This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Long-Term Care Insurer Penn Treaty American Fails

Stocks in this article: PTYA

Pennsylvania regulators are mulling options that include selling or liquidating long-term care insurer Penn Treaty American Corp. (PTYA), two days after a judge ordered two of its subsidiaries into rehabilitation.

According to court order issued by the Commonwealth Court of Pennsylvania, the rehabilitator will continue to pay claims on all existing policies held by Penn Treaty Network America Insurance Co. and its much smaller subsidiary, American Network Insurance Co. Rosanne Placey, a spokesperson for the Pennsylvania Insurance Commissioner, said that in these very early stages their goal is to decide what is viable for the company.

No new policies will be sold under the rehabilitation although the intention is to renew existing policies, she said.

Both companies are monoline insurers in the long-term care insurance market. When Penn Treaty entered the long-term care insurance market in the 1990s it had a reputation for very aggressive pricing in order to rapidly build up its business. Placey explained that policies written prior to 2000 were underpriced and the company had difficulty getting approval for rate increases from the various states in which it sold policies.

Placey explained that pricing difficulties across the industry in the past few years, as the definition of long-term care and the expectations of its policyholders evolved, had a negative impact on the company.

She said the company's existing financial difficulties leading only worsened in the current economic environment, when it became impossible to raise new capital.

According to its third-quarter statutory financial statement, Penn Treaty lost $2.4 million for the first nine months of the year and had negative capital of $44.8 million at Sept. 30. From Jan. 1 to Sept. 30, capital had declined $11 million from unrealized capital losses and $54.5 million from a decrease in its liability for reinsurance in unauthorized companies.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,079.27 +49.06 0.27%
S&P 500 2,089.86 +7.98 0.38%
NASDAQ 4,802.2370 +28.7650 0.60%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs