PhilPlans payments on track

MANILA, Philippines – The first payments (FPs) of the PhilPlan First Inc. (PhilPlans) has reached P139 million, prompting officials to raise optimism of hitting its target P400 million FPs for the whole of 2012.

Total FPs in 2011 amounted to P257 million.

First payments (FP) are the initial payments for the generally five-year payment period for pre-need products, which include pension, memorial/life and education. It can be compared to the first year premiums (FYP) in the case of the life insurance industry.

In terms of consolidated net income, PhilPlans hopes to equal if not surpass its 2011 performance. Last year, it reported an income of P1.647 billion, up 64.7 percent from the P1 billion recorded in the previous year.

Management plans to increase its total paid up capital to P1 billion by end 2012. It stood at P700 million end 2011.

“We are on track to reach our conservative targets,” PhilPlans president and chief executive officer Monico V. Jacob said.

PhilPlans is a wholly owned subsidiary of STI Investments Inc. and a member of the Philippine First Group. It is the leading pre-need company and ranked 241 in terms of gross income among the country’s top 1000 corporations.

FPs is critical for pre-need companies, as it translates to additional investments for its trust funds as well as operational expenses and agent commissions. Pre-need firms are required by law to extract 51 percent from FPs for its trust funds.

The trust funds, held by seven independent trustee banks, amounted to over P40 billion, or more than enough to pay out claims for PhilPlans’ over 300,000 plan holders.

Jacob said that the trustee banks continue to place the funds in the strong performance of the both the fixed income and equity investments. Roughly 80 percent of investments are placed in fixed income instruments, mostly government securities, while the balance are in equity investment instruments.

 Data from its annual reports show that the trustee banks are BDO Unibank Inc. (BDO), Deutsche Bank, the Bank of the Philippine Islands (BPI), the Metropolitan Bank & Trust Co. (Metrobank), Union Bank of the Philippines (UnionBank), East West Banking Corp. (EastWest Bank), Maybank ATR KE Financial, and Maybank Philippines Inc.

PhilPlans sells pension, memorial or life, and education plans, with the former accounting for 52 percent. Education plans accounts for 33 percent and memorial for 14 percent.

Jacob said that the challenge is to dramatically increase the share of education plans in the coming years.

The Philippine First Group also has under its wings the STI schools and the Philippine Women’s University (PWU).

“There is a strong potential for synergy between the plans and the educational institutions that we run,” the company chief executive said.

PhilPlans has a sales force of 5,000 and a branch network of 54 nationwide. The plan by the end of 2013 is to bring that to 70 by end 2013. Curiously, STI presently runs 85 locations or schools while PWU and affiliate Jose Abad Santos Memorial School (JASM) is in the rebuilding stage.

“We want to beef up the force in terms of locations and agents, as well as introduce new pre-need products or variants of existing products,” he added.