A.M. Best Affirms Rating of Northwestern Mutual and Assigns Issuer Credit Rating; Affirms Debt Rating of Frank Russell Company.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A++ (Superior) of The Northwestern Mutual Life Insurance Company (Northwestern Mutual) and its subsidiary, Northwestern Long Term Care Insurance Company, both of Milwaukee, WI. Concurrently, A.M. Best assigned an issuer credit rating (ICR) of "aaa" to Northwestern Mutual. In addition, A.M. Best has affirmed the "aaa" rating on the $350 million senior notes of its subsidiary, Frank Russell Company (Russell) (Tacoma, WA). Principal and interest payments on these securities are unconditionally guaranteed by Northwestern Mutual. The outlook for all ratings is stable.

These ratings reflect Northwestern Mutual's leading position as a provider of individual risk protection and investment products, its conservative operating strategy, high-quality investment portfolio, excellent earnings performance and superior risk-adjusted capitalization. The ratings also acknowledge the strength and quality of the Northwestern Mutual Financial Network, the company's exclusive career distribution system, which is efficiently operated on a variable cost basis. While recognizing the competitive advantage of its distribution network, growing the field force has become more difficult as recent recruiting efforts have not met company goals. The company's sustained profitability is supported by its core participating life insurance line, where historically favorable policy persistency and mortality experience have become competitive advantages.

Northwestern Mutual has consistently provided policyowners with dividend rates that are among the industry's highest, contributing to excellent persistency and its preeminent position in the individual life insurance market. The growth and stability of the in-force business, combined with Northwestern Mutual's focus on operating fundamentals, has enabled it to generate favorable earnings from its traditional individual life insurance segment. Growth in new individual life sales has been slowing, as the company faces challenges from highly competitive product pricing in certain product lines. Northwestern Mutual has conservatively grown its individual annuity business and improved the profitability of its individual disability line.

Broadening Northwestern Mutual's global presence in asset management, Russell's mutual funds are distributed through the Northwestern Mutual Financial Network, as well as to other retail clients through financial institutions, registered investment advisors and brokers. Russell funds are also made available as investment options in Northwestern Mutual's variable products. On an operating basis, Russell has experienced exceptional growth in revenues and operating profits, and its debt service coverage is sufficient, notwithstanding the guarantee. Additionally, Northwestern Mutual's financial leverage is minimal at less than 5% of capital; the company has no plans to issue additional debt.

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A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com.