our Mutual advantage

Of all the reasons policyowners and clients value Northwestern Mutual as their partner on the path to financial security, one is paramount. It’s often called the company’s “mutual advantage.”

Northwestern Mutual did not invent “mutuality.” Over time, however, and continuing today, our company has become what many point to as the pre-eminent example of the power inherent in the mutual form of corporate governance.

Indeed, Northwestern Mutual offers dramatic evidence that a company governed by mutual values can be, in its field, best in the nation. During the period that FORTUNE magazine conducted its “definitive report card on corporate reputations,” Northwestern Mutual was the only company to lead its industry as one of America’s Most Admired Companies® for 25 consecutive years.1

The mutual structure of Northwestern Mutual allows the company to act differently than most publicly traded stock companies, which typically must split their focus between customers and shareholders.

In the typical stock company, profits go to shareholders. In contrast, Northwestern Mutual is more like a cooperative. After setting aside a safe margin for reserves and surplus each year, the company returns what would otherwise be “profits” to its participating policyowners in the form of dividends. In other words, our mutual structure brings into alignment the interests of both policyowners and company. For policyowners, that’s an enormous “mutual advantage.”

There are others. As a mutual, the company is free to employ a long-term investment approach within its general account investment portfolio, rather than following an approach focused on meeting quarterly expectations. As a strategy, long-term investing has served us well in all economic environments. Respected experts praise the company’s mutual structure and values as underpinning an “extremely strong competitive position” within the U.S. life insurance industry2—one in which Northwestern Mutual focuses on helping its policyowners and clients achieve financial security.

As practiced by Northwestern Mutual, however, mutuality extends well beyond these basic mutual advantages. The benefits of our mutuality are manifested in four key values:

• Doing what’s right for policyowners and other clients• Building long-term relationships to meet client needs• Building and preserving financial strength• Offering world-class products and expert guidance that serve changing needs

over a lifetime

We invite you to explore these values on the following pages, to see how our brand of mutuality sets us apart. We believe you will find it to be … a mutual advantage.

1 FORTUNE® magazine survey, “America’s Most Admired Companies,” March 17, 20082 Standard & Poor’s, March 23, 2010

As a mutual, Northwestern Mutual has no shareholders. The company focuses solely and directly on its customers.

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More than a Century and a Half of Doing the Right Thing for Policyowners

Our steadfast dedication to doing the right thing for policyowners is as old as the company itself. Since our beginnings in 1857, generations of company leaders have tested the merits of corporate decisions against only one standard: “Is what we’re doing in the best long-term interest of our policyowners?”

It’s an uncompromising focus on the customer, one that embraces a strong belief in fairness—equitable treatment for all.

Equitable treatment for all

Elsewhere in the life insurance industry, inequitable treatment of policyowners has become commonplace. To attract new customers, many companies have offered

special or improved benefits—benefits not available to current policyowners.

Such an approach is not the practice at Northwestern Mutual, where all policyowners are treated equitably. This guiding principle extends to all areas: pricing, underwriting, claims, dividend payouts, and more.

Equitable treatment at work

As our life and disability insurance products are enhanced or improved, our current policyowners are invited to share in the new benefits at no charge, whenever possible and practical. The same is true of policies offered by Northwestern Long Term Care Insurance Company.

“… It (is) …. pre-eminently the policyowner’s company.”

– Executive Committee of theBoard of Trustees, 1888

“The company is a mutual organization in the strictest and best sense … This is a company operated by the policyholders and for the best interests of the policyholders.”

– Examination of the Wisconsin Insurance Department, 1905

“Our beliefs are not the easy way— but we think they are the right way. We do not propose to change our philosophy of mutuality and fairness to all policyowner-members. This company is different.”

– Francis Ferguson, President and CEO, Northwestern Mutual, 1973

“Northwestern Mutual executives use a simple yardstick to measure every business venture, every business decision, every contract: Is it in the best interest of the 2.8 million policyowners …?”

– Best’s Review, 1999

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Throughout the years, the company has offered several life insurance enhancements to existing policyowners—because doing so serves the best interests of our policyowners. One program alone offered life insurance policyowners $4.5 billion of additional insurance at no increase in premium.

A recognized distinction

Forbes magazine acknowledged the unusual nature of our commitment: “The tactics of Milwaukee-based Northwestern Mutual are a little bit unconventional. It has a habit of attracting new customers by giving away money to old ones.”3 n

“We believe mutuality provides Northwestern Mutual with great competitive advantage and is one of the factors that has enabled the company to remain financially strong and to keep decisions focused on longer-term implications (rather than on reported quarterly earnings).”

– Report of the Policyowners’ Examining Committee, 2001

“A commitment to policyholders and the mutual structure are key aspects of Northwestern Mutual’s strategy. These principles underlie the company’s emphasis on efficiency, personalized ‘high-touch’ service and competitive dividends to policyholders.”

– Standard & Poor’s, 2009

“We believe mutuality is at the center of Northwestern Mutual’s success. We found a near obsessive focus on the long term to deliver the ‘promise’ to all policyowners.”

– Report of the Policyowners’Examining Committee, 2004

“… Northwestern Mutual has been able to stay the course, true to its founding principles and with policyowners’ interest as its guiding light.”

– Report of the Policyowners’Examining Committee, 2006

“Simply put, most mutual companies have more and better quality capital to absorb unexpected shocks—a vital distinguishing factor in today’s challenging economy.”

– Revenge of the Mutuals, Special Comment Moody’s Investors Service, August 2009

3 Forbes, “Shopping for Life,” February 22, 1988

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The Benefits of Taking the Long-term ViewSteady, stable, superior value

Policyowners receive steady, stable, and excellent value, in part because of the long-term investment strategy we employ in our general account investment portfolio. Long-term investments typically outperform short-term investments. In addition, focusing on long-term strategies gives us flexibility in selecting investments and asset classes while minimizing short-term risk and volatility.

It’s an approach that has worked. It’s the reason that we pay far more individual life insurance dividends each year than any other company. In 2010, we will pay $4.7 billion in total individual life insurance dividends:

• $4.3 billion in dividends on participating permanent life insurance policies;

• $225 million in dividends on individual disability income insurance policies;

• $8 million in dividends to long-term care policyowners through our subsidiary, Northwestern Long Term Care Insurance Company.

Customer loyalty that leads the industry

Our mutual business practices and the value they deliver create extraordinary loyalty among our policyowners. Northwestern Mutual

is commonly ranked as a leader in customer satisfaction. Again this year, we lead the industry among U.S. life insurers.4

So satisfied are policyowners that they not only keep their policies, they return for more. In a typical year, existing customers account for more than half of our life insurance sales.5

The comment we so often hear from clients who have watched the cash value of their policies grow over the years:

“I wish I had bought more back then.”

The same mutual principles that protect our financial strength and stability also provide policyowner value. We have paid outstanding dividends6 year after year, decade after decade. In fact, we have paid dividends every year since 1872, no matter the economic climate.

We work hard to secure customer loyalty: through our quality products, excellent value, consistent financial strength, and prudent yet productive investment practices—as well as through enduring customer relationships.

Lifetime customer relationships

It’s often said that we have what many others in our industry hope to create—lasting relationships built on confidence and trust.

These relationships begin with our well-trained network of financial representatives and the financial specialists who help them meet each client’s individual needs.

We have long been committed to maintaining and building our field force of financial representatives who make this profession their lifelong career.

4 American Customer Satisfaction Index, February 2010. Produced by the Ross School of Business at the University of Michigan, the American Society for Quality and the international consulting firm CFI Group.

5 Source: Northwestern Mutual6 Neither the existence nor the amount of the dividend is guaranteed and is limited to ordinary and group life insurance

dividends. For a fuller explanation of dividends, see back cover.

“For our part, we have never lost sight of our need for financial strength— and never will. We will continue to build on a strength that is manifested in our industry-leading dividend payment and our exceptionally healthy surplus.” – John Schlifske, Chairman & CEO,

Northwestern Mutual, 2010

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“Thank you for the fine job you are doing during these difficult times. You have my 100% support.”

-- South Dakota policyowner, 2010

“Keep up the good work. [You’re] what other insurance companies wish they were. ”

-- Florida policyowner, 2010

“The Policyowners’ Examining Committee is an extraordinary thing. I don’t know of any company, insurance or not, that opens up its entire shop, in intimate detail, to its customers. The ultimate winners are the policyowners.”

– George Dickerman, Policyowner,Former Trustee and former member,Policyowners’ Examining Committee,

Chairman (Retired) Spalding Sports Worldwide

“Over the years, we have always thought in terms of the individual rather than the mass and have consciously built toward a personal relationship between the policyholder, the agent, and the company.”

– Edmund Fitzgerald, President and CEO, Northwestern Mutual, 1958

Rooted in the Northwestern Mutual culture, our representatives—

• Develop lifetime clients, not one-time customers;

• Identify each client’s long-term needs to help people build sound plans aimed at ensuring financial security.

Our representatives work exclusively for Northwestern Mutual. They share our values.

A long history of listening to customers

For more than a century, we have listened to our policyowners. We still do. Our Policyowners’ Examining Committee is unique in our industry.

Since 1907, our Board of Trustees has annually named a group of three to five policyowners to produce an independent and unrestricted evaluation of company operations, management, and strategic plans. We publish the committee’s report each year in our Annual Report. Read the entire report at www.northwesternmutual.com.

Over the years, these reports have kept us sensitive to customer needs and prompted important improvements in company structure and operations. n

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Maintaining Financial StrengthOur mutuality sets us apart financially. We are built to withstand the good times and bad.

On a basic level, of course, financial strength is an obligation. It arises from our commitment to policyowners, from the personal security they entrust with us. Company founders pioneered a culture of scrupulous responsibility for policyowner funds—to keep long-term financial promises.

Very few companies receive the best possible ratings from the four major rating agencies for insurance financial strength, let alone during the most trying economic times. These important third-party perspectives on our current financial strength validate Northwestern Mutual as a proven pillar of strength and consistency.

Our approach to mutuality, including our long-term investment strategy and tight focus on operating fundamentals, helps us maintain the best possible insurance financial strength ratings.

“… consistently receives the highest marks from rating agencies, which means it is fiscally strong enough to outlast you.”

– Worth magazine, Editor’s Choice Award, July/August 2002

A.M. Best A++ (Superior)

Fitch Ratings AAA (Exceptionally Strong)

Moody’s Aaa (Exceptional)

Standard & Poor’s AAA (Extremely Strong)

Financial Strength Ratings

Ratings are for Northwestern Mutual Life Insurance Company and Northwestern Long Term Care Insurance Company. n

A.M. Best (March 2010), Fitch Ratings (May 2010), Moody’s (March 2010), Standard & Poor’s (March 2010). Third-party ratings are subject to change.

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“Northwestern Mutual’s Aaa insurance financial strength rating is based upon the company’s exceptional franchise in individual participating life insurance, which is demonstrated by its excellent persistency, mortality, and expense management, as well as by its solid capitalization.”

– Moody’s Investors Service, 2010

“Northwestern Mutual has developed an excellent risk-management culture that places extreme importance on financial security, with a mission that emphasizes policyowner safety over size.”

– Standard & Poor’s, 2009

“If you find a client with an existing Northwestern Mutual Life policy, simply insist on retention of that policy. Northwestern Mutual is, by quite a margin, the best. So it was in 1955 when I went into the business. So it will likely be long after I’m dead.”– James Hunt, Consumer Federation of America website

(www.consumerfed.org) September 2001

“Everything we do must be done wisely. We won’t invest unless we can do it prudently. We won’t grow unless it’s by our values. And we may not follow the industry if we see opportunity differently. We remain financially strong because we make good decisions. And because we’re financially strong, it gives us the power to avoid poor decisions.”

– Ed Zore, Chairman and CEO, Northwestern Mutual, 2009

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How the Building Blocks of Mutuality WorkWe are able to offer policyowners superior value because, as a mutual company, we diligently monitor our business practices in four vital areas:

• Mortality

• Expenses

• Customer Loyalty

• Portfolio Management

These building blocks lay the groundwork for a mutual company and create advantages for our customers. As you’ll see in the four sections that follow, we excel in these areas—and frequently surpass the industry averages by a wide margin.

Superior mortality results

Why is this important? Because the average company pays proportionately more in death benefits than Northwestern Mutual does.

Therefore, the average company has that much less to return in dividends.

The chart below represents an industry study that compares the “mortality” rate of Northwestern Mutual and 20 of its major competitors over a period of years. It includes all ages and the best classes of smokers and non-smokers, the vast majority of our policyowners. The chart shows that our policyowners tend to live longer—producing a mortality experience about 35 percent better than the inter-company average.

We credit our superiority in this area to a field force that seeks out people who live responsibly and to a medical and underwriting staff exceptionally skilled in assessing health risks.

This is only one building block that contributes to the long-term value we offer policyowners.

Source: Society of Actuaries Intercompany Mortality StudiesPrepared and calculated by The Northwestern Mutual Life Insurance Company, Milwaukee, WI.Intercompany Average data is currently available only through 2005.

Society of Actuaries | Intercompany Mortality StudyAll Ages, Select Period.

Intercompany Average Northwestern Mutual

Mor

talit

y R

atio

(U

sing

197

5-80

Bas

ic T

able

)

0

20

40

60

80

100

120

140

160

69-74 71-76 73-78 75-80 77-82 79-84 81-86 83-88 85-90 87-92 89-94 91-96 93-98 95-00 97-02 99-04 01-06 03-08

Mor

talit

y R

atio

(usi

ng th

e 19

75-8

0 B

asic

Tab

le)

SOA Intercompany Mortality Study All Ages, Select Period, Excludes 9/11

Intercompany Average Northwestern Mutual

SOURCE: Society of Actuaries Intercompany Mortality Studies For Internal or Financial Representative use only, Not for use with the general public

0

20

40

60

80

100

120

140

160

69-74 71-76 73-78 75-80 77-82 79-84 81-86 83-88 85-90 87-92 89-94 91-96 93-98 95-00 97-02 99-04 01-06 03-08

Mor

talit

y R

atio

(usi

ng th

e 19

75-8

0 B

asic

Tab

le)

SOA Intercompany Mortality Study All Ages, Select Period, Excludes 9/11

Intercompany Average Northwestern Mutual

SOURCE: Society of Actuaries Intercompany Mortality Studies For Internal or Financial Representative use only, Not for use with the general public

160

140

120

100

80

60

40

20

069-74

71-76

73-78

75-80

77-82

79-84

81-86

83-88

85-90

87-92

89-94

91-96

93-98

95-00

97-02

99-04

01-06

03-08

(5-year Periods)

Because the average company pays proportionately more in death benefits than Northwestern Mutual does, the average company has that much less to return in dividends to surviving policyowners.

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Keeping expenses low

Taken together, our careful approach to managing expenses and our favorable claims experience account for more than one-half of the total dividends to be paid during 2010.

Our vigilance in keeping costs down has been a hallmark of ours for decades and gives us a strong competitive advantage today. It’s another important factor that contributes to the value we offer clients.

The chart below makes this case by comparing the expenses on our principal product line with the industry average. We consistently spend about one-third less on expenses than other companies. These savings can contribute to dividend and surplus, providing more value to policyowners.

“Thanks Northwestern Mutual for being who you are—dependable, sound, trustworthy. In these times of economic uncertainty, it is nice to have at least one place where I am sure my principal is safe.”

– Alabama policyowner, 2010

“The company has a long-held reputation for safety, stability, and performance during difficult times ...”

– Business Management magazine, 2008

“Our character means 108 years of adherence to principles and practices that have produced outstanding results. Our record of quality performance and integrity gives this company unique character.”

– Donald Slichter, President and CEO, Northwestern Mutual, 1965

Ordinary Life Expenses as Percent of Premium*

Company** 2005 2007 2009

Northwestern Mutual 18% 17% 18%

Ameriprise Financial Group 33 34 20Manulife Financial (1) 27 29 22Guardian Life 25 24 23AXA Financial Group (2) 26 32 23Genworth Financial Group 32 25 25State Farm Life Group 28 25 24Principal Life Group 28 28 25New York Life Group 28 28 26Prudential of America Group 24 26 26Lincoln National Group 29 30 27Mass Mutual Financial Group 24 25 28AEGON USA, Inc 25 22 28Metropolitan Life and Affiliated Companies (3) 25 28 28

Industry Average 25 23 26

* Direct premiums measured at 100%, excluding dividends to additions.** Family data(1) Primary Companies – John Hancock, John Hancock USA(2) Primary Companies – Equitable, MONY(3) Primary Companies – Metropolitan Life, New England, General American, TravelersSource: SNL FinancialPrepared and calculated by The Northwestern Mutual Life Insurance Company, Milwaukee, WI

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“As it happens, Northwestern Mutual, the master of loyalty, is also famous for its careful cost management … yet all of Northwestern Mutual’s savings would not sustain superior production if they weren’t reinvested in the delivery of superior value to customers and agents, earning their loyalty in the process.”

– Frederick Reichheld, “The Loyalty Effect,” 1996

“A commandment that flows from our credo is a policy of aggressive fairness. We treat all of our policyowners with the same thorough respect.”

– Donald J. Schuenke, President and CEO, Northwestern Mutual, 1988

“Our company has embraced mutuality for 143 years. But ironically, today, as more and more companies abandon the mutual form, the advantage of mutuality is finally getting its rightful attention. We like being a mutual company.”

– James D. Ericson, President and CEO, Northwestern Mutual, 2000

Customer satisfaction — our customers keep what they buy

Satisfied policyowners are loyal—they keep what they have purchased. In the insurance world, this is called “persistency.”

We lead the industry in “persistency,” and that’s important to you.

• Persistency is perhaps the truest measure of customer satisfaction—people voting with their dollars, so to speak.

• Persistency acts as an indicator: that the products “fit.” They were properly bought and sold in the first place.

Persistency benefits the company in two ways. First, incoming premiums create a steady cash flow that adds to our investment portfolio. Second, retaining clients gives us a larger base over which to spread expenses. Both can contribute to the dividend payout, resulting in greater value for our policyowners.

In the insurance industry, the “lapse ratio” is the inverse of persistency. Policies lapse when people stop paying their premiums. The latest available data show Northwestern Mutual’s annual life insurance lapse ratio is almost half the industry average. Persistency and lapse ratios are two sides of the same coin.

The Power of Our Portfolio

How we manage our general account investment portfolio is the final building block of superior value.

Our investment goal is well-defined: to perform well both in good times and in bad.

• We invest in all the major asset classes and market sectors, maintaining a diversified portfolio that blends fixed income and equity investments.

• We seize opportunities when we invest and are value-oriented in our investment approach.

• We take a long-term perspective, but when prudent, we can invest more aggressively with portions of the portfolio.

This strategy has enabled us to maximize total returns with reduced volatility. To learn more about how we invest to create additional value for policyowners (pie chart at right), visit northwesternmutual.com | About Us | Investment Information | The Power of the Portfolio.7 n

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Public Bonds and Preferred Stock 54%

Private Bonds and Preferred Stock 17%

Mortgage Loans 15%

Private Equities & Subsidiaries 5%

Real Estate Equities 4%

Public Common Stock 3%

Money Market 2%

Portfolio Composition

54%

17%

15%

5%4%

3%2%

Fixed Income: 88%Equities: 12%

Public Bonds and Preferred Stock 54%

Private Bonds and Preferred Stock 17%

Mortgage Loans 15%

Private Equities & Subsidiaries 5%

Real Estate Equities 4%

Public Common Stock 3%

Money Market 2%

Portfolio Composition

54%

17%

15%

5%4%

3%2%

Fixed Income: 88%Equities: 12%

Portfolio CompositionDecember 31, 2009 | Total Managed Assets: $131.6 Billion (Statement Value)

7 Available upon request, Northwestern Mutual’s brochure, “The Power of the Portfolio,”contains a fuller explanation of the investment portfolio.

Source: Northwestern Mutual Investment Report

Lapse Ratio by Amount, Combining New Business & In-Force Business

Company* 2005 2007 2009

Northwestern Mutual 3.6 3.6 4.5

Metropolitan Life & Affiliated Companies (3) 5.9 4.8 4.5Genworth 4.3 5.0 5.9MassMutual Financial Group 5.1 4.5 5.9Lincoln National Corp 6.6 6.5 6.6New York Life Group 5.5 5.6 6.5Prudential of America Group 5.2 5.4 6.3Guardian Life 6.0 5.9 6.5Principal Life Insurance Company 5.4 5.5 6.5Ameriprise 4.7 5.1 6.3AXA (2) 7.2 5.4 6.8John Hancock / ManuLife (ManuLife Financial Group) (1) 5.5 6.1 7.6State Farm Group 6.1 6.8 7.6AEGON USA, Inc. 7.5 6.5 9.1

Industry Average 6.6 6.4 7.3

* Family data(1) Primary Companies – John Hancock, John Hancock USA(2) Primary Companies – Equitable, MONY(3) Primary Companies – Metropolitan Life, New England, General American, TravelersSource: SNL FinancialPrepared and calculated by The Northwestern Mutual Life Insurance Company, Milwaukee, WI

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Meeting Changing Needs—For LifeNorthwestern Mutual’s world-class insurance products result from a vision and passion to be “simply the best” in quality and value. We have always aimed to:

• Provide superior products

• Avoid fads and gimmicks

• Upgrade our policies in both the scope of coverage and ability to provide better benefits at lower costs

In recent decades, policyowners have brought to us a broader range of financial needs. Northwestern Mutual has answered with more diverse products and services. While keeping our focus on world-class insurance, we’ve also added a careful selection of related financial products.

Our financial representatives

These financial products are presented to customers in a coordinated way through Northwestern Mutual’s network of financial representatives who develop enduring relationships with clients by providing expert guidance for a lifetime of financial security.

With access to a network of specialists, financial representatives take a holistic approach to identifying client needs, including:

• Asset and income protection

• Education funding

• Business needs analysis

• Investment services

• Employee and executive benefits

• Retirement solutions

• Estate analysis

And our “mutual advantage” thrives. As we continue to do what’s right for policyowners, we will draw upon the benefits of the culture and values that have defined our company over time: build long-term relationships to meet client needs, build and preserve financial strength, and provide expert guidance. n

“This insurance and financial firm has zero new-economy glamour, and that’s just fine. It’s only gaining market share, boosting sales, and successfully retaining its top-performing sales agents.”

– Sales and Marketing Management, #1 Sales Force: Co-Winner, July 2001

“ For our part, we have never lost sight of our need for financial strength—and never will. We will continue to build on a strength that is manifested in our industry-leading dividend payment and our exceptionally healthy surplus.”

– John Schlifske, Chairman & CEO, Northwestern Mutual, 2010

Charts contained in this brochure were prepared and calculated by The Northwestern Mutual Life Insurance Company, Milwaukee, WI.

The Northwestern Mutual Life Insurance Company • Milwaukee, WIwww.northwesternmutual.com

6 Dividends for Northwestern Mutual policies are distributions of the company’s surplus. They arise when premiums plus investment income are more than enough to cover company operating expenses (including taxes), claim costs, guaranteed increases in policy cash values and additions to surplus. Dividends are paid annually to policyowners in proportion to company earnings on their policies. However, decisions with respect to the determination and allocation of divisible surplus are at the discretion and sound business judgment of the company’s Board of Trustees. There is no guaranteed specific method or formula for the determination and allocation of divisible surplus. Accordingly, the company’s approach is subject to change. Also, there is no guarantee that any dividend will be paid on an individual policy in any given year.

Securities are offered through Northwestern Mutual Investment Services, LLC, 1-866-664-7737, a wholly-owned company of Northwestern Mutual, broker-dealer and member FINRA and SIPC.

Northwestern Long Term Care Insurance Company, Milwaukee, WI, (long-term care insurance) is a subsidiary of Northwestern Mutual.

“ Fitch believes that Northwestern Mutual’s mutual status and policyowner dividend enhances the company’s ability to maintain a strong capital position and execute on its long-term investment and financial strategy.”

– Fitch Ratings, June 2009

19-0185 (1002) (REV 0910)