This was a tough case.
The contractor needed a performance bond. We reviewed the bond request form and noted the bid results: They were 100% below the second bidder!
We obtained the company’s fiscal year end financial statement. Our analysis revealed a negative working capital and their net worth had slipped below zero due to a net loss for the period. Pretty tough…
The agent was not a bonding expert, so it was up to us to find a way to help this account.
Collateral was not an option because of their weakened condition. If it hurts the contractor, it can’t be good for us.
We dug deeper to fully appreciate all of the applicant’s attributes:
- The bid spread resulted from the fact that the project was specialty work and the second bidder was a general contractor. They would have to hire someone like our client to perform the job. This contributed to their significantly higher price. Also, the applicant documented a good profit margin in their price.
- There were specific reasons for the net loss. Corrective actions were taken and current financial results were improved.
- We identified the applicant’s additional financial resources – there were multiple credit lines available (unused) and personal cash.
We wrote the bond! The difference is that FIA has a team of seasoned professionals with many years of experience (since the ’70s!). We know how to get through these tough cases.
Site, Subdivision, Performance and Payment Bonds.
Now you know who to call.
Steve Golia, Marketing Mgr. 856-304-7348
FIA Surety / First Indemnity of America Insurance Company, Morris Plains, NJ
We are currently licensed in: NJ, PA, DE, MD, VA, NC, SC, WV, TN, FL, GA, AL, OK, TX