Pre-need firm placed under conservatorship

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

The Insurance Commission (IC) has determined that Mercantile Careplans Inc. has capital deficiency and has placed the business under a conservatorship.

This was learned from IC Commissioner Dennis Funa on Monday who said the insurer operated under an impaired paid-up capital set up.

“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,” Funa 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,” he said.

According to the IC chief, the capital impairment totaled P14.23 million or well below the minimum requirement.

Prior to the order, the IC required Mercantile Careplans to address the capital impairment, a condition the business acknowledged as something it cannot comply and ceased selling any more plans since 2009 as a result.

The company however, continued to service its clients in the interim.

Funa said Mercantile Careplans’ trust fund contribution remain compliant with the Pre-Need Code despite the impairment in paid-up capital.