NU Online News Service, Nov. 15, 11:15 a.m. – Penn Treaty American Corp., Allentown, Pa., is reporting $4.1 million in net income for the third quarter on $90 million in revenue, down from $6.8 million in net income on $102 million in revenue for the third quarter of 2000.
Penn Treaty, one of the insurers that helped develop the modern long-term care insurance market, says reductions in new claims helped reduce the cost of claims to 63% of premium revenue, from 66% for the comparable period in 2000.
Penn Treaty usually reported strong sales and strong current profits, but regulators began imposing restrictions on the company last spring, because of fears that growth in liabilities to LTC policyholders was outstripping growth in reserves.
The company stopped selling LTC policies in some states in the spring, then agreed to a voluntary suspension of new LTC policy sales in all states from Sept. 11 to Dec. 15. The company is now working with Pennsylvania insurance regulators to come up with a “corrective action plan.”
Penn Treaty warns the suspension of new LTC policy sales may hurt efforts to keep its network of independent agents together.
But the suspension also helped the company reduce expenses in the latest quarter, by reducing commission payments to $17 million, from $26 million for the third quarter of 2000.