Untitled Texas Attorney General Opinion

THE ATTQEWEY GENERAL O,P TEXAS Arrwrmi 11. TEXAS PRICE DANIEL ATTORNEYGENERAL December 9, 1948 Hon. George B. Butler, Chairman Board of Insurance Commissioners Austin, Texas Opinion No. V-729. Re: The legality of a County Mutual Insur- ance Company, under Article 4860a-20, Vernon's Civil Stat- utes, wrlting insur- ance outside of Texas. Dear Mr. Butler: Your letter of October 25, 1948, asks our opln- ion on the following question: “Please advise me whether a County Mu- tual Insurance Compan organized and oper- ating under Article 4 8'60a-20, Vernon’s Stat- utes, may write Insurance outside of Texas, If its reserve fund, or pollcyhoXders con- tingent llablllty, or both such reserve fund and contingent llablllty taken together, ex- ceeds the sum of Fifty Thousand Dollars ($50,000) . ” Article 4860a-20, Vernon’s Clvll Statutes, con- ‘%alns only two Sections specifically limiting the terrl- tory in which County Mutual Insurance Companies may enter ‘~‘into insurance contracts. .‘~’ Section 15 provides: “A County Mutual Insurance Company may write insurance (a) in any County adjoining the County in and for which it is organized, or (b) In any County in which no County Mu- tual Insurance Company has been organized, or (c) anywhere, if Its reserve fund, or pollcy- holders contingent liability, or both such re- ,serve fund and contingent llabillty taken to- ether, exceeds the sum of Fifty Thousand ? $~O,OOO.OO) Dollars." (Emphasis supplied) Hon. George B. Butler, Page 2, v-729. Section 20 provides, in part: “County Mutual Insurance Companies may reinsure any or all of their risks against any or all hazards which they are permitted to insure against with any other company or companies. “They shall have power and authority to make and enter into mutual or reclprocai re- insurance contracts with other Companies on the mutual or cooperative plan; provided that no County Mutual shall write or assume the relnsurance on any other property than the property it is permitted to Insure, or on property situated outside of the State Texas; . . . I’ (Emphasis supplied) Having expressly limited the authority to assume the . reinsurance of property to that situated in Texas, tnere arlses an lmpllcatlon that the Legislature did not intend to so limit the assumption of primary Insurance to property situated In the State, except as limited by Sec- tion 15 where the company’s reserve fund or policyholders contingent llablllty, or both, is $50,000.00 or less. There 1s nothing essentially different in the scheme of organization of “County Mutuals” from the scheme of any other type of mutual or reciprocal Insurance organ- ization. Many types of companies are restricted In var- ious ways unless the capital, reserves or surplus exceed stipulated amounts, or unless certain excess coverages are reinsured. No other type of insurance company, nor, for that matter, other type of business corporation, is ordinarily restricted to operations within the terrltor- la1 limits ‘of the State of Texas, other than by operation of laws in other States governing the territory outside of Texas. The flat authority granted by Section 15 to operate “anywhere” if the reserve or contingent llabll- lties ,of members exceed the stipulated amount, when con- sidered in the light of the absence of territorial re- strlctlons on corporations and individuals generally, ln- dicates’the absence of any intent on the part of the Legis- lature to impose the suggested llmltatlon, and you are so advised. Of course, the fact that under Texas law these companies may operate beyond ,the borders of the State, does not mean that the laws of other States permit such operation. Hon. George B. Butler, Page 3, v-729. SUMMARY County Mutual Insurance Companies with a reserve fund or policyholders contingent liability, or both taken to- gether, in excess of $50,000.00, may write insurance outside of Texas. Art- icle 486Oa-20, Section 15, Vernon's Civil .Statutes. Yours very truly ATTORNEYGENERALOF TEXAS By $&&kLQei& Ned McDaniel Assistant APPROVED: T ASSISTANT ORNEYGENERAL. NMc: jmc