EAXTORNEY GENERAL 

OFTEXAS 

GERALD C. MANN AUSTINI~.TEXAS 

Honorable 0. P. Lockhart, Chairman 

Board of Insurance Commissioners 

Austin, Texas 

Dear Sirr Opinion No. O-4636 

Re: Can the Board of Insurance Cormissioners properly limit the amount 

of a single risk to whiah a United 

States Branch of an alien insurer 

licensed in Texae may expose itself without reinsurance in the 

manner provided in Article 49327 

Your letter of September 6, 1942, presenting the above question for 

an opinion of this department, reader 

"Article 4932, Se&ion 1, sets the limit to which a fire, fire and 

marine, marine or inland insurer, may expose itself to a single risk without reinsurence at ten peroent of itr paid up oapital. 

'The United States Branches of alien companies have no oapital stock. 

Each Branch licensed in Texas is oertified by the Mew York Superintendent 

of Insurance to have oomplied with Se&ion 104 of the New York Insurance 

Law of 1939, requiring the maintenanoe of minimum deposits with the proper 

state officers for the benefit of all its policyholders and oreditors in 

the United States. This deposit is a capital account, and when made, has 

heretofore been construed to be analogous to the capital stock requirement 

of our Article 4993 as one of the predioates to do business in Texas. On 

showing of satisfactory oondition of the affairs of the United States 

Eranohes (without regard to the parent aompanies abroad) by examination or 

annual statement, and the meeting of other eonditione not pertinent here, 

the Branches have been licensed in this state under Artiales 4666 and 4919. 

"Each of the branches operating in Texas is also licensed in Mew York, 

and its requirement of maintenance of 'Trusteed Surplus' has been complied with, as set out and fully defined in Section 96 of its 1939 laws. 

"Will you kindly advise me whether this Department may properly limit 

the amount of a single riak to which a United States Branch of an alien 

insurer licensed in Texas may expose itself without reinsurance in the 

manner provided in Artiole 4932: and if so, whether the ratio of the risk 

shall be to the 'statutory deposit t desoribed in Section 104 or to the 

'Trusteed Surplus* BLI defined in Section 96 of the Mew York Insurance Laws 

of 1939." 
Honorable 0. P. Lookhart, Chairman, Page 2 O-4838 

Article 4932, Section 1, Revised Civil Statutes, 1925, provides: 

"No fire, fire and marine, marine or inland insuranoe company doing 

business in this State shall expose itself to any one risk, except when 

insuring cotton in bales, and grain, to an amount exceeding ten per cent 

of its paid up capital stock, unless the excess shall be insured by such 

company in some other solvent insurance company legally authorized to do 

business in this State." 

The above quoted section of Article 4932 was originally enacted by 

the Acts of 1875, 14th Legislature, being at that time a part of Section 

8 of Chapter 31 of said Acts from which section, our present Article 4919 

is taken. By its language as enacted, such limitation extended to not exceeding ten percent (lO$) of the "paid up capital" of such companies. 

This provision so worded was brought forward in both the Revised Statutes 

of 1879 and 1896 as Articles 2967 and 3075, respectively. By the Acts of 

1905, 29th Legislature, Chapter 80, this Article was amended by adding 

several sections and as it now appears in Section 1, the term "paid up 

capital stock" was adopted in lieu of "paid up capital". 

It is pointed out by you that the United States branches of the alien 

companies have no capital steak. Regardless of what distinction, if any, 

should be made, it is apparent by the change as above noted, that neither 

of the terms, "paid up capital" nor "paid up capital stock" are to be 

construed as equivalent to and meaning statutory deposits or trusteed surpluses in or defined,by the laws of a particular foreign state. 

Such oompanies as named in this Article are governed by the provisions of Chapter 11, Title 78 of the Revised Civil Statutes, 1925, wherein 

is contained Article 4919 and we fail to find any statutory authority for 

the Board of Insurance Commissioners to accept the deposits made by United 

States branches of alien companies in the State of New York as either 

their "capital“ or "capital stock" within the purview of this statute. 

This statute limits the risks to which such character of insurance 

companies may be exposed to ten percent (10%) of its paid up capital 

stock. It is apparent that such alien branch companies must be considered 

as having no paid up capital stock. It seems to us that any application 

of this statute as would construe the term "paid up capital stock" as 

meaning statutory deposits or trusteed surpluses made in and defined under 

the laws of any particular foreign state appears to have been refuted by 

the Supreme Court in Glens Falls Insurance Company v. Hawkins, 126 S. W. 

1114. Although a stock company was there involved, the Court held that 

the surplus it could show of #2,433,826, and urged as a permissible basis 

of limitation of risks under the laws of New York, was not to be considered, and therefore the Court refused to mandamus the Commissioner of 

Insurance to issue a certificate to this foreign company who had violated 

the statute. 
. 

Honorsble 0. P. Lockhart, Chairmen, Page 3 O-4838 

We are not to be understood as holding herein that Article 4932, 

supra, does not apply to suoh alien branch companies nor do we undertake 

to decide that there has been any violation of this statute. We have 

understood end discussed your request solely upon the assumption that you 

would enforce this statute to one or the other capital accounts required 

end designated under the laws of New York as "statutory deposit" or 

trusteed surplus", neither of which are within the meaning of "paid up 

oapital stock" as used in this statute. 

You are therefore respectfully advised that in the opinion of this 

department, the Board of Insurance Commissioners is not authorized to 

accept the statutory deposit or the trusteed surplus made in end as defined by the State of New York by United States branohes of alien companies doing business in Texas as its "paid up capital stock" within the 

provisions of Article 4932, Revised Civil Statutes of Texas, as same 

limits any one single risk to which such oharacter of companies named 

therein may be exposed. 

Yours very truly 

ATTORNEY GENERAL OF TEXAS 

By s/V& J. R. King 

Wh. J. R. King 

Assistant 

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APPROW;', OCT. 24, 1942 

APPROVED 

O?~NI@N 

COMMLTTEE 

BY Bin? 

Chairman