                  HE       .J%    OBEY                 GENEKAL
                                       TEXAS




                                  March      26, 1957


Hon.   John Osorio, Chairman                       Opinion No. WW -73
Board of Insuiance Commissioners
International  Life Building                       Re:   W,hether the Board of Insur-
Austin, Texas                                            ance Commissioners       is ra-
                                                         quired to approve     merger
                                                         agreements     submitted   under
                                                         Article   14.13 of the Texas
                                                         Insurance   Code, 1951, as
Dear   Sir:                                              amended.

                You have requested      our opinion as to whether   the Board of
Insurance   Commissioners     is required   by Article  14.13 of the Texas  Insur-
ance Code to approve     merger   agreements    between  mutual assessment    as-
sociations.

                 Article    14.13 provides     that:

                   “The associations       subject  to this chapter   are
         hereby expressly       prohibited     from merging    with another
         association,   are prohibited       from ‘transferring’    any part
         or group of membership,           or all the membership     to an-
         other association      or from merging       groups or transfer-
         ring members       from one group to another in an associa-
         tion without the consent in advance of the Board of Insur-
         ance Commissioners          which may be given only after com-
         plete investigation      into the facts and determination       that
         such transfer     or merger      is to the advantage    of members
         of the association      or groups to be affected.”

                It can readily  be seen from a reading      of this statute that mu-
tual assessment    associations  are prohibited   by law from merging         with each
other unless these associations     first obtain the consent for such merger
from the Board of Insurance     Commissioners.       The statute requires       that
this consent must be obtained in advance of the actual merger.             The Board
may give its consent only after it has made a complete         investigation      into
all the facts and circumstances     and made a determination       that the contem-
plated merger   is to the advantage     of the members   of the affected     groups or
associations.

                  You stated in your request      that it had been the policy of the
Board for several      years to approve    all merger     agreements   when it was de-
termined    that such agreements      were not to the detriment      of the particular
policyholders    affected,  but that the Board now desired to refuse all merger
agreements     where it is not clearly    shown from the facts that the, merger
is to the best interests     of all policyholders     affected  by the agreement.
Hon,   John Osorio,   page   2 (WW-73)




While in your request      you use the term “policyholders”            and the statute re-
 fers to “members”,     this is of no consequence    and does         not affect this opin-
,ion, as Article 14.02 defines    “member”    as policyholder          or any person in-
 sured by an association,

                 We are of the opinion that Article         14.13 makes it the Board’s
duty and responsibility     to make a complete      investigation     into all.the surround-
ing facts and circumstances       involved   in the merger      agreement,     and to disap-
prove the plan if the Board finds that such merger agreement                is not to the
advantage   of the members      of the affected   groups or associations.          If the
Board finds the merger       plan is to the advantage      of the affected    policyholders,
it may,approve    the plan.

                                     SUWY                     l


                 Mutual assessment       associations    are prohibited
                 by Article    14.13, Insurance     Code of Texac,    from
                 merging    with each other unless the associations
                 first obtain the consent for such msrgcr         from the
                 Board of Insurance      Commissioners.                 i

                  It is the duty of the Board of Insurance             Commis-
                  sioners    under the provisions        of Article     14.13, In-
                  surance     Code.of  Texas,    to investigate      the facts
                  and circumstances        involved    in a contemplated
                  merger     agreement     between mutual assessment            as-
                  sociations    or groups within such associationa,            and
                  to approve     or disapprove      the merger      agreement
                  after determination       as to which course would be
                  to the advantage      of the members       of the associations
                  or groups to be affected        by the merger plan.

                                             Yours   very   truly,

                                             WILL    WILSON
                                             Attorney   General




                                               . % ill D. Davis
                                                 Assistant

APPROVED:

OPINION     <;OMlviITTEE
H. Grady    Chandler,   Chairman
