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Troubled preneed firm fails to pay planholders

GMANews.TV
Feb. 16, 2009

MANILA, Philippines- Preneed firm Pryce Plans Inc. remains solvent and liquid though it is barely able to pay planholders in cash owing to trust fund illiquidity, data from the Securities and Exchange Commission showed.

In a letter to Sentaor Mar Roxas, Jose Aquino, SEC director for Non-Traditional Securities and Instruments department, said Pryce Plans trustees ChinaBank and Asiatrust Bank informed the SEC of the trust funds’ illiquidity. 

The SEC also noted that Pryce Plans has a trust fund deficiency of P56.17 million since it only has reserves of P113.23 million consisting of listed equities and a little cash as against the required 20 percent reserve of P168.4 million. 

Aquino noted that the firm has chosen to deal with its maturing obligations to holders and surrendered plans by giving them the option to avail of the cash settlement or dacion en pago, provided the consent of the availing planholder is secured.

The dacion is by way of liquefied petroleum gas from sister company Pryce Gases Inc., medicine from another sister company Pryce Pharmaceuticals Inc., and memorial lots provided by other Pryce companies.

For those availing the swapping option, their maturity benefits are in effect converted into capital for dealership of liquefied petroleum gas or medicines which are given immediately to them upon signification of their assent.

However, for those availing the settlement mode by way of cash, the SEC said Pryce Plans is implementing a queuing program due to the illiquidity of the assets of its trust fund.

Pryce Plans has assets of P1.28 billion as of the end of 2008 as against total liabilities of P974.56 million. The firms assets have dwindled by 31.7 percent from 2004 when its total assets amounted to P1.87 billion.

As of the end of 2008, Pryce Plans trustee banks reported a total trust fund equity of P846.99 million, of which P590.73 million is for educational plans while P256.26 million is for Pension plans.

However, the cash portion of these trust funds amounted to only P106,839.00 or a mere 0.01 percent of total trust fund. 

This is because the bulk of these trust funds have been invested in real estate, primarily condominium units (P518.45 million), and memorial lots (P216.84 million) as well as some in listed equities (P113.12 million). 

The company has stopped selling new plans since 2006 and has since continued to service planholders only. GMANews.TV

February 16, 2009 Posted by | Philippine Newspapers/Web News | , | 2 Comments

Pre-need planholders get LPG, memorial lots

The Philippine Star
By Zinnia De La Peña
Updated February 16, 2009 12:00 AM

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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. -

February 16, 2009 Posted by | Philippine Newspapers/Web News | , , , | 4 Comments

‘Pryce Plans is solvent but trust fund’s illiquid’

abs-cbnNEWS.com | 02/15/2009 2:15 PM

Pryce Plans Inc. remains solvent but is barely able to pay its obligations to plan holders in cash because its trust fund is illiquid, according to the Securities and Exchange Commission (SEC).
    
In a letter to Sen. Manuel Roxas II, SEC acting director for Non-Traditional Securities and Instruments Department Jose Aquino said the commission’s conclusion is based on trust fund reports submitted by Pryce Plans’ trustees, ChinaBank and Asiatrust Bank.

The SEC also noted that Pryce Plans has a trust fund deficiency of P56.17 million since it only has reserves of P113.23 million, consisting of listed equities and a little cash, as against the required 20 percent reserve of P168.4 million. 
    
Aquino noted that the firm has chosen to deal with its obligations to plan holders by giving them the option to avail of the cash settlement or dacion en pago, provided the consent of the availing plan holder is secured.
    
The dacion includes liquefied petroleum gas (LPG) from sister company Pryce Gases Inc., medicine from another sister company Pryce Pharmaceuticals Inc., and memorial lots provided other Pryce companies.
    
For those availing the swapping option, their maturity benefits are in effect converted into capital for dealership of LPG or medicines which are given immediately to them upon their assent.
    
However, for those who want settlement in cash, the SEC said Pryce Plans is implementing a “queuing program” due to the illiquidity of the assets of its trust fund.

Pryce Plans has assets of P1.28 billion as of the end of 2008 as against total liabilities of P974.56 million. The firm’s assets have shrank by 31.7 percent from 2004 when its total assets amounted to P1.87 billion.
    
As of the end of 2008, Pryce Plans’ trustee banks reported a total trust fund equity of P846.99 million, of which P590.73 million is for educational plans while P256.26 million is for Pension plans.
    
However, the cash portion of these trust funds amounted to only P106,839.00 or a mere 0.01 percent of total trust fund. 

This is because the bulk of these trust funds have been invested in real estate, primarily condominium units (P518.45 million), and memorial lots (P216.84 million) as well as some in listed equities (P113.12 million).

as of 02/15/2009 3:31 PM

February 15, 2009 Posted by | Philippine Newspapers/Web News | , , | Leave a comment

4 preneed firms in trouble: But SEC refuses to reveal identities of troubled companies

The Manila Times
Feb. 11, 2009
By Efren L. Danao, Senior Reporter

Four more preneed companies are on the verge of collapse and would mostly likely follow the lead of Legacy Consolidated Inc. that had gone bankrupt, a resource person claimed Tuesday at a Senate inquiry.

Phillip Piccio, president of the Parents Enabling Parents (PEP) Coalition, said the Securities and Exchange Commission knew about the financial difficulties of the four preneed firms—but still allowed them to operate.

He told the inquiry by the Senate Committee on Trade and Commerce headed by Sen. Manuel “Mar” Roxas 2nd that one of these firms is now switching benefits by giving planholders cooking gas, charcoal and other similar items. The committee is investigating the state of the preneed industry.

Chairman Fe Barin of the Securities and Exchange Commission (SEC) asked that she be given time to submit a written report, because it was dangerous for them to commit a mistake. She named “Pryce” as among the preneed firms, but she added that it is no longer selling plans.

Barin confirmed Piccio’s report of some pre-needs firms switching of benefits from cash payouts to cooking gas. She justified it, saying it is not illegal.

“Between zero and you get something,” she added. “Of course we don’t like that. But on the other hand, you could be faced with a trust fund that is not liquid.”

But she stressed that SEC would not be encouraging investors in preneed plans to accept cooking gas instead of cash.

Barin said that SEC would be meeting with preneed firms to see which among them would be recapitalizing and which would prefer to fold up. She said the law prohibits the SEC from divulging the names of firms that are in trouble.

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February 11, 2009 Posted by | Philippine Newspapers/Web News | , , , , , | 1 Comment

Pryce handing out gas, drugs instead of cash

Manila Standard Today
Feb. 11, 2009
By Fel V. Maragay

FOUR more pre-need companies are having a hard time paying their customers, and one of them is on the verge of declaring insolvency, the leader of an alliance of educational plan holders said yesterday.

Testifying before the Senate, Philip Piccio, president of the Parents Enabling Parents Coalition, challenged the Securities and Exchange Commission to advise the public about the real financial condition of troubled pre-need companies and to order them to stop selling new plans.

“It is the job of the regulator to find out who is okay,” Piccio told Standard Today after yester-day’s hearing.

He declined to identify the four financially strapped pre-need firms, but SEC Chairman Fe Barin said Pryce Plans was among those having liquidity problems.

“Based on the complaints that are being brought to us by plan holders, these four have been identified and one of them was mentioned by Chairman Barin,” Piccio said.

He said he did not know when these companies would close shop, but added: “There is already smoke.”

Congress is investigating the pre-need industry following the collapse of the Legacy Group’s pre-need group and 13 affiliated rural banks.

A House plan to summon judges and justices to shed light on the case drew a warning from the Supreme Court, which said doing so would set a bad precedent.

The House panel wanted a Manila trial court judge and two justices of the Court of Appeals to explain why they granted the Legacy Group a temporary restraining order against government efforts to close it down.

“It could create a very bad precedent among two co-equal branches of government,” said Supreme Court spokesman Jose Midas Marquez.

Members of the central bank and its policy-making Monetary Board were also concerned about a similar invitation to testify.

During a hearing at the Senate yesterday, Senator Mar Roxas prodded the SEC to quickly order the attachment of the assets of Celso de los Angeles, head of the Legacy Group, which had filed a notice of dissolution of its pre-need business in December for insolvency.

Roxas said plan holders, depositors, investors and creditors of the pre-need firm, banks and other business enterprises under the group could also file a collective petition with the courts for the attachment of De los Angeles’ properties to pay for company obligations to them.

Roxas, chairman of the committee on trade and commerce, said he intended to invite Vice President Noli de Castro to the next hearing to shed light on his ties with De los Angeles, who was appointed president of the National Home Mortgage and Finance Corp. in 2005 on De Castro’s recommendation.

Piccio said the pre-need firm on the brink of collapse, where his wife was a plan holder, had run out of cash and was offering to pay its clients in kind with memorial lots, liquefied petroleum gas and medicines.

Barin told the hearing that Pryce Plans was found to have an insufficient trust fund but was allowed to supplement the fund through its real estate assets.

Piccio criticized the SEC for failing to advise the public to refrain from buying pension, educational and memorial plans from the company even though it was aware of its problems.

Juan Miguel Vasquez, president of the Philippine Federation of Pre-Need Companies Inc., reported that his group had adopted a plan to require its members to build up their capitalization but asked for a longer period within which to undertake it.

Vasquez said the companies failing to comply with that requirement would have to stop selling plans and start winding up operations. With Eileen A. Mencias and Rey E. Requejo

February 11, 2009 Posted by | Philippine Newspapers/Web News | , , , , , , , , , | Leave a comment

Pre-need firm’s assets sought to cover plan holders’ claims

BusinessWorld Online
Feb. 11, 2009

A SENATE panel has asked the owner of a beleaguered financial group to submit a statement of assets and liabilities (SAL) as basis for liquidating properties to pay the claims of pre-need plan holders.

Senator Manuel A. Roxas II, chairman of the committee on trade and commerce that handles the investigation into the collapse of the Legacy Group, yesterday bared during a hearing several properties of Sto. Domingo, Albay Mayor Celso delos Angeles, Jr., including four luxury vehicles, a mansion in Cebu and a yacht docked in Sto. Domingo.

Mr. delos Angeles, who admitted he owned the properties, promised to submit his SAL to the committee.

Mr. Roxas said the properties, which are worth at least P100 million, could be attached to retrieve pre-need plan holders’ claims of over P1.1 billion.

“These properties should be sheriffed, should be attached by proper government agencies. The fruits of his [Mr. delos Angeles’] enterprise should go to the plan holders,” said Mr. Roxas in a news conference after the hearing.

Mr. delos Angeles said there are “sufficient funds” in the trust fund to pay the claims of plan holders. Officials had earlier said the amount in the trust fund stood at P300 million.

Pre-need firms’ closure?

Philip H. Piccio, president of Parents Enabling Parents Coalition fighting for the claims of plan holders, raised the rumored imminent collapse of four pre-need companies.

He criticized the Securities and Exchange Commission (SEC) for having been remiss in ensuring the welfare of thousands of plan holders.

“How come the SEC is not even announcing that there is another pre-need company that will collapse anytime now? The smoke is so strong, everyday we get complaints for the past year already of them not being paid,” Mr. Piccio told senators during the hearing.

SEC Chairman Fe B. Barin refused to identify the companies, saying they would submit a formal report to the Senate “because it’s very difficult, it’s very dangerous for us to err.”

“Then maybe Mr. Piccio would know [the firms] because he’s the one saying it,” she told reporters.

Ms. Barin, however, confirmed that Pryce Plans, Inc. is “switching benefits” and is only paying its plan holders medicines and cooking gas, instead of the promised investment returns. She refused to elaborate when asked if Pryce was among the troubled companies.

“If ever there’s a case where there is a switching of benefits that is actually deposited, this is already a servicing pre-need plan and this is the Pryce Plans because the information that we received is instead of delivering the benefits promised, they just pay them medicine, so they pay some cooking gas,” said Jose P. Aquino, director of the SEC’s nontraditional securities and instruments department.

“I know for one that Pryce is no longer selling plans,” said Ms. Barin. — Bernard U. Allauigan

February 11, 2009 Posted by | Philippine Newspapers/Web News | , , , , , , , | 19 Comments

4 more pre-need companies on brink of collapse

The Philippine Star
By Aurea Calica Updated February 11, 2009 12:00 AM

MANILA, Philippines – Four more pre-need companies are on the verge of collapse, one of which was already paying off plan holders with medicine and cooking gas because it no longer had funds to deliver the promised benefits.

Securities and Exchange Commission chair Fe Barin and Jose Aquino, SEC director of the Non-Traditional Securities and Instruments Department, identified one of the beleaguered firms as Pryce Plans Inc. that could no longer meet its obligations to plan holders and started giving away medicine and cooking gas.

During the resumption of the Senate public hearing on the pre-need industry, Barin and Philip Piccio, president of Parents Enabling Parents Coalition, each said the other should identify the pre-need companies in trouble.

SEC and Bangko Sentral ng Pilipinas (BSP) officials were grilled as to when would be the right time to disclose that a pre-need firm was in trouble to save both the company and the plan holders.

“How come the SEC is not even announcing that there is another pre-need company that will collapse anytime now? The smoke is so strong, every day for the past year we get complaints of them not being paid. Can you imagine they offer to pay in kind and not money anymore. They offer a lot of things. They are fooling the people,” Piccio said during the hearing.

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February 11, 2009 Posted by | Philippine Newspapers/Web News | , , , , , , , | 2 Comments

Pre-need firm pays with medicines – SEC

By Maila Ager
INQUIRER.net
First Posted 10:55:00 02/10/2009

MANILA, Philippines – (UPDATE 2) Another troubled pre-need company, has been paying its plan holders medicines and cooking gas because it could no longer deliver the benefits it had offered, an official of the Securities and Exchange Commission disclosed on Tuesday.

The Pryce Plan has been paying its clients medicines and cooking gas because it could no longer deliver the promised benefits, Jose Aquino, director of the non-traditional securities and instruments department, said during the hearing of the trade and banks committees investigating the pre-need industry in the country.

“If ever there’s a case where there is a switching of benefits that is actually deposited, this is already a servicing pre-need plan and this is the Pryce Plan because the information that we received is instead of delivering the benefits promised, they just pay them medicine, so they pay some cooking gas.” Aquino said.

Asked by Senator Manuel “Mar” Roxas if this was okay with the Securities and Exchange Commission, Aquino said, “We called their attention your honor but then they told us that this is the most that they can do.”

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February 11, 2009 Posted by | Philippine Newspapers/Web News | , , , , , | Leave a comment

4 pre-need firms near collapse

By Michael Lim Ubac
Philippine Daily Inquirer
First Posted 02:19:00 02/11/2009

MANILA, Philippines–Four more pre-need firms are said to be on the verge of financial collapse, the head of a group of plan-holders said Tuesday.

One of them is Pryce Plans Inc., said Philip Piccio, president of the Parents-Enabling Parents Coalition (PEP).

Securities and Exchange Commission Chairperson Fe Barin refused to comment on Piccio’s information at the resumption of a Senate inquiry into troubled pre-need firms, but Jose Aquino, director of the SEC Nontraditional Securities and Instruments Department, confirmed it.

Pryce had declared funding problems in 2005 and has not been allowed by the SEC to sell new pre-need products. The SEC confirmed that the company was still in operation but only to service clients’ claims.

Piccio refused to name the three other troubled pre-need firms lest he be sued for libel, but he challenged the SEC to make the public disclosure to warn plan-holders and protect the public from buying plans from them.

“It is their duty to announce the situation of every company,” he said. “The problem here is it is the federation [of pre-need companies] that is announcing, not the regulator. That’s the problem. Let the regulators regulate, see the problem, not the federation. But the problem is the federation says ‘we’re OK.’”

Piccio said he got wind of the impending bankruptcy of the three unnamed pre-need firms from complaints of their plan-holders. He said the companies were still operating.

Barin said at the hearing: “If the question is about the pre-need companies that are about to collapse, no, we are not at liberty to say that. In the first place, we have to go back to our offices and take a look.”

Piccio criticized the SEC during a break at the three-hour hearing. “That’s the biggest question — why are they withholding the information?” he said.

He said the SEC did not want to disclose the information “because they don’t want to create panic. But if it will collapse, it will collapse.”

In December 2008, three pre-need firms affiliated with Legacy Group — Legacy Consolidated Plans Inc., Scholarship Plan Philippines Inc. and All Asia Plans Corp. — ceased operations without SEC approval.

A list obtained from the official SEC website showed 27 pre-need corporations with 2009 dealer’s license as of end-January. Last year, pre-need corporations sold more than 250,000 educational, life and pension plans totaling P15 billion.

Barin confirmed to the joint committee that Pryce was no longer selling plans. “If you don’t have a dealer’s license for this year, then you should not be selling,” she said.

Barin also confirmed that the SEC had received reports that Pryce was giving plan-holders cooking gas and medicines instead of cash to service claims, a scheme dubbed “exchange of benefits.” She said this was not illegal.

Piccio said people were going to the PEP for help. “We know what these companies are, and yet the [SEC] is not announcing it,” he said. With Inquirer Research; edited by INQUIRER.net

February 11, 2009 Posted by | Philippine Newspapers/Web News | , , , , | 1 Comment

SEC monitors 12 pre-need firms offering open-ended education plans

Manila Bulletin
July 4, 2005
Byline: ANA MARIE MACUJA

The Securities and Exchange Commission (SEC) is closely monitoring 12 pre-need companies that have offered traditional or open-ended education plans.

Of the 12, four have had their dealers license suspended or revoked. The four include College Assurance Plan Philippines, Inc. (CAP), Pacific Plans, Inc. (PPI), Platinum Plans, Inc. and Scholarship Plans, Phils., Inc.

The remaining eight include Eduplan Phils., Inc., Eternal Plans, Inc., Legacy Consolidated Plans, Inc., PET Plans, Inc., Prudentialife Plans, Inc., Pryce Plans, Inc., TPG Corp., and Trusteeship Plans, Inc.

To recall, PPI claimed its liquidity problem is caused by its open-ended plans. The company said the deregulation of tuition increases in 1990 placed in peril the companys obligations under the open-ended or traditional plans.

PPI earlier claimed as a result of the deregulation, its obligation under the open-ended educational plans ballooned to a level not originally projected by the company.

“The deregulation of tuition fees has caused a tremendous rise in the cost of education, which in turn put an enormous pressure on traditional (open-ended) plans and their respective trust funds considering that pre-need companies dealing in such securities could not pass on the additional cost to their planholders,” PPI claimed.

PPI stopped selling open-ended education plans in 1992, 10 years ahead of a directive from the SEC putting to a stop the sale of such type of education plans.

The SEC, on the other hand, has been criticized for allegedly not doing its job to prevent the financial turmoil of companies such as PPI and CAP.

The SEC has also received criticisms for not immediately putting to a stop the sale of open-ended plans. The SEC directed pre-need firms to stop selling this type of education plan only in 2002.

July 4, 2005 Posted by | Philippine Newspapers/Web News | , , , , , , , , , , , | 2 Comments

   

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