What advice do you have for contractors who look to increase their bonding capacity?

Early and frequent communication of the size and timing of an expected request for increased capacity is the key. Be sure to have a sound plan that will address not only the financial impacts, such as cash flow needs, but also outline how this increase will be managed by existing and/or new staff. When putting these plans together, contractors should work directly with their surety agents to vet the plan. Professional surety agents will know what the bonding company is going to need to be able to positively respond to a capacity increase request.

Why should surety be a preferred career choice or direction for a college graduate or a young business professional?

When students are considering their career path, they should certainly consider the surety industry. Being a surety professional combines many skills that will need to be applied to be successful. Financial analysis and credit analysis are key areas of importance, but they are not the only ones. A surety professional needs to have strong marketing and personal interaction skills to develop the relationships needed to succeed. The job will also require business intuition to be able to assess the risks associated with potential clients and their current and future business plans. Finally, some degree of understanding of the legal environment and laws is used when reading bond forms, contracts, applicable statutes, etc. If a student wants to use many of the skills obtained during their college career, then the surety industry is an area they certainly should consider.

Do you foresee changes in the surety reinsurance market affecting the availability of commercial/contract surety credit?

In speaking with members of the surety reinsurance community, it seems clear that the 2024 treaty renewals saw some significant changes. Pricing increased for nearly everyone. In addition, increases in net retentions for many markets, to better balance the risks retained and the amounts ceded, seem to be another common theme. There are increased claims sizes and frequencies hitting the reinsurers, more so than in prior years, so these changes may continue in 2025. These changes are likely to result in some markets re-underwriting their book as their share of the risks will increase. This typically results in more new submissions available to surety agents and companies. But this typically also comes with new, more stringent terms and conditions for the entities needing the bonds. There remains more than ample capacity and competition. Accounts will most likely still be able to get the bonds they need, but it will probably be a bit tougher in the coming year or two while the surety reinsurance industry continues to balance its risks and its results.