Insurance Commission
MANILA — The Department of Finance on Monday said the Insurance Commission might place pre-need company Provident Plans International Corp. under conservatorship due to its poor financial state.
In a statement Monday, the DOF said Insurance Commissioner Dennis B. Funa reported to Finance Secretary Carlos G. Dominguez III that “while Provident Plans manifested before the IC [Insurance Commission] in February and March this year that it has a ‘white knight’ investor to cover up its capital impairment and trust fund deficiencies, [the regulator] has yet to receive any concrete plan or letter of intent from this supposed investor.”
“Thus, [the IC] has ordered Provident Plans to submit a concrete plan and letter of intent from its proposed investor or to cover up its capital impairment and trust fund deficiencies within 60 days from receipt of the directive dated April 12, or until June 17. Otherwise, [the IC] will issue a cease and desist order and place the company under conservatorship,” Funa told Dominguez.
Based on the IC’s assessment, Provident Fund had P340.61 million in capital impairment on top of P284 million in trust deficiency as of December 2016, the DOF said.
The DOF quoted the IC as claiming that “the primary cause of [Provident Plans’] capital impairment and trust fund deficiency is the unrecoverable investment with its previous trustee bank, the Export and Industry (EIB), and the neglect by its new trustee bank, the United Coconut Planters Bank (UCPB), in protecting the trust fund.”
“The primary reason behind these deficiencies was the ‘disallowance of the unrecoverable/unqualified trust fund investment made by EIB as a trustee bank of Provident Plans, in its own bank in the form of time deposits in 2005,’” Funa explained.
“That year, EIB invested Provident Plans’ trust funds in a seven-year ‘double-your-money’ time deposit. But in December 2008, Provident Plans’ investment group recommended the withdrawal of the trust fund
deposits because of the following: the resignation of key officers of EIB’s trust department; EIB’s 2006 and 2007 audited financial statements showed the bank incurred losses of P2.7 billion; and the suspension of EIB from stock trading,” Funa said.
“EIB was ordered closed and placed under receivership by the Bangko Sentral ng Pilipinas in 2012 over its failure to meet its maturing obligations, insufficient realizable assets and its inability to continue business without inflicting losses on its depositors and creditors,” Funa noted.
According to Funa, “Provident Plans told the IC that it has regularly met with its new trustee bank—UCPB—but the latter apparently did not do anything to protect the trust fund investment of the pre-need firm in EIB.”
Provident Plans sold education, memorial and pension plans, with 70 percent of sales comprised of life policies. SFM
Provident Plans International Corp. (official logo)