NU Online News Service, July 27, 10:55 a.m. – Penn Treaty American Corp., Allentown, Pa., says it is calling off previously announced plans to sell its Medicare supplement business and disability business to Universal American Financial Corp., Rye Brook, N.Y., because it thinks it can get a better deal.
State regulators in Florida and Virginia imposed restrictions in April that limited the ability of Penn Treaty to sell new LTC coverage. The regulators questioned whether Penn Treaty, which has been known for selling LTC coverage at a low cost, had enough capital support its rapidly growing book of LTC business.
Penn Treaty disagreed, but it responded by announcing plans to sell some operations to Universal American for $13 million and organizing a sale in May that offered existing shareholders rights to purchase additional stock.
Penn Treaty has decided against completing the proposed deal with Universal American, in part because the May rights offering succeeded at raising $26 million in capital and bolstering capital reserves, Penn Treaty.
Since the rights offering ended, Penn Treaty and the prospective purchaser have been “unable to reach agreement on the terms of a definitive agreement,” Penn Treaty says.
But the success of the May rights offering “enabled the Company to pursue and enter discussions with other insurance companies that have expressed interest in individually purchasing the Medicare supplement, disability business or the New York subsidiary,” Penn Treaty says.