IC mulls conservatorship for Provident Plans

MANILA, Philippines - The Insurance Commission (IC) is considering to place pre-need firm Provident Plans International Corp. under conservatorship if no clear improvements are seen in its financial condition by mid-June to protect the interest of the company’s 38,000 plan holders.

In a report to Finance Secretary Carlos Dominguez, Insurance Commissioner Dennis Funa said Provident Plans was among the companies the IC has found to be financially deficient since the regulation of the pre-need industry was placed under the commission.

As of December 2016, Funa said the company’s capital impairment reached P340.61 million, while its trust fund deficiencies hit P284 million.

“The primary cause of its capital impairment and trust fund deficiency is the unrecoverable investment with its previous trustee bank, the Export and Industry, and the neglect by its new trustee bank, the United Coconut Planters Bank in protecting the trust fund,” the commissioner said.

Funa said that while Provident Plans has assured in February that it has a potential investor who could cover up its capital impairment and trust fund deficiencies, the IC has yet to receive any concrete plan or letter of intent from this supposed investor.

“Thus, this commission has ordered Provident Plans to submit a concrete plan and letter of intent from its proposed investor or to cover up its capital impairment and trust fund deficiencies within 60 days from receipt of the directive (dated April 12 or until June 17, 2017,” Funa said in his report.

“Otherwise, this commission will issue a cease and desist order and place the company under conservatorship,” he said.

About 70 percent of Provident Plans’ business is focused on life or memorial plans, while the remaining is on educational plans and pension plans.

In January 2014, Provident Plans submitted a five-year capital buildup program to the IC. However, the plan was found to be non-beneficial to plan holders.

The IC then ordered the company to submit a three-year program instead with an initial capital infusion of P75 million, to which the company was able to comply within the first year. But it has since failed to follow through with its compliance in 2015 to 2016.

The supervision and regulation of pre-need companies was transferred to the Insurance Commission from the Securities and Exchange Commission in 2009 upon the enactment of Republic Act 9829 or the Pre-Ned Code of the Philippines.