MANILA, Philippines -- The planned rehabilitation of troubled pre-need firm Prudential Plans Inc. (PPI) may have to wait as the House of Representatives has sought the conduct of hearings on the issue.
The Insurance Commission (IC) reportedly received last Thursday a congressional resolution asking the Department of Finance (DOF) to stop any action on the proposed rehabilitation until after the conclusion of a congressional hearing.
House Deputy Speaker Lorenzo R. Tanada III penned the resolution, according to IC Commissioner Emmanual L. Dooc.
Dooc said they were about to forward their rehabilitation proposal for PPI to the finance department for final resolution.
“We have forwarded it (House resolution) to the finance department,” he said. “It is up to the Secretary (of Finance) to decide on the issue.”
That means Finance Secretary Cesar V. Purisima has two options: disregard the congressional invitation and go on with approving and implementing the rehabilitation proposal, or suspend any decisions pending the congressional hearings.
PPI planholder Jose Rizal O. Batiles, who submitted a rehabilitation proposal with the IC, has been calling for congressional intervention since June. In one of the public hearings, Batiles called for the transformation of the existing plans into equity.
The other two rehabilitation proposals came from Loyola Plans Consolidated Inc. and PPI-Manila Bankers Life (MB Life).
One of the forerunners of the memorial plan business, Loyola Plans was willing to assume only the outstanding memorial plans portfolio of PPI. Then it would turn over the memorial plans trust fund surplus of P200 million to the trust fund portfolio of PPI’s education and pension portfolio.
The second option is that Loyola Plans would assume PPI’s memorial, pension and education plan portfolio as well as commit a 5.5% rate of return on the trust fund accounts and a 2.5% rate of return on corporate assets.
The PPI-Manila Bankers Life Insurance Co. proposal offers to return the planholders’ investments only after a 10-year period, but offers a variety of insurance coverage, lending facilities, options for early surrendering of insurance coverage.
The rehabilitation plan will decide the fate of more than 300,000 planholders, the P10-billion deficit (start of 2011) in its trust fund, the fate of the 34-year-old pre-need firm, and the type of regulatory environment the pre-need industry faces.
As of May this year, there are 20 accredited pre-need companies under the guidance of the IC.