BILL ANALYSIS


                                                        H.B. 2793
                                          By: Shields (Wentworth)
                                             Economic Development
                                                         05-22-95
                              Senate Committee Report (Unamended)
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, H.B. 2793 provides for the regulation of insurance
holding companies.

RULEMAKING AUTHORITY

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

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 2(b), Article 21.49-1, Insurance Code,
to redefine "commercially domiciled insurer" to mean an alien
insurer authorized to do business in this state that, during a
specified amount of time, has written an average of more gross
premiums in this state that it has written in its state of domicile
during the same period, with those gross premiums constituting 30,
rather than 20, percent or more of its total gross premiums.

SECTION 2. Amends Section 4(c)(2), Article 21.49-1, Insurance Code,
to provide that an extraordinary dividend or distribution includes
any dividend or distribution of cash or other property, whose fair
market value together with that of other dividends or distributions
made within the preceding 12 months exceeds the greater of 10
percent of such insurer's surplus as regards policyholders as of
the 31st day of December next preceding, or the net gain from
operations of such insurer, if such insurer is a life or title
insurer, or the net, rather than net investment, income, if the
insurer is not a life or title insurer, for the 12-month period
ending the 31st day of December next preceding, but shall not
include pro rata distributions of any class of the insurer's own
securities.

SECTION 3. Amends Section 6(b), Article 21.49-1, Insurance Code,
to authorize a domestic insurer to invest in securities of one or
more subsidiaries and affiliates amounts which in the aggregate do
not exceed the lesser of 10, rather than five, percent of the
insurer's assets.  In calculating the amount of investments,
investments in domestic or foreign insurance subsidiaries are
excluded.

SECTION 4. Amends Section 6(d), Article 21.49-1, Insurance Code,
to provide that whether any investment under Subsection (b) hereof
meets the applicable requirements thereof is to be determined
before the investment is made by computing the applicable
investment limitations as though the investment has already been
made, taking into account the principal balance outstanding at the
time of the computation on all previous investments in debt
obligations and the value of all previous investments in equity
securities as of the day the previous investments were made, net of
any return of capital invested, not including dividends. Deletes
the provision that whether any investment under Subsection (b)
hereof meets the applicable requirements thereof is to be
determined on a pro forma basis as of the time after such
investment is made.

SECTION 5. Amends Section 6A(a), Article 21.49-1, Insurance Code,
to provide that for financial statement valuation purposes only,
and not to determine the amount invested in accordance with Section
6(b)(1) of this article, valuation of an investment by an insurer
in a subsidiary or affiliate of an insurer shall be valued on a
certain basis.

SECTION 6. Amends Section 18, Article 21.49-1, Insurance Code, as
follows:

     Sec. 18. New heading: APPLICABILITY TO FOREIGN AND ALIEN
     INSURERS. (a) Created from existing text.
     
     (b) Provides that a foreign or alien insurer is not subject
       to the requirements of this article if the commissioner of
       insurance has approved a withdrawal plan for the insurer
       under Article 21.49-2C of this code.
       
       SECTION 7.   Effective date: September 1, 1995.

SECTION 8. Emergency clause.