It seems everywhere you look these days you hear about the slowing of the U.S. economy. The surety bond industry guarantees construction projects and licenses for companies throughout the country. One could argue that the surety industry is a basic economic health indicator. Fortunately, the surety bond industry is not only keeping afloat during these uncertain times, but may actually show a modest increase. Perhaps the U.S. economy is more resilient than the major media reports indicate.
I have numerous meetings with multiple carriers every year. To my delight, the year has been surprisingly good for every carrier. Some of the carriers write larger contract bonds only, while others only deal with smaller license surety bonds.
During the start of 2008, JW Bond anticipated a decrease in revenue throughout the year due to the troubles stemming from the housing market. There is no doubt our economy is in some turbulent waters, as our agency is seeing a larger amount of cancelled bonds than ever before. Usually, the policies are cancelled due to the principal going out of business. That’s the bad news. On the bright side, our agency is also seeing a record amount of new incoming applications due to new companies being formed. Similar to our carriers, our agency should still show a small increase in revenue for 2008, as well as an increase in overall policies within our book. In other words, we are seeing more start-ups being created than companies going out of business. Hopefully a sign for the general health of the economy.