SEC, lobby group hit for collapse of preneeds
Manila Standard Today
Oct. 13, 2005
A CONTROVERSIAL United States lobby firm, Senator Mar Roxas and the Securities and Exchange Commission are to blame for the collapse of the preneed industry.
This was the testimony given by former SEC chairman Perfecto Yasay Jr. during the hearing of the House committee on oversight, chaired by Quezon Rep. Danilo Suarez.
Yasay testified that during her term as SEC chief, the lobby group Accelerating Growth for Investment Liberalization and Equity (AGILE) recommended that all preneed firms should use the actuarial reserve limit (ARL) rule to protect the policyholders.
“I rejected that because I believe the preneed industry will go bankrupt and the policyholders would be on the losing end,” Yasay told the panel.
House Senior Deputy Minority Leader Rolex Suplico explained that ARL refers to a reserve fund, which the SEC will make sure that every preneed company must have at any given time.
The ARL rule was implemented by his successor, SEC Chief Lilia Bautista, in 2002 upon the orders of then Department of Trade and Industry secretary-turned-senator Roxas.
“It was quite anomalous that Roxas ordered the SEC chief and the SEC chief followed the order to implement the AGILE-proposed ARL when SEC is not under the DTI but under the Department of Finance,” Yasay said.
Yasay said the collapse of the preneed industry began when the companies could no longer touch their funds because of the rule.
He cited the case of College Assurance Plan (CAP), which was compelled by SEC to have an ARL exposure of P2.5 billion in 2002.
In 2003, CAP’s exposure more than doubled from P7.5 billion and yet grew by P15 billion in 2004 because of the rule.
Meanwhile, Pacific Plans failed to send a representative to the hearing after House Speaker Jose de Venecia refused to sign the invitation for former ambassador Alfonso Yuchengco to testify before Suarez’ committee.
The family of Yuchengco, a member of the newly formed Constitutional Commission, owns Pacific Plans.
CAP officials who were present said the company has yet to recover from the financial mess it is in and could not promise to issue checks for the next semester’s enrollment of its beneficiaries. Christine F. Herrera
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