -        -        -        5,192        5,039  

Accidental death benefits

      -        -        -        -        9        10  

Disability - active lives

      -        -        -        -        1,064        971  

Disability - disabled lives

      -        -        -        -        1,563        1,475  

Miscellaneous reserves

      -        -        -        -        3,051        3,003  
  

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

Total gross life reserves 1

      13,713        11,629        198,609        189,213        215,625        205,027  

Reinsurance ceded

      -        -        -        -        1,184        1,203  
  

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

Total net life insurance

      $ 13,713        $ 11,629        $ 198,609        $ 189,213        $ 214,441        $ 203,824  
  

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

 

1

This line includes only the Company’s general life reserves, whereas, the life insurance reserves presented in the general account policy benefit reserves table above include life and annuity unpaid claims.

At December 31, 2022 and 2021, the withdrawal characteristics of the Company’s separate account life reserves were as follows:

 

     Account Value    Cash Value    Reserves
                               
     December 31,
           2022                2021                2022                2021                2022                2021      
                               
               (in millions)          

Subject to discretionary withdrawal, surrender values or policy loans:

                  

Variable life

      $ -        $ -        $ 8,399        $ 10,251        $ 7,476        $ 9,350  

Variable universal life

      1,837        1,817        1,690        1,718        1,654        1,687  
  

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

Total gross life reserves

      $ 1,837        $ 1,817        $ 10,089        $ 11,969        $ 9,130        $ 11,037  
  

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

Reinsurance ceded

      -        -        -        -        -        -  
  

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

Total net life insurance

      $ 1,837        $ 1,817        $ 10,089        $ 11,969        $ 9,130        $ 11,037  
  

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

 

NM-40

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

The following are amounts reported as net life insurance reserves in the Company’s Annual Statement, which agree with the amounts reported as net life insurance reserves in the table above at December 31, 2022 and 2021.

 

     December 31,
           2022                2021      
           
     (in millions)

From Life, Accident & Health Annual Statement:

      

Life insurance

    $ 211,671      $ 201,186  

Accidental death benefits

      9        10  

Disability - active lives

      1,064        971  

Disability - disabled lives

      1,561        1,473  

Miscellaneous reserves

      136        184  
  

 

 

 

   

 

 

 

Subtotal net life insurance

      214,441        203,824  

From Separate Accounts Annual Statement:

      

Life insurance

      9,130        11,037  
  

 

 

 

   

 

 

 

Combined Total

    $ 223,571      $ 214,861  
  

 

 

 

   

 

 

 

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.

Deposit Funds

Deposit fund liabilities at December 31, 2022 and 2021 were $11.0 billion and $8.3 billion, respectively. 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 Company’s 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 Company’s 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 Company’s 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.

The total deposit fund liability for Northwestern Access Fund account balances held by the Company was $270 million and $292 million at December 31, 2022 and 2021, respectively. Accounts were credited with interest at annual rates ranging from 0.01% to 3.87% and 0.01% to 3.50% during 2022 and 2021, respectively. The crediting interest rates changed 42 times and 13 times during 2022 and 2021, respectively.

 

NM-41

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

The Company is a member of the Federal Home Loan Bank of Chicago (FHLBC) and issues 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 investments when funding agreements are issued. Upon an event of default by the Company, the FHLBC’s recovery on the collateral is limited to the outstanding amount of the Company’s liability to the FHLBC.

At December 31, 2022 and 2021, the Company held $121 million and $92 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, 2022

      $ 4,681          $ 4,195    

December 31, 2021

      3,705        3,948  

 

(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, 2022

    $ 4,718      $ 4,451      $ 2,188  

December 31, 2021

      3,711        3,958        1,952  

The amount borrowed from FHLBC, in the form of funding agreements, was as follows:

 

     December 31,    December 31,
           2022                2021      
     (in millions)    (in millions)

Borrowed

      $ 2,698          $ 2,052    

Deposit fund reserves

      $ 2,707        $ 2,052  

Max borrowed during the year

      $ 2,698        $ 2,052  

Borrowing capacity as determined by insurer

      $ 8,000        $ 8,000  

The Company does not have prepayment obligations for these funding agreements.

The Company has established a $10 billion global Funding Agreement Backed Note (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, 2022 and 2021, the Company had issued and outstanding funding agreements of $4.2 billion and $2.0 billion, respectively.

For all deposit type contracts, reserves reflect the accumulated value. For funding agreements with fixed rate interest payments, the Company utilizes valuation interest rates to calculate the present value (floored at the accumulated value) of any future cash flow amounts. Amounts in excess of accumulated values are recorded as an additional reserve and are reported in the deposit fund reserve balance above.

 

NM-42

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

Withdrawal Characteristics of Annuity Reserves and Deposit Funds

At December 31, 2022 and 2021, the withdrawal characteristics of the Company’s general account and separate account annuity reserves and deposit funds were as follows:

 

     General Account     Separate Account     Total  
    

 

    

 

    

 

  
    

 

December 31,

  
     2022     2021     2022     2021     2022     2021  
    

 

    

 

    

 

    

 

    

 

    

 

  
    

 

(in millions)

  

Individual Annuities

             

Subject to discretionary withdrawal

             

- with market value adjustment

      $ 106       $ 59       $ -       $ -       $ 106       $ 59  

- at book value less surrender charge of 5% or more

      67       62       -       -       67       62  

- at fair value

      -       -       19,556       24,137       19,556       24,137  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total with market value adjustment or at fair value

      173       121       19,556       24,137       19,729       24,258  

- at book value without adjustment

      1,665       1,779       -       -       1,665       1,779  

Not subject to discretionary withdrawal

      9,723       8,861       248       311       9,971       9,172  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total gross individual annuities

      11,561       10,761       19,804       24,448       31,365       35,209  

Reinsurance ceded

      -       -       -       -       -       -  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total net individual annuities

      $ 11,561       $ 10,761       $ 19,804       $ 24,448       $ 31,365       $ 35,209  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Group Annuities

             

Subject to discretionary withdrawal

             

- at fair value

      $ -       $ -       $ 13       $ 16       $ 13     $ 16  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total with market value adjustment or at fair value

      -       -       13       16       13       16  

Not subject to discretionary withdrawal

      2,099       2,053       5,105       6,647       7,204       8,700  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total gross group annuities

      2,099       2,053       5,118       6,663       7,217       8,716  

Reinsurance ceded

      -       -       -       -       -       -  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total net group annuities

      $ 2,099       $ 2,053       $ 5,118       $ 6,663       $ 7,217       $ 8,716  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Deposit-Type Contracts

             

Subject to discretionary withdrawal

             

- with market value adjustment

      $ 101       $ 80       $ -       $ -       $ 101       $ 80  

- at fair value

      -       -       28       36       28       36  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total with market value adjustment or at fair value

      101       80       28       36       129       116  

- at book value without adjustment

      3,719       3,757       -       -       3,719       3,757  

Not subject to discretionary withdrawal

      7,167       4,466       -       -       7,167       4,466  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total gross deposit-type contracts

      10,987       8,303       28       36       11,015       8,339  

Reinsurance ceded

      -       -       -       -       -       -  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total net deposit-type contracts

      $ 10,987       $ 8,303       $ 28       $ 36       $ 11,015       $ 8,339  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total annuity reserves and deposit funds

      $ 24,647         $ 21,117         $ 24,950         $ 31,147         $ 49,597         $ 52,264    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Of the individual annuity reserves at book value less surrender charge of 5% or more noted above, the Company expects that $8 million will have less than a 5% surrender charge and be reported with the amounts at book value without adjustment in 2023.

 

NM-43

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

The following are amounts reported as net annuity reserves in the Company’s Annual Statement, which agree with the amounts reported as net annuity reserves in the table above at December 31, 2022 and 2021.

 

     December 31,  
     2022     2021  
    

 

    

 

  
     (in millions)  

From Life, Accident & Health Annual Statement:

     

Annuities

    $ 11,930     $ 11,129  

Supplementary contracts with life contingencies

      1,730       1,685  

Deposit-type contracts

      10,987       8,303  
  

 

 

    

 

 

  

Subtotal net annuity reserves

      24,647       21,117  

From Separate Accounts Annual Statement:

     

Annuities

      24,674       30,800  

Supplementary contracts

      248       311  

Other contract deposit funds

      28       36  
  

 

 

    

 

 

  

Subtotal net annuity reserves

      24,950       31,147  
  

 

 

    

 

 

  

Combined Total

    $ 49,597       $ 52,264    
  

 

 

    

 

 

  

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, 2022 and 2021 were as follows:

 

     For the years ended  
     December 31,  
    

 

      2022      

    

 

      2021      

  
    

 

    

 

  
     (in millions)  

Balance at January 1

        $ 5,455         $ 5,342  

Incurred related to:

     

Current year

      877       990  

Prior years

      (8 )      (125)  
  

 

 

    

 

 

  

Total incurred

      869       865  
  

 

 

    

 

 

  

Paid related to:

     

Current year

      (36 )      (33)  

Prior years

      (760 )      (719)  
  

 

 

    

 

 

  

Total paid

      (796 )      (752)  
  

 

 

    

 

 

  

Balance at December 31

        $ 5,528         $ 5,455  
  

 

 

    

 

 

  

Changes in reserves for incurred claims related to prior years are generally the result of differences between claim experience assumed in reserve calculations and subsequent actual claim 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

 

NM-44

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

reserves for disability policies issued through 2000 and mid-terminal plus unearned premium reserves for policies issued after 2000. Active life reserves for long-term care policies consist of mid-terminal reserves and unearned premiums. Mid-terminal reserves are based on the one-year preliminary term method.

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, 2022 and 2021, reserves required as a result of AAT were as follows:

 

     December 31,
           2022                2021      
    

 

   

 

     (in millions)

Annuities and deposit funds

    $ 45      $ 250  

Life insurance

      2        2  
  

 

 

 

   

 

 

 

Total reserves

    $ 47      $ 252  
  

 

 

 

   

 

 

 

Statutory Minimum Reserves

The Company has the option to establish policy benefit and deposit fund 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 $1,400 million and $973 million at December 31, 2022 and 2021, 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, 2022 and 2021 were as follows:

 

     December 31, 2022    December 31, 2021
     Gross    Net    Gross    Net
    

 

   

 

   

 

   

 

     (in millions)    (in millions)

Ordinary new business

       $     372         $     243         $     453         $     259  

Ordinary renewal

      3,281        2,660        3,056        2,397  
  

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

Total deferred and uncollected premiums

       $ 3,653         $ 2,903         $ 3,509         $ 2,656  
  

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

 

NM-45

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

7.

Separate Accounts

Separate account liabilities at December 31, 2022 and 2021 were as follows:

 

     Variable Life    Variable Annuities    Total
    

 

   

 

   

 

     December 31,
     2022    2021    2022    2021    2022    2021
    

 

   

 

   

 

   

 

   

 

   

 

     (in millions)

Separate account reserves

       $     9,130         $     11,037         $     24,950         $     31,147         $     34,080         $     42,184  

Non-policy liabilities

                  201        199  
              

 

 

 

   

 

 

 

Total separate account liabilities

                   $     34,281         $     42,383  
              

 

 

 

   

 

 

 

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 $10 million and $7 million attributable to GMDB at December 31, 2022 and 2021, respectively.

Premiums and other considerations received from variable annuity and variable life insurance policyowners were $1.6 billion and $1.7 billion for the years ended December 31, 2022 and 2021, 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. The following are amounts reported as transfers to and from separate accounts within the Company’s 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,
         2022           2021           2020    
    

 

  

 

  

 

     (in millions)

From Separate Account Annual Statement:

       

Transfers to separate accounts

       $ 1,670        $ 1,724        $ 1,467  

Transfers from separate accounts

      (2,160 )      (2,529 )      (2,147 ) 
  

 

 

 

  

 

 

 

  

 

 

 

Net transfers from separate accounts

       $ (490 )       $ (805 )       $ (680 ) 
  

 

 

 

  

 

 

 

  

 

 

 

 

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 Company’s funding policy for the qualified plans is to make annual contributions that are no less than the minimum amount needed to comply with the requirements of ERISA and no greater than the maximum amount deductible for federal income tax purposes. The Company made no contributions to the qualified retirement plans during either of the years ended December 31, 2022 and 2021 and does not expect to make a contribution to the plans during 2023.

The Company’s 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

 

NM-46

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

that awards cash balance credits based on each participant’s age and years of service that became effective 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 Company’s defined benefit pension plans for financial representatives utilize a formula that is based on the participant’s 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. Additionally, the Company does not provide a subsidy for retiree health care coverage for employees retiring on or after January 1, 2022.

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, 2022 and 2021, and changes in these assets for the years then ended, were as follows:

 

     Defined Benefit Plans   Postretirement Benefit Plans
             2022                   2021                   2022                   2021        
    

 

  

 

  

 

  

 

     (in millions)   (in millions)

Fair value of plan assets at January 1

       $ 6,504        $ 6,158        $ 100        $ 94  

Changes in plan assets:

         

Actual return on plan assets

      (1,315 )      515       (20 )      9  

Actual plan benefits paid

      (193 )      (169 )      (4 )      (3 ) 
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Fair value of plan assets at December 31

       $ 4,996        $ 6,504        $ 76        $ 100  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

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.

 

NM-47

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The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

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. The target asset allocations and the actual allocation of the plans’ investments based on fair value at December 31, 2022 and 2021 were as follows:

 

     Target
Allocation		      Actual
Allocation		  
           2022                  2021                  2022                  2021        

Bonds

      74%        74%        70%        70%  

Equity investments

      25%        25%        27%        28%  

Other investments

      1%        1%        3%        2%  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets

      100%        100%        100%        100%  
  

 

 

     

 

 

     

 

 

     

 

 

  

At each of December 31, 2022 and 2021, 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, 2022 and 2021 and changes in these obligations for the years then ended were as follows:

 

     Defined Benefit Plans   Postretirement Benefit Plans
             2022                   2021                   2022                   2021        
     (in millions)   (in millions)

Projected benefit obligation at January 1

       $ 7,038        $ 7,069        $     628        $     662  

Changes in benefit obligation:

         

Service cost of benefits earned

      240       205       8       10  

Interest cost on projected obligations

      173       141       13       11  

Projected gross plan benefits paid

      (204 )      (197 )      (27 )      (25 ) 

Experience (gains)/losses

      (2,000 )      (180 )      (165 )      (30 ) 

Plan amendments and other

      -       -       -       -  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Projected benefit obligation at December 31

       $ 5,247        $ 7,038        $ 457        $ 628  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

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 $5.0 billion and $6.6 billion for the years ended December 31, 2022 and 2021, respectively. Experience (gains)/losses for each of the years ended December 31, 2022 and 2021 primarily reflect the impact of changes in the PBO discount rate.

 

NM-48

Table of Contents

Benefit Plan Assumptions

The assumptions used in estimating the projected benefit obligations at December 31, 2022 and 2021 and the net periodic benefit cost for the years ended December 31, 2022, 2021 and 2020 were as follows:

 

     Defined Benefit Plans      Postretirement Benefit Plans                
         2022              2021              2022              2021                    

Projected benefit obligation:

                  

Weighted average discount rate

      5.00%        2.77%        4.98%        2.72%        

Annual increase in compensation

      3.75%        3.75%        3.75%        3.75%        

Cash balance plan interest crediting rate

      4.99%        2.73%        n/a        n/a        

 

     Defined Benefit Plans      Postretirement Benefit Plans  
         2022              2021              2020              2022              2021              2020      

Net periodic benefit cost:

                  

Weighted average discount rate

      2.77%        2.44%        3.17%        2.72%        2.37%        3.18%  

Annual increase in compensation

      3.75%        3.75%        3.75%        3.75%        3.75%        3.75%  

Long-term rate of return on plan assets

      5.25%        5.75%        6.25%        5.25%        5.75%        6.25%  

Cash balance plan interest crediting rate

      3.00%        2.39%        3.14%        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,  
         2022              2021      

Assumed annual increase

      5.00%        5.00%  

Ultimate rate of annual increase

      5.00%        5.00%  

Year in which ultimate rate is reached

      2023        2022  

The Company’s exposure to medical inflation is 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.

 

49

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

Benefit Plan Funded Status

The 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, 2022 and 2021.

 

     Defined
Benefit Plans		     Postretirement
Benefit Plans		  
             2022                     2021                 2022                     2021          
    

 

    

 

    

 

    

 

  
     (in millions)     (in millions)  

Fair value of plan assets

       $ 4,996        $ 6,504        $ 76        $ 100  

Projected benefit obligation

      5,247       7,038       457       628  
  

 

 

    

 

 

    

 

 

    

 

 

  

Funded status

      (251 )      (534 )      (381 )      (528 ) 

Nonadmitted asset

      (818 )      (887 )      -       -  
  

 

 

    

 

 

    

 

 

    

 

 

  

Financial statement liability

       $ (1,069 )       $ (1,421 )       $ (381 )       $ (528 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

The PBO for defined benefit plans above included $1,069 million and $1,421 million related to unfunded non-qualified plans at December 31, 2022 and 2021, respectively. In the aggregate, the fair value of qualified defined benefit plan assets represented 120% and 116% of the projected benefit obligations of these plans at December 31, 2022 and 2021, 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.

Aggregate defined benefit pension and postretirement plan surplus impacts were as follows for the years ended December 31, 2022 and 2021:

 

    For the year ended December 31, 2022  
    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  		  
   

 

    

 

    

 

    

 

    

 

  
    (in millions)     (in millions)  

Balance at January 1

     $ (1,215 )      $ 115       $ 258       $ (125 )      $ 173  
Amortization from surplus into net periodic benefit cost     34       (25 )      (17 )      4       (13 ) 
Changes in plan assets and benefit obligations recognized in surplus     318       -       -       141       -  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at December 31

     $ (863 )      $ 90       $ 241       $ 20       $ 160  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

NM-50

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The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 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  		  
   

 

    

 

    

 

    

 

    

 

  
    (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       -  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at December 31

     $ (1,215 )        $ 115       $ 258       $ (125 )      $ 173  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Benefit Plan Costs

The components of net periodic benefit cost for the years ended December 31, 2022, 2021 and 2020 were as follows:

 

     Defined Benefit Plans   Postretirement Benefit Plans
     2022   2021   2020   2022   2021   2020
    

 

  

 

  

 

  

 

  

 

  

 

    

 

(in millions)

  

 

(in millions)

Components of net periodic benefit cost:

             

Service cost of benefits earned

      $ 240       $ 205       $ 134       $ 8       $ 10       $ 14  

Interest cost on projected obligations

      173       141       177       13       11       16  

Amortization of experience losses

      34       67       56       4       7       4  

Amortization of prior service (credits) costs

      (25 )      (25 )      (25 )      (12 )      (12 )      (4 ) 

Amortization of initial net asset

      (16 )      (27 )      (14 )      -       -       -  

Expected return on plan assets

      (337 )      (349 )      (336 )      (5 )      (5 )      (5 ) 

Curtailment

      -       -       (1 )      -       -       28  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Net periodic benefit cost (credit)

      $ 69         $ 12         $ (9 )        $ 8         $ 11         $ 53    
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

The expected benefit payments by the defined benefit plans and the postretirement benefit plans for the years 2023 through 2032 are as follows:

 

     Defined
Benefit Plans		    Postretirement
Benefit Plans
    

 

   

 

    

 

(in millions)

2023

      $ 206        $ 28  

2024

      234        28  

2025

      251        27  

2026

      261        27  

2027

      271        26  

2028-2032

      1,493        130  
  

 

 

 

   

 

 

 

Total

      $ 2,716        $ 266  
  

 

 

 

   

 

 

 

 

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The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

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, 2022, 2021 and 2020, the Company expensed total contributions to these plans of $37 million, $34 million and $57 million, respectively. In lieu of making matching contributions to the employee 401(k) plan in 2022 and 2021, the Company made additional contributions to the cash balance plan in these years.

 

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 60—80% 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 NLTC’s long-term care business. At December 31, 2022 and 2021, the net amount due from NLTC under this agreement was $45 million and $48 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, 2022 and 2021. The Company has reinsured all risks disclosed in the statutory financial statements under Actuarial Guideline 48.

The effects of reinsurance on premium revenue and total benefits for the years ended December 31, 2022, 2021 and 2020 were as follows:

 

     For the years ended December 31,  
           2022                 2021                 2020        
    

 

    

 

    

 

  
     (in millions)  

Direct premium revenue

      $ 22,500       $ 22,936       $ 19,501  

Premiums assumed

      840       830       800  

Premiums ceded

      (1,052 )      (995 )      (978 ) 
  

 

 

    

 

 

    

 

 

  

Premium revenue

      $     22,288       $     22,771       $     19,323  
  

 

 

    

 

 

    

 

 

  

Direct benefit expense

      $ 23,494       $ 23,975       $ 20,538  

Benefits assumed

      771       915       837  

Benefits ceded

      (824 )      (937 )      (792 ) 
  

 

 

    

 

 

    

 

 

  

Total benefits    

      $ 23,441       $ 23,953       $ 20,583  
  

 

 

    

 

 

    

 

 

  

In addition, the Company received $120 million, $127 million and $133 million in allowances from reinsurers for reimbursement of commissions and other expenses on ceded business for the years ended December 31, 2022, 2021 and 2020, respectively. These amounts are reported in other income in the statutory statements of operations. For the years ended December 31, 2022, 2021 and 2020, the Company incurred $116 million, $130 million and $127 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

 

NM-52

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

to concentration limits for counterparty exposure to any single reinsurer. Most significant reinsurance treaties contain financial protection provisions that take effect if a reinsurer’s credit rating falls below a prescribed level. There were no reinsurance recoverables at December 31, 2022 and 2021 that were considered by the Company to be uncollectible. No reinsurance contracts were identified which require disclosure under paragraph 79-84 of SSAP No. 61R - Life, Deposit-Type and Accident and Health Reinsurance.

 

10.

Federal Income Taxes

The results of the Company’s operations are consolidated with the following entities for purposes of filing the Company’s 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 Co., LLC & subsidiaries    NM SAS, LLC and subsidiaries
Northwestern Long Term Care Ins. Co    Venture Studio Holdings, LLC and subsidiaries
Wysh Life & Health Insurance Co. & subsidiaries    Wysh Holdings, LLC
NMU Holdings, LLC & subsidiaries    Lake Emily Holdings, LLC & subsidiaries

The Company collects from or refunds to these subsidiaries their share of consolidated federal income taxes determined pursuant to written tax-sharing agreements, which generally require that these subsidiaries determine their share of consolidated tax payments or refunds as if each subsidiary filed a separate federal income tax return on a stand-alone basis.

The components of current income tax (benefit) expense in the statutory statements of operations for the years ended December 31, 2022, 2021 and 2020 related to ordinary taxable income (loss) were as follows:

 

    For the years ended December 31,
   

 

      2022      

  

 

      2021      

  

 

      2020      

   

 

  

 

  

 

    (in millions)

Tax payable on ordinary income

     $ 154       $ (914 )      $ 637  

Low income housing tax credits

     (161 )      (150 )      (136 ) 

Other tax credits

     (133 )      (122 )      (71 ) 

Change in contingent tax liabilities

     (20 )      20       (153 ) 
 

 

 

 

  

 

 

 

  

 

 

 

Total current tax expense (benefit)

     $ (160 )      $ (1,166 )      $ 277  
 

 

 

 

  

 

 

 

  

 

 

 

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 (benefit) expense of $(819) million, $327 million and $433 million was included in net IMR deferrals for the years ended December 31, 2022, 2021 and 2020, respectively. In addition, net realized capital gains and losses as reported in the statutory statements of operations included current tax expense (benefit) of $171 million, $233 million and $(2) million for the years ended December 31, 2022, 2021 and 2020, respectively.

 

NM-53

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

The table below shows how the Company’s income tax expense or benefit for the years ended December 31, 2022, 2021 and 2020 differs from the amount obtained by applying the statutory rate of 21% to gain (loss) from operations before taxes, including net realized capital gains (losses) before IMR and capital gain tax (benefit):

 

     For the years ended December 31,
    

 

          2022      

  

 

      2021      

  

 

      2020      

    

 

  

 

  

 

     (in millions)

Provision computed at statutory rate

      $ (626 )      $ 336       $ 580  

Adjustments to the statutory rate:

       

Subsidiary distributions

      (282 )      (28 )      (283 ) 

Tax credits

      (296 )      (270 )      (207 ) 

Amortization of IMR

      (61 )      (89 )      (53 ) 

Dividends received deduction

      (44 )      (41 )      (31 ) 

Employee benefits

      (15 )      (22 )      (22 ) 

Deferred adjustments

      86       110       (29 ) 

Other

      (27 )      (127 )      (50 ) 
  

 

 

 

  

 

 

 

  

 

 

 

Total statutory income tax benefit

      $ (1,265 )      $ (131 )      $ (95 ) 
  

 

 

 

  

 

 

 

  

 

 

 

Federal income tax (benefit) expense reported on the statutory statements of operations

      $ (160 )      $ (1,166 )      $ 277  

Capital gains tax (benefit) expense, net of IMR transfers

      (648 )      559       431  

Change in net deferred tax assets

      (457 )      476       (803 ) 
  

 

 

 

  

 

 

 

  

 

 

 

     $ (1,265 )        $ (131 )        $ (95 )   
  

 

 

 

  

 

 

 

  

 

 

 

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 net income tax payments, including subsidiaries, of $135 million, $295 million and $679 million to the IRS during the years ended December 31, 2022, 2021 and 2020, respectively.

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 2022, 2021 and 2020 that are available for recoupment are $1 million, $1,133 million and $0 million, respectively.

Federal income tax returns for 2018 and prior years are closed as to further assessment of tax. 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.

 

NM-54

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

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, 2022 and 2021 contingent liabilities were as follows:

 

           For the years ended      
December 31,		  
     2022      2021  
    

 

     

 

  
     (in millions)  

Balance at January 1

    $ 20      $ -  

(Reductions) additions for tax positions of prior years

      (20 )       20  
  

 

 

     

 

 

  

Balance at December 31

    $ -      $ 20  
  

 

 

     

 

 

  

Included in contingent tax liabilities at December 31, 2022 and 2021 were no 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. As of December 31, 2022 and 2021, the Company had $0 million and $20 million, respectively, of tax positions for which the ultimate deductibility is not certain.

For the years ended December 31, 2022, 2021 and 2020, the Company recognized $0 million, $0 million and $15 million, respectively, of interest-related tax benefit.

The Inflation Reduction Act, which created a new corporate minimum tax (CAMT) effective for calendar year taxpayers January 1, 2023, was enacted on August 16, 2022. Based upon projected adjusted financial statement income for 2023, the company (or the controlled group of corporations of which the reporting entity is a member) has determined that average “adjusted financial statement income” is above the thresholds for the 2023 tax year such that it does expect to be required to perform the CAMT calculations. The controlled group of corporations of which the company is a member has not determined as of the reporting date if they will be liable for CAMT in 2023. The accompanying statutory financial statements do not include an estimated impact of the CAMT because a reasonable estimate can not be made.

 

NM-55

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

The components of net deferred tax assets reported in the statutory statements of financial position at December 31, 2022 and 2021 were as follows:

 

     December 31,         
             2022                          2021                      Change          
    

 

     

 

     

 

  
     (in millions)         

Deferred tax assets:

         

Policy acquisition costs

      $ 1,265        $ 1,142        $ 123  

Investments

      735        239        496  

Policy benefit liabilities

      1,832        1,747        85  

Benefit plan obligations

      522        625        (103 ) 

Fixed Assets

      20        -        20  

Other

 

     

 

 131

 

  

 

     
 82
  
     

 

 49

 

  

 

  

 

 

        

 

 

  

Gross deferred tax assets

      4,505        3,835        670  

Nonadmitted deferred tax assets

 

      50        -        50  
  

 

 

        

 

 

  

Gross admitted deferred tax assets

 

      4,455        3,835        620  
  

 

 

        

 

 

  

Deferred tax liabilities:

         

Investments

      1,526        1,185        341  

Other

      820        1,081        (261 ) 
  

 

 

        

 

 

  

Gross deferred tax liabilities

 

      2,346        2,266        80  
  

 

 

        

 

 

  

Net deferred tax assets

      $ 2,109        $ 1,569        $ 540  
  

 

 

        

 

 

  

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, 2022 and 2021.

Significant components of the calculation of net admitted deferred tax assets at December 31, 2022 and 2021 were as follows (in millions):

 

     December 31, 2022      December 31, 2021            Change         
  

 

 

  
         Ordinary              Capital             Total              Ordinary              Capital             Total              Ordinary             Capital              Total      
Gross deferred tax assets      $ 3,770        $ 735       $ 4,505        $ 3,596        $ 239       $ 3,835        $ 174         $496          $670  
Statutory valuation allowance adjustment      -        -       -        -        -       -        -       -        -  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  
Adjusted gross deferred tax assets      3,770        735       4,505        3,596        239       3,835        174       496        670  
Deferred tax assets nonadmitted      50        -       50        -        -       -        50       -        50  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  
Subtotal net admitted deferred tax asset      3,720        735       4,455        3,596        239       3,835        124       496        620  
Deferred tax liabilities      820        1,526       2,346        1,081        1,185       2,266        (261 )      341        80  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  
Net admitted deferred tax asset/ (liability)      $ 2,900        $ (791 )      $ 2,109        $ 2,515        $ (946 )      $ 1,569        $ 385         $155          $540  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  

 

NM-56

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

     December 31, 2022        December 31, 2021        Change  
  

 

 

  
             Ordinary            Capital                Total                Ordinary                Capital                Total                Ordinary                Capital                Total      
Federal income taxes paid in prior years recoverable through loss carrybacks      $ -        $ 241        $ 241        $ -        $ 96        $ 96        $ -        $ 145        $ 145  
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)      1,778        89        1,867        1,720        -        1,720        $58      $ 89      $ 147  
Adjusted gross deferred tax assets (excluding the amount of deferred tax assets offset by gross deferred tax liabilities)      1,942        405        2,347        1,876        143        2,019        $ 66        $ 262        $ 328  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
Total deferred tax assets admitted as the result of application of SSAP No. 101      $ 3,720        $ 735        $ 4,455        $ 3,596        $ 239        $ 3,835          $124        $ 496        $ 620  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
a. Adjusted gross deferred tax assets expected to be realized following the balance sheet date            $ 1,867              $ 1,720              $ 147  
        

 

 

           

 

 

           

 

 

  
b. Adjusted gross deferred tax assets allowed per limitation threshold            $ 4,162              $ 4,152              $ 10  
        

 

 

           

 

 

           

 

 

  
Ratio percentage used to determine recovery period and threshold limitation amount            1060%              1048%           
        

 

 

           

 

 

           
Amount of adjusted capital and surplus used to determine recovery period and threshold limitation            $ 27,748              $ 27,680           
        

 

 

           

 

 

           

All gross deferred tax liabilities have been recognized at December 31, 2022 and 2021. The Company did not employ tax planning strategies in its valuation allowance assessment at either December 31, 2022 or 2021. At December 31, 2022 and 2021, the percentage of net ordinary deferred tax assets admitted as a result of tax planning strategies was 0% and 0%, 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 $9.3 billion and $9.7 billion at December 31, 2022 and 2021, respectively, 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 Company’s assessment of the probability or estimated amount of potential losses from pending or threatened legal actions. Based on available information, it is the opinion of the Company that the ultimate resolution of pending or threatened legal actions, both individually and in the aggregate, will not result in losses that would have a material effect on the Company’s financial position at December 31, 2022.

 

NM-57

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

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 1 year to 12 years at December 31, 2022.

The following is a summary of the guarantees provided by the Company that were outstanding at December 31, 2022 and 2021, including both the maximum potential exposure under the guarantees and the financial statement liability reported based on fair value of the guarantees.

 

     December 31, 2022    December 31, 2021

        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

      $ 47           $ -          $ 59           $ 1    

Guarantees of real estate obligations

      445           4          493           5    

Guarantees issued on behalf of wholly-owned subsidiaries

      78           -          89           -    

Guarantees on behalf of field loan support program

      71           -          37           -    
  

 

 

 

    

 

 

 

   

 

 

 

    

 

 

 

Total guarantees

      $ 641           $ 4          $ 678           $ 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 NLTC’s 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 NLTC’s 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 $10 million and $15 million for the years ended December 31, 2022 and 2021, respectively. The Company has contributed a total of $230 million to NLTC through December 31, 2022. The Company reported a payable to NLTC of $59 million at December 31, 2022 and 2021, 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-58

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

13.

Surplus Notes

The following table summarizes the surplus notes issued by the Company and are outstanding at December 31, 2022:

 

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        $ 1,231        6.063 %      3/30/2040  

2017 Notes

      9/26/2017        1,200        1,198        46        231        3.850 %      9/30/2047  

2019 Notes

      9/20/2019        1,347        1,161        49        148        3.625 %      9/30/2059  

2021 Notes

      3/22/2021        900        897        31        55        3.450 %      3/30/2051  
     Total                   
     

 

 

     

 

 

     

 

 

     

 

 

       
        $ 4,671        $ 4,480        $ 200        $ 1,665       
     

 

 

     

 

 

     

 

 

     

 

 

       

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, 2022 and 2021.

 

14.

Fair Value of Financial Instruments

Certain of the Company’s assets and liabilities are considered “financial instruments” as defined by Statement of Statutory Accounting Principles No. 100—Revised, Fair Value Measurements (SSAP 100R). The Company’s estimation of fair value for financial instruments uses a hierarchy that, where possible, makes use of quoted market prices from active and transparent markets for assets that are identical to those being valued, typically obtained from independent pricing services (“Level 1”). In the absence of quoted market prices for identical assets, fair value is estimated by these pricing services using relevant and observable market-based inputs for substantially similar securities (“Level 2”). Financial instruments for which no quoted market prices or observable inputs are available are generally valued using internally-developed pricing models or indicative (i.e., non-binding) quotes from independent securities brokers (“Level 3”).

 

NM-59

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

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, 2022 and 2021 were as follows:

 

     December 31, 2022
               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

      $ 187,268      $ 166,114        $ 4,588        $ 145,263        $ 16,263        $ -  

Mortgage loans

      51,798        46,724        -        -        46,724        -  

Common and preferred stocks

      2,051        2,041        1,398        110        533        -  

Policy loans

      17,653        17,653        -        -        17,653        -  

Derivative assets

      1,680        2,344        -        2,344        -        -  

Other invested assets

      241        212        -        174        38        -  

Cash and short-term investments

      4,476        4,476        543        3,933        -        -  

Separate account assets

      34,281        34,281        30,448        2,640        759        434  

General account liabilities:

                  

Investment-type insurance reserves

      $ 12,596        $ 11,647        $ -        $ -        $ 11,647        $ -  

Liabilities for repurchase agreements

      2,294        2,294        -        2,294        -        -  

Derivative liabilities

      219        393        -        393        -        -  

Separate account liabilities

      34,281        34,281        30,448        2,640        759        434  

 

NM-60

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

     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        -        -  

Other invested assets

      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  

Bonds

Bonds classified as Level 1 financial instruments are generally limited to U.S. Treasury securities. Most bonds, including U.S. and foreign public and private corporate bonds, municipal bonds and structured securities, are classified as Level 2 financial instruments and are valued based on prices obtained from independent pricing services or internally-developed pricing models using observable inputs. Typical market-observable inputs include benchmark yields, reported trades, issuer spreads, bids, offers, benchmark securities, estimated cash flows and prepayment speeds. Level 3 bonds are typically privately-placed and relatively illiquid, with fair value based on non-binding broker quotes or internally-developed pricing models utilizing unobservable inputs. See Note 3 for more information regarding the Company’s investments in bonds.

Mortgage Loans

Mortgage loans consist solely of commercial mortgage loans underwritten and originated by the Company. Fair value of these loans is estimated using a discounted cash flow approach based on market interest rates for commercial mortgage debt with comparable credit risk and maturity. See Note 3 for more information regarding the Company’s investments in mortgage loans.

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 Company’s 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-61

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

Derivative Instruments

The Company’s derivative investments are generally traded in over-the-counter markets with fair value estimated using industry-standard models with market-observable inputs such as swap yield curves, basis curves, foreign currency spot rates, foreign currency basis curves, option volatilities and credit spreads. See Note 4 for more information regarding the Company’s derivative investments.

Other Invested Assets

Other Invested Assets primarily consist of the Company’s investment in surplus note issuances of other mutual insurance companies and residual tranches. The surplus note 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. The fair value of residual tranches is derived using non-binding broker quotes or internally-developed pricing models utilizing unobservable inputs and therefore is classified as Level 3.

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 Company’s 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 Company’s 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 Company’s 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-62

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

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, 2022 and 2021.

 

    December 31, 2022
    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

     $ -       $ 2       $ 55       $ -       $ 57  

Common and preferred stocks

     1,399       -       533       -       1,932  

Money market mutual funds

     491       -       -       -       491  

Other invested assets

     -       -       38       -       38  

Derivative assets

     -       480       -       -       480  

Derivative liabilities

     -       173       -       -       173  
 

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total general account

     $ 1,890       $ 655       $ 626       $ -       $ 3,171  
 

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Separate accounts:

          

Mutual fund investments

     $ 29,170       $ -       $ -       $ -       $ 29,170  

Other benefit plan assets/liabilities

     12       20       5       3       40  

Pension and postretirement assets:

          

Bonds

     332       2,554       118       -       3,004  

Common and preferred stock

     772       -       50       431       1,253  

Cash and short-term securities

     16       63       -       -       79  

Other assets/liabilities

     146       3       586       -       735  
 

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Subtotal pension and postretirement assets

     1,266       2,620       754       431       5,071  
 

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total separate accounts

     $ 30,448       $ 2,640       $ 759       $ 434       $ 34,281  
 

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

 

NM-63

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 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  
 

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

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  
 

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

During 2022 and 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.

The following tables summarize the changes in fair value of Level 3 financial instruments for the years ended December 31, 2022 and 2021.

 

For the year ended December 31, 2022    General account
common and
preferred stock		    General
account bonds		    General account
other invested
assets		    Derivative
assets		    Separate
account assets
     (in millions)

Fair value, beginning of period

      $                 606        $                 115        $                 -        $                 -        $                 758  

Realized gains/(losses)

      104        (102)        -        -        74  

Unrealized gains/(losses)

      (25)        34        (13)        -        (58)  

Issuances

      -        -        -        -        -  

Purchases

      45        2        51        -        125  

Sales

      (196)        (29)        -        -        (148)  

Settlements

      -        -        -        -        -  

Net discount/premium

      1        -        -        -        -  

Transfers into Level 3

      -        35        -        -        10  

Transfers out of Level 3

      (2)        -        -        -        (2)  
  

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

Fair value, end of period

    $ 533      $ 55      $ 38      $ -      $ 759  
  

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

 

NM-64

Table of Contents

The Northwestern Mutual Life Insurance Company

Notes to the Statutory Financial Statements

December 31, 2022, 2021 and 2020

 

 

For the year ended December 31, 2021    General account
common and
preferred stock		    General
account bonds		    General account
other invested
assets		    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  
  

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

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 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 entity’s 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-65

Table of Contents
PART C
OTHER INFORMATION
Item 26. Exhibits 
Exhibit
Description
Filed Herewith/Incorporated Herein By Reference To
(a)(1)
Resolution of the Board of Trustees of The Northwestern
Mutual Life Insurance Company amending Northwestern
Mutual Variable Life Account Operating Authority
(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)(1)
Flexible Premium Variable Life Insurance Policy,
RR.VEL. (0398), including Policy amendments Form of
Notice of short-term cancellation right
(d)(2)
Variable Life Insurance Policy, RR.VEL, Flexible
Premium, including Amendment to Flexible Premium
Variable Life (sex-neutral)
(d)(3)
Variable Life Insurance Policy, RR.VEL, Flexible
Premium, including Amendment to Flexible Premium
Variable Life (sex-distinct)
(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)
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
(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
C-1
Exhibit
Description
Filed Herewith/Incorporated Herein By Reference To
(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
(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
C-2
Exhibit
Description
Filed Herewith/Incorporated Herein By Reference To
(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 of Counsel
(l)
Not Applicable
 
(m)
Not Applicable
 
(n)
Consent of PricewaterhouseCoopers LLP
(o)
Not Applicable
 
(p)
Not Applicable
 
(q)
Memorandum describing Issuance, Transfer and
Redemption Procedures
Item 27. Directors and Officers of the Depositor
The following lists include all of the Trustees, executive officers and other officers of The Northwestern Mutual Life Insurance Company without regard to their activities relating to variable life insurance policies or their authority to act or their status as “officers” as that term is used for certain purposes of the federal securities laws and rules thereunder.
TRUSTEES – As of April 1, 2023 
Name
Address
Nicholas E. Brathwaite
Founding Managing Partner
Celesta Capital
One California Street, Ste 1750
San Francisco, CA 94111
 
 
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
 
 
C-3
Name
Address
Randolph W. Melville
Retired Senior Vice President & General Manager
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 Chief Executive Officer
MicroTek, Inc.
72 Reservation Road
Sunderland, MA 01375
 
 
Sandra R. Rogers
Retired Vice President – Supply Chain
Hillrom
12363 E. Black Rock Road
Scottsdale, AZ 85255
 
 
John E. Schlifske
Chairman, President & Chief Executive Officer
Northwestern Mutual
720 E. Wisconsin Avenue
Milwaukee, WI 53202
 
 
Aarti S. Shah
Retired Senior Vice President, Chief Information and Digital
Officer
Eli Lilly
13360 Sioux Trail
Carmel, IN 46033
 
 
Mary Ellen Stanek
Managing Director & Director of Asset Management
Robert W. Baird & Co.
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
 
 
C-4
Name
Address
Juan C. Zarate
Global Co-Managing Partner & Chief Strategy Officer
K2 Integrity
1050 Connecticut Avenue, NW, Suite 680
Washington, DC 20036
EXECUTIVE OFFICERS – As of April 1, 2023 
John E. Schlifske
Chairman, President & Chief Executive Officer
Michael G. Carter
Executive Vice President & Chief of Staff
Timothy J. Gerend
Executive Vice President & Chief Distribution Officer
Aditi J. Gokhale
Executive Vice President, Chief Strategy Officer & Head of
Retail and Institutional Investments
John M. Grogan
Executive Vice President & Chief Insurance Officer
Todd M. Jones
Executive Vice President & Chief Financial Officer
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
Jeffrey D. Sippel
Executive Vice President & Chief Information Officer
The business addresses for all of the executive officers and other officers is 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
Item 28. Persons Controlled By or Under Common Control with the Depositor or Registrant
The subsidiaries of The Northwestern Mutual Life Insurance Company (“Northwestern Mutual”), as of April 1, 2023 are shown below. In addition to the subsidiaries shown below, the following separate investment accounts (which include the Registrant) may be deemed to be either controlled by, or under common control with, Northwestern Mutual:
1.
NML Variable Annuity Account A
2.
NML Variable Annuity Account B
3.
NML Variable Annuity Account C
4.
Northwestern Mutual Variable Life Account
5.
Northwestern Mutual Variable Life Account II
Northwestern Mutual Series Fund, Inc. (the “Funds”), shown below as a subsidiary of Northwestern Mutual, is an investment company, registered under the Investment Company Act of 1940, offering shares to the separate accounts identified above; and the shares of the Funds held in connection with certain of the accounts are voted by Northwestern Mutual in accordance with voting instructions obtained from the persons who own, or are receiving payments under, variable annuity contracts or variable life insurance policies issued in connection with the separate accounts, or in the same proportions as the shares which are so voted.
 
Legal Entity Name
Domestic
Jurisdiction
Owner(s)
Owner %
Operating Subsidiaries
 
 
 
Mason Street Advisors, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
Northwestern Long Term Care
Insurance Company(2)
Wisconsin
The Northwestern Mutual Life Insurance Company
100.00
Northwestern Mutual Investment
Management Company, LLC (2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
Northwestern Mutual Investment
Services, LLC(2)
Wisconsin
The Northwestern Mutual Life Insurance Company
100.00
Northwestern Mutual Wealth
Management Company(2)
United States
The Northwestern Mutual Life Insurance Company
100.00
All Other Subsidiaries
 
 
 
1838938 Alberta Ltd.(2)
Canada
The Northwestern Mutual Life Insurance Company
100.00
1890 Maple, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
3412 Exchange, LLC(2)
Delaware
NM Imperial, LLC
100.00
45East11(2)
Cayman Islands
NYLV, LLC
100.00
777 North Van Buren
Apartments, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
777 North Van Buren
Condominium Association, Inc.(2)
Wisconsin
The Northwestern Mutual Life Insurance Company
100.00
C-5
Legal Entity Name
Domestic
Jurisdiction
Owner(s)
Owner %
Operating Subsidiaries
 
 
 
777 North Van Buren Parking,
LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
777 North Van Buren Retail,
LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
720 East LLC(2)
Delaware
Northwestern Mutual Investment Management Company, LLC
100.00
AFE Brentwood Park, LLC(2)
Delaware
Cortona Holdings, LLC
100.00
Amber, LLC(2)
Delaware
NML Real Estate Holdings, LLC
100.00
Artisan Garden Apartments,
LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
Baraboo, Inc.(2)
Delaware
NML Securities Holdings, LLC
100.00
Bayridge, LLC(2)
Delaware
NML Real Estate Holdings, LLC
100.00
BCC Cancer Center Venture,
LP(2)
Delaware
NM Cancer Center GP, LLC
0.01
NM Imperial, LLC
83.99
RE Corp.
16.0
Bishop Square, LLC(2)
Delaware
NM BSA, LLC
100.00
Bradford II SPE, LLC(2)
Delaware
C – Land Fund, LLC
100.00
Bradford Master Association
Inc.(2)
North Carolina
C – Land Fund, LLC
100.00
Brandywine Distribution, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
Burgundy, LLC(2)
Delaware
NML Real Estate Holdings, LLC
100.00
Cedarstone, LLC(2)
Delaware
Baraboo, Inc.
100.00
Chateau, LLC(2)
Delaware
NML Securities Holdings, LLC
100.00
Chelsea Ventures, LLC(2)
Maryland
The Northwestern Mutual Life Insurance Company
100.00
C – Land Fund, LLC(2)
Delaware
NML Real Estate Holdings, LLC
100.00
Coral, Inc.(2)
Delaware
NML Securities Holdings, LLC
100.00
Cortona Holdings, LLC(2)
Delaware
NML Real Estate Holdings, LLC
100.00
Cream City Venture Capital,
LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
99.00
NML Development Corporation
1.00
Crown Farm Partners, LLC(2)
Maryland
NM Imperial, LLC
99.00
RE Corp.
1.00
Dortmund, LLC(2)
Delaware
NML Securities Holdings, LLC
100.00
EBS Services, LLC(2)
Delaware
Lake Emily Holdings, LLC
100.00
Ellington Residential, LLC(2)
Maryland
Crown Farm Partners, LLC
100.00
Fairfield Potomac Club, LLC(2)
Delaware
RE Corp.
1.00
NM Imperial, LLC
99.00
FB #2, LLC(2)
Maryland
Chelsea Ventures, LLC
100.00
FES, LLC(2)
Delaware
NML Securities Holdings, LLC
100.00
FI Van Buren, LLC (2)
Delaware
Umbrella XYZ, LLC
100.00
GRO, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
GRO-SUB, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
Hamptons PBG, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
Hazel, Inc.(2)
Delaware
NML Securities Holdings, LLC
100.00
Higgins, Inc.(2)
Delaware
NML Securities Holdings, LLC
100.00
Hobby, Inc.(2)
Delaware
NML Securities Holdings, LLC
100.00
Hollenberg 1, Inc.(2)
Delaware
NML Securities Holdings, LLC
100.00
Lake Emily Holdings, LLC.(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
Logan, Inc.(2)
Delaware
NML Real Estate Holdings, LLC
100.00
Los Alamitos Corporate Center
Joint Venture, LLC(2)
California
NM Imperial, LLC
99.00
RE Corp.
1.00
Maroon, Inc.(2)
Delaware
NML Securities Holdings, LLC
100.00
Mason & Marshall, Inc.(2)
Delaware
NML Securities Holdings, LLC
100.00
Millbrook Apartments Associates
L.L.C.(2)
Virginia
NM Imperial, LLC
100.00
Model Portfolios, LLC(2)
Delaware
NML Securities Holdings, LLC
100.00
MPC Park 27 Industrial, LLC (2)
Florida
The Northwestern Mutual Life Insurance Company
100.00
C-6
Legal Entity Name
Domestic
Jurisdiction
Owner(s)
Owner %
Operating Subsidiaries
 
 
 
Network Office Cashiership,
LLC(2)
Delaware
NM Career Distribution Holdings, LLC
100.00
Nicolet, Inc.(2)
Delaware
NML Securities Holdings, LLC
100.00
NM BSA, LLC(2)
Delaware
NML Real Estate Holdings, LLC
100.00
NM Cancer Center GP, LLC(2)
Delaware
NM Imperial, LLC
100.00
NM Career Distribution
Holdings, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NM DFW Lewisville, LLC(2)
Delaware
NM Majestic Holdings, LLC
100.00
NM Edgewater Joint Venture (2)
Pennsylvania
The Northwestern Mutual Life Insurance Company
100.00
NM Gen, LLC(2)
Delaware
NML Securities Holdings, LLC
100.00
NM GP Holdings, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NM Green, LLC(2)
Delaware
NML Real Estate Holdings, LLC
100.00
NM GSB, LLC(2)
New York
NM-SAS, LLC
100.00
NM Imperial, LLC(2)
Delaware
NML Real Estate Holdings, LLC
100.00
NM Investment Holdings,
LLC.(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NM Lion, LLC(2)
Delaware
NML Real Estate Holdings, LLC
100.00
NM Majestic Holdings, LLC(2)
Delaware
NML Real Estate Holdings, LLC
100.00
NM Neptune, LLC(2)
Delaware
NM Regal, LLC
100.00
NM Network Office 135
Insurance Agency, LLC (2)
Delaware
NM Career Distribution Holdings, LLC
100.00
NM Pebble Valley LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NM Pioneer, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NM RE Funds, LLC(2)
Delaware
NML Real Estate Holdings, LLC
100.00
NM Regal, LLC(2)
Delaware
NML Securities Holdings, LLC
100.00
NM Twin Creeks GP, LLC(2)
Delaware
NM Imperial, LLC
100.00
NM-808 West, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NMC JCAF VI CARRY, LP(2)
Delaware
Higgins, Inc.
1.00
Northwestern Mutual Investment Management Company, LLC
99.00
NMC V Equity Fund, LP(2)
Delaware
NMC V GP, LLC
100.00
NMC V GP, LLC(2)
Delaware
NM GP Holdings, LLC
100.00
NMC V Mezz Fund, LP(2)
Delaware
NMC V GP, LLC
100.00
NMC VI Equity Fund, LP(2)
Delaware
NMC VI GP, LLC
100.00
NMC VI GP, LLC(2)
Delaware
NM GP Holdings, LLC
100.00
NM-CSV Holdings ULC (2)
British
Columbia
Coral, Inc
95.70
The Northwestern Mutual Life Company
4.30
NM-Hemlock, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NM-Jasper, Inc.(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NM-MNO, LLC(2)
Delaware
NM Career Distribution Holdings, LLC
100.00
NM-Morristown, LLC(2)
Delaware
NM Career Distribution Holdings, LLC
100.00
NM-Muse, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NM-Port Royale(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NM-Pulse, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NM-RESA, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NM-SAS, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NM-Skye, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NM-Target Distribution Center 1,
LLC(2)
Delaware
NM-Target.com Distribution Center, LLC
89.00
NM-Target Distribution Center 2, LLC
11.00
NM-Target Distribution Center 2,
LLC(2)
Delaware
NM-Target.com Distribution Center, LLC
100.00
NM-Target Distribution Center
Property Owner, LLC(2)
Delaware
NM-Target.com Distribution Center, LLC
89.00
NM-Target Distribution Center 1, LLC
11.00
NM-Target.com Distribution
Center, LLC(2)
Delaware
NM Imperial, LLC
100.00
NM-West Hartford, LLC(2)
Delaware
NM Career Distribution Holdings, LLC
100.00
C-7
Legal Entity Name
Domestic
Jurisdiction
Owner(s)
Owner %
Operating Subsidiaries
 
 
 
NML Development
Corporation(2)
Delaware
NML Securities Holdings, LLC
100.00
NML Real Estate Holdings,
LLC(2)
Wisconsin
The Northwestern Mutual Life Insurance Company
100.00
NML Securities Holdings, LLC(2)
Wisconsin
The Northwestern Mutual Life Insurance Company
100.00
NMLSP1, LLC(2)
Delaware
NML Real Estate Holdings, LLC
100.00
NMPE I GP, LLC(2)
Delaware
NM GP Holdings, LLC
100.00
NMPE II GP, LLC(2)
Delaware
NM GP Holdings, LLC
100.00
NMRM Holdings, LLC(2)
Delaware
NML Real Estate Holdings, LLC
100.00
NMU Holdings, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
Northwestern Broadway Plaza,
LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
Northwestern Ellis Company(2)
Canada
Coral, Inc.
100.00
Northwestern Mutual Capital GP
II, LLC(2)
Delaware
NM GP Holdings, LLC
100.00
Northwestern Mutual Capital GP
III, LLC(2)
Delaware
NM GP Holdings, LLC
100.00
Northwestern Mutual Capital GP
IV, LLC(2)
Delaware
NM GP Holdings, LLC
100.00
Northwestern Mutual Capital GP,
LLC(2)
Delaware
NM GP Holdings, LLC
100.00
Northwestern Mutual Capital
Mezzanine Fund III, LP(2)
Delaware
Northwestern Mutual Capital GP III, LLC
100.00
Northwestern Mutual Capital
Mezzanine Fund IV, LP(2)
Delaware
Northwestern Mutual Capital GP IV, LLC
100.00
Northwestern Mutual Capital
Strategic Equity Fund III, LP(2)
Delaware
Northwestern Mutual Capital GP III LLC
100.00
Northwestern Mutual Capital
Strategic Equity Fund IV, LP(2)
Delaware
Northwestern Mutual Capital GP IV, LLC
100.00
Northwestern Mutual MU TLD
Registry, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
Northwestern Mutual Private
Equity Co-Investment Fund I,
LP(2)
Delaware
NMPE I GP, LLC
1.00
Northwestern Mutual Investment Management Company
99.00
Northwestern Mutual Private
Equity Co-Investment Fund II,
LP(2)
Delaware
NMPE II GP, LLC
1.00
Northwestern Mutual Investment Management Company
99.00
Northwestern Mutual Registry,
LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
Northwestern Mutual Series
Fund, Inc.(3)
Maryland
The Northwestern Mutual Life Insurance Company
100.00
NorthWoods Phase I, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NorthWoods Phase II, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NorthWoods Phase III, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NWM ZOM GP, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
NYLV, LLC(2)
Delaware
BCC Cancer Center Venture, LP
100.00
Osprey Links Golf Course,
LLC(2)
Delaware
Osprey Links, LLC
100.00
Osprey Links, LLC(2)
Delaware
NM Imperial, LLC
99.00
RE Corp
1.0
Plantation Oaks MHC-NM,
LLC(2)
Delaware
NM Imperial, LLC
100.00
QOZ Holdings Company, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
RE Corp.(2)
Delaware
NML Real Estate Holdings, LLC
100.00
Regency NM Johns Creek,
LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
C-8
Legal Entity Name
Domestic
Jurisdiction
Owner(s)
Owner %
Operating Subsidiaries
 
 
 
Ruhl Financial Group, LLC(2)
Delaware
NM Career Distribution Holdings, LLC
100.00
Russet, Inc.(2)
Delaware
NML Real Estate Holdings, LLC
100.00
Scotty, LLC(2)
Delaware
Hobby, Inc.
6.31
Maroon, Inc.
65.01
Stadium and Arena Management, Inc.
28.68
Seattle Network Office, LLC(2)
Delaware
NM Career Distribution Holdings, LLC
100.00
Seazen GP, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
Seazen Rocky Point, LP(2)
Delaware
The Northwestern Mutual Life Insurance Company
99.90
Seazen GP, LLC
0.10
Stadium and Arena Management,
Inc.(2)
Delaware
NML Securities Holdings, LLC
100.00
Tapestry Condominium Owners
Association, Inc.(2)
Tennessee
The Northwestern Mutual Life Insurance Company
100.00
Tupelo, Inc.(2)
Delaware
NML Securities Holdings, LLC
100.00
Two Con Holdings, LLC(2)
Delaware
Bishop Square, LLC
100.00
Two Con SPE, LLC(2)
Delaware
NML Real Estate Holdings, LLC
100.00
Two Con, LLC(2)
Delaware
Two Con Holdings, LLC
100.00
Umbrella XYZ LLC(2)
Delaware
NMU Holdings, LLC
100.00
Ventura Lakes MHC-NM, LLC(2)
Delaware
NM Imperial, LLC
100.00
Walden OC, LLC(2)
Delaware
NML Real Estate Holdings, LLC
100.00
White Oaks, Inc.(2)
Delaware
NML Securities Holdings, LLC
100.00
Wysh Financial, LLC(2)
Delaware
Wysh Holdings, LLC
100.00
Wysh Holdings, LLC(2)
Delaware
The Northwestern Mutual Life Insurance Company
100.00
Wysh Insurance Agency, LLC(2)
Delaware
Wysh Life and Health Insurance Company
100.00
Wysh Life and Health Insurance
Company(2)
Delaware
Wysh Holdings, LLC
100.00
(1)
Certain subsidiaries are omitted on the basis that, considered in the aggregate at year end 2022, they did not constitute a significant subsidiary as defined by Regulation S-X. Certain investment partnerships and limited liability companies that hold real estate assets of The Northwestern Mutual Life Insurance Company are not represented.
(2)
Subsidiary included in the consolidated financial statements.
(3)
Northwestern Mutual Series Fund, Inc. consists of 27 series of capital stock, each a separate investment portfolio (the “Portfolios”). The Portfolios consist of: Growth Stock Portfolio, Focused Appreciation Portfolio, Large Cap Core Stock Portfolio, Large Cap Blend Portfolio, Index 500 Stock Portfolio, Large Company Value Portfolio, Domestic Equity Portfolio, Equity Income Portfolio, Mid Cap Growth Stock Portfolio, Index 400 Stock Portfolio, Mid Cap Value Portfolio, Small Cap Growth Stock Portfolio, Index 600 Stock Portfolio, Small Cap Value Portfolio, International Growth Portfolio, Research International Core Portfolio, International Equity Portfolio, Emerging Markets Equity Portfolio, Government Money Market Portfolio, Short-Term Bond Portfolio, Select Bond Portfolio, Long-Term U.S. Government Bond Portfolio, Inflation Protection Portfolio, High Yield Bond Portfolio, Multi-Sector Bond Portfolio, Balanced Portfolio, Asset Allocation Portfolio.
Item 29. Indemnification
(a) That portion of the By-laws of the Depositor, Northwestern Mutual, relating to indemnification of Trustees and officers is set forth in full in Article VII of the By-laws of Northwestern Mutual, amended by resolution and previously filed as Exhibit A(6)(b) to the registration statement of Northwestern Mutual Variable Life Account (File No. 333-59103) on July 15, 1998.
(b) Section 10 of the Distribution Agreement dated May 1, 2006 between Northwestern Mutual and Northwestern Mutual Investment Services, LLC (“NMIS”) provides substantially as follows:
B. Indemnification by Company. The Company agrees to indemnify, defend and hold harmless NMIS, its successors and assigns, and their respective officers, directors, and employees (together referred to as “NMIS Related Persons”), from any and all joint or several losses, claims, damages or liabilities (including any reasonable investigative, legal and other expenses incurred in connection with, and any amounts paid in settlement of, any action, suit or proceeding or any claim asserted), to which NMIS and/or any NMIS Related Persons may become subject, under any law, regulation or NASD rule, at
C-9
common law or otherwise, that arises out of or are based upon (i) any breach of this Agreement by the Company and (ii) any untrue statement of or omission to state a material fact (except for information supplied by or on behalf of NMIS or for which NMIS is responsible) contained in any Registration Statement, Contract prospectus, SAI or supplement thereto or in any Marketing Material.
This indemnification shall be in addition to any liability that the Company may otherwise have; provided, however, that no person shall be entitled to indemnification pursuant to this provision for any loss, claim, damage or liability due to the willful misfeasance, bad faith or gross negligence or reckless disregard of duty by the person seeking indemnification.
C. Indemnification by NMIS. NMIS agrees to indemnify, defend and hold harmless the Company, its successors and assigns, and their respective officers, trustees or directors, and employees (together referred to as “Company Related Persons”), from any and all joint or several losses, claims, damages or liabilities (including any reasonable investigative, legal and other expenses incurred in connection with, and any amounts paid in settlement of, any action, suit or proceeding or any claim asserted), to which the Company and/or any Company Related Persons may become subject, under any law, regulation or NASD rule, at common law or otherwise, that arises out of or are based upon (i) any breach of this Agreement by NMIS and (ii) any untrue statement of or omission to state a material fact (except for information supplied by or on behalf of the Company or for which the Company is responsible) contained in any Registration Statement, Contract prospectus, SAI or supplement thereto or in any Marketing Material, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon information furnished in writing by NMIS to the Company specifically for use in the preparation of the aforesaid material.
This indemnification shall be in addition to any liability that NMIS may otherwise have; provided however, that no person shall be entitled to indemnification pursuant to this provision for any loss, claim, damage or liability due to the willful misfeasance, bad faith or gross negligence or reckless disregard of duty by the person seeking indemnification.
D. Indemnification Generally. Any person seeking indemnification under this section shall promptly notify the indemnifying party in writing after receiving notice of the commencement of any action as to which a claim for indemnification will be made; provided, however, that failure to so notify the indemnifying party shall not relieve such party from any liability which it may have to such person otherwise than on account of this section.
The indemnifying party shall be entitled to participate in the defense of the indemnified person but such participation will not relieve such indemnifying party of the obligation to reimburse the indemnified party for reasonable legal and other expenses incurred by such party in defending himself, herself or itself.
Item 30. Principal Underwriters
(a) NMIS is the principal underwriter of the securities of the Registrant. NMIS also acts as the principal underwriter for the NML Variable Annuity Account A (811-21887), the NML Variable Annuity Account B (811-1668), the NML Variable Annuity Account C (811-21886), and the Northwestern Mutual Variable Life Account II (811-21933).
(b) As of April 1, 2023, the directors and officers of NMIS are as follows: 
Name
Position
Laura M. Deaner
Chief Information Security Officer
Quentin M. Doll
Director
Bradley L. Eull
Secretary
Don P. Gehrke
Vice President - Investment Client Services, Chief Operations Officer
Timothy Gerend
Executive Vice President, Chief Distribution Officer
Betsy Heisler
Vice President - Risk Products
Dean Hopp
Vice President - IPS Investment Programs
Madhusudan Kotian
Chief Technology Officer
Susan K. Limbach
Assistant Treasurer
Mark E. McNulty
NMIS Anti-Money Laundering Officer
Blaire L. Puls
Variable Investment Product Consultant
Sarah R. Schneider
President
Deborah A. Schultz
Director
Justin Stipan
Distribution Performance Principal
William H. Taylor
Vice President – Planning and Sales
Rebecca Villegas
Vice President - NMIS Compliance, Chief Compliance Officer
Jarod A. Ward
Treasurer, Financial and Operations Principal
C-10
Name
Position
Becki Williams
Vice President - Advanced Markets
Kamilah D. Williams-Kemp
Vice President - New Business
Terry R. Young
Assistant Secretary
The address for each director and officer of NMIS is 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
(c) NMIS, the principal underwriter, received $499,080 of commissions and other compensation, directly or indirectly, from Registrant during the last fiscal year.
Item 31. Location of Accounts and Records
All accounts, books or other documents required to be maintained in connection with the Registrant’s operations are maintained in the physical possession of Northwestern Mutual at 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
Item 32. Management Services
There are no management-related service contracts, other than those referred to in Part A or Part B of this Registration Statement, under which management-related services are provided to the Registrant and pursuant to which total payments of $5,000 or more were made during any of the last three fiscal years.
Item 33. Fee Representation
The Northwestern Mutual Life Insurance Company hereby represents that the fees and charges deducted under the variable adjustable life insurance policies which are the subject of this registration statement, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the insurance company under the policies.
C-11
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the Investment Company Act of 1940, the Registrant, Northwestern Mutual Variable Life Account, certifies that it meets all of the requirements for effectiveness of this Amended Registration pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amended Registration Statement to be signed on its behalf, in the City of Milwaukee, and State of Wisconsin, on April 26, 2023.
Northwestern Mutual Variable Life Account
(Registrant) 
By
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
(Depositor)
 
By:
/s/ JOHN E. SCHLIFSKE
 
John E. Schlifske,
Chairman, President and Chief Executive
Officer
As required by the Securities Act of 1933, this Amended Registration Statement has been signed by the Depositor on April 26, 2023.
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
(Depositor) 
By:
/s/ JOHN E. SCHLIFSKE
 
John E. Schlifske,
Chairman, President and Chief Executive
Officer
As required by the Securities Act of 1933, this Amended Registration Statement has been signed by the following persons in the capacities with the Depositor and on the dates indicated: 
Signature
Title
/s/ JOHN E. SCHLIFSKE
Chairman, President and
Chief Executive Officer;
Principal Executive Officer
John E. Schlifske
/s/ TODD M. JONES
Executive Vice President and
Chief Financial Officer;
Principal Financial Officer
Todd M. Jones
/s/ MATTHEW P. SULLIVAN
Vice President and Controller;
Principal Accounting Officer
Matthew P. Sullivan
C-12
 
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/ 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/ Sandra R. Rogers*
Trustee
Sandra R. Rogers
 
/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.
C-13
EXHIBIT INDEX
EXHIBITS FILED WITH FORM N-6
POST-EFFECTIVE AMENDMENT NO. 38 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FOR
Northwestern Mutual Variable Life Account 
Exhibit
Description
 
(k)
Opinion and Consent of Counsel
Filed herewith
(n)
Consent of PricewaterhouseCoopers LLP
Filed herewith
(q)
Memorandum describing Issuance, Transfer and
Redemption Procedures
Filed herewith
C-14