Northwestern Mutual Life Insurance Co. said that it expects to pay a dividend of $4.63 billion to policyholders in 2007, increasing the payout by $360 million for the second consecutive year.

The board of trustees of the Milwaukee-based insurance and financial services firm approved the dividend payout Monday. The company will also continue to pay a dividend interest rate of 7.5 percent on unborrowed funds on most permanent life insurance policies for the third straight year.

Northwestern Mutual's president and CEO Edward Zore said the company was able to offer the same rate of interest -- despite the low interest rates of recent years -- because of the insurance and financial services company's long-term investment strategy, rigorous expense management, strong policy retention and favorable underwriting experience.

The 2007 dividend will be about $360 million more than last year's payout. That increase matches last year's record increase. About 99 percent of the company's 4.2 million participating permanent life insurance policies that received a dividend in 2006 are expected to receive a larger dividend in 2007.

The 2007 dividend payout also includes a $109 million in individual disability insurance dividends, up $13 million compared with 2006, and $84 million in dividends on individual term life insurance policies, up by about $24 million.

Northwestern Mutual is the nation's largest direct provider of individual life insurance. It also provides annuities, mutual funds, long-term care insurance, disability income insurance and employee benefit services to the group employee and executive markets.

_____________________________________________________________

© 2006 American City Business Journals, Inc. and its licensors. All rights reserved.