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June 10,2005
Cocoplans says pre-need industry still viable
The pre-need industry remains vibrant despite the public backlash on the top two industry players.
Cocoplans, Inc. President Caesar T. Michelena told BusinessWorld that in the past 27 years he had been in the industry, the pre-need sector had been an anchor to thousands of Filipinos.
"The industry grew through the years and helped people. The situation of CAP [College Assurance Plans (Philippines), Inc.] and Pacific Plans, Inc. are endemic to the industry. They were faced with problems because they sold traditional educational plans which were hard to handle due to the growing cost of college education and the decreasing investment that led to huge variants in their ARLs [actuarial reserve liabilities]," Mr. Michelena said.
"The industry is still vibrant with 80% of the sales from fixed liability plans and only 20% from traditional educational plans."
Fixed liability plans, such as memorial plans, fixed-value education plans and pension plans, are plans that pay a fixed amount when they mature.
He said the industry's problems did not happen overnight. "The problem has been there long time ago, a few years back when the Securities and Exchange Commission [SEC] consolidated its regulations into new pre-need rules that raised the minimum requirement for capitalization to P100 million from P10 million. The realization of that problem is just being felt now and it is unfortunate that all pre-need firms are cast in the same light," Mr. Michelena said.
He said there are still many pre-need firms that are toiling hard to keep their contractual obligations to planholders.
"The industry is strong. The problems now just taught the market to be careful in who it deals with and for the regulator to implement policies little by little."
He assured Cocoplans will not renege on its obligations to its 114,000 planholders since it started in 1994. Forty percent of Cocoplans' customers are in Metro Manila and 60% are from the provinces.
Cocoplans' trust fund as of April 30 is P933.09 million, 90% of which or P917.83 million, are in government securities, P38.96 million is deposited in cash and P72.22 million in short-term fixed-income investments.
The company was awarded outstanding pre-need provider by two customer groups in 2004 and 2005.
"We are careful of our clients' money," Mr. Michelena said. -- Roulee Jane F. Calayag
http://www.bworld.com.ph/BW061005/corp3.php
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