NML VARIABLE ANNUITY ACCT C OF NORTHWESTERN MUT LIFE INS CO, 485APOS, 1999-02-25

NML VARIABLE ANNUITY ACCT C OF NORTHWESTERN MUT LIFE INS CO
485APOS, 1999-02-25

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<PAGE>

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. / /
---

Post-Effective Amendment No. 19 / X /
---

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 / /

Amendment No. / /
---

(Check appropriate box or boxes.)

NML VARIABLE ANNUITY ACCOUNT C
- --------------------------------------------------------------------------------
(Exact Name of Registrant)

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
(Name of Depositor)

720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
- ------------------------------------------------------------------ -----------
(Address of Depositor's Principal Executive Offices) (Zip Code)

Depositor's Telephone Number, including Area Code 414-271-1444
------------------------------

JOHN M. BREMER, Executive Vice President, General Counsel and Secretary
720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
- --------------------------------------------------------------------------------
(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
-----
on (DATE) pursuant to paragraph (b) of Rule 485
-----
60 days after filing pursuant to paragraph (a)(1) of Rule 485
-----
X on April 30, 1999 pursuant to paragraph (a)(1) of Rule 485
-----
this post-effective amendment designates a new effective date for
----- a previously filed post-effective amendment.
<PAGE>

NML VARIABLE ANNUITY ACCOUNT C

- --------------------------------------------------------------------------------

CROSS-REFERENCE SHEET

N-4, Part A Heading in
Item Prospectus
- ----------- ----------
<S> <C>
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 Funds
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
- ----------- --------------------------
<S> <C>
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
</TABLE>
<PAGE>

P R O S P E C T U S

April 30, 1999

NORTHWESTERN
MUTUAL LIFE-Registered Trademark-
The Quiet Company-Registered Trademark-

NML VARIABLE ANNUITY ACCOUNT C

Group Combination Annuity Contracts for
Retirement Plans of Self-Employed Persons
and Their Employees

(PHOTO)

Northwestern Mutual Series Fund, Inc. and
Russell Insurance Funds

The Northwestern Mutual
Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
(414) 271-1444

<PAGE>

CONTENTS FOR THIS PROSPECTUS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Group Combination Annuity Contracts
NML Variable Annuity Account C . . . . . . . . . . . . . . . . . . . . 1

INDEX OF SPECIAL TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Penalty Tax on Premature Payments. . . . . . . . . . . . . . . . . . . . 2

EXPENSE TABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ACCUMULATION UNIT VALUES. . . . . . . . . . . . . . . . . . . . . . . . . . 5

THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

NML VARIABLE ANNUITY
ACCOUNT C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

THE FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

THE CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Unallocated Group Annuity Contracts. . . . . . . . . . . . . . . . . . . 9

Purchase Payments Under the Contracts. . . . . . . . . . . . . . . . . . 9

Amount and Frequency . . . . . . . . . . . . . . . . . . . . . . . . . 9

Application of Purchase Payments . . . . . . . . . . . . . . . . . . . 9

Net Investment Factor. . . . . . . . . . . . . . . . . . . . . . . . . . 9

Benefits Provided Under the Contracts. . . . . . . . . . . . . . . . . . 10

Surrender or Withdrawal Value. . . . . . . . . . . . . . . . . . . . . 10

Retirement Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . 10

Variable Payment Plans . . . . . . . . . . . . . . . . . . . . . . . . 10

Description of Payment Plans . . . . . . . . . . . . . . . . . . . . . 10

Amount of Annuity Payments . . . . . . . . . . . . . . . . . . . . . . 10

Assumed Investment Rate. . . . . . . . . . . . . . . . . . . . . . . . 10

Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . 11

Transfers Between Divisions and
Payment Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Owners of the Contracts . . . . . . . . . . . . . . . . . . . . . . . 11

Deferment of Benefit Payments . . . . . . . . . . . . . . . . . . . . 11

Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Substitution and Change . . . . . . . . . . . . . . . . . . . . . . . 11

Amendments and Termination. . . . . . . . . . . . . . . . . . . . . . 12

Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . 12

FEDERAL INCOME TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Contribution Limits . . . . . . . . . . . . . . . . . . . . . . . . . 12

Taxation of Contract Benefits . . . . . . . . . . . . . . . . . . . . 12

Taxation of Northwestern Mutual Life. . . . . . . . . . . . . . . . . 12

DEDUCTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

DISTRIBUTION OF THE
CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

CONTRACTS ISSUED PRIOR TO
JANUARY 1, 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

YEAR 2000 ISSUES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>

THE TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL INFORMATION APPEARS ON THE
PAGE FOLLOWING PAGE 14 OF THIS PROSPECTUS.

<PAGE>

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"). You
may accumulate funds on a variable or fixed or combination basis. We will pay
retirement benefits in a lump sum or under a variable or fixed annuity payment
plan. Annuity benefits are described in individual certificates issued to
Annuitants.

We fund variable accumulations and retirement benefits are funded through NML
Variable Annuity Account C (the "Account"), our separate account. 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 sixteen Divisions. You may direct how net considerations are
allocated among the Divisions.

We use NML Variable Annuity Account C (the "Account") to keep the money you
invest separate from our general assets. The money in the Account is invested
in the eleven portfolios of Northwestern Mutual Series Fund, Inc. and the five
Russell Insurance Funds. You select the Portfolios or Funds in which you want
to invest. The Account has 16 Divisions that correspond to the 11 Portfolios
and 5 Funds in which you may invest. The Contracts also permit you to invest on
a fixed basis, at rates that we determine. This prospectus describes only the
Account and the variable provisions of the Contracts except where there are
specific references to the fixed provisions.

We offer two versions of the Contracts: front-load Contracts and simplified-load
Contracts. (See "Expense Table", p. 2, and "Deductions", p. 13.)

This prospectus is a concise description of the information you should know
before you buy a Contract. We have filed additional information about the
Contracts with the Securities and Exchange Commission in a Statement of
Additional Information. We incorporate the Statement of Additional Information
into this prospectus by reference. We will send you the Statement of Additional
Information without charge if you write to The Northwestern Mutual Life
Insurance Company, 720 East Wisconsin Avenue, Milwaukee, Wisconsin, 53202, or
call us at Telephone Number (414) 271-1444. You will find the table of contents
for the Statement of Additional Information on the inside front cover of this
prospectus.

THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUS FOR
NORTHWESTERN MUTUAL SERIES FUND, INC. AND RUSSELL INSURANCE FUNDS WHICH ARE
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.

The Date of the Statement of Additional Information is April 30, 1999

1
<PAGE>

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. . . . . . . . . 9 ANNUITANT . . . . . . . . . . .11
ANNUITY (or ANNUITY PAYMENTS). . . 10 OWNER . . . . . . . . . . . . .11
NET INVESTMENT FACTOR. . . . . . . 9 PAYMENT PLANS . . . . . . . . .10
SURRENDER OR WITHDRAWAL VALUE. . . 10
</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. 12.)

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
EXPENSE TABLE

FRONT-LOAD CONTRACT ANNUAL EXPENSES OF THE ACCOUNT
TRANSACTION EXPENSES FOR CONTRACTOWNERS (AS A PERCENTAGE OF ASSETS)
- --------------------------------------- ---------------------------
<S> <C>
Maximum Sales Load (as a percentage Mortality Rate and Expense Guarantee
of purchase payments). . . . . . . . . . . . 4.5% Charge . . . . . . . . . . . . . . . . . . . .65%
Installation Fee . . . . . . . . . . . . . . None

<CAPTION>
SIMPLIFIED-LOAD CONTRACT ANNUAL EXPENSES OF THE ACCOUNT
TRANSACTION EXPENSES FOR CONTRACTOWNERS (AS A PERCENTAGE OF ASSETS)
- --------------------------------------- ---------------------------
<S> <C>
Maximum Sales Load (as a percentage Mortality Rate and Expense Guarantee
of purchase payments). . . . . . . . . . . . None Charge . . . . . . . . . . . . . . . . . . . 1.25%
Installation Fee . . . . . . . . . . . . . . $750
</TABLE>

<TABLE>
<CAPTION>
ANNUAL EXPENSES OF THE PORTFOLIOS
(AS A PERCENTAGE OF THE ASSETS)

MANAGEMENT CUSTODY OTHER TOTAL ANNUAL
FEES FEES EXPENSES EXPENSES
---------- ------- -------- ------------
<S> <C> <C> <C> <C>
Northwestern Mutual Series Fund, Inc.
- --------------------------------------
Small Cap Growth Stock* .80% .00% .12% .92%
Aggressive Growth Stock .52% .00% .00% .52%
International Equity .67% .08% .01% .76%
Index 400 Stock* .25% .00% .10% .35%
Growth Stock .45% .00% .01% .46%
Growth and Income Stock .57% .00% .01% .58%
Index 500 Stock .20% .00% .01% .21%
Balanced .30% .00% .00% .30%
High Yield Bond .49% .00% .01% .50%
Select Bond .30% .00% .00% .30%
Money Market .30% .00% .00% .30%
Russell Insurance Funds
- -----------------------
Multi-Style Equity .49% .25% .18% .92%
Aggressive Equity .53% .45% .27% 1.25%
Non-U.S. .00% 1.10% .20% 1.30%
Real Estate Securities* .85% .12% .19% 1.16%
Core Bond .12% .39% .29% .80%
</TABLE>

- ------------------------
*Expenses are estimated for these new Portfolios and Funds, for 1999 at
annualized rates. The estimates for the Russell Insurance Funds reflect fee
waivers and reimbursements that the Funds' adviser has voluntarily agreed to
make for 1999. These may be changed at any time without notice.

2
<PAGE>

- --------------------------------------------------------------------------------
EXAMPLE

FRONT-LOAD CONTRACT - The plan would pay the following expenses on each $1,000
investment, assuming 5% annual return:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Northwestern Mutual Series Fund, Inc.
- -------------------------------------
Small Cap Growth Stock $60 $ 92 $127 $223
Aggressive Growth Stock $56 $ 80 $106 $181
International Equity $59 $ 88 $119 $206
Index 400 Stock $55 $ 75 $ 98 $162
Growth Stock $56 $ 79 $103 $174
Growth and Income Stock $57 $ 82 $110 $187
Index 500 Stock $53 $ 71 $ 91 $146
Balanced $54 $ 74 $ 95 $156
High Yield Bond $56 $ 80 $105 $178
Select Bond $54 $ 74 $ 95 $156
Money Market $54 $ 74 $ 95 $156
Russell Insurance Funds
- -----------------------
Multi-Style Equity $60 $ 92 $127 $223
Aggressive Equity $63 $102 $143 $257
Non-U.S. $64 $103 $145 $262
Real Estate Securities $63 $ 99 $139 $248
Core Bond $59 $ 89 $121 $211

</TABLE>

SIMPLIFIED LOAD CONTRACT - The plan would pay the following expenses on each
$1,000 investment, assuming 5% annual return:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Northwestern Mutual Series Fund, Inc.
- -------------------------------------
Small Cap Growth Stock $24 $70 $119 $252
Aggressive Growth Stock $20 $58 $ 98 $210
International Equity $23 $65 $111 $236
Index 400 Stock $19 $53 $ 89 $192
Growth Stock $20 $56 $ 95 $204
Growth and Income Stock $21 $60 $101 $217
Index 500 Stock $17 $49 $ 82 $177
Balanced $18 $51 $ 87 $187
High Yield Bond $20 $57 $ 97 $208
Select Bond $18 $51 $ 87 $187
Money Market $18 $51 $ 87 $187
Russell Insurance Funds
- -----------------------
Multi-Style Equity $24 $70 $119 $252
Aggressive Equity $28 $80 $135 $285
Non-U.S. $28 $82 $138 $290
Real Estate Securities $27 $77 $131 $276
Core Bond $23 $67 $113 $240
</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 you in understanding the expenses
paid by the Account and the Portfolios and Funds 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. 13, for additional information about

3
<PAGE>

expenses for the Contracts. The expenses shown in the table for the Portfolios
and Funds show the annual expenses for each, as a percentage of their average
net assets, based on 1998 operations for the Portfolios and their predecessors
and the Funds. Expenses for Portfolios and Funds which have not begun
operations are estimated. Expenses for the Russell Insurance Funds reflect fee
waivers and reimbursements that the Funds' adviser has voluntarily agreed to
make for 1999. These may be changed at any time without notice. For additional
information about expenses of the Portfolios and Funds, see the prospectuses for
Northwestern Mutual Series Fund, Inc. and the Russell Insurance Funds 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.

4
<PAGE>

ACCUMULATION UNIT VALUES

CONTRACTS ISSUED AFTER DECEMBER 31, 1991

FOR THE YEARS ENDED DECEMBER 31
--------------------------------------------------------------------------------------------------

1998 1997 1996 1995 1994 1993 1992
----- ----- ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
AGGRESSIVE GROWTH STOCK DIVISION
Front Load Version
Beginning of Period $2.350 $2.078 $1.777 $1.284 $1.226 $1.036 $ .984
End of Period $2.512 $2.350 $2.078 $1.777 $1.284 $1.226 $1.036
Simplified Load Version
Beginning of Period $3.598 $3.200 $2.753 $2.001 $1.922 $1.634 $1.562
End of Period $3.822 $3.598 $3.200 $2.753 $2.001 $1.922 $1.634
Number of Units
Outstanding, End of Period
Front Load 2,921,309 3,169,006 3,197,341 2,242,402 1,206,187 1,370,746 821,911
Simplified Load 8,671,088 8,989,193 7,872,553 5,316,689 3,503,170 1,538,447 411,718

INTERNATIONAL EQUITY DIVISION
Front Load Version
Beginning of Period* $1.881 $1.686 $1.402 $1.232 $1.241 $1.000 --
End of Period $1.958 $1.881 $1.686 $1.402 $1.232 $1.241 --
Simplified Load Version
Beginning of Period* $1.829 $1.649 $1.380 $1.220 $1.236 $1.000 --
End of Period $1.893 $1.829 $1.649 $1.380 $1.220 $1.236 --
Number of Units
Outstanding, End of Period
Front Load 2,807,888 3,021,349 2,709,249 2,009,228 1,453,091 743,216 --
Simplified Load 6,652,248 7,247,144 5,703,032 3,972,573 2,764,466 591,810 --

GROWTH STOCK DIVISION
Front Load Version
Beginning of Period** $2.035 $1.577 $1.313 $1.010 $1.000 -- --
End of Period $2.561 $2.035 $1.577 $1.313 $1.010 -- --
Simplified Load Version
Beginning of Period** $1.991 $1.552 $1.300 $1.006 $1.000 -- --
End of Period $2.491 $1.991 $1.552 $1.300 $1.006 -- --
Number of Units
Outstanding, End of Period
Front Load 845,190 710,110 587,482 361,207 149,268 -- --
Simplified Load 3,373,983 2,159,985 1,742,522 586,644 177,918 -- --

GROWTH AND INCOME STOCK DIVISION
Front Load Version
Beginning of Period+ $2.002 $1.550 $1.300 $0.998 $1.000 -- --
End of Period $2.449 $2.002 $1.550 $1.300 $0.998 -- --
Simplified Load Version
Beginning of Period+ $1.959 $1.525 $1.287 $0.994 $1.000 -- --
End of Period $2.382 $1.959 $1.525 $1.287 $0.994 -- --
Number of Units
Outstanding, End of Period
Front Load 2,452,149 1,970,478 1,357,354 861,211 418,974 -- --
Simplified Load 5,876,089 4,547,004 2,769,823 1,733,022 745,425 -- --

INDEX 500 STOCK DIVISION
Front Load Version
Beginning of Period $2.564 $1.937 $1.588 $1.165 $1.159 $1.062 $ .997
End of Period $3.279 $2.564 $1.937 $1.588 $1.165 $1.159 $1.062
Simplified Load Version
Beginning of Period $3.240 $2.463 $2.032 $1.499 $1.500 $1.384 $1.306
End of Period $4.119 $3.240 $2.463 $2.032 $1.499 $1.500 $1.384
Number of Units
Outstanding, End of Period
Front Load 4,231,423 3,966,706 3,880,961 2,399,586 1,918,074 1,919,768 921,624
Simplified Load 10,493,642 9,442,314 8,015,553 5,080,179 3,939,802 2,767,397 599,961

</TABLE>

* The initial investment in the International Equity Division was made on
April 30, 1993.
** The initial investments in the Growth Stock Division and High Yield Bond
Division were made on May 3, 1994.
+ The initial investment in the Growth and Income Stock Division was made on
May 3, 1994.

5
<PAGE>

ACCUMULATION UNIT VALUES

CONTRACTS ISSUED AFTER DECEMBER 31, 1991

FOR THE YEARS ENDED DECEMBER 31
--------------------------------------------------------------------------------------------------------

1998 1997 1996 1995 1994 1993 1992
---- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCED DIVISION
Front Load Version
Beginning of Period $1.931 $1.600 $1.419 $1.130 $1.138 $1.045 $ .999
End of Period $2.281 $1.931 $1.600 $1.419 $1.130 $1.138 $ 1.045
Simplified Load Version
Beginning of Period $5.796 $4.830 $4.311 $3.453 $3.497 $3.232 $ 3.107
End of Period $6.805 $5.796 $4.830 $4.311 $3.453 $3.497 $ 3.232
Number of Units
Outstanding, End of Period
Front Load 6,324,558 6,187,478 5,934,240 5,275,308 3,879,218 4,987,943 3,980,687
Simplified Load 7,165,398 6,839,439 5,971,232 4,902,410 4,108,593 3,002,098 1,445,698

HIGH YIELD BOND DIVISION
Front Load Version
Beginning of Period** $1.630 $1.416 $1.190 $1.026 $1.000 -- --
End of Period $1.590 $1.630 $1.416 $1.190 $1.026 -- --
Simplified Load Version
Beginning of Period** $1.595 $1.394 $1.178 $1.022 $1.000 -- --
End of Period $1.546 $1.595 $1.394 $1.178 $1.022 -- --
Number of Units
Outstanding, End of Period
Front Load 441,272 423,726 275,323 90,184 47,321 -- --
Simplified Load 1,917,813 1,219,819 626,090 313,810 149,862 -- --

SELECT BOND DIVISION
Front Load Version
Beginning of Period $1.490 $1.370 $1.335 $1.128 $1.169 $1.066 $1.003
End of Period $1.585 $1.490 $1.370 $1.335 $1.128 $1.169 $1.066
Simplified Load Version
Beginning of Period $6.768 $6.261 $6.137 $5.217 $5.437 $4.990 $4.722
End of Period $7.157 $6.768 $6.261 $6.137 $5.217 $5.437 $4.990
Number of Units
Outstanding, End of Period
Front Load 2,718,375 2,574,248 2,676,832 1,800,898 1,668,091 2,389,345 736,697
Simplified Load 1,231,485 1,034,899 966,414 677,396 503,763 328,979 133,930

MONEY MARKET DIVISION
Front Load Version
Beginning of Period $1.249 $1.192 $1.140 $1.084 $1.048 $1.026 $ .999
End of Period $1.308 $1.249 $1.192 $1.140 $1.084 $1.048 $1.026
Simplified Load Version
Beginning of Period $2.340 $2.246 $2.161 $2.067 $2.012 $1.980 $1.940
End of Period $2.436 $2.340 $2.246 $2.161 $2.067 $2.012 $1.980
Number of Units
Outstanding, End of Period
Front Load 1,905,815 1,710,473 2,829,669 2,956,017 3,313,061 218,747 127,838
Simplified Load 6,483,460 5,844,682 3,818,067 1,890,645 1,453,033 810,405 485,704

</TABLE>

6
<PAGE>

ACCUMULATION UNIT VALUES

CONTRACTS ISSUED BETWEEN APRIL 30, 1984 AND DECEMBER 31, 1991

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
----------------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
AGGRESSIVE GROWTH STOCK
DIVISION
Beginning of Period* $37.055 $32.543 $27.649 $19.849 $18.832
End of Period $39.854 $37.055 $32.543 $27.649 $19.849
Number of Units
Outstanding, End of Period 1,801,179 1,935,434 1,944,411 1,397,885 1,239,328

INTERNATIONAL EQUITY DIVISION
Beginning of Period** $1.938 $1.726 $1.427 $1.245 $1.246
End of Period $2.032 $1.938 $1.726 $1.427 $1.245
Number of Units
Outstanding, End of Period 20,139,790 23,069,550 20,439,570 14,747,734 15,153,296

GROWTH STOCK DIVISION
Beginning of Period+ $20.837 $16.047 $13.272 $10.145 --
End of Period $26.399 $20.837 $16.047 $13.272 --
Number of Units
Outstanding, End of Period 651,556 482,897 378,236 63,881 --

GROWTH AND INCOME STOCK DIVISION
Beginning of Period+ $20.502 $15.767 $13.143 $10.024 --
End of Period $25.246 $20.502 $15,767 $13.143 --
Number of Units
Outstanding, End of Period 801,964 711,558 424,144 117,004 --

INDEX 500 STOCK DIVISION
Beginning of Period++ $36.142 $27.134 $22.105 $16.105 $15.916
End of Period $46.522 $36.142 $27.134 $22.105 $16.105
Number of Units
Outstanding, End of Period 2,699,180 2,558,205 2,386,284 2,232,983 2,284,637

BALANCED DIVISION
Beginning of Period $71.491 $58.832 $51.856 $41.029 $41.036
End of Period $84.987 $71.491 $58.832 $51.856 $41.029
Number of Units
Outstanding, End of Period 1,211,837 1,341,930 1,489,658 1,889,324 2,327,834

HIGH YIELD BOND DIVISION
Beginning of Period+ $16.693 $14.409 $12.030 $10.302 --
End of Period $16.385 $16.693 $14.409 $12.030 --
Number of Units
Outstanding, End of Period 301,661 235,585 119,423 21,583 --

SELECT BOND DIVISION
Beginning of Period $83.939 $76.682 $74.223 $62.322 $64.139
End of Period $89.873 $83.939 $76.682 $74.223 $62.322
Number of Units
Outstanding, End of Period 84,033 85,036 97,868 124,163 150,232

MONEY MARKET DIVISION
Beginning of Period $27.435 $26.011 $24.706 $23.346 $22.436
End of Period $28.924 $27.435 $26.011 $24.706 $23.346
Number of Units
Outstanding, End of Period 45,209 38,584 57,013 62,209 200,510

1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
AGGRESSIVE GROWTH STOCK
DIVISION
Beginning of Period* $15.810 $14.923 $10.000 -- --
End of Period $18.832 $15.810 $14.923 -- --
Number of Units
Outstanding, End of Period 910,764 594,531 40,650 -- --

INTERNATIONAL EQUITY DIVISION
Beginning of Period** $1.000 -- -- -- --
End of Period $1.246 -- -- -- --
Number of Units
Outstanding, End of Period 1,128,950 -- -- -- --

GROWTH STOCK DIVISION
Beginning of Period+ -- -- -- -- --
End of Period -- -- -- -- --
Number of Units
Outstanding, End of Period -- -- -- -- --

GROWTH AND INCOME STOCK DIVISION
Beginning of Period+ -- -- -- -- --
End of Period -- -- -- -- --
Number of Units
Outstanding, End of Period -- -- -- -- --

INDEX 500 STOCK DIVISION
Beginning of Period++ $14.500 $13.519 $10.000 -- --
End of Period $15.916 $14.500 $13.519 -- --
Number of Units
Outstanding, End of Period 2,454,444 246,820 36,842 -- --

BALANCED DIVISION
Beginning of Period $37.449 $35.557 $28.690 $28.392 $24.560
End of Period $41.036 $37.449 $35.557 $28.690 $28.392
Number of Units
Outstanding, End of Period 2,660,165 2,787,942 2,872,612 2,853,458 2,721,226

HIGH YIELD BOND DIVISION
Beginning of Period+ -- -- -- -- --
End of Period -- -- -- -- --
Number of Units
Outstanding, End of Period -- -- -- -- --

SELECT BOND DIVISION
Beginning of Period $58.132 $54.335 $46.489 $42.915 $37.688
End of Period $64.139 $58.132 $54.335 $46.489 $42.915
Number of Units
Outstanding, End of Period 157,630 170,104 162,656 139,272 131,612

MONEY MARKET DIVISION
Beginning of Period $21.814 $21.110 $19.973 $18.488 $16.965
End of Period $22.436 $21.814 $21.110 $19.973 $18.488
Number of Units
Outstanding, End of Period 341,361 355,217 476,920 427,960 289,871
</TABLE>

* The initial investment in the Aggressive Growth Stock Division was made on
January 25, 1991.
** The initial investment in the International Equity Division was made on
April 30, 1993.
+ The initial investments in the Growth Stock Division, Growth and Income
Stock Division, and High Yield Bond Division were made on May 3, 1994.
++ The initial investment in the Index 500 Stock Division was made on January
16, 1991.

7
<PAGE>

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 fourth largest life
insurance company, based on total assets in excess of $77 billion on
December 31, 1998, 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.

"We" in this prospectus means Northwestern Mutual Life.

- --------------------------------------------------------------------------------

NML VARIABLE ANNUITY ACCOUNT C

We established the Account on July 22, 1970 by action of our Board of Trustees
in accordance with the provisions of the Wisconsin insurance law.

The Account has sixteen Divisions. The money you invest to provide variable
benefits under your Contract is placed in one or more of the Divisions as you
direct.

Under Wisconsin law, the investment operations of the Account are kept separate
from our other operations. The values for your Contract will not be affected by
income, gains or losses for the rest of our business. The income, gains or
losses, realized or unrealized, for the assets we place in the Account for your
Contract will determine the value of your Contract benefits and will not affect
the rest of our business. The assets in the Account are reserved for you and
other Contract owners, although the assets belong to us and we do not hold the
assets as a trustee. We and our creditors cannot reach those assets to satisfy
other obligations until our obligations under your Contract have been satisfied.
But all of our assets (except those we hold in some other separate accounts) are
available to satisfy our obligations under your Contract.

- --------------------------------------------------------------------------------

THE FUNDS

Northwestern Mutual Series Fund, Inc. is composed of eleven separate portfolios
which operate as separate mutual funds. The portfolios are the Small Cap Growth
Stock Portfolio, Aggressive Growth Stock Portfolio, International Equity
Portfolio, Index 400 Stock Portfolio, Growth Stock Portfolio, Growth and Income
Stock Portfolio, Index 500 Stock Portfolio, Balanced Portfolio, High Yield Bond
Portfolio, Select Bond Portfolio and Money Market Portfolio. The Account buys
shares of each Portfolio at net asset value, that is, without any sales charge.

Northwestern Mutual Investment Services, LLC ("NMIS"), our wholly-owned
subsidiary, is the investment adviser to the Fund. We provide the people and
facilities that NMIS uses in performing its investment advisory functions, and
we are a party to the investment advisory agreement. We and NMIS also perform
certain administrative functions and act as co-depositors of the Account. NMIS
has retained J.P. Morgan Investment Management, Inc. and Templeton Investment
Counsel, Inc. under investment sub-advisory agreements to provide investment
advice to the Growth and Income Stock Portfolio and the International Equity
Portfolio.

The Russell Insurance Funds include five separate portfolios which operate as
separate mutual funds. These are the Multi-Style Equity Fund, Aggressive Equity
Fund, Non-U.S. Fund, Real Estate Securities Fund and Core Bond Fund. The
Account buys shares of each of the Russell Insurance Funds at net asset value,
that is, without any sales charge.

The assets of each of the Russell Insurance Funds are invested by one or more
investment management organizations researched and recommended by Frank Russell
Company ("Russell"), and an affiliate of Russell, Frank Russell Investment
Management Company ("FRIMCo"). FRIMCo also advises, operates and administers
the Russell Insurance Funds. Russell is our majority-owned subsidiary.

FOR MORE INFORMATION REGARDING THE MUTUAL FUNDS, INCLUDING INFORMATION ABOUT
THEIR INVESTMENT OBJECTIVES AND EXPENSES, SEE THE PROSPECTUSES FOR NORTHWESTERN
MUTUAL SERIES FUND, INC. AND RUSSELL INSURANCE FUNDS ATTACHED HERETO. YOU
SHOULD READ THE MUTUAL FUND PROSPECTUSES CAREFULLY BEFORE YOU INVEST IN THE
CONTRACTS.

8
<PAGE>

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, you may direct us to pay annuity benefits to the participant.
(See "Retirement Benefits", p. 10). We will then issue the Annuitant a
Certificate describing the benefits which have been selected. (See "Variable
Payment Plans", p. 10.) Benefits available to Participants are determined
entirely by the provisions of the Plan or Trust.

PURCHASE PAYMENTS UNDER THE CONTRACTS

AMOUNT AND FREQUENCY You determine the amount and frequency of purchase
payments subject to the provisions of the Plan or Trust. You may pay larger or
additional purchase payments. However, we 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.

You may pay purchase payments monthly, quarterly, semiannually, annually or on
any other frequency acceptable to us. If a purchase payment is not paid when
due, or if we decline to accept a purchase payment as provided above, the
Contract will continue in force unless you redeem all Accumulation Units for
their value. You may resume payment of purchase payments at any time the
Contract is in force.

APPLICATION OF PURCHASE PAYMENTS We credit net purchase payments to your
Contract, after deduction of any sales load or installation fee, and we allocate
the payments as you direct. To the extent that you direct a net purchase payment
to accumulate on a variable basis we place it in the Account and allocate it to
one or more Divisions. Assets we allocate to each Division we thereupon invest
in shares of the Portfolio or Fund which corresponds to that Division. If we
receive no allocation instructions, we will place the net purchase payment in
the Money Market Division.

We apply payments we place in the Account to provide "Accumulation Units" in one
or more Divisions. Accumulation Units represent your interest 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 we make after we receive your purchase payment at our Home Office.
Receipt of purchase payments at a lockbox facility we have designated will be
considered the same as receipt at the Home Office. We value assets as of the
close of trading on the New York Stock Exchange for each day the Exchange is
open.

The number of your 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 your
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 or Fund. We determine the value of an
Accumulation Unit on any date 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 you bear the
investment risk, there is no guarantee as to the aggregate value of your
Accumulation Unit. That value may be less than, equal to or more than the
cumulative net purchase payments you have made.

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 or Fund 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 or Fund.

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 up 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. 13.)

The Portfolios and Funds will distribute investment income and realized capital
gains to the Account Divisions. We will reinvest those distributions in
additional shares of the same Portfolio or Fund. Unrealized capital gains and
realized and unrealized

9
<PAGE>

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, we will pay all of these benefits in a lump sum or
under the payment plans described below. We will take the amounts required to
pay benefits from the Divisions of the Account, or from the value accumulated on
a fixed basis, as you direct.

SURRENDER OR WITHDRAWAL VALUE To the extent permitted by the Plan or Trust, you
may terminate the Contract and redeem the value of Accumulation Units credited
to the Contract. We determine the value, which may be either greater or less
than the amount you have paid, as of the valuation date coincident with or next
following our receipt of a written request for termination. Request forms are
available from our Home Office and our agents. You may surrender a portion of
the Accumulation Units 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. We
base the withdrawal value 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 You may at any time direct us to pay retirement benefits to
an Annuitant. Upon your request, benefits may be paid in a lump sum or under the
Payment Plans described below. Your request will state the Payment Plan you have
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.

We 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

We will pay part or all of the benefits under a Contract may be paid under a
variable payment plan you select. 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
you must expect the amount of such payments 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. We will issue the Annuitant a Certificate
describing the variable annuity benefits and including beneficiary provisions of
annuity contracts we issue 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. 12.

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 we require for
annuity payment plans on the date you elect the plan. From time to time we may
establish payment plan rates with greater actuarial value than those stated in
the Contract and make them available at the time of settlement. We may also make
available other payment plans, with provisions and rates as we publish for those
plans.

AMOUNT OF ANNUITY PAYMENTS We will determine the amount of the first annuity
payment on the basis of the particular Payment Plan you select, 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

10
<PAGE>

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 You may change the allocation of
net purchase payments among the Divisions or transfer Accumulation Units from
one Division to another at any time. 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 we
receive a written request at our Home or on a future specified date.

We will adjust the number of Accumulation or Annuity Units to be credited to
reflect the respective value of the Accumulation and Annuity Units in each of
the Divisions. You may transfer Accumulation Units among the Divisions up to
twelve times in a Contract year without charge. The charge for each additional
transfer is $25. We may set charges and waiting periods for transfers of
Annuity Units.

If you contemplate the transfer of funds from one Division to another, you
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. In this prospectus, "you" means the owner or a prospective purchaser of
a Contract. 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 We reserve 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 shares of a
Portfolio or Fund 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 us to
dispose of securities we own, or to determine the value of Accumulation or
Annuity Units.

DIVIDENDS The Contracts share in our divisible surplus, except while payments
are being made under a payment plan. Our divisible surplus is determined
annually. We credit each Contract's share, if any, as a dividend on the
Contract anniversary. Under the terms of the Contract, we will apply any
dividend 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 1999, 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 We reserve the right to (a) substitute other securities
for shares of each Portfolio or 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. We 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. You will be given prompt notice after any substitution
or change.

11
<PAGE>

AMENDMENTS AND TERMINATION After the fifth Contract year, we 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 not become effective until after we have given you at least 30
days' written notice. An Amendment to the payment rate tables will not apply to
a Payment Plan that starts before the amendment becomes effective.

We reserve the right to terminate a Contract if representations you have made to
us are or become incorrect. You may terminate a Contract in whole or in part at
any time and we will pay you 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

We offer the Contracts only for use under tax-qualified plans meeting the
requirements of Sections 401 and 403(a) of the Code. However, in the event we
should issue Contracts 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.

CONTRIBUTION LIMITS

Any employer, including a self-employed person, can establish a plan under
Section 401(a) or 403(a) for participating employees. As a general rule, annual
contributions to a defined contribution plan made by the employer and the
employee cannot exceed the lesser of $30,000 or 25% of compensation or earned
income (up to $160,000, indexed).

Qualified plans are subject to minimum coverage, nondiscrimination and spousal
consent requirements. In addition, "top heavy" rules apply if more than 60% of
the contributions or benefits are allocated to certain highly compensated
employees. Violations of the contribution limits or other requirements may
disqualify the plan and/or subject the employer to taxes and penalties.

TAXATION OF CONTRACT BENEFITS

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 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 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 or unless payments are made for medical expenses in excess of 7.5% of the
employee's Adjusted Gross Income.

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."

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. You should
consult qualified tax counsel before you adopt an HR-10 pension or
profit-sharing plan or trust.

TAXATION OF NORTHWESTERN MUTUAL LIFE

We may charge the appropriate Contracts with their shares of any tax liability
which may result from the

12
<PAGE>

maintenance or operation of the Divisions of the Account. We are currently
making no charge. (See "Net Investment Factor", p. 9 and "Deductions", below.)

- --------------------------------------------------------------------------------

DEDUCTIONS

We will make the following deductions:

1. DEDUCTIONS FROM PURCHASE PAYMENTS.

Front-Load Contract

We deduct a sales load from all purchase payments we receive. We base the
deduction on the cumulative amounts we have 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

We deduct an installation fee in the amount of $750 from the first purchase
payment we receive. Alternatively, you may pay the fee separately when you
submit the application for the Contract. 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. 9) we use in determining the value of
Accumulation and Annuity Units reflects a charge on each valuation date for
mortality and expense risks we have assumed. 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. We may increase this charge to a maximum of 1.00% for the
front-load Contract and 1.50% for the simplified-load Contract. After the fifth
Contract year we may amend the maximum. (See "Amendments and Termination",
p. 12.)

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 we make may be insufficient to cover the
actual costs we incur in connection with the Contracts. We assume 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
the mutual funds as described under "Substitution and Change", p. 11, and the
deduction of any applicable taxes. Applicable taxes could include any tax
liability we have paid or reserved for resulting from the maintenance or
operation of a Division of the Account. We do not presently anticipate that any
deduction will be made for federal income taxes (see "Federal Income Taxes"
p. 12), nor do we anticipate that maintenance or operation of the Account will
give rise to any deduction for state or local taxes. However, we reserve 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. We 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 we may charge an administration fee
of $150 annually on the Contract anniversary.

- --------------------------------------------------------------------------------

DISTRIBUTION OF THE CONTRACTS

We will sell the Contracts through individuals who, in addition to being
licensed insurance agents of Northwestern Mutual Life, are registered
representatives of Northwestern Mutual Investment Services, LLC, our
wholly-owned subsidiary. Northwestern Mutual Investment Services, LLC is 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,
these 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. We do not expect total commissions, on average, to exceed the
equivalent of 7.0% of purchase payments.

13
<PAGE>

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 we
currently are making no charge for these risks. These Contracts contain no
provisions for accumulation of funds on a fixed basis.

- --------------------------------------------------------------------------------

YEAR 2000 ISSUES

Since early 1996, we have been preparing for the computer requirements
associated with the approaching turn of the century. We completed assessment of
our internal systems in 1996. As of the date of this prospectus, the necessary
system changes are substantially complete. System testing is in process and we
expect testing of all critical systems to be completed during the first six
months of 1999.

The work on these computer systems extends to software packages we purchase from
vendors. In addition, we have been communicating formally with our business
partners to identify and assess potential exposure that could result from their
failure to address these computer issues on a timely basis. Each of our
departments has prepared a contingency plan.

We and our business partners bear all of the costs of identifying and resolving
the computer systems issues associated with the year 2000. These costs will
have no effect on the performance of the Account. The Contracts permit us to
increase the charges for our expense risks up to the guaranteed maximum rates.
However, we do not expect our costs for year 2000 compliance to have any
significant effect on the benefits or values provided by the Contracts.

We believe that our computer systems will be ready for the year 2000 well in
advance of the deadline. By their nature, however, the issues in this area
carry the risk of unforeseen problems, both at Northwestern Mutual Life and at
all the other sites where supporting functions and interaction take place.
There can be no assurance that these problems will not have a material adverse
impact on the operations of Northwestern Mutual Life and the Account.

14
<PAGE>

<TABLE>
<CAPTION>
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION

PAGE
----
<S> <C>
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 the two years ended
December 31, 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . B-5

REPORT OF INDEPENDENT
ACCOUNTANTS (for the two years
ended December 31, 1998) . . . . . . . . . . . . . . . . . . . . . . . B-11

FINANCIAL STATEMENTS OF
NORTHWESTERN MUTUAL LIFE
(for the three years ended December
31, 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-12

REPORT OF INDEPENDENT
ACCOUNTANTS (for the three years
ended December 31, 1998). . . . . . . . . . . . . . . . . . . . . . . . B-25
</TABLE>

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

Annuity and Accumulation Products Marketing Department
Room E12J
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
------------------------------------------ ------- -----------

<PAGE>

More information about Northwestern Mutual Series Fund, Inc. is included in the
Fund's Statement of Additional Information (SAI), incorporated by reference in
this prospectus, which is available free of charge.

More information about the Fund's investments is included in the Fund's annual
and semi-annual reports, which discuss the market conditions and investment
strategies that significantly affected each Portfolio's performance during the
previous fiscal period.

To request a free copy of the Fund's SAI, or current annual or semi-annual
report, call us at 1-800-519-4665. Information about the Fund (including the
SAI) can be reviewed and copied at the Public Reference Room of the Securities
and Exchange Commission (SEC) in Washington, DC. Information on the operation
of the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330. Reports and other information about the Fund are available on
the SEC's Internet site at http://www.sec.gov. Copies of this information may
be obtained, upon payment of a duplicating fee, by writing the Public Reference
Section of the SEC, Washington, DC 20549-6009.

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.

RUSSELL INSURANCE FUNDS

P R O S P E C T U S

Investment Company Act File Nos. 811-3990 and 811-5371

NORTHWESTERN
MUTUAL LIFE-Registered Trademark-

PO Box 3095
Milwaukee WI 53201-3095

Change Service Requested

<PAGE>

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, 1999.

The date of this Statement of Additional Information is April 30,
1999.

B-1
<PAGE>

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, LLC ("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>
1998 $162,781
1997 $120,550
1996 $756,038
</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. 10, including "Description of Payment Plans", p. 10, "Amount
of Annuity Payments", p. 11, and "Assumed Investment Rate", p. 11; "Dividends",
p. 12; "Net Investment Factor", p. 9; and "Deductions", p. 17.

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.

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

B-2
<PAGE>

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 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.

B-3
<PAGE>

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 or Fund shares 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 a Portfolio or 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, 1998 and
for each of the two years in the period ended December 31, 1998 and of
Northwestern Mutual Life as of December 31, 1998 and 1997 and for each of the
three years in the period ended December 31, 1998 included in this Statement of
Additional Information have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting. PricewaterhouseCoopers LLP
provides audit services for the Account. The address of PricewaterhouseCoopers
LLP is 100 East Wisconsin Avenue, Suite 1500, Milwaukee, Wisconsin 53202.

B-4
<PAGE>

ACCOUNT C FINANCIAL STATEMENTS
NML VARIABLE ANNUITY ACCOUNT C
Financial Statements
DECEMBER 31, 1998

STATEMENT OF ASSETS AND LIABILITIES
(IN THOUSANDS)

<TABLE>
<S> <C> <C>
ASSETS
Investments at Market Value:
Northwestern Mutual Series Fund, Inc.
Aggressive Growth Stock
32,435 shares (cost $90,547)............... $112,355
International Equity
35,340 shares (cost $52,601)............... 59,265
Growth Stock
12,380 shares (cost $21,944)............... 27,819
Growth and Income Stock
24,848 shares (cost $35,764)............... 40,354
Index 500 Stock
55,739 shares (cost $103,423).............. 183,326
Balanced
77,775 shares (cost $122,951).............. 172,972
High Yield Bond
9,200 shares (cost $10,065)................ 8,611
Select Bond
16.617 shares (cost $19,964)............... 20,755
Money Market
19,629 shares (cost $19,629)............... 19,629 $645,086
---------
Due from Sale of Fund Shares.................................. 495
Due from Northwestern Mutual Life Insurance Company........... 356
--------
Total Assets.................................................. $645,937
--------
--------
LIABILITIES
Due to Northwestern Mutual Life Insurance Company........... $ 495
Due on Purchase of Fund Shares.............................. 356
--------
Total Liabilities....................................... 851
--------
EQUITY (NOTE 8)
Group Variable Annuity Contracts Issued:
Before December 17, 1981 or between April 30, 1984 and
December 31, 1991.......................................... $392,516
After December 16, 1981 and Prior to May 1, 1984............ 8,067
After December 31, 1991 - Front Load Version................ 56,811
After December 31, 1991 - Simplified Load Version........... 187,692
--------
Total Equity............................................ 645,086
--------
Total Liabilities and Equity............................ $645,937
--------
--------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-5
<PAGE>

ACCOUNT C FINANCIAL STATEMENTS
NML VARIABLE ANNUITY ACCOUNT C
Statements of Operations and Changes in Equity
(IN THOUSANDS)

<TABLE>
<CAPTION>
AGGRESSIVE GROWTH
COMBINED STOCK DIVISION INTERNATIONAL EQUITY DIVISION
----------------------------- ----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997 1998 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend Income............... $ 26,993 $ 27,691 $ 4,152 $6,050 $ 3,732 $ 1,946
Annuity Rate and Expense
Guarantees.................. 3,155 2,502 591 533 289 259
------------- ------------- ------------- ------------- ------------- -------------
Net Investment Income......... 23,838 25,189 3,561 5,517 3,443 1,687
------------- ------------- ------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Realized Gain on
Investments............... 29,249 18,686 7,961 6,115 3,560 1,012
Unrealized Appreciation
(Depreciation) of
Investments During the
Period.................... 37,108 44,242 (3,919) 1,306 (4,426) 3,272
------------- ------------- ------------- ------------- ------------- -------------
Net Gain (Loss) on
Investments............... 66,357 62,928 4,042 7,421 (866) 4,284
------------- ------------- ------------- ------------- ------------- -------------
Increase in Equity Derived
from Investment
Activity.................. 90,195 88,117 7,603 12,938 2,577 5,971
EQUITY TRANSACTIONS
Contract Owners' Net
Deposits.................. 93,657 91,195 16,937 18,472 8,353 9,763
Annuity Payments............ (54) (50) (2) (2) (1) (1)
Surrenders and Other
(net)..................... (87,761) (58,500) (20,805) (13,113) (8,855) (4,326)
Transfers from Other
Divisions or Sponsor...... 72,485 46,344 3,375 5,552 2,281 6,230
Transfers to Other Divisions
or Sponsor................ (71,425) (45,769) (6,341) (7,536) (8,966) (3,221)
------------- ------------- ------------- ------------- ------------- -------------
Increase (Decrease) in Equity
Derived from Equity
Transactions................ 6,902 33,220 (6,836) 3,373 (7,188) 8,445
------------- ------------- ------------- ------------- ------------- -------------
Net Increase (Decrease) in
Equity...................... 97,097 121,337 767 16,311 (4,611) 14,416
EQUITY
Beginning of Year........... 547,989 426,652 111,590 95,279 63,876 49,460
------------- ------------- ------------- ------------- ------------- -------------
End of Year................. $645,086 $547,989 $112,357 $111,590 $59,265 $63,876
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-6
<PAGE>

ACCOUNT C FINANCIAL STATEMENTS

NML VARIABLE ANNUITY ACCOUNT C
Statements of Operations and Changes in Equity
(IN THOUSANDS)

<TABLE>
<CAPTION>
GROWTH & INCOME
GROWTH STOCK DIVISION STOCK DIVISION
-------------------------------- --------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend Income............... $ 447 $ 712 $ 343 $ 5,941
Annuity Rate and Expense
Guarantees.................. 92 52 180 104
-------------- -------------- -------------- --------------
Net Investment Income......... 355 660 163 5,837
-------------- -------------- -------------- --------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Realized Gain on
Investments............... 1,374 715 780 660
Unrealized Appreciation
(Depreciation) of
Investments During the
Period.................... 3,304 1,866 5,917 (1,982)
-------------- -------------- -------------- --------------
Net Gain (Loss) on
Investments............... 4,678 2,581 6,697 (1,322)
-------------- -------------- -------------- --------------
Increase (Decrease) in
Equity Derived from
Investment Activity....... 5,033 3,241 6,860 4,515
EQUITY TRANSACTIONS
Contract Owners' Net
Deposits.................. 3,452 2,670 6,130 7,626
Annuity Payments............ (3) (3) -- --
Surrenders and Other
(net)..................... (2,332) (1,049) (3,594) (2,186)
Transfers from Other
Divisions or Sponsor...... 9,371 3,487 8,719 5,741
Transfers to Other Divisions
or Sponsor................ (3,548) (2,232) (5,246) (1,247)
-------------- -------------- -------------- --------------
Increase (Decrease) in Equity
Derived from Equity
Transactions................ 6,940 2,873 6,009 9,934
-------------- -------------- -------------- --------------
Net Increase in Equity........ 11,973 6,114 12,869 14,449
EQUITY
Beginning of Year........... 15,847 9,733 27,485 13,036
-------------- -------------- -------------- --------------
End of Year................. $ 27,820 $ 15,847 $ 40,354 $ 27,485
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------

INDEX 500
STOCK DIVISION
-----------------------------

YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
------------- -------------
<S> <C> <C>
INVESTMENT INCOME
Dividend Income............... $ 5,271 $ 3,756
Annuity Rate and Expense
Guarantees.................. 721 514
------------- -------------
Net Investment Income......... 4,550 3,242
------------- -------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Realized Gain on
Investments............... 7,377 5,480
Unrealized Appreciation
(Depreciation) of
Investments During the
Period.................... 27,279 23,021
------------- -------------
Net Gain (Loss) on
Investments............... 34,656 28,501
------------- -------------
Increase (Decrease) in
Equity Derived from
Investment Activity....... 39,206 31,743
EQUITY TRANSACTIONS
Contract Owners' Net
Deposits.................. 21,772 17,138
Annuity Payments............ (3) (3)
Surrenders and Other
(net)..................... (18,000) (11,007)
Transfers from Other
Divisions or Sponsor...... 12,300 7,667
Transfers to Other Divisions
or Sponsor................ (5,878) (4,859)
------------- -------------
Increase (Decrease) in Equity
Derived from Equity
Transactions................ 10,191 8,936
------------- -------------
Net Increase in Equity........ 49,397 40,679
EQUITY
Beginning of Year........... 133,929 93,250
------------- -------------
End of Year................. $183,326 $133,929
------------- -------------
------------- -------------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-7
<PAGE>

ACCOUNT C FINANCIAL STATEMENTS

NML VARIABLE ANNUITY ACCOUNT C
Statements of Operations and Changes in Equity
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCED DIVISION HIGH YIELD BOND DIVISION SELECT BOND DIVISION
----------------------------- ----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997 1998 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend Income............... $ 9,909 $ 6,461 $ 883 $ 1,028 $ 1,357 $ 1,058
Annuity Rate and Expense
Guarantees.................. 906 749 39 22 142 117
------------- ------------- ------------- ------------- ------------- -------------
Net Investment Income......... 9,003 5,712 844 1,006 1,215 941
------------- ------------- ------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Realized Gain on
Investments............... 7,790 4,562 (56) 44 463 97
Unrealized Appreciation
(Depreciation) of
Investments During the
Period.................... 10,517 16,710 (1,081) (376) (483) 425
------------- ------------- ------------- ------------- ------------- -------------
Net Gain (Loss) on
Investments............... 18,307 21,272 (1,137) (332) (20) 522
------------- ------------- ------------- ------------- ------------- -------------
Increase (Decrease) in
Equity Derived from
Investment Activity....... 27,310 26,984 (293) 674 1,195 1,463
EQUITY TRANSACTIONS
Contract Owners' Net
Deposits.................. 17,458 17,262 1,310 964 3,811 3,598
Annuity Payments............ (41) (37) -- -- (3) (3)
Surrenders and Other
(net)..................... (22,224) (16,900) (1,191) (198) (3,378) (3,448)
Transfers from Other
Divisions or Sponsor...... 9,934 5,080 2,932 2,564 4,393 1,445
Transfers to Other Divisions
or Sponsor................ (13,201) (9,980) (716) (418) (3,323) (2,798)
------------- ------------- ------------- ------------- ------------- -------------
Increase (Decrease) in Equity
Derived from Equity
Transactions................ (8,074) (4,575) 2,335 2,912 1,500 (1,206)
------------- ------------- ------------- ------------- ------------- -------------
Net Increase in Equity........ 19,236 22,410 2,042 3,586 2,695 257
EQUITY
Beginning of Year........... 153,735 131,325 6,569 2,983 18,059 17,802
------------- ------------- ------------- ------------- ------------- -------------
End of Year................. $172,971 $153,735 $ 8,611 $ 6,569 $ 20,754 $ 18,059
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------

MONEY MARKET DIVISION
-----------------------------

YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
------------- -------------
<S> <C> <C>
INVESTMENT INCOME
Dividend Income............... $ 899 $ 739
Annuity Rate and Expense
Guarantees.................. 195 152
------------- -------------
Net Investment Income......... 704 587
------------- -------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Realized Gain on
Investments............... -- --
Unrealized Appreciation
(Depreciation) of
Investments During the
Period.................... -- --
------------- -------------
Net Gain (Loss) on
Investments............... -- --
------------- -------------
Increase (Decrease) in
Equity Derived from
Investment Activity....... 704 587
EQUITY TRANSACTIONS
Contract Owners' Net
Deposits.................. 14,434 13,702
Annuity Payments............ (1) (1)
Surrenders and Other
(net)..................... (7,382) (6,273)
Transfers from Other
Divisions or Sponsor...... 19,180 8,578
Transfers to Other Divisions
or Sponsor................ (24,206) (13,478)
------------- -------------
Increase (Decrease) in Equity
Derived from Equity
Transactions................ 2,025 2,528
------------- -------------
Net Increase in Equity........ 2,729 3,115
EQUITY
Beginning of Year........... 16,899 13,784
------------- -------------
End of Year................. $ 19,628 $ 16,899
------------- -------------
------------- -------------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-8
<PAGE>

NOTES TO FINANCIAL STATEMENTS
NML VARIABLE ANNUITY ACCOUNT C
Notes to Financial Statements
DECEMBER 31, 1998

NOTE 1 -- NML Variable Annuity Account C (the "Account") is a segregated asset
account of The Northwestern Mutual Life Insurance Company ("Northwestern Mutual"
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 1/2% of purchase payments and Simplified Load contracts with an
installment 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
adjustments 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
and sales of Fund shares for the year ended December 31, 1998 by each Division
are shown below:

<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Aggressive Growth Division....... $ 15,042,444 $ 18,315,682
International Equity Division.... 10,115,335 13,861,624
Growth Stock Division............ 11,736,176 4,445,344
Growth & Income Stock Division... 12,220,296 6,047,669
Index 500 Stock Division......... 27,128,970 12,386,814
Balanced Division................ 25,547,459 24,616,712
High Yield Bond Division......... 4,842,682 1,661,445
Select Bond Division............. 7,219,542 4,504,138
Money Market Division............ 28,689,880 25,961,429
</TABLE>

NOTE 6 -- A deduction for annuity rate and expense guarantees is determined
daily and paid to Northwestern Mutual as compensation for assuming the risk that
annuity payments will continue for longer periods than anticipated because the
annuities as a group live longer than expected, and the risk that the charges
made by Northwestern Mutual may be insufficient to cover the actual costs
incurred in connection with the contracts.

Generally, for contracts issued after December 31, 1991, for the Front Load
version and the Simplified Load version, the deduction for annuity rate and
expense guarantee is determined daily at annual rates of 6 1/2/10 of 1% and
1 1/4%, respectively, of the net assets of each Division attributable to these
contracts and is paid to Northwestern Mutual. For these contracts, the rates may
be increased or decreased by the Board of Trustees of Northwestern Mutual not to
exceed 1% and 1 1/2% annual rates, respectively.

For contracts issued after December 16, 1981, and prior to 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. For these contracts, the rate may be increased or decreased by the Board
of Trustees of Northwestern Mutual not to exceed a 3/4% of 1% annual rate.

Since 1996, Northwestern Mutual has paid a dividend to certain contracts. The
dividend is re-invested in the Account and has been reflected as a Contract
Owners' Net Deposit in the accompanying financial statements.

NOTE 7 -- Northwestern Mutual 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. 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>

NOTES TO FINANCIAL STATEMENTS

NML VARIABLE ANNUITY ACCOUNT C
Notes to Financial Statements
(IN THOUSANDS)
DECEMBER 31, 1998

NOTE 8 -- Equity Values by Division are shown below:

<TABLE>
<CAPTION>
GROUP VARIABLE ANNUITY CONTRACT ISSUED:
---------------------------------------------------------------------------------------
BEFORE DECEMBER 17, 1981 OR BETWEEN AFTER DECEMBER 16, 1981 AND
APRIL 30, 1984 AND DECEMBER 31, 1991 PRIOR TO MAY 1, 1984
----------------------------------------- --------------------------------------------
ACCUMULATION UNITS ACCUMULATION UNITS
DIVISION UNIT VALUE OUTSTANDING EQUITY UNIT VALUE OUTSTANDING EQUITY
- ------------------------------------------ -------------- ------------- ---------- -------------- ----------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Stock................... $ 39.854126 1,801 $ 71,784 $ 38.303948 2 $ 56
International Equity...................... 2.031842 20,140 40,921 1.975051 119 235
Growth Stock.............................. 26.398692 652 17,200 25.790044 -- 4
Growth and Income Stock................... 25.245888 802 20,246 24.663747 4 106
Index 500 Stock........................... 46.522428 2,699 125,572 44.708227 14 606
Balanced.................................. 84.986573 1,212 102,990 78.082648 80 6,256
High Yield Bond........................... 16.385350 302 4,943 16.007423 -- 3
Select Bond............................... 89.873176 84 7,552 82.531570 1 40
Money Market.............................. 28.923541 45 1,308 26.605346 1 25
---------- ---------
Equity.................................. 392,516 7,331
Annuity Reserves........................ -- 736
---------- ---------
Total Equity............................ $ 392,516 $ 8,067
---------- ---------
---------- ---------
</TABLE>

<TABLE>
<CAPTION>
GROUP COMBINATION ANNUITY CONTRACT ISSUED:
-------------------------------------------------------------------------------------
AFTER DECEMBER 31, 1991 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>
Aggressive Growth Stock.................. $ 2.511728 2,922 $ 7,338 $ 3.822308 8,671 $ 33,144
International Equity..................... 1.958397 2,808 5,499 1.893030 6,652 12,593
Growth Stock............................. 2.561090 845 2,164 2.490522 3,374 8,403
Growth and Income Stock.................. 2.449237 2,452 6,005 2.381813 5,876 13,996
Index 500 Stock.......................... 3.278539 4,232 13,873 4.119000 10,494 43,223
Balanced................................. 2.281157 6,324 14,427 6.804809 7,165 48,759
High Yield Bond.......................... 1.589625 442 702 1.545816 1,918 2,965
Select Bond.............................. 1.585144 2,718 4,309 7.157135 1,232 8,814
Money Market............................. 1.308441 1,906 2,494 2.436196 6,484 15,795
--------- ----------
Equity................................. 56,811 187,692
Annuity Reserves....................... -- --
--------- ----------
Total Equity........................... $ 56,811 $ 187,692
--------- ----------
--------- ----------
</TABLE>

B-10
<PAGE>

ACCOUNT C ACCOUNTANTS' REPORT

[LOGO]

REPORT OF INDEPENDENT ACCOUNTANTS

To The Northwestern Mutual Life Insurance Company and
Contract Owners 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 Aggressive Growth Stock Division,
International Equity Division, Growth Stock Division, Growth and Income Stock
Division, Index 500 Stock Division, Balanced Division, High Yield Bond Division,
Select Bond Division, and the Money Market Division thereof at December 31,
1998, the results of each of their operations and the changes in each of their
equity for each of the two years in the period ended December 31, 1998, 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, 1998 with
Northwestern Mutual Series Fund, Inc., provide a reasonable basis for the
opinion expressed above.

/s/ PricewaterhouseCoopers

Milwaukee, Wisconsin
January 25, 1999

B-11
<PAGE>

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(IN MILLIONS)

The following financial statements of Northwestern Mutual should be considered
only as bearing upon the ability of Northwestern Mutual Life to meet its
obligations under the Policies.

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1998 1997
--------- ---------
<S> <C> <C>
ASSETS
Bonds......................................... $ 34,888 $ 32,359
Common and preferred stocks................... 6,576 6,524
Mortgage loans................................ 12,250 10,835
Real estate................................... 1,481 1,372
Policy loans.................................. 7,580 7,163
Other investments............................. 1,839 2,026
Cash and temporary investments................ 1,275 572
Due and accrued investment income............. 827 795
Other assets.................................. 1,313 1,275
Separate account assets....................... 9,966 8,160
--------- ---------
Total assets.............................. $ 77,995 $ 71,081
--------- ---------
--------- ---------
LIABILITIES AND SURPLUS
Reserves for policy benefits.................. $ 51,815 $ 47,343
Policy benefit and premium deposits........... 1,709 1,624
Policyowner dividends payable................. 2,870 2,640
Interest maintenance reserve.................. 606 461
Asset valuation reserve....................... 1,994 1,974
Income taxes payable.......................... 1,161 1,043
Other liabilities............................. 3,133 3,735
Separate account liabilities.................. 9,966 8,160
--------- ---------
Total liabilities......................... 73,254 66,980
Surplus....................................... 4,741 4,101
--------- ---------
Total liabilities and surplus............. $ 77,995 $ 71,081
--------- ---------
--------- ---------
</TABLE>

The accompanying notes are an integral part of these financial statements.

B-12
<PAGE>

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENT OF OPERATIONS

(IN MILLIONS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
REVENUE
Premium income................................ $ 8,021 $ 7,294 $ 6,667
Net investment income......................... 4,536 4,171 3,836
Other income.................................. 922 861 759
--------- --------- ---------
Total revenue............................. 13,479 12,326 11,262
--------- --------- ---------
BENEFITS AND EXPENSES
Benefit payments to policyowners and
beneficiaries................................ 3,602 3,329 2,921
Net additions to policy benefit reserves...... 4,521 4,026 3,701
Net transfers to separate accounts............ 564 566 579
--------- --------- ---------
Total benefits............................ 8,687 7,921 7,201
Operating expenses............................ 1,297 1,138 1,043
--------- --------- ---------
Total benefits and expenses............... 9,984 9,059 8,244
--------- --------- ---------
Gain from operations before dividends and taxes... 3,495 3,267 3,018
Policyowner dividends............................. 2,869 2,636 2,341
--------- --------- ---------
Gain from operations before taxes................. 626 631 677
Income tax expense................................ 301 356 452
--------- --------- ---------
Net gain from operations.......................... 325 275 225
Net realized capital gains........................ 484 414 395
--------- --------- ---------
Net income................................ $ 809 $ 689 $ 620
--------- --------- ---------
--------- --------- ---------
</TABLE>

The accompanying notes are an integral part of these financial statements.

B-13
<PAGE>

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENT OF CHANGES IN SURPLUS

(IN MILLIONS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
BEGINNING OF YEAR BALANCE......................... $4,101 $3,515 $2,786
Net income...................................... 809 689 620
Increase (decrease) in net unrealized gains..... (147) 576 295
Increase in investment reserves................. (20) (526) (176)
Other, net...................................... (2) (153) (10)
------- ------- -------
Net increase in surplus......................... 640 586 729
------- ------- -------
END OF YEAR BALANCE............................... $4,741 $4,101 $3,515
------- ------- -------
------- ------- -------
</TABLE>

The accompanying notes are an integral part of these financial statements.

B-14
<PAGE>

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS

(IN MILLIONS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Insurance and annuity premiums.................. $ 8,876 $ 8,093 $ 7,361
Investment income received...................... 4,216 3,928 3,634
Disbursement of policy loans, net of
repayments..................................... (416) (360) (326)
Benefits paid to policyowners and
beneficiaries.................................. (3,572) (3,316) (2,912)
Net transfers to separate accounts.............. (564) (565) (579)
Policyowner dividends paid...................... (2,639) (2,347) (2,105)
Operating expenses and taxes.................... (1,749) (1,722) (1,663)
Other, net...................................... (83) 124 (59)
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES..... 4,069 3,835 3,351
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
PROCEEDS FROM INVESTMENTS SOLD OR MATURED
Bonds......................................... 28,720 38,284 31,942
Common and preferred stocks................... 10,359 9,057 4,570
Mortgage loans................................ 1,737 1,012 1,253
Real estate................................... 159 302 178
Other investments............................. 768 398 316
-------- -------- --------
41,743 49,053 38,259
-------- -------- --------
COST OF INVESTMENTS ACQUIRED
Bonds......................................... 30,873 41,169 35,342
Common and preferred stocks................... 9,642 9,848 4,463
Mortgage loans................................ 3,135 2,309 2,455
Real estate................................... 268 202 125
Other investments............................. 567 359 255
-------- -------- --------
44,485 53,887 42,640
-------- -------- --------
NET INCREASE (DECREASE) IN SECURITIES LENDING
AND OTHER...................................... (624) 440 1,617
-------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES......... (3,366) (4,394) (2,764)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
INVESTMENTS...................................... 703 (559) 587
CASH AND TEMPORARY INVESTMENTS, BEGINNING OF
YEAR............................................. 572 1,131 544
-------- -------- --------
CASH AND TEMPORARY INVESTMENTS, END OF YEAR....... $ 1,275 $ 572 $ 1,131
-------- -------- --------
-------- -------- --------
</TABLE>

The accompanying notes are an integral part of these financial statements.

B-15
<PAGE>

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS

DECEMBER 31, 1998, 1997 AND 1996

1. PRINCIPAL ACCOUNTING POLICIES

The accompanying consolidated statutory financial statements include the
accounts of The Northwestern Mutual Life Insurance Company ("Company") and its
wholly-owned life insurance subsidiary, Northwestern Long Term Care Insurance
Company ("Subsidiary"). The Company and its Subsidiary offer life, annuity,
disability income and long term care 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 Office of the Commissioner of Insurance
of the State of Wisconsin ("statutory basis of accounting").

In 1998, the National Association of Insurance Commissioners ("NAIC") adopted
the Codification of Statutory Accounting Principles, which will replace the
current Accounting Practices and Procedures manual as the NAIC's primary
guidance on statutory accounting. The NAIC is now considering amendments to the
codification guidance that would also be effective upon its planned
implementation effective January 1, 2001. It is expected that the Office of the
Commissioner of Insurance of the State of Wisconsin ("OCI") will adopt the
codification, but it is not known whether the OCI will make any changes to that
guidance. The potential effect of the codification on the Company will depend
upon the guidance adopted by the OCI.

Financial statements prepared on the statutory basis of accounting vary from
financial statements prepared on the basis of Generally Accepted Accounting
Principles ("GAAP") primarily because on a GAAP basis (1) policy acquisition
costs are deferred and amortized, (2) investment valuations and insurance
reserves are based on different assumptions, (3) funds received under
deposit-type contracts are not reported as premium revenue, and (4) deferred
taxes are provided for temporary differences between book and tax basis of
certain assets and liabilities. The effects on the financial statements of the
differences between the statutory basis of accounting and GAAP are material to
the Company.

The preparation of financial statements in conformity with the statutory basis
of accounting 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 future results could differ from these estimates.

INVESTMENTS

The Company's investments are valued on the following bases:

<TABLE>
<S> <C> <C>
Bonds -- Amortized cost using the interest method; loan-backed and
structured securities are amortized using estimated
prepayment rates and, generally, the prospective adjustment
method
Common and preferred stocks -- Common stocks are carried at fair value, preferred stocks
are generally carried at cost, and unconsolidated
subsidiaries are recorded using the equity method
Mortgage loans -- Amortized cost
Real estate -- Lower of cost, less depreciation and encumbrances, or
estimated net realizable value
Policy loans -- Unpaid principal balance, which approximates fair value
Other investments -- Consists primarily of joint venture investments which are
valued at equity in ventures' net assets
Cash and temporary investments -- Amortized cost, which approximates fair value
</TABLE>

B-16
<PAGE>

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS

DECEMBER 31, 1998, 1997 AND 1996

TEMPORARY INVESTMENTS

Temporary investments consist of debt securities that have maturities of one
year or less at acquisition.

NET INVESTMENT INCOME

Net investment income includes interest and dividends received or due and
accrued on debt securities and stocks, equity in unconsolidated subsidiaries'
earnings and the Company's share of joint venture income. Net investment income
is reduced by investment management expenses, real estate depreciation,
depletion related to energy assets and costs associated with securities lending.

INTEREST MAINTENANCE RESERVE

The Company is required to maintain an interest maintenance reserve ("IMR"). The
IMR is used to defer realized gains and losses, net of tax, on fixed income
investments resulting from changes in interest rates. Net realized gains and
losses deferred to the IMR are amortized into investment income over the
approximate remaining term to maturity of the investment sold.

INVESTMENT RESERVES

The Company is required to maintain an asset valuation reserve ("AVR"). The AVR
establishes a general reserve for invested asset valuation using a formula
prescribed by state regulations. The AVR is designed to stabilize surplus
against potential declines in the value of investments. In addition, the Company
maintained a $200 million voluntary investment reserve at December 31, 1998 and
1997 to absorb potential investment losses exceeding those considered by the AVR
formula. Increases or decreases in these investment reserves are recorded
directly to surplus.

SEPARATE ACCOUNTS

Separate account assets and related policy liabilities represent the segregation
of funds deposited by "variable" life insurance and annuity policyowners.
Policyowners bear the investment performance risk associated with variable
products. Separate account assets are invested at the direction of the
policyowner in a variety of Company-managed mutual funds. Variable product
policyowners also have the option to invest in a fixed interest rate annuity in
the general account of the Company. Separate account assets are reported at fair
value.

PREMIUM REVENUE AND OPERATING EXPENSES

Life insurance premiums are recognized as revenue at the beginning of each
policy year. Annuity and disability income premiums are recognized when received
by the Company. Operating expenses, including costs of acquiring new policies,
are charged to operations as incurred.

OTHER INCOME

Other income includes considerations on supplementary contracts, ceded
reinsurance expense allowances and miscellaneous policy charges.

B-17
<PAGE>

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS

DECEMBER 31, 1998, 1997 AND 1996

BENEFIT PAYMENTS TO POLICYOWNERS AND BENEFICIARIES

Benefit payments to policyowners and beneficiaries include death, surrender and
disability benefits, matured endowments and supplementary contract payments.

RESERVES FOR POLICY BENEFITS

Reserves for policy benefits are determined using actuarial estimates based on
mortality and morbidity experience tables and valuation interest rates
prescribed by the Office of the Commissioner of Insurance of the State of
Wisconsin. See Note 3.

POLICYOWNER DIVIDENDS

Almost all life insurance policies, and certain annuity and disability income
policies, issued by the Company are participating. Annually, the Company's Board
of Trustees approves dividends payable on participating policies in the
following fiscal year, which are accrued and charged to operations when
approved.

RECLASSIFICATION

Certain financial statement balances for 1997 and 1996 have been reclassified to
conform to the current year presentation.

2. INVESTMENTS

DEBT SECURITIES

Debt securities consist of all bonds and fixed-maturity preferred stocks. The
estimated fair values of debt securities 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. The Company
records unrealized losses for debt securities considered impaired.

B-18
<PAGE>

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS

DECEMBER 31, 1998, 1997 AND 1996

Statement value, which principally represents amortized cost, and estimated fair
value of the Company's debt securities at December 31, 1998 and 1997 were as
follows:
<TABLE>
<CAPTION>
RECONCILIATION TO ESTIMATED FAIR VALUE
---------------------------------------
GROSS GROSS ESTIMATED
STATEMENT UNREALIZED UNREALIZED FAIR
DECEMBER 31, 1998 VALUE APPRECIATION DEPRECIATION VALUE
- -------------------------------------------------- --------- ------------ ------------ ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
US Government and political obligations........... $ 3,904 $ 461 $ (11) $ 4,354
Mortgage-backed securities........................ 7,357 280 (15) 7,622
Corporate and other debt securities............... 23,627 1,240 (382) 24,485
--------- ------------ ------ ---------
34,888 1,981 (408) 36,461
Preferred stocks.................................. 189 4 (1) 192
--------- ------------ ------ ---------
Total............................................. $35,077 $1,985 $(409) $36,653
--------- ------------ ------ ---------
--------- ------------ ------ ---------

RECONCILIATION TO ESTIMATED FAIR VALUE
---------------------------------------
GROSS GROSS ESTIMATED
STATEMENT UNREALIZED UNREALIZED FAIR
DECEMBER 31, 1997 VALUE APPRECIATION DEPRECIATION VALUE
- -------------------------------------------------- --------- ------------ ------------ ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
US Government and political obligations........... $ 3,695 $ 336 $ (3) $ 4,028
Mortgage-backed securities........................ 7,015 264 (4) 7,275
Corporate and other debt securities............... 21,649 1,098 (208) 22,539
--------- ------------ ------ ---------
32,359 1,698 (215) 33,842
Preferred stocks.................................. 167 4 (2) 169
--------- ------------ ------ ---------
Total............................................. $32,526 $1,702 $(217) $34,011
--------- ------------ ------ ---------
--------- ------------ ------ ---------
</TABLE>

The statement value of debt securities by contractual maturity at December 31,
1998 and 1997 is 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, DECEMBER 31,
1998 1997
------------ ------------
(IN MILLIONS)
<S> <C> <C>
Due in one year or less........................... $ 655 $ 605
Due after one year through five years............. 5,031 4,878
Due after five years through ten years............ 10,286 9,760
Due after ten years............................... 11,748 10,268
------------ ------------
27,720 25,511
Mortgage-backed securities........................ 7,357 7,015
------------ ------------
$35,077 $32,526
------------ ------------
------------ ------------
</TABLE>

STOCKS

The estimated fair values of common and perpetual preferred stocks 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.

B-19
<PAGE>

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS

DECEMBER 31, 1998, 1997 AND 1996

The adjusted cost of common and preferred stock held by the Company at December
31, 1998 and 1997 was $4.8 billion and $5.0 billion, respectively.

MORTGAGE LOANS AND REAL ESTATE

Mortgage loans are collateralized by properties located throughout the United
States and Canada. The Company attempts to minimize mortgage loan investment
risk by diversification of geographic locations and types of collateral
properties.

The fair value of mortgage loans as of December 31, 1998 and 1997 was
approximately $12.9 billion and $11.5 billion, respectively. The fair value of
the mortgage loan portfolio is estimated by discounting the future estimated
cash flows using current interest rates of debt securities with similar credit
risk and maturities, or utilizing net realizable values.

At December 31, 1998 and 1997, real estate includes $61 million acquired through
foreclosure at each date and $120 million and $124 million, respectively, of
home office real estate. In 1998, 1997 and 1996, the Company recorded unrealized
losses of $5 million, $2 million and $43 million, respectively, for the excess
of statement value over fair value of certain real estate investments and
mortgage loans.

REALIZED GAINS AND LOSSES

Realized investment gains and losses for the years ended December 31, 1998, 1997
and 1996 were as follows:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------------ ------------------------------ ------------------------------
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......................... $ 514 $ (231) $ 283 $ 518 $ (269) $ 249 $ 396 $ (383) $ 13
Common and preferred stocks... 885 (240) 645 533 (150) 383 580 (115) 465
Mortgage loans................ 18 (11) 7 14 (14) - 2 (15) (13)
Real estate................... 41 - 41 100 (2) 98 36 - 36
Other investments............. 330 (267) 63 338 (105) 233 204 (51) 153
-------- -------- -------- -------- -------- -------- -------- -------- --------
1,788 (749) 1,039 1,503 (540) 963 1,218 (564) 654
-------- -------- -------- -------- -------- -------- -------- -------- --------
Less: Capital gains taxes..... 358 340 224
Less: IMR deferrals........... 197 209 35
-------- -------- --------
Net realized capital gains.... $ 484 $ 414 $ 395
-------- -------- --------
-------- -------- --------
</TABLE>

SECURITIES LENDING

The Company has entered into a securities lending agreement whereby certain
securities are loaned to third parties, primarily major brokerage firms. The
Company's policy requires a minimum of 102 percent of the fair value of the
loaned securities as collateral, calculated on a daily basis in the form of
either cash or securities. Collateral assets received and related liability due
to counterparties of $1.5 billion are included in the consolidated

B-20
<PAGE>

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS

DECEMBER 31, 1998, 1997 AND 1996

statements of financial position for each of the periods ended at December 31,
1998 and 1997, and approximate the statement value of securities loaned at those
dates.

INVESTMENT IN MGIC

The Company owns 11.0% (11.9 million shares) of the outstanding common stock of
MGIC Investment Corporation ("MGIC"). This investment is accounted for using the
equity method. At December 31, 1998 and 1997, the fair value of the Company's
investment in MGIC exceeded the statement value of $180 million and $273
million, respectively, by $296 million and $768 million, respectively.

In July 1995, the Company entered into a forward contract with a brokerage firm
to deliver 8.9 million to 10.7 million shares of MGIC (or cash in an amount
equal to the market value of the MGIC shares at contract maturity) in August,
1998, in exchange for a fixed cash payment of $247 million ($24 per share). The
Company's objective in entering into the forward contract was to hedge against
depreciation in the value of its MGIC holdings during the contract period below
the initial spot price of $24, while partially participating in appreciation, if
any, during the forward contract's duration. In August 1998, the Company
delivered 8.9 million shares to settle the forward contract. In conjunction with
the settlement, the Company recorded a $114 million realized gain.

DERIVATIVE FINANCIAL INSTRUMENTS

In the normal course of business, the Company enters into transactions to reduce
its exposure to fluctuations in interest rates, foreign currency exchange rates
and market volatility. These hedging strategies include the use of forwards,
futures, options and swaps.

The Company held the following positions for hedging purposes at December 31,
1998 and 1997:
<TABLE>
<CAPTION>
DERIVATIVE FINANCIAL INSTRUMENT NOTIONAL AMOUNTS RISKS REDUCED
- --------------------------------------------- --------------------------------------- ----------------------------------------
(IN MILLIONS)
DECEMBER 31, 1998 DECEMBER 31, 1997
------------------ ------------------
<S> <C> <C> <C>
Foreign Currency Forward
Contracts................................... $ 601 $ 564 Currency exposure on foreign-denominated
investments.
Common Stock Futures......................... 657 327 Stock market price fluctuation.
Bond Futures................................. 379 95 Bond market price fluctuation.
Options to acquire Interest Rate 419 530 Interest rates payable on certain annuity
Swaps....................................... and insurance contracts.
Foreign Currency and Interest Rate Swaps..... 94 209 Interest rates on variable rate notes and
currency exposure on foreign-denominated
bonds.
</TABLE>

The notional or contractual amounts of derivative financial instruments are used
to denominate these types of transactions and do not represent the amounts
exchanged between the parties.

In addition to the use of derivatives for hedging purposes, equity swaps were
held for investment purposes during 1997 and 1998. The notional amount of equity
swaps outstanding at December 31, 1998 and 1997 was $188 million and $143
million, respectively.

Foreign currency forwards, foreign currency swaps, stock futures and equity
swaps are reported at fair value. Resulting gains and losses on these contracts
are unrealized until expiration of the contract. There is no statement

B-21
<PAGE>

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS

DECEMBER 31, 1998, 1997 AND 1996

value reported for interest rate swaps, bond futures and options to acquire
interest rate swaps prior to the settlement of the contract, at which time
realized gains and losses are deferred to IMR. Changes in the value of
derivative instruments are expected to offset gains and losses on the hedged
investments. During 1998, net realized and unrealized gains on investments were
partially offset by net realized losses of $104 million and net unrealized
losses of $58 million on derivative instruments. The effect of derivative
instruments in 1997 and 1996 was not material to the Company's results of
operations.

3. RESERVES FOR POLICY BENEFITS

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 life policy reserves are primarily based on the net
level premium method employing various mortality tables at interest rates
ranging from 2% to 4 1/2%.

Deferred annuity reserves on contracts issued since 1985 are valued primarily
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
contract value. Immediate annuity reserves are based on 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. Active life reserves for prior DI policies are based on the net level
premium method, a 3% to 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 primarily using the 1985 CIDA
(modified for Company experience in the 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.

4. EMPLOYEE AND AGENT BENEFIT PLANS

The Company sponsors noncontributory defined benefit retirement plans for all
eligible employees and agents. The expense associated with these plans is
generally recorded by the Company in the period contributions to the plans are
funded. As of January 1, 1998, the most recent actuarial valuation date
available, the qualified defined benefit plans were fully funded. The Company
recorded a liability of $98 million and $87 million for nonqualified defined
benefit plans at December 31, 1998 and 1997, respectively. In addition, the
Company has a contributory 401(k) plan for eligible employees and a
noncontributory defined contribution plan for all full-time agents. The
Company's contributions are expensed in the period contributions are made to the
plans. The Company recorded $29 million, $27 million and $25 million of total
expense related to its defined benefit and defined contribution plans for the
years ended December 31, 1998, 1997 and 1996, respectively. The defined benefit
and defined contribution plans' assets of $1.9 billion and $1.7 billion at
December 31, 1998 and 1997, respectively, were primarily invested in the
separate accounts of the Company.

In addition to pension and retirement 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
costs for the years ended December 31, 1998, 1997 and 1996 were a net expense
(benefit) of $1.8 million, ($1.3) million and

B-22
<PAGE>

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS

DECEMBER 31, 1998, 1997 AND 1996

($12.0) million, respectively. Net benefits were primarily a result of favorable
differences between actuarial assumptions and actual experience.

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
-------------------- --------------------
<S> <C> <C>
Unfunded postretirement
benefit obligation for
retirees and other fully
eligible employees (Accrued
in statement of financial
position).................... $35 million $34 million
Estimated postretirement
benefit obligation for active
non-vested employees (Not
accrued until employee
vests)....................... $56 million $50 million
Discount rate................. 7% 7%
Health care cost trend rate... 10% to an ultimate 10% to an ultimate
5%, declining 1% for 5%, declining 1% for
5 years 5 years
</TABLE>

If the health care cost trend rate assumptions were increased by 1%, the accrued
postretirement benefit obligation as of December 31, 1998 and 1997 would have
been increased by $5 million and $4 million, respectively.

At December 31, 1998 and 1997, the recorded postretirement benefit obligation
was reduced by $23 million and $20 million, respectively, for assets funded for
postretirement health care benefits.

5. 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
to reinsurers under excess coverage and coinsurance contracts. The Company
retains a maximum of $25 million of coverage per individual life and $35 million
maximum of coverage per joint life. The Company has an excess reinsurance
contract for disability income policies with retention limits varying based upon
on coverage type.

The amounts shown in the accompanying consolidated financial statements are net
of reinsurance. Policy benefit reserves at December 31, 1998 and 1997 were
reported net of ceded reserves of $518 million and $435 million, respectively.
The effect of reinsurance on premiums and benefits for the years ended December
31, 1998, 1997 and 1996 was as follows:

<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C>
Direct premiums................................... $8,426 $7,647 $7,064
Premiums ceded.................................... (405) (353) (397)
------- ------- -------
Net premium revenue............................... $8,021 $7,294 $6,667
------- ------- -------
------- ------- -------
Benefits to policyowners and beneficiaries........ $8,869 $8,057 $7,348
Benefits ceded.................................... (182) (136) (147)
------- ------- -------
Net benefits to policyowners and beneficiaries.... $8,687 $7,921 $7,201
------- ------- -------
------- ------- -------
</TABLE>

B-23
<PAGE>

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS

DECEMBER 31, 1998, 1997 AND 1996

In addition, the Company received $121 million, $115 million and $93 million for
the years ended December 31, 1998, 1997 and 1996, respectively, from reinsurers
representing allowances for reimbursement of commissions and other expenses.
These amounts are included in other income in the consolidated statement of
operations.

Reinsurance contracts do not relieve the Company from its obligations to
policyowners. 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.

6. INCOME TAXES

Provisions for income taxes are based on current income tax payable without
recognition of deferred taxes. 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 tax. 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 gains from operations before taxes for the
years ended December 31, 1998, 1997 and 1996 was 48%, 56%, and 67% respectively.
The Company's effective tax rate exceeds the federal corporate rate of 35%
primarily because, (1) the Company pays a tax that is assessed only on the
surplus of mutual life insurance companies ("equity tax"), and (2) the Company
must capitalize and amortize (as opposed to immediately deducting) an amount
deemed to represent the cost of acquiring new business ("DAC tax").

7. ACQUISITION OF FRANK RUSSELL COMPANY

Pursuant to an Agreement and Plan of Merger, dated as of August 10, 1998, the
Company acquired Frank Russell Company effective January 1, 1999 for a purchase
price of approximately $950 million. Frank Russell is a leading investment
management and consulting firm, providing investment advice, analytical tools
and investment vehicles to institutional and individual investors in more than
30 countries.

In connection with its acquisition of Frank Russell Company, the Company will be
required in 1999 to charge-off directly from surplus approximately $341 million,
which represents the amount of acquisition goodwill less 10% of the Company's
surplus at December 31, 1998. In addition, the Company will request permission
from the OCI to charge-off the remaining $474 million of acquisition goodwill in
1999 and currently intends to do so.

In connection with the acquisition, the Company has unconditionally guaranteed
certain debt obligations of Frank Russell Company, including $350 million of
senior notes and up to $150 million of other credit facilities.

8. CONTINGENCIES

The Company has guaranteed certain obligations of its affiliates. These
guarantees totaled approximately $133 million at December 31, 1998 and are
generally supported by the underlying net asset values of the affiliates.

In addition, the Company routinely makes commitments to fund mortgage loans or
other investments in the normal course of business. These commitments aggregated
to $2.1 billion at December 31, 1998 and were extended at market interest rates
and terms.

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 position.

B-24
<PAGE>

[LOGO]

[LETTERHEAD]

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Trustees and Policyowners of
The Northwestern Mutual Life Insurance Company

We have audited the accompanying consolidated statement of financial position of
The Northwestern Mutual Life Insurance Company and its subsidiary as of December
31, 1998 and 1997, and the related consolidated statements of operations, of
changes in surplus and of cash flows for each of the three years in the period
ended December 31, 1998. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As described in Note 1, these consolidated financial statements were prepared in
conformity with accounting practices prescribed or permitted by the Office of
the Commissioner of Insurance of the State of Wisconsin (statutory basis of
accounting), which practices differ from generally accepted accounting
principles. Accordingly, the consolidated financial statements are not intended
to represent a presentation in accordance with generally accepted accounting
principles. The effects on the consolidated financial statements of the
variances between the statutory basis of accounting and generally accepted
accounting principles, although not reasonably determinable, are presumed to be
material.

In our opinion, the consolidated financial statements audited by us (1) do not
present fairly in conformity with generally accepted accounting principles, the
financial position of The Northwestern Mutual Life Insurance Company and its
subsidiary at December 31, 1998 and 1997, or the results of their operations or
their cash flows for each of the three years in the period ended December 31,
1998 because of the effects of the variances between the statutory basis of
accounting and generally accepted accounting principles referred to in the
preceding paragraph and (2) do present fairly, in all material respects, the
financial position of The Northwestern Mutual Life Insurance Company and its
subsidiary at December 31, 1998 and 1997 and the results of their operations and
their cash flows for each of the three years in the period ended December 31,
1998, on the basis of accounting described in Note 1.

/s/ PricewaterhouseCoopers

January 25, 1999

B-25
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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 the two years ended December 31, 1998)

REPORT OF INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . B-11
(for the two years ended December 31, 1998)

FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL LIFE . . . . . . . . . . . . . B-12
(for the three years ended December 31, 1998)

REPORT OF INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . B-25
(for the three years ended December 31, 1998)
</TABLE>

B-26
<PAGE>

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 the two years ended
December 31, 1998)
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, 1998)
Consolidated Statement of Financial Position
Consolidated Summary of Operations
Consolidated Statement of Changes in Surplus
Consolidated Statement of Cash Flows
Notes to Consolidated Statutory Financial Statements
Report of Independent Accountants

(b) Exhibits

Exhibit B(4)(a) Group Combination Annuity Contract,
NVP.1C.(0594), with amended application,
including Contract amendment (sex neutral)

Exhibit B(5) The application form is included in Exhibit
B(4)(a) above

Exhibit B(8)(a) Form of Participation Agreement Among Russell
Insurance Funds, Russell Fund Distributors,
Inc. and The Northwestern Mutual Life
Insurance Company

Exhibit B(8)(b) Form of Administrative Service Fee Agreement
between The Northwestern Mutual Life
Insurance Company and Frank Russell Company

Exhibit B(10) Consent of PricewaterhouseCoopers LLP

The following exhibit was filed in electronic format with the
Registration Statement on Form S-6 for Northwestern Mutual
Variable Life Account, File No. 333-59103, CIK 0000742277, dated
July 15, 1998, and is incorporated herein by reference.

Exhibit A(6)(b) Amended By-Laws of The Northwestern Mutual
Life Insurance Company dated January 28, 1998

C-1
<PAGE>

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, 1999, 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 Aarque Capital Corporation
111 West Second Street
P.O. Box 310
Jamestown, NY 14702-0310

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

Robert C. Buchanan Fox Valley Corporation
100 West Lawrence Street
P.O. Box 727
Appleton, WI 54911

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

Pierre S. du Pont Richards, Layton and Finger
P.O. Box 551
1 Rodney Square
Wilmington, DE 19899

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 87505

C-2
<PAGE>

Stephen N. Graff 805 Lone Tree Road
Elm Grove, WI 53122-2014

Patricia Albjerg Graham Graduate School of Education
Harvard University
420 Gutman
Cambridge, MA 02138

Stephen F. Keller 101 South Las Palmas Avenue
Los Angeles, CA 90004

Barbara A. King Landscape Structures, Inc.
Route 3, 601 - 7th Street South
Delano, MN 55328

J. Thomas Lewis 228 St. Charles Avenue
Suite 1024
New Orleans, LA 70130

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

Timothy D. Proctor Glaxo Wellcome plc
P.O. Box 13398
5 Moore Drive
Research Triangle Park, NC 27709

Donald J. Schuenke The Northwestern Mutual
Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202

H. Mason Sizemore, Jr. The Seattle Times
Fairview Avenue North and John Street
P.O. Box 70
Seattle, WA 98109

Harold B. Smith, Jr. Illinois Tool Works, Inc.
3600 West Lake Avenue
Glenview, IL 60625-5811

Sherwood H. Smith, Jr. Carolina Power & Light Company
411 Fayetteville Street Mall
P.O. Box 1551
Raleigh, NC 27602

C-3
<PAGE>

John E. Steuri Advanced Thermal Technologies
2102 Riverfront Drive, Suite 120
Little Rock, AR 72202-1747

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.
100 First Street
Suite 2350
San Francisco, CA 94105

Kathryn D. Wriston c/o Shearman & Sterling
599 Lexington Avenue
Room 1126
New York, NY 10022

EXECUTIVE OFFICERS

Name Title
- ---- -----

Deborah A. Beck Senior Vice President
William H. Beckley Senior Vice President
Robert J. Berdan Vice President
John M. Bremer Executive 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 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 Senior Vice President
Bruce L. Miller Senior Vice President
Gregory C. Oberland Vice President
Barbara F. Piehler Vice President
James F. Reiskytl Vice President
Mason G. Ross Senior Vice President
John E. Schlifske Vice President
Leonard F. Stecklein Senior 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

C-4
<PAGE>

OTHER OFFICERS

Name Title
- ---- -----

John M. Abbott Associate Director - Benefits Research
Carl G. Amick Director - Disability Benefits
Maria J. Avila Assistant Controller
Michael J. Backus Associate Director - Information Systems
John E. Bailey Senior Actuary
Nicholas H. Bandow Assistant Director - Information Systems
Lynn F. Bardele Assistant Director - Field Training & Development
Margaret A. Barkley Assistant Director
Walter L. Barlow Assistant Director - Education
Sandra L. Barton Assistant Director - Marketing
Bradford P. Bauer Assistant Director - Advanced Marketing
Beth M. Berger Assistant General Counsel & Assistant Secretary
Frederick W. Bessette Assistant General Counsel & Assistant Secretary
Carrie L. Bleck Assistant Director
D. Rodney Bluhm Assistant General Counsel
Willette Bowie Employee Relations Director
Martin R. Braasch Director - Underwriting Standards & Services
Patricia R. Braeger Associate Director - Information Systems
James A. Brewer Investment Research Officer
William J. Buholzer Employee Relations Director
Michael S. Bula Assistant General Counsel
Jerry C. Burg Associate Director - Field Benefits
Pency P. Byhardt Assistant Director - New Business
Gregory B. Bynan Director - Corporate Services
Kim M. Cafaro Assistant General Counsel & Assistant Secretary
Gwen C. Canady Assistant Director-Mutual Funds
Shanklin B. Cannon, M.D. Medical Director - Life Products/Research
Terese J. Capizzi Assistant Director
Kurt P. Carbon Assistant Regional Director
Michael G. Carter Assistant General Counsel & Assistant Secretary
William W. Carter Associate Actuary
John E. Caspari Assistant Director - Advertising & Corporate
Information
Walter J. Chossek Associate Controller
Thomas R. Christenson Director - Advanced Marketing
Eric P. Christophersen Associate Director
Alan E. Close Associate Controller
Carolyn M. Colbert Assistant Director - New Business
Margaret Winter Combe Director - Corporate Development
Virginia A. Corwin Assistant Director - New Business
Barbara E. Courtney Associate Director - Mutual Funds
Larry A. Curran Actuarial Administrative Officer
Dennis J. Darland Assistant Director - Disability Income
Thomas H. Davis Associate Director - Information Systems
Nicholas De Fino Assistant Director
Carol A. Detlaf Director - Annuity Administration
Colleen Devlin Assistant Director - Communications
Glen W. DeZeeuw Director - Agency Services

C-5
<PAGE>

Joseph Dobering, III Director - Underwriting Standards & Services
Jennifer L. Docea Actuary
Lisa C. Dodd Actuary
Richard P. Dodd Assistant Director - Agency
Daniel C. Dougherty Director - Personal Markets
Margaret T. Dougherty Assistant Director - Information Systems
John R. Dowell Director - Workforce Diversity
William O. Drehfal Assistant Director - Media Services
Steven J. Dryer Associate Director
Jeffrey S. Dunn Vice President
John E. Dunn Assistant General Counsel & Secretary
Somayajulu Durvasula Associate Director - Field Financial
James R. Eben Assistant General Counsel and Assistant
Secretary
Magda El Sayed Assistant Director - Information Systems
Michael S. Ertz Assistant Director - Advanced Marketing
Thomas F. Fadden Assistant Director - Information Systems
Christina H. Fiasca Director - Policyowner Services
Zenia J. Fieldbinder Assistant Director - Annuity Accumulation
Richard F. Fisher Senior Actuary
Dennis J. Fitzpatrick Director - Advanced Marketing
Jon T. Flaschner Director - Policyowner Services
Kate M. Fleming Assistant General Counsel and Secretary
Carol J. Flemma Assistant Director - Marketing
John E. Fobes II Assistant Director - Agency Services
Donald Forecki Investment Officer
Phillip B. Franczyk Vice President
Stephen H. Frankel Vice President
Peter Q. Fraser Director - Development
Anne A. Frigo Assistant Director - New Business
Richard R. Garthwait Vice President - Field Financial
David L. Georgenson Director - Agent Development
Paulette A. Getschman Assistant Director - Policyowner Services
James W. Gillespie Vice President
Walter M. Givler Director - Corporate Services
Robert P. Glazier Director - New Business
Robert K. Gleeson, M.D. Vice President - Medical Director
Mark J. Gmach Director - Agency
Jason G. Goetze Assistant Director - Marketing
David Lee Gosse Assistant Director - Disability Benefits
William F. Grady Director of Field Finances
John M. Grogan Director - Disability Income
Thomas C. Guay Director - Field Financial
Gerald A. Haas Assistant Director - Information Systems
Patricia Ann Hagen Assistant Director - Information Systems
Ronald D. Hagen Vice President
Thomas P. Hamilton Associate Director - Information Systems
Lori A. Hanes Director - Human Resources
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

C-6
<PAGE>

William L. Hegge Associate Director of Telecommunications
Wayne F. Heidenreich Medical Director
Jacquelyn F. Heise Associate Director - Information Systems
Robert L. Hellrood Director - New Business
Herbert F. Hellwig Assistant Director - Personal Markets
Jane A. Herman Director - Term Upgrade
Gary M. Hewitt Vice President & Treasurer
Donna R. Higgins Associate Director - Information Systems
David L. Hilbert Investment Officer
Karla D. Hill Human Resource Officer
Susan G. Hill Assistant Director
John D. Hillmer Assistant Director - Information Systems
Hugh L. Hoffman Assistant Director - Information Systems
Richard S. Hoffmann Director - Audit
Bruce Holmes Associate Actuary
Scott C. Iodice Assistant Director - Agency
Joseph P. Jansky Assistant Director - Corporate Planning
Michael D. Jaquint Assistant Actuary
Dolores A. Juergens Associate Director of Restaurant Operations
Marilyn J. Katz Assistant Director - Medical Consultants
John C. Kelly Associate Controller
Kevin C. Kennedy Assistant Director - Architecture
James B. Kern Regional Director - Central Region
Donald C. Kiefer Vice President
Jason T. Klawonn Assistant Actuary
Brian J. Klink Director - Research
Allen B. Kluz Director - Field Financial
Beatrice C. Kmiec Assistant Regional Director - East
James A. Koelbl Assistant General Counsel and Secretary
John L. Kordsmeier Director - Human Resources
Robert J. Kowalsky Associate Director - Information Systems
Carol L. Kracht Assistant General Counsel & Assistant Secretary
Martha Krawczak Officer - Life and Disability
Jeffrey J. Krygiel Assistant Actuary
Todd L. Laszewski Associate Actuary
Patrick J. Lavin Director - Disability Benefits
James L. Lavold Associate Director - Meetings
Elizabeth J. Lentini Assistant General Counsel & Secretary
Sally Jo Lewis Assistant General Counsel & Assistant Secretary
Mark P. Lichtenberger Associate Director - LINK Technical Planning
Paul E. Lima Vice President-International Insurance Operations
Steven M. Lindstedt Assistant Director - Information Systems
Melissa C. Lloyd Assistant Director - Advanced Marketing
James Lodermeier Assistant Director - Tax Planning
George R. Loxton Assistant General Counsel & Assistant Secretary
Mary M. Lucci Director - New Business
Christine M. Lucia Human Resources Officer
Mark J. Lucius Corporate Information Officer
Merrill C. Lundberg Assistant General Counsel & Assistant Secretary
Jon K. Magalska Associate Actuary
Jean M. Maier Vice President - Life Benefits
Joseph Maniscalco Associate Director - Information Systems

C-7
<PAGE>

Raymond J. Manista Assistant General Counsel and Secretary
Steven C. Mannebach Assistant Director - Field Financial Services
Jeffrey S. Marks Multi Life, Research & Reinsurance Officer
Steve Martinie Assistant General Counsel & Assistant Secretary
Ted A. Matchulat Actuarial Products Officer
Margaret McCabe Director - Policy Benefits Systems
Richard A. McComb Director - Human Resources
William L. McCown Vice President & Investment Counsel
Paul E. McElwee Assistant General Counsel & Assistant Secretary
James L. McFarland Assistant General Counsel & Secretary
Mary C. McIntosh Associate Director - Field Financial
Daniel E. McGinley Director - Management Development
Mark J. McLennon Assistant Director
Robert J. Meiers Ad Valorem Tax Manager
Larry S. Meihsner Assistant General Counsel & Assistant Secretary
Robert G. Meilander Vice President
Richard E. Meyers Assistant General Counsel
Patricia A. Michel Assistant Director - Policyowner Services
Jay W. Miller Vice President & Tax Counsel
Sara K. Miller Vice President
Jill Mocarski Associate Medical Director
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 - Personal Markets
Timothy P. Murphy Assistant Director-Marketing
Randolph J. Musil Assistant Director - Advanced Marketing
John E. Muth Assistant Director - Advanced Marketing
David K. Nelson Assistant General Counsel
Ronald C. Nelson Director
Timothy Nelson Assistant Director - Marketing
Leon W. Nesbitt Vice President-Agency
Karen M. Niessing Director - Policyowner Services
Daniel J. O'Meara Director - Field Financial
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 Associate Director - Policyowner Services
David W. Perez Assistant General Counsel
Judith L. Perkins Assistant General Counsel & Assistant Secretary
Wilson D. Perry Assistant General Counsel & Assistant Secretary
Gary N. Peterson Actuary
John C. Peterson Director of Policyowner Services - West
Harvey W. Pogoriler Assistant General Counsel
Randolph R. Powell, M.D. Medical Director
Mark A. Prange Associate Director - Information Systems
Brian R. Pray Assistant Regional Director - New Business
Thomas O. Rabenn Assistant General Counsel and Secretary
David R. Remstad Senior Actuary
David R. Retherford Assistant Director of New Business - Central

C-8
<PAGE>

Stephen M. Rhode Assistant Director - Qualified Benefits
Richard R. Richter Vice President
Daniel A. Riedl Assistant General Counsel
Marcia Rimai Vice President - Litigation Counsel
Kathleen M. Rivera Vice President - Insurance Counsel
Faith B. Rodenkirk Assistant Director - Group Marketing
James S. Rolfsmeyer Assistant Director - Information Systems
Larry R. Roscoe Assistant Director - Compliance
Lora A. Rosenbaum Director - New Business
Robert K. Roska Associate Director - Information Systems
Sue M. Roska Director - Systems and Services
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 Director - Field Training & Development
Linda Ann Schaefer Assistant Director - Marketing
Thomas F. Scheer Assistant General Counsel & Assistant Secretary
Carlen A. Schenk Associate Director
Jane A. Schiltz Vice President - Disability Income
Kathleen H. Schluter Assistant General Counsel & Secretary
Calvin R. Schmidt Associate Director - Information Systems
Rodd Schneider Assistant General Counsel and Secretary
John O. Schnorr Assistant Director
Margaret R. Schoewe Vice President - Information Systems
Todd M. Schoon Assistant Regional Director - Agency
John F. Schroeder Associate Director of Field Office Real Estate
Melva T. Seabron Director - Corporate Services
Norman W. Seguin, II Investment Officer - Ad Valorem Taxes
Catherine L. Shaw Assistant General Counsel & Assistant Secretary
John E. Sheaffer, Jr. Assistant Director - Agent Development
Janet Z. Silverman Director - New Business
Stephen M. Silverman Assistant General Counsel
David W. Simbro Managing Director - Life Marketing
Paul W. Skalecki Associate Actuary
Cynthia S. Slavik Assistant Director - Environmental Engineer
Landon T. Smith Assistant Director - Replacements
Mark W. Smith Assistant General Counsel & Assistant Secretary
Warren L. Smith, Jr. Investment Officer - Architecture
Steven W. Speer Director - Public Markets
Robert J. Spellman, M.D. Vice President & Chief Medical Director
Steve P. Sperka Assistant Actuary
Mark A. Stalsberg Assistant Director - Agency
Barbara J. Stansberry Director - New Business
Bonnie L. Steindorf Director - Department Operations
Steven H. Steidinger Assistant Director - Marketing
Karen J. Stevens Assistant General Counsel & Assistant Secretary
Steven J. Stribling Associate Actuary
Stephen J. Strommen Associate Actuary
Theodore H. Strupp Assistant Director
Daniel J. Suprenant Director - Group Disability Marketing

C-9
<PAGE>

Victoria A. Sweigart Human Resources Officer
Rachel L. Taknint Assistant General Counsel & Assistant Secretary
Thomas Talajkowski Assistant Director - Tax Compliance
Paul B. Tews Director - Investment Planning
J. Edward Tippetts Vice President
Susan M. Tompkins Director - Agency
Chris J. Torkelson Assistant Director
Jeannine M. Torkelson Assistant Director - Marketing
Thomas W. Towers Associate Director - Public Relations
Gloria E. Tracy Assistant Director - Marketing
Linda K. Tredupp Assistant Director - Information Systems
Chris G. Trost Associate Actuary
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
Gloria J. Venski Associate Director - Disability Benefits
Scott E. Wallace Assistant Director - Projects
Hal W. Walter Vice President
Robert J. Waltos Regional Director - Agency
P. Andrew Ware Vice President
Mary L. Wehrle-Schnell Associate Director - Information Systems
Daniel T. Weidner Assistant Director - Information Systems
Joel S. Weiner Assistant Medical Director
Ronald J. Weir Associate Director - Information Systems
Kenneth R. Wentland Assistant Director of Policyowner Services - East
Sandra D. Wesley Associate Director of Special Projects
Anna C. Westfall Financial Officer
Catherine A. Wilbert Assistant General Counsel & Secretary
David L. Wild Director - Corporate Services
Donald R. Wilkinson Vice President - Agency
Jeffrey B. Williams Risk Manager
John K. Wilson Director - Personal Markets
Penelope A. Woodcock Associate Director - Benefit Systems
Richard W. Woody Assistant Director - Agency
Stanford A. Wynn Assistant Director - Advanced Marketing
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
Diana M. Zawada Associate Director
Rick T. Zehner Director - Corporate Planning
Patricia A. Zimmermann Investment Officer - Real Estate Systems
Ray Zimmermann Director - LINK Information Network
Philip R. Zwieg Vice President - 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.

C-10
<PAGE>

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 January 1, 1999, are set forth on pages C-12
and C-13. In addition to the subsidiaries set forth on pages C-12 and C-13, 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-12
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.

C-11
<PAGE>

NML CORPORATE STRUCTURE*
(AS OF JANUARY 1, 1999)

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
Frank Russell Company and its subsidiaries - 100%
Eiger Corporation - 100%
Bradford, Inc. 100%
NML/Tallahassee, Inc. - 100%
Northwestern Investment Management Company - 100%
Northwestern Mutual Las Vegas, Inc. - 100%
Northwestern Long Term Care Insurance Company - 100%
Northwestern International Holdings, Inc. - 100%
Saskatoon Centre, Limited (inactive) - 100%
Northwestern Mutual Series Fund, Inc. (and its 9 portfolios) - 100%
Mason Street Funds, Inc. (and its 9 funds) - 77.03%
MGIC Investment Corporation - 10.5%. MGIC holds 100% of the voting stock
of the following:
Mortgage Guaranty Reinsurance Corporation, MGIC, MGIC Reinsurance
Corporation of Wisconsin,
MGIC Mortgage Insurance Corporation, and various subsidiaries.
Baird Financial Corporation - 80%. Baird Financial Corporation holds 83%
of the voting stock of
Robert W. Baird & Co., Incorporated and various subsidiaries.
Northwestern Mutual Investment Services, LLC - 100%

NML REAL ESTATE HOLDINGS, LLC - 100%
The Grand Avenue Corporation - 98.54% Olive, Inc. - 100%
Marina Pacific, Ltd. - 100% Bayridge, Inc. - 100%
NML - Bellevue Corporation - 100% Ryan, Inc. - 100%
Solar Resources, Inc. - 100% Pembrook, Inc. - 100%
Rocket Sports, Inc. (inactive) - 100% PBClub, Inc. - 100%
Summit Sports, Inc. - 100%
Greenway Sports, Inc. - 100%
RE Corporation - 100%
INV Corp. - 100%
Buffalo Promotions, Inc. - 100%
NW Greenway #1 (inactive) - 100%
NW Greenway #9 - 100%
Logan, Inc. - 100%
Mitchell, Inc. - 100%
Cass Corporation - 100%
Burgundy, Inc. - 100%
Amber, Inc. - 100%

*Except for MGIC Investment Corporation and its subsidiaries, includes all NML
mutual funds and other corporations of which 50% or more voting power is
controlled by NML.

C-12
<PAGE>

NML CORPORATE STRUCTURE, CONTINUED*
(AS OF JANUARY 1, 1999)

NML SECURITIES HOLDINGS, LLC-100%

NW Pipeline, Inc. - 100% Kristina International
Painted Rock Development Corporation - 100% Sales, Inc. - 100%
NML Development Corporation - 100% NML/Mid Atlantic, Inc. -
Stadium and Arena Management, Inc. - 100% 100%
Carlisle Ventures, Inc. - 100%
Park Forest Northeast, Inc. - 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%
Baraboo, Inc. - 100%
Elizabeth International Sales, Inc. - 100%
Sean International Sales, Inc. - 100%
Alexandra International Sales, Inc. - 100%
Brian International Sales, Inc. - 100%
Jack International Sales, Inc. - 100%
Brendan International Sales, Inc. - 100%
Justin International FSC, Inc. - 100%
Mason & Marshall, Inc. - 100%
North Van Buren, Inc. - 100%
Northwestern Mutual Life
International, Inc. - 100%
White Oaks, Inc. - 100%
Hazel, Inc. - 100%
Maroon, Inc. - 100%
Coral, Inc. - 100%
Russet, Inc. - 100%
Larkin, Inc. - 100%
Lydell, Inc. - 100%
Klode, Inc. - 100%
Chateau, Inc. - 100%
Diversey, Inc. - 100%
Lake Bluff, Inc. - 100%
Nicolet, Inc. - 100%
Tupelo, Inc. - 100%

* Except for MGIC Investment Corporation and its subsidiaries, includes all
NML mutual funds and other corporations of which 50% or more voting power is
controlled by NML.

C-13
<PAGE>

Item 27. NUMBER OF CONTRACT OWNERS

As of January 31, 1999, the number of contract owners of NML Variable
Annuity Account C was 911. 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.

Item 29. PRINCIPAL UNDERWRITERS

(a) Northwestern Mutual Investment Services, LLC ("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
- ---- --------

Maria J. Avila Assistant Treasurer
Deborah A. Beck Director and Vice President, Variable Life
Administration
William H. Beckley Executive Vice President, Sales
Peter W. Bruce Director
Robert E. Carlson Director
Thomas A. Carroll Vice President - Common Stocks
Walter J. Chossek Treasurer
Barbara E. Courtney Assistant Treasurer
Jefferson V. De Angelis Vice President - Fixed Income Securities
Mark G. Doll Executive Vice President, Investment Advisory
Services
James R. Eben Assistant Secretary
Richard L. Hall President and CEO
Lisa M. Heise Assistant Director, Equity Compliance, NMIS
Office of Supervisory Jurisdiction
Beatrice C. Kmiec Assistant Vice President, Variable Life
Administration
Merrill C. Lundberg Secretary
Meridee J. Maynard Vice President, Variable Annuity
Administration and Marketing
Donald Parker Assistant Director, Equity Compliance, NMIS
Office of Supervisory Jurisdiction
Larry R. Roscoe Vice President and Chief Compliance Officer
Ignatius L. Smetek Vice President - Common Stocks
Leonard F. Stecklein Vice President, Sales Support

C-14
<PAGE>

Steven P. Swanson Vice President
Carla A. Thoke Director, Equity Compliance, NMIS Office of
Supervisory Jurisdiction
Julie Van Cleave Vice President - Common Stocks
Patricia L. Van Kampen Vice President - Common Stocks
William R. Walker Vice President
Edward J. Zore Director
Robert J. Ziegler Assistant Treasurer

The address for each director and officer of NMIS is 720 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202.

(c) During 1998 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 $162,782 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.

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,

C-15
<PAGE>

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-16
<PAGE>

SIGNATURES

As required by the Securities Act of 1933, the Registrant, NML
Variable Annuity Account C, has duly caused this Amended Registration Statement
to be signed on its behalf, in the City of Milwaukee, and State of Wisconsin, on
the 25th day of February, 1999.

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, Executive 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 25th day of February, 1999.

THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
(Depositor)

Attest: JOHN M. BREMER By: JAMES D. ERICSON
-------------------------------- -------------------------------
John M. Bremer, Executive 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
February 25, 1999
GARY E. LONG Vice President, Controller
- -------------------------------- and Principal Accounting
Gary E. Long Officer

HAROLD B. SMITH* Trustee
- --------------------------------
Harold B. Smith

C-17
<PAGE>

J. THOMAS LEWIS* Trustee
- --------------------------------
J. Thomas Lewis

PATRICIA ALBJERG GRAHAM* Trustee
- --------------------------------
Patricia Albjerg Graham*

DONALD J. SCHUENKE* Trustee
- --------------------------------
Donald J. Schuenke

R. QUINTUS ANDERSON* Trustee
- --------------------------------
R. Quintus Anderson

STEPHEN F. KELLER* Trustee
- --------------------------------
Stephen F. Keller

PIERRE S. du PONT* Trustee
- --------------------------------
Pierre S. du Pont

J. E. GALLEGOS* Trustee Dated
- -------------------------------- February 25, 1999
J. E. Gallegos

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.

ROBERT E. CARLSON* Trustee
- --------------------------------
Robert E. Carlson

EDWARD E. BARR* Trustee
- --------------------------------
Edward E. Barr

C-18
<PAGE>

ROBERT C. BUCHANAN* Trustee
- --------------------------------
Robert C. Buchanan

SHERWOOD H. SMITH, JR.* Trustee
- --------------------------------
Sherwood H. Smith, Jr.

H. MASON SIZEMORE, JR.* Trustee
- --------------------------------
H. Mason Sizemore, Jr.

JOHN J. STOLLENWERK* Trustee
- --------------------------------
John J. Stollenwerk

GEORGE A. DICKERMAN* Trustee Dated
- --------------------------------
George A. Dickerman February 25, 1999

GUY A. OSBORN* Trustee
- --------------------------------
Guy A. Osborn

JOHN E. STEURI* Trustee
- --------------------------------
John E. Steuri

STEPHEN N. GRAFF* Trustee
- --------------------------------
Stephen N. Graff

BARBARA A. KING* Trustee
- --------------------------------
Barbara A. King

TIMOTHY D. PROCTOR* Trustee
- --------------------------------
Timothy D. Proctor

*By: JAMES D. ERICSON
---------------------------
James D. Ericson, Attorney
in Fact, pursuant to the
Power of Attorney attached
hereto

C-19
<PAGE>

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, 1998 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 22nd day of July, 1998.

R. QUINTUS ANDERSON Trustee
-----------------------------
R. Quintus Anderson

EDWARD E. BARR Trustee
-----------------------------
Edward E. Barr

GORDON T. BEAHAM III Trustee
-----------------------------
Gordon T. Beaham III

ROBERT C. BUCHANAN Trustee
-----------------------------
Robert C. Buchanan

ROBERT E. CARLSON Trustee
-----------------------------
Robert E. Carlson

GEORGE A. DICKERMAN Trustee
-----------------------------
George A. Dickerman

C-20
<PAGE>

PIERRE S. du PONT Trustee
-----------------------------
Pierre S. du Pont

JAMES D. ERICSON Trustee
-----------------------------
James D. Ericson

J. E. GALLEGOS Trustee
-----------------------------
J. E. Gallegos

STEPHEN N. GRAFF Trustee
-----------------------------
Stephen N. Graff

PATRICIA ALBJERG GRAHAM Trustee
-----------------------------
Patricia Albjerg Graham

STEPHEN F. KELLER Trustee
-----------------------------
Stephen F. Keller

BARBARA A. KING Trustee
-----------------------------
Barbara A. King

J. THOMAS LEWIS Trustee
-----------------------------
J. Thomas Lewis

DANIEL F. McKEITHAN, JR. Trustee
-----------------------------
Daniel F. McKeithan, Jr.

GUY A. OSBORN Trustee
-----------------------------
Guy A. Osborn

C-21
<PAGE>

TIMOTHY D. PROCTOR Trustee
-----------------------------
Timothy D. Proctor

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-22
<PAGE>

EXHIBIT INDEX
EXHIBITS FILED WITH FORM N-4
POST-EFFECTIVE AMENDMENT NO. 19 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FOR
NML VARIABLE ANNUITY ACCOUNT C

Exhibit Number Exhibit Name
- -------------- ------------

Exhibit B(4)(a) Group Combination Annuity Contract, NVP.1C.(0594),
with amended application, including Contract
amendment (sex neutral)

Exhibit B(5) The application form is included in Exhibit
B(4)(a) above

Exhibit B(8)(a) Form of Participation Agreement Among Russell
Insurance Funds, Russell Fund Distributors, Inc.
and The Northwestern Mutual Life Insurance Company

Exhibit B(8)(b) Form of Administrative Service Fee Agreement
between The Northwestern Mutual Life Insurance
Company and Frank Russell Company

Exhibit B(10) Consent of PricewaterhouseCoopers LLP

The following exhibit was filed in electronic format with the Registration
Statement on Form S-6 for Northwestern Mutual Variable Life Account, File No.
333-59103, CIK 0000742277, dated July 15, 1998, and is incorporated herein by
reference.

Exhibit A(6)(b) Amended By-Laws of The Northwestern Mutual Life
Insurance Company dated January 28, 1998

<PAGE>

Exhibit B(4)(a)

================================================================================

The Northwestern Mutual Life Insurance Company agrees to pay the benefits
provided in this contract, subject to its terms and conditions. Signed at
Milwaukee, Wisconsin on the Date of Issue.

/s/ James D. Ericson /s/ John M. Bremer

PRESIDENT AND C.E.O. SECRETARY

GROUP COMBINATION ANNUITY

Benefits provided by investments in Separate Account Divisions (Section 2) or
Guaranteed Return Fund Accounts (Section 3).

Contract benefits payable in one sum or as Variable or Guaranteed monthly
income. Variable Payment Plan benefits described in Sections 7, 8 and 9.

Participating.

AMOUNTS ALLOCATED TO THE SEPARATE ACCOUNT DIVISIONS AND VARIABLE PAYMENTS
PROVIDED BY THIS CONTRACT ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT BUT
ARE VARIABLE AND MAY INCREASE OR DECREASE TO REFLECT THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT.

NPV.1C

NORTHWESTERN
MUTUAL LIFE-Registered Trademark

================================================================================

OWNER TRUSTEES OF JOHN DOE CORPORATION TRUST

CONTRACT NUMBER 10 000 001

CONTRACT DATE MAY 3, 1994

NPV.1C.(0594)

<PAGE>

This is a legal contract between the Owner and

The Northwestern Mutual Life Insurance Company

Read your contract carefully.

GUIDE TO POLICY PROVISIONS

Page

LOADS, FEES, AND CHARGES 3

SECTION 1. BENEFITS 5

Benefits paid at Owners direction.

Investment accounts.

SECTION 2. ACCUMULATION UNITS IN SEPARATE ACCOUNT 5

Definition of Separate Account, Valuation Date,

Accumulation Units, and Net Investment Factor.

Valuation of Assets.

SECTION 3. GUARANTEED RETURN FUND ACCOUNTS 6

Definition of Guaranteed Return Fund (GRF) Account and

GRF Account Accumulation Value.

Maturity of amounts in a GRF Account.

GRF Accounts Maximum. Market Value Adjustment.

SECTION 4. PURCHASE PAYMENTS, TRANSFERS, AND WITHDRAWALS 7

Payment and allocation of purchase payments.

Limitations on acceptance of purchase payments.

Transfers between and withdrawals from investment accounts.

Definition of Effective Date of a transaction.

SECTION 5. OWNERSHIP 8

Rights of the Owner. Reports to Owner.

SECTION 6. THE CONTRACT 9

Changes by the Company.

Determination of values.

Termination of the contract.

SECTION 7. BENEFITS UNDER PAYMENT PLANS 10

Benefits to Annuitants.

Description of payment plans.

Beneficiaries.

Transfers between and withdrawals under payment plans.

SECTION 8. CALCULATIONS REGARDING VARIABLE PAYMENT PLANS 11

Definition of Annuity Unit.

Payments under variable payment plans.

SECTION 9. PAYMENT PLAN RATES 12

Guaranteed monthly payment rates.

APPLICATION Attached to the contract

NPV.1C

<PAGE>

LOADS, FEES, AND CHARGES

(SUBJECT TO AMENDMENT, SECTION 6.5)

DEDUCTIONS FROM PURCHASE PAYMENTS (SECTION 4.3):

INSTALLATION FEE: NOT APPLICABLE

SALES LOAD: CUMULATIVE PURCHASE PAYMENTS

PAID UNDER THE CONTRACT DEDUCTION

FIRST $ 150,000 4.50%

NEXT 350,000 3.00

NEXT 500,000 1.00

BALANCE OVER 1,000,000 0.50

ANNUAL ANNUITY RATE AND EXPENSE GUARANTEE CHARGE (SECTION 2.4):

0.65% AT ISSUE; 1.00% MAXIMUM

ADMINISTRATION FEE (SECTION 6.7):

$ 150 PER YEAR IF THE CONTRACT VALUE IS LESS THAN $ 25,000 ON THE CONTRACT

ANNIVERSARY

TRANSFER FEE (SECTION 4.4)

$ 25 PER TRANSFER BEGINNING WITH THE THIRTEENTH TRANSFER IN ANY CONTRACT

YEAR

PURCHASE PAYMENTS AND ACCUMULATED VALUE

MINIMUM PURCHASE PAYMENT:

$ 100

GUARANTEED RETURN FUND ACCOUNTS MAXIMUM (SECTION 3.4):

$ 10,000,000

MINIMUM CONTRACT VALUE (SECTION 6.7):

$ 25,000 BEGINNING ON THE FIRST CONTRACT ANNIVERSARY

OWNER TRUSTEES OF JOHN DOE CORPORATION TRUST

CONTRACT NUMBER 10 000 001

CONTRACT DATE MAY 3, 1994

NPV.1C.(0594) PAGE 3

<PAGE>

SECTION 1. BENEFITS

1.1 GROUP ANNUITY

The Northwestern Mutual Life Insurance Company ("the Company") agrees to

provide benefits in accordance with the terms and conditions of this annuity

contract. The benefits will be provided from amounts accumulated in one or more

investment accounts. The investment accounts are the Divisions of the Separate

Account (Section 2) and the Guaranteed Return Fund Accounts (Section 3).

1.2 BENEFITS AT DIRECTION OF OWNER

The value of the investment accounts will be used to provide the amount

required to pay benefits as directed by the Owner. Upon the Owners request,

contract benefits will be paid under one or more of the following:

o a variable payment plan.

o a fixed payment plan.

o in cash.

SECTION 2. ACCUMULATION UNITS IN SEPARATE ACCOUNT

2.1 SEPARATE ACCOUNT

Net purchase payments received (Section 4.3) or amounts transferred from

other investment accounts under this contract (Section 4.4) may be placed in the

Separate Account. The Separate Account ("NML Variable Annuity Account C") and

its Divisions have been established by the Company pursuant to Wisconsin Law

relating to separate investment accounts. Interests in the Separate Account are

represented by the Accumulation Units described in Section 2.3.

Assets of the Separate Account are owned by the Company. The Company is

not a trustee of the Separate Account assets. The Company may from time to time

adjust the amount of assets contained in the Separate Account, by periodic

withdrawals or additions, to reflect the contract provisions and the Company's

reserves for this and other similar contracts.

The Separate Account is comprised of the Select Bond, International

Equity, Money Market, Balanced, Index 500 Stock, Aggressive Growth Stock, High

Yield Bond, Growth Stock, and Growth and Income Stock Divisions. Assets

allocated to these Divisions are invested in shares of Northwestern Mutual

Series Fund, Inc. (the "Fund"). The Fund is registered under the Investment

Company Act of 1940 as an open-end, diversified investment company. The Fund has

nine Portfolios: Select Bond Portfolio, International Equity Portfolio, Money

Market Portfolio, Balanced Portfolio, Index 500 Stock Portfolio, Aggressive

Growth Stock Portfolio, High Yield Bond Portfolio, Growth Stock Portfolio, and

Growth and Income Stock Portfolio. Assets of each Division of the Separate

Account are invested in shares of the corresponding Portfolio of the Fund.

Shares of the fund are purchased for the Separate Account at their asset value.

Shares of the Fund are purchased for the Separate Account at their net

asset value.

The Company may make available additional Divisions and Portfolios.

2.2 VALUATION OF SEPARATE ACCOUNT ASSETS

A Valuation Date is any day on which the assets of the Separate Account

are valued. Assets are valued as of the close of trading on the New York Stock

Exchange for each day the Exchange is open.

The value of the shares of each Fund held in the Separate Account on each

Valuation Date will be the redemption value of the shares on that date. If the

right to redeem shares of a Fund has been suspended, or if payment of the

redemption value has been postponed, the shares held in the Separate Account may

be valued at fair value as determined in good faith by the Board of Trustees of

the Company for the sole purpose of computing annuity benefits.

2.3 ACCUMULATION UNITS

The interests of this contract in the Separate Account are represented by

Accumulation Units. The dollar value of Accumulation Units for each Division

will increase or decrease to reflect the investment experience of the Division.

The value of an Accumulation Unit on any Valuation Date is determined by

multiplying:

o the value of the Accumulation Unit on the immediately preceding

Valuation Date; by

o the Net Investment Factor for the period starting on the immediately

preceding Valuation Date up to and including the current Valuation

Date (the current period).

Accumulation Units are credited or surrendered as of the Effective Date of

the purchase payment, transfer, or withdrawal.

The number of Accumulation Units will be determined by dividing:

o the net purchase payment (see Section 4.3) or the requested transfer

or withdrawal amounts; by

o the value of an Accumulation Unit on that Valuation Date.

This number of Accumulation Units will not be changed by any later change

in the dollar value of the Accumulation Units.

NPV.1C.(0594) 5

<PAGE>

2.4 NET INVESTMENT FACTOR

For each Division of the Separate Account the Net Investment Factor for

the current period is 1.000000 plus the net investment rate for that Division.

The net investment rate for the current period is equal to the gross investment

rate for the Division, expressed in decimal form to six places, reduced on each

Valuation Date by a charge for annuity rate and expense guarantees. The charge

for these guarantees on the date of issue and the maximum charge are shown on

page 3.

The gross investment rate for the current period for each Division is

equal to a. divided by b. where:

a. is defined as

(1) the investment income of the Division for the current period;

(2) plus capital gains and minus capital losses for the period,

whether realized or unrealized, on the assets of the Division;

(3) less any taxes paid or reserved for by the Company resulting

from the maintenance or operation of the Division; and

(4) less any reasonable expenses paid or reserved for by the

Company which result from a substitution of other securities

for shares of the Fund as set forth in Section 2.5; and

b. is defined as the value of the assets in the Division as determined

on the immediately preceding Valuation Date.

The gross investment rate may be positive or negative. The deduction for

any tax liability may be charged proportionately against those contracts to

which the liability is attributable by a reduction in the gross investment rate

for those contracts.

2.5 SUBSTITUTION AND CHANGE

Pursuant to the authority of the Board of Trustees of the Company:

o the assets of a Division maybe invested in securities other than

shares of the Fund as a substitute for those shares already

purchased or shares to be purchased in the future.

o the provisions of the contract may be changed to comply with any

applicable federal or state laws.

In the event of a substitution or change, the Company may make appropriate

endorsement on this and other contracts having an interest in the Separate

Account and take such other actions as may be necessary to effect the

substitution or change.

SECTION 3. GUARANTEED RETURN FUND ACCOUNTS

3.1 PURCHASE PAYMENTS AND TRANSFERS

Net purchase payments received (see Section 4.3) or amounts transferred

from other investment accounts under this contract (see Section 4.4) may be

credited to a Guaranteed Return Fund Account (GRF Account). A GRF Account is

defined by the interest rate guarantee period established for amounts deposited

into it.

Amounts are credited to a GRF Account as of the Effective Date of the

purchase payment or transfer.

3.2 GRF ACCOUNT ACCUMULATION VALUE

The Accumulation Value for a GRF Account is the sum of the amounts

deposited into it plus interest less any amounts removed. Interest begins to

accrue on an amount in a GRF Account on the date the amount is credited at the

Home Office.

3.3 MATURITY OF AMOUNTS IN A GRF ACCOUNT

On the last day of a guarantee period for an amount in a GRF account the

Accumulation Value for that amount will be transferred to the Money Market

Division where it will remain until the Owner instructs the Company otherwise.

However, if the last day of the guarantee period does not fall on a Valuation

Day, then the Accumulation Value will be transferred on the next following

Valuation Date.

3.4 GRF ACCOUNTS MAXIMUM

The sum of the Accumulation Values of all the GRF Accounts may not exceed

the GRF Accounts Maximum shown on page 3, except when the Maximum is exceeded

because of interest accruing to the GRF Accounts. To the extent that any

purchase payments or transfers result in the sum of the Accumulation Values of

all the GRF Accounts exceeding the Maximum, the amount of such excess will be

placed in the Money Market Division of the Separate Account. This amount will

remain in the Money Market Division until the Owner instructs the Company

otherwise.

NPV.1C 6

<PAGE>

3.5 MARKET VALUE ADJUSTMENT

A market value adjustment will be added to each amount in a GRF Account

that is withdrawn or transferred prior to the end of the guarantee period, with

the following exceptions:

o amounts withdrawn to purchase an annuity under Section 7; or

o amounts withdrawn or transferred within 30 days prior to the end of

the guarantee period; or

o amounts withdrawn to pay a Transfer Fee (Section 4.4) or to pay an

Administration Fee (Section 6.7); or

o amounts withdrawn to pay a Plan participant's individual account

balance subject to the following provisions:

o the payment must be as a result of the bona fide termination

of employment of such participant;

o the Plan must be a defined contribution plan;

o the payment must be in accordance with the provisions of the

relevant Plan; and

Reasonable proof that these provisions are met must be provided to the

Company upon request.

Amounts will be removed from a GRF Account until the total amount of the

transfer or withdrawal request is satisfied. Amounts closest to maturity will be

removed first; in the event that two amounts are equally close to maturity, the

one which was credited to the GRF Account earlier will be removed first. The

Market Value Adjustment (MVA) for each amount removed from a GRF Account will be

based on: (a) the amount removed from the GRF Account (b) the time remaining to

the end of the guarantee period, (c) the guaranteed interest rate on the amount

removed, and (d) the Company's declared interest rate for a new purchase payment

deposited into a GRF Account, as follows:

For each amount removed,

MVA = AMT X n X ((i)g (i)new)

where: AMT = amount removed

n = time remaining to the end of the guarantee period for

the amounts removed from the GRF Account, expressed as

number of days remaining divided by 365

(i)g = guaranteed interest rate (in decimal form) on the amount

removed from the GRF Account

(i)new = declared interest rate (in decimal form) for a new

purchase payment to a GRF Account with the shortest

available guarantee period greater than or equal to n.

If no such guarantee period exists, the declare interest

rate will be based on the longest available guarantee

period.

The total Market Value Adjustment for the transfer or withdrawal request

will be the sum of the MVAs for each amount removed.

SECTION 4. PURCHASE PAYMENTS, TRANSFERS, AND WITHDRAWALS

4.1 PAYMENT OF PURCHASE PAYMENTS

All purchase payments after the first are payable at the Home Office.

Subject to Section 4.2, purchase payments may be paid at any time in the amounts

needed to meet the obligations of the Plan or the Trust.

4.2 LIMITATION ON ACCEPTANCE OF PURCHASE PAYMENTS

The Owner may vary the amounts of the purchase payments, but no purchase

payment may be less than the Minimum Purchase Payment shown on page 3. The

Company may limit the maximum amount of any purchase payment in accordance with

its published rules in effect at the time the purchase payment is paid. The

Company may limit purchase payments paid to the Guaranteed Return Fund Accounts

(Section 3.4).

Purchase payments may not be paid under this contract unless they are

contributions for funding, or for payment of fees or loads, under a pension or

profit sharing plan or trust that is qualified under Section 401 of the Internal

Revenue Code.

4.3 DEDUCTIONS; ALLOCATION OF NET PURCHASE PAYMENTS

The Company will deduct the Installation Fee shown on page 3 from the

first purchase payment received. The Company will also deduct from purchase

payments received the Sales Load shown on page 3 and a charge for any premium

tax incurred.

A net purchase payment is a purchase payment received less the deductions

for Installation Fee, Sales Load and premium tax. Each net purchase patent will

be allocated as directed in writing by the Owner, through a request satisfactory

to the Company, to one or more of the investment accounts. If no instructions

are received from the Owner, a net purchase payment will be allocated to the

Money Market Division of the Separate Account.

NPV.1C 7

<PAGE>

4.4 TRANSFERS AND WITHDRAWALS

The Owner may, on request satisfactory to the Company, transfer amounts

from one investment account to another or withdraw amounts from an investment

account. A transfer may be subject to a Transfer Fee (page 3).

In the case of transfers between Divisions of the Separate Account the

number of Accumulation Units to be credited will be adjusted to reflect the

respective value of the Accumulation Units in each of the Divisions. A transfer

or withdrawal from a GRF Account may be subject to a market value adjustment

(see Section 3.5).

The total value of the amounts transferred (net of market value

adjustments) from investment account(s) must exceed any applicable Transfer Fee.

The transfer or withdrawal will be made as of its Effective Date. The

Company may establish waiting periods between transfers or withdrawals.

4.5 EFFECTIVE DATE OF A TRANSACTION

If the request for a transaction, including any purchase payment,

transfer, withdrawal, or termination, does not specify a future transaction

date, the Effective Date of the transaction is generally the Valuation Date

coincident with the date on which the transaction request is received at the

Home Office. However, the Effective Date of the transaction is the next

following Valuation Date if the transaction request is received at the Home

Office either: (a) on a Valuation Date after the close of trading on the New

York Stock Exchange (NYSE); or (b) on a day on which the NYSE is closed.

If the request for the transaction specifies a future transaction date,

the Effective Date of the transaction is generally the Valuation Date coincident

with the specified date. However, if the NYSE is closed on the specified date,

the Effective Date of the transaction is the next following Valuation Date.

The Effective Date of an automatic transaction, such as the application of

a dividend or the deduction of the Administration Fee, is generally the

Valuation Date coincident with the date on which the Company processes the

transaction. However, if the NYSE is closed on the processing date, the

Effective Date of the transaction is the next following Valuation Date.

SECTION 5. OWNERSHIP

5.1 THE OWNER

The Owner of this contract is named on page 3. All contract rights may be

exercised by the Owner, or by the Owners successor or transferee, without the

consent of any other person.

5.2 TRANSFER OF OWNERSHIP

The Owner may transfer the ownership of this contract to a new Owner who

acknowledges in writing that the new Owner is acting as the fiduciary of a

pension or profit-sharing plan under Section 401 of the Internal Revenue Code.

Written proof of transfer satisfactory to the Company must be received at its

Home Office. The transfer will then take effect as of the date it was signed.

The Company will not be responsible to the new Owner for an y payment or other

action taken by the Company before receipt of the written proof of transfer at

the Home Office. The Company may require that the contract be sent to it for

endorsement to show the transfer.

5.3 ASSIGNMENT

The Owner may not assign this contract without the consent of the Company.

The Company is not responsible for the validity or effect of any assignment. The

Company will not be responsible to an assignee for any payment or other action

taken by the Company before the Company consents to an assignment.

5.4 REPORTS TO OWNER

At least once each contract year, the Company will send to the Owner a

statement of:

o the number of Accumulation Units in each Division of the Separate

Account credited to the contract;

o the dollar value of an Accumulation Unit in each Division as of a

date not more than two months prior to the date of mailing;

o the investments held by the Separate Account; and

o the total Accumulation Value for each GRF Account.

NPV.1C 8

<PAGE>

SECTION 6. THE CONTRACT

6.1 ENTIRE CONTRACT; CHANGES

This contract with the attached application is the entire contract. This

contract is subject to the laws of the state in which it is delivered. A change

in the contract is valid only if it is approved in writing by an officer of the

Company. The Company may require that the contract be sent to it for endorsement

to show a change. No agent has the authority to change the contract or to waive

any of its terms.

6.2 DATES

Contract months, years and anniversaries are computed from the Contract

Date. The Contract Date is shown on page 3.

6.3 PAYMENTS BY THE COMPANY

All payments by the Company under this contract are payable at its Home

Office.

6.4 DETERMINATION OF VALUES

The method of determination by the Company of the Net Investment Factor,

of the number and value of Accumulation Units and Annuity Units, and of the

declared rates in the Guaranteed Return Fund Accounts, will be conclusive upon

the Owner, and upon any assignee, participant, annuitant, or beneficiary.

6.5 AMENDMENTS

After the fifth contract year the Company may amend this contract from

time to time with respect to:

o the Installation Fee;

o the Sales Load;

o the Maximum Annual Annuity Rate and Expense Guarantee Charge;

o the Administration Fee;

o the Transfer Fee;

o the Minimum Purchase Payment;

o the GRF Accounts Maximum;

o the Minimum Contract Value; and

o the Payment Rate Tables shown in Section 9.

The amendment will take effect not less than 30 days after 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.

6.6 DEFERMENT OF BENEFIT PAYMENTS

The Company may defer determination and payment of contract benefits and

payments or withdrawals (Section 7.5) under a variable patent plan until after

the end of any period during which the right to redeem shares of a Fund is

suspended, or during which payment of the redemption value is postponed. Any

deferment would be in accordance with the provisions of the Investment Company

Act of 1940 by reason of the closing of, or the restriction of trading on, the

New York Stock Exchange, or other emergency, or as otherwise permitted by the

Act. In addition, the Company reserves the right to defer payment of benefits

from any of the Divisions of the Separate Account until seven days after the end

of a deferment in the determination of such benefits.

The Company reserves the right to defer payment of contract benefits from

a GRF Account and withdrawals under a fixed payment plan (Section 7.5) for up to

six months from the date of request If payment is deferred for 30 days or more,

interest will be paid on the benefit proceeds at an annual effective rate of 3

1/2% from the date of request to the date of payment.

6.7 TERMINATION OF CONTRACT

The Company reserves the right to terminate this contract if the

representations of the Owner contained in the attached application are or become

incorrect.

At any time after this contract has been in force for one year, the

Company may terminate it if the Contract Value (the total of all amounts in all

investment accounts) is less than the Minimum Contract Value shown on page 3.

The contract will terminate on the date stated in a notice mailed to the Owner,

the date not to be less than 60 days after the date of mailing.

However, in lieu of terminating the contract, the Company may assess the

Administration Fee shown on page 3. This fee will be charged annually on the

contract anniversary if, on the contract anniversary, the Contract Value is less

than the Minimum Contract Value. This fee will be deducted from the investment

accounts in proportion to the value of those accounts. The investment accounts

will be valued as of the Effective Date that the fee is charged.

The Owner may terminate the contract by written notice to the Company. The

termination date will be specified by the Owner in the written notice, but this

date will not be earlier than the date the Company receives the written notice.

On termination of the contract, the value of any Accumulation Units and

the value of any GRF Accounts, as adjusted for any market value adjustment, will

be determined as of the Effective Date of the termination. The Company may

require that the contract be sent to it.

6.8 DIVIDENDS

This contract, except for payment plans, will share in the divisible

surplus of the Company to the extent it contributes to divisible surplus.

Divisible surplus is determined each year. This policy's share will be credited

as a dividend on the contract anniversary. Any dividend will automatically be

applied as a purchase payment, without deductions, to the Money Market Division

of the Separate Account on the Effective Date of the dividend credit.

Since this policy is not expected to contribute to divisible surplus, it

is not expected that any dividends will be paid.

NPV.1C 9

<PAGE>

6.9 PROVISIONS OF THE PLAN OR TRUST AGREEMENT

The Company makes no representation as to the sufficiency of this contract

to provide annuity benefits in accordance with the provisions of the Plan or

Trust.

The Company may deal with the Owner without regard to the provisions of

the Plan or Trust Agreement. The Company is not a fiduciary under the Plan or

Trust Agreement, nor to its participants, and has no responsibility to ascertain

whether or not benefits paid by the contract meet the requirements of any state

or federal legislation relating to plans or trusts.

Nothing in the Plan or Trust Agreement will:

o affect the obligations of the Company as provided in this contract;

o hold the Company responsible for any failure of the Owner to perform

his duties; or

o hold the Company responsible for application or disposition of

monies paid to, or at the direction of, the Owner. These payments

will fully discharge the Company with respect to the amount so paid.

SECTION 7. BENEFITS UNDER PAYMENT PLANS

7.1 BENEFITS TO ANNUITANTS

A participant must be an employee (including an "owner-employee") who is

or may become eligible for benefits under the Plan or Trust. The annuitant under

a payment plan will be the participant or his beneficiary. The Company will, on

request satisfactory to it, pay benefits to annuitants named by the Owner.

The Owner may elect a payment plan with payments greater than or equal to

the minimums then in effect for payment plans then being offered by the Company.

The Company will determine the amount required to provide the requested

benefits. This amount will be withdrawn from the designated investment accounts

as of the Effective Date of the withdrawal.

If amounts are taken from a Division of the Separate Account, Accumulation

Units will be redeemed in accordance with Section 2.3. If benefits are to be

paid under a fixed payment plan, the Company will transfer the required amount

to its General Account.

The first payment under a payment plan will be due as of the effective

date of the payment plan and will be paid promptly after that date.

The Company will issue to the annuitant a certificate describing his

rights and benefits.

7.2 DESCRIPTION OF PAYMENT PLANS

The Owner may elect to provide payment of part or all of the contract

benefits to an annuitant under the following variable or fixed payment plans:

Installment Income For Specified Period (Option B)

The Company will make monthly installment income payments over a specified

period of five to 30 years.

Life Income Plans

o Single Life Income (Option C). The Company will make monthly

payments for the selected certain period and thereafter during the

remaining lifetime of the annuitant. The selections available are:

(a) no certain period; or (b) a certain period of 10 or 20 years.

o joint And Survivor Life Income (Option E). The Company will make

monthly payments for a 10 year certain period and thereafter during

the joint lifetime of the annuitant and joint annuitant and

continuing during the remaining lifetime of the survivor.

o Limitations. An Annuitant may be paid under a Life Income Plan only

if the Annuitant is a natural person and if the payments depend on

that person's life.

o Other Selections. The Company may offer other selections under the

life income plans.

7.3 BENEFICIARIES

Naming and Change of Beneficiary by Annuitant. The annuitant may name and

change the beneficiaries for payments under a payment plan that remain unpaid on

the date of the death of the annuitant (or on the date of the death of the

second to die of the annuitant and the joint annuitant if any).

If there are no named beneficiaries alive on the date of the death of the

annuitant (or on the date of the death of the second to die of the annuitant and

the joint annuitant if any), any withdrawal value will be paid to the estate of

the annuitant (or to the estate of the second to die of the annuitant and the

joint annuitant, if any).

A naming or change of a beneficiary will be made on receipt at the Home

Office of a written request that is acceptable to the Company. The request will

then take effect as of the date that it was signed. The Company is not

responsible for any payment or other action that is taken by it before the

receipt of the request.

Other Beneficiary Provisions. A certificate that is issued to provide

benefits to the annuitant may contain other beneficiary provisions of annuity

contracts issued by the Company on the date of issue of the certificate.

NPV.1C 10

<PAGE>

7.4 TRANSFER BETWEEN PAYMENT PLANS

An annuitant or joint annuitant receiving benefits under any payment plan

which includes the right of withdrawal may transfer the withdrawal value to any

other payment plan.

An annuitant or joint annuitant receiving benefits under a variable

payment plan may, on request satisfactory to the Company, transfer Annuity Units

from one Division to another. The number of Annuity Units to be credited will be

adjusted to reflect the respective value of the Annuity Units in each of the

Divisions.

The transfer will be made as of its Effective Date. Any charges for the

transfer will be determined by the Company and deducted from the value of the

amounts transferred. The Company may establish waiting periods between

transfers.

7.5 WITHDRAWAL UNDER PAYMENT PLANS

Withdrawal of the present value of any unpaid income payments may be

elected at any time by the annuitant, joint annuitant, or beneficiary. However,

withdrawal may not be elected under a Life Income Plan (Option C or E) until the

death of all individuals upon whose lives the payments depend.

The withdrawal value under the Installment Income Plan (Option B) will be

the present value of any unpaid payments. The withdrawal value under all Life

Income Plans (Options C and E), where available, will be the present value of

any unpaid payments for the certain period.

For a fixed payment plan, the present value of any unpaid payments will be

based on the interest rate used to determine the amount of the payments.

For a variable payment plan, the present value of any unpaid payments will

be based on interest at the Assumed Investment Rate used in calculating the

variable payments. The amount of the payment used in calculating the present

value of unpaid payments will be determined by multiplying:

o the number of Annuity Units; by

o the value of an Annuity Unit on the Effective Date of withdrawal.

The withdrawal will be made as of its Effective Date. Any charges for the

withdrawal will be determined by the Company and deducted from the value of the

amounts withdrawn.

SECTION 8. CALCULATIONS REGARDING VARIABLE PAYMENT PLANS

8.1 ALLOCATION OF BENEFITS

Variable annuity benefits may be paid from any of the Divisions of the

Separate Account described in Section 2.1. Under a variable payment plan, the

annuitant must select the initial allocation of variable benefits among the

Divisions. The annuitant may make transfers between payment plans subject to the

terms set forth in Section 7.4.

8.2 ANNUITY UNITS UNDER VARIABLE PAYMENT PLANS

The interest of the annuitant in the Separate Account after the effective

date of a variable payment plan is represented by Annuity Units. The dollar

value of Annuity Units for each Division will increase or decrease to reflect

the investment experience of the Division. The value of an Annuity Unit on any

Valuation Date is determined by multiplying the Annuity Unit Value on the

immediately preceding Valuation Date by:

o the Net Investment Factor for the current period, as defined in

Section 2.4, for the Division; and

o the Daily Adjustment Factor of .99990575 raised to a power equal to

the number of days in the current period to reflect the Assumed

Investment Rate of 3 1/2% used in calculating the monthly payment

rate.

8.3 PAYMENTS UNDER VARIABLE PAYMENT PLANS

The amount of the First Payment is the sum of payments from each Division,

each determined by multiplying the benefits allocated to the Division under

the variable payment plan by the applicable variable payment rate per $1,000 of

benefits.

Number of Annuity Units. The number of Annuity Units in each Division

under a variable payment plan is determined by dividing the portion of the First

Payment from that Division by the Annuity Unit value for the Division at the

close of business on the Valuation Date coincident with or next receding the

date on which the variable payment plan becomes effective. The number of Annuity

Units will not be changed by any later change in the dollar value of Annuity

Units.

Subsequent Variable Payments. The amount of subsequent payments under a

variable payment plan will increase or decrease according to the value of

Annuity Units which reflect the investment experience of each Division of the

Separate Account.

The amount of subsequent variable payments is the sum of payments from

each Division, each payment being determined by multiplying the fixed number of

Annuity Units for the Division by the value of an Annuity Unit for that Division

on:

o the fifth Valuation Date prior to the payment due date, if the

payment due date is a Valuation Date; or

o the sixth Valuation Date prior to the payment due date, if the

payment due date is not a Valuation Date.

NPV.1C 11

<PAGE>

SECTION 9. PAYMENT PLAN RATES

9.1 PAYMENT RATE TABLES

The guaranteed monthly payment rates for both a fixed payment plan and the

first payment under a variable payment plan are shown in the Payment Rate

Tables. The tables show rates for the Installment Income Plan for a Specified

Period (Option B) and Life Income Plans (Option C or E). Life Income Plan rates

are based on the adjusted age of any individual upon whose life payments depend.

The adjusted age is:

o the age on the birthday that is nearest to the date on which the

payment plan takes effect; plus

o the age adjustment shown below for the number of contract years that

have elapsed from the Contract Date to the date that the payment

plan takes effect. A part of a contract year is counted as a full

year.

- --------------------------------------------------------------------------------

CONTRACT CONTRACT

YEARS AGE YEARS AGE

ELAPSED ADJUSTMENT ELAPSED ADJUSTMENT

- --------------------------------------------------------------------------------

1 to 8 0 33 to 40 -4

9 to -1 41 to 48 -5

17 to 24 -2 49 or more -6

25 to 32 -3

- --------------------------------------------------------------------------------

9.2 CURRENT FIXED PAYMENT PLAN RATES

o Installment Income For Specified Period (Option B). The Company may

offer fixed payment plan rates higher than those guaranteed in this

contract with conditions on withdrawal.

o Life Income Plans (Option C or E). Payments will be based on rates

declared by the Company which will not be less than the rates

guaranteed in this contract. The declared rates will provide at

least as much income as would the Company's rates, on the date that

the payment plan takes effect for a single premium immediate annuity

contract.

9.3 ALTERNATE VARIABLE RATE BASIS

The Company may from time to time publish higher initial rates for

variable payment plans under this contract. These higher rates cannot be used to

increase payments under payment plans that have already started.

When a variable payment plan is on an alternate rate basis, the Daily

Adjustment Factor defined in Section 8.2 will be determined based on the Assumed

Investment Rate used in calculating the alternate payment rate.

PAYMENT RATE TABLES

Monthly Income Payments Per $1,000 Contract Benefits

First Payment Under Variable Payment Plan

INSTALLMENT INCOME PLAN (OPTION B)

- --------------------------------------------------------------------------------

PERIOD MONTHLY PERIOD MONTHLY PERIOD MONTHLY

(YEARS) PAYMENT (YEARS) PAYMENT (YEARS) PAYMENT

- --------------------------------------------------------------------------------

Years 1-4 11 $ 9.09 21 $ 5.56

Not Available 12 8.46 22 5.39

13 7.94 23 5.24

14 7.49 24 5.09

5 $ 18.12 15 7.10 25 4.96

6 15.35 16 6.76 26 4.84

7 13.38 17 6.47 27 4.73

8 11.90 18 6.20 28 4.63

9 10.75 19 5.97 29 4.53

10 9.83 20 5.75 30 4.45

- --------------------------------------------------------------------------------

Guaranteed Fixed Payment Plans

INSTALLMENT INCOME PLAN (OPTION B)

- --------------------------------------------------------------------------------

PERIOD MONTHLY PERIOD MONTHLY PERIOD MONTHLY

(YEARS) PAYMENT (YEARS) PAYMENT (YEARS) PAYMENT

- --------------------------------------------------------------------------------

1 $84.09 11 $8.42 21 $4.85

2 42.46 12 7.80 22 4.67

3 28.59 13 7.26 23 4.51

4 21.65 14 6.81 24 4.36

5 17.49 15 6.42 25 4.22

6 14.72 16 6.07 26 4.10

7 12.74 17 5.77 27 3.98

8 11.25 18 5.50 28 3.87

9 10.10 19 5.26 29 3.77

10 9.18 20 5.04 30 3.68

- --------------------------------------------------------------------------------

NPV.1C.(0594) 12

<PAGE>

PAYMENT RATE TABLES

MONTHLY INCOME PAYMENTS PER $1,000 CONTRACT BENEFITS

LIFE INCOME PLANS (Options C and E)

-------------------------------------------------------------------

SINGLE LIFE MONTHLY PAYMENTS (Option C)

-------------------------------------------------------------------

GUARANTEED FIXED PAYMENT OR FIRST PAYMENT

UNDER VARIABLE PAYMENT PLAN

-------------------------------------------------------------------

ADJUSTED CERTAIN PERIOD (YEARS)

AGE* ZERO 10 20

-------------------------------------------------------------------

55 $4.17 $4.14 $4.06

56 4.23 4.20 4.11

57 4.31 4.28 4.17

58 4.39 4.35 4.23

59 4.47 4.43 4.29

60 4.56 4.51 4.35

61 4.65 4.59 4.42

62 4.76 4.69 4.49

63 4.87 4.79 4.56

64 4.98 4.90 4.63

65 5.10 5.00 4.70

66 5.24 5.12 4.77

67 5.38 5.24 4.84

68 5.54 5.37 4.91

69 5.70 5.51 4.98

70 5.88 5.66 5.05

71 6.07 5.81 5.12

72 6.27 5.96 5.19

73 6.49 6.13 5.24

74 6.73 6.30 5.30

75 6.99 6.48 5.36

76 7.27 6.67 5.40

77 7.58 6.86 5.45

78 7.91 7.05 5.49

79 8.26 7.25 5.52

80 8.64 7.45 5.55

81 9.05 7.65 5.58

82 9.50 7.84 5.60

83 9.98 8.02 5.62

84 10.50 8.20 5.63

85 and over 11.08 8.38 5.64

-------------------------------------------------------------------

- --------------------------------------------------------------------------------

JOINT AND SURVIVOR MONTHLY PAYMENTS (Option E)

- --------------------------------------------------------------------------------

GUARANTEED FIXED PAYMENT OR FIRST PAYMENT UNDER VARIABLE PAYMENT PLAN

- --------------------------------------------------------------------------------

OLDER LIFE YOUNGER LIFE ADJUSTED AGE*

ADJUSTED -------------------------------------------------------------------

AGE* 55 60 65 70 75 80 85 and over

- --------------------------------------------------------------------------------

55 $3.79

60 3.87 $4.07

65 3.94 4.18 $4.45

70 3.99 4.27 4.61 $4.99

75 4.02 4.34 4.73 5.20 $5.72

80 4.05 4.38 4.81 5.35 6.00 $6.67

85 and over 4.06 4.40 4.86 5.45 6.18 7.00 $7.75

- --------------------------------------------------------------------------------

*See Section 9.1.

The amount of the payment for an y other combination of ages will be furnished

by the Company on request. Monthly payment rates are based on the 1983 Table a

mortality table with projection scale G, and an annual interest rate of 3 1/2%.

NPV.1C 13

<PAGE>

AMENDMENT TO SECTION 2 AND SECTION 6
FOR THE GROUP COMBINATION ANNUITY

AS OF THE CONTRACT DATE, THE THIRD, FOURTH AND FIFTH PARAGRAPHS OF SECTION
2.1 ARE AMENDED TO READ AS FOLLOWS:

The Separate Account is comprised of the Select Bond, International Equity,
Money Market, Balanced, Index 500 Stock, Aggressive Growth Stock, High Yield
Bond, Growth Stock, Growth and Income Stock, Index 400 Stock, Small Cap Growth
Stock, Russell Multi-Style Equity, Russell Aggressive Equity, Russell Non-US,
Russell Real Estate Securities, and Russell Core Bond Divisions. Assets
allocated to these Divisions are invested in shares of corresponding mutual
funds or portfolios of mutual funds, both of which are referred to in this
policy as Funds.

Shares of the Funds are purchased for the Separate Account at their net
asset value.

The Company may make available additional Divisions and Funds.

AS OF THE CONTRACT DATE SECTION 6.5 IS AMENDED TO READ AS FOLLOWS:

After the fifth contract year the Company may amend this contract from time
to time with respect to:

- - the Installation Fee;

- - the Sales Load;

- - the Maximum Annual Annuity Rate and Expense Guarantee Charge;

- - the Administration Fee;

- - the Transfer Fee;

- - the Minimum Purchase Payment;

- - the GRF Accounts Maximum; and

- - the Minimum Contract Value.

The amendment will take effect not less than 30 days after written notice
to the Owner.

Secretary
NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY

NPV.FUNDS.(0599)

<PAGE>

AMENDMENT TO SEPARATE ACCOUNT DIVISIONS

AS OF APRIL 30, 1999, THE SECOND AND THIRD PARAGRAPHS OF THE SEPARATE
ACCOUNT SECTION OF THE CONTRACT RELATING TO THE DIVISIONS OF THE SEPARATE
ACCOUNT AND THE ASSETS ALLOCATED TO THESE DIVISIONS ARE AMENDED TO READ AS
FOLLOWS:

The Company may make available additional Divisions and Portfolios.

Secretary
NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY

VA.FUNDS.(0599)
C

<PAGE>

A APPLICATION FOR GROUP COMBINATION ANNUITY CONTRACT

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
720 EAST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53202

NML Plan (or Trust) No. 001
-------------
Contract No. 10 000 001
-------------
- --------------------------------------------------------------------------------

1. NAME OF OWNER: Trustees of John Doe Corporation Trust
------------------------------------------------
(Name of Pension Plan)

2. ADDRESS OF OWNER: 123 Main Street
----------------------------------------------------------
Street & No. or RFD

Anywhere Anywhere Anystate 50000
----------------------------------------------------------
City County State Zip Code

3. NAME OF EMPLOYER: John Doe Corporation
----------------------------------------------------------

4. NAME OF APPLICANT:
----------------------------------------------------------
(If other than Owner)

5. CONTRACT LOAD TYPE (Check one):

/X/ FRONT-LOAD CONTRACT: Sales Load will be deducted pro-rata from the
allocations below.

/ / SIMPLIFIED-LOAD CONTRACT: Installation Fee ($750.00) will be deducted
pro-rata from the allocations below unless an amount is paid separately
from the allocations and is entered on the Amount of Installation Fee
line in question 7A.

6. Will any existing Northwestern Mutual Life annuities be exchanged for the
contract for which you are applying?

/X/ No (Continue with question 7.)

/ / Yes (Attach exchange form 18-1543 containing allocation instructions
for the exchange proceeds. If a purchase payment is to be made in
addition to the exchange proceeds, indicate the allocation
instructions for this purchase payment in question 7. Otherwise,
skip directly to question 8.)

7A. ALLOCATION OF PURCHASE PAYMENT:
<TABLE>
<CAPTION>
NORTHWESTERN MUTUAL SERIES FUNDS RUSSELL INSURANCE FUNDS
<S> <C> <C> <C>
Select Bond $ 10,000 Multi-Style Equity $
---------- ----------
International Equity $ Aggressive Equity $
---------- ----------
Money Market $ Non-US $
---------- ----------
Balanced $ Real Estate Securities $
---------- ----------
Index 500 Stock $ Core Bond $
---------- ----------
Aggressive Growth Stock $
----------
High Yield Bond $ FIXED FUND ACCOUNTS
----------
Growth Stock $ 1 Year Guaranteed $
---------- ----------
Growth and Income Stock $ 3 Year Guaranteed $
---------- ----------
Index 400 Stock $ 5 Year Guaranteed $
---------- ----------
Small Cap Growth Stock $
----------
</TABLE>
AMOUNT OF INSTALLATION FEE (IF
BEING PAID SEPARATELY FROM THESE
ALLOCATIONS).
Enter $0 or $750. (Does
not apply to front load
contracts.) $
----------

TOTAL PURCHASE PAYMENT $ 10,000
----------

- --------------------------------------------------------------------------------
90-1818 (0599)

Page 1
<PAGE>

- --------------------------------------------------------------------------------
7B. METHOD OF PURCHASE PAYMENT:

/X/ Check (Payable to The Northwestern Mutual Life Insurance Company)

/ / Wire Transfer

8. MATURITY REALLOCATION: Maturing amounts in a Guaranteed Return Fund Account
will be allocated to the Money Market Division unless otherwise directed by
checking the box below.

/ / Check here, if maturing amounts should be reallocated to the same
Guaranteed Return Fund Account.

9. FREQUENCY OF CONTRACT REPORTS: /X/ Annual / / Semi-Annual / / Quarterly

10. The following PROSPECTUS or OFFERING CIRCULAR AND REPORT was delivered on
May 1, 1999 :
------------------
Date of Delivery

/X/ Account C Offering Circular and Report (Corporate Employee Plan).

Date of Offering Circular May 1, 1999 Date of Report May 1, 1999
-------------- -------------.

/ / Account C Prospectus (Partnership or Sole Proprietorship Employee
Plan).

Date of Prospectus
----------------.

THE AGENT ACKNOWLEDGES DELIVERY AND THE OWNER ACKNOWLEDGES RECEIPT OF THE
PROSPECTUS OR OFFERING CIRCULAR AND REPORT. IT IS UNDERSTOOD THAT:

(1) Amounts allocated to the Separate Account Divisions are not guaranteed
as to fixed dollar amount but are variable and may increase or
decrease to reflect the investment experience of the Separate Account
Divisions.

(2) Any amounts surrendered or transferred from a Guaranteed Return Fund
Account prior to their maturity may be subject to a Market Value
Adjustment.

(3) The contract will be issued and the initial purchase payment will be
applied on the latest of the following dates: (a) the date on which
the pension or profit sharing plan or trust which this contract will
fund is established; (b) the date on which this completed application
is received at the Home Office; and (c) the date on which the initial
purchase payment is received at the Home Office.

(4) No agent of the Company is authorized to make or to alter contracts or
to waive any of the Company's rights or requirements.

(5) The Licensed Agent is a Registered Representative of Northwestern
Mutual Investment Services, LLC.

The Owner represents that the contract is funding a pension or profit sharing
plan or trust that is qualified under the Internal Revenue Code.

(signed) Norm W. Western (signed) John J. Doe
- ------------------------------------- ---------------------------------------
Signature of LICENSED AGENT Signature of APPLICANT

- -------------------------------------
Signature of OWNER if other than Applicant

Signed at: Anywhere Anywhere Anystate DATE: 5 / 1/ 99
-------------------------------------------- ----------------
City County State MM DD YYYY

90-1818 (0599)
Page 2

<PAGE>

================================================================================

It is recommended that you...

read your contract.

notify your Northwestern Mutual agent or the Company at 720 E. Wisconsin Avenue,

Milwaukee, Wis. 53202, of an address change.

call your Northwestern Mutual agent for information -- particularly on a

suggestion to terminate or exchange this contract for another contract or plan.

Election Of Trustees

The members of The Northwestern Mutual Life Insurance Company are its

policyholders of insurance policies and deferred annuity contracts. The members

exercise control through a Board of Trustees. Elections to the Board are held

each year at the annual meeting of members. Members are entitled to vote in

person or by proxy.

GROUP COMBINATION ANNUITY

AMOUNTS ALLOCATED TO THE SEPARATE ACCOUNT DIVISIONS AND VARIABLE PAYMENTS

PROVIDED BY THIS CONTRACT ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT BUT ARE

VARIABLE AND MAY INCREASE OR DECREASE TO REFLECT THE INVESTMENT EXPERIENCE OF

THE SEPARATE ACCOUNT.

NPV.1C

NORTHWESTERN

MUTUAL LIFE(R)

================================================================================

<PAGE>

EXHIBIT B(8)(a)

PARTICIPATION AGREEMENT
AMONG
RUSSELL INSURANCE FUNDS,
RUSSELL FUND DISTRIBUTORS, INC.
AND
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

THIS AGREEMENT is made and entered into as of this ____ day of
______________,by and among THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY a
Wisconsin life insurance company (hereinafter the "Company"), on its own behalf
and on behalf of each segregated asset account of the Company set forth on
Schedule A hereto as such schedule may be amended from time to time (each such
account hereinafter referred to as the "Account" and collectively as the
"Accounts"), and RUSSELL INSURANCE FUNDS, a Massachusetts Business Trust
(hereinafter the "Investment Company"), and RUSSELL FUND DISTRIBUTORS, INC. a
Washington corporation (hereinafter the "Underwriter").

WHEREAS, Investment Company engages in business as a diversified
open-end management investment company and is available to act as the investment
vehicle for separate accounts established for variable life insurance policies
and variable annuity contracts (collectively, the "Variable Insurance
Products"); and

WHEREAS, the beneficial interest in the Investment Company is divided
into several series of shares, referred to individually as "Funds" and
representing the interest in a particular managed portfolio of securities and
other assets; and

WHEREAS, Investment Company is registered as an open-end management
investment company under the 1940 Act, and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and

WHEREAS, Frank Russell Investment Management Company (the "Adviser")
is registered as an investment adviser under the federal Investment Advisers Act
of 1940 and any applicable state securities law; and

WHEREAS, the Company has registered or will register certain variable life or
annuity contracts or both under the 1933 Act, and offers or will offer for sale
certain variable life or annuity contracts or both which are or will be exempt
from registration; and

WHEREAS, each Account is a duly organized, validly existing,
segregated asset account, established by resolution of the Board of Trustees of
the Company, on the date shown for such Account on Schedule A hereto, to set
aside and invest assets attributable to one or more variable life or annuity
contracts; and

WHEREAS, the Company has registered or will register some of the
Accounts as unit investment trusts under the 1940 Act and other Accounts are
exempt from registration; and

1
<PAGE>

WHEREAS, Investment Company has received "mixed and shared funding"
exemptive relief from the Securities and Exchange Commission permitting it to
offer its shares to life insurers in connection with variable annuity contracts
and variable life insurance policies offered by such insurers which may or may
not be affiliated with each other (SEC Release IC-16160, Dec. 7, 1987); and

WHEREAS, the Underwriter is registered as a broker/dealer with the SEC
under the Securities Exchange Act of 1934, as amended (hereinafter the "1934
Act") and is a member in good standing of the National Association of Securities
Dealers, Inc. (hereinafter the "NASD"); and

WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Funds on behalf of
each Account to fund certain of the aforesaid variable life or annuity contracts
or both, and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value.

NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and other good and valuable consideration the receipt
of which is hereby acknowledged, the parties hereto, intending to be legally
bound hereby, agree as follows:

ARTICLE 1. SALE OF INVESTMENT COMPANY SHARES

1.1 The Underwriter agrees to sell to the Company those shares of
Investment Company which each Account orders, executing such orders on a daily
basis at the net asset value next computed after receipt by the Investment
Company or its designee of the order for the shares of the Investment Company.
For purposes of this Section 1.1, the Company shall be the designee of the
Investment Company for receipt of such orders from each Account and receipt by
such designee shall constitute receipt by the Investment Company; provided that
the Investment Company receives notice of such order by 8:00 a.m. Pacific time
on the next following Business Day. "Business Day" shall mean any day on which
the New York Stock Exchange is open for trading and on which Investment Company
calculated its net asset value pursuant to the rules of the Securities and
Exchange Commission.

1.2 The Investment Company agrees to make its shares available
indefinitely for purchase at the applicable net asset value per share by the
Company and its Accounts on those days on which the Investment Company
calculates its net asset value pursuant to rules of the Securities and Exchange
Commission, and the Investment Company shall use reasonable efforts to calculate
such net asset value on each day on which the New York Stock Exchange is open
for trading. Notwithstanding the foregoing, the Board of Directors of the
Investment Company (hereinafter the "Board") may refuse to sell shares of any
Fund, or suspend or terminate the offering of shares of any Fund if such action
is required by law or by regulatory authorities having jurisdiction or is, in
the sole discretion of the Board acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in the
best interests of the shareholders of such Fund.

1.3 The Investment Company and the Underwriter agree that no shares of any
Fund will be sold to the general public.

2
<PAGE>

1.4 The Investment Company agrees to redeem for cash, on the Company's
request, any full or fractional shares of the Investment Company held by the
Company, executing such requests on a daily basis at the net asset value next
computed after receipt by the Investment Company or its designee of the request
for redemption. For purposes of this Section 1.4, the Company shall be the
designee of the Investment Company for receipt of requests for redemption from
each Account, and receipt by such designee shall constitute receipt by the
Investment Company; provided that the Investment Company receives notice of such
request for redemption by 8:00 a.m. Pacific time on the next following Business
Day.

1.5 The Company agrees to purchase and redeem the shares of selected Funds
offered by the then-current prospectus of the Investment Company and in
accordance with the provisions of such prospectus. The parties agree that all
net amounts available under the variable life and annuity contracts with the
form number(s) which are listed on Schedule B attached hereto and incorporated
herein by this reference, as such Schedule B may be amended from time to time
hereafter by mutual written agreement of all the parties hereto (the
"Contracts"), may be invested in the Investment Company, in other separate
accounts of the Company, in other investment companies, in the Company's general
account, or in other funding vehicles.

1.6 The Company shall pay for Investment Company shares on the next
Business Day after an order to purchase Investment Company shares is made in
accordance with the provisions of Section 1.1 hereof. Payment shall be in
federal funds transmitted by wire.

1.7 Issuance and transfer of the Investment Company's shares will be by
book entry only. Stock certificates will not be issued to the Company or any
Account. Shares ordered from the Investment Company will be recorded in an
appropriate title for each Account.

1.8 The Investment Company shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the Company of any income
dividends or capital gain distributions payable on the Investment Company's
shares. The Company hereby elects to receive all such income dividends and
capital gain distributions as are payable on the Fund shares in additional
shares of that Fund. The Company reserves the right to revoke this election and
to receive all such income dividends and capital gain distributions in cash.
Investment Company shall furnish same day notice to the Company of the number of
shares so issued as payment of such dividends and distributions.

1.9 The Investment Company shall make the net asset value per share for
each Fund available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated.

ARTICLE II. REPRESENTATIONS AND WARRANTIES

2.1 The Company represents and warrants that the Contracts are registered
under the 1933 Act or are exempt from registration thereunder; that; the
Contracts will be issued and sold in compliance in all material respects with
all applicable Federal and State laws and that the sale of the Contracts shall
comply in all material respects with state insurance suitability requirements.
The Company further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally and
validly established each

3
<PAGE>

Account prior to any issuance or sale of Contracts funded thereby as a
segregated asset account under applicable state insurance law and that each
Account is or will be registered as a unit investment trust in accordance with
the provisions of the 1940 Act to serve as a segregated investment account for
the Contracts or is exempt from registration thereunder.

2.2 The Investment Company represents and warrants that Investment Company
shares sold pursuant to this Agreement shall be registered under the 1933 and
1940 Acts, duly authorized for issuance and sold in compliance with the laws of
the State of Washington and all applicable federal and state securities laws and
that the Investment Company is and shall remain registered under the 1940 Act.
The Investment Company shall amend the Registration Statement for its shares
under the 1933 and the 1940 Acts from time to time as required in order to
effect the continuous offering of its shares. The Investment Company shall
register and qualify the shares for sale in accordance with the laws of the
various states only if and to the extent deemed advisable by the Investment
Company or the Underwriter.

2.3 The Investment Company represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.

2.4 The Company represents that the Contracts are currently treated as
endowment, annuity or life insurance contracts, under applicable provisions of
the Code and that it will make every effort to maintain such treatment and that
it will notify the Investment Company and the Underwriter immediately upon
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.

2.5 The Investment Company currently does not intend to make any payments
to finance distribution expenses pursuant to Rule l2b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. To the extent that
it decides to finance distribution expenses pursuant to Rule 12b-1, the
Investment Company undertakes to have its board of trustees, a majority of whom
are not interested persons of the Investment Company, formulate and approve any
plan under Rule l2b-1 to finance distribution expenses.

2.6 The Investment Company makes no representation as to whether any
aspect of its operations (including, but not limited to, fees and expenses and
investment policies) complies with the insurance laws or regulations of the
various states.

2.7 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Investment
Company shares in accordance with any applicable state laws and federal
securities laws, including without limitation the 1933 Act, the 1934 Act, and
the 1940 Act.

2.8 The Investment Company represents that it is lawfully organized and
validly existing under the laws of the Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act.

4
<PAGE>

2.9 The Underwriter represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable federal and
state securities laws and that the Adviser shall perform its obligations for the
Investment Company in compliance in all material respects any applicable state
laws and federal securities laws.

2.10 The Investment Company and Underwriter represent and warrant that all
of their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money or securities of the Investment
Company are and shall continue to be at all times covered by a blanket fidelity
bond or similar coverage for the benefit of the Investment Company in an amount
not less than the minimal coverage as required currently by Rule 17g-(1) of the
1940 Act or related provisions as may be promulgated from time to time. The
aforesaid Bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company.

2.11 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other entities dealing with the
money or securities of the Investment Company are and shall continue to be at
all times covered by a blanket fidelity bond or similar coverage for the benefit
of the Investment Company in an amount not less than five million dollars ($5
million). The aforesaid Bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.

ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS: VOTING

3.1 The Underwriter shall provide the Company with as many printed copies
of the Investment Company's current prospectus and Statement of Additional
Information as the Company may reasonably request. If requested by the Company
in lieu thereof, the Investment Company shall provide camera-ready film or
computer diskettes containing the Investment Company's prospectus and Statement
of Additional Information and such other assistance as is reasonably necessary
in order for the Company once each year (or more frequently if the prospectus
and/or Statement of Additional Information for the Investment Company is amended
during the year) to have the prospectus for the Contracts and the Investment
Company's prospectus printed together in one document, and to have the Statement
of Additional Information for the Investment Company and the Statement of
Additional Information for the Contracts printed together in one document.
Alternatively, the Company may print the Investment Company's prospectus and/or
its Statement of Additional Information in combination with other fund
companies' prospectuses and statements of additional information. Except as
provided in the following three sentences, all expenses of printing and
distributing Investment Company prospectuses and Statements of Additional
Information distributed by the Company shall be the expense of the Company. For
Prospectuses and Statement of Additional Information provided by the Company to
its existing owners of Contracts in order to update disclosure as required by
the 1933 Act and/or the 1940 Act, the cost of printing shall be borne by the
Investment Company. If the Company chooses to receive camera-ready film or
computer diskettes in lieu of receiving printed copies of the Investment
Company's prospectus, the Investment Company will reimburse the Company in an
amount equal to the product of A and B where A is the number of such
prospectuses distributed to owners of the Contracts, and B is the Investment
Company's per unit cost of typesetting and printing the Investment Company's

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prospectus. The same procedures shall be followed with respect to the
Investment Company's Statement of Additional Information.

The Company agrees to provide the Investment Company or its designee
with such information as may be reasonably requested by the Investment Company
to assure that the Investment Company's expenses do not include the cost of
printing any prospectuses or Statements of Additional Information other than
those actually distributed to existing owners of the Contracts.

3.2 The Investment Company's prospectus shall state that the Statement of
Additional Information for the Investment Company is available from the
Underwriter or the Company (or in the Fund's discretion, the Prospectus shall
state that such Statement is available from the Investment Company).

3.3 The Investment Company, at its expense, shall provide the Company with
copies of its proxy statements, reports to shareholders, and other required
communications (except for prospectuses and Statement of Additional Information,
which are covered in Section 3.1) to shareholders in such quantity as the
Company shall reasonably require for distributing to Contract owners.

3.4 The Company will provide pass-through voting privileges to all
Contract owners to the extent that and so long as the SEC continues to interpret
the Investment Company Act of 1940 as requiring pass-through voting privileges
for Contract owners. Accordingly, the Company, where applicable, will vote
shares of the Fund held in its Separate Accounts in a manner consistent with
voting instructions timely received from its Contract owners. The Company will
be responsible for assuring that each of its separate accounts that participates
in the Investment Company calculates voting privileges in a manner consistent
with other participating insurance companies. The Company will vote shares for
which it has not received timely voting instructions, as well as shares it owns,
in the same proportion as it votes those shares for which it has received voting
instructions.

3.5 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Investment Company Act of 1940 or the rules thereunder with respect to mixed and
shared funding on terms and conditions materially different from any exemptions
granted in the Investment Company's mixed and shared funding exemptive order,
then the Investment Company, and/or the Company, as appropriate, shall take such
steps as may be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as amended,
and Rule 6e-3, as adopted, to the extent such Rules are applicable.

3.6 The Investment Company will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Investment Company will
either provide for annual or special meetings or comply with the requirements of
Section 16(c) of the 1940 Act (although the Investment Company is not one of the
trusts described in Section 16(c) of that Act) as well as with Sections 16(a)
and, if and when applicable, 16(b). Further, the Investment Company will act in
accordance with the SEC's interpretation of the requirements of Section 16(a)
with respect to periodic elections of directors and with whatever rules the SEC
may promulgate with respect thereto.

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ARTICLE IV. SALES MATERIAL AND INFORMATION

4.1 The Company shall furnish, or shall cause to be furnished, to the
Investment Company or its designee, each piece of sales literature or other
promotional material, or component thereof, in which the Investment Company, the
Adviser, or the Underwriter is named, at least fifteen Business Days prior to
its use. No such material shall be used if the Investment Company or its
designee object to such use within fifteen Business Days after receipt of such
material. Once any such material has been so furnished to the Investment
Company or its designee and fifteen Business days have elapsed, such materials
need not again be so furnished absent any subsequent changes to such material
that affect the materials' discussion or presentation relating to the Investment
Company, its advisor, the Underwriter, or any of their affiliates (other than
the Company or persons that are deemed affiliates only by virtue of being
controlled by the Company). In particular, materials that have been changed
merely to update performance or financial information need not be so furnished.

4.2 The Company shall not give any information or make any representations
or statements on behalf of the Investment Company or concerning the Investment
Company in connection with the sale of the Contracts other than the information
or representations contained in the registration statement or prospectus for the
Investment Company shares, as such registration statement and prospectus may be
amended or supplemented from time to time, or in reports or proxy statements for
the Investment Company, or in sales literature or other promotional material
approved by the Investment Company or its designee or by the Underwriter, except
with the permission of the Investment Company or the Underwriter or the designee
of either.

4.3 The Investment Company, the Underwriter, or their designees shall
furnish, or shall cause to be furnished, to the Company or its designee, each
piece of sales literature or other promotional material, or component thereof,
in which the Company or its separate Accounts are named at least fifteen
Business Days prior to its use. No such material shall be used if the Company
or its designee objects to such use within fifteen Business Days after receipt
of such material.

4.4 The Investment Company and the Underwriter shall not give any
information or make any representations on behalf of the Company or concerning
the Company, each Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus or offering
materials for the Contracts, as such may be amended or supplemented from time to
time, or in published reports for each Account which are in the public domain or
approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.

4.5 The Investment Company will provide to the Company at least one
complete copy of all registration statements, prospectuses, Statements of
Additional Information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Investment
Company or its shares, contemporaneously with the filing of such document with
the Securities and Exchange Commission or other regulatory authorities.

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<PAGE>

4.6 The Company will provide to the Investment Company at least one
complete copy of all registration statements, prospectuses, Statements of
Additional Information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Contracts or each Account, contemporaneously with the filing of
such document with the SEC or other regulatory authorities. In the case of
unregistered Contracts, in lieu of providing prospectuses and Statements of
Additional Information, the Company shall provide the Investment Company with
one complete copy of the offering materials for the Contracts.

4.7 For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, electronic media, or other public media),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.

ARTICLE V. POTENTIAL CONFLICTS

5.1 The parties acknowledge that Investment Company has received a "mixed
and shared funding "exemptive order from the SEC granting relief from various
provisions of the Investment Company Act of 1940 and the rules thereunder to the
extent necessary to permit Investment Company shares to be sold to and held by
Variable Insurance Products separate accounts of both affiliated and
unaffiliated participating insurance companies. The exemptive order requires
the Investment Company and each participating insurance company to comply with
conditions and undertakings substantially as provided in this Article V. The
Investment Company will not enter into a participation agreement with any other
participating insurance company unless it imposes the same conditions and
undertakings as are imposed on the Company.

5.2 The Investment Company's Board of Trustees ("Board") will monitor the
Investment Company for the existence of any material irreconcilable conflict
between the interests of Contract owners of all separate accounts investing in
the Investment Company. An irreconcilable material conflict may arise for a
variety of reasons, which may include: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling or any similar action by insurance, tax or securities regulatory
authorities; (c) an administrative or judicial decision in any relevant
proceeding; (d) the manner in which the investments of the Investment Company
are being managed; (e) a difference in voting instructions given by Contract
owners; and (f) a decision by a participating insurance company to disregard the
voting instructions of Contract owners.

5.3 The Company will report any potential or existing conflicts to the
Investment Company's Board. The Company will be responsible for assisting the
Board in carrying out its duties in this regard by providing the Board with all
information reasonably necessary for the Board to

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<PAGE>

consider any issues raised. The responsibility includes, but is not limited to,
an obligation by the Company to inform the Board whenever it has determined to
disregard Contract owner voting instructions. These responsibilities of the
Company will be carried out with a view only to the interests of the Contract
owners.

5.4 If a majority of the Board or majority of its disinterested Trustees,
determines that a material irreconcilable conflict exists affecting the Company,
then the Company, at its expense and to the extent reasonably practicable (as
determined by a majority of the Board's disinterested Trustees), will take any
steps necessary to remedy or eliminate the irreconcilable material conflict,
including: (a) withdrawing the assets allocable to some or all of the separate
accounts from the Investment Company or any Fund thereof and reinvesting those
assets in a different investment medium, which may include another Fund of the
Investment Company, or another investment company; (b) submitting the question
as to whether such segregation should be implemented to a vote of all affected
Contract owners and as appropriate, segregating the assets of any appropriate
group (i.e., variable annuity or variable life insurance contract owners of one
or more participating insurance companies) that votes in favor of such
segregation, or offering to the affected Contract owners the option of making
such a change; and (c) establishing a new registered management investment
company (or series thereof) or managed separate account. If a material
irreconcilable conflict arises because of the Company's decision to disregard
Contract owner voting instructions, and that decision represents a minority
position or would preclude a majority vote, the Company may be required at the
election of the Investment Company, to withdraw its separate accounts'
investment in the Investment Company, and no charge or penalty will be imposed
as a result of such withdrawal. The responsibility to take such remedial action
shall be carried out with a view only to the interests of the Contract owners.

For the purposes of this Section 5.4, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict but in no event will
the Investment Company or any investment adviser of the Investment Company be
required to establish a new funding medium for any Contract. Further, the
Company shall not be required by this Section 5.4 to establish a new funding
medium for any Contract if any offer to do so has been declined by a vote of a
majority of Contract owners materially and adversely affected by the
irreconcilable material conflict.

5.5 The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to the Company.

5.6 No less than annually, the Company shall submit to the Board such
reports, materials or data as the Board may reasonably request so that the Board
may fully carry out its obligations. Such reports, materials, and data shall be
submitted more frequently if deemed appropriate by the Board.

ARTICLE VI. FEES AND EXPENSES

6.1 The Investment Company and the Underwriter shall pay no fee or other
compensation to the Company under this Agreement, except that if the Investment
Company or any Fund adopts and implements a plan pursuant to Rule l2b-1 to
finance distribution expenses, then the Underwriter may make payments to the
Company or to the underwriter for the Contracts if and in amounts agreed to by
the Underwriter in writing and such payments will be made out of

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<PAGE>

existing fees otherwise payable to the Underwriter, past profits of the
Underwriter, or other resources available to the Underwriter. No such payments
shall be made directly by the Investment Company. Currently, no such payments
are contemplated.

6.2 All expenses incident to performance by the Investment Company under
this Agreement shall be paid by the Investment Company. The Investment Company
shall ensure that all its shares are registered and authorized for issuance in
accordance with applicable federal law and, if and to the extent deemed
advisable by the Investment Company, in accordance with applicable state laws
prior to their sale. The Investment Company shall bear the expenses for the
cost of registration and qualification of the Investment Company's shares,
preparation and filing of the Investment Company's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes and fees on the issuance or transfer of the Investment Company's
shares.

6.3 The Company shall bear the expenses of distributing the Investment
Company's prospectus, proxy materials, and reports to owners of Contracts issued
by the Company.

ARTICLE VII. DIVERSIFICATION

7.1 The Investment Company will at all times invest money from the
Contracts in such a manner as to ensure that the Contracts will be treated as
variable contracts under the Internal Revenue Code and the regulations issued
thereunder. Without limiting the scope of the foregoing, the Investment Company
will at all times comply with Section 817(h) of the Code and Treasury Regulation
1.817-5, relating to the diversification requirements for variable annuity,
endowment, or life insurance contracts and any amendments or other modifications
to such Section or Regulations.

ARTICLE VIII. INDEMNIFICATION

8.1 INDEMNIFICATION BY THE COMPANY

8.1(a). The Company agrees to indemnify and hold harmless the Investment
Company and each member of the Board and officers and each person, if any, who
controls the Investment Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company) or litigation (including
legal and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or action in respect thereof)
or settlements are related to the Company's sale or acquisition of the
Investment Company's shares or the Contracts and:

(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in any Registration Statement,
prospectus or other offering materials for the Contracts or contained in the
Contracts or sales literature for the Contracts (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or

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<PAGE>

necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or on behalf
of the Investment Company for use in any Registration Statement or prospectus
for the Contracts or in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the Contracts or
Investment Company's shares; or

(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the Registration
Statement, prospectus or sales literature of the Investment Company not supplied
by the Company, or persons under its control) or wrongful conduct of the Company
or persons under its control, with respect to the sale or distribution of the
Contracts or Investment Company shares; or

(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a Registration Statement, prospectus, or sales
literature of the Investment Company or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance upon information
furnished to the Investment Company by or on behalf of the Company; or

(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement; or

(v) arise out of a result from any material breach of any
representation or warranty made by the Company in this Agreement or arise out of
or result from any other material breach of this Agreement by the Company, as
limited by and in accordance with the provisions of Sections 8.1(b) and 8.1(c)
hereof.

8.1(b). The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations or duties under this Agreement or to the
Investment Company, whichever is applicable.

8.1(c). The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Company in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Company of any such claim shall not
relieve the Company from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's election
to assume the defense thereof, the Indemnified Party shall

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<PAGE>

bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.

8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Investment Company shares or the Contracts or the
operation of the Investment Company.

8.2 INDEMNIFICATION BY THE UNDERWRITER

8.2(a). The Underwriter agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who controls or is
controlled by the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
expenses (including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Investment
Company's shares or the Contracts and;

(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement or prospectus or sales literature of the Investment Company
(or any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if
such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to
the Underwriter or Investment Company by or on behalf of the Company
for use in the Registration Statement or prospectus for the Investment
Company or in the sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or
Investment Company shares; or

(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in any
Registration Statement, prospectus, other offering materials or sales
literature for the Contracts not supplied by the Underwriter or
persons under its control) or wrongful conduct of the Investment
Company, Adviser, or Underwriter or persons under their control, with
respect to the sale or distribution of the Contracts or Investment
Company shares; or

(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement, prospectus,
other offering materials or sales literature covering the Contracts,
or any amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on behalf of
the Investment Company; or

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<PAGE>

(iv) arise as a result of any failure by the Investment Company to
provide the services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good faith
or otherwise, to comply with the diversification requirements
specified in Article VII of this Agreement); or

(v) arise out of or result from any material breach of any
representation or warranty made by the Underwriter in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Underwriter; as limited by and in accordance with the
provisions of Sections 8.2(b) and 8.2(c) hereof.

8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company or each Account, whichever is applicable.

8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.

8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of any Account.

8.3 INDEMNIFICATION BY THE INVESTMENT COMPANY

8.3(a). The Investment Company agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls or is controlled by the Company within the meaning of Section 15 of
the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8.3) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Investment Company) or litigation expenses (including legal and other
expenses) to which the Indemnified Parties may become subject under any
statute, at common law or otherwise, insofar as such losses, claims,

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<PAGE>

damages, liabilities or expenses (or actions in respect thereof) or
settlements result from the gross negligence, bad faith or willful misconduct
of the Board or any member thereof, are related to the operations of the
Investment Company and:

(i) arise as a result of any failure by the Investment Company to
provide the services and furnish the materials under the terms of this
Agreement (including a failure to comply with the diversification
requirements specified in Article VII of this Agreement); or

(ii) arise out of or result from any material breach of any
representation or warranty made by the Investment Company in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Investment Company, as limited by and in
accordance with the provisions of Sections 8.3(b) and 8.3(c) hereof.

8.3(b). The Investment Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's will misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Investment Company, the Underwriter or any Account, which ever
is applicable.

8.3(c). The Investment Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Investment Company in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Investment
Company of any such claim shall not relieve the Investment Company from any
liability which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In case
any such action is brought against the Indemnified Parties, the Investment
Company will be entitled to participate, at its own expense, in the defense
thereof. The Investment Company also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action. After
notice from the Investment Company to such party of the Investment Company's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Investment
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.

8.3(d). The Company and the Underwriter agree promptly to notify the
Investment Company of the commencement of any litigation or proceeding against
it or any of its respective officers or directors in connection with this
Agreement, the issuance or sale of the Contracts, with respect to the operation
of any Account, or the sale or acquisition of shares of the Investment Company.

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ARTICLE IX. APPLICABLE LAW

9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Washington.

9.2 To the extent they are applicable, this Agreement shall be subject to
the provisions of the 1933, 1934 and 1940 acts, and the rules and regulations
and rulings thereunder, including such exemptions from those statutes, rules and
regulations as the Securities and Exchange Commission may grant and the terms
hereof shall be interpreted and construed in accordance therewith.

ARTICLE X. TERMINATION OF AGREEMENT

10.1 This Agreement shall continue in full force and effect until the first
to occur of:

(a) termination by any party for any reason by sixty (60) days
advance written notice delivered to the other parties; or

(b) termination by the Company by written notice to the Investment
Company and the Underwriter with respect to any fund based upon the Company's
determination that shares of such Fund are not reasonably available to meet the
requirements of the Contracts; or

(c) termination by the Company by written notice to the Investment
Company and the Underwriter with respect to any Fund in the event any of the
Fund's shares are not registered, issued, or sold materially in accordance with
applicable state or federal law or such law precludes the use of such shares as
the underlying investment media of the Contracts issued or to be issued by the
Company; or

(d) Termination by the Company by written notice to the Investment
Company and the Underwriter with respect to any Fund in the event that such Fund
ceases to qualify as a Regulated Investment Company under Subchapter M of the
Code or under any successor or similar provision, or if the Company reasonably
believes that the Investment Company may fail to so qualify; or

(e) termination by the Company by written notice to the Investment
Company and the Underwriter with respect to any Fund in the event that such Fund
fails to meet the diversification requirements specified in Article VII hereof;
or

(f) termination by either the Investment Company or the Underwriter
by written notice to the Company, if either one or both of the Investment
Company or the Underwriter respectively, shall determine, in their sole judgment
exercised in good faith, that the Company or its affiliated companies has
suffered a material adverse change in its business, operations, financial
condition, or prospects since the date of this Agreement or is the subject of
material adverse publicity; or

(g) termination by the Company by written notice to the Investment
Company and the Underwriter, if the Company shall determine, in its sole
judgment exercised in good faith, that either the Investment Company or the
Underwriter has suffered a material adverse change in its

15
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business, operations, financial condition, or prospects since the date of this
Agreement or is the subject of material adverse publicity.

10.2 Notwithstanding any termination of this Agreement, the Investment
Company and the Underwriter shall at the option of the Company, continue to make
available additional shares of the Investment Company pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective date
of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investment in the Investment Company,
redeem investments in the Investment Company, or invest in the Investment
Company upon the making of additional purchase payments under the Existing
Contracts.

10.3 The Company shall not redeem Investment Company shares attributable to
the Contracts (as opposed to Investment Company shares attributable to the
Company's assets held in any of the Accounts) except (i) as necessary to
implement Contract Owner initiated transactions, or (ii) as required by state or
federal laws or regulations or judicial or other legal precedent of general
application (hereinafter referred to as a "Legally Required Redemption"). Upon
request, the Company will promptly furnish to the Investment Company and the
Underwriter the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Investment Company and the Underwriter) to the
effect that any redemption pursuant to clause (ii) above is a Legally Required
Redemption. Furthermore, except in cases where permitted under the terms of the
Contracts, the Company shall not prevent Existing Contract Owners from
allocating payments to a Fund that was otherwise available under the Contracts
without first giving the Investment Company or the Underwriter sixty (60) days
notice of its intention to do so.

ARTICLE XI. NOTICES

Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.

If to the Investment Company:

909 A. Street
Tacoma, Washington 98402
Attention: Karl J. Ege, Esq.

If to the Company:

720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-4797
Attention:
-------------------------

If to the Underwriter:

909 A. Street
Tacoma, Washington 98402
Attention: Karl J. Ege, Esq.

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ARTICLE XII. MISCELLANEOUS

12.1 All persons dealing with the Investment Company must look solely to
the property of the Investment Company for the enforcement of any claims against
the investment Company as neither the Board, officers, agents or shareholders
assume any personal liability for obligations entered into on behalf of the
Investment Company.

12.2 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.

12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.

12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.

12.5 If any provisions of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.

12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable life
insurance operations of the Company are being conducted in a manner consistent
with the California Variable Life Insurance Regulations and any other applicable
law or regulations.

12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.

12.8 This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Underwriter may assign this Agreement or any
rights or obligations hereunder to any affiliate of or company under common
control with the Underwriter, if such assignee is duly licensed and registered
to perform the obligations of the Underwriter under this Agreement.

17
<PAGE>

12.9 The Company shall furnish, or shall cause to be furnished, to the
Investment Company or its designee copies of the following reports:

(a) the Company's annual statement prepared under statutory
accounting principles, as soon as practical and in any event within 90 days
after the end of each fiscal year;

(b) the Company's quarterly statement (statutory), as soon as
practical and in any event within 45 days after the end of each quarterly
period; and

(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders or policyholders, as soon as practical after the
delivery thereof; and

12.10 The Master Trust Agreement dated 11 July 1996, as amended from time to
time, establishing the Investment Company, which is hereby referred to and a
copy of which is on file with the Secretary of The Commonwealth of
Massachusetts, provides that the name Russell Insurance Funds means the Trustees
from time to time serving (as Trustees but not personally) under said Master
Trust Agreement. It is expressly acknowledged and agreed that the obligations
of the Investment Company hereunder shall not be binding upon any of the
shareholders, Trustees, officers, employees or agents of the Investment Company,
personally, but shall bind only the trust property of the Investment Company as
provided in its Master Trust Agreement. The execution and delivery of this
Agreement have been authorized by the Trustees of the Investment Company and
signed by the President of the Investment Company, acting as such, and neither
such authorization by such Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Investment Company as provided in its Master Trust Agreement.

IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed in its name and on behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date first
written above.

THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY

ATTEST: BY:
- ------------------------------------- --------------------------------------
Secretary Title:

RUSSELL INSURANCE FUNDS

ATTEST: BY:
- ------------------------------------- --------------------------------------
Secretary President

RUSSELL FUND DISTRIBUTORS, INC.

18
<PAGE>

ATTEST: BY:
- ------------------------------------- --------------------------------------
Secretary President

19
<PAGE>

SCHEDULE A

ACCOUNTS

Name of Account Date of Resolution of Company's
Board that established the Account

NML Variable Annuity Account A February 14, 1968
NML Variable Annuity Account B February 14, 1968
NML Variable Annuity Account C July 22, 1970
Northwestern Mutual Variable Life November 23, 1983
Account

20
<PAGE>

SCHEDULE B

CONTRACTS

1. Contract Form Numbers:

Variable Life:
RR.VJL.(1298) RR Series Variable Joint Life
RR.VEL.(0398) RR Series Variable Executive Life
QQ.VCL QQ Series Variable CompLife
MM 15 MM Series Variable Whole Life
MM 16 MM Series Variable Single Premium Life
MM 17 MM Series Variable Extraordinary Life

Individual Variable Annuity:
QQV.ACCT.A QQV.ACCT.B QQ Series VAs
MM V 1A MM V 1B MM V 1 MM Series VAs
LL V 1A LL V 1B LL V 1 LL Series VAs
KK V 1A KK V 1B KK V 1 KK Series VAs
JJ V 1A JJ V 1B JJ Series VAs

Group Variable Annuity
NPV.1C NN Series GPA
MP V 1C MM Series GPA
LL V 1C LL Series GPA
KK V 1C KK Series GPA
JJ V 1C JJ Series GPA

2. Funds currently available to act as investment vehicles for the
above-listed contracts:

Russell Insurance Funds: Multi-Style Equity Fund
Aggressive Equity Fund
Non-U.S. Fund
Core Bond Fund
Russell Real Estate Securities Fund

<PAGE>

Exhibit B(8)(b)

February __, 1999

The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202

Re: Administrative Service Fee

Gentlemen:

The purpose of this letter is to confirm certain financial arrangements
between Frank Russell Investment Management Company ("FRIMCo"), the investment
adviser to Russell Insurance Funds, a registered investment company (the
"Trust"), and The Northwestern Mutual Life Insurance Company ("NML") in
connection with NML's investment in the Trust. FRIMCo or its affiliates will
pay an administrative services fee to NML equal, on an annualized basis, to
0.10% of the aggregate net assets of the Trust attributable to NML (other
than assets attributable to NML employee and agent qualified plans). Such fee
shall be paid quarterly (on a calendar year basis) in arrears for as long as NML
owns shares in the Trust.

Sincerely,

FRANK RUSSELL INVESTMENT
MANAGEMENT COMPANY

By:
---------------------------
Lynn L. Andersen
Chief Executive Officer

Agreed to and accepted:

THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY

By:
--------------------------------
Mark G. Doll
Senior Vice President

<PAGE>

Exhibit B(10)

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 19 to the registration
statement on Form N-4 (the "Registration Statement") of our report dated
January 25, 1999, relating to the financial statements of The Northwestern
Mutual Life Insurance Company, and of our report dated January 25, 1999,
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.

PricewaterhouseCoopers LLP

Milwaukee, Wisconsin
February 25, 1999