Over the next few months we will be looking at jurisdictions where AILO membership is growing, and give you a snapshot of each jurisdiction’s history, advantages, opportunities and challenges. We begin with Liechtenstein.
A decade of progress
Liechtenstein has come a long way as an international finance centre over the past decade or so. However, says Stephan Moltzen who is a Member of the Management Board at YOUPLUS Assurance AG, it’s important to know about the principality’s centuries of history to appreciate how and why it has been able to establish its modern day status as a safe haven for wealth in a turbulent world.
Centuries of stability
Its geographical location at the heart of Europe, and a proven track record for economic, legal and social stability, created the firm foundations on which its current position is built. Liechtenstein gained its sovereignty in 1806, but historians trace its foundation back to 1719 when it acquired its present name and became an independent principality of the Holy Roman Empire.
High levels of trust created by centuries of stability is particularly important today in the context of global economic and political crises which make Liechtenstein attractive to corporations and HNWIs. That’s now strengthened by being a very modern, well-regulated, forward-thinking jurisdiction with a determination to provide the highest standards of trust and transparency. Many of its advantages derive from a close economic relationship with the EU through the European Economic Area Agreement (EEA), which Liechtenstein joined in 1995. EEA status includes participation in the EU internal market’s agencies and programmes, and it’s regarded as being a major factor behind Liechtenstein’s economic success. However, of equal importance are the facts that this is complemented by having a legal system modelled on that of Switzerland, being in a customs union with Switzerland since 1923 and the Swiss Franc as its currency.
Leading on AML & CFT
Over the past decade or so Liechtenstein has made significant progress towards reaching its goal of becoming best in its class for AML/CFT measures and related compliance processes. One example of the progress that has been made is that it has implemented the fourth and fifth EU Anti-Money Laundering Directives, plus Regulation (EU) 2015/847 which relates to information accompanying transfers of funds. The Financial Market Authority in Liechtenstein has made it very clear that there is a zero-tolerance policy regarding anti-money laundering and combating the financing of terrorism.
Liechtenstein also offers the advantage of very attractive low tax rates for individuals and businesses. Click here for more details.
Looking ahead, the life sector in Liechtenstein – as it is in many jurisdictions – is moving towards more consolidation, says Stephan. That’s a process which he believes is being driven primarily by increased regulatory measures and declining margins. As it has done over the past decade or so, Liechtenstein is highly likely to continue to steer a steady course in an uncertain world by remaining independent. All the signs are that in addition to its political autonomy it will remain legally independent from Switzerland and economically independent from the EU.
The principality’s international reputation should continue to improve, driven by its commitment to quality, stability, innovation and sustainability. While significant progress has been made to implement robust regulatory processes and achieve conformity with best practice regarding legal and tax matters, there’s more work to be done regarding its image. In some quarters of the finance industry there are still outdated perceptions which are shaped by the image that Liechtenstein had over a decade ago. Slowly but surely, those outdated perceptions will continue to be challenged and changed as its life and finance sectors grow.
Most importantly from a life sector point of view, Liechtenstein’s strategy will be based on thinking in terms of generations rather than decades.
Many thanks to Stephan Moltzen for giving us the benefit of his expertise which was a great help in creating this article. Stephan is a Member of the Management Board at YOUPLUS Assurance AG (Liechtenstein-based specialists in life insurance in specific European markets and a business with assets under management worth around €6billion). His successful career in the financial services industry spans more than two decades, including nearly 10 years at Deutsche Bank. YOUPLUS offers single life premium or universal life products to HNWIs and has partnerships with 60 custodian banks and more than 100 asset managers.
Did you know?
Here are 3 quick facts about Liechtenstein which are all relevant to the jurisdiction’s growth as an international finance centre:
- It has AAA ratings from Standard & Poor, Fitch and Moody. In May 2022 S&P confirmed its AAA rating and described Liechtenstein’s outlook as ‘stable’. The Liechtenstein Bankers’ Association commented that this was an ‘excellent assessment’ because it was made despite the ‘extremely high degree of global political and economic uncertainties as well as the expected second-round effects as a result of the war in Ukraine’.
- It is home to a strong life sector which has a diverse range of insurance businesses that offer competitive, Europe-compliant products. According to Liechtenstein Finance figures, at the end of 2021 the balance sheet total of the country’s insurance companies was €31billion while gross premiums were worth approximately €5.6billion, and invested capital around €27billion. Figures from the same source say there are currently 33 insurance companies active in Liechtenstein that operate in life, non-life insurance and reinsurance.
- Liechtenstein continues to strengthen its robust but pragmatic regulatory framework. A recent example of that was in November 2022 and an announcement by the Global Forum on Transparency and Exchange of Information for Tax Purposes. It awarded Liechtenstein the best possible rating for its implementation of and compliance with the global standard for the Automatic Exchange of Information (AEOI) in tax matters which aims to combat international tax avoidance and evasion.
Our Liechtenstein Members
AILO has six Full Members in Liechtenstein at the time of writing – and our presence in the principality is growing fast. Squarelife :ebemsversocjerimgs-AG was the first to join us in 2018, and the most recent are Baloise Life (Liechtenstein) AG and Swisspartners Versicherung AG (both joined in October 2022).
Baloise Life (Liechtenstein) AG: Baloise Life, which is a wholly owned subsidiary of the Baloise Group, offers modern and secure life insurance contracts with flexible benefits.
Octium Assurance AG: A unit-linked life assurance company that offers innovative solutions designed to meet financial and succession planning needs of European and international clients.
PrismaLife AG: A leading life insurer offering unit-linked insurance products that fit personal budgets, combined with the location advantages that Liechtenstein offers.
Squarelife Lebensversicherungs-AG: Part of the Lifeware family (the renowned Swiss company), Squarelife manages 50 products in 12 different countries.
Swisspartners Versicherung AG: As one of the most important independent Swiss financial services providers, Swisspartners Group is dedicated to the needs of international private clients.
YOUPLUS Assurance AG: YOUPLUS provide insurance-based solutions that are implemented easily and effectively to achieve long-term goals.
To find out about the benefits of being an AILO Full Member or Associate Member – and to apply to join – click here.