Coming off a record year in 2021, Northwestern Mutual saw its total revenue climb to a new high of nearly $35 billion last year and before accounting for dividends and taxes the company’s gain for the year was up 21%.
The Milwaukee-based life insurance company saw revenue of $34.9 billion for the year, up around 2.5% from 2021.
“This past year we again achieved remarkable milestones as a company, all while managing through historic economic and market headwinds,” said John Schlifske, chairman, president and chief executive officer of Northwestern Mutual.
Net income for the year was down slightly from $978 million to $912 million. However, the bottom-line figure comes after a company record dividend for policyowners of $6.8 billion, up from $6.5 billion in 2021.
The company’s gain before dividends and taxes was up more than $1.2 billion to almost $7.3 billion for the year. Total policyowner benefits paid were down slightly, from $12 billion to $11.7 billion, and commissions and expenses were up around $110 million or 2.7% to $4.16 billion.
Growth in revenue was driven by a 12.6% increase in net investment income to nearly $11.8 billion. Total premium revenue was down slightly to $22.3 billion, a decrease of 2.7%
“One year is a record, multiple years is a trend,” Todd Jones, chief financial officer of Northwestern Mutual, said in an interview with BizTimes Media.
Jones added that sales for the year remained strong and the company set a record for permanent life insurance sales.
Rising interest rates contributed to the increase in net investment income, helping push overall revenue higher for the year.
“Higher interest rates are good for an insurance company because we are able to make investments in higher yielding, returning investments,” Jones said.
He pointed out the rising interest rate environment of the past year marks the first time in decades rates have increased this much.
“It’s interesting to live in that environment when most of us in our careers haven’t seen that, but it’s a positive for people that have policies with us on the permanent life side,” Jones said.
While a company like Northwestern Mutual still needs to be competitive and offer better returns compared to other products or investments, no matter the interest rate environment, “it is nicer to be able to have those higher returns on the fixed income side,” Jones said.
Higher rates could also translate to future growth for the company moving forward.
“It does take time to cycle through,” Jones said. “The first year interest rates are higher, it doesn’t have that large of an impact, but we’re a long-term company and we’re making investments for 20, 30 years plus. You get those higher rates, it’s going to compound and kind of be the gift that keeps on giving.”
Of course, the Federal Reserve’s decision to repeatedly raise interest rates came in response to accelerating inflation. Jones acknowledged the company is hit by those rising costs just like everyone else.
“Inflation is real and inflation impacts us,” he said, noting it shows up as an impact on the company’s investments, services it uses in its operations and in compensation.
“We’re fighting for employees just like everybody else is,” Jones said.
Part of that fight for employees has come in the form of investments in Northwestern Mutual’s downtown Milwaukee corporate headquarters campus. The company built a glassy office tower that opened in 2017 and recently announced plans to convert its 19-story north office tower downtown into a similar style building. It is a $500 million project aimed at offering employees the same experience regardless of which building they work in.
Northwestern Mutual has also been at the heart of efforts to bolster Milwaukee’s standing as a technology-oriented city. Those efforts have helped the company in its own bid to improve its digital offerings to customers.
Jones pointed to investments in cybersecurity, new planning experience tools and the ability to accelerate the underwriting process as some of the benefits of those efforts.
“It really just does help make it easier to do business with us, which is a lot of what our tech investment is about,” Jones said.
He added that it can be difficult to connect new offerings or tech investments directly to a percentage increase in sales, but agreed the idea is for investments to build on each other, bolster the company’s reputation and ultimately lead to the trend in strong results the company has seen in recent years.
Jones also expressed optimism about the company’s financial position and said it sets up well for 2023 and beyond.
“We’re a growing and thriving company,” he said. “We don’t necessarily have to hunker down like others with a recession perhaps looming. For us, it’s really continuing to double down and invest in that future.”
Northwestern Mutual ranked 97th on the 2022 Fortune 500 list.
