MANILA, Philippines - The Securities and Exchange Commission (SEC) has assured the public that the remaining 22 licensed pre-need companies with a combined trust fund of P62 billion, can meet their obligations to planholders.
The SEC issued this statement following the results of an evaluation conducted into the financial records of the 22 existing licensed pre-need firms.
Gerard Lukban, SEC spokesperson, said the pre-need firms can continue to service their planholders in accordance with the provisions of their pre-need contracts.
“The industry players, backed up by P62 billion in its trust funds are ready to service its around 1.5 million planholders, specially educational plan holders in time for the opening of the coming school year,” Lukban said.
Lukban pointed out that the SEC continues to perform its regulatory functions for the protection of planholders.
Amid the tough business climate that has seen a decline in the value of trust funds of pre-need firms, the SEC urged planholders to remain vigilant and report any deviation from the terms of their pre-need contracts or any unusual delays in the servicing of the planholders.
From 24 at the start of the year, the number of licensed pre-need firms has been whittled down to 22 after the SEC revoked the permits to sell of Prudentialife Plans Inc. and Permanent Plans.
According to the SEC, Prudentialife failed to present an acceptable proposal to address its capital and trust fund deficiencies.
In the case of Permanent Plans, the pre-need company voluntarily ceased operations and is now focusing on just servicing existing clients.
Industry figures show that as of end-December 2008, the pre-need industry’s trust fund reached P76.23 billion as against pre-need reserves of P75.46 billion, thereby posting a surplus of P772 million based on an assumed yield of 11 to 12 percent. The figures still included the output of Prudentialife and Permanent Plans.
The 11-12 percent assumption was still realistic when these pre-need companies filed their financial reports in April 2008, pointing out that trustee banks even supported it.
Observers said conservative estimates would show that the industry’s trust fund deficiency could have gone up to P70 billion as of end-December last year based on an assumed yield of six percent.
The rule of thumb is for every one percent lower yield, liability goes up by 10 percent.
The SEC had eased the rules on the build-up of the capitalization and trust funds of pre-need companies to help them ride out the economic crisis.
The 22 pre-need companies with dealership licenses for this year include AMA Plans Inc., Ayala Plans Inc., Caritas Financial Plans Inc., CityPlans Inc., Cocoplans Inc., Danvil Plans Inc. (formerly Berkeley International Plans Inc.), Destiny Financial Plans Inc., Eternal Plans Inc., First Country Plans Inc., First Union Plans Inc., Grayline Plans Inc., Himlayang Pilipino Plans Inc., Loyola Plans Consolidated Inc., Manulife Financial Plans Inc., Mercantile Careplans Inc., Paz Memorial Service Inc., Philam Plans Inc., Provident Plans International Corp., St. Peter Life Plan Inc., Sun Life Financial Plans Inc., Transnational Plans Inc. and Trusteeship Plans Inc.