As IC mulls placing pre-need firm under conservatorship
UNITED Coconut Planters Bank (UCPB) on Tuesday refuted reports that it was negligent in protecting the trust fund of pre-need firm Provident Plans International Corp., which the Insurance Commission (IC) is reportedly considering to put under conservatorship.
In a report by the Department of Finance (DoF) on Monday, Insurance Commissioner Dennis Funa said the commission is “inclined to place” under conservatorship the capital “impaired” Provident Plans to protect the interests of its 38,000 plan holders if no clear improvements are seen in its financial condition by mid-June.
“UCPB wishes to clarify recent news reports on the bank’s handling of Provident Plans’ trust Fund, which was cited as one of the factors why the Insurance Commission is considering to place the pre-need company under conservatorship,” UCPB said in a statement.
As mentioned in the reports, the primary reason behind Provident Plan’s current status was the “disallowance of the unrecoverable/unqualified trust fund investment made by Export and Industry Bank (EIB), as a trustee bank of Provident Plans, in its own bank in the form of time deposits in 2005.”
“In 2009, Provident Plans decided to terminate its trust agreement with EIB and subsequently transferred the EIB time deposits to UCPB. At the time it was transferred to UCPB, the EIB time deposits were considered as an allowable investment under the SEC [Securities and Exchange Commission] guidelines and IC regulations. EIB was eventually shuttered by the BSP [Bangko Sentral ng Pilipinas] in 2012,” UCPB said.
Funa also stated in his report that Provident Plans’ financial woes were already existing before the enactment of the Pre-Need Code and the transfer of supervision of pre-need companies to the IC.
He said the IC haD already given sufficient time and opportunity for the company to infuse cash and/or additional assets to address its financial problems, which it failed to do. The IC, he said, needs to protect the interest of Provident Plans’ policy holders as it cannot allow the company to continue to operate under its present condition.
“As its trustee bank, UCPB had fulfilled all its obligations in the Trust Agreement approved by Provident Plans and complied with all the pertinent regulations of the Insurance Commission,” UCPB said.
UCPB said it is currently coordinating with the DoF to clarify the matter, “but it nonetheless wishes to state that as Provident Plan’s trustee bank from 1989 until 2014 UCPB had never been negligent in protecting their trust fund.”
Under conservatorship, the IC will appoint a conservator, who is mandated to immediately take charge of the company’s assets, liabilities and management, collect all money and debts due it and exercise all the powers necessary to preserve its assets, reorganize its management and restore its viability.
Provident Plans is among the companies that the IC has found to be financially deficient after the regulation of the pre-need industry was placed under the Commission in 2010 under Republic Act 9829. Pre-need firms were previously under the supervision of the SEC.
Provident Plans has three product lines focused on life and memorial plans, education plans and pension plans, but 70 percent of its clientele are life and memorial policy holders.