<PAGE>

                                    FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

[X]  Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the quarterly period ended September 30, 1999

                                       or

[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from

                                       to
       ------------------------------      --------------------------

Commission file number 0-13972

                        PENN TREATY AMERICAN CORPORATION
                        --------------------------------
             (Exact name of registrant as specified in its charter)

       PENNSYLVANIA                                    23-1664166
       ------------                                    ----------
(State or other jurisdiction of                 (I.R.S. Employer Identifi-
 incorporation of organization)                       cation No.)

                     3440 LEHIGH STREET, ALLENTOWN, PA 18103
                     ---------------------------------------
          (Address, including zip code, of principal executive offices)

                                 (610) 965-2222
                                 --------------
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
                                 --------------
              (Former name, former address and former fiscal year,
                          if change since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. YES [ X ] NO [ ]

The number of shares  outstanding on the  Registrant's  common stock,  par value
$.10 per share, as of November 8, 1999 was 7,808,589.

<PAGE>

PART I   FINANCIAL INFORMATION

ITEM 1.  Financial Statements

The registrant's Unaudited Consolidated Balance Sheets, Statements of Operations
and Comprehensive Income and Statements of Cash Flows and Notes thereto required
under this item are contained on pages 3 through 8 of this report, respectively.
These financial  statements represent the consolidation of the operations of the
registrant, and its subsidiaries,  Penn Treaty Network America Insurance Company
("PTNA"),  American Network  Insurance Company  ("ANIC"),  American  Independent
Network Insurance Company of New York ("AINIC") (collectively,  "the Insurers"),
United Insurance Group Agency,  Inc.  ("UIG") and Senior  Financial  Consultants
(collectively,   "the  Agencies"),  which  are  underwriters  and  marketers  of
long-term care insurance products. PTNA is also an underwriter of life insurance
products.


                                       2
<PAGE>
<TABLE>
                          PENN TREATY AMERICAN CORPORATION
                                   AND SUBSIDIARIES
                              Condensed Balance Sheets
                               (amounts in thousands)
<CAPTION>
                                                                                      September 30,       December 31,
                                                                                           1999               1998
                                                                                           ----               ----
                                                                                       (unaudited)
                                       ASSETS
<S>                                                                                       <C>                 <C>
Investments:
  Bonds, available for sale at market (cost of $352,027 and $310,993, respectively)       $344,149            $321,448
  Equity securities at market value (cost of $17,976 and $15,090, respectively)             16,913              17,334
  Policy loans                                                                                 140                 107
                                                                                          --------            --------
Total investments                                                                          361,202             338,889
Cash and cash equivalents                                                                   45,016              38,402
Property and equipment, at cost, less accumulated depreciation of
  $3,873 and $3,033, respectively                                                            9,284               9,635
Unamortized deferred policy acquisition costs                                              193,044             157,385
Receivables from agents, less allowance for
  uncollectable amounts of $166 and $166, respectively                                       1,877               1,804
Accrued investment income                                                                    5,941               4,889
Federal income tax recoverable                                                                   -               1,741
Cost in excess of fair value of net assets acquired, less
  accumulated amortization of $1,773 and $1,029, respectively                               22,605               6,349
Present value of future profits acquired                                                     2,870               3,181
Receivable from reinsurers                                                                  13,336              12,288
Other assets                                                                                 7,768               5,989
                                                                                          --------            --------
    Total assets                                                                          $662,943            $580,552
                                                                                          ========            ========
                                     LIABILITIES
Policy reserves:
  Accident and health                                                                     $243,967            $190,036
  Life                                                                                      10,369               9,434
Policy and contract claims                                                                 124,652             105,667
Accounts payable and other liabilities                                                      13,412               8,639
Federal income tax payable                                                                     468                   -
Long-term debt                                                                              82,879              76,550
Deferred income taxes                                                                       28,522              32,556
                                                                                          --------            --------
    Total liabilities                                                                      504,269             422,882
                                                                                          --------            --------
Commitments and contingencies

                                SHAREHOLDERS' EQUITY
Preferred stock, par value $1.00; 5,000 shares authorized, none outstanding                      -                   -
Common stock, par value $.10; 10,000 shares authorized, 8,191 and 8,189 shares issued          819                 819
Additional paid-in capital                                                                  53,627              53,516
Net unrealized appreciation (depreciation) of securities                                    (5,902)              8,381
Retained earnings                                                                          111,836              96,660
                                                                                          --------            --------
                                                                                           160,380             159,376
Less 606 common shares held in treasury, at cost                                            (1,706)             (1,706)
                                                                                          --------            --------
                                                                                           158,674             157,670
                                                                                          --------            --------
    Total liabilities and shareholders' equity                                            $662,943            $580,522
                                                                                          ========            ========

            See accompanying notes to consolidated financial statements.
</TABLE>

                                       3
<PAGE>
<TABLE>
                        PENN TREATY AMERICAN CORPORATION
                                AND SUBSIDIARIES
         Consolidated Statements of Operations and Comprehensive Income
                                   (unaudited)
                 (amounts in thousands, except per share data)

<CAPTION>
                                                         Three Months Ended September 30,     Nine Months Ended September 30,
                                                         --------------------------------     -------------------------------
                                                                  1999       1998                   1999       1998
                                                                  ----       ----                   ----       ----
 <S>                                                             <C>        <C>                   <C>         <C>
 Revenue:
   Accident and health premiums                                 $ 71,311   $ 57,575              $208,689   $162,237
   Life premiums                                                     854        830                 2,677      2,551
                                                                --------   --------              ---------   --------
                                                                  72,165     58,405               211,366    164,788

   Net investment income                                           5,967      5,432                16,721     15,008
   Net realized capital gains                                        269        532                 4,112      7,323
   Other income                                                    1,564         75                 4,661        239
                                                                --------   --------              --------   --------
                                                                  79,965     64,444               236,860    187,358
 Benefits and expenses:
   Benefits to policyholders                                      49,623     40,535               144,332    112,911
   Commissions                                                    23,167     20,655                68,647     57,685
   Net policy acquisition costs deferred                         (12,201)   (12,141)              (35,659)   (32,450)
   General and administrative expense                             10,576      6,765                30,223     18,840
   Loss due to impairment of property and equipment                    -          -                 2,799          -
   Interest expense                                                1,315      1,173                 3,893      3,586
                                                                --------   --------              --------   --------
                                                                  72,480     56,987               214,235    160,572
                                                                --------   --------              --------   --------

 Income before federal income taxes                                7,485      7,457                22,625     26,786
 Provision for federal income taxes                                2,470      2,399                 7,466      8,866
                                                                --------   --------              --------   --------
     Net income                                                    5,015      5,058                15,159     17,920
                                                                --------   --------              --------   --------

  Other comprehensive income:
     Unrealized holding gain (loss) arising during period         (4,482)     8,573               (17,528)    11,556
     Income (tax) benefit from unrealized holdings,                1,524     (2,915)                5,960     (3,929)
     Reclassification adjustment for (gain) loss included           (269)      (532)               (4,112)    (7,323)
       in net income
     Income (tax) benefit from reclassification adjustment            91        181                 1,398      2,490
                                                                --------   --------              --------   ---------

     Comprehensive income                                       $  1,879   $ 10,365              $    876   $ 20,714
                                                                ========   ========              ========   ========


 Basic earnings per share                                       $   0.66   $   0.67              $   2.00   $   2.37
 Diluted earnings per share                                     $   0.57   $   0.57              $   1.71   $   1.96


 Weighted average number of shares outstanding                     7,585      7,580                 7,584      7,575
 Weighted average number of shares outstanding                    10,363     10,421                10,366     10,407

          See accompanying notes to consolidated financial statements.

</TABLE>

                                       4
<PAGE>
<TABLE>

                        PENN TREATY AMERICAN CORPORATION
                                AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                     for the Nine Months Ended September 30,
                                   (unaudited)
                             (amounts in thousands)
<CAPTION>
                                                               1999             1998
                                                               ----             ----
<S>                                                          <C>    <C>
Net cash flow from operating activities:
  Net income                                                 $ 15,159         $ 17,920
  Adjustments to reconcile net income to cash
    provided by operations:
    Amortization of intangible assets                             814              816
    Policy acquisition costs, net                             (35,659)         (32,450)
    Deferred income taxes                                       3,324            6,652
    Depreciation expense                                          840              284
    Compensation expense for agent options                         81                -
    Net realized capital gains                                 (4,112)          (7,323)
    Realized loss on disposal of property and equipment         2,799                -
  Increase (decrease) due to change in:
    Receivables from agents                                       489             (262)
    Receivable from reinsurers                                 (1,048)          (1,535)
    Policy and contract claims                                 18,985           17,358
    Policy reserves                                            54,866           39,993
    Accounts payable and other liabilities                      3,484            1,984
    Federal income taxes recoverable                            1,794              595
    Federal income taxes payable                                  468                -
    Accrued investment income                                  (1,052)            (852)
    Other, net                                                 (2,584)             479
                                                             --------         --------
      Cash provided by operations                              58,648           43,659
Cash flow from (used in) investing activities:
  Net cash purchase of subsidiary                              (9,194)               -
  Proceeds from sales of bonds                                 55,698           35,060
  Proceeds from sales of equity securities                     20,361           22,640
  Maturities of investments                                     4,741           14,919
  Purchase of bonds                                          (100,721)         (83,384)
  Purchase of equity securities                               (19,921)          (8,026)
  Acquisition of property and equipment                        (2,986)          (1,345)
                                                             --------         --------
      Cash used in investing                                  (52,022)         (20,136)
Cash flow from (used in) financing activities:
  Proceeds from exercise of stock options                          31              108
  Repayments of long-term debt                                    (43)            (250)
                                                             --------         --------
      Cash used in financing                                      (12)            (142)
\                                                            --------         --------
Increase (decrease) in cash and cash equivalents                6,614           23,381
Cash balances:
  Beginning of period                                          38,402           11,241
                                                             --------         --------
  End of period                                              $ 45,016         $ 34,622
                                                             ========         ========

  Acquisition of subsidiary with note payable                $  7,167         $      -
                                                             ========         ========

             See accompanying notes to consolidated financial statements.

</TABLE>

                                       5
<PAGE>


NOTES TO  CONSOLIDATED  FINANCIAL  STATEMENTS
September  30,  1999
(unaudited)
(amounts in thousands, except per share data)

The Consolidated  Financial  Statements should be read in conjunction with these
notes and with the Notes to Consolidated  Financial  Statements  included in the
Annual  Report on Form 10-K for the year ended  December 31, 1998 of Penn Treaty
American  Corporation  (the  "Company").  In  the  opinion  of  management,  the
summarized financial  information  reflects all adjustments  (consisting only of
normal recurring  adjustments),  which are necessary for a fair  presentation of
the financial position and results of operations for the interim periods.


1.   Investments:

     Management has  categorized  all of its investment  securities as available
for sale  since they may be sold in  response  to  changes  in  interest  rates,
prepayments and similar factors. Investments in this classification are reported
at their current market value with net unrealized  gains and losses,  net of the
applicable  deferred  income tax effect,  being  added to or  deducted  from the
Company's total  shareholders'  equity on the balance sheet. As of September 30,
1999,  shareholders'  equity was decreased by $5,902 due to unrealized losses of
$8,941 in the  investment  portfolio.  As of December  31,  1998,  shareholders'
equity  was  increased  by $8,381  due to  unrealized  gains of  $12,699  in the
investment portfolio.

     The amortized cost and estimated market value of investments  available for
sale as of September 30, 1999 and December 31, 1998 are as follows:

<TABLE>
<CAPTION>
                                              September 30, 1999                     December 31, 1998
                                              ------------------                     -----------------
                                           Amortized      Estimated               Amortized      Estimated
                                             Cost        Market Value               Cost        Market Value
                                           ---------     ------------             ---------     ------------
   <S>                                      <C>            <C>                     <C>            <C>
   U.S. Treasury securities
     and obligations of U.S
     Government authorities
     and agencies                           $ 132,041      $ 132,649               $ 124,664      $ 132,031

   Obligations of states and
     political sub-divisions                      571            598                   2,660          2,864

   Mortgage backed securities                  21,933         21,415                  10,368         10,407

   Debt securities issued by
    foreign governments                        11,007         10,747                   2,974          3,109

   Corporate securities                       186,475        178,740                 170,327        173,037

   Equities                                    17,976         16,913                  15,090         17,334

   Policy Loans                                   140            140                     107            107
                                            ---------      ---------               ---------      ---------
   Total Investments                        $ 370,143      $ 361,202               $ 326,190      $ 338,889
                                            =========      =========               =========      =========

   Net unrealized gain (loss)                  (8,941)                                12,699
                                            ---------                              ---------
                                            $ 361,202                              $ 338,889
                                            =========                              =========
</TABLE>


                                       6
<PAGE>

2.   New Accounting Principle:

     Statement of Position 97-3,  "Accounting by Insurance and Other Enterprises
for  Insurance-Related  Assessments"  (SOP  97-3)  was  issued  by the  American
Institute of Certified Public Accountants in December 1997 and provides guidance
for  determining  when an  insurance  or other  enterprise  should  recognize  a
liability  for   guaranty-fund   assessments  and  guidance  for  measuring  the
liability.  The statement is effective for 1999 financial  statements with early
adoption  permitted.  The Company has adopted SOP 97-3, and  established a gross
liability  of $1,066  for  future  assessments  and a gross  asset of $1,046 for
premium tax offsets related to those  assessments for the period ended September
30, 1999.

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
Instruments and Hedging Activities," which establishes  accounting and reporting
standards for derivative  instruments,  including certain derivative instruments
embedded in other contracts  (collectively referred to as "derivatives") and for
hedging activities. SFAS No. 133 requires an entity to recognize all derivatives
as either  assets or  liabilities  in the  statement of  financial  position and
measure  those  instruments  at fair  value.  While  the  Company  is  presently
evaluating  the  impact of SFAS No.  133,  the  adoption  of SFAS No. 133 is not
expected  to have a material  impact on the  Company's  financial  condition  or
results of operations.

     Statement of Position 98-1  "Accounting for the Costs of Computer  Software
Developed or Obtained  for  Internal  Use" (SOP 98-1) was issued by the American
Institute of Certified Public Accountants in March 1998 and provides guidance on
accounting for the costs of computer software developed or obtained for internal
use. The statement is effective for 1999 financial  statements.  The adoption of
SOP 98-1 has not had a material impact on the Company's  financial  condition or
results of operations.

3.   Statutory Regulation:

     In 1998, the National  Association of Insurance  Commissioners (the "NAIC")
adopted the Codification of Statutory Accounting Principles guidance, which will
replace the current  Accounting  Practices and  Procedures  manual as the NAIC's
primary guidance on statutory accounting. The Codification provides guidance for
areas where statutory  accounting has been silent and changes current  statutory
accounting in some areas.

     The  Pennsylvania   Insurance   Department  has  adopted  the  Codification
guidance, effective January 1, 2001. The Company has not estimated the effect of
the Codification guidance upon its financial condition or results of operations.

4.   Acquisition of Business:

     Effective  January 1, 1999, the Company acquired all of the common stock of
United  Insurance Group Agency,  Inc., a Michigan based  consortium of long-term
care insurance  agencies,  for the amount of $18,192, of which $8,078 was in the
form of a three-year  zero-coupon  installment note. The installment note, after
discounting for imputed interest, was recorded as a note payable of $7,167, with
a current  outstanding  balance of $6,372. The acquisition is accounted for as a
purchase,  for which the Company  recognized  goodwill of $17,000  that is being
amortized  over 25  years.  The  Company  believes that the  proforma  effect of
consolidating  the financial results of UIG prior to 1999 would be immaterial to
the Company's financial condition or results of operations.


                                       7
<PAGE>

5.   Reconciliation of Earnings Per Share:

     The following describes the reconciliation of the numerator and denominator
of the basic earnings per share  computation to the numerator and denominator of
the diluted  earnings per share  computation.  Basic earnings per share excludes
dilution and is computed by dividing income available to common  shareholders by
the weighted-average number of common shares outstanding for the period. Diluted
earnings per share reflect the potential dilution that could occur if securities
or other contracts to issue common stock were exercised or converted into common
stock.

<TABLE>
<CAPTION>
                                                Three Months Ended September 30,   Nine Months Ended September 30,
                                                --------------------------------   -------------------------------
                                                      1999             1998             1999            1998
                                                      ----             ----             ----            ----
<S>                                                <C>              <C>               <C>             <C>
Net income                                         $  5,015         $  5,058          $ 15,159        $ 17,920
Weighted average common shares outstanding            7,585            7,580             7,584           7,575
Basic earnings per share                           $   0.66         $   0.67          $   2.00        $   2.37
                                                   ========         ========          ========        ========

Net income                                         $  5,015         $  5,058          $ 15,159        $ 17,920
Adjustments net of tax:
     Interest expense on convertible debt               783              792             2,348           2,344
     Amortization of debt offering costs                 61               62               183             182
                                                   --------         --------          --------        --------
Diluted net income                                 $  5,859         $  5,912          $ 17,690        $ 20,446
                                                   ========         ========          ========        ========

Weighted average common shares outstanding            7,585            7,580             7,584           7,575
Common stock equivalents due to dilutive
     effect of stock options                            150              213               154             204
Shares converted from convertible debt                2,628            2,628             2,628           2,628
                                                   --------         --------          --------        --------
Total outstanding shares for diluted earnings
     per share computation                           10,363           10,421            10,366          10,407
Diluted earnings per share                         $   0.57         $   0.57          $   1.71        $   1.96
                                                   ========         ========          ========        ========
</TABLE>


6.   Impairment of Property and Equipment:

     During the second quarter,  1999, the Company determined to discontinue its
planned  implementation  of its LifePro computer system. As of the date that the
determination  was made,  the Company  had  capitalized  $2,799 of  expenditures
related  to this  project,  including  licensing  costs and fees paid to outside
parties for system  development  and  implementation.  As the system was not yet
placed in service,  none of these costs had previously  been  depreciated on the
Company's  Consolidated  Statements of Operations and Comprehensive Income. Upon
determining not to utilize these fixed assets, their value became fully impaired
and the Company recognized the entire amount as current period expense.

7.   Subsequent Event:

     Subsequent to the end of the third quarter,  1999, the Company  initiated a
$5,000,000  stock  repurchase  program.  The  program,  which was  announced  on
November 3, 1999, was completed on its first day of implementation.  The Company
purchased  approximately  300,000 shares of its outstanding  common stock, which
was recorded as Treasury stock.


                                       8
<PAGE>


ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations.

THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998:
(amounts in thousands, except per share data)

     Premiums.  First  year  premiums  earned in the three  month  period  ended
September 30, 1999 (the "1999 quarter"),  including  long-term care and Medicare
supplement,  increased 10.9% to $23,986,  compared to $21,638 in the same period
in 1998 (the "1998  quarter").  First year long-term care premiums earned in the
1999  quarter  increased  12.4% to  $23,412,  compared  to  $20,837  in the 1998
quarter. The Company attributes its growth to sales in newly licensed states and
to continued  improvements in product  offerings,  which  competitively meet the
needs of the long term care  marketplace.  In  addition,  the  Company  actively
recruits and trains  agents to sell its products.  Management  believes that the
general public has become more educated regarding the benefits of long-term care
insurance,  which has added to its  growth.  The Company  anticipates  that this
trend in receipt of premium revenue will continue.

Management  believes  premium  revenues  in the  1999  quarter  are  lower  than
anticipated due to the impact of new sales collected with semi-annual, quarterly
and monthly  installments,  rather than by annual payment.  Although similar net
profit margins are received on this type of modal sale, the timing of net income
ultimately realized from each policy may be deferred by up to twelve months. The
Company has encouraged  monthly  installment sales with automatic bank drafts in
anticipation of increased sales and better policyholder retention/persistency.

Renewal  premiums  earned by the Company in the 1999 quarter  increased 31.0% to
$48,179,  compared  to  $36,767  in the 1998  quarter.  Renewal  long-term  care
premiums  earned in the 1999  quarter  increased  31.4% to $44,471,  compared to
$33,854 in the 1998 quarter. This increase reflects renewals of a larger base of
in-force  policies.  In recent years,  the Company has  experienced  significant
growth in first year premium sales,  which produces  increased  renewal rates in
subsequent years.

     Net Investment  Income. Net investment income earned by the Company for the
1999  quarter  increased  9.8% to  $5,967,  from  $5,432  for the 1998  quarter.
Management  attributes this growth to more invested assets as a result of higher
established  reserves.  Investment income is reduced,  however, by the Company's
use of cash for the acquisition of UIG on January 1, 1999. Also, the Company has
intentionally  invested  approximately  10% of its investible assets in cash and
short-term  investments in the event that market interest rates rise. The effect
of this position is lower short-term investment returns.

     Net Realized Capital Gains. During the 1999 quarter, the Company recognized
capital  gains of $269,  compared  to gains of $532 in the 1998  quarter.  These
gains were  recorded as a result of the  Company's  normal  treasury  management
operations.

     Other Income.  The Company  recorded $1,564 in other income during the 1999
quarter,  up from $75 in the 1998 quarter.  The increase is  attributable to the
inclusion  of  commissions  earned by UIG,  which was acquired by the Company on
January 1, 1999, on sales of insurance  products  underwritten  by  unaffiliated
insurers.

     Benefits to  Policyholders.  Total  benefits to  policyholders  in the 1999
quarter  increased  22.4% to $49,623  compared  to $40,535 in the 1998  quarter.
During  the 1999  quarter,  the  Company  paid  $24,072  in  claims  or 33.4% of
premiums,  compared to 1998 quarter paid claims of $19,735 or 33.8% of premiums.
The Company's loss ratio, or policyholder benefits to premiums, was 68.8% in the
1999 quarter, compared to 69.4% in the 1998 quarter.


                                       9
<PAGE>


The Company uses independent care managers to monitor the use of policy benefits
by  claimants  and  their   providers  and  to  ensure  proper   utilization  of
policyholder benefits in its home health care coverage.  The expenses related to
care management  included in benefits to policyholders were $499 or .7% and $525
or .9% of premiums in the 1999 and 1998 quarters, respectively.

     Commissions.  Commissions to agents  increased 12.2% to $23,167 in the 1999
quarter, compared to $20,655 in the 1998 quarter.

Excluding  the iresult of $753 total  commission  paid to UIG,  which  serves to
reduce commissions to agents on policies underwritten by the Company, first year
commissions on accident and health  business in the 1999 quarter  increased 8.4%
to  $15,980  compared  to  $14,743  in the 1998  quarter,  corresponding  to the
increase in first year  accident  and health  premiums.  The ratio of first year
accident and health  commissions to first year accident and health  premiums was
68.0% in the 1999 quarter and 69.6% in the 1998 quarter.

Renewal  commissions  on  accident  and  health  business  in the  1999  quarter
increased  38.8% to $7,565,  compared to $5,452 in the 1998 quarter,  consistent
with the  increase in renewal  premiums  discussed  above.  The ratio of renewal
accident and health  commissions  to renewal  accident  and health  premiums was
16.6% in the 1999 quarter and 15.7% in the 1998 quarter.

     Net Policy Acquisition Costs Deferred.  The net deferred policy acquisition
costs in the 1999 quarter  increased  .5% to $12,201  compared to $12,141 in the
1998 quarter.

Deferred  costs are typically all costs deemed to vary with the  acquisition  of
new premiums. These costs include the variable portion of commissions, which are
defined as the first year commission  rate less renewal  commission  rates,  and
variable general and  administrative  expenses  related to policy  underwriting.
Deferred  costs are amortized  over the life of the policy based upon  actuarial
assumptions,  including  persistency of policies in force. In the event a policy
lapses  prematurely  due to death or  termination  of  coverage,  the  remaining
unamortized portion of the deferred amount is immediately  recognized as expense
in the current period.

     General and Administrative Expenses. General and administrative expenses in
the 1999  quarter  increased  56.3% to  $10,576,  compared to $6,765 in the 1998
quarter. The 1999 quarter reflects UIG expense of $2,006, which includes $170 of
goodwill  amortization.   The  remaining  general  and  administrative  expenses
increased  over the 1998 quarter  consistent  with premium  growth.  Among other
factors such as staff  additions  and  infrastructure  development,  the Company
believes that expense increases are the result of underwriting  costs associated
with new  in-force  policies.  However,  the  impact of  deferred  premiums,  as
discussed in Premium Revenue, serves to increase expense to premium ratios.

The Company has also undertaken various expense savings initiatives, such as the
consolidation  of remote  office  operations  and the  outsourcing  of printing,
supply  and  licensing  functions,  which it expects  to reduce  future  expense
growth.

     Provision for Federal Income Taxes.  The provision for federal income taxes
recorded by the Company for the 1999 quarter increased 3.0% to $2,470,  compared
to $2,399 for the 1998  quarter.  The  effective tax rates of 33.0% and 32.2% in
the 1999 and 1998 quarters, respectively, are below the normal federal corporate
rate as a  result  of small  life  insurance  company  deductions  and  dividend
received  deductions  attributable  to equity  investments,  which are partially
offset by non-deductible goodwill amortization.

                                       10
<PAGE>

     Comprehensive  Income.  During the 1999 quarter,  the Company's  investment
portfolio generated unrealized losses of $4,751 due to increased market interest
rates, compared to 1998 quarter unrealized gains of $8,041. After accounting for
deferred taxes from these gains and losses and net income,  shareholders' equity
increased by $1,879 from comprehensive income during the 1999 quarter,  compared
to comprehensive income of $10,365 in the 1998 quarter.


NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998:
(amounts in thousands, except per share data)

     Premiums.  First  year  premiums  earned  in the nine  month  period  ended
September 30, 1999 (the "1999 period"),  including  long-term care,  disability,
life and Medicare supplement, increased 16.2% to $73,568, compared to $63,306 in
the same period in 1998 (the "1998 period").  First year long-term care premiums
earned in the 1999 period increased 19.0% to $71,951, compared to $60,484 in the
1998 period.  The Company  attributes  its growth to continued  improvements  in
product  offerings,  which  competitively  meet the needs of the long-term  care
marketplace,  and expansion into new states, such as New Jersey, Connecticut and
New York.  In addition,  the Company has been actively  recruiting  and training
agents to sell its products.

Management believes premium revenue growth in the 1999 period was reduced due to
the  impact of new sales  collected  with  semi-annual,  quarterly  and  monthly
installments, rather than by annual payment. Although similar net profit margins
are received on this type of modal sale,  the timing of premium  revenue and net
income  ultimately  realized  from each  policy may be  deferred by up to twelve
months. The Company has encouraged monthly installment sales with automatic bank
drafts   in   anticipation   of   increased   sales  and   better   policyholder
retention/persistency. The Company anticipates that this trend in the receipt of
premium revenues will continue.

Renewal  premiums  earned by the Company in the 1999 period  increased  35.8% to
$137,798,  compared to  $101,482  in the 1998  period.  Renewal  long-term  care
premiums  earned in the 1999 period  increased  32.5% to  $127,726,  compared to
$96,365 in the 1998 period.  This increase reflects renewals of a larger base of
in-force  policies.  The Company  believes  that this  increase also reflects an
increase in persistency (renewals as a percentage of total prior year business).

     Net Investment  Income. Net investment income earned by the Company for the
1999 period  increased  11.4% to  $16,721,  from  $15,008  for the 1998  period.
Management  attributes this growth to more invested assets as a result of higher
established  reserves.  Investment income is reduced,  however, by the Company's
use of cash for the acquisition of UIG on January 1, 1999. Also, the Company has
intentionally  invested  approximately  10% of its investible assets in cash and
short-term  investments in the event that market interest rates rise. The effect
of this position is lower short-term investment returns.

     Net Realized Capital Gains.  During the 1999 period, the Company recognized
capital  gains of $4,112,  compared to gains of $7,323 in the 1998  period.  The
1999 period,  gains include  approximately  $2,800 from the sale of a portion of
its  equities  securities  portfolio,  which  was  executed  as a result  of the
Company's  desire to  offset  the net  income  impact  of its  recorded  expense
attributable  to the  impairment  of fixed assets.  During the 1998 period,  the
Company  recognized  approximately  $6,400  of  capital  gains  from the sale of
substantially its entire equities securities portfolio at that time. In both the
1998 and 1999 periods, the Company replenished its equities securities portfolio
through subsequent market purchases.  The remainder of the gains in both periods
was recorded as a result of the Company's normal treasury management operations.

                                       11
<PAGE>

     Other Income.  The Company  recorded $4,661 in other income during the 1999
period,  up from $239 in the 1998 period.  The increase is  attributable  to the
inclusion  of  commissions  earned by UIG,  which was acquired by the Company on
January 1, 1999, on sales of insurance  products  underwritten  by  unaffiliated
insurers.

     Benefits to  Policyholders.  Total  benefits to  policyholders  in the 1999
period  increased  27.8% to $144,332  compared  to $112,911 in the 1998  period.
During the 1999 period, the Company paid $69,003 in claims or 32.6% of premiums,
compared to $54,360 or 32.6% paid in the 1998 period.  The Company's loss ratio,
or policyholder benefits to premiums, was 68.3% in the 1999 period,  compared to
68.5% in the 1998 period.

The Company uses independent care managers to monitor the use of policy benefits
by  claimants  and  their   providers  and  to  ensure  proper   utilization  of
policyholder benefits in its home health care coverage.  The amounts due to care
management  included in benefits to policyholders  were $1,478 or .7% and $1,200
or .7% of premiums in the 1999 and 1998 periods, respectively.

     Commissions.  Commissions to agents  increased 19.0% to $68,647 in the 1999
period compared to $57,685 in the 1998 period.

Excluding the payment of $1,823 in total  commissions to of UIG, which serves to
reduce  commissions  from  policies  underwritten  by the  Company,  first  year
commissions on accident and health  business in the 1999 period  increased 16.5%
to  $47,513,  compared  to  $40,784  in the 1998  period,  corresponding  to the
increase  in first year  accident  and health  premiums  and to the  issuance of
younger age policies,  which typically pay a higher first year commission  rate.
The ratio of first year accident and health  commissions  to first year accident
and health premiums was 65.7% in the 1999 period and 65.8% in the 1998 period.

Renewal commissions on accident and health business in the 1999 period increased
40.8% to $21,647,  compared to $15,373 in the 1998 period,  consistent  with the
increase in renewal premiums  discussed above. The ratio of renewal accident and
health commissions to renewal accident and health premiums was 16.5% in the 1999
period and 15.6% in the 1998 period.

     Net Policy Acquisition Costs Deferred.  The net deferred policy acquisition
costs in the 1999  period  increased  .9% to $35,659  compared to $32,450 in the
1998 period.

Deferred  costs are typically all costs deemed to vary with the  acquisition  of
new premiums. These costs include the variable portion of commissions, which are
defined as the first year commission  rate less renewal  commission  rates,  and
variable general and  administrative  expenses  related to policy  underwriting.
Deferred  costs are amortized  over the life of the policy based upon  actuarial
assumptions,  including  persistency of policies in force. In the event a policy
lapses  prematurely  due to death or  termination  of  coverage,  the  remaining
unamortized portion of the deferred amount is immediately  recognized as expense
in the current period.

     General and Administrative Expenses. General and administrative expenses in
the 1999  period  increased  60.4% to  $30,223,  compared to $18,840 in the 1998
period.  The 1999  period  reflects  UIG  expense of $5,871,  including  $510 of
goodwill  amortization.  While the remaining  Company expense has grown over the
1998 period with overall premium growth,  management  believes that current cost
savings  initiatives,  such as remote office  consolidation  and  outsourcing of
certain administrative functions, will reduce this growth in the future.

                                       12
<PAGE>

     Provision for Federal Income Taxes.  The provision for federal income taxes
recorded by the Company for the 1999 period decreased 15.8% to $7,466,  compared
to $8,866 for the 1998 period. The effective tax rates of 33.0% and 33.1% in the
1999 and 1998 periods, respectively, are below the normal federal corporate rate
as a result of credits from the small life insurance  company  deduction as well
as the Company's investments in tax-exempt bonds or from dividends received that
are partially exempt from taxation, which are partially offset by non-deductible
goodwill amortization.

     Comprehensive  Income.  During the 1999 period,  the  Company's  investment
portfolio  generated  unrealized  losses  of  $21,640  due to  increased  market
interest  rates,  compared  to 1998  period  unrealized  gains of $4,233.  After
accounting for deferred taxes from these gains,  shareholders'  equity increased
by  $876  from  comprehensive  income  during  the  1999  period,   compared  to
comprehensive income of $20,714 in the 1998 period.


YEAR 2000 READINESS DISCLOSURE:

As many computer  systems and other  equipment with embedded chips or processors
use only two  digits to  represent  the year,  they may be unable to  accurately
process  certain  data  before,  during  or after  the year  2000.  As a result,
business and governmental  entities are at risk for possible  miscalculations or
systems  failures  causing  disruptions  in their business  operations.  This is
commonly  known as the Year 2000 ("Y2K")  issue.  The Y2K issue can arise at any
point in the Company's supply, billing, processing, sales or financial chains.

The Company and each of its  subsidiaries  are in the process of  implementing a
Y2K  readiness  program with the  objective  of having all of their  significant
operations  functioning properly with respect to Y2K before January 1, 2000. The
first  component  of the Y2K project was to identify  all systems and  hardware,
which would be impacted by the Y2K issue.  This  portion of the project has been
completed for the Company and for all of its subsidiaries.

The second  component  of the Y2K project  involves the actual  remediation  and
replacement of various  systems and hardware,  which will be affected by the Y2K
issue.  The Company and its insurance  subsidiaries  are using both internal and
external  resources to complete  this  process.  Each system has been assigned a
priority for Y2K completion, beginning with the most critical projects.

Prior to the second quarter,  1999, the Company intended to replace its existing
computer system with a new system that was vendor-certified as Y2K compliant. In
the event the new system could not be  implemented  prior to January 1, 2000, or
was unable to process Y2K  functions  upon  installation,  the Company  employed
internal  and  external  programmers  to ensure Y2K  compliance  of its  current
operating system as a contingency.  This  contingency  development was completed
prior to January 1999, and to date has passed all substantial testing.

During the second  quarter,  1999,  the Company  determined to  discontinue  its
planned  implementation of its new system, finding that the system was unable to
fully  perform  its  expected  operations.  The Company  determined  to continue
operations  utilizing  its current  system,  which is currently  processing  all
long-term  care  operations  and is  believed to be fully Y2K  compliant.  Final
testing on all aspects of the current system will be performed during the fourth
quarter, 1999.

                                       13
<PAGE>

As part of the Y2K project,  significant service providers,  vendors, suppliers,
and  customers  that are  believed to be critical to business  operations  after
January 1,  2000,  have been  identified  and steps are being  undertaken  in an
attempt to reasonably ascertain their level of readiness through questionnaires,
interviews, on-site visits and other available means.

The Company cannot guarantee that final testing will be successful. In the event
that one or all of these  system  tests  are  unsuccessful,  the  Company  could
experience  interruptions in its business operations,  which are critical to its
ongoing profitability and sustainability. However, the Company believes that its
final systems  testing will be successful,  and does not anticipate any failures
or unnecessary delays in its critical functions as a result of the Y2K issue. In
the event final testing fails, the Company believes that critical  functions can
be performed manually until program enhancements can be made.

Since January 1999,  the Company has been testing its system using Y2K dates and
has not  experienced any  difficulties  or problems.  Any policy written with an
annual collection of premium has been successfully processed since January 1999,
with no interruption of services.

The Company  believes that in addition to its  computer-related  systems,  other
operations may be affected due to embedded Y2K problems.  These operations could
include, among others,  telephone,  electrical and security systems. The Company
has relied upon vendor certification for all such systems.  However, the Company
has not independently verified the accuracy of these certifications,  and cannot
guarantee that any of its vendors will not experience Y2K problems,  which could
adversely affect the Company's operations.  In the event of failure, the Company
has  identified  secondary  vendors for all major  services.  The  Company  also
believes  that a temporary  disruption  of any of these  services  would have no
material effect upon its financial condition or results of operations.

The  Company  has spent  approximately  $350,000  to date  related to  modifying
existing  systems to become Y2K compliant,  and  anticipates  the expenditure of
approximately  $50,000  more  before the end of the fourth  quarter,  1999.  The
Company  estimates that this amount  represents  approximately  15% of its total
information  technology budget. The Company expects the impact of Y2K to have no
material impact upon its financial condition or results of operations.


LIQUIDITY AND CAPITAL RESOURCES:

The Company's consolidated liquidity requirements have historically been created
and met from the operations of its insurance subsidiaries. The Company's primary
sources of cash are premiums and  investment  income.  The Company has provided,
and may continue to provide,  cash through public offerings of its common stock,
capital  markets  activities or debt  instruments.  The primary uses of cash are
policy acquisition costs (principally  commissions),  payments to policyholders,
investment purchases and general and administrative expenses.

Statutory  requirements  allow  insurers to pay  dividends  only from  statutory
earnings as approved by the state insurance commissioner. Statutory earnings are
generally  lower  than  publicly-reported  earnings  due  to  the  immediate  or
accelerated  recognition of all costs associated with premium growth and benefit
reserves.  The Company has not and does not intend to pay shareholder  dividends
in the near  future  due to these  requirements,  choosing  to retain  statutory
surplus to support continued premium growth.

                                       14
<PAGE>

The Company's cash flows in the 1999 period were  attributable  to cash provided
by operations,  cash used in investing and cash used in financing. The Company's
cash  increased  by  $6,614  in the  1999  period  primarily  due to  cash  from
operations of $58,648.  The major provider of cash from  operations was premiums
used to fund  additions to reserves of $73,851 in the 1999  period.  The primary
uses of cash were commissions  deferred as additions to policy acquisition costs
of $35,659,  the purchase of bonds and equities  securities  of $120,642 and net
cash of $9,194 paid for the acquisition of UIG.

The Company's cash flows in the 1998 period were  attributable  to cash provided
by operations,  cash used in investing and cash used in financing. The Company's
cash  increased  by  $23,381  in the 1998  period  primarily  due to the sale of
$22,640 of its equity securities  portfolio and cash from operations of $43,659.
The major  provider of cash from  operations was premiums used to fund additions
to  reserves  of  $57,352  in the 1998  period.  The  primary  uses of cash were
commissions deferred as additions to policy acquisition costs of $32,450 and the
purchase of bonds and equities securities of $91,410.

The Company invests in securities and other investments authorized by applicable
state laws and regulations and follows an investment policy designed to maximize
yield to the extent  consistent with liquidity  requirements and preservation of
assets.  The market value of the Company's bond portfolio  represented  97.8% of
its cost at September 30, 1999,  compared to 103.4% at December 31, 1998, with a
current  unrealized  loss of  $7,878  at  September  30,  1999,  compared  to an
unrealized  gain of $10,455 at December 31, 1998.  Its equity  portfolio,  which
consisted of preferred  and common  stock at  September  30, 1999,  had a market
value below cost of $1,063, compared to $2,244 above cost on December 31, 1998.

As of September  30, 1999,  shareholders'  equity was decreased by $5,902 due to
unrealized  losses  in  the  investment  portfolio.  As of  December  31,  1998,
shareholders'  equity was  increased  by $8,381 due to  unrealized  gains in the
investment portfolio.

The Company's debt currently consists primarily of a mortgage note in the amount
of $1,757, $74,750 in convertible subordinated debt and a note payable of $6,372
for the purchase of UIG.  The  convertible  debt,  issued in November  1996,  is
convertible at $28.44 per share,  and unless  converted,  is  outstanding  until
November  2003.  The debt  carries a fixed  interest  coupon  of 6.25%,  payable
semi-annually. The mortgage note is currently amortized over 15 years, and has a
balloon  payment due on the  remaining  outstanding  balance in September  2003.
Although the note carries a variable interest rate, the Company has entered into
an amortizing swap agreement with the same bank, with a notional amount equal to
the  outstanding  debt,  which has the effect of converting  the note to a fixed
rate of interest. The note payable,  although carrying a zero percent coupon, is
discounted at six percent and is payable in installments over three years.

The Company  consists of the  Insurers,  the Agencies and a  non-insurer  parent
company, Penn Treaty American Corporation (the "Parent"). The Parent directly or
indirectly controls 100% of the voting stock of the subsidiary insurers.  In the
event the Parent is unable to meet its financial obligations, becomes insolvent,
or discontinues  operations,  the Insurers'  financial  condition and results of
operations could be materially affected.

The Parent currently has the obligation of making semi-annual  interest payments
attributable to the Company's  convertible debt. In that the dividend ability of
the  subsidiaries  is restricted,  the Parent must rely on its own liquidity and
cash flows to make all required interest installments.  Management believes that
the  Parent  holds  sufficient  liquid  funds  to meet its  obligations  for the
foreseeable future.

                                       15
<PAGE>

Subsequent  to the end of the third  quarter,  1999,  the  Company  initiated  a
$5,000,000 stock repurchase program.  The program,  which was announced November
3, 1999, was completed on its first day of implementation. The Company purchased
approximately 300,000 shares of its outstanding common stock, which was recorded
as Treasury stock

The  Company's  continued  growth is dependent  upon its ability to (1) continue
marketing efforts to expand its historical  markets,  (2) continue to expand its
network  of agents  and  effectively  market its  products  in states  where its
insurance  subsidiaries  are currently  licensed and (3) fund such marketing and
expansion while at the same time maintaining minimum statutory levels of capital
and surplus required to support such growth.  Management believes that the funds
necessary to accomplish  the  foregoing,  including  funds  required to maintain
adequate levels of statutory  surplus in the Company's  insurance  subsidiaries,
can be met for the foreseeable future from the Company's operations.

In the event (1) the Company fails to maintain minimum loss ratios calculated in
accordance  with  statutory  guidelines,  (2) the  Company  fails to meet  other
requirements  mandated and enforced by regulatory  authorities,  (3) the Company
has adverse  claims  experience  in the future,  (4) the Company  cannot  obtain
additional  financing to support  future growth or (5) the economy  continues to
effect  the  buying  powers  of  senior  citizens,   the  Company's  results  of
operations, liquidity and capital resources could be adversely affected.

Some of the  information  presented in this report  constitutes  forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995.  Although  the  Company  believes  that  its  expectations  are  based  on
reasonable  assumptions  within the bounds of its  knowledge of its business and
operations,  there can be no  assurance  that  actual  results of the  Company's
operations will not differ materially from its expectations.  Factors that could
cause actual  results to differ from  expectations  include,  among others,  the
adequacy of the Company's  loss reserves,  the Company's  ability to qualify new
insurance  products  for sale and the  acceptance  of such  products,  the modal
structure  of  insurance  policy  sales,  the  Company's  ability to comply with
government regulations, the ability of senior citizens to purchase the Company's
products  in light of the  increasing  costs of  health  care and the  Company's
ability to expand its network of productive independent agents.


NEW ACCOUNTING PRINCIPLE:

     Statement of Position 97-3,  "Accounting by Insurance and Other Enterprises
for  Insurance-Related  Assessments"  (SOP  97-3)  was  issued  by the  American
Institute of Certified Public Accountants in December 1997 and provides guidance
for  determining  when an  insurance  or other  enterprise  should  recognize  a
liability  for   guaranty-fund   assessments  and  guidance  for  measuring  the
liability.  The statement is effective for 1999 financial  statements with early
adoption  permitted.  The Company has adopted SOP 97-3, and  established a gross
liability  of $1,066  for  future  assessments  and a gross  asset of $1,046 for
premium tax offsets  related to those  assessments for the period ended June 30,
1999.

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
Instruments and Hedging Activities," which establishes  accounting and reporting
standards for derivative  instruments,  including certain derivative instruments
embedded in other contracts  (collectively referred to as "derivatives") and for
hedging activities. SFAS No. 133 requires an entity to recognize all derivatives
as either  assets or  liabilities  in the  statement of  financial  position and
measure  those  instruments  at fair  value.  While  the  Company  is  presently
evaluating  the  impact of SFAS No.  133,  the  adoption  of SFAS No. 133 is not
expected  to have a material  impact on the  Company's  financial  condition  or
results of operations.

                                       16
<PAGE>

     Statement of Position 98-1  "Accounting for the Costs of Computer  Software
Developed or Obtained  for  Internal  Use" (SOP 98-1) was issued by the American
Institute of Certified Public Accountants in March 1998 and provides guidance on
accounting for the costs of computer software developed or obtained for internal
use. The statement is effective for 1999 financial  statements.  The adoption of
SOP 98-1 has not had a material impact on the Company's  financial  condition or
results of operations.


ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk:

The Company invests in securities and other investments authorized by applicable
state laws and regulations and follows an investment policy designed to maximize
yield to the extent  consistent with liquidity  requirements and preservation of
assets.

A significant portion of assets and liabilities are financial instruments, which
are  subject to the market risk of  potential  losses  from  adverse  changes in
market rates and prices.  The Company's  primary market risk exposures relate to
interest  rate risk on fixed rate  domestic  medium-term  instruments  and, to a
lesser  extent,  domestic  short- and  long-term  instruments.  The  Company has
established  strategies,  asset quality  standards,  asset allocations and other
relevant criteria for its portfolio to manage its exposure to market risk.

The  Company  currently  has  only one  derivative  instrument  outstanding,  an
interest rate swap on its mortgage, with the same bank, which is used as a hedge
to convert the mortgage to a fixed  interest  rate.  The Company  believes  that
since  the  notional  amount  of the swap is  amortized  at the same rate as the
underlying mortgage, and that both financial instruments are with the same bank,
no credit or financial risk is carried with the swap.

All of the  Company's  financial  instruments  are held for purposes  other than
trading. The Company's portfolio does not contain any significant concentrations
in single issuers (other than U.S.  treasury and agency  obligations),  industry
segments or geographic regions.

Caution should be used in evaluating  overall  market risk from the  information
below,  since actual results could differ materially because the information was
developed  using  estimates  and  assumptions  as described  below,  and because
insurance   liabilities  and   reinsurance   receivables  are  excluded  in  the
hypothetical effects (insurance liabilities represent 75.2% of total liabilities
and  reinsurance  receivables on unpaid losses  represent 2.0% of total assets).
Long-term  debt,  although  not  carried  at  fair  value,  is  included  in the
hypothetical effect calculation.

The hypothetical effects of changes in market rates or prices on the fair values
of  financial   instruments  as  of  September  30,  1999,  excluding  insurance
liabilities and reinsurance  receivables on unpaid losses because such insurance
related assets and liabilities are not carried at fair value, would have been as
follows:

If interest  rates had increased by 100 basis  points,  there would have been an
approximate  $10,500 decrease in the net fair value of the Company's  investment
portfolio less its long-term debt or the related swap  agreement.  The change in
fair values was  determined by estimating the present value of future cash flows
using models that measure the change in net present values arising from selected
hypothetical  changes in market  interest  rate.  A 200 basis point  increase in
market rates at September 30, 1999 would have resulted in an approximate $20,200
decrease in the net fair value.  If interest  rates had decreased by 100 and 200
basis  points,  there  would have been an  approximate  $11,500  and $24,000 net
increase, respectively, in the net fair value of the Company's total investments
and debt.

                                       17
<PAGE>

Certain mortgage and asset backed  securities are held by the Company as part of
its investment  portfolio.  The fair value of these  instruments  may react in a
convex or  non-linear  fashion  when  subjected  to interest  rate  increases or
decreases.  The  anticipated  cash flows of these  instruments  may differ  from
expectations in changing interest rate environments, resulting in duration drift
or a varying nature of predicted time-weighted present values of cash flows. The
result of unpredicted  cash flows from these  investments  could cause the above
hypothetical estimates to change. However, the Company believes that its minimal
invested  amount  in  these   instruments  and  their  broadly  defined  payment
parameters  sufficiently  outweigh  the cost of  computer  models  necessary  to
accurately predict their possible impact to the Company's investment income from
the hypothetical effects of changes in market rates or prices on the fair values
of financial instruments as of September 30, 1999.


                                       18
<PAGE>

                            PART II OTHER INFORMATION

ITEM 1.  Legal Proceedings

The Insurers  are parties to various  lawsuits  generally  arising in the normal
course of their  insurance  business.  The  Company  does not  believe  that the
eventual outcome of any of the suits to which the Insurers are currently a party
will have a material  adverse  effect on the  financial  condition  or result of
operations of the Company.

ITEM 2.  Changes in Securities

Not Applicable

ITEM 3.  Defaults Upon Senior Securities

Not Applicable

ITEM 4.  Submission of Matters to a Vote of Security Holders

Not Applicable.

ITEM 5.  Other Information

Subsequent  to the end of the third  quarter,  1999,  the  Company  initiated  a
$5,000,000 stock repurchase program.  The program,  which was announced November
3, 1999, was completed on its first day of implementation. The Company purchased
approximately 300,000 shares of its outstanding common stock, which was recorded
as Treasury stock.

ITEM 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits:

         Exhibit 27 -    Financial Data Schedule

(b)      Reports on Form 8-K:

         The  Company  filed no reports  on Form 8-K  during the  quarter  ended
         September 30, 1999.


                                       19
<PAGE>


                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  had duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                    PENN TREATY AMERICAN CORPORATION
                                                  Registrant


Date  November 12, 1999             /s/  Irving Levit
      -----------------             -------------------------------------
                                         Irving Levit
                                         Chairman of the Board, President
                                         And Chief Executive Officer

Date  November 12, 1999             /s/  Cameron B. Waite
     ------------------             -------------------------------------
                                         Cameron B. Waite
                                         Chief Financial Officer


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