A.M. Best vs. Demotech: You decide

Insurance companies are often rated by Demotech and A.M. Best. They both claim to be superior.  So which one is actually better?

A.M. Best has a 100 year history.  There are no bikers with A.M. Best tattoos, but they must be doing something right.

Demotech is also a force in the ratings war. In 1990 they were acknowledged by Fannie Mae & Freddie Mac.  After hurricane Andrew in 1993, Demotech rose to prominence when they filled a rating void in the southern states.

They both have their fans.  Both are relevant.  That’s why we are especially proud that FIA Surety is highly rated by both!  A.M. Best says Excellent and Demotech says Exceptional!”

Might be an awesome tattoo?

Find out why A.M. Best rates us Excellent!  Call FIA Surety with your next Subdivision Bond.  We’ve been a steady provider for more than 40 years.

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

Visit us: www.fiasurety.com
We are currently licensed in: NJ, PA, DE, MD, VA, NC, SC, WV, TN,  FL, GA, AL, OK, TX

BIG News! A.M. Best rates FIA Surety

We’re pleased to announce the newest addition to FIA’s credentials.

We now are rated by A.M. Best.


OLDWICK – SEPTEMBER 16, 2021 03:21 PM (EDT)

AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-”(Excellent) to First Indemnity of America Insurance Company (FIAIC) (Morris Plains, NJ). The outlook assigned to the Credit Ratings (ratings) is stable.

The ratings reflect First Indemnity’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.”

Read the entire announcement here.

For more than 40 years, FIA Surety has been an enthusiastic writer of Site and Subdivision Bonds.

Stability. Fast, flexible underwriting. A “can-do” attitude, plus an A- rating from A.M. Best. You get it all over here. Call us!

FIA Surety / First Indemnity of America Insurance Company

2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

Check out the surety webinars in our Free CE School: https://fiasurety.blog/2020/08/16/free-ce/

Next webinar: 10/1/21

We are currently licensed in: NJ, PA, DE, MD, VA, NC, SC, WV, TN,  FL, GA, AL, OK, TX

Sub-D Bonds: Like Pulling Teeth?

Cringe when your client’s need subdivision bonds? Why is that? Why is it so hard?

Probably because you’re going to a market that doesn’t write them, or basically dislikes writing them. So getting an approval is like. Well… you know.

The solution OBVIOUSLY is to use a market that loves them, thinks they’re fun. OK, maybe we don’t think they’re fun, but we do like to write them, all sizes and shapes.

For more than 40 years, FIA Surety has been an enthusiastic writer of site and subdivision bonds. We handle one shot deals and big regional developers.

FIA Surety provides A rated, T-listed bonds in every state with the support of our national partners.

Stability. Fast, flexible underwriting. A “can-do” attitude. You get it all over here. Call us!

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Ste. 205
Morris Plains, NJ 07950
Office: 973-541-3417


Check out the surety webinars in our Free CE School: https://fiasurety.blog/2020/08/16/free-ce/

Surety Bond “F” Words

When you think of Surety Bonds, what “F” word comes to mind?

Is it Financing,
Funds Control or

After reading this article, it might be!

Let’s sort these out:
Financing is premium financing which is typically not available on most surety bonds b/c of their non-cancelable nature.
Funds Control is a procedure the surety may require. A 3rd party paymaster handles all the contract funds, pays all the bills to reduce the possibility of a Payment Bond claim.  
Factoring is used to speed the contractors receipt of monthly payments. The factor is an intermediary that fronts each payment to the contractor immediately, then waits to be reimbursed when the money is released in due course.

Out of these three, Funds Control is the one you may run into. Sureties don’t like Factoring b/c it can result in the loss of dollars needed to complete the project.

Premium Financing is typically not available. However, Funds Control will guarantee the surety’s prompt receipt of the premium, if such an assurance is needed.

Wait! Here’s one more: FIA Surety! Your best carrier for Contract SuretySite and Subdivision Bonds

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417
Visit us: www.fiagroup.com

Free CE course on 9/1/21: Advanced Financial Analysis Click
We are currently licensed in: NJ, PA, DE, MD, VA, NC, SC, WV, TN,  FL, GA, AL, OK, TX

Meet the Director of the FIA Surety School

Steve Golia

Steve Golia is a veteran surety producer, underwriter, author and instructor.  

Over the course of the last 40+ years he has held a range of industry positions of responsibility including that of underwriter, bond manager, branch manager, and company officer for Aetna C&S, CNA, Mountbatten Surety, Amwest and FIA Surety.

As a producer, in addition to owning a bonding agency, he has worked for Johnson & Higgins, Haas & Haas, and was a nationally recognized “President’s Club” top producer at Bollinger.

Steve’s original career was teaching, which may explain his love for sharing information about surety bonds – a subject that is mysterious and vexing to many professionals.

Prior to the arrival of the internet, he established a long history of bond instruction through hundreds of classes and seminars that have been delivered for the Federal Government, Universities, Small Business Development Centers, SCORE, and several other public and private bodies.

Steve is a participating author for the Associate in Fidelity and Surety Bonding (AFSB) designation.

You can reach Steve on his cell: 856-304-7348

#188: 10 Tips to BOOST Bonding Capacity!

I never met a contractor who didn’t want MORE surety bonding capacity. Here are TEN ways to Boost that bonding line:

  1. Leave profits in the company. To the extent that bonuses, distributions and salaries are limited, this directly helps bonding (and banking) by maximizing net worth.
  2. Control 3rd party debt, such as bank debt. Limiting such borrowing improves the Debt to Equity ratio, which is a key benchmark for bonding. It also improves the company’s credit rating.
  3. Stockholders / owners should avoid borrowing from the company. This directly reduces the net worth analysis and hurts the Debt to Equity ratio – both are bad for bonding. If such borrowing has occurred, start the process of payback ASAP.
  4. Stockholders / owners can add funds to the company as permanent capital (not a temporary loan).
  5. Funds already loaned to the company by Stockholders / owners can be subordinated to the surety. It then may be treated as net worth rather than 3rd party debt. The loan can also be converted to permanent capital.
  6. Restructure 3rd party debt to longer term. Restructuring short term debt to long term directly increases the working capital calculation – an important benchmark for bonding.
  7. Update equipment appraisal. The monetary value of heavily depreciated equipment can be recaptured and added to the net worth calculation.
  8. Consider leasing buildings and equipment to preserve cash. Q. “Where did all the money go?” A. Oh, we bought a boat!” This DOES NOT help bonding. Company owners can personally buy such fixed assets and lease them to the company. Also, sell unused equipment and hold the cash.
  9. Improve accounting procedures and methods. Better job cost records? Get a mid-year statement? Get a CPA? Get a CPA Review statement? Etc.!
  10. Get a bank line. Even if you don’t need one, available bank credit directly helps the bonding capacity.

Bonus Tip: Pick the right bonding agent and bonding company.

  • The right agent knows construction and has other contractor clients.
  • The right bonding company is a problem solver, a highly experienced and confident underwriter – Like FIA Surety!

Specialists in Contract Surety, Site and Subdivision Bonds.

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

Join our 9/1/21 webinar: Advanced Financial Statement Analysis FREE CE School

An “A Rated” Carrier

We are currently licensed in: NJ, PA, DE, MD, VA, NC, SC, WV, TN,  FL, GA, AL, OK, TX



It’s not too late to get in on our Free CE Zoom webinar on 8/2/21 “ETHICS FOR INSURANCE.” Attend from your home or office computer for 3 credits. No exam. Register or watch one minute video about our accredited CE school.

Brought to you by your best carrier for Contract SuretySite and Subdivision Bonds:

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

Visit us: www.fiagroup.com

We are currently licensed in: NJ, PA, DE, MD, VA, NC, SC, WV, TN,  FL, GA, AL, OK, TX

Surety Bond Challenge: How Would You Respond?

Our agent asked this question. How would YOU respond? (Our answer at the end.)

Hi Steve, my client got a call from a township that is one of his past customers. There’s a project they want him to finish. The other contractor ran out of money and couldn’t complete the job.

The defaulted contractor thinks he is 95% complete, but it looks like there is more than 5% left to finish this up. There is also subcontract work that the township cannot evaluate. They are not sure what remains to be done.”

Your answer: __________________________________

This is a bit thorny. There are red flags and we don’t even know the size of the contract yet!

The first point is that this is a completion contract for the defaulted contractor’s surety. It’s not a normal township bonded project – like the client is used to doing. Does he have prior experience working for a bonding company? I don’t think so.

“Abbey Normal”

Secondly, if there is some question regarding the remaining work, how can he price it correctly? “Lump Sum” contracts are common in the industry. There is a set dollar amount to be paid. If it turns out to be insufficient to complete the work, the contractor faces a loss on the project.

Obviously there is much more to know about this, but here was our response:

  1. Generally, sureties are reluctant to issue bonds with another surety as obligee, can get too messy. This is an “abbey normal” situation. He could only offer to proceed with no bond on his completion contract.
  2. The client should avoid a lump sum contract because the scope of work is not clearly defined. A better choice would be a Cost Plus contract. It would prevent an unprofitable outcome.

No premium on that one, but at least we helped our agent and contractor.

Want this level of expertise on your next contract suretysite or subdivision bond? Call us!

Free CE Credits: 8/2/21 Ethics course. Info and register.

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

An “A Rated” Carrier

We are currently licensed in: NJ, PA, DE, MD, VA, NC, SC, WV, TN,  FL, GA, AL, OK, TX


#187: LOOK B 4 U LEAP: Top 10 Surety Bonding Tips for Beginners

Tip #1: The Contractors Questionnaire should be filled out completely, signed and dated.

Explanation: It is better to answer every question and provide additional explanations than to leave answers blank.  They make the reader suspicion that critical info is being withheld.  It gets the relationship off on the wrong foot.

Tip #2: Owners spouses’ info must be included in all areas including the Contractors Questionnaire and personal financial statements. 

Explanation: Bonding companies expect to have personal financial info and the indemnity of all owners and spouses.  The underwriters will ultimately determine if the owners are married.  If the spouse info has been omitted it is an immediate red flag.

Tip #3: If there is a default or bankruptcy in the company or personal history, provide full disclosure with an explanation and offer documentation (even if it occurred more than 7 years ago.)

Explanation: There are often legitimate reasons for such events.  It is important to explain why it happened and the events/actions that followed.  There are bonding companies that will be understanding and welcome the business. 

Such historical details cannot be concealed.  They will be seen in the credit reports and background checks.

Tip #4: Tax disputes – if they result in a Tax Lien, you may lose more money by fighting it than by paying it off.

Explanation: Tax Liens are viewed as a possible indication of poor management, insufficient cash flow and/or bad accounting practices.  This can hold back your bonding and keep you from acquiring new projects. Weigh the advantages.  It may be better to pay the tax bill and keep your credit report clear.

NOTE: Unpaid taxes can result in a tax lien even if you have been told to not make payments while the matter is under appeal.

Explanation: During an appeal, the government may file a tax lien to perfect it’s rights.  They do this with no regard for the effects a lien may have on your credit rating, your banking or your bonding relationship.

Talk to your attorney about paying the disputed amount during the appeal process.

Tip #5: Don’t borrow money from the company.

Explanation: This creates an asset on the company balance sheet called “Stockholder’s Loan Receivable.” Bond underwriters typically disallow this asset by deducting it from Working Capital and Net Worth (bad for your bonding). Avoid such transactions!

Extra Tip: If you have already borrowed from your company, start paying it back now.

Tip #6: Litigation – open suits must be disclosed on the Contractor Questionnaire.

Explanation: Such facts will become known to the surety from a variety of sources. For example, your CPA may be required to disclose open litigation in the financial statement notes. 

If you are a defendant, the surety will want to know the cause of the action and the financial implications. It can help if your attorney writes a letter of explanation and predicts the likely outcome.

It is better to volunteer this info on the application, and offer the explanation YOU feel is appropriate.

Tip #7: Young companies can supplement their history by providing resumes of key people.

Explanation: Many sureties will not accept applicants with less than 3-5 years of operating history under the current name and ownership structure. When experienced construction professionals start their own companies, their resumes will be a key element explaining skills and capabilities demonstrated on prior projects.  Be sure to include contract details such as work description, year completed, $ amount and your personal responsibilities.

Tip #8: Hopping around – multiple sureties over a short period of time will raise concerns.

Explanation: Setting up a bond account is an expensive proposition for the surety.  They are looking for customer loyalty and stability.

Long term relationships tend to produce more capacity and better terms for the contractor.  If you like to hop around on your insurance every year, try not to do so on your bonds.

Tip #9: Maximizing bank credit can help your bonding.

Explanation: Even if you don’t expect to need it, maximizing your bank credit will help support your bonding. Bond underwriting includes a credit analysis.  If the bank supports you, it proves to the surety that you are credit worthy and therefore deserving of bonds.

In addition, bank credit is a financial resource that could be the key to completing a bonded project and avoiding a bond claim or default.

Tip #10: Make bid estimates sufficiently high.

Explanation: When submitting a bid bond request, make the “estimated contract amount” high enough to allow for last minute increases.  There is no harm in bidding less than indicated.  

BONUS TIP: For contract surety, site and subdivision bonds, come to the folks who get them done…

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

An “A Rated” Carrier

We are currently licensed in: NJ, PA, DE, MD, VA, NC, SC, WV, TN,  FL, GA, AL, OK, TX