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The pending liquidation of Penn Treaty Network America Insurance Co. and American Network Insurance Co., collectively known as Penn Treaty, is gearing up to be the largest-ever insolvency in the U.S. insurance industry, with hefty projected liabilities for some states and projected shortfalls that are not yet public, according to industry and guaranty association memos.
A chart of state-by-state data on estimated assets and liabilities in a post-liquidation scenario prepared by a leading long-term care insurance actuary projects that many states are facing towering net liabilities for LTC policyholders for the Penn Treaty companies. The two related companies, Penn Treaty Network America Insurance Co. (PTNA) and American Network Insurance Co. (ANIC), are being handled together.
In California alone, net liabilities are estimated at about $382.2 million, according to one calculation. Florida is facing net liabilities of nearly $354.0 million while Arizona, New Jersey, Pennsylvania, Texas, Virginia and Washington State each show net liabilities north of $100 million.
The total net liabilities of all the states were calculated at more than $2.58 billion. On a gross basis, the amount is over $3 billion, excluding assets. However, PTNA is projected to run out of assets in 2018, and the much smaller ANIC is projected to run out of assets in 2023, according to court filings by the Pennsylvania insurance commissioner.
The projections were provided in a June 16 memo to the National Organization of Life and Health Guaranty Associations officials. Its author, Vincent Bodnar, chief actuary of consultancy the Long Term Care Group Inc., is serving as a consultant to the NOLHGA Task Force on Penn Treaty/ANIC, NOLHGA director of communications Sean McKenna said.
Bodnar said the values in the chart he created are estimates of potential guaranty association covered net liabilities if the companies were placed into liquidation at year-end 2015. The net...