Pacific Plans sales hit P1.4-B in first semester

After six months into 2003, Pacific Plans Inc. sold all types of pre-need products amounting to P1.4 billion in terms of pre-need prices (PNP).

That puts the pre-need company of the Yuchengco Group of Companies (YGC) still on track with its full year target of P3.7 billion in PNP terms. Last year, it racked up an impressive P3.13 billion.

However, the original target for first semester PNP was P1.8 billion.

Pacific Plans officials are not worried though as they put more importance to their gross collection targets more. "The profitability of the company is more important for us and our client base. Gross collections is the true gauge of growth," said Pacific Plans first vice president Roy G. Padiernos.

"Our gross collection target for the full year is P2.45 billion of which P407 million will come from new business," Padiernos said, adding that the remaining would come from "old businesses" or plans already sold.

From January to June this year, gross collections for new businesses reached P201 million or roughly 93 percent of its target P203 million for the six-month period.

The Pacific Plan executive said that it is one thing to sell products, it is another thing to collect from the sales. It is the real collections that make the company profitable, which in turn, ensures the continued service to its customer base.

The pre-need industry is peculiar in a sense that looking at the financial statement sometimes reflects a loss. That is because companies are constantly or annually paying the traditional or previous matured plans.

"But by yearend, we expect our income to grow by leaps and bounds." Incidentally, it has an P8.7-billion trust fund to service all its existing plan holders.

Padiernos said that Pacific Plans operating cost this year would drop further due to retooling of its organization.

Operational costs averaged 14.4 percent of gross premium collection last year. This year, the YGC-led pre-need company will be trimming it down to 10 percent by yearend. It presently stands at 11.5 percent of gross collections.

Much of the growth in both sales and collections is hinged on expanding and professionalizing its sales force in areas outside of Metro Manila while consolidating its strengths in Metro Manila.

It is also looking at maintaining a persistency rate of 85 percent from its 78 percent last year.

As of end May, Pacific Plans was ranked second in terms of life plans sold, fourth in the pension market, and sixth in the education plan sector.

Last year, the pre-need industry suffered a five-percent decline in sales due to bad performances of some companies in terms of lack of capital or trust fund deficiencies.

Nonetheless, Pacific Plans outlined programs to ensure its achieving target growths through improvements of the traditional and non-traditional route.

It has four operations centers and 81 branches nationwide excluding the head office located in Binondo. The operation centers are in Makati, Quezon City, Cebu and Davao. Its sales force reached 22,000 as of end 2002 with nearly 40 percent situated outside Metro Manila.