THE INSURANCE Commission (IC) placed pre-need firm Loyola Plans Consolidated, Inc. under conservatorship for failing to comply with capital, trust fund and reportorial requirements.
In a statement on Sunday, Insurance Commissioner Dennis B. Funa said the pre-need company was placed under conservatorship for its “continuing inability” to meet capital and trust fund requirements of pre-need companies under the Pre-Need Code of the Philippines.
The IC said Loyola Plans has a capital impairment amounting to P126 million and a trust fund deficiency worth P149 million.
“Considering that the company has a negative net worth based on the verification on the 2016 Annual Financial Statements, its paid-up capital was found to be impaired by P126 million. The company’s trust fund, on the other hand, is only P932 million as against its total pre-need reserves (liability) of P1.48 billion,” the IC said.
Pre-need firms are required by law to set up a trust fund out of their premium collections. The fund will be used for future delivery of services as provided in the pre-need contracts, separate from the paid-up capital of the firm.
Loyola Plans is now prohibited from selling new plans. However, the firm should still continue to service its clients and pay existing obligations, the regulator said.
“[A]ll plans issued before the conservatorship order remain valid, and the obligation of the company toward its planholders still exists. This means that the company is still required to pay all existing and matured claims,” Mr. Funa said.
The IC appointed Dionne Marie M. Sanchez as the conservator to manage the distressed company.
The regulator called the attention of Loyola Plans as early as 2018 to cover up capital and trust fund gaps based on their 2016 financial statements.
The pre-need plan has yet to submit their 2017 and 2018 financial statements, despite IC’s show-cause order.
“The submission of Annual Financial Statements is important in determining the current financial condition of a pre-need company. However, these reportorial requirements are yet to be submitted to us,” Mr. Funa said.
Despite Loyola Plans’ submission of their plan to address its capital impairment and trust fund deficiency, Mr. Funa said the IC’s evaluation of their plan has not yet been completed due to the non-submission of updated financial reportorial requirements.
“Without these documents, we cannot verify the sufficiency and adequacy of the company’s action plan to generate cash flow to address its deficiencies,” he said.
Loyola Plans is a pre-need firm offering education, life and pension plans. It was founded by the late Senator Gil J. Puyat, Sr. and later on managed by her daughter Jesusa Puyat-Concepcion.
The pre-need company hit the headlines in April 2016 after its policyholders complained of the company’s inability to pay claims on time. The IC said it had a trust fund deficiency worth P238.3 million.
However, Loyola Plans averted being placed under conservatorship after plugging its trust fund gap through cash and non-cash contributions. — Karl Angelo N. Vidal