NU Online News Service, May 16, 12:05 p.m. – Penn Treaty American Corp., Allentown, Pa., is reporting a $14 million net loss for the first quarter on $85 million in revenue, compared with a $2.3 million net loss on $102 million in revenue for the first quarter of 2001.
The insurer helped create the modern U.S. long-term care insurance industry, but it has had to struggle over the past year to ease regulators' concerns about the adequacy of its capital.
The company addressed those concerns by setting up a reinsurance arrangement with Centre Solutions (Bermuda) Ltd., an affiliate of Zurich Financial Services A.G., Zurich. Penn Treaty says it transferred most of its investment portfolio to Centre Solutions in February.
The Centre Solutions arrangement includes a "notional experience account" that generates income when investment benchmark indices do well but generates losses when the indices do poorly. The experience account produced a $17 million loss for the first quarter.
