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INDUSTRY NEWS
September 11, 2007 - Contractors May Recover Lost Profit Damages as a Result of Losing Bonding Capacity Caused by Wrongful Termination by a Public Agency
In a California Court of Appeals case that was filed on August 29, 2007 and published, the court held that a contractor, wrongfully terminated by a public agency, can, under certain circumstances, recover the lost profits it has suffered if the wrongful termination impaired its bonding capacity and thus the ability to bid new jobs. The case is Begl Construction Company, Inc. v. Los Angeles Unified School District (8-29-07) C.A. 2nd, DAR p. 13364
In that case, as in so many others, the School District and the contractor had a dispute regarding the performance of the contract, which ultimately led...
August 28, 2007 - Infopia and buySAFE Partner to Enhance eCommerce Trust
Infopia, the leader in multi-channel online selling solutions, today announced a strategic partnership with buySAFE, the leading trust and safety company for eCommerce transactions, to boost consumer confidence in eCommerce sites. By integrating Infopia's Marketplace Manager platform with buySAFE's trust seal and bonding services, merchants can offer their customers third-party assurance that they are trustworthy and reliable, easing consumers' concerns and facilitating more sales and revenue.
The buySAFE Certified Merchant program will be available as an integrated feature of Infopia's Marketplace Manager platform. Approved merchants will display the buySAFE Seal, which certifies that they are trustworthy and reliable, their businesses are...
August 28, 2007 - Fitch to Rate $900MM Long Beach Bond Fin Auth Natural Gas Purchase Rev Bnds 'AA
Bond proceeds will be used to prepay for a fixed quantity of natural gas to be delivered over a 30-year period by Merrill Lynch Commodities, Inc. (MLCI) pursuant to a Prepaid Natural Gas Purchase and Sale Agreement (Prepaid Gas Agreement) between MLCI and the authority. With respect to any variable-rate 2007 bonds issued, the authority will enter into matched floating-to-fixed interest rate swaps with Merrill Lynch Capital Services Inc.(MLCS), to synthetically fix its net interest rate expense on the floating-rate bonds.
Given the structured nature of this transaction and the different components of pledged revenues, the rating on the 2007...
August 28, 2007 - SBA Increases Access to Bonds for Small Businesses
New rules establish a more flexible pricing structure, allowing Preferred Surety Bond Sureties to charge current state rates rather than being locked into rates that have become outdated and unwieldy.
Corporate surety bonds protect project owners against financial loss, and in the case of public construction projects, protect taxpayer dollars if the contractor defaults.
The new rules reduce the frequency of audits previously required of PSB sureties, obligate SBA to guarantee 90 percent of the loss incurred by a prior approval surety on bonds issued on behalf of small businesses owned and controlled by veterans and service-disabled veterans, impose a...
August 28, 2007 - CMS proposes surety bond requirement for DMEPOS suppliers
The proposed rule would implement a provision of the Balanced Budget Act of 1997 (PubLNo 105-33) (BBA), which authorizes CMS to require a surety bond for DMEPOS suppliers in the amount of at least $50,000. According to CMS, the bond requirement would: (1) limit the Medicare program risk to DMEPOS suppliers; (2) ensure that only legitimate DMEPOS suppliers are enrolled or allowed to remain enrolled in the Medicare program; (3) ensure that the Medicare program recoups erroneous payments that result from fraudulent or abusive billing practices by allowing CMS or its designated contractor to seek payments from a surety up...
August 28, 2007 - Bill to speed up bridge work in Missouri nears passage
Meeting in special session, the Senate Transportation Committee voted 7-1 Monday, Aug. 27, to advance a bill to the Senate floor that would correct a glitch that has delayed the Missouri Department of Transportations plan to award a single bid to repair or replace 800 bridges in the state. If approved by the full Senate, it would head to Gov. Matt Blunts desk. House lawmakers approved the bill last week on a 135-14 vote.
In July, MODOT delayed plans to choose a contractor for its bridge repair program. The agency cited requirements for the performance bonds the contractor would need for...
May 25, 2007 - Surety Bond announces new training.
Surety Bond School & Luncheon
Learn about fidelity and surety bonds and why bonds are required by numerous federal statutes and regulations. This interesting, informative seminar is sponsored by THE SURETY ASSOCIATION OF AMERICA (SAA). At the close of this seminar you will know . . .
The types of bonds available and how they are used; How bonds protect and save taxpayer dollars; How bond requirements can be tailored to achieve
specific goals.
There is NO CHARGE to attend. T
1:30 a.m. Registration and Luncheon
12:00 Noon Welcome & Introductions
12:15 p.m. The...
May 25, 2007 - 10 THINGS YOU SHOULD KNOW ABOUT SURETY BONDING
Making the right choice to mitigate and manage risk on construction projects and selecting the most fiscally responsible option to ensure timely project completion are imperative to a successful project and a sound business. Gambling on a contractor or subcontractor whose level of commitment is uncertain or who could become bankrupt halfway through the job can be an economically devastating decision. Surety bonds offer the optimal solution: providing financial security and construction assurance by assuring project owners that contractors will perform the work and pay specified subcontractors, laborers, and material suppliers.
A surety bond is a three-party agreement where the...
May 25, 2007 - Subdivision Bond Forums Answer Surety Questions
The Surety Bond Forums, an online community within the surety industry is nearly two years old now. The forums are available for free, to all who wish to participate. Questions can be viewed and answered by anyone with an Internet connection. The answers are monitored by industry professionals to ensure that they are accurate.
The forums are organized by several bond categories. There are also sub-categories of some of the more frequently requested bond classes. Subdivision Bonds are one of the several sub-categories under the Contract Bond Category. A subdivision bond is required to guarantee public improvements. Typically a...
May 25, 2007 - Surety Bonding Agency Launches a Website Providing Quick and Easy Insurance Surety, Fidelity and Fiduciary Bond Applications
In todays complex society more people are engaging in litigation, which creates an increased need for the various bonds required across our country. Another important factor in todays society is that the constant flow of new businesses needs to be overseen by federal, state and local governmental agency, all of which are required to have a surety bonded before they can operate. Many people do not understand what a bond is and why they need it.
Virtually anyone from the average man starting a business to a practicing lawyer looking for a bond
Lawyers, judges and accountants requested easy Surety bond,...
May 25, 2007 - SIO Awards for Excellence in Surety Bond Promotion Criteria & Nomination Form
The SIO Award for Excellence in Surety Bond Promotion honors Local Surety Associations (LSAs) and individual NASBP and SFAA members with three levels of achievement:
The Silver Award for LSAs that conducted at least five relevant public relations activities in a calendar year to promote the value and benefits of contract surety bonds.
The Gold Award for LSAs that conducted at least 10 relevant public relations activities in a calendar year to promote the value and benefits of contract surety bonds.
The Platinum Award for an individual NASBP or SFAA member who has undertaken special initiatives to promote...
May 25, 2007 - Awards for Excellence in Surety Bond Promotion
The Surety Information Office (SIO) has named the recipients of the Awards for Excellence in Surety Bond Promotion and the newest members. The SIO Awards for Excellence in Surety Bond Promotion are presented annually by SIO to local surety associations that actively promote the benefits of surety bonds.
Silver Award
NASBP Annual Meeting
SFAA Annual Meeting
The Silver Award for Excellence in Surety Bond Promotion recognizes local surety associations that conducted at least five promotional activities in 2006. Three LSAs have won the Silver Award:
Alabama Surety Association - This is Alabamas ninth consecutive SIO award. This group focused on topics such as...
May 25, 2007 - Surety Bonds: Seeing Project to Completion
Construction represents 10% of the U.S. Gross Domestic Product according to the U.S. Census Bureau. This $845 billion industry comprises nearly 650,000 construction companies and 5.7 million workers. With unparalleled competition in recent years, less predictable profit margins, and increased preferences by project owners for fixed price contracts and design-build project delivery, construction is a risky business.
Completion is the goal of everyone involved in a construction project. Although the purpose of a surety bond is to assure a qualified contractor capable of completing the project, contractors do experience problems, and default does occur. Fortunately, surety bonds protect private and public...
May 25, 2007 - The Importance of Surety Bonds in Construction
Surety bonds have been a valuable tool for centuries. The first known record of contract suretyship was an etched clay tablet from the Mesopotamian region around 2750 BC. According to the contract, a farmer drafted into the service of the king was unable to tend his fields. The farmer contracted with another farmer to tend them under the condition they split the proceeds equally. A local merchant served as the surety and guaranteed the second farmers compliance.
Suretyship was addressed in the first known written legal code, the Code of Hammurabi, around 1792-1750 BC. A Babylonian contract of financial guarantee...
May 25, 2007 - Getting your first surety bond
An introduction to corporate surety bonding for contractors considering projects that require bid, performance, and payment bonds.
Today's construction industry is more competitive than ever, and more contractors are interested in projects that require them to provide surety bonds guaranteeing their performance of the contract.
What is a Surety Bond?
Surety bonds are usually required of general contractors on public projects let by federal, state or local government agencies. But many subcontractors also find that they are being asked to provide bonds. And an increasing number of private project owners are requiring bonds as well.
Simply stated, a surety bond is an agreement under...
May 25, 2007 - Surety Companies: What They Are & How to Find Out About Them
Contract surety bonds guarantee the performance or financial obligations of others. In construction, contract surety bonds are provided to an obligee (for example, the construction project owner) by licensed surety companies that commit their assets to support the performance and financial obligations of the principal (typically the contractor). General contractors frequently also act as the obligee in the case of bonds provided by subcontractors. Surety bonds used in construction include bid, performance, and payment bonds as well as supply and maintenance bonds. Construction owners, contractors, lenders, public officials, and others involved in the construction project need to know about the...
May 25, 2007 - SBA's Surety Bond Guarantee Program-Helping Contractors Grow
An established relationship with a surety company and surety bond producer helps small and emerging contractors grow by increasing contracting opportunities, especially in public sector construction. Many surety bond companies recognize the importance of providing bonds to small, minority, and emerging contractors and have developed programs to assist them. Small contractors needing bonding should contact a surety bond producer in their area. A list of professional surety bond producers is available through the Web site of the National Association of Surety Bond Producers at www.nasbp.org/bond.cfm.
SBG Program Overview
For more than 30 years, the Surety Bond Guarantee (SBG) program has...
May 25, 2007 - Surety Bonds Versus Bank Letters of Credit
Definitions
Surety Bonds
A contract surety bond is a three-party agreement whereby the surety guarantees to the obligee (the project owner) that the principal (the contractor) is capable of performing the contract in accordance with the contract documents.
Performance of the contract, which is the subject of the bond, determines the rights and obligations of the surety and the obligee.
A performance bond protects the owner from non-performance and financial exposures should the contractor default on the contract. It is directly tied to the underlying contract and if the contractor is unable to perform the contract, the surety has responsibilities to...
May 25, 2007 - HOW BOND-WORTHY ARE YOU?
Sureties Look at Variety of Criteria Before Bonding Contractors
Whether your company wants to pursue private or public projects, obtaining surety bonding can be a huge asset, if not a requirement. So how does a contractor go
about obtaining a bond?
Sureties consider a number of fundamental factors. One is the contractors reputationits relationships with subcontractors, suppliers, lenders and owners. The strength of the contractors financial statement is another. Is the contractor profitable? Debt, equity, capital, revenue, overhead and indemnity (both personal and corporate) may all be taken into consideration. Does the contractor have an accountant who specializes in construction?...
April 25, 2007 - Construction firms must be able to secure surety bonds
Competition for construction projects among contractors has become an issue of survival. The winners will be those who can secure surety bonds.
First, it is necessary to understand what's going on in the surety markets during these difficult economic times. The insurance industry has suffered catastrophic losses due to the recession and aftermath of the tragedy of Sept.11 as well as the recent performance of the stock market. Sureties have also taken major losses due to an inordinate number of claims which may be brought on by some of the same factors. As a result, they have increased rates and...
April 25, 2007 - Director of U.S. Small Business Administration Office of Surety Guarantees Updates NASBP on the Bond Guarantee Program
Director of U.S. Small Business Administration Office of Surety Guarantees Updates NASBP on the Bond Guarantee Program
NASBP recently had the opportunity to meet with the Director of the U.S. SBA Office of Surety Guarantees, Frank Lalumiere. Below is a brief summary of some of the points discussed. Mr. Lalumiere will attend NASBPs Annual Meeting on Saturday and Sunday at which time Mr. Lalumiere will be happy to discuss the Bond Guarantee Program with interested producers.
What is the mission of the SBA Surety Bond Guarantee Program?
The mission of the Surety Bond Guarantee Program is to help small construction businesses...
April 18, 2007 - Positive Outlook For Surety Bond Industry
The surety bond industry has weathered the storm of the hardest bond market seen to date. The Surety & Fidelity Association of America (SFAA) reported that the surety bond industry as a whole returned to profitability in 2005 after repeated years of record losses. The SFAAs report included both contract and commercial surety bonds.
Mcgraw Hill Constructions Engineering News-Record provided a special on suretyship in the June 2006 issue. The article listed the views of many industry top executives for the future and current status of the industry. Almost every executive editorial asserted the same opinions, surety capacity is large...
April 18, 2007 - SFAA Surety Bond Form Library
The surety bond industry has and still is struggling to categorize commercial bond forms required throughout the nation. A surety bond is made up of the bond form attached to a power of attorney. The bond form contains the language of the guarantee, telling you exactly what the bond is guaranteeing. Unfortunately, there is an astounding amount of different bond forms throughout the country. Think of how many different professions there are throughout the nation, everyone from mortgage brokers to auto dealers need bonds in order to legally operate in most states. Now take into consideration that the Federal Government,...
April 18, 2007 - Surety Association of America Changes Name
The Surety Association of America (SAA) changed their name to The Surety & Fidelity Association of America (SFAA) earlier this year. The name change was made effective on May 18, 2006. The association has always been involved with surety bonds and fidelity bonds, but the name change clarifies that there is a difference between the two.
Many assume that fidelity bonds are a type of surety bond. It is easy to understand why one can misinterpret a fidelity policy as a surety bond. Typically any agency that offers surety bonds also offers fidelity as well. There are numerous different surety...
April 18, 2007 - Surety Bond Improvements Act of 2006
On Friday August 4th, Senator Olympia J. Snowe (R-ME), chair of the Senate Committee on Small Business and Entrepreneurship, introduced the gSurety Bond Improvements Act of 2006. The proposed legislation will reform and update the SBAfs Surety Bond Guarantee program by increasing the number of bonding companies involved, as well as the number of small businesses obtaining bonds through the program. The senator stated, gMy legislation will help ensure that small businesses are able to obtain the surety bonds they need to compete for government contracts and create jobs,h. gThese necessary program changes will help revitalize the SBG program and...
April 18, 2007 - Saving Money Using Surety Bonds
Surety bonds can look like a more expensive alternative to posting an irrevocable letter of credit. However, if you look deeper into the costs of each, it is clear surety bonds are the obvious choice. In this article we will review view an example to demonstrate the cost differences between the two. We will also go into depth on how a bank makes money off of a letter of credit versus how a bonding company makes money off of issuing a bond. After you have read this article you will want to make use of your surety credit whenever possible,...
August 15, 2006 - Willis Group Forms Alliance with Smith-Manus to Drive Innovative Surety, Insurance and Environmental Solutions
NEW YORK--(BUSINESS WIRE)--Aug. 15, 2006--Willis North America, a unit of Willis Group Holdings (NYSE:WSH), the global insurance broker, and Smith-Manus, the industry leader in developing specialty bond programs, have formed a strategic alliance to help environmental contractors and other specialized risks with the development of innovative surety bond programs.
As one of the largest, independent bond agencies in the United States, Smith-Manus is focused on developing innovative surety bond programs for many specialized industries with emphasis on environmental businesses. "With perhaps the two largest specialty practices focused on Environmental and Construction Risks in the United States, it is important for...
August 4, 2006 - Snowe Introduces Bill to Strengthen Small Business Contracting
WASHINGTON, Aug. 4 /U.S. Newswire/ -- Senator Olympia J. Snowe (R-ME), chair of the Senate Committee on Small Business and Entrepreneurship, today introduced the "Surety Bond Improvements Act of 2006," (S. 3785) legislation that will reform the Small Business Administration Surety Bond Guarantee (SBG) program by increasing the number of surety companies underwriting bonds and the number of small businesses receiving bonds through the program. A surety bond binds a contractor to comply with the terms and conditions of a contract. If the contractor is unable to successfully perform the contract, the surety assumes the contractor's responsibilities so the project...
July 31, 2006 - CNA Surety 2Q Profit Rises
CHICAGO (AP) - Insurer CNA Surety Corp. said Monday it swung to a second-quarter profit as the company slashed costs by 30 percent and collected more premiums from policies.
The company posted second-quarter net income of $19.5 million, or 45 cents per share, compared with a loss of $11.9 million, or 28 cents per share, in the year-ago quarter. The 2005 period included a charge of $26 million after taxes to establish a reserve for losses related to a contractor.
Gross premiums rose 12 percent to $119.3 million. Contract surety gross premiums rose 18 percent to $78.8 million on strong construction activity...
July 27, 2006 - Surety Liable for Amounts Due Under Savings Clause
The U.S. Court of Appeals for the Ninth Circuit, in Taylor Construction Inc. v. ABT Service Corp., Inc., found that a surety who had furnished a Miller Act payment bond on a federal construction project was liable to a subcontractor for the amount due under the subcontract's savings clause. Specifically, the subcontract provided that "any savings realized in this Work shall be divided evenly between the Contractor and the
Subcontractor." The surety contended that it was not required to pay the subcontractor its portion of savings, since this amount did not represent amounts for "labor" or "material." The U.S. District...
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