LIFE INSURANCE
Update: New York Life, Other Mutual Life Insurers See Value in Boosting 2025 Dividends
OLDWICK, N.J. //BestWire// - (Corrects the length of time Northwestern Mutual has paid dividends in 11th paragraph.) New York Life is among several mutual life insurers that plan to offer record dividends to policyowners, as it sees strong levels of surplus.
Kevin VarvaroIn November, New York Life declared a record-high dividend of $2.5 billion payable to participating policy owners in 2025, which it said marked the highest payout in almost 180 years as a company. The company said it has paid out more than $1 billion in annual dividends every year since 1990 and more than $50 billion in cumulative payouts since then.
Along with whole life policies, the company is also, for a ninth-consecutive year, paying dividends on participating mutual income annuities and its fifth paying them on NYL MY Life long-term care policies.
“A rising tide lifts all boats in that regard,” said Erik Anderson, senior vice president and chief actuary with New York Life. “Companies have been able to pick up a bit more investment yield and pass that through dividends. That’s certainly been the case for us. At the same time, it was another great year for equity markets in 2024 and 2023.”
“If you take the interest rate environment and the equity environment, and you’ve got overall favorable macroeconomic factors, those contribute to being able to pass more in dividends to policyowners.”
New York Life divides itself into two types of business: Foundational businesses, which Anderson said delivers protection-first holistic advice and guidance to millions of customers through its 12,000 agents and advisers across the United States, and strategic businesses, including investment management, group benefit solutions, institutionally owned life insurance and annuities, direct-to-consumer sales of life insurance and other solutions to affinity group members, and Latin America’s largest agent-sold life insurance business.
While the strategic businesses do not offer participating products, they indirectly affect surplus levels through a return on the investment, he said.
“To the extent that those businesses are kicking off earnings, those earnings contribute to our surplus, which supports the dividend paid to our foundational businesses' participating policyowners,” Anderson said.
According to BestLink data, mutual life insurers had a surplus of $165.75 billion in 2023, the most recent year for which data was available.
New York Life is not alone in deciding to increase the payments.
Massachusetts Mutual Life Insurance Co. has also earmarked $2.5 billion for dividends, the most ever and the 157th consecutive payout. Northwestern Mutual said it had set aside a record $8.2 billion for dividends in 2025 and has offered the payouts to participating policyowners since 1872, the company said.
MassMutual said in a statement announcing the payments that total adjusted capital grew to nearly $34 billion.
“Our 2025 record dividend payout reflects our unwavering commitment to delivering consistently strong performance and enduring value to our policyowners,” said Roger Crandall, chairman, president and chief executive officer of MassMutual. “As a mutual company, our interests are directly aligned with their needs, which means our success is their success.
A MassMutual spokesperson said the company’s payout balances preserving its long-term financial strength and growth, while providing its customers with value.
“Together with our strong operating fundamentals, earnings contributions from our portfolio of strategic businesses and investments — one of our most distinct competitive advantages — has enabled us to provide excellent value to our policyowners and customers and is reflected in our 2025 dividend payout,” the spokesperson said in an email.
In a statement announcing the dividends, Northwestern said the move followed a decade of “unprecedented market volatility,” ongoing inflation and other economic pressures on financial institutions. This year’s payout is expected to surpass the 2024 one by more than $800 million, adding to the company’s total of $160 billion.
Northwestern Mutual said it has $2.3 trillion in life insurance policies in-force with 4.3 million customers. Whole life policyowners will see $7.1 billion of the total, while disability customers and annuities customers will see $560 million and $350 million, respectively.
"This historic dividend payout to policyowners is possible because of our exceptional investment performance, careful underwriting and prudent financial management," said John Schlifske in November. At the time, he was Northwestern Mutual chairman and chief executive officer.
Higher dividends enhance the value of participating whole life insurance, AM Best said in a March 2024 Best's Market Segment Report titled "US Life/Annuity Insurers Stay the Course as They Prepare for 2024 Uncertainty."
“Mutual life insurers have led the way in sales in recent years, as many publicly traded companies stopped or substantially cut back their life insurance product offerings due to the low-interest rate environment, which made achieving profit margin targets difficult,” the report said.
Kevin Varvaro, an AM Best senior financial analyst, said the size of mutual dividends offered to life customers is not as high a concern as crediting rates for annuities.
“It was a good investment year across the board,” he said. “You had the second full calendar year of higher interest rates, the S&P returned over 20% for the second consecutive year. There wasn’t much that under-performed. The exception was real estate — where there there has been some reevaluation of what office buildings are valued at. Aside from that it was a stellar year for equities, bonds and cash short term.”
Using the Money
In the mutual structure, each policyholder essentially owns a piece of the company, meaning the company’s sole purpose is to provide insurance protection to them without a concern over shareholders. The insured population shares any profit, buying them some independence from a focus on quarterly earnings and share price.
The structure allows them to remain focused on policyholders rather than stock owners. Additionally, mutual companies sometimes tend to have higher levels of capitalization than their publicly traded counterparts, which allows them some freedom in the way they invest that their publicly traded peers do not always have.
Mutuals generally cannot access the equity capital market like a stock company and tend to be very cautious when managing the capital contributed by their policyholder members.
“These boards have several considerations when approving the dividend rate scales, which generally become effective at the start of each year," said Stratos Laskarides, a senior financial analyst with AM Best ."Firstly, they want to protect risk-adjusted capitalization into the future, so they’ll declare a dividend the company can support. They want to maintain their balance sheet strength even in severe stress test scenarios based on their relatively limited access to capital sources. This also means the dividend rate scales can be quite stable from year to year, but may gradually increase over time with higher interest rates.”
Laskarides said these boards generally prefer not to approve a big increase that may need to be walked back in future years to protect solvency ratios, given that members and distributors favor stability. He added that companies need to feel equitable to current and future policyholders in terms of how much excess capital they return to the policyowners.
New York Life's Anderson said policyowners most often tend to reinvest the dividends back into their policies, taking them and purchasing a single-premium life insurance policy to grow death benefit. Other options include using them to offset premiums or taking them as a cash payment.
Anderson said the dividends make a case for the strengths of the mutual structure.
“If you buy a policy from a mutual life insurance company, there’s sort of one less mouth to feed,” he said. “Mutuals operate on behalf of their policyowners, there's no Wall Street or shareholder component.”
(By Terrence Dopp, senior associate editor, Best’s Review: Terry.Dopp@ambest.com)