                       September 30, 1953

Hon. George B. Butler, Chairman
Board of Insurance Comnh3lotiers
InternationalLife E3uIldIng
Austin, Texas                0pInIon No. s-101
                                 Re:   Payment of old age
                                       benefits by Western
                                       hmerioaa Life Insur-
                                       ance Company upon
                                       polioles issued by
                                       National Aid Life
Dear Hr. Butler:                       Asecofation.
        'Yourrequest for our opialdn Involves,thePollow-
lng brief statement of facts:
             In 1929, National Aid ,LIfeAssociation.of     Oklahoma
City,   ,.Okl+homa; ~was admitted to ‘the, State of’ Texas Par the
purpose of insuring underthe ~%atural,~mIum plan" then
perml$$ed by Chapter'5,  ~Tltle78; ,oSPerrrcn~s~Giv~l3,
                                                     Statutes.
In 1941,   this Company converted to a pPan,cf opelration
                                                        a8 a
legal reserve as well as a natural premium or asseesment
under the name of National Aid Life Insurance Oompane, and
by charter ame@neat beoame the National LIte;AssuxanoeCorn-
         Oh Deoember ~28,1945, the &sse,ssment
                                             business was du-
F'
 y aaeumed by Reserve Loan Life Insuranoe Company of Texas,
and on Suly 29, 1949 this mutual'assessment;busIness   was
assumed by Scuthland'LifeInsuranoe Company. In -Lay,1353,
a relnsuranoe agreement was made between Muthland and Wes-
tern American Life Ineuranoe Cornpaneof Austin, Texas. The
latter oompan was organlsed under the provislo~ or Chap-
ters 13 and 1t . Texas Insuranoe Code. In clue&Ion are the
Certificatesoriginally Issued by National-AidLife Insur-
anoe Corn II whloh provide that the Qontraots~w
uiiuredls            reaohlng a oertaln age. All% %u%r-
lbus transaotlons,except the last one by Western Amerioan,
assume all of the oontraotual obligationswithout rese.rva-
tioa. You have also further advised that the original oer-
tlfloates met with the requirementsof Oklahoma ‘laws.   Wes-
tern Amerloan oontends that its oertiflo8te of assumptlcn
limits Its relnsuranoe agreement to~the provision of the
laws of the State of Texas and that speoIfloallyArt. 13.04
of the Insuranoe Code ocnfllots with provisionsof the
Hon. George B. Butler, page 2, (S-101)


cotitract.You state your request for our opinion as fol-
lows:
        "Premisesconsidered,we respectfullyrequest
     your advice as to whether-Western~AmerIcanLife
     Insurance Company~ls legally..obl$gatedto make
     payments of o'ldage benefits t6 the same dxtent
     that National Aid Life Insurance Company would
     have been liable In the,abseqceof the relnsur-
     ante agreements aforementioned?"
        The answersIs "Yes."
        Article 13.04, "Pdllcles;" Insuranoe Code, provides:
        "No corporationhereunder shall Issue any
     certlflcate OCRpolicy upon a lImIted payment
     plan, nor guarantee or prcmls~eto pay any type
     of endowment or annuity benefits, but shall
     confine Its operation to the issuance of cer-
     tlfloates looking to continuous payment of
     premlum# or assessmentsduring the 1QV of the
     policyholder. . . ."
         We Sall.tc Slad, however,.$hatthe certificateson
the policies In quest&n were originally Issued by a oompang
organlsed or Inoorporatedunder t& provlslons of C%pter 13,
Insurance Code (SormerlyArt..4859S,V.C.S.) and thereSore
these restriotlons would not apply. There Is no question
that these certificateswere eaforoeableduring reinsuranoe
agreements under National Life Reserve'Lcan,and Southland
Life. The fact that Western American was organieed under
Chapters 13 and 14 of the Insuranoe code and IS required t0
comply with Art. 13.04, supra, does not void the provisions
of business assumed under Its relnswance-agreement. The
1Imltatlon placed by Art. 13.04, supra,,i& a restriction con-
fining mtnal assessment oompanitisto the lssuance~cf ?rdI-
nary Insurance certlfloates, and,applies to new policies which
WesteriiAmerican Issues. ,Bankers Life & I;oanAsSh v. Chaie,
333 s.w.26 374 .(Tex.Clv. App. 1936)-
         The oourts,oS this State have spoken out to protect
innocent policyholderseven where p6lioies may +ve been
Issued In violation of our statntea. Amerloaa National In-
suranoe Co. v. Tabcr, 111 Tex. 155, 230 s W 3977zJ21) 8 OWCS
Of Insuranae Commissionersv. Great South& Life Insurince
E    150 T    23U 239 S W 26 an        (1951) It i th
fE;g our oz;Ioa ~&at oo&iaots ailoh have bein In e~feo~~ll
of these years, assumed and reinsured by various companies;
Hon. George B. Butler, page 3 (S-101)


are still enforceableby the holder against a company assum-
lng these contracts even though such company may not itself
legally write like contracts.

                      SUNNARY

            A Texas statewide mutual assessment
         company is legally.obligated,tomake
         payments of old age benefits to the same
         extent that Rational Aid 'LifeIneuranae
         Company would have been liable In the
         absenoe of the relnsuranceagreements.
APPROVED:                        Yours very truly,
Rudy 0. Rice                     JORlBEN SHEPPERD
State Affair8 Division           Attorney General
Willis E. Oresham                          Id&
Revlewer                         By . .
                                   mT
                                    V. F. aylor
Robert S. TrottI                    Assistant
FIrst Assistant
John Ben Shepperd
Attorney ibmeral
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