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
Contractor
Owner

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

Preferences
◦ Federal Work
◦ State Work
◦ Smaller Markets = Smaller
Contractor
◦ 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
Bond Program
Total Bond Program
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$0
Total Bond…
Elite agencies will look
support your business.
Quality of Agent
 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