                   T~ER-~-~oRNEY                   GENERAL
                                OF TEXAS
                               Aun.rx~    1% we
PRICE   DANIEL
ATTORNEY GENERAL

                                          February     10,    1919


               Hon. J. P. Gibbs,     Commissioner
               Casualty Insurance     Division
               Board af Insuraae      Cemmlssiaers
               A-tin 14, Texas
               Attention:    Mr. Ned Price,        Director
                             Title Section

                                         Opinion     No. Q-495

                                         Re:   Whether agreement by repre-
                                               sentative    of a title   insurer
                                               to pay a portion     of the in-
                                               surer’s   losses  constitutes
                                               a refnsurance    agreement;    and
                                               whether such an agreement vio-
                                               lates Section    11 of Article
                                               1302a, Q. C. S.

               Dear Sir:

                           Your letter     of December 30 states     that the Kan-
               sas City Title    Company, a tftle     insurance- cornpax qualified
               and operating    under the provisions      of Article    13 2a, T.C.
               S    has entered     into an agreement with the Hexter Abstract
               aii Title   Company, an abstract      company not qualified       to
               operate   as a title     company under Article    1302a ) Q.C.S.,
               as Its representative       for the fssuance    of title   insurance.
               The agreement provides        in part as follows:

                            “It being mutually      agreed and understood
                     as a part of the consideration         for this con-
                     tract    that Agent hereby agrees to pay all loss-
                     es and cla?ms under any policy         written   by Agent
                     up to the sum of $l,OOOOOO; and to Indemnify
                     Company from any and all loss of any nature or
                     kind on any policy,        commitment to insure or
                     binder    issued by Agent on all losses        or claims
                     up to $1,000.00;       and further   agrees to pay one-
                     half of any and all loss incurred          under any
                     policy    ,issued~by Agent over $l,OOO.OO up to and
                     including      $lO,OOO.OO; and to indemnify      Company
                     from any and all loss of any nature or kind on
                     any policy,       commitment to insure or binder is-
                     sued by Agent to the extent of one-half           of any
                     sum in excess       of $l,OOO.OO up to and including
                     $10,000.00.”
Hon. J.     P. Gibbs,    Page Z., Q-495



               You request    an opinion on the     following     ques-
tions:

                “1.   Does the above quoted provision
         constitute    a reissurence    agreement between
         Kansas City Title      Company and Hexter Ab-
         stract    and Title   Coapaay?

                “2.    If your answer to question         No. 1
         is to the effect        that the e@reement between
         the Kansas City Tit1.e Company and the Hexter
         Abstract     and Title     Company is one of rein-
         surance,     then please advise whether or not
         the agreement is in violation            of that part
         of Section      I1 of Article     1302(a) s which pro-
         vldes,    ‘such Mm any operating           under the
         provisions      of th !is Act may reinsure      any or
         all of its business         provided   the reinsuring
         company shall be qualified           to do business
         in Texas and the reinsuring           contract   shall
         be first     approved by the Board of Insurance
         Commissioners !”

             As to your fPWs$ question,      the agreement clear-
ly ronstltutes     a reinsurance   agreement.    Reins uranc e is
defkned in Couch, Cyclopedia       of Insurance   Law, Section
2256, and in 24 Tax, Jur. o page 1293, as a contract          where-
by one for a consideration       agrees to indemnify    another,
either   in whole or in part,     against  loss or liability     the
risk of whiob’ the latter      has assumed under a separate      and
distinct   contract   as insurer   of a third party,

           As to your second question,        Section    11 of Arti-
cle 1302a, which you quote,       having provided     for the cfr-
cumstances  under which companies operating          thereunder
might reinsure   their    risks,  there is an implied      prohfbi-
tion to such companies ‘reinsuring       in any other manner.
It is our opinion,     therefore,   that the agreement is in
violation  of the quoted portion       of Section    11 of Article
1302a e
                                   SUMMARY

                An agreement by an abstract     company
         not qualified    to operate as a title     company
         under Article    1302a; Q.~C. S., to Indemnify
         a title   company which ft represents      against
         any portion    of the losses  sustained    by such
         title   company on policies   issued by the ab-
         stract   company constitutes    a reinsuranct    a-
         greement D
Hon. J.   P. Gibbs,   Page 3, Y-495



              Saoh an agTeeement would tielate Se01
      tions    3 and 11 of Artlole 130Em, t. C. 9.

                               Very truly    yours
                            ATTOEZNEY
                                    GENERALOF TEXAS




                                      Ned McDaniel
                                         Assistant



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