Press Release
February 3, 2009

Urgent regulatory reforms needed to prevent
further collapse of Pre-Need industry

Nacionalista Party President Senator Manny Villar cited the need to review regulatory policies in order to prevent further collapse of the distressed pre-need industry.

"Reforms should be urgently implemented so this situation will not happen again and turn into a vicious cycle. Many thought that industry players and the regulators themselves would have learned their lessons from the experience of the College Assurance Plans (CAP) and Pacific Plans a few years ago. And yet it happened again with Legacy Consolidated Plans," said Villar.

Villar added that although it should be acknowledged that the present global financial meltdown might have adversely affected the pre-need firms, it cannot however be cited as a major factor. The value of trust funds has been reduced by over 10% in yields. Trust funds are assets reserved for benefit payments to plan-holders. Majority of these trust funds are invested in government securities and the stock market-- the value of which plummeted because of the global financial crunch.

"Pre-need companies regularly submit financial documents to the regulators, thus they should be on top of the situation all the time. As of middle of last year, the industry has been bleeding, with reported trust fund deficit of over P45 billion. How could this have escaped the eyes of the regulators?" Villar further cited.

According to media reports also, several pre-need companies such as CAP and Pacific Plans have been on the watchlist of the Securities and Exchange Commission (SEC). On top of this, the pre-need companies themselves have notified SEC last year about their problems.

"The big losers in the collapse of pre-need companies are our countrymen, parents who diligently invest their hard-earned money to secure their future and that of their children. Then they are left holding worthless policies and most of them have to pay for lawyers to run after the policy providers. This makes the recommendation to bail out these pre-need firms using taxpayers' money as ridiculous. It is a double whammy for the taxpaying policyholders involved in the debacle," said Villar.

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