Northwestern Mutual Braces for Disruptive Technology
(Bloomberg Opinion) -- Managing through social and technological disruptions over a period of 150 years means building on strengths and improving weaknesses, according to John Schlifske, the chief executive officer of Northwestern Mutual Life Insurance Co. and this week’s guest on the Masters in Business podcast. The 160-year-old firm has underwritten more than $2 trillion in life insurance policies, and has $300 billion in client assets under management.
Schlifske discusses how scraping paint off trucks at his father’s small trucking business made him want to go to college and work in an office. He joined the Fortune 100 company in 1987 as an investment specialist – his second job out of graduate school – and rose through the ranks to become CEO 11 years ago. He explains the headwinds low interest rates create for policy holders. In the 1990s, when long term rates were as high as 8%, the returns on bonds were significant greater than what can be had today with yields of around 3% on long-term bonds. A visit Schlifske took to Japan in the 1980s laid bare the pernicious impact ultra-low yields could have on insurers.
The insurance industry hasn’t been disrupted by technology as much as others. One reason may be tied to massive capital requirements. Schlifske believes technology is coming for the insurance business, on both the risk and the wealth management sides.
Be sure to check out our Masters in Business podcast next week with Rob Arnott, founder and chairman of Research Affiliates. The firm, which manages more than $160 billion, created and patented a methodology for basing indexes on fundamental metrics instead of market cap weightings. Arnott is the author of more than 100 academic papers, and is the co-author of the book “The Fundamental Index: A Better Way to Invest.”
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Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”
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