Pre-need industry posts 27% growth in revenues

Despite the economic setbacks since the Asian currency crisis in 1997, the pre-need industry has continued to flourish, raking in a total of P13.8 billion in revenues this year.

The Securities and Exchange Commission (SEC) said 18 pre-need firms have reached the billion-peso benchmark in assets, aggregating P122.9 billion equivalent to 94.3 percent of total assets.

Based on the financial statements submitted by 52 pre-need firms, the SEC report singled out the top five perennial leaders: College Assurance Plan Philippines, Inc.; Philam Plans, Inc.; Pacific Plans, Inc.; Prudentialife Pension Plans, Inc.; and Prudentialife Education Plan, Inc.
Aside from the 27-percent increase in revenues from last year’s P10.8 billion, the pre-need industry’s income has also been augmented by its installment contracts receivables (ICR) which represent 64 percent of all its resources.

On the other hand, the pre-need industry’s total liabilities have been broken down as follows: 44 percent have been attributed to estimated benefit provision; 33 percent to unrealized gross income; 17 percent to actuarial reserve liabilities.

In six years, the industry’s total assets have increased by 246 percent from P37.7 billion in 1994 to P130.3 billion in 1999 with total liabilities peaking at P117.6 billion in 1999, up by 234.4 percent from 1994 figures.
"Plan sales are still the main source of industry revenues, representing 84 percent of total, although trust fund earnings expanded by as much as 513.4 percent from its 1998 level," the SEC report said.

Although the industry’s performance in 1996 and 1998 reflected declines in trust fund earnings as market value of stock investments substantially diminished, 33 companies became gainers with P1.1 billion in profits after tax while 19 of them incurred losses amounting to P242.5 million.

The Philippine Federation of Pre-need Plan Companies Inc. (PFPPCI) recently said that it preferred being regulated by the Insurance Commission instead of the Securities and Exchange Commission which, it claimed, had bypassed the pre-need group before issuing policies inimical to the industry.

The SEC, on the other hand, maintained that it had always been fair in its dealings with the industry and that the policies issued by the agency have been with the knowledge and consent of the federation which, it said, appeared to have no objections to them.