PROSPECTUS SUPPLEMENT NO. 2                     Filed pursuant to Rule 424(b)(3)
(To prospectus dated November 15, 2000)               Registration No. 333-50016

Penn Treaty American Corporation
3440 Lehigh Street
Allentown, PA 18103
(610) 965-2222

                         [GRAPHIC PENN TREATY AMERICAN]

        RIGHTS TO PURCHASE 6 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2008

           $45,000,000 6 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2008

         This prospectus supplement supplements information contained in our
prospectus dated November 15, 2000 (the "Prospectus") as supplemented by a
prospectus supplement dated December 24, 2002 ("Prospectus Supplement No. 1")
relating to our distribution of transferable rights to purchase an aggregate
principal amount of $45 million of 6 1/4% convertible subordinated notes due
2008 (the "Notes") to holders of (a) our common stock, (b) our 6 1/4%
convertible subordinated notes due 2003, and (c) our 6 1/4% convertible
subordinated notes due 2008 as of November 25, 2002, the record date. This
prospectus supplement should be read in conjunction with the Prospectus and
Prospectus Supplement No. 1.

RECENT DEVELOPMENTS

         On January 2, 2003, we announced that we had agreed to amend our
consent order with the Florida Insurance Department dated July 30, 2002 and
previously amended on November 27, 2002. The consent order prior to amendment
included, among other things, a requirement that we raise additional statutory
surplus for our largest insurance subsidiary, Penn Treaty Network America
Insurance Company, prior to December 31, 2002 to satisfy gross premium to
surplus ratio requirements specific to Florida. We estimate that the amount
necessary to satisfy the Florida requirement is approximately $23 million. The
newly amended consent order will allow us an additional month to satisfy this
obligation. Accordingly, we now have until January 31, 2003 to meet this
requirement. As set forth in more detail in Prospectus Supplement No. 1, we
intend to use a portion of the proceeds from this offering (to the extent
sufficient) to satisfy this requirement.

         For further information about the Florida consent order, see "Risk
Factors," "Use of Proceeds" and "Business - Government Regulation" in Prospectus
Supplement No. 1.




         On January 10, 2003, we announced that we had entered into a
reinsurance agreement for new long-term care insurance policies with Centre
Solutions (Bermuda) Limited ("Centre"). The Agreement, which is effective for
all new long-term care insurance policies written after December 31, 2001,
initially provides the us with 50% quota share reinsurance on the first $100
million of newly issued long-term care annual insurance premium. The Agreement
further provides Centre the option to reinsure a portion of the next $1 billion
in newly issued long-term care annual insurance premium. If exercised, the
option will allow Centre to reinsure future policies, subject to maximum quota
share amounts of up to 40% as additional policies are written.

         For information about our reinsurance agreement with Centre Solutions
(Bermuda) Limited for long-term care policies issued prior to January 1, 2002,
see "Risk Factors" and "Business - Reinsurance" in Prospectus Supplement No. 1.

         The financial strength rating assigned to Penn Treaty's subsidiaries by
Standard & Poor's Insurance Ratings Services remains at "B-" and the financial
strength rating assigned to Penn Treaty by Standard & Poor's Insurance Ratings
Services remains at "CCC-."

        The date of this Prospectus Supplement No. 2 is January 14, 2003