Bryant Surety Bonds will be closed on Thursday, July 3rd for Independence Day Weekend; we will return on Monday, July 5th.  We hope you all have a safe and pleasant holiday. While we are closed, please explore our website for information on surety bonds, and when you are ready, use our free online application.  We look forward to quickly responding to your needs when we return.

Bryant Surety Bonds, Inc will be closed on Friday March 21, 2008.

Please explore our website to learn all about the Surety Industry, along with surety bond information by business type.

Also be sure to fill out an surety bond application, it is easy to do as everything can be completed online, and instant quotes are available.

Though not directly related to the surety bond industry, we though we would post a quick snapshot of what happened on black Friday. This day every year tends to give a quick view of the american economy and how comfortable consumers are to spend money. A good black friday, and therefore a good holiday season can great effects for retailers which then can ripple out to other parts of the economy in the new year. Lets look at the highlights:

It is still very early, and all the results are not in, but there are some encouraging signs that the holiday season could very well out pace predictions. Look for future posting on this topic in between our normal surety bond information postings.

Because the majority of sureties are closing early on Wednesday, November 21 2007, Bryant Surety Bonds will follow as well. Bryant Surety Bonds will close at 11 AM EST on Wednesday so that our employees can enjoy a nice long holiday weekend with their families. We will return on Monday the 26th rejuvenated and ready to satisfy your bonding needs with fair quotes and unmatched customer service.

Just because we are closed does not mean you are stuck. Please visit our site and learn about all the surety bond types, and when you are ready apply use our online surety bond application.

We thank you for the ability to serve you and wish you Happy Thanksgiving.

The surety bond industry can be broken down into major categories and sub-categories of these bonds. The two major surety bond types are commercial and contract bonds (court bonds being a third). To truly understand the surety bond market, and how it is viewed, you must know these types of bonds and what they mean. This article will discuss each major bond type, what they guarantee and examples of contract surety bonds and commercial surety bonds.

Think of Contract Bonds like a contractor for your building or dwelling. Contract bonds gives protection on specific contracts by assuring the project owner, or obligee, that the contractor, or principal, will guarantee performance on specified contract. The contractor shall work and pay laborers, sub-contractors and suppliers for material. Some major sub-categories for contract bonds are as follows:

1. Bid Bond is a guarantee that the contract, once awarded, will be performed at the bid amount. The bonding company, or agent, will underwrite the bond and provide the performance. The bidder becomes the contractor, or principal if awarded the contract. If required, the agent also provides payment and maintenance bonds.
2. The contractor will perform a contract under terms and conditions of its Performance bond. Simply stated, the principal shall complete the work under the terms and conditions of the contract.
3. The principal shall pay material suppliers, laborers and sub-contractor(s). Payment bonds guarantee this will happen. In some instances, the principal shall not be paid until all others are paid.
4. Maintenance bonds guarantee that materials and craftsmanship is acceptable to the obligee. Maintenance shall be performed after a specified amount of time due to lack of craftsmanship or defective material or the like.
5. Subdivision bonds guarantee improvements nearby, such as curbs, sidewalks, sewer and gutter; be it replacement or new construction. The principal shall promise to finance and construct items listed in this bond. Subdivision bonds may include construction and financing of traffic lights, drainage systems, streetlights, etc.

Commercial Bonds guarantee the principal listed on the bond will perform as specified in the bond. These are much different than the contract bonds, as you will notice just by their bond types.

1. License and permit bonds guarantee the operator shall be licensed. The licensee such as an auto dealer bond, telemarketing bond, mortgage broker bond shall perform to the terms set forth in each specific bond. 
2. Public official bond is that of the performance of a public official is guaranteed.
3. Miscellaneous Bonds guarantee lost securities. This sub-category bond includes but is not limited to utility payments, union fringe benefit contributions, workers compensation and certain leases.

There are many other sub-category bonds in both contract surety bonds and commercial surety bonds and to numerous to mention. The sub-category bonds each have their own different type of surety bond to offer. For instance there are literally hundreds of bond types in License and Permit Bonds alone. It is common that agents may deal with a sub-category bond for which they never came across before.

Perhaps the reason it is useful to know about these different bonds is that each bonding company underwrites each sub-category differently. The industry defines this terminology as “language”. The requirements for each sub-category have as many similarities as there are differences.

A report released by Realty Trac showed that a total of 446,726 homes nationwide were targeted by some sort of foreclosure activity in the third quearter of this year. This number is up 100.1% from 223,233 properties from the same period last year.

This was also 33.9% higher then the second quarter number of 333,731 properties.

Realty Trac CEO James Saccacio has this to say of the markets future prospects:

“Given the number of loans due to reset through the middle of 2008, and the continuing weakness in home sales, we would expect foreclosure activity to remain high and even increase over the next year in many markets.”

Mortgage lenders are bracing themselves as many adjustable-rate mortgages originated in 2005 and 2006, the height of the housing market frenzy, reset to higher interest rates.

Due to the slow down, and credit crunch, many brokers and lenders are applying for licensure in additional states to help supplement income.  Visit these pages to learn more about the mortgage bond and lender bond. Also the future FHA Bond may be of interest to some of our readers.

Cost is usually the first concern when a consumer buys anything. This is an important factor but not necessarily the first consideration when purchasing everything, specifically surety bonds. One must look at other features such as the financial strength of the surety, the reputation of the bond agency, any additional available surety credit, requirements for renewal and others requirements specifically tailored to your needs.

Bond Agency: Look for good customer service in this area. An agency lacking in this could lead to bigger problems. Many customers making the switch have left because their previous agency had inadequate customer service. One client said they waited weeks to receive their bond even after making payment. We find this kind service to be unacceptable and pride ourselves as one of the quickest in the industry. While our competition may take more than a week to quote, we provide an instant on-line approval for many classes of business; most other quotes take one to three business days. In a world where often you get what you pay for, be cautious when it comes to service. Bryant Surety Bonds, Inc. is not always cheapest but we are very competitive and our service is first rate. Not only that, but our reputation has allowed us to receive several exclusive markets from sureties.  

Financial Strength of Sureties: AM Best analyzes bonding companies’ financial strength and gives ratings by letter grade. This is a good source when evaluating bonding companies. Also, different surety bonds may have letter grade ratings. A contract bond may require a surety with a certain letter grade. Otherwise the bond, as good as it seems, is useless if it does not meet the contract specifications. Another good source is Federal Treasury List for contract bonds and commercial bonds. This list, also known as the T-list, has a directory of all bonding companies meeting the requirements of the federal government. It is important that you check with the obligee for bond acceptance on any bond prior to sending payment. Once the bond is issued, it is fully earned the first year in most cases. That means if you cancel after issuance, there is no refund.  Bryant Surety Bonds, Inc. represents only A-Rates, T-listed Sureties.

Requirements for Renewal: When you “shop” for surety bonds, this feature will vary the most with different bond agencies. While most will ask for account updates, some will require new business and personal financial statements, others will need information on business financials only, credit reports and the like. Not only is it annoying to update, this could pose a potential problem for some principals. If the bonding company’s requirements are not met, the surety may not renew the bond. Even if you have been with the agency for years, you could jeopardize the bond if you do not meet the current guidelines from the bonding company.

Some agencies automatically renew sureties without any updates at all. This is a clear advantage as there is no fear of being dropped after a particularly bad year or, having the surety complaining of a net loss at the end of the year from a large owner draw.

Potential for Additional Bonds: Depending on how hungry a bonding company is for your business, the underwriting guidelines could vastly differ. Some conservative carriers will not write a bond for principals below a 700 credit rating while others will approve with a 615 credit score and still provide a competitive rate. Bryant Surety Bonds, Inc. can offer standard rates for some business classes due to our volume, regardless of credit ratings. The strict underwriting of conservative bonding companies allows for low claim rates thus the premiums are lower.  If you are looking to expand your company and need additional bonding, you need to be aware of the potential for additional bonds available and the bonding companies who will provide them for you.

In summary, cost is a factor along with a good knowledge and decision making when purchasing a surety bond. The decision to purchase a surety bond on cost alone could be dangerous when considering the poor service/response time from your agent, renewals are not granted, or there are no provisions for additional bonding.

This is a follow up to our post on 9/25/07.  Perhaps it’s no surprise but a new report released shows that new home sales lagging as well.  Here’s the details:

• Sales of new single-family homes fell 8.3%
• August volume was 795,000 units
• This marks the slowest pace since June 2000, seven years ago
• The median sales price of a new homes also fell 8.3% to $225,700
• The median sales price fell 7.5% from a year ago.  This represents the largest drop (in terms of percentage) in nearly 37 years

When writing a traditional surety bond, losses are not considered. For instance, approval on a surety bond is for all practical purposes designed to be flawless and have no claims. If the underwriters believe that the applicant will not have any claims, they should be approved. By comparison, insurance underwriting expects that there will be losses and as a result the premiums are higher. If a surety bond applicant is considered high risk, some sureties may require the applicant to post 100% collateral, while other bonding companies flat out decline the offer. This is about to change. Some agencies are rethinking how bonds should be written for future considerations. As this is a traditionally conservative industry, these fore-thinkers are a minority.

Losses are not expected in underwriting a surety bond because this is supposed to be a service fee. Unlike an insurance policy, claims are not built into the premiums because claims are supposed as non-existent. These suretyship guidelines are antiquated because the reality is, losses do occur, even with the most conservative of agencies. No matter how great the underwriting, we now know that losses are, although limited, inevitable. It has taken some time for bonding companies to realize this. Now recognized, why not change our philosophy on underwriting? A bond should be written with premiums that reflect the principals’ risk factor. A high risk principal should have higher premiums. Although this makes sense, it goes against the grain of traditional bonding companies.

Approving high risk surety bonds with higher premiums is not new. In fact, this has been around for years. We have worked successfully with clients and these high risk / high premiums are proven methods in our business. Even with rates 10 to 15 times higher than average commercial bonds, this still is the best course of action for applicants with bad credit. What is more surprising is that little claims have been filed in this high risk program. They are considerablely less than the 5 to 15 claims per average traditional surety. I can only speculate that high risk principals are very conscience during the bond existence, as they do not want to stay as high risk. Bonding companies who are writing these types of programs are producing well. Some still wary after the fall of the soft market, are reluctant to take the risk, but the new thinkers are capitalizing and creating a monopoly for themselves.

What is even more rare, are sureties willing to write higher risk contract bonds.  The approval for bonds for a five-year contract virtually does not exist these days.  Fortunately, there are some contract bonding companies that are willing to change traditional suretyship and take larger risks with the expectation of a 0% loss.  Following the high-risk commercial bonds, higher risk contracts, also known as long contracts, will expect increased rates as well.  Just as surprising to us are the sureties willing to write the higher risk contract bonds do not experience greater losses than their peers who shy away from writing such bonds.   The average loss ratio of our new thinking contract bonding companies is 14.35%, which is lower than many of old style sureties.  One reason for this is their high volume as they have a monopoly on the market, and remember few sureties are willing to write these dangerous bonds.

Surety underwriters contact us often about wanting to do business with us.  These underwriters are well aware of our reputation of being a high volume agency that has a diverse range of accounts and they want in on the action. Rarely do we get appointed with new sureties, for they offer the same as the competition.  They will need to think outside of the box if they wish to increase their book of business and re-create underwriting and rate guidelines. Our agency would not want to set our clients up with a surety that is no different from every other market out there.  We suggest finding market segments that are not flooded with other sureties offering identical programs. If you are an open-minded underwriter looking to expand your book of business, please contact us.  We have set up numerous programs and continue to be successful to date. We agree with the philosophy of approving programs with higher premium rates which offset the cost of claims and we differ from the market which might have been soft in the past approving higher risk bonds.

The time is now when the surety industry realizes that a 0% loss is not an option. The way traditional business has “always did it before” is past. Old fashion thinking is waning and the new way of forward thinking will be the only way to survive in this industry.

Often times when someone calls in to our office the first question they have is “how do I get bonded?” This question can lead down many paths, but all too often it is revealed that this question is asked out of confusion. For this reason we are going to try and clarify what “getting bonded” means.

Often this call comes from people who have seen a sign saying “insured” or “bonded” at the locksmiths, or on advertisements in the yellow pages; after seeing this they think, “maybe my company should be bonded too.”

There are several kinds of “bonds”, one kind is a fidelity bond, but don’t be fooled by this name, a fidelity bond is actually not a bond at all, but a type of insurance. The company who is “bonded” is the beneficiary of the policy, not there clients.

At Bryant Surety Bonds, Inc. we specialize in surety bonds. A surety bond is a three-party agreement (obligee, principle and surety) that is a requirement of the obligee onto the principle. In the situation where the principle defaults, the surety will make the obligee whole again. Surety bonds cannot be issued to a company that “wishes to be bonded” as these bonds are created to guarantee an agreement.