AM Best

APRIL 26, 2017 03:24 PM (EDT)

A.M. Best Affirms Credit Ratings of The Northwestern Mutual Life Insurance Company and Its Subsidiary

 Erik Miller
Senior Financial Analyst
+1 908 439 2200, ext. 5187

Rosemarie Mirabella
+1 908 439 2200, ext. 5892

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


OLDWICK - APRIL 26, 2017 03:24 PM (EDT)
A.M. Best has affirmed the Financial Strength Rating of A++ (Superior) and the Long-Term Issuer Credit Rating of “aaa” of The Northwestern Mutual Life Insurance Company (Northwestern Mutual) and its subsidiary, Northwestern Long Term Care Insurance Company, both domiciled in Milwaukee, WI and collectively known as Northwestern Mutual Group (NMG).

Concurrently, A.M. Best has affirmed the Long-Term Issue Credit Rating of “aa” on Northwestern Mutual’s outstanding $1.75 billion 6.063 % surplus notes due 2040. The outlook of each Credit Rating (rating) is stable.

The rating affirmations reflect NMG’s leading participating ordinary life insurance franchise, consistently profitable operating performance and supportive risk-adjusted capitalization, along with a well-developed enterprise risk management program. The growth and stability of its in-force business, combined with NMG’s focus on favorable investment and underwriting and its strong commitment to the life insurance market, have enabled the group to generate a steady stream of operating earnings from traditional whole life insurance, which A.M. Best views as highly creditworthy on its product continuum scale. While NMG has been proactive in moderately reducing its dividend scale, its payout rate remains competitive due to strong mortality experience within its customer base. The ratings also recognize the strength of its exclusive distribution system, leading market position, strong policyholder persistency, and strong persistency in its five-year-or-longer career-agent channel. A partially offsetting rating factor is the highly saturated competitive market within the affluent market, which is NMG’s core market. In addition, NMG maintains an elevated level of investment risk including below-investment-grade bonds and real estate assets, broadly defined to include commercial mortgages, structured securities, wholly owned real estate and joint ventures. However, this risk is mitigated partially by its substantial capital position, stable liquidity profile and conservative underwriting standards. Finally, Northwestern Mutual has a modest level of exposure to long-term care, which exposes it to interest rate, lapse and morbidity risk.

A negative rating action could occur if there were significant investment losses that result in a material decline in risk-adjusted capitalization. Additionally, a negative rating action could occur if there were a material shift in the business mix toward lower creditworthy products or a sustained decline in ordinary life production.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.

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