Expanding the Arsenal.

Northwestern Mutual's new president prepares for stiffer competition with a broader product platform and a new name.

As Edward J. Zore prepares to become Northwestern Mutual's 16th president on March 31, succeeding James D. Ericson, he knows he will be steering the company into a sea of change within the financial-services industry.

Recent U.S. financial-services reform will continue to expand the playing field. Three of the company's largest life insurance competitors-John Hancock, Metropolitan Life Insurance Co. and Prudential Insurance Company of America-are leaving the mutual fold and becoming stock companies. Meanwhile, Northwestern Mutual has been busy building its own financial-services empire The "Quiet Company" has even tweaked its own name. Best's Review recently talked with Zore, 54, who currently serves as executive vice president, life and disability income insurance.

Q. what have you been doing to prepare for the change in management?

Typically, the president has a broad portfolio of responsibilities, which includes spending a great deal of time in the field with our agents. I've already been doing this with my current responsibilities, visiting with our general agents and our agents, finding out what's on their minds. It is important for the new president to see firsthand what is actually going on in the field, especially at a time when change is at an all-time high in our industry.

Q. What signal is Northwestern Mutual sending by taking the shorter name [as of July 2000, shortening from Northwestern Mutual Life Insurance Co.] and taking a new name for its sales force?

For more than 18 months, we've been involved in a brand equity project to define and understand the unique positioning of our brand as it relates to all of our products and services.

During that time, we conducted extensive consumer and agent research, which basically confirmed that while we are best in class in the life insurance industry, we need an identity that reflects a broader array of skills and service. We are doing more for our clients, yet some consumers don't see us that way. Instead, they see "life insurance" in the name and often don't know the rest of the story. To help communicate the right message, we are modifying our corporate, or "master," brand to Northwestern Mutual and developing a new name for our sales and distribution-Northwestern Mutual Financial Network. We selected the name "Network" because we feel it appropriately communicates our broad capabilities as a company and a sales force. And we've had nothing but positive reactions to these changes from employees and agents.

Q. What's the biggest impact of financial-services reform on a company like Northwestern Mutual?

The nature of the competition will continue to change rapidly Our traditional list of competitors is expanding to include banks and brokerage firms. However, we feel prepared for the challenge. For several years, the whole focus of our business strategy has been to strengthen our core life insurance business--and a big part of that requires that we give agents the range of products they need to compete. We're not trying to change our stripes, but rather better communicate how we can build security and protection around a life insurance program.

Q . What about the consolidation movement? Do you feel any pressure to seek mergers or acquisitions?

It's not a real high probability for us. It's difficult to find a company that would have what we need, within the insurance business. That doesn't mean we aren't looking for opportunities to better serve our policyowners. Last year we acquired Frank Russell Co. [an investment-management and advisory firm], we've had [securities brokerage] Robert W. Baird since the early '80s, and we're starting a trust company in an alliance with Northern Trust Co. If there's a product we need, we'll find it or manufacture it.

Q. What do you expect to gain from launching a thrift?

We have models as to where we expect trust services to grow. We decided to establish a trust company for our clients within the wealth-management field. On average, our sales force puts 10,000 to 15,000 insurance trusts together each year. And that number is increasing. We not only need a place for these trusts, but we have other services that our policyowners and clients need. Being in the trust business is a natural adjunct to what we do. We were going to handle it all internally, but aligning with Northern Trust will give us additional credibility, more capability right out of the box. Northern Trust already has a broad reach nationally, so it really is a good fit.

Q. With so many other mutual insurers converting, what's the outlook for Northwestern remaining a mutual?

We think being a mutual company is really a benefit. We know consumers have a favorable impression of mutual companies, and for us it works very well. Mutuality is part of our core value system: We make all our decisions in the best interest of the policy-owner. We do not need any extra capital. The business itself is profitable; last year we had a 51% net gain from operations over 1998. We have basically all the tools we need to accomplish our objective. The only reason to change would be if we needed to do so to remain viable in the business, but we don't see that as an issue at this time.

Q. How's it going in long-term care and disability?

As far as long-term care goes, we began rolling out our QuietCare product 18 months ago. We are extremely pleased with how well it is doing. Everything is going according to plan. As far as disability income, we've repriced the product and reconfigured the benefits. While sales had gone down for about three or four years, they turned around strongly in 1999. One reason for this upswing is that the competitive environment has changed. There aren't too many companies doing crazy things these days, which can only help the industry and the consumer.

Q. How is your association with InsWeb going?

We've dabbled a bit on InsWeb--not in selling insurance, but to generate leads and prospects. We have our annually renewable term product on the site right now. So far, in a little over three months, we've had 785 leads, which has led to about 115 sales of life insurance. That's about a 15% rate, so it seems to be working. In some of those cases, the customer has ended up purchasing a whole life product. Overall, we have to get more experience in analyzing the opportunity, not as a means to sell products, but to have a presence on the Web.