S&P Announces: Penn Treaty Network America Insurance Co. and Penn Treaty American Corp. Ratings Affirmed; Outlook Positive

Business Wire, July 8, 2004

--Parent company liquidity concerns. PTAC's operating companies, of which PTNA is the largest, have not paid any dividends for the past three years and are unlikely to make dividend payments in the foreseeable future. On a parent company only basis, PTAC sustained losses before undistributed net earnings of subsidiaries of $15.1 million and $8.9 million in 2003 and 2002, respectively.

Although the parent company currently has sufficient liquidity to meet its obligations through April 15, 2005, and potentially has sufficient liquidity through Oct. 15, 2005, PTAC will likely need to raise additional capital if the price of the company's common stock on or after Oct. 15, 2005, is insufficient to cause mandatory conversion of the company's convertible subordinated debt. Since the issue, $33 million has converted leaving the company with $82 million of convertible subordinated debt.

Ratings List
Penn Treaty Network America Insurance Co.
Counterparty credit rating                   B-/Positive/--
Financial strength rating                    B-/Positive
Penn Treaty American Corp.
Counterparty credit rating                 CCC-/Positive/--