Penn Treaty announces restructuring plan

By Lisa Kerner

Charlotte, N.C., Oct. 3 - Penn Treaty American Corp. announced an economic restructuring plan to help preserve shareholder value as well as to protect 325 company jobs.

The company stopped issuing new policies nationwide as it continues its review of strategic alternatives through Dec. 31.

However, Penn Treaty will continue to service and renew all existing long-term care insurance policies currently in force.

As part of the plan, Penn Treaty notified Imagine International Reinsurance Ltd. that it plans to recapture all long-term care insurance policies reinsured by Imagine on Jan. 1.

Penn Treaty said it also agreed to voluntarily enter a rehabilitation plan with the Pennsylvania Insurance Department on Jan. 1 if no binding proposals are received by then.

According to Penn Treaty, its statutory surplus is currently enhanced by approximately $145 million as a result of the reinsurance agreements. Unless a strategic alternative that provides for adequate surplus is in place prior to Jan. 1, Penn Treaty's primary insurance subsidiary would be considered insolvent under Pennsylvania statute, a company news release said.

The New York Stock Exchange has suspended trading of Penn Treaty shares of common stock and will delist the company's common stock as a result of its adoption of the plan.

Penn Treaty, through its subsidiary insurers, specializes in the sale and distribution of long-term care insurance products. The company is based in Allentown, Pa.

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