More than 150 years ago, a group of insurance enthusiasts in Milwaukee decided it was time to shake up the industry. There were uninsured horses and carriages all over the place, and although the demand for insurance was growing, in a modern sense, the industry was still in its infancy.
Northwestern Mutual, the company they founded, is now one of the leading providers of life insurance, disability insurance, and long-term care insurance in the United States. The company also offers various financial products, including retirement planning and investment services such as:
- Term, whole, and universal life insurance
- Various mutual funds covering different asset classes and investment strategies
- Retirement accounts, such as individual retirement accounts (IRAs) and 401k plans
- Education savings accounts, including 529 plans
Despite its significant presence in the financial industry, investing directly in Northwestern Mutual is not possible. Since it's a mutual company, policyholders, rather than shareholders, own it. However, there are several ways to get exposure to the insurance industry and companies tangentially related to Northwestern Mutual.
Publicly traded?
Is Northwestern Mutual publicly traded?
No, Northwestern Mutual is not publicly traded on the stock market. This means you cannot directly buy shares of Northwestern Mutual as you would with a publicly traded company, like Tesla (TSLA 0.15%) or Yum! Brands (YUM -2.45%). As a mutual company, its policyholders own it, which allows the company to focus on serving its best interests.
What does it mean when a company operates as a mutual company?
A mutual company is owned by its policyholders rather than shareholders. Northwestern Mutual policy owners can benefit from the company's profits through dividends or reduced premiums. This structure enables Northwestern Mutual to prioritize policyholder interests over shareholder profits.
When will it IPO?
When will Northwestern Mutual IPO?
An initial public offering (IPO) would involve Northwestern Mutual selling shares to the public and being listed on a stock exchange. As of now, Northwestern Mutual has not announced plans to go public. Because of its mutual company structure, Northwest Mutual would need to overhaul its business model to go public.
IPO
How to buy
How to buy Northwestern Mutual stock
While you can't purchase shares of Northwestern Mutual, you can invest in other insurance companies or companies that provide goods or services to the insurance industry. Follow these steps to buy stock in companies similar to Northwestern Mutual.
Step 1: Open a brokerage account
To start investing in companies related to Northwestern Mutual, you'll need a brokerage account. This account will allow you to trade stocks, exchange-traded funds (ETFs), and other securities. Here is what to look for when searching for brokers:
- Commission-free trades: Many brokers have eliminated commissions on trading, which can save you money when you buy and sell securities.
- Low or no minimum deposit: Many brokers have eliminated their minimum deposit requirement, making investing more accessible for everyone.
- User-friendly platform: Choose a brokerage with a platform that is easy to use and navigate.
- Research tools and resources: Access to educational resources, stock analysis tools, and customer support can be very helpful, especially for new investors.
Step 2: Figure out your budget
Before you place an order, determine how much you can afford to invest. Consider your investment goals, risk tolerance, and time horizon. This will help you decide how much money to allocate toward investments related to Northwestern Mutual.
It's important to diversify your investments. You may want to invest in multiple insurance companies, insurance-related ETFs, or different industries altogether.
Step 3: Do research
With any investment, knowledge is power. The more data you can gather, the more prepared you will be. If you want to research stocks similar to Northwestern Mutual, here are some to consider.
MetLife (MET)
MetLife (MET -0.27%) is a global provider of insurance, annuities, and employee benefit programs. Like Northwestern Mutual, MetLife offers a wide range of financial services, including life insurance, retirement planning, and investment products. Known for its strong financial stability and comprehensive service offerings, MetLife provides a way to gain exposure to the insurance and financial services market sectors.
Sapiens International (SPNS)
Sapiens International Corporation (SPNS -0.34%) provides software-as-a-service (SaaS) solutions for the insurance industry, including the property and casualty, life, and annuities sectors. Its suite includes products for policy administration, claims management, and billing solutions for insurers.
Root Insurance Co. (ROOT)
Root Insurance Co. (ROOT 2.83%) is a digital car insurance company that uses telematics to offer personalized insurance rates based on individual driving behavior rather than traditional means, such as demographics. Although it's an auto insurance company, Root offers excellent exposure to some of the most important digital transformations in the insurance industry.
Its platform allows users to quickly obtain coverage, manage policies, and file claims via a user-friendly mobile app. By leveraging advanced data analytics, Root Insurance provides customized rates for drivers.
Step 4: Place an order
Once you've opened your brokerage account, made a budget, and done your due diligence, it's time to place an order. But you'll still need to decide between a market order and a limit order. (The Motley Fool recommends market orders since you'll get the current price.) Submit your order and become a shareholder.
Should I invest?
Should I invest in Northwestern Mutual-related stocks?
The question of whether you should invest in stocks related to Northwestern Mutual depends on your personal circumstances and investment strategy. Here are some key points to consider.
Consider investing in Northwestern Mutual-related stocks if:
- You value corporate social responsibility
If you prioritize investing in companies with strong commitments to corporate social responsibility (CSR), companies related to Northwestern Mutual can be appealing. Northwestern Mutual is known for its community engagement and sustainability initiatives. Investing in similar companies allows you to support businesses that actively contribute to social and environmental causes, aligning your portfolio with your values.
- You seek stability during economic downturns
Investing in companies like Northwestern Mutual can provide a safe haven during economic downturns. Insurance tends to be a relatively recession-resistant business, making it a good choice for investors looking to protect their portfolios from market volatility and economic shocks.
- You want to invest in a company that provides comprehensive financial services
Northwestern Mutual offers a broad spectrum of financial services, including insurance, wealth management, and retirement planning. Investing in companies that provide similar comprehensive services can give you diversified exposure to the financial sector.
Consider avoiding investing in Northwestern Mutual-related stocks if:
- You prefer industries with high innovation potential
If you are an investor looking for cutting-edge innovation and rapid technological advancements, companies related to Northwestern Mutual probably aren't a fit. The financial services and insurance industries are typically slower to innovate than tech-driven companies, making them less suitable for those seeking to invest in growth stocks.
- You are wary of interest rate sensitivity
Companies in the financial services sector, like Northwestern Mutual, are often highly sensitive to interest rate changes. If you are concerned about potential fluctuations in interest rates affecting the profitability and performance of these companies, you might want to avoid them and instead consider sectors less affected by interest rate volatility.
- You are concerned about the impact of demographic changes
Demographic shifts, such as aging populations, significantly influence the insurance and retirement planning sectors. If you anticipate that demographic trends might hurt the demand for certain financial services, you may prefer to invest in sectors less dependent on these factors, focusing instead on industries with more diverse and growing customer bases.
ETF options
ETFs with exposure to Northwestern Mutual-related stocksWhat Is a Growth Stock?
| ETF Name | ETF Ticker | Exposure to Northwestern Mutual-Related Companies | AUM | Expense Ratio |
|---|---|---|---|---|
| SPDR S&P Insurance ETF | (NYSEMKT:KIE) | Tracks the S&P Insurance Select Industry Index, including a wide array of insurance companies | $740.1 million | 0.35% |
| First Trust Financials AlphaDEX ETF | (NYSEMKT:FXO) | Follows the StrataQuant Financials Index, investing in financial sector companies selected based on growth and value factors | $882.3 million | 0.64% |
| T. Rowe Price Financial Services ETF | (NASDAQMUTFUND:PRIS.X) | Targets financial services firms, including those in the insurance industry | $1.6 billion | 0.79% |
| iShares U.S. Insurance ETF | (NYSEMKT:IAK) | Seeks to track the investment results of the Dow Jones U.S. Select Insurance Index, which measures the performance of the insurance sector of the U.S. equity market | $625.3 million | 0.40% |
Related investing topics
The bottom line on Northwestern Mutual
Although you can't directly invest in Northwestern Mutual because it's not publicly traded, there are several ways to gain indirect exposure to its performance. By investing in related companies and ETFs, you can benefit from Northwestern Mutual's success and the broader insurance sector's stability. But if you're looking for big returns and can withstand volatility, the insurance industry's general stability and low growth potential might be right for you.
FAQ
Investing in Northwestern Mutual FAQ
Can you buy stock in Northwestern Mutual?
No, you cannot buy stock in Northwestern Mutual. Northwestern Mutual operates as a mutual company, meaning it is owned by its policyholders rather than shareholders. However, there are numerous stock offerings from competitors with business models similar to Northwestern Mutual's.
Is Northwestern Mutual publicly traded?
No, Northwestern Mutual is not publicly traded. It has a mutual company structure. As a mutual company, it does not issue stock or seek equity investments from the public market. Unless Northwestern changes its business model in its entirety, it will not be publicly traded in the foreseeable future.
What type of investments does Northwest Mutual offer?
Northwestern Mutual offers a range of investment products designed to help individuals and businesses. These include various types of life insurance policies, such as term, whole, and universal life insurance; annuities that provide a steady income stream for retirement; a variety of mutual funds covering different asset classes and investment strategies; retirement accounts, like individual retirement accounts (IRAs) and 401(k) plans; education savings accounts, including 529 plans; and comprehensive investment management and advisory services through Northwestern Mutual Investment Services.
The Motley Fool has positions in and recommends Sapiens International and Tesla. The Motley Fool has a disclosure policy.
