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
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(Signature of Officer)
Treasurer
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(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
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A. J. Cardin, Executive Vice President