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Penn Treaty American has potential buyer for Network Insurance Senior Health Division subsidiary
By Lisa Kerner
Charlotte, N.C., Nov. 11 - Penn Treaty American Corp. entered into a non-binding letter of intent to sell its wholly owned subsidiary, Network Insurance Senior Health Division, to an unnamed buyer.
The letter of intent provides for the completion of due diligence and the preparation of definitive documentation within approximately 30 days, a Penn Treaty news release said.
In early October, Penn Treaty announced an economic restructuring plan to help preserve shareholder value as well as to protect 325 company jobs.
It was previously reported that the company stopped issuing new policies nationwide as it continues its review of strategic alternatives through Dec. 31.
Penn Treaty notified Imagine International Reinsurance Ltd. that it plans to recapture all long-term care insurance policies reinsured by Imagine on Jan. 1 and voluntarily agreed to enter a rehabilitation plan with the Pennsylvania Insurance Department if no binding proposals are received by Jan. 1, a prior company news release said.
According to Penn Treaty, its statutory surplus is 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, the company said previously.
The New York Stock Exchange delisted Penn Treaty shares of 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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