Construction - Surety Overview
De-Mystifying the Surety Bond Underwriting Process
How does a contractor go about the task of obtaining surety bonds? What is involved? How will the surety company evaluate a contractor’s surety credit-worthiness?
The first step in the process is to seek out the services and professional representation that only a licensed surety bond agent can provide. The professionals within Gencorp’s Construction Practice Group have the knowledge and resources to represent your company, and navigate the rapidly changing surety marketplace. We commit ourselves to understanding your business and its unique characteristics, and to fully evaluating your immediate and long term bonding needs.
Gencorp prepares the underwriting package for submission to the surety company, and represents you in negotiating the absolute best terms possible.
The underwriting process conducted by the surety is rigorous, and focuses on three essential traits of a contractor: Character, Capacity, and Capital.
- Character refers to the contractor’s reputation, business practices, and relationships with subs, suppliers, employees, owners, architects, and engineers. It is typically assessed through face-to-face meetings, and through independent reference checks.
- Capacity refers to the contractor’s technical skill, management ability, self-performance trade skills, track record of success on previous contracts, amount of current work on hand relative to potential total backlog, and progress on other contracts that may be underway.
- Capital refers to the company’s financial strength and is evaluated through the Surety Bond Underwriting Information Package. Considerations include:
- Working capital and net worth levels
- Historical profitability
- Amount and structure of debt
- Quality of internal accounting & estimating systems
- Quality and reliability of financial statements
- Credit history
- Banking relationship and borrowing ability
After Gencorp establishes your bond program, we monitor the program over time to ensure that your bond needs are continually satisfied. We work with you and the surety company to facilitate communication, and ensure that the flow of critical information is uninterrupted.
The ultimate goal is the establishment of a relationship between contractor, surety company, and agent that is stable and reliable, and through which all parties work together with confidence over the long-term.