10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005

COMMISSION FILE NUMBERS 333-72913 AND 2-89905-01

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY IN

RESPECT OF NML VARIABLE ANNUITY ACCOUNT A & NML VARIABLE

ANNUITY ACCOUNT C

(Exact name of registrant as specified in its charter)

WISCONSIN	39-0509570
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
720 EAST WISCONSIN AVENUE MILWAUKEE, WISCONSIN	53202
(Address of principal executive offices)	(Zip Code)

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (414) 271-1444

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

TITLE OF EACH CLASS	NAME OF EACH EXCHANGE ON WHICH REGISTERED
NONE	NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨    Accelerated filer  ¨    Non-accelerated filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. NOT APPLICABLE

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. NONE

DOCUMENTS INCORPORATED BY REFERENCE

NONE

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY IN RESPECT OF

NML VARIABLE ANNUITY ACCOUNT A AND NML VARIABLE ANNUITY ACCOUNT C

FORM 10-K

PART I

ITEM 1. BUSINESS

ACCOUNTS A & C

NML Variable Annuity Account A (“Account A”) and NML Variable Annuity Account C (“Account C”) are segregated asset accounts of The Northwestern Mutual Life Insurance Company (“Northwestern Mutual”) formed to provide retirement annuity benefits for (i) self-employed individuals (and their eligible employees) who adopt plans (“HR-10 Plans”) meeting the requirements of Sections 401 or 403(a) of the Internal Revenue Code of 1986, as amended (the “Code”) and (ii) employees of corporate employers who adopt pension or profit sharing plans meeting the requirements of Section 401(a) of the Code, or annuity purchase plans meeting the requirements of Section 403(a) of the Code (collectively, “Corporate Plans”). Account A receives payments under individual variable annuity contracts issued by Northwestern Mutual in connection with HR-10 Plans and Corporate Plans. Account C receives payments under group combination variable annuity contracts issued by Northwestern Mutual in connection with HR-10 Plans and Corporate Plans. The variable annuity contracts issued by Northwestern Mutual in connection with HR-10 Plans and Corporate Plans are hereinafter referred to as the “Contracts.” Account A and Account C were established on February 14, 1968 and July 22, 1970, respectively, by action of the Board of Trustees of Northwestern Mutual in accordance with the provisions of Wisconsin insurance law. Neither Account A nor Account C is currently registered as an investment company under the Investment Company Act of 1940.

The Contracts provide for the accumulation of funds and the payment of retirement benefits to participants and their beneficiaries (“Annuitants”). Account A and Account C each have 24 divisions. Money invested to provide variable benefits under the Contracts is placed in one or more divisions of the applicable Account which are in turn invested in 18 portfolios of Northwestern Mutual Series Fund, Inc. (Small Cap Growth Stock Portfolio, T. Rowe Price Small Cap Value Portfolio, Aggressive Growth Stock Portfolio, International Growth Portfolio, Franklin Templeton International Equity Portfolio, AllianceBernstein Mid Cap Value Portfolio, Index 400 Stock Portfolio, Janus Capital Appreciation Portfolio, Growth Stock Portfolio, Large Cap Core Stock Portfolio, Capital Guardian Domestic Equity Portfolio, T. Rowe Price Equity Income Portfolio, Index 500 Stock Portfolio, Asset Allocation Portfolio, Balanced Portfolio, High Yield Bond Portfolio, Select Bond Portfolio, and Money Market Portfolio), the Fidelity VIP Mid Cap Portfolio (a fund of Variable Insurance Products Fund III), and 5 funds of Russell Investment Funds (Multi-Style Equity Fund, Aggressive Equity Fund, Non-U.S. Fund, Real Estate Securities Fund and Core Bond Fund), each of which corresponds to one of the Account divisions, all as directed by the Annuitant. Northwestern Mutual Series Fund, Inc. and Russell Investment Funds, which are sponsored by Northwestern Mutual and a Northwestern Mutual affiliate, respectively, and Variable Insurance Products Fund III, which is not affiliated with Northwestern Mutual, are each registered as investment companies under the Investment Company Act of 1940. The Contracts also permit investment on a fixed basis, at rates determined by Northwestern Mutual. The Contracts are sold through individuals who, in addition to being licensed insurance agents of Northwestern Mutual, are registered representatives of Northwestern Mutual Investment Services, LLC (“NMIS”), a wholly-owned company of Northwestern Mutual and a registered broker-dealer under the Securities Exchange Act of 1934.

Under Wisconsin law, the investment operations of each of Account A and Account C (other than those Contract investments for which the fixed rate option is selected) are kept separate from the operations of Northwestern Mutual. Northwestern Mutual and its creditors cannot reach assets in Account A or Account C to satisfy non-Contract related obligations until all obligations under the Contracts have been satisfied.

See Item 6 herein for Account A and Account C historical financial information regarding results of operations, changes in equity and total assets. See Item 8 herein for the audited financial statements of Account A and Account C.

NORTHWESTERN MUTUAL

Founded in 1857, Northwestern Mutual is a mutual insurance company organized under the laws of the State of Wisconsin. Northwestern Mutual’s products consist of a wide range of permanent and term life insurance, disability income insurance and annuities for the personal, business, estate planning and pension markets. Mutual funds, equity and debt securities, long-term care insurance, trust and investment management services are offered and/or sold through subsidiaries. Northwestern Mutual markets its insurance products and services in all 50 states of the United States and in the District of Columbia through an exclusive network of approximately 7,500 financial representatives at December 31, 2005 located in approximately 320 offices nationwide. At December 31, 2005, Northwestern Mutual had approximately 4,600 full- and part-time employees. Northwestern Mutual’s website address is www.nmfn.com.

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Northwestern Mutual’s principal lines of business are: (i) life insurance, which provides a wide range of individual life insurance products, including traditional whole life, permanent and term combination, universal life, variable life and term policies to meet the needs of middle to upper income individuals, small business owners and professionals, estates and selected large corporations; (ii) disability income insurance, which provides a line of individual and group products, including individual non-cancelable, guaranteed renewable loss of earnings, buyout, key person, and short-term and long-term group coverages, marketed primarily to middle to upper income individuals, professionals, and small- to medium-sized businesses and their owners; (iii) investment products and services, which provide individual variable, fixed and immediate annuities offered in conjunction with qualified pension plans, retirement plans for self-employed individuals, individual retirement and personal non-tax qualified situations, group annuities, retail mutual funds (including associated funds offered by Frank Russell Investment Company and Russell Investment Funds), brokerage services (offered through its subsidiary Northwestern Mutual Investment Services, LLC) and trust and other wealth management services (offered through its subsidiary Northwestern Mutual Wealth Management Company), marketed primarily to middle to upper income individuals, business owners and professionals; and (iv) long-term care insurance, offered through its subsidiary Northwestern Long Term Care Insurance Company, marketed primarily to middle to upper income individuals, small business owners and professionals. For the years ended December 31, 2005, 2004 and 2003, Northwestern Mutual had (a) total premiums of $11.4 billion, $10.7 billion and $10.3 billion, respectively, of which $9.3 billion, $9.0 billion and $8.7 billion, respectively, was attributable to life insurance, $0.7 billion, $0.7 billion and $0.7 billion, respectively, was attributable to disability income insurance, and $1.4 billion, $1.0 billion and $0.9 billion, respectively, was attributable to annuity products in the investment products and services line of business; (b) net income of $924 million, $817 million and $692 million, respectively, of which $620 million, $597 million and $493 million, respectively, was attributable to life insurance, $225 million, $186 million and $179 million, respectively, was attributable to disability income insurance, $81 million, $41 million and $29 million, respectively, was attributable to annuity products in the investment products and services line of business, and losses of $(2) million, $(7) million and $(9) million, respectively, was attributable to long term care insurance; and (c) total assets of $133.0 billion, $123.9 billion and $113.8 billion, respectively, of which $108.4 billion, $100.7 billion and $92.2 billion, respectively, was attributable to life insurance, $6.8 billion, $6.5 billion and $6.1 billion, respectively, was attributable to disability income insurance, and $17.8 billion, $16.7 billion and $15.5 billion, respectively, was attributable to annuity products in the investment products and services line of business.

The life insurance industry is mature and highly competitive. Competitiveness in the life insurance business is affected by various factors including, but not limited to, product quality, financial strength and stability, third party ratings, size and competence of agency force, product pricing and guarantees, range of product lines, customer service, and reputation. Based on total admitted statutory assets at September 30, 2005 (the most recent data available), Northwestern Mutual was the 4th largest U.S. domiciled life insurance company on an individual company basis and the 10th largest on a corporate family basis. During 2005, there were approximately 900 life insurance companies doing business in the United States and many of these companies offer individual life insurance and annuity products similar to those offered by Northwestern Mutual. In addition, Northwestern Mutual competes with banks, brokerage firms, investment advisers, mutual funds and other financial entities for investment and savings customers. In the individual and group disability markets, Northwestern Mutual competes with a limited number of major national and regional companies offering these specialized products. In the long-term care business, Northwestern Mutual competes primarily with a limited number of national companies. National banks, with their pre-existing customer bases for financial services products, may pose increasing competition in the future to insurers who sell life insurance and annuity products, including Northwestern Mutual. United States Supreme Court decisions have expanded the authority of national banks to sell life insurance products and annuities. In addition, legislation enacted in 1999 to overturn Depression-era restrictions on bank affiliations, the Gramm-Leach-Bliley Act (the “Act”), implemented fundamental changes in the regulation of the financial services industry in the U.S. The Act eliminated certain barriers to and restrictions on affiliations between banks, securities firms and insurance companies that were previously contained in the Glass-Steagall Act of 1933, as amended, and the Bank Holding Company Act of 1956, as amended. Under the Act, through the use of two new structures, financial holding companies and financial subsidiaries, qualifying bank holding companies and state and national banks are allowed to provide a wide variety of financial services, including the authority to engage in certain insurance activities (e.g., the sale and, in the case of qualifying bank holding companies only, the underwriting of insurance and annuities). As a result of the Act, among other things, bank holding companies may acquire insurers and insurance holding companies may acquire banks. Over time, the Act may change the competitive and regulatory environment in which Northwestern Mutual and its subsidiaries conduct their businesses and may result in additional competition in one or more markets in which they sell their products and services.

Northwestern Mutual, and its insurance subsidiary Northwestern Long Term Care Insurance Company, are licensed to transact their insurance business in, and are subject to regulation and supervision by, all 50 states of the United States and the District of Columbia. The extent of such regulation varies, but most jurisdictions have laws and regulations governing the financial aspects of insurance companies, including standards of solvency, reserves, reinsurance, capital adequacy and the business conduct of insurance companies. In addition, statutes and regulations usually require the licensing of insurers and

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their agents, the approval of policy forms and related materials and, for certain lines of insurance, the approval of rates. Such statutes and regulations also prescribe the permitted types and concentration of investments. The Act reaffirms that the states remain responsible for regulating the business of insurance. However, subject to certain exceptions, no state authority can prevent or restrict depository institutions and their affiliates from affiliating with insurance companies as permitted under the Act. In addition, certain state laws and regulations that place restrictions on a depository institution’s insurance sales activities are preempted.

Frank Russell Company (“Russell”), a subsidiary of Northwestern Mutual, is a global investment services firm providing multi-manager investment products and services in more than 40 countries. Together with its subsidiaries, Russell managed $155 billion in assets at December 31, 2005 and advised clients representing more than $2.3 trillion in assets worldwide. Russell is also well known for its family of market indices, including the Russell 2000, which provide sets of performance benchmarks for investors.

NMIS, a wholly-owned company of Northwestern Mutual, is a full-service registered broker-dealer and registered investment adviser serving the investment planning and product needs of individuals and businesses. Through its registered representatives, NMIS offers mutual funds, variable annuities, variable life insurance products, stocks and bonds to its customers in more than 60 cities nationwide. NMIS is a member of the National Association of Securities Dealers, Inc.

See Item 15 herein for the audited consolidated financial statements of Northwestern Mutual.

PURPOSE OF ANNUAL REPORT

This Annual Report on Form 10-K is filed with respect to Account A and Account C of Northwestern Mutual. While certain information in this Form 10-K relates to Northwestern Mutual as a whole, this Form 10-K is intended to provide information with respect to Account A and Account C where relevant.

ITEM 1A. RISK FACTORS

Account A and Account C are segregated asset accounts of Northwestern Mutual. All assets of each division of Account A and Account C are invested in open end investment companies registered under the Investment Company Act of 1940. The assets of the Accounts are subject to inherent risks of changes in market values that may be caused by general economic conditions, performance of the financial markets, the level of interest rates, foreign currency exchange, and circumstances affecting individual credits. The income, gains or losses, realized or unrealized, for the assets placed in Account A and Account C with respect to the Contracts determine the value of Contract benefits. Contract values are not affected by income, gains or losses for the rest of Northwestern Mutual’s business.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

Account A and Account C own no physical properties. Northwestern Mutual owns and occupies all of the space in its home office complex in Milwaukee and Franklin, Wisconsin. Northwestern Mutual, as lessee, also occupies temporary space in three buildings adjacent to its Milwaukee campus. Northwestern Mutual is the lessee of seven leases covering its real estate regional offices in locations throughout the United States. Russell leases its principal office space located in Tacoma, Washington as well as other office space within and outside the U.S. Northwestern Mutual believes that its owned and leased properties are suitable for its current operations.

ITEM 3. LEGAL PROCEEDINGS

Neither Account A nor Account C are named parties in any pending legal proceedings. Northwestern Mutual is subject to various claims and proceedings, including claims or proceedings related to its investments, that occur in the ordinary course of its business. Although the outcome of such claims and proceedings cannot be predicted with certainty, based on information currently available to Northwestern Mutual, Northwestern Mutual believes that none of these current claims or proceedings, either individually or in the aggregate, will have a material adverse effect on the financial position of Northwestern Mutual.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

As segregated asset accounts, Account A and Account C do not issue common equity securities. As a mutual life insurance company, Northwestern Mutual does not issue common equity securities.

The Contracts issued in connection with Account A and Account C, and interests in those Contracts, are offered on a continuous basis to Corporate Plans and HR-10 Plans. The Contracts for Corporate Plans are not registered under the Securities Act of 1933 in reliance on the exemption provided by Section 3(a)(2) thereof. All of the Contracts are offered exclusively by financial representatives of Northwestern Mutual who are also registered representatives of NMIS.

During 2005, the following aggregate dollar amounts of such unregistered securities were sold to Corporate Plans, generating the aggregate commissions stated:

ACCOUNT A						ACCOUNT C
AMOUNT SOLD			COMMISSIONS			AMOUNT SOLD			COMMISSIONS
$	25,511,291	(A)	$	1,203,270	(B)	$	42,166,351	(A)	$	354,702	(B)

(A) Reflects premiums paid by Contract holders, dividend additions and Northwestern Mutual plan contributions, as applicable.

(B) Reflects an estimate of amounts paid to Northwestern Mutual financial representatives for sales to Corporate Plans based on a pro rata allocation of Contract sales generating commissions under the Account.

Accumulation units in Account A and Account C represent the interests of Contract owners. Purchase payments are applied to credit additional accumulation units based on the accumulation unit value next determined after each payment is received in good order. Accumulation units are valued as of the close of business on the New York Stock Exchange for each day the Exchange is open, and at any other time required by the Investment Act of 1940.

ITEM 6. SELECTED FINANCIAL DATA

The following tables set forth selected historical financial data for Account A for the five years in the period ended December 31, 2005. The data should be read in conjunction with the financial statements and notes thereto of Account A contained in Item 8 of this Annual Report.

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RESULTS OF OPERATIONS FOR ACCOUNT A

(IN THOUSANDS)

	Year Ended December 31
	2005			2004			2003			2002			2001
Investment Income:
Dividend Income from:
Small Cap Growth Stock Division	$	—		$	—		$	—		$	26		$	1
T. Rowe Price Small Cap Value Division #		25			12			—			14			1
Aggressive Growth Stock Division		25			—			—			61			93
International Growth Division #		56			21			14			3			—
Franklin Templeton International Equity Division		634			531			408			574			615
AllianceBernstein Mid Cap Value Division ##		8			9			2			N/A			N/A
Index 400 Stock Division		100			79			66			76			1
Janus Capital Appreciation Division ##		4			1			—			N/A			N/A
Growth Stock Division		233			163			194			324			262
Large Cap Core Stock Division ^		184			142			139			170			190
Capital Guardian Domestic Equity Division #		118			71			47			20			1
T. Rowe Price Equity Income Division ##		48			20			4			N/A			N/A
Index 500 Stock Division		1,307			1,046			1,074			1,197			1,498
Asset Allocation Division #		119			—			78			45			6
Balanced Division		4,620			4,900			6,026			7,949			10,344
High Yield Bond Division		390			399			11			456			529
Select Bond Division		1,006			1,141			1,248			1,181			1,257
Money Market Division		442			230			300			440			1,067
Fidelity VIP Mid Cap Division ##		—			—			—			N/A			N/A
Russell Multi-Style Equity Division		63			37			26			22			18
Russell Aggressive Equity Division		8			7			3			—			3
Russell Non-U.S. Division		81			87			78			41			17
Russell Core Bond Division		129			73			92			55			78
Russell Real Estate Securities Division		239			168			227			142			93
Total Dividend Income		9,839			9,137			10,037			12,796			16,074
Mortality and Expense Risk Charges		(6,043	)		(6,064	)		(5,714	)		(6,269	)		(7,425	)
Net Investment Income	$	3,796		$	3,073		$	4,323		$	6,527		$	8,649
Realized and Unrealized Gains (Losses) on Investments:
Realized Gains (Losses) on Investments	$	14,685		$	8,647		$	(13,067	)	$	(14,549	)	$	52,168
Change in Unrealized Appreciation (Depreciation) of Investments During the Period		5,545			34,868			98,006			(74,854	)		(124,257	)
Net Gains (Losses) on Investments		20,230			43,515			84,939			(89,403	)		(72,089	)
Net Increase (Decrease) in Net Assets Resulting from Operations	$	24,026		$	46,588		$	89,262		$	(82,876	)	$	(63,440	)

# Became an investment option under the Contracts effective July 31, 2001.

## Became an investment option under the Contracts effective May 1, 2003.

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

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CHANGES IN NET ASSETS FOR ACCOUNT A

(IN THOUSANDS)

	Year Ended December 31
	2005			2004			2003			2002			2001
Operations:
Net Investment Income	$	3,796		$	3,073		$	4,323		$	6,527		$	8,649
Net Realized Gains (Losses)		14,685			8,647			(13,067	)		(14,549	)		52,168
Net Change in Unrealized Appreciation (Depreciation)		5,545			34,868			98,006			(74,854	)		(124,257	)
Net Increase (Decrease) in Net Assets Resulting from Operations		24,026			46,588			89,262			(82,876	)		(63,440	)
Contract Transactions:
Contract Owners’ Net Payments		37,217			38,971			39,633			46,958			46,213
Annuity Payments		(1,193	)		(1,205	)		(1,111	)		(1,186	)		(1,316	)
Surrenders and Other (Net)		(68,833	)		(76,869	)		(70,519	)		(86,526	)		(83,649	)
Transfers from Other Divisions or Sponsor		158,529			126,833			92,326			89,970			83,322
Transfers to Other Divisions or Sponsor		(160,222	)		(127,326	)		(95,723	)		(91,980	)		(84,772	)
Net Increase (Decrease) in Net Assets Resulting from Contract Transactions		(34,502	)		(39,596	)		(35,394	)		(42,764	)		(40,202	)
Net Increase (Decrease) in Net Assets		(10,476	)		6,992			53,868			(125,640	)		(103,642	)
Net Assets:
Beginning of Period		528,932			521,940			468,072			593,712			697,354
End of Period	$	518,456		$	528,932		$	521,940		$	468,072		$	593,712

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TOTAL ASSETS OF ACCOUNT A

(IN THOUSANDS)

	December 31
	2005		2004		2003		2002		2001
ASSETS
Investments, at Value:
Northwestern Mutual Series Fund, Inc.:
Small Cap Growth Stock	$	15,844	$	15,880	$	18,478	$	14,422	$	15,624
T. Rowe Price Small Cap Value #		8,689		7,840		4,572		2,692		585
Aggressive Growth Stock		48,248		54,615		57,087		51,966		77,633
International Growth #		6,141		3,767		2,232		598		157
Franklin Templeton International Equity		36,607		34,641		29,053		22,529		30,810
AllianceBernstein Mid Cap Value ##		1,455		1,232		444		N/A		N/A
Index 400 Stock		13,890		12,670		11,335		8,330		9,168
Janus Capital Appreciation ##		3,364		1,059		190		N/A		N/A
Growth Stock		22,251		22,578		24,542		23,486		32,717
Large Cap Core Stock ^		14,140		14,271		15,885		13,703		23,058
Capital Guardian Domestic Equity #		7,309		5,726		3,535		1,670		291
T. Rowe Price Equity Income ##		3,290		1,764		484		N/A		N/A
Index 500 Stock		74,070		80,235		80,656		69,524		104,943
Asset Allocation #		10,181		7,178		4,815		2,800		800
Balanced		165,993		185,169		195,524		181,610		229,239
High Yield Bond		5,918		6,155		5,419		4,280		5,018
Select Bond		28,450		27,346		29,252		31,441		23,983
Money Market		14,792		14,581		18,413		26,634		27,159
Fidelity Variable Insurance Products Fund III:
VIP Mid Cap ##		6,559		3,712		1,031		N/A		N/A
Russell Investment Funds:
Multi-Style Equity		5,657		5,864		4,547		3,042		4,111
Aggressive Equity		4,279		4,538		3,765		2,283		2,947
Non-U.S.		5,581		5,041		3,551		2,284		2,861
Core Bond		3,743		3,532		2,477		2,331		1,527
Real Estate Securities		12,286		10,587		5,521		3,056		1,820
Due from Northwestern Mutual		56		47		21		211		8
Due from Sale of Fund Shares		—		—		—		—		39
Total Assets	$	518,793	$	530,028	$	522,829	$	468,892	$	594,498

# Became an investment option under the Contracts effective July 31, 2001.

## Became an investment option under the Contracts effective May 1, 2003.

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

The following tables set forth selected historical financial data for Account C for the five years in the period ended December 31, 2005. The data should be read in conjunction with the financial statements and notes thereto of Account C contained in Item 8 of this Annual Report.

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RESULTS OF OPERATIONS FOR ACCOUNT C

(IN THOUSANDS)

	Year Ended December 31
	2005			2004			2003			2002			2001
Investment Income:
Dividend Income from:
Small Cap Growth Stock Division	$	—		$	—		$	—		$	32		$	2
T. Rowe Price Small Cap Value Division #		4			2			—			2			—
Aggressive Growth Stock Division		39			—			—			90			133
International Growth Division #		7			3			1			—			—
Franklin Templeton International Equity Division		1,121			895			618			906			976
AllianceBernstein Mid Cap Value Division ##		3			3			1			N/A			N/A
Index 400 Stock Division		227			164			115			140			2
Janus Capital Appreciation Division ##		1			—			—			N/A			N/A
Growth Stock Division		271			177			179			330			283
Large Cap Core Stock Division ^		244			164			137			180			208
Capital Guardian Domestic Equity Division #		21			21			17			7			—
T. Rowe Price Equity Income Division ##		3			4			1			N/A			N/A
Index 500 Stock Division		1,599			1,197			1,167			1,468			1,898
Asset Allocation Division #		24			—			21			24			—
Balanced Division		1,951			1,973			2,491			3,922			5,164
High Yield Bond Division		457			433			11			415			487
Select Bond Division		603			729			771			863			911
Money Market Division		105			70			128			221			523
Fidelity VIP Mid Cap Division ##		—			—			—			N/A			N/A
Russell Multi-Style Equity Division		20			9			6			7			7
Russell Aggressive Equity Division		2			2			1			—			1
Russell Non-U.S. Division		23			25			25			9			4
Russell Core Bond Division		53			25			29			20			48
Russell Real Estate Securities Division		703			497			604			481			290
Total Dividend Income		7,481			6,393			6,323			9,117			10,937
Mortality and Expense Risk Charges		(778	)		(890	)		(1,026	)		(1,432	)		(2,007	)
Net Investment Income	$	6,703		$	5,503		$	5,297		$	7,685		$	8,930
Realized and Unrealized Gains (Losses) on Investments:
Realized Gains (Losses) on Investments	$	12,345		$	2,182		$	(22,413	)	$	(35,241	)	$	52,289
Change in Unrealized Appreciation (Depreciation) of Investments During the Period		14,797			47,729			103,646			(58,211	)		(133,527	)
Net Gains (Losses) on Investments		27,142			49,911			81,233			(93,452	)		(81,238	)
Net Increase (Decrease) in Net Assets Resulting from Operations	$	33,845		$	55,414		$	86,530		$	(85,767	)	$	(72,308	)

# Became an investment option under the Contracts effective July 31, 2001.

## Became an investment option under the Contracts effective May 1, 2003.

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

8

CHANGES IN NET ASSETS FOR ACCOUNT C

(IN THOUSANDS)

	Year Ended December 31
	2005			2004			2003			2002			2001
Operations:
Net Investment Income	$	6,703		$	5,503		$	5,297		$	7,685		$	8,930
Net Realized Gains (Losses)		12,345			2,182			(22,413	)		(35,241	)		52,289
Net Change in Unrealized Appreciation (Depreciation)		14,797			47,729			103,646			(58,211	)		(133,527	)
Net Increase (Decrease) in Net Assets Resulting from Operations		33,845			55,414			86,530			(85,767	)		(72,308	)
Contract Transactions:
Contract Owners’ Net Payments		50,107			55,524			53,289			78,994			90,774
Annuity Payments		(74	)		(63	)		(58	)		(58	)		(64	)
Surrenders and Other (Net)		(64,365	)		(61,599	)		(87,264	)		(160,876	)		(140,073	)
Transfers from Other Divisions or Sponsor		41,210			36,544			35,966			49,213			55,326
Transfers to Other Divisions or Sponsor		(41,090	)		(36,221	)		(36,353	)		(50,870	)		(53,674	)
Net Increase (Decrease) in Net Assets Resulting from Contract Transactions		(14,212	)		(5,815	)		(34,420	)		(83,597	)		(47,711	)
Net Increase (Decrease) in Net Assets		19,633			49,599			52,110			(169,364	)		(120,019	)
Net Assets:
Beginning of Period		485,161			435,562			383,452			552,816			672,835
End of Period	$	504,794		$	485,161		$	435,562		$	383,452		$	552,816

9

TOTAL ASSETS OF ACCOUNT C

(IN THOUSANDS)

	December 31
	2005		2004		2003		2002		2001
ASSETS
Investments, at Value:
Northwestern Mutual Series Fund, Inc.:
Small Cap Growth Stock	$	35,722	$	30,537	$	24,418	$	16,885	$	21,098
T. Rowe Price Small Cap Value #		1,275		1,267		826		454		165
Aggressive Growth Stock		80,758		83,563		79,023		71,638		112,232
International Growth #		766		455		146		58		38
Franklin Templeton International Equity		68,649		59,840		47,872		35,006		48,902
AllianceBernstein Mid Cap Value ##		551		386		229		N/A		N/A
Index 400 Stock		32,951		27,718		20,392		14,520		16,849
Janus Capital Appreciation ##		906		422		234		N/A		N/A
Growth Stock		26,753		25,556		25,380		22,261		33,016
Large Cap Core Stock ^		20,786		17,959		16,756		13,872		25,473
Capital Guardian Domestic Equity #		1,363		1,676		1,235		580		211
T. Rowe Price Equity Income ##		186		291		144		N/A		N/A
Index 500 Stock		92,072		94,708		89,325		77,810		131,489
Asset Allocation #		1,870		1,703		1,259		1,491		46
Balanced		71,708		77,040		78,027		82,213		115,972
High Yield Bond		6,725		6,683		6,206		3,894		4,583
Select Bond		16,230		16,572		18,448		19,561		17,379
Money Market		3,047		4,096		6,171		10,973		15,185
Fidelity Variable Insurance Products Fund III:
VIP Mid Cap ##		796		408		377		N/A		N/A
Russell Investment Funds:
Multi-Style Equity		2,037		1,812		1,087		751		1,403
Aggressive Equity		848		981		911		527		710
Non-U.S.		1,538		1,428		1,149		527		672
Core Bond		1,592		1,395		895		804		793
Real Estate Securities		35,654		28,645		15,029		9,566		6,600
Due from Northwestern Mutual		17		34		35		67		37
Due from Sale of Fund Shares		—		—		—		—		13
Total Assets	$	504,800	$	485,175	$	435,574	$	383,458	$	552,866

# Became an investment option under the Contracts effective July 31, 2001.

## Became an investment option under the Contracts effective May 1, 2003.

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

The results of operations for Accounts A and C are primarily impacted by the investment results of the underlying Divisions. The investment results of the underlying Divisions are primarily driven by the investment results of the related Portfolio of the Northwestern Mutual Series Fund, Inc., Fidelity Variable Insurance Products Fund III or Russell Investment Funds. The pro-rata portion of the investment results of the related Portfolio attributable to Accounts A and C are reflected in the Statement of Operations and Statement of Changes in Net Assets as Dividend Income, Realized Gains (Losses) on Investments and Change in Unrealized Appreciation (Depreciation) of Investments. The other item impacting the results of operations is the Mortality and Risk Expense Charges, which are owed to Northwestern Mutual and are an expense of the Division.

10

Sources of cash for Accounts A and Account C include premium payments which are reflected on the Statement of Changes in Net Assets, in the Contract Transactions section line item titled Contract Owners’ Net Payments. Uses of cash for Accounts A and C include annuity payments and policy surrenders. These are also reflected on the Statement of Changes in Net Assets.

The primary risks associated with assets of Accounts A and C are investment related risks or market risk. See Item 1A of this Annual Report. It should be noted that Accounts A and C represent a small portion of the net assets of the related Portfolio for each Division.

LIQUIDITY

The assets of Accounts A and C are invested solely in shares of Northwestern Mutual Series Fund, Inc. (“Series Fund”), the Fidelity Variable Insurance Products Fund III (“Fidelity Fund”), and the Russell Investment Funds (“Russell Funds,” and collectively with the Series Fund and Fidelity Fund, the “Funds”). The Series Fund consists of the Small Cap Growth Stock Portfolio, T. Rowe Price Small Cap Value Portfolio, Aggressive Growth Stock Portfolio, International Growth Portfolio, Franklin Templeton International Equity Portfolio, AllianceBernstein Mid Cap Value Portfolio, Index 400 Stock Portfolio, Janus Capital Appreciation Portfolio, Growth Stock Portfolio, Large Cap Core Stock Portfolio, Capital Guardian Domestic Equity Portfolio, T. Rowe Price Equity Income Portfolio, Index 500 Stock Portfolio, Asset Allocation Portfolio, Balanced Portfolio, High Yield Bond Portfolio, Select Bond Portfolio, and Money Market Portfolio. The Fidelity Fund consists of the Fidelity VIP Mid Cap Portfolio (for purposes of Account A and C investment). The Russell Funds consist of the Multi-Style Equity Fund, Aggressive Equity Fund, Non-U.S. Fund, Core Bond Fund and Real Estate Securities Fund. The Funds are open-end investment companies registered under the Investment Company Act of 1940. In order to pay annuity benefits and expenses, the Accounts redeem shares in the Funds.

CAPITAL RESOURCES

Accounts A and C have no material commitments for capital expenditures as of December 31, 2005, the end of the most recent fiscal year. All payments from Contract owners of Account A and Account C, less any sales load or installation fee, are invested in shares of the Funds. The capital resources of Account A and Account C are the equity in the respective Accounts. This consists of payments from the Contract owners, plus unrealized and realized appreciation on the investment of these payments, plus investment income received from the Funds, minus payment of annuity benefits and expenses.

RESULTS OF OPERATIONS

Accumulation units in Account A and Account C represent the interests of Contract owners. The value of an accumulation unit in each Division varies with the investment experience of the Division, which in turn is determined by the investment experience of the corresponding Portfolio or Fund. Set forth below for each of Account A and Account C are accumulation unit values at December 31, 2005, 2004, and 2003 for each Division, and the percentage change in such values from year to year.

11

ACCOUNT A

ACCUMULATION UNIT VALUES

CONTRACTS ISSUED PRIOR TO DECEMBER 17, 1981:

DIVISION	12/31/2005		% CHANGE		12/31/2004		% CHANGE		12/31/2003
Small Cap Growth Stock	$	2.606684	10.35	%	$	2.362099	17.91	%	$	2.003241
T. Rowe Price Small Cap Value		1.677900	6.42	%		1.576732	23.64	%		1.275243
Aggressive Growth Stock		5.485431	5.35	%		5.207047	13.36	%		4.593218
International Growth		1.532315	17.12	%		1.308297	20.68	%		1.084083
Franklin Templeton International Equity		2.991857	10.69	%		2.702895	18.44	%		2.282107
AllianceBernstein Mid Cap Value ##		1.633473	4.67	%		1.560530	17.78	%		1.324927
Index 400 Stock		1.884064	11.54	%		1.689185	15.40	%		1.463815
Janus Capital Appreciation ##		1.645662	16.13	%		1.417108	18.78	%		1.193045
Growth Stock		2.681914	6.91	%		2.508557	5.87	%		2.369404
Large Cap Core Stock ^		2.229337	7.65	%		2.070897	7.35	%		1.929029
Capital Guardian Domestic Equity		1.264720	7.24	%		1.179310	15.98	%		1.016839
T. Rowe Price Equity Income ##		1.454076	3.41	%		1.406111	14.30	%		1.230194
Index 500 Stock		4.498618	3.95	%		4.327836	9.87	%		3.938953
Asset Allocation		1.206955	6.20	%		1.136505	9.20	%		1.040782
Balanced		9.172086	2.82	%		8.920173	7.09	%		8.329807
High Yield Bond		2.146008	0.64	%		2.132449	11.92	%		1.905353
Select Bond		11.164423	1.46	%		11.003992	3.96	%		10.584441
Money Market		3.134091	2.22	%		3.066057	0.68	%		3.045469
Fidelity VIP Mid Cap ##		2.028562	17.14	%		1.731755	23.72	%		1.399684
Russell Multi-Style Equity		0.898290	6.47	%		0.843681	8.99	%		0.774096
Russell Aggressive Equity		1.471711	5.57	%		1.394059	13.87	%		1.224208
Russell Non-U.S		1.259956	12.84	%		1.116570	17.42	%		0.950951
Russell Core Bond		1.374456	1.25	%		1.357433	3.88	%		1.306711
Russell Real Estate Securities		2.626758	12.12	%		2.342872	33.87	%		1.750140

## Became an investment option under the Contracts effective May 1, 2003.

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

12

ACCOUNT A

ACCUMULATION UNIT VALUES

CONTRACTS ISSUED AFTER DECEMBER 16, 1981 AND PRIOR TO MARCH 31, 1995:

DIVISION	12/31/2005		% CHANGE		12/31/2004		% CHANGE		12/31/2003
Small Cap Growth Stock	$	2.521099	9.81	%	$	2.295965	17.32	%	$	1.956937
T. Rowe Price Small Cap Value		1.641244	5.89	%		1.549988	23.02	%		1.259912
Aggressive Growth Stock		5.087495	4.82	%		4.853439	12.80	%		4.302813
International Growth		1.498861	16.54	%		1.286123	20.08	%		1.071062
Franklin Templeton International Equity		2.808145	10.14	%		2.549602	17.85	%		2.163493
AllianceBernstein Mid Cap Value ##		1.611849	4.15	%		1.547558	17.19	%		1.320512
Index 400 Stock		1.822214	10.98	%		1.641894	14.82	%		1.429987
Janus Capital Appreciation ##		1.623859	15.55	%		1.405312	18.19	%		1.189063
Growth Stock		2.529872	6.38	%		2.378175	5.34	%		2.257547
Large Cap Core Stock ^		2.102957	7.12	%		1.963264	6.82	%		1.837972
Capital Guardian Domestic Equity		1.237056	6.71	%		1.159280	15.40	%		1.004585
T. Rowe Price Equity Income ##		1.434821	2.90	%		1.394433	13.73	%		1.226098
Index 500 Stock		4.172416	3.43	%		4.034071	9.32	%		3.690039
Asset Allocation		1.180583	5.67	%		1.117219	8.65	%		1.028260
Balanced		8.134566	2.31	%		7.950679	6.55	%		7.461780
High Yield Bond		2.024344	0.14	%		2.021608	11.36	%		1.815388
Select Bond		9.899443	0.95	%		9.805966	3.44	%		9.479507
Money Market		2.779764	1.71	%		2.733012	0.17	%		2.728314
Fidelity VIP Mid Cap ##		2.001683	16.56	%		1.717354	23.11	%		1.395022
Russell Multi-Style Equity		0.868789	5.94	%		0.820050	8.44	%		0.756197
Russell Aggressive Equity		1.423377	5.04	%		1.355022	13.30	%		1.195908
Russell Non-U.S		1.218592	12.28	%		1.085315	16.83	%		0.928976
Russell Core Bond		1.329349	0.75	%		1.319453	3.36	%		1.276523
Russell Real Estate Securities		2.540501	11.56	%		2.277262	33.20	%		1.709672

## Became an investment option under the Contracts effective May 1, 2003.

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

13

ACCOUNT A

ACCUMULATION UNIT VALUES

CONTRACTS ISSUED ON OR AFTER MARCH 31, 1995 AND PRIOR TO MARCH 31, 2000 - FRONT LOAD

VERSION:

DIVISION	12/31/2005		% CHANGE		12/31/2004		% CHANGE		12/31/2003
Small Cap Growth Stock	$	2.667734	10.74	%	$	2.409091	18.33	%	$	2.035993
T. Rowe Price Small Cap Value		1.703785	6.79	%		1.595527	24.07	%		1.285976
Aggressive Growth Stock		2.634839	5.71	%		2.492488	13.76	%		2.191030
International Growth		1.555979	17.53	%		1.323909	21.10	%		1.093220
Franklin Templeton International Equity		2.525906	11.07	%		2.274073	18.85	%		1.913375
AllianceBernstein Mid Cap Value ##		1.648664	5.04	%		1.569608	18.19	%		1.328001
Index 400 Stock		1.928160	11.92	%		1.722759	15.80	%		1.487736
Janus Capital Appreciation ##		1.660941	16.53	%		1.425327	19.19	%		1.195801
Growth Stock		2.560389	7.28	%		2.386622	6.24	%		2.246405
Large Cap Core Stock ^		2.127635	8.02	%		1.969605	7.73	%		1.828313
Capital Guardian Domestic Equity		1.284256	7.61	%		1.193398	16.38	%		1.025423
T. Rowe Price Equity Income ##		1.467592	3.77	%		1.414287	14.70	%		1.233047
Index 500 Stock		2.848747	4.31	%		2.731142	10.26	%		2.477110
Asset Allocation		1.225587	6.57	%		1.150060	9.58	%		1.049545
Balanced		2.437514	3.18	%		2.362380	7.46	%		2.198372
High Yield Bond		2.078570	0.98	%		2.058316	12.31	%		1.832738
Select Bond		2.001179	1.81	%		1.965614	4.33	%		1.884108
Money Market		1.459736	2.57	%		1.423127	1.03	%		1.408673
Fidelity VIP Mid Cap ##		2.047402	17.54	%		1.741819	24.16	%		1.402932
Russell Multi-Style Equity		0.919329	6.84	%		0.860463	9.37	%		0.786751
Russell Aggressive Equity		1.506167	5.94	%		1.421771	14.27	%		1.244218
Russell Non-U.S		1.289430	13.23	%		1.138748	17.82	%		0.966479
Russell Core Bond		1.406633	1.61	%		1.384409	4.24	%		1.328054
Russell Real Estate Securities		2.688177	12.51	%		2.389375	34.33	%		1.778695

## Became an investment option under the Contracts effective May 1, 2003.

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

14

ACCOUNT A

ACCUMULATION UNIT VALUES

CONTRACTS ISSUED ON OR AFTER MARCH 31, 1995 AND PRIOR TO MARCH 31, 2000 - BACK LOAD

VERSION:

DIVISION	12/31/2005		% CHANGE		12/31/2004		% CHANGE		12/31/2003
Small Cap Growth Stock	$	2.521099	9.81	%	$	2.295965	17.32	%	$	1.956937
T. Rowe Price Small Cap Value		1.641244	5.89	%		1.549988	23.02	%		1.259912
Aggressive Growth Stock		5.087495	4.82	%		4.853439	12.80	%		4.302813
International Growth		1.498861	16.54	%		1.286123	20.08	%		1.071062
Franklin Templeton International Equity		2.808145	10.14	%		2.549602	17.85	%		2.163493
AllianceBernstein Mid Cap Value ##		1.611849	4.15	%		1.547558	17.19	%		1.320512
Index 400 Stock		1.822214	10.98	%		1.641894	14.82	%		1.429987
Janus Capital Appreciation ##		1.623859	15.55	%		1.405312	18.19	%		1.189063
Growth Stock		2.529872	6.38	%		2.378175	5.34	%		2.257547
Large Cap Core Stock ^		2.102957	7.12	%		1.963264	6.82	%		1.837972
Capital Guardian Domestic Equity		1.237056	6.71	%		1.159280	15.40	%		1.004585
T. Rowe Price Equity Income ##		1.434821	2.90	%		1.394433	13.73	%		1.226098
Index 500 Stock		4.172416	3.43	%		4.034071	9.32	%		3.690039
Asset Allocation		1.180583	5.67	%		1.117219	8.65	%		1.028260
Balanced		8.134566	2.31	%		7.950679	6.55	%		7.461780
High Yield Bond		2.024344	0.14	%		2.021608	11.36	%		1.815388
Select Bond		9.899443	0.95	%		9.805966	3.44	%		9.479507
Money Market		2.779764	1.71	%		2.733012	0.17	%		2.728314
Fidelity VIP Mid Cap ##		2.001683	16.56	%		1.717354	23.11	%		1.395022
Russell Multi-Style Equity		0.868789	5.94	%		0.820050	8.44	%		0.756197
Russell Aggressive Equity		1.423377	5.04	%		1.355022	13.30	%		1.195908
Russell Non-U.S		1.218592	12.28	%		1.085315	16.83	%		0.928976
Russell Core Bond		1.329349	0.75	%		1.319453	3.36	%		1.276523
Russell Real Estate Securities		2.540501	11.56	%		2.277262	33.20	%		1.709672

## Became an investment option under the Contracts effective May 1, 2003.

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

15

ACCOUNT A

ACCUMULATION UNIT VALUES

CONTRACTS ISSUED ON OR AFTER MARCH 31, 2000 - FRONT LOAD VERSION AND BACK LOAD VERSION

CLASS A:

DIVISION	12/31/2005		% CHANGE		12/31/2004		% CHANGE		12/31/2003
Small Cap Growth Stock	$	1.216920	10.63	%	$	1.100014	18.21	%	$	0.930572
T. Rowe Price Small Cap Value		1.696385	6.68	%		1.590166	23.95	%		1.282924
Aggressive Growth Stock		0.839995	5.61	%		0.795400	13.65	%		0.699892
International Growth		1.549220	17.41	%		1.319461	20.98	%		1.090626
Franklin Templeton International Equity		1.289348	10.97	%		1.161941	18.73	%		0.978611
AllianceBernstein Mid Cap Value ##		1.644335	4.93	%		1.567025	18.08	%		1.327125
Index 400 Stock		1.512499	11.81	%		1.352705	15.68	%		1.169318
Janus Capital Appreciation ##		1.656560	16.42	%		1.422971	19.08	%		1.195012
Growth Stock		0.829993	7.18	%		0.774425	6.14	%		0.729643
Large Cap Core Stock ^		0.833720	7.92	%		0.772557	7.62	%		0.717843
Capital Guardian Domestic Equity		1.278681	7.51	%		1.189385	16.27	%		1.022974
T. Rowe Price Equity Income ##		1.463736	3.67	%		1.411949	14.58	%		1.232233
Index 500 Stock		0.886007	4.20	%		0.850261	10.15	%		0.771935
Asset Allocation		1.220273	6.46	%		1.146198	9.47	%		1.047056
Balanced		1.120868	3.08	%		1.087384	7.35	%		1.012887
High Yield Bond		1.413965	0.89	%		1.401540	12.20	%		1.249172
Select Bond		1.470271	1.71	%		1.445569	4.22	%		1.386996
Money Market		1.137767	2.47	%		1.110318	0.93	%		1.100118
Fidelity VIP Mid Cap ##		2.042024	17.43	%		1.738950	24.03	%		1.402004
Russell Multi-Style Equity		0.858577	6.74	%		0.804386	9.26	%		0.736202
Russell Aggressive Equity		1.274157	5.83	%		1.203942	14.16	%		1.054631
Russell Non-U.S		1.024633	13.12	%		0.905783	17.71	%		0.769505
Russell Core Bond		1.388626	1.50	%		1.368038	4.14	%		1.313645
Russell Real Estate Securities		2.831791	12.40	%		2.519496	34.20	%		1.877412

## Became an investment option under the Contracts effective May 1, 2003.

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

16

ACCOUNT A

ACCUMULATION UNIT VALUES

CONTRACTS ISSUED ON OR AFTER MARCH 31, 2000 - BACK LOAD VERSION CLASS B:

DIVISION	12/31/2005		% CHANGE		12/31/2004		% CHANGE		12/31/2003
Small Cap Growth Stock	$	2.521099	9.81	%	$	2.295965	17.32	%	$	1.956937
T. Rowe Price Small Cap Value		1.641244	5.89	%		1.549988	23.02	%		1.259912
Aggressive Growth Stock		5.087495	4.82	%		4.853439	12.80	%		4.302813
International Growth		1.498861	16.54	%		1.286123	20.08	%		1.071062
Franklin Templeton International Equity		2.808145	10.14	%		2.549602	17.85	%		2.163493
AllianceBernstein Mid Cap Value ##		1.611849	4.15	%		1.547558	17.19	%		1.320512
Index 400 Stock		1.822214	10.98	%		1.641894	14.82	%		1.429987
Janus Capital Appreciation ##		1.623859	15.55	%		1.405312	18.19	%		1.189063
Growth Stock		2.529872	6.38	%		2.378175	5.34	%		2.257547
Large Cap Core Stock ^		2.102957	7.12	%		1.963264	6.82	%		1.837972
Capital Guardian Domestic Equity		1.237056	6.71	%		1.159280	15.40	%		1.004585
T. Rowe Price Equity Income ##		1.434821	2.90	%		1.394433	13.73	%		1.226098
Index 500 Stock		4.172416	3.43	%		4.034071	9.32	%		3.690039
Asset Allocation		1.180583	5.67	%		1.117219	8.65	%		1.028260
Balanced		8.134566	2.31	%		7.950679	6.55	%		7.461780
High Yield Bond		2.024344	0.14	%		2.021608	11.36	%		1.815388
Select Bond		9.899443	0.95	%		9.805966	3.44	%		9.479507
Money Market		2.779764	1.71	%		2.733012	0.17	%		2.728314
Fidelity VIP Mid Cap ##		2.001683	16.56	%		1.717354	23.11	%		1.395022
Russell Multi-Style Equity		0.868789	5.94	%		0.820050	8.44	%		0.756197
Russell Aggressive Equity		1.423377	5.04	%		1.355022	13.30	%		1.195908
Russell Non-U.S		1.218592	12.28	%		1.085315	16.83	%		0.928976
Russell Core Bond		1.329349	0.75	%		1.319453	3.36	%		1.276523
Russell Real Estate Securities		2.540501	11.56	%		2.277262	33.20	%		1.709672

## Became an investment option under the Contracts effective May 1, 2003.

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

ACCOUNT A

NET ASSETS

(IN THOUSANDS)

12/31/2005	12/31/2004		12/31/2003
$518,456	$	528,932	$	521,940

The change in 2005’s Net Assets was attributable primarily to investment activities within the Account: net realized gains of $14,685 led to an increase in net assets resulting from operations of $24,026 for the year ended December 31, 2005. The remaining change in net assets of $(34,502) is attributed to the contract transactions for the year ended December 31, 2005. The change in 2004’s Net Assets was attributable primarily to investment activities within the Account: the net change in unrealized appreciation of $34,868 led to an increase in net assets resulting from operations of $46,588 for the year ended December 31, 2004. The remaining change in net assets of $(39,596) is attributed to the contract transactions for the year ended December 31, 2004.

17

ACCOUNT C

ACCUMULATION UNIT VALUES

CONTRACTS ISSUED PRIOR TO DECEMBER 17, 1981 OR BETWEEN APRIL 30, 1984 AND

DECEMBER 31, 1991:

DIVISION	12/31/2005		% CHANGE		12/31/2004		% CHANGE		12/31/2003
Small Cap Growth Stock	$	27.401692	11.18	%	$	24.646196	18.80	%	$	20.745671
T. Rowe Price Small Cap Value		17.342719	7.21	%		16.175980	24.57	%		12.985287
Aggressive Growth Stock		58.106257	6.14	%		54.747494	14.22	%		47.932675
International Growth		15.838526	18.00	%		13.422496	21.59	%		11.039080
Franklin Templeton International Equity		3.289423	11.52	%		2.949634	19.33	%		2.471833
AllianceBernstein Mid Cap Value ##		16.663892	5.46	%		15.801473	18.67	%		13.315544
Index 400 Stock		19.805364	12.37	%		17.624859	16.26	%		15.159273
Janus Capital Appreciation ##		16.788069	17.00	%		14.349081	19.67	%		11.990097
Growth Stock		29.265983	7.71	%		27.170823	6.67	%		25.471804
Large Cap Core Stock ^		24.327323	8.46	%		22.430441	8.16	%		20.737771
Capital Guardian Domestic Equity		13.072390	8.04	%		12.099054	16.85	%		10.354264
T. Rowe Price Equity Income ##		14.833915	4.19	%		14.237970	15.16	%		12.363579
Index 500 Stock		52.479807	4.72	%		50.112283	10.70	%		45.268617
Asset Allocation		12.475450	6.99	%		11.659896	10.02	%		10.598020
Balanced		111.421574	3.59	%		107.555819	7.89	%		99.686821
High Yield Bond		23.417544	1.39	%		23.096633	12.76	%		20.482734
Select Bond		136.984725	2.22	%		134.012491	4.75	%		127.939507
Money Market		36.095241	2.98	%		35.049174	1.43	%		34.553668
Fidelity VIP Mid Cap ##		20.694231	18.02	%		17.535222	24.66	%		14.066904
Russell Multi-Style Equity		9.442962	7.27	%		8.802993	9.81	%		8.016570
Russell Aggressive Equity		15.470599	6.36	%		14.545498	14.73	%		12.677885
Russell Non-U.S		13.244730	13.69	%		11.650240	18.30	%		9.848016
Russell Core Bond		14.448349	2.01	%		14.163304	4.66	%		13.532112
Russell Real Estate Securities		27.611672	12.96	%		24.444468	34.87	%		18.123797

## Became an investment option under the Contracts effective May 1, 2003.

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

18

ACCOUNT C

ACCUMULATION UNIT VALUES

CONTRACTS ISSUED AFTER DECEMBER 16, 1981 AND PRIOR TO MAY 1, 1984:

DIVISION	12/31/2005		% CHANGE		12/31/2004		% CHANGE		12/31/2003
Small Cap Growth Stock	$	26.502238	10.63	%	$	23.956264	18.21	%	$	20.266253
T. Rowe Price Small Cap Value		16.963788	6.68	%		15.901602	23.95	%		12.829144
Aggressive Growth Stock		53.923710	5.61	%		51.060593	13.65	%		44.929401
International Growth		15.492364	17.41	%		13.194729	20.98	%		10.906272
Franklin Templeton International Equity		3.087441	10.96	%		2.782359	18.73	%		2.343355
AllianceBernstein Mid Cap Value ##		16.443216	4.93	%		15.670114	18.08	%		13.271202
Index 400 Stock		19.155300	11.81	%		17.131512	15.68	%		14.808985
Janus Capital Appreciation ##		16.565759	16.42	%		14.229799	19.08	%		11.950148
Growth Stock		27.607246	7.18	%		25.758905	6.14	%		24.269545
Large Cap Core Stock ^		22.948362	7.92	%		21.264720	7.62	%		19.758825
Capital Guardian Domestic Equity		12.786645	7.51	%		11.893730	16.27	%		10.229694
T. Rowe Price Equity Income ##		14.637433	3.67	%		14.119597	14.58	%		12.322387
Index 500 Stock		48.697779	4.20	%		46.733245	10.15	%		42.428293
Asset Allocation		12.202816	6.46	%		11.462082	9.47	%		10.470560
Balanced		98.847881	3.08	%		95.895281	7.35	%		89.326036
High Yield Bond		22.090395	0.89	%		21.896587	12.20	%		19.516037
Select Bond		121.466757	1.71	%		119.425260	4.22	%		114.586395
Money Market		32.059904	2.47	%		31.286399	0.93	%		30.999129
Fidelity VIP Mid Cap ##		20.420232	17.43	%		17.389476	24.03	%		14.020063
Russell Multi-Style Equity		9.132958	6.74	%		8.556544	9.26	%		7.831294
Russell Aggressive Equity		14.962745	5.83	%		14.138303	14.16	%		12.384892
Russell Non-U.S		12.809950	13.12	%		11.324119	17.71	%		9.620430
Russell Core Bond		13.974171	1.51	%		13.766970	4.14	%		13.219553
Russell Real Estate Securities		26.705759	12.40	%		23.760619	34.20	%		17.705263

## Became an investment option under the Contracts effective May 1, 2003.

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

19

ACCOUNT C

ACCUMULATION UNIT VALUES

CONTRACTS ISSUED AFTER DECEMBER 31, 1991 – FRONT LOAD VERSION:

DIVISION	12/31/2005		% CHANGE		12/31/2004		% CHANGE		12/31/2003
Small Cap Growth Stock	$	2.623886	10.46	%	$	2.375356	18.03	%	$	2.012501
T. Rowe Price Small Cap Value		1.685204	6.52	%		1.582043	23.76	%		1.278281
Aggressive Growth Stock		3.499067	5.45	%		3.318231	13.48	%		2.924175
International Growth		1.539014	17.24	%		1.312727	20.80	%		1.086683
Franklin Templeton International Equity		3.029496	10.80	%		2.734209	18.56	%		2.306261
AllianceBernstein Mid Cap Value ##		1.637759	4.78	%		1.563095	17.90	%		1.325796
Index 400 Stock		1.896510	11.65	%		1.698670	15.51	%		1.470580
Janus Capital Appreciation ##		1.649963	16.24	%		1.419420	18.90	%		1.193818
Growth Stock		2.712956	7.02	%		2.535103	5.98	%		2.392114
Large Cap Core Stock ^		2.255126	7.76	%		2.092800	7.46	%		1.947509
Capital Guardian Domestic Equity		1.270242	7.35	%		1.183300	16.09	%		1.019273
T. Rowe Price Equity Income ##		1.457931	3.51	%		1.408447	14.41	%		1.231018
Index 500 Stock		3.533871	4.05	%		3.396371	9.98	%		3.088134
Asset Allocation		1.212214	6.30	%		1.140330	9.30	%		1.043259
Balanced		2.857685	2.93	%		2.776467	7.19	%		2.590151
High Yield Bond		2.170854	0.73	%		2.155028	12.03	%		1.923624
Select Bond		2.308631	1.56	%		2.273220	4.07	%		2.184385
Money Market		1.560248	2.32	%		1.524874	0.77	%		1.513153
Fidelity VIP Mid Cap ##		2.033893	17.25	%		1.734607	23.85	%		1.400609
Russell Multi-Style Equity		0.904209	6.58	%		0.848412	9.10	%		0.777670
Russell Aggressive Equity		1.481405	5.67	%		1.401874	13.99	%		1.229860
Russell Non-U.S		1.268236	12.95	%		1.122807	17.53	%		0.955315
Russell Core Bond		1.383514	1.35	%		1.365029	3.98	%		1.312719
Russell Real Estate Securities		2.644046	12.23	%		2.355972	34.00	%		1.758196

## Became an investment option under the Contracts effective May 1, 2003.

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

20

ACCOUNT C

ACCUMULATION UNIT VALUES

CONTRACTS ISSUED AFTER DECEMBER 31, 1991 - SIMPLIFIED LOAD VERSION:

DIVISION	12/31/2005		% CHANGE		12/31/2004		% CHANGE		12/31/2003
Small Cap Growth Stock	$	2.521099	9.81	%	$	2.295965	17.32	%	$	1.956937
T. Rowe Price Small Cap Value		1.641244	5.89	%		1.549988	23.02	%		1.259912
Aggressive Growth Stock		5.106174	4.82	%		4.871253	12.80	%		4.318610
International Growth		1.498861	16.54	%		1.286123	20.08	%		1.071062
Franklin Templeton International Equity		2.808145	10.14	%		2.549602	17.85	%		2.163493
AllianceBernstein Mid Cap Value ##		1.611849	4.15	%		1.547558	17.19	%		1.320512
Index 400 Stock		1.822214	10.98	%		1.641894	14.82	%		1.429987
Janus Capital Appreciation ##		1.623859	15.55	%		1.405312	18.19	%		1.189063
Growth Stock		2.529872	6.38	%		2.378175	5.34	%		2.257547
Large Cap Core Stock ^		2.102957	7.12	%		1.963264	6.82	%		1.837972
Capital Guardian Domestic Equity		1.237056	6.71	%		1.159280	15.40	%		1.004585
T. Rowe Price Equity Income ##		1.434821	2.90	%		1.394433	13.73	%		1.226098
Index 500 Stock		4.257509	3.43	%		4.116350	9.32	%		3.765294
Asset Allocation		1.180583	5.67	%		1.117219	8.65	%		1.028260
Balanced		8.174739	2.31	%		7.989947	6.55	%		7.498641
High Yield Bond		2.024344	0.14	%		2.021608	11.36	%		1.815388
Select Bond		9.995944	0.95	%		9.901557	3.44	%		9.571910
Money Market		2.785794	1.71	%		2.738952	0.17	%		2.734239
Fidelity VIP Mid Cap ##		2.001683	16.56	%		1.717354	23.11	%		1.395022
Russell Multi-Style Equity		0.868789	5.94	%		0.820050	8.44	%		0.756197
Russell Aggressive Equity		1.423377	5.04	%		1.355022	13.30	%		1.195908
Russell Non-U.S		1.218592	12.28	%		1.085315	16.83	%		0.928976
Russell Core Bond		1.329349	0.75	%		1.319453	3.36	%		1.276523
Russell Real Estate Securities		2.540501	11.56	%		2.277262	33.20	%		1.709672

## Became an investment option under the Contracts effective May 1, 2003.

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

ACCOUNT C

NET ASSETS

(IN THOUSANDS)

12/31/2005	12/31/2004		12/31/2003
$504,794	$	485,161	$	435,562

The change in 2005’s Net Assets was attributable primarily to investment activities within the Account: the net change in unrealized appreciation of $14,797 led to an increase in net assets resulting from operations of $33,845 for the year ended December 31, 2005. The remaining decrease in net assets of $14,212 is attributed to the contract transactions for the year ended December 31, 2005. The change in 2004’s Net Assets was attributable primarily to investment activities within the Account: the net change in unrealized appreciation of $47,729 led to an increase in net assets resulting from operations of $55,414 for the year ended December 31, 2004. The remaining change in net assets of $(5,815) is attributed to the contract transactions for the year ended December 31, 2004.

CRITICAL ACCOUNTING POLICIES

Dividend income and distributions of net realized gains received from the Funds are recorded on the ex-date of the dividends. Transactions in the Funds’ shares are accounted for on the trade date. Annuity reserves are based on published annuity tables. A deduction for mortality and risk expense charges is determined daily. Under current law, no federal income taxes are payable with respect to Accounts A and C. Accordingly, no provisions for any such liability has been made. See Note 2 of the Account A and Account C financial statements, respectively, in Item 8 herein.

21

OFF-BALANCE SHEET ARRANGEMENTS

Each of Account A and Account C had no off-balance sheet arrangement (as defined by S-K 303) during 2005 that have or are reasonably likely to have a current or future effect on the respective Account’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to Contract holders.

CONTRACTUAL OBLIGATIONS

At December 31, 2005, neither Account A nor Account C had any contractual obligations classified as long-term debt obligations, capital (finance) lease obligations, operating lease obligations, purchase obligations or other long-term liabilities reflected on their respective balance sheets.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The assets of Account A and Account C consist entirely of shares of the 18 portfolios of the Series Fund, the Fidelity VIP Mid Cap Portfolio (the “Fidelity Portfolio”), and 5 funds of the Russell Funds, together with current amounts due from the sale of Series Fund, Fidelity Portfolio, and Russell Funds shares and due from Northwestern Mutual. The liabilities of each of Account A and Account C consist of current amounts due to Contract owners, due to Northwestern Mutual and due on purchase of Series Fund, Fidelity Portfolio, and Russell Funds shares. Neither of the Accounts enters into any market risk sensitive instruments, either for trading purposes or for purposes other than trading purposes.

22

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA     

NML Variable Annuity Account A

Statements of Assets and Liabilities

As of December 31

(in thousands, except accumulation unit values)

	Small Cap Growth Stock Division				T. Rowe Price Small Cap Value Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	15,844	$	15,880	$	8,689	$	7,840
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		2		—		1		10
Total Assets		15,846		15,880		8,690		7,850
Due to Northwestern Mutual Life Insurance Company		—		—		—		—
Due to Participants		—		1		—		1
Total Liabilities		—		1		—		1
Total Net Assets	$	15,846	$	15,879	$	8,690	$	7,849
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981
Accumulation Units (3)	$	226	$	259	$	426	$	526
Annuity Reserves		—		—		—		—
After December 16, 1981 and Prior to March 31, 1995
Accumulation Units (4)		8,025		8,731		5,129		3,984
Annuity Reserves		162		38		14		206
On or After March 31, 1995 and Prior to March 31, 2000 - Front Load Version
Accumulation Units (5)		817		785		413		603
Annuity Reserves		—		—		—		—
On or After March 31, 1995 and Prior to March 31, 2000 - Back Load Version
Accumulation Units (6)		4,076		3,933		1,292		1,333
Annuity Reserves		2		3		—		—
On or After March 31, 2000 - Front Load Version
Accumulation Units (7)		254		248		146		105
Annuity Reserves		—		—		—		—
On or After March 31, 2000 - Back Load Version
Class A Accumulation Units (8)		57		28		23		44
Class B Accumulation Units (9)		2,227		1,854		1,247		1,048
Annuity Reserves		—		—		—		—
Total Net Assets	$	15,846	$	15,879	$	8,690	$	7,849
___________
(1)    Investments, at cost	$	11,786	$	12,396	$	7,561	$	6,269
(2)    Shares Outstanding		6,262		6,904		5,305		4,996
(3)    Accumulation Unit Value	$	2.606684	$	2.362099	$	1.677900	$	1.576732
Units Outstanding		87		109		254		334
(4)    Accumulation Unit Value	$	2.521099	$	2.295965	$	1.641244	$	1.549988
Units Outstanding		3,183		3,803		3,126		2,571
(5)    Accumulation Unit Value	$	2.667734	$	2.409091	$	1.703785	$	1.595527
Units Outstanding		306		326		242		378
(6)    Accumulation Unit Value	$	2.521099	$	2.295965	$	1.641244	$	1.549988
Units Outstanding		1,617		1,713		787		860
(7)    Accumulation Unit Value	$	1.216920	$	1.100014	$	1.696385	$	1.590166
Units Outstanding		208		226		86		66
(8)    Accumulation Unit Value	$	1.216920	$	1.100014	$	1.696385	$	1.590166
Units Outstanding		47		25		14		27
(9)    Accumulation Unit Value	$	2.521099	$	2.295965	$	1.641244	$	1.549988
Units Outstanding		883		808		759		676

The Accompanying Notes are an Integral Part of the Financial Statements.

23

NML Variable Annuity Account A

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Aggressive Growth Stock Division				International Growth Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	48,248	$	54,615	$	6,141	$	3,767
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		—		—		—		—
Total Assets		48,248		54,615		6,141		3,767
Due to Northwestern Mutual Life Insurance Company		2		24		—		1
Due to Participants		—		168		—		4
Total Liabilities		2		192		—		5
Total Net Assets	$	48,246	$	54,423	$	6,141	$	3,762
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981
Accumulation Units (3)	$	1,024	$	1,126	$	161	$	87
Annuity Reserves		50		51		—		—
After December 16, 1981 and Prior to March 31, 1995
Accumulation Units (4)		29,664		34,973		2,897		1,696
Annuity Reserves		106		113		63		—
On or After March 31, 1995 and Prior to March 31, 2000 - Front Load Version
Accumulation Units (5)		1,660		1,798		520		374
Annuity Reserves		68		70		—		—
On or After March 31, 1995 and Prior to March 31, 2000 - Back Load Version
Accumulation Units (6)		12,141		13,022		993		687
Annuity Reserves		2		3		—		—
On or After March 31, 2000 - Front Load Version
Accumulation Units (7)		169		184		152		93
Annuity Reserves		—		—		—		—
On or After March 31, 2000 - Back Load Version
Class A Accumulation Units (8)		356		237		118		37
Class B Accumulation Units (9)		3,006		2,846		1,237		788
Annuity Reserves		—		—		—		—
Total Net Assets	$	48,246	$	54,423	$	6,141	$	3,762
___________
(1)    Investments, at cost	$	47,240	$	57,587	$	5,344	$	3,025
(2)    Shares Outstanding		14,629		17,567		4,160		2,856
(3)    Accumulation Unit Value	$	5.485431	$	5.207047	$	1.532315	$	1.308297
Units Outstanding		187		216		105		66
(4)    Accumulation Unit Value	$	5.087495	$	4.853439	$	1.498861	$	1.286123
Units Outstanding		5,831		7,206		1,933		1,319
(5)    Accumulation Unit Value	$	2.634839	$	2.492488	$	1.555979	$	1.323909
Units Outstanding		630		721		334		283
(6)    Accumulation Unit Value	$	5.087495	$	4.853439	$	1.498861	$	1.286123
Units Outstanding		2,386		2,683		662		534
(7)    Accumulation Unit Value	$	0.839995	$	0.795400	$	1.549220	$	1.319461
Units Outstanding		201		232		99		70
(8)    Accumulation Unit Value	$	0.839995	$	0.795400	$	1.549220	$	1.319461
Units Outstanding		424		298		76		28
(9)    Accumulation Unit Value	$	5.087495	$	4.853439	$	1.498861	$	1.286123
Units Outstanding		591		586		825		613

The Accompanying Notes are an Integral Part of the Financial Statements.

24

NML Variable Annuity Account A

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Franklin Templeton International Equity Division				AllianceBernstein Mid Cap Value Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	36,607	$	34,641	$	1,455	$	1,232
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		1		5		—		—
Total Assets		36,608		34,646		1,455		1,232
Due to Northwestern Mutual Life Insurance Company		—		2		—		—
Due to Participants		—		52		—		2
Total Liabilities		—		54		—		2
Total Net Assets	$	36,608	$	34,592	$	1,455	$	1,230
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981
Accumulation Units (3)	$	908	$	807	$	18	$	18
Annuity Reserves		—		—		—		—
After December 16, 1981 and Prior to March 31, 1995
Accumulation Units (4)		23,916		23,294		790		688
Annuity Reserves		185		226		9		41
On or After March 31, 1995 and Prior to March 31, 2000 - Front Load Version
Accumulation Units (5)		1,579		1,362		166		96
Annuity Reserves		22		22		—		—
On or After March 31, 1995 and Prior to March 31, 2000 - Back Load Version
Accumulation Units (6)		6,924		6,523		229		164
Annuity Reserves		1		1		—		—
On or After March 31, 2000 - Front Load Version
Accumulation Units (7)		285		231		6		2
Annuity Reserves		—		—		—		—
On or After March 31, 2000 - Back Load Version
Class A Accumulation Units (8)		55		80		21		38
Class B Accumulation Units (9)		2,733		2,046		216		183
Annuity Reserves		—		—		—		—
Total Net Assets	$	36,608	$	34,592	$	1,455	$	1,230
___________
(1)    Investments, at cost	$	30,229	$	31,159	$	1,414	$	1,147
(2)    Shares Outstanding		20,203		20,931		1,003		847
(3)    Accumulation Unit Value	$	2.991857	$	2.702895	$	1.633473	$	1.560530
Units Outstanding		303		299		11		12
(4)    Accumulation Unit Value	$	2.808145	$	2.549602	$	1.611849	$	1.547558
Units Outstanding		8,516		9,136		489		445
(5)    Accumulation Unit Value	$	2.525906	$	2.274073	$	1.648664	$	1.569608
Units Outstanding		626		599		101		61
(6)    Accumulation Unit Value	$	2.808145	$	2.549602	$	1.611849	$	1.547558
Units Outstanding		2,466		2,558		142		106
(7)    Accumulation Unit Value	$	1.289348	$	1.161941	$	1.644335	$	1.567025
Units Outstanding		221		199		4		1
(8)    Accumulation Unit Value	$	1.289348	$	1.161941	$	1.644335	$	1.567025
Units Outstanding		43		69		13		24
(9)    Accumulation Unit Value	$	2.808145	$	2.549602	$	1.611849	$	1.547558
Units Outstanding		973		803		134		119

The Accompanying Notes are an Integral Part of the Financial Statements.

25

NML Variable Annuity Account A

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Index 400 Stock Division				Janus Capital Appreciation Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	13,890	$	12,670	$	3,364	$	1,059
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		4		—		1		2
Total Assets		13,894		12,670		3,365		1,061
Due to Northwestern Mutual Life Insurance Company		—		1		—		—
Due to Participants		—		2		—		—
Total Liabilities		—		3		—		—
Total Net Assets	$	13,894	$	12,667	$	3,365	$	1,061
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981
Accumulation Units (3)	$	358	$	330	$	417	$	99
Annuity Reserves		—		—		—		—
After December 16, 1981 and Prior to March 31, 1995
Accumulation Units (4)		6,325		5,962		1,428		602
Annuity Reserves		367		158		120		—
On or After March 31, 1995 and Prior to March 31, 2000 - Front Load Version
Accumulation Units (5)		669		616		178		45
Annuity Reserves		—		—		—		—
On or After March 31, 1995 and Prior to March 31, 2000 - Back Load Version
Accumulation Units (6)		3,351		3,234		630		183
Annuity Reserves		5		5		—		—
On or After March 31, 2000 - Front Load Version
Accumulation Units (7)		319		248		67		3
Annuity Reserves		—		—		—		—
On or After March 31, 2000 - Back Load Version
Class A Accumulation Units (8)		198		72		125		—
Class B Accumulation Units (9)		2,302		2,042		400		129
Annuity Reserves		—		—		—		—
Total Net Assets	$	13,894	$	12,667	$	3,365	$	1,061
___________
(1)    Investments, at cost	$	10,904	$	9,802	$	3,053	$	954
(2)    Shares Outstanding		8,979		8,660		2,069		740
(3)    Accumulation Unit Value	$	1.884064	$	1.689185	$	1.645662	$	1.417108
Units Outstanding		190		195		254		70
(4)    Accumulation Unit Value	$	1.822214	$	1.641894	$	1.623859	$	1.405312
Units Outstanding		3,471		3,631		879		428
(5)    Accumulation Unit Value	$	1.928160	$	1.722759	$	1.660941	$	1.425327
Units Outstanding		347		358		107		31
(6)    Accumulation Unit Value	$	1.822214	$	1.641894	$	1.623859	$	1.405312
Units Outstanding		1,839		1,970		388		131
(7)    Accumulation Unit Value	$	1.512499	$	1.352705	$	1.656560	$	1.422971
Units Outstanding		211		183		41		2
(8)    Accumulation Unit Value	$	1.512499	$	1.352705	$	1.656560	$	1.422971
Units Outstanding		131		53		75		—
(9)    Accumulation Unit Value	$	1.822214	$	1.641894	$	1.623859	$	1.405312
Units Outstanding		1,263		1,244		247		92

The Accompanying Notes are an Integral Part of the Financial Statements.

26

NML Variable Annuity Account A

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Growth Stock Division				Large Cap Core Stock Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	22,251	$	22,578	$	14,140	$	14,271
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		—		1		2		1
Total Assets		22,251		22,579		14,142		14,272
Due to Northwestern Mutual Life Insurance Company		—		1		1		1
Due to Participants		—		—		15		1
Total Liabilities		—		1		16		2
Total Net Assets	$	22,251	$	22,578	$	14,126	$	14,270
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981
Accumulation Units (3)	$	619	$	438	$	171	$	222
Annuity Reserves		—		—		178		213
After December 16, 1981 and Prior to March 31, 1995
Accumulation Units (4)		10,978		11,436		7,784		7,807
Annuity Reserves		21		22		252		256
On or After March 31, 1995 and Prior to March 31, 2000 - Front Load Version
Accumulation Units (5)		962		1,072		450		432
Annuity Reserves		19		19		115		117
On or After March 31, 1995 and Prior to March 31, 2000 - Back Load Version
Accumulation Units (6)		6,428		6,778		3,924		4,013
Annuity Reserves		—		—		1		—
On or After March 31, 2000 - Front Load Version
Accumulation Units (7)		188		159		166		208
Annuity Reserves		—		—		—		—
On or After March 31, 2000 - Back Load Version
Class A Accumulation Units (8)		109		50		32		67
Class B Accumulation Units (9)		2,927		2,604		1,053		935
Annuity Reserves		—		—		—		—
Total Net Assets	$	22,251	$	22,578	$	14,126	$	14,270
___________
(1)    Investments, at cost	$	21,439	$	23,613	$	13,761	$	15,297
(2)    Shares Outstanding		10,526		11,380		11,572		12,496
(3)    Accumulation Unit Value	$	2.681914	$	2.508557	$	2.229337	$	2.070897
Units Outstanding		231		175		77		108
(4)    Accumulation Unit Value	$	2.529872	$	2.378175	$	2.102957	$	1.963264
Units Outstanding		4,338		4,809		3,701		3,976
(5)    Accumulation Unit Value	$	2.560389	$	2.386622	$	2.127635	$	1.969605
Units Outstanding		376		449		211		219
(6)    Accumulation Unit Value	$	2.529872	$	2.378175	$	2.102957	$	1.963264
Units Outstanding		2,541		2,850		1,866		2,044
(7)    Accumulation Unit Value	$	0.829993	$	0.774425	$	0.833720	$	0.772557
Units Outstanding		227		205		200		269
(8)    Accumulation Unit Value	$	0.829993	$	0.774425	$	0.833720	$	0.772557
Units Outstanding		131		65		39		87
(9)    Accumulation Unit Value	$	2.529872	$	2.378175	$	2.102957	$	1.963264
Units Outstanding		1,157		1,095		501		477

The Accompanying Notes are an Integral Part of the Financial Statements.

27

NML Variable Annuity Account A

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Capital Guardian Domestic Equity Division				T. Rowe Price Equity Income Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	7,309	$	5,726	$	3,290	$	1,764
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		1		—		1		1
Total Assets		7,310		5,726		3,291		1,765
Due to Northwestern Mutual Life Insurance Company		—		—		—		—
Due to Participants		—		4		—		—
Total Liabilities		—		4		—		—
Total Net Assets	$	7,310	$	5,722	$	3,291	$	1,765
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981
Accumulation Units (3)	$	94	$	289	$	288	$	25
Annuity Reserves		—		—		—		—
After December 16, 1981 and Prior to March 31, 1995
Accumulation Units (4)		4,011		2,862		1,849		1,085
Annuity Reserves		94		45		79		113
On or After March 31, 1995 and Prior to March 31, 2000 - Front Load Version
Accumulation Units (5)		700		462		181		84
Annuity Reserves		—		—		—		—
On or After March 31, 1995 and Prior to March 31, 2000 - Back Load Version
Accumulation Units (6)		908		912		446		218
Annuity Reserves		—		—		—		—
On or After March 31, 2000 - Front Load Version
Accumulation Units (7)		136		116		104		27
Annuity Reserves		—		—		—		—
On or After March 31, 2000 - Back Load Version
Class A Accumulation Units (8)		101		76		26		24
Class B Accumulation Units (9)		1,266		960		318		189
Annuity Reserves		—		—		—		—
Total Net Assets	$	7,310	$	5,722	$	3,291	$	1,765
___________
(1)    Investments, at cost	$	6,865	$	4,926	$	3,259	$	1,656
(2)    Shares Outstanding		6,451		5,006		2,472		1,306
(3)    Accumulation Unit Value	$	1.264720	$	1.179310	$	1.454076	$	1.406111
Units Outstanding		74		245		198		18
(4)    Accumulation Unit Value	$	1.237056	$	1.159280	$	1.434821	$	1.394433
Units Outstanding		3,242		2,469		1,289		778
(5)    Accumulation Unit Value	$	1.284256	$	1.193398	$	1.467592	$	1.414287
Units Outstanding		545		387		123		60
(6)    Accumulation Unit Value	$	1.237056	$	1.159280	$	1.434821	$	1.394433
Units Outstanding		734		787		311		156
(7)    Accumulation Unit Value	$	1.278681	$	1.189385	$	1.463736	$	1.411949
Units Outstanding		106		98		71		19
(8)    Accumulation Unit Value	$	1.278681	$	1.189385	$	1.463736	$	1.411949
Units Outstanding		79		64		18		17
(9)    Accumulation Unit Value	$	1.237056	$	1.159280	$	1.434821	$	1.394433
Units Outstanding		1,024		828		221		135

The Accompanying Notes are an Integral Part of the Financial Statements.

28

NML Variable Annuity Account A

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Index 500 Stock Division				Asset Allocation Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	74,070	$	80,235	$	10,181	$	7,178
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		12		—		—		—
Total Assets		74,082		80,235		10,181		7,178
Due to Northwestern Mutual Life Insurance Company		—		92		—		—
Due to Participants		8		222		—		—
Total Liabilities		8		314		—		—
Total Net Assets	$	74,074	$	79,921	$	10,181	$	7,178
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981
Accumulation Units (3)	$	14,389	$	14,564	$	97	$	72
Annuity Reserves		550		597		—		—
After December 16, 1981 and Prior to March 31, 1995
Accumulation Units (4)		36,315		41,317		5,289		3,222
Annuity Reserves		1,283		1,303		—		—
On or After March 31, 1995 and Prior to March 31, 2000 - Front Load Version
Accumulation Units (5)		1,901		2,092		1,012		867
Annuity Reserves		70		73		—		—
On or After March 31, 1995 and Prior to March 31, 2000 - Back Load Version
Accumulation Units (6)		13,521		14,984		1,512		1,199
Annuity Reserves		2		2		—		—
On or After March 31, 2000 - Front Load Version
Accumulation Units (7)		425		313		665		575
Annuity Reserves		—		—		—		—
On or After March 31, 2000 - Back Load Version
Class A Accumulation Units (8)		362		255		250		227
Class B Accumulation Units (9)		5,256		4,421		1,356		1,016
Annuity Reserves		—		—		—		—
Total Net Assets	$	74,074	$	79,921	$	10,181	$	7,178
___________
(1)    Investments, at cost	$	64,039	$	69,278	$	8,957	$	6,184
(2)    Shares Outstanding		24,923		27,263		8,777		6,409
(3)    Accumulation Unit Value	$	4.498618	$	4.327836	$	1.206955	$	1.136505
Units Outstanding		3,198		3,365		81		64
(4)    Accumulation Unit Value	$	4.172416	$	4.034071	$	1.180583	$	1.117219
Units Outstanding		8,704		10,242		4,479		2,884
(5)    Accumulation Unit Value	$	2.848747	$	2.731142	$	1.225587	$	1.150060
Units Outstanding		667		766		826		754
(6)    Accumulation Unit Value	$	4.172416	$	4.034071	$	1.180583	$	1.117219
Units Outstanding		3,241		3,714		1,281		1,073
(7)    Accumulation Unit Value	$	0.886007	$	0.850261	$	1.220273	$	1.146198
Units Outstanding		480		368		545		502
(8)    Accumulation Unit Value	$	0.886007	$	0.850261	$	1.220273	$	1.146198
Units Outstanding		409		300		205		198
(9)    Accumulation Unit Value	$	4.172416	$	4.034071	$	1.180583	$	1.117219
Units Outstanding		1,260		1,096		1,148		909

The Accompanying Notes are an Integral Part of the Financial Statements.

29

NML Variable Annuity Account A

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Balanced Division				High Yield Bond Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	165,993	$	185,169	$	5,918	$	6,155
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		24		1		—		—
Total Assets		166,017		185,170		5,918		6,155
Due to Northwestern Mutual Life Insurance Company		—		7		—		—
Due to Participants		300		476		—		—
Total Liabilities		300		483		—		—
Total Net Assets	$	165,717	$	184,687	$	5,918	$	6,155
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981
Accumulation Units (3)	$	9,666	$	10,345	$	154	$	95
Annuity Reserves		1,546		1,641		—		—
After December 16, 1981 and Prior to March 31, 1995
Accumulation Units (4)		125,973		143,055		2,889		3,022
Annuity Reserves		4,094		4,370		47		65
On or After March 31, 1995 and Prior to March 31, 2000 - Front Load Version
Accumulation Units (5)		2,240		2,580		426		377
Annuity Reserves		179		187		—		—
On or After March 31, 1995 and Prior to March 31, 2000 - Back Load Version
Accumulation Units (6)		15,828		17,251		1,387		1,721
Annuity Reserves		72		77		1		1
On or After March 31, 2000 - Front Load Version
Accumulation Units (7)		190		122		96		75
Annuity Reserves		—		—		—		—
On or After March 31, 2000 - Back Load Version
Class A Accumulation Units (8)		130		79		42		27
Class B Accumulation Units (9)		5,799		4,980		876		772
Annuity Reserves		—		—		—		—
Total Net Assets	$	165,717	$	184,687	$	5,918	$	6,155
___________
(1)    Investments, at cost	$	154,964	$	171,235	$	5,604	$	5,531
(2)    Shares Outstanding		89,244		98,862		8,253		8,109
(3)    Accumulation Unit Value	$	9.172086	$	8.920173	$	2.146008	$	2.132449
Units Outstanding		1,054		1,160		72		44
(4)    Accumulation Unit Value	$	8.134566	$	7.950679	$	2.024344	$	2.021608
Units Outstanding		15,486		17,993		1,427		1,495
(5)    Accumulation Unit Value	$	2.437514	$	2.362380	$	2.078570	$	2.058316
Units Outstanding		919		1,092		205		183
(6)    Accumulation Unit Value	$	8.134566	$	7.950679	$	2.024344	$	2.021608
Units Outstanding		1,946		2,170		685		852
(7)    Accumulation Unit Value	$	1.120868	$	1.087384	$	1.413965	$	1.401540
Units Outstanding		169		113		68		54
(8)    Accumulation Unit Value	$	1.120868	$	1.087384	$	1.413965	$	1.401540
Units Outstanding		116		72		30		19
(9)    Accumulation Unit Value	$	8.134566	$	7.950679	$	2.024344	$	2.021608
Units Outstanding		713		626		433		382

The Accompanying Notes are an Integral Part of the Financial Statements.

30

NML Variable Annuity Account A

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Select Bond Division				Money Market Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	28,450	$	27,346	$	14,792	$	14,581
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		2		3		1		1
Total Assets		28,452		27,349		14,793		14,582
Due to Northwestern Mutual Life Insurance Company		—		—		—		—
Due to Participants		5		5		—		13
Total Liabilities		5		5		—		13
Total Net Assets	$	28,447	$	27,344	$	14,793	$	14,569
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981
Accumulation Units (3)	$	3,617	$	4,281	$	1,302	$	739
Annuity Reserves		47		58		40		43
After December 16, 1981 and Prior to March 31, 1995
Accumulation Units (4)		14,450		13,818		7,780		8,593
Annuity Reserves		474		491		261		276
On or After March 31, 1995 and Prior to March 31, 2000 - Front Load Version
Accumulation Units (5)		1,536		1,489		604		786
Annuity Reserves		24		26		—		—
On or After March 31, 1995 and Prior to March 31, 2000 - Back Load Version
Accumulation Units (6)		4,670		4,476		3,062		2,832
Annuity Reserves		7		9		—		—
On or After March 31, 2000 - Front Load Version
Accumulation Units (7)		326		288		269		170
Annuity Reserves		—		—		—		—
On or After March 31, 2000 - Back Load Version
Class A Accumulation Units (8)		70		13		78		59
Class B Accumulation Units (9)		3,226		2,395		1,397		1,071
Annuity Reserves		—		—		—		—
Total Net Assets	$	28,447	$	27,344	$	14,793	$	14,569
___________
(1)    Investments, at cost	$	28,981	$	27,294	$	14,792	$	14,581
(2)    Shares Outstanding		23,649		22,269		14,792		14,581
(3)    Accumulation Unit Value	$	11.164423	$	11.003993	$	3.134091	$	3.066057
Units Outstanding		324		389		415		241
(4)    Accumulation Unit Value	$	9.899443	$	9.805966	$	2.779764	$	2.733012
Units Outstanding		1,459		1,409		2,800		3,144
(5)    Accumulation Unit Value	$	2.001179	$	1.965614	$	1.459736	$	1.423127
Units Outstanding		768		758		414		553
(6)    Accumulation Unit Value	$	9.899443	$	9.805966	$	2.779764	$	2.733012
Units Outstanding		472		457		1,101		1,036
(7)    Accumulation Unit Value	$	1.470271	$	1.445569	$	1.137767	$	1.110318
Units Outstanding		222		199		236		153
(8)    Accumulation Unit Value	$	1.470271	$	1.445569	$	1.137767	$	1.110318
Units Outstanding		48		9		69		53
(9)    Accumulation Unit Value	$	9.899443	$	9.805966	$	2.779764	$	2.733012
Units Outstanding		325		244		502		392

The Accompanying Notes are an Integral Part of the Financial Statements.

31

NML Variable Annuity Account A

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Fidelity VIP Mid Cap Division				Russell Multi-Style Equity Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	—	$	—	$	—	$	—
Fidelity Variable Insurance Products Fund III		6,559		3,712		—		—
Russell Investment Funds		—		—		5,657		5,864
Due from Northwestern Mutual Life Insurance Company		—		11		1		—
Total Assets		6,559		3,723		5,658		5,864
Due to Northwestern Mutual Life Insurance Company		1		—		—		—
Due to Participants		—		2		—		2
Total Liabilities		1		2		—		2
Total Net Assets	$	6,558	$	3,721	$	5,658	$	5,862
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981
Accumulation Units (3)	$	162	$	84	$	17	$	17
Annuity Reserves		—		—		—		—
After December 16, 1981 and Prior to March 31, 1995
Accumulation Units (4)		3,656		2,283		2,615		2,925
Annuity Reserves		61		22		89		90
On or After March 31, 1995 and Prior to March 31, 2000 - Front Load Version
Accumulation Units (5)		170		85		209		444
Annuity Reserves		—		—		—		—
On or After March 31, 1995 and Prior to March 31, 2000 - Back Load Version
Accumulation Units (6)		1,125		593		1,543		1,429
Annuity Reserves		—		—		—		—
On or After March 31, 2000 - Front Load Version
Accumulation Units (7)		532		155		472		264
Annuity Reserves		—		—		—		—
On or After March 31, 2000 - Back Load Version
Class A Accumulation Units (8)		29		18		9		34
Class B Accumulation Units (9)		823		481		704		659
Annuity Reserves		—		—		—		—
Total Net Assets	$	6,558	$	3,721	$	5,658	$	5,862
___________
(1)    Investments, at cost	$	5,437	$	3,158	$	4,774	$	5,421
(2)    Shares Outstanding		189		124		423		465
(3)    Accumulation Unit Value	$	2.028562	$	1.731755	$	0.898290	$	0.843681
Units Outstanding		80		49		19		20
(4)    Accumulation Unit Value	$	2.001683	$	1.717354	$	0.868789	$	0.820050
Units Outstanding		1,827		1,329		3,010		3,567
(5)    Accumulation Unit Value	$	2.047402	$	1.741819	$	0.919329	$	0.860463
Units Outstanding		83		49		227		516
(6)    Accumulation Unit Value	$	2.001683	$	1.717354	$	0.868789	$	0.820050
Units Outstanding		562		345		1,776		1,743
(7)    Accumulation Unit Value	$	2.042024	$	1.738950	$	0.858577	$	0.804386
Units Outstanding		260		89		549		328
(8)    Accumulation Unit Value	$	2.042024	$	1.738950	$	0.858577	$	0.804386
Units Outstanding		14		10		10		42
(9)    Accumulation Unit Value	$	2.001683	$	1.717354	$	0.868789	$	0.820050
Units Outstanding		411		280		811		804

The Accompanying Notes are an Integral Part of the Financial Statements.

32

NML Variable Annuity Account A

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Russell Aggressive Equity Division				Russell Non-US Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	—	$	—	$	—	$	—
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		4,279		4,538		5,581		5,041
Due from Northwestern Mutual Life Insurance Company		—		—		1		—
Total Assets		4,279		4,538		5,582		5,041
Due to Northwestern Mutual Life Insurance Company		—		1		—		1
Due to Participants		—		—		—		—
Total Liabilities		—		1		—		1
Total Net Assets	$	4,279	$	4,537	$	5,582	$	5,040
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981
Accumulation Units (3)	$	134	$	164	$	96	$	53
Annuity Reserves		—		—		—		—
After December 16, 1981 and Prior to March 31, 1995
Accumulation Units (4)		1,905		2,332		2,616		2,501
Annuity Reserves		—		—		30		29
On or After March 31, 1995 and Prior to March 31, 2000 - Front Load Version
Accumulation Units (5)		334		307		483		487
Annuity Reserves		—		—		—		—
On or After March 31, 1995 and Prior to March 31, 2000 - Back Load Version
Accumulation Units (6)		1,220		1,228		1,434		1,239
Annuity Reserves		—		—		1		1
On or After March 31, 2000 - Front Load Version
Accumulation Units (7)		170		80		258		200
Annuity Reserves		—		—		—		—
On or After March 31, 2000 - Back Load Version
Class A Accumulation Units (8)		2		23		6		24
Class B Accumulation Units (9)		514		403		658		506
Annuity Reserves		—		—		—		—
Total Net Assets	$	4,279	$	4,537	$	5,582	$	5,040
___________
(1)    Investments, at cost	$	4,061	$	3,940	$	4,389	$	4,130
(2)    Shares Outstanding		297		305		440		445
(3)    Accumulation Unit Value	$	1.471711	$	1.394059	$	1.259956	$	1.116570
Units Outstanding		91		118		77		48
(4)    Accumulation Unit Value	$	1.423377	$	1.355022	$	1.218592	$	1.085315
Units Outstanding		1,338		1,721		2,145		2,304
(5)    Accumulation Unit Value	$	1.506167	$	1.421771	$	1.289430	$	1.138748
Units Outstanding		222		216		375		427
(6)    Accumulation Unit Value	$	1.423377	$	1.355022	$	1.218592	$	1.085315
Units Outstanding		857		906		1,177		1,142
(7)    Accumulation Unit Value	$	1.274157	$	1.203942	$	1.024633	$	0.905783
Units Outstanding		134		67		252		220
(8)    Accumulation Unit Value	$	1.274157	$	1.203942	$	1.024633	$	0.905783
Units Outstanding		2		19		6		27
(9)    Accumulation Unit Value	$	1.423377	$	1.355022	$	1.218592	$	1.085315
Units Outstanding		361		297		540		467

The Accompanying Notes are an Integral Part of the Financial Statements.

33

NML Variable Annuity Account A

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Russell Core Bond Division				Russell Real Estate Securities Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	—	$	—	$	—	$	—
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		3,743		3,532		12,286		10,587
Due from Northwestern Mutual Life Insurance Company		—		—		2		11
Total Assets		3,743		3,532		12,288		10,598
Due to Northwestern Mutual Life Insurance Company		—		—		—		—
Due to Participants		5		5		—		5
Total Liabilities		5		5		—		5
Total Net Assets	$	3,738	$	3,527	$	12,288	$	10,593
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981
Accumulation Units (3)	$	60	$	30	$	212	$	627
Annuity Reserves		—		—		—		—
After December 16, 1981 and Prior to March 31, 1995
Accumulation Units (4)		1,393		1,468		6,138		4,870
Annuity Reserves		3		3		261		210
On or After March 31, 1995 and Prior to March 31, 2000 - Front Load Version
Accumulation Units (5)		316		388		779		982
Annuity Reserves		—		—		—		—
On or After March 31, 1995 and Prior to March 31, 2000 - Back Load Version
Accumulation Units (6)		1,018		892		1,958		1,804
Annuity Reserves		—		—		3		4
On or After March 31, 2000 - Front Load Version
Accumulation Units (7)		199		153		402		327
Annuity Reserves		—		—		—		—
On or After March 31, 2000 - Back Load Version
Class A Accumulation Units (8)		10		2		128		23
Class B Accumulation Units (9)		739		591		2,407		1,746
Annuity Reserves		—		—		—		—
Total Net Assets	$	3,738	$	3,527	$	12,288	$	10,593
___________
(1)    Investments, at cost	$	3,837	$	3,547	$	11,140	$	8,488
(2)    Shares Outstanding		366		336		711		619
(3)    Accumulation Unit Value	$	1.374456	$	1.357433	$	2.626758	$	2.342872
Units Outstanding		43		22		80		268
(4)    Accumulation Unit Value	$	1.329349	$	1.319453	$	2.540501	$	2.277262
Units Outstanding		1,048		1,113		2,416		2,138
(5)    Accumulation Unit Value	$	1.406633	$	1.384409	$	2.688177	$	2.389375
Units Outstanding		225		280		290		411
(6)    Accumulation Unit Value	$	1.329349	$	1.319453	$	2.540501	$	2.277262
Units Outstanding		766		676		771		792
(7)    Accumulation Unit Value	$	1.388626	$	1.368038	$	2.831791	$	2.519496
Units Outstanding		143		112		142		129
(8)    Accumulation Unit Value	$	1.388626	$	1.368038	$	2.831791	$	2.519496
Units Outstanding		7		2		45		9
(9)    Accumulation Unit Value	$	1.329349	$	1.319453	$	2.540501	$	2.277262
Units Outstanding		556		448		948		767

The Accompanying Notes are an Integral Part of the Financial Statements.

34

NML Variable Annuity Account A

Statements of Operations

For the Years Ended December 31

(in thousands)

	Small Cap Growth Stock Division									T. Rowe Price Small Cap Value Division									Aggressive Growth Stock Division
	2005			2004			2003			2005			2004			2003			2005			2004			2003
Income:
Dividend income	$	—		$	—		$	—		$	25		$	12		$	—		$	25		$	—		$	—
Expenses:
Mortality and expense risk charges		187			203			187			93			63			36			589			651			640
Net Investment Income (Loss)		(187	)		(203	)		(187	)		(68	)		(51	)		(36	)		(564	)		(651	)		(640	)
Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		963			201			(817	)		817			467			(87	)		(1,398	)		(3,024	)		(4,723	)
Realized gain distributions		157			—			—			212			68			—			—			—			—
Realized gains (losses)		1,120			201			(817	)		1,029			535			(87	)		(1,398	)		(3,024	)		(4,723	)
Change in unrealized appreciation (depreciation) of investments during the period		574			2,472			5,347			(443	)		792			1,067			3,980			10,089			16,613
Net increase (decrease) in net assets resulting from operations	$	1,507		$	2,470		$	4,343		$	518		$	1,276		$	944		$	2,018		$	6,414		$	11,250
	International Growth Division									Franklin Templeton International Equity Division									Alliance Bernstein Mid Cap Value Division ##
	2005			2004			2003			2005			2004			2003			2005			2004			2003
Income:
Dividend income	$	56		$	21		$	14		$	634		$	531		$	408		$	8		$	9		$	2
Expenses:
Mortality and expense risk charges		58			32			14			424			365			284			15			9			2
Net Investment Income (Loss)		(2	)		(11	)		—			210			166			124			(7	)		—			—
Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		537			247			—			436			(394	)		(2,283	)		54			49			8
Realized gain distributions		257			—			—			—			—			394			72			73			4
Realized gains (losses)		794			247			—			436			(394	)		(1,889	)		126			122			12
Change in unrealized appreciation (depreciation) of investments during the period		54			341			469			2,897			5,476			9,917			(44	)		27			58
Net increase (decrease) in net assets resulting from operations	$	846		$	577		$	469		$	3,543		$	5,248		$	8,152		$	75		$	149		$	70

## The initial investment in this Division was made on May 1, 2003.

The Accompanying Notes are an Integral Part of the Financial Statements.

35

NML Variable Annuity Account A

Statements of Operations (continued)

For the Years Ended December 31

(in thousands)

	Index 400 Stock Division									Janus Capital Appreciation Division ##									Growth Stock Division
	2005			2004			2003			2005			2004			2003			2005			2004			2003
Income:
Dividend income	$	100		$	79		$	66		$	4		$	1		$	—		$	233		$	163		$	194
Expenses:
Mortality and expense risk charges		151			138			107			24			5			1			262			278			280
Net Investment Income (Loss)		(51	)		(59	)		(41	)		(20	)		(4	)		(1	)		(29	)		(115	)		(86	)
Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		734			331			(344	)		102			3			1			(437	)		(1,242	)		(2,074	)
Realized gain distributions		616			71			—			91			—			—			—			—			—
Realized gains (losses)		1,350			402			(344	)		193			3			1			(437	)		(1,242	)		(2,074	)
Change in unrealized appreciation (depreciation) of investments during the period		119			1,301			3,079			206			91			14			1,847			2,541			5,970
Net increase (decrease) in net assets resulting from operations	$	1,418		$	1,644		$	2,694		$	379		$	90		$	14		$	1,381		$	1,184		$	3,810
	Large Cap Core Stock Division ^									Capital Guardian Domestic Equity Division									T. Rowe Price Equity Income Division ##
	2005			2004			2003			2005			2004			2003			2005			2004			2003
Income:
Dividend income	$	184		$	142		$	139		$	118		$	71		$	47		$	48		$	20		$	4
Expenses:
Mortality and expense risk charges		167			174			167			77			50			26			30			11			2
Net Investment Income (Loss)		17			(32	)		(28	)		41			21			21			18			9			2
Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		(451	)		(1,498	)		(1,905	)		317			362			(141	)		51			27			6
Realized gain distributions		—			—			—			493			75			—			125			38			2
Realized gains (losses)		(451	)		(1,498	)		(1,905	)		810			437			(141	)		176			65			8
Change in unrealized appreciation (depreciation) of investments during the period		1,405			2,498			4,887			(357	)		232			803			(76	)		78			30
Net increase (decrease) in net assets resulting from operations	$	971		$	968		$	2,954		$	494		$	690		$	683		$	118		$	152		$	40

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

## The initial investment in this Division was made on May 1, 2003.

The Accompanying Notes are an Integral Part of the Financial Statements.

36

NML Variable Annuity Account A

Statements of Operations (continued)

For the Years Ended December 31

(in thousands)

	Index 500 Stock Division									Asset Allocation Division									Balanced Division
	2005			2004			2003			2005			2004			2003			2005			2004		2003
Income:
Dividend income	$	1,307		$	1,046		$	1,074		$	119		$	—		$	78		$	4,620		$	4,900	$	6,026
Expenses:
Mortality and expense risk charges		840			886			815			90			64			39			2,077			2,278		2,229
Net Investment Income (Loss)		467			160			259			29			(64	)		39			2,543			2,622		3,797
Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		1,628			1,092			(1,048	)		144			112			(81	)		1,638			1,230		(550	)
Realized gain distributions		1,318			853			—			135			—			—			2,540			6,919		—
Realized gains (losses)		2,946			1,945			(1,048	)		279			112			(81	)		4,178			8,149		(550	)
Change in unrealized appreciation (depreciation) of investments during the period		(926	)		4,979			18,294			230			525			701			(2,905	)		1,060		25,366
Net increase (decrease) in net assets resulting from operations	$	2,487		$	7,084		$	17,505		$	538		$	573		$	659		$	3,816		$	11,831	$	28,613
	High Yield Bond Division									Select Bond Division									Money Market Division
	2005			2004			2003			2005			2004			2003			2005			2004		2003
Income:
Dividend income	$	390		$	399		$	11		$	1,006		$	1,141		$	1,248		$	442		$	230	$	300
Expenses:
Mortality and expense risk charges		70			67			59			314			312			358			174			185		280
Net Investment Income (Loss)		320			332			(48	)		692			829			890			268			45		20
Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		9			(101	)		(321	)		26			379			704			—			—		—
Realized gain distributions		—			—			—			171			788			712			—			—		—
Realized gains (losses)		9			(101	)		(321	)		197			1,167			1,416			—			—		—
Change in unrealized appreciation (depreciation) of investments during the period		(310	)		397			1,567			(583	)		(1,004	)		(949	)		—			—		—
Net increase (decrease) in net assets resulting from operations	$	19		$	628		$	1,198		$	306		$	992		$	1,357		$	268		$	45	$	20

The Accompanying Notes are an Integral Part of the Financial Statements.

37

NML Variable Annuity Account A

Statements of Operations (continued)

For the Years Ended December 31

(in thousands)

	Fidelity VIP Mid Cap Division ##									Russell Multi-Style Equity Division									Russell Aggressive Equity Division
	2005			2004			2003			2005			2004			2003			2005			2004			2003
Income:
Dividend income	$	—		$	—		$	—		$	63		$	37		$	26		$	8		$	7		$	3
Expenses:
Mortality and expense risk charges		58			22			4			67			59			41			51			50			33
Net Investment Income (Loss)		(58	)		(22	)		(4	)		(4	)		(22	)		(15	)		(43	)		(43	)		(30	)
Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		251			75			46			(109	)		(159	)		(338	)		238			361			(83	)
Realized gain distributions		66			—			—			—			—			—			407			153			—
Realized gains (losses)		317			75			46			(109	)		(159	)		(338	)		645			514			(83	)
Change in unrealized appreciation (depreciation) of investments during the period		569			457			96			440			626			1,264			(381	)		36			1,207
Net increase (decrease) in net assets resulting from operations	$	828		$	510		$	138		$	327		$	445		$	911		$	221		$	507		$	1,094
	Russell Non-U.S. Division									Russell Core Bond Division									Russell Real Estate Securities Division
	2005			2004			2003			2005			2004			2003			2005			2004			2003
Income:
Dividend income	$	81		$	87		$	78		$	129		$	73		$	92		$	239		$	168		$	227
Expenses:
Mortality and expense risk charges		56			47			31			40			33			31			129			82			48
Net Investment Income (Loss)		25			40			47			89			40			61			110			86			179
Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		287			(75	)		(389	)		(9	)		15			73			1,134			542			121
Realized gain distributions		—			—			—			34			62			46			1,029			547			—
Realized gains (losses)		287			(75	)		(389	)		25			77			119			2,163			1,089			121
Change in unrealized appreciation (depreciation) of investments during the period		282			731			1,237			(79	)		(15	)		(56	)		(954	)		1,138			1,025
Net increase (decrease) in net assets resulting from operations	$	594		$	696		$	895		$	35		$	102		$	124		$	1,319		$	2,313		$	1,325

## The initial investment in this Division was made on May 1, 2003.

The Accompanying Notes are an Integral Part of the Financial Statements.

38

NML Variable Annuity Account A

Statements of Changes in Net Assets

For the Years Ended December 31

(in thousands)

	Small Cap Growth Stock Division									T. Rowe Price Small Cap Value Division
	2005			2004			2003			2005			2004			2003
Operations:
Net investment income (loss)	$	(187	)	$	(203	)	$	(187	)	$	(68	)	$	(51	)	$	(36	)
Net realized gains (losses)		1,120			201			(817	)		1,029			535			(87	)
Net change in unrealized appreciation (depreciation)		574			2,472			5,347			(443	)		792			1,067
Net increase (decrease) in net assets resulting from operations		1,507			2,470			4,343			518			1,276			944
Contract Transactions:
Contract owners’ net payments		1,413			1,625			1,691			753			640			622
Annuity payments		(7	)		(11	)		(2	)		(15	)		(11	)		—
Surrenders and other (net)		(2,130	)		(3,840	)		(1,913	)		(1,070	)		(950	)		(446	)
Transfers from other divisions or sponsor		5,835			5,689			4,438			5,843			5,546			2,709
Transfers to other divisions or sponsor		(6,651	)		(8,520	)		(4,512	)		(5,188	)		(3,224	)		(1,951	)
Net increase (decrease) in net assets resulting from contract transactions		(1,540	)		(5,057	)		(298	)		323			2,001			934
Net increase (decrease) in net assets		(33	)		(2,587	)		4,045			841			3,277			1,878
Net Assets:
Beginning of Period		15,879			18,466			14,421			7,849			4,572			2,694
End of Period	$	15,846		$	15,879		$	18,466		$	8,690		$	7,849		$	4,572
Units issued during the period		3,359			4,063			1,313			4,602			4,175			1,206
Units redeemed during the period		(4,038	)		(6,458	)		(1,642	)		(4,246	)		(2,874	)		(443	)
Net units issued (redeemed) during period		(679	)		(2,395	)		(329	)		356			1,301			763
	Aggressive Growth Stock Division									International Growth Division
	2005			2004			2003			2005			2004 *			2003
Operations:
Net investment income (loss)	$	(564	)	$	(651	)	$	(640	)	$	(2	)	$	(11	)	$	—
Net realized gains (losses)		(1,398	)		(3,024	)		(4,723	)		794			247			—
Net change in unrealized appreciation (depreciation)		3,980			10,089			16,613			54			341			469
Net increase (decrease) in net assets resulting from operations		2,018			6,414			11,250			846			577			469
Contract Transactions:
Contract owners’ net payments		3,122			3,797			4,213			819			392			231
Annuity payments		(26	)		(27	)		(28	)		(17	)		(1	)		—
Surrenders and other (net)		(7,965	)		(8,888	)		(7,671	)		(493	)		(574	)		(37	)
Transfers from other divisions or sponsor		5,566			6,259			5,148			6,925			3,499			1,930
Transfers to other divisions or sponsor		(8,892	)		(10,219	)		(7,808	)		(5,701	)		(2,363	)		(959	)
Net increase (decrease) in net assets resulting from contract transactions		(8,195	)		(9,078	)		(6,146	)		1,533			953			1,165
Net increase (decrease) in net assets		(6,177	)		(2,664	)		5,104			2,379			1,530			1,634
Net Assets:
Beginning of Period		54,423			57,087			51,983			3,762			2,232			598
End of Period	$	48,246		$	54,423		$	57,087		$	6,141		$	3,762		$	2,232
Units issued during the period		2,347			2,947			1,345			5,872			3,391			1,358
Units redeemed during the period		(4,039	)		(4,961	)		(2,925	)		(4,751	)		(2,552	)		(47	)
Net units issued (redeemed) during period		(1,692	)		(2,014	)		(1,580	)		1,121			839			1,311

* Due to rounding, certain amounts have been restated.

The Accompanying Notes are an Integral Part of the Financial Statements.

39

NML Variable Annuity Account A

Statements of Changes in Net Assets (continued)

For the Years Ended December 31

(in thousands)

	Franklin Templeton International Equity Division									Alliance Bernstein Mid Cap Value Division ##
	2005			2004 *			2003			2005			2004			2003
Operations:
Net investment income (loss)	$	210		$	166		$	124		$	(7	)	$	—		$	—
Net realized gains (losses)		436			(394	)		(1,889	)		126			122			12
Net change in unrealized appreciation (depreciation)		2,897			5,476			9,917			(44	)		27			58
Net increase (decrease) in net assets resulting from operations		3,543			5,248			8,152			75			149			70
Contract Transactions:
Contract owners’ net payments		2,646			2,324			1,961			197			116			66
Annuity payments		(17	)		(22	)		(13	)		(1	)		(2	)		—
Surrenders and other (net)		(4,650	)		(4,553	)		(3,483	)		(133	)		(38	)		(2	)
Transfers from other divisions or sponsor		12,560			9,631			4,587			1,303			1,410			457
Transfers to other divisions or sponsor		(12,066	)		(7,087	)		(4,662	)		(1,216	)		(848	)		(148	)
Net increase (decrease) in net assets resulting from contract transactions		(1,527	)		293			(1,610	)		150			638			373
Net increase (decrease) in net assets		2,016			5,541			6,542			225			787			443
Net Assets:
Beginning of Period		34,592			29,051			22,509			1,230			443			—
End of Period	$	36,608		$	34,592		$	29,051		$	1,455		$	1,230		$	443
Units issued during the period		6,335			5,656			1,303			1,022			1,040			337
Units redeemed during the period		(6,850	)		(5,462	)		(2,311	)		(896	)		(606	)		(1	)
Net units issued (redeemed) during period		(515	)		194			(1,008	)		126			434			336
	Index 400 Stock Division									Janus Capital Appreciation Division ##
	2005			2004			2003			2005			2004			2003
Operations:
Net investment income (loss)	$	(51	)	$	(59	)	$	(41	)	$	(20	)	$	(4	)	$	(1	)
Net realized gains (losses)		1,350			402			(344	)		193			3			1
Net change in unrealized appreciation (depreciation)		119			1,301			3,079			206			91			14
Net increase (decrease) in net assets resulting from operations		1,418			1,644			2,694			379			90			14
Contract Transactions:
Contract owners’ net payments		1,150			1,346			1,217			288			73			39
Annuity payments		(23	)		(11	)		(4	)		(3	)		—			—
Surrenders and other (net)		(1,660	)		(1,544	)		(1,769	)		(125	)		(6	)		(9	)
Transfers from other divisions or sponsor		7,776			5,657			4,785			3,739			1,091			154
Transfers to other divisions or sponsor		(7,434	)		(5,760	)		(3,911	)		(1,974	)		(377	)		(8	)
Net increase (decrease) in net assets resulting from contract transactions		(191	)		(312	)		318			1,925			781			176
Net increase (decrease) in net assets		1,227			1,332			3,012			2,304			871			190
Net Assets:
Beginning of Period		12,667			11,335			8,323			1,061			190			—
End of Period	$	13,894		$	12,667		$	11,335		$	3,365		$	1,061		$	190
Units issued during the period		5,421			4,870			1,782			2,761			941			168
Units redeemed during the period		(5,603	)		(5,100	)		(1,619	)		(1,524	)		(347	)		(8	)
Net units issued (redeemed) during period		(182	)		(230	)		163			1,237			594			160

## The initial investment in this Division was made on May 1, 2003.

* Due to rounding, certain amounts have been restated.

The Accompanying Notes are an Integral Part of the Financial Statements.

40

NML Variable Annuity Account A

Statements of Change in Net Assets (continued)

For the Years Ended December 31

(in thousands)

	Growth Stock Division									Large Cap Core Stock Division ^
	2005			2004 *			2003			2005			2004 *			2003
Operations:
Net investment income (loss)	$	(29	)	$	(115	)	$	(86	)	$	17		$	(32	)	$	(28	)
Net realized gains (losses)		(437	)		(1,242	)		(2,074	)		(451	)		(1,498	)		(1,905	)
Net change in unrealized appreciation (depreciation)		1,847			2,541			5,970			1,405			2,498			4,887
Net increase (decrease) in net assets resulting from operations		1,381			1,184			3,810			971			968			2,954
Contract Transactions:
Contract owners’ net payments		1,842			2,208			2,312			1,020			1,205			1,434
Annuity payments		(4	)		(4	)		(3	)		(89	)		(87	)		(71	)
Surrenders and other (net)		(2,761	)		(3,483	)		(3,795	)		(1,881	)		(3,026	)		(2,308	)
Transfers from other divisions or sponsor		5,891			5,240			4,018			4,552			3,029			2,136
Transfers to other divisions or sponsor		(6,676	)		(7,107	)		(5,293	)		(4,717	)		(3,692	)		(1,989	)
Net increase (decrease) in net assets resulting from contract transactions		(1,708	)		(3,146	)		(2,761	)		(1,115	)		(2,571	)		(798	)
Net increase (decrease) in net assets		(327	)		(1,962	)		1,049			(144	)		(1,603	)		2,156
Net Assets:
Beginning of Period		22,578			24,540			23,491			14,270			15,873			13,717
End of Period	$	22,251		$	22,578		$	24,540		$	14,126		$	14,270		$	15,873
Units issued during the period		3,567			3,756			1,345			3,224			2,750			1,234
Units redeemed during the period		(4,214	)		(5,069	)		(2,675	)		(3,809	)		(4,063	)		(1,742	)
Net units issued (redeemed) during period		(647	)		(1,313	)		(1,330	)		(585	)		(1,313	)		(508	)
	Capital Guardian Domestic Equity Division									T. Rowe Price Equity Income Division ##
	2005			2004 *			2003			2005			2004			2003
Operations:
Net investment income (loss)	$	41		$	21		$	21		$	18		$	9		$	2
Net realized gains (losses)		810			437			(141	)		176			65			8
Net change in unrealized appreciation (depreciation)		(357	)		232			803			(76	)		78			30
Net increase (decrease) in net assets resulting from operations		494			690			683			118			152			40
Contract Transactions:
Contract owners’ net payments		757			604			424			304			179			55
Annuity payments		(6	)		(10	)		(10	)		(7	)		(4	)		—
Surrenders and other (net)		(669	)		(420	)		(380	)		(225	)		(11	)		(4	)
Transfers from other divisions or sponsor		6,790			5,010			3,099			2,949			2,193			526
Transfers to other divisions or sponsor		(5,778	)		(3,687	)		(1,951	)		(1,613	)		(1,228	)		(133	)
Net increase (decrease) in net assets resulting from contract transactions		1,094			1,497			1,182			1,408			1,129			444
Net increase (decrease) in net assets		1,588			2,187			1,865			1,526			1,281			484
Net Assets:
Beginning of Period		5,722			3,535			1,670			1,765			484			—
End of Period	$	7,310		$	5,722		$	3,535		$	3,291		$	1,765		$	484
Units issued during the period		6,505			5,417			1,622			2,371			1,778			427
Units redeemed during the period		(5,579	)		(3,849	)		(514	)		(1,323	)		(983	)		(40	)
Net units issued (redeemed) during period		926			1,568			1,108			1,048			795			387

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

* Due to rounding, certain amounts have been restated.

## The initial investment in this Division was made on May 1, 2003.

The Accompanying Notes are an Integral Part of the Financial Statements.

41

NML Variable Annuity Account A

Statements of Change in Net Assets (continued)

For the Years Ended December 31

(in thousands)

	Index 500 Stock Division									Asset Allocation Division
	2005			2004			2003			2005			2004 *			2003
Operations:
Net investment income (loss)	$	467		$	160		$	259		$	29		$	(64	)	$	39
Net realized gains (losses)		2,946			1,945			(1,048	)		279			112			(81	)
Net change in unrealized appreciation (depreciation)		(926	)		4,979			18,294			230			525			701
Net increase (decrease) in net assets resulting from operations		2,487			7,084			17,505			538			573			659
Contract Transactions:
Contract owners’ net payments		4,067			4,691			5,066			1,090			1,403			913
Annuity payments		(229	)		(238	)		(228	)		—			—			—
Surrenders and other (net)		(8,532	)		(11,391	)		(11,228	)		(541	)		(649	)		(683	)
Transfers from other divisions or sponsor		14,201			13,834			10,444			5,273			3,717			2,154
Transfers to other divisions or sponsor		(17,841	)		(14,627	)		(10,285	)		(3,357	)		(2,681	)		(1,025	)
Net increase (decrease) in net assets resulting from contract transactions		(8,334	)		(7,731	)		(6,231	)		2,465			1,790			1,359
Net increase (decrease) in net assets		(5,847	)		(647	)		11,274			3,003			2,363			2,018
Net Assets:
Beginning of Period		79,921			80,568			69,294			7,178			4,815			2,797
End of Period	$	74,074		$	79,921		$	80,568		$	10,181		$	7,178		$	4,815
Units issued during the period		5,252			5,735			1,955			5,582			5,202			2,218
Units redeemed during the period		(7,144	)		(7,462	)		(3,820	)		(3,401	)		(3,483	)		(791	)
Net units issued (redeemed) during period		(1,892	)		(1,727	)		(1,865	)		2,181			1,719			1,427
	Balanced Division									High Yield Bond Division
	2005			2004 *			2003			2005			2004			2003
Operations:
Net investment income (loss)	$	2,543		$	2,622		$	3,797		$	320		$	332		$	(48	)
Net realized gains (losses)		4,178			8,149			(550	)		9			(101	)		(321	)
Net change in unrealized appreciation (depreciation)		(2,905	)		1,060			25,366			(310	)		397			1,567
Net increase (decrease) in net assets resulting from operations		3,816			11,831			28,613			19			628			1,198
Contract Transactions:
Contract owners’ net payments		8,342			9,139			9,659			537			608			588
Annuity payments		(627	)		(652	)		(600	)		(5	)		(5	)		(18	)
Surrenders and other (net)		(25,216	)		(26,743	)		(21,746	)		(828	)		(756	)		(732	)
Transfers from other divisions or sponsor		6,939			7,080			8,516			3,761			3,476			2,767
Transfers to other divisions or sponsor		(12,224	)		(10,957	)		(10,744	)		(3,721	)		(3,221	)		(2,645	)
Net increase (decrease) in net assets resulting from contract transactions		(22,786	)		(22,133	)		(14,915	)		(256	)		102			(40	)
Net increase (decrease) in net assets		(18,970	)		(10,302	)		13,698			(237	)		730			1,158
Net Assets:
Beginning of Period		184,687			194,989			181,291			6,155			5,425			4,267
End of Period	$	165,717		$	184,687		$	194,989		$	5,918		$	6,155		$	5,425
Units issued during the period		2,320			2,656			1,670			2,302			2,205			591
Units redeemed during the period		(5,143	)		(5,463	)		(4,645	)		(2,411	)		(2,158	)		(591	)
Net units issued (redeemed) during period		(2,823	)		(2,807	)		(2,975	)		(109	)		47			—

* Due to rounding, certain amounts have been restated.

The Accompanying Notes are an Integral Part of the Financial Statements.

42

NML Variable Annuity Account A

Statements of Change in Net Assets (continued)

For the Years Ended December 31

(in thousands)

	Select Bond Division									Money Market Division
	2005			2004			2003			2005			2004 *			2003
Operations:
Net investment income (loss)	$	692		$	829		$	890		$	268		$	45		$	20
Net realized gains (losses)		197			1,167			1,416			—			—			—
Net change in unrealized appreciation (depreciation)		(583	)		(1,004	)		(949	)		—			—			—
Net increase (decrease) in net assets resulting from operations		306			992			1,357			268			45			20
Contract Transactions:
Contract owners’ net payments		2,168			2,238			2,723			2,487			2,590			4,170
Annuity payments		(58	)		(72	)		(86	)		(29	)		(25	)		(37	)
Surrenders and other (net)		(2,800	)		(4,264	)		(5,006	)		(2,931	)		(3,061	)		(6,679	)
Transfers from other divisions or sponsor		16,288			10,355			9,655			9,197			7,876			8,733
Transfers to other divisions or sponsor		(14,801	)		(11,153	)		(10,829	)		(8,768	)		(11,057	)		(14,593	)
Net increase (decrease) in net assets resulting from contract transactions		797			(2,896	)		(3,543	)		(44	)		(3,677	)		(8,406	)
Net increase (decrease) in net assets		1,103			(1,904	)		(2,186	)		224			(3,632	)		(8,386	)
Net Assets:
Beginning of Period		27,344			29,248			31,434			14,569			18,201			26,587
End of Period	$	28,447		$	27,344		$	29,248		$	14,793		$	14,569		$	18,201
Units issued during the period		2,696			1,951			560			4,901			4,294			1,793
Units redeemed during the period		(2,543	)		(2,105	)		(761	)		(4,936	)		(5,909	)		(4,875	)
Net units issued (redeemed) during period		153			(154	)		(201	)		(35	)		(1,615	)		(3,082	)
	Fidelity VIP Mid Cap Division ##									Russell Multi-Style Equity Division
	2005			2004 *			2003			2005			2004			2003
Operations:
Net investment income (loss)	$	(58	)	$	(22	)	$	(4	)	$	(4	)	$	(22	)	$	(15	)
Net realized gains (losses)		317			75			46			(109	)		(159	)		(338	)
Net change in unrealized appreciation (depreciation)		569			457			96			440			626			1,264
Net increase (decrease) in net assets resulting from operations		828			510			138			327			445			911
Contract Transactions:
Contract owners’ net payments		994			360			96			634			788			464
Annuity payments		(7	)		—			—			(6	)		(6	)		(6	)
Surrenders and other (net)		(410	)		(202	)		(11	)		(703	)		(487	)		(443	)
Transfers from other divisions or sponsor		4,394			3,001			1,340			6,006			4,508			2,871
Transfers to other divisions or sponsor		(2,962	)		(978	)		(533	)		(6,462	)		(3,932	)		(2,355	)
Net increase (decrease) in net assets resulting from contract transactions		2,009			2,181			892			(531	)		871			531
Net increase (decrease) in net assets		2,837			2,691			1,030			(204	)		1,316			1,442
Net Assets:
Beginning of Period		3,721			1,030			—			5,862			4,546			3,104
End of Period	$	6,558		$	3,721		$	1,030		$	5,658		$	5,862		$	4,546
Units issued during the period		3,046			2,236			748			8,120			7,390			1,623
Units redeemed during the period		(1,960	)		(822	)		(9	)		(8,738	)		(6,249	)		(801	)
Net units issued (redeemed) during period		1,086			1,414			739			(618	)		1,141			822

## The initial investment in this Division was made on May 1, 2003.

* Due to rounding, certain amounts have been restated.

The Accompanying Notes are an Integral Part of the Financial Statements.

43

NML Variable Annuity Account A

Statements of Change in Net Assets (continued)

For the Years Ended December 31

(in thousands)

	Russell Aggressive Equity Division									Russell Non-U.S. Division
	2005			2004 *			2003			2005			2004			2003
Operations:
Net investment income (loss)	$	(43	)	$	(43	)	$	(30	)	$	25		$	40		$	47
Net realized gains (losses)		645			514			(83	)		287			(75	)		(389	)
Net change in unrealized appreciation
(depreciation)		(381	)		36			1,207			282			731			1,237
Net increase (decrease) in net assets resulting from operations		221			507			1,094			594			696			895
Contract Transactions:
Contract owners’ net payments		370			399			337			508			541			339
Annuity payments		—			—			—			(2	)		(2	)		(2	)
Surrenders and other (net)		(374	)		(448	)		(706	)		(641	)		(468	)		(450	)
Transfers from other divisions or sponsor		2,729			3,173			3,366			5,270			4,554			2,550
Transfers to other divisions or sponsor		(3,204	)		(2,858	)		(2,546	)		(5,187	)		(3,832	)		(2,092	)
Net increase (decrease) in net assets resulting from contract transactions		(479	)		266			451			(52	)		793			345
Net increase (decrease) in net assets		(258	)		773			1,545			542			1,489			1,240
Net Assets:
Beginning of Period		4,537			3,764			2,219			5,040			3,551			2,311
End of Period	$	4,279		$	4,537		$	3,764		$	5,582		$	5,040		$	3,551
Units issued during the period		2,376			3,129			1,288			5,275			5,537			1,113
Units redeemed during the period		(2,715	)		(2,931	)		(805	)		(5,338	)		(4,703	)		(696	)
Net units issued (redeemed) during period		(339	)		198			483			(63	)		834			417
	Russell Core Bond Division									Russell Real Estate Securities Division
	2005			2004			2003			2005			2004 *			2003
Operations:
Net investment income (loss)	$	89		$	40		$	61		$	110		$	86		$	179
Net realized gains (losses)		25			77			119			2,163			1,089			121
Net change in unrealized appreciation
(depreciation)		(79	)		(15	)		(56	)		(954	)		1,138			1,025
Net increase (decrease) in net assets resulting from operations		35			102			124			1,319			2,313			1,325
Contract Transactions:
Contract owners’ net payments		451			465			277			1,258			1,240			736
Annuity payments		—			—			—			(15	)		(15	)		(3	)
Surrenders and other (net)		(743	)		(393	)		(487	)		(1,352	)		(674	)		(531	)
Transfers from other divisions or sponsor		5,642			3,495			2,278			9,100			7,510			3,665
Transfers to other divisions or sponsor		(5,174	)		(2,616	)		(2,023	)		(8,615	)		(5,302	)		(2,728	)
Net increase (decrease) in net assets resulting from contract transactions		176			951			45			376			2,759			1,139
Net increase (decrease) in net assets		211			1,053			169			1,695			5,072			2,464
Net Assets:
Beginning of Period		3,527			2,474			2,305			10,593			5,521			3,057
End of Period	$	3,738		$	3,527		$	2,474		$	12,288		$	10,593		$	5,521
Units issued during the period		4,581			3,121			429			4,474			4,394			1,208
Units redeemed during the period		(4,446	)		(2,391	)		(390	)		(4,296	)		(3,048	)		(427	)
Net units issued (redeemed) during period		135			730			39			178			1,346			781

* Due to rounding, certain amounts have been restated.

The Accompanying Notes are an Integral Part of the Financial Statements.

44

NML Variable Annuity Account A

Notes to Financial Statements

1. Organization

NML Variable Annuity Account A (the “Account”) is a segregated asset account of The Northwestern Mutual Life Insurance Company (“Northwestern Mutual”) 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. Currently, two versions of the contract are offered: Front Load contracts with a sales charge up to 4.5% of purchase payments and Back Load contracts with a withdrawal charge of 0-6%.

All assets of each Division of the Account are invested in shares of the corresponding Portfolio of Northwestern Mutual Series Fund, Inc., Fidelity Variable Insurance Products Fund III and the Russell Investment Funds (collectively known as “the Funds”). The Funds are open-end investment companies registered under the Investment Company Act of 1940.

2. Significant Accounting Policies

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America 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.

The shares are valued at the Funds’ offering and redemption prices per share. Transactions in the Funds’ shares are accounted for on the trade date. The basis for determining cost on sale of the Funds’ shares is identified cost. Dividend income and distributions of net realized gains from the Funds are recorded on the ex-date of the dividends. Since 1995, Northwestern Mutual has paid a dividend to certain contracts. The dividend is reinvested in the Account and has been reflected as a Contract Owners’ Net Payment in the accompanying financial statements.

Annuity reserves are based on published annuity tables with age adjustment and benefit payments which reflect actual investment experience. For variable payment plans issued prior to January 1, 1974, annuity reserves are based on the 1955 American Annuity Table with assumed interest rates of 3% or 5%. For variable payment plans issued on or after January 1, 1974 and before January 1, 1985, annuity reserves are based on the 1971 Individual Annuity Mortality Table with assumed interest rates of 3.5% or 5%. For variable payment plans issued on or after January 1, 1985 and before January 1, 2002, annuity reserves are based on the 1983 Annuity Table a, adjusted with assumed interest rates of 3.5% or 5%. For variable payment plans issued on or after January 1, 2002, annuity reserves are based on the 2000 Annuity Table with assumed interest rates of 3.5% or 5%.

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.

3. Purchases and Sales of Investments

Purchases and sales of the Funds’ shares for the years ended December 31, 2005, 2004 and 2003 by each Division are shown as follows: (in thousands)

The Accompanying Notes are an Integral Part of the Financial Statements.

45

NML Variable Annuity Account A

Notes to Financial Statements (continued)

PURCHASES	2005		2004		2003
Small Cap Growth Stock	$	1,733	$	2,216	$	2,098
T. Rowe Price Small Cap Value		1,914		3,495		1,370
Aggressive Growth Stock		3,338		4,490		4,682
International Growth		2,607		1,654		1,205
Franklin Templeton International Equity		3,514		5,550		2,604
AllianceBernstein Mid Cap Value ##		399		815		378
Index 400 Stock		2,208		1,799		2,160
Janus Capital Appreciation ##		2,137		784		185
Growth Stock		2,210		3,018		2,817
Large Cap Core Stock ^		1,250		1,749		1,992
Capital Guardian Domestic Equity		2,365		2,300		1,610
T. Rowe Price Equity Income ##		1,848		1,316		492
Index 500 Stock		6,980		7,490		7,109
Asset Allocation		3,179		2,512		2,101
Balanced		16,231		22,364		16,457
High Yield Bond		974		1,221		880
Select Bond		4,584		4,794		5,896
Money Market		3,572		3,288		4,781
Fidelity VIP Mid Cap ##		2,596		2,379		900
Russell Multi-Style Equity		723		1,398		1,118
Russell Aggressive Equity		795		863		1,216
Russell Non-U.S		643		1,347		907
Russell Core Bond		1,051		1,525		618
Russell Real Estate Securities		3,081		4,610		1,929
SALES
Small Cap Growth Stock	$	3,306	$	7,489	$	2,572
T. Rowe Price Small Cap Value		1,440		1,486		470
Aggressive Growth Stock		12,288		14,027		11,452
International Growth		825		707		41
Franklin Templeton International Equity		4,881		5,045		4,108
AllianceBernstein Mid Cap Value ##		186		102		1
Index 400 Stock		1,841		2,097		1,890
Janus Capital Appreciation ##		139		10		10
Growth Stock		3,946		6,280		5,659
Large Cap Core Stock ^		2,335		4,364		2,792
Capital Guardian Domestic Equity		743		702		408
T. Rowe Price Equity Income ##		296		141		45
Index 500 Stock		13,847		13,982		12,828
Asset Allocation		550		786		705
Balanced		34,140		35,010		27,359
High Yield Bond		910		781		986
Select Bond		2,923		6,074		7,839
Money Market		3,361		7,120		13,001
Fidelity VIP Mid Cap ##		568		231		12
Russell Multi-Style Equity		1,260		548		540
Russell Aggressive Equity		912		487		859
Russell Non-U.S		671		513		488
Russell Core Bond		752		470		489
Russell Real Estate Securities		1,562		1,225		611

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

## The initial Investment in this Division was made on May 1, 2003.

4. Expenses and Related Party Transactions

A deduction for mortality and expense risks 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 annuitants 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.

46

NML Variable Annuity Account A

Notes to Financial Statements (continued)

For contracts issued prior to December 17, 1981, the deduction is at an annual rate of 0.75% of the net assets of each Division attributable to these contracts. For these contracts, the rate may be increased or decreased by the Board of Trustees of Northwestern Mutual not to exceed a 1% annual rate.

For contracts issued after December 16, 1981 and prior to March 31, 1995, the deduction is at an annual rate of 1.25% of the net assets of each Division attributable to these contracts. For these contracts, the rate may be increased or decreased by the Board of Trustees of Northwestern Mutual not to exceed a 1.5% annual rate.

For contracts issued on or after March 31, 1995 and prior to March 31, 2000, for the Front Load version and the Back Load version, the deduction for mortality and expense risks is determined daily at annual rates of 0.4% and 1.25%, 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 0.75% and 1.5%, respectively.

For contracts issued on or after March 31, 2000, for the Front Load version and the Back Load version, the deduction for mortality and expense risks is determined daily at annual rates of 0.5% and 1.25%, respectively, of the net assets of each Division attributable to these contracts and is paid to Northwestern Mutual. Under the terms of the back-load version of the contract, Class B, the net assets may be subject to the deduction for the front-load version of the contract after the withdrawal charge period, Class A. Rates may be increased or decreased by the Board of Trustees of Northwestern Mutual not to exceed 0.75% and 1.5% annual rate for the Front Load version and Back Load version, respectively. The current charges will not be increased for five years from the date of the most recent Prospectus.

5. Financial Highlights

(For a unit outstanding during the period)

	As of the respective period end date:								For the respective period ended:
Division	Units Outstanding (000’s)	Unit Value, Lowest to Highest					Net Assets (000’s)		Dividend Income as a % of Average Net Assets		Expense Ratio, Lowest to Highest					Total Return Lowest to Highest (3)
Small Cap Growth Stock
Year Ended 12/31/05	6,331	$	1.216920	to	$	2.667734	$	15,846	0.00	%	0.40	%	to	1.25	%	9.81	%	to	10.74	%
Year Ended 12/31/04	7,010	$	1.100014	to	$	2.409091	$	15,879	0.00	%	0.40	%	to	1.25	%	17.32	%	to	18.33	%
Year Ended 12/31/03	9,405	$	0.930572	to	$	2.035993	$	18,466	0.00	%	0.40	%	to	1.25	%	31.41	%	to	32.53	%
Year Ended 12/31/02	9,734	$	0.702869	to	$	1.536295	$	14,421	0.16	%	0.40	%	to	1.25	%	(19.44	)%	to	(18.75	)%
Year Ended 12/31/01	8,500	$	0.865935	to	$	1.890848	$	15,623	0.01	%	0.40	%	to	1.25	%	(4.97	)%	to	(4.15	)%
T. Rowe Price Small Cap Value (1)
Year Ended 12/31/05	5,268	$	1.641244	to	$	1.703785	$	8,690	0.31	%	0.40	%	to	1.25	%	5.89	%	to	6.79	%
Year Ended 12/31/04	4,912	$	1.549988	to	$	1.595527	$	7,849	0.20	%	0.40	%	to	1.25	%	23.02	%	to	24.07	%
Year Ended 12/31/03	3,612	$	1.259912	to	$	1.285976	$	4,572	0.00	%	0.40	%	to	1.25	%	33.48	%	to	34.61	%
Year Ended 12/31/02	2,849	$	0.943905	to	$	0.955324	$	2,694	0.57	%	0.40	%	to	1.25	%	(6.75	)%	to	(5.96	)%
Year Ended 12/31/01	577	$	1.012260	to	$	1.015860	$	584	0.44	%	0.40	%	to	1.25	%	1.23	%	to	1.59	%
Aggressive Growth Stock
Year Ended 12/31/05	10,250	$	0.839995	to	$	5.485431	$	48,246	0.05	%	0.40	%	to	1.25	%	4.82	%	to	5.71	%
Year Ended 12/31/04	11,942	$	0.795400	to	$	5.207047	$	54,423	0.00	%	0.40	%	to	1.25	%	12.80	%	to	13.76	%
Year Ended 12/31/03	13,994	$	0.699892	to	$	4.593218	$	57,087	0.00	%	0.40	%	to	1.25	%	23.15	%	to	24.19	%
Year Ended 12/31/02	15,574	$	0.564112	to	$	3.711325	$	51,983	0.10	%	0.40	%	to	1.25	%	(22.13	)%	to	(21.47	)%
Year Ended 12/31/01	17,994	$	0.719033	to	$	4.742335	$	77,631	0.11	%	0.40	%	to	1.25	%	(20.88	)%	to	(20.20	)%
International Growth Stock (1)
Year Ended 12/31/05	4,034	$	1.498861	to	$	1.555979	$	6,141	1.08	%	0.40	%	to	1.25	%	16.54	%	to	17.53	%
Year Ended 12/31/04	2,913	$	1.286123	to	$	1.323909	$	3,762	0.73	%	0.40	%	to	1.25	%	20.08	%	to	21.10	%
Year Ended 12/31/03	2,078	$	1.071062	to	$	1.093220	$	2,232	1.09	%	0.40	%	to	1.25	%	37.27	%	to	38.43	%
Year Ended 12/31/02	767	$	0.780276	to	$	0.789715	$	598	0.73	%	0.40	%	to	1.25	%	(13.42	)%	to	(12.69	)%
Year Ended 12/31/01	174	$	0.901258	to	$	0.904464	$	157	0.00	%	0.40	%	to	1.25	%	(9.87	)%	to	(9.55	)%

(1) Division commenced operations on July 31, 2001.

(2) Division commenced operations on May 1, 2003.

(3) Total Return includes deductions for management and other expenses; excludes deductions for sales loads and other charges. Returns are not annualized for periods less than one year.

47

NML Variable Annuity Account A

Notes to Financial Statements (continued)

	As of the respective period end date:								For the respective period ended:
Division	Units Outstanding (000’s)	Unit Value, Lowest to Highest					Net Assets (000’s)		Dividend Income as a % of Average Net Assets		Expense Ratio, Lowest to Highest					Total Return Lowest to Highest (3)
Franklin Templeton International Equity
Year Ended 12/31/05	13,148	$	1.289348	to	$	2.991857	$	36,608	1.78	%	0.40	%	to	1.25	%	10.14	%	to	11.07	%
Year Ended 12/31/04	13,663	$	1.161941	to	$	2.702895	$	34,592	1.73	%	0.40	%	to	1.25	%	17.85	%	to	18.85	%
Year Ended 12/31/03	13,490	$	0.978611	to	$	2.282107	$	29,051	1.70	%	0.40	%	to	1.25	%	38.72	%	to	39.90	%
Year Ended 12/31/02	14,498	$	0.700185	to	$	1.636881	$	22,509	2.12	%	0.40	%	to	1.25	%	(18.43	)%	to	(17.73	)%
Year Ended 12/31/01	16,147	$	0.851962	to	$	1.996677	$	30,784	1.81	%	0.40	%	to	1.25	%	(15.07	)%	to	(14.35	)%
AllianceBernstein Mid Cap Value (2)
Year Ended 12/31/05	894	$	1.611849	to	$	1.648664	$	1,455	0.56	%	0.40	%	to	1.25	%	4.15	%	to	5.04	%
Year Ended 12/31/04	768	$	1.547558	to	$	1.569608	$	1,230	1.09	%	0.40	%	to	1.25	%	17.19	%	to	18.19	%
Year Ended 12/31/03	336	$	1.320512	to	$	1.328001	$	443	0.84	%	0.40	%	to	1.25	%	32.05	%	to	32.80	%
Year Ended 12/31/02	n/a		n/a					n/a	n/a		n/a					n/a
Year Ended 12/31/01	n/a		n/a					n/a	n/a		n/a					n/a
Index 400 Stock
Year Ended 12/31/05	7,452	$	1.512499	to	$	1.928160	$	13,894	0.77	%	0.40	%	to	1.25	%	10.98	%	to	11.92	%
Year Ended 12/31/04	7,634	$	1.352705	to	$	1.722759	$	12,667	0.67	%	0.40	%	to	1.25	%	14.82	%	to	15.80	%
Year Ended 12/31/03	7,865	$	1.169318	to	$	1.487736	$	11,335	0.72	%	0.40	%	to	1.25	%	33.34	%	to	34.47	%
Year Ended 12/31/02	7,702	$	0.870423	to	$	1.106344	$	8,323	0.82	%	0.40	%	to	1.25	%	(15.60	)%	to	(14.88	)%
Year Ended 12/31/01	7,044	$	1.023646	to	$	1.299809	$	9,158	0.01	%	0.40	%	to	1.25	%	(1.90	)%	to	(1.06	)%
Janus Capital Appreciation (2)
Year Ended 12/31/05	1,991	$	1.623859	to	$	1.660941	$	3,365	0.18	%	0.40	%	to	1.25	%	15.55	%	to	16.53	%
Year Ended 12/31/04	754	$	1.405312	to	$	1.425327	$	1,061	0.16	%	0.40	%	to	1.25	%	18.19	%	to	19.19	%
Year Ended 12/31/03	160	$	1.189063	to	$	1.195801	$	190	0.11	%	0.40	%	to	1.25	%	18.91	%	to	19.58	%
Year Ended 12/31/02	n/a		n/a					n/a	n/a		n/a					n/a
Year Ended 12/31/01	n/a		n/a					n/a	n/a		n/a					n/a
Growth Stock
Year Ended 12/31/05	9,001	$	0.829993	to	$	2.681914	$	22,251	1.05	%	0.40	%	to	1.25	%	6.38	%	to	7.28	%
Year Ended 12/31/04	9,648	$	0.774425	to	$	2.508557	$	22,578	0.70	%	0.40	%	to	1.25	%	5.34	%	to	6.24	%
Year Ended 12/31/03	10,962	$	0.729643	to	$	2.369404	$	24,540	0.83	%	0.40	%	to	1.25	%	17.47	%	to	18.47	%
Year Ended 12/31/02	12,292	$	0.616498	to	$	2.006974	$	23,491	1.16	%	0.40	%	to	1.25	%	(21.81	)%	to	(21.15	)%
Year Ended 12/31/01	13,336	$	0.782628	to	$	2.554121	$	32,717	0.78	%	0.40	%	to	1.25	%	(15.29	)%	to	(14.56	)%
Large Cap Core Stock
Year Ended 12/31/05	6,595	$	0.833720	to	$	2.229337	$	14,126	1.31	%	0.40	%	to	1.25	%	7.12	%	to	8.02	%
Year Ended 12/31/04	7,180	$	0.772557	to	$	2.070897	$	14,270	0.97	%	0.40	%	to	1.25	%	6.82	%	to	7.73	%
Year Ended 12/31/03	8,493	$	0.717843	to	$	1.929029	$	15,873	0.97	%	0.40	%	to	1.25	%	22.51	%	to	23.56	%
Year Ended 12/31/02	9,001	$	0.581563	to	$	1.566688	$	13,717	0.96	%	0.40	%	to	1.25	%	(29.09	)%	to	(28.49	)%
Year Ended 12/31/01	10,696	$	0.814020	to	$	2.198364	$	23,057	0.80	%	0.40	%	to	1.25	%	(8.92	)%	to	(8.14	)%
Capital Guardian Domestic Equity (1)
Year Ended 12/31/05	5,804	$	1.237056	to	$	1.284256	$	7,310	1.72	%	0.40	%	to	1.25	%	6.71	%	to	7.61	%
Year Ended 12/31/04	4,878	$	1.159280	to	$	1.193398	$	5,722	1.60	%	0.40	%	to	1.25	%	15.40	%	to	16.38	%
Year Ended 12/31/03	3,313	$	1.004585	to	$	1.025423	$	3,535	2.02	%	0.40	%	to	1.25	%	32.74	%	to	33.87	%
Year Ended 12/31/02	2,205	$	0.756787	to	$	0.765966	$	1,670	1.82	%	0.40	%	to	1.25	%	(22.22	)%	to	(21.56	)%
Year Ended 12/31/01	299	$	0.973004	to	$	0.976476	$	290	0.72	%	0.40	%	to	1.25	%	(2.70	)%	to	(2.35	)%
T. Rowe Price Equity Income (2)
Year Ended 12/31/05	2,231	$	1.434821	to	$	1.467592	$	3,291	1.83	%	0.40	%	to	1.25	%	2.90	%	to	3.77	%
Year Ended 12/31/04	1,183	$	1.394433	to	$	1.414287	$	1,765	1.92	%	0.40	%	to	1.25	%	13.73	%	to	14.70	%
Year Ended 12/31/03	387	$	1.226098	to	$	1.233047	$	484	2.70	%	0.40	%	to	1.25	%	22.61	%	to	23.30	%
Year Ended 12/31/02	n/a		n/a					n/a	n/a		n/a					n/a
Year Ended 12/31/01	n/a		n/a					n/a	n/a		n/a					n/a
Index 500 Stock
Year Ended 12/31/05	17,959	$	0.886007	to	$	4.498618	$	74,074	1.75	%	0.40	%	to	1.25	%	3.43	%	to	4.31	%
Year Ended 12/31/04	19,851	$	0.850261	to	$	4.327836	$	79,921	1.34	%	0.40	%	to	1.25	%	9.32	%	to	10.26	%
Year Ended 12/31/03	21,633	$	0.771935	to	$	3.938953	$	80,568	1.49	%	0.40	%	to	1.25	%	26.84	%	to	27.92	%
Year Ended 12/31/02	23,497	$	0.604035	to	$	3.089894	$	69,294	1.40	%	0.40	%	to	1.25	%	(23.04	)%	to	(22.38	)%
Year Ended 12/31/01	27,345	$	0.779001	to	$	3.994853	$	104,907	1.32	%	0.40	%	to	1.25	%	(12.98	)%	to	(12.23	)%

(1) Division commenced operations on July 31, 2001.

(2) Division commenced operations on May 1, 2003.

(3) Total Return includes deductions for management and other expenses; excludes deductions for sales loads and other charges. Returns are not annualized for periods less than one year.

48

NML Variable Annuity Account A

Notes to Financial Statements (continued)

	As of the respective period end date:								For the respective period ended:
Division	Units Outstanding (000’s)	Unit Value, Lowest to Highest					Net Assets (000’s)		Dividend Income as a % of Average Net Assets		Expense Ratio, Lowest to Highest					Total Return Lowest to Highest (3)
Asset Allocation (1)
Year Ended 12/31/05	8,565	$	1.180583	to	$	1.225587	$	10,181	1.41	%	0.40	%	to	1.25	%	5.67	%	to	6.57	%
Year Ended 12/31/04	6,384	$	1.117219	to	$	1.150060	$	7,178	0.00	%	0.40	%	to	1.25	%	8.65	%	to	9.58	%
Year Ended 12/31/03	4,665	$	1.028260	to	$	1.049545	$	4,815	2.12	%	0.40	%	to	1.25	%	19.13	%	to	20.14	%
Year Ended 12/31/02	3,238	$	0.863125	to	$	0.873571	$	2,797	2.26	%	0.40	%	to	1.25	%	(11.37	)%	to	(10.62	)%
Year Ended 12/31/01	821	$	0.973862	to	$	0.977328	$	800	1.20	%	0.40	%	to	1.25	%	2.61	%	to	(2.27	)%
Balanced
Year Ended 12/31/05	20,403	$	1.120868	to	$	9.172086	$	165,717	2.68	%	0.40	%	to	1.25	%	2.31	%	to	3.18	%
Year Ended 12/31/04	23,226	$	1.087384	to	$	8.920173	$	184,687	2.61	%	0.40	%	to	1.25	%	6.55	%	to	7.46	%
Year Ended 12/31/03	26,091	$	1.012887	to	$	8.329807	$	194,989	3.25	%	0.40	%	to	1.25	%	16.53	%	to	17.52	%
Year Ended 12/31/02	29,067	$	0.862735	to	$	7.112654	$	181,291	3.92	%	0.40	%	to	1.25	%	(8.68	)%	to	(7.91	)%
Year Ended 12/31/01	33,386	$	0.937735	to	$	7.750204	$	228,923	4.26	%	0.40	%	to	1.25	%	(4.36	)%	to	(3.54	)%
High Yield Bond
Year Ended 12/31/05	2,920	$	1.413965	to	$	2.146008	$	5,918	6.53	%	0.40	%	to	1.25	%	0.14	%	to	0.98	%
Year Ended 12/31/04	3,029	$	1.401540	to	$	2.132449	$	6,155	6.98	%	0.40	%	to	1.25	%	11.36	%	to	12.31	%
Year Ended 12/31/03	2,982	$	1.249172	to	$	1.905353	$	5,425	0.21	%	0.40	%	to	1.25	%	27.46	%	to	28.54	%
Year Ended 12/31/02	2,982	$	0.972766	to	$	1.487426	$	4,267	9.94	%	0.40	%	to	1.25	%	(4.10	)%	to	(3.28	)%
Year Ended 12/31/01	3,362	$	1.006773	to	$	1.543249	$	5,008	10.16	%	0.40	%	to	1.25	%	3.72	%	to	4.61	%
Select Bond
Year Ended 12/31/05	3,618	$	1.470271	to	$	11.164423	$	28,447	3.57	%	0.40	%	to	1.25	%	0.95	%	to	1.81	%
Year Ended 12/31/04	3,465	$	1.445569	to	$	11.003992	$	27,344	4.10	%	0.40	%	to	1.25	%	3.44	%	to	4.33	%
Year Ended 12/31/03	3,619	$	1.386996	to	$	10.584441	$	29,248	3.93	%	0.40	%	to	1.25	%	4.18	%	to	5.07	%
Year Ended 12/31/02	3,820	$	1.321394	to	$	10.108841	$	31,434	4.40	%	0.40	%	to	1.25	%	10.70	%	to	11.64	%
Year Ended 12/31/01	3,027	$	1.184790	to	$	9.086342	$	23,757	5.71	%	0.40	%	to	1.25	%	8.99	%	to	9.92	%
Money Market
Year Ended 12/31/05	5,537	$	1.137767	to	$	3.134091	$	14,793	2.93	%	0.40	%	to	1.25	%	1.71	%	to	2.57	%
Year Ended 12/31/04	5,572	$	1.110318	to	$	3.066057	$	14,569	1.42	%	0.40	%	to	1.25	%	0.17	%	to	1.03	%
Year Ended 12/31/03	7,192	$	1.100118	to	$	3.045469	$	18,201	1.26	%	0.40	%	to	1.25	%	(0.02	)%	to	0.83	%
Year Ended 12/31/02	10,274	$	1.092171	to	$	3.030949	$	26,587	1.65	%	0.40	%	to	1.25	%	0.39	%	to	1.25	%
Year Ended 12/31/01	10,780	$	1.079788	to	$	3.004024	$	27,147	3.80	%	0.40	%	to	1.25	%	2.62	%	to	3.50	%
Fidelity VIP Mid Cap (2)
Year Ended 12/31/05	3,237	$	2.001683	to	$	2.047402	$	6,558	0.00	%	0.40	%	to	1.25	%	16.56	%	to	17.54	%
Year Ended 12/31/04	2,151	$	1.717354	to	$	1.741819	$	3,721	0.00	%	0.40	%	to	1.25	%	23.11	%	to	24.16	%
Year Ended 12/31/03	739	$	1.395022	to	$	1.402932	$	1,030	0.00	%	0.40	%	to	1.25	%	39.50	%	to	40.29	%
Year Ended 12/31/02	n/a		n/a					n/a	n/a		n/a					n/a
Year Ended 12/31/01	n/a		n/a					n/a	n/a		n/a					n/a
Russell Multi-Style Equity
Year Ended 12/31/05	6,402	$	0.858577	to	$	0.919329	$	5,658	1.09	%	0.40	%	to	1.25	%	5.94	%	to	6.84	%
Year Ended 12/31/04	7,020	$	0.804386	to	$	0.860463	$	5,862	0.73	%	0.40	%	to	1.25	%	8.44	%	to	9.37	%
Year Ended 12/31/03	5,881	$	0.736202	to	$	0.786751	$	4,546	0.72	%	0.40	%	to	1.25	%	27.26	%	to	28.34	%
Year Ended 12/31/02	5,060	$	0.574187	to	$	0.613006	$	3,104	0.60	%	0.40	%	to	1.25	%	(24.14	)%	to	(23.50	)%
Year Ended 12/31/01	5,082	$	0.751294	to	$	0.801293	$	4,111	0.46	%	0.40	%	to	1.25	%	(15.28	)%	to	(14.55	)%
Russell Aggressive Equity
Year Ended 12/31/05	3,005	$	1.274157	to	$	1.506167	$	4,279	0.18	%	0.40	%	to	1.25	%	5.04	%	to	5.94	%
Year Ended 12/31/04	3,344	$	1.203942	to	$	1.421771	$	4,537	0.17	%	0.40	%	to	1.25	%	13.30	%	to	14.27	%
Year Ended 12/31/03	3,147	$	1.054631	to	$	1.244218	$	3,764	0.11	%	0.40	%	to	1.25	%	43.79	%	to	45.01	%
Year Ended 12/31/02	2,664	$	0.727980	to	$	0.857996	$	2,219	0.00	%	0.40	%	to	1.25	%	(20.06	)%	to	(19.38	)%
Year Ended 12/31/01	2,763	$	0.903873	to	$	1.064253	$	2,875	0.11	%	0.40	%	to	1.25	%	(3.58	)%	to	(2.76	)%
Russell Non-U.S.
Year Ended 12/31/05	4,572	$	1.024633	to	$	1.289430	$	5,582	1.63	%	0.40	%	to	1.25	%	12.28	%	to	13.23	%
Year Ended 12/31/04	4,635	$	0.905783	to	$	1.138748	$	5,040	2.07	%	0.40	%	to	1.25	%	16.83	%	to	17.82	%
Year Ended 12/31/03	3,801	$	0.769505	to	$	0.966479	$	3,551	2.94	%	0.40	%	to	1.25	%	37.07	%	to	38.23	%
Year Ended 12/31/02	3,385	$	0.557227	to	$	0.699179	$	2,311	1.48	%	0.40	%	to	1.25	%	(16.20	)%	to	(15.49	)%
Year Ended 12/31/01	3,516	$	0.659991	to	$	0.827309	$	2,862	0.60	%	0.40	%	to	1.25	%	(23.00	)%	to	(22.34	)%

(1) Division commenced operations on July 31, 2001.

(2) Division commenced operations on May 1, 2003.

(3) Total Return includes deductions for management and other expenses; excludes deductions for sales loads and other charges. Returns are not annualized for periods less than one year.

49

NML Variable Annuity Account A

Notes to Financial Statements (continued)

	As of the respective period end date:								For the respective period ended:
Division	Units Outstanding (000’s)	Unit Value, Lowest to Highest					Net Assets (000’s)		Dividend Income as a % of Average Net Assets	Expense Ratio, Lowest to Highest			Total Return Lowest to Highest (3)
Russell Core Bond
Year Ended 12/31/05	2,788	$	1.329349	to	$	1.406633	$	3,738	3.60%	0.40%	to	1.25%	0.75%	to	1.61%
Year Ended 12/31/04	2,653	$	1.319453	to	$	1.384409	$	3,527	2.44%	0.40%	to	1.25%	3.36%	to	4.24%
Year Ended 12/31/03	1,927	$	1.276523	to	$	1.328054	$	2,474	3.47%	0.40%	to	1.25%	4.83%	to	5.72%
Year Ended 12/31/02	1,888	$	1.217720	to	$	1.256188	$	2,305	2.87%	0.40%	to	1.25%	7.49%	to	8.40%
Year Ended 12/31/01	1,323	$	1.132872	to	$	1.158815	$	1,501	5.90%	0.40%	to	1.25%	6.07%	to	6.97%
Russell Real Estate Securities
Year Ended 12/31/05	4,692	$	2.540501	to	$	2.831791	$	12,288	2.10%	0.40%	to	1.25%	11.56%	to	12.51%
Year Ended 12/31/04	4,514	$	2.277262	to	$	2.519496	$	10,593	2.27%	0.40%	to	1.25%	33.20%	to	34.33%
Year Ended 12/31/03	3,171	$	1.709672	to	$	1.877412	$	5,521	5.35%	0.40%	to	1.25%	35.51%	to	36.66%
Year Ended 12/31/02	2,390	$	1.261665	to	$	1.375137	$	3,057	5.39%	0.40%	to	1.25%	2.51%	to	3.39%
Year Ended 12/31/01	1,430	$	1.230726	to	$	1.331406	$	1,820	5.13%	0.40%	to	1.25%	6.49%	to	7.40%

(1) Division commenced operations on July 31, 2001.

(2) Division commenced operations on May 1, 2003.

(3) Total Return includes deductions for management and other expenses; excludes deductions for sales loads and other charges. Returns are not annualized for periods less than one year.

50

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Northwestern Mutual Life Insurance Company and

Contract Owners of NML Variable Annuity Account A

In our opinion, the accompanying statements of assets and liabilities, the related statements of operations, and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the NML Variable Annuity Account A and its Small Cap Growth Stock Division, T. Rowe Price Small Cap Value Division, Aggressive Growth Stock Division, International Growth Division, Franklin Templeton International Equity Division, AllianceBernstein Mid Cap Value Division, Index 400 Stock Division, Janus Capital Appreciation Division, Growth Stock Division, Large Cap Core Stock Division, Capital Guardian Domestic Equity Division, T. Rowe Price Equity Income Division, Index 500 Stock Division, Asset Allocation Division, Balanced Division, High Yield Bond Division, Select Bond Division, Money Market Division, Fidelity VIP Mid Cap Division, Russell Multi-Style Equity Division, Russell Aggressive Equity Division, Russell Non-U.S. Division, Russell Core Bond Division, and Russell Real Estate Securities Division at December 31, 2005 and 2004, and the results of each of their operations, the changes in each of their net assets and their financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “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 the standards of the Public Company Accounting Oversight Board (United States). 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, 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 securities owned at December 31, 2005 with Northwestern Mutual Series Fund, Inc., Fidelity Variable Insurance Products Fund III and the Russell Investment Funds, provide a reasonable basis for our opinion.

/s/ PRICEWATERHOUSECOOPERS LLP

Milwaukee, Wisconsin

February 7, 2006

51

NML Variable Annuity Account C

Statements of Assets and Liabilities

As of December 31

(in thousands, except accumulation unit values)

	Small Cap Growth Stock Division				T. Rowe Price Small Cap Value Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	35,722	$	30,537	$	1,275	$	1,267
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		2		—		—		—
Total Assets		35,724		30,537		1,275		1,267
Due to Northwestern Mutual Life Insurance Company		2		—		—		—
Total Liabilities		2		—		—		—
Total Net Assets	$	35,722	$	30,537	$	1,275	$	1,267
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981 or between April 30, 1984 and December 31, 1991
Accumulation Units (3)	$	34,466	$	28,975	$	321	$	227
Annuity Reserves		—		—		—		—
After December 16, 1981 and Prior to May 1, 1984
Accumulation Units (4)		—		—		—		—
Annuity Reserves		—		—		—		—
After December 31, 1991 - Front Load Version
Accumulation Units (5)		224		308		276		288
Annuity Reserves		—		—		—		—
After December 31, 1991 - Simplified Load Version
Accumulation Units (6)		1,032		1,254		678		752
Annuity Reserves		—		—		—		—
Total Net Assets	$	35,722	$	30,537	$	1,275	$	1,267
___________
(1)    Investments, at cost	$	27,167	$	24,077	$	1,084	$	976
(2)    Shares Outstanding		14,120		13,277		778		802
(3)    Accumulation Unit Value	$	27.401692	$	24.646196	$	17.342719	$	16.175980
Units Outstanding		1,258		1,176		19		14
(4)    Accumulation Unit Value	$	26.502238	$	23.956264	$	16.963788	$	15.901602
Units Outstanding		—		—		—		—
(5)    Accumulation Unit Value	$	2.623886	$	2.375356	$	1.685204	$	1.582043
Units Outstanding		85		130		164		182
(6)    Accumulation Unit Value	$	2.521099	$	2.295965	$	1.641244	$	1.549988
Units Outstanding		410		546		413		485

The Accompanying Notes are an Integral Part of the Financial Statements.

52

NML Variable Annuity Account C

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Aggressive Growth Stock Division				International Growth Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	80,758	$	83,563	$	766	$	455
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		—		2		—		—
Total Assets		80,758		83,565		766		455
Due to Northwestern Mutual Life Insurance Company		1		6		—		—
Total Liabilities		1		6		—		—
Total Net Assets	$	80,757	$	83,559	$	766	$	455
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981 or between April 30, 1984 and December 31, 1991
Accumulation Units (3)	$	73,841	$	75,536	$	101	$	114
Annuity Reserves		33		8		—		—
After December 16, 1981 and Prior to May 1, 1984
Accumulation Units (4)		—		—		—		—
Annuity Reserves		—		—		—		—
After December 31, 1991 - Front Load Version
Accumulation Units (5)		2,101		2,366		184		156
Annuity Reserves		—		—		—		—
After December 31, 1991 - Simplified Load Version
Accumulation Units (6)		4,782		5,649		481		185
Annuity Reserves		—		—		—		—
Total Net Assets	$	80,757	$	83,559	$	766	$	455
___________
(1)    Investments, at cost	$	75,969	$	84,999	$	675	$	403
(2)    Shares Outstanding		24,487		26,878		519		345
(3)    Accumulation Unit Value	$	58.106257	$	54.747494	$	15.838526	$	13.422496
Units Outstanding		1,271		1,380		6		8
(4)    Accumulation Unit Value	$	53.923710	$	51.060593	$	15.492364	$	13.194729
Units Outstanding		—		—		—		—
(5)    Accumulation Unit Value	$	3.499067	$	3.318231	$	1.539014	$	1.312727
Units Outstanding		600		713		120		119
(6)    Accumulation Unit Value	$	5.106174	$	4.871253	$	1.498861	$	1.286123
Units Outstanding		936		1,160		321		144

The Accompanying Notes are an Integral Part of the Financial Statements.

53

NML Variable Annuity Account C

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Franklin Templeton International Equity Division				AllianceBernstein Mid Cap Value Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	68,649	$	59,840	$	551	$	386
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		1		2		—		—
Total Assets		68,650		59,842		551		386
Due to Northwestern Mutual Life Insurance Company		1		1		—		—
Total Liabilities		1		1		—		—
Total Net Assets	$	68,649	$	59,841	$	551	$	386
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981 or between April 30, 1984 and December 31, 1991
Accumulation Units (3)	$	64,201	$	55,146	$	13	$	6
Annuity Reserves		26		20		—		—
After December 16, 1981 and Prior to May 1, 1984
Accumulation Units (4)		—		—		—		—
Annuity Reserves		—		—		—		—
After December 31, 1991 - Front Load Version
Accumulation Units (5)		1,569		1,377		301		269
Annuity Reserves		—		—		—		—
After December 31, 1991 - Simplified Load Version
Accumulation Units (6)		2,853		3,298		237		111
Annuity Reserves		—		—		—		—
Total Net Assets	$	68,649	$	59,841	$	551	$	386
___________
(1)    Investments, at cost	$	50,823	$	46,502	$	509	$	339
(2)    Shares Outstanding		37,886		36,157		380		265
(3)    Accumulation Unit Value	$	3.289423	$	2.949634	$	16.663892	$	15.801473
Units Outstanding		19,517		18,696		1		—
(4)    Accumulation Unit Value	$	3.087441	$	2.782359	$	16.443216	$	15.670114
Units Outstanding		—		—		—		—
(5)    Accumulation Unit Value	$	3.029496	$	2.734209	$	1.637759	$	1.563095
Units Outstanding		518		503		184		172
(6)    Accumulation Unit Value	$	2.808145	$	2.549602	$	1.611849	$	1.547558
Units Outstanding		1,016		1,294		147		72

The Accompanying Notes are an Integral Part of the Financial Statements.

54

NML Variable Annuity Account C

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Index 400 Stock Division				Janus Capital Appreciation Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	32,951	$	27,718	$	906	$	422
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		1		—		—		—
Total Assets		32,952		27,718		906		422
Due to Northwestern Mutual Life Insurance Company		—		1		—		—
Total Liabilities		—		1		—		—
Total Net Assets	$	32,952	$	27,717	$	906	$	422
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981 or between April 30, 1984 and December 31, 1991
Accumulation Units (3)	$	31,349	$	25,851	$	2	$	1
Annuity Reserves		41		16		—		—
After December 16, 1981 and Prior to May 1, 1984
Accumulation Units (4)		—		—		—		—
Annuity Reserves		—		—		—		—
After December 31, 1991 - Front Load Version
Accumulation Units (5)		381		412		335		259
Annuity Reserves		—		—		—		—
After December 31, 1991 - Simplified Load Version
Accumulation Units (6)		1,181		1,438		569		162
Annuity Reserves		—		—		—		—
Total Net Assets	$	32,952	$	27,717	$	906	$	422
___________
(1)    Investments, at cost	$	26,579	$	22,159	$	779	$	352
(2)    Shares Outstanding		21,300		18,946		557		295
(3)    Accumulation Unit Value	$	19.805364	$	14.624859	$	16.788069	$	14.349081
Units Outstanding		1,583		1,466		—		—
(4)    Accumulation Unit Value	$	19.155300	$	17.131512	$	16.565759	$	14.229799
Units Outstanding		—		—		—		—
(5)    Accumulation Unit Value	$	1.896510	$	1.698670	$	1.649963	$	1.419420
Units Outstanding		201		243		203		182
(6)    Accumulation Unit Value	$	1.822214	$	1.641894	$	1.623859	$	1.405312
Units Outstanding		648		876		351		115

The Accompanying Notes are an Integral Part of the Financial Statements.

55

NML Variable Annuity Account C

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Growth Stock Division				Large Cap Core Stock Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	26,753	$	25,556	$	20,786	$	17,959
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		2		2		2		1
Total Assets		26,755		25,558		20,788		17,960
Due to Northwestern Mutual Life Insurance Company		1		—		—		—
Total Liabilities		1		—		—		—
Total Net Assets	$	26,754	$	25,558	$	20,788	$	17,960
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981 or between April 30, 1984 and December 31, 1991
Accumulation Units (3)	$	23,242	$	21,857	$	18,213	$	15,471
Annuity Reserves		32		29		4		—
After December 16, 1981 and Prior to May 1, 1984
Accumulation Units (4)		—		—		—		—
Annuity Reserves		—		—		—		—
After December 31, 1991 - Front Load Version
Accumulation Units (5)		977		1,064		895		647
Annuity Reserves		—		—		—		—
After December 31, 1991 - Simplified Load Version
Accumulation Units (6)		2,503		2,608		1,676		1,842
Annuity Reserves		—		—		—		—
Total Net Assets	$	26,754	$	25,558	$	20,788	$	17,960
___________
(1)    Investments, at cost	$	24,884	$	25,982	$	19,303	$	18,488
(2)    Shares Outstanding		12,655		12,881		17,010		15,726
(3)    Accumulation Unit Value	$	29.265983	$	27.170823	$	24.327323	$	22.430441
Units Outstanding		794		804		749		690
(4)    Accumulation Unit Value	$	27.607246	$	25.758905	$	22.948362	$	21.264720
Units Outstanding		—		—		—		—
(5)    Accumulation Unit Value	$	2.712956	$	2.535103	$	2.255126	$	2.092800
Units Outstanding		360		420		397		309
(6)    Accumulation Unit Value	$	2.529872	$	2.378175	$	2.102957	$	1.963264
Units Outstanding		989		1,097		797		938

The Accompanying Notes are an Integral Part of the Financial Statements.

56

NML Variable Annuity Account C

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Capital Guardian Domestic Equity Division				T. Rowe Price Equity Income Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	1,363	$	1,676	$	186	$	291
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		—		—		—		—
Total Assets		1,363		1,676		186		291
Due to Northwestern Mutual Life Insurance Company		—		—		—		—
Total Liabilities		—		—		—		—
Total Net Assets	$	1,363	$	1,676	$	186	$	291
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981 or between April 30, 1984 and December 31, 1991
Accumulation Units (3)	$	109	$	106	$	35	$	34
Annuity Reserves		—		—		—		—
After December 16, 1981 and Prior to May 1, 1984
Accumulation Units (4)		—		—		—		—
Annuity Reserves		—		—		—		—
After December 31, 1991 - Front Load Version
Accumulation Units (5)		462		391		34		32
Annuity Reserves		—		—		—		—
After December 31, 1991 - Simplified Load Version
Accumulation Units (6)		792		1,179		117		225
Annuity Reserves		—		—		—		—
Total Net Assets	$	1,363	$	1,676	$	186	$	291
___________
(1)    Investments, at cost	$	1,227	$	1,318	$	187	$	274
(2)    Shares Outstanding		1,203		1,465		140		216
(3)    Accumulation Unit Value	$	13.072390	$	12.099054	$	14.833915	$	14.237970
Units Outstanding		8		9		2		3
(4)    Accumulation Unit Value	$	12.786645	$	11.893730	$	14.637433	$	14.119597
Units Outstanding		—		—		—		—
(5)    Accumulation Unit Value	$	1.270242	$	1.183300	$	1.457931	$	1.408447
Units Outstanding		364		331		23		23
(6)    Accumulation Unit Value	$	1.237056	$	1.159280	$	1.434821	$	1.394433
Units Outstanding		640		1,017		81		161

The Accompanying Notes are an Integral Part of the Financial Statements.

57

NML Variable Annuity Account C

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Index 500 Stock Division				Asset Allocation Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	92,072	$	94,708	$	1,870	$	1,703
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		2		1		1		1
Total Assets		92,074		94,709		1,871		1,704
Due to Northwestern Mutual Life Insurance Company		1		4		—		—
Total Liabilities		1		4		—		—
Total Net Assets	$	92,073	$	94,705	$	1,871	$	1,704
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981 or between April 30, 1984 and December 31, 1991
Accumulation Units (3)	$	82,467	$	82,785	$	533	$	498
Annuity Reserves		57		37		177		179
After December 16, 1981 and Prior to May 1, 1984
Accumulation Units (4)		—		—		—		—
Annuity Reserves		—		—		—		—
After December 31, 1991 - Front Load Version
Accumulation Units (5)		3,129		3,575		70		66
Annuity Reserves		—		—		—		—
After December 31, 1991 - Simplified Load Version
Accumulation Units (6)		6,420		8,308		1,091		961
Annuity Reserves		—		—		—		—
Total Net Assets	$	92,073	$	94,705	$	1,871	$	1,704
___________
(1)    Investments, at cost	$	82,305	$	85,260	$	1,586	$	1,431
(2)    Shares Outstanding		30,980		32,181		1,612		1,521
(3)    Accumulation Unit Value	$	52.479807	$	50.112283	$	12.475450	$	11.659896
Units Outstanding		1,571		1,652		43		43
(4)    Accumulation Unit Value	$	48.697779	$	46.733245	$	12.202816	$	11.462082
Units Outstanding		—		—		—		—
(5)    Accumulation Unit Value	$	3.533871	$	3.396371	$	1.212214	$	1.140330
Units Outstanding		885		1,053		57		57
(6)    Accumulation Unit Value	$	4.257509	$	4.116350	$	1.180583	$	1.117219
Units Outstanding		1,508		2,018		925		860

The Accompanying Notes are an Integral Part of the Financial Statements.

58

NML Variable Annuity Account C

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

					High Yield Bond Division
	Balanced Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	71,708	$	77,040	$	6,725	$	6,683
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		1		1		—		—
Total Assets		71,709		77,041		6,725		6,683
Due to Northwestern Mutual Life Insurance Company		—		—		—		—
Total Liabilities		—		—		—		—
Total Net Assets	$	71,709	$	77,041	$	6,725	$	6,683
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981 or between April 30, 1984 and December 31, 1991
Accumulation Units (3)	$	52,887	$	57,397	$	5,508	$	5,195
Annuity Reserves		382		293		20		16
After December 16, 1981 and Prior to May 1, 1984
Accumulation Units (4)		806		782		—		—
Annuity Reserves		—		—		—		—
After December 31, 1991 - Front Load Version
Accumulation Units (5)		5,109		4,220		205		336
Annuity Reserves		—		—		—		—
After December 31, 1991 - Simplified Load Version
Accumulation Units (6)		12,525		14,349		992		1,136
Annuity Reserves		—		—		—		—
Total Net Assets	$	71,709	$	77,041	$	6,725	$	6,683
___________
(1)    Investments, at cost	$	69,529	$	74,813	$	6,527	$	5,965
(2)    Shares Outstanding		38,552		41,132		9,379		8,806
(3)    Accumulation Unit Value	$	111.421574	$	107.555819	$	23.417544	$	23.096633
Units Outstanding		475		533		235		225
(4)    Accumulation Unit Value	$	98.847881	$	95.895281	$	22.090395	$	21.896587
Units Outstanding		8		8		—		—
(5)    Accumulation Unit Value	$	2.857685	$	2.776467	$	2.170854	$	2.155028
Units Outstanding		1,788		1,520		95		156
(6)    Accumulation Unit Value	$	8.174739	$	7.989947	$	2.024344	$	2.021608
Units Outstanding		1,532		1,796		490		562

The Accompanying Notes are an Integral Part of the Financial Statements.

59

NML Variable Annuity Account C

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Select Bond Division				Money Market Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	16,230	$	16,572	$	3,047	$	4,096
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		1		1		—		—
Total Assets		16,231		16,573		3,047		4,096
Due to Northwestern Mutual Life Insurance Company		—		—		—		—
Total Liabilities		—		—		—		—
Total Net Assets	$	16,231	$	16,573	$	3,047	$	4,096
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981 or between April 30, 1984 and December 31, 1991
Accumulation Units (3)	$	11,244	$	10,831	$	105	$	75
Annuity Reserves		64		66		5		5
After December 16, 1981 and Prior to May 1, 1984
Accumulation Units (4)		—		—		—		—
Annuity Reserves		—		—		—		—
After December 31, 1991 - Front Load Version
Accumulation Units (5)		1,019		1,191		542		780
Annuity Reserves		—		—		—		—
After December 31, 1991 - Simplified Load Version
Accumulation Units (6)		3,904		4,485		2,395		3,236
Annuity Reserves		—		—		—		—
Total Net Assets	$	16,231	$	16,573	$	3,047	$	4,096
___________
(1)    Investments, at cost	$	16,602	$	16,684	$	3,047	$	4,096
(2)    Shares Outstanding		13,492		13,495		3,047		4,096
(3)    Accumulation Unit Value	$	136.984725	$	134.012491	$	36.095241	$	35.049174
Units Outstanding		82		81		3		2
(4)    Accumulation Unit Value	$	121.466757	$	119.425260	$	32.059904	$	31.286399
Units Outstanding		—		—		—		—
(5)    Accumulation Unit Value	$	2.308631	$	2.273220	$	1.560248	$	1.524874
Units Outstanding		442		524		347		512
(6)    Accumulation Unit Value	$	9.995944	$	9.901557	$	2.785794	$	2.738952
Units Outstanding		390		453		860		1,181

The Accompanying Notes are an Integral Part of the Financial Statements.

60

NML Variable Annuity Account C

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Fidelity VIP Mid Cap Division				Russell Multi-Style Equity Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	—	$	—	$	—	$	—
Fidelity Variable Insurance Products Fund III		796		408		—		—
Russell Investment Funds		—		—		2,037		1,812
Due from Northwestern Mutual Life Insurance Company		—		—		—		—
Total Assets		796		408		2,037		1,812
Due to Northwestern Mutual Life Insurance Company		—		—		—		1
Total Liabilities		—		—		—		1
Total Net Assets	$	796	$	408	$	2,037	$	1,811
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981 or between April 30, 1984 and December 31, 1991
Accumulation Units (3)	$	132	$	75	$	214	$	214
Annuity Reserves		—		—		—		—
After December 16, 1981 and Prior to May 1, 1984
Accumulation Units (4)		—		—		—		—
Annuity Reserves		—		—		—		—
After December 31, 1991 - Front Load Version
Accumulation Units (5)		118		32		991		895
Annuity Reserves		—		—		—		—
After December 31, 1991 - Simplified Load Version
Accumulation Units (6)		546		301		832		702
Annuity Reserves		—		—		—		—
Total Net Assets	$	796	$	408	$	2,037	$	1,811
___________
(1)    Investments, at cost	$	669	$	337	$	1,845	$	1,751
(2)    Shares Outstanding		23		14		152		144
(3)    Accumulation Unit Value	$	20.694231	$	17.535222	$	9.442962	$	8.802993
Units Outstanding		6		4		23		24
(4)    Accumulation Unit Value	$	20.420232	$	17.389476	$	9.132958	$	8.556544
Units Outstanding		—		—		—		—
(5)    Accumulation Unit Value	$	2.033893	$	1.734607	$	0.904209	$	0.848412
Units Outstanding		58		18		1,096		1,055
(6)    Accumulation Unit Value	$	2.001683	$	1.717354	$	0.868789	$	0.820050
Units Outstanding		273		176		957		857

The Accompanying Notes are an Integral Part of the Financial Statements.

61

NML Variable Annuity Account C

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Russell Aggressive Equity Division				Russell Non-US Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	—	$	—	$	—	$	—
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		848		981		1,538		1,428
Due from Northwestern Mutual Life Insurance Company		—		—		—		—
Total Assets		848		981		1,538		1,428
Due to Northwestern Mutual Life Insurance Company		—		—		—		—
Total Liabilities		—		—		—		—
Total Net Assets	$	848	$	981	$	1,538	$	1,428
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981 or between April 30, 1984 and December 31, 1991
Accumulation Units (3)	$	—	$	8	$	12	$	18
Annuity Reserves		—		—		7		—
After December 16, 1981 and Prior to May 1, 1984
Accumulation Units (4)		—		—		—		—
Annuity Reserves		—		—		—		—
After December 31, 1991 - Front Load Version
Accumulation Units (5)		203		207		974		796
Annuity Reserves		—		—		—		—
After December 31, 1991 - Simplified Load Version
Accumulation Units (6)		645		766		545		614
Annuity Reserves		—		—		—		—
Total Net Assets	$	848	$	981	$	1,538	$	1,428
___________
(1)    Investments, at cost	$	727	$	781	$	187	$	1,169
(2)    Shares Outstanding		59		66		121		126
(3)    Accumulation Unit Value	$	15.470599	$	14.545498	$	13.244730	$	11.650240
Units Outstanding		—		1		1		2
(4)    Accumulation Unit Value	$	14.962745	$	14.138303	$	12.809950	$	11.324119
Units Outstanding		—		—		—		—
(5)    Accumulation Unit Value	$	1.481405	$	1.401874	$	1.268236	$	1.122807
Units Outstanding		137		148		768		709
(6)    Accumulation Unit Value	$	1.423377	$	1.355022	$	1.218592	$	1.085315
Units Outstanding		453		565		447		566

The Accompanying Notes are an Integral Part of the Financial Statements.

62

NML Variable Annuity Account C

Statements of Assets and Liabilities (continued)

As of December 31

(in thousands, except accumulation unit values)

	Russell Core Bond Division				Russell Real Estate Securities Division
	2005		2004		2005		2004
Assets:
Investments, at value (1) (2)
Northwestern Mutual Series Fund, Inc.	$	—	$	—	$	—	$	—
Fidelity Variable Insurance Products Fund III		—		—		—		—
Russell Investment Funds		1,592		1,395		35,654		28,645
Due from Northwestern Mutual Life Insurance Company		—		—		4		23
Total Assets		1,592		1,395		35,658		28,668
Due to Northwestern Mutual Life Insurance Company		—		—		—		1
Total Liabilities		—		—		—		1
Total Net Assets	$	1,592	$	1,395	$	35,658	$	28,667
Net Assets:
Variable Annuity Contracts Issued:
Prior to December 17, 1981 or between April 30, 1984 and December 31, 1991
Accumulation Units (3)	$	—	$	2	$	33,358	$	26,411
Annuity Reserves		—		—		37		31
After December 16, 1981 and Prior to May 1, 1984
Accumulation Units (4)		—		—		—		—
Annuity Reserves		—		—		—		—
After December 31, 1991 - Front Load Version
Accumulation Units (5)		957		842		718		639
Annuity Reserves		—		—		—		—
After December 31, 1991 - Simplified Load Version
Accumulation Units (6)		635		551		1,545		1,586
Annuity Reserves		—		—		—		—
Total Net Assets	$	1,592	$	1,395	$	35,658	$	28,667
___________
(1)    Investments, at cost	$	1,629	$	1,395	$	32,368	$	22,810
(2)    Shares Outstanding		156		133		2,063		1,676
(3)    Accumulation Unit Value	$	14.448349	$	14.163304	$	27.611672	$	24.444468
Units Outstanding		—		—		1,208		1,080
(4)    Accumulation Unit Value	$	13.974171	$	13.766970	$	26.705759	$	23.760619
Units Outstanding		—		—		—		—
(5)    Accumulation Unit Value	$	1.383514	$	1.365029	$	2.644046	$	2.355972
Units Outstanding		691		617		272		271
(6)    Accumulation Unit Value	$	1.329349	$	1.319453	$	2.540501	$	2.277262
Units Outstanding		478		417		609		697

The Accompanying Notes are an Integral Part of the Financial Statements.

63

NML Variable Annuity Account C

Statements of Operations

For the Years Ended December 31

(in thousands)

	Small Cap Growth Stock Division									T. Rowe Price Small Cap Value Division									Aggressive Growth Stock Division
	2005			2004			2003			2005			2004			2003			2005			2004			2003
Income:
Dividend income	$	—		$	—		$	—		$	4		$	2		$	—		$	39		$	—		$	—
Expenses:
Mortality and expense risk charges		17			20			19			11			8			6			74			96			137
Net Investment Income (Loss)		(17	)		(20	)		(19	)		(7	)		(6	)		(6	)		(35	)		(96	)		(137	)
Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		939			191			(1,212	)		155			47			1			(1,702	)		(3,382	)		(8,800	)
Realized gain distributions		306			—			—			36			11			—			—			—			—
Realized gains (losses)		1,245			191			(1,212	)		191			58			1			(1,702	)		(3,382	)		(8,800	)
Change in unrealized appreciation (depreciation) of investments during the period		2,096			4,540			6,622			(100	)		147			183			6,225			14,017			24,998
Net increase (decrease) in net assets resulting from operations	$	3,324		$	4,711		$	5,391		$	84		$	199		$	178		$	4,488		$	10,539		$	16,061
	International Growth Division									Franklin Templeton International Equity Division									Alliance Bernstein Mid Cap Value Division ##
	2005			2004			2003			2005			2004			2003			2005			2004			2003
Income:
Dividend income	$	7		$	3		$	1		$	1,121		$	895		$	618		$	3		$	3		$	1
Expenses:
Mortality and expense risk charges		5			2			—			48			51			48			4			2			—
Net Investment Income (Loss)		2			1			1			1,073			844			570			(1	)		1			1
Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		24			11			(5	)		1,490			190			(2,671	)		4			2			—
Realized gain distributions		33			—			—			—			—			428			27			22			2
Realized gains (losses)		57			11			(5	)		1,490			190			(2,243	)		31			24			2
Change in unrealized appreciation (depreciation) of investments during the period		39			38			23			4,488			8,456			14,872			(4	)		25			22
Net increase (decrease) in net assets resulting from operations	$	98		$	50		$	19		$	7,051		$	9,490		$	13,199		$	26		$	50		$	25

## The initial investment in this Division was made on May 1, 2003.

The Accompanying Notes are an Integral Part of the Financial Statements.

64

NML Variable Annuity Account C

Statements of Operations (continued)

For the Years Ended December 31

(in thousands)

	Index 400 Stock Division									Janus Capital Appreciation Division ##									Growth Stock Division
	2005			2004			2003			2005			2004			2003			2005			2004			2003
Income:
Dividend income	$	227		$	164		$	115		$	1		$	—			—		$	271		$	177		$	179
Expenses:
Mortality and expense risk charges		17			20			17			5			2			—			38			47			52
Net Investment Income (Loss)		210			144			98			(4	)		(2	)		—			233			130			127
Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		1,063			465			(593	)		12			2			1			(617	)		(1,352	)		(2,089	)
Realized gain distributions		1,402			148			—			25			—			—			—			—			—
Realized gains (losses)		2,465			613			(593	)		37			2			1			(617	)		(1,352	)		(2,089	)
Change in unrealized appreciation (depreciation) of investments during the period		812			2,971			5,365			57			55			15			2,295			2,737			5,845
Net increase (decrease) in net assets resulting from operations	$	3,487		$	3,728		$	4,870		$	90		$	55		$	16		$	1,911		$	1,515		$	3,883
	Large Cap Core Stock Division ^									Capital Guardian Domestic Equity Division									T. Rowe Price Equity Income Division ##
	2005			2004			2003			2005			2004			2003			2005			2004			2003
Income:
Dividend income	$	244		$	164		$	137		$	21		$	21		$	17		$	3		$	4		$	1
Expenses:
Mortality and expense risk charges		26			34			51			16			14			8			2			3			—
Net Investment Income (Loss)		218			130			86			5			7			9			1			1			1
Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		(639	)		(1,201	)		(2,362	)		215			17			(10	)		14			19			—
Realized gain distributions		—			—			—			100			22			—			7			8			1
Realized gains (losses)		(639	)		(1,201	)		(2,362	)		315			39			(10	)		21			27			1
Change in unrealized appreciation (depreciation) of investments during the period		2,013			2,370			5,487			(222	)		174			251			(19	)		6			11
Net increase (decrease) in net assets resulting from operations	$	1,592		$	1,299		$	3,211		$	98		$	220		$	250		$	3		$	34		$	13

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

## The initial investment in this Division was made on May 1, 2003.

The Accompanying Notes are an Integral Part of the Financial Statements.

65

NML Variable Annuity Account C

Statements of Operations (continued)

For the Years Ended December 31

(in thousands)

	Index 500 Stock Division								Asset Allocation Division									Balanced Division
	2005			2004		2003			2005			2004			2003			2005			2004			2003
Income:
Dividend income	$	1,599		$	1,197	$	1,167		$	24		$	—		$	21		$	1,951		$	1,973		$	2,491
Expenses:
Mortality and expense risk charges		111			131		162			12			11			10			199			237			255
Net Investment Income (Loss)		1,488			1,066		1,005			12			(11	)		11			1,752			1,736			2,236
Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		649			126		(2,525	)		55			22			(63	)		(456	)		(662	)		(3,454	)
Realized gain distributions		1,612			976		—			27			—			—			1,072			2,785			—
Realized gains (losses)		2,261			1,102		(2,525	)		82			22			(63	)		616			2,123			(3,454	)
Change in unrealized appreciation (depreciation) of investments during the period		321			6,996		21,648			12			124			269			(49	)		1,742			13,665
Net increase (decrease) in net assets resulting from operations	$	4,070		$	9,164	$	20,128		$	106		$	135		$	217		$	2,319		$	5,601		$	12,447
	High Yield Bond Division								Select Bond Division									Money Market Division
	2005			2004		2003			2005			2004			2003			2005			2004			2003
Income:
Dividend income	$	457		$	433	$	11		$	603		$	729		$	771		$	105		$	70		$	128
Expenses:
Mortality and expense risk charges		15			17		14			61			75			98			38			54			105
Net Investment Income (Loss)		442			416		(3	)		542			654			673			67			16			23
Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		157			218		(145	)		(82	)		183			593			—			—			—
Realized gain distributions		—			—		—			102			504			440			—			—			—
Realized gains (losses)		157			218		(145	)		20			687			1,033			—			—			—
Change in unrealized appreciation (depreciation) of investments during the period		(521	)		96		1,433			(260	)		(624	)		(745	)		—			—			—
Net increase (decrease) in net assets resulting from operations	$	78		$	730	$	1,285		$	302		$	717		$	961		$	67		$	16		$	23

The Accompanying Notes are an Integral Part of the Financial Statements.

66

NML Variable Annuity Account C

Statements of Operations (continued)

For the Years Ended December 31

(in thousands)

	Fidelity VIP Mid Cap Division ##									Russell Multi-Style Equity Division									Russell Aggressive Equity Division
	2005			2004			2003			2005			2004			2003			2005			2004			2003
Income:
Dividend income	$	—		$	—		$	—		$	20		$	9		$	6		$	2		$	2		$	1
Expenses:
Mortality and expense risk charges		5			4			1			14			11			8			10			11			8
Net Investment Income (Loss)		(5	)		(4	)		(1	)		6			(2	)		(2	)		(8	)		(9	)		(7	)
Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		31			55			—			(42	)		19			(104	)		55			19			(18	)
Realized gain distributions		7			—			—			—			—			—			84			32			—
Realized gains (losses)		38			55			—			(42	)		19			(104	)		139			51			(18	)
Change in unrealized appreciation (depreciation) of investments during the period		57			22			49			130			130			321			(80	)		72			290
Net increase (decrease) in net assets resulting from operations	$	90		$	73		$	48		$	94		$	147		$	215		$	51		$	114		$	265
	Russell Non-U.S. Division									Russell Core Bond Division									Russell Real Estate Securities Division
	2005			2004			2003			2005			2004			2003			2005			2004			2003
Income:
Dividend income	$	23		$	25		$	25		$	53		$	25		$	29		$	703		$	497		$	604
Expenses:
Mortality and expense risk charges		13			11			7			13			9			7			24			20			13
Net Investment Income (Loss)		10			14			18			40			16			22			679			477			591
Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		78			(71	)		(35	)		(2	)		2			4			3,097			1,241			188
Realized gain distributions		—			—			—			14			23			15			2,993			1,490			—
Realized gains (losses)		78			(71	)		(35	)		12			25			19			6,090			2,731			188
Change in unrealized appreciation (depreciation) of investments during the period		92			259			273			(37	)		(4	)		(4	)		(2,548	)		3,380			2,753
Net increase (decrease) in net assets resulting from operations	$	180		$	202		$	256		$	15		$	37		$	37		$	4,221		$	6,588		$	3,532

## The initial investment in this Division was made on May 1, 2003.

The Accompanying Notes are an Integral Part of the Financial Statements.

67

NML Variable Annuity Account C

Statements of Changes in Net Assets

For the Years Ended December 31

(in thousands)

	Small Cap Growth Stock Division									T. Rowe Price Small Cap Value Division
	2005			2004 *			2003			2005			2004 *			2003
Operations:
Net investment income (loss)	$	(17	)	$	(20	)	$	(19	)	$	(7	)	$	(6	)	$	(6	)
Net realized gains (losses)		1,245			191			(1,212	)		191			58			1
Net change in unrealized appreciation (depreciation)		2,096			4,540			6,622			(100	)		147			183
Net increase (decrease) in net assets resulting from operations		3,324			4,711			5,391			84			199			178
Contract Transactions:
Contract owners’ net payments		4,047			4,896			4,693			169			150			71
Annuity payments		—			—			—			—			—			—
Surrenders and other (net)		(2,782	)		(3,972	)		(3,732	)		(191	)		(205	)		(61	)
Transfers from other divisions or sponsor		3,586			2,644			2,378			195			473			216
Transfers to other divisions or sponsor		(2,990	)		(2,161	)		(1,197	)		(249	)		(176	)		(32	)
Net increase (decrease) in net assets resulting from contract transactions		1,861			1,407			2,142			(76	)		242			194
Net increase (decrease) in net assets		5,185			6,118			7,533			8			441			372
Net Assets:
Beginning of Period		30,537			24,419			16,886			1,267			826			454
End of Period	$	35,722		$	30,537		$	24,419		$	1,275		$	1,267		$	826
Units issued during the period		537			606			572			238			337			216
Units redeemed during the period		(636	)		(861	)		(406	)		(323	)		(245	)		(58	)
Net units issued (redeemed) during period		(99	)		(255	)		166			(85	)		92			158
	Aggressive Growth Stock Division									International Growth Division
	2005			2004			2003			2005			2004 *			2003
Operations:
Net investment income (loss)	$	(35	)	$	(96	)	$	(137	)	$	2		$	1		$	1
Net realized gains (losses)		(1,702	)		(3,382	)		(8,800	)		57			11			(5	)
Net change in unrealized appreciation (depreciation)		6,225			14,017			24,998			39			38			23
Net increase (decrease) in net assets resulting from operations		4,488			10,539			16,061			98			50			19
Contract Transactions:
Contract owners’ net payments		6,055			7,345			7,787			53			52			59
Annuity payments		(2	)		(1	)		—			—			—			—
Surrenders and other (net)		(7,368	)		(10,090	)		(13,766	)		(57	)		(48	)		(8	)
Transfers from other divisions or sponsor		1,121			1,534			1,935			338			327			52
Transfers to other divisions or sponsor		(7,096	)		(4,790	)		(4,649	)		(121	)		(72	)		(35	)
Net increase (decrease) in net assets resulting from contract transactions		(7,290	)		(6,002	)		(8,693	)		213			259			68
Net increase (decrease) in net assets		(2,802	)		4,537			7,368			311			309			87
Net Assets:
Beginning of Period		83,559			79,022			71,654			455			146			59
End of Period	$	80,757		$	83,559		$	79,022		$	766		$	455		$	146
Units issued during the period		488			504			699			239			243			74
Units redeemed during the period		(934	)		(1,222	)		(2,136	)		(63	)		(92	)		(13	)
Net units issued (redeemed) during period		(446	)		(718	)		(1,437	)		176			151			61

* Due to rounding, certain amounts have been restated.

The Accompanying Notes are an Integral Part of the Financial Statements.

68

NML Variable Annuity Account C

Statements of Changes in Net Assets (continued)

For the Years Ended December 31

(in thousands)

	Franklin Templeton International Equity Division									Alliance Bernstein Mid Cap Value Division ##
	2005			2004 *			2003			2005			2004			2003
Operations:
Net investment income (loss)	$	1,073		$	844		$	570		$	(1	)	$	1		$	1
Net realized gains (losses)		1,490			190			(2,243	)		31			24			2
Net change in unrealized appreciation (depreciation)		4,488			8,456			14,872			(4	)		25			22
Net increase (decrease) in net assets resulting from operations		7,051			9,490			13,199			26			50			25
Contract Transactions:
Contract owners’ net payments		6,080			5,908			4,343			62			47			13
Annuity payments		(2	)		(2	)		(1	)		—			—			—
Surrenders and other (net)		(4,853	)		(4,988	)		(5,044	)		(26	)		(3	)		(1	)
Transfers from other divisions or sponsor		4,488			4,012			2,551			166			93			194
Transfers to other divisions or sponsor		(3,956	)		(2,461	)		(2,174	)		(63	)		(30	)		(2	)
Net increase (decrease) in net assets resulting from contract transactions		1,757			2,469			(325	)		139			107			204
Net increase (decrease) in net assets		8,808			11,959			12,874			165			157			229
Net Assets:
Beginning of Period		59,841			47,882			35,008			386			229			—
End of Period	$	68,649		$	59,841		$	47,882		$	551		$	386		$	229
Units issued during the period		4,319			4,380			2,522			144			99			172
Units redeemed during the period		(3,761	)		(3,498	)		(3,078	)		(56	)		(26	)		—
Net units issued (redeemed) during period		558			882			(556	)		88			73			172
	Index 400 Stock Division									Janus Capital Appreciation Division ##
	2005			2004			2003			2005			2004 *			2003
Operations:
Net investment income (loss)	$	210		$	144		$	98		$	(4	)	$	(2	)	$	—
Net realized gains (losses)		2,465			613			(593	)		37			2			1
Net change in unrealized appreciation (depreciation)		812			2,971			5,365			57			55			15
Net increase (decrease) in net assets resulting from operations		3,487			3,728			4,870			90			55			16
Contract Transactions:
Contract owners’ net payments		4,374			5,852			3,862			107			31			32
Annuity payments		(3	)		(2	)		(1	)		—			—			—
Surrenders and other (net)		(3,252	)		(3,386	)		(3,229	)		(13	)		(3	)		—
Transfers from other divisions or sponsor		2,821			2,487			1,896			333			131			186
Transfers to other divisions or sponsor		(2,192	)		(1,360	)		(1,521	)		(33	)		(26	)		—
Net increase (decrease) in net assets resulting from contract transactions		1,748			3,591			1,007			394			133			218
Net increase (decrease) in net assets		5,235			7,319			5,877			484			188			234
Net Assets:
Beginning of Period		27,717			20,398			14,521			422			234			—
End of Period	$	32,952		$	27,717		$	20,398		$	906		$	422		$	234
Units issued during the period		674			1,004			552			288			125			196
Units redeemed during the period		(827	)		(863	)		(603	)		(31	)		(24	)		—
Net units issued (redeemed) during period		(153	)		141			(51	)		257			101			196

## The initial investment in this Division was made on May 1, 2003.

* Due to rounding, certain amounts have been restated.

The Accompanying Notes are an Integral Part of the Financial Statements.

69

NML Variable Annuity Account C

Statements of Changes in Net Assets (continued)

For the Years Ended December 31

(in thousands)

	Growth Stock Division									Large Cap Core Stock Division ^
	2005			2004			2003			2005			2004 *			2003
Operations:
Net investment income (loss)	$	233		$	130		$	127		$	218		$	130		$	86
Net realized gains (losses)		(617	)		(1,352	)		(2,089	)		(639	)		(1,201	)		(2,362	)
Net change in unrealized appreciation (depreciation)		2,295			2,737			5,845			2,013			2,370			5,487
Net increase (decrease) in net assets resulting from operations		1,911			1,515			3,883			1,592			1,299			3,211
Contract Transactions:
Contract owners’ net payments		2,838			3,196			3,259			2,657			2,458			2,454
Annuity payments		(3	)		(3	)		(3	)		—			—			—
Surrenders and other (net)		(2,959	)		(4,333	)		(3,681	)		(2,325	)		(2,643	)		(3,531	)
Transfers from other divisions or sponsor		1,944			1,546			1,689			3,025			1,853			1,858
Transfers to other divisions or sponsor		(2,535	)		(1,745	)		(2,026	)		(2,121	)		(1,766	)		(1,104	)
Net increase (decrease) in net assets resulting from contract transactions		(715	)		(1,339	)		(762	)		1,236			(98	)		(323	)
Net increase (decrease) in net assets		1,196			176			3,121			2,828			1,204			2,888
Net Assets:
Beginning of Period		25,558			25,382			22,261			17,960			16,759			13,871
End of Period	$	26,754		$	25,558		$	25,382		$	20,788		$	17,960		$	16,759
Units issued during the period		484			623			500			827			656			607
Units redeemed during the period		(662	)		(1,203	)		(816	)		(821	)		(1,264	)		(1,657	)
Net units issued (redeemed) during period		(178	)		(580	)		(316	)		6			(608	)		(1,050	)
	Capital Guardian Domestic Equity Division									T. Rowe Price Equity Income Division ##
	2005			2004			2003			2005			2004 *			2003
Operations:
Net investment income (loss)	$	5		$	7		$	9		$	1		$	1		$	1
Net realized gains (losses)		315			39			(10	)		21			27			1
Net change in unrealized appreciation (depreciation)		(222	)		174			251			(19	)		6			11
Net increase (decrease) in net assets resulting from operations		98			220			250			3			34			13
Contract Transactions:
Contract owners’ net payments		119			169			95			37			45			1
Annuity payments		—			—			—			—			—			—
Surrenders and other (net)		(158	)		(190	)		(51	)		(123	)		(52	)		—
Transfers from other divisions or sponsor		275			551			414			44			241			130
Transfers to other divisions or sponsor		(647	)		(309	)		(57	)		(65	)		(121	)		—
Net increase (decrease) in net assets resulting from contract transactions		(411	)		221			401			(108	)		113			131
Net increase (decrease) in net assets		(313	)		441			651			(105	)		147			144
Net Assets:
Beginning of Period		1,676			1,235			584			291			144			—
End of Period	$	1,363		$	1,676		$	1,235		$	186		$	291		$	144
Units issued during the period		394			609			466			80			215			117
Units redeemed during the period		(739	)		(363	)		(48	)		(161	)		(145	)		—
Net units issued (redeemed) during period		(345	)		246			418			(81	)		70			117

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

* Due to rounding, certain amounts have been restated.

## The initial investment in this Division was made on May 1, 2003.

The Accompanying Notes are an Integral Part of the Financial Statements.

70

NML Variable Annuity Account C

Statements of Changes in Net Assets (continued)

For the Years Ended December 31

(in thousands)

	Index 500 Stock Division									Asset Allocation Division
	2005			2004 *			2003			2005			2004			2003
Operations:
Net investment income (loss)	$	1,488		$	1,066		$	1,005		$	12		$	(11	)	$	11
Net realized gains (losses)		2,261			1,102			(2,525	)		82			22			(63	)
Net change in unrealized appreciation (depreciation)		321			6,996			21,648			12			124			269
Net increase (decrease) in net assets resulting from operations		4,070			9,164			20,128			106			135			217
Contract Transactions:
Contract owners’ net payments		6,533			8,443			8,607			185			289			74
Annuity payments		(5	)		(4	)		(3	)		(14	)		(14	)		(13	)
Surrenders and other (net)		(9,239	)		(10,309	)		(15,633	)		(146	)		(66	)		(23	)
Transfers from other divisions or sponsor		2,383			2,757			2,343			194			283			177
Transfers to other divisions or sponsor		(6,374	)		(4,669	)		(3,957	)		(158	)		(182	)		(663	)
Net increase (decrease) in net assets resulting from contract transactions		(6,702	)		(3,782	)		(8,643	)		61			310			(448	)
Net increase (decrease) in net assets		(2,632	)		5,382			11,485			167			445			(231	)
Net Assets:
Beginning of Period		94,705			89,323			77,838			1,704			1,259			1,490
End of Period	$	92,073		$	94,705		$	89,323		$	1,871		$	1,704		$	1,259
Units issued during the period		877			931			958			343			361			38
Units redeemed during the period		(1,636	)		(1,534	)		(2,729	)		(278	)		(180	)		(624	)
Net units issued (redeemed) during period		(759	)		(603	)		(1,771	)		65			181			(586	)
	Balanced Division									High Yield Bond Division
	2005			2004 *			2003			2005			2004			2003
Operations:
Net investment income (loss)	$	1,752		$	1,736		$	2,236		$	442		$	416		$	(3	)
Net realized gains (losses)		616			2,123			(3,454	)		157			218			(145	)
Net change in unrealized appreciation (depreciation)		(49	)		1,742			13,665			(521	)		96			1,433
Net increase (decrease) in net assets resulting from operations		2,319			5,601			12,447			78			730			1,285
Contract Transactions:
Contract owners’ net payments		5,198			5,323			6,524			802			976			1,706
Annuity payments		(32	)		(27	)		(26	)		(2	)		(1	)		(1	)
Surrenders and other (net)		(10,628	)		(11,021	)		(19,636	)		(608	)		(971	)		(842	)
Transfers from other divisions or sponsor		2,234			4,413			4,412			817			1,109			2,347
Transfers to other divisions or sponsor		(4,423	)		(5,275	)		(7,918	)		(1,045	)		(1,366	)		(2,183	)
Net increase (decrease) in net assets resulting from contract transactions		(7,651	)		(6,587	)		(16,644	)		(36	)		(253	)		1,027
Net increase (decrease) in net assets		(5,332	)		(986	)		(4,197	)		42			477			2,312
Net Assets:
Beginning of Period		77,041			78,027			82,224			6,683			6,206			3,894
End of Period	$	71,709		$	77,041		$	78,027		$	6,725		$	6,683		$	6,206
Units issued during the period		1,163			891			738			248			282			273
Units redeemed during the period		(1,217	)		(1,484	)		(2,311	)		(371	)		(375	)		(168	)
Net units issued (redeemed) during period		(54	)		(593	)		(1,573	)		(123	)		(93	)		105

* Due to rounding, certain amounts have been restated.

The Accompanying Notes are an Integral Part of the Financial Statements.

71

NML Variable Annuity Account C

Statements of Changes in Net Assets (continued)

For the Years Ended December 31

(in thousands)

	Select Bond Division									Money Market Division
	2005			2004			2003			2005			2004 *			2003
Operations:
Net investment income (loss)	$	542		$	654		$	673		$	67		$	16		$	23
Net realized gains (losses)		20			687			1,033			—			—			—
Net change in unrealized appreciation (depreciation)		(260	)		(624	)		(745	)		—			—			—
Net increase (decrease) in net assets resulting from operations		302			717			961			67			16			23
Contract Transactions:
Contract owners’ net payments		1,932			1,751			2,727			1,217			2,030			3,819
Annuity payments		(7	)		(6	)		(7	)		(1	)		(1	)		(1	)
Surrenders and other (net)		(1,931	)		(2,819	)		(4,255	)		(3,300	)		(2,949	)		(11,210	)
Transfers from other divisions or sponsor		1,269			1,789			3,183			2,671			1,876			5,882
Transfers to other divisions or sponsor		(1,907	)		(3,307	)		(3,722	)		(1,703	)		(3,047	)		(3,315	)
Net increase (decrease) in net assets resulting from contract transactions		(644	)		(2,592	)		(2,074	)		(1,116	)		(2,091	)		(4,825	)
Net increase (decrease) in net assets		(342	)		(1,875	)		(1,113	)		(1,049	)		(2,075	)		(4,802	)
Net Assets:
Beginning of Period		16,573			18,448			19,561			4,096			6,171			10,973
End of Period	$	16,231		$	16,573		$	18,448		$	3,047		$	4,096		$	6,171
Units issued during the period		428			307			217			2,113			1,583			1,869
Units redeemed during the period		(572	)		(476	)		(389	)		(2,598	)		(2,427	)		(4,171	)
Net units issued (redeemed) during period		(144	)		(169	)		(172	)		(485	)		(844	)		(2,302	)
	Fidelity VIP Mid Cap Division ##									Russell Multi-Style Equity Division
	2005			2004 *			2003			2005			2004			2003
Operations:
Net investment income (loss)	$	(5	)	$	(4	)	$	(1	)	$	6		$	(2	)	$	(2	)
Net realized gains (losses)		38			55			—			(42	)		19			(104	)
Net change in unrealized appreciation (depreciation)		57			22			49			130			130			321
Net increase (decrease) in net assets resulting from operations		90			73			48			94			147			215
Contract Transactions:
Contract owners’ net payments		120			72			9			182			242			194
Annuity payments		—			—			—			—			—			—
Surrenders and other (net)		(35	)		(7	)		(1	)		(141	)		(36	)		(128	)
Transfers from other divisions or sponsor		335			165			324			327			618			183
Transfers to other divisions or sponsor		(122	)		(272	)		(3	)		(236	)		(247	)		(128	)
Net increase (decrease) in net assets resulting from contract transactions		298			(42	)		329			132			577			121
Net increase (decrease) in net assets		388			31			377			226			724			336
Net Assets:
Beginning of Period		408			377			—			1,811			1,087			751
End of Period	$	796		$	408		$	377		$	2,037		$	1,811		$	1,087
Units issued during the period		201			116			269			524			923			248
Units redeemed during the period		(62	)		(187	)		—			(384	)		(172	)		(240	)
Net units issued (redeemed) during period		139			(71	)		269			140			751			8

## The initial investment in this Division was made on May 1, 2003.

* Due to rounding, certain amounts have been restated.

The Accompanying Notes are an Integral Part of the Financial Statements.

72

NML Variable Annuity Account C

Statements of Changes in Net Assets (continued)

For the Years Ended December 31

(in thousands)

	Russell Aggressive Equity Division									Russell Non-U.S. Division
	2005			2004 *			2003			2005			2004 *			2003
Operations:
Net investment income (loss)	$	(8	)	$	(9	)	$	(7	)	$	10		$	14		$	18
Net realized gains (losses)		139			51			(18	)		78			(71	)		(35	)
Net change in unrealized appreciation (depreciation)		(80	)		72			290			92			259			273
Net increase (decrease) in net assets resulting from operations		51			114			265			180			202			256
Contract Transactions:
Contract owners’ net payments		74			142			132			116			169			95
Annuity payments		—			—			—			—			—			—
Surrenders and other (net)		(105	)		(217	)		(52	)		(68	)		(304	)		(34	)
Transfers from other divisions or sponsor		44			200			111			263			254			329
Transfers to other divisions or sponsor		(197	)		(169	)		(72	)		(381	)		(42	)		(24	)
Net increase (decrease) in net assets resulting from contract transactions		(184	)		(44	)		119			(70	)		77			366
Net increase (decrease) in net assets		(133	)		70			384			110			279			622
Net Assets:
Beginning of Period		981			911			527			1,428			1,149			527
End of Period	$	848		$	981		$	911		$	1,538		$	1,428		$	1,149
Units issued during the period		97			265			179			330			426			498
Units redeemed during the period		(221	)		(301	)		(52	)		(391	)		(346	)		(49	)
Net units issued (redeemed) during period		(124	)		(36	)		127			(61	)		80			449
	Russell Core Bond Division									Russell Real Estate Securities Division
	2005			2004			2003			2005			2004 *			2003
Operations:
Net investment income (loss)	$	40		$	16		$	22		$	679		$	477		$	591
Net realized gains (losses)		12			25			19			6,090			2,731			188
Net change in unrealized appreciation (depreciation)		(37	)		(4	)		(4	)		(2,548	)		3,380			2,753
Net increase (decrease) in net assets resulting from operations		15			37			37			4,221			6,588			3,532
Contract Transactions:
Contract owners’ net payments		136			223			163			7,014			5,715			2,570
Annuity payments		—			—			—			(3	)		(2	)		(2	)
Surrenders and other (net)		(69	)		(46	)		(126	)		(13,987	)		(2,941	)		(2,220	)
Transfers from other divisions or sponsor		377			561			271			11,960			6,627			2,905
Transfers to other divisions or sponsor		(262	)		(275	)		(253	)		(2,214	)		(2,353	)		(1,318	)
Net increase (decrease) in net assets resulting from contract transactions		182			463			55			2,770			7,046			1,935
Net increase (decrease) in net assets		197			500			92			6,991			13,634			5,467
Net Assets:
Beginning of Period		1,395			895			803			28,667			15,033			9,566
End of Period	$	1,592		$	1,395		$	895		$	35,658		$	28,667		$	15,033
Units issued during the period		377			590			130			1,403			1,069			535
Units redeemed during the period		(242	)		(235	)		(103	)		(1,362	)		(654	)		(399	)
Net units issued (redeemed) during period		135			355			27			41			415			136

* Due to rounding, certain amounts have been restated.

The Accompanying Notes are an Integral Part of the Financial Statements.

73

NML Variable Annuity Account C

Notes to Financial Statements

1. Organization

NML Variable Annuity Account C (the “Account”) is a segregated asset account of The Northwestern Mutual Life Insurance Company (“Northwestern Mutual”) 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. Currently, two versions of the contract are offered: Front Load contracts with a sales charge up to 4.5% of purchase payments and Simplified Load contracts with an installment fee of $750.

All assets of each Division of the Account are invested in shares of the corresponding Portfolio of Northwestern Mutual Series Fund, Inc., Fidelity Variable Insurance Products Fund III and the Russell Investment Funds (collectively known as “the Funds”). The Funds are open-end investment companies registered under the Investment Company Act of 1940.

2. Significant Accounting Policies

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America 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.

The shares are valued at the Funds’ offering and redemption prices per share. Transactions in Funds’ shares are accounted for on the trade date. The basis for determining cost on sale of the Funds’ shares is identified cost. Dividend income and distributions of net realized gains from the Funds are recorded on the ex-date of the dividends. 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 Payment in the accompanying financial statements.

Annuity reserves are based on published annuity tables with age adjustment and benefit payments which reflect actual investment experience. Annuity reserves are based on the 1983 Annuity Table a, adjusted with assumed interest rates of 3.5% or 5%.

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.

3. Purchases and Sales of Investments

Purchases and sales of the Funds’ shares for the years ended December 31, 2005, 2004 and 2003 by each Division are shown as follows: (in thousands)

PURCHASES	2005		2004		2003
Small Cap Growth Stock	$	6,040	$	5,795	$	6,284
T. Rowe Price Small Cap Value		342		457		252
Aggressive Growth Stock		7,813		8,317		9,252
International Growth		322		309		80
Franklin Templeton International Equity		9,055		9,122		5,760
AllianceBernstein Mid Cap Value ##		192		137		207
Index 400 Stock		7,536		7,872		4,532
Janus Capital Appreciation ##		428		134		219
Growth Stock		4,029		3,954		3,816
Large Cap Core Stock		4,706		2,904		3,455
Capital Guardian Domestic Equity		319		441		466
T. Rowe Price Equity Income ##		78		175		133
Index 500 Stock		11,818		11,524		11,518
Asset Allocation		271		381		94
Balanced		10,203		10,568		10,374
High Yield Bond		1,475		1,509		1,929

74

NML Variable Annuity Account C

Notes to Financial Statements (continued)

PURCHASES (CONTINUED)	2005		2004		2003
Select Bond		3,143		3,196		4,306
Money Market		3,004		2,453		6,895
Fidelity VIP Mid Cap ##		343		77		329
Russell Multi-Style Equity		319		612		247
Russell Aggressive Equity		170		197		163
Russell Non-U.S		146		394		419
Russell Core Bond		305		549		218
Russell Real Estate Securities		25,632		13,103		5,091
SALES
Small Cap Growth Stock	$	3,888	$	4,409	$	4,161
T. Rowe Price Small Cap Value		390		211		64
Aggressive Growth Stock		15,141		14,411		18,065
International Growth		73		50		10
Franklin Templeton International Equity		6,224		5,800		5,524
AllianceBernstein Mid Cap Value ##		26		7		1
Index 400 Stock		4,178		3,982		3,434
Janus Capital Appreciation ##		13		4		—
Growth Stock		4,509		5,164		4,450
Large Cap Core Stock		3,252		2,870		3,694
Capital Guardian Domestic Equity		626		190		51
T. Rowe Price Equity Income ##		178		53		—
Index 500 Stock		15,423		13,264		18,696
Asset Allocation		171		82		533
Balanced		15,031		12,636		24,771
High Yield Bond		1,071		1,345		905
Select Bond		3,143		4,631		5,266
Money Market		4,053		4,527		11,697
Fidelity VIP Mid Cap ##		43		123		1
Russell Multi-Style Equity		182		35		123
Russell Aggressive Equity		279		217		52
Russell Non-U.S		206		303		35
Russell Core Bond		70		47		127
Russell Real Estate Securities		19,172		4,108		2,570

^ Prior to January 31, 2003 this Division was named the J.P. Morgan Select Growth and Income Stock Division.

## Initial Investment in this Division was made on May 1, 2003.

4. Expenses and Related Party Transactions

A deduction for mortality and expense risks 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 annuitants 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.

For contracts issued prior to December 17, 1981 or between April 30, 1984 and December 31, 1991, there is no deduction for mortality and expense risks.

For contracts issued after December 16, 1981, and prior to May 1, 1984, the deduction is determined daily at an annual rate of 0.5% 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 0.75% annual rate.

75

NML Variable Annuity Account C

Notes to Financial Statements (continued)

Generally, for contracts issued after December 31, 1991, for the Front Load version and the Simplified Load version, the deduction for mortality and expense risks is determined daily at annual rates of 0.65% and 1.25%, 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 1.5% annual rates, respectively.

5. Financial Highlights

(For a unit outstanding during the period)

Division	As of the respective period end date:								For the respective period ended:
	Units Outstanding (000’s)	Unit Value, Lowest to Highest					Net Assets (000’s)		Dividend Income as a % of Average Net Assets		Expense Ratio, Lowest to Highest					Total Return Lowest to Highest (3)
Small Cap Growth Stock
Year Ended 12/31/05	1,753	$	2.521099	to	$	27.401692	$	35,722	0.00	%	0.00	%	to	1.25	%	9.81	%	to	11.18	%
Year Ended 12/31/04	1,852	$	2.295965	to	$	24.646196	$	30,537	0.00	%	0.00	%	to	1.25	%	17.32	%	to	18.80	%
Year Ended 12/31/03	2,107	$	1.956937	to	$	20.745671	$	24,419	0.00	%	0.00	%	to	1.25	%	31.41	%	to	33.06	%
Year Ended 12/31/02	1,942	$	1.489185	to	$	15.591407	$	16,886	0.16	%	0.00	%	to	1.25	%	(19.44	)%	to	(18.42	)%
Year Ended 12/31/01	2,309	$	1.848493	to	$	19.112629	$	21,098	0.01	%	0.00	%	to	1.25	%	(4.97	)%	to	(3.76	)%
T. Rowe Price Small Cap Value (1)
Year Ended 12/31/05	596	$	1.641244	to	$	17.342719	$	1,275	0.33	%	0.00	%	to	1.25	%	5.89	%	to	7.21	%
Year Ended 12/31/04	681	$	1.549988	to	$	16.175980	$	1,267	0.21	%	0.00	%	to	1.25	%	23.02	%	to	24.57	%
Year Ended 12/31/03	589	$	1.259912	to	$	12.985287	$	826	0.00	%	0.00	%	to	1.25	%	33.48	%	to	35.15	%
Year Ended 12/31/02	432	$	0.943905	to	$	9.607906	$	454	0.49	%	0.00	%	to	1.25	%	(6.75	)%	to	(5.58	)%
Year Ended 12/31/01	149	$	1.012260	to	$	10.175772	$	165	0.38	%	0.00	%	to	1.25	%	1.23	%	to	1.76	%
Aggressive Growth Stock
Year Ended 12/31/05	2,807	$	3.499067	to	$	58.106257	$	80,757	0.05	%	0.00	%	to	1.25	%	4.82	%	to	6.14	%
Year Ended 12/31/04	3,253	$	3.318231	to	$	54.747494	$	83,559	0.00	%	0.00	%	to	1.25	%	12.80	%	to	14.22	%
Year Ended 12/31/03	3,970	$	2.924175	to	$	47.932675	$	79,022	0.00	%	0.00	%	to	1.25	%	23.15	%	to	24.69	%
Year Ended 12/31/02	5,407	$	2.360410	to	$	38.441232	$	71,654	0.10	%	0.00	%	to	1.25	%	(22.13	)%	to	(21.15	)%
Year Ended 12/31/01	8,261	$	3.013165	to	$	48.753408	$	112,232	0.11	%	0.00	%	to	1.25	%	(20.88	)%	to	(19.87	)%
International Growth Stock (1)
Year Ended 12/31/05	447	$	1.498861	to	$	15.838526	$	766	1.19	%	0.00	%	to	1.25	%	16.54	%	to	18.00	%
Year Ended 12/31/04	271	$	1.286123	to	$	13.422496	$	455	1.15	%	0.00	%	to	1.25	%	20.08	%	to	21.59	%
Year Ended 12/31/03	120	$	1.071062	to	$	11.039080	$	146	1.79	%	0.00	%	to	1.25	%	37.27	%	to	38.99	%
Year Ended 12/31/02	59	$	0.780276	to	$	7.942434	$	59	0.27	%	0.00	%	to	1.25	%	(13.42	)%	to	(12.34	)%
Year Ended 12/31/01	26	$	0.901258	to	$	9.060000	$	38	0.00	%	0.00	%	to	1.25	%	(9.87	)%	to	(9.40	)%
Franklin Templeton International Equity
Year Ended 12/31/05	21,051	$	2.808145	to	$	3.289423	$	68,649	1.76	%	0.00	%	to	1.25	%	10.14	%	to	11.52	%
Year Ended 12/31/04	20,493	$	2.549602	to	$	2.949634	$	59,841	1.70	%	0.00	%	to	1.25	%	17.85	%	to	19.33	%
Year Ended 12/31/03	19,611	$	2.163493	to	$	2.471833	$	47,882	1.64	%	0.00	%	to	1.25	%	38.72	%	to	40.46	%
Year Ended 12/31/02	20,167	$	1.559571	to	$	1.759773	$	35,008	2.11	%	0.00	%	to	1.25	%	(18.43	)%	to	(17.40	)%
Year Ended 12/31/01	23,382	$	1.911919	to	$	2.130553	$	48,902	1.81	%	0.00	%	to	1.25	%	(15.07	)%	to	(14.00	)%
AllianceBernstein Mid Cap Value (2)
Year Ended 12/31/05	332	$	1.611849	to	$	16.663892	$	551	0.60	%	0.00	%	to	1.25	%	4.15	%	to	5.46	%
Year Ended 12/31/04	244	$	1.547558	to	$	15.801473	$	386	1.03	%	0.00	%	to	1.25	%	17.19	%	to	18.67	%
Year Ended 12/31/03	172	$	1.320512	to	$	13.315544	$	229	1.22	%	0.00	%	to	1.25	%	32.05	%	to	33.16	%
Year Ended 12/31/02	n/a		n/a					n/a	n/a		n/a					n/a
Year Ended 12/31/01	n/a		n/a					n/a	n/a		n/a					n/a
Index 400 Stock
Year Ended 12/31/05	2,432	$	1.822214	to	$	19.805364	$	32,952	0.77	%	0.00	%	to	1.25	%	10.98	%	to	12.37	%
Year Ended 12/31/04	2,585	$	1.641894	to	$	17.624859	$	27,717	0.66	%	0.00	%	to	1.25	%	14.82	%	to	16.26	%
Year Ended 12/31/03	2,444	$	1.429987	to	$	15.159273	$	20,398	0.71	%	0.00	%	to	1.25	%	33.34	%	to	35.01	%
Year Ended 12/31/02	2,495	$	1.072428	to	$	11.227976	$	14,521	0.84	%	0.00	%	to	1.25	%	(15.60	)%	to	(14.54	)%
Year Ended 12/31/01	2,621	$	1.270690	to	$	13.138452	$	16,849	0.01	%	0.00	%	to	1.25	%	(1.90	)%	to	(0.65	)%
Janus Capital Appreciation (2)
Year Ended 12/31/05	554	$	1.623859	to	$	16.788069	$	906	0.19	%	0.00	%	to	1.25	%	15.55	%	to	17.00	%
Year Ended 12/31/04	297	$	1.405312	to	$	14.349081	$	422	0.14	%	0.00	%	to	1.25	%	18.19	%	to	19.67	%
Year Ended 12/31/03	196	$	1.189063	to	$	11.990097	$	234	0.13	%	0.00	%	to	1.25	%	18.91	%	to	19.90	%
Year Ended 12/31/02	n/a		n/a					n/a	n/a		n/a					n/a
Year Ended 12/31/01	n/a		n/a					n/a	n/a		n/a					n/a

(1) Division commenced operations on July 31, 2001.

(2) Division commenced operations on May 1, 2003.

(3) Total Return includes deductions for management and other expenses; excludes deductions for sales loads and other charges. Returns are not annualized for periods less than one year.

76

NML Variable Annuity Account C

Notes to Financial Statements (continued)

	As of the respective period end date:								For the respective period ended:
Division	Units Outstanding (000’s)	Unit Value, Lowest to Highest					Net Assets (000’s)		Dividend Income as a % of Average Net Assets		Expense Ratio, Lowest to Highest					Total Return Lowest to Highest (3)
Growth Stock
Year Ended 12/31/05	2,143	$	2.529872	to	$	29.265983	$	26,754	1.04	%	0.00	%	to	1.25	%	6.38	%	to	7.71	%
Year Ended 12/31/04	2,321	$	2.378175	to	$	27.170823	$	25,558	0.70	%	0.00	%	to	1.25	%	5.34	%	to	6.67	%
Year Ended 12/31/03	2,901	$	2.257547	to	$	25.471804	$	25,382	0.80	%	0.00	%	to	1.25	%	17.47	%	to	18.94	%
Year Ended 12/31/02	3,217	$	1.921805	to	$	21.414901	$	22,261	1.20	%	0.00	%	to	1.25	%	(21.81	)%	to	(20.83	)%
Year Ended 12/31/01	4,357	$	2.458020	to	$	27.049526	$	33,016	0.79	%	0.00	%	to	1.25	%	(15.29	)%	to	(14.22	)%
Large Cap Core Stock
Year Ended 12/31/05	1,943	$	2.102957	to	$	24.327323	$	20,788	1.27	%	0.00	%	to	1.25	%	7.12	%	to	8.46	%
Year Ended 12/31/04	1,937	$	1.963264	to	$	22.430441	$	17,960	0.95	%	0.00	%	to	1.25	%	6.82	%	to	8.16	%
Year Ended 12/31/03	2,546	$	1.837972	to	$	20.737771	$	16,759	0.92	%	0.00	%	to	1.25	%	22.51	%	to	24.05	%
Year Ended 12/31/02	3,596	$	1.500218	to	$	16.717038	$	13,871	0.97	%	0.00	%	to	1.25	%	(29.09	)%	to	(28.20	)%
Year Ended 12/31/01	5,367	$	2.115675	to	$	23.281928	$	25,473	0.79	%	0.00	%	to	1.25	%	(8.92	)%	to	(7.77	)%
Capital Guardian Domestic Equity (1)
Year Ended 12/31/05	1,012	$	1.237056	to	$	13.072390	$	1,363	1.34	%	0.00	%	to	1.25	%	6.71	%	to	8.04	%
Year Ended 12/31/04	1,357	$	1.159280	to	$	12.099054	$	1,676	1.48	%	0.00	%	to	1.25	%	15.40	%	to	16.85	%
Year Ended 12/31/03	1,111	$	1.004585	to	$	10.354264	$	1,235	1.96	%	0.00	%	to	1.25	%	32.74	%	to	34.41	%
Year Ended 12/31/02	693	$	0.756787	to	$	7.703469	$	584	2.12	%	0.00	%	to	1.25	%	(22.22	)%	to	(21.24	)%
Year Ended 12/31/01	188	$	0.973004	to	$	9.781208	$	211	0.71	%	0.00	%	to	1.25	%	(2.70	)%	to	(2.19	)%
T. Rowe Price Equity Income (2)
Year Ended 12/31/05	106	$	1.434821	to	$	14.833915	$	186	1.44	%	0.00	%	to	1.25	%	2.90	%	to	4.19	%
Year Ended 12/31/04	187	$	1.394433	to	$	14.237970	$	291	1.39	%	0.00	%	to	1.25	%	13.73	%	to	15.16	%
Year Ended 12/31/03	117	$	1.226098	to	$	12.363579	$	144	3.03	%	0.00	%	to	1.25	%	22.61	%	to	23.64	%
Year Ended 12/31/02	n/a		n/a					n/a	n/a		n/a					n/a
Year Ended 12/31/01	n/a		n/a					n/a	n/a		n/a					n/a
Index 500 Stock
Year Ended 12/31/05	3,964	$	3.533871	to	$	52.479807	$	92,073	1.75	%	0.00	%	to	1.25	%	3.43	%	to	4.72	%
Year Ended 12/31/04	4,723	$	3.396371	to	$	50.112283	$	94,705	1.32	%	0.00	%	to	1.25	%	9.32	%	to	10.70	%
Year Ended 12/31/03	5,326	$	3.088134	to	$	45.268617	$	89,323	1.46	%	0.00	%	to	1.25	%	26.84	%	to	28.43	%
Year Ended 12/31/02	7,097	$	2.420098	to	$	35.246385	$	77,838	1.44	%	0.00	%	to	1.25	%	(23.04	)%	to	(22.07	)%
Year Ended 12/31/01	10,764	$	3.125796	to	$	45.228886	$	131,489	1.31	%	0.00	%	to	1.25	%	(12.98	)%	to	(11.88	)%
Asset Allocation (1)
Year Ended 12/31/05	1,025	$	1.180583	to	$	12.475450	$	1,871	1.41	%	0.00	%	to	1.25	%	5.67	%	to	6.99	%
Year Ended 12/31/04	960	$	1.117219	to	$	11.659896	$	1,704	0.00	%	0.00	%	to	1.25	%	8.65	%	to	10.02	%
Year Ended 12/31/03	779	$	1.028260	to	$	10.598020	$	1,259	1.72	%	0.00	%	to	1.25	%	19.13	%	to	20.63	%
Year Ended 12/31/02	1,364	$	0.863125	to	$	8.785751	$	1,490	2.61	%	0.00	%	to	1.25	%	(11.37	)%	to	(10.26	)%
Year Ended 12/31/01	19	$	0.973862	to	$	9.789803	$	46	0.72	%	0.00	%	to	1.25	%	(2.61	)%	to	(2.10	)%
Balanced
Year Ended 12/31/05	3,803	$	2.857685	to	$	111.421574	$	71,709	2.66	%	0.00	%	to	1.25	%	2.31	%	to	3.59	%
Year Ended 12/31/04	3,857	$	2.776467	to	$	107.555819	$	77,041	2.55	%	0.00	%	to	1.25	%	6.55	%	to	7.89	%
Year Ended 12/31/03	4,451	$	2.590151	to	$	99.686821	$	78,027	3.21	%	0.00	%	to	1.25	%	16.53	%	to	17.99	%
Year Ended 12/31/02	6,024	$	2.209502	to	$	84.486469	$	82,224	4.05	%	0.00	%	to	1.25	%	(8.68	)%	to	(7.54	)%
Year Ended 12/31/01	8,748	$	2.405185	to	$	91.372736	$	115,972	4.21	%	0.00	%	to	1.25	%	(4.36	)%	to	(3.15	)%
High Yield Bond
Year Ended 12/31/05	820	$	2.024344	to	$	23.417544	$	6,725	6.73	%	0.00	%	to	1.25	%	0.14	%	to	1.39	%
Year Ended 12/31/04	943	$	2.021608	to	$	23.096633	$	6,683	6.94	%	0.00	%	to	1.25	%	11.36	%	to	12.76	%
Year Ended 12/31/03	1,036	$	1.815388	to	$	20.482734	$	6,206	0.21	%	0.00	%	to	1.25	%	27.46	%	to	29.06	%
Year Ended 12/31/02	931	$	1.424293	to	$	15.870922	$	3,894	10.23	%	0.00	%	to	1.25	%	(4.10	)%	to	(2.89	)%
Year Ended 12/31/01	1,293	$	1.485164	to	$	16.343831	$	4,583	10.11	%	0.00	%	to	1.25	%	3.72	%	to	5.03	%
Select Bond
Year Ended 12/31/05	914	$	2.308631	to	$	136.984725	$	16,231	3.57	%	0.00	%	to	1.25	%	0.95	%	to	2.22	%
Year Ended 12/31/04	1,058	$	2.273220	to	$	134.012491	$	16,573	4.24	%	0.00	%	to	1.25	%	3.44	%	to	4.75	%
Year Ended 12/31/03	1,226	$	2.184385	to	$	127.939507	$	18,448	3.86	%	0.00	%	to	1.25	%	4.18	%	to	5.49	%
Year Ended 12/31/02	1,398	$	2.084184	to	$	121.279762	$	19,561	4.77	%	0.00	%	to	1.25	%	10.70	%	to	12.09	%
Year Ended 12/31/01	1,547	$	1.871532	to	$	108.200259	$	17,379	5.60	%	0.00	%	to	1.25	%	8.99	%	to	10.37	%

(1) Division commenced operations on July 31, 2001.

(2) Division commenced operations on May 1, 2003.

(3) Total Return includes deductions for management and other expenses; excludes deductions for sales loads and other charges. Returns are not annualized for periods less than one year.

77

NML Variable Annuity Account C

Notes to Financial Statements (continued)

	As of the respective period end date:								For the respective period ended:
Division	Units Outstanding (000’s)	Unit Value, Lowest to Highest					Net Assets (000’s)		Dividend Income as a % of Average Net Assets		Expense Ratio, Lowest to Highest					Total Return Lowest to Highest (3)
Money Market
Year Ended 12/31/05	1,210	$	1.560248	to	$	36.095241	$	3,047	2.96	%	0.00	%	to	1.25	%	1.71	%	to	2.98	%
Year Ended 12/31/04	1,695	$	1.524874	to	$	35.049174	$	4,096	1.42	%	0.00	%	to	1.25	%	0.17	%	to	1.43	%
Year Ended 12/31/03	2,539	$	1.513153	to	$	34.553668	$	6,171	1.29	%	0.00	%	to	1.25	%	(0.02	)%	to	1.23	%
Year Ended 12/31/02	4,840	$	1.504462	to	$	34.132616	$	10,973	1.66	%	0.00	%	to	1.25	%	0.39	%	to	1.65	%
Year Ended 12/31/01	5,757	$	1.489628	to	$	33.577318	$	15,185	7.64	%	0.00	%	to	1.25	%	2.62	%	to	3.92	%
Fidelity VIP Mid Cap (2)
Year Ended 12/31/05	337	$	2.001683	to	$	20.694231	$	796	0.00	%	0.00	%	to	1.25	%	16.56	%	to	18.02	%
Year Ended 12/31/04	198	$	1.717354	to	$	17.535222	$	408	0.00	%	0.00	%	to	1.25	%	23.11	%	to	24.66	%
Year Ended 12/31/03	269	$	1.395022	to	$	14.066904	$	377	0.00	%	0.00	%	to	1.25	%	39.50	%	to	40.67	%
Year Ended 12/31/02	n/a		n/a					n/a	n/a		n/a					n/a
Year Ended 12/31/01	n/a		n/a					n/a	n/a		n/a					n/a
Russell Multi-Style Equity
Year Ended 12/31/05	2,076	$	0.868789	to	$	9.442962	$	2,037	1.07	%	0.00	%	to	1.25	%	5.94	%	to	7.27	%
Year Ended 12/31/04	1,936	$	0.820050	to	$	8.802993	$	1,811	0.67	%	0.00	%	to	1.25	%	8.44	%	to	9.81	%
Year Ended 12/31/03	1,185	$	0.756197	to	$	8.016570	$	1,087	0.70	%	0.00	%	to	1.25	%	27.26	%	to	28.86	%
Year Ended 12/31/02	1,177	$	0.594202	to	$	6.221208	$	751	0.62	%	0.00	%	to	1.25	%	(24.14	)%	to	(23.19	)%
Year Ended 12/31/01	1,556	$	0.783335	to	$	8.099453	$	1,403	0.46	%	0.00	%	to	1.25	%	(15.28	)%	to	(14.21	)%
Russell Aggressive Equity
Year Ended 12/31/05	590	$	1.423377	to	$	15.470599	$	848	0.18	%	0.00	%	to	1.25	%	5.04	%	to	6.36	%
Year Ended 12/31/04	714	$	1.355022	to	$	14.545498	$	981	0.17	%	0.00	%	to	1.25	%	13.30	%	to	14.73	%
Year Ended 12/31/03	749	$	1.195908	to	$	12.677885	$	911	0.11	%	0.00	%	to	1.25	%	43.79	%	to	45.60	%
Year Ended 12/31/02	622	$	0.831686	to	$	8.707578	$	527	0.00	%	0.00	%	to	1.25	%	(20.06	)%	to	(19.06	)%
Year Ended 12/31/01	671	$	1.040412	to	$	10.757522	$	710	0.11	%	0.00	%	to	1.25	%	(3.58	)%	to	(2.36	)%
Russell Non-U.S.
Year Ended 12/31/05	1,216	$	1.218592	to	$	13.244730	$	1,538	1.58	%	0.00	%	to	1.25	%	12.28	%	to	13.69	%
Year Ended 12/31/04	1,277	$	1.085315	to	$	11.650240	$	1,428	2.09	%	0.00	%	to	1.25	%	16.83	%	to	18.30	%
Year Ended 12/31/03	1,196	$	0.928976	to	$	9.848016	$	1,149	3.46	%	0.00	%	to	1.25	%	37.07	%	to	38.79	%
Year Ended 12/31/02	747	$	0.677755	to	$	7.095865	$	527	1.62	%	0.00	%	to	1.25	%	(16.20	)%	to	(15.15	)%
Year Ended 12/31/01	800	$	0.808779	to	$	8.362558	$	672	0.59	%	0.00	%	to	1.25	%	(23.00	)%	to	(22.03	)%
Russell Core Bond
Year Ended 12/31/05	1,169	$	1.329349	to	$	14.448349	$	1,592	3.61	%	0.00	%	to	1.25	%	0.75	%	to	2.01	%
Year Ended 12/31/04	1,034	$	1.319453	to	$	14.163304	$	1,395	2.45	%	0.00	%	to	1.25	%	3.36	%	to	4.66	%
Year Ended 12/31/03	680	$	1.276523	to	$	13.532112	$	895	3.52	%	0.00	%	to	1.25	%	4.83	%	to	6.15	%
Year Ended 12/31/02	653	$	1.217720	to	$	12.748590	$	803	2.91	%	0.00	%	to	1.25	%	7.49	%	to	8.84	%
Year Ended 12/31/01	695	$	1.132872	to	$	11.713217	$	793	6.24	%	0.00	%	to	1.25	%	6.07	%	to	7.41	%
Russell Real Estate Securities
Year Ended 12/31/05	2,089	$	2.540501	to	$	27.611672	$	35,658	2.13	%	0.00	%	to	1.25	%	11.56	%	to	12.96	%
Year Ended 12/31/04	2,048	$	2.277262	to	$	24.444468	$	28,667	2.32	%	0.00	%	to	1.25	%	33.20	%	to	34.87	%
Year Ended 12/31/03	1,633	$	1.709672	to	$	18.123797	$	15,033	5.38	%	0.00	%	to	1.25	%	35.51	%	to	37.21	%
Year Ended 12/31/02	1,498	$	1.261665	to	$	13.208871	$	9,566	5.22	%	0.00	%	to	1.25	%	2.51	%	to	3.80	%
Year Ended 12/31/01	1,064	$	1.230726	to	$	12.725061	$	6,600	5.28	%	0.00	%	to	1.25	%	6.49	%	to	7.84	%

(1) Division commenced operations on July 31, 2001.

(2) Division commenced operations on May 1, 2003.

(3) Total Return includes deductions for management and other expenses; excludes deductions for sales loads and other charges. Returns are not annualized for periods less than one year.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Northwestern Mutual Life Insurance Company and

Contract Owners of NML Variable Annuity Account C

In our opinion, the accompanying statements of assets and liabilities, the related statements of operations, and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the NML Variable Annuity Account C and its Small Cap Growth Stock Division, T. Rowe Price Small Cap Value Division, Aggressive Growth Stock Division, International Growth Division, Franklin Templeton International Equity Division, AllianceBernstein Mid Cap Value Division, Index 400 Stock Division, Janus Capital Appreciation Division, Growth Stock Division, Large Cap Core Stock Division, Capital Guardian Domestic Equity Division, T. Rowe Price Equity Income Division, Index 500 Stock Division, Asset Allocation Division, Balanced Division, High Yield Bond Division, Select Bond Division, Money Market Division, Fidelity VIP Mid Cap Division, Russell Multi-Style Equity Division, Russell Aggressive Equity Division, Russell Non-U.S. Division, Russell Core Bond Division, and Russell Real Estate Securities Division at December 31, 2005 and 2004, and the results of each of their operations, the changes in each of their net assets and their financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “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 the standards of the Public Company Accounting Oversight Board (United States). 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, 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 securities owned at December 31, 2005 with Northwestern Mutual Series Fund, Inc., Fidelity Variable Insurance Products Fund III and the Russell Investment Funds, provide a reasonable basis for our opinion.

/s/ PRICEWATERHOUSECOOPERS LLP

Milwaukee, Wisconsin

February 7, 2006

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

The registrant’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the registrant’s disclosure controls and procedures (as such term is defined in Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the registrant’s Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2005, those disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the registrant in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

ITEM 9B. OTHER INFORMATION

Not applicable.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Neither Account A nor Account C have any directors or executive officers. The following information, as of March 1, 2006, is provided with respect to each director, including persons nominated or chosen to become directors, of Northwestern Mutual. Northwestern Mutual uses the title of Trustee to denote the directors.

TRUSTEE	AGE	YEAR ELECTED/ APPT’D	EXPIRATION OF TERM OF OFFICE	OTHER POSITIONS PRESENTLY HELD WITH REGISTRANT
Edward E. Barr	69	1991	May 2007	Member, Human Resources, Nominating and Corporate Governance Committee
John M. Bremer	58	2001	May 2006(1)	Chief Operating Officer (Chief Compliance Officer); Member, Executive Committee
Peter W. Bruce	60	2001	May 2008	Chief Insurance Officer; Member, Executive Committee
Robert C. Buchanan	65	1991	May 2007	Member, Audit, Executive and Finance Committees
George A. Dickerman	67	1994	May 2008	Member, Agency and Marketing Committee
David J. Drury	57	2005	May 2006(1)	Member, Audit, Executive and Finance Committees
Connie K. Duckworth	51	2004	May 2009	Member, Executive, Finance, and Human Resources, Nominating and Corporate Governance Committees
James D. Ericson	70	1989	May 2006(2)	Member, Agency and Marketing, Executive and Finance Committees
David A. Erne	62	2002	May 2009	Member, Executive, Finance and Operations and Technology Committees
J. E. Gallegos	70	1985	May 2006(2)	Member, Audit Committee
James P. Hackett	50	2000	May 2006(1)	Chair, Audit Committee
Hans Helmerich	47	2006	May 2006(1)	Member, Audit Committee
Stephen F. Keller	67	1984	May 2007	Member, Operations and Technology Committee
Barbara A. King	59	1996	May 2006(1)	Chair, Agency and Marketing Committee
Margery Kraus	59	2004	May 2009	Member, Agency and Marketing Committee
J. Thomas Lewis	69	1978	May 2006(1)	Member, Agency and Marketing Committee
Daniel F. McKeithan, Jr.	70	1988	May 2006(2)	Member, Executive, Finance, and Human Resources, Nominating and Corporate Governance Committees
Ulice Payne, Jr.	50	2005	May 2006(1)	Member, Executive, Finance, and Human Resources, Nominating and Corporate Governance Committees
H. Mason Sizemore, Jr.	64	1993	May 2007	Member, Operations and Technology Committee
Peter M. Sommerhauser	63	1999	May 2006(1)	Chair, Human Resources, Nominating and Corporate Governance Committee; Member, Executive and Finance Committees
John E. Steuri	66	1994	May 2007	Chair, Operations and Technology Committee
John J. Stollenwerk	66	1993	May 2009	Member, Agency and Marketing, Executive and Finance Committees
Barry L. Williams	61	1987	May 2009	Member, Operations and Technology Committee
Kathryn D. Wriston	67	1986	May 2009	Member, Audit Committee
Edward J. Zore	60	2000	May 2009	President and CEO; Chair, Executive and Finance Committees; Member, Agency and Marketing and Operations and Technology Committees

(1) Candidates proposed for re-election by the Board of Trustees for the election to be held at the May 2006 Annual meeting of Policyowners. If re-elected, the terms for Mr. Bremer, Mr. Hackett, Ms. King, Mr. Lewis, Mr. Payne and Mr. Sommerhauser will expire in May 2010. If re-elected, the terms for Messrs. Drury and Helmerich will expire in May 2008.

(2) Messrs. Ericson, Gallegos and McKeithan are retiring from the Board of Trustees effective May 24, 2006.

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The business experience and public company directorships of Northwestern Mutual’s Trustees as of March 1, 2006 are as follows:

TRUSTEE	PRINCIPAL OCCUPATION DURING PAST FIVE YEARS	DIRECTORSHIPS
Edward E. Barr	Retired Chairman, Sun Chemical Group, B.V. (graphic arts), Fort Lee, New Jersey, since 2003. Prior thereto, Chairman from 1998-2002; Chairman and CEO, 1997-1998; President and Chief Executive Officer, 1987-1997.	Sequa Corporation Smith Investments United Water Resources
John M. Bremer	Chief Operating Officer (Chief Compliance Officer) of Northwestern Mutual since 2002. Prior thereto, Senior Executive Vice President and Chief Operating Officer (Chief Compliance Officer) from 2001-2002; Senior Executive Vice President and Secretary from 2000-2001; Executive Vice President, General Counsel and Secretary from 1998-2000; Senior Vice President, General Counsel and Secretary from 1995-1998.
Peter W. Bruce	Chief Insurance Officer of Northwestern Mutual since 2002. Prior thereto, Senior Executive Vice President (Insurance) from 2000-2002; Executive Vice President (Accumulation Products and Long Term Care) from 1998-2000; Executive Vice President (Operations and Administration) from 1995-1998.
Robert C. Buchanan	Non-Executive Chairman, Fox Valley Corporation (manufacturer of gift wrap and writing paper), Appleton, Wisconsin, since 2005. Prior thereto, President and Chief Executive Officer since 1980.	Brady Corporation
George A. Dickerman	Retired Chairman and CEO, Spalding Sports Worldwide (manufacturer of sporting equipment), Chicopee, Massachusetts, since 1999. Prior thereto, Chairman, 1997-1998; President, 1981-1997.
David J. Drury	President and owner of Poblocki Sign Company LLC (designer and manufacturer of custom interior and exterior signage), West Allis, Wisconsin, since 1999.	Journal Communications, Inc. Plexus Corp.
Connie K. Duckworth	President and Chairman, ARZU (non-profit organization), Lake Forest, Illinois, since 2003. Prior thereto, Partner and Managing Director (retired) of Goldman, Sachs & Co. (global investment banking, securities and investment management firm), 1981-2001.	DNP Select Income Fund Inc. Smurfit-Stone Container Corporation Nuveen Investments, Inc.
James D. Ericson	Retired Chairman of Northwestern Mutual since 2001; Chairman, 2001; Chairman and Chief Executive Officer from 2000 to 2001. Prior thereto, President and Chief Executive Officer from 1993-2000.	Kohl’s Corporation The Marcus Corporation
David A. Erne	Attorney, Reinhart Boerner Van Deuren s.c. (law firm), Milwaukee, Wisconsin, since 1968.	Artisan Funds, Inc.
J. E. Gallegos	Attorney, Gallegos Law Firm, Santa Fe, New Mexico, since 1988.
James P. Hackett	President and Chief Executive Officer, Steelcase Inc. (office furniture manufacturer), Grand Rapids, Michigan, since 1994.	Fifth Third Bancorp. Steelcase Inc.

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TRUSTEE	PRINCIPAL OCCUPATION DURING PAST FIVE YEARS	DIRECTORSHIPS
Hans Helmerich	President and Chief Executive Officer, Helmerich & Payne, Inc. (contract oil drilling), Tulsa, Oklahoma, since 1989.	Helmerich & Payne, Inc. Cimarex Energy Co. Atwood Oceanics, Inc.
Stephen F. Keller	Attorney, Los Angeles, California, since 1962. Chairman, The Santa Anita Companies, Arcadia, California, 1993-1996.
Barbara A. King	President, Landscape Structures, Inc. (manufacturer of playground equipment), Delano, Minnesota, since 1973.
Margery Kraus	President and CEO, APCO Worldwide (global communication consultancy), Washington, D.C., since 1984.
J. Thomas Lewis	Attorney, New Orleans, Louisiana, since 1998. Prior thereto, associated with Monroe & Lemann (law firm), New Orleans, Louisiana, 1965-1998.
Daniel F. McKeithan, Jr.	President, Tamarack Petroleum Co., Inc. (operator of oil and gas wells), Milwaukee, Wisconsin, since 1982.	The Marcus Corporation
Ulice Payne, Jr.	President & CEO, Addison-Clifton, LLC (global trade compliance advisors), Brookfield, Wisconsin, since 2004. President and Chief Executive Officer of the Milwaukee Brewers Baseball Club from 2002-2003. Prior thereto, Managing Partner of the Milwaukee, Wisconsin office of Foley & Lardner (law firm).	Wisconsin Energy Corporation Badger Meter, Inc. Midwest Air Group, Inc.
H. Mason Sizemore, Jr.	Retired President and Chief Operating Officer, The Seattle Times, Seattle, Washington, since 2001. Prior thereto, President and Chief Operating Officer since 1985.
Peter M. Sommerhauser	Attorney, Godfrey & Kahn, SC (law firm), Milwaukee, Wisconsin, since 1969.	Kohl’s Corporation
John E. Steuri	Retired Chairman and Chief Executive Officer, Advanced Thermal Technologies, Inc. (heating, air conditioning, humidity control), Little Rock, Arkansas, since 2001; Chairman, 1997-2001. Prior thereto, Retired Chairman and Chief Executive Officer, ALLTEL Information Services, Inc., Little Rock, Arkansas.
John J. Stollenwerk	President and Chief Executive Officer, Allen-Edmonds Shoe Corporation, Port Washington, Wisconsin, since 1998. Prior thereto, President and Owner, 1980-1998.	Badger Meter, Inc. Koss Corporation
Barry L. Williams	President and Chief Executive Officer, Williams Pacific Ventures, Inc. (venture capital), San Francisco, California, since 1993.	CH2M Hill, Inc. R. H. Donnelley Corporation Pacific Gas & Electric Company PG&E Corporation Simpson Manufacturing Co., Inc.
Kathryn D. Wriston	Trustee of the John A. Hartford Foundation (health care philanthropy), New York, New York, since 1991 and the Practicing Law Institute (continuing legal education provider), New York, New York, since 1975; Director of The Stanley Works (producer of tools and security products), New Britain, Connecticut, since 1996.	The Stanley Works

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TRUSTEE	PRINCIPAL OCCUPATION DURING PAST FIVE YEARS	DIRECTORSHIPS
Edward J. Zore	President and Chief Executive Officer of Northwestern Mutual since 2001. Prior thereto, President, 2000-2001; Executive Vice President (Life and Disability Income Insurance), 1998-2000; Executive Vice President (Finance and Investments), 1995-1998.	Manpower, Inc. Mason Street Funds, Inc. Northwestern Mutual Series Fund, Inc.

Neither Account A nor Account C have Boards of Directors or Audit Committees. Northwestern Mutual’s Board of Trustees has determined that its Audit Committee has at least one “Audit Committee Financial Expert” serving on the Audit Committee. In 2005 Northwestern Mutual’s Board determined Mr. David J. Drury to be the Audit Committee Financial Expert and concurrently determined that he was independent (applying the NASD definition of independent director then in effect).

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The following information as of March 1, 2006, is provided with respect to each Executive Officer of Northwestern Mutual. The term of office for all Executive Officers is one year expiring May 31, 2006.

NAME	AGE	CURRENT POSITION AND YEAR ASSUMED
Edward J. Zore	60	President and Chief Executive Officer (2001)
John M. Bremer	58	Chief Operating Officer (Chief Compliance Officer) (2001)
Peter W. Bruce	60	Chief Insurance Officer (2002)
Deborah A. Beck	58	Executive Vice President (Planning and Technology) (2000)
William H. Beckley	58	Executive Vice President (Agencies) (2000)
Mason G. Ross	62	Executive Vice President and Chief Investment Officer (2001)
Mark G. Doll	56	Senior Vice President (Public Markets) (1996)
Christine H. Fiasca	51	Senior Vice President (Agency Services) (2006)
Richard L. Hall	60	Senior Vice President (Life Product) (2004)
William C. Koenig	58	Senior Vice President and Chief Actuary (1995)
Jean M. Maier	51	Senior Vice President (Insurance Operations) (2006)
Meridee J. Maynard	50	Senior Vice President (2006)
Gregory C. Oberland	48	Senior Vice President and Chief Information Officer (2006)
Gary A. Poliner	52	Senior Vice President and Chief Financial Officer (2001)
Marcia Rimai	50	Senior Vice President (Business Integration Services) (2006)
Charles D. Robinson	61	Senior Vice President (Investment Products and Services) (2001)
John E. Schlifske	46	Senior Vice President (Investment Products and Services and Affiliates) (2004)
Leonard F. Stecklein	59	Senior Vice President (Investment Products and Services) (2004)
Robert J. Berdan	59	Vice President, General Counsel and Secretary (2001)
Michael G. Carter	44	Vice President (Field Compensation and Planning) (2006)
Steven T. Catlett	56	Vice President (Investment Products) (2004)
Eric P. Christophersen	44	Vice President (Compliance/Best Practices) (2006)
David D. Clark	54	Vice President (Real Estate) (2004)
Gloster B. Current	60	Vice President (Policyowner Services) (2006)
Thomas E. Dyer	60	Vice President (Corporate Services) (1998)
John M. Grogan	42	Vice President (Disability Income) (2006)
John C. Kelly	46	Vice President and Controller (2004)
John L. Kordsmeier	51	Vice President (New Business) (2004)
Susan A. Lueger	52	Vice President (Human Resources) (1994)
Jeffrey J. Lueken	45	Vice President (Securities) (2004)
Raymond J. Manista	40	Vice President (Corporate Planning) (2006)
David W. Simbro	44	Vice President (Long Term Care) (2005)
Brenda F. Skelton	50	Vice President (Communications) (2003)
Calvin R. Schmidt	43	Vice President (Investment Products Operations) (2006)
J. Edward Tippetts	61	Vice President (Wealth Management) (2006)
Donald G. Tyler	53	Vice President (Investment Products and Services Sales and Products) (2006)
Martha M. Valerio	59	Vice President (Technology Research and Web Resources) (2001)
Michael L. Youngman	54	Vice President (Government Relations) (2001)

All of the Executive Officers, except Charles D. Robinson, Gloster B. Current, Brenda F. Skelton and Donald G. Tyler, have been employed by Northwestern Mutual in an executive or management position for more than five years. Mr. Robinson joined Northwestern Mutual in 2001. Prior thereto he was with AIG, Global Retirement Services Division as Chief Marketing Officer and Senior Vice President from 1999 to 2000. From 1980 to 1999, Mr. Robinson served in various positions of increasing responsibility with VALIC/American General Group, most recently as Senior Vice President, Institutional Marketing. Prior to joining Northwestern Mutual in 2003, Mr. Current was Vice President and Chief Marketing Officer for Lincoln Financial Group from 1995 to 2003. Prior to Lincoln Financial, Mr. Current served as Vice President at Citibank, North America in a variety of operations and marketing management assignments, and in key leadership roles at Kentucky Fried Chicken Co., Canadian Canners Ltd., Del Monte Corp., R.J. Reynolds Foods, Inc., Procter and Gamble Co. and AT&T Long Lines. Ms. Skelton joined Northwestern Mutual in 2002. Prior to Northwestern Mutual, Ms. Skelton worked for the Milwaukee Wave professional soccer team from 2001 to 2002 as the general manager of business operations. Ms. Skelton also headed up the marketing function for Midwest Airlines from 1987 to 2000. During her tenure at Midwest Airlines, Ms. Skelton held the positions of Senior Vice President of Marketing, Vice President of Marketing and Director of Marketing Programs. She also served on the Midwest Air Group, Inc. Board of Directors from 1995 until her departure in

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2000. Prior to Midwest Air Group, Ms. Skelton held a variety of other marketing and product management positions of progressive responsibility. Mr. Tyler joined Northwestern Mutual in 2003. Prior thereto he was the President of Precision Marketing Partners and The Academy of Financial Services Studies, two consulting firms dedicated to assisting mutual fund companies in distribution, marketing and training capabilities, since 1999. Mr. Tyler has also held positions at Strong Capital Management and Thrivent Financial.

As indicated above, neither Account A nor Account C have executive officers and thus do not have a “Code of Ethics.” However, Northwestern Mutual has adopted a “Code of Ethics” that applies to Northwestern Mutual’s Chief Executive Officer, Chief Financial Officer and Controller, as well as to the rest of its employees. A copy of Northwestern Mutual’s Guidelines for Business Conduct, which satisfy the Code of Ethics requirements, were filed as Exhibit 14.1 to the Annual Report on Form 10-K for the year ended December 31, 2003 and are incorporated by reference herein.

ITEM 11. EXECUTIVE COMPENSATION

Not applicable. Account A and Account C have no directors or executive officers, the Executive Officers and Trustees of Northwestern Mutual spend no substantial portion of their time on matters relating to Accounts A and C, such persons receive no compensation tied specifically to any services provided to Accounts A and C, and the amounts of compensation received by the Executive Officers and Trustees of Northwestern Mutual have no bearing on the values associated with the Contracts issued in connection with Accounts A and C.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Not applicable. As segregated asset accounts, Account A and Account C have no shareholders. As a mutual life insurance company, Northwestern Mutual has no shareholders. Each member of Northwestern Mutual is entitled to one vote, regardless of the amount of coverage or number of Contracts or insurance policies held. Neither Accounts A or C, nor Northwestern Mutual, maintain equity compensation plans under which equity securities are authorized for issuance.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Northwestern Mutual’s subsidiary, Mason Street Advisors, LLC (“MSA”), serves as the investment adviser to the Series Fund. Various Trustees and Executive Officers of Northwestern Mutual serve as directors and officers of the Series Fund and/or MSA and may be deemed to have a direct or indirect material interest in the existence of the investment advisory agreement.

Northwestern Mutual’s subsidiary, Frank Russell Company, provides the Russell Funds and its investment adviser, Frank Russell Investment Management Company (“FRIMCo”), a subsidiary of Frank Russell Company, with asset management consulting services that it provides to its other consulting clients. The Russell Funds do not compensate Russell for these services. FRIMCo is party to an investment advisory agreement with the Russell Funds. Certain Trustees and Executive Officers of Northwestern Mutual serve as directors of Frank Russell Company and may be deemed to have a direct or indirect material interest in the existence of the investment management agreement.

Various Trustees and Executive Officers of Northwestern Mutual (and their family members and associates) may have securities accounts with NMIS and may have effected transactions through such accounts during 2005 and through the date hereof, including transactions in mutual funds sponsored by Northwestern Mutual and Russell.

Trustees and executive officers of Northwestern Mutual (and their family members and associates) own insurance policies and/or other contracts issued by Northwestern Mutual or an insurance affiliate in the ordinary course of business. Loans are made to Northwestern Mutual’s Trustees and Executive Officers (and their family members and associates) in accordance with the provisions of insurance policies or other contracts which they may own. Such loans are made in the ordinary course of business, in accordance with applicable law and are administered solely pursuant to the terms of such policies.

In the ordinary course of its business, Northwestern Mutual makes loans to its field force Managing Partners in connection with their business operations. Interest on such loans is tied to Northwestern Mutual’s cost of funds or the prime rate, depending upon the purpose of the loan. On occasion, a Managing Partner who has received such a loan may assume an Executive Officer position at Northwestern Mutual. In such circumstances, historically the outstanding loans have remained in place and are satisfied in accordance with the terms of the underlying loan documentation.

In the ordinary course of business, Northwestern Mutual engages law firms to assist it on various matters. From time to time, an engaged law firm may employ, or have as a partner or shareholder, a family member of a Northwestern Mutual executive officer or trustee. Any such executive officer or trustee would not participate in the selection of such law firm for such matter.

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Mr. David A. Erne, a Northwestern Mutual Trustee since July 2002, is a shareholder of Reinhart Boerner Van Deuren s.c. Reinhart Boerner Van Deuren s.c. provided legal services to Northwestern Mutual and/or certain related entities during 2005. The aggregate amount of such legal services billed to Northwestern Mutual or related entities is less than 1% of the law firm’s gross revenues for its last fiscal year.

Mr. Peter M. Sommerhauser, a Northwestern Mutual Trustee since May 1999, is a shareholder of Godfrey & Kahn, S.C. Godfrey & Kahn, S.C. provided legal services to Northwestern Mutual and/or certain related entities during 2005. The aggregate amount of such legal services billed to Northwestern Mutual or related entities is less than 1% of the law firm’s gross revenues for its last fiscal year.

Mr. Hans Helmerich, a Northwestern Mutual Trustee since January 2006, is President and CEO of Helmerich & Payne, Inc. In 2002, Northwestern Mutual lent as part of its normal portfolio investment activities to Helmerich & Payne International Drilling Co., a subsidiary of Helmerich & Payne, Inc., a total of $30,000,000 and received privately placed 6.46% Senior Notes, Series C due August 15, 2012. The principal amount of such indebtedness remained at $30,000,000 at February 28, 2006.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES

PricewaterhouseCoopers LLP is Account A’s and Account C’s principal accountant. Set forth below are the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit or review of Account A’s and Account C’s financial statements or other services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.

	2005		2004
Account A	$	32,400	$	31,600
Account C	$	32,400	$	31,600

AUDIT-RELATED FEES

In fiscal year 2005, audit-related fees totaling $142,107 were billed by the principal accountant for internal control services related to Sarbanes-Oxley. In fiscal year 2004, audit-related fees totaling $55,760 were billed by the principal accountant for internal control services related to Sarbanes-Oxley. These fees were paid by the sponsor and are not reported under the caption “Audit Fees” above.

TAX FEES

Neither Account A nor Account C had any fees billed for each of the last two fiscal years for tax compliance, tax advice or tax planning services rendered by their principal accountant.

ALL OTHER FEES

Neither Account A nor Account C had any fees billed for each of the last two fiscal years for products and services provided by their principal accountant that are not otherwise reported under the captions “Audit Fees,” “Audit-Related Fees” and “Tax Fees” above.

PRE-APPROVAL POLICIES AND PROCEDURES

Neither Account A nor Account C have a Board of Directors or Audit Committee and have therefore not adopted pre-approval policies and procedures for audit and non-audit services. However, Northwestern Mutual’s Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy that does apply to Account A and Account C (the “Policy”).

Under the Policy, the Audit Committee must pre-approve all audit and permissible non-audit services provided by the independent accountant. The Policy requires certain services to be approved on a case-by-case basis by the Audit Committee. Such services that must be approved on a case-by-case basis include the annual financial statement audits of Northwestern Mutual and its subsidiaries. The Policy also provides that other audit services (e.g., services associated with statements, reports and other documents filed with the Commission), audit-related services (e.g., employee benefit plan audits and internal control reviews), tax services (e.g., U.S. federal, state and local tax planning and advice) and all other permissible services may be pre-approved through the adoption by the Audit Committee of a list of authorized services along with specific budgeted amounts for such services. The Audit Committee has established such a list of authorized services. Audit

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and non-audit services to be provided by Northwestern Mutual’s independent accountant not on such list, or that would exceed the budgeted amount for such service, must be pre-approved by the Audit Committee on a case-by-case basis. The Policy requires the Northwestern Mutual Audit Committee to be informed on a timely basis of any services rendered by the independent accountant pursuant to such authorized list of services.

The Policy also permits the Audit Committee to delegate to one or more of its members pre-approval authority, which the Audit Committee has done. Those Audit Committee members are required to report any pre-approval decisions to the Audit Committee at its next scheduled meeting.

In 2005, there were no fees paid to Account A’s and Account C’s independent accountant under a de minimis exception to the rules that waives the pre-approval requirements for certain non-audit services.

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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements and Exhibits

	PAGE
(1) NML Variable Annuity Account A (in Part II, Item 8)	23
Statements of Assets and Liabilities at December 31, 2005 and 2004	23
Statements of Operations for Years Ended December 31, 2005, 2004 and 2003	35
Statements of Changes in Net Assets for Years Ended December 31, 2005, 2004 and 2003	39
Notes to Financial Statements	45
Report of Independent Registered Public Accounting Firm	51
(2) NML Variable Annuity Account C (in Part II, Item 8)	52
Statements of Assets and Liabilities at December 31, 2005 and 2004	52
Statements of Operations for Years Ended December 31, 2005, 2004 and 2003	64
Statements of Changes in Net Assets for Years Ended December 31, 2005, 2004 and 2003	68
Notes to Financial Statements	74
Report of Independent Registered Public Accounting Firm	79
(3) The Northwestern Mutual Life Insurance Company
Immediately following this page are:
Report of Independent Registered Public Accounting Firm	90
Consolidated Statement of Financial Position at December 31, 2005 and 2004	91
Consolidated Statement of Operations for Years Ended December 31, 2005, 2004 and 2003	92
Consolidated Statement of Changes in Surplus for Years Ended December 31, 2005, 2004 and 2003	93
Consolidated Statement of Cash Flows for years ended December 31, 2005, 2004 and 2003	94
Notes to Consolidated Statutory Financial Statements	95
(b)     See Index to Exhibits which is incorporated herein by reference	124

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Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Policyowners of

  The Northwestern Mutual Life Insurance Company

We have audited the accompanying statutory consolidated statement of financial position of The Northwestern Mutual Life Insurance Company and its subsidiary (“the Company”) as of December 31, 2005 and 2004, and the related consolidated statutory statements of operations, of changes in surplus and of cash flows for each of the three years in the period ended December 31, 2005. 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 as established by the Auditing Standards Board (United States) and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). 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 to the financial statements, the Company prepared these consolidated financial statements using 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 accounting principles generally accepted in the United States of America. Accordingly, the consolidated financial statements are not intended to represent a presentation in accordance with accounting principles generally accepted in the United States of America. The effects on the consolidated financial statements of the variances between the statutory basis of accounting and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.

In our opinion, because of the effects of the matter discussed in the preceding paragraph, the consolidated financial statements referred to above do not present fairly in conformity with accounting principles generally accepted in the United States of America, the financial position of The Northwestern Mutual Life Insurance Company and its subsidiary as of December 31, 2005 and 2004, or the results of their operations or their cash flows for each of the three years in the period ended December 31, 2005. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Northwestern Mutual Life Insurance Company and its subsidiary as of December 31, 2005 and 2004 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005, on the basis of accounting described in Note 1.

/s/ PRICEWATERHOUSECOOPERS LLP

Milwaukee, Wisconsin

January 24, 2006

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The Northwestern Mutual Life Insurance Company

Consolidated Statement of Financial Position

(in millions)

	December 31,
	2005		2004
Assets:
Bonds	$	65,899	$	60,930
Common and preferred stocks		8,120		7,414
Mortgage loans		18,118		17,240
Real estate		1,620		1,619
Policy loans		10,265		9,750
Other investments		6,935		5,774
Cash and temporary investments		2,124		2,949
Total investments		113,081		105,676
Due and accrued investment income		1,183		1,133
Net deferred tax assets		1,057		936
Deferred premium and other assets		1,983		1,894
Separate account assets		15,753		14,318
Total assets	$	133,057	$	123,957
Liabilities and Surplus:
Reserves for policy benefits	$	94,144	$	87,588
Policyowner dividends payable		4,270		3,910
Interest maintenance reserve		839		943
Asset valuation reserve		2,529		2,556
Income taxes payable		593		665
Other liabilities		4,548		5,043
Separate account liabilities		15,753		14,318
Total liabilities		122,676		115,023
Surplus		10,381		8,934
Total liabilities and surplus	$	133,057	$	123,957

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

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The Northwestern Mutual Life Insurance Company

Consolidated Statement of Operations

(in millions)

	For the year ended
	December 31,
	2005		2004			2003
Revenue:
Premiums	$	11,363	$	10,682		$	10,307
Net investment income		6,543		6,117			5,737
Other income		494		511			501
Total revenue		18,400		17,310			16,545
Benefits and expenses:
Benefit payments to policyowners and beneficiaries		4,577		4,487			4,079
Net additions to policy benefit reserves		6,445		6,181			6,260
Net transfers to separate accounts		664		422			288
Total benefits		11,686		11,090			10,627
Commissions and operating expenses		1,774		1,741			1,690
Total benefits and expenses		13,460		12,831			12,317
Gain from operations before dividends and taxes		4,940		4,479			4,228
Policyowner dividends		4,269		3,880			3,765
Gain from operations before taxes		671		599			463
Income tax expense (benefit)		57		(124	)		(90	)
Net gain from operations		614		723			553
Net realized capital gains		310		94			139
Net income	$	924	$	817		$	692

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

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The Northwestern Mutual Life Insurance Company

Consolidated Statement of Changes in Surplus

(in millions)

	For the year ended December 31,
	2005			2004			2003
Beginning of year balance	$	8,934		$	7,547		$	7,217
Net income		924			817			692
Change in net unrealized capital gains		343			645			1,171
Change in net deferred income tax		237			28			(137	)
Change in nonadmitted assets and other		(84	)		(115	)		(96	)
Change in asset valuation reserve		27			12			(1,300	)
Net increase in surplus		1,447			1,387			330
End of year balance	$	10,381		$	8,934		$	7,547

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

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The Northwestern Mutual Life Insurance Company

Consolidated Statement of Cash Flows

(in millions)

	For the year ended December 31,
	2005			2004			2003
Cash flows from operating activities:
Premiums and other income received	$	8,074		$	7,584		$	6,984
Investment income received		6,347			5,999			5,727
Disbursement of policy loans, net of repayments		(515	)		(199	)		(254	)
Benefit payments to policyowners and beneficiaries		(4,794	)		(4,650	)		(4,312	)
Net transfers to separate accounts		(657	)		(418	)		(284	)
Commissions, expenses and taxes paid		(2,000	)		(1,900	)		(1,637	)
Net cash provided by operating activities		6,455			6,416			6,224
Cash flows from investing activities:
Proceeds from investments sold or matured:
Bonds		72,406			47,537			75,838
Common and preferred stocks		3,969			3,300			2,392
Mortgage loans		2,585			1,867			1,843
Real estate		120			109			356
Other investments		1,389			1,258			1,047
		80,469			54,071			81,476
Cost of investments acquired:
Bonds		77,345			52,323			79,994
Common and preferred stocks		3,896			3,150			2,708
Mortgage loans		3,464			2,670			2,534
Real estate		261			259			191
Other investments		2,661			1,757			1,387
		87,627			60,159			86,814
Net cash applied to investing activities		(7,158	)		(6,088	)		(5,338	)
Cash flows from financing and miscellaneous sources:
Net inflows on deposit-type contracts		52			32			142
Other cash applied		(174	)		(5	)		(248	)
Net cash provided by (applied to) financing and other activities:		(122	)		27			(106	)
Net increase (decrease) in cash and temporary investments		(825	)		355			780
Cash and temporary investments, beginning of year		2,949			2,594			1,814
Cash and temporary investments, end of year	$	2,124		$	2,949		$	2,594

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

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The Northwestern Mutual Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2005, 2004 and 2003

1. Basis of Presentation and Changes in Accounting Principles

The accompanying consolidated statutory financial statements include the accounts of The Northwestern Mutual Life Insurance Company and its wholly-owned subsidiary, Northwestern Long Term Care Insurance Company (together, “the Company”). All intercompany balances and transactions have been eliminated. The Company offers life, annuity, disability income and long-term care insurance products to the personal, business and estate markets.

The consolidated financial statements were prepared in accordance with accounting practices prescribed or permitted by the Office of the Commissioner of Insurance of the State of Wisconsin (“statutory basis of accounting”). See Notes 3 and 12. Financial statements prepared on the statutory basis of accounting differ from financial statements prepared in accordance with generally accepted accounting principles (“GAAP”), primarily because on a GAAP basis: (1) certain policy acquisition costs are deferred and amortized, (2) investment valuations and policy benefit reserves are established using different methods and assumptions, (3) deposit-type contracts, for which premiums, benefits and reserve changes are not included in revenue or benefits as reported in the statement of operations, are defined differently, (4) majority-owned, non-insurance subsidiaries are consolidated, (5) changes in deferred taxes are reported as a component of net income and (6) no deferral of realized investment gains and losses is permitted. The effects on the financial statements of the Company attributable to the differences between the statutory basis of accounting and GAAP are material.

2. New Accounting and Reporting Pronouncements

Following is a summary of new statutory basis accounting or disclosure requirements that were adopted by the Company for the first time during 2005.

Investments in Subsidiary, Controlled and Affiliated Entities

Statement of Statutory Accounting Principles No. 88 requires that the Company’s equity method investments in any non-insurance subsidiary, controlled or affiliated entity (“SCA”) be supported by audited GAAP financial statements of the SCA. Any equity method investment in an SCA that is not supported by audited GAAP financial statements must be nonadmitted and thereby excluded from reported assets and surplus. Prior to the adoption of this new guidance, the GAAP financial statements on which equity method investments in SCAs were based were not required to be audited. As required by the new guidance, this change was adopted prospectively beginning in 2005.

In preparation for adoption of the new guidance, the Company made capital contributions during 2005 of its investment interest in certain unaudited SCAs to another wholly-owned subsidiary for which audited GAAP financial statements are prepared annually. The aggregate equity method statement value and fair value of the investment interests transferred were $987 million and $1.3 billion, respectively. These capital contributions were made at statement value, and no capital gain or loss was reported as a result of these transfers.

At December 31, 2005, the equity method statement value of the SCA investments transferred continue to be admitted in the reported value of the Company’s investment assets and surplus. Certain other SCA investments with an aggregate equity method statement value of $85 million did not meet the requirements of the new guidance and were nonadmitted at December 31, 2005. This increase in nonadmitted assets is included as a direct reduction of surplus in the consolidated statement of changes in surplus for the year ended December 31, 2005.

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Impact of Medicare Modernization Act on Postretirement Benefits

Statutory Accounting Principles Interpretation No. 04-17 requires the Company to evaluate the impact of Medicare Prescription Drug Improvement and Modernization Act of 2003 (“the Act”) on its liability for postretirement health benefits. The Act introduces a voluntary prescription drug benefit under Medicare Part D, effective January 1, 2006. Under the Act, employers can receive subsidy payments from the federal government if they provide equivalent drug benefits to qualified plan participants who do not elect to enroll in Medicare Part D.

The Company has determined that the drug benefits provided by its existing postretirement health plan are actuarially equivalent to the new Medicare benefit, and as a result the Company is eligible for the government subsidy. Accordingly, the plan’s projected benefit obligation was reduced by $22 million upon the adoption of this new guidance on January 1, 2005. This reduction was treated as a deferred experience gain, which will be amortized as a reduction of net periodic postretirement cost over a period of up to 18 years, the average remaining years of service for active plan participants. For the year ended December 31, 2005, this amortization reduced net periodic postretirement cost by $3 million. See Note 9.

Pension and Postretirement Benefit Disclosures

Statutory Accounting Principles Working Group Issue No. 2005-1 requires that certain additional disclosures be made regarding the Company’s pension and postretirement benefits provided to employees and financial representatives. These additional disclosures include a summary of plan investment assets, a description of the related investment policy, expected plan contributions to be made by the Company during the upcoming fiscal year and an estimate of the benefits to be paid to plan participants over the next ten years. See Note 9.

Other Than Temporary Declines in the Value of Investments

Statutory Accounting Principles Interpretation No. 02-07 requires that a decline in the value of an investment security due to an increase in market interest rates be recognized as other-than-temporary only if management has the intent to sell the security as of the reporting date. This interpretation has been incorporated into the Company’s impairment policy but did not have a material effect on the impairments recognized in 2005.

3. Summary of Significant Accounting Policies

The preparation of financial statements in accordance with the statutory basis of accounting requires management to make estimates or 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 periods then ended. Actual future results could differ from these estimates and assumptions.

Investments

See Notes 4 and 15 regarding the reported statement value and estimated fair value of the Company’s investments in bonds, common and preferred stocks, mortgage loans and real estate.

Policy Loans

Policy loans primarily represent amounts borrowed from the Company by life insurance policyowners, secured by the cash value of the related policies, and are reported in the financial statements at unpaid principal balance.

Other Investments

Other investments consist primarily of partnership investments (including real estate, venture capital and leveraged buyout fund limited partnerships), real estate joint ventures and unconsolidated non-insurance subsidiaries organized as limited liability companies. These investments are valued based on the equity method of accounting.

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Other investments also include $97 million and $104 million of interests in oil and natural gas production at December 31, 2005 and 2004, respectively. These oil and gas interests are accounted for using the full cost method, a method permitted by the Office of the Commissioner of Insurance of the State of Wisconsin (“OCI”). The NAIC “Accounting Practices and Procedures Manual” does not provide accounting guidance for oil and gas interests.

Other investments also include leveraged leases and derivative financial instruments. See Note 4 for a description of the Company’s investments in leveraged leases and Note 5 regarding the Company’s use of derivatives and their presentation in the financial statements.

Temporary Investments

Temporary investments represent securities that had maturities of one year or less at purchase and are reported at amortized cost, which approximates fair value.

Net Investment Income

Net investment income primarily represents interest and dividends received or accrued on bonds, mortgage loans, policy loans and other investments. It also includes amortization of any purchase premium or discount using the interest method, adjusted retrospectively for any change in estimated yield-to-maturity. Accrued investment income more than 90 days past due is nonadmitted and reported as a direct reduction of surplus. Accrued investment income that is ultimately deemed uncollectible is reported as a reduction of net investment income in the period that such determination is made. Net investment income also includes dividends paid to the Company from accumulated earnings of joint ventures, partnerships and unconsolidated non-insurance subsidiaries and prepayment fees on bonds and mortgages. Net investment income is reduced by investment management expenses, real estate depreciation, depletion related to energy assets and interest 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 income tax, on fixed income investments and derivatives that are attributable to changes in interest rates. Net realized gains and losses deferred to the IMR are amortized into investment income over the estimated remaining term to maturity of the investment sold or the asset/liability hedged by the derivative.

Investment Capital Gains and Losses

Realized capital gains and losses are recognized based upon specific identification of securities sold. Realized capital losses also include valuation adjustments for impairment of bonds, stocks, mortgage loans, real estate and other investments that have experienced a decline in fair value that management considers to be other-than-temporary. Factors considered in evaluating whether a decline in value is other-than-temporary include: (1) the duration and extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer in relation to the anticipated recovery, and (3) the Company’s ability and intent to retain the investment for a period of time sufficient to allow for an anticipated recovery in value. Realized capital gains and losses as reported in the consolidated statement of operations exclude any IMR deferrals. See Note 4 regarding realized capital gains and losses.

Unrealized capital gains and losses primarily represent changes in the reported fair value of common stocks and changes in valuation adjustments made for bonds in or near default. Changes in the Company’s share of undistributed earnings of joint ventures, partnerships and unconsolidated non-insurance subsidiaries are also classified as changes in unrealized capital gains and losses. See Note 4 regarding changes in unrealized capital gains and losses.

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Asset Valuation Reserve

The Company is required to maintain an asset valuation reserve (“AVR”). The AVR represents a reserve liability for invested asset valuation using a formula prescribed by the National Association of Insurance Commissioners (“NAIC”). The AVR is designed to protect surplus against potential declines in the value of the Company’s investments. Increases or decreases in AVR are reported as direct adjustments to surplus.

Separate Accounts

Separate account assets and related policy liabilities represent the segregation of balances attributable to variable life insurance and variable annuity products. 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 mutual fund options. Variable annuity policyowners also have the option to invest in a fixed interest rate annuity issued by the general account of the Company. Separate account assets are reported at fair value based primarily on quoted market prices. See Note 8.

Premium Revenue

Life insurance premiums are recognized as revenue at the beginning of each policy year. Disability income and long-term care insurance premiums are recognized as revenue when due to the Company. Annuity premiums are recognized as revenue when received. Considerations received on supplementary insurance contracts without life contingencies are deposit-type transactions and thereby excluded from revenue in the consolidated statement of operations. Premium revenue is reported net of ceded reinsurance, see Note 10.

Other Income

Other income primarily represents ceded reinsurance expense allowances and various insurance policy charges. See Note 10.

Benefit Payments to Policyowners and Beneficiaries

Benefit payments to policyowners and beneficiaries include death, surrender, disability and long-term care benefits, as well as matured endowments and payments on supplementary insurance contracts that include life contingencies. Benefit payments on supplementary insurance contracts without life contingencies are deposit-type transactions and thereby excluded from benefits in the consolidated statement of operations. Benefit payments are reported net of ceded reinsurance recoveries, see Note 10.

Reserves for Policy Benefits

Reserves for policy benefits represent the net present value of future policy benefits, less future policy premiums, estimated using actuarial methods based on mortality and morbidity experience tables and valuation interest rates prescribed or permitted by the OCI. These actuarial tables and methods include assumptions regarding future mortality and morbidity. Actual future experience could differ from the assumptions used to make these reserve estimates. See Note 6.

Commissions and Operating Expenses

Commissions and other operating costs, including costs of acquiring new insurance policies, are generally charged to expense as incurred.

Electronic Data Processing Equipment and Software

The cost of electronic data processing (“EDP”) equipment and operating system software used in the Company’s business is generally capitalized and depreciated over three years using the straight-line method. Non-operating system software is generally capitalized and depreciated over a maximum of five years. EDP equipment and operating software assets of $33 million and $37 million at December 31, 2005 and 2004, respectively, are classified as other assets in the consolidated statement of financial

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position and are net of accumulated depreciation of $88 million and $68 million, respectively. Non-operating software costs, net of accumulated depreciation, are nonadmitted assets and thereby excluded from reported assets and surplus in the consolidated statement of financial position. Depreciation expense for EDP equipment and software totaled $71 million, $56 million and $42 million for the years ended December 31, 2005, 2004 and 2003, respectively.

Furniture, Fixtures and Equipment

The cost of furniture, fixtures and equipment, including leasehold improvements, is generally capitalized and depreciated over the useful life of the assets using the straight-line method. Furniture, fixtures and equipment costs, net of accumulated depreciation, are nonadmitted assets and thereby excluded from reported assets and surplus in the consolidated statement of financial position. Depreciation expense for furniture, fixtures and equipment totaled $7 million, $7 million and $6 million for the years ended December 31, 2005, 2004 and 2003, respectively.

Policyowner Dividends

Nearly all life, disability income and long-term care insurance policies and certain annuity contracts issued by the Company are participating. Annually, the Company’s Board of Trustees approves dividends payable on participating policies during the subsequent fiscal year, which are accrued and charged to operations when approved. Participating policyowners generally have the option to direct their dividends to be paid in cash, used to reduce future premiums due or used to purchase additional insurance. Dividends used by policyowners to purchase additional insurance are reported as premiums in the consolidated statement of operations, but are not included in premiums received or benefit payments in the consolidated statement of cash flows.

Nonadmitted Assets

Certain assets are designated as nonadmitted on the statutory basis of accounting. Such assets, principally related to pension funding, amounts advanced to or due from the Company’s financial representatives, furniture, fixtures, equipment and non-operating software (net of accumulated depreciation) and certain invested assets are excluded from reported assets and surplus in the consolidated statement of financial position. Changes in nonadmitted assets are reported as a direct adjustment to surplus in the consolidated statement of changes in surplus.

Reclassifications

Certain prior year footnote disclosures have been reclassified to conform to the current year presentation.

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4. Investments

Bonds

Investments in bonds are reported in the financial statements at amortized cost, less any valuation adjustment. The interest method is used to amortize any purchase premium or discount. Use of the interest method for loan-backed bonds and structured securities includes estimates of future prepayments obtained from independent sources. Prepayment assumptions are updated at least annually, using the retrospective adjustment method to recognize related changes in the estimated yield-to-maturity of such securities. Prior to 2004, the prospective adjustment method was used.

The cumulative effect of this change in method as of January 1, 2004 was immaterial.

Valuation adjustments are made for bonds in or near default, which are reported at the lower of amortized cost or fair value, or for bonds with a decline in fair value that management considers to be other-than-temporary. See Note 3 regarding investment capital gains and losses. At December 31, 2005 and 2004, the reported value of bonds was reduced by $174 million and $121 million, respectively, of valuation adjustments.

Disclosure of estimated fair value is based upon values published by the Securities Valuation Office (“SVO”) of the NAIC. In the absence of SVO-published values, estimated fair value is based upon quoted market prices, if available. For bonds without quoted market prices, fair value is estimated using independent pricing services or internally developed pricing models.

Statement value and estimated fair value of bonds at December 31, 2005 and 2004 were as follows:

December 31, 2005	Reconciliation to Estimated Fair Value
	Statement Value		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
			(in millions)
U.S. Government	$	7,309	$	266	$	(77	)	$	7,498
States, territories and possessions		96		1		(3	)		94
Special revenue and assessments		12,505		114		(197	)		12,422
Public utilities		3,507		126		(49	)		3,584
Banks, trust and insurance companies		7,521		364		(98	)		7,787
Industrial and miscellaneous		34,961		1,303		(355	)		35,909
	$	65,899	$	2,174	$	(779	)	$	67,294

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December 31, 2004	Reconciliation to Estimated Fair Value
	Statement Value		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
			(in millions)
U.S. Government	$	8,848	$	475	$	(47	)	$	9,276
States, territories and possessions		264		43		(1	)		306
Special revenue and assessments		11,207		178		(28	)		11,357
Public utilities		3,915		304		(6	)		4,213
Banks, trust and insurance companies		8,254		542		(41	)		8,755
Industrial and miscellaneous		28,442		1,621		(179	)		29,884
Total	$	60,930	$	3,163	$	(302	)	$	63,791

Statement value and estimated fair value of bonds by contractual maturity at December 31, 2005 are presented below. Estimated maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

	Statement Value		Estimated Fair Value
	(in millions)
Due in one year or less	$	971	$	980
Due after one year through five years		10,835		11,050
Due after five years through ten years		17,234		17,489
Due after ten years		16,196		17,214
		45,236		46,733
Mortgage-backed and structured securities		20,663		20,561
Total	$	65,899	$	67,294

Common and Preferred Stocks

Common stocks are generally reported in the financial statements at fair value, which is based upon quoted market prices, if available. For common stocks without quoted market prices, fair value is estimated using independent pricing services or internally developed pricing models. The equity method is generally used to value investments in common stock of unconsolidated non-insurance subsidiaries. See Note 12 regarding the statement value of the Company’s investment in Frank Russell Company.

Preferred stocks rated “1” (highest quality), “2” (high quality), or “3” (medium quality) by the SVO are reported in the financial statements at amortized cost. All other preferred stock is reported at the lower of amortized cost or fair value. Estimated fair value is based upon quoted market prices, if available. For preferred stock without quoted market prices, fair value is estimated using independent pricing services or internally developed pricing models.

Valuation adjustments are made for preferred stocks rated “4” (low quality), “5” (lower quality) or “6” (lowest quality) by the SVO, which are reported at the lower of cost or fair value, or for common and preferred stocks with a decline in fair value that management considers to be other-than-temporary. At December 31, 2005 and 2004, the reported value of common and preferred stocks was reduced by $172 million and $108 million, respectively, of valuation adjustments.

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Mortgage Loans

Mortgage loans are reported in the financial statements at unpaid principal balance, less any valuation allowance or unamortized commitment or origination fee. Such fees are generally deferred upon receipt and amortized into investment income using the interest method.

Mortgage loans are considered impaired when, based on current information, management considers it probable that the Company will be unable to collect all principal and interest due according to the contractual terms of the loan. If necessary, a valuation adjustment is made to reduce the carrying value of an impaired loan to the lower of unpaid principal balance or estimated net realizable value based on appraisal of the collateral property. If the impairment is considered to be temporary, the valuation adjustment is reported as an unrealized loss. Valuation adjustments for impairments considered to be other-than-temporary are reported as realized losses. The reported value of mortgage loans was reduced by $2 million for valuation adjustments at each of December 31, 2005 and 2004.

The maximum and minimum interest rates for mortgage loans originated during 2005 were 7.8% and 3.7%, respectively, while these rates during 2004 were 8.8% and 2.3%, respectively. The aggregate ratio of amounts loaned to the value of collateral for mortgage loans originated during 2005 and 2004 were 59% and 65%, respectively, with a maximum of 100% for any single loan during each of 2005 and 2004.

Real Estate

Real estate investments are reported in the financial statements at cost, less any valuation adjustment, encumbrances and accumulated depreciation of buildings and other improvements using a straight-line method over the estimated useful lives of the improvements. An investment in real estate is considered impaired when, based on current information, the estimated fair value of the property is lower than depreciated cost. The estimated fair value is primarily based upon the present value of future cash flow (for commercial properties) or the capitalization of stabilized net operating income (for multi-family residential properties). When the Company determines that an investment in real estate is impaired, a valuation adjustment is made to reduce the carrying value to estimated fair value, net of encumbrances. Valuation adjustments are reported as a realized loss. The reported value of real estate investments was reduced by $27 million for valuation adjustments at each of December 31, 2005 and 2004.

At December 31, 2005 and 2004, the reported value of real estate included $185 million and $190 million, respectively, of real estate properties occupied by the Company.

Leveraged Leases

Leveraged leases primarily represent investments in commercial aircraft or real estate properties that are leased to third parties and serve as collateral for non-recourse borrowings. Leveraged leases are valued at the present value of future minimum lease payments plus the residual value of the leased asset and classified as other investments in the consolidated statement of financial position. At December 31, 2005 and 2004, the reported value of leveraged leases was $342 million and $458 million, respectively. When the Company determines that an investment in leveraged leases is impaired, the lease value is recalculated with a valuation adjustment made to reduce the statement value. Valuation adjustments are reported as a realized loss. At December 31, 2005 and 2004, the reported value of leveraged leases was reduced by $106 million and $98 million, respectively, of valuation adjustments.

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Capital Gains and Losses

Realized investment gains and losses for the years ended December 31, 2005, 2004 and 2003 were as follows:

	For the year ended December 31, 2005								For the year ended December 31, 2004								For the year ended December 31, 2003
	Realized Gains		Realized Losses			Net Realized Gains (Losses)			Realized Gains		Realized Losses			Net Realized Gains (Losses)			Realized Gains		Realized Losses			Net Realized Gains (Losses)
	(in millions)
Bonds	$	454	$	(536	)	$	(82	)	$	816	$	(369	)	$	447		$	1,369	$	(861	)	$	508
Common and preferred stocks		909		(196	)		713			521		(211	)		310			397		(402	)		(5	)
Mortgage loans		3		(1	)		2			—		(1	)		(1	)		12		—			12
Real estate		64		(1	)		63			48		(8	)		40			198		—			198
Other investments		140		(177	)		(37	)		325		(522	)		(197	)		145		(286	)		(141	)
	$	1,570	$	(911	)		659		$	1,710	$	(1,111	)		599		$	2,121	$	(1,549	)		572
Less: IMR gains (losses)							(61	)							317								538
Less: Capital gains taxes (benefit)							410								188								(105	)
Net realized capital gains						$	310							$	94							$	139

Proceeds from the sale of bond investments totaled $72 billion, $47 billion and $83 billion for the years ended December 31, 2005, 2004 and 2003, respectively.

Realized losses (before capital gains taxes) included $276 million, $116 million and $405 million of valuation adjustments for declines in fair value of investments that were considered to be other-than-temporary for the years ended December 31, 2005, 2004 and 2003, respectively.

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The amortized cost and estimated fair value of bonds and common and preferred stocks for which the estimated fair value had temporarily declined and remained below cost as of December 31, 2005 and 2004, were as follows:

	December 31, 2005
	Decline For Less Than 12 Months							Decline For Greater Than 12 Months
	Cost		Fair Value		Difference			Cost		Fair Value		Difference
	(in millions)
Bonds	$	26,488	$	25,975	$	(513	)	$	5,752	$	5,486	$	(266	)
Common and preferred stocks		68		64		(4	)		81		62		(19	)
Total	$	26,556	$	26,039	$	(517	)	$	5,833	$	5,548	$	(285	)
	December 31, 2004
	Decline For Less Than 12 Months							Decline For Greater Than 12 Months
	Cost		Fair Value		Difference			Cost		Fair Value		Difference
	(in millions)
Bonds	$	13,173	$	12,953	$	(220	)	$	1,698	$	1,616	$	(82	)
Common and preferred stocks		746		704		(42	)		375		318		(57	)
Total	$	13,919	$	13,657	$	(262	)	$	2,073	$	1,934	$	(139	)

Changes in net unrealized investment gains and losses for the years ended December 31, 2005, 2004 and 2003 were as follows:

	For the year ended December 31,
	2005			2004			2003
	(in millions)
Bonds	$	(43	)	$	42		$	188
Common and preferred stocks		304			818			1,372
Other investments		198			75			163
		459			935			1,723
Change in deferred taxes		(116	)		(290	)		(552	)
	$	343		$	645		$	1,171

Securities Lending

The Company has entered into securities lending agreements whereby certain investment securities are loaned to third parties, primarily major brokerage firms. The aggregate statement value of loaned securities was $2.9 billion and $2.5 billion at December 31, 2005 and 2004, respectively. The Company’s policy requires a minimum of 102% of the fair value of the loaned securities, calculated on a daily basis, as collateral in the form of either cash or securities held by the Company or a trustee. At December 31, 2005 and 2004, unrestricted cash collateral held by the Company of $2.9 billion and $2.6 billion, respectively, is classified as cash and invested assets and the offsetting collateral liability of $2.9 billion and $2.6 billion, respectively, is classified as other liabilities in the consolidated statement of financial position. At December 31, 2005 and 2004, additional non-cash collateral of $539 million and $359 million, respectively, was held on the Company’s behalf by a trustee and is not included in the consolidated statement of financial position.

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5. Derivative Financial Instruments

In the normal course of business, the Company enters into derivative transactions, generally to mitigate the risk to assets and surplus from fluctuations in interest rates, foreign currency exchange rates and other market risks. On the statutory basis of accounting, derivatives used for hedging purposes are classified as “cash flow” hedges, which mitigate the risk of variability in future cash flows from the position being hedged, or “fair value” hedges, which mitigate the risk of changes in fair value of the position being hedged. Derivatives classified as hedges that meet the specific requirements for hedge accounting are accounted for in a manner that is consistent with the item being hedged (e.g., at amortized cost or fair value). Derivatives used as hedges, but that do not meet the specific requirements for hedge accounting, are accounted for at fair value.

In addition to hedging, the Company uses derivatives for the purpose of investment “replication.” A replication is a derivative transaction that, when entered into in conjunction with other investments, serves to replicate in the aggregate the characteristics of otherwise permissible investments. Derivatives used as part of a replication are accounted for in a manner consistent with the replicated asset (e.g., at amortized cost or fair value).

The reported statement value of derivatives is classified as other investments in the consolidated statement of financial position.

Fair value is estimated as the amount that the Company would expect to receive or pay upon termination of the derivative contract as of the reporting date. Changes in fair value on open derivative positions accounted for at fair value are reported as unrealized capital gains or losses. Upon maturity or termination of derivative positions accounted for at fair value, capital gains and losses are reported as realized.

The Company does not take positions in derivatives for income generation purposes.

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The Company held the following derivative positions at December 31, 2005 and 2004:

	December 31, 2005								December 31, 2004
Derivative Instrument	Notional Amount		Statement Value			Fair Value			Notional Amount		Statement Value			Fair Value
	(in millions)
Cash Flow Hedges:
Interest rate floors	$	1,250	$	20		$	34		$	925	$	17		$	36
Swaptions		818		33			19			681		30			21
Foreign currency swaps		312		—			(10	)		93		—			(14	)
Construction loan forwards		19		—			1			82		—			3
Foreign currency covers		67		—			67			12		—			12
Interest rate swaps		292		3			11			351		—			9
Interest rate basis swaps		80		—			—			80		—			—
Commodity swaps		3		1			1			3		—			—
Fair Value Hedges:
Credit default swaps		220		(3	)		(3	)		220		(3	)		(3	)
Foreign currency forwards		1,735		13			13			4,171		(72	)		(72	)
Fixed income futures		1,775		—			—			345		—			—
Short equity index futures		441		—			—			—		—			—
Purchased put options		—		—			—			—		—			—
Replications:
Fixed income		136		—			(1	)		210		—			2
Long equity futures		5		—			—			152		—			—
Long fixed income futures		—		—			—			—		—			—

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

Cash Flow Hedges:

Interest rate floors are used to mitigate the asset/liability risks of a significant and sustained decrease in interest rates for certain of the Company’s insurance products. Floors entitle the Company to receive settlement payments from the counterparties if interest rates decline below a specified level. Interest rate floors qualify for hedge accounting.

Swaptions are used to mitigate the asset/liability risks of a significant and sustained increase or decrease in interest rates for certain of the Company’s insurance products. A swaption is a contractual agreement whereby one party holds an option to enter into an interest rate swap with another party on predefined terms. Swaptions qualify for hedge accounting.

Foreign currency swaps are used to mitigate exposure to variable U.S. dollar cash flows from certain bonds denominated in foreign currencies. A foreign currency swap is a contractual agreement to exchange the currencies of two different countries at a specified rate of exchange in the future. Foreign currency swaps qualify for hedge accounting.

Construction loan forwards are entered into to mitigate exposure to market fluctuations for the forecasted purchase of GNMA loan certificates. Construction loan forwards entitle the Company to purchase

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GNMA loan certificates at a predetermined price at a date in the future that does not exceed 10 years. Construction loan forwards qualify for hedge accounting.

Foreign currency covers are used to mitigate the foreign exchange risk on trades of investments denominated in foreign currencies. Foreign currency covers obligate the Company to pay or receive a specified amount of foreign currency at a future date at a specified exchange rate. Foreign currency covers qualify for hedge accounting.

Interest rate swaps are used to mitigate exposure to interest rate risk on certain floating and fixed rate bonds. An interest rate swap is a contractual agreement to pay a rate of interest based upon a reference index in exchange for a fixed rate of interest established at the origination of the contract. Certain of the Company’s interest rate swaps qualify for hedge accounting, while others do not. Unrealized gains of $2 million and $1 million were recognized during 2005 and 2004, respectively, on contracts that did not qualify for hedge accounting.

Interest rate basis swaps are used to mitigate the basis risk on certain hedges of variable rate preferred stocks. An interest rate basis swap is a contractual agreement to pay a rate of return based upon one reference index in exchange for receiving a rate of return based upon a different reference index. Interest rate basis swaps do not qualify for hedge accounting. No unrealized gains or losses were recognized during 2005 or 2004 on these contracts.

Commodity swaps are used to mitigate exposure to market fluctuations for the forward sale of crude oil and natural gas production. They are contractual agreements whereby one party pays a floating commodity price in exchange for a specified fixed commodity price. Commodity swaps do not qualify for hedge accounting. An unrealized gain of $1 million and unrealized losses of $400 thousand were recognized during 2005 and 2004, respectively, on these contracts.

Fair Value Hedges:

Credit default swaps are used to mitigate the credit risk associated with investments in bonds of specific issuers. A credit default swap allows the Company to put the bond to a counterparty at par upon a “credit event” sustained by the bond issuer. A credit event is defined as bankruptcy, failure to pay or obligation acceleration. Certain of the Company’s credit default swaps qualify for hedge accounting, while others do not. Unrealized gains of $1 million and unrealized losses of $3 million were recognized during 2005 and 2004, respectively, on contracts that did not qualify for hedge accounting.

Foreign currency forwards are used to mitigate the foreign exchange risk for portfolios of investments denominated in foreign currencies. Foreign currency forward contracts obligate the Company to deliver a specified amount of foreign currency at a future date at a specified exchange rate. Foreign currency forward contracts do not qualify for hedge accounting. Unrealized gains of $85 million and unrealized losses of $29 million were recognized during 2005 and 2004, respectively, on these contracts.

Fixed income futures are used to mitigate interest rate risk for a portion of the Company’s fixed maturity investment portfolio. Fixed income futures contracts obligate the Company to buy or sell a financial instrument at a specified future date for a specified price. Fixed income futures contracts do not qualify for hedge accounting. Unrealized losses of $9 million and $2 million were recognized during 2005 and 2004, respectively, on these contracts.

Short equity index futures are used to mitigate exposure to market fluctuations for the Company’s portfolio of common stocks. Futures contracts obligate the Company to buy or sell a financial instrument at a specified future date for a specified price. These futures contracts do not qualify for hedge accounting. Unrealized losses of $1 million and $0 were recognized during 2005 and 2004, respectively, on these contracts.

Purchased put options are used to mitigate exposure to credit risk associated with a specific security. Purchased put options give the Company the ability to sell a financial instrument at a specified future date for a specified price. These options do not qualify for hedge accounting. No unrealized gains or losses were recognized during 2005 or 2004 on these contracts.

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Replications:

Fixed income replications are used to replicate a bond investment through the use of credit default swaps, interest rate swaps, credit default indexes and cash market instruments. These replication transactions, including the derivative components, are reported at amortized cost. The average fair value of such contracts was ($4) million and $3 million during 2005 and 2004, respectively. A realized loss of $10 million and a realized gain of $300 thousand were recognized during 2005 and 2004, respectively, on the termination of these contracts.

Long equity futures replications are used to gain equity market investment exposure. These replication transactions are reported at fair value, with changes in fair value reflected as a component of unrealized gains and losses until such time as the contracts are terminated. The average fair value of such contracts was $230 million and $141 million during 2005 and 2004, respectively. Realized losses of $2 million and realized gains of $15 million were recognized during 2005 and 2004, respectively, on the termination of these contracts.

Long fixed income futures replications are used to manage the duration of the fixed income portfolio and mitigate exposure to interest rate changes. These replication transactions are reported at fair value, with changes in fair value reflected as a component of unrealized gains and losses until such time as the contracts are terminated. The average fair value of such contracts was $342 million and $384 million during 2005 and 2004, respectively. Realized gains of $7 million and $6 million were recognized during 2005 and 2004, respectively, on the termination of these contracts.

6. Reserves for Policy Benefits

General account reserves for policy benefits at December 31, 2005 and 2004 are summarized below:

	December 31,
	2005		2004
	(in millions)
Life insurance reserves	$	83,590	$	77,418
Annuity reserves and deposit liabilities		5,193		5,037
Disability income and long-term care unpaid claims and claim reserves		3,373		3,234
Disability income and long-term care active life reserves		1,988		1,899
Total reserves for policy benefits	$	94,144	$	87,588

Life insurance reserves on substantially all policies issued since 1978 are based on the Commissioner’s Reserve Valuation Method (“CRVM”) using the 1958, 1980 or 2001 CSO mortality tables with interest rates ranging from 3.5% to 5.5%. Other life insurance reserves are primarily based on the net level premium method, using various mortality tables at interest rates ranging from 2% to 4.5%. As of December 31, 2005, the Company had $930 billion of total life insurance in-force, including $12 billion of life insurance in-force for which gross premiums were less than net premiums according to the standard valuation methods and assumptions prescribed by the OCI.

Tabular cost has been determined from the basic data for the calculation of policy reserves. Tabular cost less actual reserves released has been determined from the basic data for the calculation of reserves and reserves released. Tabular interest has been determined from the basic data for the calculation of policy reserves. Tabular interest on funds not involving life contingencies is calculated as the product of the valuation rate of interest times the mean of the amount of funds subject to such rate held at the beginning and end of the year of valuation.

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Additional premiums are charged for substandard lives for policies issued after January 1, 1956. Net level premium or CRVM mean reserves are based on multiples of mortality tables or one-half the net flat or other extra mortality charge. The Company waives deduction of fractional premiums upon death of an insured and returns any portion of the final premium beyond the date of death. Cash values are not promised in excess of the legally computed reserves.

Deferred annuity reserves on contracts issued since 1985 are primarily based on the Commissioner’s Annuity Reserve Valuation Method with interest rates ranging from 3.5% to 6.25%. Other deferred annuity reserves are based on contract value. Immediate annuity reserves are based on present value of expected benefit payments with interest rates ranging from 3.5% to 7.5%. Changes in future policy benefits on supplementary contracts without life contingencies are classified as deposit-type transactions and thereby excluded from net additions to policy benefit reserves in the consolidated statement of operations.

At December 31, 2005 and 2004, the withdrawal characteristics of the Company’s general account annuity reserves and deposit liabilities were as follows:

	December 31,
	2005		2004
	(in millions)
Subject to discretionary withdrawal
- with market value adjustment	$	1,276	$	1,290
- without market value adjustment		2,508		2,413
Not subject to discretionary withdrawal		1,409		1,334
Total	$	5,193	$	5,037

Unpaid claims and claim reserves for disability income policies are based on the present value of expected benefit payments, primarily using the 1985 Commissioner’s Individual Disability Table A (“CIDA”), modified for Company experience in the first four years of disability, with interest rates ranging from 3% to 5.5%. Unpaid claims and claim reserves for long-term care policies are based on the present value of expected benefit payments using industry-based long-term care experience with a 4.5% interest rate.

Reserves for unpaid claims, losses and loss adjustment expenses on disability income and long-term care insurance were $3.4 billion and $3.2 billion at December 31, 2005 and 2004, respectively. The table below provides a summary of the changes in these reserves for the years ended December 31, 2005 and 2004.

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	For the year ended December 31,
	2005			2004
	(in millions)
Balance at January 1	$	3,234		$	3,083
Incurred related to:
Current year		462			472
Prior year		68			45
Total incurred		530			517
Paid related to:
Current year		(18	)		(18	)
Prior year		(373	)		(348	)
Total paid		(391	)		(366	)
Balance at December 31	$	3,373		$	3,234

The changes in reserves for incurred claims related to prior years are generally the result of ongoing analysis of recent loss development trends.

Active life reserves for disability income policies issued since 1987 are primarily based on the two-year preliminary term method using the 1985 CIDA for morbidity with a 4.0% interest rate. Active life reserves for prior disability income policies are based on the net level premium method, using the 1964 Commissioner’s Disability Table for morbidity with interest rates ranging from 3.0% to 4.0%.

Active life reserves for long-term care policies consist of mid-terminal reserves and unearned premium. Mid-terminal reserves are based on the one-year preliminary term method, industry-based morbidity experience, total terminations based on the 1983 Individual Annuity Mortality table without lapses or the 1983 Group Annuity Mortality table with lapses, with an interest rate of either 4.0% or 4.5%. For reserves using lapse assumptions, a separate calculation is performed using interest rates ranging from 5.2% to 6.0% and excluding lapses. Reserves resulting from the separate calculation are compared in the aggregate to the statutory minimum and the greater of the two is held.

7. Premium and Annuity Considerations Deferred and Uncollected

Gross deferred and uncollected insurance premiums represent life insurance premiums due to be received from policyowners through the next respective policy anniversary dates. Net deferred and uncollected premiums represent only the portion of gross premiums related to mortality charges and interest, and are reported as an asset in the consolidated statement of financial position.

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Deferred and uncollected premiums at December 31, 2005 and 2004 were as follows:

	December 31, 2005				December 31, 2004
	Gross		Net		Gross		Net
	(in millions)
Ordinary new business	$	171	$	81	$	162	$	76
Ordinary renewal		1,647		1,348		1,570		1,283
	$	1,818	$	1,429	$	1,732	$	1,359

8. Separate Accounts

Following is a summary of separate account liabilities by withdrawal characteristic at December 31, 2005 and 2004:

	December 31,
	2005		2004
	(in millions)
Subject to discretionary withdrawal
- with market value adjustment	$	13,098	$	11,987
- without market value adjustment		—		—
Not subject to discretionary withdrawal		2,434		2,109
Non-policy liabilities		221		222
Total separate account liabilities	$	15,753	$	14,318

While separate account liability values are not guaranteed by the Company, variable annuity and variable life insurance products do include guaranteed minimum death benefits underwritten by the Company. General account reserves for policy benefits included $8 million attributable to these benefits at each of December 31, 2005 and 2004.

Premiums and other considerations received from variable life and variable annuity policyowners during the years ended December 31, 2005 and 2004 were $1.6 billion and $1.3 billion, respectively. These amounts are reported as premiums in the consolidated statement of operations. The subsequent transfer of these receipts to the separate accounts is reported in transfers to separate accounts in the consolidated statement of operations, net of amounts received from the separate accounts to provide for policy benefit payments to variable product policyowners.

Following is a summary reconciliation of amounts reported as transfers to and from separate accounts in the summary of operations of the Company’s NAIC Separate Account Annual Statement with the amount reported as net transfers to separate accounts in the accompanying consolidated statement of operations for the years ended December 31, 2005, 2004 and 2003:

111

	For the year ended December 31,
	2005			2004			2003
	(in millions)
From Separate Account Annual Statement:
Transfers to separate accounts	$	1,721		$	1,428		$	1,224
Transfers from separate accounts		(1,043	)		(1,012	)		(1,125	)
		678			416			99
Reconciling adjustments:
Investment management and administrative charges		—			—			73
Mortality, breakage and taxes		(14	)		6			116
Net transfers to separate accounts	$	664		$	422		$	288

9. Employee and Representative Benefit Plans

The Company sponsors noncontributory defined benefit retirement plans (“plans”) for all eligible employees and financial representatives. These include tax-qualified plans, as well as nonqualified plans that provide benefits to certain participants in excess of ERISA limits for qualified plans. The Company’s funding policy for the tax qualified plans is to make annual contributions that are no less than the minimum amount needed to comply with the requirements of ERISA and no greater than the maximum amount deductible for federal income tax purposes. The Company contributed $180 million and $38 million to the qualified employee retirement plan during 2005 and 2004, respectively, and expects to contribute $38 million in 2006.

In addition to defined pension benefits, the Company provides certain health care and life insurance benefits (“postretirement benefits”) to retired employees, financial representatives and eligible dependents. Substantially all employees and financial representatives will become eligible for these benefits if they reach retirement age while working for the Company.

Aggregate assets and projected benefit obligations of the defined benefit plans and for postretirement benefits at December 31, 2005 and 2004, and changes in assets and obligations for the years then ended, were as follows:

	Defined Benefit Plans						Postretirement Benefit Plans
	2005			2004			2005			2004
	(in millions)
Fair value of plan assets at January 1	$	1,950		$	1,738		$	22		$	20
Changes in plan assets:
Actual return on plan assets		173			208			1			4
Company contributions		180			38			—			—
Actual plan benefits paid		(39	)		(34	)		(2	)		(2	)
Fair value of plan assets at December 31	$	2,264		$	1,950		$	21		$	22
Projected benefit obligation at January 1	$	2,041		$	1,729		$	196		$	166
Changes in benefit obligation:
Service cost of benefits earned		72			70			20			18
Interest cost on projected obligations		118			111			11			11
Projected plan benefits paid		(45	)		(40	)		(11	)		(10	)
Experience losses (gains)		47			171			(8	)		11
Projected benefit obligation at December 31	$	2,233		$	2,041		$	208		$	196

Plan assets are invested primarily in common stocks and corporate debt securities through a separate account of the Company. The investment objective of the plans is to maximize long-term total rate of return, consistent with prudent investment risk management and in accordance with ERISA requirements. Investments are made for the sole interest of the plans’ participants.

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While significant exposure to publicly traded equity securities is warranted by the long-term nature of expected benefit payments, diversification across asset classes is maintained to provide a risk/reward profile consistent with the objectives of the plans’ participants. Diversified equity investments are subject to an aggregate maximum exposure of 75%, with holdings in any one corporate issuer not to exceed 3% of total assets. Asset mix is rebalanced regularly to maintain holdings within target asset allocation ranges. The measurement date for plan assets is December 31, with the fair value of plan assets based primarily on quoted market values.

Plan assets by asset class at December 31, 2005 and 2004 were as follows:

	Defined Benefit Plans								Postretirement Benefit Plans
	2005		% of FV		2004		% of FV		2005		% of FV		2004		% of FV
	(in millions)
Bonds	$	965	43	%	$	856	44	%	$	9	42	%	$	9	43	%
Preferred stock		7	0	%		7	0	%		—	0	%		—	0	%
Public common stock		1,239	55	%		1,058	54	%		12	58	%		13	57	%
Private equities and other		53	2	%		29	2	%		—	0	%		—	0	%
Total assets	$	2,264	100	%	$	1,950	100	%	$	21	100	%	$	22	100	%

The projected benefit obligation (“PBO”) represents the actuarial net present value of future benefit obligations. For defined benefit plans, PBO includes assumptions as to future salary increases. This measure is consistent with the ongoing concern assumption and is mandated for measuring pension obligations. The accumulated benefit obligation (“ABO”) is similar to the calculation of the PBO, but is based only on current salaries, with no assumption of future salary increases. The aggregate ABO for the defined benefit plans of the Company was $1.8 billion and $1.6 billion at December 31, 2005 and 2004, respectively.

The following table summarizes assumptions used in estimating the projected benefit obligations at December 31, 2005, 2004 and 2003:

	Defined Benefit Plans						Postretirement Benefit Plans
	2005		2004		2003		2005		2004		2003
Discount rate	5.75	%	6.00	%	6.50	%	5.75	%	6.00	%	6.50	%
Long-term rate of return on plan assets	8.00	%	8.00	%	8.00	%	8.00	%	8.00	%	8.00	%
Annual increase in compensation	4.50	%	4.50	%	4.50	%	4.50	%	4.50	%	4.50	%

The long-term rates of return on plan assets are estimated assuming an allocation of plan assets among asset classes consistent with December 31, 2005. Returns are estimated by asset class based on the current risk free interest rate plus a risk premium. The risk premium is based on historical returns and other factors such as expected reinvestment returns and anticipated asset manager performance.

The projected benefit obligation for postretirement benefits at December 31, 2005 and 2004 assumed an annual increase in future retiree medical costs of 10%, grading down to 5% over five years and remaining level thereafter. A further increase in the assumed healthcare cost trend of 1% in each year would increase the accumulated postretirement benefit obligation as of December 31, 2005 by $19 million and net periodic postretirement benefit expense during 2005 by $3 million. A decrease in the assumed healthcare cost trend of 1% in each year would reduce the accumulated postretirement benefit obligation as of December 31, 2005 and net periodic postretirement benefit expense during 2005 by the same amounts.

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Following is an aggregate reconciliation of the funded status of the plans to the related financial statement liability reported by the Company at December 31, 2005 and 2004:

	Defined Benefit Plans						Postretirement Benefit Plans
	2005			2004			2005			2004
	(in millions)
Fair value of plan assets at December 31	$	2,264		$	1,950		$	21		$	22
Projected benefit obligation at December 31		2,233			2,041			208			196
Funded status		31			(91	)		(187	)		(174	)
Unrecognized net experience losses		513			466			44			50
Unrecognized initial net asset		(557	)		(577	)		—			—
Additional minimum liability		(10	)		(16	)		—			—
Nonadmitted asset		(326	)		(114	)		—			—
Net pension liability	$	(349	)	$	(332	)	$	(143	)	$	(124	)

Unrecognized net experience gains or losses represent cumulative amounts by which plan experience for return on plan assets or growth in benefit liabilities have varied from related assumptions. These differences accumulate without recognition in the Company’s financial statements unless they exceed 10% of plan assets or projected benefit obligation, whichever is greater. If they exceed this limit, they are amortized into net periodic benefit costs over the remaining average years of service until retirement of the plan participants, which is currently fourteen years for employee plans and twelve years for field representative plans.

Unrecognized initial asset represents the amount by which the fair value of plan assets exceeded the projected benefit obligation for funded pension plans upon the adoption of the statutory basis of accounting for pensions as of January 1, 2001. The Company has elected not to record a direct credit to surplus for this excess, electing instead to amortize this unrecognized initial asset as a credit to net periodic benefit cost in a systematic manner until exhausted.

An additional minimum liability is required if a plan’s accumulated benefit obligation exceeds plan assets or accrued pension liabilities. This liability was $10 million, $16 million and $7 million at December 31, 2005, 2004 and 2003, respectively. Changes in the liability are reported as a direct adjustment to surplus in the consolidated statement of changes in surplus.

Any net pension assets for funded plans are nonadmitted and are thereby excluded from reported assets and surplus in the consolidated statement of financial position.

The components of net periodic benefit costs for the years ended December 31, 2005, 2004 and 2003 were as follows:

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	Defined Benefit Plans												Postretirement Benefits
	2005			2004			2003			2005			2004			2003
	(in millions)
Components of net periodic benefit cost:
Service cost of benefits earned	$	72		$	70		$	64		$	20		$	18		$	15
Interest cost on projected obligations		118			111			103			11			11			10
Amortization of experience gains and losses		15			13			34			1			1			2
Amortization of initial net asset		(20	)		(21	)		(46	)		—			—			—
Expected return on plan assets		(166	)		(138	)		(113	)		(4	)		(1	)		(1	)
Net periodic expense	$	19		$	35		$	42		$	28		$	29		$	26

The expected benefit payments by the defined benefit plans and the postretirement plans for the years 2006 through 2015 are as follows:

	Defined Benefit Plans		Postretirement Benefit Plans
	(in millions)
2006	$	52	$	11
2007		58		13
2008		65		14
2009		72		16
2010		80		17
2011-2015		581		115
	$	908	$	186

The Company also sponsors a contributory 401(k) plan for eligible employees and a noncontributory defined contribution plan for financial representatives. For the years ended December 31, 2005, 2004 and 2003 the Company expensed total contributions to these plans of $25 million, $24 million and $23 million, respectively.

10. Reinsurance

The Company limits its exposure to life insurance death benefits by ceding insurance coverage to various reinsurers. The Company retains a maximum of $35 million of coverage per individual life and a maximum of $50 million of coverage per joint life. The Company also cedes a portion of its exposure to group disability benefits on a coinsurance basis and has an excess reinsurance contract for certain individual disability income policies issued prior to 1999 with retention limits varying based upon coverage type. The Company also participates in catastrophic risk sharing pools.

Amounts shown in the consolidated financial statements are reported net of the impact of reinsurance. Reserves for policy benefits at December 31, 2005 and 2004 were reported net of ceded reserves of $1.3 billion and $1.2 billion, respectively.

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The effects of reinsurance on premium revenue and benefits expense for the years ended December 31, 2005, 2004 and 2003 were as follows:

	For the year ended December 31,
	2005			2004			2003
	(in millions)
Direct premium revenue	$	12,078		$	11,397		$	10,959
Premiums ceded		(715	)		(715	)		(652	)
Net premium revenue	$	11,363		$	10,682		$	10,307
Direct benefit expense		12,161			11,568			11,110
Benefits ceded		(475	)		(478	)		(483	)
Net benefit expense	$	11,686		$	11,090		$	10,627

In addition, the Company reported $182 million, $207 million and $184 million in allowances from reinsurers for reimbursement of commissions and other expenses on ceded business for the years ended December 31, 2005, 2004 and 2003, respectively. These amounts are classified as 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. There were no reinsurance recoverables at December 31, 2005 and 2004 that were considered by management to be uncollectible.

11. Income Taxes

The Company files a consolidated federal income tax return including the following entities:
Northwestern Mutual Investment Services, LLC	Frank Russell Company
Northwestern International Holdings, Inc.	Bradford, Inc.
NML Real Estate Holdings, LLC and subsidiaries	Network Planning Advisors, LLC
NML Securities Holdings, LLC and subsidiaries	Mason Street Advisors, LLC
Northwestern Investment Management Company, LLC	NML – CBO, LLC
Northwestern Mutual Wealth Management Company	JYD Assets, LLC

The Company collects from or refunds to these subsidiaries their share of consolidated income taxes determined under written tax-sharing agreements. During 2004, the Company sold its majority interest in Baird Holding Company (see Note 14). Prior to the sale, Baird Holding Company was included in the Company’s consolidated income tax return. Federal income tax returns for years through 2001 are closed as to further assessment of tax. The liability for income taxes payable in the consolidated statement of financial position reflects taxes payable at the reporting date plus a provision for additional taxes that may become due with respect to the open tax years.

The Company accounts for deferred tax assets and liabilities, which reflect the financial statement impact of cumulative temporary differences between the tax and financial statement bases of assets and liabilities. The significant components of the net deferred tax asset at December 31, 2005 and 2004 were as follows:

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	December 31,
	2005		2004		Change
	(in millions)
Deferred tax assets:
Policy acquisition costs	$	794	$	757	$	37
Investment assets		135		118		17
Policy benefit liabilities		1,705		1,644		61
Benefit plan obligations		313		284		29
Guaranty fund assessments		7		10		(3	)
Nonadmitted assets		63		61		2
Other		63		37		26
Gross deferred tax assets		3,080		2,911		169
Deferred tax liabilities:
Premium and other receivables		539		504		35
Investment assets		1,480		1,464		16
Other		4		7		(3	)
Gross deferred tax liabilities		2,023		1,975		48
Net deferred tax assets	$	1,057	$	936	$	121

The statutory basis of accounting limits the amount of gross deferred tax assets that can be included in Company surplus. This limit is based on a formula that takes into consideration available loss carryback capacity, expected timing of reversal for existing temporary differences, gross deferred tax liabilities and the level of Company surplus. At December 31, 2005 and 2004, the Company’s gross deferred tax assets did not exceed this limitation.

Changes in deferred tax assets and liabilities related to unrealized gains and losses on investments are reported as a component of changes in unrealized capital gains and losses in the consolidated statement of changes in surplus. Other net changes in deferred tax assets and liabilities are direct adjustments to surplus and separately reported in the consolidated statement of changes in surplus.

The major components of current income tax expense (benefit) were as follows:

	For the year ended December 31,
	2005			2004			2003
	(in millions)
Income tax	$	113		$	(85	)	$	(65	)
Tax credits		(56	)		(39	)		(25	)
Total current tax expense (benefit)	$	57		$	(124	)	$	(90	)

The Company’s taxable income can vary significantly from gain from operations before taxes due to temporary and permanent differences in revenue recognition and expense deduction between tax and financial statement bases of reporting.

In previous years the Company was subject to an “equity tax” that was applied only to mutual life insurance companies. In March 2002, Congress passed legislation that suspended the equity tax for tax years 2001 through 2003. While the Company was subject to the equity tax in 2004, no related expense recognition was considered necessary. Legislation was enacted in April 2004 that permanently repealed the equity tax effective January 1, 2005.

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The Company’s effective tax rates were 16%, 12% and 13% for the years ended December 31, 2005, 2004 and 2003, respectively. The effective rate is not the statutory rate applied to the Company’s taxable income or loss by the Internal Revenue Service. It is a financial statement relationship that represents the ratio between the sum of total taxes, including those that affect net income and changes in deferred taxes not related to unrealized gains and losses on investments, to the sum of gain from operations before taxes and pretax net realized gains or losses. These financial statement effective rates were different than the applicable federal tax rate of 35% due primarily to differences between book and tax recognition of net investment income and realized capital gains and losses, as well as prior year adjustments.

Income taxes paid in 2005 and prior years of $1.1 billion are available at December 31, 2005 for recoupment in the event of future tax losses.

12. Frank Russell Company Acquisition and Goodwill

The Company acquired Frank Russell Company (“Russell”) effective January 1, 1999. Russell, a global leader in multi-manager investment services, provides investment products and services in more than 39 countries. The initial purchase price of approximately $1.0 billion was funded with a combination of cash, senior notes issued by Russell and bank debt. The purchase agreement also called for additional contingent consideration to be paid to the former owners of Russell based upon the financial performance of Russell during the five year period ended December 31, 2003.

The acquisition was accounted for using the statutory purchase method, whereby the excess of the acquisition price over the fair value of Russell net assets at the time of the acquisition was attributed to goodwill reported in the accounts of Russell. Further, the statutory purchase method required that the Company’s cost basis of its investment in Russell be reduced, through a direct reduction of Company surplus, for the amount by which Russell goodwill exceeded 10% of the Company’s surplus at the time of the acquisition.

The Company applied for, and was granted, permission by the OCI for an alternative accounting treatment (“permitted practice”), whereby all Russell goodwill, including any subsequent additions to goodwill resulting from payment of contingent purchase consideration, be charged off as a direct reduction of Company surplus. This permitted practice differs from that required by the NAIC “Accounting Practices and Procedures Manual,” which requires that any goodwill not in excess of 10% of the Company’s surplus be amortized using a straight-line method over the period during which the acquiring entity benefits economically or ten years, whichever is shorter.

At December 31, 2005 and 2004, the Company had made cumulative direct reductions of surplus for goodwill associated with the Russell acquisition of $981 million. These charge-offs exceeded the Company’s equity method investment basis in Russell by $531 million and $581 million at December 31, 2005 and 2004, respectively, which is classified as a reduction of the Company’s total investment in common stocks.

If the Company had not received permission for this alternative accounting treatment, Company surplus as reported in the statement of financial position would have been greater by $257 million, $320 million and $358 million at December 31, 2005, 2004 and 2003, respectively, and net income as reported in the statement of operations would have been lower by $63 million, $61 million and $53 million for the years then ended, respectively.

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13. Contingencies and Guarantees

The Company has unconditionally guaranteed repayment of $350 million of senior notes and up to $50 million of bank borrowings owed by Russell.

In the normal course of business, the Company has guaranteed certain obligations of other affiliates and made guarantees of operating leases or future minimum compensation payments on behalf of its financial representatives. The maximum exposure under these guarantees totaled approximately $386 million at December 31, 2005. The Company believes that the likelihood is remote that payments will be required under these guarantees and therefore has not accrued a contingent liability in the consolidated statement of financial position. In addition, the Company routinely makes commitments to fund mortgage loans or other investments in the normal course of business. These commitments aggregated to $3.7 billion at December 31, 2005 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, losses that may ultimately result from such actions would not have a material effect on the Company’s financial position at December 31, 2005.

14. Related Party Transactions

During 2005, the Company and other affiliates redeemed $94 million of seed money from mutual funds within the Company’s Mason Street Funds, Inc. subsidiary. The Company recognized $6 million of losses on these redemptions.

The Company has agreed to combine the Mason Street mutual funds with new or existing mutual funds of two competitors. These transactions are subject to approval by fund shareholders at a meeting that is anticipated to take place at the end of March 2006. The financial statement impact on the Company during 2006 of these combinations is expected to be immaterial. Following the exchange of Mason Street fund shares for shares in the respective competitor funds, the Company will be required to maintain investments of up to $900 million in the funds for up to three years following the closing of the transaction. At December 31, 2005 the Company held investments in Mason Street funds totaling $971 million, which are reported at fair value as common stocks in the consolidated statement of financial position.

See Note 2 regarding certain related party transactions made during 2005 in conjunction with the adoption of new accounting guidance for investments in subsidiary, controlled or affiliated entities.

On May 13, 2004 the Company sold its majority interest in Baird Holding Company (“Baird”) to Baird management and employees. At the time of the sale, the Company owned approximately 51% of Baird common stock, with Baird management and employees owning the remainder. The Company realized a $30 million gain on the sale of its remaining interest in Baird, which was included in realized capital gains in the consolidated statement of operations during 2004. The Company financed a substantial portion of the sale price through the purchase of $240 million of subordinated notes, with attached warrants, issued by Baird. These notes have interest rates of between 6.50% and 8.25% and maturities of between ten and twelve years. Notes in the amount of $210 million remain outstanding at December 31, 2005 and are classified as bonds in the consolidated statement of financial position.

During 2004, the Company refinanced a credit facility owed by Russell and provided additional capital through the purchase, at par, of $258 million of notes issued by Russell. These notes have interest rates of between 4.19% and 6.35% and maturities of between five and ten years. Notes in the amount of $191 million remain outstanding at December 31, 2005 and are classified as bonds in the consolidated statement of financial position.

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During 2004, the Company transferred certain investments to a wholly-owned subsidiary as a capital contribution. The fair value of these securities was $222 million at the time of the transfer. Realized capital gains of $2 million were recognized during 2004 upon the transfer of these assets.

During 2003, the Company transferred certain investments to a majority-owned subsidiary as a capital contribution. The fair value of these securities was $219 million at the time of the transfer. Realized capital losses of $7 million were recognized during 2003 upon the transfer of these assets.

15. Fair Value of Financial Instruments

The fair value of investment assets, including derivatives, and certain policy liabilities at December 31, 2005 and 2004 were as follows:

	December 31, 2005				December 31, 2004
	Statement Value		Fair Value		Statement Value		Fair Value
	(in millions)
Assets:
Bonds	$	65,899	$	67,294	$	60,930	$	63,791
Common and preferred stocks		8,120		10,844		7,414		9,312
Mortgage loans		18,118		18,766		17,240		18,674
Real estate		1,620		2,542		1,619		2,415
Policy loans		10,265		11,603		9,750		10,771
Other investments		6,935		8,393		5,774		6,730
Cash and temporary investments		2,124		2,124		2,949		2,949
Liabilities:
Investment-type insurance reserves	$	4,100	$	3,892	$	4,023	$	3,824

The fair value of bonds is generally based upon values published by the SVO of the NAIC and upon quoted market prices when no SVO value is available. The estimated fair value of common and preferred stocks are based upon quoted market prices if available. For those not actively traded, fair value is estimated using independent pricing services or internally developed pricing models. See Note 12 regarding the statement value of the Company’s investment in Russell. The fair value of mortgage loans is estimated by discounting estimated future cash flows using market interest rates for debt with comparable credit risk and maturities. Real estate fair value is estimated by discounting estimated future cash flows using market interest rates. Policy loan fair value is estimated based on discounted projected cash flows using market interest rates and assumptions regarding future loan repayments based on Company experience. Other investments include real estate joint ventures, which are valued by discounting estimated future cash flows using market interest rates, as well as other joint ventures and partnerships, for which the equity accounting basis approximates fair value. Other investments also include derivative financial instruments, for which fair value is estimated as the amount that the Company would expect to receive or pay upon termination of the derivative contract as of the reporting date.

The estimated fair value of investment-type insurance reserves is estimated by discounting estimated future cash flows at market interest rates for similar instruments with comparable maturities.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY IN RESPECT OF NML VARIABLE ANNUITY ACCOUNT A AND NML VARIABLE ANNUITY ACCOUNT C (Registrant)
By	/s/ EDWARD J. ZORE
	Edward J. Zore President and Chief Executive Officer

Date: March 24, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

	TITLE
/S/ EDWARD J. ZORE Edward J. Zore	Trustee, President and Chief Executive Officer
/S/ GARY A. POLINER Gary A. Poliner	Senior Vice President and Chief Financial Officer
/S/ JOHN C. KELLY John C. Kelly	Vice President and Controller
/S/ EDWARD E. BARR* Edward E. Barr	Trustee
/S/ JOHN M. BREMER* John M. Bremer	Trustee
/S/ PETER W. BRUCE* Peter W. Bruce	Trustee
/S/ ROBERT C. BUCHANAN* Robert C. Buchanan	Trustee
/S/ GEORGE A. DICKERMAN* George A. Dickerman	Trustee
/S/ DAVID J. DRURY* David J. Drury	Trustee
/S/ CONNIE K. DUCKWORTH* Connie K. Duckworth	Trustee
/S/ JAMES D. ERICSON* James D. Ericson	Trustee

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/S/ DAVID A. ERNE* David A. Erne	Trustee
/S/ J. E. GALLEGOS* J. E. Gallegos	Trustee
/S/ JAMES P. HACKETT* James P. Hackett	Trustee
/S/ HANS HELMERICH* Hans Helmerich	Trustee
/S/ STEPHEN F. KELLER* Stephen F. Keller	Trustee
/S/ BARBARA A. KING* Barbara A. King	Trustee
/S/ MARGERY KRAUS* Margery Kraus	Trustee
/S/ J. THOMAS LEWIS* J.Thomas Lewis	Trustee
/S/ DANIEL F. MCKEITHAN, JR.* Daniel F. McKeithan, Jr.	Trustee
/S/ ULICE PAYNE, JR.* Ulice Payne, Jr.	Trustee
/S/ H. MASON SIZEMORE, JR.* H. Mason Sizemore, Jr.	Trustee
/S/ PETER M. SOMMERHAUSER* Peter M. Sommerhauser	Trustee
/S/ JOHN E. STEURI* John E. Steuri	Trustee
/S/ JOHN J. STOLLENWERK* John J. Stollenwerk	Trustee
/S/ BARRY L. WILLIAMS* Barry L. Williams	Trustee
/S/ KATHRYN D. WRISTON* Kathryn D. Wriston	Trustee

*By	/s/ EDWARD J. ZORE
	Edward J. Zore, Attorney in Fact, pursuant to the Power of Attorney attached as exhibit 24.1 hereto.

Each of the above signatures is affixed as of March 24, 2006

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SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED PURSUANT TO SECTION 12 OF THE ACT

As supplemental information, the Commission is separately being furnished with four copies of each of the following documents: (1) 2005 Annual Report for NML Variable Annuity Account A; and (2) 2005 Annual Report for NML Variable Annuity Account C.

No proxy material is prepared specifically for contract holders under NML Variable Annuity Account A or NML Variable Annuity Account C. The Northwestern Mutual Life Insurance Company, a mutual company with no shareholders, does prepare a proxy statement and proxy for each policyholder of a company-issued insurance policy or annuity contract.

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INDEX TO EXHIBITS

EXHIBIT	DESCRIPTION	FILED HEREWITH
3.1	Restated Articles of Incorporation of The Northwestern Mutual Life Insurance Company. (This exhibit was filed in electronic format with Post-Effective Amendment No. 6 on Form N-4 for NML Variable Annuity Account A, File No. 33-58476, CIK 0000790162, dated November 13, 1995, and is incorporated herein by reference.)
3.2	By-Laws of The Northwestern Mutual Life Insurance Company as amended December 4, 2002. (This exhibit was filed in electronic format with the Annual Report on Form 10-K for the fiscal year ended December 31, 2002 of The Northwestern Mutual Life Insurance Company, dated March 27, 2003 (“2002 From 10-K”), and is incorporated herein by reference.)
3.3	Resolution of the Board of Trustees of The Northwestern Mutual Life Insurance Company creating “Northwestern Mutual Variable Annuity Account A”. (This exhibit was filed in electronic format with the Registration Statement on Form N-4 for NML Variable Annuity Account A, File No. 333-22455, CIK 0000790162, dated February 27, 1997, and is incorporated herein by reference.)
3.4	Resolution of the Board of Trustees of The Northwestern Mutual Life Insurance Company amending the operating authorities of NML Variable Annuity Account A.	X
3.5	Resolution of the Board of Trustees of The Northwestern Mutual Life Insurance Company creating Separate Account C. (This exhibit was filed in electronic format with the Annual Report on Form 10-K for the fiscal year ended December 31, 1999 of The Northwestern Mutual Life Insurance Company in respect of NML Variable Annuity Account A and NML Variable Annuity Account C, dated March 28, 2000 (“1999 Form 10-K”), and is incorporated herein by reference.)
3.6	Resolution of the Board of Trustees of The Northwestern Mutual Life Insurance Company to use Separate Account C to facilitate the issuance and maintenance of the Contracts and renaming the Account “NML Variable Annuity Account C”. (This exhibit was filed in electronic format with the 1999 Form 10-K and is incorporated herein by reference.)
3.7	Resolution of the Board of Trustees of The Northwestern Mutual Life Insurance Company amending the operating authorities of NML Variable Annuity Account C.	X
10.1	Amended Flexible Payment Variable Annuity Front Load Contract, RR.V.A.FR. (0803) (sex neutral). (This exhibit was filed in electronic format with the Annual Report on Form 10-K for the fiscal year ended December 31, 2003 of The Northwestern Mutual Life Insurance Company in respect of NML Variable Annuity Account A and NML Variable Annuity Account C, dated March 24, 2004 (“2003 Form 10-K”), and is incorporated herein by reference.)
10.2	Amended Flexible Payment Variable Annuity Back Load Contract, RR.V.A.BK. (0803) (sex neutral). (This exhibit was filed in electronic format with the 2003 Form 10-K, and is incorporated herein by reference.)
10.3	Amended Variable Annuity Front Load and Back Load Contract Payment Rate Tables, RR.V.A.FR. (0803) and RR.V.A.BK. (0803) (sex distinct), included in Exhibits 10.1 and 10.2 above and are incorporated herein by reference.
10.4	Amended Enhanced Death Benefit for Front Load and Back Load Contracts, VA. EDB. (0803), included in Exhibits 10.1 and 10.2 above and are incorporated herein by reference.
10.5	Waiver of Withdrawal Charge for Back Load Contract, VA.WWC. (03200), included in Exhibit 10.2 above and is incorporated herein by reference.
10.6	Amended Application Forms for Front Load and Back Load Contracts, included in Exhibits 10.1 and 10.2 above and are incorporated herein by reference.
10.7	Amended Flexible Payment Variable Annuity Front Load Contract, RR.V.A.FR. (0704) (sex neutral). (This exhibit was filed in electronic format with Post-Effective Amendment No. 7 on Form N-4 for NML Variable Annuity Account A, File No. 333-72913, CIK 0000790162, dated April 29, 2004, and is incorporated herein by reference.)

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EXHIBIT	DESCRIPTION	FILED HEREWITH
10.8	Amended Flexible Payment Variable Annuity Back Load Contract, RR.V.A.BK. (0704) (sex neutral). (This exhibit was filed in electronic format with Post-Effective Amendment No. 7 on Form N-4 for NML Variable Annuity Account A, File No. 333-72913, CIK 0000790162, dated April 29, 2004, and is incorporated herein by reference.)
10.9	Amended Variable Annuity Front Load and Back Load Contract Payment Rate Tables, RR.V.A.FR. (0704) and RR.V.A.BK. (0704), (sex distinct). (This exhibit was filed in electronic format with Post-Effective Amendment No. 7 on Form N-4 for NML Variable Annuity Account A, File No. 333-72913, CIK 0000790162, dated April 29, 2004, and is incorporated herein by reference.)
10.10	Form of Flexible Payment Variable Annuity Front Load Contract, RR.V.A. FR. (0805). (This exhibit was filed in electronic format with Post-Effective Amendment No. 11 on Form N-4 for NML Variable Annuity Account A, File No. 333-72913, CIK 0000790162, dated August 19, 2005, and is incorporated herein by reference.)
10.11	Form of Flexible Payment Variable Annuity Back Load Contract, RR.V.A. BK. (0805). (This exhibit was filed in electronic format with Post-Effective Amendment No. 11 on Form N-4 for NML Variable Annuity Account A, File No. 333-72913, CIK 0000790162, dated August 19, 2005, and is incorporated herein by reference.)
10.12	Forms of Applications for Front Load and Back Load Contracts (0805), with Owner Identity Verification (0104) and Variable Annuity Suitability Supplement (0805), included in Exhibits 10.10 and 10.11 above and are incorporated herein by reference.
10.13	Form of Participation Agreement Among Russell Investment Funds, Russell Fund Distributors, Inc. and The Northwestern Mutual Life Insurance Company. (This exhibit was filed in electronic format with the Registration Statement on Form N-4 for NML Variable Annuity Account A, File No. 333-72913, CIK 0000790162, dated February 25, 1999, and is incorporated herein by reference.)
10.14	Form of Participation Agreement among Variable Insurance Products Funds, Fidelity Distributors Corporation and The Northwestern Mutual Life Insurance Company. (This exhibit was filed in electronic format Post-Effective Amendment No. 9 on Form N-6 for Northwestern Mutual Variable Life Account, File No. 33-89188, CIK 0000742277, dated February 28, 2003, and is incorporated herein by reference.)
10.15	Form of Administrative Service Fee Agreement between The Northwestern Mutual Life Insurance Company and Frank Russell Company. (This exhibit was filed in electronic format with the Registration Statement on Form N-4 for NML Variable Annuity Account A, File No. 333-72913, CIK 0000790162, dated February 25, 1999, and is incorporated herein by reference.)
10.16	Distribution Contract. (This exhibit was filed in electronic format with the Registration Statement on Form N-4 for NML Variable Annuity Account A, File No. 333-22455, CIK 0000790162, dated February 27, 1997, and is incorporated herein by reference.)
10.17	Group Combination Annuity Contract, NVP.1C.(0594), with amended application, including Contract amendment (sex neutral). (This exhibit was filed in electronic format with Post-Effective Amendment No. 22 on Form N-4 for NML Variable Annuity Account C, File No. 2-89905-01, CIK 0000790163, dated May 31, 2001, and is incorporated herein by reference.)
10.18	Simplified Load Schedule as to NML Variable Annuity Account C. (Referenced to Group Combination Annuity Contract, NVP.1C.(0594) (sex neutral), filed as Exhibit B(4)(a) to Form N-4 Post-Effective Amendment No. 22 for NML Variable Annuity Account C, File No. 2-89905-01, filed on May 31, 2001.)	X
10.19	Amended Application Form for Group Combination Annuity Contract, included in Exhibit 10.17 above.

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14.1	The Northwestern Mutual Life Insurance Company Guidelines for Business Conduct. (This exhibit was filed in electronic format with the 2003 Form 10-K, and is incorporated herein by reference.)
21.1	Subsidiaries of the Registrant	X
24.1	Power of Attorney	X
31.1	Rule 15d-14(a) Certification of Edward J. Zore	X
31.2	Rule 15d-14(a) Certification of Gary A. Poliner	X
32.1	Section 1350 Certification of Edward J. Zore and Gary A. Poliner	X

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EX-3.4

Exhibit 3.4

RESOLUTION OF THE BOARD OF TRUSTEES

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

Amendment to NML Variable Annuity Account A Operating Authority; Authorization to Register as an Investment Company; and Approval of Fee-Based Variable Annuity Contract

January 25, 2006

WHEREAS, The Board of Trustees of The Northwestern Mutual Life Insurance Company (the “Company”) adopted a resolution on February 14, 1968 (the “1968 Resolution”) establishing a separate account in accordance with the provisions of Section 206.385 of the Wisconsin Statutes of 1965, as amended by Chapter 338, Wisconsin laws of 1967 designated the Northwestern Mutual Variable Annuity Account A (subsequently renamed the “NML Variable Annuity Account A” and hereinafter referred to as the “Account”) to facilitate the issuance of such variable annuity contracts (the “Contracts”) as may be eligible for certain Federal income tax benefits under Sections 401 and 403 of the Internal Revenue Code, and as may be included in the Account without requiring the Account to be registered under the Investment Company Act of 1940 (the “1940 Act”);

WHEREAS, The 1968 Resolution includes certain additional provisions relating to offering prices of the Contracts, and accounting policies and administration of the Account (“Operating Authority”); and

WHEREAS, It is desired to permit the issuance of Contracts as shall require the Account to be registered as a unit investment trust under the 1940 Act and to amend the Operating Authority:

NOW, THEREFORE, BE IT RESOLVED As follows:

1. Contracts Supported by Account. Subject to the applicable provisions of Sections 611.24 and 611.25 of the Wisconsin Statutes and Section Ins 2.13 of the Wisconsin Administrative Code, the Account shall be used hereafter for the issuance of, and serve as the funding medium to support reserves for, one or more classes of Contracts sponsored by the Company that require registration of the Account under the 1940 Act, as well as the continued use of the Account for Contracts that do not require such registration. Hereafter, each class of Contracts may be issued in an indefinite amount.

2. New Class of Contract. A new flexible payment deferred variable annuity contract for distribution without sales charges, but subject to fees assessed by investment advisers or broker-dealers for investment-related services they provide to owners of the contracts (“Fee-Based Contracts”), as reviewed with and recommended by the Agency and Marketing Committee of the Board of Trustees is hereby approved.

3. Investment Policy. The Account or any Subaccount (hereinafter defined) may be operated either as a unit investment trust or a management company under the 1940 Act, or in any other form allowed by law, if deemed by the Company to be in the best

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interests of owners of the Contracts. Assets of the Account shall be invested and reinvested in shares of investment portfolios of management investment companies, or in units or other interests in unit investment trusts, real estate investment trusts or other pooled investment vehicles (“Permitted Investments”), as permitted by the Contracts, to the extent the Account or any Subaccount is operated as a unit investment trust. Permitted Investments may include those that are sponsored by the Company or its affiliates and those that are sponsored by unaffiliated third parties.

4. SEC Registration and Regulatory Filings. The executive officers of the Company, with such assistance from the Company’s independent certified public accountants, legal counsel and independent consultants or others as they may require, are authorized on behalf of the Account and the Company to take all action necessary or appropriate to:

(a) register the Account as a unit investment trust under the 1940 Act;

(b) register each class of Contracts in such amounts, which may be indefinite amounts, as the officers of the Company shall from time to time deem appropriate under the Securities Act of 1933 ( the “1933 Act”);

(c) on behalf of the Account and the Company, prepare and cause to be filed with the Securities and Exchange Commission (“SEC”):

(i) a notification of registration on Form N-8A and a registration statement registering the Account under the 1940 Act;

(ii) a registration statement registering the Fee-Based Contract as a new class of Contracts under the 1933 Act; and

(iii) any and all amendments to the notification of registration on Form N-8A and registration statements registering the Account and one or more classes of Contracts for which the Account is used as a funding medium;

(d) prepare and cause to be filed with state and federal regulatory agencies such other filings, and any amendments thereto, as may be necessary or desirable to obtain requisite qualifications, registrations and/or authorizations or exemptions to operate the Account and facilitate the offering for sale, and the issuance and administration of, the Contracts; and

(e) take any and all action as is hereafter necessary or advisable (including entering into whatever agreements and contracts may be necessary) in order to maintain registrations, qualifications, authorizations or exemptions relating to the Account and the Contracts as long as such action is believed to be in the best interests of the Account and the Company.

5. Agent for Service. The Secretary of the Company is duly appointed as agent for service under any registration statement filed with the SEC and under any other consent to service of process requirement applicable to the Account or the Contracts, and the Secretary is duly authorized to (i) further appoint an appropriate state official or other third party for service of process as may be allowed or required by applicable state law and (ii) receive communications and notices from the SEC or any other regulatory body having jurisdiction over the Account or the Contracts.

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6. Operation of Account and Administration of Contracts. The executive officers of the Company are authorized to:

(a) divide the Account into one or more investment subaccounts (the “Subaccounts”), each of which shall invest assets allocated to the Subaccount in Permitted Investments as permitted by the Contracts, to the extent the Subaccount is operated as a unit investment trust;

(b) add or remove any Subaccount, change the designation of any Subaccount or combine any Subaccounts as may hereafter be deemed necessary or appropriate;

(c) substitute shares of, or units or interests in, one designated Permitted Investment for another as may hereafter be deemed necessary or appropriate;

(d) invest such amount of the Company’s cash in the Account or in any Subaccount thereof or in any Permitted Investment as may be deemed necessary or appropriate to facilitate commencement, or ongoing operation of the Account or the Permitted Investment and/or to meet any minimum capital requirements under the 1940 Act or any state laws or regulations;

(e) transfer cash from time to time between the Company’s general account and the Account as deemed necessary or appropriate and consistent with the terms of the Contracts;

(f) transfer assets of the Account in excess of reserve requirements applicable to Contracts supported by the Account to the Company’s general account;

(g) transfer assets of the Account that are associated with one class of Contracts to another separate account consistent with the terms of the Contracts; and

(h) change the designation of the Account under the 1940 Act or make any other nonmaterial change to the Account or the terms of the Contracts, or interpret the provisions of the Contracts in such manner, as deemed necessary or appropriate, to comply with applicable federal or state law or to facilitate operation of the Account or administration or issuance of the Contracts, provided such change or interpretation is not inconsistent with the terms of the Contracts.

7. Accounting Policies. The Account shall be administered consistent with the following accounting policies:

(a) income, gains and losses, realized or unrealized, from Account assets shall be credited to or charged against the Account, and further credited to or charged against the appropriate Subaccount, without regard to other income, gains or losses of either the Company or any other Subaccount of the Account; and

(b) the portion of Account assets that equals the reserves and other liabilities under the Contracts supported by the Account may not be charged with liabilities arising out of any other business the Company may conduct.

8. Proxy Voting. The executive officers of the Company are authorized to establish procedures under which the Company will provide voting rights for owners of the Contracts with respect to securities owned by the Account.

9. Depositor and Principal Underwriter. Hereafter, the Company shall serve as sole depositor of the Account and Northwestern Mutual Investment Services, LLC (“NMIS”) shall serve as principal underwriter for all Contracts as the terms “depositor” and “principal underwriter” are used in the 1940 Act, and the executive officers of the Company are authorized to execute such agreement or agreements as they deem necessary or appropriate relating thereto, and to execute additional agreements as they deem necessary or appropriate with the Permitted Investments (or with the principal

129

underwriters or distributors of the Permitted Investments) that may be designated for investment of Account assets from time to time concerning purchase and redemption of shares, or units or interests in, such Permitted Investments by the Account.

10. Standards of Conduct. The following Standards of Conduct shall apply to the Company and its officers, directors, employees and affiliates with respect to the purchase or sale of investments of the Account.

Neither the Company, nor any of its officers, directors, employees or affiliates, shall:

(a) Employ any device, scheme or artifice to defraud the Account or the owners of the Contracts;

(b) Make any untrue statement of a material fact with respect to the investments of the Account or omit to state a material fact necessary in order to make the statements made not misleading;

(c) Engage in any act, practice or course of business that operates or would operate as a fraud or deceit upon the Account or the owners of the Contracts;

(d) Engage in any manipulative practice with respect to the Account or the owners of the Contracts;

(e) Engage in any transaction with the Account, or with the Company or any affiliate of the Company acting on behalf of the Account, except as permitted under applicable laws, rules, regulations, orders, or other interpretations of any government, agency, or self-regulatory organization; or

(f) Borrow money or securities from the Account other than under a Contract loan provision.

11. General Authority. The executive officers of the Company, and any other person that may be duly designated by an executive officer, are authorized to execute and deliver such agreements and other documents and do such acts and things as each of them may deem necessary, appropriate or desirable to carry out the intent and purpose of this resolution.

12. Interpretation. To the extent the aforesaid provisions are inconsistent with any provision in the 1968 Resolution or any other resolution heretofore adopted with respect to the subject matter of this resolution, this resolution shall control.

130

EX-3.7

Exhibit 3.7

RESOLUTION OF THE BOARD OF TRUSTEES

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

Amendment to NML Variable Annuity Account C Operating Authority; Authorization to Register as an Investment Company; and Approval of Financial Representative Variable Annuity Contract

January 25, 2006

WHEREAS, The Board of Trustees of The Northwestern Mutual Life Insurance Company (the “Company”) adopted a resolution on July 22, 1970 (the “1970 Resolution”) establishing a separate account in accordance with the provisions of Section 206.385 of the Wisconsin Statutes of 1967 designated the NML Separate Account C (subsequently renamed the “NML Variable Annuity Account C” and hereinafter referred to as the “Account”) to facilitate the issuance of agreements which may be offered by the Company to the trustees of tax-qualified pension and profit sharing plans in connection with the purchase of annuity contracts (the “Tax–Qualified Contracts”) without requiring the Account to be registered under the Investment Company Act of 1940 (the “1940 Act”);

WHEREAS, The 1970 Resolution includes certain additional provisions relating to offering prices of the Tax-Qualified Contracts, and accounting policies and administration of the Account (“Operating Authority”); and

WHEREAS, It is desired to permit the issuance of both Tax-Qualified Contracts and any other variable annuity contracts (together with the Tax-Qualified Contracts referred to herein as the “Contracts”) as shall require the Account to be registered as a unit investment trust under the 1940 Act and to amend the Operating Authority:

NOW, THEREFORE, BE IT RESOLVED As follows:

7. Contracts Supported by Account. Subject to the applicable provisions of Sections 611.24 and 611.25 of the Wisconsin Statutes and Ins Section 2.13 of the Wisconsin Administrative Code, the Account shall be used hereafter for the issuance of, and serve as the funding medium to support reserves for, one or more classes of Contracts sponsored by the Company that require registration of the Account under the 1940 Act, as well as the continued use of the Account for Contracts that do not require such registration. Hereafter, each class of Contracts may be issued in an indefinite amount.

8. New Class of Contract. A new flexible payment deferred variable annuity contract for distribution without sales charges, which shall be offered for sale as either a Tax-Qualified or Non-Qualified Contract to registered representatives and associated persons of Northwestern Mutual Investment Services, LLC (“NMIS”) and their immediate family (meaning spouses, or equivalent if recognized under local law, parents and children under age twenty-one) and any such other persons as the executive officers so determine (the “Financial Representatives Contract”), as reviewed with and recommended by the Agency and Marketing Committee of the Board of Trustees is hereby approved. The executive officers are authorized to further limit the offerees of the Financial Representatives Contract as they determine appropriate.

131

9. Investment Policy. The Account or any Subaccount (hereinafter defined) may be operated either as a unit investment trust or a management company under the 1940 Act, or in any other form allowed by law, if deemed by the Company to be in the best interests of owners of the Contracts. Assets of the Account shall be invested and reinvested in shares of investment portfolios of management investment companies, or in units or other interests in unit investment trusts, real estate investment trusts or other pooled investment vehicles (“Permitted Investments”), as permitted by the Contracts, to the extent the Account or any Subaccount is operated as a unit investment trust. Permitted Investments may include both those that are sponsored by the Company or its affiliates and those that are sponsored by unaffiliated third parties.

10. SEC Registration and Regulatory Filings. The executive officers of the Company, with such assistance from the Company’s independent certified public accountants, legal counsel and independent consultants or others as they may require, are authorized on behalf of the Account and the Company to take all action necessary or appropriate to:

(a) register the Account as a unit investment trust under the 1940 Act;

(b) register each class of Contracts in such amounts, which may be indefinite amounts, as the officers of the Company shall from time to time deem appropriate under the Securities Act of 1933 ( the “1933 Act”);

(c) on behalf of the Account and the Company, prepare and cause to be filed with the Securities and Exchange Commission (“SEC”):

(j) a notification of registration on Form N-8A and a registration statement registering the Account under the 1940 Act;

(iv) a registration statement registering the Financial Representatives Contract as a new class of Contracts under the 1933 Act; and

(v) any and all amendments to the notification of registration on Form N-8A and registration statements registering the Account and one or more classes of Contracts for which the Account is used as a funding medium;

(d) prepare and cause to be filed with state and federal regulatory agencies such other filings, and any amendments thereto, as may be necessary or desirable to obtain requisite qualifications, registrations and/or authorizations or exemptions to operate the Account and facilitate the offering for sale, and the issuance and administration of, the Contracts; and

(e) take any and all action as is hereafter necessary or advisable (including entering into whatever agreements and contracts may be necessary) in order to maintain registrations, qualifications, authorizations or exemptions relating to the Account and the Contracts as long as such action is believed to be in the best interests of the Account and the Company.

11. Agent for Service. The Secretary of the Company is duly appointed as agent for service under any registration statement filed with the SEC and under any other consent to service of process requirement applicable to the Account or the Contracts, and the Secretary is duly authorized to (i) further appoint an appropriate state official or other third party for service of process as may be allowed or required by applicable state law and (ii) receive communications and notices from the SEC or any other regulatory body having jurisdiction over the Account or the Contracts.

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12. Operation of Account and Administration of Contracts. The executive officers of the Company are authorized to:

(a) divide the Account into one or more investment subaccounts (the “Subaccounts”), each of which shall invest assets allocated to the Subaccount in Permitted Investments as permitted by the Contracts, to the extent the Subaccount is operated as a unit investment trust;

(b) add or remove any Subaccount, change the designation of any Subaccount or combine any Subaccounts as may hereafter be deemed necessary or appropriate;

(c) substitute shares of, or units or interests in, one designated Permitted Investment for another as may hereafter be deemed necessary or appropriate;

(d) invest such amount of the Company’s cash in the Account or in any Subaccount thereof or in any Permitted Investment as may be deemed necessary or appropriate to facilitate commencement, or ongoing operation of the Account or the Permitted Investment and/or to meet any minimum capital requirements under the 1940 Act or any state laws or regulations;

(e) transfer cash from time to time between the Company’s general account and the Account as deemed necessary or appropriate and consistent with the terms of the Contracts;

(f) transfer assets of the Account in excess of reserve requirements applicable to Contracts supported by the Account to the Company’s general account;

(g) transfer assets of the Account that are associated with one class of Contracts to another separate account consistent with the terms of the Contracts; and

(h) change the designation of the Account under the 1940 Act or make any other nonmaterial change to the Account or the terms of the Contracts, or interpret the provisions of the Contracts in such manner, as deemed necessary or appropriate, to comply with applicable federal or state law or to facilitate operation of the Account or administration or issuance of the Contracts, provided such change or interpretation is not inconsistent with the terms of the Contracts.

7. Accounting Policies. The Account shall be administered consistent with the following accounting policies:

(a) income, gains and losses, realized or unrealized, from Account assets shall be credited to or charged against the Account, and further credited to or charged against the appropriate Subaccount, without regard to other income, gains or losses of either the Company or any other Subaccount of the Account; and

(b) the portion of Account assets that equals the reserves and other liabilities under the Contracts supported by the Account may not be charged with liabilities arising out of any other business the Company may conduct.

8. Proxy Voting. The executive officers of the Company are authorized to establish procedures under which the Company will provide voting rights for owners of the Contracts with respect to securities owned by the Account.

9. Depositor and Principal Underwriter. Hereafter, the Company shall serve as sole depositor of the Account and NMIS shall serve as principal underwriter for all Contracts

133

as the terms “depositor” and “principal underwriter” are used in the 1940 Act, and the executive officers of the Company are authorized to execute such agreement or agreements as they deem necessary or appropriate relating thereto, and to execute additional agreements as they deem necessary or appropriate with the Permitted Investments (or with the principal underwriters or distributors of the Permitted Investments) that may be designated for investment of Account assets from time to time concerning purchase and redemption of shares, or units or interests in, such Permitted Investments by the Account.

10. Standards of Conduct. The following Standards of Conduct shall apply to the Company and its officers, directors, employees and affiliates with respect to the purchase or sale of investments of the Account.

Neither the Company, nor any of its officers, directors, employees or affiliates, shall:

(a) Employ any device, scheme or artifice to defraud the Account or the owners of the Contracts;

(b) Make any untrue statement of a material fact with respect to the investments of the Account or omit to state a material fact necessary in order to make the statements made, in light of the circumstances in which they were made, not misleading;

(c) Engage in any act, practice or course of business that operates or would operate as a fraud or deceit upon the Account or the owners of the Contracts;

(d) Engage in any manipulative practice with respect to the Account or the owners of the Contracts;

(e) Engage in any transaction with the Account, or with the Company or any affiliate of the Company acting on behalf of the Account, except as permitted under applicable laws, rules, regulations, orders, or other interpretations of any government, agency, or self-regulatory organization; or

(f) Borrow money or securities from the Account other than under a Contract loan provision.

11. General Authority. The executive officers of the Company, and any other person that may be duly designated by an executive officer, are authorized to execute and deliver such agreements and other documents and do such acts and things as each of them may deem necessary, appropriate or desirable to carry out the intent and purpose of this resolution.

12. Interpretation. To the extent the aforesaid provisions are inconsistent with any provision in the 1970 Resolution or any other resolution heretofore adopted with respect to the subject matter of this resolution, this resolution shall control.

134

EX-10.18

Exhibit 10.18

LOADS, FEES, AND CHARGES

(SUBJECT TO AMENDMENT, SECTION 6.5)

DEDUCTIONS FROM PURCHASE PAYMENTS (SECTION 4.3):

INSTALLATION FEE: $ 750

SALES LOAD: NOT APPLICABLE

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

1.25% AT ISSUE: 1.50% 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	124
Simplified Load

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EX-21.1

EXHIBIT 21.1

SUBSIDIARIES OF THE REGISTRANT

(AS OF FEBRUARY 28, 2006)

Account A and Account C have no subsidiaries. The following sets forth the name and jurisdiction of incorporation of the subsidiaries of The Northwestern Mutual Life Insurance Company.

NAME OF SUBSIDIARY	JURISDICTION OF INCORPORATION
Alexandra International Sales, Inc.	U.S. Virgin Islands
Amber, LLC	Delaware
Baraboo, Inc.	Delaware
Bayridge, LLC	Delaware
Bradford, Inc.	Delaware
Brendan International Sales, Inc.	U.S. Virgin Islands
Brian International Sales, Inc.	U.S. Virgin Islands
Burgundy, LLC	Delaware
Carlisle Ventures, Inc.	Delaware
Cass Corporation	Delaware
Chateau, Inc.	Delaware
Chateau, LLC	Delaware
Chateau I, LP	Delaware
Coral, Inc.	Delaware
Diversey, Inc.	Delaware
Elderwood International Sales, Inc.	U.S. Virgin Islands
Elizabeth International Sales, Inc.	U.S. Virgin Islands
Frank Russell Company	Washington
Frank Russell Investment Management Company	Washington
Green Room Properties, LLC	Delaware
Hazel, Inc.	Delaware
Health Invest, LLC	Delaware
Higgins, Inc.	Delaware
Highbrook International Sales, Inc.	U.S. Virgin Islands
Hobby, Inc.	Delaware
INV Corp.	Delaware
Justin International FSC, Inc.	U.S. Virgin Islands
Jersey Par, LLC	Delaware
JYD Assets, LLC	Delaware
KerryAnne International Sales, Inc.	U.S. Virgin Islands
Klode, Inc.	Delaware
Kristiana International Sales, Inc.	U.S. Virgin Islands
Lake Bluff, Inc.	Delaware
Larkin, Inc.	Delaware
Logan, Inc.	Delaware
Lydell, Inc.	Delaware
Mallon International Sales, Inc.	U.S. Virgin Islands
Maroon, Inc.	Delaware
Mason & Marshall, Inc.	Delaware
Mason Street Advisors, LLC	Delaware
Mason Street Funds, Inc.	Maryland
Mitchell, Inc.	Delaware
NM Albuquerque Inc.	New Mexico
NM Regal, LLC	Delaware
NM-Exchange, LLC	Delaware
NM Harrisburg, Inc.	Pennsylvania
NM Imperial, LLC	Delaware
NM Majestic Holdings, LLC	Delaware
NMIS Alabama Agency, LLC	Alabama
NMIS Massachusetts Insurance Agency, LLC	Massachusetts
NMIS Georgia Agency, LLC	Georgia
NML Buffalo Agency, Inc.	New York
NML-CBO, LLC	Delaware
NML Development Corporation	Delaware

136

NML/Mid-Atlantic, Inc.	New Jersey
NML Real Estate Holdings, LLC	Wisconsin
NML Securities Holdings, LLC	Wisconsin
NML/Tallahassee, Inc.	Florida
NVOP, Inc.	Delaware
NVOP, LLC	Delaware
NVOP Fairfax Ridge	Delaware
NW Pipeline, Inc.	Texas
Network Planning Advisors, L.L.C.	Wisconsin
New Arcade, LLC	Wisconsin
Nicolet, Inc.	Delaware
North Van Buren, Inc.	Delaware
Northwestern Ellis Company	Nova Scotia
Northwestern Foreign Holdings B.V.	Netherlands
Northwestern International Holdings, Inc.	Delaware
Northwestern Investment Management Company, LLC	Delaware
Northwestern Long Term Care Insurance Company	Illinois
Northwestern Mutual Investment Services, LLC	Wisconsin
Northwestern Mutual Las Vegas, Inc.	Nevada
Northwestern Mutual Life International, Inc.	Delaware
Northwestern Mutual Series Fund, Inc.	Maryland
Northwestern Mutual Wealth Management Company	Federal Savings Bank (subject to jurisdiction of the Office of Thrift Supervision)
Northwestern Real Estate Partnership Holdings, LLC	Delaware
Northwestern Reinsurance Holdings N.V.	Netherlands
Northwestern Securities Holdings, LLC	Delaware
Northwestern Securities Partnership Holdings, LLC	Delaware
Olive, Inc.	Delaware
Painted Rock Development Company	Arizona
Park Forest Northeast, Inc.	Delaware
RE Corporation	Delaware
Regina International Sales, Inc.	U.S. Virgin Islands
Rocket Sports, Inc.	Texas
Russell Investment Funds	Massachusetts
Russet, Inc.	Delaware
Scotty, LLC	Delaware
Sean International Sales, Inc.	U.S. Virgin Islands
Solar Resources, Inc.	Wisconsin
St. James Apartments, LLC	Delaware
Stadium and Arena Management, Inc.	Delaware
Summit Mall, LLC	Delaware
Travers International Sales, Inc.	U.S. Virgin Islands
Tupelo, Inc.	Delaware
Walden OC, LLC	Delaware
White Oaks, Inc.	Delaware

Certain non-insurance subsidiaries are omitted on the basis that, considered in the aggregate, they did not constitute a significant subsidiary as defined by Regulation S-X at December 31, 2005.

137

EX-24.1

EXHIBIT 24.1

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

TRUSTEES’

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that each of the undersigned Trustees of THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, organized by a special act of the Wisconsin Legislature (the “Company”), by his or her execution hereof, or an identical counterpart hereof, does hereby constitute and appoint each or either of Edward J. Zore and John M. Bremer, as his or her attorney-in-fact and agent, and in his or her name, place and stead, to execute and sign any registration statement, including any pre-effective or post-effective amendments thereto, together with all exhibits and schedules thereto and other documents and instruments associated therewith to be filed on either Form N-4 or Form N-6 (or on any other applicable form) with the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933 and/or the Investment Company Act of 1940 in connection with variable contracts issued through separate accounts that are established by the Company, including the following:

(a) NML Variable Annuity Account A (333-72913);

(b) NML Variable Annuity Account B (2-29240);

(c) Select Variable Annuity Fee-Based (333-33232);

(d) NML Variable Annuity Account C (2-89905-01);

(e) Northwestern Mutual Variable Life Account (2-89972);

(f) Northwestern Mutual Variable CompLife (33-89188);

(g) Northwestern Mutual Variable Executive Life (333-36865);

(h) Northwestern Mutual Variable Joint Life (333-59103);

(i) The new Variable Annuity Contracts to be issued through Accounts A and C and filed with the SEC on or about April 12, 2006; and

(j) The new Variable Life Contracts to be issued through the Northwestern Mutual Variable Life Account II and filed with the SEC beginning in May 2006.

In addition, we do hereby constitute and appoint each or either of Edward J. Zore and John M. Bremer, as his or her attorney-in-fact and agent, and in his or her name, place and stead, to execute and sign one or more reports for the fiscal year ended December 31, 2005, including amendments thereto, together with all exhibits and schedules thereto and other documents and instruments associated therewith, to be filed on Form 10-K with the SEC under the Securities Exchange Act of 1934 in connection with any such registration statement or amendment thereto. Each of the undersigned does hereby further authorize each or either of said attorneys-in-fact and agents to make said filings with the SEC and with any federal or state securities or insurance regulatory authority as they determine to be required or necessary. Each of the undersigned hereby ratifies and confirms all acts of each and either of said attorneys-in-fact and agents which they may lawfully do or cause to be done by virtue hereof. As used herein, “variable contracts” means any contracts providing for benefits or values which may vary according to the investment experience of the separate account associated therewith, including variable annuity contracts and variable life insurance policies.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his hand this 22nd day of March, 2006.

/s/ EDWARD E. BARR	Trustee
Edward E. Barr
/s/ JOHN M. BREMER	Trustee
John M. Bremer
/s/ PETER W. BRUCE	Trustee
Peter W. Bruce
/s/ ROBERT C. BUCHANAN	Trustee
Robert C. Buchanan
/s/ GEORGE A. DICKERMAN	Trustee
George A. Dickerman

138

/s/ DAVID J. DRURY	Trustee
David J. Drury
/s/ CONNIE K. DUCKWORTH	Trustee
Connie K. Duckworth
/s/ JAMES D. ERICSON	Trustee
James D. Ericson
/s/ DAVID A. ERNE	Trustee
David A. Erne
/s/ J. E. GALLEGOS	Trustee
J. E. Gallegos
/s/ JAMES P. HACKETT	Trustee
James P. Hackett
/s/ HANS HELMERICH	Trustee
Hans Helmerich
/s/ STEPHEN F. KELLER	Trustee
Stephen F. Keller
/s/ BARBARA A. KING	Trustee
Barbara A. King
/s/ MARGERY KRAUS	Trustee
Margery Kraus
/s/ J. THOMAS LEWIS	Trustee
J. Thomas Lewis
/s/ DANIEL F. McKEITHAN, JR.	Trustee
Daniel F. McKeithan, Jr.
/s/ ULICE PAYNE, JR.	Trustee
Ulice Payne, Jr.
/s/ H. MASON SIZEMORE, JR.	Trustee
H. Mason Sizemore, Jr.
/s/ PETER M. SOMMERHAUSER	Trustee
Peter M. Sommerhauser
/s/ JOHN E. STEURI	Trustee
John E. Steuri

139

/s/ JOHN J. STOLLENWERK	Trustee
John J. Stollenwerk
/s/ BARRY L. WILLIAMS	Trustee
Barry L. Williams
/s/ KATHRYN D. WRISTON	Trustee
Kathryn D. Wriston
/s/ EDWARD J. ZORE	Trustee
Edward J. Zore

140

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Edward J. Zore, certify that:

1. I have reviewed this Annual Report on Form 10-K of The Northwestern Mutual Life Insurance Company in respect of NML Variable Annuity Account A and NML Variable Annuity Account C;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ EDWARD J. ZORE

Edward J. Zore

President and Chief Executive Officer

Date: March 24, 2006

141

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Gary A. Poliner, certify that:

1. I have reviewed this Annual Report on Form 10-K of The Northwestern Mutual Life Insurance Company in respect of NML Variable Annuity Account A and NML Variable Annuity Account C;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ GARY A. POLINER

Gary A. Poliner

Senior Vice President and Chief Financial Officer

Date: March 24, 2006

142

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Annual Report on Form 10-K of The Northwestern Mutual Life Insurance Company in respect of NML Variable Annuity Account A and NML Variable Annuity Account C (the “Registrant”) for the period ended December 31, 2005 (the “Report”), Edward J. Zore, as Chief Executive Officer of the Registrant, and Gary A. Poliner, as Chief Financial Officer of the Registrant, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ EDWARD J. ZORE	Date: March 24, 2006
Edward J. Zore
President and Chief Executive Officer
/s/ GARY A. POLINER	Date: March 24, 2006
Gary A. Poliner
Senior Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to The Northwestern Mutual Life Insurance Company in respect of NML Variable Annuity Account A and NML Variable Annuity Account C (the “Registrant”) and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

143