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Pre-need firms move to assure clients

BusinessWorld
By Don Gil K. Carreon
Apr. 24, 2009

Following a week where two of their number lost their licenses due to financial problems, pre-need companies moved to issue assurances that they have enough money to keep operating and service clients.

In separate interviews, officials of Philam Plans, Inc., Transnational Plans, Inc., Caritas Financial Plans, Inc., Eternal Plans, Inc. and City Plans, Inc. all declared their firms as solvent. BusinessWorld was unable to reach of officers of the 14 other pre-need firms under scrutiny by the Securities and Exchange Commission (SEC).

On the sidelines of an Institute of Corporate Directors event on Wednesday, Philam Plans Chairman Jose L. Cuisia, Jr. said the company was doing fine, which is why it decided not to avail of an SEC plan that gives pre-need companies up to three years to erase their capital and trust fund deficits.

“We’re doing well. We will continue to be strongly capitalized … Our plan holders need not worry,” he said.

Mr. Cuisia said Philam Plans, a unit of Philippine American Life and General Insurance Co., ended 2008 with P30.1 billion in its trust fund with claims against it reaching P28 billion. He also pointed out that Philam Plans’ paid-in capital of P700 million remained the highest in the industry.

In a phone interview, meanwhile, Caritas Plans President and CEO Eliseo P. Dizon, Jr. said the pension plan firm, being just two years old, did not have any trust fund deficiency with its earliest maturing plans coming in 2017.

“We are also not capital deficient. For a one plan firm, the minimum paid-in capital is P50 million, but we have P150 million,” he said.

Mr. Eliseo added that the firm’s board planned to add P92 million to its trust fund this year, which is currently worth P18 million and has P11 million in liabilities.

“This is to give the public and our plan holders comfort that Caritas Plans is solvent and solid,” he said.

Mr. Eliseo, who was founding president of Philam Plans, said the pre-need industry remained viable and was only burdened by old plans that promised up to 15% in returns, which companies cannot meet now given poor economic conditions.

Amor B. Masigla, assistant vice-president at Eternal Plans, was likewise confident about her company’s financial position, but did not provide specifics.

“We have enough in our trust funds whatever the results of the 2008 valuations are, which is why we did not apply for the buildup,” she said.

In an e-mail, Transnational Plans President Veronica S. Lao Guico also claimed the firm did not need relief as it did not have a trust fund deficit.

“As to how much is our trust fund and our liability, we have just submitted to SEC our 2008 Actuarial Valuation Report and we would like to wait for the results of the review of SEC,” she said.

Cityplans, a unit of listed Cityland Development, Inc., echoed this in a statement. It declined to provide figures, also preferring that these come from the SEC. Cityland Development’s latest financial report shows Cityplans’ trust fund assets at P63.5 million against potential claims worth P63.86 million.

Sun Life Financial Plans, Inc., meanwhile, issued a statement on Wednesday saying that profits hit a record P117.5 million last year. It did not provide 2007 figures. The pre-need firm also said its trust fund jumped by over a quarter to P5.3 billion, but also did not say how much its liabilities to clients were.

Following an April 15 SEC deadline for 24 pre-need firms to submit financial statements and capital/trust fund buildup plans, the regulator announced on Monday that it was revoking Prudential Life Plans, Inc.’s license to sell after rejecting its proposal to fund a P4.49-billion trust fund deficit via shares in affiliate firms.

The following day, it said it had also taken back Permanent Plans, Inc.’s license even as the firm announced that it was shutting down and had told the regulator a week before of its plans.

The SEC has so far approved the capital and trust fund buildup plan of Cocoplans, Inc., while Danvil Plans, Inc.’s proposal is under review.

as of 04/24/2009 11:39 AM

April 24, 2009 - Posted by | International Newspapers/Web News | , , , , , ,

1 Comment »

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    Comment by Maria Ann | November 11, 2010


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