Prudentialife Plans sees big net profit

Prudentialife Plans expects to generate a net income of between P300 to P500 million for the fiscal year ending March 31, 2005 compared to P302 million last fiscal year, even as its trust fund as of end-March this year reached P12.5 billion, the biggest in the pre-need industry.

This as Prudentialife president Jose Alberto Alba told The STAR that the company has no problem meeting its financial obligations to its planholders, including those holding the traditional or open-ended educational plans. "We have sufficient assets," he stressed.

Prudentialife has a trust fund of over P12.5 billion compared to College Assurance Plan’s P4.7 billion. Pacific Plans Inc. reportedly has less than P10 billion. Both CAP and Pacific posted losses during their last fiscal year. And while CAP has a trust fund deficiency, Prudentialife’s latest actuarial valuation showed an excess of P1 billion.

"Clearly, we are not in the same situation as that of CAP and Pacific Plans. I assure you that all obligations of Prudentialife will be honored," Alba said.

Meanwhile, he revealed that as of end-2004, Prudentialife’s sales grew 46 percent compared to the previous year while the industry growth was only 13 percent.

Alba attributed the sales growth to a migration of planholders from other companies (flight to quality) as well as the increase in Prudentialife’s sales organization, the introduction of new products, and the fact that CAP was no longer allowed to sell as of September last year. Just last December Prudentiallife ventured into mutual funds while its health maintenance (HMO) service will be offered starting this May.

According to Securities and Exchange data for January this year, Prudentialife is second in terms of sales volume next to Philam. But while Prudentialife’s sales volume grew 18.28 percent, that of Philam went down 22 percent. Number three is Loyola, followed by Lifetime Plans, Berkley, Manulife, St. Peter, Pet Plans, Sun Life, and TPG Plans.

The company has around 50,000 traditional college education plans to service (as against its over a million planholders) compared to CAP which has over 700,000 open-ended plans (those that pay the actual value of the tuition fee at the time the plan matures).

It was learned that the Yuchengco-owned Pacific Plans, which is seeking court approval for suspension of payments, sold grade school and high school traditional education plans, the early maturities of which strained Pacific’s trust fund. Pacific has around 34,000 open-ended plans.

Alba revealed that while the problem of CAP was more or less anticipated by the public, the industry and the public were caught offguard by Pacific Plan’s action. "We have to stress though that the problem of some pre-need companies is not the problem of all,"Alba, who is currently vice-president of the Philippine Federation of Pre-need Plan Companies, told The STAR.

While the industry as a whole is experiencing a 20-percent reduction in sales following the aftermath of Pacific’s action, Alba said he expects the situation to normalize once the public is able to realize that the pre-need industry is still a safe place to invest in general, provided they choose the company well. "We expect lower sales and higher termination in the next few months‚ but we believe that the general public’s reaction to Pacific is a temporary thing," he said.