Pre-need sales continue sliding
BusinessWorld
June 6, 2009
MANILA – Pre-need firms continued to see their revenues slide in the first quarter despite selling more plans, data from the Securities and Exchange Commission (SEC) showed.
Revenues fell by almost a fifth to P3.2 billion, even as the number of plans sold rose to 62,882 from 53,825 in the same period last year.
The public continued to stay away from education and pension plans, preferring life plans, whose sales jumped by almost half to P2.03 billion in peso terms and by more than two-fifths to 52,173 in terms of plans sold.
Sales of pension plans, which face competition from other investment products, continued to decline, as well as of education plans, which carry the stigma of failed pre-need companies unable to pay clients.
The number of pension plans sold dropped by almost a third to 9,442, and sales, by more than half to P1.05 billion. Education plans fared worse with the number of plans sold reduced by more than half to 1,267, and sales, by more than three-fifths to P173.19 million.
Pre-need sales have been falling since January 2008.
Caesar T. Michelena, president of the Philippine Federation of Pre-need Companies, explained that customers nowadays prefer to buy more but cheaper plans.
Mr. Michelena, who also heads Cocoplans, Inc., said life plans continue to register growth because of the active effort of companies to market these products and customers’ negative perception of education and pension plans.
“We are still looking at growth but maybe not as substantial because of the economic conditions,” he said.
On Monday, the SEC ordered pre-need companies to avail the services of independent auditors that would review whether they are managing their trust funds according to its standards or not. The auditors would submit their findings on July 15.
Mr. Michelena, however, does not see this having an effect on the industry’s performance.
“It’s really more of administrative requirement… It would have no major impact overall,” he said, pointing out that pre-need companies already employ external auditors to verify the valuation of their trust fund assets.
Pre-need companies now number 22 from 24, after the regulator revoked the license of one firm to sell plans and suspended another due to financial difficulties. — Don Gil K. Carreon
as of 06/06/2009 2:26 AM
2 Comments »
Leave a comment
-
Your Say on the Matter....
amor21 on An open letter to Sen. Mar Rox… Rose Valena on Pre-need firm’s assets sought … Preneed Plan Holder on Pre-need sales continue s… pEDo on Pre-need sales continue s… mike on Legacy owner shows up at House… Celso Quiling on Pacific Plans owner offers to … -
-
This site is a public service for PEP Coalition planholders as well as for the public who may be looking for information on the pre-need industry and the PEP Coalition's quest for justice in the courts. We also scour the internet for past and present articles on the industry and specific pre-need companies in an effort to provide ready access to everything written about the pre-need industry in a central area (our site). Each news article contains the source, publish date, and where available, a link back to the actual news site. If you have a reaction to a specific article posted, you may click on Comments link found at the bottom of each post.
ano na po kaya ang update about sa mga bumagsak na pre-need companies like Permanent Plans?
Pre-need plans na ang version ng pyramid scam for this decade.
Flawed talaga and pre-need plan model. Even worse, reactive and regulations in place. Hindi pro-active. The SEC was late in suspending PrudentialLife Plans, Inc. license to sell pre-need plans.
If you read the SEC Order dated 20 April 2009 cancelling the license of PrudentialLife Plans you’ll come across the fact that based on the Acturial Valuation Report dated 31 March 2008 the company has Php 3, 641,624,725.00 deficiency in its trust fund.
How on earth will PrudentialLife make up for that amount of deficiency? On top of that, they can’t sell pre-need plans anymore.
It’s anybody’s guess how PrudentialLife will be able to recover. Heck, Lazarus came back from the dead…maybe PrudentialLife too! I think not.
PrudentialLife is still liquid…But don’t look beyond 2014. The company itself admitted that their “Trust Fund has sufficient liquid assets to service the obligations of the company to its planholders for the next five (5) years.”
That means for those waiting to benefit from their pre-need plans with PrudentialLife Plans, Inc., it is only good up to 2014. Beyond that, a rehabilitation plan is the brightest scenario. Worse comes to worst…BANKRUPTCY!