Pre-need industry profit jumps 37%

MANILA, Philippines — The earnings of the pre-need industry jumped 36.8 percent to hit P2.12 billion last year from P1.55 billion in 2020 on the back of the the 50-percent increase in the number of life plans sold, data from the Insurance Commission (IC) showed.

The pre-need sector booked an 11 percent increase in premiums sold to P19.76 billion, backed by the recovery of demand particularly for life plans.

Data showed the industry sold a total of 564,479 pre-need plans, comprised of 563,186 life plans and 1,393 pension plans, last year.

When compared to 2020, firms just released 378,439 pre-need plans made up of 376,495 life plans and 1,944 pension plans.

Likewise, the IC reported that investments in trust funds expanded by almost nine percent to P97.2 billion, while pre-need reserves jumped by nearly 12 percent to P89.97 billion, both in 2021.

As mandated by the pre-need code, pre-need providers keep a reserve to cover benefit payables.

On the other hand, the IC said that the difference between investment in trust funds and pre-need reserves declined by close to 16 percent to P7.23 billion last year from P8.57 billion in 2020.

Despite the decline, the industry managed to maintain an asset base worth P111.63 billion as against a liability sum of P93.86 billion, resulting in a net worth of P17.78 billion as of 2021.

The IC said that the pre-need figures covered a total of 12 firms, of which nine are licensed, one is servicing, while two are waiting for license approvals.

St. Peter Life Plan Inc. sold the most number of life plans at 540,236 with a contract price of P26.2 billion, followed by Cosmopolitan Climbs Life Plan Inc. sold 20,419 worth P672.11 million, Golden Future Life Plan issued 1,949 worth P154.6 million, and Trusteeship Plans Inc. signed off 582 valued at P22.18 million.

Only Caritas Financial Plans sold pension plans in 2021, releasing 1,393 with a contract price of P196.94 million. For the second year in a row, the industry sold no education plans at all.

During the height of the pandemic in 2020, the industry flipped to a net income of P1.4 billion, from a net loss of P718.6 million in 2019.

On the other hand, premiums sold by pre-need firms declined by more than 15 percent to P18.64 billion from P718.6 million due to an across the board drop in plan sales.