The Securities and Exchange Commission (SEC) announced Monday that it revoked the license of Prudentialife Plans Inc. to sell preneed plans because it allegedly failed to meet the required fund infusion into its trust fund for planholders.
SEC Chairman Fe Barin initially told the Senate Committee on Trade that Prudentialife’s license was merely suspended. But after the hearing, she told the media that the license had been actually revoked.
Barin made the revelation while she was being taken to task by Sen. Manuel “Mar” Roxas 2nd, chairman of the committee, for SEC’s slow response to plug legal loopholes following the scandal involving the Legacy group of companies.
Later on Monday, the SEC issued a statement saying Prudentialife Plans has no license to sell preneed products.
In a document obtained by The Manila Times, Jose Aquino, SEC non-traditional securities department acting director, ordered Prudentialife to terminate the offering or sale of preneed plans, but continue servicing its obligations to its planholders.
SEC found that Prudentialife has capital deficiency of P4.498 billion and a trust fund deficiency of P3.641 billion, both as of end-March this year.
The regulator also ordered the preneed firm to infuse P100 million cash into its trust fund within 30 working days, and increase the periodic deposit to trust fund for its education, pension and life plans to 80 percent of the periodic collection starting next month.
The SEC also wants Prudentilaife to cancel all unsold plans and cause the publication of the cancellation within 10 days, and should not declare any dividends, stock options or warrant assets unless approved by the regulator.
Regulators also prohibited profit sharing, performance bonus and other compensation schemes to members of the board of directors, executives and officers of Prudentialife.
Increase in salaries, per diems, allowances, fringe benefits and any similar compensation and benefits to officials of the preneed company are also banned.
Prudentialife’s proposal
In a letter dated January 31, 2009, Prudentialife proposed to fund the multibillion deficiencies, by the way of shares of stocks of its related companies. But the SEC denied the proposal.
Instead, the government suggested that Prudetialife offer real property.
After the SEC’s denial, Prudentialife requested reconsideration, saying the preneed firm has pending deals related to some of its property, hence, its inability to contribute to the deficiencies.
In an argument submitted by Prudentialife, it said the trust fund is liquid enough to service its obligations to shareholders for the next five years.
Prudentialife also cited that the huge losses it incurred last year was was caused by market-to-market losses, and should return to profit as market conditions improve.
“Upon the review of the argument raised and records on file, we hold Prudentialife no longer possesses the qualification provided for under the existing SEC rules and regulations to be or remain a dealer of preneed plans,” Aquino said in the order.
Prudentialife statement
“The assets we offered are real estate properties that have good values but are not yet income-generating. Besides this, we offered unlisted shares of profitable companies but are affiliates of our preneed company. The SEC did not accept these assets for contribution to our trust fund and capital,” Prudentialife said in a statement also on Monday.
The statement noted that it was from Jose Alberto Alba, president of Prudentialife.
The statement added that despite the order of the SEC, it would continue to operate as a servicing pre-need company and would provide plan benefits to planholders.
The preneed company has blamed the global economic turmoil and impact of the controversy surrounding the Legacy group as culprits behind the preneed sector’s troubles.
Those reasons have “dragged down the confidence in our industry whose image has already been tarnished when major preneed firms went down years ago,” the statement added.
Legacy group
During the Senate hearing Monday, Jose Nograles, president of the Philippine Deposit Insurance Corp. (PDIC), said that their verification of deposit accounts in Legacy-affiliated banks showed that of the estimated P14 billion deposited in 134,653 accounts, some 28,847 accounts totaling P5.6 billion were found doubtful and that 40,152 accounts totaling P1.52 billion had been validated.
Nograles testified that his agency would start paying claimants of Legacy by the end of April. But Roxas said he was concerned that Legacy planholders would not get paid in full.
Roxas noted the results of an audit by the Philippine Deposit Insurance Corp. showed that of the P1.3 billion of assets claimed in the books of Legacy banks, the real value was only P2.5 billion, while of the P1.3 billion book value of Legacy preneed, the actual value was only 216 million.
“The chances of the plan holders’ getting repaid is becoming dimmer,” he said, while venting his ire on the slow action of the Department of Justice, the SEC and the Bangko Sentral ng Pilipinas against Legacy and its owner, Celso de los Angeles.
Nograles pointed out that while SEC and the central bank had filed charges against Legacy and de los Angeles before the Justice department, it still has to file even a single case before the courts. A Justice department representative told the committee that six of 40 cases in Cagayan de Oro City have been submitted for resolution, and that the city prosecutor would make a recommendation next month.
Roxas said the committee would subpoena de los Angeles for the next hearing to submit his Statement of Assets and Liabilities and Waiver of Bank Deposits that the Lecacy owner had promised at a previous hearing. He warned that de los Angeles, who failed to attend Monday’s hearing, could be cited for contempt if he failed to submit those documents.
Senate President Juan Ponce Enrile also warned SEC to act on the complaint of 12,000 soldiers and policemen who had been victimized by Legacy.
“You better be careful in handling this. I know how they think and feel when aggrieved. They can turn their gun on you,” said Enrile, a former Defense secretary.
The Armed Forces of the Philippines Savings and Loan Association Inc. submitted to the committee a 125-page list of about 12,000 policemen and soldiers who paid a total of P317.55 million to the Scholarship Plan of the Philippines Inc. (SPPI) a Legacy-affiliated company.
Barin said that besides the list, SEC also needs documents on the payroll deduction of soldiers and evidence of the remittance to SPPI.-- Efren L. Danao and Chino S. Leyco
SEC Chairman Fe Barin initially told the Senate Committee on Trade that Prudentialife’s license was merely suspended. But after the hearing, she told the media that the license had been actually revoked.
Barin made the revelation while she was being taken to task by Sen. Manuel “Mar” Roxas 2nd, chairman of the committee, for SEC’s slow response to plug legal loopholes following the scandal involving the Legacy group of companies.
Later on Monday, the SEC issued a statement saying Prudentialife Plans has no license to sell preneed products.
In a document obtained by The Manila Times, Jose Aquino, SEC non-traditional securities department acting director, ordered Prudentialife to terminate the offering or sale of preneed plans, but continue servicing its obligations to its planholders.
SEC found that Prudentialife has capital deficiency of P4.498 billion and a trust fund deficiency of P3.641 billion, both as of end-March this year.
The regulator also ordered the preneed firm to infuse P100 million cash into its trust fund within 30 working days, and increase the periodic deposit to trust fund for its education, pension and life plans to 80 percent of the periodic collection starting next month.
The SEC also wants Prudentilaife to cancel all unsold plans and cause the publication of the cancellation within 10 days, and should not declare any dividends, stock options or warrant assets unless approved by the regulator.
Regulators also prohibited profit sharing, performance bonus and other compensation schemes to members of the board of directors, executives and officers of Prudentialife.
Increase in salaries, per diems, allowances, fringe benefits and any similar compensation and benefits to officials of the preneed company are also banned.
Prudentialife’s proposal
In a letter dated January 31, 2009, Prudentialife proposed to fund the multibillion deficiencies, by the way of shares of stocks of its related companies. But the SEC denied the proposal.
Instead, the government suggested that Prudetialife offer real property.
After the SEC’s denial, Prudentialife requested reconsideration, saying the preneed firm has pending deals related to some of its property, hence, its inability to contribute to the deficiencies.
In an argument submitted by Prudentialife, it said the trust fund is liquid enough to service its obligations to shareholders for the next five years.
Prudentialife also cited that the huge losses it incurred last year was was caused by market-to-market losses, and should return to profit as market conditions improve.
“Upon the review of the argument raised and records on file, we hold Prudentialife no longer possesses the qualification provided for under the existing SEC rules and regulations to be or remain a dealer of preneed plans,” Aquino said in the order.
Prudentialife statement
“The assets we offered are real estate properties that have good values but are not yet income-generating. Besides this, we offered unlisted shares of profitable companies but are affiliates of our preneed company. The SEC did not accept these assets for contribution to our trust fund and capital,” Prudentialife said in a statement also on Monday.
The statement noted that it was from Jose Alberto Alba, president of Prudentialife.
The statement added that despite the order of the SEC, it would continue to operate as a servicing pre-need company and would provide plan benefits to planholders.
The preneed company has blamed the global economic turmoil and impact of the controversy surrounding the Legacy group as culprits behind the preneed sector’s troubles.
Those reasons have “dragged down the confidence in our industry whose image has already been tarnished when major preneed firms went down years ago,” the statement added.
Legacy group
During the Senate hearing Monday, Jose Nograles, president of the Philippine Deposit Insurance Corp. (PDIC), said that their verification of deposit accounts in Legacy-affiliated banks showed that of the estimated P14 billion deposited in 134,653 accounts, some 28,847 accounts totaling P5.6 billion were found doubtful and that 40,152 accounts totaling P1.52 billion had been validated.
Nograles testified that his agency would start paying claimants of Legacy by the end of April. But Roxas said he was concerned that Legacy planholders would not get paid in full.
Roxas noted the results of an audit by the Philippine Deposit Insurance Corp. showed that of the P1.3 billion of assets claimed in the books of Legacy banks, the real value was only P2.5 billion, while of the P1.3 billion book value of Legacy preneed, the actual value was only 216 million.
“The chances of the plan holders’ getting repaid is becoming dimmer,” he said, while venting his ire on the slow action of the Department of Justice, the SEC and the Bangko Sentral ng Pilipinas against Legacy and its owner, Celso de los Angeles.
Nograles pointed out that while SEC and the central bank had filed charges against Legacy and de los Angeles before the Justice department, it still has to file even a single case before the courts. A Justice department representative told the committee that six of 40 cases in Cagayan de Oro City have been submitted for resolution, and that the city prosecutor would make a recommendation next month.
Roxas said the committee would subpoena de los Angeles for the next hearing to submit his Statement of Assets and Liabilities and Waiver of Bank Deposits that the Lecacy owner had promised at a previous hearing. He warned that de los Angeles, who failed to attend Monday’s hearing, could be cited for contempt if he failed to submit those documents.
Senate President Juan Ponce Enrile also warned SEC to act on the complaint of 12,000 soldiers and policemen who had been victimized by Legacy.
“You better be careful in handling this. I know how they think and feel when aggrieved. They can turn their gun on you,” said Enrile, a former Defense secretary.
The Armed Forces of the Philippines Savings and Loan Association Inc. submitted to the committee a 125-page list of about 12,000 policemen and soldiers who paid a total of P317.55 million to the Scholarship Plan of the Philippines Inc. (SPPI) a Legacy-affiliated company.
Barin said that besides the list, SEC also needs documents on the payroll deduction of soldiers and evidence of the remittance to SPPI.-- Efren L. Danao and Chino S. Leyco
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