Pre-need firms down to 29 in 2006

The number of companies licensed by the Securities and Exchange Commission to sell pre-need plans dropped to 29 from 30 last year.

SEC spokesperson Gerard Lukban said the companies that were issued dealer licenses include Ayala Plans Inc., Berkley International Plans Inc., Loyola Plans Consolidated Inc., Manulife Financial Plans Inc., Pacific Plans Inc., Permanent Plans Inc., Philam Plans, Prudentialife Plans, and Sunlife Financial Plans.

Completing the list are Classic Plans, Cityplans, Cocoplans, Destiny Financial Plans, Eduplans, Eternal Plans, First Country Plans, First Union Plans, Himlayang Pilipino Plans, Ideal Pension Plans Corp., Mercantile Care Plans Inc., Millenium Plans, Primanila Plans, Primeplan International Corp., Provident Plans International Corp., St. Peter Life Plans, Transnational Plans, and Trusteeship Plans.

The decline in the number of companies authorized to sell pre-need plans was due to the failure of some companies to comply with trust fund and paid-up capital requirements.

A measure of how healthy a pre-need company is if its trust fund is equal to or exceeds the actuarial reserve liability (ARL). A trust fund is the pool of premium payments from planholders that had been invested.

The ARL is the present value of all current and future tuition availments. It is based on inflation, interest rates, and expected tuition increases, among others.

Lukban, however, said other companies that failed to secure their licenses can still comply with the SEC requirements.

"It’s just the start of the year and the other companies can comply with the requirements to secure their licenses anytime within the year," said Lukban.

Sales of the country’s pre-need companies fell 7.08 percent in the first 11 months of 2006, reflecting the continued poor investor confidence in the industry which has been plagued with controversies arising from the deterioration of the financial condition of some pre-need firms.

SEC data show that sales for the period under review reached P17.57 billion compared with P18.91 billion in 2005. The number of plans sold likewise decreased 23.35 percent to 217,930 from 284,307.

Education plans suffered the biggest drop in sales as the number of plans sold dipped 34.31 percent to 30,956 valued at P3.8 billion or 30.44 percent lower than the previous level of P5.47 billion.

Sales of life plans also declined 32 percent to 72,525 from 106,621. In terms of contract value, sales of life plans amounted to P2.6 billion, down 26.42 percent from P3.53 billion.

The number of pension plans sold likewise went down 12.34 percent to 114,449 from 130,560. In terms of contract value, sales of pension plans, however, increased 12.7 percent to P11.16 billion from P9.91 billion.

Initial collections from the plans sold amounted to P2.21 billion or an increase of 8.78 percent from the previous level’s P2.03 billion.

Pre-need plans are contracts which provide for the performance of future services or the payment of future monetary considerations at the time of actual need for which planholders pay in cash or installment at stated prices, with or without interest or insurance coverage and includes life, pension, education, and interment.

The industry expected a flat growth in 2006 due to difficulties in the business environment especially with the adoption of the more stringent international accounting standards.