Federal Life Insurance Co. wants to help wealthy, sophisticated investors tie variable annuity returns to the performance of cryptocurrencies.
The Riverwoods, Illinois-based insurer is preparing to introduce a private placement variable annuity that will let owners link some of the account value to Bitcoin assets, Ether assets and other cryptocurrency assets..
Federal Life said it will offer the annuity only to accredited investors who can tolerate big account value ups and downs, and the risk of loss of principal.
The company announced the contract launch in a press release that included the following disclaimer:
This press release is directed to independent investment advisors and not to any potential purchasers of the private placement variable annuity. No offer for the sale of securities is made hereby.
The Machinery
Federal Life reported it has already set up an insurance-dedicated fund that will support the new annuity.
It plans to use Gemini and Onramp to hold and trade cryptocurrency coins, WisdomTree to design the contract asset allocations and FED Mutual Financial Services to distribute the contracts.
Bain Capital helped Federal Life demutualize. Bain will now help support the company's cryptocurrency annuity effort, Federal Life said.
The History
Federal Life was founded in 1899. It was a policyholder-owned mutual. It formed a mutual holding company structure in 2016, and it completely demutualized in 2018.
The company has been using cash from the demutualization to strengthen and expand its operations.
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