The Insurance Commission (IC) has placed pre-need company Mercantile Careplans Inc. under conservatorship for its failure to comply with the minimum capital requirement prescribed under Republic Act No. 9829 or the Pre-Need Code of the Philippines.
“The result of the examination made into the affairs, financial condition, and methods of doing of business of Mercantile Careplans as of end-2018 disclosed that the company failed to comply with the minimum P75 million paid-up capital requirement. Particularly, Mercantile Careplans’ paid-up capital is impaired by P14.23 million,” Dennis Funa, insurance commissioner, said.
“Under the Pre-Need Code, pre-need companies existing at the time of the effectivity of the law selling two types of plan are required to have a minimum unimpaired paid-up capital of P75 million,” Funa added.
Before the IC issued the Conservatorship Order, Mercantile Careplans was required to address its capital impairment.
Mercantile Careplans, on the other hand, manifested to the IC that it is no longer financially capable of addressing its capital impairment citing that it ceased selling any plan since 2009 and is merely servicing its existing and maturing plan holders.
Funa noted while the company’s paid-up capital is impaired, the amount of its trust fund contributions is compliant with the requirements of the Pre-Need Code.
The IC said Mercantile Careplans has 5,622 enforced pension plans and 170 enforced educational plans as of end-2018.
Funa said the company is required to continue servicing its clients until and unless the IC-appointed conservator recommends otherwise.
“The initial step in the conservatorship process is for the IC-appointed conservator to review the current financial condition of the company and recommend measures to ensure the preservation of the assets of the company for the benefit of its plan holders and other stakeholders,” Funa said.