Plenty achieved so far plenty of...with Germany.3 Business environment in 2019 for the insurance sector As predicted in 2018, many insurtech and fintech companies were able to further

Plenty achieved so far... plenty of plans ahead!

Annual Report 2019Liechtenstein Life Assurance AG

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Table of contents

Annual Report 2019

01

06

0203

07

04

08

05

Administrative Board & Management p. 4

Annual Financial Statements p. 14

Letter to the shareholders p. 5

Management Report p. 7

Actuarial confirmation p. 30

Report of the Administrative Board p. 9

Auditors’ Report p. 31

Business performance Liechtenstein Life Assurance AG p. 10

Changes to the insurance portfolio p. 10

Expenses for acquisition and administration p. 11

Key balance sheet figures for Liechtenstein Life Assurance AG p. 11

Our staff p. 12

Risk management and risks for future development p. 13

Statement of financial position (in CHF thousand) p. 14

Income statement (in CHF thousand) p. 18

Notes p. 20

Appropriation of profit p. 29

3

In CHF thousandGross premiums written

Gross premiums written (current premiums)

Gross premiums written (single premium)

APE (Annual Premium Equivalent)

Earnings after taxes

Balance sheet total

Client assets managed

Own funds

109,850

66,663

43,187

70,982

2,125

328,302

273,845

18,800

2017

100,600

79,881

20,719

81,953

3,086

348,954

303,198

21,885

2018

113,155

93,700

19,454

95,646

4,909

438,528

386,011

26,794

2019

Overview of key figures

Annual Report 2019

4

Management

Michael Blank, Actuary DAVChief Financial Officer

Gordon Diehr, MBAChief Operations Officer (since May 2019)

Holger RothChief Sales Officer (until May 2019)

Actuary responsible

Rebekka Schreiber, Actuary DAV

Auditors

PricewaterhouseCoopers AG Birchstrasse 160, 8050 Zurich

Administrative Board

Gilles Meyer, MBAChairman of the Administrative Board

Reto Mathias Näscher, LL.MVice-Chair of the Administrative Board (since April 2019)

Dr. Marcel Vaschauner Vice-Chair of the Administrative Board (until February 2019)

Prof. Dr. Marco Josef Menichetti Member of the Administrative Board

Dr. Rolf NebelMember of the Administrative Board

Dr. rer. nat. Josef KaltenbachDelegate of the Administrative Board (until June 2019)Member of the Administrative Board (since July 2019)

Stefan DebortoliMember of the Administrative Board (since April 2019)

Dr. Aron VeressMember of the Administrative Board (since December 2019)

Christoph Böckle, MBAMember of the Administrative Board (from April 2019 until September 2019)

Administrative Board Committees

Compliance CommitteeDr. rer. nat. Franz Josef KaltenbachDr. Rolf NebelDr. Marcel Vaschauner (until February 2019)Reto Mathias Näscher, LL.M (since April 2019)

Audit CommitteeDr. rer. nat. Franz Josef KaltenbachGilles Meyer, MBADr. Marcel Vaschauner (until February 2019)Reto Mathias Näscher, LL.M (since April 2019)

Administrative Board & Management1

Risk Management CommitteeDr. rer. nat. Franz Josef KaltenbachProf. Dr. Marco Josef Menichetti (until April 2019)Gilles Meyer, MBAChristoph Böckle, MBA (April until September 2019)Dr. Aron Veress (since December 2019)

Personnel CommitteeProf. Dr. Marco Josef Menichetti Gilles Meyer, MBA Dr. Marcel Vaschauner (until February 2019)Reto Mathias Näscher, LL.M (since April 2019)

Investments CommitteeProf. Dr. Marco Josef MenichettiDr. Rolf Nebel (until December 2019)Dr. Marcel Vaschauner (until February 2019)Dr. Stefan Debortoli (since April 2019)Dr. Aron Veress (since December 2019)

2019 Annual Report – Administrative Board & Management

5

Dear Ladies and Gentlemen,

Dear Clients, Partners in Cooperation and Investors,

2019 represented another year of growth for Liechtenstein Life Assurance AG. We delivered on our promises in a demanding market environment. Our earnings increased by double digits for the fourth time in a row, namely by 59% to CHF 4.9 million this last year. At the same time, client assets under management rose by 27% to over CHF 386 million and gross premiums written increased by 12% to over CHF 113 million, with both of these figures also representing new records.

Our employees have done a great deal in the past year to make these results possible. The strong growth required everyone involved to perform at the highest levels and was based on good cooperation across all departments and groups. We would therefore like to express our sincere thanks to all employees for their exceptional and impressive efforts and commitment.

It is also clear that the course pursued by Liechtenstein Life Assurance AG in recent years with its focus on innovation and digitalisa-tion is already showing results. We plan to continue along this route and will carry on investing in digitalisation going forward in the aim of providing our clients and business partners with our premium-quality and rapid service.

Innovation and digitalisation

Anyone wishing to continue to be successful in the European insurance market in the future will need to follow their customers into the digital world. With the introduction of the online application, we have been able to offer our partners genuine added value and to meet our clients with even more attractive options. One in two applications are now submitted to us via this 100% digital channel. Significant changes to contracts, i.e. business transactions, are also being gradually digitised, thereby reducing the throughput times for these processes and allowing them to be processed more quickly for our clients. Drawing up policies for digital applications on a daily basis is a particular competitive advantage and is highly appreciated by brokers and clients.

COOGordon Diehr

CFOMichael Blank

Letter tothe shareholders2

Annual Report 2019 – Letter to the shareholders

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The prosperity Group

The prosperity Group was launched with various companies in 2019. Liechtenstein Life Assurance AG is an essential part of this InsurTech Group as a wholly owned subsidiary of prosperity company AG. Various companies have joined in order to provide their knowledge and expertise to the Group as a whole, so that we are able to actively shape digital transformation within the industry instead of simply following this. Our colleagues from prosperity services GmbH in Ruggell and Berlin for instance are supporting the entire Group with the development of a client portal, i.e. our prosperity.app. The company cashyou AG develops innovative compensation solutions for the European market. Products with no acquisition commission – known as net products – form a major pillar of our product environment. In combination with the range of services offered by cashyou AG, we offer a real alternative to bro-kers and meet the client’s desire for fair remuneration for good advice on pension plans. The Group is now combining its marketing and sales expertise in the company prosperity brokershome AG, which supports the Group companies in gaining additional sales channels and marketing their products and services.

Outlook for the future – process improvement and product innovation

We look forward to 2020 with optimism and delight, as our good business results show that we are on the right track with our ser-vice and performance. Our efforts will be concentrated on increasing the degree of digitalisation, further expanding app functions at client and agent levels and a strong focus on growth. The European insurance market is a strong brokerage market which the insurtech companies cannot and do not want to change. Around 90 per cent of insurtech companies are geared towards the bro-kerage business. Liechtenstein Life Assurance AG also sees great sales potential in the brokerage landscape which can be devel-oped in many different ways. Individual brokers in particular are looking for pragmatic solutions given the challenges of digitalisation and increase in regulatory requirements. Our online portal for brokers is therefore being expanded even further and already offers numerous features that improve the day-to-day work of our brokers and greatly simplify the processes for acquiring and supporting clients. It offers legally compliant advisory documentation, a wide range of information on the client portfolio, a document archive with correspondence on all insurance contracts, and daily updates on fund and surrender values. This content is illustrated with vivid graphics and presented in a user-friendly interface that can be navigated with just a few mouse clicks. We want to expand this platform to include useful innovations and equip it with additional services and advice tools. Continuous process improvement represents an important pillar of our growth plan.

We are constantly expanding our product range in our core markets and we consciously focus on innovation. A mixture of regulation and falling interest rates is causing more and more brokers to follow new routes away from traditional sales channels and to be open towards product and sales innovations. Digital sales platforms are also playing an increasingly important role here and repre-sent an important interface between brokers and product providers such as Liechtenstein Life Assurance AG. Different models are competing with each other here, from a few hundred connected brokers to large platforms with up to several thousand accounts. Liechtenstein Life Assurance AG already maintains numerous contacts with the most important pools and has entered into some initial contracts. Other prospective contracts are in progress.

This way we are working further on our continued success in 2020. We would like to thank you for your support and for your loyalty to Liechtenstein Life Assurance AG.

Sincerely,

Gordon Diehr Michael Blank

Chief Operations Officer Chief Financial Officer

Annual Report 2019 – Letter to the shareholders

7

Business environment for 2019

Economic environment 2019

Growth for the German economy was projected to be more positive in 2019 than proved to be the case. According to the latest figures, Germany’s gross domestic product rose by 0.6 per cent, i.e. the lowest growth in the last six years. The weak growth is due to the trade conflict between the USA and China.1 Private consumer spending by the population and the construction industry represented a reliable source of support here. Both of these factors had a positive impact on growth.2

The unfavourable international environment also had an impact on the Swiss economy as well as on the German one. Growth in gross domestic product of 0.9% has been recorded at present. Moderate development in the industrial sector and the exports of goods associated with this were significant factors. Growth in private consumption remained moderate in Switzerland as compared with Germany.3

Business environment in 2019 for the insurance sector

As predicted in 2018, many insurtech and fintech companies were able to further establish themselves in the insurance market in 2019. The change in the regulatory environment provided by the Insurance Distribution Directive (IDD) has been implemented effec-tively by the insurance industry. Discussions surrounding a potential cap on commissions in Germany also caused unrest among brokers in 2019. However, the first drafts of the law capping the acquisition commission for life insurance policies are still with the government pending a final decision. The Solvency II Framework Directive was also an issue for the insurance industry, as the first consultation phases for its revision took place in 2019.4

Economic outlook for 2020

The consequences of the trade conflict between the USA and China will continue to be felt by the global economy in 2020. Most bank economists are therefore remaining cautious in their assumptions. Banks expect an increase in gross domestic product of between 0.6 and 1% in Germany.5 According to the federal government's group of experts, developments in the Swiss economy are only expected to be moderate in 2020.6

Experts take a very positive view of Brexit which will not be so hard according to their projections. The year 2020 is considered to be the year for decisions. Experts are focused in this respect on the presidential election in the USA, the conflicts in global trade and the changes in monetary and fiscal policy. The fight against climate change is increasingly seen by economists as an essential issue in global politics. Sustainability will therefore remain a megatrend in 2020.7

1 Spiegel.de, found on 13 January 2020 at https://www.spiegel.de/wirtschaft/service/wachstum-in-deutschland-schwaecht-sich-deutlich-ab-a-3e617bd5-0e2f-4d23-afcd-8149b55ca4732 DATEV, found on 13 January 2020 at https://www.datev.de/web/de/aktuelles/nachrichten-steuern-und-recht/wirtschaft/die-wirtschaftliche-lage-in-deutschland-im-dezember-2019/3 Economic Trends SECO - Winter 2019/2020 Economic Forecast, found on 14 January 20204 Versicherungsforen.net, found on 3 February 2020 at https://blog.versicherungsforen.net/2020/01/jahresrueckblick-2019-was-die-versicherungswirtschaft-bewegte/5 NZZ, found on 13 January 2020 at https://www.nzz.ch/wirtschaft/deutschland-droht-2020-ein-blutleerer-aufschwung-ld.15253466 SECO, found on 14 January 2020 at https://www.seco.admin.ch/seco/de/home/wirtschaftslage---wirtschaftspolitik/Wirtschaftslage/konjunkturprognosen.html7 NZZ, found on 14 January 2020 at https://www.nzz.ch/wirtschaft/deutschland-droht-2020-ein-blutleerer-aufschwung-ld.1525346

ManagementReport3

2019 Annual Report - Management Report

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Outlook for the insurance industry in 2020

The World Insurance Report (WIR) 2019 has forecast some macro trends for 2020. According to the Report, consumers want to see more services in cybersecurity and environmental threats. Yet it also claims that insurers are not as aware of the new risks as consumers are. The insurance industry is therefore faced with the challenge of responding to these customer expectations. The insurance industry should therefore continue to focus on the use of new technologies and on cooperation with insurtech companies.1

Outlook for Liechtenstein Life Assurance AG in 2020

As to the core markets of Liechtenstein Life Assurance AG, stable growth is assumed to prevail under the current market conditions. As the low interest rate situation persists, demand from clients for unit-linked provision products will not decline. As well as expand-ing our product range in the field of corporate pension plans, we will also be launching an innovative low-cost product in the field of biometrics in 2020. We also intend to continue working in 2020 towards implementing the automation and digitalisation processes that we have begun over the last few years in order to ensure that we can continue to provide high-quality and speedy services to our clients for the future. We assume that this will enable us to expand our market position even further.

People are slowly beginning to reconsider their approach towards share-based private pensions given the persistence of low interest rates. Investors are also increasingly showing an interest in the social impact of their insurance policies at the same time. Whereas life insurance used to be regarded by customers as a black box, the focus today on shares is increasingly leading to interest being shown in the funds deposited. Liechtenstein Life Assurance AG therefore aims to expand its investment portfolio in 2020. Liechtenstein Life Assurance AG is working with more than 100 product providers for this purpose.

We are consciously focusing on the topic of sustainability in the efforts to expand our range of investments. As with all megatrends, sustainability is a concept that is subject to continuous change in terms of its meaning, as it is constantly being redefined through ongoing discussions and is also subject to the influences of different cultures at different times. In France for instance, nuclear energy has different connotations to those prevalent in Germany, while abortion is evaluated differently by those with a religious background than it is by those with no such background. The same applies to alcohol and genetic engineering. The information provided on our brokerage portal takes account of this diverse and subjectively different perception of sustainability in two ways:

1. By providing maximum transparency, we enable clients to put together a portfolio according to their personal preferences, excluding funds that do not meet their selection criteria, or allowing them to focus on specific funds. These may include specific countries, industries or forms of investment.

2. By assigning an ESG label to the funds in our overall portfolio, even clients who have no detailed knowledge or do not have sufficient opportunities to devote their attention to the issue have the opportunity to align their portfolio in accordance with ESG aspects.

1 AssCompact, found on 14 January 2020 at https://www.asscompact.de/nachrichten/fünf-makrotrends-auf-diese-neuen-risiken-müssen-versicherer-gefasst-sein

2019 Annual Report - Management Report

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Report of the Administrative Board

Dear Ladies and Gentlemen,

The Administrative Board undertook the tasks in the 2019 business year imposed upon it by law. It supervised the company Man-agement team, advised the Management team on questions relating to managing the company and dealt with personnel issues. The Administrative Board of Liechtenstein Life Assurance AG underwent changes in terms of its personnel structure in the reporting year. We would like to thank the departing members Dr. Marcel Vaschauner and Christoph Böckle MBA for the commitment they have shown. We are pleased to welcome Reto Mathias Näscher, LL.M, Dr. Aron Veress and Dr. Stefan Debortoli to the Administrative Board. We look forward to a successful collaboration.

Subjects dealt with in the Administration Board Committee

Within the framework of our activity, we asked to receive reports from the company Management Team regularly, promptly and comprehensively and in both written and oral forms. The Administrative Board met five times within the reporting year. The Manage-ment Team updated the Administrative Board on sales developments at all of the Board meetings, and also addressed business performance and the latest developments in the process. Management also reported on the financial and capital position and on risk management at the company. Furthermore, the Management Team provided information regarding measures to ensure product quality, to cut costs and also with regard to the general situation of the company. The Management Team at prosperity company AG also reported on group-wide topics.

Work in the Committees of the Administrative Board

The Administrative Board has set up five permanent Committees in order to be able to fulfil its tasks in an efficient manner. These are: Compliance Committee, Audit Committee, Risk Management Committee, Personnel Committee and Investments Committee. These Committees analyse their respective subject areas on behalf of the entire Administrative Board, compile the results, report to the whole Administrative Board on the results obtained and prepare any resolutions that may need to be discussed by the Admin-istrative Board.

In 2019, the Committees dealt primarily with the following subjects:

- identification and analysis of the primary risks, together with the management of these risks- checking and approval of the Annual Financial Statements for the attention of the Annual General Meeting- implementation of statutory changes as well as revisions to the Code of Conduct- personnel issues- review of capital investment guidelines, as well as sustainable capital investments

The Administrative Board was directly involved in making fundamental decisions and, in particular, played a crucial role in initiating the future strategic and human resource focus for Liechtenstein Life Assurance AG.

The auditors PricewaterhouseCoopers AG Zurich audited the Annual Financial Statements of Liechtenstein Life Assurance AG and awarded this its note of unqualified confirmation.

At this point, the Administrative Board would like to thank all employees of Liechtenstein Life Assurance AG for their personal com-mitment and high levels of engagement.

4Annual Report 2019 - Report of the Administrative Board

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Changes to the Insurance Portfolio

Periodic gross premiums rose to CHF 93,700 thousand, predominantly due to the development of new business in the 2019 reporting period. This equates to an increase of 17% compared with the previous year. The Annual Premium Equivalent totalled CHF 95,646 thousand in the 2019 financial year, up 17% on the previous year.

Capital

Our need for capital and liquid funds is strongly influenced by the growth in our insurance portfolio and by our business model.

The capitalisation required by Liechtenstein Life Assurance AG is derived from the legal provisions laid down by the Liechtenstein Law on Insurance. In addition to the minimum capital level, a minimum solvency margin is also prescribed by law. The funds that are to be set aside as own funds to cover the legal supervisory requirement for the solvency margin are likewise prescribed with an equal degree of precision.

Equity

As at 31 December 2019, our subscribed equity amounted to: CHF 20 million (previous year CHF 20 million). The subscribed equity of Liechtenstein Life Assurance AG was made up of 2 million registered securities with a nominal value of CHF 10 each. prosperity company AG became the sole shareholder in Liechtenstein Life Assurance AG on 31 December 2019.

Business performanceLiechtenstein Life Assurance AG

5Annual Report for 2019 - Business performance Liechtenstein Life Assurance AG

11

Expenses for Acquisition and Administration

Acquisition costs

Acquisition costs in the reporting year amounted to CHF 33,719 thousand (previous year CHF 30,709 thousand).

Administration expenses

Total administration expenses amounted to CHF 5,259 thousand (previous year CHF 7,216 thousand).

Profit after taxes

Profit after taxes amounted to CHF 4,909 thousand (previous year CHF 3,086 thousand).

Key balance sheet figures for Liechtenstein Life Assurance AG

Balance sheet total

Total assets amounted to CHF 438,528 thousand in the reporting year (previous year CHF 348,954 thousand) and therefore rose by 26%.

Assets

At 88%, the largest proportion of Liechtenstein Life Assurance AG’s assets is formed by the capital investments which are invested for the account and risk of clients. These capital investments amounted to CHF 386,011 thousand as of 31 December 2019. This item had totalled CHF 303,198 thousand in the previous year.

Capital investments administered

The capital investments administered by Liechtenstein Life AG include own capital investments and the capital investments of the unit-linked insurance products, which are invested for the account and risk of the insurance policyholders in investment funds and other capital investments. Liechtenstein Life Assurance AG was administering an overall total of CHF 386,530 thousand at the reporting date (previous year CHF 303,736 thousand).

Equity and liabilities

The actuarial provisions for life insurance contracts where the investment risk is borne by the insurance policyholders increased from CHF 283,549 thousand in 2018 to CHF 367,215 thousand in 2019.

Annual Report for 2019 - Business performance Liechtenstein Life Assurance AG

12

Our staff

Numbers and facts

Liechtenstein Life Assurance AG employed 45 members of staff in 2019 (previous year 41 employees).

Changes in personnel

Liechtenstein Life Assurance AG believes that preparing its staff for the challenges of the international insurance industry is an important part of staff development, involving a continuous learning and development process and requiring maximum support to be provided to them in relation to all new market requirements. This also means that services and development programs are continuously being scrutinised and optimised in consultation with managers and employees. In addition to increasing our attractiveness as an employer, these processes are also aimed at pursuing the goal of providing the best possible support for our employees. This way, we want to create optimal conditions for a working culture that is based on expert knowledge and that boosts our innovative capacity. Furthermore, we offer our employees opportunities to work from home as part of their functions, as well as a lunchtime package and sport allowance. We also believe that assuming 2/3 of pension fund contributions is a commitment to our employees. As a company that operates internationally, we want to continue to invest in the development and satisfaction of our employees so that we can consolidate our position in the insurance market on a sustainable basis and also expand this in the long term.

Thanks

We would like to thank all our employees whose great commitment and dedication made a positive contribution to the further development and growth of our company once again this year.


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Risk management and risks for future development

Within the framework of company taxation, Liechtenstein Life Assurance AG has a comprehensive risk management system avail-able to it. By means of effective analysis and controlling instruments, we can meet the challenges posed in being able to recognise, analyse and reduce risks to which Liechtenstein Life Assurance AG is exposed. The objective is to render these capable of being mastered by means of active risk control, bolstering financial strength and increasing company value in a sustainable way.

Actuarial risks

Actuarial risks can result from possible changes in the biometric tariff calculation principles employed, such as mortality. We check these risks in an ongoing manner by means of actuarial analyses. Random fluctuations within the loss ratios are largely balanced out by means of the insurance portfolio and are guarded against in addition by suitable reinsurance measures.

The assessment of the longevity risk is of particular importance for insurance provision in the area of annuities. With annuities, increasing reduction in the safety margins can be observed in terms of mortality.

Risks arising from the default of insurance receivables

Our receivables from reinsurers, brokers and customers are subject to default risk. In the area of reinsurance, the risk of default can be rated as very low, because our partners are companies with a correspondingly high rating classification. Outstanding amounts from insurance policyholders are monitored by means of our comprehensive electronic dunning system. In addition, all business relationships are reviewed on a regular basis and any risks arising are controlled with appropriate risk-mitigating measures where necessary.

Risks stemming from capital investments

Risks in the area of capital investments are taken into account by the company by means of a balanced policy of capital investment, which keeps the risks posed by interest rates and exchange rates to the minimum possible by means of diversification within the framework of supervisory regulations (mixture and spread).

Operational risks

Risks in conjunction with internal organisation, people, technology and external factors are summarised under operational risks. In order to keep these risks to a minimum, we have a highly developed internal control system. Separation of duty in work processes, clear working instructions and plausibility checks enable us to reduce the risk of detrimental actions and to avoid mistakes being made. An extensive automation of processes as well as progressive digitalisation further reduce error rates. We devote particular attention to possible risks occurring in the area of data processing and cybercrime. Emphasis is especially placed on operating malfunctions, on data losses and on external attacks on our systems (cyberattacks). We counter these risks by means of comprehensive protective measures such as authorisation concepts, firewalls and anti-virus measures that are being updated and developed continuously.

In summary, Liechtenstein Life Assurance AG has risk management instruments at its disposal that are continuously being further developed – including with regard to Solvency II. From the current perspective, no changes can be recognised that could exert any negative influence on the position of the company in terms of its assets, finances and earnings.

Other risks

There are various other risk categories defined within Liechtenstein Life Assurance AG in addition to the risk categories stated above. One example is liquidity risk. This is the risk that Liechtenstein Life Assurance AG may not be able to meet its payment obligations on time. Liechtenstein Life Assurance AG pays great attention to this issue and the current liquidity status is monitored on an ongoing basis in accordance with this. Reputational risk is another example in this context. This is the risk arising from potential harm to the company’s reputation as a result of a negative perception among the public. Liechtenstein Life Assurance AG attaches great importance to minimising any potential grounds for reputational risks as part of its internal control system.

Events after the reporting date

None.


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Assets Notes 31.12.2019 31.12.2018

A. Intangible assets

IV. Other intangible assets 6.1 57 81

57 81

B. Investments

III. Other investments

2. Debt securities and other fixed-income securities 519 538

519 538

C. Capital investments for the account and risk of life insurance policyholders 6.2 386,011 303,198

D. Additional receivables

I. Receivables from self-concluded insurance business

1. from insurance policyholders 1,511 1,384

2. from insurance brokers 4,795 1,624

II. Receivables fromreinsurance business

3. from other debtors 1,082 3,308

III. Other receivables

1. from affiliated companies 880 2,154

3. from other debtors 6.3 863 986

9,131 9,456

E. Other assets

I. Property, plant and equipment (apart from plots of land and buildings) and inventory stocks

6.4 151 209

II. Current credits with banks, giro cheque credits,cheques and cash-in-hand 34,617 31,182

34,768 31,391

F. Prepaid expenses

I. Prepaid interest payments and rents 11 1

III. Other prepaid expenses 6.5 8,031 4,289

8,042 4,290

Total assets 438,528 348,954

Statement of financial position (in CHF thousand)

Annual Financial Statements6

Annual Report 2019 – Annual Financial Statements

15

Equity and liabilities Notes 31.12.2019 31.12.2018

A. Shareholders’ equity

I. Paid-in capital

1. Subscribed capital 6.6 20,000 20,000

II. Organisation funds 6,500 6,500

V. Loss carried forward -4,615 -7,701

VI. Annual earnings 4,909 3,086

26,794 21,885

D. Technical provisions

I. Unearned premiums

1. Gross amount 58 69

58 69

II. Insurance provisions

1. Gross amount 687 554

687 554

III. Provision for unsettled claims

1. Gross amount 2,133 1,410

2. Of which less reinsurers share -1,361 -899

772 511

Total D. Technical provisions 1,518 1,134

E. Technical provisions for life insurance contracts where the investment risk is borne by the insurance policyholders 6.2 367,215 283,549

F. Other provisions

II. Tax provisions 192 115

III. Other provisions 2,138 1,715

2,330 1,830

G. Deposits from reinsurers insurance business 381 328

Carried over 398,238 308,726


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Equity and liabilities Notes 31.12.2019 31.12.2018

Carried over 398,238 308,726

H. Other liabilities

I. Accounts payable arising out of insurance business contracted directly

3. to other creditors 6.7 33,682 32,149

II. Reinsurance settlement liabilities

3. to other creditors 4,286 3,719

IV. Liabilities to banks

3. to other creditors 384 0

V. Other liabilities

1. Liabilities from taxes 94 131

2. Liabilities within the framework of social security 158 185

3. Other liabilities to affiliated companies 1,024 2,754

5. Other liabilities to other creditors 505 814

Total H. Other liabilities 40,133 39,752

I. Deferred charges 157 476

Total equity and liabilities 438,528 348,954


17

18

Notes 2019 2018

II. Result of the underwriting account for life insurance

1. Premiums earned for own account

a) Gross premiums posted 6.8 113,155 100,600

b) Reinsurance premiums ceded 6.9 -31,485 -25,677

c) Change in gross unearned premiums 10 -14

d) Change in the proportion of reinsurers in gross unearned premiums 0 0

81,679 74,908

2. Income from investments

c) Current income from other capital investments 2,481 2,025

3. Unrealised gains from capital investments 43,908 16,962

5. Claims expenses for expenditures for insurance claims

a) Claims paid

- Gross amount -16,352 -13,690

- Reinsurers’ share 210 247

b) Change in provision for unsettled insurance claims

- Gross amount -723 -7

- Reinsurers’ share 453 -94

-16,413 -13,545

6. Change in the remaining actuarial net provisions

a) Change in insurance provision

- Gross amount -83,799 -30,370

-83,799 -30,370

8. Operating expenses for own account

a) Acquisition costs 6.9 -33,719 -30,709

b) Administration expenses 6.9 -5,259 -7,216

c) Commissions and shares of earnings received fromreinsurance business 6.9 34,597 34,338

-4,381 -3,587

Carried over 23,475 46,393

Income statement (in CHF thousand)


19

Notes 2019 2018

Carried over 23,475 46,393

9. Expenses for capital investments

a) Expenses for the administration of capital investmentsand interest expenses 6.10 -802 -1,183

10. Unrealised losses from capital investments -18,992 -42,708

11. Other technical expenses for own account 6.11 -185 52

14. Results of the actuarial accountfor life insurance 3,497 2,555

III. Non-actuarial account

3. Income from investments

c) Current income from other capital investments 65 23

65 23

5. Expenses for capital investments

b) Depreciation, amortisation and impairment losses on capital investments 0 -128

c) Losses on disposal of capital investments 0 -122

0 -250

7. Other income from ordinary activities 6.12 1,285 5,152

8. Other expenses from ordinary activities -585 -4,067

10. Extraordinary income 848 68

11. Extraordinary expenses 0 -200

13. Taxes on income and on earnings -202 -194

Annual earnings 4,909 3,086


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General notes

Reporting year

The business year for Liechtenstein Life Assurance AG corresponds with the calendar year.

Basic accounting principles

Accounting principles

The Financial Statement is based on the basic principles of the Liechtenstein Law on Persons and Companies (PGR) as well as the Law of 12 June 2015 regarding supervision of insurance companies (Insurance Supervision Law; VersAG) and the Ordinance issued to accompany it (Insurance Supervision Ordinance; VersAV) in the respectively valid versions.

Translation of foreign currencies

Credits, receivables, proportional interest payments, liabilities and actuarial provisions, etc. issued in foreign currencies are, as a basic principle, converted into Swiss francs at the rate of valuation of the reporting date as established by the Liechtenstein tax authorities. The same also applies to securities issued in a foreign currency. Any possible currency differences are recorded so as to post their effect on net income.

The following reporting date exchange rates were applied in the 2019 reporting year:

Currency 31.12.2019 31.12.2018

EUR 1.0870 1.1269

USD 0.9684 0.9858

Notes


21

Valuation method

Investments

Capital investments in affiliated companies, holdings and other capital investments are applied in accordance with the lowest value principle.

Capital investments for the account and risk of insurance policyholders are valued at their market value on the reporting date or, if the reporting date is not a trading day, at the exchange rate on the last trading day preceding the reporting date.

Intangible assets and other assets

Intangible assets as well as property, plant and equipment are capitalised at procurement costs and depreciated in a linear manner in accordance with their estimated useful lives. The useful lives are between three and ten years.

Receivables

Receivables are valued with the normal amounts, taking into account any value adjustments that may be required.

Since the 2015 business year, receivables stemming from the purchase of remuneration agreements from brokers are posted with the nominal amount of the receivable, less any instalments that have already been paid.

Deferred acquisition costs

According to Appendix 1 of the VersAV, in the life insurance sector the apportionment of expenses for the conclusion of insurance contracts is permissible to a limited extent on the basis of an appropriate procedure upon presentation of an accrual and deferral attestation of “Earned, but not yet due, claims derived from the insurance contractual relationship”, if these involve acquisition costs that have been made and included in the actuarial calculations and have actually been paid and if only acquisition costs are involved that have been disclosed to the insurance policy holder as one-off acquisition costs.

For this appropriate procedure for calculating the claims that are not yet due from the insurance relationship, the acquisition cost rate used in actuarial calculations is authoritative, however not at a rate higher than a maximum rate of 40%, related to the total of the recurring premiums of the respective insurance contract.

The attestation of accrual and deferral is only permitted for contracts that are active at the reporting date and for which the acquisition costs have been included in the actuarial calculations and have been actually paid out in whole or in part in the course of concluding the contract as an acquisition commission. Furthermore, regulations are to be agreed in the agreement with the insurance broker to the effect that the acquisition commission is to be reimbursed proportionately if the insurance contract is cancelled prematurely by the broker.

Unearned premiums

Unearned premiums are set in accordance with actuarial basic principles.

Insurance provisions

The calculation of the insurance provision is undertaken whilst taking into account the due statutory provisions. The insurance provision for life insurance contracts where the investment risk is borne by the insurance policyholders, is calculated according to the retrospective method for each individual contract. At the reporting date, the respective share units are valued with the value on the date.

Liabilities

Liabilities to policyholders and brokers are reported together with the repayment amounts.


22

Assets6.1 Intangible assets

All figures in CHF thousand Portfolio as at 01.01.2019

Additions/disposals Amortisation and impairment

Portfolio as at 31.12.2019

Licences and software 81 0 - 24 57

Total 81 0 -24 57

Previous year

All figures in CHF thousand Portfolio as at 01.01.2018

Additions/disposals Amortisation and impairment


Licences and software 123 0 -42 81

Total 123 0 -42 81

The terms “Licences and software” are understood to include various licenses and software tools required for conducting insurance business.

6.2 Capital investments for the account and risk of life insurance policyholders

All figures in CHF thousand 31.12.2019 31.12.2018

Capital investments for the account and risk of life insurance policyholders 386,011 303,198

Premium deposit -18,796 -19,649

Technical provisions where the investment risk is borne by the insurance policyholders 367,215 283,549

For capital investments at the expense and risk of the policyholders, unrealised exchange rate gains from market fluctuations amount to CHF 43,908 thousand in the 2019 financial year (previous year CHF 16,962 thousand), and unrealised exchange rate losses amount to CHF 18,992 thousand (previous year CHF 42,708 thousand). The acquisition costs of these capital investments amount to CHF 361,962 thousand (previous year CHF 308,353 thousand), with a market value of CHF 380,217 thousand (previous year CHF 297,698 thousand) (in each case excl. PLI business).

6.3 Other receivables to other debtors

This item contains a loan to an associate amounting to CHF 89 thousand (previous year CHF 150 thousand).

The loan has a maturity period lasting up to 31.12.2030. The underpinning interest rate amounts to 1% plus the 1-month Libor rate for Swiss francs.


23

6.4 Property, plant and equipment

All figures in CHF thousand


Additions/Disposals

Depreciation and impairment


Office furniture 60 0 -12 48

Fixtures in buildings belonging to others 70 0 -12 59

EDP hardware 76 0 -34 42

Security devices 4 0 -1 3

Total 209 0 -58 151

Previous year

All figures in CHF thousand


Additions/Disposals

Depreciation and impairment


Office furniture 86 -3 -23 60

Fixtures in buildings belonging to others 82 0 -12 70

EDP hardware 122 -11 -35 76

Security devices 5 0 -1 4

Total 295 -14 -71 209

Office furniture is depreciated over a duration of 10 years and the EDP equipment over 7 years.


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6.5 Prepaid expenses

This item contains the deferred acquisition costs that are entered in the balance sheet with a haircut. Acquisition costs amounting to CHF 6,802 thousand (previous year CHF 3, 045 thousand) are entered in the balance sheet accordingly.

Deferred acquisition costs

In accordance with the guidelines of the VersAV, Liechtenstein Life Assurance AG capitalises the following values as “earned, not yet due claims from the insurance contractual relationship” under asset balance sheet item F.III for each tariff group:

Tariff group 2019 amount 2018 amount

Value and Value Invest CHF 3,783 thousand CHF 2,070 thousand

Kokon Value CHF 3,018 thousand CHF 975 thousand

Total CHF 6,802 thousand CHF 3,045 thousand

Posting of capitalised acquisition expenses is basically undertaken after having taken into account the outward reinsurance for the unit-linked insurance products of Liechtenstein Life Assurance AG. This means that the levels of the accruals and deferrals are determined on the basis of the cost sharing of the insurance business and the associated claims from the insurance relationship with it that are earned but not yet due (“net principle”). The increase on the previous year is due to the positive portfolio development and higher cost sharing in the insurance business.

Capitalisation of the acquisition costs is made up of the total of amounts calculated for individual contracts. Redemption of the accruals and deferrals is undertaken for each individual contract in the respective currency of the contract, i.e. CHF or EUR. For safety’s sake, a haircut is also undertaken once again on the value calculated according to the VersAV.


25

Equity and liabilities

6.6 Subscribed capital

Share capital in the 2019 business year remained unchanged at CHF 20,000 thousand. At the reporting date, 2 million registered securities with a nominal value of CHF 10 each had been issued. The nominal value capital amounting to CHF 20,000 thousand has been fully paid in.

6.7 Direct insurance liabilities to other creditors

The liabilities to other creditors amounting to CHF 33,682 thousand (previous year CHF 32,149 thousand) include premium deposit liabilities to policyholders amounting to CHF 18,796 thousand (previous year CHF 19,649 thousand). Policyholders at Liechtenstein Life Assurance AG have the option of paying into a premium deposit account. This primarily involves payments exceeding the pre-miums that are already due. These are automatically allocated to the premium deposit.


26

Disclosures to the Income Statement

6.8 Gross premiums posted

All figures in CHF thousand 2019 2018Periodic premiums in CHF 73,576 62,801

Periodic premiums in EUR 20,124 17,080

One-off deposits in CHF 7,594 6,238

One-off deposits in EUR 11,860 14,481

Total 113,155 100,600

Allocation of the gross premiums posted according to countries:

All figures in CHF thousand 2019 2018Switzerland 81,093 69,014

Liechtenstein 543 626

Austria 1,281 1,482

Italy 184 212

Germany 30,054 29,266

Total 113,155 100,600


27

6.9 Operating expenses for own account

a) Acquisition costs

All figures in CHF thousand 2019 2018Commissions -26,542 -26,501

Sales promotion costs -260* -267*

Personnel costs -3,230 -2,813

Other acquisition expenses -3,687 -1,128

Total -33,719 -30,709

*incl. doctor’s fees within the framework of health checks

b) Administration expenses

All figures in CHF thousand 2019 2018Portfolio commissions -635 -510

Personnel expenses -1,733 -3,176

Other operating expenditure -2,808 -3,417

Amortisation and impairment -82 -113

Total -5,259 -7,216

c) Commissions and shares of earnings received from reinsurance business

This item includes the financing commissions received by the reinsurers amounting to CHF 34,597 thousand (previous year CHF 34,338 thousand).

6.10 Expenses for the administration of capital investments and interest expenses

Costs of CHF 233 thousand (previous year CHF 254 thousand) were incurred in the 2019 financial year for account management charges, deposit account management charges, brokerage fees and interest expenses.

6.11 Other technical expenses for own account

The item “other actuarial expenses” contains the payments of interest on the premium deposits amounting to CHF 9 thousand (previous year CHF 10 thousand).

6.12 Other income from ordinary activities

An affiliated company entered into the master purchase agreement between Liechtenstein Life and Deutsche Kontor Privatbank in the previous year. This resulted in extraordinary income in the amount of CHF 2,047 thousand. A guarantee agreement was concluded with an affiliated company in the 2019 financial year. This guarantee enabled income to be realised from self-funded receivables. The resulting extraordinary income totals CHF 776 thousand.


28

Other disclosures

Number of employees

As at the reporting date of 31.12.2019, the staff of the company consisted of 45 employees (previous year 41). Of these, 39.6 (previous year 35.6) employees were employed on a full-time equivalent basis.

Fixed remuneration of the administrative and managerial organs

In line with Art. 1092 (9) PGR, details are not divulged of the fixed remuneration rates of the members of the administration and management teams.

Auditors’ fees

The auditing services provided for the 2019 business year amount, according to the order confirmation, to CHF 92.4 thousand, excluding VAT (previous year CHF 105 thousand excluding VAT).

Other financial obligations

Other financial obligations amount to CHF 1,519 thousand (previous year CHF 1,891 thousand) and result from long-term rental contracts.

Events after the reporting date

None.

Parent company

prosperity company AG, Industriering 40 in 9491 Ruggell has been the sole shareholder in Liechtenstein Life Assurance AG since 31 December 2019.

Transactions with associated persons

Rental charges for the office building and warehouse in the 2019 financial year amounted to CHF 403 thousand to associated persons (previous year CHF 403 thousand).

As at 31.12.2019, a loan amounting to CHF 89 thousand with an associated person is in place (previous year CHF 150 thousand).

Liechtenstein Life Assurance AG has seven life insurance contracts running with associated persons and associated companies. The volume of premiums of these contracts posted within the 2019 financial year amounted overall to CHF 56 thousand (previous year CHF 52 thousand).

Services amounting to CHF 2,777 thousand (previous year CHF 131 thousand) were utilised by affiliated companies in the 2019 financial year. CHF 120 thousand and EUR 10 thousand of services rendered were also charged to affiliated companies (previous year CHF 493 thousand).

The purchase of treasury shares from related parties in the amount of CHF 3,655 thousand and the sale of treasury shares to related parties in the amount of CHF 4,500 thousand resulted in income totalling CHF 845 thousand.

As of 31 December 2019, there are receivables of CHF 880 thousand (previous year CHF 2,154 thousand) and liabilities of CHF 1,024 thousand (previous year CHF 2,754 thousand) due from and to affiliated companies.


29

Net profit for the year and appropriation of profitThe profit for the year amounts to CHF 4,909 thousand. The Administrative Board proposes the appropriation of available profit to the Annual General Meeting as shown in the table below.

Appropriation of profit

Net profit for the year in CHF thousand 2019 2018Balance carried forward from the previous year -4,615 -7,701

Annual earnings 4,909 3,086

Total net profit for the year 294 -4,615

Appropriation of profit in CHF thousand 2019 2018Contribution to statutory reserves 294 -

Carried forward to new account - -4,615

Total net profit for the year 294 -4,615


30

Actuarial confirmation of Liechtenstein Life Assurance AG as at 31 December 2019

I confirm that the insurance provisions and unearned premiums have been calculated in accordance with the provisions in force in this regard and with basic actuarial principles:

- D. I. Unearned premiums of CHF 58,465

- D. II. Insurance provisions of CHF 687,440

- D. III. Provisions for unsettled insurance claims (incl. IBNR) of CHF 2,133,429

- of which reinsurers’ share of CHF 1,360,949

- E. I. Underwriting provisions for life insurance contracts where the investment risk is borne by the insurance policyholders of CHF 367,214,970

No business in reinsurance was taken.

Ruggell, 6 February 2020

Rebekka Schreiber(Responsible actuary)

Actuarial confirmation72019 Annual Report – Actuarial confirmation

312019 Annual Report - Auditors’ Report

PricewaterhouseCoopers AG, Birchstrasse 160, Postfach, 8050 Zürich Telefon: +41 58 792 44 00, Telefax: +41 58 792 44 10, www.pwc.ch

PricewaterhouseCoopers AG ist Mitglied eines globalen Netzwerks von rechtlich selbständigen und voneinander unabhängigen Gesellschaften.

To the General Meeting of Liechtenstein Life Assurance AG Ruggell

Report of the auditors in accordance with Article 196 of the Liechtenstein Persons and Companies Act (PGR)

reffüK .P érdnA izzortS ocirnE

Head Auditor

Zurich, 26 March 2020

As statutory auditor, we have audited the financial statements, which comprise the statement of financial position, income statement and notes (pages 14 to 29) as well as the annual report of Liechtenstein Life Assurance AG for the year ended 31 December 2019.

The Administrative Board is responsible for these financial statements and the annual report; our task is to express an opinion on them based on our audit. We confirm that we meet the legal requirements concerning professional qualifications and independence.

Our audit was conducted in accordance with auditing standards promulgated by the Liechtenstein profession and stipulated under Article 10a(1) of the Liechtenstein Auditors and Auditing Companies Act (WPRG), which require that an audit be planned and performed in such a manner as to obtain reasonable assurance about whether the financial statements and annual report are free from material misstatement. We have examined the items and disclosures in the annual financial statements by conducting analyses and taking random samples. We have also assessed the accounting principles used, significant estimates made and the overall presentation of the financial statements. We believe that our audit provides a sufficient basis for our opinion.

According to our assessment, the financial statements give a true and fair view of the financial position, the results of operations and the cash flows in accordance with Liechtenstein law. Furthermore, the annual financial statements and the annual report as well as the proposal for the appropriation of available earnings comply with Liechtenstein law and the Articles of Association.

The annual report is consistent with the financial statements and, according to our assessment, does not contain any material misstatements.

We recommend that you approve these financial statements.

PricewaterhouseCoopers AG

LIECHTENSTEIN LIFE ASSURANCE AGIndustriering 379491 Ruggell, Principality of LiechtensteinT +423 265 34 [email protected]

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