Not Over Yet
Volume 12 No. 6 – Industry
In July, three months after Pacific Plans filed for rehabilitation at a Makati City Regional Trial Court in April, another firm joined SEC’s list of ailing pre-need companies. Platinum Plans, majority-owned by the Salas family, had its license to sell fixed-value and open-ended educational plans suspended after it ran into liquidity problems. According to the SEC, Platinum Plans had an ARL of P470.1 million in December 2003 as against trust fund assets of P219.9 million, resulting in a trust fund deficiency of P250.2 million.
Asian Diamond Plans, another pre-need firm, is facing criminal raps from the SEC. Unlike CAP and Pacific Plans, the company was charged for committing “fraudulent, deceptive, and manipulative practices” in violation of pre-need rules. The SEC found the company made it appear they complied with the minimum paid-up capital of P100 million. Preliminary investigations showed the company window-dressed its accounts and created fraudulent entries to conceal the deficiency of its paid-up capital.
Nine other firms are also on the SEC’s watch list, but the commission clarifies that not all of these have liquidity problems. These firms are being monitored because they sell open-ended plans, considered to be the bone of contention of the pre-need mess.
The controversy has had an impact on the industry as a whole. While educational plans constitute less than a third of the total number of plans sold, the decline still poses concerns to surviving pre-need firms, which must overcome the crisis of confidence that is slowly creeping into the industry.
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