View of the Northwestern Mutual Tower and Commons on the left and the North Office Building on the right at the company's downtown Milwaukee headquarters campus. Photo credit: Jon Elliott of MKE Drones LLC.
Milwaukee-based Northwestern Mutual ended 2023 with total revenues reaching $36.1 billion and an operating gain before dividends and taxes of more than $8.1 billion. Revenue increased 3.5% from 2022 while the company’s gain from operations before dividends and taxes was up 11.3%, an increase of more than $800 million from the prior year. “If you
Milwaukee-based Northwestern Mutual ended 2023 with total revenues reaching $36.1 billion and an operating gain before dividends and taxes of more than $8.1 billion.
Revenue increased 3.5% from 2022 while the company’s gain from operations before dividends and taxes was up 11.3%, an increase of more than $800 million from the prior year.
“If you look at our results over the past few years, there's really been a theme in there,” said Todd Jones, chief financial officer of Northwestern Mutual. “It seems like every year we're saying record this and record that and it really has been another exceptional year for us.”
In September, the company also announced plans to pay $7.3 billion in dividends this year.
“No financial services company is stronger than Northwestern Mutual, no company is paying out more in dividends to policyowners than Northwestern Mutual, and no company offers a more comprehensive approach to financial planning than Northwestern Mutual,” said John Schlifske, chairman and chief executive officer of Northwestern Mutual.
A 12.5% increase in net investment income was the primary driver of increased revenue for the company. Premium revenues were down 1.3% for the year to $22 billion.
[caption id="attachment_585214" align="aligncenter" width="650"] Northwestern Mutual annual revenue since 2010[/caption]
Bonds, which represent around 62% of the NML’s total investments, delivered $8 billion in investment income, up 22.5% from 2022. Mortgage loans generated $2.1 billion in investment income, up 11.8%. Income from stock investments increased 7.1% and real estate investment income was up 3.9%.
Jones said the higher interest rate environment that’s developed over the past few years has benefitted the company as free cashflow is invested at those higher rates.
“That’s what you’re really seeing in 2023 is that’s start to come to life in our financials and the value we deliver and it’s really going to continue at a faster pace in the future as we continue to invest in these higher rates,” Jones said.
He pointed to Northwestern Mutual’s gain before dividends and taxes as a sign of the impact of higher rates. From 2014 to 2021, that metric was between $6 billion and $6.5 billion every year except 2020, when it jumped to $7 billion.
After dipping back down to $6 billion in 2021, the company’s operating gain climbed 21% to nearly $7.3 in 2022 and then another 11.3% this past year.
[caption id="attachment_585213" align="alignnone" width="651"] Northwestern Mutual's operating gain before dividends and taxes since 2010.[/caption]
With the potential for the Federal Reserve to begin cutting interest rates this year, Jones said the company is well positioned moving forward, especially after having gained experience in a low interest rate environment over the past decade.
“I sleep well at night knowing that we’re ready for any environment that’s going to come up,” he said.
Jones also said the real estate related investments in the company’s portfolio are well positioned, even as there are concerns in the broader economy about commercial real estate.
“We’re very comfortable with where we are from a risk standpoint when it comes to that,” Jones said.
On the benefit and expense side of the equation, NML had $12.82 billion in benefit payments, up 9.5% from the pervious year. Commissions and operating expenses were up 1.4% to $4.22 billion.
Northwestern Mutual did note in announcing its 2023 results that its field force has now grown to nearly 8,000 financial professionals, a record for the company.
“They are more productive than they ever have been and they're more diverse than they ever have been as well,” Jones said. “On top of that, they also are the youngest in the industry by far. And that's really something that we watch closely because that really is going to signal our continued success in years to come in delivering comprehensive financial planning to as many clients as we can.”
Editor's Note: This story has been updated to clarify NML's $8.1 billion operating gain comes before accounting for dividends and taxes. A reference to commissions and expenses has also been corrected. Commissions and expenses increased 1.4%. The story originally indicated they were down 2.6%.
