Pair of Penn Treaty Subs Enter Rehabilitation

Penn Treaty American Corp. announced that two of its insurance subsidiaries, Penn Treaty Network America and American Network Insurance Company entered rehabilitation under orders issued by the Pennsylvania Commonwealth Court, effective Jan. 6.

Under the Orders, PTNA and ANIC are placed under the statutory control of the Pennsylvania Insurance Department. The Orders also grant the Insurance Commissioner direct authority to preserve the insurers' assets and oversee their current financial situation and operations, while continuing to pay policyholder claims. Both insurers remain under the ownership of Penn Treaty American Corporation.

As announced in October 2008, Penn Treaty American Corporation agreed that PTNA and ANIC would voluntarily enter rehabilitation if the Company was unsuccessful in its efforts to enter into a transaction prior to Jan. 1, 2009, that provided its insurance subsidiaries with adequate capitalization.

The company announced in December 2008, that it had received a non-binding letter of intent for the sale of ANIC and substantially all of its long-term care insurance policies issued after Jan. 1, 2002. The company is continuing the due diligence process for the proposed transaction, but believes that proceeds realized from the transaction will be insufficient to fully capitalize PTNA's immediate capital needs. As a result, the company agreed to the entrance of the Orders as previously committed.