PETPlans trust fund seen to hit P6.35B in 10 years

The Ocampo-owned PETPlans Inc. expects its trust fund to more than double to P6.35 billion over the next 10 years, based on its amended rehabilitation plan which was approved by a local court last week.

The projection was based on the assumption of a conservative rate of return of eight percent per annum for the trust fund portfolio.

Income contributions from PETPlans are also assumed to come in only on the fifth year.

The revised rehab plan, drafted by lawyer and former Securities and Exchange Commission Associate Commissioner Danilo Concepcion, called for the replacement of all pre-need contracts with shares in a unified trust fund called the Enhanced Value Plan. This is expected to result in higher profits for the company, thereby boosting PETPlans’ capacity to service the needs of its planholders.

The unified trust fund has grown to P3.04 billion from only P2.6 billion when PETPlans filed for corporate rehabilitation with the court in June last year.

The pooled fund will be solely and exclusively managed by a competent, experienced, and professional fund manager.

"This Modified Rehabilitation Plan is very feasible and will boost the viability of the pre-need business of PET Plans. This will also allow PET Plans to apply for a dealer’s license and sell new products subject to and in compliance with all the laws, rules and regulations imposed by the SEC on the pre-need industry," the rehabilitation receiver for PET Plans said.

PETPlans president and CEO Lorenzo T. Ocampo said there are no set maturity dates for the EVP and the planholder has the discretion to continue or withdraw from the EVP.

"Unlike ordinary pre-need plans, the EVP will not lapse, has no pre-set installments and it is up to planholders to put in additional investments," Ocampo said.

All earnings of the fund will be credited to the planholders without PETPlans taking part in the earnings. Additionally, 15 percent of Pet Plans’ net income after tax will be contributed to the EVP fund.

PETPlans has been a major player in the troubled pre-need industry, and its prudent and quality management has kept its trust fund, liquid and intact despite the large-scale deterioration of the industry.

With the court ruling, planholders of plans that are fully paid and have matured may immediately avail of the EVP, or the amount in pesos that the EVP is worth, without any discount. Planholders of pre-need plans that have not yet matured but who wish to avail of their EVP during the first three years from conversion are allowed to do so, but subject to a discount of 30 percent on the first year, 20 percent on the second year, and 10 percent on the third year after conversion.

Planholders whose pre-need plans had lapsed before June 27, 2006 are given six months within which to reinstate their plans if allowed by the terms of the plan and if they comply with all requirements for reinstatement. For plans that have lapsed on or after that date, the court-approved plan will not consider them as lapsed. But the pre-termination value of these plans shall be computed on the basis of the premiums paid as of the said date.