PhilRatings announces its first assignment ever of a corporate credit rating to a company — Berkley International Plans, Inc. (Berkley Plans), a pre-need firm established in 1997.
As differentiated from PhilRatings’ outstanding issue ratings or ratings related to a particular commercial paper, bond, or debt security, a corporate credit rating measures the over-all creditworthiness of a company or its ability to meet its outstanding financial commitments. It can be used for financing, marketing, or benchmarking purposes.
Berkley Plans is given a rating of PRS A plus (corp.) which is defined as, “the company has an ABOVE AVERAGE capacity to meet its financial commitments relative to that of other Philippine corporates. However, the corporation is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than higher-rated corporates.â€
In arriving at the rating, PhilRatings considered Berkley Plans’ good compliance with Trust Fund and other regulatory (e.g. capitalization) and monitoring requirements of the Securities and Exchange Commission (SEC). The rating company also gave positive marks to Berkley’s ability to compete with big, established players and for positioning itself as one of the leading and fastest-growing pre-need firms in the country today. In just four years of operation, Berkley has emerged as No. 2 in educational plans and No. 4 overall in the pre-need industry, in terms of new business.
Berkley Plans achieved this largely through its innovative marketing techniques and unique distribution channel, whereby Family First, Inc., its marketing arm, brings Berkley’s services closer to its prospective customers via its aggressive direct-selling activities in centrally-located malls. The design and cost structure of its plans likewise provide adequate cover for any plan lapsation and allow for a reasonable recovery of related expenses. Management has also been able to build up its trust fund adequately, covering future requirements sufficiently.
Going forward, any improvement in the company’s rating will be hinged on its being able to demonstrate consistent, reliable, and good over-all performance, critical to establishing a sound investment and operating track record in the context of a slow-moving economy. A stronger capital position would also provide an additional buffer to Berkley’s trust fund and likewise afford the company more flexibility in pursuing its expansion plans.