Northwestern Mutual

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billion — of insurers that sought new rulings on accounting practicew from theirstate regulators, accordinyg to a new report. Milwaukee-based Northwestern Mutuakl improvedits year-end 2008 capital surplus to $13.4 billion from $11.8 billion as a result of the rulint from the Wisconsin Office of Commissioner of Insurance. The capital surplusa is the leading measurde ofinsurance companies’ financial strength and ability to meet obligations to policyholders.
The Insurance Forum, an Indiana-basedr publication that monitors insurance trendsand statistics, attained documents from state regulators on 63 insurers that received what the publicationb called “deviations” from accounting practice s impacting insurers’ capital in 2008. The publication’sa May issue reported that Northwestern Mutual showed the largestcapital increase. Next on the list was of Illinoiw atnearly $1.4 billion. Northwestern Mutua l was the only Wisconsin-based insurer that soughyt a ruling from the Wisconsininsurance commissioner’a office, said commissioner Sean Dilweg.
The company sought a ruling on how it accountedd forgoodwill — the current value compared with the acquisitiomn price — for its Russell Investments subsidiary in Tacoma, Northwestern Mutual previously wrote off the goodwill on Frank Russell and showec a negative value on the insurer’x books, said Guenther Ruch, an administratotr with the insurance commissioner’s office. Northwestern Mutual provided new informatio n that Frank Russell actually should carry apositivd valuation.
That led to an $828 million positiver swing inNorthwestern Mutual’s capital, Ruch Northwestern Mutual also sought a rulinb on accounting for the percentagse of its deferred tax assets affecter by investments that suffered market declinese in 2008. The commissioner ruled the companu could make apercentage change, resulting in a $773 millionb increase in capital. Dilweg said the rulingw were in the best intereste of Northwestern Mutual policyholders andthe company’w continued dividend payments. He said the rulinge were both conservativeand reasonable. “They’ve taken but they’re not in any trouble at Dilweg said.
“This is a stronbg company and will continuee tobe strong.” Northwestern Mutualo spokeswoman Jean Towell said the company soughtf the rulings to provide a more accuratr representation of the insurer’s financial strength. “Wre were substantially undervalued by the existingaccounting rules,” Towell