-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CE+LHbARw1Jb9lw0N1RWJewxOUdWAG35GEMk8vaZarCsrf2V3SvKL93ugpo2udE9 SedQFe6Q1bYP4/Dmff98CQ== 0000914317-96-000139.txt : 19960517 0000914317-96-000139.hdr.sgml : 19960517 ACCESSION NUMBER: 0000914317-96-000139 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENN TREATY AMERICAN CORP CENTRAL INDEX KEY: 0000814181 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 231664166 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15972 FILM NUMBER: 96567095 BUSINESS ADDRESS: STREET 1: 3440 LEHIGH ST CITY: ALLENTOWN STATE: PA ZIP: 18103 BUSINESS PHONE: 2159652222 MAIL ADDRESS: STREET 2: 3440 LEHIGH STREET CITY: ALLENTOWN STATE: PA ZIP: 18103 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 [x] Quarterly Report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1996 or [ ] Transition Report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the transition period from ____________________to____________________ Commission file number 0-13972 PENN TREATY AMERICAN CORPORATION (Exact name of registrant as specified in its charter) PENNSYLVANIA 23-1664166 (State or other juris- (I.R.S. Employer Identi- diction of incorporation fication No.) of organization) 3440 Lehigh Street, Allentown, PA 18103 (Address, including zip code, of principal executive offices) (610) 965-2222 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former fiscal year, if change since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] The number of shares outstanding on the Registrant's common stock, par value $.10 per share, as of May 9, 1996 was 6,990,084. PART I FINANCIAL INFORMATION Item I. Financial Statements The registrant's Unaudited Consolidated Balance Sheets, Statements of Operations and Statements of Cash Flows and Notes thereto required under this item are contained on pages 3 through 9 of this report, respectively.
PENN TREATY AMERICAN CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 1996 DECEMBER 31, 1995 -------------- ----------------- (UNAUDITED) ASSETS Investments: Bonds, available for sale at market, (amortized cost $145,354,697 and $136,600,775, respectively) ............... $ 146,747,870 $ 142,243,341 Equity securities at market value, (cost $2,826,441 and $2,102,529, respectively) .. 3,515,637 2,605,612 Policy loans ................................ 79,567 79,404 ------------- ------------- Total Investments ......................... 150,343,074 144,928,357 ------------- ------------- Cash and cash equivalents ..................... 8,349,672 8,881,061 Property and equipment, at cost, less accumulated depreciation of $1,939,365 and $1,854,065, respectively ................ 6,007,713 5,740,353 Unamortized policy acquisition costs .......... 67,303,615 63,133,759 Receivables from agents, less allowance for uncollectable amounts of $231,226 ........... 1,354,377 1,275,481 Accrued investment income ..................... 2,333,406 2,436,435 Cost in excess of net assets acquired, less accumulated amortization of $240,766 and $231,826, respectively ...................... 1,188,634 1,197,574 Receivable from reinsurers .................... 8,042,085 7,730,828 Other assets .................................. 3,062,556 2,420,422 ------------- ------------- Total Assets .............................. 247,985,132 237,744,270 ============= ============= LIABILITIES Policy reserves: Accident and health ......................... 68,774,532 62,007,433 Life ........................................ 7,360,838 7,118,848 Unearned premium reserve ...................... 30,719 26,503 Policy and contract claims .................... 53,075,354 50,206,608 Accounts payable and other liabilities ........ 3,690,181 2,681,499 Mortgages and other debts ..................... 2,165,672 2,206,117 Federal income taxes payable .................. 175,000 183,249 Deferred income taxes ......................... 15,437,352 16,206,959 ------------- ------------- Total Liabilities ......................... 150,709,648 140,637,216 ------------- ------------- (Continued) PENN TREATY AMERICAN CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS -- Continued MARCH 31, 1996 DECEMBER 31, 1995 -------------- ----------------- (UNAUDITED) Commitments and contingencies SHAREHOLDERS' EQUITY Preferred stock, par value $1.00; 5,000,000 shares authorized, none outstanding ......... -- -- Common stock, par value $.10; 10,000,000 shares authorized, 7,595,713 and 7,576,913 shares issued ..................... 759,571 757,691 Additional paid-in capital .................... 41,301,234 41,146,594 Net unrealized appreciation (depreciation) of securities ............................... 1,374,364 4,055,788 Retained earnings ............................. 55,546,189 52,852,855 ------------- ------------- 98,981,358 98,812,928 Less 605,629 common shares held in treasury, at cost ..................................... (1,705,874) (1,705,874) ------------- ------------- Total Shareholders' Equity ................ 97,275,484 97,107,054 ------------- ------------- Total Liabilities and Shareholders' Equity $ 247,985,132 $ 237,744,270 ============= ============= SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PENN TREATY AMERICAN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) THREE MONTHS ENDED MARCH 31, ---------------------------- 1996 1995 ------------ ------------ Revenue: Accident and health premiums ................. $ 29,523,797 $ 22,561,821 Life premiums ................................ 946,097 846,371 ------------ ------------ 30,469,894 23,408,192 Net investment income ........................ 2,386,069 1,682,466 Net realized capital gains ................... 51,221 13,123 Other income ................................. 85,750 61,274 ------------ ------------ 32,992,934 25,165,055 ------------ ------------ Benefits and expenses: Benefits to policyholders .................... 19,786,654 14,699,128 Commissions .................................. 10,186,871 7,399,866 Net policy acquisition costs deferred ........ (4,169,856) (2,425,042) General and administrative ................... 3,305,716 2,717,166 Interest ..................................... 36,215 136,512 ------------ ------------ 29,145,600 22,527,630 ------------ ------------ Income before federal income taxes ............. 3,847,334 2,637,425 Provision for federal income taxes ............. 1,154,000 795,000 ------------ ------------ Net Income ................................. $ 2,693,334 $ 1,842,425 ============ ============ Earnings per share ............................. 0.39 0.39 Weighted average number of shares outstanding .. 6,985,988 4,671,284 ============ ============ SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PENN TREATY AMERICAN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED) THREE MONTHS ENDED MARCH 31, ---------------------------- 1996 1995 ------------ ------------ Net cash flow from operating activities: Net income ................................... $ 2,693,334 $ 1,842,425 Adjustments to reconcile net income to cash provided by operations: Amortization of intangible assets .......... 8,940 8,940 Policy acquisition costs, net .............. (4,169,856) (2,425,042) Deferred income taxes ...................... 612,248 422,964 Depreciation expense ....................... 70,665 65,135 Net realized capital gains ................. (51,221) (13,123) Increase (decrease) due to change in: Receivables from agents .................... (78,896) (35,301) Receivable from reinsurers ................. (311,257) (331,210) Policy and contract claims ................. 2,868,746 2,647,744 Policy and unearned premium reserves ....... 7,013,305 3,954,983 Accounts payable and other liabilities ..... 1,008,682 814,688 Federal income taxes recoverable ........... 0 372,036 Federal income tax payable ................. (8,249) 0 Accrued investment income .................. 103,029 (159,868) Other, net ................................. (642,134) (395,142) ------------ ------------ Cash provided by operations .............. 9,117,336 6,769,229 ------------ ------------ Cash flow from (used in) investing activities: Proceeds from sales of investments ........... 2,549,725 3,663,123 Maturities of investments .................... 2,140,771 454,696 Purchase of investments ...................... (14,117,271) (9,989,361) Acquisition of property and equipment ........ (338,025) (109,414) ------------ ------------ Cash used in investing ................... (9,764,800) (5,980,956) ------------ ------------ Cash flow from (used in) financing activities: Proceeds from excerise of options ............ 156,520 0 Repayments of mortgages and other debts ...... (40,445) (6,952) ------------ ------------ Cash provided by (used in) financing ..... 116,075 (6,952) ------------ ------------ Decreases in cash .............................. (531,389) 781,321 Cash balances: Beginning of period .......................... 8,881,061 7,226,769 ------------ ------------ End of period ................................ $ 8,349,672 $ 8,008,090 ============ ============ SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 1996 (unaudited) The Consolidated Financial Statements should be read in conjunction with this note and with the Notes to Consolidated Financial Statements included in Penn Treaty American Corporation's ("the Company's") Annual Report on Form 10-K for the year ended December 31, 1995. In the opinion of management, the summarized financial information reflects all adjustments (consisting only of normal recurring adjustments) which are necessary for a fair presentation of financial position and results of operations for the interim periods. Certain prior period amounts have been reclassified to conform with current period presentation. 1. Investments Management has categorized all of its investment securities as available for sale since they may be sold in response to changes in interest rates, prepayments, and similar factors. Investments in this classification are reported at the current market value with net unrealized gains and losses, net of the applicable deferred income tax effect, being added to or deducted from the Company's total shareholders' equity on the balance sheet. As of March 31, 1996, shareholders' equity was increased by $1,374,364 due to unrealized gains of $2,082,369 in the investment portfolio. As of December 31, 1995 shareholders equity was increased by $4,055,788 due to unrealized gains of $6,145,649 in the investment portfolio. The amortized cost and estimated market value of investments available for sale as of March 31, 1996 and December 31, 1995 are as follows:
March 31, 1996 December 31, 1995 -------------- ----------------- Amortized Estimated Amortized Estimated Cost Market Value Cost Market Value ---- ------------ ---- ------------ U.S. Treasury securities and obligations of U.S. Government corporations and agencies $113,497,522 $113,983,203 $103,119,270 $107,160,841 Obligations of states and political sub-divisions 24,952,467 25,771,483 24,952,467 26,147,000 Debt securities issued by foreign governments 424,055 450,059 449,055 480,500 Corporate securities 4,020,169 4,008,915 5,619,499 5,820,000 Other debt securities 2,460,484 2,534,210 2,460,484 2,635,000 Equities 2,826,441 3,515,637 2,102,529 2,605,612 Policy Loans 79,567 79,567 79,404 79,404 -------- -------- ------- ------- Total Investments $148,260,705 $150,343,074 $138,782,708 $144,928,357 ============ ============ ============ ============ Net unrealized gain (loss) $2,082,369 $6,145,649 ----------- ---------- $150,343,074 $144,928,357 ============ ============
2. Reinsurance The Company has assumed and ceded reinsurance on certain life and accident and health contracts under various agreements. The tables below highlight the amounts shown in the accompanying consolidated statements of operations which are net of reinsurance activity:
Assumed Assumed Three Months Ended Gross Ceded to from Other Net March 31, 1995 Amount Other Companies Companies Amount ------------------ ------ --------------- --------- ------ Ordinary Life Insurance In-Force $68,709,000 $18,862,000 - $49,847,000 Premiums: Accident and Health $30,136,962 $736,315 $123,150 $29,523,797 Life 1,183,024 236,927 0 946,097 Benefits to Policyholders: Accident and Health 13,064,577 418,440 57,880 12,704,017 Life 466,426 186,394 - 280,032 Increase (decrease) in Policy Reserves: Accident and Health 6,550,602 (34,918) (1,842) 6,583,678 Life 241,990 23,063 - 218,927 Commissions 10,485,378 316,980 18,473 10,186,871 Assumed Three Months Ended Gross Ceded to from Other Net March 31, 1995 Amount Other Companies Companies Amount ------------------ ------ --------------- --------- ------ Ordinary Life Insurance In-Force 55,732,000 15,421,000 - 40,311,000 Premiums: Accident and Health $22,992,556 $584,672 $153,937 $22,561,821 Life 1,307,661 461,290 0 846,371 Benefits to Policyholders: Accident and Health 11,339,958 653,865 72,350 10,758,443 Life 253,694 82,391 0 171,303 Increase (decrease in Policy Reserves: Accident and Health 3,862,401 242,527 (1,267) 3,618,607 Life 1,128,151 977,376 0 150,775 Commissions 7,640,358 263,583 23,091 7,399,866
3. Merger Agreement On March 15, 1996, the Company signed an agreement with Health Insurance of Vermont, Inc. ("HIVT") providing that the Company will acquire HIVT by means of a statutory merger with a subsidiary of the Company. Completion of the merger is subject to approval of regulatory authorities, and to certain other conditions. HIVT is licensed to conduct business in 46 states, including New Jersey, West Virginia, Kansas, Maine and Massachusetts. Upon completion of the merger the Company would be licensed in all states with the exception of New York. The Company currently has a license application pending in New York. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Three Months Ended March 31, 1996 and 1995: Accident and Health Premiums. First year accident and health premiums earned by the Company in the three month period ended March 31, 1996, including long-term care and Medicare supplement, increased 44.9% to $10,013,934, compared to $6,911,074 in the same period in 1995. First year long-term care premiums earned by the Company in the three month period ended March 31, 1996 increased 43.0% to $9,792,244, compared to $6,847,645 in the same period in 1995. This increase was primarily attributable to increased sales of home health care policies, which increased to $4,648,039 for the three month period ended March 31, 1996 from $1,759,499 for the same period in 1995. Premiums from sales of nursing home care policies also increased from $5,088,146 in the three month period ended March 31, 1995 to $5,144,205 in the same period in 1996. These results reflect increasing market demand for the Company's home health care policies relative to its nursing home policies and the Company's marketing focus on its Independent Living policy first introduced in the fourth quarter of 1994. First year Medicare supplement premiums earned by the Company in the three month period ended March 31, 1996 increased to $221,690 from $63,429 in the same period in 1995. Total new business for this product remains low due to the Company's continued de-emphasis of its Medicare supplement products because of lower profit margins associated with this line of business. Renewal accident and health premiums earned by the Company in the three month period ended March 31, 1996 including long-term care and Medicare supplement, increased 24.7% to $19,509,862, compared to $15,650,747 in the same period in 1995. Renewal long-term care premiums earned by the Company in the three month period ended March 31, 1996 increased 26.6% to $18,788,224, compared to $14,841,115 in the same period in 1995. This increase reflects renewals of a larger base of in-force policies as well as the effect of rate increases the Company received in various states. The Company believes that this increase also reflects an increase in persistency. Renewal Medicare supplement premiums earned by the Company in the three month period ended March 31, 1996 decreased 10.9% to $721,638, compared to $809,632 in the same period in 1995, consistent with the Company's de-emphasis in marketing this product discussed above. Life Premiums. First year life premiums earned by the Company in the three month period ended March 31, 1996 decreased 6.4% to $387,036, compared to $413,568 in the same period in 1995. The Company's life business has remained stable as the Company is focusing its marketing efforts on its new Independent Living policy and its other long-term care products. Renewal life premiums earned by the Company in the three month period ended March 31, 1996 increased to $559,061, compared to $432,803 in the same period in 1995. This increase was primarily the result of renewals of first-year policies written in 1995. Net Investment Income. Net investment income earned by the Company for the three month period ended March 31, 1996 increased 41.8% to $2,386,069, from $1,682,466 for the same period in 1995. This increase was primarily the result of growth in the Company's investment assets due to continued premium growth and additional funds of $22,500,000 from the Company's public offering in July 1995 which were offset by a decrease in the average yield on the Company's investments to 6.5% for the three month period ended March 31, 1996 from 7.0% for the same period in 1995. Benefits to Policyholders. Accident and health benefits to policyholders in the three month period ended March 31, 1996 increased 34.2% to $19,287,695 compared to $14,377,050 in the same period in 1995. The Company's accident and health loss ratio (the ratio of benefits to policyholders to total accident and health premiums) was 65.3% in the three month period ended March 31, 1996, compared to 63.7% in the same period in 1995. This increase in loss ratio was due, in part, to the increase in premium of the Company's Independent Living policy which is reserved for at a higher rate, and also to improved persistency. Life benefits to policyholders in the three month period ended March 31, 1996 increased to $498,959, compared to $322,078 for the same period in 1995. The life loss ratio (the ratio of claims experience and increases in policy reserves to total life premiums) was 52.7% in the three month period ended March 31, 1996, compared to 38.1% for the same period in 1995. This increase relates to the maturing of the life products that the Company first introduced in August 1993. Net Policy Acquisition Costs Deferred. The net deferred policy acquisition costs in the three month period ended March 31, 1996 increased 71.9% to $4,169,856 compared to $2,425,042 in the same period in 1995, consistent with the growth of the Company's business. This deferral is net of amortization, which decreases or increases as the Company's actual persistency is better or worse than the persistency assumed for reserving purposes. The deferral of policy acquisition costs has remained consistent with the growth of premiums and the growth in amortization of policy acquisition costs has been modified by improved persistency. General and Administrative Expenses. General and administrative expenses in the three month period ended March 31, 1996 increased 21.7% to $3,305,716, compared to $2,717,166 in the same period in 1995. This increase was due to the increase in the growth of the Company's business. The ratio of general and administrative expenses to total revenues decreased to 10.0% in the three month period ended March 31, 1996 compared to 10.8% in the same period during 1995. First Year Commissions. First year commissions on accident and health business in the three month period ended March 31, 1996 increased 46.9% to $6,756,482, compared to $4,599,040 in the same period in 1995, corresponding to the increase in first year accident and health premiums. The ratio of first year accident and health commissions to first year accident and health premiums was 67.5% in the three month period ended March 31, 1996, compared to 66.6% in the same period in 1995. First year commissions on life business in the three month period ended March 31, 1996 decreased 4.4% to $310,272, compared to $324,441 in the same period in 1995, corresponding to the decrease in first year life premiums. The ratio of first year life commissions to first year life premiums was 80.2% in the three month period ended March 31, 1996 compared to 78.5% in the same period in 1995, reflecting a commission structure which varies with the premium payment terms of policies. Renewal Commissions. Renewal commissions on accident and health business in the three month period ended March 31, 1996 increased 25.3% to $3,060,449, compared to $2,443,023 in the same period in 1995, consistent with the increase in renewal premiums discussed above. The ratio of renewal accident and health commissions to renewal accident and health premiums was 15.6% in the three month period ended March 31, 1996 compared to 15.4% in the same period in 1995. This ratio fluctuates in relation to the age of the policies in force and the rates of commissions paid to the agents. Provision for Federal Income Taxes. The provision for federal income taxes recorded by the Company in the three month period ended March 31, 1996 increased 45.2% to $1,154,000, compared to $795,000 in the same period in 1995. The effective tax rate remained at 30% in the three month period ended March 31, 1996 as in the same period in 1995. The Company's effective tax rate was below the normal federal corporate rate as a result of deductions allowed for small life insurance companies as well as the Company's tax-exempt investment income. Liquidity and Capital Resources. The Company's consolidated liquidity requirements have historically been created and met from the operations of the Insurers. The Company's primary sources of cash are premiums and investment income. The primary uses of cash are policy acquisition costs (principally commissions), payments to policyholders, investment purchases and general and administrative expenses. The Company invests in securities and other investments authorized by applicable state laws and regulations and follows an investment policy designed to maximize yield to the extent consistent with liquidity requirements and preservation of assets. At December 31, 1995, the average maturity of the Company's bond portfolio was 6.4 years and its market value exceeded cost by 4.1% or approximately $5,643,000. At March 31, 1996, the average maturity of the Company's bond portfolio was 6.3 years and its market value exceeded cost by 1.0% or approximately $1,393,000. On December 28, 1994, the Company entered into an agreement with CoreStates Bank, N.A., whereby a loan was extended to the Company in an amount of $4,000,000. The proceeds of the loan were contributed to the surplus of PTLIC in the form of cash to strengthen its overall capital position. The Company repaid this loan as required by the loan agreement, with a portion of the proceeds of the Company's recent public offering of 2,300,000 shares of common stock. The public offering was consummated on July 6, 1995 and the Company realized net proceeds of $26,165,000, including the proceeds from the exercise of the underwriters' over-allotment option. Management has categorized all of its investment securities as available for sale since they may be sold in response to changes in interest rates, prepayments, and similar factors. Investments in this classification are reported at the current market value with net unrealized gains and losses, net of the applicable deferred income tax effect, being added to or deducted from the Company's total shareholders' equity on the balance sheet. As of March 31, 1996, shareholders' equity was increased by $1,374,364 due to unrealized gains of $2,082,369 in the investment portfolio. As of December 31, 1995 shareholders equity was increased by $4,055,788 due to unrealized gains of $6,145,649 in the investment portfolio. The Company's continued growth is dependent upon its ability to (i) continue marketing efforts to expand its historical markets, (ii) continue to expand its network of agents and effectively market its products in states where the Insurers are currently licensed and (iii) fund such marketing and expansion while at the same time maintaining minimum statutory levels of capital and surplus required to support such growth. Management believes that the funds necessary to accomplish the foregoing, including funds required to maintain adequate levels of statutory surplus in the Insurers, can be met for at least the next 24 months by funds generated from the Company's recent public offering and from operations. PTLIC's capital position was improved by the contribution of $14,000,000 of the net proceeds of the recent public offering to the capital and surplus of the Insurers during the third quarter of 1995. The Insurers are, on a combined basis, currently licensed in all states except Kansas, Maine, Massachusetts, New Jersey, New York and West Virginia. The Company believes that the Insurers' capital and surplus presently meets or exceeds the requirements in all jurisdictions in which they each are licensed. The long-term care insurance industry is a subject of pending legislation in Congress which, in its present form, provides for a number of modifications of existing law, including the tax deductibility of long-term care insurance premiums and the implementation of minimum consumer protection standards to be included in all long-term care insurance policies. There can be no assurance that such legislation will be enacted or, if enacted, that the current proposals will be included. The Company regularly evaluates potential acquisition opportunities and often makes preliminary inquiries to determine whether potential acquisition candidates might be interested in being acquired by the Company. The Company periodically enters into negotiations with respect to such potential acquisition opportunities. On March 15, 1996, the Company signed an agreement with Health Insurance of Vermont, Inc. ("HIVT") providing that the Company will acquire HIVT by means of a statutory merger with a subsidiary of the Company. Completion of the merger is subject to approval of regulatory authorities, and to certain other conditions. HIVT is licensed to conduct business in 46 states, including New Jersey, West Virginia, Kansas, Maine and Massachusetts. Upon completion of the merger the Company would be licensed in all states with the exception of New York. The Company currently has a license application pending in New York. In the event the Company (i) fails to maintain minimum loss ratios calculated in accordance with statutory guidelines, (ii) fails to meet other requirements mandated and enforced by regulatory authorities, (iii) has adverse claim experience in the future, (iv) is unable to obtain additional financing to support future growth, or (v) the economy continues to effect the buying power of senior citizens, the Company's results of operations, liquidity and capital resources could be adversely affected. PART II OTHER INFORMATION Item 1. Legal Proceedings The Insurers are parties to various lawsuits generally arising in the normal course of their insurance business. The Company does not believe that the eventual outcome of any of the suits to which the Insurers are currently a party will have a material effect on the financial condition or result of operations of the Company. Item 2. Changes in Securities Not Applicable Item 3. Defaults Upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information Not Applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 11 (b) Reports on Form 8-K: The Company filed one report on Form 8-K during the quarter ending March 31, 1996, pursuant to Item 5 of that form. No financial statements were filed as part of that report. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant had duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PENN TREATY AMERICAN CORPORATION Registrant Date May 9, 1996 /s/Irving Levit ------------------- ----------------------------------------- Irving Levit President Date May 9, 1996 /s/Michael F. Grill ------------------- ----------------------------------------- Michael F. Grill Treasurer EX-11 2 PENN TREATY EXHIBIT 11 EXHIBIT 11 PENN TREATY AMERICAN CORPORATION COMPUTATION OF EARNINGS PER SHARE (unaudited)
Three months ended March 31, --------------- 1996 (1) 1995 (1) -------- -------- Shares outstanding 6,971,284 4,671,284 beginning of period Weighted average shares of exercised stock options 14,704 -- Weighted average primary shares outstanding 6,985,988 4,671,284 Net income for primary earnings per share 2,693,334 1,842,425 Net income per common primary share $0.39 $0.39
(1) Shares outstanding at the beginning of the period are net of Treasury Shares held at January 1, 1995 and 1994 of 605,629. EX-27 3 PENN TREATY FDS
7 3-MOS 3-MOS DEC-31-1995 DEC-31-1994 JAN-01-1996 JAN-01-1995 MAR-31-1996 MAR-31-1995 146,747,870 0 0 0 0 0 3,515,637 0 0 0 0 0 150,343,074 0 8,349,672 0 8,042,085 0 67,303,615 0 247,985,132 0 53,075,354 0 30,719 0 76,135,370 0 0 0 0 0 759,571 0 0 0 0 0 96,515,913 0 247,985,132 0 30,469,894 23,408,192 2,386,069 1,682,466 51,221 13,123 85,750 61,274 19,786,654 14,699,128 (4,169,856) (2,425,042) 13,528,802 10,253,544 3,874,334 2,637,425 1,154,000 795,000 2,693,334 1,842,425 0 0 0 0 0 0 2,693,334 1,842,425 .39 .39 .39 .39 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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