Preneed sector posted P1.15-B net loss in Q1 as sales plunged

The preneed sector posted a P1.15-billion net loss in the first quarter as sales took a hit from the pandemic-induced economic slump.

The latest Insurance Commission (IC) data on Thursday showed preneed firms’ combined net income turned red at the start of the year, reversing the P222.1-million net income recorded as of end-March last year.

The 12 preneed companies covered by the IC report eked out P9.4 million in revenues during the first three months but losses were bigger at P1.16 billion.

30% drop

The regulator said the number of plans sold from January to March dropped 30 percent to 134,225 from 191,868 a year ago.

Life plans sold to preneed clients declined 29.9 percent to 133,861 from a year ago’s 191,195.

The number of pension plans sold during the three-month period also slid 45.9 percent to 364 from 673 last year.

Preneed players nonetheless posted larger assets and net worth of P101.4 billion (up 13.3 percent year-on-year) and P15.5 billion (up 44.1 percent), respectively, as of March, given their compliance with the capitalization requirement of at least P900 million.

As such, reserves increased by almost a tenth to P82.2 billion, ensuring the sector’s viability under the Pre-Need Code.

Over 200 preneed firms were operating in the country until the Asian financial crisis in the late 1990s toppled most of them.

The problem peaked in the mid-2000s when big industry players, such as College Assurance Plan and Pacific Plans Inc., could no longer service their obligations to plan holders.