Pre-need industry incurs losses in 2019

MANILA, Philippines — The pre-need industry suffered a net loss of P718.6 million in 2019 as companies posted higher liabilities despite an increase in sales, the Insurance Commission (IC) said Friday.

Based on the latest unaudited interim financial statements submitted by 14 companies, the industry’s total liabilities increased by 3.81 percent to P112.78 billion.

Reserve liabilities rose by 4.42 percent to P108.65 billion, of which P103.33 billion comprised pre-need reserves. The remaining P5.32 billion consisted of payables or benefit obligations.

“This considerable increase in the pre-need industry’s liabilities contributed to the net loss that it sustained as of Dec. 31, 2019 amounting to P718.6 million,” Funa said.

The industry booked a net loss despite a 11.51-percent growth in premium income, which reached P22 billion compared to P19.73 billion the previous year.

Funa said premium income expanded by 18.9 percent as the number of plans sold increased to 925,370 from 778,033 in 2018.

He said 98.86 percent of the plans sold during the period were life plans.

Similarly, the pre-need industry’s total asset base grew by 3.86 percent to P131.39 billion as of the end of 2019.  Total net worth also increased by 4.18 percent to P18.61 billion.

Funa said the pre-need industry’s investment in trust funds rose by 4.59 percent to P117.85 billion. Retained earnings also jumped by 133.2 percent to P9.44 billion.

“The figures mentioned from the pre-need companies’ unaudited interim financial statements were obtained before the effectivity of the community quarantine due to the coronavirus disease 2019 (COVID-19) pandemic,” Funa said.

“We in the Commission hope that the economic and financial impact of the pandemic in the succeeding reporting quarter will, to a certain extent, be cushioned by the measures in the various COVID-19-related circular letters that we have issued,” he added.