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Non-Tech : PTA: Penn Treaty American Corp
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From: Paul Lee12/15/2001 10:01:21 AM
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Penn Treaty American Corporation Signs Letter of Intent For 100% Reinsurance Agreement


ALLENTOWN, Pa., Dec. 14 /PRNewswire/ -- Penn Treaty American Corporation (NYSE: PTA) today announced that it has executed a non-binding letter of intent to enter into a reinsurance agreement with a major reinsurer. The proposed agreement would provide reinsurance for 100% of the long-term care insurance policies currently in-force with two Penn Treaty insurance subsidiaries, Penn Treaty Network America and American Network Insurance Company. The reinsurance transaction would substantially reduce the Companies' statutory capital requirements, thereby expanding its short and long-term growth opportunities.

The proposed agreement provides the reinsurer warrants to purchase shares of Penn Treaty American Corporation common stock. PTA will use proceeds from the warrants, if exercised, for liquidity purposes and to supplement the statutory capital of its insurance subsidiaries.

The reinsurance transaction, an important component of the Company's pending Corrective Action Plan, is subject to, among other things, the execution of a definitive agreement and approval by the Pennsylvania Insurance Department. In anticipation of the preparation and review of the definitive agreement, the Company has extended its voluntary suspension of new long-term care insurance sales in Pennsylvania. The Company believes that the timing of reentrance into sales in other states will vary while the agreement is finalized, reviewed and assessed by other state insurance regulators.
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