Moody’s Investors Services
“Northwestern Mutual has had a sustained track record of realizing favorable investment returns over the long run through active management of its investment portfolio and judicious investment decisions. While this approach is not without risk to the company, Moody’s believes that this risk is substantially mitigated by the participating nature of most of the company’s product liabilities where the policyowners bear most of the risk from unfavorable investment results,” Moody’s reported.
“You tend to have greater capitalization in mutual (companies) and a higher equity basis, which is helpful in an environment like this,” Arthur Fliegelman, vice president and senior credit officer at Moody’s Investors Services, told BizTimes Milwaukee. “Mutuals tend to have less risky product designs, particularly in participating products and Northwestern Mutual has followed that design.”
Northwestern Mutual, like many mutual companies, is operating well in today’s financial market because of its relative independence from capital markets, Fliegelman said. “Mutual companies never had the luxury and they designed their business model to get money when they need it. When you most need (money) is when it’s most hard to get. Mutual companies have even turned down TARP funds, while stock companies are doing the opposite.”
Standard & Poor’s Ratings Services
Standard & Poor’s, a financial market analysis firm, has a negative outlook for 2009 on the insurance industry, largely because of the challenges in the financial marketplaces.
However, S&P’s September report on Northwestern Mutual, when the company’s AAA rating was upheld, said that the Milwaukee life insurance giant had been unaffected by the collapse of Lehman Bros.
“Northwestern maintains capital that comfortably meets Standard & Poor’s requirements for a ‘AAA’ rating, and we consider it one of the most well-capitalized companies in the life insurance industry,” S&P stated. “The ratings on Northwestern reflect the group’s market-leading individual life insurance business, extremely strong capitalization, very strong operating performance and strong enterprise risk management.”
AAA Financial Strength;
classified as “Stable.”
Standard & Poor’s:
AAA, classified as “Stable.”
Moody’s: AAA, “Stable.”
A.M. Best: A++, “Superior.”