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Business

Pre-need sector incurs P7.11 billion loss in 9 months

Louise Maureen Simeon - The Philippine Star

MANILA, Philippines — The pre-need industry incurred a net loss of P7.11 billion as of the third quarter of 2022, as 75 percent of firms reported declines during the period, the Insurance Commission (IC) said.

Latest data from IC showed the industry’s losses from January to September 2022 reversed the P1.23 billion earnings in the same period in 2021.

This, even as premiums sold inched up by 2.44 percent to P15.43 billion as demand for life plans  increased.

In total, the industry sold 530,925 pre-need plans, 27 percent more than the 416,775 sold in the comparative period in 2021.

Bulk of this, at 99 percent, were life plans, which also registered a 28 percent hike in the number of plans sold.

The remaining 914 were pension plans, which dropped 40 percent from the 1,528 sold a year ago. Education plans also slipped by 42 percent to just 37.

Further, the IC noted that investments in trust funds slightly declined by two percent to P114.51 billion while pre-need reserves edged up by 1.65 percent to P113.45  billion.

As mandated by the Pre-need Code, pre-need providers must keep a reserve to cover benefit payables.

Meanwhile, the IC said the difference between investments in trust funds and pre-need reserves plummeted by 80 percent to P1.06 billion from P5.24 billion in 2021.

Following the declines, the industry’s asset base decreased by 2.53 percent to P134.71 billion while liabilities rose by 1.34 percent to P119.52 billion.

Similarly, total net worth went down by 25 percent to P15.19 billion.

Latest pre-need figures covered a total of 16 firms, down from the 2021 number of 17. Of the total, 13 are licensed and three are servicing companies.

St. Peter Life Plan Inc. sold the most number of life plans at 519,264, with a contract price of P25.25 billion. It recorded the largest net worth of P9.69 billion, but also incurred a net loss of P4.14 billion as of end-September 2022.

Cosmopolitan Climbs Life Plan Inc. came in second in terms of life plans sold at 7,211 worth P270 million.

PhilPlans First Inc. issued 2,083 plans worth P238 million, and Trusteeship Plans Inc. signed in 738 valued at P35.37 million.

Twelve of the 16 firms that disclosed their financial status incurred a net loss during the period. Only four reported profits, namely, Golden Future Life Plan (P5.05 million) Cityplans Inc. (P1.34 million), Diamond Memorial Care Plans Inc. (P1.31 million), and Mercantile Care Plans Inc. (P630,000).

Only Caritas Financial Plans and Philplans sold pension plans as of the third quarter, releasing 534 and 380 worth P71.39 million and P89.75 million, respectively.

The industry finally sold education plans after two years, with 37 valued at P10.52 million, as face-to-face learning slowly resumed.

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