Pre-need planholders get LPG, memorial lots
The Philippine Star
By Zinnia De La Peña
Updated February 16, 2009 12:00 AM
MANILA, Philippines – Cash-strapped pre-need firm Pryce Plans Inc. has opted to fulfill its obligation to plan holders by paying them in kind – specifically, through medicines, cooking gas and memorial lots.
Pryce Plans Inc. is hardly able to pay its obligations to plan holders in cash because its trust fund is illiquid, according to the Securities and Exchange Commission (SEC).
Based on data obtained from SEC, Pryce Plans Inc. has a trust deficiency of P56.17 million.
Reports submitted by Pryce Plans’ trustee banks to the SEC showed that the ailing pre-need company had reserves of only P113.23 million, short of the required 20 percent reserve of P168.4 million. These reserves comprised investments in the stock market and cash amounting to only P106,839 which is just 0.01 percent of the firm’s total trust fund.
As of end-December 2008, Pryce Plans had a total trust fund equity of P845 million, P591 million of which is for educational plans while P256 million is for pension plans.
The payment-in-kind scheme includes cooking gas from a sister company Pryce Gases Inc., medicine from another sister company and memorial lots.
Pryce Plans blamed the non-renewal by the SEC of its license to sell pre-need plans and the negative publicity involving the collapse of two of the industry’s major players – College Assurance Plans and Pacific Plans, for the deterioration in its cashflow generation.
As of end last year, Pryce Plans had assets of P1.28 billion as against total liabilities of P974.56 million. From P1.87 billion in 2004, its assets have been depleted by 31.7 percent.
Aside from Pryce Plans, three more pre-need firms are believed to be on the brink of collapse due to a funding shortfall.
The Federation of Pre-Need Plan Companies has asked the SEC to relax its capital and trust fund build-up requirements to ensure its survival amid a deepening global financial turmoil.
For this year, the SEC has licensed 24 pre-need companies, namely Ama Plans, Ayala Plans, Caritas Financial, Citiplans, Cocoplans, Danvil Plans, Destiny Financial Plans, Eternal Plans, First Country Plans, First Union Plans, Greyline Plans, and Himlayang Pilipino Plans, Loyola Plans Consolidated, Manulife, Mercantile, Paz Memorial Service, Permanent Plans, Philam Plans, Provident Plans International, Prudential Plans, St. Peter Life Plans, Sunlife Financial Plans, Transnational Plans, and Trusteeship Plans. –