1. Surety Review: Western Surety Company (CNA)

    December 3, 2009 by Michael Weisbrot

    This is the first installment of our surety company reviews. We are starting with Western Surety Company, a subsidiary of CNA Surety, founded in 1986, located in Sioux Falls, South Dakota. Why start with Western Surety? Simple. They are the largest provider of commercial surety bonds in the U.S.!


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    Western Surety’s Success

    Clearly there is a reason for Western Surety Company’s great success in the commercial bond market. So let’s take a look at some of the reasons why they are the top market for so many.

    A Good Fit For All Agencies
    They have over 700 employees on staff, a staggering amount relative to the surety industry. The staff not only includes management and underwriters, but in-house bond issuers. This is a great asset to smaller bond agencies or insurance based agencies that don’t have experience with bond issuance. Anyone who has ever issued a bond knows that one small incorrect detail and the bond could be rejected.

    They also accommodate larger agencies like JW Surety Bonds. We have been working with Western surety since day 1. Fortunately for us and our clients, there will never be a day that we “outgrow” Western Surety Company, as they are a great fit for agencies of all sizes.

    Fast Turnaround
    From the agent’s perspective, Western Surety Company seems to have come close to perfecting the underwriting process. Their simplified underwriting allows for quicker turnaround than most underwriting departments, something I find more valuable than rate at times.

    Strong Paper
    While you don’t see as many commercials for Western Surety as you do for The Hartford Surety or Travelers Surety as of recent, I assure you it is a very financially sound bonding company.

    Don’t take my word for it…

    You can find their surety results posted to the surety associations using our agencies surety comparison tool: CNA Surety.

    Their A.M. Best Rating is currently ‘A, Excellent’ as well as ‘Stable’. I don’t recall it ever being otherwise.

    You can also find them on the Department of the Treasury’s Listing of Approved Sureties (Department Circular 570), a list of all Federally approved sureties.

    Let’s Hear From Other Agents
    What do you like about Western Surety? Are there any reasons we didn’t list that you feel make them a good match for your agency? What bonds do you primarily place with Western Surety?

    Share your thoughts!

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    Category: Surety Company Reviews

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  2. Bonding Company Ranking Tool Update

    July 7, 2009 by Michael Weisbrot

    Recently we posted about our new surety company ranking tool. Due to the positive feedback within the surety community we have added additional functionality to the tool. Now you can see premium and ranking details for all years selected by surety. Graphs have also been added for ease of use. Here is an example using Liberty Mutual as the selected bonding company.

    For the time being, the database has information on ranking and premium from 2006-2008. We are currently in the process of populating the database for years prior to 2006.

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    Category: Other

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  3. Bonding Company Rankings

    June 22, 2009 by Michael Weisbrot

    Bonding companies are ranked every year by how much premium they book. Our agency has compiled that data and made a tool to allow you to compare year to year. As of now, you can only look back to 2006, but we hope to add more history to it. You can use the Surety Ranking Tool for free.

    So tell us what you think in the comment box below. Are any of the results surprising? Do you have any suggestions on how to make the tool more useful? Let us know!

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    Category: Other, Surety News

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  4. What Bonding Companies Look For In A Contractor

    November 8, 2005 by Michael Weisbrot

    Bonding companies look at far more than just owners’ personal credit when it comes to contract surety over $250,000. A surety wants to have confidence in their bonded contractors prior to approval. There are numerous different actions a contractor can take to instill confidence in a bonding company. A contractor must be organized and practice restraint when necessary to gain the trust of an underwriter.

    Contractor Work Site

    For most, the best way to run a company in an organized fashion is to hire professionals they can count on to assist in decision making. A bond producer well versed in contract bonding should be a top priority. If your agent is not knowledgeable enough or does not have the markets to fit your company’s needs, then there is little they can do to help with your bonding needs. An experienced bond producer is a must to ensure you are competitive in your bids and to allow for a bond line size that suits the needs of the contractor. An accountant that understands construction is a must. The business financial statements are the highest weighted item for underwriting a contractor. You can think of them as the underwriter’s window into your company. A contractor must walk away if their accountant does not know how to complete financial statements on a percentage of completion basis. A good relationship with a banker is a rather obvious need for any business that relies heavily on loans to operate. There are numerous other professionals that one could utilize such as a good controller and legal counsel, but we will stop our list here so it still applies to most contractors.

    Surety underwriters will want to periodically meet with their medium to larger sized contractors. The underwriter will want to see that the contractor knows their cash flow and their receivables that are over 90 days. The underwriter will also want to see that the contractor can answer all other questions regarding their company. In other words, the underwriter will want to leave feeling confident that the contractor knows their industry and the specifics on their company.

    Bonding Companies

    Earlier, I mentioned that a contractor must practice restraint when necessary. By restraint, I mean that they can not be blinded by profits and take risks above and beyond their ordinary work. A surety will not be comfortable approving a bond twice the size of any previously bonded work for a new company. A red flag is raised for any contractor that wants to do work outside of their niche and or territory. If an underwriter is not comfortable with the contract for any reason, they will decline the contractor.

    A contractor must keep in mind that they are essentially obtaining surety credit. Underwriters must use the financial documentation provided and personal relationships to decide the risk on a particular account. A contractor that is well organized with a team of professionals to assist them will create a great deal of confidence in a surety’s underwriters.

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    Category: Bid Bonds, Contract Bonds, General Bonding, Performance Bonds, Subdivision Bonds

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  5. Performance Bonds – How times change

    August 25, 2004 by Riskwriter

    Turning back the clock…..and bond agents working for a living.

    Performance BondingDo you recall the late 90’s and way early in 2000 when getting approved for contractors Performance & Payment bonds were as easy as having a pulse? “Oh, you’re breathing? You’re approved!” That time period was an interesting but a rather frightening time in the surety industry. All the bonding companies began to become more and more competitive in this dog eat dog industry, so much that sureties were giving things away to contractors! Waving your spouse from the agreement? SURE! waiving personal indemnity all together for that matter! Dropping rates down to $6 per thousand….the list goes on.

    Since the sureties have exceeded losses in the past couple years more than the losses they had throughout the whole past decade, has forced them to re-group themselves. Underwriting has taken an entire swing the other way and is incredibly conservative in all spectrums of underwriting. Aggregate bond lines have been sliced in half, rates have doubled, the re-insurers even writing surety have dropped to a measly 10 and all of this is all a snowball effect of one thing affecting another. However, In the end, it does change the industry in a positive way.

    Performance BondingFor one thing, it means that any contractor OR sub-contractor with a Performance bond in hand for the guarantee of their contract, likely, truly is qualified to get that job done-AND will get it done per the terms of their contract.

    The obligee (who is requiring the bond) won’t feel the reluctance in accepting a bond as they may have in the soft bond market previously due to the soft underwriting that was occurring. Previously, many contractors still defaulted on jobs, and did so more willingly with no personal indemnity on the line.

    Now, there is a rigorous underwriting process that each contractor must face. And there should be! Applying for a bonding line of credit and or Performance bond is just like applying for a line of credit from your bank. It is CREDIT. In this case, it’s not simply just to pay back a loan but to actually perform on a contract. Of course, with this type of guarantee the bonding company must make, their research into each contractor is complete.

    This makes performance bonds not only a stronger tool for the owner that accepts them, but it sure does make us agents work for a living!

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    Category: Contract Bonds, Performance Bonds, Surety News

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