PET Plans assures planholders on conversion into a mutual fund

PET Plans Inc., a pre-need firm controlled by the Ocampo family, has assured planholders that it has enough liquidity to cover the next five years and has sufficient assets that can be disposed to generate more cash.

In a briefing with reporters, PET Plans president and chief executive officer Lorenzo Ocampo said the company has over P2.7 billion in trust funds, P1.2 billion of which is cash or near cash equivalents as compared to an estimated P700 million in availments over the next five years.

Ocampo pointed out that the company’s plan to convert all outstanding pre-need plans into a professionally managed mutual fund is the best alternative to get a reasonable value for the planholders. This forms part of the recovery program filed by PET Plans at the Makati Regional Trial Court as it moves to exit from the pre-need industry to engage in the marketing of other financial products and services.

"We are in a solid position to meet our obligations to planholders because our liquidity position is way above the 10 percent requirement set by the SEC (Securities and Exchange Commission)," Ocampo said.

He said the company has P60 million worth of real estate properties.

"While the pre-need trust fund is liquid and intact, we are leaving the pre-need industry because its framework and environment are no longer conducive to selling or owning pre-need plans. It’s because of the new rules implemented by the SEC, the deregulation of tuition in 1992 and lower interest yields on trust fund investments," Ocampo said.

He said while the law does not allow mutual funds to guarantee a return, they may provide reasonable returns for the planholders’ investments.

The management of the trust fund by a very large, experienced and reputable institution which can easily be accessed by planholders nationwide, will help reassure the planholders with peace of mind as their investments are intact and being taken care of, Ocampo said.

Ocampo said the pre-need firm is now in talks with several universal banks to manage the mutual fund.

To show good faith to PET Plans planholders, the company will go into a full-blown campaign to inform investors about its proposal.

Ocampo said they will be holding meetings in major cities in North and South Luzon, Visayas and Mindanao with planholders and business partners in the next few months to allay their fears.

He said PET Plans will continue to pay scheduled education, pension and memorial benefits to its planholders even while the recovery plan is awaiting approval by the court.

Under its rehabilitation plan, PET Plans will continue to operate but under a new name, PETPlans Financial Corp., which will set three business hubs – the network hub which will sell life, non-life, HMO and memorial park lots; OFW hub which will provide money transfer and document and parcel delivery services; and financial hub to provide loans and credit card facilities.

PET Plans intends to sell the life insurance and HMO products of the Philam Life Group.

Ocampo said all subsequent installments or payments made by amortizing planholders will be deposited directly into the fund, for which additional certificates with the corresponding value will be issued to the planholders.