EATTORNEY GENERAL 

OF TElxAs 

PRICE DANIEL 

ATTORNEY GENeRAI. 

December 11, 1951 

Hon. Geo. 8. Butler, Chairman 

Board of Insurance Commissioners 

Austin, Texas 

Oplaien Not V-1368 

I&: Pr&edune for Ftpwtiug 

rsal atate held by an cl*- 

of -3trte If Be ins urancc 

company under Article 

4769, V.C.S. (Article 4.03, 

Dear Mr. Butler: insurrnce Cede), 

Ywu request the opinion of this office upon the question presented in your letter, which is as follows: 

“Pleaoe see Article, 4766 [Article 3.34, Insuaanca Code] and pwticulWlp the following excerpt 

from Paragraph 2 of the Article: 

* ‘The investments nequired by this Chapter 

may be made by the purchaoe of not more than one 

,‘~ : building site, and in the erection thereon of not more 

than one o&lee building, or in the purchase, at its 

reasonable market value, d such office building already constructed and the ground upon which the snme 

is located in a city of the State of more than four 

thousand @,OgO 7 inbabitarts. All real estate owned 

by life inau@amor compcurira La this State on’December 31, 1909. and a11 thereaftor l cquined under the 

ptisirar, o& tBdr Clmpbet, ur by ioreclosure o8 a lien 

tke*s*n till be t*crtwd+ tm the extent of its reasonable ma&et vati. as a part of the investment required 

by thkw Ckb*w.’ 

‘It hat ken the Departmentai construetien 

thr*qh the *a~ t&t since l&r inr~aacp companier 

licesad la Texas bcquirt aud hold real estate: 

arbject to the &nltat l C Article 4726 [Article 3.40, 

W~@aoco Code], any nat estate held or acquired in 

a manner other than antherized by Article 4726 may 

mt be admitted as an asset to the company, 
Hon. Geo. B. Butler, Page 2 (V-1368) 

“Some of the out-of-State life insurers doing 

business in Texas own and hold real estate situated 

in the state of their domicile which the more liberal 

laws of their state permit them to do but which would 

be in conflict with Article 4726 if the real estate 

were located in Texas. The result is that the out-ofState life companies properly carry such real estate 

as admitted assets. 

“In making their annual tax return as required 

by Article 4769 [Article 4.03, Insurance Code], some 

of the out-of-State companies list as similar securities in the State in which they had the highest percentage of their admitted assets invested only the real 

estate located in that state which was owned on December 3 1, 1909 and all which was, acquired and held 

by it in the manner prescribed by our Article 4726. 

See Item 12, Part II of the tax return blank enclosed. 

“The position of such companies is that real 

estate in Texas held outside the provisions of Article 

4726 would not be an admitted asset in so far as this 

State is concerned, and therefore is not a Texas security, the consequence being that such real estate 

legally held in another state could not be a similar 

security to Texas securities. The Departmental position, with some differences in viewpoint here, is 

that real estate legally held in the state in which the 

company has its highest percentage of admitted assets 

is similar to real estate legally held in Texas, and 

should be so reported by such out-of-State companies. 

“Will you please advise me whether real estate 

held by an out-of-State life, heal,th and accident insurance company in the state in which it had its highest 

percentage of admitted assets inves,ted should be reported as a similar security in the Texas tax return 

required by Article 4769, even though a portion,.of 

such real estate holdings would not meet the provisions of our Article 47267 ” 

Article 4769, V.C.S., which now appears as Article 

‘4.03 of the new Insurance Code, provides for a gross premiums 

tax with respect to life, personal accident, life and accidtnt, or 

health and accident insurance for profit, or for mutual benefit or 

protection, upon such foreign life insurance companies doing 

business in Texas. The tax rate is a percentage of the gross premiums received, the tax being payable to the State Treasurer on 

or before March 15th for the preceding calendar year. The stat&ate 

i 
Hon. Gco. B. Butler, Page 3 (V-1368) 

provides for graduated rates depending on the ratio of the company’s investments in Texas securities as of December 31st of 

the preceding year to its investments in similar securities in the 

state in which it had the highest percentage of its admitted assets 

invested. 

It is reflected by your request that certain foreign 

insurance companies doing business in this State subject to the 

gross receipts tax provided in Article 4,03, Insurance Code, 

maintain that they should not include as a similar security any 

real estate owned by them in the state in which they have their 

highest percentage of admitted assets invested if the ownership 

of such real estate in Texas would be forbidden by the provisions 

of Article 3.40, Insurance Code. It is observed that the provisions of Article 3.34 defining Texas securities in so far as applicable to real estate, coincide with the provisions of Article 

3.40. In the definition of Texas secu*ities found in Article 3.34, 

the only reference to real estate is in this language: 

“The investments required by this Chapter may 

be made by the purchase of not more than one build- 

‘ing site, and in the erection thereon & net more than 

one office building, or in the purchase, at its rearonable market value, of such office building, already constructed and the ground upon which the same is located in any city of the State of more than four thousand 

(4,000) inhabitants, All real estate owned by life insurance companies in this State on December 3 1, 1909, 

and all thereafter acquired under the provisions of 

this Chapter, or by foreclosure of a lien thereon shell 

be treated, to the extent of its reasonable market value, as a part of the investment required by this Chapter.” 

The answer to your question depends upon the meaning to be accorded the term Ysimilar securities.” The Legislature defined ‘Texas securities” and as to the securities of the 

fereign state merely requifed that the securities be similar to 

Texas securities. Since the Ls.gislature did not define *similar 

securities,” we may assume that it is to be given its ordinary 

meaning as generally used and understood. Webster’s New International Dictionary (2nd Ed, 1938) defines “similar” as follows: 

“1. Nearly corresponding; resembling in many 

respects; somewhat like; having a general likeness.” 

In 39 Words and Phrases (Perm. Ed.) 302-306, several cases are cited construing the word “similar” appearing in 
Hon. Geo. B. Butler, Page 4 (V-1368) 

contracts, wills, ordinances, and statutes, the general tenor of 

which is to accord the generally accepted meaning to the term as 

distinguished from the term “identical.” These cases poihout 

that unless the context indicates a more restricted meaning of 

the word “similar ,” the generally accepted meaning as commonly used is the one that should be adopted. 

Had the Legislature used the. term “identical securities ” instead of the term “similar securities,” we would have a 

different problem; for then it could be logically urged that only 

such real estate as the company owned in the foreign state identical with the real estate defined in Article 3.34 shouldbe included and that any other real estate,, although the ownership thereof 

is legal in the foreign state, should be excluded. However, the 

Legislature used the word “similar” and did not use the word 

“identical. ” Therefore, it is our opinion that real estate legally 

owned by a foreign insurance company in the state in which it has 

its highest percentage of admitted assets invested is a similar 

security to real estate legally owned in Texas as defined in Article 3.34, Insurance Code. 

SUMMARY 

Real estate lawfully owned by a foreign insurance company in the state in which it has its highest 

percentage of admitted assets invested and which is 

doing business in this State and is subject to the gross 

receipts tax imposed by Article 4.03, Insurance Code, 

is ‘similar” to real estate in Texas as defined in Article 3.34, Insurance Code, notwithstanding the ownership thereof would be contrary to the provisions of 

Article 3.40, Insurance Code, if owned in this State. 

Such foreign insurance company should include the 

real estate lawfully owned by it in such foreign state 

in determining its tax rate under Article 4.03, Insurance Code. 

APPROVED: Yours very truly, 

W. V. Geppert PRICE DANIEL 

Taxation Division Attorney General 

Everett Hutchinson 

Executiie Assistant 

Charles D. Mathews 

Firet Assistant 

LPL/mwb 

L. P. Lollar 

Assistant