Berkley eyes 20% sales growth next year

Pre-need firm Berkley International Philippines Inc. is eyeing a 20-percent growth in its sales next year with its aggressive direct-selling activities and its plan to set up its first provincial branch. Newly-appointed Berkley president Alan Michael Rafe said the growth in sales will come from new business and succeeding payment collections as the company steps up its marketing strategy to attract more planholders.

Rafe said the pre-need firm has earmarked around P30 million for the establishment of six new branches over the next three years. Each branch is estimated to cost P5 million.

He said plans are underway to open one branch in Cebu, the second most populous city next to Metro Manila.

"We think Cebu is the perfect choice for our first branch outside Metro Manila. The demographics are good," Berkley chief financial officer Daniel Villanueva said.

At present, Berkley has five branches located in SM Megamall, Enterprise Center in Makati, Festival Supermall in Alabang, SM Southmall in Las Piñas City, and SM North Edsa.

Rafe said Berkley will continue to develop new businesses as platforms to support its long-term growth. For one, it is planning to sell new life plans to provide the public with more options.

Berkley ended 2003 with a net profit of a little over P100 million on revenues of P800 million. For this year, the company expects to post a net income of P80 million due to the decline in interest rates.

As it positions itself as one of the leading and fastest-growing pre-need firms in the country today, Berkley plans to raise its trust fund to $5 billion in the next five years from the existing $2 billion. This would give the company more flexibility in pursuing its expansion plans.

From being at the tailend of the pre-need industry at number 87 in 1997, Berkley has emerged as the number four overall, in terms of new business. The company achieved this largely through its innovative marketing techniques and unique distribution channel, whereby Family First, Inc., its marketing arm, brings Berkley’s services closer to its prospective customers via its aggressive direct-selling activities in centrally-located malls.

The design and cost structure of its plans also provide adequate cover for any plan lapsation and allow for a reasonable recovery of related expenses. Management has also been able to build up its trust fund adequately, covering future requirements sufficiently.

Last year, Berkley Inc. once again obtained a credit rating of A plus from the Philippine Rating Services Corp. for the third consecutive year. The rating underscores the company’s above average capacity to meet its financial commitments. Philratings is the local affiliate of world-renowned Standard and Poor’s.

In assigning the rating, PhilRatings took into account Berkley Plans’adequate level of investment in its trust fund relative to its actuarial reserve liabilities; its compliance with SEC guidelines and reportorial requirements; its position as one of the leading players in the education segment of the pre-need sector and its adequate capitalization level. "Berkley continues to be the only pre-need firm with a credit rating." We are especially proud of this because it bespeaks of the company’s confidence to open its financial books for a third party examination," Rafe said.

The rating company also gave positive marks to Berkley’s ability to compete with big, established players amid a slow-moving economy.– Zinnia dela Peña