Loyola Plans placed under conservatorship
The Insurance Commission (IC) has placed Loyola Plans Inc. under conservatorship for its failure to comply with the minimum capital and trust fund requirements for pre-need companies.
In a statement sent over the weekend, Insurance Commissioner Dennis Funa said the IC has issued a conservatorship order against Loyola Plans, prohibiting the company from selling new plans.
The order came after the IC learned of the firm’s capital impairment and trust fund deficiency amounting to P126 million and P149 million, respectively.
“Loyola’s inability to cover up its paidup capital impairment amounting to P126 million and trust fund deficiency in the amount of P149 million based on its 2016 audited financial statements as of Dec. 31, 2016 is one of the grounds for placing the company under conservatorship,” he said.
Loyola Plans is a pre-need company offering education, life and pension plans.
Under Republic Act 9829 or the PreNeed Code of the Philippines, pre-need firms selling at least three types of plans are required to have a minimum paid-up capital of P100 million.
It also mandates pre-need companies to set up a trust fund out of their premium collections. This fund is supposed to answer for future delivery of services as provided in the pre-need contracts, and is separate and distinct from the paid-up capital of the company.
However, Funa said Loyola Plan, based on its 2016 annual financial statement, has a negative net worth, while its trust fund only stood at P932 million, as against its pre-need reserves (liabilities) of P1.48 billion.
Furthermore, the IC chief said Loyola Plans has yet to submit its 2017 and 2018 annual financial statements to the regulator, despite issuance of show cause orders.
Without these financial statements, Funa said the action plan submitted by Loyola Plans to address its capital impairment and trust fund deficiency is incomplete.
“One of the reasons why the evaluation of the company’s submitted action plan to address these deficiencies had not yet been completed is due to the nonsubmission of its financial reportorial requirements despite sufficient time given to the company,” he said.
“Without these documents, we cannot verify the sufficiency and adequacy of the company’s action plan to generate cash flow to address its deficiencies,” he added.
While under conservatorship, the management of the Loyola Plans is transferred to the IC-appointed conservator, Dionne Marie Sanchez.