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Despite the fact that the construction economy continues to recover with backlogs growing stronger each year, there is still significant capacity for contractors of all sizes. Whether it is a small or mega-size contractor, capacity looks to remain extremely strong again in the year ahead. —Michael J. Mitchell, The Graham Company

Capacity is substantial at all market levels. While the players are not always the same at the small and mega range, adequate surety capacity is available to support virtually any size construction operation. —Chris Murphy, Travelers
The entry of several new sureties over the past few years, along with a favorable reinsurance market, has had a positive impact on surety capacity. For contractors that continue to focus on managing expenses and debt, as well as maintaining reasonable backlog, surety capacity remains plentiful for all market sizes. Surety capacity also remains available in the specialty surety markets for contractors that have weak balance sheets due to excess debt and poor operating results. —Michael P. Cifone, Hudson Insurance Group

Surety capacity in the under $10 million segment is robust. Longstanding surety carriers have been augmented with a number of newer market entrants to more than amply serve the small contractor community. —Chris Hunt, Liberty Mutual

Plenty of surety capacity remains available to contractors with annual revenues in the $10 million to $100 million range. When commercial construction activity slowed way down in 2009, the national sureties developed a sharper focus on medium-sized contractors; many regional bonding companies targeted contractors at the upper levels of the $10 million to $100 million range; and some new sureties have been formed that are also competing for contractors in this space. All of these activities translate into sufficient surety capacity for medium-sized contractors. In recent years, our agency rarely deals with capacity issues for either existing clients or prospects. —Mike Specht, Minard-Ames Insurance Services / INSURICA

Capacity for mid-market surety may be at an all-time high, and contractors that are working with the right insurance carriers and agents certainly can benefit. Many new markets have begun to enter this space, while traditionally small markets are beginning to reach up to the mid-market domain. We see further examples in which large and mega-market sureties now have greater interest in sliding back into mid-market opportunities. —Robert Thomas, Hanover Surety

Qualified contractors will find ample capacity from their sureties. —Edward Titus, Philadelphia Insurance Companies

The surety market for contractors performing projects under $100 million is very competitive. We are seeing an adequate amount of surety capacity in this market segment for properly capitalized and well-managed contractors. —Josh Penwell, Merchants Bonding

Surety capacity remains strong in the middle market arena due to profitable results over the past several years. Senior management looks at the profitable results and allocates capital to this line of business as demonstrated by the new entrants into all segments of the marketplace. This ultimately increases overall capacity in the middle market. —Antonio C.
Albanese, Nationwide Surety & Fidelity

There is an abundance of capacity in every segment of the market, with the middle to large segment being the sweet spot for the vast majority of surety companies. —Matthew S. Haydon, Arch Insurance Company

Surety capacity remains plentiful and competitive for the mega market from a handful of sureties, often working in co-surety arrangements. The surety capacity available often far exceeds the contractor’s capacity to man the work, serving as a natural temper to uncontrolled growth. The issue of talent and labor shortages is driving the discussion. —Susan Hecker, National Association of Surety Bond Producers (NASBP

There is ample availability in every segment of the market. Terms and conditions have been marginally deteriorating each year for the past few years, and we would expect this trend to continue as the surety industry, in general, has experienced very good underwriting results. —Matthew S. Haydon, Arch Insurance Company

Sureties continue to be hungry for more business even in light of the recent construction recovery. Surety availability is strong; this is truly a buyer’s market regardless of the size of the construction company. —Michael J. Mitchell, The Graham Company

Many surety companies have an appetite for bonding all size contractors, and there have been recent market entrants that focus on small and middle, and some that focus on large/mega, although these entrants do not typically overlap each other. —Chris Murphy, Travelers

Availability of surety credit for contractors performing on work programs under $10 million is plentiful. Increasingly, automated, credit-based models are common at the lower end of the range, with traditional underwriting criteria more common toward the upper end. Collateral terms are not uncommon in the under $10 million segment. —Chris Hunt, Liberty Mutual

Most small to mid-sized contractors have many options available to them regarding their surety needs. Successful contractors have an opportunity to increase capacity and improve terms and conditions of their surety program. Contractors that may have struggled during the past year also will find surety support in this market. —Michael P. Cifone, Hudson Insurance Group

The surety market is extremely soft and surety support is readily available for properly capitalized and well-managed contractors. A large number of surety companies appear to be marketing for the contractors performing projects under $100 million. This creates a very competitive environment and adequate surety availability. —Josh Penwell, Merchants Bonding

Availability is not a problem for a qualified contractor. Due to the number of new entrants into the mid-market, coupled with some larger market sureties’ entry into the mid-market, availability is not and probably won’t be an issue for the foreseeable future. —Alan P. Pavlic, Old Republic Surety Company

The right surety carriers—those with proven track records of financial stability and delivering on their commitments—have ample availability to meet the needs and desires of contractors that have exhibited their staying power and sound business acumen during the recent recessionary period. Coming out of this period, some work is rather erratic, exhibiting an uneven recovery, which creates some concerns about the quality and stability of backlog. However, carriers specialized in this market are willing and able to support a growing backlog of work when provided appropriate insight into contractors’ current financial and operational framework. —Robert Thomas, Hanover Surety 

Surety companies continue to be hungry for new business, and medium-sized commercial contractors are a real focus for them. Underwriters have stepped up their marketing efforts with bonding agents to build their contractor books. In Arizona, more than 50 bonding companies are pursuing business in the state, so this provides agents and their contractor clients with many options. I would estimate that more than one-third of the sureties have the financial capabilities to support the bonding program for a $100 million-per-year contractor, and most of the remaining bonding companies can handle the needs of contractors in the lower end of the $10 million to $100 million range. —Mike Specht, Minard-Ames Insurance Services / INSURICA

Recent surety market entrants and longstanding industry leaders have bolstered surety availability to large contractors. With project complexity increasing and owners insisting on difficult contract terms, contractors in this segment rely on both availability of surety capacity and value-added support from their strategic surety partners. —Michael Bond, Zurich North America

While only a handful of sureties participate on mega accounts, the number of sureties participating is both adequate and growing.—Susan Hecker, NASBP

Most mega contractors can obtain the bonding needed under reasonable terms. Sureties that are experiencing some loss activity are driving more difficult terms and conditions, while new (and unproven) capacity providers may offer more flexibility. —James Bly, Alliant Construction Services Group

Losses have been low over the last two or three years despite the economic downturn and slow recovery. However, there is concern that with increased production pressures and new entrants into the marketplace, underwriting discipline may suffer, leading to increased claim activity as well as severity. —Alan P. Pavlic, Old Republic Surety Company

The industry continues to be profitable. However, loss activity appears to be trending upward. Depending on macroeconomic factors, this trend could continue. —Antonio C. Albanese, Nationwide Surety & Fidelity

Loss severity for most sureties is trending down. There is an increase in frequency in the small end of the middle market with an emphasis on the sub-trades. —Edward Titus, Philadelphia Insurance Companies

We have seen an increase in severity losses for middle market contractors as a result of some difficult projects and stringent contract terms from demanding owners. Risks have increased for contractors in this segment and even firms with strong reputations in the marketplace have experienced problems. —Michael Bond, Zurich North America 

Losses are present in the middle market segment, with fairly active frequency, while severity is limited to a handful of individual events. Contractors value surety carriers that offer thoughtful guidance to help effectively navigate changes in the market without becoming overly extended. The recessionary period has begun to move toward a period of growth, particularly in the private sector. However, the scars from the recession are still felt, especially on public works projects. —Robert Thomas, Hanover Surety

Over the last year, we have seen more surety losses greater than $50 million in value in the market since the 2004 surety crisis. While there has been an increase in loss activity, we are not yet at the level where the surety market is constricting due to the overall profitability of the market and the new capital that is emerging. —James Bly, Alliant Construction Services Group

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