MANILA, Philippines—Due to insolvency or inability to pay its debts, the Insurance Commission (IC) has placed Himlayang Pilipino Plans Inc. under conservatorship.
In a statement on Monday (Jan. 24), the IC said Insurance Commissioner Dennis Funa’s conservatorship order on Dec. 13, 2021 came after the pre-need firm’s failures to not only address insolvency issues but also fill-up trust fund deficiencies.
Prior to the conservatorship order, Funa slapped Himlayang Pilipino Plans with a cease-and-desist order due to its “continuing inability or unwillingness to comply” with the IC’s earlier orders to resolve the P112.3-million insolvency and P184.9-million deficiency shown by the company’s 2020 financial statement.
“The IC gave Himlayang Pilipino Plans ample time to comply with these instructions. Despite extensions granted by the commission, Himlayang Pilipino Plans still failed to abide by its undertakings,” Funa said.
Funa disclosed that Himlayang Pilipino Plans had “requested for various regulatory reliefs after it was apprised of the results of the verification of its 2020 annual statement.” These included, among others, requests for authority to venture into high-yielding investment portfolios, suspension of the directive to fund deficiencies, and withdrawal of the excess of the trust funds for both education and pension plans.
“The requests were denied due to various legal considerations, which eventually led to the issuance of the cease-and-desist order, and, later, the conservatorship order,” Funa added.
Funa pointed to Section 49 of Republic Act (RA) No. 9829 or the Pre-Need Code of the Philippines which allows the IC as the industry’s regulator to put under conservatorship any pre-need provider which was “in a state of continuing inability or unwillingness to comply with the requirements of the code and/or orders of the commission.”
“By placing Himlayang Pilipino Plans under conservatorship, we aim to restore the company to financial viability with the ultimate objective of protecting the interest of its plan holders,” Funa said.
The IC usually places troubled pre-need companies, insurers, as well as health maintenance organizations (HMO) in its supervision under conservatorship to preserve their value, shepherd them to a return to financial health, or before ultimately placing them under receivership.
The latest IC data had shown the pre-need industry swung to profitability as of end-September 2021, reversing 2020’s pandemic-induced losses, as sales of life plans jumped by almost half year-on-year.
The 12 licensed pre-need players posted a total net income of P369.2 million during the first nine months of last year. In contrast, the sector in 2020 recorded an end-September net loss amounting to P2.3 billion.
The improved nine-month bottom line, being sustained since the second quarter of 2021, came on the back of the 47.5-percent jump in the number of plans that pre-need firms sold, to 414,496 from 281,055 in 2020.
But Funa had told the Inquirer that last year’s sales were just en route to returning to pre-pandemic numbers — pre-need plans sold from January to September 2019 reached a much-bigger 687,236.
TSB