                               E     f%TTOKNEY                        GENERAL

                                               OF    TEXAS

PRICE   DANIEL
ATTORXEY CE:NEBAI.
                                                October       10,    1951



          Hon. George     B. Butler,  Chairman
          Board   of Insurance    Commissioners
          Austin,   Texas                                           Opinion   No.   V-1313

                                                                    Re:   Procedure       for reporting
                                                                          the percentage          of United
                                                                          States    Bonds     held by an
                                                                          out-of-State       life    insur-
                                                                          ance company          under Ar-
          Dear   Mr.       Butler:                                        title  4769, V.C.S.

                              Your    letter    requesting    our opinion    in reference            to the
          above-captioned            matter     reads    in part as follows:

                            “Please     see Article         4769 enacted   by H.B. 471 of
                     the 51st Legislature,       and       particularly  the following pro-
                     vision  of Section    1:

                              ” ‘Each     such insurance           organization        shall also re-
                     port to the Board           of Insurance         Commissioners          on or
                     before    the first      day of March          of each year       the amount
                     that it had invested            on the 31st day of December,                pre-
                     ceding,     in Texas       securities       as defined       by Article     4766
                     of the Revised         Civil     Statutes     of Texas,       1925, as amend-
                     ed, and the amount             that it had invested           on said date in
                     similar      securities       in the State in which it had its high-
                     est percentage          of admitted        assets     invested,     and in corn-
                     puting the amount            of such investments             it shall include
                     as a part thereof          that percentage           of its investments         in
                     bonds    of the United          States    of America        that its reserves
                     on policies      of insurance          issued     on the lives      of persons
                     residing      or domiciled          in Texas      ark= of its total reserves
                     on all policies        outstanding,         but in no event        shall it in-
                     clude    any amount         of such bonds          in excess     of the amount
                     thereof     reported       by said company            as Texas      securities
                     in its Texas       tax return         covering      the year     1946.’

                             “Lincoln      National   Life   Insurance     Company,       Fort
                     Wayne,    Indiana,     is an out-of-State      life insurance       corn-
                     pany licensed       in Texas.     For    the purpose    of this request
                     for opinion,     we can assume        that the company’s         reserves
                     for policies     issued    on the lives     of persons    residing     or
                     domiciled     in Indiana     are considerably       in excess      of its
Hon.   George     B.    Butler,    Page    2 (V-1313)




        reserves        on policies     issued     on the lives    of persons
        residing       or domiciled       in Texas.       When the Company
        filed   its tax return       for the year        1950, it reported    the
        same      figure     for its Government          Bonds   in the column
        reflecting       its Texas     securities      that it did in the col-
        umn setting         out its similar       securities    in the State of
        Indiana.

                 61
                      . . .

                “There     is some      difference     of viewpoint     in the
        Department       as to the effect       of the changes      made    in the
        quoted   portion     of Article      4769 as against      the corre-
        sponding    provision      in Article      4769-a   before   its repeal.

                “Will    you please        advise    me whether          Article     4769
        permits    out-of-State        life insurance         companies         admitted
        in Texas     to report      as ‘similar        securities       in the state
        in which    it had its highest          percentage        of admitted       as-
        sets invested’       that percentage          of its investments           in the
        Bonds    of the United       States      that its Texas        reserves       are
        of its total reserves,          or should       such a company           report
        as similar      securities       that percentage          of its investment
        in United     States    Bonds      that its reserves          on policies       is-
        sued on the lives        of persons        residing      or domiciled         in
        the state in which         the company         had the highest          percent-
        age of its admitted         assets      invested     are to the company’s
        total reserves        on all of its outstanding             policies?     ”

              Article    4769, V.C.S.,     prior  to its amendment      in 1949
(House   Bill 471, Acts     Slst  Leg.,   R.S. 1949, ch. 619, p. 1362), pro-
vided  a method     of reporting    the percentage      of United States   Bonds
held by out-of-State      insurance     companies    as follows:

                “Each     such insurance            organization       shall also     re-
        port to the Board          of Insurance         Commissioners           on or
        before    the first     day of March          of each year       the amount
        that it had invested            on the 31st day of December,              pre-
        ceding,    in Texas      securities        as defined      by Article     4766
        of the Revised        Civil      Statutes    of Texas,      1925, as amend-
        ed, and the amount             that it had invested         on said date in
        similar     securities        in the state      in which it had its high-
        est percentage         of admitted        assets     invested,     and in com-
        puting   the amount         of such investments            in such other
        state it shall include            as a part thereof        that percentage
        of its investments           in bonds of the United            States   of Amer-
        ica purchased        between         December       8, 1941, and the ter-
        mination     of the war in which             the United      States   is now
        engaged     that its reserves            on policies     of insurance       is-
        sued on the lives         of persons        residing     or domiciled        in
Hon.    George      8.   Butler,     Page   3 (V-1313)




         such state are of its          total  reserves       on all    policies     out-
         standing. ” (Emphasis             added.)

                The 51st Legislature       amended     Article   4769 by House
Bill 471 (Acts      51st Leg.,   R.S. 1949, ch. 619, p. 1362) so as to change
the method     of computing     the securities     in the state in which      out-of-
State insurance       companies    had their   highest   percentage      of admitted
assets   invested.      Such amended    act, with certain      omissions     deemed
immaterial,      is as follows:

                  “Each    such insurance        organization       shall also re-
         port . * * the amount        that it had invested         . . . in Texas
         securities     . . , and the amount        that it had invested         on
         said date in similar        securities      in the State in which          it
         had its highest      percentage       of admitted      assets    invested,
         and in computing        the amount       of such investments           it
         shall include      as a part thereof         that percentage        of its
         investments       in bonds      of the United      States   of America
         that its reserves        on policies     of insurance        issued    on
         the lives    of persons       residing    or domiciled        in Texas
         are of its total     reserves       on all policies       outstanding,
               II
         . . .

                  The     language     used in this amendment    is plain             and    un-
ambiguous,        and    therefore     is not susceptible of construction.

                   You are therefore         advised       that an out-of-State          life in-
surance      company       in its annual      report     to the Board       of Insurance
Commissioners            should    show the amount            that it had invested          on the
31st day of December,             preceding,        in securities,       similar     to Texas
securities,       in the state     in which      it had its highest        percentage        of ad-
mitted     assets    invested;      and such insurance            company      in computing
the amount        of such investments           should      include    as a part thereof
that percentage         of its investments           in bonds of the United           States    of
America       that its reserves        on policies        of insurance       issued     on the
lives   of persons       residing     or domiciled          in Texas     are of its total re-
serves      on all policies      outstanding.          However,      in making      such report
it should     not include      any amount         of such bonds        in excess     of the a-
mount     thereof     reported     by said company            as Texas      securities       in its
Texas     tax return      covering     the year        1946, as provided         in House      Bill
471, Acts      51st Leg.,      R.S. 1949, ch. 619, p. 1362.



                                       SUMMARY

               An out-of-State      life insurance     company     in its
        annual  report    to the Board     of Insurance    Commission-
        ers should    show the amount        that it had invested     on the
        31st day of December,         preceding,    in securities    simi-
        lar to Texas    securities,     in the state   in which   it had
Hon.   George     8.   Butler,    Page    4 (V-13     13)




        its highest     percentage        of admitted       assets     invested;
        and the insurance           company     in computing         the amount
        of these    investments         should    include     as a part thereof
        that percentage        of its investments           in bonds      of the
        United    States    of America        which     its reserves        on poli-
        cies of insurance          issued    on the lives       of persons       re-
        siding   or domiciled         in Texas      are of its total        reserves
        on all policies       outstanding.        However,        in making       this
        report    it should     not include      any amount         of such bonds
        in excess     of the amount         reported      by said company            as
        Texas    securities       in its Texas       tax return       covering      the
        year   1946, as provided           in House      Bill  471, Acts        51st
        Leg.,   R.S.    1949, ch. 619, p. 1362.

                                                              Yours     very   truly,

                                                              PRICE       DANIEL
                                                             Attorney      General



APPROVED:
                                                                  W.    V. Geppert
Jesse   P.    Luton.   Jr.                                                Assistant
Reviewing      Assistant

Everett      Hutchinson
Executive      Assistant

Charles     D. Mathews
First   Assistant




WVG/mwb
