Liechtenstein Life is one of the insurance industry’s blockchain pioneers. It has launched its own blockchain fund and uses the technology to streamline billing processes.
Liechtenstein-based life insurance firm Liechtenstein Life has made headlines last year when it launched its own blockchain fund. The goal is to offer clients a way to invest in innovative technologies.
“Innovation is a key element of Liechtenstein Life,” says Holger Roth, CSO at Liechtenstein Life. “Including blockchain projects into our investment portfolio enables people to get involved with new technologies and benefit from the rapid growth of cryptocurrencies, while building up their retirement funds.”
Portfolio includes blockchain equity, cryptocurrencies, bonds and precious metals
Liechtenstein Life was established in 2008 in Ruggell, Liechtenstein. The company sells life insurance policies, mostly in Switzerland, Liechtenstein, Germany and Austria.
The newly launched blockchain fund is part of Liechtenstein Life’s overall investment portfolio. It’s set up as a UCITS funds (“Undertakings for the Collective Investment in Transferable Securities”), which means it adheres to the regulatory framework of the European Commission and its high standards for investor protection.
The fund invests mostly in equities of established companies that undertake blockchain projects. Thus, it’s not a venture capital fund, there are no early stage startups involved. Instead, the focus is on companies that already have a long-standing track record in their respective industries, but have also made a commitment to implementing blockchain-based projects.
Additionally, the fund invests in structured products that are based on cryptocurrencies such as Bitcoin, Ethereum or Ripple. The fund also includes precious metals and highly rated bonds, which can make up to 35% of the overall portfolio mix, depending on the market trends, explains Stephan Bruckner, Head of Sales at Liechtenstein Life.
Blockchain projects fit well to a life insurer’s portfolio strategy
Liechtenstein Life believes blockchain technology should be part of a life insurer’s portfolio mix, because of its enormous growth potential. Blockchain technology might disrupt nearly every industry. It is clearly a long-term trend and thus fits well to a life insurer’s investment strategy, explains Bruckner.
As life insurance policies are long-term investments, Liechtenstein Life does not focus on blockchain startups. The risk is too high. Bruckner says, “Companies like Danone or Nestle are established in their markets and can benefit from blockchain technology in areas like food trust or food tracking.”
Cryptocurrencies, however, come with high volatility and thus pose similar risk-return profiles as startups. Instead of investing in cryptocurrencies directly, Liechtenstein Life will add structured crypto investment vehicles that hedge against the volatility risks associated with cryptocurrencies.
“Swiss and Liechtenstein-based banks have developed products that have great security features,” explains Bruckner. Liechtenstein Life will invest in these products.
Liechtenstein Life uses blockchain technology in its operations
Besides its blockchain fund, Liechtenstein Life is also using blockchain technology in its own operations.
The company has launched a project in cooperation with novaCapta Software & Consulting Schweiz AG and Microsoft, which aims at using blockchain technology to improve billing processes and speed up the processing of insurance claims.
“We believe blockchain technology will in future play a key role in business and bring enormous change in every industry, especially in the insurance industry,” says Liechtenstein Life CIO Christoph Böckle.
Blockchain technology and smart contracts can automate insurance processes and make them faster, more transparent and more safe. Already today, insurers use these technologies to manage scenarios such as travel delays, says Bruckner.
Liechtenstein Life has realized the potential of blockchain technologies and wants to be an innovative frontrunner in the insurance industry. Both, the blockchain fund as well as the company’s internal projects are setting the company on track for the future.