Pennsylvania Insurance Commissioner Joel Ario says he is “still optimistic” about the possibility that he will get the long term care insurance subsidiaries of Penn Treaty American Corp. out of rehabilitation.

Ario said during an interview that he also would consider placing Penn Treaty policies with the state-sponsored entity that his department created in November 2008 to take over older LTC insurance policies from a unit of Conseco Inc., Carmel, Ind.

The Pennsylvania Commonwealth Court last week gave Ario permission to take over Penn Treaty Network America Insurance Company and American Network Insurance Company, the principal subsidiaries of Penn Treaty, Allentown, Pa.

The units faced serious financial problems after a reinsurer pulled out of a deal to back their LTC insurance policies, Penn Treaty says.

Penn Treaty executives say they have been unable to find replacement financing or to find a buyer for the units or the policies.

A few weeks earlier, Ario approved a move by Conseco to turn an LTC insurance unit, Conseco Senior Health Insurance Company, into an independent trust.

The trust, Senior Health Insurance Company of Pennsylvania, will relieve Conseco for financial responsibility for 140,000 older LTC policies, according to Pennsylvania officials.

Ario says he is concerned that the financial troubles that have beset Penn Treaty and Conseco could undermine consumer confidence in the LTC insurance industry. But he distinguished between policies written in the 1990s and earlier and newer policies.

The older policies were “underpriced,” Ario says.

“Now there are new [National Association of Insurance Commissioner] standards to ensure business written since 2002 is subject to more strict review by the states, to make sure pricing is adequate,” Ario says.

Ario says his department, which is effectively running most parts of Penn Treaty, is negotiating with a prospective buyer that had been talking to Penn Treaty before the subsidiaries entered rehabilitation.

“I don’t know of anyone who’d buy the whole business,” Ario says. “That’s all part of the discussion. Our first priority is to get a full accounting.”

Ario says owners of older Penn Treaty LTC insurance policies will get their full benefits, whatever happens.

Ario says he would not rule out bankruptcy for Penn Treaty itself but still hopes to find a buyer for the LTC units or return them to solvency through some other means.