PRENEED firm PETPlans Inc. has taken legal steps to move forward from the preneed industry to the marketing of various financial products and services. The move calls for the conversion of its planholders’ certificates into shares in a professionally managed mutual fund.
Lorenzo Ocampo, PETPlans president, said the move “is the best alternative we can take to protect the interests of our planholders. The present regulatory environment and the continuing rapid decline of the market no longer allow us to assure our planholders peace of mind, which is the whole point of the preneed business.”
Ocampo assured that PETPlans will continue to pay scheduled education, pension and memorial benefits to its planholders even while the plan is awaiting approval by the court.
The company intends to shift its business into what it calls business hubs —the Network Hub will sell life, nonlife, HMO, and memorial park lots; Filipino Workers Overseas Hub will provide money transfer, and document and parcel delivery services; and Financial Hub will provide loans and credit card facilities.
The pooled fund will be managed independently and invested in a sound portfolio by one of the country’s largest and most reputable institutions that is accessible to planholders nationwide.
To satisfy legal requirements that will pave the way for this conversion, PETPlans filed a petition for rehabilitation with the Makati Regional Trial Court yesterday. The firm asked for the court’s permission to convert all outstanding preneed plans and contracts into a professionally managed trust fund.
“Once outside of the preneed industry’s restricted investment guidelines,” Ocampo said, “the trust fund can take advantage of broader investment parameters that allow for better risk management, more realistic asset-liability matches, and higher returns.”
The company will continue to remain in operation but under a new name, PETLink Financial Corp. Since it will no longer be subjected to the “uncertainties and restrictions in the preneed environment,” the company is optimistic that the converted plans will generate reasonable returns for the planholders.
PETPlans will continue to pay planholders whose educational, pension and memorial benefits are due pending the approval of the conversion petition.
In the conversion, planholders will exchange their preneed plans, contracts and insurance certificates with a fund certificate indicating a certain value proportionate to their share in the fund.
All subsequent installments or payments made by amortizing planholders will be deposited directly into the fund, for which additional certificates with the corresponding value will be issued to the planholders.
Once the conversion is completed, holders of fully paid fund certificates may decide to hold on to their investment so that it may continue to grow or may withdraw from their investment.
PETPlans, founded in 1988, has enjoyed a good reputation arising from good service to its planholders to whom it has paid P1.1 billion in benefits over the years. It has trust funds of P2.7 billion with 44 percent liquidity and corporate funds of about P140 million and real estate properties worth P60 million. It is the most comprehensively ISO-certified preneed company.
Amidst the difficulties facing the industry, PETPlans has taken proactive programs, such as being the first to stop selling traditional or open-ended educational plans when tuition was deregulated in 1992; cost-reduction moves including closure and merger of branches, retrenchment, and process improvements that resulted in savings; new products and a restructured trust fund portfolio to generate better returns; and a March this year a voluntary stop to the selling of new plans.
In spite of all these measures, the company has determined that it has to exit from the preneed industry since the regulatory framework of the Securities and Exchange Commission has not changed despite the industry’s serious difficulties, and that the market itself, owing to the closure of several large players and the resulting adverse publicity, continues to shrink at alarming rates.
http://www.manilastandardtoday.com/?page=business02_june24_2006
No comments:
Post a Comment