FORM A
STATEMENT REGARDING THE ACQUISITION OF CONTROL
OF OR MERGER WITH A DOMESTIC INSURER
Health Insurance of Vermont, Inc.
By
Penn Treaty American Corporation
Filed with the Insurance Department of Vermont
Dated: June 11, 1996
TABLE OF CONTENTS
Form A - Statement Regarding the Acquisition of Control of or Merger
with a Domestic Insurer; Health Insurance of Vermont, Inc. by
Penn Treaty American Corporation (June 11, 1996)
Exhibits
I. Penn Treaty American Corporation & Health Insurance of
Vermont, Inc. Proxy Statement/Prospectus (June 10, 1996)
II. Form 10-K - 1995 Annual Report pursuant to Sections 13 and
15(d) of Securities Exchange Act of 1934 filed with Securities
and Exchange Commission by Penn Treaty American Corp.
III. Penn Treaty Form 10K - (1994)
IV. Penn Treaty Form 10K - (1993)
V. Penn Treaty Form 10K - (1992)
VI. Penn Treaty Form 10K - (1991)
VII. (a) Form 8-K - Agreement Plan and Merger as of March 15,
1996
(b) 8-A for Registration of Certain Classes of Securities
Pursuant to Section 12(b) or (g) of the Securities
the Securities Exchange Act of 1984
(c) 8-K/A Amendment No. 1 to Agreement and Plan of Merger
Form A
VIII. Identity and Background of Individuals Associated With the
Applicant
IX. Additional Information Requested By Deputy Commissioner by
letter dated May 13, 1996
FORM A
STATEMENT REGARDING THE ACQUISITION OF CONTROL
OF OR MERGER WITH A DOMESTIC INSURER
Health Insurance of Vermont, Inc.
By
Penn Treaty American Corporation
Filed with the Insurance Department of Vermont
Dated: June 11, 1996
Name, Title and Address and Telephone Number of Officer to Whom Notices and
Correspondence Concerning This Statement Should be Addressed:
A. J. Carden, Executive Vice President
Penn Treaty American Corporation
3440 Lehigh Street
Allentown, PA 18103
(610)965-2222
Item 1. Insurer and Method of Acquisition
Pursuant to the terms and conditions of a certain Merger Agreement dated as
of March 15, 1996, Health Insurance of Vermont, Inc., a Vermont corporation
("HIVT"), will be acquired by Penn Treaty American Corporation ("Penn
Treaty"), a Pennsylvania insurance holding company.
As outlined in on pages 24-25 of the Penn Treaty/HIVT Proxy
Statement/Prospectus (June 10, 1996) (hereinafter referred to as "Proxy" or
"Exhibit I"), Penn Treaty will form a wholly-owned Vermont domestic
insurance company that will merger into HIVT. On June 6, 1996, Penn Treaty
filed with the Department of Banking, Insurance & Securities a Petition for
a Certificate of Public Good and Articles of Incorporation for Mayfly
Insurance, Inc. ("Merger Sub"). Under the plan of incorporation, Merger Sub
will issue one share of stock, with no par value, to Penn Treaty.
Penn Treaty will merge Merger Sub into HIVT by converting its single share
of stock into HIVT securities. Subsequently, HIVT shares will be exchanged
for shares of Penn Treaty (80%) and cash (20%). As a result of the share
exchange, HIVT will be a wholly-owned subsidiary of Penn Treaty.
Item 2. Identity and Background of the Applicant
(a) Penn Treaty American Corporation, 3440 Lehigh Street, Allentown,
Pennsylvania.
(b) A description of the nature of Penn Treaty's business operations and
the business intended to be done are described in Exhibit I, pages 6-7, and
also described in Exhibit II (1995 Form 10-K at pages 6-31.
(c) Identities of interrelationships among the applicant and its affiliates
are fully described in Exhibit II (Form 10-K 1995).
Item 3. Identity and Background of Individuals Associated With the
Applicant
(a) Penn Treaty is primarily engaged in developing and marketing long- term
care nursing home and home health insurance products.
(b) Biographical information pertaining to all persons who are directors,
executive officers or owners of more than 10% of the voting securities of
Penn Treaty are attached in Exhibit VIII.
Item 4. Nature, Source and Amount of Consideration
(a) (b) (c) Information relating to the nature, source and amount of funds
or other consideration used to complete the transaction, as well as
criteria used in determining the nature and amount of consideration are
fully described in Exhibit I at pages 24-33.
Item 5. Future Plans for Insurer
HIVT will maintain its independent existence following acquisition by Penn
Treaty. HIVT will continue to market guarantied renewable disability income
insurance written on an individual basis, and will continue its focus on
the marketing of competitive, quality disability insurance in those
forty-six states (and the District of Columbia) in which it is licensed.
HIVT will be wholly-owned by Penn Treaty, which also owns two other
insurance companies. Those insurance companies do not write the same
products as HIVT, and the transaction will therefore have no competitive
effect.
Penn Treaty has no plans or proposals to liquidate HIVT, sell its assets or
consolidate or merge it with any other entity or to make any material
change in its business, corporate structure or management.
Item 6. Voting Securities to Be Acquired
Information relating to the number of HIVT voting securities to be acquired
by Penn Treaty and the other terms of the transaction are fully described
in Exhibit I at pages 7-8 and 25-33. The Merger Agreement is set forth in
full on pages 38-44.
HIVT retained Advest, Inc. as its financial advisor. A complete description
of the methodologies used by Advest in determining that the transaction
will be fair to the shareholders of HIVT is set forth in Exhibit I at pages
28-30 and appendix II. Advest utilized comparable company analysis,
comparable transaction analysis, liquidation value, and the comparison of
other bids in reaching its opinion. The fairness opinion itself is attached
as Appendix II to the S-4.
Item 7. Ownership of Voting Securities
Information relating to the amount and class of shares of HIVT beneficially
owned is fully described in Exhibit I at pages 8, 12-13, 20-21, and 25-33
of the Proxy. Also see pages 38-44 setting forth the full text of the
Merger Agreement.
Item 8. Contracts, Arrangements or Understandings with Respect to Voting
Securities of the Insurer
There are no contracts, arrangements or understandings with respect to any
voting security of HIVT in which Penn Treaty, its affiliates, or any
persons described in Item 3 is involved.
Item 9. Recent Purchases of Voting Securities
There have been no purchases of any HIVT voting securities during the last
twelve calendar months made by Penn Treaty, its affiliates, officers,
directors, or shareholders holding more than 10% of Penn Treaty.
Other than the transaction reflected in the Merger Agreement and Proxy,
there have been no other tender offers for, requests or invitations for
tender offers of, exchange offers for, or agreements to acquire or exchange
any securities of HIVT.
Item 10. Recent Recommendations to Purchase
Other than the transaction reflected in the Merger Agreement set forth in
Proxy, there have been no recommendations to purchase made to Penn Treaty,
its affiliates, or any officer, director, or 10% holder thereof, for
securities of HIVT in the last twelve months.
Item 11. Agreements with Broker-Dealers
Penn Treaty has not entered into any agreement, contract or understanding
with any broker/dealer as to the solicitation of securities of HIVT, thus
there are no related fees, commissions or other compensation to be paid by
Penn Treaty to any third party in connection with this transaction.
Item 12. Financial Statements and Exhibits
Financial statements are attached as follows:
Exhibit II Penn Treaty Form 10K - (1995)
Exhibit III Penn Treaty Form 10K - (1994)
Exhibit IV Penn Treaty Form 10K - (1993)
Exhibit V Penn Treaty Form 10K - (1992)
Exhibit VI Penn Treaty Form 10K - (1991)
Item 13. Signature and Certification
SIGNATURE
Pursuant to the requirements of 8 V.S.A. [SECTION] 3683 and Regulation
71-2, Penn Treaty American Corporation has caused this application to be duly
signed on its behalf in the City of Allentown and Commonwealth of Pennsylvania,
on the 10th day of June 1996.
PENN TREATY AMERICAN CORPORATION
By /s/ A. J. CARDIN
--------------------------------------
A. J. Cardin, Executive Vice President
Attest:
/s/ Michael Grill
- ------------------------------
(Signature of Officer)
Treasurer
- ------------------------------
(Title)
CERTIFICATION
The undersigned deposes and says that he has duly executed the attached
application dated June 10, 1996, for and on behalf of Penn Treaty American
Corporation; that he is the Executive Vice President of such company, and that
he is authorized to execute and file such instrument. Deponent further says that
he is familiar with such instrument and the contents thereof, and that the facts
therein set forth are true to the best of his knowledge, information and belief.
/s/ A. J. CARDIN
--------------------------------------
A. J. Cardin, Executive Vice President
EXHIBIT VIII
Identity and Background of Individuals Associated
With the Applicant
Penn Treaty American Corporation
Acquisition of HIVT, Inc.
Form A Filing, June 10, 1996
Penn Treaty American Corporation
3440 LEHIGH STREET ALLENTOWN, PENNSYLVANIA 18103
(610) 965-2222 1-800-222-3469 FAX (610) 967-4616
================================================================================
It is intended that the following individuals will be selected as Executive
Officers and/or Directors of the acquired company.
Irving Levit is the founder, Chairman of the Board of Directors, President
and Chief Executive Officer of PTAC. Mr. Levit has also been Chairman of the
Board of Directors, President and Chief Executive Officer of PTLIC since it was
purchased by PTAC in 1976 and of Network America since July 1989. In addition,
Mr. Levit has been the sole owner of the Irv Levit Insurance Management
Corporation ("IMC"), an insurance agency, since 1961. Mr. Levit is 66 and has
over 40 years experience in the insurance business. Mr. Levit has not been
convicted on any criminal offense other than any minor traffic violations during
the past ten years.
A. J. Carden has served as Executive Vice President and Director of PTAC
and PTLIC since July 1983 and of Network America since July 1989. His duties
include overseeing the Company's underwriting and claims departments and
monitoring the Company's compliance with various state insurance department
requirements. From 1970 to July 1983, Mr. Carden served as Assistant to the
President and Vice President of Claims for Columbia Life Insurance Company and
Columbia Accident and Health Insurance Company located in Bloomsburg,
Pennsylvania. Mr. Carden is 63 and has a total of 38 years experience in the
insurance business. Mr. Carden has not been convicted on any criminal offense
other than any minor traffic violations during the past ten years.
Michael F. Grill has served as Treasurer and Comptroller of PTAC and PTLIC
since 1981 and of Network America since July 1989. Mr. Grill became a Director
of PTAC in December 1986 and of Network America in July 1989. Prior to joining
PTAC, Mr. Grill served as Chief Accountant for World Life and Health Insurance
Company located in King of Prussia, Pennsylvania from 1973 to 1981. Mr. Grill is
46 and has a total of 22 years experience in the insurance business. Mr. Grill
has not been convicted of any criminal offense other than any minor traffic
violations during the past ten years.
John W. Mahoney has served as the President of Health Insurance of Vermont
since December 1988. Prior to becoming the insurance company's president, Mr.
Mahoney served as an Executive Vice President for 3 years and as Vice President
for 18 years. Mr. Mahoney is a member of the National Association of Life
Underwriters, the National Association of Health Underwriters and is a Director
of the Vermont Life and Health Guaranty Association. Mr. Mahoney holds a B.A.
degree from St. Michael's College in Colchester, Vermont. He is 53 years old and
has a total of 29 years of insurance experience. Mr. Mahoney has not been
convicted of any criminal offense other than any minor traffic violations during
the past ten years.
Domenic P. Stangherlin has served as Secretary and Director of PTAC and
PTLIC since June 1971, of the Agency since February 1988 and of Network America
since July 1989. In addition, Mr. Stangherlin is the owner and manager of the
Line Tool Company, a manufacturer of micro-positioners located in Allentown,
Pennsylvania. He is 69. Mr. Stangherlin has not been convicted of any criminal
offense other than any minor traffic violations during the past ten years.
Jack D. Baum has served as Vice President of Marketing of PTAC and PTLIC
since April 1985 and became a Director of each in March 1987. He became Vice
President of Sales and Director of Network America in July 1989. His duties
include supervising and motivating the Company's sales force and he is
responsible for advertising and promotional activities. prior to joining the
Company, Mr. Baum served as Vice President of Marketing for National Security
General Insurance Company in Lancaster, Pennsylvania from September 1983 to
April 1985 and as a Director of Group Sales and Marketing for Educators Mutual
Life Insurance in Lancaster, Pennsylvania, from March 1976 to September 1983.
Mr. Baum is 62 and has a total of 19 years experience in the insurance business.
Mr. Baum has not been convicted of any criminal offense other than any minor
traffic violations during the past ten years.
Emile G. Ilchuck has served as a Director of PTAC and PTLIC since January
1972 and of Network America since July 1989. Mr. Ilchuck has worked as a Safety
Inspector for the Pennsylvania Department of Labor and Industry since 1975. He
is 58. Mr. Ilchuck has not been convicted of any criminal offense other than any
minor traffic violations during the past ten years.
Glen A. Levit has served as a Director of PTAC since May 1995 and as a
Director of PTLIC and Network America since April 1995. Mr. Levit has served as
Vice President of Sales of Penn Treaty Life Insurance Company and Network
America Life Insurance Company since June, 1993. His duties include hiring,
training and supervising agents and marketers and he is responsible for planning
and conducting seminars across the country. From October 1991 until June, 1993
Mr. Levit served as the Regional Sales Director and as a regional marketer for
PTLIC and Network America. Prior to that time, Mr. Levit worked in several other
departments of the Insurers including Underwriting and also served as a director
of Insurance Management Corporation, an insurance agency, since 1988. He is 28
and has over 8 years of experience in the insurance business. Mr. Levit is the
son of Irving Levit. Mr. Levit has not been convicted of any criminal offense
other than any minor traffic violations during the past ten years.
C. Mitchell Goldman, Esquire, has served as a Director of Penn Treaty
American Corporation since May 1987. Mr. Goldman is a partner in the law firm of
Goldman, Marshall & Muszynski, P.C., which engages in the practice of healthcare
law. Mr. Goldman was also a partner and Senior Vice President of GLS Associates,
a health care consulting firm providing marketing and other planning services
for hospitals, nursing homes and other health care facilities from 1975 until
October 1995. Mr. Goldman currently serves as Corporate Secretary of the
Corporate Alliance for Drug Education. Mr. Goldman is a member of the National
Health Lawyer Association and the American Hospital Association Society for
Planning and Healthcare Marketing. In addition to his law degree, Mr. Goldman
has an MBA in Health Care Administration from the Wharton School of the
University of Pennsylvania. He is 45.
EXHIBIT IX
Additional Information Requested
By the Deputy Commissioner by letter dated May 13, 1996
The Department requested supplemental information which we address below.
1. 8 V.S.A. [SECTION] 3683(f) findings.
We address the criteria under [SECTION] 3683(f) in order:
A. The change of control of HIVT will have no impact on its ability to
satisfy the requirements for its Certificate of Authority to write the
lines of insurance for which it is presently licensed.
B. As discussed in the Form A, the acquisition of HIVT will have no
impact on competition in insurance in Vermont or tend to create a
monopoly therein.
C. The financial condition of Penn Treaty is such as it will enhance
the financial stability of HIVT. (See Penn Treaty Form 10-K (Annual
Reports) at Exhibits II through VI).
D. The terms of the agreement are fair and reasonable to the hareholders
of HIVT, as concluded by Advest, Inc. and HIVT's Board of Directors.
See Exhibit I, pages 9 and 28-30.
E. Penn Treaty has no plans or proposals to liquidate HIVT, sell its
assets or consolidate or merge it with any other entity or to make any
material change in its business, corporate structure or management.
F. We believe the submissions regarding the post-acquisition Directors
and Officers of HIVT demonstrate sufficient competence, experience and
integrity such that the interests of the policyholders of HIVT and the
public will be maintained.
2. Extraordinary Dividends.
The Proxy Statement contains a specific disclosure regarding Vermont's
extraordinary dividend provisions as set forth in 8 V.S.A. [SECTION]
3685(c) and (d) at page 36.
3. Tender Offers, Etc.
Other then the transaction reflected in the Proxy, there have been no other
tender offers for, requests or invitations for tender offers of, exchange
offers for, or agreements to acquire or exchange any securities of HIVT.
