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Texas Insurance Code - Section 425.119. Authorized Investments: Real Property

Legal Research Home > Texas Lawyer > Insurance Code > Texas Insurance Code - Section 425.119. Authorized Investments: Real Property

§ 425.119. AUTHORIZED INVESTMENTS:  REAL PROPERTY.  (a) 
Subject to this section, an insurance company may invest in a real 
property fee simple or leasehold estate located in the United 
States.
	(b)  An insurance company may invest in home and branch 
office real property or a participation in home or branch office 
real property.  At least 30 percent of the available space in a 
building used as a home or branch office must be occupied for the 
business purposes of the company and the company's affiliates.  A 
company's aggregate investment in home and branch office real 
property may not exceed 20 percent of the company's assets.
	(c)  An insurance company may invest in real property other 
than home and branch office real property or participations in home 
and branch office real property.  A company's investment under this 
subsection in a single piece of property or in an interest in a 
single piece of property, including improvements, fixtures, and 
equipment relating to the property, may not exceed five percent of 
the company's assets.
	(d)  Investment real property held under Subsection (b) or 
(c) must be materially enhanced in value by:
		(1)  the construction of durable, permanent-type 
buildings and other improvements that cost an amount at least equal 
to the cost of the real property, excluding buildings and 
improvements at the time the real property is acquired;  or
		(2)  the construction, commenced before the second 
anniversary of the date the real property is acquired, of buildings 
and improvements described by Subdivision (1).
	(e)  The admissible asset value of each investment in real 
property under Subsection (b) or (c) is subject to review and 
approval by the commissioner.  The commissioner may, at the time the 
investment is made or any time the insurance company is being 
examined, have the investment appraised by an appraiser appointed 
by the commissioner.  The company shall pay the reasonable expense 
of the appraisal.  The expense of the appraisal is considered to be 
a part of the expense of examination of the company unless the 
company applies for the appraisal to be made.  A company may not 
increase the valuation of real property described by Subsection (b) 
or (c) unless:
		(1)  the company applies for the increase in valuation;  
and                
		(2)  the commissioner approves the increase.                                  
	(f)  Except as provided by Subsection (g), an insurance 
company may not own, develop, or hold an equity interest in any 
residential property or subdivision, single or multiunit family 
dwelling property, or undeveloped real property to subdivide for or 
develop residential or single or multiunit family dwellings.
	(g)  An insurance company may invest in other real property 
acquired:        
		(1)  in good faith to secure a loan previously 
contracted for, or for money due;
		(2)  in satisfaction of a debt previously contracted 
for in the course of the company's dealings;  or
		(3)  by purchase at a sale under a judgment or decree of 
a court or under a mortgage or other lien held by the company.
	(h)  Regardless of the manner in which an insurance company 
acquires real property under this section, on the sale of the 
property, the company may retain indefinitely the fee title to the 
mineral estate or any portion of the mineral estate.

Added by Acts 2005, 79th Leg., ch. 727, § 1, eff. April 1, 2007.           

Last modified: August 11, 2007