BILL ANALYSIS



C.S.H.B. 2793
By: Shields
03-29-95
Committee Report (Substituted)


BACKGROUND

     Currently, the Texas Insurance Holding Company System
Regulatory Act provides regulation for the payment of dividends by
property and casualty insurers by defining what constitutes an
"extraordinary" dividend whose payment is subject to the prior
approval of the commissioner of insurance.  Additionally, the
Holding Company Act establishes specific amounts an insurer may
invest in its subsidiaries or affiliates.

PURPOSE

     As proposed, House Bill 2793 would amend the Texas Insurance
Holding Company System Regulatory Act to conform with the National
Association of Insurance Commissioners (NAIC) model legislation.

RULEMAKING AUTHORITY

     It is the committee's opinion that this bill does not
expressly grant any additional rulemaking authority to a state
officer, department, agency or institution.

SECTION BY SECTION ANALYSIS

SECTION 1.

Amends Section 4(c) (2) of Article 21.49-1, Insurance Code by using
"net income" rather than 
rather than "net investment income".

SECTION 2.

Amends Section 6(b) of Article 21.49-1, Insurance Code by excluding
the investments in a domestic or foreign insurance subsidiaries
from the determination of those permitted investments by an insurer
in its other subsidiaries or affiliates.

SECTION 3.

Amends Section 6(d) of Article 21.49-1, Insurance by establishing
the qualification of an investment in an affiliate is to be
determined before the investment is made and taking into
consideration all current debt amounts outstanding and capital
invested in such affiliate, net of any returned capital previously
invested in the affiliate.

SECTION 4.

Amends Section 6A of Article 21.49-1, Insurance Code, by providing
that the "valuation of investment provisions" applies to financial
statement preparation purposes, but does not apply to the initial
quantitative investment limitations set forth elsewhere in the
article.

SECTION 5. Effective Date.

SECTION 6. Emergency Clause.




COMPARISON OF ORIGINAL TO SUBSTITUTE

     The substitute to H.B. 2793 under SECTION 1 would delete
amending language contained in the filed bill determining whether
a dividend or distribution is extraordinary, an insurer other than
a life insurer may carry forward net income from the previous two
years that has not already been paid out as dividends.  Any net
income carried forward shall be computed by taking the net income
from the second and third preceding calendar years, but not
including realized capital gains, less dividends paid in the second
and immediate preceding calendars years.

SUMMARY OF COMMITTEE ACTION

     In accordance with House Rules, H.B. 2793 was heard in a
public hearing on March 22, 1995.  The Chair announced, at the
request of the author, H.B. 2793 be left as pending business before
the Committee.   

     On March 29, 1995 the Chair laid out H.B. 2793 as pending
business before the Committee.  The Chair recognized Representative
Shields who offered a substitute to H.B. 2793 and moved the
Committee adopt the substitute.  The Chair heard no objections and
the substitute to H.B. 2793 was adopted.

     The Chair recognized the following persons to testify in
support of H.B. 2793:
Ross Davidson, USAA; Will D. Davis, USAA.  The Chair recognized the
following person to testify neutrally on H.B. 2793:  A.W. "Woody"
Pogue, Texas Department of Insurance.
No one testified in opposition to H.B. 2793.

     The Chair recognized Representative G. Lewis who moved the
Committee report H.B. 2793 as substituted to the full House with
the recommendation that it do pass and be printed.  Representative
Dutton seconded the motion and the motion prevailed by the
following vote:
AYES (6); NAYES (0); ABSENT (3); PNV (0).