MANILA, Philippines - Claims of over 100,000 planholders are affected by a shortage in trust fund of Loyola Plans Consolidated Inc., which risks being brought to court by regulators next week.
The Insurance Commission said the Sen. Gil Puyat-founded firm has until Monday to prove it can fill up the shortfall amounting to P238 million or else it would be placed under conservatorship.
“If they fail to respond, I will appoint a conservator to take over the company and look at what can be done,” Insurance Commissioner Emmanuel Dooc said in a phone interview.
“We have pointed out to them that they have corporate assets to satisfy the deficiency. To touch that, we have to go to the regular court,” he added.
Of the total amount, P66 million is for life plans, P120 million for pension plans and P50 million is for educational plans.
Last week, Loyola Plans lost its license to sell new products this year after Dooc said the IC already uncovered problems on its operations.
Loyola Plans could not be reached for comment yesterday.
According to IC data, Loyola Plans had total assets of P3.75 billion last year against liabilities of P1.68 billion. Investments on its trust fund totaled P1.10 billion.
Its pre-need reserves-- used as buffer for servicing claims – however have dwindled 32.7 percent from previous year to P685.71 million.
Nonetheless, the company more than doubled its net income to P486.54 million during the same period.
While he has yet to examine the company’s financial condition, Dooc said he believes there are enough assets to cover for the deficit, although he was told Loyola Plans “does not want to touch it.”
Another problem is that most of the assets are real estate, which could not be easily sold, and thus, would require time before claims could be serviced.
“What we can do is to tell the trustees to liquidate them so that we can effect the distribution of claims. But, of course, that will take some time,” he explained.
“Although, as I have told you, there could already be cash assets there which we could easily tap. I have not really taken a look at it yet,” he added.
From more than 200 before the Asian financial crisis, the number of pre-need firms in the country has consistently declined to just 11 this year after a number of closures, IC data showed.
For instance, the College Assurance Plan left more than 700,000 planholders empty-handed when it closed down in 2005. In 2008, the Legacy Group filed for voluntary dissolution before the Securities and Exchange Commission (SEC).
To strengthen regulation of pre-need firms, the Department of Finance transferred oversight powers from SEC to IC just this year.
The Finance department oversees SEC and IC. – With Ted Torres