Commercial Surety

Clients that most commonly utilise surety include government suppliers, contractors, subcontractors or organisations operating in a highly regulated environment.

Surety needs can also arise for any client in the event of adverse outcomes to litigation and are used to defer judgements as part of the appeals process.

As your advocate, our approach takes a proactive stance on the key elements of your surety relationship, including:

  • negotiating with global markets to deliver the most favourable terms and conditions – work programme, carrier strength, rate and indemnity
  • maintaining outstanding relationships with top-tier surety companies at both the local, national and global levels – we engage the best surety people to address the situation affecting your business
  • fostering a strong relationship between our clients and their surety partners – ensuring there are no surprises
  • providing 24/7 online access to comprehensive bond reports customised to your requirements
  • establishing and maintaining 'stand-by' surety capacity to assure our clients of uninterrupted support.

Our diverse, global and creative team of specialists works as your agent and problem solver to overcome concerns or challenges, and work out a strategy to leverage your business volumes. We believe insurance contributes to the growth of your business as well as providing crucial protection in unstable circumstances.

We find opportunities where others see challenges. Our entrepreneurial culture and exclusive analytical ability helps clients to identify and realise opportunity in volatility.

WHAT WE DO

Commercial surety

Few partnerships are as vital as the one between you and your surety partners. We understand this dynamic and have the experience and technical capability to ensure that your bonding programme provides you with the competitive advantage needed to maximise your future financial success.

Our surety client first approach is based upon a fundamental understanding of our client’s industry, what makes their business stand apart from the crowd, and the technical capabilities to present the risk accordingly to the insurance market.

Commercial surety

Our success in advising clients through the surety process, changing regulatory landscapes, and structuring solutions that limit volatility to clients’ business operations is unique in that it is focused on long-term partnership and programme stability.

Our ability to provide security structures, placement, and on-going service to the nature of a client’s long-term bond programme requirements as opposed to simply satisfying a transactional need in a commoditised fashion is truly a differentiating factor.

FAQs

  • Surety bond – A written contract in which one party guarantees a second party’s performance to a third party for the second party’s failure to fulfil an obligation.
  • Principal – The bonded person or organisation that has the duty to perform in some way for the benefit of the obligee.
  • Obligee – The party to whom a bond is given and who is protected against loss. Generally, the party that can make a claim.
  • Surety – the party to a surety bond who answers to the obligee for the principal’s failure to perform as required by the underlying contract, permit, or law.

The 3C’s of Surety: Character, Capacity, and Capital.

Character: When analysing character, the underwriter will consider personal credit, including that of the principal’s spouse, business credit, bill pay history, management experience, past judgments and/or liens, standing in the community, among others. Essentially, if you are lacking in any character issues it doesn’t mean you won’t get a bond, but it does factor into the decision making process. Key components: honesty, transparency, and continuous qualitative analysis.

Capacity: This is essentially the contractor’s capability to complete the work. The underwriter will examine company staff, estimating team, supervisory skills, project management, internal controls, management and others. This is a critical element to the picture. Having superior capacity to help manage the complex nature of construction will help qualify a contractor. Key components: experience, track record, business plan and execution, and bonded obligation being underwritten.

Capital: This is the money and financial resources a company possesses – and at the end of the day, is the most important “C.” Profitability, working capital, cash, credit lines, debt to equity ratios, equity, personal financial strength, all factors into the capital assessment of a company. The old saying “cash is king” holds true in many ways with bonding. Key components: periodic qualitative analysis, financial ratios, and liquidity sources.

Depending on the magnitude and scope of the bond programme required and access to the requisite underwriting information needed, we can establish a working surety programme within a week’s time.

If a properly documented request is submitted, a 24 hour turnaround is possible.

  • Last 2 year’s audited financial statements
  • Most recent interim financial statement
  • Most recent investor/lender presentation
  • Third party evaluation of assets (Reserve Report, etc.)
  • Available financial projections
  • A detailed listing of outstanding bonds
  • Applicable underlying contracts.

A copy of the underlying contract, bond form(s), supporting detail regarding bond penal sum(s), description of the work to be completed, and a financial update (if applicable).

Collateral requirements are dependent upon a number of underwriting factors related to the specific underwriting case. Collateral is typically required in letter of credit or cash escrow formats approved by the requiring surety.

A document that spells out the respective rights and obligations of the indemnitors and the surety. A key component of the indemnity agreement is the principal’s promise to reimburse the surety. This could be from every claim, demand, liability, expense or loss. It could also be from adjusters’ and consultants’ fees, fees of attorneys retained by the surety on a solicitor and own client basis, bills for legal cost and any and all liability therefore, sustained or incurred by the surety by reason of having executed or procured the execution of bonds.

WHY JLT

Commercial surety

Clients wishing to purchase insurance for commercial surety need to ensure that they select a broker with the relevant skills, knowledge and expertise in their business sector. We believe insurance contributes to the growth of your business as well as providing crucial protection in challenging circumstances.

We find opportunities where others see challenges. Our entrepreneurial culture and exclusive analytical ability helps clients to identify and realise opportunity in volatility.

Our multilingual team handle broking services for clients globally including many of the world’s leading corporations, financial institutions and government/multilateral agencies.

As a CPS client you will benefit from:

  • access to a diverse global team to deliver creative, comprehensive risk and insurance solutions which facilitate growth, reduce capital costs, improve returns, secure people and assets
Commercial surety
  • ideas and products that positively impact risk mitigation and risk transfer strategies allowing you to make business decisions with confidence
  • our ability to create capacity to underwrite new and evolving risks
  • proprietary analytical tools to ensure you have access to complete and accurate real-time information which enables fact based decision making
  • experienced resources available where you need them without hierarchical, geography or financial barriers
  • consistent engagement through advisory, structuring, placement and claims, drawing in management leverage and technical expertise to ensure that when losses do occur we maximise recovery and minimize the impact on your operations.

Case Study

Collateral free programme

A private equity backed company that operates an extensive network of waste disposal facilities supplemented by numerous smaller satellite processing facilities was supported by a competing surety broker with an aggressively priced programme. Our assessment of the programme was that the supporting surety was not a specialist in the industry nor was it predisposed to understand the financing strategy used to fund the company.

Shortly after our initial meeting with the client, the incumbent broker received notice that their surety was requiring 100% collateral to support a newly acquired asset as well as to support the existing assets bonded.

The client then engaged JLT to market the programme using our technical broking strategy outlining the unique credit and asset based underwriting factors that mitigate probability of surety loss. We submitted the narrative and supporting documentation to select market partners who specialised in the client’s industry.

Our efforts resulted in a collateral free programme with an attractive rating structure and available capacity for growth supported by the leading waste surety underwriter in the market. The bonds procured by JLT on behalf of the client have aided it in becoming the largest and leading player in its space.

Claims Capabilities

We deliver results. We deploy all resources to help resolve complex losses and deliver claim payments. Our track record is unblemished.

Our clients have confidence that the insurance policies we arrange for them are expertly structured and written by experienced insurers with strong track records in paying claims. Our approachable brokers work alongside our meticulous CPS claims professionals who specialise in handling, managing and negotiating claims.

In the unfortunate event of a loss:

  • You would have a single point of contact with overall accountability for all losses wherever they occur
  • Our proactive claims handling process would help maximise your recovery under your programme, while minimising the intrusion and interference to your on-going operations
  • We would leverage our strong relationships with the major leaders, loss adjusters and lawyers to help expedite the claims process
  • You would have access to our sophisticated pre-loss consulting and effective post-loss recovery services.

CPS ANALYTICS

Our starting point when structuring a new policy is to precisely understand your needs. Our brokers sit alongside a team of risk analysts drawn from security, technical and academic backgrounds.

Their substantial knowledge is utilised to help us understand the precise nature of your risk profile, thereby assisting us in determining the right insurance solution for your requirements.

Using ground-breaking modelling and rating tools, such as Sunstone and World Risk Review, our analysts can pinpoint risks, map exposures, analyse the risk triggers, and evaluate probable maximum loss (PML) ratios across a portfolio of assets.

Read our latest insights