Loyola Plans Consolidated Inc. plan holders can now collect their claims as the pre-need insurance firm offered its non-cash assets to settle its liquidity problem, the Insurance Commission (IC) said on Monday.
The IC said it received 95 informal complaints from policyholders as of March 31, and did
not renew Loyola Plans’ license to operate this year.
Last week, it served the firm a show-cause order dated April 11 after its trust fund fell short to serve the claims of 100,000 plan holders.
It has been given five working days to respond to the Commission on why it should not be placed under conservatorship and why it should not be ordered to cease and desist from engaging in pre-need business.
The company was also directed to come up with plans to cover its trust fund deficiency of P238 million.
In response, the IC said Loyola Plans came up with a proposal offering to contribute more than enough real estate assets to the trust fund so that the deficiency will be fully covered.
“As you know it has a deficiency of P238 million. They proposed a non-cash contribution against its net worth and corporate assets amounting to P1.8 billion, which is more than enough to cover the deficiency,” Insurance Commissioner Emmanuel Dooc told reporters in a press conference on Monday.
Loyola Plans offered its real estate properties–mostly in prime locations–amounting to P1.873 billion to fully comply with its trust fund deficiency.
“Loyola would like to propose for a non-cash contribution against its net worth amounting to P1,873,843,648.00 based on the 2015 audited financial statements,” the pre-need firm said in a letter to the IC.
Since these are illiquid assets, Dooc said some of them would have to be converted into cash by selling them.
“There are no specific talks yet on how we will liquidate the assets because there are several choices, but I think we can generate enough funds to cover the deficiency,” he said.
With this, the regulator announced that it would start releasing payments to claimants today (Tuesday).
“Furthermore, starting tomorrow, the office of the IC will start to pay off the 95 complaints lodged with us, we invited representatives from the Loyola Plans to bring the checks so that they can also witness the settlement of the aforesaid complaints,” he said.
Meanwhile, Dooc said that in addition to the 95 complaints, which the IC has already validated, there are some 32 additional complaints that will be evaluated.
“And once established to be valid and due for payment, the same shall likewise be paid,” he said.
As a result of Loyola Plan’s proposal, the IC announced that it would not place the company under conservatorship or issue cease and desist orders.
“We hope that this issue has been sufficiently addressed. We’ll ensure that Loyola management will honor its commitment and that it will make good all its undertakings given to us. The titles of the properties will be with us until they are converted into cash to cover up the trust fund deficiency,” Dooc concluded.
On the other hand, Parents Enabling Parents Coalition (PEP) Coalition President Philip Piccio is questioning the IC’s decision to lift its conservatorship warning to Loyola Plans.
He also urged the agency to look deeper into what could be the reason for the ballooning trust fund deficiency of the pre-need firm.
“Before we even consider the property that was submitted, the IC should find out why in the first place there was deficiency. Is IC even investigating this?” Piccio told The Manila Times.
Piccio pointed out that Loyola Plans’ deficiency ballooned to P238 million this year from just P90 million last year.
“Instead of going down, it went up. Now, is the IC investigating why it went up?” he said.
In addition, Piccio is also asking the IC if Loyola Plans’ non-cash asset contribution was properly valuated.
“They offered P1 billion worth of properties. Who valuated that? The IC is accepting this, saying that they are lifting the conservation but nobody is investigating why there is deficiency in the trust fund,” he said.
“If the deficiency is only P238 million, why would they give P1.8 billion? I can smell dead rats in here,” he said.
According to IC data, Loyola Plans had total assets worth P3.75 billion last year against liabilities of P1.68 billion. Investments in its trust fund totaled P1.10 billion.