Our long-term approach is different and better for policyowners

It is an honor to write to you in my first year as Northwestern Mutual’s chief investment officer. After over two decades at the firm, I’d first like to highlight what has not changed at your company—“your company” because as a mutual, we are owned by our policyowners.

Our mission is unchanged—provide long-term financial security to our clients. Our general account investment portfolio stands behind the long-term promises we make to you, maximizing long-term returns while maintaining our unsurpassed financial strength. To deliver on this mission, our investment team must navigate complex and competitive global capital markets, maintaining our time-tested approach while adapting to a rapidly changing world.

2024 in review

Last year, our internal investment team delivered very strong long-term performance across every asset class, augmented by value-added contributions from top-tier external partners. In the challenged commercial real estate sector, our team’s property-level expertise and disciplined credit underwriting led to superior outcomes. In addition, unlike many competitors, we invest significant capital in publicly traded equities, which we believe will enhance returns over time and certainly delivered success in 2024.

Our investment performance was a key contributor to Northwestern Mutual’s outstanding financial results, and we declared a record dividend payout for 2025 of $8.2 billion. With an all-time-high surplus exceeding $40 billion, we entered 2025 ready to face any market challenges.

We invest differently

In today’s world, many market participants focus on the next “hot” idea or the next quarterly earnings report. With an around-the-clock media cycle, the cacophony of social media and intense pressure to deliver quarterly results, it’s very difficult to think in terms of years and decades, so most institutional investors do not.

Northwestern Mutual is different. We focus on delivering value to you over the long term. We can do this because our insurance products and client relationships are long term, with our average client’s insurance policy in place for over 40 years. Our industry-leading financial strength allows us to steer through turbulent periods with confidence. To bolster this confidence, we perform rigorous stress testing on our portfolio to ensure it can withstand market downturns. As a result, during market corrections we can stay true to our long-term investment strategy, avoiding forced sales and opportunistically acquiring assets at attractive prices.

Our time horizon and our excellent liquidity allow us to invest a substantial portion of the portfolio in less liquid assets, which we believe will deliver attractive incremental long-term returns over more liquid alternatives. Our consistent market presence over decades has allowed us to build mutually beneficial relationships with leading investment firms, positioning Northwestern Mutual as an important capital partner with access to exclusive investment opportunities.

All of these factors support our unique ability to succeed as a truly long-term investor.

Our 2025 outlook

Entering 2025, we were concerned about investor complacency and high valuations across most markets. The first four months of the year brought significant volatility back to markets, with evolving tariff and other policy changes creating major uncertainty. At the same time, the global economy is also adjusting to the increase in long-term interest rates that began in 2022 and to the promise and fear of AI-enabled innovation. Looking ahead, as a lender to many companies around the globe, higher interest rates are a tailwind for investment performance.

We anticipate, and are prepared for, continued equity and fixed-income market fluctuations. As noted above, our exceptional financial strength allows us to navigate periods of extreme volatility with confidence. We expect that this volatility will lead to opportunity for disciplined, value-oriented investors. We do not expect public and private equities to deliver the same exceptional returns they’ve delivered over the past decade. At the same time, we firmly believe that they are an important contributor to long-term value.

In navigating uncertain markets, we will continue to focus on disciplined risk-taking; prudent underwriting of credit risk; and diversification across issuers, industries and geographies. While our investment philosophy will remain consistent, we are increasing our focus on origination to ensure that we have access to the most attractive investment opportunities through a broad network of relationships. We are also aggressively pursuing improvements to our technology, data and analytics in order to maintain and enhance our investment performance.

Regardless of market and economic conditions, our investment team will continue to invest your capital with prudence and discipline. On behalf of all of us at Northwestern Mutual, thank you for the continued trust you place in our company.