Does Northwestern Really Outperform MassMutual?

[Mountaineer Fan]

These cherry-picked reports are not helpful nor are they truly 3rd party. If Mass Mutual had a die-hard desciple posting in this thread, they too would no doubt be posting their own cherry-picked pseudo-3rd party literature.

Personally, both companies are strong. I began my career with NML as a college agent in the mid-70's.

What it may boil down to is which agent do you want to have the relationship with? NML agents will stick to their "guns" come hell or high water.

 

[dgoldenz]

Someone correct me if I'm wrong, but didn't SBLI have the best IRR of all the companies and the lowest premium rates? Why does nobody ever mention SBLI?

 

[mikichan]

Someone correct me if I'm wrong, but didn't SBLI have the best IRR of all the companies and the lowest premium rates? Why does nobody ever mention SBLI?

I did look at SBLI, and over the short term, they are best -- tons of cash and a small dividend. But after 30 years, their NG cash value and dividends isn't that great compared to NML or MM (at least in the NG part of the illustration). I'm just looking at cash value before 30 years, and dividend after 30 years. If I went with SBLI, I feel like I'd do better buying term and investing the difference (BTID). But with NML or MM, it seems like after 30 years, they will do better or about the same than BTID.

 

[dgoldenz]

There is no way to predict which company will have the highest IRR or dividends 30 years from now.

 

[Brantley]

Someone correct me if I'm wrong, but didn't SBLI have the best IRR of all the companies and the lowest premium rates? Why does nobody ever mention SBLI?

One of the problems with SBLI is that they do not have a flexible PUA rider. Their PUA rider only allows PUA's to purchased through dividends. In other words, you can't stuff it full of cash.

 

[Chuckles21]

I did look at SBLI, and over the short term, they are best -- tons of cash and a small dividend. But after 30 years, their NG cash value and dividends isn't that great compared to NML or MM (at least in the NG part of the illustration). I'm just looking at cash value before 30 years, and dividend after 30 years. If I went with SBLI, I feel like I'd do better buying term and investing the difference (BTID). But with NML or MM, it seems like after 30 years, they will do better or about the same than BTID.

You hit it on the head, they front load the dividends. Long term both companies will outperform SBLI.

 

[dgoldenz]

You hit it on the head, they front load the dividends. Long term both companies will outperform SBLI.

Is that a guarantee?

 

[BNTRS]

Jesus NML brands everything.

The comparison report you should be looking at is a vital-signs report. That way you can look at figures that really matter.

A few things:

NML holds onto a lot of junk bonds. And I mean a lot. Their total position in Junk bonds is a little over half their surplus ratio. Surplus ratio is the money they have in access of liabilities.

Massmutual has way fewer junk bonds and a higher net investment yield on assets over the past 5 years. I'm not saying it's all about bonds, but that play (as at least part of the overall investment strategy) hasn't worked out for NML as well as what MM is doing is working for them.

NML loves to quote the amount of dividends it pays in absolute numbers. Of course, it doesn't mean much, since they pay dividends on just about everything they sell, so they spread the dividends out quite a bit.

NML does have a lower lapse rate, which is good news for stability of business. Both are about the same when it comes to day to day business success. Neither has a stellar return on equity. NML does a better job keeping a handle on expenses than Massmutual.


NML doesn't reinsure much of anything. They have lots of assets and they write smaller policies than Mass, so they can get buy with this, but it's a little worrying.


NML is all about individual life business. Mass is spread out more. Both has done well with what they are currently doing.

Maybe if I have a little more time over the next day or two, I'll dive into actual policy provision specifics.

 

[Chuckles21]

NML loves to quote the amount of dividends it pays in absolute numbers. Of course, it doesn't mean much, since they pay dividends on just about everything they sell, so they spread the dividends out quite a bit.

Not true, the # i quoted before is only for life.

2010 total dividends paid: $4,846,170,000
2010 life dividends paid: $4,527,758,000

So over 93% of all dividends went to life policies, how is that spread out?

NML doesn't reinsure much of anything. They have lots of assets and they write smaller policies than Mass, so they can get buy with this, but it's a little worrying.

Depends on your definition of much of anything. In 2010 NML reinsured 6.4% of premiums and 38.7% of face amount. So they reinsured a good amount of their face amount. Mass definitely did more though doing 11.1% of premiums and 61.8% of face amount. Although Mass also did assume reinsurance for others while NML does not assume any reinsurance.

 

[BNTRS]

Not true, the # i quoted before is only for life.

2010 total dividends paid: $4,846,170,000
2010 life dividends paid: $4,527,758,000

So over 93% of all dividends went to life policies, how is that spread out?

So if NML is paying money on term insurance, what does that do for me as a WL policy owner? It takes divisible surplus away from me.

Depends on your definition of much of anything. In 2010 NML reinsured 6.4% of premiums and 38.7% of face amount. So they reinsured a good amount of their face amount. Mass definitely did more though doing 11.1% of premiums and 61.8% of face amount. Although Mass also did assume reinsurance for others while NML does not assume any reinsurance.

Or maybe it depends on what your definition of "is" is. NML is reinsuring about a third of face amount written, while Mass is close to two-thirds. Now maybe you'd tell me that's because NML has agents that care about the company and its profitability and so they don't writ the crap business Mass agents do. And that would be totally acceptable, because I wouldn't expect any less. Truth is, they are taking on more risk. I'm not sure why you'd bring up the NML doesn't assume reinsurance. That's like Macy's making a budget and saying we're not going to assume any sales adjustments. There's a cost to reinsurance, so not assuming it means you don't budget for it. You can't possibly be right about this, NML is not that foolish.