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Fitch Rates Northwestern Mutual Surplus Note 'AA'
September 21, 2017 / 8:10 PM / 3 months ago

Fitch Rates Northwestern Mutual Surplus Note 'AA'

(The following statement was released by the rating agency) NEW YORK, September 21 (Fitch) Fitch Ratings has assigned a 'AA' rating to Northwestern Mutual Life Insurance Co.'s (Northwestern) proposed issuance of an approximately $1 billion surplus note due in 2047. KEY RATING DRIVERS The new note's rating is equivalent to the ratings on Northwestern's $1.75 billion existing surplus note. The 'AA' rating assigned to the surplus note reflects Fitch's standard notching from the company's 'AAA' Insurer Financial Strength (IFS) rating and considers the subordination of the surplus notes relative to policyholder obligations. The notes are rated one notch below Northwestern's long-term Issuer Default Rating, reflecting one notch for Fitch's assumption of "below average" recovery prospects in the event of default and zero notches tied to its "minimal" non-performance risk. Interest and principal payments on the surplus notes are subject to prior approval from the Office of the Commissioner of Insurance of the State of Wisconsin. Fitch anticipates that the proceeds will be used for general corporate purposes. Northwestern's surplus notes to total adjusted capital (TAC) ratio was 6% as of June 30, 2017 and 10% pro forma for the issuance. Fitch affirmed Northwestern's ratings with a Stable Outlook on July 12, 2017. For more details, see Fitch's press release at www.fitchratings.com. RATING SENSITIVITIES Northwestern's IFS ratings are currently at Fitch's highest level. Key rating drivers that could lead to a downgrade include: --A decline to a sustained RBC ratio less than 450% or a Prism score below 'Extremely Strong'; --An increase in the ratio of surplus notes to TAC to above 15%; --An unexpected shift in tax, regulatory or market dynamics that affects Northwestern's competitive strengths. FULL LIST OF RATING ACTIONS Fitch has assigned the following rating: Northwestern Mutual Life Insurance Company --Surplus note due 2047 'AA'. Fitch currently rates the Northwestern entities as follows: Northwestern Mutual Life Insurance Company --Long-Term Issuer Default Rating 'AA+'; --6.063% surplus note due 2040 'AA'; --IFS 'AAA'. Northwestern Long Term Care Insurance Company --IFS 'AAA'. Contact: Primary Analyst Jamie R. Tucker, CPA Associate Director +1-212-612-7856 Fitch Ratings, Inc. 33 Whitehall Street New York, NY 10004 Secondary Analyst Douglas L. Meyer, CFA Managing Director +1-312-368-2061 Committee Chairperson Brian C. Schneider, CPA, CPCU, ARe Senior Director +1-312-606-2321 Date of Relevant Rating Committee: July 11, 2017 Media Relations: Benjamin Rippey, New York, Tel: +1 646 582 4588, Email: benjamin.rippey@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Insurance Rating Methodology (pub. 26 Apr 2017) here Additional Disclosures Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. 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Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

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