SEC okays dealership license for Pacific Plans

The Securities and Exchange Commission approved late Thursday the issuance of a dealership license to Yuchengco-owned pre-need firm Pacific Plans Inc., allowing it to sell new plans to the public.

The approval of PPI’s request for a dealership license was anchored on the pre-need firm’s full compliance with the requirements imposed by the SEC on liquidity, capitalization and the actuarial valuation report.

In its decision, the SEC took into consideration the order issued by the Makati Regional Trial Court, urging the corporate watchdog agency to grant Pacific Plans a dealers’ license to ensure its continued operations and settlement of obligations to planholders.

Based on the company’s audited financial statements as of Dec. 31, 2005, Pacific Plans has a paid-up capital of P210.1 million, well above the minimum paid-up capital requirement of P100 million for a three-plan type pre-need company.

Pacific Plans has no trust fund deficiencies based on actuarial reserve liability (ARL) using a 12 percent interest rate assumption.

Its trust fund amounted to P13.15 billion while its ARL was P11.79 billion.

Pacific Plans has tapped Rizal Commercial Banking Corp., ING Bank and China Bank as its trustee banks.

Officials of Pacific Plans said they are elated over the SEC’s decision to issue a dealership license to the company.

Pacific Plans president Alfredo J. Non said that its more than 5,000 agents and employees all over the country also cheered on the move taken by the SEC.

Non said that the SEC move would enable the company to serve even better its more than 400,000 fixed planholders in the areas of education, pension and memorial plans.

Non stressed that PPI has continuously fully supported all the requirements of the fixed-planholders.

Fixed plans, by its name, have fixed returns on investments.

PPI has stopped selling open-ended plans since 1992 while SEC has banned its sale in 2002 owing to the skyrocketing tuition that placed companies selling open-ended plans in financial distress.

The Makati Regional Trial Court approved in April Pacific Plans’ alternative rehabilitation plan to allow the pre-need firm to continue servicing its over 400,000 planholders. The alternative rehabilitation plan is based on the percentage of average school fees for school year 2005-2006 with tuition support on every enrollment period until 2009-2010.

Similar to the original plan, the benefits under the PEP traditional plans will be translated to fixed-value benefits as of Dec. 31, 2004, which will be termed as base year-end 2004 entitlement.

The bulk of the PEP Traditional Trust Fund is in Napocor bonds.

The most important feature of this investment is that it enjoys a government guarantee.

Further, they can be traded in the secondary market.

Last school year 2005-2006, Pacific Plans released a total of P591 million in tuition support to its 16,000 availing open-ended planholders.

The open-ended educational plan is an industry wide problem.

Almost all pre-need companies that sold open-ended educational plans are already in distress with others filing for rehabilitation in the courts.