Philam Plans trust fund grows to P15.3B in Q1

Amid the controversies besetting the pre-need industry, Philam Plans Inc. continued to lead with its trust fund growing to P15.3 billion as of end-March this year, more than enough to cover obligations to planholders for the next six years.

Philam president and chief executive officer Jesus Hofilena said the company’s current trust fund level, the largest and fastest-growing trust fund in the pre-need industry to date, can more than cover for the P9.8-billion programmed benefits for the period 2006 to 2011.

Trust funds refer to the pre-need company’s future obligation to planholders as their plan contracts fall due.

Hofilena said the company’s trust fund is highly liquid with more than 80 percent invested in secured government securities and near-cash equivalents. Government securities are among the safest and most liquid investments in the country at present since earnings are guaranteed by the government.

Last year, Philam contributed a total of P4.52 billion to its trust fund placing its total investment at no less than P14.2 billion by the end of 2004 or 47 percent higher than the previous year.

Hofilena said Philam not only follows the trust fund portfolio mix set by the Securities and Exchange Commission for all pre-need companies but also adheres to even stricter guidelines set by its parent company, Philippine American Life and General Insurance Co. (Philamlife), the number one life insurance company in the country.

This year, Philam Plans will pay a total of P574 million in total pre-need benefits. Of this amount, P362 million will be paid to over 3,000 pension planholders while the balance of P123 million will be paid to 8,000 education planholders.

He said the pre-need firm also posted the biggest pre-need sales for the first quarter of the year at P1.9 billion or 28 percent of the total market. The amount also represents an 81.5 percent increase over last year’s performance for the same period.

Pension plans continued to account for bulk of total sales with a 41.2 percent share, equivalent to P2.86 billion in total sales. Sales of education plans, on the other hand, amounted to P2.46 billion, representing a 35.4 percent share.

Sales of life plans, meanwhile, jumped 140 percent to P1.6 billion from only P674 million a year earlier.

However, sales of Philam fell 15 percent in April, largely due to the problems involving the Yuchengco-owned pre-need firm Pacific Plans Inc. which filed for rehabilitation with the court.

Philam expects to post an increase in its sales this year on the back of new product offerings and aggressive marketing efforts.

Hofilena said Philam is open to acquiring existing pre-need firms should there be a good offer, but has ruled out acquiring another beleaguered pre-need firm College Assurance Plans.

He said Philam will offer more innovative plans and services this year as it eyes greater participation from overseas Filipino workers. The company intends to launch three new educational plan products and two pension plan products to give investors more choices.