The Insurance Commission (IC) has given preneed firm Provident Plans International Corp. (Provident Plans) only up to the middle of the month to come up with a white knight, or it will be placed under conservatorship.
The warning, the regulator said, was necessary to protect the interests of its 38,000 plan holders.
The IC said Provident Plans’s financial footing was found deficient after was placed under its supervision in 2010 under Republic Act 9829. Pre-need firms were previously under the supervision of the Securities and Exchange Commission.
Subsequently, Provident Plans sustained an impairment of capital when its books were examined in 2011. An IC audit showed a capital impairment of P316.33 million, a liquidity-reserve deficiency of another P78.54 million and a trust-fund deficiency of P263.46 million.
In a report to Finance Secretary Carlos G. Dominguez III, Insurance Commissioner Dennis B. Funa said while Provident Plans swore in February and March this year that it has a white-knight investor to cover its capital impairment and trust-fund deficiencies, it has yet to receive any concrete plan or letter of intent (LOI) from the supposed investor.
“Thus, this Commission has ordered Provident Plans to submit a concrete plan and LOI from its proposed investor or to cover up its capital impairment and trust-fund deficiencies within 60 days from receipt of the directive [dated April 12, 2017] or until June 17, 2017. Otherwise, this Commission will issue a Cease and Desist Order and place the company under conservatorship,” Funa said in reporting to Dominguez.
Provident Plans sells memorial plans, education plans and pension plans, even though 70 percent of its clients are life memorial policyholders.
Funa cited circumstances forcing the IC to consider placing Provident Plans under conservatorship. He said its financial woes already existed even before the enactment of the Pre-Need Code and the transfer of supervision to the IC. He also said its capital impairment and trust-fund deficiency resulted from the unrecoverable investment of its trustee bank, the failed Export and Industry (EIB) and the neglect by its new trustee bank, the United Coconut Planters Bank, in protecting its trust fund.
The IC said it has sufficiently given the preneed firm time and opportunity to infuse cash and additional assets to address its financial problems.
The IC needs to protect the interest of Provident Plans’s policyholders and cannot allow the company to continue to operate under its present condition.
“The primary reason behind these deficiencies was the “disallowance of the unrecoverable/unqualified trust-fund investment made by EIB as a trustee bank of Provident Plans, in its own bank in the form of time deposits in 2005”, he added.