EATTORNEY GENERAL
OF TElxAs
PRICE DANIEL
ATTORNEYGENeRAI.
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 ques-
tion presented in your letter, which is as follows:
“Pleaoe see Article, 4766 [Article 3.34, Insua-
anca 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 al-
ready constructed and the ground upon which the snme
is located in a city of the State of more than four
thousand @,OgO7 inbabitarts. All real estate owned
by life inau@amor compcurira La this State on’Decem-
ber 31, 1909. and a11 thereaftor lcquined under the
ptisirar, o& tBdr Clmpbet, ur by ioreclosure o8 a lien
tke*s*n till be t*crtwd+ tm the extent of its reason-
able 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 lC 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-of-
State 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 securi-
ties in the State in which they had the highest percent-
age of their admitted assets invested only the real
estate located in that state which was owned on De-
cember 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 se-
curity, the consequence being that such real estate
legally held in another state could not be a similar
security to Texas securities. The Departmental po-
sition, 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 insur-
ance company in the state in which it had its highest
percentage of admitted assets inves,ted should be re-
ported 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 provi-
sions 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 pre-
miums 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 com-
pany’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 provi-
sions of Article 3.34 defining Texas securities in so far as ap-
plicable 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 rearon-
able market value, of such office building, already con-
structed and the ground upon which the same is locat-
ed in any city of the State of more than four thousand
(4,000) inhabitants, All real estate owned by life in-
surance 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 val-
ue, as a part of the investment required by this Chap-
ter.”
The answer to your question depends upon the mean-
ing to be accorded the term Ysimilar securities.” The Legisla-
ture 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 In-
ternational Dictionary (2nd Ed, 1938) defines “similar” as fol-
lows:
“1. Nearly corresponding; resembling in many
respects; somewhat like; having a general likeness.”
In 39 Words and Phrases (Perm. Ed.) 302-306, sev-
eral 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 common-
ly used is the one that should be adopted.
Had the Legislature used the. term “identical securi-
ties ” 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 iden-
tical with the real estate defined in Article 3.34 shouldbe includ-
ed 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 Arti-
cle 3.34, Insurance Code.
SUMMARY
Real estate lawfully owned by a foreign insur-
ance 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 Ar-
ticle 3.34, Insurance Code, notwithstanding the owner-
ship 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, Insur-
ance Code.
APPROVED: Yours very truly,
W. V. Geppert PRICE DANIEL
Taxation Division Attorney General
Everett Hutchinson
Executiie Assistant
L. P. Lollar
Charles D. Mathews Assistant
Firet Assistant
LPL/mwb