By: Scott Mahorsky

A surety bond is a written agreement where one party, the surety, obligates itself to a second party, the obligee/owner, to answer for the default of a third party, the principal/contractor. Surety ContractorOwner

 Bid Bond  Performance & Payment  Maintenance  Others – Supply, Subdivision, Judicial, Mining, etc…

 Agent ◦ Execution ◦ Role

◦ Large Markets  Travelers  CNA  Arch  Liberty  Zurich ◦ Small/Medium Markets  Aegis  Capitol  Hudson  IFIC  NAS Surety

 Differing Sizes ◦ Large Sureties = Larger Contractor ◦ Smaller Markets = Smaller Contractor  Preferences ◦ Federal Work ◦ State Work ◦ Subdivisions ◦ Commercial Surety

 Character  Financials

 Bank Line of Credit  Experience/Work History ◦ Resumes of Key Employees ◦ Job References ◦ Awards

 Working Capital  Equity  Total Bond Program  Cost to Complete

 Agent ◦ Relationship with Sureties ◦ Technical Ability ◦ Focus on Surety ◦ Understands Federal Marketplace  Sureties ◦ Track Record  Overall - Losses  Resumes

 Construction Accountants & Financial Reporting  Project Types & Profitability ◦ IDIQ ◦ SATOC ◦ MATOC/MACC  Build a Team  Construct a Long Range Plan/Strategy

 Profits  Letters – Better Opportunities  Less Dependence on Large Contractors

 Economy ◦ Increased risk for owners, contractors & sureties caused by current economy ◦ Continued disciplined underwriting, exposure management & project analysis ◦ More competition, fewer projects

 Mergers