Deadline for NLIC rehab plan extended

MANILA, Philippines - The Insurance Commission (IC) has extended indefinitely the deadline for the submission of a final rehabilitation plan for suspended National Life Insurance Co. (NLIC) to allow all stakeholders sufficient time to evaluate two proposals. The original deadline was set for May 1. 

Conservator Ermilando D. Napa crafted the first proposal while an alternative proposal was formulated by a group composed of agents, policyholders and premium deposit fund (PDF) owners. 

IC Deputy Commissioner Dorothy M. Calimag said in a letter to NLIC president and chief executive officer Benjamin L. de Leon that the request (for an extension) “is granted until further notice.” De Leon had earlier asked for a two-month extension or up to the end of June. 

But Calimag reminded De Leon to submit the actuarial projections based on Napa’s rehabilitation plan. 

“This would facilitate the analysis and evaluation of NLIC’s five-year cash flow projections and help this Commission make a decision,” the deputy commissioner said. 

The IC also informed policyholder Katherine Yupangco of the indefinite extension. Yupangco is the spokesperson of the agents, policy and PDF holders. 

The rehabilitation plan presented by Napa effectively converts all policies and PDFs into equity or shares of stock, meaning policy and PDF holders will become part owner of NLIC. 

Napa said that it would likewise entail the sale of NLIC’s properties located in Ayala Ave. and Byron EDSA Hotel in Pasig.

Money raised from the sale of the two properties will be used to retire its debts and other financial obligations to BDO Unibank Inc. (BDO), Philippine Business Bank (PBB), and other private and government institutions.

 It plans to form a nine-man board of directors composed of five representing the policy and PDF holders, one representing the present owners, and three independent directors. 

During this time, it will seek to get its certificate of authority to operate (CA) in order to resume sale of insurance policies, as well as hire highly competent management personnel and staff. 

Meanwhile, the group of agents, policy and PDF holders recommended in their alternative plan for NLIC to be placed under a state of receivership. 

Under the direct supervision of the IC, the group urges the regulator â€œto open an NLIC trust account  where  all  premium  payments,  loan  receivables,  rental  fees collected from the sale of the Ayala building and the Byron EDSA Hotel, and other such fudiciary collections shall be deposited and held-in statutory trust, to be reserved for future payment of NLIC liabilities.” 

Other recommendations are: the “removal” of all NLIC directors, stockholders and management, placing the insurance company under the full authority of the IC;  full protection of the insurance public as well as “seeking out the person(s) responsible or those who participated and profited from irregular and anomalous NLIC transactions and investments; and that all policy and PDF holders be given “the right and be granted access to examine the books and finances of the company during office hours.” 

De Leon meanwhile said that he was not adverse to requests of policy and PDF holders to conduct a forensic auditing of past transactions. 

“In the spirit of transparency and for the avoidance of doubt, NLIC is willing to recommend to the Conservator to include, as part of the 2013 proposed Rehabilitation Plan, the following express statement: that the forensic auditing and investigation will be done after, and even if, the proposed plan be approved; and that any recovery as a result of the auditing and investigation will eventually accrue to the policyholders who will then constitute 82 percent of NLIC’s equity,” he said in a letter to the IC dated April 30 this year. 

IC officials said that there is a thin line between being placed under receivership and liquidation. 

The life insurer has been in and out of conservatorship, and under at least five conservators since 2006. It threatens to have the distinction of being the first Philippine life insurance company to be liquidated.

 Several foreign insurers have ventured into the Philippine market during the liberalization period in the ‘90s. But eventually sold its business, including its portfolios, to existing insurers.