NU Online News Service, Aug. 14, 10:35 a.m. – Penn Treaty American Corp., Allentown, Pa., is reporting $2.4 million in net income for the second quarter on $101 million in revenue, compared with $4.8 million in net income on $94 million in revenue for the second quarter of 2000.
The company, which sells long-term care insurance and other insurance products, faced close scrutiny from state regulators during the quarter as a result of concerns about its ability to meet obligations to LTC policyholders. The company stopped selling new LTC insurance policies in several large states.
Premiums from the sale of new LTC policies fell 50%, to $12 million. Penn Treaty also had to add $6 million to claim reserves because of an unexpected increase in the claims rate.
Penn Treaty “continues to work closely with state insurance regulators to affirm its reserving and surplus levels,” the company says.
But revenue from renewals of existing LTC policies increased 25%, helping Penn Treaty record a 4% increase in overall revenue.
Penn Treaty found the funds to increase its total invested assets to $504 million June 30, from $366 million Dec. 31, 2000.
Penn Treaty announced today that it has moved to improve its reserve levels further by agreeing to sell its individual disability insurance business to Assurity Life Insurance Company, a subsidiary of Woodmen Accident and Life Company, Lincoln, Neb.
Terms of the proposed deal were not disclosed.
Penn Treaty says it also hopes to raise additional cash by selling its Medicare supplement business and its New York insurance subsidiary.