Philam Plans Reinforces Planholders’ Faith

By Cherry C. Bobadilla Special Features Writer

Everyone wishes that he has a crystal ball to foresee the future. But while one cannot really predict the inevitable, a landholder can take comfort in the fact that this chosen pre-need provider will make good on its promise to secure his child’s education and his comfortable retirement.

Yet this very same sense of security is being threatened by controversies confronting the pre-need industry at present. And notwithstanding the efforts of more stable firms to mitigate the effects to distraught companies, it is evident that the entire industry is reeling from their impact.

Data from the Securities and Exchange Commission (SEC) showed that pre-need plans sold continued to slip in the first five months of the year. The number of plans sold from January to May was 164,789, dipping 18.38% from 201,889 for the same period in 2004. Notably, sales of education plans dropped by 48.60% ton 28,734 from 55,898 previously.

Although it sold about P2.85 billion worth of pre-need policies in the first semester, industry leader Philam Plans, Inc. admits that the number could have been higher “ had the business climate been better.”

The pre-need arm of insurance giant Philippine American Life and General Insurance Co. (Philamlife) sold about 10,745 plans for the period, Philam Plans president and chief execution officer Jesus G. Hofilena told BusinessWorld in an e-mail interview.

Apart from the continuing effect of failed pre-need companies, Mr. Hofilena ascribed the industry’s sluggish performance to the country’s existing economic situation. He quickly pointed out, however, that Philam Plans remains optimistic of the next half of 2005. The current condition, he argued, is not indicative of now the firm will perform in the second semester. “We are confident we will do better,” Mr. Holfilena said, adding that the sentiment is also true for the whole industry.

AN ESSENTIAL SAVINGS TOOL

While the controversies have indeed, shaken the industry, Mr. Holfilena stressed the message pre-need products deliver remains unchanged. “Our conviction that pre-need is an essential savings mechanism for all Filipinos is unshaken,” he said. “Even if industry sales are below par, we know the market is there and needs to be served.”

Thus, instead of “brooding” over factorsd beyond its control, Philam Plans has been focusing on “rebuilding, retooling, and reinforcing” its foundations.

To reflect current investment realities, for example, Philam Plans has-adjusted the prices of its products. Though the company may end up selling less plans than last year with this move, the overall value and profitability may in fact, “be better.”
“While market share is an important parameter to measure our competitive performance, we will not sell simply for the sake of market share,” Mr. Hofilena said, explaining how Philam Plans has always operated on preserving the long-term viability of its business.

Philam Plans has also forged synergies with the other Philamlife companies to promote more benefits and services to its clients. One of these paved way for cross-selling, which significantly widens the pre-need provider’s distibution network.

LIQUID AND SUFFICIENT TRUST FUND

At the same time, Philam Plans continues to reaafirm its commitment to its more than half a million policyholders through various information campaigns.

“Essentially, we are giving priority to making the market understand how and why Philam Plans is different from those companies that have experienced difficulties in meeting their obligations to planholders. It is important to assert what we are doing to protect all our planholders against those circumstances,” Mr. Hofilena explained.

These measures include beefing up its trust to ensure that it will meet its obligations. Prudent management and financial expertise – traits that served Philam Plans well when it started – continue to guide the firm in managing its trust funds, Mr. Hofilena noted.

At the end of 2004, Philam Plans’ trust funds stood at P14.2 billion, reflecting a 47% increased to P15.3 billion, making the company’s trust funds that largest in the pre-need industry today.

In addition, these funds are invested in liquid and secure instruments. Around 80% of its trust funds are invested in government securities, exceeding the SEC’s minimum liquidity requirement of 10%.

In fact , Mr. Hofilena noted that with a current liquidity of P11 billion, Philam Plans can actually assure the payment of all programmed plan benefits “not only for 2005 but until 2011,”

Given this financial strength, not to mention the support of its parent company, Mr. Hofilena said that palnholders are guaranteed of Philam Plans’ stability.

“Philam Plans has never reneged on its commitments. We have paid all maturing and availing plans either ahead of time or on time. We are proud of this record of never letting our planholders down,” Mr. Hofilena ended.