A New Life For LTCi Carrier Penn Treaty

18 Май 2012 г.,zastrahovatel.com

 

A judge has breathed new life into Penn Treaty American Corp., ruling against the state's efforts to dissolve the Salisbury Township provider of long-term care policies.

In 2009, the Pennsylvania Insurance Department filed papers in Commonwealth Court to liquidate Penn Treaty after an analysis showed the company would need an additional $1.3 billion to cover future claims.

But last week, Judge Mary Hannah Leavitt not only denied the state Insurance Department's petition, but took the agency to task. She said the case amounted to "a serious indictment of the existing system of rate regulation of long-term care insurance."

According to Penn Treaty, the ruling was the first time a petition to liquidate an insurance company has been defeated in Pennsylvania. For the more than 200 employees who work there, it means their jobs are no longer in immediate peril.

"My whole goal is to keep our insurance company alive," said Eugene J. Woznicki, the chairman of Penn Treaty's board of directors.

Penn Treaty, on Lehigh Street, along with a subsidiary called American Network, has about 120,000 policy-holders nationwide, including about 16,000 in Pennsylvania.

The company stopped selling new policies in 2008 as it came to terms with the impact of the nation's incipient financial crisis. Long-term care insurance helps pay for certain medical and personal expenses, such as nursing-home care.

The Insurance Department's move against Penn Treaty was the first of its kind in five years. In Pennsylvania, all long-term care policies are backed up, up to$300,000, in the event a company fails. The money comes from fees assessed on other insurance companies.

Leavitt, however, concluded Penn Treaty -- with $1 billion in assets, cash flow in excess of $200 million and no debt -- is sufficiently funded to meet its obligations.

She said the department's decision to shut down Penn Treaty was based on "unreliable" and "wildly fluctuating" actuarial projections, and she gave the agency 90 days to develop a new approach for dealing with distressed insurance companies.

Woznicki said Penn Treaty will soon resume selling long-term care insurance, which is in high demand because so many other companies have stopped selling it.

 



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