Insurers ditched wrappers after the products drew regulatory scrutiny. A Swiss firm has quietly advanced to a discreet custodian for the controversial instruments, and is readying its next step.
Last month, Liechtenstein's financial regulator FMA ordered the transfer of insurance policies to Skandia Leben, a Liechtenstein-based subsidiary of Zurich's Inlife Group. The transaction attracted little attention despite the explosive nature of the deal: the FMA's order followed the discovery of a major insurance scam involving 3,000 policyholders and 3.6 billion Swiss francs ($3.6 billion) in assets.
The so-called wrappers grew popular in the early 2000s until they drew the attention of foreign tax authorities: some clients has used the obscure instruments to avoid taxes. The ensuing crackdown led most insurers to exit the market – except for a few, which specialized in the maintenance and wind-down of the wrappers.
Inlife Group is one of the largest: the Swiss firm has swallowed the run-off of five firms in Switzerland and Liechtenstein in the last five years, including that of UBS Life and Aspecta. With the latest Liechtenstein deal, Inlife's assets rose to 5.6 billion francs.
With U+ into Eastern Europe
The bump has led Inlife to rebrand its Liechtenstein, Swiss, and German entities into Insurevolution, as well as to expand its run-off business. The new firm of 150 employees will manage 250,000 life insurance policies and 15 billion francs in assets.
The new group also has expansion plans for life insurance wrappers, under the U+ brand, based on worldwide wealth growth. U+ is waiting for regulatory approval in the Czech Republic and in Slovakia, where Inlife brought a 50,000-policy business from Swiss insurer Baloise. The plan is to offer traditional products like life insurance and fund-linked savings products.
Hannover Re Ties
In Germany, Insurevolution last year took over Mylife, a life insurer. «We've observed for some time the consolidation and focusing on life insurance, driven by the biggest players», Chairman Martin Vogl told finews.com. «This opens up more niches for specific needs». Insurevolution wants to grow, including by acquisition, in these areas.
Klaus Mutschler is behind the push: the Zurich-based businessman founded Germany's Cash.Life, which made a name for itself buying abandoned life insurance policies. Since the early 2000s, this has grown into a meshwork of companies and stakes including Swiss Rock Asset Management, which is run by Julius Baer's former funds boss Roman von Ah.
Mutschler holds 85 percent of Insurevolution. The company tied up on run-offs with one of the world's largest reinsurers, Hannover Re. The Germany company holds the remaining 15 percent of Insurevolution.
