United Coconut Planters Bank on Tuesday denied being negligent in protecting the trust fund of pre-need company Provident Plans International Corp., which the Insurance Commission plans to put under conservatorship to protect the interest of plan holders.
UCPB said in a statement it was coordinating with the Finance Department to clarify the matter.
It said as Provident Plan’s trustee bank from 1989 until 2014, it “had never been negligent in protecting their trust fund.”
“As its trustee bank, UCPB had fulfilled all its obligations in the trust agreement approved by Provident Plans and complied with all the pertinent regulations of the Insurance Commission,” it said.
Earlier reports said the primary reason behind Provident Plan’s current status was the “disallowance of the unrecoverable/unqualified trust fund investment made by Export and Industry Bank [EIB], as a trustee bank of Provident Plans, in its own bank in the form of time deposits in 2005.”
UCPB said in 2009, Provident Plans decided to terminate its trust agreement with EIB and transferred the EIB time deposits to UCPB.
“At the time it was transferred to UCPB, the EIB time deposits were considered as an allowable investment under the SEC guidelines and IC regulations. EIB was eventually shuttered by the BSP in 2012,” it said.
The Insurance Commission said it planned to put the capital impaired Provident Plans under conservatorship to protect the interests of 38,000 plan holders if no clear improvements were seen in its financial condition by mid-June.
Provident Plans is among the companies found financially deficient after the regulation of the pre-need industry was placed under the commission in 2010 under Republic Act 9829. Pre-need firms were previously under the supervision of the Securities and Exchange Commission.
Insurance commissioner Dennis Funa said while Provident Plans manifested before the IC in February and March this year that it had a “white knight” investor to cover up its capital impairment and trust fund deficiencies, it had not yet received any concrete plan or letter of intent from the supposed investor.
Provident Plans has three product lines focused on life/memorial plans, education plans and pension plans, but 70 percent of its clients are life/memorial policy holders.
Funa said Provident Plans’ financial woes were already existing before the enactment of the Pre-Need Code and the transfer of supervision of pre-need companies to the IC.
He said the primary cause of the company’s capital impairment and trust fund deficiency was the unrecoverable investment with previous trustee bank EIB and the neglect by new trustee bank UCPB in protecting the trust fund.