Prudentialife barred from selling new pre-need plans
Apr. 20, 2009
The Securities and Exchange Commission (SEC) has prohibited Prudentialife Plans Inc. from selling new pre-need plans since last week, the company announced Monday.
Prudentialife said the SEC revoked the company’s dealer license for failure to meet the requirements of the corporate regulator’s Multi-year Capital and Trust Fund Build-up scheme.
Under the scheme, acceptable assets that can be contributed to plug any trust fund deficiency are income-generating real estate and unlisted shares that are not in any way related to the pre-need company.
“The assets we offered are real estate properties that have good values but are not yet income-generating. Aside from this, we offered unlisted shares of profitable companies but are affiliates of our pre-need company. The SEC did not accept these assets for contribution to our trust fund and capital,” Prudentialife said in a statement.
Despite this, Prudentialife said it will continue to service and honor the existing plans already sold to its planholders.
The SEC reported that Prudentialife should have P19.5 billion in its trust fund as of September last year. However, the company only reported P14.16 billion in its trust fund as of the said date.
The company blamed the global economic crisis and the impact of the controversy surrounding the Legacy Group as culprits behind the pre-need sector’s dilemma.
“The global economic crisis has affected a number of industries worldwide including the Philippine pre-need industry. The trust funds of the industry have not been earning their projected returns…Compounding the problem of the industry is the ongoing investigation of the Legacy fraud case. This has dragged down the confidence in our industry whose image has already been tarnished when major pre-need firms went down years ago,” Prudentialife said.
To address the situation, the Philippine Federation of Pre-Need Plan Companies Inc., of which Prudentialife is a member, was left with three options to consider. These include raising new capital based on the SEC’s multi-year funding scheme, taking an “orderly exit” from the industry and paying plan benefits as warranted, and seeking corporate rehabilitation.
as of 04/23/2009 9:01 PM
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