The insurers didn’t directly purchase bitcoin or another cryptocurrency, but the investment products derive their value from shares of Grayscale Bitcoin Trust or Grayscale Ethereum Trust. Grayscale is a unit of Digital Currency Group, CoinDesk's parent company.
Investors can buy shares in a private placement transaction and then sell them on the secondary market following a holding period. Retail and institutional investors can then buy shares on the over-the-counter market. The trusts use published CoinDesk indexes to track cryptocurrency prices.
Grinnell Mutual Reinsurance and Donegal Mutual Insurance, a subsidiary of Atlantic States Insurance, made their first moves in February, purchasing 18,000 and 20,000 shares, respectively. Grinnell paid $968,000 for its shares.
Georgia-based State Mutual Insurance Co. was the only insurer to initially purchase shares of both the bitcoin and ethereum investment products. The mutual insurer acquired 13,000 shares of Bitcoin Trust and 9,000 shares of Ethereum Trust for about $491,000 and $141,500, respectively.
Insurance companies have recently ramped up their interest in cryptocurrency investments. In December, Massachusetts Mutual Life Insurance Co. purchased $100 million of bitcoin and made a $5 million equity investment in New York Digital Investment Group LLC.