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July 29, 2005 at 08:00 PM
Penn Treaty American Corp. says it will be getting its long term care insurance reinsurance from Imagine International Reinsurance Ltd.[@@]
Penn Treaty obtained 100% quota share reinsurance from Centre Solutions Ltd., Hamilton, Bermuda, in 2002 in connection with efforts to assure state regulators that it had the resources necessary to back the LTC insurance policies it was selling.
The Centre arrangement included a notional experience account with a value that could vary dramatically with changes in interest rates. The fluctuations had a big effect on Penn Treaty’s net income.
The new arrangement with Imagine, Dublin, Ireland, fixes the value of the notional experience account at the value recorded May 23, Penn Treaty says.
Because the new Imagine arrangement is a traditional funds withheld agreement, it will not cause the same kind of income statement volatility that the Centre agreement caused, Penn Treaty says.
