By Chino S. Leyco
Pre-need firm Loyola Plans, Inc. has been placed under conservatorship for failing to meet the minimum unimpaired capital, trust fund requirement and reportorial obligation of the Insurance Commission (IC).
In a statement, Insurance Commissioner Dennis B. Funa said Loyala Plans has the “continuing inability” to cover its capital and trust fund deficiencies, a violation under Republic Act No. 9829 or the Pre-Need Code of the Philippines.
According to Funa, the fund deficiency is among the grounds for placing Loyola Plans under conservatorship.
Based on the 2016 audited financial statements submitted by Loyola Plans with IC, the pre-need company has paid-up capital impairment amounting to P126 million, while its trust fund deficiency stood at P149 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,” Funa said.
Pre-need companies are required by law to set up a trust fund out of their premium collections. This fund is supposed to answer for future delivery of services as provided in the pre-need contracts which is separate and distinct from the paid-up capital of the company.
As early as 2018, IC already called the attention of Loyola Plans to cover up its provisional capital and trust fund deficiencies which were based on the 2016 Annual Statement of the company.
He also noted that company has yet to submit its 2017 and 2018 Annual Financial Statements despite issuance of another Show Cause Order.
“At that time, the deficiencies were still considered provisional as the company only submitted its 2016 Annual Statement. It had failed to submit its 2016 Audited Financial Statements within the deadline provided under the Pre-Need Code despite repeated orders and issuance of show cause orders issued by the Insurance Commission,” Funa said.
“Despite being provisional, the Insurance Commission already required them to address these deficiencies,” he added.
Loyola Plans, on the other hand, submitted a plan to address its capital impairment and trust fund deficiency.