This excerpt taken from the PTA 8-K filed Apr 4, 2005.
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On March 29, 2005, the Companys Board of Directors concluded that the Companys financial statements for the years ended December 31, 2004, 2003 or 2002 and the quarters ended September 30, 2004, 2003 and 2002, June 30, 2004, 2003 and 2002 and March 31, 2004, 2003 and 2002 should no longer be relied upon because of an error in such financial statements. As part of the Companys actuarial review for the period ended December 31, 2004, it discovered that the impact of approximately 2,500 inflation riders (out of approximately 65,000 riders and 200,000 base policies) issued as far back as 1987, was incorrectly excluded from policy benefit liabilities. As a result, the Company will restate its financial statement to reflect an increase in policy reserves as of December 31, 2004, 2003 and 2002 by approximately $10 million, $10.2 million and $10.5 million, respectively, and a decrease in shareholders equity of approximately $6.5 million as of December 31, 2004, 2003 and 2002. The Company does not anticipate a material impact on either the 2004 or 2003 Consolidated Statements of Income and Comprehensive Income. However, the Company estimates that the impact on the 2002 Consolidated Statement of Income and Comprehensive Income would an increase to benefits expense of approximately $2 million before Federal income taxes. The Company has not yet determined the impact on the financial statements for the quarters ended September 30, 2004, 2003, and 2002, June 30, 2004, 2003 and 2002 or March 31, 2004, 2003 and 2002. Management has discussed these matters with the Companys independent accountant.
Management has determined that the matters discussed above constitute a material weakness in the Companys disclosure controls and procedures. As a result, management has determined the Company did not maintain effective disclosure controls and procedures regarding its policy benefit reserve estimates related to policy riders as of December 31, 2004 and expects that it will be unable to conclude that the Company maintained effective disclosure controls and procedures as of December 31, 2004. The material weakness and managements conclusion as to the effectiveness of the Companys disclosure controls and procedures will be disclosed in Item 9A of Part II of the Companys 10-K. Also, management has been advised by its independent accountants that they will report the matters discussed above to the Companys Audit Committee as a material weakness in disclosure controls and procedures and internal controls over financial reporting.