# EATTORNEY GENERAL OF TElxAs

PRICE DANIEL ATTORNEY

GENeRAI. December 11,

# 1951

Hon. Geo. 8. Butler, Chairman Board ofInsurance Commissioners Austin, Texas Oplaien Not V-1368
I&: Pr&edune for Ftpwtiug rsal atate held by an cl*- **of**-3trte IfBeinsurancc company under Article **4769,** V.C.S. (Article 4.03, Dear **Mr.** Butler: insurrnce Cede),

Ywu request the opinion ofthis 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 2ofthe Article:
*‘The investments nequired bythis Chapter may be made by the purchaoe ofnot more than one

,‘~ : building site, and in the erection thereon ofnot 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 ofthe State of more than four thousand @,OgO

7 inbabitarts. All real estate owned by life inau@amor compcurira Lathis State on’Decem**ber** 31, 1909. and **a11**thereaftor 

## l cquined **under** the ptisirar, o&tBdr Clmpbet, ur by ioreclosure o8a lien tke*s*n till be t*crtwd+ tmthe extent ofits reasonable ma&et vati. as apart ofthe investment required by thkwCkb*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 CArticle 4726 [Article 3.40, W~@aoco Code], any nat estate held or acquired in amanner other than antherized byArticle 4726 may mt be admitted as an asset tothe company,Hon. Geo. B. Butler, Page 2(V-1368)

“Some ofthe out-of-State life insurers doing business in Texas own and hold real estate situated in the state oftheir domicile which the more liberal laws oftheir state permit them to dobut which would be in conflict with Article 4726 ifthe 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 byArticle 4769 [Article 4.03, Insurance Code], some ofthe 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 31, 1909and all which was, acquired and held by it in the manner prescribed by our Article 4726. See Item 12,Part II ofthe tax return blank enclosed.

“The position of such companies is that real estate in Texas held outside the provisions ofArticle 4726 would not be an admitted asset in so far as this State is concerned, and therefore is not aTexas 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 inviewpoint here, is that real estate legally held in the state inwhich the company has its highest percentage ofadmitted 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 ofadmitted assets inves,ted should be reported as a similar security in the Texas tax return required by Article 4769, even though aportion,.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 ofthe 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 inTexas. The tax rate is apercentage ofthe gross premiums received, the tax being payable to the State Treasurer on or before March 15thfor the preceding calendar year. The **stat&ate**

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

provides for graduated rates depending on the ratio ofthe company’s investments in Texas securities as of December 31st of the preceding year to its investments in similar securities in the state inwhich ithad the highest percentage ofits admitted assets invested.
It is reflected byyour request that certain foreign insurance companies doing business in this State subject to the gross receipts tax provided inArticle 4,03, Insurance Code, maintain that they should not include as a similar security any real estate owned by them in the state inwhich they have their highest percentage ofadmitted assets invested ifthe ownership of such real estate in Texas would be forbidden by the provisions ofArticle 3.40, Insurance Code. It is observed that the provisions of Article 3.34 defining Texas securities in sofar as applicable to real estate, coincide with the provisions ofArticle 3.40. In the definition ofTexas secu*ities found inArticle 3.34, the only reference toreal estate is in this **language:**

“The investments required by this Chapter may be made by the purchase ofnot 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, ofsuch 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 31, 1909, and all thereafter acquired under the provisions of this Chapter, or by foreclosure of a lien thereon shell be treated, to the extent ofits reasonable market value, as apart ofthe investment required by this Chapter.” The answer to**your** question depends upon the meaning tobe accorded the term Ysimilar securities.” The Legislature defined ‘Texas securities” and as to the securities ofthe 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 39Words and Phrases (Perm. Ed.) 302-306, several cases are cited construing the word “similar” appearing inHon. 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 amore 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 inArticle 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 aforeign insurance company in the state inwhich it has its highest percentage ofadmitted assets invested is asimilar security to real estate legally owned in Texas as defined in Article 3.34, Insurance Code.

**SUMMARY**

Real estate lawfully owned by aforeign insurance company in the state inwhich it has its highest percentage ofadmitted assets invested and which is doing business in this State and is subject tothe gross receipts tax imposed byArticle 4.03, Insurance Code, is ‘similar” to real estate in Texas as defined inArticle 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