Texas Insurance Code - Not Codified - Article 3.40. May Hold Real Estate
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Art. 3.40. MAY HOLD REAL ESTATE.
Article repealed effective April 1, 2007
Every such insurance company may secure, hold and convey real
property only for the following purposes and in the following
manner:
1(a). One building site and office building for its
accommodation in the transaction of its business and for lease and
rental; and such office building may be on ground on which the
company owns a lease having not less than fifty (50) years to run
from the date of its acquisition by the company, provided that the
company shall own, or be entitled to the use of, all the
improvements thereon, and that the value of such improvements shall
at least equal the value of the ground, and shall be not less than
twenty (20) times the annual average ground rentals payable under
such lease; and provided such office building shall have an annual
average net rental of at least twice such annual ground rental; and
provided further, that such company shall be liable for and shall
pay all State and local taxes levied and assessed against such
ground and the improvements thereon, which for the purposes of
taxation shall be deemed real estate owned by the company. Provided
that an acquisition of such an office building on leased ground
shall be approved by the State Board of Insurance before such
investment.
Branch office buildings in the State of Texas and elsewhere
within the United States wherein such company is authorized to do
business as shall be requisite for its convenient accommodation in
the transaction of its business and for lease and rental and also
parking facilities adjacent to or in the vicinity of each office
building owned by such insurance company as shall be reasonably
requisite for such insurance company and tenants of the buildings;
however, at least fifty per cent (50%) of the space in each such
branch office building which is available for occupancy for
business purposes shall be used by such insurance company for the
transaction of its business and not for lease and rental to others;
provided, however, that such investments in the properties
described in this paragraph shall only be made in towns or cities
having a population of fifteen thousand (15,000) or more according
to the last Federal Census.
1(b). No such company shall make any investment in the
properties described in Subdivision 1(a) above if, after making
such investment, the total investment of the company in such
properties is in excess of thirty-three and one-third per cent
(33-1/3%) of its admitted assets as of December 31st next preceding
the date of such investment; provided, however, that such
investment may be increased to as much as fifty per cent (50%) of
the company's admitted assets upon advance approval by the State
Board of Insurance; provided further, that such investment may be
further increased if the amount of such additional increase is paid
for only from surplus funds and is not included as an admitted asset
of the company.
1(c). The value of each such investment in the properties
described in Subdivision 1(a) shall be subject to the approval by
the State Board of Insurance; and the Board may, in its discretion,
at the time such investment is made or any time when an examination
of the company is being made, cause any such investment to be
appraised by an appraiser appointed or approved by the Board, and
the reasonable expense of such appraisal shall be paid by such
insurance company and shall be deemed to be a part of the expense of
examination of such company. No such insurance company may
hereafter make any increase in the valuation of any of the
properties described in Subdivision 1(a) unless and until such
increased valuation shall be likewise approved by the Board,
subject to the limitations and conditions set out in Subdivision
1(b);
2. Such as have been acquired in good faith by way of security
for loans previously contracted or for moneys due;
3. Such as have been conveyed to it in the satisfaction of
debts previously contracted in the course of its dealings;
4. Such as have been purchased at sales under judgment or
decrees of court, or mortgage or other liens held by such companies.
5. All such real property specified in Subdivisions 2, 3, and
4 of this Article which shall not be necessary for its accommodation
in the convenient transactions of its business, except interests in
minerals and royalties reserved upon the sale of land acquired
under such Subdivisions 2, 3, and 4 hereof, and further excepting
interests in producing royalties and producing overriding
royalties otherwise acquired, shall be sold and disposed of within
five (5) years after the company shall have acquired title to the
same, or within five (5) years after the same shall have ceased to
be necessary for the accommodation of its business. It shall not
hold such property for a longer period, unless it shall procure a
certificate from the Board that its interests will suffer
materially by the forced sale thereof; in which event the time for
the sale may be extended to such time as the Board shall direct in
such certificate.
In addition to, and without limitation on, the purposes for
which real property may be acquired, secured, held or retained
pursuant to other provisions of this Article, every such insurance
company may secure, hold, retain and convey production payments,
producing royalties and producing overriding royalties as an
investment for the production of income; provided, however, that
the total amount of all such investments in production payments,
producing royalties and producing overriding royalties plus the
total amount of investments in home office and branch office
properties under Subdivision 1(a) of this Article shall not exceed
the total amount permitted by and shall be subject to all of the
limitations and restrictions of Subdivisions 1(b) and 1(c) of this
Article and for this purpose all investments in production
payments, producing royalties and producing overriding royalties
pursuant to the provisions of this paragraph shall be deemed to be
"properties described in Subdivision 1(a)" of this Article; and
provided further, that in valuing each such production payment,
producing royalty and producing overriding royalty for the purposes
of Subdivision 1(c) of this Article the State Board of Insurance may
establish such value as being the maximum amount which the company
purchasing such production payment, producing royalty and
producing overriding royalty could loan against a first lien on
such production payment, producing royalty and producing
overriding royalty under the provisions of Part II, Section A,
Subsection 2 of Article 3.39 of the Insurance Code; and provided
further, no such company shall make any investment in such
production payments, producing royalties and producing overriding
royalties solely as an investment for the production of income if,
after making such investment, the total investment of the company
at cost in such production payments, producing royalties and
producing overriding royalties is in excess of ten per cent (10%) of
its admitted assets as of December 31st next preceding the date of
such investment. For the purposes of this paragraph, a production
payment is defined to mean a right to oil, gas or other minerals in
place or as produced that entitles its owner to a specified fraction
of production until a specified sum of money, or a specified number
of units of oil, gas or other minerals, has been received; a
royalty and an overriding royalty are each defined to mean a right
to oil, gas and other minerals in place or as produced that entitles
the owner to a specified fraction of production without limitation
to a specified sum of money, or a specified number of units of oil,
gas or other minerals; "producing" is defined to mean producing
oil, gas or other minerals in paying quantities, provided that it
shall be deemed that oil, gas or other minerals are being produced
in paying quantities if a well has been "shut in" and "shut in
royalties" are being paid. In the event production in paying
quantities should cease from any such royalty interest or
overriding royalty interest held by any insurance company, such
royalty or overriding royalty shall be sold and disposed of within
two (2) years after such production shall have ceased, unless
production in paying quantities shall have been resumed, or unless
such Insurance Company shall have procured a certificate from the
Board that its interests will suffer materially by the forced sale
thereof; in which event the sale may be extended to such time as the
Board shall direct in such certificate.
Acts 1951, 52nd Leg., ch. 491. Amended by Acts 1955, 54th Leg., p.
916, ch. 363, Sec. 13; Acts 1959, 56th Leg., p. 890, ch. 411, Sec.
4; Acts 1961, 57th Leg., p. 627, ch. 294, Sec. 1; Acts 1961, 57th
Leg., p. 1049, ch. 467, Sec. 4; Acts 1969, 61st Leg., p. 1529, ch.
464, Sec. 1, eff. Sept. 1, 1969; Acts 1977, 65th Leg., p. 207, ch.
102, Sec. 1, eff. Aug. 29, 1977.
Article: 3.29 3.31 3.32 3.33 3.38 3.39 3.39a 3.40 3.40-1 3.41 3.41a 3.49-3 3.50-7A 3.50-7A 3.50-7B
Last modified: August 11, 2007
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