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Friday, October 3, 2008

NYSE suspends trading in Penn Treaty shares

The New York Stock Exchange today suspended trading of the common stock of Penn Treaty American Corp.

That decision had nothing to do with today's PhillyInc. column, and everything to do with the Allentown insurers' announcement today that it is suspending the issuance of new policies and entering a rehabilitation plan with the Pennsylvania Insurance Department as of Jan. 1.

Penn Treaty has been in a dispute with its reinsurer, called Imagine International Reinsurance Ltd. It first bubbled to the surface on Aug. 21.

But Penn Treaty is in a bit of time crunch. Its agreement with Imagine says Penn Treaty can only recapture reinsured long-term care policies on Jan. 1 of any year subject to 90 days notification.

So that's what the insurer did on Oct. 2. But the problem is that by recapturing those policies, Penn Treaty's statutory surplus would fall and be considered insolvent by Pennsylvania regulators. (Penn Treaty says that the Insurance Department has approved the recapture of the policies.)

The company has hired Friedman, Billings, Ramsey & Co. to help it "evaluate strategic alternatives." It sounds like wants to do a deal fast. Penn Treaty needs to hear some interest from someone by mid-October.

As for Penn Treaty's 325 employees nationwide, the company says it's trying to "preserve those positions." The company said it is administering its existing insurance policies and "expects to retain many of its current employees for that purpose."

Shares closed Thursday at $1.32. After the NYSE suspended trading at about 11 a.m., shares of Penn Treaty were trading over-the-counter for prices well below $1.
Posted by Mike Armstrong @ 12:21 PM  Permalink | File Under: Financial Services | | Investing, Markets | Post a comment
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About Mike Armstrong
Mike Armstrong, a business editor and writer for nearly two decades, is the Inquirer's business columnist and PhillyInc blog editor. Contact Mike via e-mail or at 215-854-2980
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