Today, I want to talk about our approach to underwriting surety bonds. We try to take a multi-step approach where we look at the client’s financials, the bond risk, and the different ways we can secure the client’s assets, if needed, from both an indemnity and a collateral standpoint. We try to be as creative as possible with the different terms we offer for bonds, and by doing so, we keep our clients happy and coming back. Our clients find that we can take what seems to be a complicated situation and provide a simple solution for it.

Bond risk is an important factor in determining how to underwrite a surety bond.  Different bonds have different types of risk. An example would be a fiduciary bond, which has a lower risk profile. These bonds can be required for estates, trusts, and guardianships. These bonds require a credit check and answering some questions about the appointment. Another example would be an Appeal Bond or a bond to guarantee a Judgment pending Appeal. This bond can require traditional and sometimes non-traditional forms of collateral. These risks are polar opposites. 

One of the ways we do that is by looking at different types of collateral. Historically, the surety has been only letters of credit and cash deposits of secure bonds. We have been looking at Capital Retention Agreements and different controls to put in place for Performance Payment bonds. In the past, we have secured real estate as collateral and non-retirement account brokerage accounts, which we can secure through an account control agreement. 

Surety is slowly evolving and will take years to catch up with many other industries. My office stays up to date with surety trends, and we know which company is offering the most competitive terms for bonds. A surety broker that can provide options and reduce the cost of capital is someone to develop a long relationship with.  

By being creative and offering solutions to problems, we can find a way to get the client terms for their bond with the lowest cost of capital and be the least intrusive. Give me a call and let’s build a surety relationship today.

Neil Pedersen
15 Maiden Lane Suite #800
New York, NY, 10038

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