Mercantile Careplans put under IC conservatorship

MANILA, Philippines — The Insurance Commission (IC) yesterday said it has placed another pre-need firm under conservatorship for failing to comply with the minimum capital requirements under the Pre-Need Code.

In a statement, Insurance Commissioner Dennis Funa said the IC has issued a conservatorship order against Mercantile Careplans Inc., after it found out that the company’s total paid-up capital is below industry standards.

“The result of the examination made into the affairs, financial condition, and methods of doing of business of Mercantile Careplans as of end-2018 disclosed that the company failed to comply with the minimum P75-million paid-up capital requirement” Funa said.

“Particularly, Mercantile Careplans’ paid-up capital is impaired by P14.23 million,” he said.

Before being placed under conservatorship, Mercantile Careplans was given a chance to address its capital impairment, Funa said.

However, he said the company manifested that it is no longer financially incapable of addressing its capital deficiency. The company said it has ceased selling plans since 2009 and is merely servicing its existing and maturing plan holders.

Nevertheless, Funa assured that Mercantile Careplans’ trust fund contributions are still compliant with the requirements under Republic Act No. 9829 or the Pre-Need Code of the Philippines, ensuring the delivery of benefits or services to its planholders as provided for in their contracts.

With the conservatorship order in place, the IC chief said the management of the company is now under the IC-appointed conservator, Marianne Lozada-Marquez.

He said the company is required to continue servicing its clients until and unless the IC-appointed conservator recommends otherwise.

“The operations of the company will continue to run under the management of Atty. Lozada. The initial step in the conservatorship process is for the IC-appointed conservator to review the current financial condition of the company and recommend measures to ensure the preservation of the assets of the company for the benefit of its plan holders and other stakeholders,” Funa said.

Mercantile Careplans has 5,622 enforced pension plans and 170 enforced educational plans as of end 2018.

Under RA 9829, pre-need firms selling two types of plans, like Mercantile Careplans, are required to have a minimum paid-up capital of P75 million.

It also mandates pre-need companies to set up a trust fund out of their premium collections. This fund is supposed to answer for future delivery of services as provided in the pre-need contracts, and is separate and distinct from the paid-up capital of the company.