Allegedly as secure as a savings account or pension insurance fund. Hundreds of German policyholders therefore entrusted their savings to a unit-linked life insurance with SwissSelect guarantee products. They were promised a secure old-age pension policy with secure returns. The sold products have now turned out to be loss makers, however. The potential claims asserted against the insurance company by the aggrieved parties are likely to amount to hundreds of millions of euros.
Liechtenstein insurance companies sold a unit-linked life insurance policy with SwissSelect guarantee products to numerous German customers as an absolutely safe investment. Some customers even cancelled existing retirement pension schemes to acquire the new product. In most cases, a Lombard credit was sold at the same time in order to finance the premium volume. The truth is that the product was by no way as safe as was advertised.
"In the meantime, we have filed around 30 lawsuits against insurance companies with the Princely District Court," confirms Matthias Niedermüller, solicitor and partner with Schwärzler Attorneys at Law in Schaan. According to Matthias Niedermüller, the insurance assets flowed into a no longer discernible number of derivative financial instruments with more or less the same name as the broker and administrator SwissSelect Asset Management AG. The actual derivative financial instruments for their part are based on high-risk hedge funds. At the same time, set-up costs amounting to 5 % and the 1.6 % annual administration charge were deducted from the policy assets. Costs were incurred at several levels, adding up to such enormous amounts that they inherently led to a reduction in the value of the premium and apparently eliminated the possibility of an increase in the value of the concluded policies right from the start. This has already been confirmed by the Supreme Court of Liechtenstein on the basis of a court opinion. After three to four years of the insurance policies being administered by SwissSelect Asset Management AG, the assets belonging to the aggrieved parties had been reduced to around half of the value of the paid premiums. No positive returns were produced at any time whatever for any of the cases reported to date.
"The customers wanted to set up a supplementary or alternative retirement pension scheme, which is why they chose the products that were advertised as being absolutely safe. Even employers' pension schemes were used for the assessment in the unit-linked life insurance with SwissSelect guarantee products. A clear indication that the customers wished for an absolutely safe investment and did not want to take any risks," Matthias Niedermüller explains. Even when the customers wanted to terminate because of the loss in value, they were strung along for years. This was because the purchased SwissSelect guarantee products frequently turned out to be insolvent and worthless.
The insurance companies concerned now have to come to terms with the claims asserted by the aggrieved parties. According to lawyer Matthias Niedermüller, customers are asserting claims against the insurance companies for payment and discharge of the full policy value with a correct, conservative assessment and supplementary claims for damages. He describes the prospects for the success of the claims against the insurance companies is being good. "Many customers hold legal protection insurance policies with companies who have agreed to give them cover to conduct the proceedings against the insurance companies. Furthermore, we have established contact with litigation funding institutions in Germany, who have already agreed to finance some of the proceedings," Matthias Niedermüller continues.
Schwärzler Attorneys at Law
Schwärzler Attorneys at Law is a firm of solicitors with domicile in Liechtenstein (Schaan) and an international network. Founded in 2005, Schwärzler Attorneys at Law represent international clients in all issues relating to Liechtenstein and Austrian law and the firm's specialisations include tort, criminal law and family law. Other areas of activity include contract law, commercial law, administrative law, labour law and inheritance law. Schwärzler Attorneys at Law was founded by Helmut Schwärzler, solicitor in Liechtenstein and Austria. In his capacity as a trained mediator, he is one of the few legal practitioners in Liechtenstein, who are also active in the mediation sector. Furthermore, Helmut Schwärzler is a member of the Administrative Board and joint owner of the affiliated companies Concordanz Trust Enterprise and Schwärzler Hotel Management, which runs six hotels in Liechtenstein, Vorarlberg and Salzburg.