Northwestern Mutual Reports Growth in Revenue and Surplus, Solid Operating Results for 2014

Transcription

1 Northwestern Mutual Reports Growth in Revenue and Surplus, Solid Operating Results for 04 Northwestern Mutual s year-end financial results for 04 included record results in total revenue, $6.7 billion; total assets, $0 billion; operating gain before dividends and taxes, $6. billion; and total surplus, $.6 billion. The company has the highest financial strength ratings awarded to any life insurer by all four of the major rating agencies: A.M. Best Company A++ (highest), 4/04; Fitch Ratings AAA (highest), /04; Moody s Investors Service Aaa (highest), /04; Standard & Poor s AA+ (second highest), 7/04. Operating Results Premium revenue, including both new and renewal premium, totaled $7.0 billion for 04, an increase of percent from the same period last year. This increase reflected continued high persistency rates for renewal premium and an increase in dividends used by policyowners for the purchase of additional life insurance protection. Despite the decline in market interest rates, net investment income increased 5 percent to $9. billion. Interest income from bonds, commercial mortgage loans and other fixed-income investments increased percent from the prior year, while growth in net investment income also included an increase in dividends and other distributions from public and private equity investments. Total insurance benefits increased percent to $7.8 billion during 04, including $8.4 billion in benefits paid to policyowners and their beneficiaries and a $9.4 billion increase in reserves for future policy benefits. The increase in total insurance benefits generally reflected the increase in premium revenue growth and continued growth in the life insurance book of business. The company s persistency rate for life insurance protection in force remained very favorable at 96.5 percent. While commissions and insurance operating expenses increased 6 percent compared to the prior year, the company expects to maintain one of the lowest life insurance unit costs in the industry again during 04, a reflection of its rigorous management of home office expenses. Operating gain before dividends and taxes increased 6 percent compared to the prior year, reflecting strong investment results and favorable product operating fundamentals such as claims experience and persistency of in-force insurance business. After dividends and taxes, net gain from operations increased to $56 million compared to $56 million last year. Net realized capital gains added $4 million to net income for the year, primarily reflecting gains on the sale of common stock and relatively low investment impairments. Including realized capital gains, net income for 04 was $679 million compared to $80 million for the prior year. The company announced its 05 dividend scale in October 04 with a total estimated payout of $5.5 billion, including a 5.60 percent dividend scale interest rate for unborrowed funds for most traditional permanent life insurance policies. The estimated dividend payout for 05 includes $0 million in dividends on individual disability income insurance policies and $50 million in dividends on term life insurance. There will be no dividend payout to its participating long-term care policyowners in 05. For more information, see the company s news release about the 05 Dividend Announcement. Northwestern Mutual Life Insurance Company (Northwestern Mutual) 70 East Wisconsin Avenue Milwaukee, Wisconsin

2 Northwestern Mutual Reports Year-End 04 Results Page Investment Portfolio Northwestern Mutual s diversified investment strategy contributes significantly to the company s financial strength and capacity to pay dividends. Its general account investment portfolio is allocated primarily to high-quality bonds and commercial mortgage loans. Investments in public common stocks, private equities and real estate provide diversification and have historically enhanced overall portfolio returns. Northwestern Mutual s general account investment portfolio grew to $95.0 billion as of December, 04, an increase of $0.6 billion from year-end 0. The company s $8. billion bond portfolio is diversified among many corporate issuers and in a wide variety of industries, government agency-issued residential mortgage-backed securities, other asset-backed securities and U.S. Treasury bonds. At December, 04, 90 percent of the bond portfolio was rated as investment grade. Along with $.6 billion of cash and short-term investments, this high-quality bond portfolio provides consistent interest income and a reliable source of liquidity. Commercial mortgage loans are exclusively sourced and underwritten by the company s real estate professionals in eight regional offices across the United States. This $9. billion portfolio increased nearly $.5 billion during the year and is diversified by collateral property type and location, with an aggregate ratio of loan balances to fair value of collateral of 54 percent at December, 04. The commercial mortgage loan portfolio had no loans that were delinquent or in foreclosure. The company s total investment in public and private common and preferred stocks increased $748 million during 04. Other investments primarily represent private securities partnerships and real estate joint ventures, made either directly by the company or through its wholly-owned investment subsidiaries. Separate account assets and liabilities are primarily policyowner-directed investments in mutual funds that underlie its variable annuity and variable life insurance products. These balances increased 7 percent during 04, reflecting positive net cash flow and overall market appreciation. Financial Strength Total surplus (the combination of surplus and asset valuation reserve) increased by $.0 billion during 04 to $.6 billion. This increase was primarily due to the recognition of a gain on the sale of Frank Russell Company, as well as strong operating results. Total surplus represented.5 percent of general account insurance reserves as of December, 04, an increase from.0 percent at year-end 0. This level of capitalization remains very strong compared to the company s historical surplus levels and the standards set by insurance regulators and the major rating agencies. The amount of dividends, if any, declared and credited to policies is determined annually at the Board of Trustees discretion. Dividends may be declared when current experience in investment earnings, mortality, morbidity, expenses, and other factors is more favorable than the original assumptions used to establish policy premiums. The declaration of dividends in any particular future year(s) is not guaranteed, although Northwestern Mutual has paid a dividend every year since 87. Northwestern Mutual Life Insurance Company (Northwestern Mutual) 70 East Wisconsin Avenue Milwaukee, Wisconsin

3 Northwestern Mutual Reports Year-End 04 Results Page Summary of Operations (Statutory basis, in millions) Twelve months ended December : 04 0 Premiums $7,00 $6,599 Net investment income 9,04 8,69 Other income Total revenue 6,707 5,858 Policyowner benefits paid 8,96 7,898 Increase in benefit reserves 9,4 9,560 Commissions and expenses,8,680 Total benefits and expenses 0,68 0,8 Gain before dividends and taxes 6,069 5,70 Policyowner dividends 5,5 5, Gain before taxes Income tax expense/(benefit) (8) Net gain from operations Net realized capital gains 4 76 Net income $679 $80 The summarized financial statement above was prepared on the statutory basis of accounting in accordance with the accounting practices prescribed or permitted by the Office of the Commissioner of Insurance of the State of Wisconsin. Financial statements prepared on the statutory basis of accounting differ materially from financial statements prepared in accordance with generally accepted accounting principles ( GAAP ). Northwestern Mutual Life Insurance Company (Northwestern Mutual) 70 East Wisconsin Avenue Milwaukee, Wisconsin

4 Northwestern Mutual Reports Year-End 04 Results Page 4 Summary of Financial Position (Statutory basis, in millions) December, December, 04 0 Bonds $8,6 $, Mortgage loans 9,4 6,845 Policy loans 6,756 6,06 Common and preferred stocks,7,965 Real estate,60,506 Other investments,87,84 Cash and short-term investments,588,6 Total investments 94,96 84,99 Other assets 7,96 7,64 Separate account assets 7,056 5,4 Total assets $9,9 $7,06 Policy benefit reserves $67,508 $58,58 Policyowner dividends payable 5,50 5,0 Other liabilities 7,6 7,45 Separate account liabilities 7,056 5,4 Liabilities (excluding AVR) 07,5 96,549 Asset valuation reserve (AVR),544,58 Surplus 9,054 7,99 Surplus and AVR,598 0,557 Total liabilities and surplus $9,9 $7,06 The summarized financial statement above was prepared on the statutory basis of accounting in accordance with the accounting practices prescribed or permitted by the Office of the Commissioner of Insurance of the State of Wisconsin. Financial statements prepared on the statutory basis of accounting differ materially from financial statements prepared in accordance with generally accepted accounting principles ( GAAP ). Northwestern Mutual Life Insurance Company (Northwestern Mutual) 70 East Wisconsin Avenue Milwaukee, Wisconsin

5 LIFE AND ACCIDENT AND HEALTH COMPANIES - ASSOCIATION EDITION ANNUAL STATEMENT FOR THE YEAR ENDED DECEMBER, 04 OF THE CONDITION AND AFFAIRS OF THE The Northwestern Mutual Life Insurance Company NAIC Group Code NAIC Company Code 6709 Employer's ID Number (Current) (Prior) Organized under the Laws of Wisconsin, State of Domicile or Port of Entry WI Country of Domicile United States of America Incorporated/Organized 0/0/857 Commenced Business /5/858 Statutory Home Office 70 East Wisconsin Avenue, Milwaukee, WI, US (Street and Number) (City or Town, State, Country and Zip Code) Main Administrative Office 70 East Wisconsin Avenue (Street and Number) Milwaukee, WI, US , (City or Town, State, Country and Zip Code) (Area Code) (Telephone Number) Mail Address 70 East Wisconsin Avenue, Milwaukee, WI, US (Street and Number or P.O. Box) (City or Town, State, Country and Zip Code) Primary Location of Books and Records 70 East Wisconsin Avenue (Street and Number) Milwaukee, WI, US , (City or Town, State, Country and Zip Code) (Area Code) (Telephone Number) Internet Website Address northwesternmutual.com Statutory Statement Contact Kevin John Abitz, (Name) (Area Code) (Telephone Number) [email protected], ( Address) (FAX Number) OFFICERS Chairman and CEO John Edward Schlifske VP and Controller John Christopher Kelly SVP, General Counsel and Secretary Raymond Joseph Manista SVP and Chief Actuary David Robert Remstad OTHER Gregory Charles Oberland # President Michael Gerard Carter EVP and CFO Ronald Paul Joelson EVP and CIO Todd Matthew Jones VP and Chief Risk Officer Timothy Gerald Schaefer Executive Vice President Leslie Barbi # Senior Vice President David Dennis Clark Senior Vice President Joann Marie Eisenhart Senior Vice President Timothy John Gerend Senior Vice President John Mitchell Grogan Senior Vice President Jeffrey James Lueken Senior Vice President Bethany Marie Rodenhuis Senior Vice President Calvin Robert Schmidt Senior Vice President Todd Michael Schoon Senior Vice President David William Simbro Senior Vice President Rebekah Buchman Barsch # Vice President Sandra Lee Botcher Vice President Eric Paul Christophersen Vice President Christina Hirth Fiasca Vice President Kimberley Goode Vice President Karl Gabriel Gouverneur Vice President Thomas Charles Guay Vice President Gary Michael Hewitt Vice President John Lee Kordsmeier Vice President Steven Charles Mannebach Vice President Christian Winfield Mitchell Vice President Steven Michael Radke Vice President Tammy Michelle Roou Vice President Sarah Renee Schneider Vice President Sarah Elizabeth Schott Vice President David Grove Stoeffel # Vice President Steve Paul Sperka Vice President Conrad Carlton York Vice President Todd Owen Zinkgraf Vice President DIRECTORS OR TRUSTEES John Nelson Balboni David John Drury Connie Kadrovach Duckworth James Patrick Hackett Paul Russell Hardin Hans Christian Helmerich Dale Elton Jones Margery Kraus David John Lubar Ulice Payne Jr. John Edward Schlifske Mary Ellen Stanek Steven Scott Voynich Ralph Andrew Weber Barry Lawson Williams Benjamin Francis Wilson Edward John Zore State of County of Wisconsin Milwaukee SS: The officers of this reporting entity being duly sworn, each depose and say that they are the described officers of said reporting entity, and that on the reporting period stated above, all of the herein described assets were the absolute property of the said reporting entity, free and clear from any liens or claims thereon, except as herein stated, and that this statement, together with related exhibits, schedules and explanations therein contained, annexed or referred to, is a full and true statement of all the assets and liabilities and of the condition and affairs of the said reporting entity as of the reporting period stated above, and of its income and deductions therefrom for the period ended, and have been completed in accordance with the NAIC Annual Statement Instructions and Accounting Practices and Procedures manual except to the extent that: () state law may differ; or, () that state rules or regulations require differences in reporting not related to accounting practices and procedures, according to the best of their information, knowledge and belief, respectively. Furthermore, the scope of this attestation by the described officers also includes the related corresponding electronic filing with the NAIC, when required, that is an exact copy (except for formatting differences due to electronic filing) of the enclosed statement. The electronic filing may be requested by various regulators in lieu of or in addition to the enclosed statement. John Edward Schlifske Raymond Joseph Manista Todd Matthew Jones Chairman and CEO SVP, General Counsel and Secretary VP and Controller a. Is this an original filing? Yes [ ] No [ X ] Subscribed and sworn to before me this b. If no, day of April, 05. State the amendment number. Date filed 04/0/05. Number of pages attached 6 Leah Lewandoski Notary Public /05/07 Schedule S, Part and Schedule S, Part, Section had some balances on incorrect lines in the original filing. All numbers are on the correct lines on the attached revised pages.

6 ASSETS Assets Current Year Nonadmitted Assets Net Admitted Assets (Cols. - ) Prior Year 4 Net Admitted Assets. Bonds (Schedule D). Stocks (Schedule D):. Preferred stocks. Common stocks. Mortgage loans on real estate (Schedule B):. First liens. Other than first liens 4. Real estate (Schedule A): 4. Properties occupied by the company (less $ encumbrances) 4. Properties held for the production of income (less $ encumbrances) 4. Properties held for sale (less $ encumbrances) 5. Cash ($, Schedule E - Part ), cash equivalents ($, Schedule E - Part ) and short-term investments ($, Schedule DA) 6. Contract loans (including $ premium notes) 7. Derivatives (Schedule DB) 8. Other invested assets (Schedule BA) 9. Receivables for securities 0. Securities lending reinvested collateral assets (Schedule DL). Aggregate write-ins for invested assets. Subtotals, cash and invested assets (Lines to ). Title plants less $ charged off (for Title insurers only) 4. Investment income due and accrued 5. Premiums and considerations: 5. Uncollected premiums and agents' balances in the course of collection 5. Deferred premiums and agents' balances and installments booked but deferred and not yet due (including $ earned but unbilled premiums) 5. Accrued retrospective premiums 6. Reinsurance: 6. Amounts recoverable from reinsurers 6. Funds held by or deposited with reinsured companies 6. Other amounts receivable under reinsurance contracts 7. Amounts receivable relating to uninsured plans 8. Current federal and foreign income tax recoverable and interest thereon 8. Net deferred tax asset 9. Guaranty funds receivable or on deposit 0. Electronic data processing equipment and software. Furniture and equipment, including health care delivery assets ($ ). Net adjustment in assets and liabilities due to foreign exchange rates. Receivables from parent, subsidiaries and affiliates 4. Health care ($ ) and other amounts receivable 5. Aggregate write-ins for other than invested assets 6. Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines to 5) 7. From Separate Accounts, Segregated Accounts and Protected Cell Accounts 8. Total (Lines 6 and 7) DETAILS OF WRITE-INS Summary of remaining write-ins for Line from overflow page 99. Totals (Lines 0 thru 0 plus 98)(Line above) 50.!" ##$%# 50. &$! # 50. " # 598. Summary of remaining write-ins for Line 5 from overflow page 599. Totals (Lines 50 thru 50 plus 598)(Line 5 above)

7 LIABILITIES, SURPLUS AND OTHER FUNDS Prior Year Current Year. Aggregate reserve for life contracts $ (Exh. 5, Line ) less $ included in Line 6. (including $ Modco Reserve). Aggregate reserve for accident and health contracts (including $ Modco Reserve). Liability for deposit-type contracts (Exhibit 7, Line 4, Col. ) (including $ Modco Reserve) 4. Contract claims: 4. Life (Exhibit 8, Part, Line 4.4, Col. less sum of Cols. 9, 0 and ) 4. Accident and health (Exhibit 8, Part, Line 4.4, sum of Cols. 9, 0 and ) 5. Policyholders dividends $ and coupons $ due and unpaid (Exhibit 4, Line 0) 6. Provision for policyholders dividends and coupons payable in following calendar year - estimated amounts: 6. Dividends apportioned for payment (including $ Modco) 6. Dividends not yet apportioned (including $ Modco) 6. Coupons and similar benefits (including $ Modco) 7. Amount provisionally held for deferred dividend policies not included in Line 6 8. Premiums and annuity considerations for life and accident and health contracts received in advance less $ discount; including $ accident and health premiums (Exhibit, Part, Col., sum of lines 4 and 4) 9. Contract liabilities not included elsewhere: 9. Surrender values on canceled contracts 9. Provision for experience rating refunds, including the liability of $ accident and health experience rating refunds of which $ is for medical loss ratio rebate per the Public Health Service Act 9. Other amounts payable on reinsurance, including $ assumed and $ ceded 9.4 Interest maintenance reserve (IMR, Line 6) 0. Commissions to agents due or accrued-life and annuity contracts $ accident and health $ and deposit-type contract funds $. Commissions and expense allowances payable on reinsurance assumed. General expenses due or accrued (Exhibit, Line, Col. 6). Transfers to Separate Accounts due or accrued (net) (including $ accrued for expense allowances recognized in reserves, net of reinsured allowances) 4. Taxes, licenses and fees due or accrued, excluding federal income taxes (Exhibit, Line 9, Col. 5) 5. Current federal and foreign income taxes, including $ on realized capital gains (losses) 5. Net deferred tax liability 6. Unearned investment income 7. Amounts withheld or retained by company as agent or trustee 8. Amounts held for agents'account, including $ agents'credit balances 9. Remittances and items not allocated 0. Net adjustment in assets and liabilities due to foreign exchange rates. Liability for benefits for employees and agents if not included above. Borrowed money $ and interest thereon $. Dividends to stockholders declared and unpaid 4. Miscellaneous liabilities: 4.0 Asset valuation reserve (AVR, Line 6, Col. 7) 4.0 Reinsurance in unauthorized and certified ($ ) companies 4.0 Funds held under reinsurance treaties with unauthorized and certified ($ ) reinsurers 4.04 Payable to parent, subsidiaries and affiliates 4.05 Drafts outstanding 4.06 Liability for amounts held under uninsured plans 4.07 Funds held under coinsurance 4.08 Derivatives 4.09 Payable for securities 4.0 Payable for securities lending 4. Capital notes $ and interest thereon $ 5. Aggregate write-ins for liabilities 6. Total liabilities excluding Separate Accounts business (Lines to 5) 7. From Separate Accounts Statement 8. Total liabilities (Lines 6 and 7) 9. Common capital stock 0. Preferred capital stock. Aggregate write-ins for other than special surplus funds. Surplus notes. Gross paid in and contributed surplus (Page, Line, Col. plus Page 4, Line 5., Col. ) 4. Aggregate write-ins for special surplus funds 5. Unassigned funds (surplus) 6. Less treasury stock, at cost: 6. shares common (value included in Line 9 $ ) 6. shares preferred (value included in Line 0 $ ) 7. Surplus (Total Lines ) (including $ in Separate Accounts Statement) 8. Totals of Lines 9, 0 and 7 (Page 4, Line 55) 9. Totals of Lines 8 and 8 (Page, Line 8, Col. ) DETAILS OF WRITE-INS !" # 598. Summary of remaining write-ins for Line 5 from overflow page 599. Totals (Lines 50 thru 50 plus 598)(Line 5 above) Summary of remaining write-ins for Line from overflow page 99. Totals (Lines 0 thru 0 plus 98)(Line above) Summary of remaining write-ins for Line 4 from overflow page 499. Totals (Lines 40 thru 40 plus 498)(Line 4 above)

8 SUMMARY OF OPERATIONS Current Year Prior Year. Premiums and annuity considerations for life and accident and health contracts (Exhibit, Part, Line 0.4, Col., less Col. ). Considerations for supplementary contracts with life contingencies. Net investment income (Exhibit of Net Investment Income, Line 7) 4. Amortization of Interest Maintenance Reserve (IMR, Line 5) 5. Separate Accounts net gain from operations excluding unrealized gains or losses 6. Commissions and expense allowances on reinsurance ceded (Exhibit, Part, Line 6., Col. ) 7. Reserve adjustments on reinsurance ceded 8. Miscellaneous Income: 8. Income from fees associated with investment management, administration and contract guarantees from Separate Accounts 8. Charges and fees for deposit-type contracts 8. Aggregate write-ins for miscellaneous income 9. Total (Lines to 8.) 0. Death benefits. Matured endowments (excluding guaranteed annual pure endowments). Annuity benefits (Exhibit 8, Part, Line 6.4, Cols ). Disability benefits and benefits under accident and health contracts 4. Coupons, guaranteed annual pure endowments and similar benefits 5. Surrender benefits and withdrawals for life contracts 6. Group conversions 7. Interest and adjustments on contract or deposit-type contract funds 8. Payments on supplementary contracts with life contingencies 9. Increase in aggregate reserves for life and accident and health contracts 0. Totals (Lines 0 to 9). Commissions on premiums, annuity considerations, and deposit-type contract funds (direct business only) (Exhibit, Part, Line, Col. ). Commissions and expense allowances on reinsurance assumed (Exhibit, Part, Line 6., Col. ). General insurance expenses (Exhibit, Line 0, Cols.,, and 4) 4. Insurance taxes, licenses and fees, excluding federal income taxes (Exhibit, Line 7, Cols. + + ) 5. Increase in loading on deferred and uncollected premiums 6. Net transfers to or (from) Separate Accounts net of reinsurance 7. Aggregate write-ins for deductions 8. Totals (Lines 0 to 7) 9. Net gain from operations before dividends to policyholders and federal income taxes (Line 9 minus Line 8) 0. Dividends to policyholders. Net gain from operations after dividends to policyholders and before federal income taxes (Line 9 minus Line 0). Federal and foreign income taxes incurred (excluding tax on capital gains). Net gain from operations after dividends to policyholders and federal income taxes and before realized capital gains or (losses) (Line minus Line ) 4. Net realized capital gains (losses) (excluding gains (losses) transferred to the IMR) less capital gains tax of $ (excluding taxes of $ transferred to the IMR) 5. Net income (Line plus Line 4) CAPITAL AND SURPLUS ACCOUNT 6. Capital and surplus, December, prior year (Page, Line 8, Col. ) 7. Net income (Line 5) 8. Change in net unrealized capital gains (losses) less capital gains tax of $ 9. Change in net unrealized foreign exchange capital gain (loss) 40. Change in net deferred income tax 4. Change in nonadmitted assets 4. Change in liability for reinsurance in unauthorized and certified companies 4. Change in reserve on account of change in valuation basis, (increase) or decrease 44. Change in asset valuation reserve 45. Change in treasury stock (Page, Lines 6. and 6., Col. minus Col. ) 46. Surplus (contributed to) withdrawn from Separate Accounts during period 47. Other changes in surplus in Separate Accounts Statement 48. Change in surplus notes 49. Cumulative effect of changes in accounting principles 50. Capital changes: 50. Paid in 50. Transferred from surplus (Stock Dividend) 50. Transferred to surplus 5. Surplus adjustment: 5. Paid in 5. Transferred to capital (Stock Dividend) 5. Transferred from capital 5.4 Change in surplus as a result of reinsurance 5. Dividends to stockholders 5. Aggregate write-ins for gains and losses in surplus 54. Net change in capital and surplus for the year (Lines 7 through 5) 55. Capital and surplus, December, current year (Lines ) (Page, Line 8) DETAILS OF WRITE-INS Summary of remaining write-ins for Line 8. from overflow page Totals (Lines 08.0 thru 08.0 plus 08.98)(Line 8. above) !"#!!! Summary of remaining write-ins for Line 7 from overflow page 799. Totals (Lines 70 thru 70 plus 798)(Line 7 above) 50. $%& 50. '!!!"%& Summary of remaining write-ins for Line 5 from overflow page 599. Totals (Lines 50 thru 50 plus 598)(Line 5 above) 4

9 CASH FLOW Current Year Prior Year Cash from Operations. Premiums collected net of reinsurance. Net investment income. Miscellaneous income 4. Total (Lines through ) 5. Benefit and loss related payments 6. Net transfers to Separate Accounts, Segregated Accounts and Protected Cell Accounts 7. Commissions, expenses paid and aggregate write-ins for deductions 8. Dividends paid to policyholders 9. Federal and foreign income taxes paid (recovered) net of $ tax on capital gains (losses) 0. Total (Lines 5 through 9). Net cash from operations (Line 4 minus Line 0) Cash from Investments. Proceeds from investments sold, matured or repaid:. Bonds. Stocks. Mortgage loans.4 Real estate.5 Other invested assets.6 Net gains or (losses) on cash, cash equivalents and short-term investments.7 Miscellaneous proceeds.8 Total investment proceeds (Lines. to.7). Cost of investments acquired (long-term only):. Bonds. Stocks. Mortgage loans.4 Real estate.5 Other invested assets.6 Miscellaneous applications.7 Total investments acquired (Lines. to.6) 4. Net increase (decrease) in contract loans and premium notes 5. Net cash from investments (Line.8 minus Line.7 minus Line 4) Cash from Financing and Miscellaneous Sources 6. Cash provided (applied): 6. Surplus notes, capital notes 6. Capital and paid in surplus, less treasury stock 6. Borrowed funds 6.4 Net deposits on deposit-type contracts and other insurance liabilities 6.5 Dividends to stockholders 6.6 Other cash provided (applied) 7. Net cash from financing and miscellaneous sources (Lines 6. to 6.4 minus Line 6.5 plus Line 6.6) RECONCILIATION OF CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS 8. Net change in cash, cash equivalents and short-term investments (Line, plus Lines 5 and 7) 9. Cash, cash equivalents and short-term investments: 9. Beginning of year 9. End of year (Line 8 plus Line 9.) Note: Supplemental disclosures of cash flow information for non-cash transactions: !" # # $!" % & % &!" # ' (##(& # $!" ) ( *!" # ) * ! & 0.00., $ 0.00., $!" # 5

10 6 ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY ANALYSIS OF OPERATIONS BY LINES OF BUSINESS Ordinary 6 Group Accident and Health Aggregate of All Total Industrial Life Life Insurance Individual Annuities Supplementary Contracts Credit Life (Group and Individual) Life Insurance (a) Annuities Group Credit (Group and Individual) Other Other Lines of Business. Premiums and annuity considerations for life and accident and health contracts. Considerations for supplementary contracts with life contingencies. Net investment income 4. Amortization of Interest Maintenance Reserve (IMR) 5. Separate Accounts net gain from operations excluding unrealized gains or losses 6. Commissions and expense allowances on reinsurance ceded 7. Reserve adjustments on reinsurance ceded 8. Miscellaneous Income: 8. Fees associated with income from investment management, administration and contract guarantees from Separate Accounts 8. Charges and fees for deposit-type contracts 8. Aggregate write-ins for miscellaneous income 9. Totals (Lines to 8.) 0. Death benefits. Matured endowments (excluding guaranteed annual pure endowments). Annuity benefits. Disability benefits and benefits under accident and health contracts 4. Coupons, guaranteed annual pure endowments and similar benefits 5. Surrender benefits and withdrawals for life contracts 6. Group conversions 7. Interest and adjustments on contract or deposit-type contract funds 8. Payments on supplementary contracts with life contingencies 9. Increase in aggregate reserves for life and accident and health contracts 0. Totals (Lines 0 to 9). Commissions on premiums, annuity considerations and deposit-type contract funds (direct business only). Commissions and expense allowances on reinsurance assumed. General insurance expenses 4. Insurance taxes, licenses and fees, excluding federal income taxes 5. Increase in loading on deferred and uncollected premiums 6. Net transfers to or (from) Separate Accounts net of reinsurance 7. Aggregate write-ins for deductions 8. Totals (Lines 0 to 7) 9. Net gain from operations before dividends to policyholders and federal income taxes (Line 9 minus Line 8) 0. Dividends to policyholders. Net gain from operations after dividends to policyholders and before federal income taxes (Line 9 minus Line 0). Federal income taxes incurred (excluding tax on capital gains). Net gain from operations after dividends to policyholders and federal income taxes and before realized capital gains or (losses) (Line minus Line ) DETAILS OF WRITE-INS Summary of remaining write-ins for Line 8. from overflow page Totals (Lines 08.0 thru 08.0 plus 08.98) (Line 8. above) 70.!" 70. #""$ %& '( Summary of remaining write-ins for Line 7 from overflow page 799. Totals (Lines 70 thru 70 plus 798) (Line 7 above) (a) Includes the following amounts for FEGLI/SGLI: Line, Line 0, Line 6, Line, Line 4

11 ANALYSIS OF INCREASE IN RESERVES DURING THE YEAR Ordinary 6 Group Total Industrial Life Life Insurance Individual Annuities Supplementary Contracts Credit Life (Group and Individual) Life Insurance 8 Annuities Involving Life or Disability Contingencies (Reserves) (Net of Reinsurance Ceded). Reserve December, prior year. Tabular net premiums or considerations. Present value of disability claims incurred XXX 4. Tabular interest 5. Tabular less actual reserve released 6. Increase in reserve on account of change in valuation basis 7 7. Other increases (net) 8. Totals (Lines to 7) 9. Tabular cost XXX 0. Reserves released by death XXX XXX XXX. Reserves released by other terminations (net). Annuity, supplementary contract and disability payments involving life contingencies. Net transfers to or (from) Separate Accounts 4. Total Deductions (Lines 9 to ) 5. Reserve December, current year

12 EXHIBIT OF NET INVESTMENT INCOME Collected During Year Earned During Year. U.S. Government bonds (a). Bonds exempt from U.S. tax (a). Other bonds (unaffiliated) (a). Bonds of affiliates (a). Preferred stocks (unaffiliated) (b). Preferred stocks of affiliates (b). Common stocks (unaffiliated). Common stocks of affiliates. Mortgage loans (c) 4. Real estate (d) 5 Contract loans 6 Cash, cash equivalents and short-term investments (e) 7 Derivative instruments (f) 8. Other invested assets 9. Aggregate write-ins for investment income 0. Total gross investment income. Investment expenses (g). Investment taxes, licenses and fees, excluding federal income taxes (g). Interest expense (h) 4. Depreciation on real estate and other invested assets (i) 5. Aggregate write-ins for deductions from investment income 6. Total deductions (Lines through 5) 7. Net investment income (Line 0 minus Line 6) DETAILS OF WRITE-INS Summary of remaining write-ins for Line 9 from overflow page Totals (Lines 090 thru 090 plus 0998) (Line 9, above) Summary of remaining write-ins for Line 5 from overflow page 599. Totals (Lines 50 thru 50 plus 598) (Line 5, above) (a) Includes $ accrual of discount less $ amortization of premium and less $ paid for accrued interest on purchases. (b) Includes $ accrual of discount less $ amortization of premium and less $ paid for accrued dividends on purchases. (c) Includes $ accrual of discount less $ amortization of premium and less $ paid for accrued interest on purchases. (d) Includes $ for company s occupancy of its own buildings; and excludes $ interest on encumbrances. (e) Includes $ accrual of discount less $ amortization of premium and less $ paid for accrued interest on purchases. (f) Includes $ accrual of discount less $ amortization of premium. (g) Includes $ investment expenses and $ investment taxes, licenses and fees, excluding federal income taxes, attributable to segregated and Separate Accounts. (h) Includes $ interest on surplus notes and $ interest on capital notes. (i) Includes $ depreciation on real estate and $ depreciation on other invested assets. EXHIBIT OF CAPITAL GAINS (LOSSES) 4 5 Total Realized Capital Gain (Loss) (Columns + ) Change in Unrealized Capital Gain (Loss) Change in Unrealized Foreign Exchange Capital Gain (Loss) Realized Gain (Loss) On Sales or Maturity Other Realized Adjustments. U.S. Government bonds. Bonds exempt from U.S. tax. Other bonds (unaffiliated). Bonds of affiliates. Preferred stocks (unaffiliated). Preferred stocks of affiliates. Common stocks (unaffiliated). Common stocks of affiliates. Mortgage loans 4. Real estate 5. Contract loans 6. Cash, cash equivalents and short-term investments 7. Derivative instruments 8. Other invested assets 9. Aggregate write-ins for capital gains (losses) 0. Total capital gains (losses) DETAILS OF WRITE-INS 090.!"#$%!" Summary of remaining write-ins for Line 9 from overflow page Totals (Lines 090 thru 090 plus 0998) (Line 9, above) 8

13 9 ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY EXHIBIT - PART - PREMIUMS AND ANNUITY CONSIDERATIONS FOR LIFE AND ACCIDENT AND HEALTH CONTRACTS Ordinary 5 Group Accident and Health Aggregate of All Total Industrial Life Life Insurance Individual Annuities Credit Life (Group and Individual) Life Insurance Annuities Group Credit (Group and Individual) Other Other Lines of Business FIRST YEAR (other than single). Uncollected. Deferred and accrued. Deferred, accrued and uncollected:. Direct. Reinsurance assumed. Reinsurance ceded.4 Net (Line + Line ) 4. Advance 5. Line.4 - Line 4 6. Collected during year: 6. Direct 6. Reinsurance assumed 6. Reinsurance ceded 6.4 Net 7. Line 5 + Line Prior year (uncollected + deferred and accrued - advance) 9. First year premiums and considerations: 9. Direct 9. Reinsurance assumed 9. Reinsurance ceded 9.4 Net (Line 7 - Line 8) SINGLE 0. Single premiums and considerations: 0. Direct 0. Reinsurance assumed 0. Reinsurance ceded 0.4 Net RENEWAL. Uncollected. Deferred and accrued. Deferred, accrued and uncollected:. Direct. Reinsurance assumed. Reinsurance ceded.4 Net (Line + Line ) 4. Advance 5. Line.4 - Line 4 6. Collected during year: 6. Direct 6. Reinsurance assumed 6. Reinsurance ceded 6.4 Net 7. Line 5 + Line Prior year (uncollected + deferred and accrued - advance) 9. Renewal premiums and considerations: 9. Direct 9. Reinsurance assumed 9. Reinsurance ceded 9.4 Net (Line 7 - Line 8) TOTAL 0. Total premiums and annuity considerations: 0. Direct 0. Reinsurance assumed 0. Reinsurance ceded 0.4 Net (Lines )

14 0 DIVIDENDS AND COUPONS APPLIED (included in Part ) ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY EXHIBIT - PART - DIVIDENDS AND COUPONS APPLIED, REINSURANCE COMMISSIONS AND EXPENSE ALLOWANCES AND COMMISSIONS INCURRED (Direct Business Only) Ordinary 5 Group Accident and Health Total Industrial Life Life Insurance Individual Annuities Credit Life (Group and Individual) Life Insurance Annuities Group Credit (Group and Individual). To pay renewal premiums. All other REINSURANCE COMMISSIONS AND EXPENSE ALLOWANCES INCURRED. First year (other than single):. Reinsurance ceded. Reinsurance assumed. Net ceded less assumed 4. Single: 4. Reinsurance ceded 4. Reinsurance assumed 4. Net ceded less assumed 5. Renewal: 5. Reinsurance ceded 5. Reinsurance assumed 5. Net ceded less assumed 6. Totals: 6. Reinsurance ceded (Page 6, Line 6) 6. Reinsurance assumed (Page 6, Line ) 6. Net ceded less assumed COMMISSIONS INCURRED (direct business only) Other Aggregate of All Other Lines of Business 7. First year (other than single) 8. Single 9. Renewal 0. Deposit-type contract funds. Totals (to agree with Page 6, Line )

15 EXHIBIT - GENERAL EXPENSES Insurance 5 6 Accident and Health 4 Life Cost Containment All Other All Other Lines of Business Investment Total. Rent. Salaries and wages. Contributions for benefit plans for employees. Contributions for benefit plans for agents. Payments to employees under non-funded benefit plans. Payments to agents under non-funded benefit plans. Other employee welfare. Other agent welfare 4. Legal fees and expenses 4. Medical examination fees 4. Inspection report fees 4.4 Fees of public accountants and consulting actuaries 4.5 Expense of investigation and settlement of policy claims 5. Traveling expenses 5. Advertising 5. Postage, express, telegraph and telephone 5.4 Printing and stationery 5.5 Cost or depreciation of furniture and equipment 5.6 Rental of equipment 5.7 Cost or depreciation of EDP equipment and software 6. Books and periodicals 6. Bureau and association fees 6. Insurance, except on real estate 6.4 Miscellaneous losses 6.5 Collection and bank service charges 6.6 Sundry general expenses 6.7 Group service and administration fees 6.8 Reimbursements by uninsured plans 7. Agency expense allowance 7. Agents balances charged off (less $ recovered) 7. Agency conferences other than local meetings 9. Real estate expenses 9. Investment expenses not included elsewhere 9. Aggregate write-ins for expenses 0. General expenses incurred (a). General expenses unpaid December, prior year. General expenses unpaid December, current year. Amounts receivable relating to uninsured plans, prior year 4. Amounts receivable relating to uninsured plans, current year 5. General expenses paid during year (Lines ) DETAILS OF WRITE-INS Summary of remaining write-ins for Line 9. from overflow page Totals (Lines 09.0 thru 09.0 plus 09.98) (Line 9. above) (a) Includes management fees of $ to affiliates and $ to non-affiliates. EXHIBIT - TAXES, LICENSES AND FEES (EXCLUDING FEDERAL INCOME TAXES) Insurance 4 5 Life Accident and Health All Other Lines of Business Investment Total. Real estate taxes. State insurance department licenses and fees. State taxes on premiums 4. Other state taxes, including $ for employee benefits 5. U.S. Social Security taxes 6. All other taxes 7. Taxes, licenses and fees incurred 8. Taxes, licenses and fees unpaid December, prior year 9. Taxes, licenses and fees unpaid December, current year 0. Taxes, licenses and fees paid during year (Lines ) EXHIBIT 4 - DIVIDENDS OR REFUNDS Life Accident and Health. Applied to pay renewal premiums. Applied to shorten the endowment or premium-paying period. Applied to provide paid-up additions 4. Applied to provide paid-up annuities 5. Total Lines through 4 6. Paid in cash 7. Left on deposit 8. Aggregate write-ins for dividend or refund options 9. Total Lines 5 through 8 0. Amount due and unpaid. Provision for dividends or refunds payable in the following calendar year. Terminal dividends. Provision for deferred dividend contracts 4. Amount provisionally held for deferred dividend contracts not included in Line 5. Total Lines 0 through 4 6. Total from prior year 7. Total dividends or refunds (Lines ) DETAILS OF WRITE-INS Summary of remaining write-ins for Line 8 from overflow page Totals (Lines 080 thru 080 plus 0898) (Line 8 above)

16 EXHIBIT 5 - AGGREGATE RESERVE FOR LIFE CONTRACTS Valuation Standard Total Industrial 4 Ordinary 5 Credit (Group and Individual) 6 Group ! "#"$%&#' ()* ()* * * ()* *+, ()* ( ( ( ()* ( ()* * ()* ()* ()* Totals (Gross) Reinsurance ceded Life Insurance: Totals (Net) ##-,.'/ 0 XXX XXX *-,.'/0 XXX XXX *-,.'/0 XXX XXX &%"&&4'"0 XXX XXX &%"&&4'"0 XXX XXX &%"&&4'"0 XXX XXX &%"&&4'"0 XXX XXX &%"&&4'"0 XXX XXX &%"&&4'"0 XXX XXX ##4.+&%"0 XXX XXX ##4.+&%"0 XXX XXX ##4.+&%"0 XXX XXX ##4.+&%"0 XXX XXX ##4.+&%"0 XXX XXX ##4.+&%"0 XXX XXX ##4.+&%"0 XXX XXX *+&%"0 XXX XXX *+&%"0 XXX XXX *+&%" 0 XXX XXX *+&%" 0 XXX XXX *+&%"0 XXX XXX &#.("""#%&#' XXX XXX 0000.!*5&4'&"'"$"" XXX XXX ##-,.'/6"$"" XXX XXX ##-,.'/6"$"" XXX XXX ##-,.'/6"$"" XXX XXX ##-,.'/ 6"$"" XXX XXX ##-,.'/ 6"$"" XXX XXX

17 EXHIBIT 5 - AGGREGATE RESERVE FOR LIFE CONTRACTS Valuation Standard Total Industrial 4 Ordinary 5 Credit (Group and Individual) 6 Group XXX XXX XXX XXX 0000.! "!" XXX "!" XXX 0000.!"! XXX!"! XXX 0000.! " " XXX " XXX !##$%!" &' XXX XXX " XXX XXX " " "! XXX "! XXX "!! XXX "!! XXX ! "! XXX! XXX !" " XXX " XXX !()*+, '-%$" &' ""! XXX ""! XXX ! " XXX " XXX !##$%! "! XXX "! XXX !##$% " XXX XXX !!##$%! XXX XXX !##$%!!! XXX!! XXX !"##$% XXX XXX !##$% "! XXX! XXX !##$% "!" XXX!" XXX !##$%! "" XXX "" XXX ##$% "" XXX "" XXX ##$%!" XXX!" XXX ##$%! " XXX " XXX &'!! XXX!! XXX !!&' XXX XXX !!&' "! XXX "! XXX " XXX XXX Totals (Gross) ""!!" XXX!"!! XXX Reinsurance ceded XXX XXX Annuities: Totals (Net) ""!" XXX!"!! XXX ##/% "!! ##" "! !! "" "" $ "! "! " 0$ "! "! $"!!!!!!! $ $"" """"! """"! $" " " ##$% " ##$% "!! ##$%! !##$% "!!!! ##$%!! "!!&'!!!! !&' "" "" &' " " !!&'!! Totals (Gross) "! "! Reinsurance ceded SCWLC: Totals (Net) "! "! "#(/%!" " " '!""!"!!"! '" "" "" !'!!"!" '!!!!! "'! """ """ '()*!"&' " " Totals (Gross) " " Reinsurance ceded Accidental Death Benefits: Totals (Net) " " "(!.

18 EXHIBIT 5 - AGGREGATE RESERVE FOR LIFE CONTRACTS Valuation Standard Total Industrial 4 Ordinary 5 Credit (Group and Individual) 6 Group Totals (Gross) Reinsurance ceded Disability-Active Lives: Totals (Net) !"##$ !"## !"%# &' % !"%# &' % !"%# &' % Totals (Gross) Reinsurance ceded Disability-Disabled Lives: Totals (Net) (" ")!*+%'%,"-.'" "# / 0&##"!'"$ %'%# & #$ ##$ %'%# #$& $!&#&%$'"&& -#"" "!'" ' )4-##" "!5&'" "!6#!"% 5%# "70$# "!5&'" "!6# 5##*")! Totals (Gross) Reinsurance ceded Miscellaneous Reserves: Totals (Net) Totals (Net) - Page, Line.

19 EXHIBIT 5 - INTERROGATORIES. Has the reporting entity ever issued both participating and non-participating contracts?. If not, state which kind is issued.. Does the reporting entity at present issue both participating and non-participating contracts?. If not, state which kind is issued.. Does the reporting entity at present issue or have in force contracts that contain non-guaranteed elements? If so, attach a statement that contains the determination procedures, answers to the interrogatories and an actuarial opinion as described in the instructions. 4. Has the reporting entity any assessment or stipulated premium contracts in force? If so, state: 4. Amount of insurance? $ 4. Amount of reserve? $ 4. Basis of reserve: 4.4 Basis of regular assessments: 4.5 Basis of special assessments: 4.6 Assessments collected during the year $ 5. If the contract loan interest rate guaranteed in any one or more of its currently issued contracts is less than 5%, not in advance, state the contract loan rate guarantees on any such contracts. 6. Does the reporting entity hold reserves for any annuity contracts that are less than the reserves that would be held on a standard basis? 6. If so, state the amount of reserve on such contracts on the basis actually held: $ 6. That would have been held (on an exact or approximate basis) using the actual ages of the annuitants; the interest rate(s) used in 6.; and the same mortality basis used by the reporting entity for the valuation of comparable annuity benefits issued to standard lives. If the reporting entity has no comparable annuity benefits for standard lives to be valued, the mortality basis shall be the table most recently approved by the state of domicile for valuing individual annuity benefits: $ Attach statement of methods employed in their valuation. 7. Does the reporting entity have any Synthetic GIC contracts or agreements in effect as of December of the current year? 7. If yes, state the total dollar amount of assets covered by these contracts or agreements $ 7. Specify the basis (fair value, amortized cost, etc.) for determining the amount: 7. State the amount of reserves established for this business: $ 7.4 Identify where the reserves are reported in the blank: 8. Does the reporting entity have any Contingent Deferred Annuity contracts or agreements in effect as of December of the current year? 8. If yes, state the total dollar amount of account value covered by these contracts or agreements: $ 8. State the amount of reserves established for this business: $ 8. Identify where the reserves are reported in the blank: 9. Does the reporting entity have any Guaranteed Lifetime Income Benefit contracts, agreements or riders in effect as of December of the current year? 9. If yes, state the total dollar amount of any account value associated with these contracts, agreements or riders: $ 9. State the amount of reserves established for this business: $ 9. Identify where the reserves are reported in the blank: EXHIBIT 5A - CHANGES IN BASES OF VALUATION DURING THE YEAR Valuation Basis 4 Increase in Actuarial Reserve Due to Description of Valuation Class NONE Changed From Changed To Change Total (Column 4, only)

20 4 ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY EXHIBIT 6 - AGGREGATE RESERVES FOR ACCIDENT AND HEALTH CONTRACTS 4 Other Individual Contracts Credit Accident Total Group Accident and Health and Health (Group and Individual) Collectively Renewable Non-Cancelable Guaranteed Renewable Non-Renewable for Stated Reasons Only Other Accident Only ACTIVE LIFE RESERVE. Unearned premium reserves. Additional contract reserves (a). Additional actuarial reserves-asset/liability analysis 4. Reserve for future contingent benefits 5. Reserve for rate credits 6. Aggregate write-ins for reserves 7. Totals (Gross) 8. Reinsurance ceded 9. Totals (Net) CLAIM RESERVE 0. Present value of amounts not yet due on claims. Additional actuarial reserves-asset/liability analysis. Reserve for future contingent benefits. Aggregate write-ins for reserves 4. Totals (Gross) 5. Reinsurance ceded 6. Totals (Net) 7. TOTAL (Net) 8. TABULAR FUND INTEREST DETAILS OF WRITE-INS Summary of remaining write-ins for Line 6 from overflow page TOTALS (Lines 060 thru 060 plus 0698) (Line 6 above) Summary of remaining write-ins for Line from overflow page 99. TOTALS (Lines 0 thru 0 plus 98) (Line above) (a) Attach statement as to valuation standard used in calculating this reserve, specifying reserve bases, interest rates and methods. 9 All Other

21 EXHIBIT 7 - DEPOSIT TYPE CONTRACTS Total Guaranteed Interest Contracts Annuities Certain 4 Supplemental Contracts 5 Dividend Accumulations or Refunds 6 Premium and Other Deposit Funds. Balance at the beginning of the year before reinsurance. Deposits received during the year. Investment earnings credited to the account 4. Other net change in reserves 5. Fees and other charges assessed 6. Surrender charges 7. Net surrender or withdrawal payments 8. Other net transfers to or (from) Separate Accounts 5 9. Balance at the end of current year before reinsurance (Lines ) 0. Reinsurance balance at the beginning of the year. Net change in reinsurance assumed. Net change in reinsurance ceded. Reinsurance balance at the end of the year (Lines 0+-) 4. Net balance at the end of current year after reinsurance (Lines 9 + )

22 . Due and unpaid:. In course of settlement: ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY EXHIBIT 8 - CLAIMS FOR LIFE AND ACCIDENT AND HEALTH CONTRACTS PART - Liability End of Current Year Ordinary 6 Group Accident and Health Total Industrial Life Life Insurance Individual Annuities Supplementary Contracts Credit Life (Group and Individual) Life Insurance Annuities Group Credit (Group and Individual). Direct. Reinsurance assumed. Reinsurance ceded.4 Net. Resisted. Direct. Reinsurance assumed. Reinsurance ceded.4 Net (b) (b) (b) (b) Other 6. Other. Direct. Reinsurance assumed. Reinsurance ceded.4 Net (b) (b) (b) (b) (b) (b) (b). Incurred but unreported:. Direct. Reinsurance assumed. Reinsurance ceded.4 Net (b) (b) (b) (b) (b) (b) (b) 4. TOTALS 4. Direct 4. Reinsurance assumed 4. Reinsurance ceded 4.4 Net (a) (a) (a) (a) Including matured endowments (but not guaranteed annual pure endowments) unpaid amounting to $ in Column, $ in Column and $ in Column 7. (b) Include only portion of disability and accident and health claim liabilities applicable to assumed "accrued" benefits. Reserves (including reinsurance assumed and net of reinsurance ceded) for unaccrued benefits for Ordinary Life Insurance $ Individual Annuities $, Credit Life (Group and Individual) $, and Group Life $, are included in Page, Line, (See Exhibit 5, Section on Disability Disabled Lives); and for Group Accident and Health $ Credit (Group and Individual) Accident and Health $, and Other Accident and Health $ are included in Page, Line (See Exhibit 6, Claim Reserve).

23 7 ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY EXHIBIT 8 - CLAIMS FOR LIFE AND ACCIDENT AND HEALTH CONTRACTS PART - Incurred During the Year Ordinary 6 Group Accident and Health Total Industrial Life (a) Life Insurance (b) Individual Annuities Supplementary Contracts Credit Life (Group and Individual) Life Insurance (c) Annuities Group Credit (Group and Individual). Settlements During the Year:. Direct. Reinsurance assumed. Reinsurance ceded.4 Net (d). Liability December, current year from Part :. Direct. Reinsurance assumed. Reinsurance ceded.4 Net. Amounts recoverable from reinsurers December, current year 4. Liability December, prior year: 4. Direct 4. Reinsurance assumed 4. Reinsurance ceded 4.4 Net 5. Amounts recoverable from reinsurers December, prior year 6. Incurred Benefits 6. Direct 6. Reinsurance assumed 6. Reinsurance ceded 6.4 Net (a) Including matured endowments (but not guaranteed annual pure endowments) amounting to $ in Line., $ in Line.4. $ in Line 6., and $ in Line 6.4. (b) Including matured endowments (but not guaranteed annual pure endowments) amounting to $ in Line., $ in Line.4. $ in Line 6., and $ in Line 6.4. (c) Including matured endowments (but not guaranteed annual pure endowments) amounting to $ in Line., $ in Line.4. $ in Line 6., and $ in Line 6.4. (d) Includes $ premiums waived under total and permanent disability benefits. Other

24 EXHIBIT OF NON-ADMITTED ASSETS Current Year Total Nonadmitted Assets Prior Year Total Nonadmitted Assets Change in Total Nonadmitted Assets (Col. - Col. ). Bonds (Schedule D). Stocks (Schedule D):. Preferred stocks. Common stocks. Mortgage loans on real estate (Schedule B):. First liens. Other than first liens 4. Real estate (Schedule A): 4. Properties occupied by the company 4. Properties held for the production of income 4. Properties held for sale 5. Cash (Schedule E - Part ), cash equivalents (Schedule E - Part ) and short-term investments (Schedule DA) 6. Contract loans 7. Derivatives (Schedule DB) 8. Other invested assets (Schedule BA) 9. Receivables for securities 0. Securities lending reinvested collateral assets (Schedule DL). Aggregate write-ins for invested assets. Subtotals, cash and invested assets (Lines to ). Title plants (for Title insurers only) 4. Investment income due and accrued 5. Premiums and considerations: 5. Uncollected premiums and agents'balances in the course of collection 5. Deferred premiums, agents'balances and installments booked but deferred and not yet due 5. Accrued retrospective premiums 6. Reinsurance: 6. Amounts recoverable from reinsurers 6. Funds held by or deposited with reinsured companies 6. Other amounts receivable under reinsurance contracts 7. Amounts receivable relating to uninsured plans 8. Current federal and foreign income tax recoverable and interest thereon 8. Net deferred tax asset 9. Guaranty funds receivable or on deposit 0. Electronic data processing equipment and software. Furniture and equipment, including health care delivery assets. Net adjustment in assets and liabilities due to foreign exchange rates. Receivables from parent, subsidiaries and affiliates 4. Health care and other amounts receivable 5. Aggregate write-ins for other than invested assets 6. Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines to 5) 7. From Separate Accounts, Segregated Accounts and Protected Cell Accounts 8. Total (Lines 6 and 7) DETAILS OF WRITE-INS Summary of remaining write-ins for Line from overflow page 99. Totals (Lines 0 thru 0 plus 98)(Line above) !" 598. Summary of remaining write-ins for Line 5 from overflow page 599. Totals (Lines 50 thru 50 plus 598)(Line 5 above) 8

25 . Summary of Significant Accounting Policies NOTES TO FINANCIAL STATEMENTS A. Accounting Practices The accompanying financial statements of The Northwestern Mutual Life Insurance Company ( the Company ) were prepared in accordance with the NAIC Accounting Practices and Procedures Manual ( statutory basis of accounting or SAP ) as adopted by the Office of the Commissioner of Insurance of the State of Wisconsin ("OCI") without exception. See Note 0 for more information regarding the prior year permitted practice utilized for the valuation of the Company s investment in the Frank Russell Company ( Russell ). A reconciliation of the Company s net income and capital and surplus between NAIC SAP and practices prescribed by the State of Wisconsin is shown below: State of NET INCOME Domicile //04 //0 () Net Income Wisconsin basis $ 0,94,688 $ 886,76,750 () State Prescribed Practices that increase/(decrease) NAIC SAP: WI - - () State Permitted Practices that increase/(decrease) NAIC SAP: WI Frank Russell investment valuation - (9,948,800) (4) NAIC SAP (--=4) $ 0,94,688 $ 876,47,950 SURPLUS (5) Statutory Surplus Wisconsin basis $ 9,055,7,77 $ 7,98,784,598 (6) State Prescribed Practices that increase/(decrease) NAIC SAP: WI - - (7) State Permitted Practices that increase/(decrease) NAIC SAP: WI Frank Russell investment valuation - (795,74,000) (8) NAIC SAP (5-6-7=8) $ 9,055,7,77 $ 6,40,60,598 B. Use of Estimates in the Preparation of the Financial Statements The preparation of financial statements in accordance with the statutory basis of accounting requires management to make estimates or assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods then ended. Actual future results could differ from these estimates and assumptions. C. Accounting Policies. Short-term investments represent securities that have maturities of one year or less at purchase, and are reported at amortized cost, which approximates fair value.. The Securities Valuation Office ( SVO ) of the NAIC evaluates the credit quality of the Company s bond investments and issues related credit ratings. Bonds rated at "" (highest quality), "" (high quality), "" (medium quality), 4 (low quality) or 5 (lower quality) are reported in the financial statements at amortized cost, less any valuation adjustment. Bonds rated 6 (lowest quality) are reported at the lower of amortized cost or fair value. The interest method is used to amortize any purchase premium or discount, including estimates of future prepayments that are obtained from independent sources. Prepayment assumptions are updated at least annually, with the retrospective method used to adjust net investment income for changes in the estimated yield to maturity.. Common stocks are generally reported in the financial statements at fair value. At each of December, 04 and 0 fair value for publicly traded common stock was based primarily on quoted market prices. For private common stocks without quoted market prices, fair value at each of December, 04 and 0 is based upon internally developed pricing models and external pricing sources. 4. Preferred stocks rated, or by the SVO are reported at amortized cost. Preferred stocks rated 4, 5 or 6 by the SVO are reported at the lower of amortized cost or fair value. At each of December, 04 and 0, fair value was based primarily on internally developed pricing models. 5. Mortgage loans are reported in the financial statements at unpaid principal balance, less any valuation adjustments or unamortized commitment or origination fees. Such fees are generally deferred upon receipt and amortized into investment income using the interest method. Mortgage loans determined to have an other-thantemporary impairment are written down to net realizable value based on appraisal of the collateral property. Valuation adjustments for impairments considered to be other-than-temporary are reported as realized capital losses. In circumstances where management has deemed it probable that the Company will be unable to collect all contractual principal and interest on a mortgage loan, a valuation allowance is established to reduce the statement value of the mortgage loan to its net realizable value. Changes to mortgage loan valuation allowances are reported as a change in unrealized capital gains and losses. The Company had no mortgage loan valuation allowance at December, 04. During 0 the Company recorded a valuation allowance on two mortgage loans totaling $,67,000. See note 5A for more information about the Company s investments in mortgage loans. 6. Loan backed bonds and structured securities are reported in the financial statements at amortized cost, less any valuation adjustment. The interest method is used to amortize any purchase premium or discount. Use of the interest method for loan-backed bonds and structured securities includes estimates of future prepayments obtained from independent sources. Prepayment assumptions are updated at least annually, with the retrospective adjustment method used to recognize related changes in the estimated yield-to-maturity of such securities. See note 5D for more information about the Company s investments in loan-backed securities. 7. Investments in subsidiaries, controlled and affiliated companies are reported in the financial statements using the equity method. 9

26 NOTES TO FINANCIAL STATEMENTS 8. Investments in partnership investments (including real estate, venture capital and leveraged buyout fund limited partnerships), real estate joint ventures, and unconsolidated subsidiaries organized as limited liability companies are reported in the financial statements using the statutory equity method. Unconsolidated subsidiaries are recorded based on their audited GAAP equity. See note 6 for more information about the Company s investments in partnerships, joint ventures and limited liability companies. 9. See note 8 for the Company s accounting policies, use of derivatives and their presentation in the financial statements. 0. Anticipated investment income is utilized in the determination of any accident and health ( A&H ) premium deficiency reserve. See note 0 for more information about the Company s premium deficiency reserves.. Unpaid losses and loss adjustment expenses include an amount determined from individual case estimates and loss reports and an amount, based on past experience, for losses incurred but not reported. Such liabilities are necessarily based on assumptions and estimates and while management believes the amount to be adequate, the ultimate liability may be in excess of or less than the amount provided. The methods for making such estimates and for establishing the resulting liability are continually reviewed and any adjustments are reflected in the period determined.. During 04, the Company amended its capitalization policy to allow purchased assets to be itemized within individual invoices for capitalization purposes. This policy change did not have a material impact on the Company s financial position at December, 04 or summary of operations for the year then ended.. The Company has no pharmaceutical rebate receivables. 4. Real estate investments are reported at cost, less any valuation adjustments, encumbrances and accumulated depreciation of buildings and other improvements using a straight-line method over the estimated useful lives of the improvements. Fair value is based primarily on the capitalization of stabilized net operating income. An investment in real estate is evaluated for an other-than temporary impairment when the fair value of the property is lower than its depreciated cost. 5. Policy loans represent amounts borrowed from the Company by life insurance policyowners, secured by the cash value of the related policies, and are reported at unpaid principal balance. Policy loans earn interest at either a fixed rate or at a variable rate based on an election that is made by the policyowner when applying for their policy. If a variable rate is elected, it is reset annually subsequent to funding of the policy loan. Some policies with a fixed rate loan provision permit the Company, at its discretion, to annually set an interest rate below that specified by the policy. Annual interest rates on policy loans ranged from 4.5% to 8.00% for loans outstanding at December, 04. Policy loans have no stated maturity date, with repayment of principal made at the discretion of the policyowner. Policyowner dividends available on the portion of life insurance cash values that serve as collateral for policy loans are generally determined using the direct recognition method, whereby dividends on the loaned portion of such policies are calculated with reference to the interest rate charged on the policy loan. The Company considers the unpaid principal balance of policy loans to approximate fair value. 6. Net investment income primarily represents interest and dividends and prepayment fees received or accrued on bonds, mortgage loans, common and preferred stocks, policy loans and other investments. Net investment income also includes dividends and distributions paid to the Company from accumulated earnings of joint ventures, partnerships and unconsolidated non-insurance subsidiaries. Net investment income is reduced by investment management expenses, real estate depreciation, interest costs associated with securities lending and interest expense related to the Company s surplus notes. Accrued investment income more than 90 days past due is a nonadmitted asset and reported as a direct reduction of surplus. Accruals of investment income for securities that have been determined to be other-than-temporarily impaired are generally suspended. Accrued investment income that is ultimately deemed uncollectible is reported as a reduction of net investment income in the period that such determination is made. 7. The Company is required to maintain an interest maintenance reserve ( IMR ). The IMR is used to defer realized capital gains and losses, net of income tax, on fixed income investments and derivatives that are attributable to changes in market interest rates, including both changes in risk-free market interest rates and market credit spreads. Net realized capital gains and losses deferred to the IMR are amortized into investment income over the estimated remaining term to maturity of the investment sold or the asset/liability hedged by an interest rate-related derivative instrument. 8. Realized capital gains and losses are recognized based upon specific identification of investment assets sold. Realized capital losses also include valuation adjustments for impairment of bonds, mortgage loans, common and preferred stocks, real estate and other investments that have experienced a decline in fair value that management considers to be other-than-temporary. Factors considered include the duration and extent to which fair value was less than cost, the financial condition and near-term financial prospects of the issuer and the Company s ability and intent to hold the investment for a period of time sufficient to allow for an anticipated recovery in value. Realized losses (before capital gains taxes) included $00 million and $66 million of valuation adjustments for declines in fair value of investments that were considered to be other-than-temporary for the years ended December, 04 and 0, respectively. Realized capital gains and losses as reported in the financial statements are net of any capital gains tax (or benefit) and exclude any IMR deferrals. 9. Unrealized capital gains and losses include changes in the fair value of common stocks and other equity investments and currency translation adjustments on foreign-denominated bonds and are reported net of any related changes in deferred taxes. Other changes in the Company s equity method share of the accumulated earnings of joint ventures, partnerships and unconsolidated non-insurance subsidiaries are also reported as changes in unrealized capital gains and losses. 0. The Company is required to maintain an asset valuation reserve ( AVR ). The AVR represents a reserve liability for invested asset valuation using a formula prescribed by the NAIC. The AVR is intended to protect 9.

27 NOTES TO FINANCIAL STATEMENTS surplus by absorbing declines in the value of the Company s investments that are not related to changes in interest rates. Increases or decreases in AVR are reported as direct adjustments to surplus in the financial statements.. Most life insurance premiums are recognized as revenue at the beginning of each respective policy year. Universal life insurance and annuity premiums are recognized as revenue when received. Considerations received on supplementary insurance contracts without life contingencies are deposit-type transactions and thereby excluded from revenue in the financial statements. Disability and assumed long-term care insurance premiums are recognized as revenue when due to the Company. Premium revenue is reported net of ceded reinsurance.. Benefit payments to policyowners and beneficiaries include death, surrender, disability and assumed long-term care benefits, as well as matured endowments and payments on supplementary annuity contracts that include life contingencies. Benefit payments on supplementary contracts without life contingencies are deposit-type transactions and thereby excluded from benefits in the financial statements. Benefit payments are reported net of ceded reinsurance recoveries.. Commissions and other operating costs, including costs of acquiring new insurance policies, are generally charged to expense as incurred. 4. The cost of information technology ( IT ) equipment and operating system software is generally capitalized and depreciated over three years using the straight-line method. Non-operating system software is generally capitalized and depreciated over a maximum of five years. IT equipment and operating software assets of $9 million and $4 million at December, 04 and 0, respectively, are classified as other assets and are net of accumulated depreciation of $80 million and $56 million, respectively. Non-operating software costs, net of accumulated depreciation, are nonadmitted assets and thereby excluded from reported assets and surplus. These amounts were $5 million and $ million at December, 04 and 0, respectively. Depreciation expense for IT equipment and software totaled $70 million and $64 million for the years ended December, 04 and 0, respectively. 5. The cost of furniture, fixtures and equipment, including leasehold improvements, is generally capitalized and depreciated over the useful life of the assets using the straight-line method. The cost of furniture, fixtures and equipment costs, net of accumulated depreciation, are nonadmitted assets and thereby excluded from reported assets and surplus. These amounts were $74 million and $79 million at December, 04 and 0, respectively. Depreciation expense for furniture, fixtures and equipment totaled $7 million for each of the years ended December, 04 and Certain assets are designated as nonadmitted on the statutory basis of accounting. Such assets, principally related to defined benefit pension funding, amounts advanced to or due from the Company's financial representatives, furniture, fixtures, equipment and non-operating software (net of accumulated depreciation), deferred tax assets in excess of statutory limits equity-method investments for which audits are not performed are excluded from assets and surplus. Changes in nonadmitted assets are reported as a direct adjustment to surplus.. Accounting Changes and Corrections of Errors A. Material Accounting Changes and Corrections of Errors Effective January, 0, the Company adopted Statement of Statutory Accounting Principle No. 9, Accounting for Postretirement Benefits Other Than Pensions, A Replacement of SSAP No. 4 ( SSAP 9 ) and Statement of Statutory Accounting Principle No. 0, Accounting for Pensions, A Replacement of SSAP No. 89 ( SSAP 0 ). These new standards under the statutory basis of accounting require that estimates of PBO and ABO include future benefit obligations for non-vested participants. The new standards also require that the Company s surplus, as reported in the financial statements, fully reflect any net liability related to the plans PBO, reduced by the fair value of any plan assets, including previously unrecognized net experience losses, prior service costs and initial net assets ( unrecognized items ). The adoption of SSAP 9 and 0 constituted a change in accounting principle that resulted in a direct reduction in surplus of $4 million that was reported in the statement of changes in surplus. See note for more information regarding the impact of the adoption of SSAPs 9 and 0 on the financial statements. During 0, the Company recorded a $5.8 million prior period adjustment, as a direct increase to surplus, to account for adjustments to our annuity and active and disabled life reserve balances.. Business Combinations and Goodwill A. Statutory Purchase Method None. B. Statutory Merger None. C. Assumption Reinsurance None. D. Impairment Loss None. 4. Discontinued Operations None. 5. Investments A. Mortgage Loans, including Mezzanine Real Estate Loans. The maximum and minimum interest rates for mortgage loans originated during 04 were 6.0% and.58%, respectively, while these rates during 0 were 6.50% and.00%, respectively. 9.

28 NOTES TO FINANCIAL STATEMENTS. The maximum percentage of any one loan to the value of security at the time of the loan, exclusive of insured or guaranteed or purchase money mortgages was 00%.. Not applicable. 4. Age Analysis of Mortgage Loans: a. Current Year b. Prior Year. Recorded Investment (All) Farm Insured All Other Insured All Other Mezzanine Total (a) Current $ - $ - $ - $ - $ 9,,55,84 $ 55,76,95 $ 9,67,,5 (b) 0-59 Days Past Due (c) Days Past Due (d) Days Past Due (e) 80+ Days Past Due Accruing Interest Days Past Due (a) Recorded Investment $ - $ - $ - $ - $ - $ - $ - (b) Interest Accrued Accruing Interest 80+ Days Past Due (a) Recorded Investment $ - $ - $ - $ - $ - $ - $ - (b) Interest Accrued Interest Reduced (a) Recorded Investment $ - $ - $ - $ - $ - $ - $ - (b) Number of Loans (c) Percent Reduced 0% 0% 0% 0% 0% 0% 0%. Recorded Investment (All) (a) Current $ - $ - $ - $ - $ 6,54,97,99 $ 69,966, $ 6,6,940,0 (b) 0-59 Days Past Due (c) Days Past Due (d) Days Past Due (e) 80+ Days Past Due Accruing Interest Days Past Due (a) Recorded Investment $ - $ - $ - $ - $ - $ - $ - (b) Interest Accrued Accruing Interest 80+ Days Past Due (a) Recorded Investment $ - $ - $ - $ - $ - $ - $ - (b) Interest Accrued Interest Reduced Residential Commercial (a) Recorded Investment $ - $ - $ - $ - $ - $ - $ - (b) Number of Loans (c) Percent Reduced 0% 0% 0% 0% 0% 0% 0% 5. Investment in Impaired Loans With or Without Allowance for Credit Losses: Residential Commercial Farm Insured All Other Insured All Other Mezzanine Total a. Current Year. With Allowance for Credit Losses $ - $ - $ - $ - $ - $ - $ -. No Allowances for Credit Losses ,49,45-0,49,45 b. Prior Year. With Allowance for Credit Losses $ - $ - $ - $ - $,906,57 $ - $,906,57. No Allowances for Credit Losses ,46,0-66,46,0 6. Investment in Impaired Loans - Average Recorded Investment, Interest Income Recognized, Recorded Investment on Nonaccrual Status and Amount of Interest Income Recognized Using a Cash-Basis Method of Accounting: a. Current Year Farm Insured All Other Insured All Other Mezzanine Total. Average Recorded Investment $ - $ - $ - $ - $ 5,074,707 $ - $ 5,074,707. Interest Income Recognized ,00,78 -,00,78. Recorded Investments on Nonaccrual Status Amount of Interest Income Recognized Using a Cash-Basis of Accounting b. Prior Year ,0,68 -,0,68. Average Recorded Investment $ - $ - $ - $ - $ 7,87,548 $ - $ 7,87,548. Interest Income Recognized ,,5-7,,5. Recorded Investments on Nonaccrual Status Amount of Interest Income Recognized Using a Cash-Basis of Accounting Residential Commercial ,,87-7,,87 7. Allowance for credit losses: Current Year Prior Year a. Balance at beginning of period $,67,000 $ - b. Additions charged to operations -,67,000 c. Direct write-downs charged against the allowance - - d. Recoveries of amounts previously charged off (,67,000) - e. Balance at end of period $ - $,67, The Company recognizes interest income on its impaired loans upon receipt. 9.

29 NOTES TO FINANCIAL STATEMENTS B. Debt Restructuring Current year Prior Year C. Reverse Mortgages None () The total recorded investment in restructured loans, as of year end $ 0,49,45 $ 66,46,0 () The realized capital losses related to these loans $ - $ - () Total contractual commitments to extend credit to debtors owing receivables whose terms have been modified in troubled debt restructurings $ - $ - (4) The Company accrues interest income on restructured loans in accordance with restructured contractual terms. D. Loan-Backed Securities. Prepayment assumptions for mortgage-backed/loan-backed bonds and structured securities were obtained from external vendors or internal estimates.. The Company did not have any loan-backed securities that have had other-than-temporary impairment charges taken against them for which there is an intent to sell or the inability or lack of intent to retain such investments for a period of time sufficient to recover the amortized cost basis during 04.. The table below lists the loan-backed securities with an other-than-temporary impairment recognized in the current period by the Company, as the present value of cash flows expected to be collected is less than the amortized cost basis of the securities: CUSIP Book/Adj Carrying Value Amortized cost before current period OTTI Present Value of Projected Cash Flows Recognized Other- Than-Temporary Impairment Amortized Cost After Other- Than-Temporary Impairment Fair Value at Time of OTTI Date of Financial Statement Where Reported 05947U-Y7-7 56,046 59,770 (4,76) 59,770,0,594 // X-BM- 67,7 49,40 (7,777) 49,40,0,944 // Q-DV-7,74,40,448,6 (9,94),448,6 4,54,896 //04 Total 4,67,40 4,7,46 (45,977) 4,7,46 8,657,44 4. All impaired securities (fair value is less than cost or amortized cost) for which an other-than-temporary impairment has not been recognized in earnings as a realized loss (including securities with a recognized otherthan-temporary impairment for non-interest related declines when a non-recognized interest related impairment remains): a. The aggregate amount of unrealized losses:. Less than months $ 7,0,. months or longer $ 49,45,47 b. The aggregate related fair value of securities with unrealized losses:. Less than months $,87,059,9. months or longer $ 6,04,40,57 5. For fixed income investments, the review focuses on the issuer s ability to remit all contractual interest and principal payments and the Company s ability and intent to hold the investment until the earlier of a recovery in value or maturity. The Company s intent and ability to hold an investment takes into consideration broad portfolio management parameters such as expected net cash flows and liquidity targets, asset/liability duration management and issuer and industry segment credit exposures. E. Repurchase Agreements and/or Securities Lending Transactions. The Company had no open repurchase agreements at either of December, 04 or 0. The Company participates in securities lending programs whereby general account investment securities are loaned to third parties, primarily major brokerage firms. These lending programs are intended to enhance the yield of the Company s investment portfolio. At December, 04 and 0, the aggregate statement value of general account loaned securities was $845 million and $704 million, respectively, while the aggregate fair value of these loaned securities was $9 million and $705 million, respectively. All of the securities on loan at December, 04 and 0 were bonds and were loaned with open terms. The offsetting liability of $954 million and $75 million, reflecting the 9.4

30 NOTES TO FINANCIAL STATEMENTS obligation to return the collateral, is reported in other liabilities in the statements of financial position at December, 04 and 0, respectively. There were no securities on loan within the separate accounts at either December, 04 or 0. The Company manages counterparty and other risks associated with its securities lending program by adhering to guidelines that require counterparties to provide the Company with cash or other high-quality collateral of no less than 0% of the market value of the securities on loan plus accrued interest and by setting conservative standards for the Company s reinvestment of cash collateral received. At December, 04 and 0, reinvested securities lending collateral held by the Company was $96 million and $7 million, respectively, which is reported at amortized cost.. The Company did not pledge any of its assets as collateral during 04 or 0.. Collateral Received a.. Repurchase Agreement - None. Securities Lending Securities Lending Fair Value Open terms $ 9,478,68 0 days or less days days - Greater than 90 days - Sub-Total $ 9,478,68 Securities Received - Total Collateral Received $ 9,478,68 b.. Dollar Repurchase Agreement - None Fair Value The fair value of that collateral and of the portion of that collateral that it has sold or repledged $ 96,497,59 c. The Company receives primarily cash or other high quality collateral in an amount in excess of the fair value of the securities lent and reinvests that collateral in a conservative manner. 4. The Company had no securities lending transactions for which one-line reporting of reinvested collateral was optional. 5. Collateral Reinvestment a. Aggregate Amount of Cash Collateral Reinvested. Repurchase Agreement None. Securities Lending December, 04 Amortized Cost Fair Value (a) Open $ - $ - (b) 0 days or less 400,640,5 400,650,069 (c) -60 days,8,8,8,8 (d) 6-90 days 76,76,547 76,76,547 (e) 9-0 days 0,5,55 0,5,55 (f) -80 days 64,56,566 64,44,447 (g) 8-65 days 90,04,4 90,0,50 (h) - years 77,60,97 78,, (i) - years - - (j) Greater than years - - (k) Sub-Total $ 96,558,6 $ 96,497,59 (l) Securities Received - - (m) Total Collateral Reinvested $ 96,558,6 $ 96,497,59. Dollar Repurchase Agreement - None b. Potential liquidity needs related to the return of collateral are anticipated to be met through sale of the investments purchased with the cash collateral. Additionally, liquidity needs related to the securities lending program are part of the Company s overall asset/liability management program. As such, cash flows from both operations and investment activities, as well as the ability to draw upon the Company s 9.5

31 NOTES TO FINANCIAL STATEMENTS liquid assets, support any potential liquidity needs of this program. The Company s liquid assets include cash, short-term investments, U.S. Treasury and government agency securities, other marketable fixedincome securities and publicly-traded common stocks. 6. The Company has not accepted any collateral that it is not permitted by contract or custom to sell or repledged. 7. The Company did not have any collateral for transactions that extend beyond one year at December, 04. F. Real Estate. The Company recognized impairment losses on real estate of $504 thousand during 04. The Company did not recognize any impairment losses during 0.. In the normal course of business, the Company sold various real estate investments during 04 and 0 with book values totaling $45 million and $48 million, respectively. During 04 and 0, gains in the aggregate of $ million and $5 million, respectively, were recorded as realized capital gains in the summary of operations due to sales of real estate investments.. The Company did not experience any changes to any plan of sale during 04 or The Company did not engage in retail land sales operations during 04 or The Company did not hold real estate investments with participating mortgage loan features during 04 or 0. G. Investments in Low Income Housing Tax Credit Properties (LIHTC). The number of remaining years of unexpired credits at December, 04 was 4 years. The required holding period for the LIHTC properties is 5 years.. The Company has no LIHTC properties subject to any regulatory review at December, 04.. The Company s aggregate investments in LIHTC properties did not exceed 0% of its total admitted assets at December, The Company did not recognize any impairment losses on LIHTC investments during The Company did not forfeit any tax credits and had no ineligible tax credits during 04. H. Restricted Assets. Restricted Assets (Including Pledged) Gross Restricted Percentage Current Year Total General G/A Supporting Account (G/A) S/A Activity (a) Total Separate Account (S/A) Restricted Assets S/A Assets Supporting G/A Activity (b) Total ( plus ) Total From Prior Year Increase/ (Decrease) (5 minus 6) Total Current Year Admitted Restricted Gross Restricted to Total Assets Admitted Restricted to Total Admitted Assets Restricted Asset Category a. Subject to contractual obligation for which liability is not shown $ - $ - $ - $ - $ - $ - $ - $ - 0.0% 0.0% b. Colateral held under security lending c. agreements Subject to repurchase $ % 0.0% $ % 0.0% d. agreements Subject to reverse repurchase agreements 4,945, ,945,000 - $ 4,945,000 4,945, % 0.0% e. Subject to dollar repurchase agreements $ % 0.0% f. Subject to dollar reverse repurchase agreements $ % 0.0% g. Placed under option h. contracts Letter stock or securities $ % 0.0% restricted as to sale - excluding FHLB capital $ % 0.0% i. stock FHLB capital stock $ % 0.0% j. On deposit with states,84,65,84,65,890,948 $ (56,95),84,65 0.0% 0.0% k. On deposit with other regulatory bodies $ % 0.0% l. Pledged as collateral to FHLB (including assets backing funding m. agreements) Pledged as collateral not captured in other categories $ % 0.0% $ 60,96,98 $ 6,699,0 $ 67,66, $ 6,85,89 $ 60,85,94 $ 67,66, 0.0% 0.0% n. Other restricted assets 845,087, ,087,69 70,8,9 $ 4,5, ,087,69 0.4% 0.4% o. Total Restricted Assets $ 94,89,9 $ - $ 6,699,0 $ - $ 94,58,659 $ 74,560,60 $ 6,968,99 $ 94,58, % 0.4% (a) Subset of column (b) Subset of column 9.6

32 NOTES TO FINANCIAL STATEMENTS. Detail of Assets Pledged as Collateral not Captured in other Categories Gross Restricted Percentage Current Year Total Separate Account (S/A) S/A Assets Increase/ Total Current Gross Admitted Restricted to Total General G/A Supporting Restricted Supporting G/A Total Total From (Decrease) (5 Year Admitted Restricted to Total Admitted Collateral Agreement Account (G/A) S/A Activity (a) Assets Activity (b) ( plus ) Prior Year minus 6) Restricted Total Assets Assets Derivatives collateral $ 60,96,98 $ 6,699,0 $ 67,66, $ 6,85,89 $ 60,85,94 $ 67,66, 0.0% 0.0% $ % 0.0% $ % 0.0% $ % 0.0% $ % 0.0% Total $ 60,96,98 $ - $ 6,699,0 $ - $ 67,66, $ 6,85,89 $ 60,85,94 $ 67,66, 0.0% 0.0% (a) Subset of column (b) Subset of column. Detail of Other Restricted Assets Other Restricted Assets Securities on loan Total (a) Subset of column (b) Subset of column Gross Restricted Percentage Current Year Total General G/A Supporting Total Separate Account (S/A) Restricted S/A Assets Supporting G/A Total Total From Increase/ (Decrease) Total Current (5 Year Admitted Gross Restricted to Admitted Restricted to Total Admitted Account (G/A) S/A Activity (a) Assets Activity (b) ( plus ) Prior Year minus 6) Restricted Total Assets Assets $ 845,087,69 $ - $ - $ - $ 845,087,69 $ 70,8,9 $ 4,5,770 $ 845,087,69 0.4% 0.4% $ % 0.0% $ % 0.0% $ % 0.0% $ % 0.0% $ 845,087,69 $ - $ - $ - $ 845,087,69 $ 70,8,9 $ 4,5,770 $ 845,087,69 0.4% 0.4% I. Working Capital Finance Investments None J. Offsetting and Netting of Assets and Liabilities Not applicable K. Structured Notes CUSIP Identification Actual Cost Fair Value Book/Adjusted Carrying Value Mortgage- Referenced Security (YES/NO) 05644AA $ 9,9,000 $,846,750 $ 9,9,000 No 077TMM6 76,68 88,499 76,68 No 5959REF7 85,90 94,8 85,90 No 6065RA98 69,900 86,57 69,900 No 64468CBC7 98,0,48 98,0 No 6497CF9 44,450 45,80 44,450 No 97546FL 4,000,547 4,000 No 9770VHE 46,45 47,78 46,45 No 78559AD8,00 0,05,05 No 980FH6 6,5,5 6,94,894 88,495,56 No 6. Joint Ventures, Partnerships and Limited Liability Companies A. The Company had no investments in joint ventures, partnerships or limited liability companies that exceed 0% of its admitted assets at December, 04. B. The Company recognized aggregate write downs for other-than-temporary impairment of its investments in joint ventures, partnerships and limited liability companies of $40 million and $5 million during 04 and 0, respectively. All of the impairments were from securities partnerships holding certain private equity securities or real estate partnerships that were determined to be impaired. In both instances, fair value was based on net realizable value. 7. Investment Income A. Due and accrued investment income on mortgage loans was nonadmitted, and thereby excluded from surplus, on loans with interest greater than 80 days past due. The Company ceases accruals of investment income on mortgage loans in process of foreclosure, delinquent more than one year, or where collection of interest is uncertain. For all other investments, due and accrued investment income over 90 days past due was nonadmitted. B. The total amount of nonadmitted due and accrued investment income was $9,04 and $5,098,76 at December, 04 and 0, respectively. 8. Derivative Instruments The Company enters into derivative transactions, generally to mitigate (or hedge ) the risk to its assets, liabilities and surplus from fluctuations in interest rates, foreign currency exchange rates, credit conditions and other market risks. Derivatives may be exchange traded or contracted in the over-the-counter market. A majority of the Company s over-the-counter derivatives are bilateral contracts between two counterparties. The Company s remaining over-the-counter derivatives are cleared and settled through central clearing facilities. 9.7

33 NOTES TO FINANCIAL STATEMENTS Derivatives that are designated as hedges for accounting purposes and meet the qualifications for statutory hedge accounting are reported on a basis consistent with the asset or liability being hedged (i.e., at amortized cost or fair value). Derivatives that are used to mitigate risk but are not designated as hedges for accounting purposes or otherwise do not meet the qualifications for statutory hedge accounting are reported at fair value. To qualify for hedge accounting, the hedge relationship must be designated and formally documented at inception. This documentation details the risk management objective and strategy for the hedge, the derivative used in the hedge and the methodology for assessing hedge effectiveness. The hedge must also be highly effective, with an assessment of its effectiveness performed both at inception and on an ongoing basis over the life of the hedge. In addition to hedging, the Company may use derivatives for the purpose of investment replication. A replication is a derivative transaction that, when entered into in conjunction with other cash market investments, replicates the risk and reward characteristics of otherwise permissible investment positions. Derivatives used as part of a replication are reported on a basis consistent with the investment position being replicated (i.e., at amortized cost or fair value). The Company may also use derivatives for income generation purposes. These instruments are reported on a basis consistent with the accounting treatment that would be used for the covering asset or underlying interest to which the derivative relates (i.e., at amortized cost or fair value). The premium received by the Company at the inception of the contract is deferred until the contract matures or is exercised by the counterparty or amortized over the life of the contract (if the term of the derivative is greater than one year). The fair value of derivative instruments is based on quoted market prices, when available. In the absence of quoted market prices, fair value is estimated using industry-standard models that make use of market observable inputs. Derivative transactions expose the Company to the risk that a counterparty may not be able to fulfill its obligations under the contract. The Company manages this risk by dealing only with counterparties that maintain a minimum credit rating, by performing ongoing review of counterparties'credit standing and by adhering to established limits for credit exposure to any single counterparty. The Company also utilizes collateral support arrangements that require the daily exchange of collateral assets if counterparty credit exposure exceeds certain limits. The Company does not offset the statement values for derivatives executed with the same counterparty, even if a master netting arrangement is in place. The Company also does not offset the right to claim collateral against the obligation to return such collateral. The Company held $68 million and $60 million of collateral under its derivative collateral support arrangements at December, 04 and 0, respectively, including $6 million and $8 million, respectively, of derivative collateral related to the separate accounts. The collateral held in the general account is reported as cash and shortterm investments in the statements of financial position, while the Company s obligation to return the collateral is reported as other liabilities. The collateral asset and related liability for collateral held by the separate accounts is reported in the separate account assets and liabilities, respectively in the statements of financial position. The Company posted $68 million and $7 million of bond securities collateral and, $6 million and $ million of cash collateral under these arrangements at December, 04 and 0, respectively. Bond securities posted as collateral is recorded as bonds and cash posted as collateral is recorded as other investments in the statement of financial position. The Company has no embedded credit derivatives that expose it to the possibility of being required to make future payments. Hedging - Designated as Hedging Instruments The Company designates and accounts for the following derivative types as cash flow hedges, with the related derivative instrument reported at amortized cost (if any) in the statement of financial position. No component of these derivatives economic gain or loss was excluded from the assessment of hedge effectiveness. For the years ended December, 04 and 0, there were no gains or losses recorded with respect to derivatives that ceased to qualify for cash flow hedge accounting or for which the Company removed the cash flow hedge accounting designation. Interest rate floors are used to mitigate the asset/liability management risk of a significant and sustained decrease in interest rates for certain of the Company s insurance products. Interest rate floors entitle the Company to receive payments from a counterparty if market interest rates decline below a specified level. Amounts received on these contracts are reported as net investment income. Interest rate swaps are used to mitigate interest rate risk for investments in variable interest rate and fixed interest rate bonds over a maximum ten year period. Interest rate swaps obligate the Company and a counterparty to exchange amounts based on the difference between a variable interest rate index and a specified fixed rate of interest applied to the notional amount of the contract. Amounts received or paid on these contracts are reported as net investment income. Foreign currency swaps are used to mitigate the foreign exchange risk for investments in bonds denominated in foreign currencies over a maximum thirty year period. Foreign currency swaps obligate the Company and a counterparty to exchange the foreign currency-denominated interest and principal payments receivable on foreign bonds for U.S. dollar-denominated payments, based on currency exchange rates specified at trade inception. Foreign exchange gains or losses on these contracts are reported as a change in unrealized capital gains or losses until the maturity or termination of the contract, at which time a realized capital gain or loss is recognized. Hedging - Not Designated as Hedging Instruments The Company enters into other derivative transactions that mitigate economic risks but are not designated as a hedge for accounting purposes or otherwise do not qualify for statutory hedge accounting. These instruments are reported in the statement of financial position at fair value. Changes in the fair value of these instruments are reported as a 9.8

34 NOTES TO FINANCIAL STATEMENTS change in unrealized gains or losses until the maturity or termination of the contract, at which time a realized gain or loss is recognized. Interest rate floors are used to mitigate the asset/liability management risk of a significant and sustained decrease in interest rates for certain of the Company s insurance products. Interest rate floors entitle the Company to receive payments from a counterparty if market interest rates decline below a specified level. Amounts received on these contracts are reported as net investment income. Interest rate swaps are used to mitigate interest rate risk for investments in variable interest rate and fixed interest rate bonds over a maximum ten year period. Interest rate swaps obligate the Company and a counterparty to exchange amounts based on the difference between a variable interest rate index and a specified fixed rate of interest applied to the notional amount of the contract. Amounts received or paid on these contracts are reported as net investment income. Swaptions are used to mitigate the asset/liability management risk of a significant and sustained increase in interest rates for certain of the Company s insurance products. Swaptions provide the Company an option to enter into an interest rate swap with a counterparty on specified terms. Fixed income futures are used to mitigate interest rate risk for investments in portfolios of fixed income securities. Fixed income futures obligate the Company to sell to or buy from a counterparty a specified bond at a specified price at a future date. Foreign currency forwards are used to mitigate the foreign exchange risk for investments in bonds denominated in foreign currencies or common stock or other equity investments in companies operating in foreign countries. Foreign currency forwards obligate the Company to pay to or receive from a counterparty a specified amount of a foreign currency at a future date. Equity total return swaps are used to mitigate market risk for investments in portfolios of common stocks and other equity securities. Equity total return swaps obligate the Company and a counterparty to exchange amounts based on the difference between a variable equity index return and a specified fixed rate of return applied to the notional amount of the contract. Equity index futures are used to mitigate market risk for investments in portfolios of common stock. Equity index futures obligate the Company to pay to or receive from a counterparty an amount based on a specified equity market index as of a future date applied to the notional amount of the contract. Purchased credit default swaps are used to mitigate the credit risk for investments in bonds issued by specific debtors. Credit default swaps provide the Company an option to put a specific bond to a counterparty at par in the event of a credit event encountered by the bond issuer. A credit event is generally defined as a bankruptcy, failure to make required payments or acceleration of issuer obligations under the terms of the bond. Investment Replications Equity total return swap replications are used in conjunction with the purchase of cash market instruments to replicate investment in portfolios of common stocks and other equity securities. Equity total return swaps obligate the Company and a counterparty to exchange amounts based on the difference between a variable equity index return and a specified fixed rate of return applied to the notional amount of the contract. Equity total return swaps are reported at fair value, with changes in fair value reported as a change in unrealized capital gains or losses until the maturity or termination of the contract, at which time a realized capital gain or loss is recognized. The average fair value of open contracts was $ million and $4 million during 04 and 0, respectively. 9.9

35 NOTES TO FINANCIAL STATEMENTS The effects of the Company s use of derivative instruments on the statement of financial position at December, 04 and 0 were as follows: December, 04 Notional Statement Value Fair Value Amount Assets Liabilities Assets Liabilities (in millions) Derivatives designated as hedging instruments: Interest rate contracts: Interest rate floors $ 950 $ 7 $ - $ 78 $ - Interest rate swaps Foreign exchange contracts: Foreign currency swaps, 64 (5) 44 () Derivatives not designated as hedging instruments: Interest rate contracts: Interest rate floors Interest rate swaps 9 - (5) - (5) Swaptions, Fixed income futures, Foreign exchange contracts: Foreign currency forwards,59 7 (4) 7 (4) Equity contracts: Equity total return swaps 455 () () Equity index futures Credit contracts: Purchased credit default swaps 0 - () - () Investment Replications: Equity contracts: Equity total return swaps Total derivatives $ 0 $ (7) $ 88 $ () December, 0 Notional Statement Value Fair Value Amount Assets Liabilities Assets Liabilities (in millions) Derivatives designated as hedging instruments: Interest rate contracts: Interest rate floors $ 950 $ 9 $ - $ 79 $ - Interest rate swaps () Foreign exchange contracts: Foreign currency swaps,5 6 (76) (59) Derivatives not designated as hedging instruments: Interest rate contracts: Interest rate floors Interest rate swaps Swaptions, Fixed income futures Foreign exchange contracts: Foreign currency forwards,04 0 (4) 0 (4) Equity contracts: Equity total return swaps 04 - () - () Equity index futures Credit contracts: Purchased credit default swaps - () - () Investment Replications: Equity contracts: Equity total return swaps Total derivatives $ 86 $ () $ 6 $ (05) The notional amounts shown above are used to denominate the derivative contracts and do not represent amounts exchanged between the Company and the derivative counterparties. 9.0

36 NOTES TO FINANCIAL STATEMENTS The effects of the Company s use of derivative instruments on the statement of operations and changes in surplus for the years ended December, 04 and 0 were as follows: For the year ended December, 04 Change in Net Unrealized Capital Gains (Losses) Net Realized Captal Gains (Losses) (in millions) Net Investment Income Derivatives designated as hedging instruments: Interest rate contracts: Interest rate floors $ - $ - $ 7 Interest rate swaps - - Foreign exchange contracts: Foreign currency swaps 00 () Derivatives not designated as hedging instruments: Interest rate contracts: Interest rate floors Interest rate swaps (5) - () Swaptions (67) - (8) Fixed income futures (56) (4) - Foreign exchange contracts: Foreign currency forwards 90 - Equity contracts: Equity total return swaps () (4) - Equity index futures () 4 - Credit contracts: Purchased credit default swaps - - () Investment Replications: Equity contracts: Equity total return swaps - Total derivatives $ 69 $ () $ Change in Net Unrealized Capital Gains (Losses) For the year ended December, 0 Net Realized Captal Gains (Losses) Net Investment Income (in millions) Derivatives designated as hedging instruments: Interest rate contracts: Interest rate floors $ - $ - $ 8 Interest rate swaps - - Foreign exchange contracts: Foreign currency swaps 8 (9) 8 Derivatives not designated as hedging instruments: Interest rate contracts: Interest rate floors Interest rate swaps Swaptions 46 - (7) Fixed income futures (5) 9 - Foreign exchange contracts: Foreign currency forwards () - - Equity contracts: Equity total return swaps () () - Equity index futures - () - Credit contracts: Purchased credit default swaps - () Investment Replications: Equity contracts: Equity total return swaps () 5 - Total derivatives $ 65 $ 8 $ 0 9.

37 NOTES TO FINANCIAL STATEMENTS 9. Income Taxes A.. The components of the net deferred tax asset/(liability) at December, are as follows: //04 () () () Ordinary Capital Total (a) Gross Deferred Tax Assets $ 4,07,596,440 $ 90,65,867 $ 4,697,96,07 (b) Statutory Valuation Allowance Adjustment (c) Adjusted Gross Deferred Tax Assets (a-b) 4,07,596,440 90,65,867 4,697,96,07 (d) Deferred Tax Assets Nonadmitted (e) Subtotal Net Admitted Deferred Tax Asset (c-d) 4,07,596,440 90,65,867 4,697,96,07 (f) Deferred Tax Liabilities 754,9,59 90,97,6,657,9,790 (g) Net Admitted Deferred Tax Assets (e-f) $,55,0,9 $ (5,56,94) $,040,64,57 //0 (4) (5) (6) Ordinary Capital Total (a) Gross Deferred Tax Assets $,859,97,899 $ 44,69,454 $ 4,8,89,5 (b) Statutory Valuation Allowance Adjustment (c) Adjusted Gross Deferred Tax Assets (a-b),859,97,899 44,69,454 4,8,89,5 (d) Deferred Tax Assets Nonadmitted (e) Subtotal Net Admitted Deferred Tax Asset (c-d),859,97,899 44,69,454 4,8,89,5 (f) Deferred Tax Liabilities 759,806, 94,548,697,674,54,90 (g) Net Admitted Deferred Tax Assets (e-f) $,099,9,666 $ (489,855,4) $,609,56,4 Change (7) (8) (9) Ordinary Capital Total (a) Gross Deferred Tax Assets $ 448,98,54 $ (4,7,587) $ 44,070,954 (b) Statutory Valuation Allowance Adjustment (c) Adjusted Gross Deferred Tax Assets (a-b) 448,98,54 (4,7,587) 44,070,954 (d) Deferred Tax Assets Nonadmitted (e) Subtotal Net Admitted Deferred Tax Asset (c-d) 448,98,54 (4,7,587) 44,070,954 (f) Deferred Tax Liabilities (5,4,704) (,6,46) (7,05,40) - (g) Net Admitted Deferred Tax Assets (e-f) $ 45,8,45 $ (,706,5) $ 4,06,094. The SSAP 0 deferred tax asset admission calculation components at December, are as follows: Admission Calculation Components SSAP No. 0 (a) Federal Income Taxes Paid In Prior Years Recoverable Through Loss Carrybacks,868,09,00 //04 () () () Ordinary Capital Total $ $ 66,094,50 $,4,,505 (b) Adjusted Gross Deferred Tax Assets Expected To Be Realized (Excluding The Amount Of Deferred Tax Assets From (a) above)after Application of the Threshold Limitation (The Lesser of (b) and (b) Below),8,946,55 -,8,946,55. Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date,8,946,55 -,8,946,55. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold NA NA,97,785,885 (c) Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From (a) and (b) above) Offset by Gross Deferred Tax Liabilities,55,60,90 4,7,64,79,88,67 (d) Deferred Tax Assets Admitted as the result of application of SSAP No. 0 4,07,596,440 90,65,867 4,697,96,07 9.

38 NOTES TO FINANCIAL STATEMENTS //0 (4) (5) (6) Ordinary Capital Total Admission Calculation Components SSAP No. 0 (a) Federal Income Taxes Paid In Prior Years Recoverable Through Loss Carrybacks $,005,6,590 $ 96,755,8 $,0,87,4 (b) Adjusted Gross Deferred Tax Assets Expected To Be Realized (Excluding The Amount Of Deferred Tax Assets From (a) above)after Application of the Threshold Limitation (The Lesser of (b) and (b) Below) 889,759, ,759,566-. Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date 889,759, ,759,566. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold NA NA,8,9,- (c) Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From (a) and (b) above) Offset by Gross Deferred Tax Liabilities 96,806,74 7,97,6,09,744,65 (d) Deferred Tax Assets Admitted as the result of application of SSAP No. 0,859,97,899 44,69,454 4,8,89,5 Admission Calculation Components SSAP No. 0 (a) Federal Income Taxes Paid In Prior Years Recoverable Through Loss Carrybacks (7,59,588) Change (7) (8) (9) Ordinary Capital Total $ $ (0,66,9) $ (68,5,97) (b) Adjusted Gross Deferred Tax Assets Expected To Be Realized (Excluding The Amount Of Deferred Tax Assets From (a) above)after Application of the Threshold Limitation (The Lesser of (b) and (b) Below) 94,86, ,86,969-. Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date 94,86,969-94,86,969. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold NA - NA - 5,49,55- (c) Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From (a) and (b) above) Offset by Gross Deferred Tax Liabilities 9,804,60 (,666,58) 88,7,90 (d) Deferred Tax Assets Admitted as the result of application of SSAP No ,98,54 (4,7,587) 44,070, (a) Recovery Period And Threshold Limitation Amount 44% 06% (b) Amount Of Adjusted Capital And Surplus Used To Determine Recovery Period And Threshold Limitation In (b) Above $ 5,985,9,4 $ 4,548,6,4 9.

39 NOTES TO FINANCIAL STATEMENTS 4. Impact of Tax-Planning Strategies: //04 () () Ordinary Capital Impact of Tax-Planning Strategies (a) Determination Of Adjusted Gross Deferred Tax Assets and Net Admitted Deferred Tax Assets, By Tax Character As A Percentage. Adjusted Gross DTAs Amount From Note 9A(c) 4,07,596,440 90,65,867. Percentage Of Adjusted Gross DTAs By Tax Character Attributable To The Impact Of Tax Planning Stategies 0% 0%. Net Admitted Adjusted Gross DTAs Amount From Note 9A(e) 4,07,596,440 90,65, Percentage Of Net Admitted Adjusted Gross DTAs By Tax Character Admitted Because Of The Impact Of Tax Planning Strategies 0% 0% //0 () () Ordinary Capital Impact of Tax-Planning Strategies (a) Determination Of Adjusted Gross Deferred Tax Assets and Net Admitted Deferred Tax Assets, By Tax Character As A Percentage. Adjusted Gross DTAs Amount From Note 9A(c),859,97,899 44,69,454. Percentage Of Adjusted Gross DTAs By Tax Character Attributable To The Impact Of Tax Planning Stategies 0% 0%. Net Admitted Adjusted Gross DTAs Amount From Note 9A(e),859,97,899 44,69, Percentage Of Net Admitted Adjusted Gross DTAs By Tax Character Admitted Because Of The Impact Of Tax Planning Strategies 0% 0% Change (5) (6) (Col -) (Col -4) Ordinary Capital Impact of Tax-Planning Strategies (a) Determination Of Adjusted Gross Deferred Tax Assets and Net Admitted Deferred Tax Assets, By Tax Character As A Percentage. Adjusted Gross DTAs Amount From Note 9A(c) 448,98,54 (4,7,587). Percentage Of Adjusted Gross DTAs By Tax Character Attributable To The Impact Of Tax Planning Stategies 0% 0%. Net Admitted Adjusted Gross DTAs Amount From Note 9A(e) 448,98,54 (4,7,587) 4. Percentage Of Net Admitted Adjusted Gross DTAs By Tax Character Admitted Because Of The Impact Of Tax Planning Strategies 0% 0% (b) Does the Company's tax-planning strategies include the use of reinsurance? Yes No X B. There were no unrecognized deferred tax liabilities at December, 04 and

40 NOTES TO FINANCIAL STATEMENTS C. Current income taxes incurred consist of the following major components: () () () //04 //0 Change. Current Income Tax (a) Federal $ 7,76,66 $ (9,864,004) $ 0,66,70 (b) Foreign,06,647,4,997 8,90,650 (c) Subtotal 84,779,0 (6,749,007),58,00 (d) Federal income tax on net capital gains 58,995,56 98,556,96 (9,560,7) (e) Utilization of capital loss carry-forwards (f) Other (g) Federal and foreign income taxes incurred $ 4,774,576 $ 7,807,89 $ (8,0,7). Deferred Tax Assets (a) Ordinary () Discounting of unpaid losses $ - $ - $ - () Unearned premium reserve () Policyholder reserves,5,779,94,076,459,740 59,9,554 (4) Investments (5) Deferred acquisition costs,9,6,0,08,44,568 8,67,54 (6) Policyholder dividends accrual 948,044,6 896,45,60 5,698,56 (7) Fixed assets 5,69,866,458,9,7,67 (8) Compensation and benefits accrual 59,085,5 557,887,044 4,98,07 (9) Pension accrual 4,746,064 0,680,604 4,065,460 (0) Receivables - nonadmitted 5,7,60 5,66, 75,48 () Net operating loss carry-forward () Tax credit carry-forward () Other (including items <5% of total ordinary tax assets) 45,944,569 44,88,08,656,54 (99) Subtotal 4,07,596,440,859,97, ,98,54 (b) Statutory valuation allowance adjustment (c) Nonadmitted (d) Admitted ordinary deferred tax assets (a99-b-c) 4,07,596,440,859,97, ,98,54 (e) Capital: () Investments 90,65,867 44,69,454 (4,7,587) () Net capital loss carry-forward () Real estate (4) Other (including items <5% of total capital tax assets) - - (99) Subtotal 90,65,867 44,69,454 (4,7,587) (f) Statutory valuation allowance adjustment (g) Nonadmitted (h) Admitted capital deferred tax assets (e99-f-g) 90,65,867 44,69,454 (4,7,587) (i) Admitted deferred tax assets (d+h) $ 4,697,96,07 $ 4,8,89,5 $ 44,070,954. Deferred Tax Liabilities (a) Ordinary () Investments $ - $ - $ - () Fixed assets 5,7,550 9,5,8 (,798,8) () Deferred and uncollected premium 70,4,49 74,550,995 (4,408,556) (4) Policyholder reserves (5) Other (including items <5% of total ordinary tax liabilities) 8,56,54 5,7,405,79,6 (99) Subtotal 754,9,50 759,806, (5,4,70) (b) Capital: () Investments 90,97,6 94,548,698 (,6,46) () Real estate () Other (including items <5% of total capital tax liabilities) (99) Subtotal 90,97,6 94,548,698 (,6,46) (c) Deferred tax liabilities (a99+b99) $,657,9,79 $,674,54,90 $ (7,05,8) 4. Net deferred tax assets/liabilities (i-c) $,040,64,55 $,609,56,4 $ 4,06,09 D. Among the more significant book to tax adjustments were the following: December, 04 Effective Tax Rate Provision computed at statutory rate $ 4,00, % Dividends received deduction (6,47,5) -.80% IMR amortization (95,7,95) -.7% Employee benefits (5,4,65) -.6% Credits (9,95,780) -0.5% Deferred adjustments (8,494,859) -.88% Other (4,796,94) -6.8% Total $ (69,5,748) -4.6% Federal and foreign income taxes incurred $ 4,774,578 5.% Change in net deferred income taxes (4,890,6) % Total statutory income taxes $ (69,5,748) -4.6% 9.5

41 NOTES TO FINANCIAL STATEMENTS E.. At December, 04, the Company had no tax credit carry forwards.. Income taxes paid in the current and prior years of $60 million are available for recoupment in the event of future tax losses.. The Company had no deposits admitted under Section 660 of the IRS Code. F. The Company files a consolidated federal income tax return including the following entities: Northwestern Mutual Investment Services, LLC NML Real Estate Holdings, LLC and subsidiaries NML Securities Holdings, LLC and subsidiaries Northwestern Mutual MU TLD Registry, LLC Northwestern Mutual Wealth Management Company NM Investment Holdings, LLC Northwestern Mutual Real Estate Investments, LLC Northwestern Mutual Capital, LLC Bradford, Inc. and subsidiaries Mason Street Advisors, LLC NM GP Holdings, LLC and subsidiaries NM Pebble Valley, LLC Northwestern Mutual Registry, LLC Northwestern Long Term Care Ins. Co. The Company collects from or refunds to these subsidiaries their share of consolidated income taxes determined pursuant to written tax-sharing agreements. Allocation is generally based upon separate return calculations with refund of tax available to subsidiaries when carryback to prior years is available, or carryforward credits to subsidiaries for net losses available to offset tax due in subsequent years. Intercompany tax balances are settled quarterly. G. The Company believes it is reasonably possible that the liability related to any federal or foreign tax loss contingencies may significantly increase within the next months. However, an estimate of this increase cannot be made at this time. 0. Information Regarding Parent, Subsidiaries and Affiliates A-C. On December, 04, the Company sold its entire investment in Russell common and preferred stock to a third party. Prior to this sale, the Company was the majority shareholder of Russell, a worldwide provider of investment products and services. The Company s common stock investment in Russell was held in a wholly-owned noninsurance subsidiary and represented 9.6% of Russell s outstanding common stock at December, 0. Upon the sale, the Company s wholly-owned subsidiary reported an after-tax gain of $. billion from the sale of its common stock investment in Russell, which was reported by the Company as an unrealized capital gain in the statements of changes in surplus for the year ended December, 04. At December, 0, the common stock investment in Russell was valued using a practice permitted by the OCI, based on the Company s share of Russell s audited GAAP-basis equity exclusive of any adjustment for unamortized acquisition goodwill in Russell s GAAPbasis financial statements. Under Statement of Statutory Accounting Principle No. 97, Investments in Subsidiary, Controlled and Affiliated Entities, A Replacement of SSAP No. 88 ( SSAP 97 ), the statutory equity method valuation of the Russell investment would be required to be reduced by its share of Russell s GAAP goodwill. If the Company had not received permission for this alternative accounting treatment, surplus as reported in the statements of financial position would have been lower by $795,74,000 at December, 0. Prior to the sale of Russell, the Company held $50 million of perpetual senior preferred stock issued by Russell, paying dividends at a rate of 8.00%. Upon the sale of Russell, the senior preferred stock was retired for consideration equal to the Company s statutory statement value. The Company earned $7 million and $8 million in dividends from Russell senior preferred stock for the years ended December, 04 and 0, respectively. Prior to the sale of Russell, the Company also held $44 million of junior preferred stock, including detachable warrants, issued by Russell and paying dividends at a rate of 0.00%. Upon the sale of Russell, the junior preferred stock was retired for consideration equal to the Company s statutory statement value. The Company exercised the warrants as part of the sale transaction and recorded an after-tax realized capital gain of $7 million for the year ended December, 04. The Company earned $4 million in dividends on Russell junior preferred stock for each of the years ended December, 04 and 0. On December 5, 04, the Company received a $55 million dividend from its wholly owned subsidiary, Northwestern Long Term Care Insurance Company ( NLTC ). The dividend was paid by transferring $97 million of investment securities, primarily comprised of publicly-traded bonds measured at fair value as of the date of the dividend, with the remaining $8 million remitted in cash to the Company. Because NLTC is a wholly-owned subsidiary of the Company, the invested asset transfer qualified as a non-economic transaction under the Statement of Statutory Accounting Principles No. 5 Accounting for and Disclosures about Transactions with Affiliates and Other Related Parties. As of the date of the dividend, the transferred bonds were recorded in the Company s statements of financial position at NLTC s statement value of $70 million. The Company had no other material transactions with related parties other than those involving allocation of operating expenses or federal income taxes during 04 or 0. The Company had no transactions with related parties that involved ½ of % of its admitted assets during 04 or

42 NOTES TO FINANCIAL STATEMENTS D. At December, the Company reported the following amounts due to and from affiliates: Due from affiliates: 04 0 Northwestern Long Term Care Insurance Company $ - $ 4,44,788 Northwestern Mutual Investment Services,4,84,,78 Northwestern Mutual Wealth Management Co.,858,,90,974 NML Real Estate Holdings, LLC,5,884,76,857 NML Securities Holdings, LLC,648,486,68,40 Frank Russell Company -,90,7 NM Pebble Valley, LLC 8,76,50 NM Investment Holdings, LLC 6,6, Northwestern Mutual Capital Ltd. 696,86 880,6 NM GP Holdings, LLC 70,58 67,67 Total due from affiliates $ 7,995,546 $ 4,065, Due to affiliates: Northwestern Long Term Care Insurance Company $ 5,447,40 $ - Northwestern Mutual Capital, LLC 8,087,458 8,09,990 Mason Street Advisors 5,890,085 5,67,94 Northwestern Mutual Real Estate Investments, LLC 0,5,959 8,,567 NML Securities Holdings, LLC - - Total due to affiliates $ 59,650,9 $,689,48 Intercompany balances are settled in cash, generally within 0 days of the respective reporting date. E. The Company has not participated in any guarantees or undertakings for the benefit of affiliates or related parties that have resulted in material contingent exposure of the Company s or any related party s assets or liabilities other than those disclosed in note 4. F. The Company has no material management or service contracts or cost-sharing arrangements with related parties. G. There are no common control relationships between the Company and another entity that could significantly affect the operating results or financial position of the Company. H. The Company has no upstream intermediate entity or ultimate parent. I. The Company had no investments in subsidiaries, controlled and affiliated companies that exceed 0% of the admitted assets of the Company at December, 04 or 0. J. The Company has reported no impairment losses with respect to its investment in subsidiaries, controlled or affiliated companies during 04 or 0. K. The Company has no foreign insurance subsidiaries. L. The Company utilizes the look-through approach in valuing its investment in NM GP Holdings, LLC ( NM GP ) at $4 million. The financial statements of NM GP are not audited and the Company has limited the value of its investment to the sum of audited balances and the value contained in the audited financial statements, including adjustments required by SSAP No. 97 of SCA entities and/or non-sca SSAP No. 48 entities owned by NM GP and valued in accordance with paragraphs through 4 of SSAP No. 97. All liabilities, commitments, contingencies, guarantees or obligations of NM GP, which are required to be recorded under applicable accounting guidance, are reflected in the Company s determination of the carrying value of its investment in NM GP, if not already recorded in the financial statements of NM GP.. Debt A. Not applicable B. The Company had no agreements with the Federal Home Loan Bank during 04 or 0.. Retirement Plans, Deferred Compensation, Post-Employment Benefits and Compensated Absences and Other Post-Retirement Benefit Plans A. Defined Benefit Plans The Company provides defined pension benefits for all eligible employees and financial representatives. This includes sponsorship of noncontributory defined benefit pension plans that are qualified under the terms of the Employee Retirement Income Security Act ( ERISA ), as well as nonqualified plans that provide benefits to certain participants in excess of limits set by ERISA for the qualified plans. The Company's funding policy for the qualified plans is to make annual contributions that are no less than the minimum amount needed to comply with the requirements of ERISA and no greater than the maximum amount deductible for federal income tax purposes. The Company made no contributions to the qualified retirement plans during either of the years ended December, 04 and 0 and does not expect to make a contribution to the plans during

43 NOTES TO FINANCIAL STATEMENTS In addition to defined pension benefits, the Company provides certain health care and life insurance benefits ( postretirement benefits ) to retired employees, retired financial representatives and their eligible dependents. The Company pays the entire cost of retiree life insurance coverage, while retirees pay premiums to offset a portion of the cost of the medical plan.. Change in Benefit Obligation a. Pension Benefits Overfunded Underfunded Benefit obligation at beginning of year $,965,0,49 $,60,4,8 $ 697,7,000 $ 685,7,00. Service cost 66,644,76 80,80,8 6,90,749 50,,688. Interest cost 47,76,90,707,6,059,968 8,45,57 4. Contribution by plan participants Actuarial gain (loss) 70,89,409 (57,889,598) 80,95,940 (9,649,669) 6. Foreign currency exchange rate changes Benefits paid (90,598,68) (85,75,5) (0,567,00) (9,6,55) 8. Plan amendments - (54,95,9) - (7,,07) 9. Business combinations, divestitures, curtailments, settlement and special termination benefits Benefit obligation at end of year $,79,40,87 $,965,0,49 $ 87,090,656 $ 697,7,000 b. Postretirement Benefits Overfunded Underfunded Benefit obligation at beginning of year $ - $ - $ 686,564,775 $ 57,04,005. Service cost - - 9,5,7 66,98,795. Interest cost - - 0,948,060 0,05,98 4. Contribution by plan participants Actuarial gain (loss) - -,045,54 (99,008,08) 6. Foreign currency exchange rate changes Benefits paid - - (,657,484) (,77,809) 8. Plan amendments (5,775,07) 9. Business combinations, divestitures, curtailments, settlement and special termination benefits Benefit obligation at end of year $ - $ - $ 85,4,0 $ 686,564,775 c. Not applicable. Change in plan assets Pension Benefits Postretirement Benefits a. Fair value of plan assets at beginning of year $,9,587,6 $,545,48,90 $ 74,47,99 $ 70,547,99 b. Actual return on plan assets 4,488,748 45,88,74 8,09,855 9,096,790 c. Foreign currency exchange rate changes d. Reporting entity contribution e. Plan participants'contribution f. Benefits paid (94,7,99) (85,778,50) (5,56,98) (5,06,050) g. Business combinations, divestitures and settlements h. Fair value of plan assets at end of year $ 4,5,6,475 $,9,587,6 $ 77,90,8 $ 74,47,99 9.8

44 . Funded status NOTES TO FINANCIAL STATEMENTS Pension Benefits Postretirement Benefits Overfunded a. Assets (nonadmitted). Prepaid benefit costs $ 96,788,997 $ 888,447,8 $ - $ -. Overfunded plan assets (477,89,49) 58,96, Total assets (nonadmitted) 458,959, ,8, Underfunded b. Liabilities recognized. Accrued benefit costs 65,74, ,90,4 85,4,945 44,80,76. Liability for pension benefits 0,65,68 89,7,0 85,56,095 87,446,587. Total liabilities recognized 87,090, ,66, ,70,040 4,48, c. Unrecognized liabilities -,067,558 77,9,70 79,878,54 Total underfunded pension and postretirement obligations of $87,090,655 and $670,70,040, respectively, are reported in the statement of financial position as Aggregate Write-ins for Liabilities. 4. Components of net periodic benefit cost Pension Benefits Postretirement Benefits Postemployment & Compensated Absence Benefits a. Service cost $ 9,575,5 $ 65,606,7 $ 9,5,7 $ 7,07,7 $ - b. Interest cost 79,8,888 6,,85 0,948,060 0,05,98 $ - c. Expected return on plan assets (5,5,056) (9,95,970) (4,65,600) (4,650,8) $ - d. Transition asset of obligation (7,09,748) (70,646,7) - - $ - e. Gains and losses 4,90,0 9,886, ,878 5,05,89 $ - f. Prior service cost or credit (4,7,0) (0,559,006),80,04,40,994 $ - g. Gain or loss recognized due to a settlement or curtailment - 0,94, $ - h. Total net periodic benefit cost $ 5,79,495 $ 09,58,864 $ 58,79,859 $ 70,90,40 $ - 5. Amounts in unassigned funds (surplus) recognized as components of net periodic benefit cost Pension Benefits Postretirement Benefits a. Items not yet recognized as a component of net periodic cost - prior year $ (0,6,76) $ - $ (87,446,586) $ - b. Net transition asset or obligation recognized (,067,558) (,097,8,967) (0,559,54) (47,674,74) c. Net prior service cost or credit arising during the period - 84,890,588 - (74,85,8) d. Net prior service cost or credit recognized (4,7,0) (0,559,006),80,04,40,994 e. Net gain and loss arising during the period (6,48,90) 600,67,57 (07,90,6) 6,608,0 f. Net gain and loss recognized 7,800,46 9,886, ,878 5,05,89 g. Items not yet recognized as a component of net periodic cost - current year $ (679,95,0) $ (0,6,76) $ (85,56,094) $ (87,446,586) 9.9

45 NOTES TO FINANCIAL STATEMENTS 6. Amounts in unassigned funds (surplus) expected to be recognized in the next fiscal year as components of net periodic benefit cost Pension Benefits Postretirement Benefits a. Net transition asset of obligation $ (4,5,79) $ (,988,0) $ - $ - b. Net prior service cost or credit (4,7,0) (4,7,0),80,04,80,04 c. Net recognized gains and losses 65,8,08,85,68 5,59,860,75, 7. Amounts in unassigned funds (surplus) that have not been recognized as components of net periodic benefit cost Pension Benefits Postretirement Benefits a. Net transition asset of obligation $ 87,058,877 $ 404,68,65 $ - $ - b. Net prior service cost or credit 9,94,05 0,989,805 (09,04,6) (9,4,8) c. Net recognized gains and losses (,59,97,4) (745,495,56) (76,57,47),697,45 8. The assumptions used in estimating defined benefit pension and postretirement benefit projected benefit obligations and their net benefit cost at December, 04 and 0 and for the years then ended were as follows: 04 0 Weighted-average assumptions used to determine net periodic benefit cost as of December a. Weighted-average discount rate 5.00% 4.00% b. Expected long-term rate of return on plan assets 6.50% 6.75% c. Rate of compensation increase.75%.75% Weighted-average assumptions used to determine projected benefit obligation as of December a. Weighted-average discount rate 4.00% 5.00% b. Rate of compensation increase.75%.75% 9. The amount of the accumulated benefit obligation for defined benefit pension plans was $4,06,56,874 at December, 04 and $,9,979,685 at December, The PBO for postretirement benefits at December, 04 assumed an annual increase in future retiree medical costs of 7.5%, grading down to 5.0% over five years and remaining level thereafter. At December, 0 the comparable assumption was for an annual increase in future retiree medical costs of 6.5% grading down to 5% over three years and remaining level thereafter.. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects: % % Increase Decrease a. Effect on total of service and interest cost $,06,407 $ (,06,407) components b. Effect on postretirement benefit obligation $ 49,8,54 $ (49,8,54). The expected benefit payments by the defined benefit plans and the postretirement benefit plans for the years 05 through 04 are as follows: Year(s) Amount a. 05 $ 56,780,57 b. 06 7,7,06 c. 07 9,68,85 d. 08,440,58 e. 09 5,489,406 f. 00 through 04 $,595,9,79,567,8,950. The Company does not expect to make a contribution to its qualified employee retirement plan during Not applicable 5. Not applicable 6. Not applicable 7. Not Applicable 8. During 04, the Company adjusted certain mortality assumptions that impacted the calculation of the benefit obligations of its pension and postretirement benefit plans. During 0, the Company s Board of Trustees approved certain prospective amendments to defined pension benefits and postretirement benefits that became effective on January, 04. These changes included an 9.0

46 NOTES TO FINANCIAL STATEMENTS amendment of the benefit formula for both the qualified employee defined benefit pension plan and a related nonqualified employee defined benefit pension plan to a cash balance formula. The accrued benefits for each participant as of December, 0 were frozen and remain available to participants upon retirement. In addition, a second nonqualified employee defined benefit pension plan was terminated, with accrued benefits as of January, 04 also available to eligible participants upon retirement. Beginning in 04, the Company provides eligible participants with cash balance credits based on each participant s age and years of service. Participants will also receive investment earnings on their cash balances based on market interest rates and subject to a minimum crediting rate. These amendments also included a change to benefits provided to most participants in the employee postretirement medical plan that will limit the Company s exposure to a maximum % annual medical inflation rate for benefits. Any annual increase in medical costs in excess of % will be passed on to the plan s participants in the form of increased plan premiums beginning January, 09. This amendment to the postretirement medical plan did not impact any plan participant age 65 or older on January, 04. Postretirement medical plan changes also eliminated coverage under the plan for employees hired after December, 0. During 0, the Company announced certain prospective amendments to the defined pension and postretirement benefits to be provided to financial representatives for service beginning on January, 04. These changes included the elimination of cost of living adjustments for financial representatives enrolled in the plan after December, 0. In addition, the postretirement medical plan for financial representatives was amended to limit the Company s exposure to a maximum % annual medical inflation rate for benefits. Any annual increase in medical costs in excess of % will be passed on to participants in the form of increased plan premiums beginning January, 09. This amendment to the postretirement medical plan did not impact any plan participant age 65 or older on January, 04. Postretirement medical plan changes for financial representatives also eliminated coverage under the plan for financial representatives that enter into contracts with the Company after December, Not applicable 0. See note A for information relating to the Company s defined benefit pension and postretirement benefit plans funded status and note A5 for benefit plan related surplus impacts during 04 and 0.. On January, 0, the recognition of benefits for non-vested participants and unrecognized items created additional net defined benefit pension and postretirement plan liabilities of $,9 million and $477 million, respectively. However, SSAPs 9 and 0 permitted the Company to recognize these liabilities and the corresponding decrease in surplus over a period of up to ten years, subject to minimum recognition requirements. The Company elected to utilize this deferral option as of January, 0, at which time the related transition liability was $68 million. The table below summarizes the net surplus impact related to the adoption of these new accounting standards on January, 0, excluding any deferred tax impact. Pension Postretirement Benefits Benefits Total Minimum surplus reduction recognized: 0% of calculated surplus impact $ 48,9,6 $ 47,674,74 $ 96,585,979 Annual amortization of unrecognized items 797,60,44-797,60,44 Difference between unfunded ABO and accrued benefit cost 84,05,95-84,05,95 Surplus reduction recognized at adoption,00,57,60 47,674,74,078,,7 Reversal of: Additional minimum liability 7,067,99-7,067,99 Nonadmitted asset relating to funded plans 880,9,49-880,9,49 Net reduction to surplus at adoption $ 76,557,88 $ 47,674,74 $ 4,,0 Prior to the adoption of SSAPs 9 and 0, an additional minimum liability ( AML ) was required if a plan s ABO exceeded plan assets or related financial statement liabilities. The AML is no longer required under the new accounting standards. The impact of the elimination of the AML was reported as a direct increase to surplus in the statements of changes in surplus for the year ended December, 0. Any net pension assets for funded plans are nonadmitted and are thereby excluded from assets and surplus in the statements of financial position. Pension assets that were nonadmitted prior to the adoption of SSAPs 9 and 0 were included in the initial surplus impact upon adoption. At December, 0, the net reduction to surplus of $4 million was reported as a change in accounting principle in the statements of changes in surplus. The surplus deferral, subsequent to the adoption of SSAP 9 and 0 (i.e. transition liability), was as follows: Recognized Surplus Impact at Transition & Remaining Transition Liability Pension & Postretirement Benefits Prior Service Cost Unrealized Experience Losses Initial Transition Asset Total Transition Liability, //0 $,695,70,58 $ 70,407, $,800,09, $ (474,84,996) Amount Recognized in Surplus, //0 (,078,,7) Remaining Transition Liability $ 67,488,985 SSAPs 9 and 0 require minimum annual amortization and, in certain circumstances, additional recognition of the transition liability into surplus. For the years ended December, 04 and 0, transition liabilities of $,66,9 million and $406,54,90 million, respectively, were reported as direct reductions to surplus in the financial statements. The remaining unamortized transition liability was $77,9,70 million and 9.

47 NOTES TO FINANCIAL STATEMENTS $0,946,08 million at December, 04 and 0, respectively, and represents the total of all remaining unrecognized items. This remaining transition liability is expected to be amortized as annual direct reductions to surplus of approximately $48 million and $9 million during 05 and 06, respectively. It is expected that the transition liability will be fully amortized by December, 06. B. Plan Assets Plan assets consist of a share of a group annuity separate account ( GASA ) issued by the Company, which primarily invests in a diversified portfolio of public and private common stocks and corporate, government and mortgage-backed debt securities. The overall investment objective of the plans is to maximize long-term total rate of return, consistent with prudent standards for investment and asset/liability risk management and in accordance with ERISA requirements. Plan investments are managed with a long-term perspective and for the sole benefit of the plans participants. Plan asset allocations are rebalanced regularly to maintain holdings within desired asset allocation ranges and to reposition the portfolio based upon perceived market opportunities and risks. Diversification, both by and within asset classes, is a primary risk management consideration. Assets are invested across various asset classes, sectors, industries and geographies. The measurement date for plan assets was December of the respective period with the fair value of plan assets primarily based on quoted market prices. The target asset allocations and the actual allocation of the plans investments on a fair value basis at December, 04 and 0 were as follows: Target Actual Allocation Allocation Debt securities 49% 50% 50% 49% Equity securities 50% 49% 46% 45% Other % % 4% 6% Total assets 00% 00% 00% 00% At each of December, 04 and 0, other investments are comprised of cash and short-term investments. C. Fair Value of Plan Assets. Fair value measurements of defined benefit pension and postretirement benefit plan assets at reporting date Description for each class of plan assets - //04 (Level ) (Level ) (Level ) Total Bonds $ 44,0,7 $,908,76, $ 7,744,655 $,6,484,04 Common and preferred stock,50,65,8 5,66,698 0,0,84,58,0,857 Cash and short term securities 9,98,808 56,54, - 66,505,90 Other assets/liabilities (77,74),7,8 76,8,860 07,54,408 Total Plan Assets $,756,579,069 $,0,944,864 $ 70,9,56 $ 4,8,75,89 Description for each class of plan assets - //0 (Level ) (Level ) (Level ) Total Bonds $ 4,9,09 $,678,576,094 $ 7,5,07 $,986,7,75 Common and preferred stock,54,498,6 6,9,55 9,96,90,570,57,78 Cash and short term securities 4,559,6,8,40-47,70,50 Other assets/liabilities (7,68,),860,005 78,7,6 8,86,507 Total Plan Assets $,776,008,76 $,89,86,794 $ 8,69,995 $,987,05,065. Fair value measurements in Level of the fair value hierarchy Description for each class of plan assets Beginning Balance at 0/0/04 Transfers into Level Transfers out of Level Return on Assets Still Held Return on Assets Sold Purchases Issuances Sales Settlements Ending Balance at //04 Bonds $ 7,509,74 $ 9,90,547 $ (5,78,556) $ (5,79,484) $,8,07 $ 7,88,68 $ - $ (54,88) $ (7,750,06) $ 7,744,655 Common and preferred stock 9,9,078 8,67 - (4,504,45) 5,6,60,986, - (4,08,6),56,95 0,0,84 Other assets/liabilities 78,,,666,6 (67,790) (,07,) 8,55,840 44,7,586 - (7,54,9) - 76,8,860 Total Plan Assets $ 8,56,56 $,698,50 $ (6,05,46) $ (,757,059) $ 45,50,507 $ 74,06,499 $ - $ (97,887,55) $ (6,59,06) $ 70,9,56 Description for each class of plan assets Beginning Balance at 0/0/0 Transfers into Level Transfers out of Level Return on Assets Still Held Return on Assets Sold Purchases Issuances Sales Settlements Ending Balance at //0 Bonds $ 7,747,94 $ 4,94,869 $ (4,9,008) $,67,97 $ 47,08 $ 5,965,98 $ - $ (,5,877) $ (7,8,595) $ 7,509,74 Common and preferred stock 6,640,799,809,487 (8,979) 4,997,85 (495,47) 7,565,595 - (447,96) - 9,9,078 Other assets/liabilities 44,94, ,65,07 9,900,7 44,74,669 - (47,78,78) - 78,, Total Plan Assets $ 89,,88 $ 45,04,56 $ (5,05,987) $,87,8 $ 9,65,604 $ 67,906,46 $ - $ (5,59,7) $ (7,8,595) $ 8,56,56. The inputs and techniques used to measure the fair value of plan assets were as follows: The Company s estimation of fair value for plan assets uses a hierarchy that, where possible, makes use of quoted market prices from active and transparent markets for assets that are identical to those being valued, typically obtained from independent pricing services ( level ). In absence of quoted market prices for identical assets, fair value is estimated by these pricing services using relevant and observable market-based inputs for substantially similar securities ( level ). Plan assets for which no quoted market prices or observable inputs are available are generally valued using internally-developed pricing models or indicative (i.e., non-binding) quotes from independent securities brokers ( level ). The Company actively monitors fair value estimates received from independent pricing services at each financial reporting date, including analysis of valuation changes for individual securities compared to overall market trends and validation on an exception basis with internally-developed pricing models. The Company also performs 9.

48 NOTES TO FINANCIAL STATEMENTS periodic reviews of the information sources, inputs and methods used by its independent pricing services, including an evaluation of their control processes. Where necessary, the Company will challenge third-party valuations or methods and require more observable inputs or different methodologies. Bonds Bonds classified as level are generally limited to U.S. Treasury securities. Most bonds, including U.S. and foreign public and private corporate bonds, municipal bonds and structured securities, are classified as level financial instruments and are valued based on prices obtained from independent pricing services or internally-developed pricing models using observable inputs. Typical market-observable inputs include benchmark yields, reported trades, issuer spreads, bids, offers, benchmark securities, estimated cash flows and prepayment speeds. Level bonds are typically privately-placed and relatively illiquid, with fair value based on non-binding broker quotes or internally-developed pricing models utilizing unobservable inputs. Common and preferred stock Common and preferred stocks classified as level are limited to those actively traded on a U.S. or foreign stock exchange. Level securities are stocks for which market quotes are available but which are not considered to be actively traded. Common and preferred stocks classified as level are generally privately-placed with fair value based on internally-developed pricing models utilizing unobservable inputs. Cash and Short-term investments Cash and short-term investments include cash deposit balances, money market funds, short-term commercial paper and other highly-liquid debt instruments, for which the Company considers amortized cost to approximate fair value. Other assets/liabilities Other assets and liabilities include investments in limited liability partnerships, derivative assets and liabilities and amounts due and payable on invested assets. Plan assets classified as level financial instruments are primarily securities partnership investments that are valued based on the Company s underlying equity in the partnerships which the Company considers to approximate fair value. The valuation methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain plan assets could result in a different fair value measurement at the reporting date. D. The expected long-term rate of return on plan assets is estimated by considering historical financial market performance, third-party capital market expectations, including those of the plans investment consultant, and the long-term target asset mix. E. Defined Contribution Plan The Company also sponsors a contributory 40(k) plan for eligible employees, for which the Company provides a matching contribution, and a noncontributory defined contribution plan for financial representatives. In addition, the Company sponsors nonqualified plans that provide benefits to certain participants in excess of limits set by ERISA for qualified defined contribution plans. For the years ended December, 04 and 0 the Company expensed total contributions to these plans of $4,50,059 and $5,400,890, respectively. F. Multi-employer Plans None G Consolidated/Holding Company Plans None H. Post-employment Benefits and Compensated Absences Obligations for post-employment benefits and compensated absences are accrued in accordance with SSAP. I. Impact of Medicare Modernization Act on Postretirement Benefits (INT 04-7) The Company s gross benefit payments for 04 were $5,650,604 including the prescription drug benefit and estimates future payments to be $5,000,000 annually. The Company s estimated subsidy related to the Medicare Prescription Drug, Improvement and Modernization Act of 00 was $,99,0 for 04 and estimates future subsidies to be $,000,000 annually.. Capital and Surplus, Shareholders Dividend Restrictions and Quasi-Reorganizations. The Company is organized as a mutual company and has no capital stock.. The Company has no preferred stock.. There are no stock dividends. 4. There are no stock dividends. 5. There are no stock dividends. 6. There are no restrictions on unassigned funds. 7. There have been no advances to surplus. 8. The Company held no stock for special purposes. 9. There were no changes in the balances of any special surplus funds during the periods presented. 0. The portion of unassigned funds (surplus) represented or reduced by cumulative unrealized gains and (losses) is $,9,677,86. 9.

49 NOTES TO FINANCIAL STATEMENTS. The Company issued the following surplus debenture: Date Issued Interest Rate Par Value (Face Amount of Notes) Carrying Value of Note Interest And/Or Principal Paid Current Year Total Interest And/Or Principal Paid Unapproved Interest And/Or Principal Date of Maturity /6/ % $,750,000,000 $,750,000,000 $ 06,0,500 $ 478,680,67 $0 /0/040 The surplus notes ( Notes ) are unsecured and subordinated to all present and future indebtedness, policy claims and other creditor claims of the Company. The Notes do not repay principal prior to maturity and principal payment at maturity is subject to the prior approval of the OCI. The Notes are not redeemable at the option of any note holder. The Notes are redeemable, in whole or in part, at the option of the Company at any time, subject to the prior approval of the OCI, at a make whole redemption price equal to the greater of the principal amount of the Notes to be redeemed or the sum of the present value of the remaining scheduled payments of principal and interest on the Notes to be redeemed, excluding accrued interest as of the date on which the Notes are to be redeemed, discounted on a semi-annual basis at a defined U.S. Treasury rate plus 0.5%. No affiliates of the Company hold any portion of the Notes. The Notes are generally held for investors of record at the Depositary Trust Company by bank custodians on behalf of investors. The largest holder of the Notes was Nippon Life Insurance Company of Japan, which held $50 million in principal at December, 04.. The Company has not been involved in any quasi-reorganization.. The Company has not been involved in any quasi-reorganization. 4. Liabilities, Contingencies and Assessments A. Contingent Commitments ) On April 9, 998, the Company and NLTC entered into a capital support agreement and guarantee of benefits. The terms of the agreement require the Company to maintain the capital and surplus (as defined) of NLTC at a minimum level based upon a formula applied to the NLTC s earned premium and policy benefit reserves, or 50% of NLTC s action level of risk-based capital ( RBC ) as prescribed by the NAIC, whichever is lower. This obligation to maintain capital and surplus may be terminated upon the Company having contributed an aggregate of $400 million to NLTC. In addition, the Company guarantees to the policyholders of NLTC the ability of NLTC to pay all policy benefits due and owing pursuant to contracts of insurance sold by NLTC during the term of the agreement. During 0, the capital support agreement was amended to increase the aggregate limitation of capital contributions from the Company from $400 million to $800 million and extend the agreement through December, 07. The Company has contributed $640 million to NLTC under this agreement through December, 0. During 04, the Company received a $55 million dividend from NLTC, which was considered a return-of-capital distribution, thereby decreasing contributed capital to $5 million at December, 04. See Note 0 for more information regarding the dividend paid to the Company during 04. In addition, the Company makes commitments to fund private equity investments, real estate, mortgage loans or other investments. These forward commitments aggregated to $5.5 billion at December, 04 and were extended at market rates and terms. ) The following tables provide additional information concerning the types of guarantees extended by the Company at December, 04. Nature and circumstances of guarantee and key attributes, including date and duration of agreement Liability recognition of guarantee Ultimate financial statement impact if action under the guarantee is required Maximum potential amount of future Current status of payments payment or performace (undiscounted) the risk of guarantee. Also guarantor coud be provide additional required to make under discussion as warranted the guarantee Guarantees of future minimum compensation - financial representatives $,57,750 Commissions and operating expenses $ 8,8,5 Risk of performance is remote Guarantees of operating leases and loans - financial representatives,67,490 Commissions and operating expenses 87,69,88 Risk of performance is remote Guarantees of obligations of affiliates - Increase equity in investment 684,954,854 Risk of performance is remote Guarantees issued on behalf of wholly-owned subsidiaries - Increase equity in investment Totals $ 5,00,4 $,00,786,60 - Risk of performance is remote 9.4

50 NOTES TO FINANCIAL STATEMENTS ) a. Aggregate Maximum Potential of Future Payments of All Guarantees (undiscounted) the guarantor coud be required to make under the guarantees $,00,786,60 b. Current Liability Recognized in F/S. Noncontingent Liabilities 5,00,4. Contingent Liabilities - c. Ultimate Financial Statement Impact if action under the guarantee is required. Investments in SCA 684,954,854. Joint Venture -. Dividends to Stockholders - 4. Expense 55,8, Other - 6. Total,00,786,60 B. Assessments ) As of December, 04, the Company received the annual notification from the National Organization of Life & Health Insurance Guaranty Associations ( NOLHGA ) of the insolvency of various insurance companies. Based on these estimates, it is estimated that these insolvencies may result in retrospective-premium-based guaranty fund assessments against the Company of up to $54,996,66 at December, 04, an amount which is reported as a liability in the financial statements at December, 04. Premium tax offsets related to the potential assessments are expected to be approximately $55,69,58 at December, 04, which is reported as an asset in the financial statements. ) a. Assets recognized from paid and accrued premium tax offsets and policy surcharges prior year-end $ 50,96,409 b. Decreases current year: Policy surcharges collected - Policy surcharges charged off - Premium tax offset applied,94,45 c. Increases current year Policy surcharges collected - Policy surcharges charged off - Premium tax offset applied,8,667 d. Assets recognized from paid and accrued premium tax offsets and policy surcharges current year-end $ 55,69,58 C. Gain Contingencies None D. Claims Related to Extra Contractual Obligation and Bad Faith Losses Stemming from Lawsuits None E. Joint and Several Liabilities None F. All Other Contingencies The Company is engaged in various legal actions in the course of its investment and insurance operations. The status of these legal actions is actively monitored by management. If management believed, based on available information, that an adverse outcome upon resolution of a given legal action was probable and the amount of that adverse outcome was reasonable to estimate, a loss would be recognized and a related liability recorded. Legal actions are subject to inherent uncertainties, and future events could change management s assessment of the probability or estimated amount of potential losses from pending or threatened legal actions. Based on available information, it is the opinion of management that the ultimate resolution of pending or threatened legal actions, both individually and in the aggregate, will not result in losses having a material effect on the Company s financial position at December, Leases A. The Company does not have any material lease obligations. B. Leasing is not a significant part of the Company s business. 6. Information About Financial Instruments With Off-Balance Sheet Risk and Financial Instruments With Concentrations of Credit Risk The Company did not hold any financial instruments with off-balance sheet risk at either December, 04 or 0. The Company s bond portfolio includes investments in structured securities, with a significant concentration in residential mortgage-backed securities ( RMBS ) issued by government agencies. The statement value of structured securities held were $5 billion and $4 billion at December, 04 and 0, respectively. Of these amounts 76% 9.5

51 NOTES TO FINANCIAL STATEMENTS and 74%, respectively, were RMBS issued by government agencies. See note 8 regarding the Company s use of derivatives. 7. Sale, Transfer and Servicing of Financial Assets and Extinguishments of Liabilities A. Transfers of Receivables Reported as Sales The Company did not transfer any receivables during 04 or 0. B. Transfer and Servicing of Financial Assets. See note 5E regarding the Company s securities lending practices. -6. The Company did not enter into any asset transfer and servicing transactions during 04 or The Company entered into a reverse repurchase agreement (with an unaffiliated third party) that allows for the purchase and resale of securities, for a specified price, at a later date. Under this agreement, the Company receives investment grade securities collateral held with a third party custodian, having a fair value at least equal to 0% of the purchase price. The collateral is not recorded in the statements of financial position, however, if the counterparty defaults, the Company would exercise its right to sell this collateral. At December, 04, the statement and fair values of the securities held in connection with the reverse repurchase agreement were $5 million and $5 million, respectively. These securities had average maturities of less than thirty days and are included in cash and cash equivalents in the statement of financial position at December, 04. C. Wash Sales ) In the course of the Company s asset management, securities are occasionally sold and reacquired within 0 days of the sale date to enhance the Company s yield on its investment portfolio. ) The details by NAIC designation or below of securities sold during the year ended December, 04 and reacquired within 0 days of the sale date are: Book Value Cost of NAIC Number of of Securities Securities Description Designation Transactions Sold Repurchased Gain/(Loss) Bonds NAIC Bonds NAIC 4 4 8,474,07 5,8,079,5 Bonds NAIC 5 7 8,9,767,,8 97,5 Bonds NAIC Preferred stock NAIC Preferred stock NAIC Preferred stock NAIC Preferred stock NAIC Gain or Loss to the Reporting Entity from Uninsured Plans and the Uninsured Portion of Partially Insured Plans The Company did not serve as an administrative services provider to any uninsured plans during 04 or Direct Premium Written/Produced by Managing General Agents/Third Party Administrators The Company did not have any direct premium written by managing general agents/third party administrators during 04 or Fair Value Measurements A. The Company s estimation of fair value for financial instruments uses a hierarchy that, where possible, makes use of quoted market prices from active and transparent markets for assets that are identical to those being valued, typically obtained from independent pricing services ( level ). In absence of quoted market prices for identical assets, fair value is estimated by these pricing services using relevant and observable market-based inputs for substantially similar securities ( level ). Financial instruments for which no quoted market prices or observable inputs are available are generally valued using internally-developed pricing models or indicative (i.e., non-binding) quotes from independent securities brokers ( level ). The Company actively monitors fair value estimates received from independent pricing services at each financial reporting date, including analysis of valuation changes for individual securities compared to overall market trends and validation on an exception basis with internally-developed pricing models. The Company also performs periodic reviews of the information sources, inputs and methods used by its independent pricing services, including an evaluation of their control processes. Where necessary, the Company will challenge third-party valuations or methods and require more observable inputs or different methodologies. The following represents a summary of the significant valuations techniques, methods and assumptions used to determine the fair value for assets and liabilities. Bonds Bonds classified as level financial instruments are generally limited to U.S. Treasury securities. Most bonds, including U.S. and foreign public and private corporate bonds, municipal bonds and structured securities, are classified as level financial instruments and are valued based on prices obtained from independent pricing services or internally-developed pricing models using observable inputs. Typical market-observable inputs include benchmark yields, reported trades, issuer spreads, bids, offers, benchmark securities, estimated cash flows and prepayment speeds. Level bonds are typically privately-placed and relatively illiquid, with fair value based on non-binding broker quotes or internally-developed pricing models utilizing unobservable inputs. See Note and Note 5 for more information regarding the Company s investments in bonds. 9.6

52 NOTES TO FINANCIAL STATEMENTS Mortgage Loans Mortgage loans consist solely of commercial mortgage loans underwritten and originated by the Company. Fair value of these loans is estimated using a discounted cash flow approach based on market interest rates for commercial mortgage debt with comparable credit risk and maturity. See Note and Note 5 more information regarding the Company s investments in mortgage loans. Policy Loans See Note for information regarding policy loans, for which the Company considers the unpaid principal balance to approximate fair value. Common and Preferred Stock Common and preferred stocks classified as level financial instruments are limited to those actively traded on a U.S. or foreign stock exchange. Level securities are stocks for which market quotes are available but which are not considered to be actively traded. Common and preferred stocks classified as level are generally privatelyplaced with fair value based on internally-developed pricing models utilizing unobservable inputs. See Note for more information regarding the Company s investments in common and preferred stocks. Derivative Instruments The Company s derivative assets and liabilities generally represent those traded in over-the-counter markets for which fair value is estimated using industry-standard models with market-observable inputs such as swap yield curves, London Interbank Offered Rate ( LIBOR ) basis curves, foreign currency spot rates, foreign currency basis curves, option volatilities and credit spreads. Cash and Short-term Investments Cash and short-term investments include cash deposit balances, money market funds, short-term commercial paper and other highly-liquid debt instruments, for which the Company considers amortized cost to approximate fair value. Separate Account Assets and Liabilities See Note 4 for information regarding the Company s separate accounts, for which fair value is based primarily on quoted market prices for the related common stocks, preferred stocks, bonds, derivative instruments and other investments. Separate account assets classified as level financial instruments are primarily securities partnership investments that are valued based on the Company s underlying equity in the partnerships which the Company considers to approximate fair value. General Account Insurance Reserves The Company s general account insurance liabilities defined as financial instruments under the Statement of Statutory Accounting Principles No Fair Value Measurements ( SSAP 00 ) are limited to investment-type products such as fixed-rate annuity policies, supplementary contracts without life contingencies and amounts left on deposit. The fair value of investment-type insurance reserves is estimated based on future cash flows discounted at market interest rates for similar instruments with comparable maturities. Securities Lending Liabilities See Note 5 for information regarding securities lending activity, for which the Company considers the liability to return collateral to approximate fair value of the collateral originally received. Assets and Liabilities Reported at Fair Value The following tables summarize assets and liabilities measured and reported at fair value in the financial statements at December, 04.. Fair Value Measurements at Reporting Date Level Level Level Description Total a. Assets at fair value Bonds General account common stock Industrial and miscellaneous $,944,,79 $ - $ 46,875,95 $,8,97,680 Mutual funds 6,46, ,46,59 General account preferred stock Hybrid Securities - 57,600-57,600 Industrial and miscellaneous - - 5,84,7 5,84,7 General account bonds Industrial and miscellaneous - 4,06,77-4,06,77 General account derivative assets - 58,4,606-58,4,606 Separate account assets 4,46,78,979,,066,479 7,0,594 7,055,809,05 Total assets at fair value $ 7,4,97,99 $,94,,06 $ 85,7,76 $ 0,64,4, b. Liabilities at fair value General account derivative liabilities $ - $,50,04 $ - $,50,04 Total liabilities at fair value $ - $,50,04 $ - $,50,04 9.7

53 NOTES TO FINANCIAL STATEMENTS. Fair Value Measurements in (Level ) of the Fair Value Hierarchy Total gains and Total gains and Beginning Balance Transfers into Level Transfers out of (losses) included in (losses) included in Ending Balance at Description at //04 Level Net Income Surplus Purchases Issuances Sales Settlements //04 General account common stock Industrial and miscellaneous $ 58,65,40 $ 9,00 $ - $ 8,75,98 $,4,87 $,86,99 $ - $ (96,46,8) $ - $ 46,875,95 General account preferred stock Industrial and miscellaneous,079,70 - (5,48,067) -,679,406 5,65,60 - (4,84,) (4,0,40) 5,84,7 General account bonds Industrial and miscellaneous 7,47,76 - (,46,69),48,970, (,48) (7,097,679) - Separate account assets 84,876,644,786,487 (6,097,86) 45,490,05 (,89,08) 74,66,80 - (98,6,97) (6,79,05) 7,0,594 Total $ 995,08,475 $,805,497 $ (4,59,548) $ 7,767,599 $ 5,774,699 $ 9,69,80 $ - $ (99,84,79) $ (8,000,97) $ 85,7,76. The Company may reclassify assets reported at fair value between levels of the SSAP 00 fair value hierarchy if appropriate based on changes in the quality of valuation inputs available during a reporting period. There were no material asset transfers between Level and Level or between Level and Level during the years ended December, 04 or The Company s investments in Level securities generally represent the value of bonds held in separate accounts for the benefit of the Company s benefit plans. The fair values were generally based on independent pricing services or internally developed pricing models based on observable market data. The Company s investments in Level securities generally represent the value of private equity securities with fair values based on internally developed pricing models utilizing inputs such as public company comparables, sponsor values and discounted cash flows and securities partnership investments (held within the separate accounts) that are valued at the Company s underlying equity in the partnerships. Changes in the value of these investments are offset by changes in separate account liabilities and have no impact on the Company s surplus or net income. There have been no material changes in the valuation methodologies used at December, Derivatives measured and reported at fair value at December, 04 are as follows: Level Level Level Description Total a. Derivative assets at fair value Equity total return swaps $ - $ - $ Fixed income futures Foreign currency forwards Interest rate floors Swaptions Total assets at fair value $ - $ 59 $ - $ 59 b. Derivative liabilities at fair value Credit default swaps $ - () $ - $ () Foreign currency forwards - (4) - (4) Interest rate swaps - (5) - (5) Equity total return swaps - () - () Total liabilities at fair value $ - $ () $ - $ () Net derivatives at fair value $ - $ 47 $ - $ 47 B. Combined Fair Value Measurements None C. Financial Instruments December, 04 Type of Financial Instrument Aggregate Fair Value Admitted Assets Level Level Level Not Practicable (Carrying Value) Assets: Bonds $ 5,5,06, $ 8,07,67,85 $,8,66,87 $ 8,505,5,55 $,508,,96 $ - Mortgage loans,46,67,949 9,67,,5 - -,46,67,949 - Policy loans 6,756,088,75 6,756,088, ,756,088,75 - Common stock,407,47,85,407,47,85,970,595,874-46,875,95 - Preferred stock 05,75,5 75,000,0-76,80,45 8,904,900 - Derivative assets 87,80,868 9,8,77-87,80, Surplus note investments 0,884,8 60,,567-78,580,8,04,000 - Collateral loans 40,0,6 40,0, ,0,6 - Cash and short-term securities,58,95,797,58,95,797 70,86,68,880,088,4 - - Separate account assets 7,055,809,05 7,055,809,05 4,46,78,979,,066,479 7,0,594 - Liabilities: Investment-type insurance reserves 5,058,64, ,058,64,405 - Liabilities for securities lending 95,846,98-95,846, Derivative liabilities,757,49 -,757, Separate account liabilities 7,055,809,05 4,46,78,979,,066,479 7,0,

54 NOTES TO FINANCIAL STATEMENTS December, 0 Type of Financial Instrument Aggregate Fair Value Admitted Assets Level Level Level Not Practicable (Carrying Value) Assets: Bonds $ 5,48,46,67 $ 0,690,4,967 $ 4,99,684,04 $ 7,60,548,689 $,608,,960 $ - Mortgage loans 7,848,646,40 6,6,940, ,848,646,40 - Policy loans 6,05,87,7 6,05,87, ,05,87,7 - Common stock,6,7,49,6,7,49,5,585,09-58,788,98 - Preferred stock 57,64, ,68,789-94,566, ,048,598 - Derivative assets 6,089,956 86,067,9-6,089, Surplus note investments 57,7,64 7,04,98-57,7, Collateral loans 4,05,8 4,05, ,05,8 - Cash and short-term securities,,66,46,,66,46 567,68,458,64,48, Separate account assets 5,4,905,9 5,4,905,9,5,8,9,84,845,996 84,876,644 - Liabilities: Investment-type insurance reserves 5,06,4, ,06,4,9 - Liabilities for securities lending 75,00,856-75,00, Derivative liabilities 04,65,4-04,65,4 - - Separate account liabilities 5,4,905,9,5,8,9,84,845,996 84,876,644 - The financial instrument values in the table above exclude financial instruments accounted for under the equity method. D. Not Practicable to Estimate Fair Value None. Other Items A. Extraordinary Items The Company and NLTC entered into a reinsurance agreement with an effective date of October, 04. Under the terms of this agreement, the Company will assume 00% of the risks associated with NLTC s long-term care ( LTC ) business in force, apart from the LTC business already reinsured by an unaffiliated third party reinsurer. The agreement also provides for 00% automatic reinsurance on new LTC business issued by NLTC subsequent to that the effective date of the agreement. As part of the initial in-force transaction discussed above, the Company assumed $.9 billion of net policy liabilities and received invested assets with a fair value equal to these liabilities from NLTC. This initial in-force transaction qualified for reinsurance accounting under the Statement of Statutory Accounting Principle No. 6R Life, Deposit- Type and Accident and Health Reinsurance, given the complete transfer of the in-force LTC risks from NLTC. The invested asset transfer, which served as consideration for assuming the policy liabilities, and the assumed liabilities are reflected as equal and offsetting increases to premium revenue and net additions to policy benefit reserves, respectively, in the statements of operations for the year ended December, 04. The transfer of invested assets that occurred as part of the initial in-force transaction directly impacted the Company s investment-related liabilities (i.e., AVR and IMR). The Company recorded a $46 million increase to its AVR and an increase to its IMR of $5 million during 04. The increase to IMR included $ million of net gains recognized by NLTC that were generated as part of the invested asset transfer and $ million of NLTC s historical IMR, which represented a proportionate share of net gains deferred to the IMR by NLTC prior to the effective date of the affiliated reinsurance agreement. The transfer of IMR was reported as an increase in aggregate write-ins for deductions in the summary of operations for the year ended December, 04. B. Troubled Debt Restructuring-Debtors None C. Other Disclosures At December, 04 and 0, Exhibit of Net Investment Income, Line 8, Other Invested Assets, includes the distribution of after-tax accumulated earnings and profits of $8 million, net of $5 million of income tax from affiliated entities and $6 million, net of $6 million of income tax from affiliated entities, respectively. With regard to General Interrogatory 6 (located on page 0. of this Annual Statement), the Company s Finance Committee, a subordinate committee of its Board of Trustees, generally delegates the authority to purchase and sell investments on behalf of the Company to its officers (e.g. Chief Investment Officer, Senior Vice President Securities) or to certain investment managers. These delegations are subject to limitations generally based on the characteristics and amount of the investments which can be purchased or sold on the Company s behalf. For information related to the Company s forward commitments see Note 4. D. Business Interruption Insurance Recoveries None E. State Transferable Tax Credits. Carrying value of transferrable state tax credits gross of any related tax liabilities and total unused transferable state tax credits by state and in total are: Description of State Transferable and Non-transferable Tax Credits State Carrying Value Unused Amount Memphis Biomed Ventures - Transferrable TN $,79, $ 6,600,000 Enterprise Development Zone - Non-transferable WI $ - $,554,000 Total $,79, $ 8,54,

55 NOTES TO FINANCIAL STATEMENTS. The Company estimated the utilization of the remaining Transferable State Tax credits by projecting future premium taking into account policy growth and rate changes, projecting future tax liability based on projected premium, tax rates and tax credits, and comparing projected future tax liability to the availability of remaining Transferrable State Tax Credits.. There were no impairment losses within the transferable state tax credit investments. 4. State Tax Credits Admitted and Nonadmitted Total Admitted Total Nonadmitted a. Transferable $,79, $ - b. Non-transferable $ - $ - E. Subprime Mortgage Related Risk Exposure. Sub-prime mortgages are residential loans to borrowers with weak credit profiles. Alt-A mortgages are residential loans to borrowers who generally have credit profiles above sub-prime but do not conform to traditional ( prime ) mortgage underwriting guidelines. The Company has invested in certain mortgagebacked and structured securities that include exposure to sub-prime and other below-prime mortgage loans. These investments are included in bonds in the statement of financial position and listed in Schedule D Part and are generally reported at amortized cost, less any valuation adjustments. For each of December, 04 and 0, the statement value of sub-prime investments was $0. The statement value of Alt-A and other below-prime investments at December, 04 and 0 was $56 million and $0 million, respectively. At each of December, 04 and 0, the fair value of subprime investments was $0. The fair value of Alt-A and other below-prime investments at December, 04 and 0 was $6 million and $06 million, respectively. Of the Alt-A and other below-prime investments held by the Company at December, 04 and 0, 7% and 7%, respectively, were rated as investment-grade.. The Company had no direct investments in sub-prime mortgage loans or investments in subsidiary, controlled or affiliated entities with significant sub-prime related risk exposure.. The Company s direct investments with underlying sub-prime exposure are summarized below. Direct Exposure through Other Investments Actual Cost Book/Adjusted Carrying Value (excluding interest) Fair Value Other Than Temporary Impairment Losses Recognized Residential mortgage backed securities (Alt-A) 54,77,676-55,66,99-60,548,4 - (4,70) - Commercial mortgage backed securities Collateralized debt obligations Structured securities Equity investments in SCAs Other assets Total direct exposure through other investments $ 54,77,676 $ 55,66,99 $ 60,548,4 $ (4,70) 4. The Company does not write mortgage guaranty or financial guaranty insurance coverage. G. Retained Assets. Deposit liabilities are comprised primarily of supplementary annuity contracts without life contingencies and amounts left on deposit with the Company by beneficiaries or policyowners. Beneficiaries of the Company s life insurance policies can choose to receive their death benefit in a single lump sum payment, or through a payment plan consisting of a series of scheduled payments. Prior to November, 0, beneficiaries could also choose to receive their death benefit by deposit of the proceeds (if $0,000 or more) into an interest-bearing retained asset account ( Northwestern Access Fund ). As of that date, the Northwestern Access Fund was eliminated as an option for receiving death benefits. If the beneficiary does not affirmatively choose a payment plan, the proceeds are automatically paid to the beneficiary in a single lump sum. If the beneficiary chose a Northwestern Access Fund account (prior to November, 0), the beneficiary received negotiable drafts that they can use to access the balance in this account at their discretion. The total reserve liability for Northwestern Access Fund account balances held by the Company on behalf of beneficiaries was $0.5 billion and $0.7 billion at December, 04 and 0, respectively. Funds held on behalf of Northwestern Access Fund account holders are segmented in the Company s general account and are invested primarily in short-term, liquid investments. Northwestern Access Fund accounts are credited with interest at short-term market rates, with certain accounts subject to guaranteed minimum crediting rates. Northwestern Access Fund accounts were credited with interest at annual rates ranging from 0.0% to.50% during both 04 and 0. The interest rates on Northwestern Access Fund accounts did not change during 04. The Company does not charge beneficiaries any fees to establish or maintain a Northwestern Access Fund account. Fees may be assessed for special account services such as stop-payment requests, drafts returned for insufficient funds or wire transfers. 9.0

56 NOTES TO FINANCIAL STATEMENTS.. In Force As of End of Current Year As of End of Prior Year Number Balance Number Balance a. Up to and including Months $,044,045 6 $ 4,70,976 b. to 4 Months 4 45,5, ,76,549 c. 5 to 6 Months 6,055, ,40,50 d. 7 to 48 Months 8 5,69, ,45,06 e. 49 to 60 Months 575 7,, ,05,0 f. Over 60 Months 6,96 86,86, 7,57 97,770,98 g. Total 8,64 $ 59,90,75 0,47 $ 694,780,55 Individual Group Balance/ Balance/ Number Amount Number Amount a. Number/Balance of Retained Asset Accounts at the Beginning of the Year 0,47 $ 694,780,55 - $ - b. Number/Amount of Retained Asset Accounts Issued/Added During the Year 47,745, c. Investment Earnings Credited to Retained Asset Accounts During the Year N/A 0,40,8 N/A - d. Fees and Other Charges Assessed to Retained Asset Accounts During the Year N/A,780 N/A - e. Number/Amount of Retained Asset Accounts Transferred to State Unclaimed Property funds During the Year 64 40, f. Number/Amount of Retained Asset Accounts Closed/Withdrawn During the Year,846 78,96,9 - - g. Number/Balance of Retained Asset Accounts at the End of the Year 8,64 $ 59,90,75 - $ -. Events Subsequent Not applicable. Reinsurance A. Ceded Reinsurance Report Section - General Interrogatories. Are any of the reinsurers listed in Schedule S as non-affiliated owned in excess of 0% or controlled, either directly or indirectly, by the Company or by any representative, officer, trustee or director of the Company? Yes ( ) No (X). Have any policies issued by the Company been reinsured with a company chartered in a country other than the United States (excluding U.S. branches of such companies) that is owned in excess of 0% or controlled directly or indirectly by an insured, a beneficiary, a creditor, or an insured or any other person not primarily engaged in the insurance business? Yes ( ) No (X) Section - Ceded Reinsurance Report- Part A. Does the Company have any reinsurance agreements in effect under which the reinsurer may unilaterally cancel any reinsurance for reasons other than for nonpayment of premium or other similar credits? Yes ( ) No (X). Does the Company have any reinsurance agreements in effect such that the amount of losses paid or accrued through the statement date may result in a payment to the reinsurer of amounts that, in aggregate and allowing for offset of mutual credits from other reinsurance agreements with the same reinsurer, exceed the total direct premium collected under the reinsured policies? Yes ( ) No (X) Section - Ceded Reinsurance Report- Part B. What is the estimated amount of the aggregate reduction in surplus (for agreements other than those under, which the reinsurer may unilaterally cancel for reasons other than nonpayment of premium or other similar credits that are reflected in Section above) of termination of all reinsurance agreements, by either party, as of the date of this statement? Where necessary, the Company may consider current or anticipated experience of the business reinsured in making this estimate. The surplus impact of a hypothetical termination of all reinsurance agreements would depend on the negotiated terms of the termination. Management believes that the impact would be immaterial based on reasonable assumptions about such terms.. Have any new agreements been executed or have any existing agreements been amended since January of the year of this statement to include policies or contracts that were in force or which had existing reserves established by the Company as of the effective date of the agreement? Yes ( ) No (X) 9.

57 NOTES TO FINANCIAL STATEMENTS B. Uncollectible Reinsurance The Company did not write off any uncollectible reinsurance balances during 04 or 0. C. Commutation of Ceded Reinsurance The Company has not commuted any ceded reinsurance during 04 or 0. D. Certified Reinsurance Rating Downgraded or Status Subject to Revocation. Not applicable.. Not applicable. 4. Retrospectively Rated Contracts and Contracts Subject to Redetermination A. The Company does not accrue retrospective premium adjustments for its group health business due to immateriality. B. The Company records retrospective premiums as an adjustment to earned premium. C. The amount of net premiums written at December, 04 that are subject to retrospective rating features is $805,40. This represents.54% of total net group health premiums. D. The Company does not accrue for medical loss ratio rebates. E. The Company does not write any accident and health insurance that is covered under the Affordable Care Act. 5. Change in Incurred Losses and Loss Adjustment Expenses The Company assumes LTC business from its wholly-owned subsidiary, NLTC (see Note for further information). The Company relies upon NLTC to provide incurred claim detail and establishes a claim reserve based upon that information. Reserves as of December, 04, were $88,999,04. As of December, 04, $7,05,998 has been paid for incurred claims and claim adjustment expenses attributable to insured events of prior years. Reserves remaining for prior years are now $7,600,705 as a result of re-estimation of unpaid claims and claim adjustment expenses principally on long term care lines of insurance. Based on beginning of year balances provided by the ceding company, there has been a $,98,57 favorable prior-year development since December, 0 to December, 04. The increase is partly due to reinsurance being assumed during 04 and also is attributed to ongoing analysis of recent loss development trends. Original estimates are increased or decreased, as additional information becomes known regarding individual claims. The Company has no retrospectively rated policies included in this increase. However, the business to which it relates is subject to premium adjustments. The Company s other accident and health reserves, excluding the LTC amounts discussed in the paragraph above, were $4,475,596,49 at December, 04. As of December, 04, $57,5,660 has been paid for incurred claims and claim adjustment expenses attributable to insured events of prior years. Reserves remaining for prior years are now $,85,86,878 as a result of re-estimation of unpaid claims and claim adjustment expenses, principally on disability income lines of insurance. Therefore, there has been a $,96,46 unfavorable prior-year development since December, 0 to December, 04. The increase is generally the result of ongoing analysis of recent loss development trends. Original estimates are increased or decreased, as additional information becomes known regarding individual claims. The Company has no retrospectively rated policies included in this increase. However, the business to which it relates is subject to premium adjustments. 6. Inter-company Pooling Arrangements The Company does not participate in any inter-company pooling arrangements. 7. Structured Settlements None 8. Health Care Receivables None 9. Participating Policies At December, 04, 00% of life insurance policies, 85% of annuity contracts, and 00% of accident and health policies were participating. Annually, the Company s Board of Trustees approves dividends payable on participating policies during the subsequent fiscal year, which are accrued and charged to operations when approved. Participating policyowners generally have the option to direct their dividends to be paid in cash, used to reduce future premiums due, used to purchase additional insurance benefits or left on deposit with the Company to accumulate interest. Dividends used by policyowners to purchase additional insurance benefits are reported as premiums in the summary of operations, but are not included in premiums received or benefit payments in the statement of cash flows. The Company s annual declaration of policyowner dividends includes a guarantee of a minimum aggregate amount of dividends to be paid to policyowners as a group in the subsequent fiscal year. If this guaranteed amount is greater than the aggregate of actual dividends paid to policyowners in the subsequent year, the difference is paid in the immediately succeeding calendar year. The Company recognized dividends to policyowners in the summary of operations of $5,5,6,8 and $5,,57,7 during 04 and 0 respectively. No additional income was allocated to participating policyowners. 0. Premium Deficiency Reserves. Liability carried for premium deficiency reserves $0. Date of the most recent evaluation of this liability 04. Was anticipated investment income utilized in the calculation Yes. Reserves for Life Contracts and Annuity Contracts. Reserves for policy benefits generally represent the net present value of future policy benefits less future policy premiums, calculated using actuarial methods, mortality and morbidity experience tables and valuation interest rates prescribed or permitted by the OCI. These actuarial tables and methods include assumptions regarding future 9.

58 NOTES TO FINANCIAL STATEMENTS mortality and morbidity experience. Actual future experience could differ from the assumptions used to make these reserve estimates. Life insurance reserves on substantially all policies issued since 978 are based on the Commissioner s Reserve Valuation Method ( CRVM ) using the 958, 980 or 00 CSO mortality tables with valuation interest rates ranging from.50% to 5.50%. Other life insurance reserves are primarily based on the net level premium method, using various mortality tables at interest rates ranging from.00% to 4.50%. Deferred annuity reserves on policies issued since 985 are based primarily on the Commissioner s Annuity Reserve Valuation Method ( CARVM ) using the Annuity 000 or 0 Individual Annuity Reserve mortality tables with valuation interest rates ranging from.50% to 6.5%. Other deferred annuity reserves are based on policy value, with additional reserves held to reflect guarantees under these contracts. Immediate annuity reserves on policies issued since 985 are based on the present value of expected benefit payments using either the 98 Individual Annuity a, Annuity 000 or 0 Individual Annuity Reserve mortality tables with valuation interest rates ranging from.50% to 7.50%. Changes in future policy benefit reserves on supplementary contracts without life contingencies are deposit-type transactions and excluded from net additions to policy benefit reserves in the summary of operations. The Company waives deduction of deferred fractional premiums upon the death of an insured and returns any portion of the final premium beyond the date of death. Surrender values are not promised in excess of the legally computed reserves.. Additional premiums are charged for substandard lives on policies issued after January, 956. Net level premium or CRVM mean reserves for these policies are based on multiples of mortality tables or one-half the net flat or other extra mortality charge.. As of December, 04, the Company has $,48,59,809 of insurance in force for which the gross premiums are less than the net premiums according to the standard valuation set by the Wisconsin Office of the Commissioner of Insurance. Gross premiums are calculated in pricing and use mortality tables that reflect both the Company s actual experience and the potential transfer of risk to reinsurers. Net premiums are determined in the calculation of statutory reserves, which must be based on industry-standard mortality tables. 4. Tabular cost (Page 7, Line 9) has been determined from the basic data for the calculation of policy reserves. Tabular less actual reserves released (Page 7, Line 5) has been determined from the basic data for the calculation of reserves and the actual reserves released. Tabular interest (Page 7, Line 4) has been determined from the basic data for the calculation of policy reserves. 5. Tabular interest on funds not involving life contingencies is calculated as the product of the valuation rate of interest times the mean of the amount of funds subject to such rate held at the beginning and end of the year of valuation. 6. Reserve changes made during the year are reported in detail in Exhibit 5A.. Analysis of Annuity Actuarial Reserves and Deposit-Type Liabilities by Withdrawal Characteristics A. E. Following is a summary of annuity reserves, including separate accounts, and deposit-fund liabilities by withdrawal characteristic at December, 04: Separate Accounts with Guarantees Separate Accounts Nonguaranteed General Account Total A. Subject to discretionary withdrawal:. With fair value adjustment $ 496,989, $ - $ - $ 496,989,.7%. At book value less current surrender charge of 5% or more 6,40, ,40,94.%. At fair value - - 6,6,9,855 6,6,9, % 4. Total with adjustment or at fair value (total of through ) $ 859,0,06 $ - $ 6,6,9,855 $ 7,00,6, % 5. At book value without adjustment (minimal or no charge or adjustment) 4,44,887, ,44,887,79 4.7% B. Not subject to discretionary withdrawal 4,4,98,557-4,548,60,666 8,68,549, 8.8% C. Total (gross: direct + assumed) $ 9,46,05,97 $ - $ 0,70,0,5 $ 0,46,059, % D. Reinsurance ceded E. Total (net) C - D $ 9,46,05,97 $ - $ 0,70,0,5 $ 0,46,059,49 % of Total 9.

59 NOTES TO FINANCIAL STATEMENTS Following is a reconciliation of total annuity actuarial reserves, including separate accounts, and deposit fund liabilities at December, 04: F. Life and Accident and Health Annual Statement:. Exhibit 5, Annuities Section, Total (net) $ 6,076,45,6. Exhibit 5, Supplementary Contracts with Life Contingencies Section, Total (net) 69,07,4. Exhibit 7, Deposit-type contracts, Line 4, Column,668,59,44 4. Subtotal $ 9,46,05,97 Separate Accounts Annual Statement: 5. Exhibit, line , Column $ 0,495,94,5 6. Exhibit, line , Column 87,,8 7. Policyholder dividend and coupon accumulations - 8. Policyholder premiums - 9. Guaranteed interest contracts - 0. Other contract deposit funds 7,505,45. Subtotal $ 0,70,0,5. Combined Total $ 0,46,059,49. Premium and Annuity Considerations Deferred and Uncollected A. Gross deferred and uncollected insurance premiums and annuity considerations represent premiums due to be received from policyowners through the next policy anniversary date. Net deferred and uncollected premiums represent only the portion of gross premiums related to mortality charges and interest. Deferred and uncollected premiums at December, 04 were as follows: Type Gross Net of Loading. Industrial $ - $ -. Ordinary new business,989,8 84,05,705. Ordinary renewal,66,97,6,9,4,98 4. Credit Life Group Life Group Annuity Totals $,589,86,85 $,05,48,90 4. Separate Accounts A. Separate Account Activity. Separate account assets and related reserve liabilities represent the segregation of balances attributable to variable life insurance and variable annuity policies, including a group annuity separate account used to fund certain of the Company s employee and financial representative benefit plan obligations. Policyowners bear the investment performance risk associated with variable products. Separate account assets are invested at the direction of the policyowner in a variety of mutual fund options. Variable annuity policyowners also have the option to invest in fixed rate investment options, which are supported by the assets held in the Company s general account. Separate account assets are generally reported at fair value based primarily on quoted market prices.. All separate account assets are legally insulated from general account claims.. While separate account liability values are not guaranteed by the Company, variable annuity and variable life insurance products do include guaranteed minimum death benefits ( GMDB ) underwritten by the Company. General account reserves for policy benefits included $,87,68 and $0,9,07 attributable to GMDB at December, 04 and 0, respectively. The total maximum guarantee under GMDB at December, 04 and 0 was $86,89,846 and $4,65,0, respectively. The risk charges received and amounts paid by the general account associated with these guarantees are not material. 4. At each of December, 04 and 0 there were no securities on loan within the separate accounts. B. General Nature and Characteristics of Separate Accounts Premiums and other considerations received from variable annuity and variable life insurance policyowners were $,95,560,59 and $,90,74,7 during the years ended December, 04 and 0, respectively. These amounts are reported as premiums in the summary of operations. The subsequent transfer of these receipts to the separate accounts is reported in transfers to or (from) separate accounts in the summary of operations, net of amounts received from the separate accounts to provide for policy benefit payments to variable product policyowners. 9.4

60 NOTES TO FINANCIAL STATEMENTS Following is a summary of financial information regarding the separate accounts of the Company at December, 04 and for the year then ended: Non-Indexed Guarantee Non-Indexed Non-Guaranteed Less Than/ Guarantee Separate Index Equal to 4% More Than 4% Accounts Total () Premiums, considerations or deposits for the year ended //4 $ - $ - $ - $,95,560,59 $,95,560,59 Reserves at //4 () For accounts with values at: a. Fair value ,96,8,794 6,96,8,794 b. Amortized cost c. Total reserves $ - $ - $ - $ 6,96,8,794 $ 6,96,8,794 () By withdrawal characteristics: a. Subject to discretionary withdrawal b. With FV adjustment c. At book value without FV adjustment and with current surrender charge of 5% or more d. At fair value - - -,4,508,8,4,508,8 e. At book value without FV adjustment and with current surrender charge less than 5% f. Subtotal $ - $ - $ - $,4,508,8 $,4,508,8 g. Not subject to discretionary withdrawal $ 4,548,60,666 $ 4,548,60,666 h. Total $ - $ - $ - $ 6,96,8,794 $ 6,96,8,794 (4) Reserves for Asset Default Risk in lieu of AVR $ - $ - $ - $ - $ - C. Reconciliation of Net Transfers To or (From) Separate Accounts Following are amounts reported as transfers to and from separate accounts in the summary of operations of the Company s NAIC Separate Account Annual Statement, which agree with the amounts reported as net transfers to separate accounts in the accompanying summary of operations for the year ended December, 04:. Transfers as reported in the Summary of Operations of the Separate Accounts Statement: a. Transfers to Separate Accounts (Page 4, Line.4) $,76,0,06 b. Transfers from Separate Accounts (Page 4, Line 0),675,04,769 c. Net transfers to or (from) Separate Accounts (a. - b.) 50,59,47. Reconciling Adjustments: Investment management and administrative charges - a. Mortality and breakage and other (4,06). Transfers as reported in the Summary of Operations Of Life, Accident and Health Annual Statement $ 50,45, 5. Loss/Claim Adjustment Expenses The Company assumes LTC business from its wholly-owned subsidiary, NLTC (see Note for further information). The Company relies upon NLTC to provide loss/claim adjustment expenses and establishes a liability based upon that information. The balance in the liability for gross unpaid accident and health claim adjustment expenses was $0,69,90 and $8,50,868 as of December, 04 and 0, respectively. Claims adjustment expenses were incurred of $4,,747 and $,499,99 and paid $,56,890 and $,6,96 during 04 and 0 respectively. Of the amounts paid, $,40,940 and $,77,4 were attributable to insured or covered events in prior years for 04 and 0, respectively. The Company did not increase or decrease the provision for insured events of prior years. The balance in the Company s other gross unpaid accident and health claim adjustment expense liability, excluding the LTC amounts discussed in the paragraph above, was $0,674,94 and $05,85,077 as of December, 04 and 0, respectively. The Company incurred $4,065,09 and $9,557,800 and paid $6,884,9 and $6,099,90 of claim adjustment expense during 04 and 0, respectively. Of the amounts paid, $5,7,0 and $4,97,5 were attributable to insured or covered events in prior years for 04 and 0, respectively. The Company did not increase or decrease the provision for insured events of prior years. The Company anticipates no salvage or subrogation to reduce the liability for unpaid claims/losses. 9.5

61 GENERAL INTERROGATORIES PART - COMMON INTERROGATORIES GENERAL. Is the reporting entity a member of an Insurance Holding Company System consisting of two or more affiliated persons, one or more of which is an insurer? If yes, complete Schedule Y, Parts, A and. If yes, did the reporting entity register and file with its domiciliary State Insurance Commissioner, Director or Superintendent, or with such regulatory official of the state of domicile of the principal insurer in the Holding Company System, a registration statement providing disclosure substantially similar to the standards adopted by the National Association of Insurance Commissioners (NAIC) in its Model Insurance Holding Company System Regulatory Act and model regulations pertaining thereto, or is the reporting entity subject to standards and disclosure requirements substantially similar to those required by such Act and regulations?. State Regulating?. Has any change been made during the year of this statement in the charter, by-laws, articles of incorporation, or deed of settlement of the reporting entity?. If yes, date of change:. State as of what date the latest financial examination of the reporting entity was made or is being made.. State the as of date that the latest financial examination report became available from either the state of domicile or the reporting entity. This date should be the date of the examined balance sheet and not the date the report was completed or released.. State as of what date the latest financial examination report became available to other states or the public from either the state of domicile or the reporting entity. This is the release date or completion date of the examination report and not the date of the examination (balance sheet date)..4 By what department or departments? Wisconsin.5 Have all financial statement adjustments within the latest financial examination report been accounted for in a subsequent financial statement filed with Departments?.6 Have all of the recommendations within the latest financial examination report been complied with? 4. During the period covered by this statement, did any agent, broker, sales representative, non-affiliated sales/service organization or any combination thereof under common control (other than salaried employees of the reporting entity), receive credit or commissions for or control a substantial part (more than 0 percent of any major line of business measured on direct premiums) of: 4. sales of new business? 4. renewals? 4. During the period covered by this statement, did any sales/service organization owned in whole or in part by the reporting entity or an affiliate, receive credit or commissions for or control a substantial part (more than 0 percent of any major line of business measured on direct premiums) of: 4. sales of new business? 4. renewals? 5. Has the reporting entity been a party to a merger or consolidation during the period covered by this statement? 5. If yes, provide the name of the entity, NAIC Company Code, and state of domicile (use two letter state abbreviation) for any entity that has ceased to exist as a result of the merger or consolidation. Name of Entity NAIC Company Code State of Domicile 6. Has the reporting entity had any Certificates of Authority, licenses or registrations (including corporate registration, if applicable) suspended or revoked by any governmental entity during the reporting period? 6. If yes, give full information: 7. Does any foreign (non-united States) person or entity directly or indirectly control 0% or more of the reporting entity? 7. If yes, 7. State the percentage of foreign control; 7. State the nationality(s) of the foreign person(s) or entity(s) or if the entity is a mutual or reciprocal, the nationality of its manager or attorney-in-fact; and identify the type of entity(s) (e.g., individual, corporation or government, manager or attorney in fact). Nationality Type of Entity 0

62 GENERAL INTERROGATORIES 8. Is the company a subsidiary of a bank holding company regulated by the Federal Reserve Board? 8. If response to 8. is yes, please identify the name of the bank holding company. 8. Is the company affiliated with one or more banks, thrifts or securities firms? 8.4 If response to 8. is yes, please provide below the names and location (city and state of the main office) of any affiliates regulated by a federal regulatory services agency [i.e. the Federal Reserve Board (FRB), the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC) and the Securities Exchange Commission (SEC)] and identify the affiliate's primary federal regulator. Affiliate Name Location (City, State) FRB 4 OCC 5 FDIC 6 SEC! "#$ 9. What is the name and address of the independent certified public accountant or accounting firm retained to conduct the annual audit? PricewaterhouseCoopers LLP 00 East Wisconsin Avenue, Milwaukee, WI Has the insurer been granted any exemptions to the prohibited non-audit services provided by the certified independent public accountant requirements as allowed in Section 7H of the Annual Financial Reporting Model Regulation (Model Audit Rule), or substantially similar state law or regulation? 0. If the response to 0. is yes, provide information related to this exemption: 0. Has the insurer been granted any exemptions related to the other requirements of the Annual Financial Reporting Model Regulation as allowed for in Section 7A of the Model Regulation, or substantially similar state law or regulation? 0.4 If the response to 0. is yes, provide information related to this exemption: 0.5 Has the reporting entity established an Audit Committee in compliance with the domiciliary state insurance laws? % 0.6 If the response to 0.5 is no or n/a, please explain. What is the name, address and affiliation (officer/employee of the reporting entity or actuary/consultant associated with an actuarial consulting firm) of the individual providing the statement of actuarial opinion/certification? Chris G. Trost, Senior Actuary, The Northwestern Mutual Life Insurance Company. Does the reporting entity own any securities of a real estate holding company or otherwise hold real estate indirectly?. Name of real estate holding company. Number of parcels involved &&'. Total book/adjusted carrying value $ &()*))+,-'. If, yes provide explanation: The Company's indirect real estate holdings consist primarily of Real Estate Joint Ventures, Real Estate Funds, and equity interests in REITS.. FOR UNITED STATES BRANCHES OF ALIEN REPORTING ENTITIES ONLY:. What changes have been made during the year in the United States manager or the United States trustees of the reporting entity?. Does this statement contain all business transacted for the reporting entity through its United States Branch on risks wherever located?. Have there been any changes made to any of the trust indentures during the year?.4 If answer to (.) is yes, has the domiciliary or entry state approved the changes? % 4. Are the senior officers (principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions) of the reporting entity subject to a code of ethics, which includes the following standards? (a) Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (b) Full, fair, accurate, timely and understandable disclosure in the periodic reports required to be filed by the reporting entity; (c) Compliance with applicable governmental laws, rules and regulations; (d) The prompt internal reporting of violations to an appropriate person or persons identified in the code; and (e) Accountability for adherence to the code. 4. If the response to 4. is No, please explain: 4. Has the code of ethics for senior managers been amended? 4. If the response to 4. is yes, provide information related to amendment(s). 4. Have any provisions of the code of ethics been waived for any of the specified officers? 4. If the response to 4. is yes, provide the nature of any waiver(s). 0.

63 GENERAL INTERROGATORIES 5. Is the reporting entity the beneficiary of a Letter of Credit that is unrelated to reinsurance where the issuing or confirming bank is not on the SVO Bank List? 5. If the response to 5. is yes, indicate the American Bankers Association (ABA) Routing Number and the name of the issuing or confirming bank of the Letter of Credit and describe the circumstances in which the Letter of Credit is triggered. American Bankers Association (ABA) Routing Number Issuing or Confirming Bank Name Circumstances That Can Trigger the Letter of Credit 4 Amount BOARD OF DIRECTORS 6. Is the purchase or sale of all investments of the reporting entity passed upon either by the board of directors or a subordinate committee thereof? 7. Does the reporting entity keep a complete permanent record of the proceedings of its board of directors and all subordinate committees thereof? 8. Has the reporting entity an established procedure for disclosure to its board of directors or trustees of any material interest or affiliation on the part of any of its officers, directors, trustees or responsible employees that is in conflict with the official duties of such person? FINANCIAL 9. Has this statement been prepared using a basis of accounting other than Statutory Accounting Principles (e.g., Generally Accepted Accounting Principles)? 0. Total amount loaned during the year (inclusive of Separate Accounts, exclusive of policy loans): 0. To directors or other officers $ 0. To stockholders not officers $ 0. Trustees, supreme or grand (Fraternal Only) $ 0. Total amount of loans outstanding at the end of year (inclusive of Separate Accounts, exclusive of policy loans): 0. To directors or other officers $ 0. To stockholders not officers $ 0. Trustees, supreme or grand (Fraternal Only) $. Were any assets reported in this statement subject to a contractual obligation to transfer to another party without the liability for such obligation being reported in the statement?. If yes, state the amount thereof at December of the current year:. Rented from others $. Borrowed from others $. Leased from others $.4 Other $. Does this statement include payments for assessments as described in the Annual Statement Instructions other than guaranty fund or guaranty association assessments?. If answer is yes:. Amount paid as losses or risk adjustment $. Amount paid as expenses $. Other amounts paid $. Does the reporting entity report any amounts due from parent, subsidiaries or affiliates on Page of this statement?. If yes, indicate any amounts receivable from parent included in the Page amount: $ INVESTMENT 4.0 Were all the stocks, bonds and other securities owned December of current year, over which the reporting entity has exclusive control, in the actual possession of the reporting entity on said date? (other than securities lending programs addressed in 4.0) 4.0 If no, give full and complete information relating thereto $7,875, EQ7 US Treasury Note 6.5% 8/5/0 JPMorgan Chase, Inc. for Futures Collateral. $,00, EQ7 US Treasury Note 6.5% 8/5/0 Credit Suisse Securities USA for Futures and Cleared Derivatives Collateral. $,00, QE US Treasury Note 4.65% /5/040 Credit Suisse Securities USA for Futures Collateral. $,000, EX US Treasury Note 6.75% 8/5/06 on deposit 4.0 For security lending programs, provide a description of the program including value for collateral and amount of loaned securities, and whether collateral is carried on or off-balance sheet. (an alternative is to reference Note 7 where this information is also provided) The Company participates in securities lending programs whereby investment securities are loaned to third-parties, primarily major brokerage. The collateral is carried on the balance sheet and reported in Schedule DL - Part Does the Company's security lending program meet the requirements for a conforming program as outlined in the Risk-Based Capital Instructions? 4.05 If answer to 4.04 is yes, report amount of collateral for conforming programs. $ 4.06 If answer to 4.04 is no, report amount of collateral for other programs. $ 4.07 Does your securities lending program require 0% (domestic securities) and 05% (foreign securities) from the counterparty at the outset of the contract? 4.08 Does the reporting entity non-admit when the collateral received from the counterparty falls below 00%? 4.09 Does the reporting entity or the reporting entity s securities lending agent utilize the Master Securities lending Agreement (MSLA) to conduct securities lending? 0.

64 GENERAL INTERROGATORIES 4.0 For the reporting entity s security lending program state the amount of the following as December of the current year: 4.0 Total fair value of reinvested collateral assets reported on Schedule DL, Parts and. $ 4.0 Total book adjusted/carrying value of reinvested collateral assets reported on Schedule DL, Parts and $ 4.0 Total payable for securities lending reported on the liability page. $ 5. Were any of the stocks, bonds or other assets of the reporting entity owned at December of the current year not exclusively under the control of the reporting entity, or has the reporting entity sold or transferred any assets subject to a put option contract that is currently in force? (Exclude securities subject to Interrogatory. and 4.0). 5. If yes, state the amount thereof at December of the current year: 5. Subject to repurchase agreements $ 5. Subject to reverse repurchase agreements $ 5. Subject to dollar repurchase agreements $ 5.4 Subject to reverse dollar repurchase agreements $ 5.5 Placed under option agreements $ 5.6 Letter stock or securities restricted as to sale - excluding FHLB Capital Stock $ 5.7 FHLB Capital Stock $ 5.8 On deposit with states $ 5.9 On deposit with other regulatory bodies $ 5.0 Pledged as collateral - excluding collateral pledged to an FHLB $ 5. Pledged as collateral to FHLB - including assets backing funding agreements $ 5. Other $ 5. For category (5.6) provide the following: Nature of Restriction Description Amount 6. Does the reporting entity have any hedging transactions reported on Schedule DB? 6. If yes, has a comprehensive description of the hedging program been made available to the domiciliary state? If no, attach a description with this statement. 7. Were any preferred stocks or bonds owned as of December of the current year mandatorily convertible into equity, or, at the option of the issuer, convertible into equity? 7. If yes, state the amount thereof at December of the current year. $ 8. Excluding items in Schedule E - Part - Special Deposits, real estate, mortgage loans and investments held physically in the reporting entity's offices, vaults or safety deposit boxes, were all stocks, bonds and other securities, owned throughout the current year held pursuant to a custodial agreement with a qualified bank or trust company in accordance with Section, III - General Examination Considerations, F. Outsourcing of Critical Functions, Custodial or Safekeeping Agreements of the NAIC Financial Condition Examiners Handbook? 8.0 For agreements that comply with the requirements of the NAIC Financial Condition Examiners Handbook, complete the following: Name of Custodian(s)!!,' +# $0(&#&/ Custodian's Address "!!#$%& '($$)*+' # $-#$. $!!/ '$"(-4*$. 8.0 For all agreements that do not comply with the requirements of the NAIC Financial Condition Examiners Handbook, provide the name, location and a complete explanation: Name(s) Location(s) Complete Explanation(s) 8.0 Have there been any changes, including name changes, in the custodian(s) identified in 8.0 during the current year? 8.04 If yes, give full and complete information relating thereto: Old Custodian New Custodian Date of Change 4 Reason 8.05 Identify all investment advisors, brokers/dealers or individuals acting on behalf of brokers/dealers that have access to the investment accounts, handle securities and have authority to make investments on behalf of the reporting entity: Central Registration Depository Number(s) Name Address $$56(77# 8$9(-(6* (!*9: $$ *$*!#($!77# 8$9(-(6* (!*9: $$ *$*!%!8$$:6$&$77# 8$9(-(6* (!*9: $$'+#($!56(77# $5/ (!*9: -*$$;(-(!6(-#&/ 0*$(+$6*$ ;!(&!$:$($*$(!77# ;($6* (/$ +&$#$(. **-(.#&/,. 0.

65 GENERAL INTERROGATORIES 9. Does the reporting entity have any diversified mutual funds reported in Schedule D, Part (diversified according to the Securities and Exchange Commission (SEC) in the Investment Company Act of 940 [Section 5(b)()])? 9. If yes, complete the following schedule: Book/Adjusted Carrying Value CUSIP # Name of Mutual Fund!" ##$ %% &''&()&&( % % (&% % % *#&((*'!($ *#&(##$ % % *#&(!$ Total % 9. For each mutual fund listed in the table above, complete the following schedule: Name of Mutual Fund (from above table) Name of Significant Holding of the Mutual Fund Amount of Mutual Fund's Book/Adjusted Carrying Value Attributable to the Holding 4 Date of Valuation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

66 0. Provide the following information for all short-term and long-term bonds and all preferred stocks. Do not substitute amortized value or statement value for fair value. Statement (Admitted) Value Excess of Statement over Fair Value (-), or Fair Value over Statement (+) Fair Value 0. Bonds 0. Preferred stocks 0. Totals 0.4 Describe the sources or methods utilized in determining the fair values: Prices are primarily provided by exchanges, quoted market prices, independent pricing services, broker quotes or internally-developed pricing models utilizing observable market data. Typical market-observable inputs include benchmark yields, report trades, issuer spreads, bids, offers, benchmark securities, estimated cash flows and prepayment speeds.. Was the rate used to calculate fair value determined by a broker or custodian for any of the securities in Schedule D?. If the answer to. is yes, does the reporting entity have a copy of the broker s or custodian s pricing policy (hard copy or electronic copy) for all brokers or custodians used as a pricing source?. If the answer to. is no, describe the reporting entity s process for determining a reliable pricing source for purposes of disclosure of fair value for Schedule D: The reliability of the pricing source was evaluated by considering, among others, the following factors: () The extent of a broker's participation in the primary or secondary market for the security in question, () The quality of a broker's insight into and analysis of the market for the security in question, () The quality of the quotes provided; when possible quotes are solicited from secondary and tertiary pricing sources to assess the quality of the primary price quotes and (4) The broker's market reputation and operating performance.. Have all the filing requirements of the Purposes and Procedures Manual of the NAIC Securities Valuation Office been followed?. If no, list exceptions: 0.4.

67 GENERAL INTERROGATORIES OTHER. Amount of payments to trade associations, service organizations and statistical or rating bureaus, if any? $. List the name of the organization and the amount paid if any such payment represented 5% or more of the total payments to trade associations, service organizations and statistical or rating bureaus during the period covered by this statement. Name Amount Paid 4. Amount of payments for legal expenses, if any? $ 4. List the name of the firm and the amount paid if any such payment represented 5% or more of the total payments for legal expenses during the period covered by this statement. Name Amount Paid 5. Amount of payments for expenditures in connection with matters before legislative bodies, officers or departments of government, if any? $ 5. List the name of the firm and the amount paid if any such payment represented 5% or more of the total payment expenditures in connection with matters before legislative bodies, officers or departments of government during the period covered by this statement. Name Amount Paid 0.5

68 !!" # # $ %# & ' " # # # & " % # ( # %" ) %" % " % * %

69 GENERAL INTERROGATORIES PART - LIFE INTERROGATORIES. Does the reporting entity have any direct Medicare Supplement Insurance in force?. If yes, indicate premium earned on U.S. business only $. What portion of Item (.) is not reported on the Medicare Supplement Insurance Experience Exhibit? $. Reason for excluding:.4 Indicate amount of earned premium attributable to Canadian and/or Other Alien not included in Item (.) above. $.5 Indicate total incurred claims on all Medicare Supplement insurance. $.6 Individual policies: Most current three years:.6 Total premium earned $.6 Total incurred claims $.6 Number of covered lives All years prior to most current three years.64 Total premium earned $.65 Total incurred claims $.66 Number of covered lives.7 Group policies: Most current three years:.7 Total premium earned $.7 Total incurred claims $.7 Number of covered lives. Health Test: All years prior to most current three years.74 Total premium earned $.75 Total incurred claims $.76 Number of covered lives Current Year Prior Year. Premium Numerator. Premium Denominator. Premium Ratio (./.).4 Reserve Numerator.5 Reserve Denominator.6 Reserve Ratio (.4/.5). Does this reporting entity have Separate Accounts?. If yes, has a Separate Accounts Statement been filed with this Department?. What portion of capital and surplus funds of the reporting entity covered by assets in the Separate Accounts statement, is not currently distributable from the Separate Accounts to the general account for use by the general account? $.4 State the authority under which Separate Accounts are maintained: Wisconsin.5 Was any of the reporting entity s Separate Accounts business reinsured as of December?.6 Has the reporting entity assumed by reinsurance any Separate Accounts business as of December?.7 If the reporting entity has assumed Separate Accounts business, how much, if any, reinsurance assumed receivable for reinsurance of Separate Accounts reserve expense allowances is included as a negative amount in the liability for Transfers to Separate Accounts due or accrued (net)"? 4. Are personnel or facilities of this reporting entity used by another entity or entities or are personnel or facilities of another entity or entities used by this reporting entity (except for activities such as administration of jointly underwritten group contracts and joint mortality or morbidity studies)? 4. Net reimbursement of such expenses between reporting entities: 4. Paid $ 4. Received $ 5. Does the reporting entity write any guaranteed interest contracts? 5. If yes, what amount pertaining to these lines is included in: 6. FOR STOCK REPORTING ENTITIES ONLY: 5. Page, Line $ 5. Page 4, Line $ 6. Total amount paid in by stockholders as surplus funds since organization of the reporting entity: $ 7. Total dividends paid stockholders since organization of the reporting entity: 7. Cash $ 7. Stock $

70 GENERAL INTERROGATORIES 8. Does the company reinsure any Workers Compensation Carve-Out business defined as: Reinsurance (including retrocessional reinsurance) assumed by life and health insurers of medical, wage loss and death benefits of the occupational illness and accident exposures, but not the employers liability exposures, of business originally written as workers compensation insurance. 8. If yes, has the reporting entity completed the Workers Compensation Carve-Out Supplement to the Annual Statement? 8. If 8. is yes, the amounts of earned premiums and claims incurred in this statement are: Reinsurance Assumed Reinsurance Ceded Net Retained 8. Earned premium 8. Paid claims 8. Claim liability and reserve (beginning of year) 8.4 Claim liability and reserve (end of year) 8.5 Incurred claims 8.4 If reinsurance assumed included amounts with attachment points below $,000,000, the distribution of the amounts reported in Lines 8. and 8.4 for Column () are: Attachment Point Earned Premium Claim Liability and Reserve 8.4 <$5, $5,000-99, $00,000-49, $50, , $,000,000 or more 8.5 What portion of earned premium reported in 8., Column was assumed from pools? $ 9. Does the company have variable annuities with guaranteed benefits? 9. If 9. is yes, complete the following table for each type of guaranteed benefit. Guaranteed Death Benefit Type Waiting Guaranteed Period Account Value Total Related Gross Amount Location of Portion Living Benefit Remaining Related to Col. Account Values of Reserve Reserve Reinsured Reinsurance Reserve Credit!" #$ %$&'$( )!" 0. For reporting entities having sold annuities to another insurer where the insurer purchasing the annuities has obtained a release of liability from the claimant (payee) as the result of the purchase of an annuity from the reporting entity only: 0. Amount of loss reserves established by these annuities during the current year: $ 0. List the name and location of the insurance company purchasing the annuities and the statement value on the purchase date of the annuities. P&C Insurance Company And Location Statement Value on Purchase Date of Annuities (i.e., Present Value). Do you act as a custodian for health savings accounts?. If yes, please provide the amount of custodial funds held as of the reporting date. $. Do you act as an administrator for health savings accounts?.4 If yes, please provide the balance of funds administered as of the reporting date. $.

71 GENERAL INTERROGATORIES. Are any of the captive affiliates reported on Schedule S, Part, authorized reinsurers?. If the answer to. is yes, please provide the following: 4 Assets Supporting Reserve Credit NAIC Company Name Company Code Domiciliary Jurisdiction Reserve Credit Letters of Credit Trust Agreements Other. Provide the following for individual ordinary life insurance* policies (U.S. business only) for the current year (prior to reinsurance assumed or ceded):. Direct Premium Written $. Total Incurred Claims $. Number of Covered Lives *Ordinary Life Insurance Includes Term (whether full underwriting,limited underwriting,jet issue,"short form app") Whole Life (whether full underwriting,limited underwriting,jet issue,"short form app") Variable Life (with or without secondary gurarantee) Universal Life (with or without secondary gurarantee) Variable Universal Life (with or without secondary gurarantee).

72 FIVE-YEAR HISTORICAL DATA Show amounts in whole dollars only, no cents; show percentages to one decimal place, i.e Life Insurance in Force (Exhibit of Life Insurance) Show amounts of life insurance in this exhibit in thousands (OMIT $000) Ordinary - whole life and endowment (Line 4, Col. 4). Ordinary - term (Line, Col. 4, less Line 4, Col. 4). Credit life (Line, Col. 6) 4. Group, excluding FEGLI/SGLI (Line, Col. 9 less Lines 4 & 44, Col. 4) 5. Industrial (Line, Col. ) 6. FEGLI/SGLI (Lines 4 & 44, Col. 4) 7. Total (Line, Col. 0) New Business Issued (Exhibit of Life Insurance) 8. Ordinary - whole life and endowment (Line 4, Col. ) 9. Ordinary - term (Line, Col. 4, less Line 4, Col. ) 0. Credit life (Line, Col. 6). Group (Line, Col. 9). Industrial (Line, Col. ). Total (Line, Col. 0) Premium Income - Lines of Business (Exhibit - Part ) 4. Industrial life (Line 0.4, Col. ) 5. Ordinary-life insurance (Line 0.4, Col. ) 5. Ordinary-individual annuities (Line 0.4, Col. 4) 6 Credit life (group and individual) (Line 0.4, Col. 5) 7. Group life insurance (Line 0.4, Col. 6) 7. Group annuities (Line 0.4, Col. 7) 8. A & H-group (Line 0.4, Col. 8) 8. A & H-credit (group and individual) (Line 0.4, Col. 9) 8. A & H-other (Line 0.4, Col. 0) 9. Aggregate of all other lines of business (Line 0.4,Col. ) 0. Total Balance Sheet (Pages & ). Total admitted assets excluding Separate Accounts business (Page, Line 6, Col. ). Total liabilities excluding Separate Accounts business (Page, Line 6). Aggregate life reserves (Page, Line ) 4. Aggregate A & H reserves (Page, Line ) 5. Deposit-type contract funds (Page, Line ) 6. Asset valuation reserve (Page, Line 4.0) 7. Capital (Page, Lines 9 and 0) 8. Surplus (Page, Line 7) Cash Flow (Page 5) 9. Net Cash from Operations (Line ) Risk-Based Capital Analysis 0. Total adjusted capital. Authorized control level risk - based capital Percentage Distribution of Cash, Cash Equivalents and Invested Assets (Page, Col. ) (Line No. /Page, Line, Col. ) x Bonds (Line ). Stocks (Lines. and.) 4. Mortgage loans on real estate(lines. and. ) 5. Real estate (Lines 4., 4. and 4.) 6. Cash, cash equivalents and short-term investments (Line 5) 7. Contract loans (Line 6) 8. Derivatives (Page, Line 7) 9. Other invested assets (Line 8) 40. Receivables for securities (Line 9) 4. Securities lending reinvested collateral assets (Line 0) 4. Aggregate write-ins for invested assets (Line ) 4. Cash, cash equivalents and invested assets (Line )

73 FIVE-YEAR HISTORICAL DATA Investments in Parent, Subsidiaries and Affiliates 04 (Continued) 44. Affiliated bonds (Schedule D Summary, Line, Col. ) 45. Affiliated preferred stocks (Schedule D Summary, Line 8, Col. ) 46. Affiliated common stocks (Schedule D Summary Line 4, Col. ), 47. Affiliated short-term investments (subtotal included in Schedule DA Verification, Col. 5, Line 0) 48. Affiliated mortgage loans on real estate 49. All other affiliated 50. Total of above Lines 44 to Total Investment in Parent included in Lines 44 to 49 above Total Nonadmitted and Admitted Assets 5. Total nonadmitted assets (Page, Line 8, Col. ) 5. Total admitted assets (Page, Line 8, Col. ) Investment Data 54. Net investment income (Exhibit of Net Investment Income) 55. Realized capital gains (losses) (Page 4, Line 4, Column ) 56. Unrealized capital gains (losses) (Page 4, Line 8, Column ) 57. Total of above Lines 54, 55 and 56 Benefits and Reserve Increases (Page 6) 58. Total contract benefits - life (Lines 0,,,, 4 and 5 Col., minus Lines 0,,,, 4 and 5 Cols. 9, 0 and ) 59. Total contract benefits - A & H (Lines & 4, Cols. 9, 0 & ) 60. Increase in life reserves - other than group and annuities (Line 9, Cols. and ) 6. Increase in A & H reserves (Line 9, Cols. 9, 0 & ) 6. Dividends to policyholders (Line 0, Col. ) Operating Percentages 6. Insurance expense percent (Page 6, Col., Lines, &, less Line 6)/(Page 6, Col., Line plus Exhibit 7, Col., Line ) x Lapse percent (ordinary only) [(Exhibit of Life Insurance, Col. 4, Lines 4 & 5) / / (Exhibit of Life Insurance, Col. 4, Lines & )] x A & H loss percent (Schedule H, Part, Lines 5 and 6, Col. ) 66. A & H cost containment percent (Schedule H, Pt., Line 4, Col. ) 67. A & H expense percent excluding cost containment expenses (Schedule H, Pt., Line 0, Col. ) A & H Claim Reserve Adequacy 68. Incurred losses on prior years claims - group health (Schedule H, Part, Line. Col. ) 69. Prior years claim liability and reserve - group health (Schedule H, Part, Line. Col. ) 70. Incurred losses on prior years claims-health other than group (Schedule H, Part, Line. Col. less Col. ) 7. Prior years claim liability and reserve-health other than group (Schedule H, Part, Line. Col. less Col. ) Net Gains From Operations After Federal Income Taxes by Lines of Business (Page 6, Line ) 7. Industrial life (Col. ) 7. Ordinary - life (Col. ) 74. Ordinary - individual annuities (Col. 4) 75. Ordinary-supplementary contracts (Col. 5) 76. Credit life (Col. 6) 77. Group life (Col. 7) 78. Group annuities (Col. 8) 79. A & H-group (Col. 9) 80. A & H-credit (Col. 0) 8. A & H-other (Col. ) 8. Aggregate of all other lines of business (Col. ) 8. Total (Col. ) NOTE: If a party to a merger, have the two most recent years of this exhibit been restated due to a merger in compliance with the disclosure requirements of SSAP No., Accounting Changes and Correction of Errors? If no, please explain:

74 5 ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY EXHIBIT OF LIFE INSURANCE Industrial Ordinary Credit Life (Group and Individual) Group Number of 9 Number of Policies Amount of Insurance (a) Number of Policies Amount of Insurance (a) Number of Individual Policies and Group Certificates Amount of Insurance (a) 7 Policies 8 Certificates Amount of Insurance (a) Total Amount of Insurance (a). In force end of prior year. Issued during year. Reinsurance assumed 4. Revived during year 5. Increased during year (net) 6. Subtotals, Lines to 5 7. Additions by dividends during year XXX XXX XXX XXX XXX 8. Aggregate write-ins for increases 9. Totals (Lines and 6 to 8) Deductions during year: 0. Death XXX. Maturity XXX. Disability XXX. Expiry 4. Surrender 5. Lapse 6. Conversion XXX XXX XXX 7. Decreased (net) 8. Reinsurance 9. Aggregate write-ins for decreases 0. Totals (Lines 0 to 9). In force end of year (Line 9 minus Line 0). Reinsurance ceded end of year XXX XXX XXX XXX XXX. Line minus Line XXX XXX XXX (b) XXX XXX DETAILS OF WRITE-INS Summary of remaining write-ins for Line 8 from overflow page TOTALS (Lines 080 thru 080 plus 0898) (Line 8 above) Summary of remaining write-ins for Line 9 from overflow page TOTALS (Lines 90 thru 90 plus 998) (Line 9 above) (a) Amounts of life insurance in this exhibit shall be shown in thousands (omit 000) (b) Group $ ; Individual $

75 EXHIBIT OF LIFE INSURANCE (Continued) ADDITIONAL INFORMATION ON INSURANCE IN FORCE END OF YEAR Industrial Amount of Insurance Number of Policies (a) Ordinary 4 Amount of Insurance (a) Number of Policies 4. Additions by dividends XXX XXX 5. Other paid-up insurance 6. Debit ordinary insurance XXX XXX ADDITIONAL INFORMATION ON ORDINARY INSURANCE Issued During Year (Included in Line ) Amount of Insurance Term Insurance Excluding Extended Term Insurance Number of Policies (a) In Force End of Year (Included in Line ) 4 Amount of Insurance (a) Number of Policies 7. Term policies - decreasing 8. Term policies - other 9. Other term insurance - decreasing XXX XXX 0. Other term insurance XXX XXX. Totals (Lines 7 to 0) Reconciliation to Lines and :. Term additions XXX XXX. Totals, extended term insurance XXX XXX 4. Totals, whole life and endowment 5. Totals (Lines to 4) CLASSIFICATION OF AMOUNT OF INSURANCE (a) BY PARTICIPATING STATUS Issued During Year (Included in Line ) Non-Participating Participating In Force End of Year (Included in Line ) Non-Participating 4 Participating 6 Industrial 7. Ordinary 8. Credit Life (Group and Individual) 9. Group 40. Totals (Lines 6 to 9) ADDITIONAL INFORMATION ON CREDIT LIFE AND GROUP INSURANCE Credit Life Group Number of Individual Policies and Group Certificates Amount of Insurance (a) Number of Certificates 4 Amount of Insurance (a) 4. Amount of insurance included in Line ceded to other companies XXX XXX 4. Number in force end of year if the number under shared groups is counted on a pro-rata basis XXX XXX 4. Federal Employees Group Life Insurance included in Line 44. Servicemen s Group Life Insurance included in Line 45. Group Permanent Insurance included in Line ADDITIONAL ACCIDENTAL DEATH BENEFITS 46. Amount of additional accidental death benefits in force end of year under ordinary policies (a) BASIS OF CALCULATION OF ORDINARY TERM INSURANCE 47. State basis of calculation of (47.) decreasing term insurance contained in Family Income, Mortgage Protection, etc., policies and riders and of (47.) term insurance on wife and children under Family, Parent and Children, etc., policies and riders included above !"#$""" POLICIES WITH DISABILITY PROVISIONS Industrial Ordinary Credit Group Number of Number of Amount of Insurance Number of Amount of Insurance Number of Amount of Insurance Certificates Policies (a) Policies (a) Policies (a) 8 Amount of Insurance (a) Disability Provisions 48. Waiver of Premium 49. Disability Income 50. Extended Benefits XXX XXX 5. Other 5. Total (b) (b) (b) (b) (a) Amounts of life insurance in this exhibit shall be shown in thousands (omit 000) (b) See Paragraph 9 of the Annual Audited Financial Reports in the General section of the annual statement instructions 6

76 EXHIBIT OF NUMBER OF POLICIES, CONTRACTS, CERTIFICATES, INCOME PAYABLE AND ACCOUNT VALUES IN FORCE FOR SUPPLEMENTARY CONTRACTS, ANNUITIES, ACCIDENT & HEALTH AND OTHER POLICIES SUPPLEMENTARY CONTRACTS Ordinary Involving Life Contingencies Not Involving Life Contingencies Involving Life Contingencies Group 4 Not Involving Life Contingencies. In force end of prior year. Issued during year. Reinsurance assumed 4. Increased during year (net) 5. Total (Lines to 4) Deductions during year: 6. Decreased (net) 7. Reinsurance ceded 8. Totals (Lines 6 and 7) 9. In force end of year 0. Amount on deposit (a) (a). Income now payable. Amount of income payable (a) (a) (a) (a) ANNUITIES Ordinary Group Immediate Deferred Contracts 4 Certificates. In force end of prior year. Issued during year. Reinsurance assumed 4. Increased during year (net) 5. Totals (Lines to 4) Deductions during year: 6. Decreased (net) 7. Reinsurance ceded 8. Totals (Lines 6 and 7) 9. In force end of year Income now payable: 0. Amount of income payable (a) XXX XXX (a) Deferred fully paid:. Account balance XXX (a) XXX (a) Deferred not fully paid:. Account balance XXX (a) XXX (a) ACCIDENT AND HEALTH INSURANCE Group Credit Other Certificates Premiums in Force Policies 4 Premiums in Force 5 Policies 6 Premiums in Force. In force end of prior year. Issued during year. Reinsurance assumed 4. Increased during year (net) XXX XXX XXX 5. Totals (Lines to 4) XXX XXX XXX Deductions during year: 6. Conversions XXX XXX XXX XXX XXX 7. Decreased (net) XXX XXX XXX 8. Reinsurance ceded XXX XXX XXX 9. Totals (Lines 6 to 8) XXX XXX XXX 0. In force end of year (a) (a) (a) DEPOSIT FUNDS AND DIVIDEND ACCUMULATIONS Dividend Deposit Funds Accumulations Contracts Contracts. In force end of prior year. Issued during year. Reinsurance assumed 4. Increased during year (net) 5. Totals (Lines to 4) Deductions During Year: 6. Decreased (net) 7. Reinsurance ceded 8. Totals (Lines 6 and 7) 9. In force end of year 0. Amount of account balance (a) (a) (a) See Paragraph 9 of the Annual Audited Financial Reports in the General section of the annual statement instructions. 7

77 FORM FOR CALCULATING THE INTEREST MAINTENANCE RESERVE INTEREST MAINTENANCE RESERVE Amount. Reserve as of December, Prior Year. Current year s realized pre-tax capital gains/(losses) of $ transferred into the reserve net of taxes of $. Adjustment for current year s liability gains/(losses) released from the reserve 4. Balance before reduction for amount transferred to Summary of Operations (Line + Line + Line ) 5. Current year s amortization released to Summary of Operations (Amortization, Line, Column 4) 6. Reserve as of December, current year (Line 4 minus Line 5) AMORTIZATION 4 Year of Amortization Reserve as of December, Prior Year Current Year s Realized Capital Gains/(Losses) Transferred into the Reserve Net of Taxes Adjustment for Current Year s Liability Gains/(Losses) Released From the Reserve Balance Before Reduction for Current Year s Amortization (Cols. + + ) and Later. Total (Lines to ) 8

78 ASSET VALUATION RESERVE Other Than Mortgage Loans Default Component Mortgage Loans Total (Cols. + ) 4 Common Stock Equity Component 5 Real Estate and Other Invested Assets. Reserve as of December, prior year. Realized capital gains/(losses) net of taxes - General Account. Realized capital gains/(losses) net of taxes - Separate Accounts 4. Unrealized capital gains/(losses) net of deferred taxes - General Account 5. Unrealized capital gains/(losses) net of deferred taxes - Separate Accounts 6 Total (Cols ) 7 Total Amount (Cols. + 6) 9 6. Capital gains credited/(losses charged) to contract benefits, payments or reserves 7. Basic contribution 8. Accumulated balances (Lines through ) 9. Maximum reserve 0. Reserve objective. 0% of (Line 0 - Line 8). Balance before transfers (Lines 8 + ). Transfers 4. Voluntary contribution 5. Adjustment down to maximum/up to zero 6. Reserve as of December, current year (Lines )

79 0 Line Number NAIC Designation ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY ASSET VALUATION RESERVE BASIC CONTRIBUTION, RESERVE OBJECTIVE AND MAXIMUM RESERVE CALCULATIONS DEFAULT COMPONENT Description 4 Basic Contribution Reserve Objective Maximum Reserve Balance for Reclassify AVR Reserve Related Party Add Third Party Calculations Amount Amount Encumbrances Encumbrances (Cols. + + ) Factor (Cols.4 x 5) Factor (Cols. 4 x 7) Factor Book/Adjusted Carrying Value LONG-TERM BONDS. Exempt Obligations XXX XXX. Highest Quality XXX XXX. High Quality XXX XXX 4. Medium Quality XXX XXX 5. 4 Low Quality XXX XXX 6. 5 Lower Quality XXX XXX 7. 6 In or Near Default XXX XXX 8. Total Unrated Multi-class Securities Acquired by Conversion XXX XXX XXX XXX XXX 9. Total Bonds (Sum of Lines through 8) XXX XXX XXX XXX XXX PREFERRED STOCK 0. Highest Quality XXX XXX. High Quality XXX XXX. Medium Quality XXX XXX. 4 Low Quality XXX XXX 4. 5 Lower Quality XXX XXX 5. 6 In or Near Default XXX XXX 6. Affiliated Life with AVR XXX XXX 7. Total Preferred Stocks (Sum of Lines 0 through 6) XXX XXX XXX XXX XXX SHORT - TERM BONDS 8. Exempt Obligations XXX XXX 9. Highest Quality XXX XXX 0. High Quality XXX XXX. Medium Quality XXX XXX. 4 Low Quality XXX XXX. 5 Lower Quality XXX XXX 4. 6 In or Near Default XXX XXX 5. Total Short - Term Bonds (Sum of Lines 8 through 4) XXX XXX XXX XXX XXX DERIVATIVE INSTRUMENTS 6. Exchange Traded XXX XXX 7. Highest Quality XXX XXX 8. High Quality XXX XXX 9. Medium Quality XXX XXX 0. 4 Low Quality XXX XXX. 5 Lower Quality XXX XXX. 6 In or Near Default XXX XXX. Total Derivative Instruments XXX XXX XXX XXX XXX 4. Total (Lines ) XXX XXX XXX XXX XXX Amount (Cols. 4 x 9)

80 Line Number NAIC Designation ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY ASSET VALUATION RESERVE (Continued) BASIC CONTRIBUTION, RESERVE OBJECTIVE AND MAXIMUM RESERVE CALCULATIONS DEFAULT COMPONENT 4 Basic Contribution Reserve Objective Maximum Reserve Balance for Reclassify AVR Reserve Related Party Add Third Party Calculations Amount Amount Encumbrances Encumbrances (Cols. + + ) Factor (Cols.4 x 5) Factor (Cols. 4 x 7) Factor Book/Adjusted Carrying Value Description MORTGAGE LOANS In Good Standing: 5. Farm Mortgages - CM - Highest Quality XXX 6. Farm Mortgages - CM - High Quality XXX 7. Farm Mortgages - CM - Medium Quality XXX 8. Farm Mortgages - CM4 - Low Medium Quality XXX 9. Farm Mortgages - CM5 - Low Quality XXX 40. Residential Mortgages - Insured or Guaranteed XXX 4. Residential Mortgages - All Other XXX 4. Commercial Mortgages - Insured or Guaranteed XXX 4. Commercial Mortgages - All Other - CM - Highest Quality XXX 44. Commercial Mortgages - All Other - CM - High Quality XXX 45. Commercial Mortgages - All Other - CM - Medium Quality XXX 46. Commercial Mortgages - All Other - CM4 - Low Medium Quality XXX 47. Commercial Mortgages - All Other - CM5 - Low Quality XXX Overdue, Not in Process: 48. Farm Mortgages XXX 49. Residential Mortgages - Insured or Guaranteed XXX 50. Residential Mortgages - All Other XXX 5. Commercial Mortgages - Insured or Guaranteed XXX 5. Commercial Mortgages - All Other XXX In Process of Foreclosure: 5. Farm Mortgages XXX 54. Residential Mortgages - Insured or Guaranteed XXX 55. Residential Mortgages - All Other XXX 56. Commercial Mortgages - Insured or Guaranteed XXX 57. Commercial Mortgages - All Other XXX 58. Total Schedule B Mortgages (Sum of Lines 5 through 57) XXX XXX XXX XXX 59. Schedule DA Mortgages XXX 60. Total Mortgage Loans on Real Estate (Lines ) XXX XXX XXX XXX Amount (Cols. 4 x 9)

81 Line Number NAIC Designation ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY ASSET VALUATION RESERVE BASIC CONTRIBUTION, RESERVE OBJECTIVE AND MAXIMUM RESERVE CALCULATIONS EQUITY AND OTHER INVESTED ASSET COMPONENT 4 Basic Contribution Reserve Objective Maximum Reserve Balance for Reclassify AVR Reserve Related Party Add Third Party Calculations Amount Amount Encumbrances Encumbrances (Cols. + + ) Factor (Cols.4 x 5) Factor (Cols. 4 x 7) Factor Book/Adjusted Carrying Value Description COMMON STOCK. Unaffiliated - Public XXX XXX (a) (a). Unaffiliated - Private XXX XXX. Federal Home Loan Bank XXX XXX 4. Affiliated - Life with AVR XXX XXX Affiliated - Investment Subsidiary: 5. Fixed Income - Exempt Obligations XXX XXX XXX 6. Fixed Income - Highest Quality XXX XXX XXX 7. Fixed Income - High Quality XXX XXX XXX 8. Fixed Income - Medium Quality XXX XXX XXX 9. Fixed Income - Low Quality XXX XXX XXX 0. Fixed Income - Lower Quality XXX XXX XXX. Fixed Income - In/Near Default XXX XXX XXX. Unaffiliated Common Stock - Public (a) (a). Unaffiliated Common Stock - Private 4. Real Estate (b) (b) (b) 5. Affiliated - Certain Other (See SVO Purposes and Procedures Manual) XXX XXX 6. Affiliated - All Other XXX XXX 7. Total Common Stock (Sum of Lines through 6) XXX XXX XXX REAL ESTATE 8. Home Office Property (General Account only) 9. Investment Properties 0. Properties Acquired in Satisfaction of Debt. Total Real Estate (Sum of Lines 8 through 0) XXX XXX XXX OTHER INVESTED ASSETS INVESTMENTS WITH THE UNDERLYING CHARACTERISTICS OF BONDS. Exempt Obligations XXX XXX. Highest Quality XXX XXX 4. High Quality XXX XXX 5. Medium Quality XXX XXX 6. 4 Low Quality XXX XXX 7. 5 Lower Quality XXX XXX 8. 6 In or Near Default XXX XXX 9. Total with Bond Characteristics (Sum of Lines through 8) XXX XXX XXX XXX XXX Amount (Cols. 4 x 9)

82 Line Number NAIC Designation ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY ASSET VALUATION RESERVE (Continued) BASIC CONTRIBUTION, RESERVE OBJECTIVE AND MAXIMUM RESERVE CALCULATIONS EQUITY AND OTHER INVESTED ASSET COMPONENT Description INVESTMENTS WITH THE UNDERLYING CHARACTERISTICS 4 Basic Contribution Reserve Objective Maximum Reserve Balance for Reclassify AVR Reserve Related Party Add Third Party Calculations Amount Amount Encumbrances Encumbrances (Cols. + + ) Factor (Cols.4 x 5) Factor (Cols. 4 x 7) Factor Book/Adjusted Carrying Value OF PREFERRED STOCKS 0. Highest Quality XXX XXX. High Quality XXX XXX. Medium Quality XXX XXX. 4 Low Quality XXX XXX 4. 5 Lower Quality XXX XXX 5. 6 In or Near Default XXX XXX 6. Affiliated Life with AVR XXX XXX 7. Total with Preferred Stock Characteristics (Sum of Lines 0 through 6) XXX XXX XXX XXX XXX INVESTMENTS WITH THE UNDERLYING CHARACTERISTICS OF MORTGAGE LOANS In Good Standing Affiliated: 8. Mortgages - CM - Highest Quality XXX 9. Mortgages - CM - High Quality XXX 40. Mortgages - CM - Medium Quality XXX 4. Mortgages - CM4 - Low Medium Quality XXX 4. Mortgages - CM5 - Low Quality XXX 4. Residential Mortgages - Insured or Guaranteed XXX 44. Residential Mortgages - All Other XXX XXX 45. Commercial Mortgages - Insured or Guaranteed XXX Overdue, Not in Process Affiliated: 46. Farm Mortgages XXX 47. Residential Mortgages - Insured or Guaranteed XXX 48. Residential Mortgages - All Other XXX 49. Commercial Mortgages - Insured or Guaranteed XXX 50. Commercial Mortgages - All Other XXX In Process of Foreclosure Affiliated: 5. Farm Mortgages XXX 5. Residential Mortgages - Insured or Guaranteed XXX 5. Residential Mortgages - All Other XXX 54. Commercial Mortgages - Insured or Guaranteed XXX 55. Commercial Mortgages - All Other XXX 56. Total Affiliated (Sum of Lines 8 through 55) XXX XXX XXX XXX 57. Unaffiliated - In Good Standing With Covenants XXX (c) (c) (c) 58. Unaffiliated - In Good Standing Defeased With Government Securities XXX 59. Unaffiliated - In Good Standing Primarily Senior XXX 60. Unaffiliated - In Good Standing All Other XXX 6. Unaffiliated - Overdue, Not in Process XXX 6. Unaffiliated - In Process of Foreclosure XXX 6. Total Unaffiliated (Sum of Lines 57 through 6) XXX XXX XXX XXX 64. Total with Mortgage Loan Characteristics (Lines ) XXX XXX XXX XXX Amount (Cols. 4 x 9)

83 4 Line Number NAIC Designation ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY ASSET VALUATION RESERVE (Continued) BASIC CONTRIBUTION, RESERVE OBJECTIVE AND MAXIMUM RESERVE CALCULATIONS EQUITY AND OTHER INVESTED ASSET COMPONENT Description INVESTMENTS WITH THE UNDERLYING CHARACTERISTICS 4 Basic Contribution Reserve Objective Maximum Reserve Balance for Reclassify AVR Reserve Related Party Add Third Party Calculations Amount Amount Encumbrances Encumbrances (Cols. + + ) Factor (Cols.4 x 5) Factor (Cols. 4 x 7) Factor Book/Adjusted Carrying Value OF COMMON STOCK 65. Unaffiliated Public XXX XXX (a) (a) 66. Unaffiliated Private XXX XXX 67. Affiliated Life with AVR XXX XXX 68. Affiliated Certain Other (See SVO Purposes & Procedures Manual) XXX XXX 69. Affiliated Other - All Other XXX XXX 70. Total with Common Stock Characteristics (Sum of Lines 65 through 69) XXX XXX XXX XXX XXX INVESTMENTS WITH THE UNDERLYING CHARACTERISTICS OF REAL ESTATE 7. Home Office Property (General Account only) 7. Investment Properties 7 Properties Acquired in Satisfaction of Debt 74. Total with Real Estate Characteristics (Sum of Lines 7 through 7) XXX XXX XXX LOW INCOME HOUSING TAX CREDIT INVESTMENTS 75. Guaranteed Federal Low Income Housing Tax Credit 76. Non-guaranteed Federal Low Income Housing Tax Credit 77. Guaranteed State Low Income Housing Tax Credit 78. Non-guaranteed State Low Income Housing Tax Credit 79. All Other Low Income Housing Tax Credit 80. Total LIHTC (Sum of Lines 75 through 79) XXX XXX XXX ALL OTHER INVESTMENTS 8. NAIC Working Capital Finance Investments XXX 8. NAIC Working Capital Finance Investments XXX 8. Other Invested Assets - Schedule BA XXX 84. Other Short-Term Invested Assets - Schedule DA XXX 85. Total All Other (Sum of Lines 8, 8, 8 and 84) XXX XXX XXX XXX 86. Total Other Invested Assets - Schedules BA & DA (Sum of Lines 9, 7, 64, 70, 74, 80 and 85) XXX XXX XXX (a) Times the company s weighted average portfolio beta (Minimum.0, Maximum.0). (b) Determined using the same factors and breakdowns used for directly owned real estate. (c) This will be the factor associated with the risk category determined in the company generated worksheet. Amount (Cols. 4 x 9)

84 ASSET VALUATION RESERVE (Continued) BASIC CONTRIBUTION, RESERVE OBJECTIVE AND MAXIMUM RESERVE CALCULATIONS REPLICATIONS (SYNTHETIC) ASSETS RSAT Number Type CUSIP 4 Description of Asset(s) 5 NAIC Designation or Other Description of Asset 6 Value of Asset 7 AVR Basic Contribution 8 AVR Reserve Objective 9 AVR Maximum Reserve NONE Total 5

85 SCHEDULE F Showing all claims for death losses and all other contract claims resisted or compromised during the year, and all claims for death losses and all other contract claims resisted December of current year State of Year of Residence Claim for Amount Resisted of Death or Amount Paid Dec. of Claimant Disability Amount Claimed During the Year Current Year Contract Numbers Claim Numbers Why Compromised or Resisted Death Claims - Ordinary XXX Death Claims - Credit XXX Death Claims - Disposed Of XXX Additional Accidental Death Benefits Claims - Disposed Of XXX Disability Benefits Claims - Disposed Of XXX Matured Endowments Claims - Disposed Of XXX Annuities with Life Contingency Claims - Disposed Of XXX Claims Disposed of During Current Year XXX Death Claims - Ordinary XXX Death Claims - Resisted XXX Additional Accidental Death Benefits Claims - Resisted XXX Disability Benefits Claims - Resisted XXX Matured Endowments Claims - Resisted XXX Annuities with Life Contingencies Claims - Resisted XXX Claims Resisted During Current Year XXX Totals XXX 6

86 Amount Total ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY % SCHEDULE H - ACCIDENT AND HEALTH EXHIBIT Group Accident and Health 4 Amount % Credit Other Individual Contracts Accident and Health Non-Renewable for Stated (Group and Individual) Collectively Renewable Non-Cancelable Guaranteed Renewable Reasons Only Other Accident Only All Other Amount % Amount % Amount % Amount % Amount % Amount % Amount PART. - ANALYSIS OF UNDERWRITING OPERATIONS 8 %. Premiums written XXX XXX XXX XXX XXX XXX XXX XXX XXX. Premiums earned XXX XXX XXX XXX XXX XXX XXX XXX XXX. Incurred claims 4. Cost containment expenses 5. Incurred claims and cost containment expenses (Lines and 4) 6. Increase in contract reserves 7. Commissions (a) 8. Other general insurance expenses 9. Taxes, licenses and fees 0. Total other expenses incurred 7. Aggregate write-ins for deductions. Gain from underwriting before dividends or refunds. Dividends or refunds 4. Gain from underwriting after dividends or refunds DETAILS OF WRITE-INS Summary of remaining write-ins for Line from overflow page 99. Totals (Lines 0 thru 0 plus 98)(Line above) (a) Includes $ reported as "Contract, membership and other fees retained by agents.

87 SCHEDULE H - ACCIDENT AND HEALTH EXHIBIT (Continued) 4 Other Individual Contracts Credit Accident and Health Non-Renewable Total Group Accident and Health (Group and Individual) Collectively Renewable Non-Cancelable Guaranteed Renewable for Stated Reasons Only PART. - RESERVES AND LIABILITIES A. Premium Reserves:. Unearned premiums. Advance premiums. Reserve for rate credits 4. Total premium reserves, current year 5. Total premium reserves, prior year 6. Increase in total premium reserves B. Contract Reserves:. Additional reserves (a). Reserve for future contingent benefits. Total contract reserves, current year 4. Total contract reserves, prior year. 5. Increase in contract reserves C. Claim Reserves and Liabilities:. Total current year. Total prior year. Increase 0 8 Other Accident Only 9 All Other 8 PART. - TEST OF PRIOR YEAR'S CLAIM RESERVES AND LIABILITIES. Claims paid during the year:. On claims incurred prior to current year. On claims incurred during current year. Claim reserves and liabilities, December, current year:. On claims incurred prior to current year. On claims incurred during current year. Test:. Lines. and.. Claim reserves and liabilities, December, prior year. Line. minus Line. PART 4. - REINSURANCE A. Reinsurance Assumed:. Premiums written. Premiums earned. Incurred claims 4. Commissions B. Reinsurance Ceded:. Premiums written. Premiums earned. Incurred claims 4. Commissions (a) Includes $ premium deficiency reserve.

88 SCHEDULE H - PART 5 - HEALTH CLAIMS Medical Dental Other 4 Total A. Direct:. Incurred Claims. Beginning Claim Reserves and Liabilities. Ending Claim Reserves and Liabilities 4. Claims Paid B. Assumed Reinsurance: 5. Incurred Claims 6. Beginning Claim Reserves and Liabilities 7. Ending Claim Reserves and Liabilities 8. Claims Paid C. Ceded Reinsurance: 9. Incurred Claims 0. Beginning Claim Reserves and Liabilities. Ending Claim Reserves and Liabilities. Claims Paid D. Net:. Incurred Claims 4. Beginning Claim Reserves and Liabilities 5. Ending Claim Reserves and Liabilities 6. Claims Paid E. Net Incurred Claims and Cost Containment Expenses: 7. Incurred Claims and Cost Containment Expenses 8. Beginning Reserves and Liabilities 9. Ending Reserves and Liabilities 0. Paid Claims and Cost Containment Expenses 9

89 NAIC Company Code ID Number ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE S - PART - SECTION Reinsurance Assumed Life Insurance, Annuities, Deposit Funds and Other Liabilities Without Life or Disability Contingencies, and Related Benefits Listed by Reinsured Company as of December, Current Year Type of Reinsurance Payable Modified Effective Domiciliary Reinsurance Amount of In Force at on Paid and Coinsurance Date Name of Reinsured Jurisdiction Assumed End of Year Reserve Premiums Unpaid Losses Reserve Funds Withheld Under Coinsurance NONE Totals 40

90 NAIC Company Code ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE S - PART - SECTION Reinsurance Assumed Accident and Health Insurance Listed by Reinsured Company as of December, Current Year Type of Reinsurance Assumed 9 Reserve Liability Other Than for Unearned Premiums 0 Reinsurance Payable on Paid and Unpaid Losses Modified Coinsurance Reserve ID Number Effective Date Name of Reinsured Domiciliary Jurisdiction Premiums Unearned Premiums Funds Withheld Under Coinsurance! " #$## ##$ #$# # #$# U.S. Affiliates - Other #$## ##$ #$# # #$# Total - U.S. Affiliates #$## ##$ #$# # #$# Total - Non-U.S. Affiliates Total - Affiliates #$## ##$ #$# # #$# Total - Non-Affiliates Total U.S. (Sum of and ) #$## ##$ #$# # #$# Total Non-U.S. (Sum of and ) Totals #$## ##$ #$# # #$# 4

91 SCHEDULE S - PART NAIC Company Code Reinsurance Recoverable on Paid and Unpaid Losses Listed by Reinsuring Company as of December, Current Year ID Number Effective Date Name of Company Domiciliary Jurisdiction Paid Losses Unpaid Losses Total Life and Annuity - U.S. Affiliates Total Life and Annuity - Non-U.S. Affiliates Total Life and Annuity - Affiliates!!"! #$!! "!! # #!!! # %!& "!"' #!! # "!!! # #$!! " #!! #!"! #!"'!"'!! #!!"! #$!! " #!! #!!"'!! #! #$!! " #!! #!!"'!! #!!"! #$! " #!! #!!"'!! #$!! "!! #!!"'! #$!! "!! #!!"'!!! #!!!! #! #$!! "!! #!!"' #$!! "!! #!!"' #$!! "!! #!!"' #$!! "!! #! #$!! "!! # # #$!! " #!! # # Life and Annuity - U.S. Non-Affiliates Total Life and Annuity - Non-Affiliates 7 4

92 SCHEDULE S - PART NAIC Company Code Reinsurance Recoverable on Paid and Unpaid Losses Listed by Reinsuring Company as of December, Current Year ID Number Effective Date Name of Company Domiciliary Jurisdiction Paid Losses Unpaid Losses Total Life and Annuity Total Accident and Health - U.S. Affiliates Total Accident and Health - Non-U.S. Affiliates Total Accident and Health - Affiliates! Accident and Health - U.S. Non-Affiliates Total Accident and Health - Non-Affiliates Total Accident and Health Total U.S. (Sum of , , and ) Total Non-U.S. (Sum of , , and ) Totals - Life, Annuity and Accident and Health 7 4.

93 4 NAIC Company Code ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE S - PART - SECTION Reinsurance Ceded Life Insurance, Annuities, Deposit Funds and Other Liabilities Without Life or Disability Contingencies, and Related Benefits Listed by Reinsuring Company as of December, Current Year Reserve Credit Taken Outstanding Surplus Relief 4 5 Domiciliary 9 0 Type of Type of Modified ID Effective Jurisdiction Reinsurance Business Amount in Force Coinsurance Number Date Name of Company Ceded Ceded at End of Year Current Year Prior Year Premiums Current Year Prior Year Reserve Funds Withheld Under Coinsurance Total General Account - Authorized U.S. Affiliates Total General Account - Authorized Non-U.S. Affiliates Total General Account - Authorized Affiliates!""# $ %&'()*'+++ )*' #"$" %&'()*'+++ # )*' "" "$" " #" %&'()*'+++ )*' %&'()*'+++ )*' %&'()*'+++ )*' #","- $ "$. $"!"# $ ""!"# $ %&'()*'+++ )*' %&'()*'+++ )*' %&'()*'+++ )*' %&'()*'+++ )*'." $" "" ""!""# $ # " "" # "$" "$.!"# $ "" !""# $ +++ # +++ "$" +++ #" +++ #" +++ "$ "" +++ "" +++

94 4. NAIC Company Code ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE S - PART - SECTION Reinsurance Ceded Life Insurance, Annuities, Deposit Funds and Other Liabilities Without Life or Disability Contingencies, and Related Benefits Listed by Reinsuring Company as of December, Current Year Reserve Credit Taken Outstanding Surplus Relief 4 5 Domiciliary 9 0 Type of Type of Modified ID Effective Jurisdiction Reinsurance Business Amount in Force Coinsurance Number Date Name of Company Ceded Ceded at End of Year Current Year Prior Year Premiums Current Year Prior Year Reserve Funds Withheld Under Coinsurance!!!!!!!" #$%!%&!&& %& %&!!!&!!!!!" #$%!%&!&& %&!! %&!!!"!! %&!!!"!! %&!!!"!! %&!!!" %&!!!" %&!!!"! %&!!!!!"! %&!! #$%!%&! %&!

95 4. NAIC Company Code ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE S - PART - SECTION Reinsurance Ceded Life Insurance, Annuities, Deposit Funds and Other Liabilities Without Life or Disability Contingencies, and Related Benefits Listed by Reinsuring Company as of December, Current Year Reserve Credit Taken Outstanding Surplus Relief 4 5 Domiciliary 9 0 Type of Type of Modified ID Effective Jurisdiction Reinsurance Business Amount in Force Coinsurance Number Date Name of Company Ceded Ceded at End of Year Current Year Prior Year Premiums Current Year Prior Year Reserve Funds Withheld Under Coinsurance! """ #$ """ """ %&##$ """! #$! """ #$ """ """ %&##$ """! #$! #$ General Account - Authorized U.S. Non-Affiliates Total General Account - Authorized Non-Affiliates Total General Account Authorized Total General Account - Unauthorized U.S. Affiliates Total General Account - Unauthorized Non-U.S. Affiliates Total General Account - Unauthorized Affiliates Total General Account - Unauthorized Non-Affiliates Total General Account Unauthorized Total General Account - Certified U.S. Affiliates Total General Account - Certified Non-U.S. Affiliates Total General Account - Certified Affiliates Total General Account - Certified Non-Affiliates Total General Account Certified Total General Account Authorized, Unauthorized and Certified Total Separate Accounts - Authorized U.S. Affiliates Total Separate Accounts - Authorized Non-U.S. Affiliates Total Separate Accounts - Authorized Affiliates Total Separate Accounts - Authorized Non-Affiliates Total Separate Accounts Authorized Total Separate Accounts - Unauthorized U.S. Affiliates Total Separate Accounts - Unauthorized Non-U.S. Affiliates Total Separate Accounts - Unauthorized Affiliates Total Separate Accounts - Unauthorized Non-Affiliates Total Separate Accounts Unauthorized Total Separate Accounts - Certified U.S. Affiliates Total Separate Accounts - Certified Non-U.S. Affiliates Total Separate Accounts - Certified Affiliates Total Separate Accounts - Certified Non-Affiliates Total Separate Accounts Certified Total Separate Accounts Authorized, Unauthorized and Certified Total U.S. (Sum of , , , , , , , , , , and )

96 NAIC Company Code ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE S - PART - SECTION Reinsurance Ceded Life Insurance, Annuities, Deposit Funds and Other Liabilities Without Life or Disability Contingencies, and Related Benefits Listed by Reinsuring Company as of December, Current Year Reserve Credit Taken Outstanding Surplus Relief 4 5 Domiciliary 9 0 Type of Type of Modified ID Effective Jurisdiction Reinsurance Business Amount in Force Coinsurance Number Date Name of Company Ceded Ceded at End of Year Current Year Prior Year Premiums Current Year Prior Year Reserve Funds Withheld Under Coinsurance Total Non-U.S. (Sum of , , , , , 99999, , , , , and ) Totals 4.

97 44 NAIC Company Code ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE S - PART - SECTION Reinsurance Ceded Accident and Health Insurance Listed by Reinsuring Company as of December, Current Year Outstanding Surplus Relief 4 Domiciliary Reserve Credit Type of Unearned Taken Other Modified ID Effective Jurisdiction Business Premiums than for Unearned Coinsurance Number Date Name of Company Type Ceded Premiums (Estimated) Premiums Current Year Prior Year Reserve Funds Withheld Under Coinsurance Total General Account - Authorized U.S. Affiliates Total General Account - Authorized Non-U.S. Affiliates Total General Account - Authorized Affiliates!! General Account - Authorized U.S. Non-Affiliates Total General Account - Authorized Non-Affiliates Total General Account Authorized Total General Account - Unauthorized U.S. Affiliates Total General Account - Unauthorized Non-U.S. Affiliates Total General Account - Unauthorized Affiliates Total General Account - Unauthorized Non-Affiliates Total General Account Unauthorized Total General Account - Certified U.S. Affiliates Total General Account - Certified Non-U.S. Affiliates Total General Account - Certified Affiliates Total General Account - Certified Non-Affiliates Total General Account Certified Total General Account Authorized, Unauthorized and Certified Total Separate Accounts - Authorized U.S. Affiliates Total Separate Accounts - Authorized Non-U.S. Affiliates Total Separate Accounts - Authorized Affiliates Total Separate Accounts - Authorized Non-Affiliates Total Separate Accounts Authorized Total Separate Accounts - Unauthorized U.S. Affiliates Total Separate Accounts - Unauthorized Non-U.S. Affiliates Total Separate Accounts - Unauthorized Affiliates Total Separate Accounts - Unauthorized Non-Affiliates Total Separate Accounts Unauthorized Total Separate Accounts - Certified U.S. Affiliates Total Separate Accounts - Certified Non-U.S. Affiliates Total Separate Accounts - Certified Affiliates Total Separate Accounts - Certified Non-Affiliates Total Separate Accounts Certified Total Separate Accounts Authorized, Unauthorized and Certified Total U.S. (Sum of , , , , , , , , , , and ) Total Non-U.S. (Sum of , , , , , 99999, , , , , and ) Totals

98 Schedule S - Part 4 N O N E Schedule S - Part 4 - Bank Footnote N O N E Schedule S - Part 5 N O N E Schedule S - Part 5 - Bank Footnote N O N E 45, 46

99 SCHEDULE S - PART 6 Five Year Exhibit of Reinsurance Ceded Business A. OPERATIONS ITEMS 04 (000 OMITTED) 0. Premiums and annuity considerations for life and accident and health contracts. Commissions and reinsurance expense allowances. Contract claims 4. Surrender benefits and withdrawals for life contracts 5. Dividends to policyholders 6. Reserve adjustments on reinsurance ceded 7. Increase in aggregate reserve for life and accident and health contracts B. BALANCE SHEET ITEMS 8. Premiums and annuity considerations for life and accident and health contracts deferred and uncollected 9. Aggregate reserves for life and accident and health contracts 0. Liability for deposit-type contracts. Contract claims unpaid. Amounts recoverable on reinsurance. Experience rating refunds due or unpaid 4. Policyholders dividends (not included in Line 0) 5. Commissions and reinsurance expense allowances due 6. Unauthorized reinsurance offset 7. Offset for reinsurance with Certified Reinsurers XXX XXX C. UNAUTHORIZED REINSURANCE (DEPOSITS BY AND FUNDS WITHHELD FROM) 8. Funds deposited by and withheld from (F) 9. Letters of credit (L) 0. Trust agreements (T). Other (O) D. REINSURANCE WITH CERTIFIED REINSURERS (DEPOSITS BY AND FUNDS WITHHELD FROM). Multiple Beneficiary Trust XXX XXX. Funds deposited by and withheld from (F) XXX XXX 4. Letters of credit (L) XXX XXX 5. Trust agreements (T) XXX XXX 6. Other (O) XXX XXX

100 SCHEDULE S - PART 7 ASSETS (Page, Col. ) Restatement of Balance Sheet to Identify Net Credit for Ceded Reinsurance As Reported (net of ceded) Restatement Adjustments Restated (gross of ceded). Cash and invested assets (Line ). Reinsurance (Line 6). Premiums and considerations (Line 5) 4. Net credit for ceded reinsurance XXX 5. All other admitted assets (balance) 6. Total assets excluding Separate Accounts (Line 6) 7. Separate Account assets (Line 7) 8. Total assets (Line 8) LIABILITIES, CAPITAL AND SURPLUS (Page ) 9. Contract reserves (Lines and ) 0. Liability for deposit-type contracts (Line ). Claim reserves (Line 4). Policyholder dividends/reserves (Lines 5 through 7). Premium & annuity considerations received in advance (Line 8) 4. Other contract liabilities (Line 9) 5. Reinsurance in unauthorized companies (Line 4.0 minus inset amount) 6. Funds held under reinsurance treaties with unauthorized reinsurers (Line 4.0 minus inset amount) 7. Reinsurance with Certified Reinsurers (Line 4.0 inset amount) 8. Funds held under reinsurance treaties with Certified Reinsurers (Line 4.0 inset amount) 9. All other liabilities (balance) 0. Total liabilities excluding Separate Accounts (Line 6). Separate Account liabilities (Line 7). Total liabilities (Line 8). Capital & surplus (Line 8) XXX 4. Total liabilities, capital & surplus (Line 9) NET CREDIT FOR CEDED REINSURANCE 5. Contract reserves 6. Claim reserves 7. Policyholder dividends/reserves 8. Premium & annuity considerations received in advance 9. Liability for deposit-type contracts 0. Other contract liabilities. Reinsurance ceded assets. Other ceded reinsurance recoverables. Total ceded reinsurance recoverables 4. Premiums and considerations 5. Reinsurance in unauthorized companies 6. Funds held under reinsurance treaties with unauthorized reinsurers 7. Reinsurance with Certified Reinsurers 8. Funds held under reinsurance treaties with Certified Reinsurers 9. Other ceded reinsurance payables/offsets 40. Total ceded reinsurance payable/offsets 4. Total net credit for ceded reinsurance 48

101 SCHEDULE T - PREMIUMS AND ANNUITY CONSIDERATIONS Allocated by States and Territories Direct Business Only Life Contracts Accident and Health Insurance Premiums, Including Policy, Total Life Insurance Annuity Membership Other Columns Premiums Considerations and Other Fees Considerations through 5 Deposit-Type Contracts States, Etc. Active Status. Alabama AL. Alaska AK. Arizona AZ 4. Arkansas AR 5. California CA 6. Colorado CO 7. Connecticut CT 8. Delaware DE 9. District of Columbia DC 0. Florida FL. Georgia GA. Hawaii HI. Idaho ID 4. Illinois IL 5. Indiana IN 6. Iowa IA 7. Kansas KS 8. Kentucky KY 9. Louisiana LA 0. Maine ME. Maryland MD. Massachusetts MA. Michigan MI 4. Minnesota MN 5. Mississippi MS 6. Missouri MO 7. Montana MT 8. Nebraska NE 9. Nevada NV 0. New Hampshire NH. New Jersey NJ. New Mexico NM. New York NY 4. North Carolina NC 5. North Dakota ND 6. Ohio OH 7. Oklahoma OK 8. Oregon OR 9. Pennsylvania PA 40. Rhode Island RI 4. South Carolina SC 4. South Dakota SD 4. Tennessee TN 44. Texas TX 45. Utah UT 46. Vermont VT 47. Virginia VA 48. Washington WA 49. West Virginia WV 50. Wisconsin WI 5. Wyoming WY 5. American Samoa AS 5. Guam GU 54. Puerto Rico PR 55. U.S. Virgin Islands VI 56. Northern Mariana Islands MP 57. Canada CAN 58. Aggregate Other Alien OT XXX 59. Subtotal (a) 90. Reporting entity contributions for employee benefits plans XXX 9. Dividends or refunds applied to purchase paid-up additions and annuities XXX 9. Dividends or refunds applied to shorten endowment or premium paying period XXX 9. Premium or annuity considerations waived under disability or other contract provisions XXX 94. Aggregate or other amounts not allocable by State XXX 95. Totals (Direct Business) XXX 96. Plus reinsurance assumed XXX 97 Totals (All Business) XXX 98. Less reinsurance ceded XXX 99. Totals (All Business) less Reinsurance Ceded XXX (b) DETAILS OF WRITE-INS XXX XXX XXX Summary of remaining write-ins for Line 58 from overflow page XXX Totals (Lines 5800 through 5800 plus 58998)(Line 58 above) XXX 940. XXX 940. XXX 940. XXX Summary of remaining write-ins for Line 94 from overflow page XXX Totals (Lines 940 through 940 plus 9498)(Line 94 above) XXX (L) Licensed or Chartered - Licensed Insurance Carrier or Domiciled RRG; (R) Registered - Non-domiciled RRGs; (Q) Qualified - Qualified or Accredited Reinsurer; (E) Eligible - Reporting Entities eligible or approved to write Surplus Lines in the state; (N) None of the above - Not allowed to write business in the state. Explanation of basis of allocation by states, etc., of premiums and annuity considerations Premiums are listed on the basis of legal residence of insured. Annuity considerations are listed on the basis of legal residence of the annuitant. (a) Insert the number of L responses except for Canada and Other Alien. (b) Column 4 should balance with Exhibit, Lines 6.4, 0.4, and 6.4, Cols. 8, 9, 0, or with Schedule H, Part, Line, indicate which:! 49

102 SCHEDULE T - PART INTERSTATE COMPACT - EXHIBIT OF PREMIUMS WRITTEN Allocated by States and Territories States, Etc. Life (Group and Individual) Annuities (Group and Individual) Direct Business Only Disability Income (Group and Individual) 4 Long-Term Care (Group and Individual) 5 Deposit-Type Contracts. Alabama AL. Alaska AK. Arizona AZ 4. Arkansas AR 5. California CA 6. Colorado CO 7. Connecticut CT 8. Delaware DE 9. District of Columbia DC 0. Florida FL. Georgia GA. Hawaii HI. Idaho ID 4. Illinois IL 5. Indiana IN 6. Iowa IA 7. Kansas KS 8. Kentucky KY 9. Louisiana LA 0. Maine ME. Maryland MD. Massachusetts MA. Michigan MI 4. Minnesota MN 5. Mississippi MS 6. Missouri MO 7. Montana MT 8. Nebraska NE 9. Nevada NV 0. New Hampshire NH. New Jersey NJ. New Mexico NM. New York NY 4. North Carolina NC 5. North Dakota ND 6. Ohio OH 7. Oklahoma OK 8. Oregon OR 9. Pennsylvania PA 40. Rhode Island RI 4. South Carolina SC 4. South Dakota SD 4. Tennessee TN 44. Texas TX 45. Utah UT 46. Vermont VT 47. Virginia VA 48. Washington WA 49. West Virginia WV 50. Wisconsin WI 5. Wyoming WY 5. American Samoa AS 5. Guam GU 54. Puerto Rico PR 55. U.S. Virgin Islands VI 56. Northern Mariana Islands MP 57. Canada CAN 58. Aggregate Other Alien OT 59. Total 6 Totals 50

103 5 ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE Y - INFORMATION CONCERNING ACTIVITIES OF INSURER MEMBERS OF A HOLDING COMPANY GROUP PART - ORGANIZATIONAL CHART

104 . / $ % 0$ %+(&! && " *+ #!!( *+ #! 0+ &(, *+# ( 0 " - " -+/+ &!&( #. $ % 0$ %+(& ('!'" / ; + &!'&' " 40 +!(( " $ '&&! " # $ % &!'( ) $+,- *+ # (!!'! 445%!(!'!! " #% (!! ).#% (!!!!60!7 +4%. / $ % ++/ % % + # #-+$ :% $8 / &!

105 0 *+ #!!( " 04 '(!&& -%+# '(!& -# +% '(!&! 0! # &!! &!!! 0-0 &( ; + &! 0 = &!&(( &!'& *+ # (! < *+ # &!! 0 $ &!((' +; + &'( -+/+ 0 (&' *+ # ('&'&! 0 $ ((' &!!(! " "+ = & 0;- + > (! ;" '&!( +, (!(&&! '7 $5? 5 (!(!. + *#%!( (('( +! (&!9 # &(!(& >+#$ ((, '! 4>0$ 0 '! 50 => * (!! 5 > * (&( ;/+" >!&&' +! ( &(7? > &? > &'? > &'(( + 0,0 04>5# 0$ &!'!'' " !(!'!!60!7 +4%$ ++/ % % +#-+$ 8

106 0 *+ #!!( ". / $ % 0$ %+(&! && " -0 &( 0 $ &!((' 0 $ ((' 0 0! -# +% '(!&! = &!&(( 0 -$: &&('. (!!!7 &&7 =$% > &(& &&7!7 " *? 5 ('(& "0!7 &&7 " $ &(&!. *+ # '(' =$% >,/!''. '!60!7 +4%$ ++/ %8

107 - *+ #! " -4 &!!!& &!'&! *## &!! * 4#! (!&&! C+ &!&&! A &!'!'!! + /!(& &!&!'!( ;B (!& $ $ &!(.$ &!&!'' #!&( "=> &!'!'' &!'& &87 E (!! *44% &!!(& &!'& 5 - &!'!'! # (!&'( $ ('(& &87 D +; + (( $ % '('( 0 C (((' 5 # (('!&& 5? ; ((''' &'!!( 5 87 (8(7 %!&!' 8'7 8(7!60!7 +4%$ ++/ % % + # 8

108 . / $ % 0$ %+(&! && " &(, *+# ( 87 " $>$!! -+/+ &!&(? (&& # $0+ (!'( 7 D + # '!!!! $, ((!! $, ((& $, (&!( *4#!! 0!=#+ (&&& $@@ ; + ((! (8!7!7!7 $# :% ; + (((!( '8'7!7!7 $@@ ; + &&( $# :% ; + &'&&(!7!7 $@@ ; + (! $# :% ; + (&!60!7 +4%$ ++/ % % + # # $ :% $8

109 . / $ % 0$ %+(&! && " *+ #!!( " 0 0 $ ((' &7 ; ' '87 $$!(( &7 " ; &(& &7 5! (( &&7 -+/+ (! '7 5? 5!&. >, (&' # + (( &7 # %? > (' '7, +#!&(' 7 5%;#, 0!'&( 0 7 (> '!'( &&8&7 +#? 5 '! 0 '8&&!7 " '' '8&&!7?-%$ &.B '7 > +0!((& 7 0 # $ (& 7 &!'''& 7 > &!'''&( 8'7 8'7 7 (!!!&.0 / # (!!' + $ &!(''' " '7!60!7 +4%$ ++/ %8

110 5 Group Code Group Name NAIC Company Code 4 ID Number ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE Y PART A - DETAIL OF INSURANCE HOLDING COMPANY SYSTEM 5 Federal RSSD 6 CIK 7 Name of Securities Exchange if Publicly Traded (U.S. or International) Names of Parent, Subsidiaries Or Affiliates Domiciliary Location Relationship to Reporting Entity Directly Controlled by (Name of Entity/Person) Type of Control (Ownership, Board, Management, Attorney-in-Fact, Influence, Other) If Control is Ownership Provide Percentage 4 Ultimate Controlling Entity(ies)/Person(s)! " #$ % & '() " *+!,)* -! %.) " *+! / -! %,)) *$ *+! 0 -! %& +() *$ *+! 0 -! % %% 4)/ *$ *+! 0 -! & & 4)/ *$ *+! 0 -! % %& ''5! *$ *+! 0 -! % %& #$4)/ " *+! 0 -! % %&&% +4)/ " *+! 0 -! / %%! " *+! 0 -! ),# *+! 0 -! % %%% *$ *+! 0 -! + % %&% " *+! 0 -! #$ & %& *$ *+! 0 -! "/ %! 6+ *+! 0 -! % 7 *$ *+! 0 -! & %& 6*#/! *$ *+! 0 -! & %% #/! *$ *+! 0 -! & & / () *$ (! 0 -! % (' *$ *+ #$4)/ 0 -!,!)/ *$ *+ #$4)/ 0 -!,/)! *$ *+ #$4)/ 0 -! & ).) *$ *+ #$4)/ 0 -! % &% 4)/ *$ *+ #$4)/ 0 -! 5 *

111 5. Group Code Group Name NAIC Company Code 4 ID Number ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE Y PART A - DETAIL OF INSURANCE HOLDING COMPANY SYSTEM 5 Federal RSSD 6 CIK 7 Name of Securities Exchange if Publicly Traded (U.S. or International) 8 Names of Parent, Subsidiaries Or Affiliates 9 0 Domiciliary Location Relationship to Reporting Entity Directly Controlled by (Name of Entity/Person) Type of Control (Ownership, Board, Management, Attorney-in-Fact, Influence, Other)! ""#"""! ""#""" )" *+! ""#""" ")), '!! ""#""" "-...! ""#""" "- /! ""#""" " 0%! ""#""" )",-,! ""#""" "-))! ""#""" -)),!! ""#""",." %! ""#""" ). %! ""#""" "! ""#""" * %! ""#""" -"."." % %! ""#""",."" %! ""#""",." 4 %! ""#""". %! ""#""" ) ( %! ""#""" )..- %! ""#""" ". 5 %! ""#""",." %! ""#""",, 6 %! ""#""" ") 7 & %! ""#""" ) %! ""#""" If Control is Ownership Provide Percentage 4 Ultimate Controlling Entity(ies)/Person(s) $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( $ %%& % '!( 5 *

112 5. Group Code Group Name NAIC Company Code 4 ID Number ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE Y PART A - DETAIL OF INSURANCE HOLDING COMPANY SYSTEM 5 Federal RSSD 6 CIK 7 Name of Securities Exchange if Publicly Traded (U.S. or International) 8 Names of Parent, Subsidiaries Or Affiliates 9 0 Domiciliary Location Relationship to Reporting Entity Directly Controlled by (Name of Entity/Person) Type of Control (Ownership, Board, Management, Attorney-in-Fact, Influence, Other)!" # )* +"'"!" # ),* &!" # ),),!-.&!" # *,/ '0'&!" # ),), $"&!" # ),),,!&!" #,/ "!" #,,*! '"( 0 &!" # ///, ( (&!" #)) ///, ( &!" /# ///, (!-.&!" #), ///, ( '0'&!" /*# /) ) 4!" #,/).&& -&!-.&!" #,,/, 4&5& -&!-.&!" # /*, 6&& -& (&!" # ), && -& (&!" # /*)* & 70.%&!" # //! "87 87!" # //))/! "87&& 87!" # /! "87&&& 87!" # $!! %&,)) 4-70 &0 '"(!" # $!! %& )//.% &0 '"(!" # $!! %& /*) " '"(!" # If Control is Ownership Provide Percentage 4 Ultimate Controlling Entity(ies)/Person(s) $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( $!! % &'"( 5 *

113 5. Group Code Group Name NAIC Company Code 4 ID Number ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE Y PART A - DETAIL OF INSURANCE HOLDING COMPANY SYSTEM 5 Federal RSSD 6 CIK 7 Name of Securities Exchange if Publicly Traded (U.S. or International) 8 Names of Parent, Subsidiaries Or Affiliates 9 0 Domiciliary Location Relationship to Reporting Entity Directly Controlled by (Name of Entity/Person) Type of Control (Ownership, Board, Management, Attorney-in-Fact, Influence, Other)!""" " "* $%#+,- $%( ""!""" # $ %&&'& ". $/ ()!""" # $ %&&'& " %0- $/ ()!""" # $ %&&'& *** -(( $/ () "!""" *** -(((- -(( "!""" # $ %&&'& *** -(((- () *"!""" # $ %&&'& " 0%0& % $/ () *!""" # $ %&&'& * 4)$% + $/ () "!""" # $ %&&'& " +/ $/ () *!""" " & +/ ""!""" # $ %&&'& "" 5)- #6 $/ () *!" "" 5)- #6 $/ $%#+,- "!"" # $ %&&'& ** ((&- $/ () *!" ** ((&- $/ $%#+,- "!"" # $ %&&'& *** -%+- $/ () "!""" # $ %&&'& "* &(,4 $/ () *"!""" # $ %&&'& ""* 0).4,/ -/ $/ ()!""" # $ %&&'& ** -+ $/ ()!""" # $ %&&'& /(4- $/ () "!""" *" #/&'4 /(4- ""!""" # $ %&&'& " + $/ ()! "" " + $/ $%,-74! "" *"" $%,- $%( ""!""" "* 5 8& $%5/ ""!""" If Control is Ownership Provide Percentage 4 Ultimate Controlling Entity(ies)/Person(s) # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() # $ %&&' &() 5 *

114 5.4 Group Code Group Name NAIC Company Code 4 ID Number ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE Y PART A - DETAIL OF INSURANCE HOLDING COMPANY SYSTEM 5 Federal RSSD 6 CIK 7 Name of Securities Exchange if Publicly Traded (U.S. or International) 8 Names of Parent, Subsidiaries Or Affiliates 9 0 Domiciliary Location Relationship to Reporting Entity Directly Controlled by (Name of Entity/Person) Type of Control (Ownership, Board, Management, Attorney-in-Fact, Influence, Other)! "##$### #! "##$### ""# - %'. &&! "##$### / /!,0 %')+! //$### / /!,0.! "$### "#!,0(!,0! "##$### /## &&4 & 5 %')+! //$### /## &&4 & 5,! "$### %& & '&( )* "# & + %)5 +,! $## #" '605&+ &5*& 45 %')+! "##$### ""# -&&!0'%' %')+! "##$### #/ 4 &0 '%' %')+! "##$### /"/# "7* %')+! "##$### /##/# 58 &-0 &! "##$### "//" % 8! "##$### "# // 8( & -0 %')+! "##$### # / *09 * '605&+ &5*&! "##$### # / *09 * )) '605&+ &5*&! "##$### # / *09 * ))) '605&+ &5*&! "##$### - + & -* '& ++ 5*&)* 5 %)5 '605&+ &5*&! /$### # 9," % 8! "##$### ""# &4 &4 & % %)5 8! $### #/# ('& 5*&)* % %)5 8 ( *& #$### -0. & & %')+! "##$### / - +& & " %')+! "##$### If Control is Ownership Provide Percentage 4 Ultimate Controlling Entity(ies)/Person(s) %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, %& & '&( )* +, 5 *

115 5.5 Group Code Group Name NAIC Company Code 4 ID Number ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE Y PART A - DETAIL OF INSURANCE HOLDING COMPANY SYSTEM 5 Federal RSSD 6 CIK 7 Name of Securities Exchange if Publicly Traded (U.S. or International) 8 Names of Parent, Subsidiaries Or Affiliates 9 0 Domiciliary Location Relationship to Reporting Entity Directly Controlled by (Name of Entity/Person) Type of Control (Ownership, Board, Management, Attorney-in-Fact, Influence, Other)!!"!!!!(! ) *++,!!"!!!!(-.) * / &0!!"!!! -((( +,4 +!!"!!! # $$ %$& (.5 + ' -!"!!! 6 5.5!!"!!! $$ 77.$ + $$ 8!"!!! $$ 77.$ # $$ %$& + ' "! $$ 77.$ + $$ 8!"!!! $$ 77.$ -!!-!! + $$ 8!"!!! $$ & 9$ '.$ + $$ 8!"!!! $$ & # $$ %$& 9$ '.$ + ' ("!(! $$ & -! 9$ '.$ + $$ 8!"!!! $$ & -!!(-- 9$ '.$ + $$ 8!"!!!! 6!! + &$ 0 -"!! :$ 6.$ + 6!"!!!!(! :$ 6 + +*!"!!! If Control is Ownership Provide Percentage 4 Ultimate Controlling Entity(ies)/Person(s) # $$ % $&' # $$ % $&' # $$ % $&' # $$ % $&' # $$ % $&' # $$ % $&' # $$ % $&' # $$ % $&' # $$ % $&' # $$ % $&' # $$ % $&' # $$ % $&' # $$ % $&' # $$ % $&' # $$ % $&' # $$ % $&' # $$ % $&' 5 * Asterisk Explanation

116 5 NAIC Company Code ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE Y PART - SUMMARY OF INSURER S TRANSACTIONS WITH ANY AFFILIATES Purchases, Sales or Exchanges of Loans, Securities, Real Estate, Mortgage Loans or Other Investments 7 Income/ (Disbursements) Incurred in Connection with Guarantees or Undertakings for the Benefit of any Affiliate(s) 8 Management Agreements and Service Contracts 9 Income/ (Disbursements) Incurred Under Reinsurance Agreements 0 Any Other Material Activity Not in the Ordinary Course of the Insurer s Business Reinsurance Recoverable/ (Payable) on Losses and/or Reserve Credit Taken/(Liability) ID Number Names of Insurers and Parent, Subsidiaries or Affiliates Shareholder Dividends Capital Contributions * Totals!"! #! "#$!! # " #!% ##! &"$!"& " #!#$! #!!! &#" "!! "&"!$'&& " "# #! "& " "!($ " ")) " Control Totals XXX

117 SUPPLEMENTAL EXHIBITS AND SCHEDULES INTERROGATORIES The following supplemental reports are required to be filed as part of your statement filing unless specifically waived by the domiciliary state. However, in the event that your domiciliary state waives the filing requirement, your response of WAIVED to the specific interrogatory will be accepted in lieu of filing a NONE report and a bar code will be printed below. If the supplement is required of your company but is not being filed for whatever reason enter SEE EXPLANATION and provide an explanation following the interrogatory questions. Responses MARCH FILING. Will the Supplemental Compensation Exhibit be filed with the state of domicile by March?. Will the confidential Risk-based Capital Report be filed with the NAIC by March?. Will the confidential Risk-based Capital Report be filed with the state of domicile, if required, by March? 4. Will an actuarial opinion be filed by March? APRIL FILING 5. Will Management s Discussion and Analysis be filed by April? 6. Will the Life, Health & Annuity Guaranty Association Model Act Assessment Base Reconciliation Exhibit be filed with the state of domicile and the NAIC by April? 7. Will the Adjustment Form (if required) be filed with the state of domicile and the NAIC by April? 8. Will the Supplemental Investment Risks Interrogatories be filed by April? JUNE FILING 9. Will an audited financial report be filed by June? 0. Will Accountant's Letter of Qualifications be filed with the state of domicile and electronically with the NAIC by June? AUGUST FILING. Will Communication of Internal Control Related Matters Noted in Audit be filed with the state of domicile by August? The following supplemental reports are required to be filed as part of your annual statement filing. However, in the event that your company does not transact the type of business for which the special report must be filed, your response of NO to the specific interrogatory will be accepted in lieu of filing a NONE report and a bar code will be printed below. If the supplement is required of your company but is not being filed for whatever reason enter SEE EXPLANATION and provide an explanation following the interrogatory questions. MARCH FILING. Will Schedule SIS (Stockholder Information Supplement) be filed with the state of domicile by March?. Will the Medicare Supplement Insurance Experience Exhibit be filed with the state of domicile and the NAIC by March? 4. Will the Trusteed Surplus Statement be filed with the state of domicile and the NAIC by March? 5. Will the actuarial opinion on participating and non-participating policies as required in Interrogatories and to Exhibit 5 be filed with the state of domicile and electronically with the NAIC by March? 6. Will the actuarial opinion on non-guaranteed elements as required in interrogatory # to Exhibit 5 be filed with the state of domicile and electronically with the NAIC by March? 7. Will the actuarial opinion on X-Factors be filed with the state of domicile and electronically with the NAIC by March? 8. Will the actuarial opinion on Separate Accounts Funding Guaranteed Minimum Benefit be filed with the state of domicile and electronically with the NAIC by March? 9. Will the actuarial opinion on Synthetic Guaranteed Investment Contracts be filed with the state of domicile and electronically with the NAIC by March? 0. Will the Reasonableness of Assumptions Certification required by Actuarial Guideline XXXV be filed with the state of domicile and electronically with the NAIC by March?. Will the Reasonableness and Consistency of Assumptions Certification required by Actuarial Guideline XXXV be filed with the state of domicile and electronically with the NAIC by March?. Will the Reasonableness of Assumptions Certification for Implied Guaranteed Rate Method required by Actuarial Guideline XXXVI be filed with the state of domicile and electronically with the NAIC by March?. Will the Reasonableness and Consistency of Assumptions Certification required by Actuarial Guideline XXXVI (Updated Average Market Value) be filed with the state of domicile and electronically with the NAIC by March? 4. Will the Reasonableness and Consistency of Assumptions Certification required by Actuarial Guideline XXXVI (Updated Market Value) be filed with the state of domicile and electronically with the NAIC by March? 5. Will the C- RBC Certifications required under C- Phase I be filed with the state of domicile and electronically with the NAIC by March? 6. Will the C- RBC Certifications required under C- Phase II be filed with the state of domicile and electronically with the NAIC by March? 54

118 SUPPLEMENTAL EXHIBITS AND SCHEDULES INTERROGATORIES 7. Will the Actuarial Certifications Related to Annuity Nonforfeiture Ongoing Compliance for Equity Indexed Annuities be filed with the state of domicile and electronically with the NAIC by March? 8. Will the actuarial opinion required by the Modified Guaranteed Annuity Model Regulation be filed with the state of domicile and electronically with the NAIC by March? 9. Will the Actuarial Certifications Related to Hedging required by Actuarial Guideline XLIII be filed with the state of domicile and electronically with the NAIC by March? 0. Will the Financial Officer Certification Related to Clearly Defined Hedging Strategy required by Actuarial Guideline XLIII be filed with the state of domicile and electronically with the NAIC by March?. Will the Management Certification That the Valuation Reflects Management s Intent required by Actuarial Guideline XLIII be filed with the state of domicile and electronically with the NAIC by March?. Will the Actuarial Certification Related to the Reserves required by Actuarial Guideline XLIII be filed with the state of domicile and electronically with the NAIC by March?. Will the Actuarial Certification regarding the use of 00 Preferred Class Tables required by the Model Regulation Permitting the Recognition of Preferred Mortality Tables for Use in Determining Minimum Reserve Liabilities be filed with the state of domicile and electronically with the NAIC by March? 4. Will the Worker's Compensation Carve-Out Supplement be filed by March? 5. Will Supplemental Schedule O be filed with the state of domicile and the NAIC by March? 6. Will the Medicare Part D Coverage Supplement be filed with the state of domicile and the NAIC by March? 7. Will an approval from the reporting entity s state of domicile for relief related to the five-year rotation requirement for lead audit partner be filed electronically with the NAIC by March? 8. Will an approval from the reporting entity s state of domicile for relief related to the one-year cooling off period for independent CPA be filed electronically with the NAIC by March? 9. Will an approval from the reporting entity s state of domicile for relief related to the Requirements for Audit Committees be filed electronically with the NAIC by March? 40. Will the confidential Regulatory Asset Adequacy Issues Summary (RAAIS) required by Actuarial Opinion and Memorandum Regulation (Model 8), Section 7A(5) be filed with the state of domicile by March 5? APRIL FILING 4. Will the Long-Term Care Experience Reporting Forms be filed with the state of domicile and the NAIC by April? 4. Will the Interest-Sensitive Life Insurance Products Report Forms be filed with the state of domicile and the NAIC by April? 4. Will the Credit Insurance Experience Exhibit be filed with the state of domicile and the NAIC by April? 44. Will the Accident and Health Policy Experience Exhibit be filed by April? 45. Will the Analysis of Annuity Operations by Lines of Business be filed with the state of domicile and the NAIC by April? 46. Will the Analysis of Increase in Annuity Reserves During the Year be filed with the state of domicile and the NAIC by April? 47. Will the Supplemental Health Care Exhibit (Parts, and ) be filed with the state of domicile and the NAIC by April? 48. Will the regulator only (non-public) Supplemental Health Care Exhibit s Expense Allocation Report be filed with the state of domicile and the NAIC by April? 49. Will the confidential Actuarial Memorandum required by Actuarial Guideline XXXVIII 8D be filed with the state of domicile by April 0? 50. Will the Supplemental XXX/AXXX Reinsurance Exhibit be filed with the state of domicile and the NAIC by April? AUGUST FILING 5. Will Management s Report of Internal Control Over Financial Reporting be filed with the state of domicile by August? Explanations:. This is a mutual company.. The Company does no Medicare Supplement Business. 4. The Company is not a U.S. branch of an alien insurer. 8. This opinion is not applicable to the Company. 9. This opinion is not applicable to the Company. 0. The Company has no products that fall under Actuarial Guideline XXXV.. The Company has no products that fall under Actuarial Guideline XXXV.. The Company has no products that fall under Actuarial Guideline XXXVI.. The Company has no products that fall under Actuarial Guideline XXXVI. 4. The Company has no products that fall under Actuarial Guideline XXXVI. 7. The Company does not issue Equity Indexed Annuities. 8. This opinion is not applicable to the Company. 9. These Certifications are not applicable to the Company. 0. This Certification is not applicable to the Company.. This Certification is not applicable to the Company. 4. The Company does no Workers'Compensation business. 6. The Company does no Medicare Part D business. 7. This approval is not applicable to the Company. 8. This approval is not applicable to the Company. 9. This approval is not applicable to the Company. 4. The Company does no Long-Term Care business. 4. The Company does no credit insurance business. 47. The Company does no health care business. 48. The Company does no health care business. 49. The Company has no products that fall under Actuarial Guidelines XXXVIII 8D. Bar Codes:. Risk-based Capital Report [Document Identifier 90]. SIS Stockholder Information Supplement [Document Identifier 40]. Medicare Supplement Insurance Experience Exhibit [Document Identifier 60] 4. Trusteed Surplus Statement [Document Identifier 490] 8. Actuarial Opinion on Separate Accounts Funding Guaranteed Minimum Benefit [Document Identifier 44] 9. Actuarial Opinion on Synthetic Guaranteed Investment Contracts [Document Identifier 444] 0. Reasonableness of Assumptions Certification required by Actuarial Guideline XXXV [Document Identifier 445]. Reasonableness and Consistency of Assumptions Certification required by Actuarial Guideline XXXV [Document Identifier 446]. Reasonableness of Assumptions Certification for Implied Guaranteed Rate Method required by Actuarial Guideline XXXVI [Document Identifier 447] 54.

119 SUPPLEMENTAL EXHIBITS AND SCHEDULES INTERROGATORIES. Reasonableness and Consistency of Assumptions Certification required by Actuarial Guideline XXXVI [Document Identifier 448] 4. Reasonableness and Consistency of Assumptions Certification required by Actuarial Guideline XXXVI (Updated Market Value) [Document Identifier 449] 7. Actuarial Certifications Related to Annuity Nonforfeiture Ongoing Compliance for Equity Indexed Annuities [Document Identifier 45] 8. Modified Guaranteed Annuity Model Regulation [Document Identifier 45] 9. Actuarial Certifications Related to Hedging required by Actuarial Guideline XLIII [Document Identifier 46] 0. Financial Officer Certification Related to Clearly Defined Hedging Strategy required by Actuarial Guideline XLIII [Document Identifier 47]. Management Certification That the Valuation Reflects Management s Intent required by Actuarial Guideline XLIII [Document Identifier 48] 4. Workers'Compensation Carve-Out Supplement [Document Identifier 495] 6. Medicare Part D Coverage Supplement [Document Identifier 65] 7. Relief from the five-year rotation requirement for lead audit partner [Document Identifier 4] 8. Relief from the one-year cooling off period for independent CPA [Document Identifier 5] 9. Relief from the Requirements for Audit Committees [Document Identifier 6] 4. Long-Term Care Experience Reporting Forms [Document Identifier 06] 4. Credit Insurance Experience Exhibit [Document Identifier 0] 47. Supplemental Health Care Exhibit (Parts, and ) [Document Identifier 6] 48. Supplemental Health Care Exhibit's Expense Allocation Report [Document Identifier 7] 49. Actuarial Memorandum Required by Actuarial Guideline XXXVIII 8D [Document Identifier 45] 54.

120 OVERFLOW PAGE FOR WRITE-INS Additional Write-ins for Assets Line 5 Current Year Net Admitted Assets (Cols. - ) Prior Year 4 Net Admitted Assets Assets Nonadmitted Assets !"#$%&""' 597. Summary of remaining write-ins for Line 5 from overflow page Additional Write-ins for Liabilities Line 5 Current Year Prior Year 504. % 505.!"(&" 506. )&" 507. & 508. *% 597. Summary of remaining write-ins for Line 5 from overflow page Additional Write-ins for Exhibit of Nonadmitted Assets Line 5 Current Year Total Nonadmitted Assets Prior Year Total Nonadmitted Assets Change in Total Nonadmitted Assets (Col. - Col. ) 504. #' 505. #' !"#$%&""' #' 597. Summary of remaining write-ins for Line 5 from overflow page #' 55

121 . Bonds: SUMMARY INVESTMENT SCHEDULE Investment Categories Gross Investment Holdings Amount Percentage Amount Admitted Assets as Reported in the Annual Statement 4 5 Securities Lending Reinvested Total Collateral (Col. + 4) Amount Amount 6 Percentage. U.S. treasury securities. U.S. government agency obligations (excluding mortgage-backed securities):. Issued by U.S. government agencies. Issued by U.S. government sponsored agencies. Non-U.S. government (including Canada, excluding mortgaged-backed securities).4 Securities issued by states, territories, and possessions and political subdivisions in the U.S. :.4 States, territories and possessions general obligations.4 Political subdivisions of states, territories and possessions and political subdivisions general obligations.4 Revenue and assessment obligations.44 Industrial development and similar obligations.5 Mortgage-backed securities (includes residential and commercial MBS):.5 Pass-through securities:.5 Issued or guaranteed by GNMA.5 Issued or guaranteed by FNMA and FHLMC.5 All other.5 CMOs and REMICs:.5 Issued or guaranteed by GNMA, FNMA, FHLMC or VA.5 Issued by non-u.s. Government issuers and collateralized by mortgage-backed securities issued or guaranteed by agencies shown in Line.5.5 All other. Other debt and other fixed income securities (excluding short-term):. Unaffiliated domestic securities (includes credit tenant loans and hybrid securities). Unaffiliated non-u.s. securities (including Canada). Affiliated securities. Equity interests:. Investments in mutual funds. Preferred stocks:. Affiliated. Unaffiliated. Publicly traded equity securities (excluding preferred stocks):. Affiliated. Unaffiliated.4 Other equity securities:.4 Affiliated.4 Unaffiliated.5 Other equity interests including tangible personal property under lease:.5 Affiliated.5 Unaffiliated 4. Mortgage loans: 4. Construction and land development 4. Agricultural 4. Single family residential properties 4.4 Multifamily residential properties 4.5 Commercial loans 4.6 Mezzanine real estate loans 5. Real estate investments: 5. Property occupied by company 5. Property held for production of income (including $ of property acquired in satisfaction of debt) 5. Property held for sale (including $ property acquired in satisfaction of debt) 6. Contract loans 7. Derivatives 8. Receivables for securities 9. Securities Lending (Line 0, Asset Page reinvested collateral) XXX XXX XXX 0. Cash, cash equivalents and short-term investments. Other invested assets. Total invested assets SI0

122 SCHEDULE A - VERIFICATION BETWEEN YEARS Real Estate. Book/adjusted carrying value, December of prior year. Cost of acquired:. Actual cost at time of acquisition (Part, Column 6). Additional investment made after acquisition (Part, Column 9). Current year change in encumbrances:. Totals, Part, Column. Totals, Part, Column 4. Total gain (loss) on disposals, Part, Column 8 5. Deduct amounts received on disposals, Part, Column 5 6. Total foreign exchange change in book/adjusted carrying value: 6. Totals, Part, Column 5 6. Totals, Part, Column 7. Deduct current year s other than temporary impairment recognized: 7. Totals, Part, Column 7. Totals, Part, Column 0 8. Deduct current year s depreciation: 8. Totals, Part, Column 8. Totals, Part, Column 9 9. Book/adjusted carrying value at the end of current period (Lines ) 0. Deduct total nonadmitted amounts. Statement value at end of current period (Line 9 minus Line 0) SCHEDULE B - VERIFICATION BETWEEN YEARS Mortgage Loans. Book value/recorded investment excluding accrued interest, December of prior year. Cost of acquired:. Actual cost at time of acquisition (Part, Column 7). Additional investment made after acquisition (Part, Column 8). Capitalized deferred interest and other:. Totals, Part, Column. Totals, Part, Column 4. Accrual of discount 5. Unrealized valuation increase (decrease): 5. Totals, Part, Column 9 5. Totals, Part, Column 8 6. Total gain (loss) on disposals, Part, Column 8 7. Deduct amounts received on disposals, Part, Column 5 8. Deduct amortization of premium and mortgage interest points and commitment fees 9. Total foreign exchange change in book value/recorded investment excluding accrued interest: 9. Totals, Part, Column 9. Totals, Part, Column 0. Deduct current year s other than temporary impairment recognized: 0. Totals, Part, Column 0. Totals, Part, Column 0. Book value/recorded investment excluding accrued interest at end of current period (Lines ). Total valuation allowance. Subtotal (Line plus ) 4. Deduct total nonadmitted amounts 5. Statement value of mortgages owned at end of current period (Line minus Line 4) SI0

123 SCHEDULE BA - VERIFICATION BETWEEN YEARS Other Long-Term Invested Assets. Book/adjusted carrying value, December of prior year. Cost of acquired:. Actual cost at time of acquisition (Part, Column 8). Additional investment made after acquisition (Part, Column 9). Capitalized deferred interest and other:. Totals, Part, Column 6. Totals, Part, Column 4. Accrual of discount 5. Unrealized valuation increase (decrease): 5. Totals, Part, Column 5. Totals, Part, Column 9 6. Total gain (loss) on disposals, Part, Column 9 7. Deduct amounts received on disposals, Part, Column 6 8. Deduct amortization of premium and depreciation 9. Total foreign exchange change in book/adjusted carrying value: 9. Totals, Part, Column 7 9. Totals, Part, Column 4 0. Deduct current year s other than temporary impairment recognized: 0. Totals, Part, Column 5 0. Totals, Part, Column. Book/adjusted carrying value at end of current period (Lines ). Deduct total nonadmitted amounts. Statement value at end of current period (Line minus Line ) SCHEDULE D - VERIFICATION BETWEEN YEARS Bonds and Stocks. Book/adjusted carrying value, December of prior year. Cost of bonds and stocks acquired, Part, Column 7. Accrual of discount 4. Unrealized valuation increase (decrease): 4.. Part, Column 4.. Part, Section, Column Part, Section, Column 4.4. Part 4, Column 5. Total gain (loss) on disposals, Part 4, Column 9 6. Deduction consideration for bonds and stocks disposed of, Part 4, Column 7 7. Deduct amortization of premium 8. Total foreign exchange change in book/adjusted carrying value: 8.. Part, Column Part, Section, Column Part, Section, Column Part 4, Column 5 9. Deduct current year s other than temporary impairment recognized: 9.. Part, Column Part, Section, Column Part, Section, Column Part 4, Column 0. Book/adjusted carrying value at end of current period (Lines ). Deduct total nonadmitted amounts. Statement value at end of current period (Line 0 minus Line ) SI0

124 SCHEDULE D - SUMMARY BY COUNTRY BONDS Governments (Including all obligations guaranteed by governments) Description Long-Term Bonds and Stocks OWNED December of Current Year Book/Adjusted Carrying Value Fair Value Actual Cost Par Value of Bonds. United States. Canada. Other Countries 4. Totals U.S. States, Territories and Possessions (Direct and guaranteed) 5. Totals U.S. Political Subdivisions of States, Territories and Possessions (Direct and guaranteed) 6. Totals U.S. Special revenue and special assessment obligations and all nonguaranteed obligations of agencies and authorities of governments and their political subdivisions 7. Totals 8. United States Industrial and Miscellaneous and 9. Canada Hybrid Securities (unaffiliated) 0. Other Countries. Totals Parent, Subsidiaries and Affiliates. Totals. Total Bonds PREFERRED STOCKS 4. United States Industrial and Miscellaneous 5. Canada (unaffiliated) 6. Other Countries 7. Totals Parent, Subsidiaries and Affiliates 8. Totals 9. Total Preferred Stocks COMMON STOCKS Industrial and Miscellaneous (unaffiliated) 0. United States. Canada. Other Countries. Totals Parent, Subsidiaries and Affiliates 4. Totals 5. Total Common Stocks 6. Total Stocks 7. Total Bonds and Stocks 4 SI04

125 SI05 ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE D - PART A - SECTION Quality and Maturity Distribution of All Bonds Owned December, at Book/Adjusted Carrying Values by Major Types of Issues and NAIC Designations Over Year Over 5 Years Over 0 Years Col. 6 as a % of Total from Col. 6 Year or Less Through 5 Years Through 0 Years Through 0 Years Over 0 Years Total Current Year Line 9.7 Prior Year 9 % From Col. 7 Prior Year 0 Total Publicly Traded Total Privately Placed (a) NAIC Designation. U.S. Governments. NAIC. NAIC. NAIC.4 NAIC 4.5 NAIC 5.6 NAIC 6.7 Totals. All Other Governments. NAIC. NAIC. NAIC.4 NAIC 4.5 NAIC 5.6 NAIC 6.7 Totals. U.S. States, Territories and Possessions etc., Guaranteed. NAIC. NAIC. NAIC.4 NAIC 4.5 NAIC 5.6 NAIC 6.7 Totals 4. U.S. Political Subdivisions of States, Territories and Possessions, Guaranteed 4. NAIC 4. NAIC 4. NAIC 4.4 NAIC NAIC NAIC Totals 5. U.S. Special Revenue & Special Assessment Obligations, etc., Non-Guaranteed 5. NAIC 5. NAIC 5. NAIC 5.4 NAIC NAIC NAIC Totals

126 SI06 ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE D - PART A - SECTION (Continued) Quality and Maturity Distribution of All Bonds Owned December, at Book/Adjusted Carrying Values by Major Types of Issues and NAIC Designations Over Year Over 5 Years Over 0 Years Col. 6 as a % of Total from Col. 6 Year or Less Through 5 Years Through 0 Years Through 0 Years Over 0 Years Total Current Year Line 9.7 Prior Year 9 % From Col. 7 Prior Year 0 Total Publicly Traded Total Privately Placed (a) NAIC Designation 6. Industrial & Miscellaneous (Unaffiliated) 6. NAIC 6. NAIC 6. NAIC 6.4 NAIC NAIC NAIC Totals 7. Hybrid Securities 7. NAIC 7. NAIC 7. NAIC 7.4 NAIC NAIC NAIC Totals 8. Parent, Subsidiaries and Affiliates 8. NAIC 8. NAIC 8. NAIC 8.4 NAIC NAIC NAIC Totals

127 SI07 ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE D - PART A - SECTION (Continued) Quality and Maturity Distribution of All Bonds Owned December, at Book/Adjusted Carrying Values by Major Types of Issues and NAIC Designations Over Year Over 5 Years Over 0 Years Col. 6 as a % of Total from Col. 6 Year or Less Through 5 Years Through 0 Years Through 0 Years Over 0 Years Total Current Year Line 9.7 Prior Year 9 % From Col. 7 Prior Year 0 Total Publicly Traded Total Privately Placed (a) NAIC Designation 9. Total Bonds Current Year 9. NAIC (d) XXX XXX 9. NAIC (d) XXX XXX 9. NAIC (d) XXX XXX 9.4 NAIC 4 (d) XXX XXX 9.5 NAIC 5 (d) (c) XXX XXX 9.6 NAIC 6 (d) (c) XXX XXX 9.7 Totals (b) XXX XXX 9.8 Line 9.7 as a % of Col. 6 XXX XXX XXX 0. Total Bonds Prior Year 0. NAIC XXX XXX 0. NAIC XXX XXX 0. NAIC XXX XXX 0.4 NAIC 4 XXX XXX 0.5 NAIC 5 XXX XXX (c) 0.6 NAIC 6 XXX XXX (c) 0.7 Totals XXX XXX (b) 0.8 Line 0.7 as a % of Col. 8 XXX XXX XXX. Total Publicly Traded Bonds. NAIC XXX. NAIC XXX. NAIC XXX.4 NAIC 4 XXX.5 NAIC 5 XXX.6 NAIC 6 XXX.7 Totals XXX.8 Line.7 as a % of Col. 6 XXX XXX XXX XXX.9 Line.7 as a % of Line 9.7, Col. 6, Section 9 XXX XXX XXX XXX. Total Privately Placed Bonds. NAIC XXX. NAIC XXX. NAIC XXX.4 NAIC 4 XXX.5 NAIC 5 XXX.6 NAIC 6 XXX.7 Totals XXX.8 Line.7 as a % of Col. 6 XXX XXX XXX XXX.9 Line.7 as a % of Line 9.7, Col. 6, Section 9 XXX XXX XXX XXX (a) Includes $ freely tradable under SEC Rule 44 or qualified for resale under SEC Rule 44A. (b) Includes $ current year, $ prior year of bonds with Z designations and $, current year $ prior year of bonds with Z* designations. The letter "Z" means the NAIC designation was not assigned by the Securities Valuation Office (SVO) at the date of the statement. "Z*" means the SVO could not evaluate the obligation because valuation procedures for the security class are under regulatory review. (c) Includes $ current year, $ prior year of bonds with 5* designations and $, current year $ prior year of bonds with 6* designations. "5*" means the NAIC designation was assigned by the (SVO) in reliance on the insurer's certification that the issuer is current in all principal and interest payments. "6*" means the NAIC designation was assigned by the SVO due to inadequate certification of principal and interest payments. (d) Includes the following amount of non-rated short-term and cash equivalent bonds by NAIC designation: NAIC $ ; NAIC $ ; NAIC $ ; NAIC 4 $ ; NAIC 5 $ ; NAIC 6 $

128 SI08 ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE D - PART A - SECTION Maturity Distribution of All Bonds Owned December, at Book/Adjusted Carrying Values by Major Type and Subtype of Issues Over Year Over 5 Years Over 0 Years Col. 6 as a % of Year or Less Through 5 Years Through 0 Years Through 0 Years Over 0 Years Total Current Year Line Total from Col. 6 Prior Year 9 % From Col. 7 Prior Year 0 Total Publicly Traded Total Privately Placed Distribution by Type. U.S. Governments. Issuer Obligations. Residential Mortgage-Backed Securities. Commercial Mortgage-Backed Securities.4 Other Loan-Backed and Structured Securities.5 Totals. All Other Governments. Issuer Obligations. Residential Mortgage-Backed Securities. Commercial Mortgage-Backed Securities.4 Other Loan-Backed and Structured Securities.5 Totals. U.S. States, Territories and Possessions, Guaranteed. Issuer Obligations. Residential Mortgage-Backed Securities. Commercial Mortgage-Backed Securities.4 Other Loan-Backed and Structured Securities.5 Totals 4. U.S. Political Subdivisions of States, Territories and Possessions, Guaranteed 4. Issuer Obligations 4. Residential Mortgage-Backed Securities 4. Commercial Mortgage-Backed Securities 4.4 Other Loan-Backed and Structured Securities 4.5 Totals 5. U.S. Special Revenue & Special Assessment Obligations etc., Non- Guaranteed 5. Issuer Obligations 5. Residential Mortgage-Backed Securities 5. Commercial Mortgage-Backed Securities 5.4 Other Loan-Backed and Structured Securities 5.5 Totals 6. Industrial and Miscellaneous 6. Issuer Obligations 6. Residential Mortgage-Backed Securities 6. Commercial Mortgage-Backed Securities 6.4 Other Loan-Backed and Structured Securities 6.5 Totals 7. Hybrid Securities 7. Issuer Obligations 7. Residential Mortgage-Backed Securities 7. Commercial Mortgage-Backed Securities 7.4 Other Loan-Backed and Structured Securities 7.5 Totals 8. Parent, Subsidiaries and Affiliates 8. Issuer Obligations 8. Residential Mortgage-Backed Securities 8. Commercial Mortgage-Backed Securities 8.4 Other Loan-Backed and Structured Securities 8.5 Totals

129 SI09 ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE D - PART A - SECTION (Continued) Maturity Distribution of All Bonds Owned December, at Book/Adjusted Carrying Values by Major Type and Subtype of Issues Over Year Over 5 Years Over 0 Years Col. 6 as a % of Year or Less Through 5 Years Through 0 Years Through 0 Years Over 0 Years Total Current Year Line Total from Col. 6 Prior Year 9 % From Col. 7 Prior Year 0 Total Publicly Traded Total Privately Placed Distribution by Type 9. Total Bonds Current Year 9. Issuer Obligations XXX XXX 9. Residential Mortgage-Backed Securities XXX XXX 9. Commercial Mortgage-Backed Securities XXX XXX 9.4 Other Loan-Backed and Structured Securities XXX XXX 9.5 Totals XXX XXX 9.6 Line 9.5 as a % of Col. 6 XXX XXX XXX 0. Total Bonds Prior Year 0. Issuer Obligations XXX XXX 0. Residential Mortgage-Backed Securities XXX XXX 0. Commercial Mortgage-Backed Securities XXX XXX 0.4 Other Loan-Backed and Structured Securities XXX XXX 0.5 Totals XXX XXX 0.6 Line 0.5 as a % of Col. 8 XXX XXX XXX. Total Publicly Traded Bonds. Issuer Obligations XXX. Residential Mortgage-Backed Securities XXX. Commercial Mortgage-Backed Securities XXX.4 Other Loan-Backed and Structured Securities XXX.5 Totals XXX.6 Line.5 as a % of Col. 6 XXX XXX XXX XXX.7 Line.5 as a % of Line 9.5, Col. 6, Section 9 XXX XXX XXX XXX. Total Privately Placed Bonds. Issuer Obligations XXX. Residential Mortgage-Backed Securities XXX. Commercial Mortgage-Backed Securities XXX.4 Other Loan-Backed and Structured Securities XXX.5 Totals XXX.6 Line.5 as a % of Col. 6 XXX XXX XXX XXX.7 Line.5 as a % of Line 9.5, Col. 6, Section 9 XXX XXX XXX XXX

130 SCHEDULE DA - VERIFICATION BETWEEN YEARS Short-Term Investments. Book/adjusted carrying value, December of prior year. Cost of short-term investments acquired. Accrual of discount Total Bonds Mortgage Loans 4 Other Short-term Investment Assets (a) 5 Investments in Parent, Subsidiaries and Affiliates 4. Unrealized valuation increase (decrease) 5. Total gain (loss) on disposals 6. Deduct consideration received on disposals 7. Deduct amortization of premium 8. Total foreign exchange change in book/adjusted carrying value 9. Deduct current year s other than temporary impairment recognized 0. Book adjusted carrying value at end of current period (Lines ) SI0. Deduct total nonadmitted amounts. Statement value at end of current period (Line 0 minus Line ) (a) Indicate the category of such assets, for example, joint ventures, transportation equipment:

131 SCHEDULE DB - PART A - VERIFICATION BETWEEN YEARS Options, Caps, Floors, Collars, Swaps and Forwards. Book/adjusted carrying value, December, prior year (Line 9, prior year). Cost paid/(consideration received) on additions:. Current year paid/(consideration received) at time of acquisition, still open, Section, Column. Current year paid/(consideration received) at time of acquisition, terminated, Section, Column 4. Unrealized valuation increase/(decrease):. Section, Column 7. Section, Column 9 4. Total gain (loss) on termination recognized, Section, Column 5. Considerations received/(paid) on terminations, Section, Column 5 6. Amortization: 6. Section, Column 9 6. Section, Column 7. Adjustment to the book/adjusted carrying value of hedged item: 7. Section, Column 0 7. Section, Column 8. Total foreign exchange change in book/adjusted carrying value: 8. Section, Column 8 8. Section, Column 0 9. Book/adjusted carrying value at end of current period (Lines ) 0. Deduct nonadmitted assets. Statement value at end of current period (Line 9 minus Line 0) SCHEDULE DB - PART B - VERIFICATION Futures Contracts. Book/Adjusted carrying value, December of prior year (Line 6, prior year). Cumulative cash change (Section, Broker Name/Net Cash Deposits Footnote - Cumulative Cash Change Column). Add: Change in variation margin on open contracts - Highly effective hedges. Section, Column 5, current year minus. Section, Column 5, prior year Change in variation margin on open contracts - All other. Section, Column 8, current year minus.4 Section, Column 8, prior year. Add: Change in adjustment to basis of hedged item. Section, Column 7, current year to date minus. Section, Column 7, prior year Change in amount recognized. Section, Column 9, current year to date minus.4 Section, Column 9, prior year. Subtotal (Line. minus Line.) 4. Cumulative variation margin on terminated contracts during the year (Section, Column 5) 4. Less: 4. Amount used to adjust basis of hedged item (Section, Column 7) 4. Amount recognized (Section, Column 6) 4. Subtotal (Line 4. minus Line 4.) 5. Dispositions gains (losses) on contracts terminated in prior year: 5. Total gain (loss) recognized for terminations in prior year 5. Total gain (loss) adjusted into the hedged item(s) for terminations in prior year 6. Book/Adjusted carrying value at end of current period (Lines ) 7. Deduct total nonadmitted amounts 8. Statement value at end of current period (Line 6 minus Line 7) SI

132 Number ANNUAL STATEMENT FOR THE YEAR 04 OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY SCHEDULE DB - PART C - SECTION Replication (Synthetic Asset) Transactions Open as of December of Current Year Replication (Synthetic Asset) Transactions Components of the Replication (Synthetic Asset) Transactions Derivative Instrument(s) Open Cash Instrument(s) Held NAIC NAIC Designation or Book/Adjusted Book/Adjusted Designation or Other Notional Carrying Effective Maturity Carrying Other Description Description Amount Value Fair Value Date Date Description Value Fair Value CUSIP Description Description 5 Book/Adjusted Carrying Value 6 Fair Value NONE Totals XXX XXX XXX XXX XXX XXX SI

133 SCHEDULE DB - PART C - SECTION Replication (Synthetic Asset) Transactions Open Number of Positions First Quarter Second Quarter Third Quarter Fourth Quarter Year To Date Total Replication Total Replication Total Replication Total Replication (Synthetic Asset) Number (Synthetic Asset) Number (Synthetic Asset) Number (Synthetic Asset) Number Transactions of Transactions of Transactions of Transactions of Statement Value Positions Statement Value Positions Statement Value Positions Statement Value Positions 0 Total Replication (Synthetic Asset) Transactions Statement Value. Beginning Inventory. Add: Opened or Acquired Transactions. Add: Increases in Replication (Synthetic Asset) Transactions Statement Value XXX XXX XXX XXX XXX 4. Less: Closed or Disposed of Transactions 5. Less: Positions Disposed of for Failing Effectiveness Criteria 6. Less: Decreases in Replication (Synthetic Asset) Transactions Statement Value XXX XXX XXX XXX XXX SI 7. Ending Inventory

134 SCHEDULE DB - VERIFICATION Verification of Book/Adjusted Carrying Value, Fair Value and Potential Exposure of all Open Derivative Contracts Book/Adjusted Carrying Value Check. Part A, Section, Column 4. Part B, Section, Column 5 plus Part B, Section Footnote - Total Ending Cash Balance. Total (Line plus Line ) 4. Part D, Section, Column 5 5. Part D, Section, Column 6 6. Total (Line minus Line 4 minus Line 5) Fair Value Check 7. Part A, Section, Column 6 8. Part B, Section, Column 9. Total (Line 7 plus Line 8) 0. Part D, Section, Column 8. Part D, Section, Column 9 Total (Line 9 minus Line 0 minus Line ) Potential Exposure Check. Part A, Section, Column 4. Part B, Section, Column 0 5. Part D, Section, Column 6. Total (Line plus Line 4 minus Line 5) SI4

135 SCHEDULE E - VERIFICATION BETWEEN YEARS (Cash Equivalents) Total Bonds Other (a). Book/adjusted carrying value, December of prior year. Cost of cash equivalents acquired. Accrual of discount 4. Unrealized valuation increase (decrease) 5. Total gain (loss) on disposals 6. Deduct consideration received on disposals 7. Deduct amortization of premium 8. Total foreign exchange change in book/adjusted carrying value 9. Deduct current year s other than temporary impairment recognized 0. Book/adjusted carrying value at end of current period (Lines ). Deduct total nonadmitted amounts. Statement value at end of current period (Line 0 minus Line ) (a) Indicate the category of such assets, for example, joint ventures, transportation equipment: SI5

136 ANNUAL STATEMENT BLANK ALPHABETICAL INDEX Analysis of Increase in Reserves During The Year 7 Analysis of Operations By Lines of Business 6 Asset Valuation Reserve Default Component 0 Asset Valuation Reserve Equity Asset Valuation Reserve Replications (Synthetic) Assets 5 Asset Valuation Reserve 9 Assets Cash Flow 5 Exhibit - Part - Premiums and Annuity Considerations for Life and Accident and Health Contracts 9 Exhibit - Part - Dividends and Coupons Applied, Reinsurance Commissions and Expense 0 Exhibit - General Expenses Exhibit - Taxes, Licenses and Fees (Excluding Federal Income Taxes) Exhibit 4 - Dividends or Refunds Exhibit 5 - Aggregate Reserve for Life Contracts Exhibit 5 - Interrogatories Exhibit 5A - Changes in Bases of Valuation During The Year Exhibit 6 - Aggregate Reserves for Accident and Health Contracts 4 Exhibit 7 - Deposit-Type Contracts 5 Exhibit 8 - Claims for Life and Accident and Health Contracts - Part 6 Exhibit 8 - Claims for Life and Accident and Health Contracts - Part 7 Exhibit of Capital Gains (Losses) 8 Exhibit of Life Insurance 5 Exhibit of Net Investment Income 8 Exhibit of Nonadmitted Assets 8 Exhibit of Number of Policies, Contracts, Certificates, Income Payable and Account Values 7 Five-Year Historical Data Form for Calculating the Interest Maintenance Reserve (IMR) 8 General Interrogatories 0 Jurat Page Liabilities, Surplus and Other Funds Life Insurance (State Page) 4 Notes To Financial Statements 9 Overflow Page For Write-ins 55 Schedule A - Part E0 Schedule A - Part E0 Schedule A - Part E0 Schedule A - Verification Between Years SI0 Schedule B - Part E04 Schedule B - Part E05 Schedule B - Part E06 Schedule B - Verification Between Years SI0 Schedule BA - Part E07 Schedule BA - Part E08 Schedule BA - Part E09 Schedule BA - Verification Between Years SI0 Schedule D - Part E0 Schedule D - Part A - Section SI05 Schedule D - Part A - Section SI08 Schedule D - Part - Section E Schedule D - Part - Section E Schedule D - Part E Schedule D - Part 4 E4 Schedule D - Part 5 E5 Schedule D - Part 6 - Section E6 Schedule D - Part 6 - Section E6 Schedule D - Summary By Country SI04 Schedule D - Verification Between Years SI0 Schedule DA - Part E7 Schedule DA - Verification Between Years SI0 Index

137 ANNUAL STATEMENT BLANK (Continued) Schedule DB - Part A - Section E8 Schedule DB - Part A - Section E9 Schedule DB - Part A - Verification Between Years SI Schedule DB - Part B - Section E0 Schedule DB - Part B - Section E Schedule DB - Part B - Verification Between Years SI Schedule DB - Part C - Section SI Schedule DB - Part C - Section SI Schedule DB - Part D - Section E Schedule DB - Part D - Section E Schedule DB - Verification SI4 Schedule DL - Part E4 Schedule DL - Part E5 Schedule E - Part - Cash E6 Schedule E - Part - Cash Equivalents E7 Schedule E - Part - Special Deposits E8 Schedule E - Verification Between Years SI5 Schedule F 6 Schedule H - Accident and Health Exhibit - Part 7 Schedule H - Part, Part and Part 4 8 Schedule H - Part 5 - Health Claims 9 Schedule S - Part - Section 40 Schedule S - Part - Section 4 Schedule S - Part 4 Schedule S - Part - Section 4 Schedule S - Part - Section 44 Schedule S - Part 4 45 Schedule S - Part 5 46 Schedule S - Part 6 47 Schedule S - Part 7 48 Schedule T - Part Interstate Compact 50 Schedule T - Premiums and Annuity Considerations 49 Schedule Y - Information Concerning Activities of Insurer Members of a Holding Company Group 5 Schedule Y - Part A - Detail of Insurance Holding Company System 5 Schedule Y - Part - Summary of Insurer s Transactions With Any Affiliates 5 Summary Investment Schedule SI0 Summary of Operations 4 Supplemental Exhibits and Schedules Interrogatories 54 Index.