IC orders liquidation of Prudential Plans

MANILA, Philippines - Prudential Plans Inc. (PPI) will finally be liquidated.

Under a July 11 directive, the Insurance Commission (IC) ordered the appointed liquidator, San Diego, Ycasiano, Macias, Estorco, Castañeda, Sanchez law office (Symecs), to submit the final plan within two months or until September this year.

The IC also said that the first tranche of payments must be based on the distribution plan and timeline agreed on by the trustee banks and the liquidator.

And to make sure that the liquidation plan is being implemented properly, the regulator requires “an implementation status report shall be submitted twice every month.”

The filing of a legal case against PPI is necessary to tap into the corporate assets to ensure that the planholders receive what is due them.

“All corporate assets are already earmarked for the deficient educational and pension plan trust funds, and to life plan trust fund if subsequently found to be deficient,” the IC directive said. The case will likewise strengthen the position of government that PPI’s corporate assets are owned by the planholders “except those for other creditors allowed by law to claim based on legal priorities.”

The entire liquidation process must be settled within two years.

PPI president and chief executive officer Albert Alba maintained that the rehabilitation is still the best option for the planholders. “Planholders stand to get more on our rehabilitation than liquidation,” Alba said.

PPI was placed under receivership leading to liquidation under directives issued by the IC on Sept. 19 and Oct. 19, both in 2012. The two directives were in accordance to Sec. 50 of Republic Act (RA) 9829 otherwise known as the Pre-Need Code.

The September directive placed PPI under receivership and the following month, ordered its liquidation when the pre-need company failed to present an acceptable rehabilitation plan.

After several meetings with the board of advisers – composed of representatives of plan holders, PPI owners and stakeholders, regulator and independent actuarial consultant, pre-need association, and a technical working committee of the House of Representatives – it was agreed that the liquidation of pre-need company would proceed.

The accumulation method for the allocation of assets to the planholders would be the accepted process.

The method takes into consideration the net accumulated value (NAV) to the aggregate net accumulated value of all planholders with in-force or lapse plans. The interest rate used to accumulate installments and benefits on the year of receipt or roll-over date is based on historical yield rate of government bonds maturing in one year as published by the Philippine Dealing Exchange (PDEx).

All plans dated prior to 2008 will follow an interest rate of 5.6 percent; 6.12 percent for 2009; 4.65 percent for 2010; 2.15 percent for 2011; and 1.52 percent for 2012.

The sources of assets are the trust funds and the corporate assets.

The trustee banks manage the trust funds assets and the IC would be the designated entity to oversee is utilization for allocations. But the courts are needed to take control of the corporate assets.

Some 300,000 or so planholders are affected by the liquidation of PPI.