Berkley continues to be the only pre-need firm with a credit rating. It first applied for a corporate credit rating in 2001.
The rating is defined as having an "above average capacity to meet financial commitments relative to that of other Philippine corporations."
"However, the corporation is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than higher-rated corporates," PhilRatings said.
In assigning the rating, PhilRatings considered Berkley Plans’ demonstrated good earnings from its trust fund investments, enabling it to sustain its assumed rate of earnings on its investments.
PhilRatings also took note of the company’s adequate coverage of its actuarial reserve liabilities and its ability to maintain its marketposition in its chosen field – the educational plan market, in spite of keen competition and negative industry developments.
"These positive factors, however, are balanced against an over-all situation in the pre-need sector where there is a general perception of uncertainty in claims-paying ability due to the experience of some industry players. This has led to a slowdown in the erstwhile phenomenal growth of pre-need sales," PhilRatings said.
Although revenues continued to increase, the number of plans sold by Berkley decreased by eight percent during the first nine months of 2004.
"Sustainability of profit performance has yet to be demonstrated as Berkley incurred a loss of P11 million in 2003, owing to some reorganization within the group, which resulted in higher general and administrative expenses compared to previous years. In the interim period ending September 2004, however, a turn-around in performance has been achieved, with Berkley realizing income amounting to P41 million," PhilRatings noted.
To sustain these gains, Berkley intends to further expand its distribution network and launch new products to serve the needs of the public.