Standard & Poor’s Ratings Services has raised its counterparty credit and financial strength ratings on Penn Treaty Network America Insurance Company to B, from B minus.[@@]

Standard & Poor’s, New York, also has increased the counterparty credit rating on the insurance company’s parent, Penn Treaty American Corp., Allentown, Pa., to CCC, from CCC minus.

The outlook on the ratings is stable, the rating agency says.

Penn Treaty managers have reduced debt levels by renegotiating reinsurance treaties and converting debt into common stock, according to Neal Freedman, an S&P credit analyst.

Although Penn Treaty’s sales are limited and its earnings are below average, both sales and earnings are improving, Standard & Poor’s says.

“The ratings also reflect the reduced, but still present, parent-company liquidity concerns,” Standard & Poor’s says.

Penn Treaty helped develop the modern long term care insurance market, but it ran into trouble with regulators in 2001, after state regulators questioned whether it had enough capital to back the LTC benefits promises it was making to customers.