<PAGE>
Prospectus Supplement No. 1 Registration No. 333-22125
to Prospectus dated April 11, 1997 Rule 424(b)(3)Prospectus
Penn Treaty American Corporation
$74,750,000 6 1/4% Convertible Subordinated Notes Due 2003
2,628,340 shares of Common Stock
This Prospectus Supplement supplements information contained in that
certain Prospectus of the Company dated April 11, 1997 (the "Prospectus")
relating to the potential sale from time to time of up to $74,750,000
aggregate principal amount of Notes and the Common Stock issuable upon
conversion thereof by the Selling Securityholders. This Prospectus
Supplement is not complete without, and may not be delivered or utilized
except in connection with, the Prospectus, including any amendments or
supplements thereto. Capitalized terms used herein but not defined have the
meanings assigned to such terms in the Prospectus.
The following table supplements the information set forth in the
Prospectus under the caption "Selling Securityholders" with respect to the
Selling Securityholders and the respective principal amounts of Notes
beneficially owned by such Selling Securityholders and that may be sold
pursuant to the Prospectus, as amended or supplemented:
<TABLE>
<CAPTION>
Principal
Amount
of Notes Number of
Beneficially Conversion
Owned and Percent of Shares
That May Outstanding That May
Name(1) Be Sold Notes Be Sold(2)
------- ------------ ----------- ----------
<S> <C> <C> <C>
Bear, Stearns & Co. Inc. (4)(5).............. $1,790,000 2.39% 62,939
Colonial Penn Insurance Co................... 700,000 * 24,613
Colonial Penn Life Insurance Co.............. 700,000 * 24,613
Glen Eagles Fund, L.P........................ 650,000 * 22,855
McMahan Securities Co. L.P. (6).............. 2,025,000 2.71 71,202
Palladin Partners, L.P....................... 150,000 * 5,274
Paloma Securities L.L.C...................... 1,350,000 1.81 47,468
Ramius Fund.................................. 800,000 1.07 28,129
Shepherd Investments International, Ltd...... 125,000 * 4,395
Stark International.......................... 125,000 * 4,395
- ------------------
* Less than 1%
</TABLE>
(1) The information set forth herein is as of April 28, 1997 and will be
updated as required. Certain of the Holders share investment power with
their respective investment advisors.
(2) Assumes conversion of the full amount of Notes held by such Holder at the
initial rate of $28.44 in principal amount of Notes per share of Common
Stock.
(4) Bear, Stearns & Co. Inc. ("Bear Stearns") was an Initial Purchaser in the
private placement of the Notes.
(5) The amount listed includes an additional $429,000 principal amount of
Notes beneficially owned by Bear Stearns. Bear Stearns, as principal,
purchased an aggregate of $429,000 of the Notes at a net price
of $111 per $1,000 Note on April 19, 1997. Bear Stearns has resold or
will resell such Notes in the manner described under "Plan of
Distribution." Any compensation in the form of discounts, fees or
commissions and any profits on the sales of such Notes may be deemed
underwriting discounts or commissions.
(6) The amount listed reflects an additional $1,625,000 principal amount of
Notes beneficially owned by the McMahan Securities Co. L.P.
The date of this Prospectus Supplement is May 6, 1997
