Author: stevegolia

Bonding Companies Are ALL The Same.

OK, you know that’s not true.  In fact, your success may depend on knowing the differences between sureties.  Each one has a certain appetite, a niche.  We are all the same, and yet we are all different.

So here is a little bit about us.

What We Do

  • OUR GOAL is to be your high capacity market that provides fast, reasonable, (maybe even wonderful) underwriting responses!
  • Exclusively contract surety.  That means bid, performance and payment, and maintenance bonds.
  • We bond construction, including subcontracts, plus service and supply contracts.
  • Sovereign nation contracts are supported
  • Also demolition, abatement and remediation
  • We will consider young companies
  • Production Underwriters: We can support companies with less than perfect credit – even with liens and bankruptcies. We’re not shackled by “bonding company bureaucracy.”
  • We are flexible regarding financial statement presentation on bonds up to $10 million each.
  • We have our own contractors questionnaire, bond request form and WIP schedule because after doing this for forty-five years, we know what info helps get your deal done.
  • Our standard bond forms are unmodified AIA forms, readily accepted throughout the construction industry.
  • Our rates are flexible / competitive.
  • We are licensed to write in every state, including D.C., and can also consider overseas projects.
  • We respond to all new business submissions on the day received.
  • We are offering new agency appointments.  No volume commitment is required.
  • Our underwriting staff is available every day of the week, including evenings, 365. (You can call us right now! 856-304-7348)

What We Don’t Do

  • Fidelity bonds or surety other than contract.  For example, we do not support license & permit, court & probate, or site & subdivision.
  • Waste your time.  We only develop files we expect to write.

We not bragging.  We just wanted you to know.

Our strong financial position (Best rating: A-8) makes us a perfect fit on a wide range of opportunities.  Aggregate programs to $15 million and fast service.  How can we help you succeed today?

 

KIS Surety Bonds, LLC is the exclusive surety underwriting department for Great Midwest Insurance Company an “A – 8” carrier licensed in all states plus D.C.  “steve@kisbonds.com” or call 856-304-7348.

SECRETS OF BONDING #157: Bid Bond Quiz

Is there anything less interesting than a bid bond?

They may not seem too exciting, but the lowly bid bond is an integral part of our surety business.  For contractors, they are often the key to acquiring new revenues.  If you don’t think they are important, watch what happens when a client is waiting for one that never arrives.

As surety underwriters, we spend a great deal of effort assuring these documents are accurate, delivered on time, and we track the outcome on each one.

Everybody knows about bid bonds, right?!  OK let’s see if you do…

True or False:

  1. If you decide to not use a bid bond you ordered, you have to send it back to the surety within 48 hours
  2. They have an expiration date
  3. A bid bond precedes every performance bond
  4. The surety can cancel the bid bond
  5. The dollar value of the bid bond equals the amount of the proposal it accompanies
  6. The surety must know the exact dollar value of the bid bond before they will issue it
  7. The premium for them must be paid in advance
  8. They remain active for up to six months
  9. It is better to use a check for security than a bid bond
  10. The same surety that issues the bid bond must issue the performance bond

OK team, how’d you do?  # of True______? # of False____?

They are all False!

  1. An unused bid bond has no value but it makes a great liner for your bird cage
  2. Never has an expiration date
  3. Some contracts are negotiated (no bid bond) or may require a surety capacity letter instead
  4. Like a performance bond, these surety instruments cannot be cancelled
  5. Most often the penal sum of the bid bond equals a percentage (10-20%) of the proposal amount
  6. Most bid bond amounts are expressed as a percentage of the proposal amount, not a dollar amount, to protect the confidentiality of the proposers bid. In such cases the exact dollar value is unknown in advance.
  7. Sureties are entitled to charge for them, but usually don’t
  8. Although not stated, most sureties consider them void after 90 days
  9. Wrong! If the performance bond is not produced, the check can be forfeited
  10. Nope! Two different sureties can be used, even if a “Consent of Surety” was issued with the bid bond.

Bonus Question: If the bid is rejected because the surety’s credentials are found to be inadequate, can this result in a bid bond claim?

Answer: Theoretically, it should not. If the bond is declared inadequate, how can it be sufficient for a claim?

When flexibility and aggressive underwriting are needed, give us a call. We have in-house authority for Bid and Performance Bonds up to $10 million each, and guarantee a same day response.  Find out what you missing when it comes to surety bonds.  

KIS Surety Bonds, LLC is the exclusive surety underwriting department for Great Midwest Insurance Company an “A – 8” carrier licensed in all states plus D.C.  “steve@kisbonds.com” or call 856-304-7348.

Secrets of Bonding #156: You Know About Financial Statements

Audit, Review, Compilation: You know the difference. With bonding companies, you need certain financial statements (FSs) at different times. But there is one FS you don’t know about, and it can be very helpful!

  • Audit: This is the highest level of CPA (Certified Public Accountant) presentation. The CPA provides a cover letter stating they have checked over the numbers and believe they are accurate.
  • Review: This is the middle level.  The CPA does some checking, but less than an audit.
  • Compilation: This report has a disclaimer letter.  It says the FS is the presentation of management – meaning the CPA does not vouch for the numbers.
  • Other than CPA prepared statements, you could run into one by a PA (Public Accountant,) or a bookkeeper.
  • There are also Internally Prepared statements produced directly by the customer, such as with Quickbooks.

Then there is this Secret One you probably don’t know about.  It can be a strategic help and will not be suggested by the accountant.  It’s up to you to get it!  We call it a “Confirmed Internal FS.”  

This document is an internal FS, such as Quickbooks, but with an important upgrade.  When obtaining a Confirmed Internal Report, the president or company owner is required to sign and date the company Balance Sheet (or maybe every page of the document) and write “Confirmed.”  This is an affirmative statement that the FS has been scrutinized.  It is a document with greater credibility, because someone is taking responsibility for it. (Read Secret #5 about the role confidence plays in bonding.)

Here is a real life example of how beneficial, how strategic, the Confirmed Internal FS can be.  This week we are issuing an $8 million P&P bond for an applicant with a 12/31 fiscal year-end. Obviously, the CPA report is not available yet (less than one month after the FYE). However, before issuing the bond, we must get a read on their financial picture.  How did the year turn out?

We can’t get the CPA report, but an internal FS is available.  These documents come off the client’s computer system. If the company doesn’t have an in-house accountant (many do not), the FS has low credibility unless it is reviewed and Confirmed by a responsible party / indemnitor.

Can underwriters base a decision on a Confirmed FS? That depends on whether the surety has the flexibility to give an approval in the absence of a CPA Audit or Review (many do not.)

Fortunately, we were able to proceed based on the confidence that the business owner reviewed and Confirmed the financial statement.  He signed his name and went on record, “You can rely on these numbers.” To us, that makes a big difference!

When flexibility and aggressive underwriting are needed, give us a call. We have in-house authority for Bid and Performance Bonds up to $10 million each, and guarantee a same day response.  Find out what you missing when it comes to surety bonds.  

KIS Surety Bonds, LLC is the exclusive surety underwriting department for Great Midwest Insurance Company an “A – 8” carrier licensed in all states plus D.C.  “steve@kisbonds.com” or call 856-304-7348.

Surety Check Up- NOW is the time

We all know the value of a medical check up.  Address the issues.  Prevent unsolvable problems and bad outcomes.

The health of a surety bond account is also important, vitally important for companies that need bid and performance bonds to acquire additional revenues. That’s why we offer a free “medical” check up for construction bond accounts at this time of the year.

It’s easy, fast and free, and you DON’T need an appointment.  We will provide a Surety Bonding Evaluation based on just two pieces of information.  This initial evaluation will show if the correct amount of capacity is being provided, identify problem areas that may be holding the account back, and may include advice on making strategic changes.

We guarantee a same day response and will review:

  • Amount of single bond capacity that may be appropriate
  • Amount of aggregate bond capacity the account qualifies for
  • Financial areas where the account can be strengthened
  • Red flags and issues that can hurt the bond account and how they may be easily resolved!
  • Good cholesterol / bad cholesterol screening (just kidding!)

Info needed:

  1. “draft” company year end financial statement
  2. contractor questionnaire.

That’s it!  Most construction companies have a 12/31 fiscal year end, so NOW is the time to preview the info and evaluate it for bonding – before the CPA makes the final 12/31/17 version. This process is strictly confidential.  We don’t run credit reports or contact anyone.  It’s confidential with the Bond Doctor…

Isn’t it better to have confidence going into 2018? Send to “steve@kisbonds.com” or call 856-304-7348.

 

KIS Surety Bonds, LLC is the exclusive surety underwriting department for Great Midwest Insurance Company an “A – 8” carrier licensed in all states plus D.C.

We have in-house authority for Bid and Performance Bonds up to $10 million each.

Contact us for creative solutions and a same day response.

 

Claim your Gift Basket!!!*

“Hey look guys! We got an awesome holiday gift basket for Christmas, Hanukkah and (fill in your favorite holiday)! It’s from that bonding company, Great Midwest Insurance Company.  Wow that’s some great stuff!  I already see what I want.  Let’s open it now.”

“OK, this one says GREAT CAPACITY. That means they write surety bonds for contracts up to $10,000,000 each. Only a couple of our sureties can do that. Hmmm!”

“This one says WORLD’S FASTEST COMMISSIONS.  Gee, you gotta love that! Money is awesome.”

“I have FLEXIBLE UNDERWRITING. I know they can work with a variety of financial situations and may serve some difficult cases.”

“STRONG CREDENTIALS, how tasty! This corporate surety is licensed in all states and rated A-8 by A.M. Best.”

“Hey this one is mine: UNSURPASSED SERVICE.  Face it, without great customer service, you got nothin’!”

“Yeah, well a lot of companies have good service.  I have an idea, let’s call a couple of our best sureties right now and see who answers the phone. You know the drill: Your call is very important to us, the estimated hold time is 9 minutes.  Ha ha ha!

OK so do it.  The phone number for their underwriting department is 856-304-7348.  Let’s see if they answer the phone on Saturdays.”

(Try us!)

*Please enjoy your virtual gift basket!

KIS Surety Bonds, LLC is the exclusive surety underwriting department for Great Midwest Insurance Company an “A – 8” carrier licensed in all states plus D.C.

We have in-house authority for Bid and Performance Bonds up to $10 million each.

Contact us for creative solutions and a same day response.

Secrets of Bonding #155: The Double Bonding Conundrum

This is America. Everyone is entitled to their opinion. But on the subject of Double Bonding (Contract Surety) we will not all agree.

So here are the facts. You will decide if this is a great idea or just a waste.

What is Double Bonding?

Also called “back bonding” or “subcontract bonding” an example would be when both a subcontract and a prime (directly with the project owner) construction contract are bonded. The prime contractor is the General Contractor (GC).

The GC gives some of the work to trade contractors such as the plumbing, electrical and HVAC. These firms may be required to give a subcontract bond to the GC guaranteeing their work. In turn, the GC provides a bond that covers everything. In other words, it too covers the plumbing, electrical and HVAC. That’s the “double” part. Sounds pretty dopey so far, right? Why would anybody do that?

Turns out this occurs often. Depending on your viewpoint, it may seem helpful / essential, or just a waste of money. Let’s evaluate it and you decide.

Why Love It:

  • Owner: Subs that have been approved by a surety may perform better.
  • GCs: May have a policy to automatically bond subs over a certain dollar value. This is intended to prevent delays and unpaid bill problems.  In addition, the GC / prime contractor is the direct beneficiary, and the potential claimant against such bonds.
  • Subcontractors: With a surety backing them, they may have an advantage when pursuing new work. These are important credentials that prove they have passed the underwriters scrutiny and have the backing of a professional guarantor.
  • Sureties:  May find it easier to support the GC bond if major subs are bonded. A portion of the risk is then covered by *another bonding company.
  • Third tier subs and material suppliers: May not be protected by a payment bond unless double bonding is in place. The GC’s bond may not go down to the third tier (sub of a sub or third tier suppliers.)
  • The most important reason: It is possible that the GC’s surety may insist that major subs be bonded as a condition of supporting the GC. This can be the key to acquiring the contract.

Why Hate It:

  • Owner: Doesn’t need sub bonds because the GC’s bond already covers all the work.  They may be forced to bear the related premium costs if the sub bonds were anticipated. If they were not, the charges may come out of the GC’s profits.
  • GC: In a competitive situation, the related costs could cause them to lose the project. Sub bonds may help GC with their surety, but they do not reduce the cost or dollar value of the GC’s bond.

Bonus Conundrum

Love it or hate it, double bonding is sometimes done voluntarily, or it may be stipulated by the GC’s surety. There is no denying that the concept is important – so important that in some cases both the GC bond and the sub bonds are written by the *same surety. Why would they do that?!

~ ~ ~

KIS Surety Bonds, LLC is the exclusive underwriting department for Great Midwest Insurance Company an “A – 8” carrier licensed in all states plus D.C.

We have in-house authority for Bid and Performance Bonds up to $10 million each.

Contact us for creative solutions and a same day response: 856-304-7348.

Flat Tires and Surety Bonds

“It’s only flat on the bottom!”  When you heard that, did it make you feel any better?  No… a flat tire is a real PIA. Nothin’ good about it!

What about “Flat line?”  Heaven forbid!  That’s real bad.

When I was a kid we had an expression, a “Flat leaver.”  That was a person who left you flat. Don’t like that either.

You can probably think of other examples: Flat footed, flat broke, flat on your back…

BUT! When it comes to surety bonds, flat can be good. Look at how major sureties typically make their decisions.  There is the field person in the branch, plus a supervisor, and a bond manager.  Then there is a home office underwriter, maybe two.  Together this “committee” makes major decisions.  Problem is, they don’t actually work as a committee, they process the decision sequentially.  Each person looks at it, then sends it on to the next.  That’s a great system, unless you need an answer in this lifetime!

This is an example of a decision making structure that is not flat.  It is multi-layer, multi-person, each with an “in” box and other priorities.  Getting a decision will take a couple of weeks.

When it comes to surety bonds, you want flat.  You want a structure where decisions are made promptly and efficiently.  Then everyone wins.  You get the answer you need, when you need it.  Isn’t this how the system is supposed to work?

KIS Surety / Great Midwest Insurance Company (GMIC) is your large capacity, most flat market.  We process decisions fast.  All new submissions receive a same day response.  Productive, creative, expert underwriting that has produced superb results for years.

Do yourself a favor.  Take a step up to surety bonds the way they should be. KIS Surety Bonds, LLC is the exclusive underwriting department for Great Midwest Insurance Company an “A – 8” carrier licensed in all states plus D.C.  We have in-house authority for Bid and Performance Bonds up to $10 million each.

Contact us for creative solutions and a same day response: 856-304-7348

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