Pre-need industry sales plunge by 27%

MANILA, Philippines - A lingering crisis of confidence as well as competition from other investment products continue to batter the pre-need industry, whose sales plunged by over a quarter in the first quarter. Data from the Securities and Exchange Commission showed that sales of the pre-need industry plunged by 27.06% to P3.84 billion in the first quarter, down from P5.26 billion a year ago. Sales of life plans remained brisk but not education and pension plans, which suffered sales reversals of 58.31% and 36.06%, respectively. Sales of life plans rose by 38.09%; over 36,000 plans worth P1.34 billion were sold in the three month period compared to over 24,000 plans in the same period last year. Sales of education plans totaled just P465 million, down from P1.115 billion last year, while sales of pension plans summed up to P2 billion, down from P3 billion last year. Jose Alberto T. Alba, Prudentialife Plans, Inc. president, said he expects the pre-need industry’s slowdown to persist throughout the year, with sales of life plans to remain the only bright spot. "There has been a slowdown given other competing products such as mutual funds," he said. "Personally, I don’t see any reversal yet. The industry expects only life plans to grow." The industry was wracked by controversy a few years ago, when several pre-need firms, facing liquidity problems, could not service the maturing plans of clients. These clients were holding mostly educational plans. The firms involved were forced to apply for corporate rehabilitation. They included the biggest, such as Professional Financial Plans, formerly TPG Corp.; College Assurance Plan Philippines, Inc.; Platinum Plans Philippines, Inc.; and Pacific Plans, Inc. Overall, the total number of plans sold in the first quarter was 4.22% lower than in the first quarter of 2006, SEC data also showed. Education, life and pension plans sold totaled 52,671, lower than the 54,994 sold in the first quarter of 2006. Initial collection — the first payment made by the planholder upon purchase of a plan depending on his mode of payment — dropped by 41.53% to P374.27 million from P640.07 million. - R.A.M. Rubio, BusinessWorld