MANILA - The news of the demise of Juan Miguel Vazquez made the president of Permanent Plans Inc. the second noteworthy pre-need industry-related death this year.

Vazquez died during a sports competition last weekend.

Last May, Securities and Exchange Commissioner (SEC) Jesus Martinez died from cancer complications. Martinez headed the SEC board’s oversight committee that supervised the pre-need companies, including those that belonged to the now bankrupt Legacy Group.

Martinez died before a graft investigation about the alleged "gifts" from Legacy —a house and car—in exchange for favorable decisions was concluded.

Another pre-need related official, Legacy founder Celso de los Angeles, is currently under hospital arrest after a warrant was served on him last July. For allegedly defrauding thousands of pre-need plan holders, bank depositors, and investors, the businessman-turned-politician, plus a couple of pre-need and bank executives, are currently facing a string syndicated estafa cases nationwide.

De los Angeles is reportedly suffering from throat cancer.

Something in common

The demise of their common denominator—the pre-need industry—has long been foretold. (For background, read: ‘Legacy is RP’s version of the AIG mess’)

But it was only this year that the retail financial industry’s downfall became more pronounced.

Aside from Legacy, Vasquez’s own Permanent Plans joined a growing list of pre-need firms that threw in the towel. Last April, Vasquez announced that mid-sized pre-need firm Permanent Plans was in financial trouble.

The pre-need firm president said, "Permanent Plans no longer believes in the viability of the pre-need pension industry as currently set up and given the adverse operating environment it finds itself in."

Instead of meeting their financial obligations to life and pension plan holders, Permanent Plans tried to re-pay portions of their obligations in kind: slimming teas, medicines and memorial lots.

Previous pre-need firms that also folded up offered other alternatives: cooking gas, memorial lots, or none at all.

Five years ago, high-profile pre-need bankruptcies included the Sobrepeñas’ College Assurance Plan (CAP) and the Yuchengco’s Pacific Plans. These sought relief from the courts, essentially keeping the company’s assets away from plan holders.

Between 2005 and the spate of pre-need closures this year, the pre-need industry stayed afloat partly due to softer regulations.

Pre-need fall

Vazquez was best known for being the longest staying head of the highly influential Federation of Pre-Need Plan Companies.

Since the SEC mulled to instill more financial discipline and regulatory requirements over the industry, the pre-need federation had lobbied against these both at the SEC and in Congress.

The well-documented plight of CAP, Pacific Plans, and Legacy pre-need plan holders has resulted in investigations both at the Senate and House of Representatives.

Vasquez almost always represented the industry in these hearings. In several of those hearings, he had placed the blame squarely on the SEC for trying to choke the industry with the planned regulatory actions.

The federation, through Vazquez, had pushed for lax accounting standards, especially in determining how much of the collected premiums are set aside to cover future obligations to clients.

By 2008, however, the tide turned against the industry when the price of investment instruments—from equities to real estate—plunged following the snowball of the financial crisis that started in the West.

By early 2009, the local pre-need industry—once the most successful retail financial instrument in the Philippines—faced collapse.

Currently, only 22 pre-need firms are allowed by the SEC to sell new plans. At its heydays in the 80’s and 90’s there used to be over 90 pre-need firms.

Vazquez resigned as president of the industry federation last May.

Affluent

Vazquez belonged to one of the Philippines’ old rich families: the Madrigals.

He was a cousin of Senator Jamby Madrigal. His mother, Ma. Luisa “Ising” Madrigal-Vasquez, is the sister of the senator’s father, Antonio Madrigal.

Ising is also the sister of Doña Consuelo Chito Madrigal, a banker and philanthropist.

Vazquez obtained his law degree from the Ateneo Law School in 1986. He graduated a salutatorian. He was married to Judy Duavit, a sister of Jimmy Duavit of GMA 7.

He would have turned 53 at the end of the month.