<PAGE> 1
Registration No. 2-89905-01
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 / /
Pre-Effective Amendment No. / /
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Post-Effective Amendment No. 16 / X /
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 / /
Amendment No. / /
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(Check appropriate box or boxes.)
NML VARIABLE ANNUITY ACCOUNT C
- --------------------------------------------------------------------------------
(Exact Name of Registrant)
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
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(Name of Depositor)
720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
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(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code 414-271-1444
- --------------------------------------------------------------------------------
JOHN M. BREMER, Senior Vice President, General Counsel and Secretary
720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate space)
immediately upon filing pursuant to paragraph (b) of Rule 485
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X on April 30, 1996 pursuant to paragraph (b) of Rule 485
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60 days after filing pursuant to paragraph (a)(1) of Rule 485
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on (DATE) pursuant to paragraph (a)(1) of Rule 485
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this post-effective amendment designates a new effective date for a
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previously filed post-effective amendment.
<PAGE> 2
NML VARIABLE ANNUITY ACCOUNT C
______________________________________________________________________________
CROSS-REFERENCE SHEET
N-4, Part A Heading in
Item Prospectus
- ----------- ----------
1 . . . . . . . . . . . . . . . . Cover Page
2 . . . . . . . . . . . . . . . . Index of Special Terms
3 . . . . . . . . . . . . . . . . Right to Examine Deferred
Contract, Penalty Tax on Premature
Payments, Expense Table
4 . . . . . . . . . . . . . . . . Accumulation Unit Values,
Financial Statements
5 . . . . . . . . . . . . . . . . The Company, NML Variable Annuity
Account C, The Fund
6 . . . . . . . . . . . . . . . . Deductions, Distribution of the
Contracts
7 . . . . . . . . . . . . . . . . The Contracts, Owners of the
Contracts, Application of Purchase
Payments, Transfers Between
Divisions and Payment Plans,
Substitution and Change
8 . . . . . . . . . . . . . . . . Variable Payment Plans,
Fixed Annuity Payment Plans,
Description of Payment Plans, Amount
of Annuity Payments, Annuity Unit
Value, Assumed Investment Rate,
Transfers Between Divisions and
Payment Plans
9 . . . . . . . . . . . . . . . . Not Applicable
10 . . . . . . . . . . . . . . . . Amount and Frequency, Application of
Purchase Payments, Net Investment
Factor, Distribution of the Contracts
11 . . . . . . . . . . . . . . . . Surrender or Withdrawal Value,
Retirement Benefits, Deferment of
Benefit Payments, Right to Examine
Deferred Contract
12 . . . . . . . . . . . . . . . . Federal Income Taxes
13 . . . . . . . . . . . . . . . . Not Applicable
14 . . . . . . . . . . . . . . . . Table of Contents for Statement of
Additional Information
______________________________________________________________________________
N-4, Part B Heading in Statement
Item of Additional Information
- ----------- -------------------------
15 . . . . . . . . . . . . . . . . Cover Page
16 . . . . . . . . . . . . . . . . Table of Contents
17 . . . . . . . . . . . . . . . . General Information
18 . . . . . . . . . . . . . . . . Experts
19 . . . . . . . . . . . . . . . . Not Applicable
20 . . . . . . . . . . . . . . . . Distribution of the Contracts
21 . . . . . . . . . . . . . . . . Not Applicable
22 . . . . . . . . . . . . . . . . Determination of Annuity Payments
23 . . . . . . . . . . . . . . . . Financial Statements
<PAGE> 3
April 30, 1996
P R O S P E C T U S
NML
Variable
Annuity
Account C
G R O U P C O M B I N A T I O N A N N U I T Y C O N T R A C T S
F O R R E T I R E M E N T P L A N S OF S E L F - E M P L O Y E D
P E R S O N S A N D T H E I R E M P L O Y E E S
[NORTHWESTERN MUTUAL LOGO]
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
(414) 271-1444
<PAGE> 4
P R O S P E C T U S
GROUP COMBINATION ANNUITY CONTRACTS
NML VARIABLE ANNUITY ACCOUNT C
This prospectus describes group combination annuity contracts (the
"Contracts") offered by The Northwestern Mutual Life Insurance Company
("Northwestern Mutual Life") for use in connection with plans and trusts
meeting the requirements of Sections 401 or 403(a) of the Internal Revenue Code
of 1986, as amended (the "Code"). Such plans, which are popularly called "HR-10
Plans", afford certain federal income tax benefits to self-employed individuals
and to employees and their beneficiaries.
The Contracts provide for the accumulation of funds and the payment of
retirement benefits to participants or their beneficiaries ("Annuitants").
Funds may be accumulated on a variable or fixed or combination basis.
Retirement benefits may be paid in a lump sum or under a variable or fixed
annuity payment plan. Annuity benefits are described in individual certificates
issued to Annuitants.
Variable accumulations and retirement benefits are funded through NML
Variable Annuity Account C (the "Account"), a separate account of Northwestern
Mutual Life. This prospectus describes only the Account and the variable
provisions of the Contracts except where there are specific references to the
fixed provisions. The Account has nine Divisions. Contract Owners may direct
how net considerations are allocated among the Divisions.
Assets of each Division of the Account are invested entirely in shares of
a corresponding Portfolio of Northwestern Mutual Series Fund, Inc. (the
"Fund"). The Fund is currently comprised of the Index 500 Stock, Select Bond,
Money Market, Balanced, Growth and Income Stock, Growth Stock, Aggressive
Growth Stock, High Yield Bond and International Equity Portfolios. Variable
accumulations and variable annuity payments will vary continuously to reflect
the investment performance of the Division or Divisions selected.
Two versions of the Contracts are offered: front-load Contracts and
simplified-load Contracts. (See "Expense Table", p. 2, and "Deductions", p.
11.)
This prospectus sets forth concisely the information about the Contracts
that a prospective investor ought to know before investing. Additional
information about the Contracts and the Account has been filed with the
Securities and Exchange Commission in a Statement of Additional Information
which is incorporated herein by reference. The Statement of Additional
Information is available upon written or oral request and without charge from
The Northwestern Mutual Life Insurance Company, 720 East Wisconsin Avenue,
Milwaukee, Wisconsin, 53202, Telephone Number (414) 271-1444. The table of
contents for the Statement of Additional Information is shown on page 13 of
this prospectus.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUS
FOR NORTHWESTERN MUTUAL SERIES FUND, INC. WHICH IS ATTACHED HERETO, AND
SHOULD BE RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.
The Date of the Statement of Additional Information is April 30, 1996
<PAGE> 5
INDEX OF SPECIAL TERMS
The following special terms used in this prospectus are discussed at the pages
indicated.
<TABLE>
<CAPTION>
TERM PAGE TERM PAGE
- ---- ---- ---- ----
<S> <C> <C> <C>
ACCUMULATION UNIT ..................... 7 ANNUITANT ............... 9
ANNUITY (or ANNUITY PAYMENTS).......... 8 OWNER ................... 9
NET INVESTMENT FACTOR ................. 7 PAYMENT PLANS ........... 8
SURRENDER OR WITHDRAWAL VALUE ......... 8
</TABLE>
PENALTY TAX ON PREMATURE PAYMENTS Premature payment of benefits under an
annuity contract may cause a penalty tax to be incurred. (See "Taxation of
Contract Benefits", p. 10.)
EXPENSE TABLE
<TABLE>
<CAPTION>
ANNUAL EXPENSES OF THE ACCOUNT
FRONT-LOAD CONTRACT --------------------------------
TRANSACTION EXPENSES FOR CONTRACTOWNERS (AS A PERCENTAGE OF ASSETS)
- --------------------------------------- --------------------------------
<S> <C> <C> <C>
Maximum Sales Load (as a percentage
of purchase payments) .................. 4.5% Mortality Rate and Expense Guarantee
Installation Fee ....................... None Charge ................................. .65%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL EXPENSES OF THE ACCOUNT
SIMPLIFIED-LOAD CONTRACT ---------------------------------------
TRANSACTION EXPENSES FOR CONTRACTOWNERS (AS A PERCENTAGE OF ASSETS)
- --------------------------------------- ---------------------------------------
<S> <C> <C> <C>
Maximum Sales Load (as a percentage
of purchase payments) .................. None Mortality Rate and Expense Guarantee
Installation Fee ....................... $750 Charge ................................. 1.25%
</TABLE>
ANNUAL EXPENSES OF THE PORTFOLIOS
(AS A PERCENTAGE OF THE ASSETS)
<TABLE>
<CAPTION>
Total Annual
Management Fees Custody Fees Other Expenses Expenses
--------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Index 500 Stock .20% .00% .01% .21%
Select Bond .30% .00% .00% .30%
Money Market .30% .00% .00% .30%
Balanced .30% .00% .00% .30%
Growth and Income Stock .65% .00% .04% .69%
Growth Stock .58% .00% .03% .61%
Aggressive Growth Stock .55% .00% .01% .56%
High Yield Bond .60% .00% .05% .65%
International Equity .68% .11% .06% .85%
</TABLE>
See the Example on page 3.
2
<PAGE> 6
EXAMPLE
The plan would pay the following expenses on each $1,000 investment, with a
Front-Load Contract, assuming 5% annual return:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Index 500 Stock $53 $71 $91 $146
Select Bond $54 $74 $95 $156
Money Market $54 $74 $95 $156
Balanced $54 $74 $95 $156
Growth and Income Stock $58 $86 $115 $199
Growth Stock $57 $83 $111 $190
Aggressive Growth Stock $57 $82 $109 $185
High Yield Bond $58 $84 $113 $195
International Equity $60 $90 $123 $216
</TABLE>
The plan would pay the following expenses on each $1,000 investment,
with a Simplified-Load Contract, assuming 5% annual return:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Index 500 Stock $44 $75 $107 $199
Select Bond $45 $77 $112 $209
Money Market $45 $77 $112 $209
Balanced $45 $77 $112 $209
Growth and Income Stock $49 $89 $132 $250
Growth Stock $48 $87 $128 $241
Aggressive Growth Stock $48 $85 $125 $236
High Yield Bond $49 $88 $130 $246
International Equity $51 $94 $140 $266
</TABLE>
NOTE: THE PURCHASE PAYMENTS FOR EITHER A FRONT-LOAD CONTRACT OR A
SIMPLIFIED-LOAD CONTRACT MUST REACH A TOTAL MINIMUM AMOUNT OF $25,000
DURING THE FIRST CONTRACT YEAR. THE NUMBERS ABOVE MUST BE MULTIPLIED BY
25 TO FIND THE EXPENSES FOR A FRONT-LOAD CONTRACT OR A SIMPLIFIED-LOAD
CONTRACT OF THIS MINIMUM SIZE.
The purpose of the table above is to assist a Contract Owner in
understanding the expenses paid by the Account and the Portfolios borne
by investors in the Contracts. The sales load for a front-load Contract
depends on the amount of cumulative purchase payments. For both
Contracts an annual administration fee of $150 applies if the Contract
value is less than $25,000 on the Contract anniversary. See
"Deductions", p. 11, for additional information about expenses for the
Contracts. The expenses shown in the table for the Portfolios show the
annual expenses for each of the Portfolios, as a percentage of the
average net assets of the Portfolio, based on 1995 operations for the
Portfolios and their predecessors. For additional information about
expenses of the Portfolios, see the prospectus for the Fund attached
hereto. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN, SUBJECT TO THE GUARANTEES OF THE CONTRACTS.
3
<PAGE> 7
ACCUMULATION UNIT VALUES
CONTRACTS ISSUED AFTER DECEMBER 31, 1991
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<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
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1995 1994 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
Index 500 Stock Division
Accumulation Unit Value:
Front Load Version
Beginning of Period $1.165 $1.159 $1.062 $ .997
End of Period $1.588 $1.165 $1.159 $1.062
Simplified Load Version
Beginning of Period $1.499 $1.500 $1.384 $1.306
End of Period $2.032 $1.499 $1.500 $1.384
Number of Accumulation Units
Outstanding, End of Period
Front Load 2,399,586 1,918,074 1,919,768 921,624
Simplified Load 5,080,179 3,939,802 2,767,397 599,961
Select Bond Division
Accumulation Unit Value:
Front Load Version
Beginning of Period $1.128 $1.169 $1.066 $1.003
End of Period $1.335 $1.128 $1.169 $1.066
Simplified Load Version
Beginning of Period $5.217 $5.437 $4.990 $4.722
End of Period $6.137 $5.217 $5.437 $4.990
Number of Accumulation Units
Outstanding, End of Period
Front Load 1,800,898 1,668,091 2,389,345 736,697
Simplified Load 677,396 503,763 328,979 133,930
Money Market Division
Accumulation Unit Value:
Front Load Version
Beginning of Period $1.084 $1.048 $1.026 $ .999
End of Period $1.140 $1.084 $1.048 $1.026
Simplified Load Version
Beginning of Period $2.067 $2.012 $1.980 $1.940
End of Period $2.161 $2.067 $2.012 $1.980
Number of Accumulation Units
Outstanding, End of Period
Front Load 2,956,017 3,313,061 218,747 127,838
Simplified Load 1,890,645 1,453,033 810,405 485,704
Balanced Division
Accumulation Unit Value:
Front Load Version
Beginning of Period $1.130 $1.138 $1.045 $ .999
End of Period $1.419 $1.130 $1.138 $1.045
Simplified Load Version
Beginning of Period $3.453 $3.497 $3.232 $3.107
End of Period $4.311 $3.453 $3.497 $3.232
Number of Accumulation Units
Outstanding, End of Period
Front Load 5,275,308 3,879,218 4,987,943 3,980,687
Simplified Load 4,902,410 4,108,593 3,002,098 1,445,698
Growth and Income Stock Division
Accumulation Unit Value:
Front Load Version
Beginning of Period* $0.998 $1.000 -- --
End of Period $1.300 $0.998 -- --
Simplified Load Version
Beginning of Period* $0.994 $1.000 -- --
End of Period $1.287 $0.994 -- --
Number of Accumulation Units
Outstanding, End of Period
Front Load 861,211 418,974 -- --
Simplified Load 1,733,022 745,425 -- --
<CAPTION>
1995 1994 1993 1992
---- ---- ---- ----
<C> <C> <C> <C>
Growth Stock Division
Accumulation Unit Value:
Front Load Version
Beginning of Period* $1.010 $1.000 -- --
End of Period $1.313 $1.010 -- --
Simplified Load Version
Beginning of Period* $1.006 $1.000 -- --
End of Period $1.300 $1.006 -- --
Number of Accumulation Units
Outstanding, End of Period
Front Load 361,207 149,268 -- --
Simplified Load 586,644 177,918 -- --
Aggressive Growth Stock Division
Accumulation Unit Value:
Front Load Version
Beginning of Period $1.284 $1.226 $1.036 $.984
End of Period $1.777 $1.284 $1.226 $1.036
Simplified Load Version
Beginning of Period $2.001 $1.922 $1.634 $1.562
End of Period $2.753 $2.001 $1.922 $1.634
Number of Accumulation Units
Outstanding, End of Period
Front Load 2,242,402 1,206,187 1,370,746 821,911
Simplified Load 5,316,689 3,503,170 1,538,447 411,718
High Yield Bond Division
Accumulation Unit Value:
Front Load Version
Beginning of Period* $1.026 $1.000 -- --
End of Period $1.190 $1.026 -- --
Simplified Load Version
Beginning of Period* $1.022 $1.000 -- --
End of Period $1.178 $1.022 -- --
Number of Accumulation Units
Outstanding, End of Period
Front Load 90,184 47,321 -- --
Simplified Load 313,810 149,862 -- --
International Equity Division
Accumulation Unit Value:
Front Load Version
Beginning of Period** $1.232 $1.241 $1.000 --
End of Period $1.402 $1.232 $1.241 --
Simplified Load Version
Beginning of Period** $1.220 $1.236 $1.000 --
End of Period $1.380 $1.220 $1.236 --
Number of Accumulation Units
Outstanding, End of Period
Front Load 2,009,228 1,453,091 743,216 --
Simplified Load 3,972,573 2,764,466 591,810 --
</TABLE>
* The initial investments in the Growth and Income Stock Division, the
Growth Stock Division and High Yield Bond Division were made on May 3, 1994.
** The initial investment in the International Equity Division was made on
April 30, 1993.
4
<PAGE> 8
ACCUMULATION UNIT VALUES
CONTRACTS ISSUED BETWEEN APRIL 30, 1984 AND DECEMBER 31, 1991
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Index 500 Stock Division
Accumulation Unit Value:
Beginning of Period* $16.105 $15.916 $14.500 $13.519 $10.000 -- -- -- -- --
End of Period $22.105 $16.105 $15.916 $14.500 $13.519 -- -- -- -- --
Number of Accumulation Units
Outstanding, End of Period 2,232,983 2,284,637 2,454,444 246,820 36,842 -- -- -- -- --
Select Bond Division
Accumulation Unit Value:
Beginning of Period $62.322 $64.139 $58.132 $54.335 $46.489 $42.915 $37.688 $34.753 $35.076 $29.950
End of Period $74.223 $62.322 $64.139 $58.132 $54.335 $46.489 $42.915 $37.688 $34.753 $35.076
Number of Accumulation Units
Outstanding, End of Period 124,163 150,232 157,630 170,104 162,656 139,272 131,612 136,739 122,517 145,401
Money Market Division
Accumulation Unit Value:
Beginning of Period $23.346 $22.436 $21.814 $21.110 $19.973 $18.488 $16.965 $15.829 $14.891 $13.993
End of Period $24.706 $23.346 $22.436 $21.814 $21.110 $19.973 $18.488 $16.965 $15.829 $14.891
Number of Accumulation Units
Outstanding, End of Period 62,209 200,510 341,361 355,217 476,920 427,960 289,871 362,742 238,771 141,147
Balanced Division
Accumulation Unit Value:
Beginning of Period $41.029 $41.036 $37.449 $35.557 $28.690 $28.392 $24.560 $22.534 $21.375 $18.376
End of Period $51.856 $41.029 $41.036 $37.449 $35.557 $28.690 $28.392 $24.560 $22.534 $21.375
Number of Accumulation Units
Outstanding, End of Period 1,889,324 2,327,834 2,660,165 2,787,942 2,872,612 2,853,458 2,721,226 2,690,086 2,491,382 1,885,972
Growth and Income Stock
Division
Accumulation Unit Value:
Beginning of Period*** $10.024 -- -- -- -- -- -- -- -- --
End of Period $13.143 -- -- -- -- -- -- -- -- --
Number of Accumulation Units
Outstanding, End of Period 117,004 -- -- -- -- -- -- -- -- --
Growth Stock Division
Accumulation Unit Value:
Beginning of Period*** $10.145 -- -- -- -- -- -- -- -- --
End of Period $13.272 -- -- -- -- -- -- -- -- --
Number of Accumulation Units
Outstanding, End of Period 63,881 -- -- -- -- -- -- -- -- --
Aggressive Growth Stock
Division
Accumulation Unit Value:
Beginning of Period** $19.849 $18.832 $15.810 $14.923 $10.000 -- -- -- -- --
End of Period $27.649 $19.849 $18.832 $15.810 $14.923 -- -- -- -- --
Number of Accumulation Units
Outstanding, End of Period 1,397,885 1,239,328 910,764 594,531 40,650 -- -- -- -- --
High Yield Bond Division
Accumulation Unit Value:
Beginning of Period*** $10.302 -- -- -- -- -- -- -- -- --
End of Period $12.030 -- -- -- -- -- -- -- -- --
Number of Accumulation Units
Outstanding, End of Period 21,583 -- -- -- -- -- -- -- -- --
International Equity Division
Accumulation Unit Value:
Beginning of Period**** $1.245 $1.246 $1.000 -- -- -- -- -- -- --
End of Period $1.427 $1.245 $1.246 -- -- -- -- -- -- --
Number of Accumulation Units
Outstanding, End of Period 14,747,734 15,153,296 1,128,950 -- -- -- -- -- -- --
</TABLE>
* The initial investment in the Index 500 Stock Division was made on
January 16, 1991.
** The initial investment in the Aggressive Growth Stock Division was made
on January 25, 1991.
*** The initial investments in the Growth and Income Stock Division, Growth
Stock Division and High Yield Bond Division were made on May 3, 1994.
**** The initial investment in the International Equity Division was made on
April 30, 1993.
5
<PAGE> 9
THE COMPANY
The Northwestern Mutual Life Insurance Company was organized by a
special act of the Wisconsin Legislature in 1857. It is the nation's
sixth largest life insurance company, based on total assets in excess of
$54 billion on December 31, 1995, and is licensed to conduct a
conventional life insurance business in the District of Columbia and in
all states of the United States. Northwestern Mutual Life sells life and
disability insurance policies and annuity contracts through its own
field force of approximately 6,000 full time producing agents. The Home
Office of Northwestern Mutual Life is located at 720 East Wisconsin
Avenue, Milwaukee, Wisconsin 53202.
NML VARIABLE ANNUITY ACCOUNT C
The Account was established on July 22, 1970 by the Board of
Trustees of Northwestern Mutual Life in accordance with the provisions
of the Wisconsin insurance law. The Account is used for the Contracts
and for outstanding Contracts to Provide Annuity Benefits. Northwestern
Mutual Life discontinued sales of Contracts to Provide Annuity Benefits
on May 1, 1984.
The Account has nine Divisons. Net considerations paid to
Northwestern Mutual Life are allocated to one or more of the Divisions
as directed by the Owner of the Contract. Assets allocated to the Index
500 Stock, Select Bond, Money Market, Balanced, Growth and Income Stock,
Growth Stock, Aggressive Growth Stock, High Yield Bond and International
Equity Divisions are simultaneously invested in shares of the
corresponding Portfolios of Northwestern Mutual Series Fund, Inc.
Under Wisconsin law, the income, gains or losses, realized or
unrealized, of the Account are credited to or charged against the
Account in accordance with the Contracts, without regard to other
income, gains or losses of Northwestern Mutual Life. The assets of the
Account are owned by Northwestern Mutual Life and it is not a trustee
with respect thereto. However, such assets are not chargeable with any
liabilities arising out of any other separate account or other business
of Northwestern Mutual Life. All obligations arising under the Contracts
are general obligations of Northwestern Mutual Life. Shares of the Fund
held in the Account will be voted in the discretion of Northwestern
Mutual Life.
THE FUND
Northwestern Mutual Series Fund, Inc. is a mutual fund of the
series type registered under the Investment Company Act of 1940 as an
open-end diversified management investment company. The Fund is composed
of nine separate portfolios which operate as separate mutual funds. The
portfolios are the Index 500 Stock Portfolio, the Select Bond Portfolio,
the Money Market Portfolio, the Balanced Portfolio, the Growth and
Income Stock Portfolio, the Growth Stock Portfolio, the Aggressive
Growth Stock Portfolio, the High Yield Bond Portfolio and the
International Equity Portfolio. Shares of each Portfolio of the Fund
will be purchased by the corresponding Division of the Account at net
asset value, that is, without any sales charge.
Northwestern Mutual Investment Services, Inc. ("NMIS"), a
wholly-owned subsidiary of Northwestern Mutual Life, is the investment
adviser to the Fund. Northwestern Mutual Life provides certain personnel
and facilities utilized by NMIS in performing its investment advisory
functions, and Northwestern Mutual Life is a party to the investment
advisory agreement. J.P. Morgan Investment Management, Inc. and
Templeton Investment Counsel, Inc. have been retained under investment
sub-advisory agreements to provide investment advice to the Growth and
Income Stock Portfolio and the International Equity Portfolio,
respectively.
FOR MORE INFORMATION REGARDING THE FUND AND ITS PORTFOLIOS,
INCLUDING INFORMATION ABOUT THEIR INVESTMENT OBJECTIVES AND EXPENSES,
SEE THE PROSPECTUS FOR THE FUND ATTACHED HERETO. AN INVESTOR SHOULD READ
THE FUND'S PROSPECTUS CAREFULLY BEFORE INVESTING IN THE CONTRACTS.
THE CONTRACTS
UNALLOCATED GROUP ANNUITY CONTRACTS
The Contracts are unallocated group annuity contracts. The
Contracts do not provide for the establishment of individual accounts
for Plan or Trust participants until participants become entitled to
receive benefits from the Plan or Trust. When a participant retires or
otherwise becomes entitled to receive benefits, the Contract Owner may
direct Northwestern Mutual Life to pay annuity benefits to the
participant. (See "Retirement Benefits", p. 8.) Northwestern
6
<PAGE> 10
Mutual Life will then issue the Annuitant a Certificate describing the
benefits which have been selected. (See "Variable Payment Plans", p. 8.)
Benefits available to Participants are determined entirely by the
provisions of the Plan or Trust.
PURCHASE PAYMENTS UNDER THE CONTRACTS
AMOUNT AND FREQUENCY The amount and frequency of purchase payments are
largely determined by the Plan or Trust and the Owner of the Contract.
Larger or additional purchase payments may be paid. However,
Northwestern Mutual Life will not accept (a) any purchase payment unless
it is a contribution for funding or for the payment of fees or loads
under a pension or profit-sharing plan or trust which meets the
requirements of Section 401 of the Code or the requirements for
deduction of the employer's contribution under Section 404(a)(2) of the
Code; or (b) any purchase payment of less than $100.
Purchase payments may be paid monthly, quarterly, semiannually,
annually or on any other frequency acceptable to Northwestern Mutual
Life. If a purchase payment is not paid when due, or if Northwestern
Mutual Life declines to accept a purchase payment as provided above, the
Contract will continue in force unless all Accumulation Units are
redeemed for their value. Payment of purchase payments may be resumed at
any time the Contract is in force.
APPLICATION OF PURCHASE PAYMENTS Net purchase payments, after deduction
of any sales load or installation fee, are credited by Northwestern
Mutual Life to the Contract and allocated as directed by the Owner. To
the extent that a net purchase payment is to be accumulated on a
variable basis it is placed in the Account and allocated to one or more
Divisions. Assets allocated to each Division will thereupon be invested
in shares of the Portfolio which corresponds to that Division. If no
allocation instructions are received the net purchase payment will be
placed in the Money Market Division.
Payments placed in the Account are applied to provide "Accumulation
Units" in one or more Divisions. Accumulation Units represent the
interest of an Owner in the Account. The number of Accumulation Units
provided by each net purchase payment is determined by dividing the
amount to be allocated to a Division by the value of an Accumulation
Unit in that Division, based upon the valuation of the assets of the
Division next following receipt of the purchase payment at the Home
Office of Northwestern Mutual Life. Receipt of purchase payments at a
lockbox facility designated by Northwestern Mutual Life will be
considered the same as receipt at the Home Office. Assets are valued as
of the close of trading on the New York Stock Exchange for each day the
Exchange is open.
The number of an Owner's Accumulation Units will be increased by
additional purchase payments and decreased by withdrawals. The
investment experience of the Account does not change the number (as
distinguished from the value) of Accumulation Units.
The value of an Accumulation Unit in each Division varies with the
investment experience of the Division. This in turn is determined by the
investment experience of the corresponding Portfolio of the Fund. The
value of an Accumulation Unit on any date is determined by multiplying
the value on the immediately preceding valuation date by the net
investment factor for the Division for the current period. (See "Net
Investment Factor", below.) Since the Owner bears the investment risk,
there is no guarantee as to the aggregate value of Accumulation Units;
such value may be less than, equal to or more than the cumulative net
purchase payments.
NET INVESTMENT FACTOR
For each Division the net investment factor for any period ending
on a valuation date is 1.000000 plus the net investment rate for the
Division for that period. Under the Contract the net investment rate is
related to the assets of the Division. However, since all amounts are
simultaneously invested in shares of the corresponding Portfolio when
allocated to the Division, calculation of the net investment rate for
each of the Divisions may also be based upon the change in value of a
single share of the corresponding Portfolio.
Thus, for example, in the case of the Balanced Division the net
investment rate is equal to (a) the change in the net asset value of a
Balanced Portfolio share for the period from the immediately preceding
valuation date to and including the current valuation date, plus the per
share amount of any dividends and other distributions made by the
Balanced Portfolio during the valuation period, less a deduction for any
applicable taxes or for any expenses resulting from a substitution of
securities, (b) divided by the net asset value of a Balanced Portfolio
share at the beginning of the valuation period, (c) less an adjustment
to provide for the charge for mortality rate and expense guarantees.
(See "Deductions", p. 11.)
Investment income and realized capital gains will be received in
the form of dividend and capital gain distributions upon Portfolio
shares held by each Division; such distributions will be reinvested in
additional shares of the same
7
<PAGE> 11
Portfolio. Unrealized capital gains and realized and unrealized capital
losses will be reflected by changes in the value of the shares held by
the Account.
BENEFITS PROVIDED UNDER THE CONTRACTS The benefits provided under the
Contracts consist of a surrender value and a retirement benefit. Subject
to the restrictions noted below, all of these benefits may be paid in a
lump sum or under the payment plans described below. The amounts
required to pay benefits will be taken from the Divisions of the
Account, or from the value accumulated on a fixed basis, as directed by
the Owner of the Contract.
SURRENDER OR WITHDRAWAL VALUE To the extent permitted by the Plan or
Trust, the Owner may terminate the Contract and redeem the value of
Accumulation Units credited to the Contract. The value, which may be
either greater or less than the amount paid by the Owner, is determined
as of the valuation date coincident with or next following receipt by
Northwestern Mutual Life of a written request for termination. Request
forms are available from Northwestern Mutual Life's Home Office and its
agents. A portion of the Accumulation Units may be surrendered on the
same basis.
A payee under Payment Plan 1 may elect to withdraw the present
value of any unpaid income payments at any time. Upon death during the
certain period of the payee under Plan 2 or both payees under Plan 3,
the beneficiary may elect to withdraw the present value of any unpaid
payments for the certain period. The withdrawal value is based on the
Annuity Unit value on the withdrawal date, with the unpaid payments
discounted at the Assumed Investment Rate. (See "Description of Payment
Plans", below.)
RETIREMENT BENEFITS The Contract Owner may at any time direct
Northwestern Mutual Life to pay retirement benefits to an Annuitant.
Upon the Owner's request, benefits may be paid in a lump sum or under
the Payment Plans described below. The Owner's request will state the
Payment Plan elected and the amount and date of the first payment.
Amounts distributed to an Annuitant may be subject to federal income
tax. A 10% penalty tax may be imposed on the taxable portion of
premature payments of benefits (prior to age 59 1/2 or disability)
unless payments are made after the employee separates from service and
payments are either paid in substantially equal installments over the
life or life expectancy of the employee or are paid on account of early
retirement after age 55.
Northwestern Mutual Life will determine the amount required to pay
the annuity or cash benefits and will redeem Accumulation Units in that
amount. There is no assurance that amounts accumulated under the
Contract will be sufficient to provide the retirement benefits under the
Plan or Trust.
VARIABLE PAYMENT PLANS
Part or all of the benefits under a Contract may be paid under a
variable payment plan. Under a variable plan the payee bears the entire
investment risk, since no guarantees of investment return are made.
Accordingly, there is no guarantee of the amount of the variable
payments, and the amount of such payments can be expected to change from
month to month.
Under a variable Payment Plan an Annuitant must select the initial
allocation of variable benefits among the Divisions. The Annuitant may
name and change the beneficiaries of unpaid payments for the specified
period under Plan 1 or the certain period under Plans 2 or 3.
Northwestern Mutual Life will issue the Annuitant a Certificate
describing the variable annuity benefits and including beneficiary
provisions of annuity contracts issued by Northwestern Mutual Life on
the date of issue of the Certificate. For a discussion of tax
considerations and limitations regarding the election of payment plans,
see "Federal Income Taxes", p. 10.
DESCRIPTION OF PAYMENT PLANS The following payment plans are available:
1. Payments for a Certain Period. An annuity payable monthly for
a specified period of five to 30 years.
2. Life Annuity with or without Certain Period. An annuity payable
monthly until the payee's death, or until the expiration of a selected
certain period, whichever is later. After the payee's death during the
certain period, if any, payments becoming due are paid to the designated
contingent beneficiary. A certain period of either 10 or 20 years may be
selected, or a plan with no certain period may be chosen.
3. Joint and Survivor Life Annuity with Certain Period. An annuity
payable monthly for a certain period of 10 years and thereafter to the
Annuitant and the Joint Annuitant for their joint lives. On the death of
either payee, payments continue for the remainder of the 10 years certain or
the remaining lifetime of the survivor, whichever is longer.
A Payment Plan must result in payments that meet the minimums required by
Northwestern Mutual Life for annuity payment plans on the date the plan is
elected. From time to time Northwestern Mutual Life may establish payment plan
8
<PAGE> 12
rates with greater actuarial value than those stated in the Contract and make
them available at the time of settlement. Northwestern Mutual Life may also
make available other payment plans, with provisions and rates as published by
Northwestern Mutual Life for those plans.
AMOUNT OF ANNUITY PAYMENTS The amount of the first annuity payment will be
determined on the basis of the particular Payment Plan selected, the annuity
payment rate and, for plans involving life contingencies, the Annuitant's
adjusted age. Variable annuity payments after the first will vary from month to
month and will depend upon the number and value of Annuity Units credited to
the Annuitant. Annuity Units represent the interest of the Annuitant in each
Division of the Account.
ASSUMED INVESTMENT RATE The payment rate tables for the Contracts are based
upon an Assumed Investment Rate of 3 1/2%. Payment rate tables based upon an
Assumed Investment Rate of 5% are also available where permitted by state law.
The Assumed Investment Rate affects both the amount of the first variable
payment and the amount by which subsequent payments increase or decrease. The
Assumed Investment Rate does not affect the actual value of the future payments
as of the date when payments begin.
Over a period of time, if each Division achieved a net investment result
exactly equal to the Assumed Investment Rate applicable to a particular Payment
Plan, the Annuity Unit for each Division would not change in value, and the
amount of annuity payments would be level. However, if the Division achieved a
net investment result greater than the Assumed Investment Rate, the amount of
annuity payments would increase. Similarly, if the Division achieved a net
investment result smaller than the Assumed Investment Rate, the amount of
annuity payments would decrease.
A higher Assumed Investment Rate will result in a larger initial payment
but more slowly rising and more rapidly falling subsequent payments than a
lower Assumed Investment Rate.
ADDITIONAL INFORMATION
TRANSFERS BETWEEN DIVISIONS AND PAYMENT PLANS A Contract Owner may at any time
change the allocation of net purchase payments among the Divisions or transfer
Accumulation Units from one Division to another. After the effective date of a
variable Payment Plan the Annuitant may transfer Annuity Units from one
Division to another. Changes in allocation and transfers are effective on the
date a written request is received at the Home Office of Northwestern Mutual
Life or on a future specified date.
The number of Accumulation or Annuity Units to be credited will be
adjusted to reflect the respective value of the Accumulation and Annuity Units
in each of the Divisions. Accumulation Units may be transferred among the
Divisions up to twelve times in a Contract year without charge. The charge for
each additional transfer is $25. For transfers of Annuity Units, charges and
waiting periods may be set by Northwestern Mutual Life.
Owners who contemplate the transfer of funds from one Division to another
should consider the risk inherent in a switch from one investment medium to
another. In general, frequent transfers based on short-term expectations for
the securities markets, especially transfers of large sums, will tend to
accentuate the danger that a transfer will be made at an inopportune time.
After the effective date of a variable Payment Plan which includes the
right of withdrawal a payee may transfer the withdrawal value to any other
Payment Plan. An administrative charge may apply.
OWNERS OF THE CONTRACTS The Owner of the Contract has the sole right to
exercise all rights and privileges under the Contract, except as the Contract
otherwise provides. The Owner is ordinarily the employer, a custodian or
trustee. The Annuitant is a Participant in the Plan or Trust who has been named
to receive annuity payments in accordance with the provisions of the Plan or
Trust.
DEFERMENT OF BENEFIT PAYMENTS Northwestern Mutual Life reserves the right to
defer determination and payment of the surrender value of the Accumulation
Units, the withdrawal value under a variable Payment Plan, or the payment of
benefits under a variable Payment Plan. Deferral will arise only if the right
to redeem Fund shares is suspended, payment of the redemption value is
postponed, or the New York Stock Exchange is closed, or trading thereon is
restricted; or an emergency exists, as a result of which it is not reasonably
practical for Northwestern Mutual Life to dispose of securities owned by it, or
to determine the value of Accumulation or Annuity Units.
DIVIDENDS The Contracts share in the divisible surplus of Northwestern Mutual
Life, except while payments are being made under a payment plan. The divisible
surplus of Northwestern Mutual Life is determined annually. Each
9
<PAGE> 13
Contract's share, if any, will be credited as a dividend on the Contract
anniversary. Under the terms of the Contract, any dividend will be applied as
a net purchase payment allocated to the Money Market Division.
On Group Combination Annuity Contracts, dividends arise principally as a
result of more favorable expense experience than that assumed in determining
mortality rate and expense guarantee charges. The dividend is based on the
average variable Contract value which is defined as the value of the
Accumulation units on the last Contract anniversary adjusted to reflect any
transactions since that date which increased or decreased the Contract's
interest in the Account.
For 1996, all front-load and simplified-load Contracts with an average
variable Contract value of $250,000 or more will receive a dividend of 0.25% of
the average variable Contract value. For the simplified-load Contracts, this
factor increases to 0.75% on the portion of the average variable Contract value
in excess of $500,000. In future years, dividends will continue to be based on
actual experience, and as a result, the factors may be different from those
stated above.
SUBSTITUTION AND CHANGE Northwestern Mutual Life reserves the right to (a)
substitute other securities for shares of each Portfolio of the Fund held by
any Division, or (b) change the provisions of the Contracts to assure
qualification for tax benefits under the Internal Revenue Code or to comply
with any other applicable federal or state laws. Northwestern Mutual Life may
make appropriate endorsement on Contracts having an interest in the Account and
take such other action as may be necessary to effect the substitution or
change. Contract Owners will be given prompt notice after any substitution or
change.
AMENDMENTS AND TERMINATION After the fifth Contract year, Northwestern Mutual
Life may amend the Contract with respect to (1) the sales load; (2) the maximum
annual annuity rate and expense guarantee charge; (3) the administration fee;
(4) the transfer fee; (5) the minimum amounts for purchase payment(s) and for
the Contract value; or (6) the payment rate tables which are included in the
Contract.
An amendment will become effective after not less than 30 days' written
notice to the Owner. An Amendment to the payment rate tables will not apply to
a Payment Plan that starts before the amendment becomes effective.
Northwestern Mutual Life reserves the right to terminate a Contract if
representations of the Owner are or become incorrect. The Contract Owner may
terminate a Contract in whole or in part at any time and be paid the value of
the Accumulation Units.
FINANCIAL STATEMENTS Financial statements of the Account and financial
statements of Northwestern Mutual Life appear in the Statement of Additional
Information.
FEDERAL INCOME TAXES
TAXATION OF CONTRACT BENEFITS
The Contracts are offered only for use under tax-qualified plans meeting
the requirements of Sections 401 and 403(a) of the Code. However, in the event
Contracts should be issued pursuant to HR-10 Plans, trusts or custodial
accounts which at the time of issuance are not qualified under the Code, some
or all of the tax benefits described herein may be lost.
No tax is payable as a result of any increase in the value of a Contract
until benefits from the Contract are received. Benefits received as annuity
payments will be taxable as ordinary income when received in accordance with
Section 72 of the Code. As a general rule, where an employee makes
nondeductible contributions to the Plan, the payee may exclude from income that
portion of each benefit payment which represents a return of the employee's
"investment in the contract" as defined in Section 72 until the entire
"investment in the contract" is recovered. A 15% penalty tax may be imposed on
aggregate payments in excess of certain annual limits and a 50% penalty tax may
be imposed on payments to the extent they are less than certain required
minimum amounts. In addition, a 10% penalty tax may be imposed on benefits paid
in excess of the benefits provided under the Plan formula if the payee is or
was a "5% owner" of the employer while a participant in the Plan.
Benefits paid in a form other than an annuity will be taxed as ordinary
income when received except for that portion of the payment, if any, which
represents a return of the employee's "investment in the contract." Benefits
received as a "lump sum distribution" may be eligible for a separate tax
averaging calculation and, with certain limited exceptions, all benefits are
subject to tax-free rollover provisions of the Code. A 10% penalty tax may be
imposed on the taxable portion of premature payments of benefits (prior to age
59 1/2 or disability) unless payments are made after the
10
<PAGE> 14
employee separates from service and payments are either paid in substantially
equal installments over the life or life expectancy of the employee or are paid
on account of early retirement after age 55.
A loan from the Plan to an employee, other than an owner-employee, may be
taxable as ordinary income depending on the amount and terms of the loan. A
loan to an owner-employee is a prohibited transaction under the Code and could
disqualify the Plan.
Benefit payments will be subject to mandatory 20% withholding unless (1)
they are rolled over directly to another tax-qualified plan or an individual
retirement arrangement, (2) they are paid in substantially equal installments
over the life or life expectancy of the employee (or of the employee and the
employee's beneficiary) or over a period of 10 years or more, or (3) they are
"required minimum distributions" payable after age 70 1/2.
The rules governing plan provisions, payments and deductions and taxation
of distributions from such Plans and Trusts, as set forth in the Code and the
regulations relating thereto, are complex and cannot be readily summarized.
Furthermore, special rules are applicable in many situations, and prospective
purchasers desiring to adopt an HR-10 pension or profit-sharing plan or trust
are advised to consult qualified tax counsel.
TAXATION OF NORTHWESTERN MUTUAL LIFE
Northwestern Mutual Life may charge the appropriate Contracts with their
shares of any tax liability which may result from the maintenance or operation
of the Divisions of the Account. No charge is currently being made. (See "Net
Investment Factor", p. 7 and "Deductions", below.)
DEDUCTIONS
The following deductions will be made:
1. Deductions from Purchase Payments.
Front-Load Contract
A sales load is deducted from all purchase payments received. The
deduction is based on the cumulative amounts received and the rates
in the table below:
<TABLE>
<CAPTION>
CUMULATIVE PURCHASE PAYMENTS PAID UNDER THE CONTRACT RATE
---------------------------------------------------- ----
<S> <C>
First $150,000 ...................................... 4.5%
Next $350,000 ...................................... 3.0%
Next $500,000 ...................................... 1.0%
Balance over $1,000,000 ............................. .5%
</TABLE>
Simplified-Load Contract
An installation fee in the amount of $750 is deducted from the
first purchase payment received. Alternatively, the fee may be paid
separately when the application for the Contract is submitted. The
installation fee covers the non-recurring expenses of processing the
application and issuing the Contract.
2. Annual Mortality Rate and Expense Guarantee Charge. The net
investment factor (see "Net Investment Factor", p. 7) used in determining
the value of Accumulation and Annuity Units reflects a charge on each
valuation date for mortality and expense risks assumed by Northwestern
Mutual Life. For the front-load Contract the charge on an annual basis is
.65% of the current value of the net assets of the Account. For the
simplified-load Contract the charge on an annual basis is 1.25% of the net
assets. This charge may be increased by Northwestern Mutual Life to a
maximum of 1.00% for the front-load Contract and 1.50% for the
simplified-load Contract. After the fifth Contract year the maximum may be
amended. (See "Amendments and Termination", p. 10.)
The mortality risk is that annuity payments will continue for longer
periods than anticipated because the Annuitants as a group live longer than
expected. The expense risk is that the charges made by Northwestern Mutual
Life may be insufficient to cover the actual costs incurred in connection
with the Contracts. Northwestern Mutual Life assumes these risks for the
duration of the Contract.
The net investment factor also reflects the deduction of any reasonable
expenses which may result if there were a substitution of other securities
for shares of a Portfolio of the Fund as described under "Substitution and
Change",
11
<PAGE> 15
p. 10, and the deduction of any applicable taxes. Applicable taxes could
include any tax liability paid or reserved for by Northwestern Mutual Life
resulting from the maintenance or operation of a Division of the Account. It
is not presently anticipated that any deduction will be made for federal
income taxes (see "Federal Income Taxes" p. 10), nor is it anticipated that
maintenance or operation of the Account will give rise to any deduction for
state or local taxes. However, Northwestern Mutual Life reserves the right
to charge the appropriate Contracts with their shares of any tax liability
which may result under present or future tax laws from the maintenance or
operation of the Account or to deduct any such tax liability in the
computation of the net investment factor for such Contracts.
3. Administration Fee. Northwestern Mutual Life may terminate a
Contract on 60 days' written notice after it has been in force for one year
if the total Contract value (including any amounts held on a fixed basis) is
less than the minimum Contract value of $25,000. In lieu of terminating the
Contract an administration fee of $150 may be charged annually on the
Contract anniversary.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be sold through individuals who, in addition to being
licensed insurance agents of Northwestern Mutual Life, are registered
representatives of Northwestern Mutual Investment Services, Inc., a
wholly-owned subsidiary of Northwestern Mutual Life and a registered
broker-dealer under the Securities Exchange Act of 1934, and a member of the
National Association of Securities Dealers. Where state law requires, such
agents will also be licensed securities salesmen. Commissions paid to the
agents on sales of the Contracts are calculated partly as a percentage of
purchase payments and partly as a percentage of Contract values for each
Contract year. Total commissions, on average, are not expected to exceed the
equivalent of 7.0% of purchase payments.
CONTRACTS ISSUED PRIOR TO JANUARY 1, 1992
For Contracts issued prior to January 1, 1992 the purchase payments are
subject to a charge for sales expenses. This deduction is at the rate of 4.0%
on the first $25,000; 2.0% on the next $75,000; 1.0% on the next $100,000; .4%
on the next $100,000; .2% on the next $200,000; and .1% on the balance over
$500,000 of cumulative considerations. For these Contracts there is also an
annual service fee charged on each anniversary, based on the value of
Accumulation Units on the last valuation date of the Contract year, at the rate
of .5% on the first $100,000; .4% on the next $100,000; .3% on the next
$100,000; .2% on the next $200,000; and .1% on the balance over $500,000. The
charge for annuity rate and expense risks may not exceed .25% of the Account
assets held for these Contracts (unless the Contracts are amended after the
fifth Contract year), and no charge for these risks is currently being made.
These Contracts contain no provisions for accumulation of funds on a fixed
basis.
12
<PAGE> 16
TABLE OF CONTENTS FOR THIS PROSPECTUS
PAGE
----
INDEX OF SPECIAL TERMS ................................................. 2
Penalty Tax on Premature Payments .................................... 2
EXPENSE TABLE .......................................................... 2
ACCUMULATION UNIT VALUES ............................................... 4
THE COMPANY ............................................................ 6
NML VARIABLE ANNUITY ACCOUNT C ......................................... 6
THE FUND ............................................................... 6
THE CONTRACTS .......................................................... 6
Unallocated Group Annuity Contracts .................................. 7
Purchase Payments Under the Contracts ................................ 7
Amount and Frequency ............................................... 7
Application of Purchase Payments ................................... 7
Net Investment Factor ................................................ 7
Benefits Provided Under the Contracts ................................ 8
Surrender or Withdrawal Value ...................................... 8
Retirement Benefits ................................................ 8
Variable Payment Plans ............................................... 8
Description of Payment Plans ....................................... 8
Amount of Annuity Payments ......................................... 9
Assumed Investment Rate ............................................ 9
Additional Information ............................................... 9
Transfers Between Divisions and Payment Plans ...................... 9
Owners of the Contracts ............................................ 9
Deferment of Benefit Payments ...................................... 9
Dividends .......................................................... 9
Substitution and Change ............................................ 10
Amendments and Termination ......................................... 10
Financial Statements................................................ 10
FEDERAL INCOME TAXES ................................................... 10
Taxation of Contract Benefits ........................................ 10
Taxation of Northwestern Mutual Life ................................. 11
DEDUCTIONS ............................................................. 11
DISTRIBUTIONS OF THE CONTRACTS ......................................... 12
CONTRACTS ISSUED PRIOR TO JANUARY 1, 1992 .............................. 12
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION
PAGE
----
GENERAL INFORMATION .................................................... B-2
DISTRIBUTION OF THE CONTRACTS .......................................... B-2
DETERMINATION OF ANNUITY PAYMENTS ...................................... B-2
Amount of Annuity Payments ........................................... B-2
Annuity Unit Value ................................................... B-3
Illustrations of Variable Annuity Payments ........................... B-3
VALUATION OF ASSETS OF THE ACCOUNT ..................................... B-4
TRANSFERABILITY RESTRICTIONS ........................................... B-4
EXPERTS ................................................................ B-4
FINANCIAL STATEMENTS OF THE ACCOUNT
(for year ended December 31, 1995).................................... B-5
REPORT OF INDEPENDENT ACCOUNTANTS
(for the year ended December 31, 1995) ............................... B-11
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
(for the three years ended December 31, 1995)........................ B-12
REPORT OF INDEPENDENT ACCOUNTANTS
(for the three years ended December 31, 1995)......................... B-28
13
<PAGE> 17
This Prospectus sets forth concisely the information about NML Variable
Annuity Account C that a prospective investor ought to know before investing.
Additional information about Account C has been filed with the Securities and
Exchange Commission in a Statement of Additional Information which is
incorporated herein by reference. The Statement of Additional Information is
available upon request and without charge from The Northwestern Mutual Life
Insurance Company. To receive a copy, return the request form to the address
listed below, or telephone (414) 271-1444.
- --------------------------------------------------------------------------------
TO: The Northwestern Mutual Life Insurance Company
Equity Compliance Division/Compliance and Sales Practices Department
720 East Wisconsin Avenue
Milwaukee, WI 53202
Please send a Statement of Additional Information for NML Variable Annuity
Account C to:
Name
-----------------------------------------------------------------------
Address
---------------------------------------------------------------------
-----------------------------------------------------------------------------
City State Zip
------------------------------------------ ---------- ----------
14
<PAGE> 18
N O R T H W E S T E R N M U T U A L L I F E
GROUP COMBINATION ANNUITY CONTRACTS
For Retirement Plans of Self-Employed Persons and their Employees
NML VARIABLE ANNUITY ACCOUNT C
NORTHWESTERN MUTUAL SERIES FUND, INC.
P R O S P E C T U S
15
<PAGE> 19
STATEMENT OF ADDITIONAL INFORMATION
GROUP COMBINATION ANNUITY CONTRACTS
(for Retirement Plans of Self-Employed Persons and their Employees)
NML VARIABLE ANNUITY ACCOUNT C
(the "Account"),
a separate investment account of
The Northwestern Mutual Life Insurance Company
("Northwestern Mutual Life")
______________________________________________________________________________
This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the prospectus
for the Contracts. A copy of the prospectus may be obtained from
The Northwestern Mutual Life Insurance Company, 720 East Wisconsin
Avenue, Milwaukee, Wisconsin 53202, telephone number (414)
271-1444.
______________________________________________________________________________
The date of the prospectus to which this Statement of Additional
Information Relates is April 30, 1996.
The date of this Statement of Additional Information is April 30,
1996.
B-1
<PAGE> 20
GENERAL INFORMATION
The Account was originally named NML Separate Account C but was renamed
NML Variable Annuity Account C on November 23, 1983. The Account is used for
the Contracts and for outstanding Contracts to Provide Annuity Benefits.
Northwestern Mutual Life discontinued sales of Contracts to Provide Annuity
Benefits on May 1, 1984.
DISTRIBUTION OF THE CONTRACTS
The Contracts are offered on a continuous basis exclusively through
individuals who, in addition to being life insurance agents of Northwestern
Mutual Life, are registered representatives of Northwestern Mutual Investment
Services, Inc. ("NMIS").
NMIS may be considered the underwriter of the Contracts for purposes of
the federal securities laws. The following amounts of commissions were paid on
sales of the Contracts, including commissions on sales of Contracts to
corporate pension plans, during each of the last three years:
<TABLE>
<CAPTION>
Year Amount
---- --------
<S> <C>
1995 $583,954
1994 $577,227
1993 $302,074
</TABLE>
DETERMINATION OF ANNUITY PAYMENTS
The following discussion of the method for determining the amount of
monthly annuity payments under a variable payment plan is intended to be read
in conjunction with these sections of the prospectus for the Contracts:
"Variable Payment Plans", p. 8, including "Description of Payment Plans", p. 8,
"Amount of Annuity Payments", p. 9, and "Assumed Investment Rate", p. 9;
"Dividends", p. 9; "Net Investment Factor", p. 7; and "Deductions", p. 11.
AMOUNT OF ANNUITY PAYMENTS The amount of the first annuity payment will
be determined on the basis of the particular Payment Plan selected, the annuity
payment rate and, for plans involving life contingencies, the Annuitant's
adjusted age. The amount of the first payment is the sum of the payments from
each Division. The payments from each Division are determined by multiplying
the applicable monthly variable annuity payment rate by the benefits allocated
to the Division under the variable Payment Plan. (See "Illustrations of
Variable Annuity Payments".) Payment rate tables are set forth in the
Contracts. Annuity payment rates currently in use by Northwestern Mutual Life
are based on the 1983 Table a with Projection Scale G.
Variable annuity payments after the first will vary from month to month
and will depend upon the number and value of Annuity Units credited to the
Annuitant. The amount held under a Payment Plan will not share in the
divisible surplus of Northwestern Mutual Life.
The number of Annuity Units in each Division is determined by dividing the
amount of the first annuity payment from the Division by the value of an
Annuity Unit on the effective date of the Payment Plan. The number of Annuity
Units thus credited to the Annuitant in each Division remains constant
throughout the annuity period. However, the value of Annuity Units in each
Division will fluctuate with the investment experience of the Division.
B-2
<PAGE> 21
The amount of each variable annuity payment after the first is the sum of
payments from each Division. The payments from each Division are determined by
multiplying the number of Annuity Units credited to the Annuitant in the
Division by the value of an Annuity Unit for the Division on (a) the fifth
valuation date prior to the payment due date if the payment due date is a
valuation date, or (b) the sixth valuation date prior to the payment due date
if the payment due date is not a valuation date. To illustrate, if a payment
due date falls on a Friday, Saturday or Sunday, the amount of the payment will
normally be based upon the Annuity Unit value calculated on the preceding
Friday. The preceding Friday would be the fifth valuation date prior to the
Friday due date, and the sixth valuation date prior to the Saturday or Sunday
due dates.
ANNUITY UNIT VALUE The value of an Annuity Unit for each Division was
arbitrarily established as of the date on which the operations of the Division
began. The value of an Annuity Unit on any later date varies to reflect the
investment experience of the Division, the Assumed Investment Rate on which the
annuity rate tables are based, and the annuity rate and expense guarantee
charge.
The Annuity Unit value for each Division on any valuation date is
determined by multiplying the Annuity Unit value on the immediately preceding
valuation date by two factors: (a) the net investment factor for the current
period for the Division; and (b) an adjustment factor to neutralize the Assumed
Investment Rate used in calculating the mortality rate tables.
ILLUSTRATIONS OF VARIABLE ANNUITY PAYMENTS To illustrate the manner in
which variable annuity payments are determined consider this example. Item (2)
in the example shows the applicable monthly payment rate for an annuitant,
adjusted age 65, who has elected a life annuity Payment Plan with a certain
period of 10 years with an Assumed Investment Rate of 3-1/2% (Plan 2, as
described in the prospectus).
<TABLE>
<S> <C>
(1) Value of Annuitant's retirement benefit
allocated to Balanced . . . . . . . . . . . . . . . $ 50,000
(2) Assumed applicable monthly payment rate
per $1,000 from annuity rate table . . . . . . . . $ 5.00
(3) Amount of first payment from Balanced
Division (1) x (2) divided by $1,000. . . . . . . . $ 250.00
(4) Assumed Value of Annuity Unit in Balanced
Division on effective date of payment plan. . . . . $1.500000
(5) Number of Annuity Units credited in
Balanced Division, (3) divided by (4) . . . . . . . 166.67
</TABLE>
The $50,000 value on the effective date of the payment plan provides a first
payment from the Balanced Division of $250.00, and payments thereafter of the
varying dollar value of 166.67 Annuity Units. The amount of subsequent
payments from the Balanced Division is determined by multiplying 166.67 units
by the value of an Annuity Unit in the Balanced Division on the applicable
valuation date. For example, if that unit value is $1.501000, the monthly
payment from the Division will be 166.67 multiplied by $1.501000, or $250.17.
However, the value of the Annuity Unit depends entirely on the investment
performance of the Division. Thus in the example above, if the net investment
rate for the following month (see "Net Investment Factor") was less than the
B-3
<PAGE> 22
Assumed Investment Rate of 3-1/2%, the Annuity Unit would decline in value. If
the Annuity Unit value declined to $1.499000 the succeeding monthly payment
would then be 166.67 X $1.499000, or $249.84.
For the sake of simplicity the foregoing example assumes that all of the
Annuity Units are in the Balanced Division. If there are Annuity Units in two
or more Divisions, the annuity payment from each Division is calculated
separately, in the manner illustrated, and the total monthly payment is the sum
of the payments from the Divisions.
VALUATION OF ASSETS OF THE ACCOUNT
The value of Portfolio shares of the Fund held in each Division of the
Account at the time of each valuation is the redemption value of such shares at
such time. If the right to redeem shares of the Fund has been suspended, or
payment of redemption value has been postponed, for the sole purpose of
computing annuity payments the shares held in the Account (and Annuity Units)
may be valued at fair value as determined in good faith by the Board of
Trustees of Northwestern Mutual Life.
TRANSFERABILITY RESTRICTIONS
Ownership of a Contract may be transferred subject to the terms of the
Plan or Trust. The transferee, or its fiduciary representative, must
acknowledge in writing that the new Owner is a tax-qualified pension or
profit-sharing plan. Written proof of transfer satisfactory to Northwestern
Mutual Life must be received at the Home Office of Northwestern Mutual Life.
The transfer will take effect on the date the proof of the transfer is signed.
Ownership of a Contract may not be assigned without the consent of Northwestern
Mutual Life. Northwestern Mutual Life will not be responsible for the validity
or effect of the assignment or for any payment or other action taken by
Northwestern Mutual Life before Northwestern Mutual Life consents to the
assignment.
EXPERTS
The financial statements of the Account as of December 31, 1995 and for
each of the two years in the period ended December 31, 1995 and of Northwestern
Mutual Life as of December 31, 1995 and 1994 and for each of the three years in
the period ended December 31, 1995 included in this Statement of Additional
Information have been so included in reliance on the reports of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting. Price Waterhouse LLP provides audit
services for the Account. The address of Price Waterhouse LLP is 100 East
Wisconsin Avenue, Suite 1500, Milwaukee, Wisconsin 53202.
B-4
<PAGE> 23
NML VARIABLE ANNUITY ACCOUNT C
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<S> <C> <C>
ASSETS
Investments at Market Value:
Northwestern Mutual Series Fund, Inc.
Index 500 Stock
37,492 shares (cost $46,642)...................................................... $ 64,560
Growth Stock
1,651 shares (cost $1,947)....................................................... 2,085
Growth and Income Stock
4,037 shares (cost $4,620)....................................................... 4,889
Aggressive Growth Stock
20,745 shares (cost $40,637)..................................................... 57,420
International Equity
22,169 shares (cost $27,852)..................................................... 30,039
Select Bond
13,258 shares (cost $15,437)..................................................... 16,281
High Yield Bond
718 shares (cost $760)........................................................... 737
Money Market
9,325 shares (cost $9,325)....................................................... 9,325
Balanced
82,587 shares (cost $113,567).................................................... 132,469 $317,805
--------
Due from Northwestern Mutual Life Insurance Company................................................ 808
--------
Total Assets................................................................................ $318,613
========
LIABILITIES
Due on Purchase of Fund Shares..................................................................... $ 808
--------
Total Liabilities........................................................................... 808
--------
EQUITY (Note 8)
Group Variable Annuity Contracts Issued:
Before December 17, 1981 or between April 30, 1984 and December 31, 1991......................... $220,420
On or After December 17, 1981 and before May 1, 1984............................................. 8,629
Group Combination Annuity Contracts Issued:
On or After December 31, 1991 -- Front Load Version.............................................. 25,574
On or After December 31, 1991 -- Simplified Load Version......................................... 63,182
--------
Total Equity................................................................................ 317,805
--------
Total Liabilities and Equity................................................................ $318,613
========
</TABLE>
B-5
The Accompanying Notes are an Integral Part of the Financial Statements
<PAGE> 24
NML VARIABLE ANNUITY ACCOUNT C
STATEMENT OF OPERATIONS AND CHANGES IN EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
INDEX 500 GROWTH STOCK
COMBINED STOCK DIVISION DIVISION#
------------------- ----------------- ---------------------------
EIGHT MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------------- ----------------- ------------ ------------
1995 1994 1995 1994 1995 1994
-------- -------- ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend Income............................. $ 6,471 $ 22,562 $ 546 $ 2,226 $ 59 $ 5
Annuity Rate and Expense Guarantees......... 857 510 140 79 8 1
-------- -------- ------- ------- ------ ----
Net Investment Income....................... 5,614 22,052 406 2,147 51 4
-------- -------- ------- ------- ------ ----
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Realized Gain (Loss) on Investments......... 9,884 5,950 2,386 2,167 33 1
Unrealized Appreciation (Depreciation) of
Investments During the Year............... 53,407 (27,057) 14,264 (3,880) 140 (3)
-------- -------- ------- ------- ------ ----
Net Gain (Loss) on Investments.............. 63,291 (21,107) 16,650 (1,713) 173 (2)
-------- -------- ------- ------- ------ ----
Increase (Decrease) in Equity Derived from
Investment Activity....................... 68,905 945 17,056 434 224 2
-------- -------- ------- ------- ------ ----
EQUITY TRANSACTIONS
Contract Owners' Net Payments............... 59,390 48,709 9,482 6,659 543 201
Surrenders and Other (net).................. (58,627) (25,661) (7,614) (2,593) (90) (3)
Transfers from Other Divisions or Sponsor... 19,929 33,189 2,498 1,607 1,254 148
Transfers to Other Divisions or Sponsor..... (22,174) (34,247) (2,411) (6,406) (177) (18)
-------- -------- ------- ------- ------ ----
Increase (Decrease) in Equity Derived from
Equity Transactions....................... (1,482) 21,990 1,955 (733) 1,530 328
-------- -------- ------- ------- ------ ----
Net Increase (Decrease) in Equity............. 67,423 22,935 19,011 (299) 1,754 330
Equity
Beginning of Year........................... 250,382 227,447 45,552 45,851 330 0
-------- -------- ------- ------- ------ ----
End of Year................................. $317,805 $250,382 $64,563 $45,552 $2,084 $330
======== ======== ======= ======= ====== ====
</TABLE>
# The initial investments in the Growth Stock and Growth and Income Stock
Divisions were made on May 3, 1994.
B-6
The Accompanying Notes are an Integral Part of the Financial Statements
<PAGE> 25
NML VARIABLE ANNUITY ACCOUNT C
STATEMENT OF OPERATIONS AND CHANGES IN EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
GROWTH & INCOME AGGRESSIVE GROWTH INTERNATIONAL SELECT BOND
STOCK DIVISION# STOCK DIVISION EQUITY DIVISION DIVISION
- ----------------------------- ------------------- ------------------- -------------------
EIGHT MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
- ------------ ------------ ------------------- ------------------- -------------------
1995 1994 1995 1994 1995 1994 1995 1994
- ------------ ------------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 277 $ 19 $ 243 $ 232 $ 190 $ 704 $ 395 $ 1,874
21 3 167 77 83 40 60 44
------ ------ ------- ------- ------- ------- ------- -------
256 16 76 155 107 664 335 1,830
------ ------ ------- ------- ------- ------- ------- -------
48 (1) 2,648 385 286 166 (71) 143
282 (14) 12,416 985 3,281 (1,424) 2,263 (2,454)
------ ------ ------- ------- ------- ------- ------- -------
330 (15) 15,064 1,370 3,567 (1,258) 2,192 (2,311)
------ ------ ------- ------- ------- ------- ------- -------
586 1 15,140 1,525 3,674 (594) 2,527 (481)
------ ------ ------- ------- ------- ------- ------- -------
1,670 660 12,411 8,438 6,644 7,447 3,236 3,231
(225) (10) (7,855) (2,328) (4,567) (617) (3,582) (1,088)
1,885 614 5,511 4,917 1,708 16,146 1,503 778
(186) (106) (1,053) (1,122) (2,068) (917) (1,666) (3,250)
------ ------ ------- ------- ------- ------- ------- -------
3,144 1,158 9,014 9,905 1,717 22,059 (509) (329)
------ ------ ------- ------- ------- ------- ------- -------
3,730 1,159 24,154 11,430 5,391 21,465 2,018 (810)
1,159 0 33,268 21,838 24,647 3,182 14,262 15,072
------ ------ ------- ------- ------- ------- ------- -------
$4,889 $1,159 $57,422 $33,268 $30,038 $24,647 $16,280 $14,262
====== ====== ======= ======= ======= ======= ======= =======
</TABLE>
B-7
The Accompanying Notes are an Integral Part of the Financial Statements
<PAGE> 26
NML VARIABLE ANNUITY ACCOUNT C
STATEMENT OF OPERATIONS AND CHANGES IN EQUITY (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
MONEY MARKET
HIGH YIELD DIVISION# DIVISION BALANCED DIVISION
--------------------------- ----------------- -------------------
EIGHT MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------ ------------- ----------------- -------------------
1995 1994 1995 1994 1995 1994
------------ ------------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend Income................................. $ 55 $ 11 $ 494 $ 444 $ 4,212 $ 17,047
Annuity Rate and Expense Guarantees............. 3 1 65 46 310 219
---- ----- ------- ------- -------- --------
Net Investment Income........................... 52 10 429 398 3,902 16,828
---- ----- ------- ------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized Gain on Investments.................... 4 -- -- -- 4,550 3,089
Unrealized Appreciation (Depreciation) of
Investments During the Year................... (14) (10) -- -- 20,775 (20,257)
---- ----- ------- ------- -------- --------
Net Gain (Loss) on Investments.................. (10) (10) 0 0 25,325 (17,168)
---- ----- ------- ------- -------- --------
Increase (Decrease) in Equity Derived from
Investment Activity........................... 42 0 429 398 29,227 (340)
---- ----- ------- ------- -------- --------
EQUITY TRANSACTIONS
Contract Owners' Net Payments................... 165 110 7,895 5,452 17,344 16,511
Surrenders and Other (net)...................... (36) -- (7,513) (3,385) (27,145) (15,637)
Transfers from Other Divisions or Sponsors...... 422 182 3,825 6,546 1,323 2,251
Transfers to Other Divisions or Sponsors........ (59) (90) (6,822) (7,431) (7,732) (14,907)
---- ----- ------- ------- -------- --------
Increase (Decrease) in Equity Derived from Equity
Transactions.................................... 492 202 (2,615) 1,182 (16,210) (11,782)
---- ----- ------- ------- -------- --------
Net Increase (Decrease) in Equity................. 534 202 (2,186) 1,580 13,017 (12,122)
Equity
Beginning of Year............................... 202 0 11,510 9,930 119,452 131,574
---- ----- ------- ------- -------- --------
End of Year..................................... $736 $ 202 $ 9,324 $11,510 $132,469 $119,452
==== ===== ======= ======= ======== ========
</TABLE>
# The initial investment in the High Yield Bond Division was made on May 3,
1994.
B-8
The Accompanying Notes are an Integral Part of the Financial Statements
<PAGE> 27
NML VARIABLE ANNUITY ACCOUNT C
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Note 1 -- NML Variable Annuity Account C (the "Account") is a segregated asset
account of The Northwestern Mutual Life Insurance Company ("Northwestern Mutual
Life" or "Sponsor") used to fund variable annuity contracts ("contracts") for
HR-10 and corporate pension and profit-sharing plans which qualify for special
tax treatment under the Internal Revenue Code. Beginning December 31, 1991, two
versions of the contract are offered: Front Load contracts with a sales charge
up to 4.5% of purchase payments and Simplified Load contracts with an
installation fee of $750.
Note 2 -- The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Principal
accounting policies are summarized below.
Note 3 -- All assets of each Division of the Account are invested in shares of
the corresponding Portfolio of Northwestern Mutual Series Fund, Inc. (the
"Fund"). The shares are valued at the Fund's offering and redemption price per
share.
The Fund is an open-end investment company registered under the Investment
Company Act of 1940.
Note 4 -- Annuity reserves are based on published annuity tables with age
adjustment and benefit payments which reflect actual investment experience.
Annuity reserves are based on the 1983 Table a with assumed interest rates of
3 1/2% or 5%.
Note 5 -- Dividend income from the Fund is recorded on the record date of the
dividends. Transactions in Fund shares are accounted for on the trade date. The
basis for determining cost on sale of Fund shares is identified cost. Purchases
of Fund shares for the year ended December 31, 1995 by each Division are shown
below:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Index 500 Stock
Division............... $ 9,719,794 $ 7,360,855
Growth Stock Division.... 1,794,866 213,213
Growth & Income Stock
Division............... 3,709,640 310,894
Aggressive Growth
Division............... 15,956,497 6,866,522
International Equity
Division............... 6,724,373 4,899,939
Select Bond Division..... 4,302,192 4,475,998
High Yield Bond
Division............... 632,095 87,219
Money Market Division.... 10,821,340 13,008,176
Balanced Division........ 17,257,735 29,565,575
</TABLE>
Note 6 -- A deduction for annuity rate and expense guarantees is determined
daily and paid to Northwestern Mutual Life as compensation for assuming the risk
that annuity payments will continue for longer periods than anticipated because
the annuitants as a group live longer than expected, and the risk that the
charges made by Northwestern Mutual Life may be insufficient to cover the actual
costs incurred in connection with the contracts.
Generally, for contracts issued on or after December 31, 1991, for the Front
Load version and the Simplified Load version, the deduction for annuity rate and
expense guarantees is determined daily at annual rates of 6.5/10 of 1% and
1 1/4%, respectively, of the net assets of each Division attributable to these
contracts and is paid to Northwestern Mutual Life. For these contracts, the
rates may be increased or decreased by the Board of Trustees of Northwestern
Mutual Life not to exceed 1% and 1 1/2% annual rates, respectively.
Generally, the deduction for contracts issued before December 17, 1981 or
between April 30, 1984 and December 31, 1991 as provided for in the contracts
has been waived by the Board of Trustees of Northwestern Mutual Life. For these
contracts, the rate may be determined by the Board of Trustees of Northwestern
Mutual Life not to exceed a 1/4 of 1% annual rate.
For contracts issued on or after December 17, 1981, and before May 1, 1984, the
deduction is determined daily at an annual rate of 1/2 of 1% of the net assets
of each Division attributable to these contracts and is paid to Northwestern
Mutual Life. For these contracts, the rate may be increased or decreased by the
Board of Trustees of Northwestern Mutual Life not to exceed a 3/4% of 1% annual
rate.
Note 7 -- Northwestern Mutual Life is taxed as a "life insurance company" under
the Internal Revenue Code and the operations of the Account form a part of and
are taxed with those of Northwestern Mutual Life. Under current law, no federal
income taxes are payable with respect to the Account. Accordingly, no provision
for any such liability has been made.
B-9
<PAGE> 28
NML VARIABLE ANNUITY ACCOUNT C
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
(IN THOUSANDS)
Note 8 -- Equity Values by Division are shown below:
<TABLE>
<CAPTION>
GROUP VARIABLE ANNUITY CONTRACT ISSUED:
---------------------------------------------------------------------------
BEFORE DECEMBER 17, 1981 OR BETWEEN ON OR AFTER DECEMBER 17, 1981 AND
APRIL 30, 1984 AND DECEMBER 31, 1991 BEFORE MAY 1, 1984
------------------------------------- -----------------------------------
ACCUMULATION UNITS ACCUMULATION UNITS
DIVISION UNIT VALUE OUTSTANDING EQUITY UNIT VALUE OUTSTANDING EQUITY
- ------------------------------------- ------------ ----------- -------- ------------ ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Index 500 Stock...................... $22.104982 2,233 $ 49,360 $ 21.564611 49 $1,066
Growth Stock......................... 13.271899 64 848 13.162242 -- --
Growth and Income Stock.............. 13.142782 117 1,538 13.034162 -- --
Aggressive Growth Stock.............. 27.648691 1,398 38,650 26.975930 6 149
International Equity................. 1.426613 14,748 21,039 1.407741 498 701
Select Bond.......................... 74.222515 124 9,216 69.192181 7 504
High Yield Bond...................... 12.030416 22 260 11.931003 -- --
Money Market......................... 24.705630 62 1,537 23.069838 14 334
Balanced............................. 51.855817 1,889 97,972 48.364840 113 5,470
-------- ------
Equity............................. 220,420 8,224
Annuity Reserves -- Balanced....... -- 405
-------- ------
Total Equity....................... $220,420 $8,629
======== ======
</TABLE>
<TABLE>
<CAPTION>
GROUP COMBINATION ANNUITY CONTRACT ISSUED:
---------------------------------------------------------------------------
ON OR AFTER DECEMBER 31, 1991 ON OR AFTER DECEMBER 31, 1991
FRONT LOAD VERSION SIMPLIFIED LOAD VERSION
------------------------------------ ------------------------------------
ACCUMULATION UNITS ACCUMULATION UNITS
DIVISION UNIT VALUE OUTSTANDING EQUITY UNIT VALUE OUTSTANDING EQUITY
- -------------------------------------- ------------ ----------- ------- ------------ ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Index 500 Stock....................... $1.588496 2,400 $ 3,812 $ 2.031929 5,080 $10,323
Growth Stock.......................... 1.312966 361 474 1.299976 587 763
Growth and Income Stock............... 1.300190 861 1,120 1.287355 1,733 2,231
Aggressive Growth Stock............... 1.776871 2,242 3,984 2.753170 5,317 14,638
International Equity.................. 1.402156 2,009 2,817 1.379966 3,973 5,482
Select Bond........................... 1.334934 1,801 2,404 6.136911 677 4,157
High Yield Bond....................... 1.190149 90 107 1.178371 314 370
Money Market.......................... 1.139693 2,956 3,369 2.160533 1,891 4,085
Balanced.............................. 1.419325 5,275 7,487 4.310821 4,902 21,133
------- -------
Equity.............................. 25,574 63,182
Annuity Reserves.................... -- --
------- -------
Total Equity........................ $25,574 $63,182
======= =======
</TABLE>
B-10
<PAGE> 29
[PRICE WATERHOUSE LLP LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
To The Northwestern Mutual Life Insurance Company and
Contract Owners of NML Variable Annuity Account C
In our opinion, the accompanying combined statement of assets and liabilities
and the related combined and separate statements of operations and changes in
equity present fairly, in all material respects, the financial position of NML
Variable Annuity Account C and the Index 500 Stock Division, Growth Stock
Division, Growth and Income Stock Division, Aggressive Growth Stock Division,
International Equity Division, Select Bond Division, High Yield Bond Division,
Money Market Division and the Balanced Division thereof at December 31, 1995,
the results of their operations and the changes in their equity for the year
then ended and for each of the other periods presented, all in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of The Northwestern Mutual Life Insurance Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included direct confirmation of the number of
shares owned at December 31, 1995 with Northwestern Mutual Series Fund, Inc.,
provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
January 24, 1996
B-11
<PAGE> 30
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
The following financial statements of Northwestern Mutual Life should be
considered only as bearing upon the ability of Northwestern Mutual Life to meet
its obligations under the Contracts.
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(In millions)
<TABLE>
<CAPTION>
ASSETS
December 31,
----------------
1995 1994
------- -------
<S> <C> <C>
BONDS
United States Government $ 3,282 $ 3,501
Industrial and other 22,236 19,232
------- -------
25,518 22,733
------- -------
STOCKS
Common 2,894 2,192
Unconsolidated subsidiaries 531 504
Preferred 546 511
------- -------
3,971 3,207
------- -------
MORTGAGE LOANS 8,429 7,099
REAL ESTATE
Investment 1,294 1,072
Home office 135 141
------- -------
1,429 1,213
------- -------
LOANS ON POLICIES 6,476 6,144
OTHER INVESTMENTS 1,341 1,301
CASH AND TEMPORARY INVESTMENTS 544 803
DUE AND ACCRUED INVESTMENT
INCOME 721 650
------- -------
Total invested assets 48,429 43,150
------- -------
SEPARATE ACCOUNT BUSINESS 5,000 3,806
OTHER ASSETS 1,447 1,156
------- -------
Total Assets $54,876 $48,112
======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
B-12
<PAGE> 31
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(In millions)
<TABLE>
<CAPTION>
LIABILITIES AND RESERVES
December 31,
----------------
1995 1994
------- -------
<S> <C> <C>
LIABILITY FOR POLICY BENEFITS
Insurance and annuity reserves $39,545 $36,124
Policy benefits left
for future payments 972 866
Premium deposits 427 419
Policy benefits in
process of payment 137 138
Policyowner dividends
payable 2,115 1,950
------- -------
43,196 39,497
------- -------
OTHER LIABILITIES
Interest maintenance reserve 281 11
Income taxes 895 561
Miscellaneous 1,336 822
------- -------
2,512 1,394
------- -------
SEPARATE ACCOUNT BUSINESS 5,000 3,806
------- -------
ASSET VALUATION RESERVE 1,382 1,190
------- -------
Total liabilities and
asset valuation reserve 52,090 45,887
------- -------
GENERAL CONTINGENCY RESERVE 2,786 2,225
------- -------
Total Liabilities and
Contingency Reserves $54,876 $48,112
======= =======
</TABLE>
The accompanying notes are an integral
part of the financial statements
B-13
<PAGE> 32
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
CONSOLIDATED SUMMARY OF OPERATIONS
(In millions)
<TABLE>
<CAPTION>
For the year ended
December 31,
----------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
INCOME
PREMIUMS $ 6,196 $5,743 $5,295
NET INVESTMENT INCOME 3,673 3,106 2,913
POLICY BENEFITS LEFT WITH COMPANY
AND OTHER INCOME 733 636 570
------- ------ ------
Total income 10,602 9,485 8,778
------- ------ ------
DISPOSITION OF INCOME
COSTS
Agents' compensation 508 492 487
Other insurance costs 398 334 361
Premium and other taxes or assessments 120 120 116
------- ------ ------
1,026 946 964
------- ------ ------
BENEFITS TO POLICYOWNERS AND BENEFICIARIES
Death benefits 655 609 526
Matured endowments 48 54 44
Annuity benefits 92 94 85
Disability benefits 174 151 126
Surrender benefits 1,375 904 837
Payments from policy benefits
left with Company 590 568 498
Net transfers to separate accounts 236 344 302
Net additions to policy reserves 3,506 3,313 3,078
------- ------ ------
6,676 6,037 5,496
------- ------ ------
Total disposition of income 7,702 6,983 6,460
------- ------ ------
SAVINGS FROM OPERATIONS BEFORE
INCOME TAXES AND DIVIDENDS 2,900 2,502 2,318
INCOME TAX EXPENSE 467 281 208
------- ------ ------
SAVINGS FROM OPERATIONS BEFORE DIVIDENDS 2,433 2,221 2,110
POLICYOWNER DIVIDENDS 2,111 1,942 1,780
------- ------ ------
NET SAVINGS FROM OPERATIONS 322 279 330
NET REALIZED CAPITAL GAINS, LESS TAX
EXPENSE OF $98, $85 AND $82, RESPECTIVELY 137 119 180
------- ------ ------
CONTRIBUTION TO GENERAL CONTINGENCY
RESERVE FROM OPERATIONS $ 459 $ 398 $ 510
======= ====== ======
</TABLE>
The accompanying notes are an integral
part of the financial statements
B-14
<PAGE> 33
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF GENERAL CONTINGENCY RESERVE
(In millions)
<TABLE>
<CAPTION>
For the year ended
December 31,
----------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
BEGINNING OF YEAR BALANCE $2,225 $2,030 $1,850
Contribution to general contingency
reserve from operations 459 398 510
Net unrealized capital gains (losses) 373 (242) (89)
Change in asset valuation reserve (192) 37 (157)
Other - net (79) 2 (84)
------ ------ ------
END OF YEAR BALANCE $2,786 $2,225 $2,030
====== ====== ======
</TABLE>
The accompanying notes are an integral
part of the financial statements
B-15
<PAGE> 34
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
<TABLE>
<CAPTION>
For the year ended
December 31,
-------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Insurance premiums, annuities and other
considerations $ 6,864 $ 6,299 $ 5,777
Net investment income received 3,480 3,013 2,813
Net loans on policies (331) (297) (143)
Benefits paid to policyholders and
beneficiaries (2,939) (2,357) (2,116)
Net transfers to separate accounts (236) (344) (302)
Policyowner dividends paid (1,945) (1,777) (1,759)
Expenses and taxes (1,279) (1,033) (1,135)
Other - net 381 89 (81)
-------- -------- --------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 3,995 3,593 3,054
CASH FLOWS FROM INVESTING ACTIVITIES
PROCEEDS FROM INVESTMENTS SOLD OR MATURED
Bonds 25,317 27,096 20,221
Stocks 2,465 1,469 1,122
Mortgage loans 431 512 394
Real estate 48 164 43
Other invested assets 149 213 132
Capital gain (tax) benefit (85) 28 (124)
-------- -------- --------
28,325 29,482 21,788
COST OF INVESTMENTS ACQUIRED
Bonds 27,596 29,674 22,393
Stocks 2,562 1,606 1,288
Mortgage loans 1,883 1,356 970
Real estate 202 6 46
Other invested assets 336 413 152
-------- -------- --------
32,579 33,055 24,849
NET CASH USED IN INVESTING ACTIVITIES (4,254) (3,573) (3,061)
-------- -------- --------
NET (DECREASE) INCREASE IN CASH AND
TEMPORARY INVESTMENTS (259) 20 (7)
CASH AND TEMPORARY INVESTMENTS, BEGINNING
OF YEAR 803 783 790
-------- -------- --------
CASH AND TEMPORARY INVESTMENTS, END OF YEAR $ 544 $ 803 $ 783
======== ======== ========
</TABLE>
The accompanying notes are an integral
part of the financial statements
B-16
<PAGE> 35
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 1 - PRINCIPAL ACCOUNTING POLICIES
The accompanying consolidated financial statements include the accounts of The
Northwestern Mutual Life Insurance Company (the "Company") and its wholly-owned
life insurance subsidiary. The Company offers life, annuity and disability
income products to the personal, business, estate and tax-qualified markets.
The consolidated financial statements have been prepared using accounting
policies prescribed or permitted by the Insurance Departments of the states in
which the Company and its subsidiary are domiciled. These policies are
considered generally accepted accounting principles for mutual life insurance
companies. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
In April 1993, the Financial Accounting Standards Board issued Interpretation
No. 40, "Applicability of Generally Accepted Accounting Principles to Mutual
Life Insurance and Other Enterprises," which establishes a different definition
of generally accepted accounting principles for mutual life insurance
companies. Under the Interpretation, financial statements of mutual life
insurance companies for periods beginning after December 15, 1995 which are
prepared on the basis of statutory accounting will no longer be characterized
as in conformity with generally accepted accounting principles.
In order to continue to present financial statements in accordance with
generally accepted accounting principles for general purpose distribution in
1996, the Company is considering presenting its financial statements in
accordance with the requirements of the Interpretation. Management believes
that financial statements prepared on this basis would result in an increase to
its general contingency reserve. The effects of this change in accounting
basis would be reported retroactively through restatement beginning with the
earliest year presented.
INVESTMENTS
The Company's investments are valued on the following bases:
Bonds - Amortized cost using the interest method; loan-backed and
structured securities are amortized using estimated
prepayment rates and the propsective adjustment method.
Common Stocks - Market value
B-17
<PAGE> 36
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
Preferred Stocks - Cost
Unconsolidated Subsidiaries - Equity in subsidiaries' net assets
Mortgage Loans - Amortized cost
Investment Real Estate - Lower of cost, less depreciation and
encumbrances, or estimated net
realizable value
Home Office Real Estate - Cost, less depreciation
Loans on Policies - Cost
Other Investments - Joint Ventures - Lower of equity in or market value of
ventures' net assets
SEPARATE ACCOUNT BUSINESS
This business consists of annuities funded by specific assets held in separate
accounts. The assets in these accounts are carried at market value. The
policy values reflect the investment performance of the respective accounts.
INSURANCE, ANNUITY AND DISABILITY INCOME RESERVES
Life insurance reserves on substantially all policies issued since 1978 are
based on the Commissioner's Reserve Valuation Method with interest rates
ranging from 3-1/2% to 5-1/2%. Other policy reserves are based primarily on
the net level premium method employing various mortality tables at interest
rates ranging from 2% to 4-1/2%.
Deferred annuity reserves on policies issued since 1985 are valued using the
Commissioner's Annuity Reserve Valuation Method with interest rates ranging
from 3-1/2% to 6-1/4%. Other deferred annuity reserves are based on the
contract value. Immediate annuity reserves are present values of expected
benefit payments at interest rates ranging from 3-1/2% to 7-1/2%.
Active life reserves for disability income ("DI") policies issued since 1987
are primarily based on the two-year preliminary term method using a 4% interest
rate and the 1985 Commissioner's Individual Disability Table A ("CIDA") for
morbidity. Previous DI business used the net level premium method, using a 3%
or 4% interest rate and the 1964 Commissioner's Disability Table for morbidity.
Disabled life reserves for DI policies are based on the present values of
expected benefit payments using primarily the 1985 CIDA (modified for Company
experience in first two years of disability) with interest rates ranging from
3% to 5 1/2%.
Use of these actuarial tables and methods involves estimation of future
mortality and morbidity based on past experience. Actual future experience
could differ from these estimates.
INTEREST MAINTENANCE RESERVE
The Company is required to maintain an interest maintenance reserve ("IMR").
The IMR establishes a reserve for realized gains and losses, net of tax,
resulting from changes in interest
B-18
<PAGE> 37
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
rates on short and long-term fixed income investments. Net realized gains and
losses charged to the IMR are amortized into investment income over the
approximate remaining life of the investment sold.
ASSET VALUATION RESERVE
The Company is also required to maintain an asset valuation reserve ("AVR").
The AVR establishes a reserve for certain invested assets held by the Company.
In the aggregate, AVR was 82% and 84% of the allowable maximum at December 31,
1995 and 1994, respectively.
PREMIUM INCOME
Life insurance premiums are recognized as income at the beginning of each
policy year.
REINSURANCE
In the normal course of business, the Company seeks to limit its exposure to
loss on any single insured and to recover a portion of benefits paid by ceding
business to other insurance enterprises or reinsurers under excess coverage and
co-insurance contracts. As of December 31, 1995 and 1994, total life insurance
inforce approximated $380 billion and $347 billion, respectively, of which
approximately $113 billion and $104 billion, respectively, comprised
principally of term insurance, had been ceded to various reinsurers. The
Company retains a maximum of $10 million of coverage per individual life.
OPERATING COSTS
Operating costs, including costs of acquiring new policies, are charged to
operations as incurred.
INCOME TAXES
Provisions for income taxes are based on current income tax returns without
recognition of deferred taxes due to timing differences. The portion of the
federal income tax based on mutual life insurance company equity is reflected
as a component of income tax expense, including related adjustments for prior
years.
The Company files a consolidated life-nonlife federal income tax return.
Federal income tax returns for years through 1988 are closed as to further
assessment of taxes. Adequate provision
has been made in the financial statements for any additional taxes which may
become due with respect to the open years.
The Company's effective tax rate on savings from operations before income tax
expense (after dividends) in 1995, 1994 and 1993 was approximately 60%, 50% and
39%, respectively. Two significant factors cause the Company's effective rate
to exceed the federal corporate rate of 35%. First, the Company pays a tax
that is assessed only on mutual life insurance companies, which is
B-19
<PAGE> 38
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
an amount that purports to equate a portion of policyholder dividends with
nondeductible dividends paid to shareholders of stock companies. Second, the
Company must capitalize and amortize (as opposed to immediately deducting) an
amount deemed to represent the cost of acquiring new business ("DAC tax").
POLICYOWNER DIVIDENDS
Dividends payable in the following year on participating policies are charged
to current operations. All life insurance policies issued by the Company are
participating.
NOTE 2 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following summarizes the bases used by the Company in estimating its fair
value disclosures for financial instruments:
Bonds and preferred stocks - Fair values are based upon quoted market
prices, if available. For securities not actively traded, fair values
are estimated using independent pricing services or internally developed
pricing models.
Mortgage loans - Fair values are derived by discounting the future
estimated cash flows using current interest rates for debt securities
with similar credit risk and maturities, or utilizing net realizable
values.
Loans on policies - The carrying amount reported in the statement of
financial position approximates fair value since loans on policies reduce
the amount payable at death or at surrender of the contract.
Cash and temporary investments and due and accrued investment income -
The carrying amounts reported in the statement of financial position
approximate fair value.
Annuity reserves (without mortality/morbidity features) - Fair values are
derived by discounting the future estimated cash flows using current
interest rates with similar maturities.
Other deposit liabilities - The carrying amounts reported in the
statement of financial position approximate fair value.
B-20
<PAGE> 39
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
NOTE 3 - INVESTMENTS
NET INVESTMENT INCOME
The Company's net investment income for the years ended December 31, 1995, 1994
and 1993 consists of the following:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- ------
(In millions)
<S> <C> <C> <C>
Interest, dividends, rents, equity
in unconsolidated subsidiaries'
earnings and joint venture income $ 3,952 $ 3,395 $3,215
Less: Investment expenses and
depreciation (279) (289) (302)
------- ------- ------
Net investment income $ 3,673 $ 3,106 $2,913
======= ======= ======
</TABLE>
REALIZED GAINS AND LOSSES
During 1995, 1994 and 1993, the Company, in its normal course of business, sold
certain invested assets realizing gains and losses before transfer to the IMR
and capital gains tax from such sales as follows:
<TABLE>
<CAPTION>
For the year ended For the year ended For the year ended
December 31, 1995 December 31, 1994 December 31, 1993
---------------------------- ---------------------------- ----------------------------
Net Net Net
Realized Realized Realized
Realized Realized Gains Realized Realized Gains Realized Realized Gains
Gains Losses (Losses) Gains Losses (Losses) Gains Losses (Losses)
-------- -------- -------- -------- -------- -------- -------- -------- --------
(In millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bonds $ 576 $ (130) $ 446 $ 171 $ (535) $ (364) $ 438 $ (133) $ 305
Stocks 574 (429) 145 499 (291) 208 297 (36) 261
Mortgage loans 2 (32) (30) - (37) (37) 1 (12) (11)
Real estate 14 (3) 11 16 (7) 9 13 (2) 11
Other invested assets 188 (95) 93 110 (98) 12 100 (54) 46
-------- -------- -------- -------- -------- -------- -------- -------- --------
$ 1,354 $ (689) $ 665 $ 796 $ (968) $ (172) $ 849 $ (237) $ 612
======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
DEBT SECURITIES
Debt securities consist of all bonds, fixed maturity preferred stocks and short
term fixed income investments.
B-21
<PAGE> 40
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
The statement values, which principally represent amortized cost, and estimated
market values of the Company's debt securities at December 31, 1995 and 1994
are as follows:
<TABLE>
<CAPTION>
December 31, 1995 RECONCILIATION TO ESTIMATED MARKET VALUE
- ----------------- ----------------------------------------
Gross Gross Estimated
Statement Unrealized Unrealized Market
Value Appreciation Depreciation Value
--------- -------------- -------------- --------------
(In millions)
<S> <C> <C> <C> <C>
US Government and
political obligations $3,267 $296 $(1) $3,562
Mortgage-backed
securities 6,734 336 (12) 7,058
Corporate and other
debt securities 15,999 1,250 (47) 17,202
--------- -------------- -------------- --------------
26,000 1,882 (60) 27,822
Preferred stocks 108 3 (2) 109
--------- -------------- -------------- --------------
Total $26,108 $1,885 $(62) $27,931
========= ============== ============== ==============
<CAPTION>
December 31, 1994 RECONCILIATION TO ESTIMATED MARKET VALUE
- ----------------- ----------------------------------------
Gross Gross Estimated
Statement Unrealized Unrealized Market
Value Appreciation Depreciation Value
--------- -------------- -------------- --------------
(In millions)
<S> <C> <C> <C> <C>
US Government and
political obligations $3,334 $61 $(41) $3,354
Mortgage-backed
securities 5,652 53 (321) 5,384
Corporate and other
debt securities 14,488 203 (515) 14,176
--------- -------------- -------------- --------------
23,474 317 (877) 22,914
Preferred stocks 71 1 (7) 65
--------- -------------- -------------- --------------
Total $23,545 $318 $(884) $22,979
========= ============== ============== ==============
</TABLE>
B-22
<PAGE> 41
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
The amortized cost and estimated market value of debt securities at December
31, 1995 and 1994, by contractual maturity, are shown below. Expected
maturities may differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
-------------------- --------------------
Estimated Estimated
Statement Market Statement Market
Value Value Value Value
--------- --------- --------- ---------
(In millions)
<S> <C> <C> <C> <C>
Due in one year or less $ 977 $ 979 $ 1,102 $ 1,100
Due after one year
through five years 3,658 3,879 4,491 4,444
Due after five years
through ten years 6,879 7,347 5,787 5,711
Due after ten years 7,860 8,668 6,513 6,340
--------- --------- --------- ---------
19,374 20,873 17,893 17,595
Mortgage-backed securities 6,734 7,058 5,652 5,384
--------- --------- --------- ---------
$ 26,108 $ 27,931 $ 23,545 $ 22,979
========= ========= ========= =========
</TABLE>
The fair value of perpetual preferred stocks as of December 31, 1995 and 1994
approximates $578 million and $440 million, respectively, compared to the
statement values of $439 million and $440 million, respectively.
B-23
<PAGE> 42
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
MORTGAGE LOANS
As of December 31, 1995 and 1994, the mortgage loan portfolio was distributed
as follows:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
----------------------- ------------------------
% of % of
GEOGRAPHIC LOCATION Statement Value Total Statement Value Total
- ------------------- --------------- ------ ---------------- ------
(In millions) (In millions)
<S> <C> <C> <C> <C>
Middle Atlantic $945 11.2% $738 10.4%
South Atlantic 2,346 27.8 1,943 27.4
North Central 1,560 18.5 1,289 18.2
South Central 1,018 12.1 921 13.0
Pacific Northwest 454 5.4 355 5.0
Pacific 1,803 21.4 1,531 21.5
Canada 303 3.6 322 4.5
------ ----- ------ ------
$8,429 00.0% $7,099 100.0%
====== ===== ====== ======
PROPERTY TYPE
- -------------------
Retail $2,897 34.4% $2,475 34.9%
Office Building 2,677 31.8 2,176 30.6
Residential 1,804 21.4 1,526 21.5
Commercial 792 9.4 745 10.5
Other 259 3.0 177 2.5
------ ----- ------ ------
$8,429 00.0% $7,099 100.0%
====== ====== ====== ======
</TABLE>
The fair value of mortgage loans as of December 31, 1995 and 1994 approximates
$8,983 million and $6,879 million, respectively. Decreases in current interest
rates were a major reason for the increase in fair value relative to statement
value in 1995.
B-24
<PAGE> 43
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
AFFILIATES
The Company has a 19.87% investment in MGIC Investment Corporation ("MGIC"), an
affiliate. At December 31, 1995, the Company's investment in MGIC (11.7
million shares) exceeded the statement value by $420 million.
In July 1995, the Company entered into a forward contract with a brokerage firm
to deliver 4.4 million to 5.4 million shares of MGIC (or cash) in August 1998
for a price determined by the market value of the MGIC shares at that time in
exchange for a fixed cash payment of $247 million ($48 per share). The
Company's objective in entering into the forward contract is to hedge against
depreciation in the value of its MGIC holdings during the contract period below
the initial spot price of $48, while partially participating in appreciation,
if any, during the forward contract's duration.
REAL ESTATE
For real estate and joint venture properties acquired subsequent to December
1990, the Company calculates depreciation using the straight-line method in
accordance with guidelines established by the National Association of Insurance
Commissioners. For properties acquired prior to December 1990, the Company
calculates depreciation using either the straight-line method or the
constant-yield method. Home office real estate is depreciated using the
straight-line method.
At December 31, 1995 and 1994, investment real estate includes $175 million and
$146 million, respectively, of real estate acquired through foreclosure. In
1995, the Company recorded writedowns of $8 million and $28 million for the
excess of carrying value over fair value of certain real estate investments and
mortgage loans, respectively. Valuation allowances for real estate and
mortgage loans with fair values that are less than statement values are
adequately covered by normal AVR reserves and by a $90 million special
investment reserve established by the Company for real estate, mortgage loans
and other invested assets.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company's current utilization of derivative financial instruments is
limited. Most of the Company's derivative transactions are used to reduce or
modify risks of volatility related to currency or interest rate movements.
These hedging strategies use forwards, futures and swaps. At December 31, 1995
and 1994, the Company held foreign currency forward contracts with a notional
value of $889 million and $605 million, respectively, as a partial hedge
against foreign currency exposure of foreign denominated investments. Changes
in the market value of these contracts offset currency gains and losses on the
hedged investments. The capital gains or losses are unrealized before contract
settlement and realized on settlement. These currency hedges and the MGIC
forward contract described above represent most of the Company's derivative
positions. The effect of derivative transactions is not significant to the
Company's results from operations or financial position.
B-25
<PAGE> 44
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
NOTE 4 - ANNUITIES AND OTHER DEPOSIT LIABILITIES
The fair value of annuities and other deposit liabilities as of December 31,
1995 and 1994 are as follows:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
------------------ -----------------
Statement Fair Statement Fair
Value Value Value Value
--------- ------- --------- ------
(In millions)
<S> <C> <C> <C> <C>
Annuities $2,631 $2,437 $2,474 $2,203
Other deposit liabilities 783 783 727 727
</TABLE>
NOTE 5 - BENEFIT PLANS
The Company maintains non-contributory defined benefit retirement plans for all
eligible employees and agents as well as a 401(k) plan for eligible employees
and a non-contributory defined contribution plan for all full-time agents.
These plans are funded currently and plan assets of $1,152 million at December
31, 1995 are primarily included in the separate accounts of the Company. In
1995, the Company made a contribution of $13 million to the employee retirement
plan; as of January 1, 1995, the most recent actuarial valuation date
available, the defined benefit plans were fully funded.
In addition to pension benefits, the Company provides certain health care and
life insurance benefits ("postretirement benefits") for retired employees.
Substantially all employees may become eligible for these benefits if they
reach retirement age while working for the Company.
Postretirement benefit expenses, which includes the expected cost of
postretirement benefits for newly eligible and vested employees and interest
costs, were $7 million, $7 million and $9 million for the years ended December
31, 1995, 1994 and 1993, respectively. At December 31, 1995 and 1994, the
unfunded postretirement benefit obligation for retirees and other fully
eligible or vested employees was $49 million and $47 million, respectively.
The estimated postretirement benefit obligation for active non-vested employees
was $46 million and $44 million at December 31, 1995 and 1994, respectively.
The discount rate used to determine the postretirement benefit obligation was
7% and the health care cost trend rate was 12% in 1995, declining by 1% per
year to an ultimate rate of 5% over 7 years. If the health care cost trend
rate assumptions were increased by 1%, the postretirement benefit obligation as
of December 31, 1995 would be increased by $6 million.
At December 31, 1995 and 1994, plan assets attributable to postretirement
health care benefits totaled $31 million and $25 million, respectively.
B-26
<PAGE> 45
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
NOTE 6 - REINSURANCE
The amounts shown in the accompanying consolidated financial statements are net
of reinsurance activity. The effect of reinsurance on premiums and benefits
for the years ended December 31, 1995, 1994 and 1993 are as follows (in
millions):
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Direct premiums $6,452 $5,977 $5,508
Reinsurance ceded (256) (234) (213)
------ ------ ------
Net premiums $6,196 $5,743 $5,295
====== ====== ======
Benefits to policyholders and beneficiaries $6,818 $6,178 $5,600
Reinsurance recoveries (142) (141) (104)
------ ------ ------
Net benefits to policyholders and beneficiaries $6,676 $6,037 $5,496
====== ====== ======
</TABLE>
In addition, during 1995, 1994 and 1993, the Company received credits of $67
million, $63 million and $59 million, respectively, from reinsurers
representing reimbursements of commissions and other expenses. These credits
are included in other income in the consolidated summary of operations.
Reinsurance contracts do not relieve the Company from its obligations to
policyholders. Failure of reinsurers to honor their obligations could result
in losses to the Company; consequently, allowances are established for amounts
deemed uncollectible. The Company evaluates the financial condition of its
reinsurers and monitors concentrations of credit risk arising from similar
geographic regions, activities, or economic characteristics of the reinsurers
to minimize its exposure to significant losses from reinsurer insolvencies.
NOTE 7 - CONTINGENCIES
In the normal course of business, the Company enters into transactions to
reduce its exposure to fluctuations in interest rates and market volatility.
These instruments may involve credit risk and may also be subject to risk of
loss due to interest rate fluctuations.
The Company has guaranteed certain obligations of its affiliates. These
guarantees totaled approximately $126 million and $83 million at December 31,
1995 and 1994, respectively, and are generally supported by the underlying net
asset values of the affiliates.
The Company is engaged in various legal actions in the normal course of its
investment and insurance operations. In the opinion of management, any losses
resulting from such actions would not have a material effect on the Company's
financial condition.
B-27
<PAGE> 46
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE
Price Waterhouse LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee, WI 53202
Telephone: 414-276-9500
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Policyowners of
The Northwestern Mutual Life Insurance Company
In our opinion, the accompanying consolidated statement of financial position
and the related consolidated summary of operations, statement of general
contingency reserve and statement of cash flows present fairly, in all material
respects, the financial position of The Northwestern Mutual Life Insurance
Company and its subsidiary at December 31, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles (practices prescribed or permitted by insurance regulatory
authorities - see Note 1). These financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
January 24, 1996
B-28
<PAGE> 47
TABLE OF CONTENTS
PAGE
----
GENERAL INFORMATION........................................................ B-2
DISTRIBUTION OF THE CONTRACTS.............................................. B-2
DETERMINATION OF ANNUITY PAYMENTS ......................................... B-2
Amount of Annuity Payments .............................................. B-2
Annuity Unit Value ...................................................... B-3
Illustrations of Variable Annuity Payments .............................. B-3
VALUATION OF ASSETS OF THE ACCOUNT ........................................ B-4
TRANSFERABILITY RESTRICTIONS .............................................. B-4
EXPERTS ................................................................... B-4
FINANCIAL STATEMENTS OF THE ACCOUNT ....................................... B-5
(for year ended December 31, 1995)
REPORT OF INDEPENDENT ACCOUNTANTS ......................................... B-11
(for year ended December 31, 1995)
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE........................... B-12
(for the three years ended December 31, 1995)
REPORT OF INDEPENDENT ACCOUNTANTS ......................................... B-28
(for the three years ended December 31, 1995)
B-29
<PAGE> 48
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The financial statements of NML Variable Annuity Account C and
The Northwestern Mutual Life Insurance Company are included in the
Statement of Additional Information.
NML Variable Annuity Account C (for year ended December 31, 1995)
Statement of Assets and Liabilities
Statement of Operations and Changes in Equity
Notes to Financial Statements
Report of Independent Accountants
The Northwestern Mutual Life Insurance Company (for the three years
ended December 31, 1995)
Consolidated Statement of Financial Position
Consolidated Summary of Operations
Consolidated Statement of General Contingency Reserve
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Accountants
(b) Exhibits
EX-99.B11 Consent of Price Waterhouse LLP.
The following documents, previously included in the Registration
Statement and amendments thereto, are herein restated in electronic
format:
EX-99.B1 Restated Articles of Incorporation of The Northwestern
Mutual Life Insurance Company.
EX-99.B2 By-Laws of The Northwestern Mutual Life Insurance Company.
Item 25. Directors and Officers of the Depositor
The following lists include all of the Trustees, executive officers and
other officers of The Northwestern Mutual Life Insurance Company as of February
1, 1996, without regard to their activities relating to variable annuity
contracts or their authority to act or their status as "officers" as that term
is used for certain purposes of the federal securities laws and rules
thereunder.
TRUSTEES
Name Business Address
R. Quintus Anderson The Aarque Companies
111 West Second Street
Jamestown, NY 14701
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Edward E. Barr Sun Chemical Corporation
222 Bridge Plaza South
Fort Lee, NJ 07024
Gordon T. Beaham III Faultless Starch/Bon Ami Co.
1025 West Eighth Street
Kansas City, MO 64101
Frank H. Bertsch Flexsteel Industries, Inc.
P.O. Box 877
Dubuque, IA 52001
Robert C. Buchanan Fox Valley Corporation
P.O. Box 727
Appleton, WI 54912
Robert E. Carlson The Northwestern Mutual Life
Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
George A. Dickerman Spalding Sports Worldwide
425 Meadow Street
P.O. Box 901
Chicopee, MA 01021-0901
Thomas I. Dolan A.O. Smith Corporation
P.O. Box 23971
Milwaukee, WI 53223-0971
Pierre S. du Pont Richards, Layton and Finger
1 Rodney Square
Wilmington, DE 19801
James D. Ericson The Northwestern Mutual Life
Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
J. E. Gallegos Gallegos Law Firm
460 St. Michaels Drive
Building 300
Santa Fe, NM 87501
Patricia Albjerg Graham 420 Gutman
Graduate School of Education
Harvard University
Cambridge, MA 02138
Richard H. Holton Haas School of Business
350 Barrows Hall
University of California
Berkeley, CA 94720
Stephen F. Keller The Santa Anita Companies
P.O. Box 60014
Arcadia, CA 91066-6014
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J. Thomas Lewis Monroe & Lemann
Suite 3300
210 St. Charles Avenue
New Orleans, LA 70170
Fred G. Luber Super Steel Products Corp.
P.O. Box 23418
Milwaukee, WI 53223
Daniel F. McKeithan Jr. Tamarack Petroleum Company, Inc.
Suite 1920
777 East Wisconsin Avenue
Milwaukee, WI 53202
Guy A. Osborn Universal Foods Corp.
433 East Michigan Street
Milwaukee, WI 53202
Donald J. Schuenke The Northwestern Mutual
Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
H. Mason Sizemore, Jr. The Seattle Times
P.O. Box 70
Seattle, WA 98111
Harold Byron Smith, Jr. Illinois Tool Works, Inc.
3600 West Lake Avenue
Glenview, IL 60625-5811
Sherwood H. Smith, Jr. Carolina Power & Light Company
P.O. Box 1551
Raleigh, NC 27602
John E. Steuri ALLTEL Information
Services, Inc.
4001 Rodney Parham Road
Little Rock, AR 72212-2496
John J. Stollenwerk Allen-Edmonds Shoe Corporation
201 East Seven Hills Road
P.O. Box 998
Port Washington, WI 53074-0998
Barry L. Williams Williams Pacific Ventures, Inc.
1200 Bayhill Drive, Suite 300
San Bruno, CA 94066
Kathryn D. Wriston 870 United Nations Plaza
Apartment 23-A
New York, NY 10017
EXECUTIVE OFFICERS
Name Title
- ----- -----
Deborah A. Beck Senior Vice President
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William H. Beckley Vice President
John M. Bremer Senior Vice President, General Counsel
and Secretary
Peter W. Bruce Executive Vice President
Robert E. Carlson Executive Vice President and Trustee
Steven T. Catlett Vice President
Mark G. Doll Senior Vice President
Thomas E. Dyer Vice President
James W. Ehrenstrom Senior Vice President
James D. Ericson President and Chief Executive Officer,
Trustee
Richard L. Hall Senior Vice President
William C. Koenig, FSA Senior Vice President and Chief Actuary
Gary E. Long Vice President and Controller
Susan A. Lueger Vice President
Meridee J. Maynard Vice President
Donald L. Mellish Vice President
Gregory C. Oberland Vice President
Ralph A. Pelton Vice President
Barbara F. Piehler Vice President
James F. Reiskytl Vice President
Virgil L. Renne, Jr. Vice President - Employer Product Marketing
Mason G. Ross Senior Vice President
Leonard F. Stecklein Vice President - Policyowner Services
Frederic H. Sweet Senior Vice President
Dennis Tamcsin Senior Vice President
Martha M. Valerio Vice President
W. Ward White Vice President
Walt J. Wojcik Senior Vice President
Edward J. Zore Executive Vice President
OTHER OFFICERS
Name Title
- ---- -----
John M. Abbott Associate Director - Benefits Research
Ronald C. Alberts Investment Officer
Thomas R. Anderson Assistant Director - Advanced
Marketing
Maria J. Avila Assistant Controller
Michael J. Backus Associate Director of Information
Systems
Jerome R. Baier Director - Securities
John E. Bailey Senior Actuary
Nicholas H. Bandow Assistant Director-Information
Systems
Lynn F. Bardele Director - Corporate Services
Walter L. Barlow Assistant Director of Education
David A. Barras Associate Director
Bradford P. Bauer Assistant Director-Advanced Marketing
James M. Baumgartner Officer - Underwriting Standards &
Services
Robert J. Berdan Assistant General Counsel &
Assistant Secretary
Beth M. Berger Assistant General Counsel &
Assistant Secretary
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James L. Bergschneider Director - Underwriting Services
Frederick W. Bessette Assistant General Counsel & Asst.
Secretary
Erik E. Bieck Director - Individual Annuity
Marketing
D. Rodney Bluhm Assistant General Counsel
Donald T. Bobbs Investment Officer
Timothy J. Bohannon Vice President
Margaret Bowe Bonvicini Associate Director - Employment &
Affirmative Action
Willette Bowie Employee Relations Director
Mark C. Boyle Assistant General Counsel & Asst.
Secretary
Martin R. Braasch Director - Underwriting Standards &
Services
Patricia R. Braeger Assistant Director - Information
Systems
Melissa C. Brooks Assistant Director - Advanced
Marketing
Mary P. Buczynski Assistant Director
William J. Buholzer Employee Relations Director
Michael S. Bula Assistant General Counsel
Jerry C. Burg Associate Director - Field Benefits
Gregory B. Bynan Director - Corporate Services
Kim M. Cafaro Assistant General Counsel & Asst.
Secretary
Shanklin B. Cannon, M.D. Medical Director - Life
Products/Research
Terese J. Capizzi Actuarial Products Officer
Kurt P. Carbon Assistant Regional Director
Thomas A. Carroll Director - Common Stock Division
Michael G. Carter Assistant General Counsel & Asst.
Secretary
William W. Carter Associate Actuary
John E. Caspari Assistant Director - Advertising &
Corporate Information
Walter J. Chossek Associate Controller
Thomas R. Christenson Director - Employer Product Services
J. Thomas Christofferson Vice President
David D. Clark Director - Real Estate Investments
Alan E. Close Associate Controller
Carolyn M. Colbert Assistant Director - New
Business
Timothy S. Collins Associate Director
Margaret Winter Combe Assistant Director - Process
and Project Management
Virginia A. Corwin Assistant Director - New Business
Barbara E. Courtney Assistant Controller
Larry A. Curran Actuarial Administrative Officer
Daniel G. Cuske Associate Director - Fixed Income
Brian H. Davidson Associate Director
Thomas H. Davis Associate Director - Information
Systems
Jefferson V. De Angelis Vice President - Fixed Income
Nicholas De Fino Assistant Director
David J. Derfus Assistant Controller
Carol A. Detlaf Associate Director - Human Resources
John Diliberti Assistant Director - New Business
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Joseph Dobering, III Director - Underwriting Standards &
Services
Timothy Doubek Director - Fixed Income
Daniel C. Dougherty Director - Individual Product
Marketing
Margaret T. Dougherty Assistant Director - Information
Systems
William O. Drehfal Assistant Director - Media Services
Jeffrey S. Dunn Vice President
Somayajulu Durvasula Assistant Director - Field Financial
James R. Eben Assistant General Counsel and
Assistant Secretary
Christina H. Fiasca Director - Policyowner Services
Zenia J. Fieldbinder Assistant Director - Employer
Product Services
Richard F. Fisher Senior Actuary
Dennis J. Fitzpatrick Director - Advanced Marketing
Jon T. Flaschner Director - Policyowner Services
Elfa O. Foldi Associate Director - Facilities
Planning
Donald Forecki Investment Officer
Stephen H. Frankel Vice President
H. Daniel Gardner Vice President & Insurance Counsel
Richard R. Garthwait Vice President - Field Financial
David L. Georgenson Director - Agent Development
Paulette A. Getschman Assistant Director - Policyowner Services
George Ghanem Assistant Regional Director - Agency
James W. Gillespie Vice President
Walter M. Givler Director - Corporate Services
Robert K. Gleeson, M.D. Vice President - Medical Director
Mark J. Gmach Assistant Regional Director - Agency
John W. Gordon Assistant Director - Information
Systems
Linda J. Gorens-Levey Associate Director
David Lee Gosse Assistant Director - Disability
Benefits
William F. Grady Associate Director of Field Finances
Francis A. Grandelis Assistant Director
John M. Grogan Assistant General Counsel and
Assistant Secretary
Jill M. Grueninger Investment Officer
Thomas C. Guay Associate Actuary
Colleen M. Gunther Investment Officer
Gerald A. Haas Assistant Director - Information
Systems
Carol A. Haiar Communications Coordinator
Stanley K. Hall Director - Policyowner Services
Thomas P. Hamilton Associate Director - Information
Systems
William M. Harris Assistant Regional Director - South
Dennis R. Hart Assistant Director - Agent
Development
James C. Hartwig Vice President - Advanced Marketing
Paul F. Heaton Assistant General Counsel and
Assistant Secretary
William L. Hegge Associate Director of
Telecommunications
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Wayne F. Heidenreich Assistant Medical Director
Jacquelyn F. Heise Assistant Director - Information
Systems
Robert L. Hellrood Director - New Business
Herbert F. Hellwig Assistant Director - Individual
Annuity Marketing
Jane A. Herman Assistant Director - Term Upgrade
Gary M. Hewitt Vice President & Treasurer
Donna R. Higgins Assistant Director - Information
Systems
Susan G. Hill Assistant Director
Hugh L. Hoffman Assistant Director - Information
Systems
Richard S. Hoffmann Director - Audit
Susan M. Hoffmann Life Product Officer
Bruce Holmes Assistant Actuary
Cindy L. Jackson Investment Officer
Meg E. Jansky Human Resources - Training
Development Officer
Michael D. Jaquint Assistant Actuary
Michael P. Johnson Investment Officer
Dolores A. Juergens Associate Director of Restaurant
Operations
Marilyn J. Katz Assistant Director - Medical
Consultants
John W. Keller Managing Actuary
Kevin C. Kennedy Investment Officer - Architecture
James B. Kern Regional Director - Central Region
David R. Keuler Investment Officer
Carson D. Keyes Vice President
Donald C. Kiefer Vice President
Mark E. Kishler Investment Officer
Allen B. Kluz Director - Field Financial
Beatrice C. Kmiec Assistant Regional Director - East
Kent Knudsen Associate Director
Daniel C. Knuth Investment Officer
William S. Koch Assistant Regional Director - Agency
A. Kipp Koester Vice President
John L. Kordsmeier Human Resources Officer
Dennis Korjenek, Jr. Director - Fixed Income
Robert J. Kowalsky Assistant Director - Information
Systems
Carol L. Kracht Assistant General Counsel & Asst.
Secretary
Todd L. Laszewski Assistant Actuary
Patrick J. Lavin Director - Life & Disability
Benefits
Patrick W. Lavin Assistant Treasurer & Assistant
Secretary
James L. Lavold Associate Director - Meetings
Russell M. Lemken Assistant Director - Consumer
Research
Sally Jo Lewis Assistant General Counsel & Asst.
Secretary
Mark P. Lichtenberger Assistant Director - LINK Technical
Planning
Steven M. Lindstedt Assistant Director - Information
Systems
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James Lodermeier Assistant Director - Tax Planning
James G. Loduha Assistant Director - Asset
Management
George R. Loxton Assistant General Counsel &
Assistant Secretary
Mary M. Lucci Director - New Business
Mark J. Lucius Corporate Information Officer
Jeffrey J. Lueken Associate Director
Merrill C. Lundberg Assistant General Counsel & Asst.
Secretary
Jon K. Magalska Assistant Director - Policyowner
Services
Jean M. Maier Director - New Business
Joseph Maniscalco Associate Director - Information
Systems
Jeffrey S. Marks Multi Life, Research & Reinsurance
Officer
Steve Martinie Assistant General Counsel & Asst.
Secretary
Ted A. Matchulat Actuarial Products Officer
Margaret McCabe Associate Director - Policy Benefits
Systems
Richard A. McComb Director - Human Resources
William L. McCown Vice President & Investment Counsel
Paul E. McElwee Assistant General Counsel & Asst.
Secretary
Mary C. McIntosh Assistant Director - Field Financial
Daniel E. McGinley Assistant Director - Management
Development
Mark J. McLennon Assistant Director - Advanced
Marketing
Robert J. Meiers Ad Valorem Tax Manager
Larry S. Meihsner Assistant General Counsel &
Assistant Secretary
Robert G. Meilander Vice President
Kelly H. Mess Investment Officer
Charles L. Messler Director - Natural Gas Sales
Richard E. Meyers Assistant General Counsel
Jay W. Miller Vice President & Tax Counsel
Sara K. Miller Vice President
Tom M. Mohr Director of Policyowner Services -
South
Richard C. Moore Associate Actuary
Scott J. Morris Assistant General Counsel and
Assistant Secretary
Sharon A. Morton Investment Officer
Adrian J. Mullin Assistant Director - Individual
Product Marketing
Randolph J. Musil Assistant Director - Advanced
Marketing
David K. Nelson Assistant General Counsel
Ronald C. Nelson Actuary
Karen M. Niessing Assistant Director - Policyowner
Services
Donald L. O'Dell Vice President
Daniel J. O'Meara Director - Field Financial
John K. O'Meara Assistant Director - Advanced
Marketing
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Mary Joy O'Meara Assistant Director - Advanced
Marketing
Kathleen A. Oman Associate Director - Information
Systems
Thomas A. Pajewski Investment Research Officer
Arthur V. Panighetti Director - Tax Planning
Christen L. Partleton Assistant Director - Policyowner
Services
Dennis L. Paul Assistant General Counsel
David W. Perez Assistant General Counsel
Judith L. Perkins Assistant General Counsel & Asst.
Secretary
Wilson D. Perry Assistant General Counsel & Asst.
Secretary
Gary N. Peterson Actuary
John C. Peterson Assistant Director of Policyowner
Services - West
Harvey W. Pogoriler Assistant General Counsel
Gary A. Poliner Vice President
Randolph R. Powell, M.D. Medical Director
Mark A. Prange Associate Director - Information
Systems
Thomas M. Price Investment Officer
David R. Remstad Actuary
David R. Retherford Assistant Director of New Business -
Central
Stephen M. Rhode Assistant Director - Qualified
Benefits
Robert C. Richardson Investment Officer
Richard R. Richter Vice President
Marcia Rimai Vice President - Litigation Counsel
Kathleen M. Rivera Vice President - Insurance Counsel
Faith B. Rodenkirk Assistant Director - Group Marketing
Ramona Windson-Rogers Financial Officer
James S. Rolfsmeyer Assistant Director - Information
Systems
Larry R. Roscoe Assistant Director - Compliance
Lora A. Rosenbaum Assistant Director - Compliance
Robert K. Roska Associate Director - Information
Systems
Sue M. Roska Director - Systems and
Services
Robert M. Ruess Vice President
Harry L. Ruppenthal Director of Policyowner Services -
East
Stephen G. Ruys Assistant Director - Information
Systems
Santo Saliture Associate Director of Advertising &
Corporate Information
Rose Kordich Sasich Assistant Director of Systems
Mary Ann Schachtner Assistant Director - Life Insurance
Marketing
Thomas F. Scheer Assistant General Counsel & Asst.
Secretary
Carlen A. Schenk Assistant Director
Jane A. Schiltz Director - Individual Product
Emily K. Schleinz Investment Officer
John E. Schlifske Director
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Kathleen H. Schluter Assistant General Counsel &
Secretary
Calvin R. Schmidt Assistant Director - Information
Systems
Richard A. Schnell Assistant Director - Asset
Management
John O. Schnorr Director - Annuity Tax & Title
Services
Margaret R. Schoewe Vice President - Information Systems
Todd M. Schoon Assistant Regional Director - Agency
Jeffrey G. Schragin Associate Medical Director
John F. Schroeder Associate Director of Field Office
Real Estate
Melva T. Seabron Associate Director - Human Resources
& Budget
Norman W. Seguin, II Investment Officer - Ad Valorem
Taxes
Catherine L. Shaw Assistant General Counsel & Asst.
Secretary
John E. Sheaffer, Jr. Assistant Director - Agent
Development
William Shinkwin Director of Tax Planning
Janet Z. Silverman Assistant Director - New Business
Stephen M. Silverman Assistant General Counsel
David W. Simbro Actuary
Eugene R. Skaggs Vice President
Paul W. Skalecki Assistant Actuary
Cynthia S. Slavik Investment Officer - Environmental
Engineer
Ignatius L. Smetek Director - Common Stocks
Lois A. Smith Director - Asset Management
Mark W. Smith Assistant General Counsel & Asst.
Secretary
Warren L. Smith, Jr. Investment Officer - Architecture
Steven W. Speer Director - Individual Product
Marketing
Robert J. Spellman, M.D. Vice President & Chief Medical Director
Barbara J. Stansberry Director - Administrative
Services/Medical Studies
Jason Steigman Investment Product Officer
Bonnie L. Steindorf Director - Department Operations
Colleen J. Stenholt Director - Organization Development
Karen J. Stevens Assistant General Counsel &
Assistant Secretary
Richard A. Strait Director
Linda L. Streifender Associate Director - Training &
Communications
Steven J. Stribling Associate Actuary
Stephen J. Strommen Associate Director - Financial
Planning
Theodore H. Strupp Assistant Director
Daniel J. Suprenant Director - Group Disability
Marketing
Christopher P. Swain Investment Officer
Steven P. Swanson Vice President
Rachel L. Taknint Assistant General Counsel & Asst.
Secretary
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Thomas Talajkowski Assistant Director - Tax
Compliance
William H. Taylor Associate Director - Advanced Marketing
Paul B. Tews Associate Director - Investment
Planning
Susan M. Tompkins Director - Recruitment & Management
Thomas W. Towers Associate Director - Public
Relations
Linda K. Tredupp Assistant Director - Information
Systems
Chris G. Trost Associate Actuary
Julie Van Cleave Director - Common Stock
Mark J. Van Cleave Assistant Director of Marketing
Research
Michael T. Van Grinsven Assistant Director - Management
Development
Mary Beth Van Groll Vice President - Information Systems
Patricia L. Van Kampen Vice President - Common Stocks
Glen J. Vanic Investment Research Officer
Gloria J. Venski Assistant Director - Disability
Benefits
Richard F. Von Haden Director - Real Estate Production
Margaret A. Wainer Assistant Director - Corporate
Planning & Information
William R. Walker Director - Common Stock
Scott E. Wallace Assistant Director - Operations
Hal W. Walter Vice President
Robert J. Waltos Assistant Regional Director -
Agency
P. Andrew Ware Vice President
Kathleen S. Warner Assistant Director - Asset
Management
Mary L. Wehrle-Schnell Associate Director - Information
Systems
Daniel T. Weidner Assistant Director - Information
Systems
Ronald J. Weir Associate Director - Information
Systems
Kenneth D. Weiser Assistant Director - Sales Services
Karen J. Weiss Senior Actuary
Kenneth R. Wentland Assistant Director of Policyowner
Services - East
Sandra D. Wesley Assistant Director of Special
Projects
Charles D. Whittier Assistant Director - Disability
Income Marketing
Catherine A. Wilbert Assistant General Counsel &
Secretary
David L. Wild Director - Corporate Services
Jeffrey B. Williams Risk Manager
John K. Wilson Assistant Director - Individual
Product Marketing
Debra C. Wing Investment Officer
Penelope A. Woodcock Associate Director - Benefit Systems
Stanford A. Wynn Assistant Director - Advanced
Marketing
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Catherine M. Young Assistant General Counsel &
Secretary
Michael L. Youngman Vice President - Legislative
Representative
James A. Youngquist Associate Actuary
Richard S. Zakrzewski Associate Research Officer
John Zao Assistant Director - Information
Systems
Rick T. Zehner Director - Corporate Planning
Patricia A. Zimmermann Investment Officer - Real Estate
Systems
Ray Zimmermann Director - LINK Information Network
Philip R. Zweig Director - Technical Support
Robert E. Zysk Director - Tax Compliance
The business addresses for all of the executive officers and other officers is
720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
Item 26. Persons Controlled By or Under Common Control with the Depositor
or Registrant
The subsidiaries of The Northwestern Mutual Life Insurance Company
("Northwestern Mutual Life"), as of March 1, 1996, are set forth on pages C-13
and C-14. In addition to the subsidiaries set forth on pages C-13 and C-14,
the following separate investment accounts (which include the Registrant) may
be deemed to be either controlled by, or under common control with,
Northwestern Mutual Life:
1. NML Variable Annuity Account A
2. NML Variable Annuity Account B
3. NML Variable Annuity Account C
4. Northwestern Mutual Variable Life Account
Northwestern Mutual Series Fund, Inc. (the "Fund") shown on page C-13 as a
subsidiary of Northwestern Mutual Life, is an investment company registered
under the Investment Company Act of 1940, offering its shares to the separate
accounts identified above; and the shares of the Fund held in connection with
certain of the accounts are voted by Northwestern Mutual Life in accordance
with voting instructions obtained from the persons who own, or are receiving
payments under, variable annuity contracts or variable life insurance policies
issued in connection with the accounts, or in the same proportions as the
shares which are so voted.
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NML CORPORATE STRUCTURE CHART*
The Northwestern Mutual Life Insurance Company
General Account
NML Variable Annuity Account A
NML Variable Annuity Account B
NML Variable Annuity Account C
NML Group Annuity Separate Account
NML Variable Life Account
Eiger Corporation - 100%
Northwestern Mutual Life Foundation, Inc. - 100%
NML Corporation - 100%
Standard of America Life Insurance Company - 100%
Saskatoon Centre, Limited (inactive) - 100%
Northwestern Mutual Series Fund, Inc. (and its 9 portfolios) - 100%
MGIC Investment Corporation - 20%. MGIC holds 100% of the voting stock of the
following: Mortgage Guaranty Reinsurance Corporation, MGIC, MGIC
Reinsurance Corporation, MGIC Mortgage Insurance Corporation, and various
subsidiaries.
Baird Financial Corporation - 92.22%. Baird Financial Corporation holds 100%
of the voting stock of Robert W. Baird & Co., Incorporated and various
subsidiaries.
Northwestern Mutual Investment Services, Inc. - 100%
The Grand Avenue Corporation - 98.54%
Marina Pacific, Ltd. - 100%
NW Pipeline, Inc. - 100%
NML - Bellevue Corporation - 100%
Solar Resources, Inc. - 100%
NH Corporation (inactive) - 100%
Rocket Sports, Inc. - 100%
Summit Sports, Inc. - 100%
Greenway Sports, Inc. - 100%
Painted Rock Development Corporation - 100%
NML Development Corporation - 100%
Stadium and Arena Management, Inc. - 100%
RE Corporation - 100%
Carlisle Ventures, Inc. - 100%
INV Corp. - 100%
Buffalo Promotions, Inc. - 100%
Park Forest Northeast, Inc. - 100%
NW Greenway #1 - 100%
NW Greenway #9 - 100%
Travers International Sales, Inc. - 100%
Highbrook International Sales, Inc. - 100%
Elderwood International Sales, Inc. - 100%
Mallon International Sales, Inc. - 100%
Higgins, Inc. - 100%
Hobby, Inc. - 100%
Logan, Inc. - 100%
Baraboo, Inc. - 100%
Mitchell, Inc. - 100%
Elizabeth International Sales, Inc. - 100% *Includes all NML mutual funds
Sean International Sales, Inc. - 100% and other corporations of
Alexandra International Sales, Inc. - 100% which 50% or more of voting
Brian International Sales, Inc. - 100% power controlled by NML.
Jack International Sales, Inc. - 100%
Brendan International Sales, Inc. - 100%
Justin International FSC, Inc. - 100% 3-1-96
C-13
<PAGE> 61
NML CORPORATE STRUCTURE, CONTINUED*
Cass Corporation - 100%
Mason & Marshall, Inc. - 100%
North Van Buren, Inc. - 100%
Northwestern Mutual Life International, Inc. - 100%
White Oaks, Inc. - 100%
Burgundy, Inc. - 100%
Hazel, Inc. - 100%
Maroon, Inc. - 100%
Coral, Inc. - 100%
Russet, Inc. - 100%
Amber, Inc. - 100%
*Includes all NML mutual
funds and other corpor-
ations of which 50% or
more of voting power
controlled by NML
3-1-96
C-14
<PAGE> 62
Item 27. Number of Contract Owners
As of March 31, 1996, the number of contract owners of NML Variable
Annuity Account C was 861. All contracts were issued as contracts for plans
qualifying for special treatment under various provisions of the Internal
Revenue Code.
Item 28. Indemnification
That portion of the By-laws of Northwestern Mutual Life relating to
indemnification of Trustees and officers is set forth in full in Article VII of
the By-laws of Northwestern Mutual Life, amended by resolution and previously
filed herein as an exhibit to the Registration Statement. Said By-laws are
restated in electronic format herein as Exhibit 99.B2.
Item 29. Principal Underwriters
(a) Northwestern Mutual Investment Services, Inc. ("NMIS"), the
broker-dealer subsidiary of Northwestern Mutual Life, may be considered the
principal underwriter currently distributing securities of the Registrant.
NMIS is also co-depositor, and may be considered the principal underwriter, for
NML Variable Annuity Account B and Northwestern Mutual Variable Life Account,
separate investment accounts of Northwestern Mutual Life registered under the
Investment Company Act of 1940 as unit investment trusts. In addition NMIS is
the investment adviser for Northwestern Mutual Series Fund, Inc.
(b) The directors and officers of NMIS are as follows:
Name Position
- ---- --------
Susan M. Achtenhagen Assistant Superintendent-New
Business
Edwin R. Ahrenhoerster Superintendent-Policy Benefits
Thomas A. Carroll Vice President-Common Stocks
Walter J. Chossek Treasurer
Thomas R. Christenson Superintendent-Policyowner Service
Carolyn M. Colbert Superintendent-Underwriting
Standards and New Business
Barbara E. Courtney Assistant Treasurer
Jefferson V. De Angelis Vice President-Fixed Income
Securities
Carol A. Detlef Superintendent-Underwriting
Standards and New Business
Mark G. Doll President and Director
Timothy Doubek Vice President
James R. Eben Assistant Secretary
James D. Ericson Director
Zenia J. Fieldbinder Superintendent-Policyowner Service
Loraine Garner Superintendent-Underwriting
Standards and New Business
Daniel R. Hernday Superintendent-Underwriting
Standards and New Business
Susan G. Hill Superintendent - Underwriting
Standards & New Business
Steven M. Kien Superintendent - Underwriting
Standards & New Business
Beatrice C. Kmiec Superintendent - Underwriting
Standards & New Business
Sharon J. Kraft Superintendent-Policyowner
Services
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<PAGE> 63
Patricia A. Krueger Superintendent - Policy Benefits
Patrick J. Lavin Superintendent - Underwriting
Standards & New Business
Patrick W. Lavin Assistant Treasurer
Merrill C. Lundberg Secretary
Meridee J. Maynard Superintendent-Sales Standards/
Compliance
Susan A. Milbeck Superintendent-Policy Benefits
Christine A. Milewski Superintendent-Policy Benefits
Johnny L. Miller Superintendent-Policy Benefits
Suzanne M. Mueller Superintendent-Underwriting
Standards and New Business
Elizabeth D. Pitterle Superintendent-Underwriting
Standards and New Business
Virgil L. Renne, Jr. Vice President
David R. Retherford Superintendent - Underwriting
Standards & New Business
Larry R. Roscoe Superintendent - Compliance
and Training
Donna B. Saltz Superintendent-Underwriting
Standards and New Business
John O. Schnorr Superintendent-Policy Benefits
Judith A. Shelton Superintendent - Policy Benefits
Ignatius L. Smetek Vice President - Common Stocks
Leonard F. Stecklein Vice President
Bonnie L. Steindorf Vice President
Steven P. Swanson Vice President
Carla A. Thoke Assistant Superintendent-Compliance
Patricia A. Valoe Superintendent-Underwriting
Standards and New Business
Julie Van Cleave Vice President - Common Stocks
Patricia L. Van Kampen Vice President-Common Stocks
Patrick J. Venuti Superintendent-Policy Benefits
William R. Walker Vice President
Evenly G. Werra Superintendent - Underwriting
Standards & New Business
Edward J. Zore Director
The address for each director and officer of NMIS is 720 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202.
(c) During 1995 life insurance agents of Northwestern Mutual Life who are
also registered representatives of NMIS received commissions, including general
agent overrides, in the aggregate amount of $739,347 for sales of variable
annuity contracts, and interests therein, issued in connection with the
Registrant. NMIS received compensation for its investment advisory services
from Northwestern Mutual Series Fund, Inc., the investment company in which
assets of the Registrant are invested.
Item 30. Location of Accounts and Records
All accounts, books or other documents required to be maintained in
connection with the Registrant's operations are maintained in the physical
possession of Northwestern Mutual Life at 720 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202.
C-16
<PAGE> 64
Item 31. Management Services
There are no contracts, other than those referred to in Part A or Part B
of this Registration Statement, under which management-related services are
provided to the Registrant and pursuant to which total payments of $5,000 or
more were made during any of the last three fiscal years.
Item 32. Undertakings
(a) The Registrant undertakes to file a post-effective amendment to this
Registration Statement as frequently as is necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16
months old for so long as payments under the variable annuity contracts may be
accepted.
(b) The Registrant undertakes to include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a Statement of Additional
Information.
(c) The Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
(d) Reference is made to the indemnification provisions disclosed in
response to Item 28. Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the registered securities, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
C-17
<PAGE> 65
SIGNATURES
As required by the Securities Act of 1933, the Registrant, NML Variable
Annuity Account C, certifies that it meets all the requirements for
effectiveness of this Amended Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this Amended Registration
Statement to be signed on its behalf, in the City of Milwaukee, and State of
Wisconsin, on the 26th day of April, 1996.
NML VARIABLE ANNUITY ACCOUNT C
(Registrant)
By THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
(Depositor)
Attest: JOHN M. BREMER By: JAMES D. ERICSON
-------------- ----------------
John M. Bremer, Senior Vice James D. Ericson, President
President, General Counsel and Chief Executive Officer
and Secretary
As required by the Securities Act of 1933, this Amended Registration
Statement has been signed by the Depositor on the 26th day of April, 1996.
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
(Depositor)
Attest: JOHN M. BREMER By: JAMES D. ERICSON
-------------- -----------------
John M. Bremer, Senior Vice James D. Ericson, Chairman
President, General Counsel and Chief Executive Officer
and Secretary
As required by the Securities Act of 1933, this Amended Registration
Statement has been signed by the following persons in the capacities with the
Depositor and on the dates indicated:
Signature Title
- --------- -----
Trustee, President and
JAMES D. ERICSON Principal Executive and
- ------------------------- Financial Officer
James D. Ericson
Dated
April 26, 1996
GARY E. LONG Vice President, Controller
- ------------------------- and Principal Accounting
Gary E. Long Officer
RICHARD H. HOLTON* Trustee
- -------------------------
Richard H. Holton
HAROLD B. SMITH* Trustee
- -------------------------
Harold B. Smith
C-18
<PAGE> 66
J. THOMAS LEWIS* Trustee
- -------------------------
J. Thomas Lewis
FRANK H. BERTSCH* Trustee
- -------------------------
Frank H. Bertsch
PATRICIA ALBJERG GRAHAM* Trustee
- -------------------------
Patricia Albjerg Graham*
DONALD J. SCHUENKE* Trustee
- -------------------------
Donald J. Schuenke
FRED G. LUBER* Trustee
- -------------------------
Fred G. Luber
R. QUINTUS ANDERSON* Trustee
- -------------------------
R. Quintus Anderson
STEPHEN F. KELLER* Trustee Dated
- ------------------------- April 26, 1996
Stephen F. Keller
PIERRE S. du PONT* Trustee
- -------------------------
Pierre S. du Pont
J. E. GALLEGOS* Trustee
- -------------------------
J. E. Gallegos
THOMAS I. DOLAN* Trustee
- -------------------------
Thomas I. Dolan
KATHRYN D. WRISTON* Trustee
- -------------------------
Kathryn D. Wriston
BARRY L. WILLIAMS* Trustee
- -------------------------
Barry L. Williams
GORDON T. BEAHAM III* Trustee
- -------------------------
Gordon T. Beaham III
DANIEL F. McKEITHAN, JR.* Trustee
- -------------------------
Daniel F. McKeithan, Jr.
C-19
<PAGE> 67
ROBERT E. CARLSON* Trustee
- -------------------------
Robert E. Carlson
Trustee
- -------------------------
Edward E. Barr
ROBERT C. BUCHANAN* Trustee
- -------------------------
Robert C. Buchanan
SHERWOOD H. SMITH, JR.* Trustee
- -------------------------
Sherwood H. Smith, Jr.
H. MASON SIZEMORE, JR.* Trustee Dated
- ------------------------- April 26, 1996
H. Mason Sizemore, Jr.
JOHN J. STOLLENWERK* Trustee
- -------------------------
John J. Stollenwerk
GEORGE A. DICKERMAN* Trustee
- -------------------------
George A. Dickerman
GUY A. OSBORN* Trustee
- -------------------------
Guy A. Osborn
JOHN E. STEURI* Trustee
- -------------------------
John E. Steuri
*By: JAMES D. ERICSON
-------------------------
James D. Ericson, Attorney in Fact,
pursuant to the Power of Attorney
attached hereto
C-20
<PAGE> 68
POWER OF ATTORNEY
The undersigned Trustees of THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
hereby constitute and appoint James D. Ericson and Robert E. Carlson, or either
of them, their true and lawful attorneys and agents to sign the names of the
undersigned Trustees to (1) the registration statement or statements to be
filed under the Securities Act of 1933 and to any instrument or document filed
as part thereof or in connection therewith or in any way related thereto, and
any and all amendments thereto in connection with variable contracts issued or
sold by The Northwestern Mutual Life Insurance Company or any separate account
credited therein and (2) the Form 10-K Annual Report or Reports of The
Northwestern Mutual Life Insurance Company and/or its separate accounts for its
or their fiscal year ended December 31, 1995 to be filed under the Securities
Exchange Act of 1934 and to any instrument or document filed as part thereof or
in connection therewith or in any way related thereto, and any and all
amendments thereto. "Variable contracts" as used herein means any contracts
providing for benefits or values which may vary according to the investment
experience of any separate account maintained by The Northwestern Mutual Life
Insurance Company, including variable annuity contracts and variable life
insurance policies. Each of the undersigned hereby ratifies and confirms all
that said attorneys and agents shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has subscribed these presents
this 26th day of July, 1995.
R. QUINTUS ANDERSON Trustee
--------------------------------
R. Quintus Anderson
Trustee
--------------------------------
Edward E. Barr
GORDON T. BEAHAM III Trustee
--------------------------------
Gordon T. Beaham III
FRANK H. BERTSCH Trustee
--------------------------------
Frank H. Bertsch
ROBERT C. BUCHANAN Trustee
--------------------------------
Robert C. Buchanan
ROBERT E. CARLSON Trustee
--------------------------------
Robert E. Carlson
C-21
<PAGE> 69
GEORGE A. DICKERMAN Trustee
--------------------------------
George A. Dickerman
THOMAS I. DOLAN Trustee
--------------------------------
Thomas I. Dolan
PIERRE S. du PONT IV Trustee
--------------------------------
Pierre S. du Pont IV
JAMES D. ERICSON Trustee
--------------------------------
James D. Ericson
J. E. GALLEGOS Trustee
--------------------------------
J. E. Gallegos
PATRICIA ALBJERG GRAHAM Trustee
--------------------------------
Patricia Albjerg Graham
RICHARD H. HOLTON Trustee
--------------------------------
Richard H. Holton
STEPHEN F. KELLER Trustee
--------------------------------
Stephen F. Keller
J. THOMAS LEWIS Trustee
--------------------------------
J. Thomas Lewis
FRED G. LUBER Trustee
--------------------------------
Fred G. Luber
DANIEL F. McKEITHAN, JR. Trustee
--------------------------------
Daniel F. McKeithan, Jr.
GUY A. OSBORN Trustee
--------------------------------
Guy A. Osborn
C-22
<PAGE> 70
DONALD J. SCHUENKE Trustee
--------------------------------
Donald J. Schuenke
H. MASON SIZEMORE, JR. Trustee
--------------------------------
H. Mason Sizemore, Jr.
HAROLD B. SMITH Trustee
--------------------------------
Harold B. Smith
SHERWOOD H. SMITH, JR. Trustee
--------------------------------
Sherwood H. Smith, Jr.
JOHN E. STEURI Trustee
--------------------------------
John E. Steuri
JOHN J. STOLLENWERK Trustee
--------------------------------
John J. Stollenwerk
BARRY L. WILLIAMS Trustee
--------------------------------
Barry L. Williams
KATHRYN D. WRISTON Trustee
--------------------------------
Kathryn D. Wriston
C-23
<PAGE> 71
EXHIBIT INDEX
EXHIBITS FILED WITH FORM N-4
POST-EFFECTIVE AMENDMENT NO. 16 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FOR
NML VARIABLE ANNUITY ACCOUNT C
Exhibit Number Exhibit Name
- -------------- ------------
EX-99.B11 Consent of Price Waterhouse LLP.
The following documents, previously included in the Registration Statement and
amendments thereto, are herein restated in electronic format:
EX-99.B1 Restated Articles of Incorporation of The
Northwestern Mutual Life Insurance Company.
EX-99.B2 By-Laws of The Northwestern Mutual Life
Insurance Company.
<PAGE> 1
EX-99.B11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 16 to the registration
statement on Form N-4 (the "Registration Statement") of our report dated
January 24, 1996, relating to the financial statements of The Northwestern
Mutual Life Insurance Company, and of our report dated January 24, 1996,
relating to the financial statements of NML Variable Annuity Account C, which
appear in such Statement of Additional Information, and to the incorporation by
reference of such reports into the Prospectus which constitutes part of this
Registration Statement. We also consent to the reference to us under the
heading "Experts" in such Statement of Additional Information.
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
April 24, 1996
<PAGE> 1
EXHIBIT-99.B1
RESTATED ARTICLES OF INCORPORATION
OF
THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY
a Wisconsin corporation
(Adopted July 26, 1972)
ARTICLE I
NAME
The name of the Company shall be The Northwestern Mutual Life
Insurance Company.
ARTICLE II
PERIOD OF EXISTENCE
The period of existence of the Company shall be perpetual.
ARTICLE III
PRINCIPLES AND PURPOSES
The Company is a mutual insurance company, without capital stock,
incorporated in 1857 by special act of the Wisconsin Legislature. The Company
is organized and operated for the mutual protection and benefit of those
persons who hold insurance policies or annuity contracts issued by the Company
or who have beneficial interests in such policies or contracts. Neither such
persons nor the policies or contracts are or shall be subject to assessment for
any purpose whatsoever.
The purposes of the Company are to engage in any lawful activity for
which insurance corporations may be organized under the Wisconsin Statutes,
including without limitation the conducting of an insurance business and
businesses incidental thereto, the making of investments and the ownership and
operation of subsidiaries, all as and to the extent authorized by the Wisconsin
Statutes.
ARTICLE IV
PRINCIPAL OFFICE
The location of the principal office of the Company shall be
determined by the board of trustees. At the date of adoption of these Articles
the principal office is located in the City of Milwaukee, Wisconsin.
ARTICLE V
MEMBERS
The members of the Company shall be those persons who are
policyholders of one or more insurance policies or deferred annuity contracts
issued by the Company, then in force and not matured by death of the insured or
annuitant or attainment of maturity date.
<PAGE> 2
The rights of members shall be as provided under the Wisconsin
Statutes, these Articles and the By-laws of the Company. The rules governing
voting by a member, including eligibility to vote and voting procedures, shall
be as provided in the Wisconsin Statutes and the By-laws.
ARTICLE VI
BOARD OF TRUSTEES
The board of trustees of the Company shall consist of such individual
members of the Company, not less than nine, as may be provided in the By-laws.
The By-laws may prescribe other qualifications for the trustees and may divide
them into classes according to their terms of office. The method of election
or appointment of the trustees and their terms of office shall be as provided
in the By-laws. The term "trustee" may be changed to "director" by an
amendment to the By-laws.
ARTICLE VII
MEMBERS' MEETINGS
Regular and special meetings of the members of the Company shall be
held as provided in the By-laws. The Company may make reasonable expenditures
in support of candidates nominated by the board for election as trustees and
the position of its management at any meeting.
ARTICLE VIII
AMENDMENTS
These Articles may be amended in the manner authorized by law at the
time of adoption of the amendment.
<PAGE> 1
EXHIBIT-99.B2
BY-LAWS
OF
THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY
MILWAUKEE, WISCONSIN
(Appendix--Restated Articles of Incorporation)
<PAGE> 2
BY-LAWS
OF
THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY
AS AMENDED
JULY 22, 1987
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I--Meetings of Members; Voting by Members; Nominations
of Board Candidates
Section 1.1 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.4 Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.5 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.6 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(a) Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(b) Furnishing Proxies and Other Materials . . . . . . . . . . . . . . . . 2
(c) Effect of Furnishing Proxies . . . . . . . . . . . . . . . . . . . . . 2
(d) Voting Inspectors . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(e) Tabulation of Voting . . . . . . . . . . . . . . . . . . . . . . . . . 2
(f) Certificate of Election . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.7 Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Number of Votes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.8 Nominations of Candidates for the Board . . . . . . . . . . . . . . . . . . . 3
(a) Filing of Board's Proposed Nominees . . . . . . . . . . . . . . . . . . 3
(b) Substitution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
(c) Nomination at Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.9 Inspection of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II--Board of Trustees and Committees
Section 2.1 General Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2 Composition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Number and Tenure . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.3 Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Citizenship, Age, Other Offices . . . . . . . . . . . . . . . . . . . . 5
(b) Non-attendance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.4 Committees of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.5 Executive Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Composition and Powers . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.6 Finance Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Composition and Powers . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.7 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.8 Alternate Members on Standing Committees
of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.9 Compensation of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
ii
<PAGE> 4
ARTICLE III--Meetings of the Board and Committees of the Board
Section 3.1 Regular Meetings . . . . . . . . . . . . . . . . . 8
Section 3.2 Special Meetings . . . . . . . . . . . . . . . . . 8
Section 3.3 Quorum . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.4 Manner of Acting . . . . . . . . . . . . . . . . . 8
Section 3.5 Notice of Special Meetings . . . . . . . . . . . . 8
Section 3.6 Waiver of Notice . . . . . . . . . . . . . . . . . 8
Section 3.7 Action Without a Meeting . . . . . . . . . . . . . 9
ARTICLE IV--Executive and Other Officers
Section 4.1 Executive Officers . . . . . . . . . . . . . . . . 9
Section 4.2 Powers and Duties of Executive Officers . . . . . . 9
Section 4.3 Other Officers . . . . . . . . . . . . . . . . . . 9
Section 4.4 Vacancies and Absences . . . . . . . . . . . . . 10
Section 4.5 Compensation . . . . . . . . . . . . . . . . . . 10
Section 4.6 Election and Appointment of Officers . . . . . . 10
ARTICLE V--Examining Committee
Section 5.1 Selection of the Examining Committee . . . . . . 10
Section 5.2 Functions of the Examining Committee . . . . . . 11
ARTICLE VI--Official Bonds; Checks; Other Instruments
Section 6.1 Official Bonds . . . . . . . . . . . . . . . . . 11
Section 6.2 Checks . . . . . . . . . . . . . . . . . . . . . 11
Section 6.3 Other Instruments . . . . . . . . . . . . . . . . 11
iii
<PAGE> 5
ARTICLE VII--Indemnification
Section 7.1 Indemnification of Trustees, Officers and Employees . 11
(a) Successful Defense . . . . . . . . . . . . . . 11
(b) Other Cases . . . . . . . . . . . . . . . . . . 12
Section 7.2 Determination of Right to Indemnification . . . . . . 12
Section 7.3 Allowance of Expenses as Incurred . . . . . . . . . . 13
Section 7.4 Additional Rights to Indemnification and Allowance
of Expenses . . . . . . . . . . . . . . . . . . . . . 13
Section 7.5 Insurance . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.6 General . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VIII--Emergency Provisions
Section 8.1 Continuity of Management . . . . . . . . . . . . . . 14
(a) Acting President . . . . . . . . . . . . . . . 14
(b) Powers of Acting President . . . . . . . . . . 14
(c) Executive Committee . . . . . . . . . . . . . . 14
(d) Committee Quorum . . . . . . . . . . . . . . . 15
(e) Board Quorum . . . . . . . . . . . . . . . . . 15
ARTICLE IX--Offices
Section 9.1 Offices . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE X--Corporate Seal
Section 10.1 Corporate Seal . . . . . . . . . . . . . . . . . . . . 15
ARTICLE XI--Amendments
iv
<PAGE> 6
Section 11.1 Amendment or Repeal of the By-laws . . . . 16
(a) By Members . . . . . . . . . . . . . 16
(b) By Board . . . . . . . . . . . . . . 16
APPENDIX--Restated Articles of Incorporation . . . . . . . . . . . . 16
v
<PAGE> 7
BY-LAWS
OF
THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY
AS AMENDED
JULY 22, 1987
ARTICLE I
MEETINGS OF MEMBERS; VOTING BY MEMBERS;
NOMINATIONS OF BOARD CANDIDATES
Section 1.1. ANNUAL MEETINGS.
An annual meeting of the members of the Company shall be held at such
time during normal business hours as may be fixed by the board of trustees (the
"board") or executive committee for the purpose of electing trustees and for
the transaction of such other business as may come before the meeting. The
board or executive committee may postpone the date of the annual meeting for
not more than 60 days, but such postponement shall not change the record date
for such annual meeting.
Section 1.2 SPECIAL MEETINGS.
A special meeting of members may be called by the president, the board,
the executive committee or members having 5% of the votes entitled to be cast
at such meeting.
Section 1.3 PLACE OF MEETINGS.
The board may designate any place, either within or without the State of
Wisconsin, as the place of any annual meeting or of any special meeting called
by the board. If no designation is made or if a special meeting is otherwise
called, the place of meeting shall be the principal office of the Company.
Section 1.4 NOTICE OF MEETINGS.
Notice of the time and place of an annual or special meeting shall be
published once in each of 2 weeks, the first publication to be not more than
120 and the second publication to be not less than 10 days prior to the date of
the meeting, in at least 2 newspapers of general circulation, one published in
the City of Madison, Wisconsin, and one published in the City of Milwaukee,
Wisconsin, and in such other newspapers, if any, as the board or executive
committee may determine. Written notice of the time and place of an annual or
special meeting shall also be given by mailing a copy thereof, not more than
120 nor less than 10 days prior to the date of the meeting, to the
policyholders constituting substantially all of the members entitled to vote at
the meeting. In the case of a special meeting or when required by law, the
published and mailed notice of meeting shall include a statement of the purpose
or purposes for which the meeting is to be held. In case the date of the
annual meeting is postponed after published and mailed notices have begun, a
published notice of the postponement shall be made as in the case of the
initial published notice but no mailed notice of the postponement need be
given.
1
<PAGE> 8
Section 1.5 QUORUM.
Members having at least 5% of the votes entitled to be cast at any
meeting, present in person or by proxy at such meeting, shall constitute a
quorum at such meeting. If a quorum is not present at any meeting, a majority
of the members present may adjourn the meeting from time to time without
further notice.
Section 1.6 VOTING.
(a) PROCEDURES. All voting by members at annual and special meetings
shall be in person or by proxy executed in writing by the member or
his duly authorized attorney-in-fact and delivered to the secretary
of the Company on or before a day specified in the notice of meeting
which shall be at least 5 days prior to the date of the meeting. A
majority of the votes entitled to be cast by the members present in
person or by proxy at a meeting at which a quorum is present shall
be sufficient for the election of any trustee or for the adoption of
any other matter voted on at such meeting unless a greater portion
is required by law. Unless sooner revoked, proxies shall be valid
for 11 months from the date of execution and for such additional
period, if any, as may be provided therein.
(b) FURNISHING PROXIES AND OTHER MATERIAL. The Company may include the
notice of meeting pursuant to Section 1.4 with or as a part of its
annual report for the preceding year or may send such notice
separately. The Company may provide proxies to any or all of the
members together with such information as the Company deems
pertinent with respect to the candidates or matters being voted upon
at the meeting.
(c) EFFECT OF FURNISHING PROXIES. The fact that the Company, by mail or
otherwise, furnishes a proxy to any person shall not constitute nor
be construed as an admission of the validity of any policy or
contract or that such person is a member entitled to vote at the
meeting; and such fact shall not be competent evidence in any action
or proceeding in which the validity of any policy or contract or any
claim under it is at issue.
(d) VOTING INSPECTORS. Prior to each meeting of members the board shall
appoint, from among members who are not trustees, candidates for
trustee, officers, employees or agents of the Company, 1 or more
voting inspectors and shall fix their fees. If an inspector so
appointed is unable or unwilling to act the chief executive officer
may appoint a substitute from among members eligible as aforesaid.
The Company shall provide such clerical and mechanical assistance to
the inspectors as they may reasonably require and shall pay the fees
and reasonable expenses of the inspectors.
(e) TABULATION OF VOTING. All voting at a meeting of members, including
voting by holders of proxies, shall be by written ballot. The votes
shall
2
<PAGE> 9
be tabulated by the voting inspectors and shall be subject to such
verification and ascertainment of the validity thereof and of the
qualification of the voters as the inspectors deem appropriate. The
inspectors may employ such mechanical equipment as they deem
advisable to assist in the tabulation. In the absence of challenge
the inspectors may assume that the signature appearing on a proxy or
ballot is the valid signature of a member entitled to vote, that any
person signing in a representative capacity is duly authorized so to
do, and that the proxy, if not older than permitted thereby, is
valid. After the tabulation has been completed, all proxies and
ballots shall be placed in sealed packages and preserved by the
secretary of the Company for at least 4 months from the date of the
meeting.
(f) CERTIFICATE OF ELECTION. Promptly after each meeting of members the
inspectors shall sign and file with the secretary of the Company and
the Wisconsin Commissioner of Insurance a certificate of the results
of the voting at such meeting.
Section 1.7 VOTING RIGHTS.
(a) RECORD DATE. Only those persons who are members of the Company at
the close of business on the record date for a meeting of members
shall be entitled to vote at such meeting. The record date for an
annual or special meeting shall be such business day not more than
120 days prior to the date of the meeting as may be established by
the board or executive committee.
(b) NUMBER OF VOTES. Each member shall be entitled to one vote on each
matter presented at a meeting for a vote by members, regardless of
the number or amount of, or the number of lives insured by, policies
or contracts owned by such member.
(c) ELIGIBILITY. All questions concerning the eligibility of members to
vote and the validity of the votes cast at any meeting shall be
determined by the voting inspectors on the basis of the records of
the Company. If a question concerning eligibility to vote arises as
between a person identified as the owner of the policy or contract
on the records of the Company and a person otherwise claiming to
control such policy or contract, the person shown on the records of
the Company as the owner at the close of business on the record date
for the meeting shall be deemed to be the member entitled to vote at
such meeting.
Section 1.8 NOMINATIONS OF CANDIDATES FOR THE BOARD.
(a) FILING OF BOARD'S PROPOSED NOMINEES. Before each annual meeting of
members, the board shall propose for nomination at such meeting a
member as candidate for every vacancy on the board to be filled at
the ensuing annual meeting as provided in Section 2.2 and shall
cause to be filed with the records of the Company and the Wisconsin
Commissioner of Insurance a certificate of such proposed nomination
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signed by the secretary of the Company, giving the names,
occupations and addresses of such proposed nominees and the terms
for which they are to be nominated and stating that such proposed
nominees meet the eligibility requirements then pertaining to
trustees prescribed by Section 2.3(a) and will accept office if
elected.
(b) SUBSTITUTION. In the event any candidate proposed by the board for
nomination pursuant to Section (a) above withdraws as a candidate
prior to the annual meeting, the board may propose a member for
nomination in substitution for the withdrawing candidate and shall
make such filings as are required pursuant to Section (a) above
promptly after such substitution.
(c) NOMINATION AT MEETING. Subject to Section 2.3(a), nominations of
members as candidates for any vacancy on the board to be filled at
an annual meeting of members, including nomination of the board's
proposed nominees, shall be made at the meeting; and such nomination
may be made by any member who is present in person or by proxy and
is entitled to vote at such meeting.
Section 1.9 INSPECTION OF RECORDS.
The Company shall keep on file after the record date for each meeting and
until the tabulation of voting at such meeting has been completed, a record for
voting purposes of the names and addresses of the persons shown as the premium
payers as of the close of business on such record date with respect to the
policies and contracts of the members. Subject to provisions of the Wisconsin
Statutes and with due regard to the Company's status as an insurance company
and financial institution, a member, or his agent or attorney, may inspect such
record at any reasonable time for the purpose of communicating with other
members in regard to nomination or election of candidates for the board or any
other matter being submitted for vote at a meeting of the members. No person
may, directly or indirectly, use any information obtained from any such
inspection for any other purpose, and the Company may impose reasonable rules
to insure that such information is not used for any other purpose.
ARTICLE II
BOARD OF TRUSTEES AND COMMITTEES
Section 2.1 GENERAL POWERS.
The business and affairs of the Company shall be managed by the board.
Section 2.2 COMPOSITION.
(a) NUMBER AND TENURE. The number of trustees of the Company shall be
not more than 30 or if permitted by law such other number, not less
than 9, as the board may establish from time to time. The regular
term of office of a trustee shall commence immediately after the
annual meeting of members at which such trustee is elected and end
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on the date of the fourth succeeding annual meeting of members. The
vacancies on the board to be filled at each annual meeting of
members shall be the offices of those trustees whose regular terms
are scheduled to expire on the date of such meeting and the offices
of any other trustees that become vacant during the 12 months ending
on the January 1 preceding such meeting. All elections shall be for
the regular term except those to fill the offices of trustees that
become vacant during the 12 months ending on the January 1 preceding
such meeting which shall be for the unexpired regular term of such
vacant offices. Except as provided in paragraph (c), each trustee
elected at an annual meeting shall hold office for the term for
which elected and until his successor has been elected or appointed
and qualified.
(b) CLASSIFICATION. Trustees shall be divided into 4 classes, which may
but need not be equal, according to the expiration date of the
regular terms of offices. The regular term of office of one of the
classes of trustees shall expire on the date of each annual meeting
of members. On July 26, 1972, the 4 classes of trustees shall be
those whose regular terms are scheduled to expire on the date of the
annual meeting of members in 1973, 1974, 1975 and 1976,
respectively.
(c) RETIREMENT. The board may by resolution provide for mandatory
retirement of trustees and members of the committees of the board.
A trustee or member of a committee of the board shall be retired on
the date provided in the resolution even though elected for a term
extending beyond such date.
Section 2.3 QUALIFICATIONS.
(a) CITIZENSHIP, AGE, OTHER OFFICES. Only those members of the Company
shall be eligible to be nominated or elected or to serve as a
trustee who are citizens of the United States of America, are not
less than 25 years of age nor more than the retirement age, if any,
as then established by resolution of the board pursuant to Section
2.2(c), are not ineligible under paragraph (b) and have no
relationship which would create a conflict of interest or impair
independence of judgment in regard to the affairs of the Company in
violation of the rules then prescribed by the board or executive
committee. Except for the chairman of the board, the president and
2 other executive officers, no trustee shall be an executive
officer, officer, other employee or agent of the Company.
(b) NON-ATTENDANCE. The failure of a trustee to attend at least 1
meeting of the board within a period of 9 consecutive calendar
months shall thereupon result in an automatic forfeiture of his
office, unless such forfeiture is avoided as provided below; and
such trustee shall not be eligible to be nominated or elected or to
serve as a trustee until at least 6 months have elapsed following
such forfeiture. Any such forfeiture shall result in a vacancy to
be filled as in the case of other
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vacancies on the board. A trustee may avoid such forfeiture if
during said 9 month period he attends a meeting of the executive
committee even though not a member of that committee, but no trustee
may so avoid forfeiture more than once during the term he is then
serving without the express approval of the executive committee.
Section 2.4 COMMITTEES OF THE BOARD.
The standing committees of the board shall be an executive committee and
a finance committee and such other standing committees as the board may
establish and designate as such. The board may from time to time establish
such other committees as it deems advisable; and the members of such other
committees shall be appointed by or in the manner provided by the board. Any
trustee may attend and participate in any meeting of a standing committee of
the board, except that no trustee who is not a member of or an alternate on a
standing committee may vote upon any matter before such committee.
Section 2.5 EXECUTIVE COMMITTEE.
(a) COMPOSITION AND POWERS. The executive committee shall consist of
such number of trustees as the board may determine, to be elected
annually by the board, plus the chairman of the board, if any, and
the president, if a trustee. When the board is not in session, the
executive committee shall have and may exercise all of the powers of
the board except (i) the powers granted to the finance committee by
Section 2.6, (ii) the power to adopt, amend or repeal by-laws, (iii)
the power to elect a chairman of the board, president or other
executive officer, and (iv) the power to fill vacancies in the board
or any of its standing committees or, except as provided in Section
4.4, in the office of chairman of the board, president or other
executive officer.
(b) RECORDS. The executive committee shall keep a record of its
transactions which record shall be made available to each member of
the board, and so much thereof shall be read at the next regular
meeting of the board as it may order.
Section 2.6 FINANCE COMMITTEE.
(a) COMPOSITION AND POWERS. The finance committee shall consist of such
number of trustees as the board may determine, to be elected
annually by the board, plus the chairman of the board, if any, and
the president, if a trustee. When the board is not in session, the
finance committee shall have and may exercise all of the powers of
the board in regard to the assets and investments of the Company
(except assets used in the operation of the Company's principal
office and agencies) including, without limitation, the power
directly or by delegation to do all such acts and things as it may
deem necessary and proper to (i) establish the Company's financial
and investment policy, (ii) invest, reinvest, manage, select, sell
and otherwise dispose of the Company's assets, (iii) designate
depositories for the Company's funds and authorize persons to make
deposits in and withdrawals from such depositories,
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(iv) appoint one or more managers of the Company's regional loan and
real estate offices, (v) borrow money for the use and benefit of the
Company in such amount and on such terms as it shall determine, and
(vi) pledge the Company's assets as security for the payment of such
loans or other proper purposes.
(b) RECORDS. The finance committee shall keep a record of its
transactions which record shall be made available to each member of
the board and all standing committees of the board and so much
thereof shall be read at the next regular meeting of the board as it
may order.
Section 2.7 VACANCIES.
Vacancies in the board or any committee of the board may be filled by the
board at any meeting. A person appointed to fill a vacancy in the board shall
hold office until the next annual meeting of members and until his successor
has been elected or appointed and qualified, except that any person appointed
to fill any such vacancy occurring after January 1 of any year but prior to the
next following meeting of members shall hold office until the second annual
meeting of members following his appointment and until his successor has been
elected or appointed and qualified. A person appointed to fill a vacancy on a
committee shall hold office until the next annual meeting of the board.
Section 2.8 ALTERNATE MEMBERS ON STANDING COMMITTEES OF THE BOARD.
(a) ELECTION. The board shall elect annually trustees to serve as
alternate members on any standing committee of the board, when so
designated by the committee or the chairman of the board or the
president to take the place of absent members, or to fill vacancies
on such committees until the next meeting of the board.
(b) COMPENSATION. An alternative member on any committee shall receive,
during his period of service, compensation as fixed by the board.
The board may determine by a generally applicable resolution to what
extent, if any, the compensation of absent members shall be withheld
or reduced during the period of service of alternates.
Section 2.9 COMPENSATION OF TRUSTEES.
By resolution of the board, each trustee may be paid his reasonable
expenses, if any, for attendance at each meeting of the board and its
committees and, if not an executive officer, may be paid a stated compensation
as trustee and committee member or a fixed sum for attendance at each meeting
of the board or its committees or both. Such payment shall not prevent the
payment of reasonable compensation to a trustee (other than an executive
officer) for the authorized performance of professional, appraisal, or other
technical or special service outside the scope of his regular duties as trustee
or member of a committee.
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ARTICLE III
MEETINGS OF THE BOARD AND
COMMITTEES OF THE BOARD
Section 3.1 REGULAR MEETINGS.
An annual meeting of the board for the election of standing committees
and the officers specified in Section 4.6(a), and the transaction of such other
business as may properly come before the meeting, shall be held annually at
such time and place, either within or without the State of Wisconsin, as
designated by resolution of the board and upon such notice as the board may
determine. Additional regular meetings of the board and regular meetings of a
committee may be held at such times and places and upon such notice as the
board or committee may determine.
Section 3.2 SPECIAL MEETINGS.
Special meetings of the board or a committee may be called at any time by
or at the request of the chairman of the board or the president, and in
addition, special meetings of the board may be called at any time by or at the
request of the executive committee or 9 or more trustees.
Section 3.3 QUORUM.
A quorum for the transaction of business at any meeting of the board or
any committee shall consist of a majority of the board or of the committee,
except that a quorum for a committee composed of an even number of persons
shall consist of 50% of the committee. Less than a quorum may adjourn the
meeting from time to time until a quorum is present.
Section 3.4 MANNER OF ACTING.
The act of a majority of the board or a committee present at a meeting at
which a quorum is present shall be the act of the board or committee, unless
the board or the committee determines a greater number is required.
Section 3.5 NOTICE OF SPECIAL MEETINGS.
Notice of special meetings of the board or a committee shall be given in
writing or by telegram to each trustee or committee member at his last known
address as it appears on the Company's records. Such notice shall be given at
least 6 days prior to the meeting date except in the case of finance and
executive committee meetings for which 2 days prior notice shall suffice. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail, so addressed, with postage prepaid. If sent by telegram, such
notice shall be deemed to be given when the telegram is delivered to the
telegraph company. Neither the business to be transacted at, nor the purpose
of, any special meeting of the board or a committee need be specified in the
notice of such meeting except as provided in Section 11.1(b) in regard to
amendment or repeal of the By-laws.
Section 3.6 WAIVER OF NOTICE.
Any notice of the time or place of any special meeting of the board or a
committee may be dispensed with if every member of the board or committee
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attends such meeting or if at any time every absent member of the board or
committee signs a written waiver of notice or waives notice by telegram.
Neither the business to be transacted at, nor the purpose of, any meeting of
the board or committee need be specified in the waiver of such meeting.
Section 3.7 ACTION WITHOUT A MEETING.
Any action required or permitted to be taken at a meeting by the board or
a committee may be taken without a meeting if a consent in writing, setting
forth the action so taken, is signed by every member of the board or committee.
ARTICLE IV
EXECUTIVE AND OTHER OFFICERS
Section 4.1 EXECUTIVE OFFICERS.
The executive officers of the Company shall consist of a president and
such other executive officers with such titles, powers and duties as may be
prescribed from time to time by the board. The board may from time to time
elect from among its members a chairman of the board, who shall be an executive
officer of the Company with such powers and duties as may be prescribed by the
board. Any 2 or more offices may be held by the same person except the offices
of president and secretary and the offices of president and vice president.
The executive officers shall hold office during the pleasure of the board. For
the purposes of the Wisconsin Statutes the principal officers shall be the
chairman of the board, if any, the president and the other executive officers.
There shall be at all times at least 3 principal officers.
Section 4.2 POWERS AND DUTIES OF EXECUTIVE OFFICERS.
The chairman of the board, if any, shall be chairman of and preside at
the meetings of the members and of the board and shall exercise such other
powers and perform such other duties as may be required by the board. In the
absence of action by the board vesting such powers in the chairman of the
board, the president shall be the chief executive officer and have the general
direction and management of the Company's affairs, and shall exercise such
powers and perform such duties as are incident to his office or as may be
required of him by the board or the executive or finance committees. The chief
executive officer, if a member of the Board, shall be chairman of and preside
at the meetings of the executive and finance committees. In the absence of, or
if there is no chairman of the board, the president shall preside at the
meetings of the members and, if a member of the board, at meetings of the
board. All other executive officers of the Company shall exercise such powers
and perform such duties as are usually incident to their office and such other
duties, including presiding at meetings of the members in the absence of the
chairman of the board and the president, as shall be assigned to or required of
them, from time to time, by the board, the executive committee, the finance
committee or the president or, if authorized by the board, the chairman of the
board.
Section 4.3 OTHER OFFICERS.
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The other officers of the Company shall include a secretary, a treasurer
and such assistants to the several executive officers and such other officers
as the board or executive committee may from time to time designate as such,
all of whom shall hold office during the pleasure of the board or executive
committee. Any such officer may be designated an executive officer by the
board or executive committee. Each officer of the Company shall perform such
duties as may be assigned to or required of him from time to time, by the
executive committee, the finance committee, the president, the head of his
department or, if authorized by the board, the chairman of the board.
Section 4.4 VACANCIES AND ABSENCES.
Any vacancy in the office of chairman of the board, president or other
executive officers may be filled at any meeting of the board, or until the next
meeting of the board, by the executive committee. In the event of the death,
prolonged absence or inability or refusal to act of a chairman of the board who
has been designated by the board as the chief executive officer, the president
shall be the chief executive officer of the Company. In the prolonged absence
of the president or in the event of his death, inability or refusal to act, an
individual designated by the board or the executive committee shall exercise
the powers and perform the duties of the president. Such designation, if made
by the executive committee, shall not extend beyond the next meeting of the
board.
Section 4.5 COMPENSATION.
Compensation of executive officers, officers and other employees of the
Company shall be fixed by or in the manner provided by the board.
Section 4.6 ELECTION AND APPOINTMENT OF OFFICERS.
Officers shall be elected or appointed from time to time, but at least
annually, as follows:
(a) The chairman of the board, if any, the president and other
executive officers shall be elected by the board.
(b) Other officers shall be appointed by the board or in a
manner provided by resolution of the board.
ARTICLE V
EXAMINING COMMITTEE
Section 5.1 SELECTION OF THE EXAMINING COMMITTEE.
An examining committee, consisting of not more than 5 or less than 3
individuals who are either members of the Company or whose lives are insured by
the Company, who are not trustees, agents, executive officers, officers or
other employees of the Company, shall be elected annually by the board, and the
board shall designate the chairman of such committee. Not more than 2 members
of any examining committee shall have been members of the previous examining
committee. A vacancy in the examining committee may be filled at any time by
the board or one of its standing committees.
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Section 5.2 FUNCTIONS OF THE EXAMINING COMMITTEE.
The purpose of the examining committee shall be to make an investigation
of and to inquire into the general policies, operations and management of the
Company. The committee shall have such powers as may be determined from time
to time by the board and shall make its reports to the board.
ARTICLE VI
OFFICIAL BONDS; CHECKS; OTHER INSTRUMENTS
Section 6.1 OFFICIAL BONDS.
The board, the executive committee or the finance committee may require a
bond from any executive officer, officer, other employee or agent of the
Company, in such sum and with such sureties as it may deem proper.
Section 6.2 CHECKS.
Disbursement of the funds of the Company shall be made upon the check of
the Company signed by such persons and in such manner as may be determined by
the finance committee. Such persons as may be designated by the finance
committee shall each have authority to endorse checks and other instruments
received by the Company or to execute powers of attorney authorizing other
persons to make such endorsements.
Section 6.3 OTHER INSTRUMENTS.
The chairman of the board, if any, the president and other executive
officers, the vice presidents, and such other persons as the board, the
executive committee or the finance committee may designate shall each have
authority to execute and acknowledge on behalf of the Company all instruments
executed in the name of the Company; and the chairman of the board, the
president and other executive officers, and the vice presidents shall each have
authority to execute powers of attorney authorizing other persons to execute
and acknowledge such instruments in specific instances. The secretary and any
associate or assistant secretary shall each have authority to attest,
countersign and acknowledge all such instruments requiring attestation,
countersignature or acknowledgment. Insurance policies and annuity contracts
issued by the Company and endorsements thereto shall be executed in the manner
provided by the board or executive committee.
ARTICLE VII
INDEMNIFICATION
Section 7.1 INDEMNIFICATION OF TRUSTEES, OFFICERS AND EMPLOYEES.
(a) SUCCESSFUL DEFENSE. The Company shall indemnify a trustee,
officer, employee or member of a committee, to the extent he or
she has been successful on the merits or otherwise in the defense
of a proceeding, for all reasonable expenses incurred in the
proceeding if the trustee, officer, employee or member of a
committee was a party because he
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or she is a trustee, officer, employee or member of a committee
of the Company.
(b) OTHER CASES. In cases not included under (a) above, the Company
shall indemnify a trustee, officer, employee or member of a
committee against liability incurred in a proceeding to which the
trustee, officer, employee or member of a committee was a party
because he or she is a trustee, officer, employee or member of a
committee of the Company or was serving at the Company's request as
a director, officer, employee, agent, partner, trustee, member of
any governing or decision-making committee of another corporation,
partnership, joint venture, trust or other enterprise, unless
liability was incurred because the trustee, officer, employee or
member of a committee breached or failed to perform a duty owed to
the Company and the breach or failure to perform constitutes any of
the following: (i) a wilful failure to deal fairly with the Company
or its members in connection with a matter in which the trustee,
officer, employee or member of a committee has a material conflict
of interest, (ii) a violation of criminal law, unless the trustee,
officer, employee or member of a committee had reasonable cause to
believe his or her conduct was lawful or no reasonable cause to
believe his or her conduct was unlawful; (iii) a transaction from
which the trustee, officer, employee or member of a committee
derived an improper personal profit; or (iv) wilful misconduct. The
termination of a proceeding by judgment, order, settlement,
conviction or upon a plea of no contest or its equivalent, does not,
by itself, create a presumption that indemnification is not required
pursuant to this section. A trustee, officer, employee or member of
a committee who seeks indemnification under this section shall make
a written request to the Company. Indemnification under this
section is not required if the trustee, officer, employee or member
of a committee previously received indemnification or allowance of
expenses in connection with the same proceeding.
Section 7.2 DETERMINATION OF RIGHT TO INDEMNIFICATION.
Any indemnification under Section 7.1, unless ordered by a court, shall
be made by the Company only as authorized in the specific case upon a
determination that indemnification of the trustee, officer, employee or member
of a committee is proper in the circumstances because he or she has met the
applicable standard of conduct. Such determination shall be made by one of the
following means selected by the person seeking indemnification:
(a) By majority vote of a quorum of the Board consisting of
trustees not at the time parties to the same or related
proceedings. If a quorum of disinterested trustees cannot be
obtained, by majority vote of a committee duly appointed by the
Board and consisting solely of two or more trustees not at the
time parties to the same or related proceedings. Trustees who are
parties to the same or related proceedings may participate in the
designation of members of the committee.
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(b) By independent legal counsel selected by a quorum of the
Board or its committee in the manner described in (a) or, if
unable to obtain such a quorum or committee, by majority vote of
the full Board, including trustees who are parties to the same or
related proceedings.
(c) By a panel of three arbitrators consisting of one arbitrator
selected by those trustees entitled under (b) to select
independent legal counsel, one arbitrator selected by the person
seeking indemnification, and one arbitrator selected by the two
arbitrators previously selected.
Section 7.3 ALLOWANCE OF EXPENSES AS INCURRED.
Upon written request by a trustee, officer, employee or member of a
committee who is party to a proceeding, the Company may pay or reimburse his or
her reasonable expenses as incurred, if such advance payment is authorized in a
manner provided in Section 7.2, and if the person provides the Company with the
following:
(a) A written affirmation of his or her good faith belief that
he or she has not breached or failed to perform his or her duties
to the Company; and
(b) A written undertaking, executed personally or on his or her
behalf, to repay the allowance to the extent that it is
ultimately determined under Section 7.2 that indemnification is
not required and that indemnification is not ordered by a court.
The undertaking under this section shall be an unlimited, general
obligation of the person involved, may be secured or unsecured,
and may be accepted without reference to his or her ability to
repay.
Section 7.4 ADDITIONAL RIGHTS TO INDEMNIFICATION AND ALLOWANCE OF EXPENSES.
Except as limited by law, the indemnification and allowance of expenses
provided by this article do not preclude any additional right to
indemnification or allowance of expenses that a trustee, officer, employee,
member of a committee, or other person serving at the request of the Company as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise may have under any written agreement
between such person and the Company, resolution of the Board, or resolution
adopted by the members.
Section 7.5 INSURANCE.
The Company may purchase and maintain insurance on behalf of any person
who is or was a trustee, officer, employee or member of a committee of the
Company or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, or a partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the Company would have the power to indemnify him against such
liability under this article.
Section 7.6 GENERAL.
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For purposes of this article, the definitions contained in Section
181.041 of the Wisconsin Statutes are incorporated herein by this reference
except that "trustee" shall be used wherever the term "director" appears in the
statute. The term "employee" shall mean a natural person who is or was an
employee of the Company or who, while an employee of the Company, is or was
serving at the Company's request as a director, officer, partner, trustee,
member of any decision-making committee, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, and, unless
the context requires otherwise, the estate or personal representative of the
employee. "Member of a committee" shall mean a member of the examining
committee described in Article V. The provisions of this article shall apply
from the date of adoption of this By-Law, regardless of the date of the
occurrence for which indemnification is sought. Any right to indemnification
under any prior By-Law of the Company is terminated as of the date of adoption
of this By-Law.
ARTICLE VIII
EMERGENCY PROVISIONS
Section 8.1 CONTINUITY OF MANAGEMENT.
To insure continuity of management in the event of a national emergency
caused by military attack or by a nuclear, atomic or other disaster, the
following delegation of executive authority and responsibility is provided on a
temporary basis pursuant to the Wisconsin Statutes until the executive
committee or a board of trustees can act:
(a) ACTING PRESIDENT. In the event such emergency results in
the disability or absence of the chairman of the board and the
president, then an executive officer in the order specified in the
latest resolution of the board relating to powers and duties of
executive officers shall be and is hereby designated as acting
president and chief executive officer, but if no executive officer
is then available, the trustee senior in point of service on the
board of trustees, who is able and willing to act, shall be and is
hereby designated the acting president and chief executive
officer.
(b) POWERS OF ACTING PRESIDENT. The acting president shall
exercise the powers and perform the duties of the president,
except as otherwise provided in the By-laws, and shall have
authority to relocate the principal office within the United
States, to take charge of all Company property and records,
including copies of such records as may be deposited outside the
principal office, and to sign all instruments relating to the
business of the Company, including checks.
(c) EXECUTIVE COMMITTEE. The acting president shall immediately call
a meeting of the executive committee, and such committee shall
have authority to designate substitutes for absent or disabled
executive officers to act until the next meeting of the board,
and shall have
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authority to determine a suitable location within the United States
for the Company's principal office.
(d) COMMITTEE QUORUM. If by reason of such emergency a quorum of either
the executive committee or finance committee cannot be obtained,
then the acting president shall have authority to designate such
number of trustees as may be required for a quorum, to serve as
substitutes on such committee. If sufficient substitutes are not
available, the acting president may reduce the number constituting a
quorum or any committee to not less than 3.
(e) BOARD QUORUM. If by reason of such emergency a quorum of the board
cannot be obtained, 3 trustees shall constitute a quorum for the
transaction of business at all meetings of the board. Any vacancy
in the board may be filled by a majority of the remaining trustees,
though less than a quorum, or by a sole remaining trustee. If there
are no surviving trustees but at least 3 executive officers of the
Company survive, then the president if he survives and 2 (or 3 if
the president does not survive) other executive officers in the
order listed in the latest resolution of the board relating to
powers and duties of executive officers shall be the trustees and
shall possess all of the powers of the previous board and such
powers as are granted herein. By majority vote such emergency board
of trustees may elect other trustees. If there are not at least 3
surviving executive officers, the Wisconsin Commissioner of
Insurance or duly designated person exercising the powers of the
Commissioner of Insurance shall appoint 3 persons as trustees who
shall possess all of the powers of the previous board and such
powers as are granted herein, and these persons by majority vote may
elect other trustees.
ARTICLE IX
OFFICES
Section 9.1 OFFICES.
The location of the principal office of the Company shall be
determined by the board. The Company may have other offices at such locations
as may be necessary or convenient for the conduct of its business.
ARTICLE X
CORPORATE SEAL
Section 10.1 CORPORATE SEAL.
The board may prescribe a corporate seal for the Company, which shall
contain the name of the Company, the words "Corporate Seal" and such other
devices, if any, as the board may determine.
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ARTICLE XI
AMENDMENTS
Section 11.1 AMENDMENT OR REPEAL OF THE BY-LAWS.
(a) BY MEMBERS. The members may, at any regular or special meeting of
the members at which a quorum is present, amend or repeal these
By-laws or adopt new By-laws by the affirmative vote of at least
two-thirds of the votes entitled to be cast by the members present
in person or by proxy at such meeting.
(b) BY BOARD. The board may, at any regular or special meeting of the
board, amend or repeal these By-laws or adopt new By-laws, except
that no by-law adopted by the members shall be subject to amendment
or repeal by the board. Written notice setting forth the substance
of the proposed action shall be given in the manner provided in
Section 3.5 to every member of the board at least 6 days prior to
the meeting date.
APPENDIX
RESTATED ARTICLES OF INCORPORATION
OF
THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY
a Wisconsin corporation
(Adopted July 26, 1972)
ARTICLE I
NAME
The name of the Company shall be The Northwestern Mutual Life Insurance
Company.
ARTICLE II
PERIOD OF EXISTENCE
The period of existence of the Company shall be perpetual.
ARTICLE III
PRINCIPLES AND PURPOSES
The Company is a mutual insurance company, without capital stock,
incorporated in 1857 by special act of the Wisconsin Legislature. The Company
is organized and operated for the mutual protection and benefit of those
persons who hold insurance policies or annuity contracts issued by the Company
or who have beneficial interests in such policies or contracts. Neither such
persons nor the
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policies or contracts are or shall be subject to assessment for any purpose
whatsoever.
The purposes of the Company are to engage in any lawful activity for
which insurance corporations may be organized under the Wisconsin Statutes,
including without limitation the conducting of an insurance business and
businesses incidental thereto, the making of investments and the ownership and
operation of subsidiaries, all as and to the extent authorized by the Wisconsin
Statutes.
ARTICLE IV
PRINCIPAL OFFICE
The location of the principal office of the Company shall be determined
by the board of trustees. At the date of adoption of these Articles the
principal office is located in the City of Milwaukee, Wisconsin.
ARTICLE V
MEMBERS
The members of the Company shall be those persons who are policyholders
of one or more insurance policies or deferred annuity contracts issued by the
Company, then in force and not matured by death of the insured or annuitant or
attainment of maturity date.
The rights of members shall be as provided under the Wisconsin Statutes,
these Articles and the By-laws of the Company. The rules governing voting by a
member, including eligibility to vote and voting procedures, shall be as
provided in the Wisconsin Statutes and the By-laws.
ARTICLE VI
BOARD OF TRUSTEES
The board of trustees of the Company shall consist of such individual
members of the Company, not less than nine, as may be provided in the By-laws.
The By-laws may prescribe other qualifications for the trustees and may divide
them into classes according to their terms of office. The method of election
or appointment of the trustees and their terms of office shall be as provided
in the By-laws. The term "trustee" may be changed to "director" by an
amendment to the By-laws.
ARTICLE VII
MEMBERS' MEETINGS
Regular and special meetings of the members of the Company shall be held
as provided in the By-laws. The Company may make reasonable expenditures in
support of candidates nominated by the board for election as trustees and the
position of its management at any meeting.
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ARTICLE VIII
AMENDMENTS
These Articles may be amended in the manner authorized by law at the time
of adoption of the amendment.
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