surety

Bnods? Bonsd? You can’t even spell “Bonds!”

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Maybe you don’t need to be a super expert on Surety Bonds. But you don’t want to be intimidated by the word either…

You can fix that now with our FREE CE program! FIA Surety is a bonding company that has specialized in Site, Subdivision and Contract surety since 1979. We’re also an approved Continuing Education provider.

It’s not too late to register for our 10/1/20 free webinar worth 3 CE credits in NJ, PA, SC,FL, TX and TN. The subject is Understanding Site and Subdivision Bonds.

The 11/2/20 class is on Bonding Basics – fun for all!

Don’t miss out. Learn how to spell B-O-N-D-S and more. The classes are a free service of FIA Surety. No exam. Take the Zoom class from your home or office computer.

Learn more and register now.

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

Get to Know FIA Surety: Glenn A. Runne, CFO

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He’s a CPA, but he only uses his powers for good…

Super CPA

Glenn Runne was born in Kew Gardens, Queens N.Y. and grew up in North Bergen, N.J. He is the oldest of three kids.

His mom was a secretary and dad drove a truck. They also owned a neighborhood Bar and Grill for a few years.   From an early age they stressed the importance of a college degree. Typical for a “first born,” Glenn became a high achiever.

Glenn graduated North Bergen High School in 1972 and Montclair State University in 1976 with a BS in accounting and finance. He paid his own way through.

With a degree in hand, Glenn landed an accounting management position at N.J. Life Insurance Company. This gave him a strong foundation and he became a Certified Public Accountant in 1987!

A couple of years later, Glenn’s brother-in-law introduced him to Pat Lynch. Pat’s young company, First Indemnity of America Insurance Company, was in its second year.  Glenn’s expertise in accounting and taxes was a perfect fit. He joined the firm as VP and CFO in 1979.

In 2012 Glenn received the coveted “Chartered Global Management Accountant” designation.  This is international recognition of the world’s top professionals in his field!

More accomplishments:

  • Plaza School of Business – Adjunct Accounting instructor
  • Bergen Community College – Adjunct Accounting instructor
  • The Children’s Corner, Founder, Treasurer and Board of Directors member of a non-profit childcare center
  • Lake Hiawatha Country Club – Treasurer, Board of Directors member
  • Fellow in the American Institute of Public Accountants
  • And the New Jersey Society of Certified Public Accountants.

With the help of his wife, Denise, Glenn raised 3 daughters: All college graduates with master’s degrees. Two girls became teachers and one is a certified public accountant. The apples fell close to the tree.

Glenn’s outside interests are physical fitness and attending New York Giants football games with his long-time season tickets.

If you did the math you see that Glenn is one of Pat’s many long-term employee/colleagues. His work has expanded proportionately with our organization.  Currently, Glenn oversees the accounting for our seven companies which includes three audits. He is also responsible for all the tax returns, plus forty-five states where we file.  Whew!

The dedication of long-term colleagues like Glenn is one of FIA Surety’s greatest strengths. 

Carry on, Glenn!

For Site, Subdivision, Bid and Performance Bonds call Steve Golia: 856-304-7348

FIA Surety / First Indemnity of America Insurance Company  Visit us: www.fiagroup.com
We are currently licensed in: NJ, PA, DE, MD, VA, NC, SC, WV, TN,  FL, GA, AL, OK, TX

Get to Know FIA Surety: Paul Alongi, Sr., Claims Manager

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When was the last time you spoke to a personal friend of Joe Pesci and Frankie Valle? Ok, never? Well, meet our Claims Manager, Mr. Paul Alongi, Sr.

Paul was born in Newark, the oldest of four children and graduated from Barringer High School.  Joe Pesci and Frankie Valle were among his friends. Born with a love of music, he learned to play tenor sax at age 7.  As a big band member, his group backed up Connie Francis, Dion and the Belmonts, Tony Bennet, Xavier Cougat, Al Martino and others.  To this day, Paul is an active musician playing in several venues.

He was athletic, too!  Paul tried out for the NY Yankees in these early years.

Paul started his insurance career in the actuarial department of U. S. Life and studied for his law degree at night. In five years, he graduated from Seton Hall Law School and started his law practice.

While running for public office, Essex County Freeholder, he met a fellow candidate, Patrick Lynch.  Years later this would result in Paul joining Pat’s young company “First Indemnity of America Insurance Company / FIA Surety” to become our first Claims Manager.  He’s been a valuable asset all these years.

Paul has served on the Bloomfield Board of Education (President), the New Jersey Commission of Investigations, and has also been a long-time leader in many community organizations, including: the Bloomfield Federation of Music and Civic Band, the Garden State Concert Band, St. Thomas the Apostle Parish and Finance Councils, Holy Name Society and Circle of Friends.

Paul is a highly experienced problem solver and, he is accessible to our agents and clients!  973-541-3414

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

 

182. Banker Holding Back

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Sure, your banker loves you. But here is important info they want to keep from Home Builders, Developers and their Agents.

When starting a new project, developers must secure the project with the township. This can be in the form of:

  1. Cash
  2. Bank issued Irrevocable Letter of Credit (ILOC,)
  3. Or a surety issued Site/Subdivision Bond

The International Risk Management Institute says a surety bond is better than an ILOC:

“Corporate surety bonds are far and away the most preferred option for most owner/developers when you consider the potential disadvantages of the alternative guarantee forms.”

Now you know. Too late if an ILOC was already filed with the township… or is it? Actually, our surety bonds can be filed to replace / release the ILOC. Your banker won’t tell you that either!

This is a great move for developers! Get back your cash. Use it to acquire or start a new project. It’s NOT too late the fix the ILOC mistake if you know where to go. Most sureties won’t write this type of bond but at FIA, it’s our specialty!

FIA is also one of the few bonding companies that will write Down-payment bonds for it’s Home Builders freeing up even more usable cash for your company.

If you have an immediate need for a Site/Subdivision bond or are interested in replacing an existing ILOC with a bond, call us at 856-304-7348.

Steve Golia

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

See Inside FIA Office

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OK, that’s not really our office.  But we want to assure you – we’re here issuing bonds, underwriting new business and making new friends!

Be careful and safe like us (not like the picture!)  FIA wants to help with the surety bonds you need including Bid, Performance, Site and Subdivision.

FIA Surety: A bonding company serving independent agents and the construction industry since 1979.

Steve Golia 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

Surety Bond Challenge: Solve This Problem!

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A key vendor / supplier is demanding that a GC provide protection for their purchase agreement. However, the project owner did not stipulate a Performance and Payment bond on the contract and none was provided. The work has started and the contractor needs to get materials delivered from the reluctant vendor.

What are the possible solutions that may satisfy the vendor? Choose one!

  1. Issue a Payment Bond on the Purchase Agreement
  2. Issue a Performance & Payment Bond on the Purchase Agreement
  3. Bond the contract in a normal way (100% Performance & Payment)
  4. Issue only a Payment Bond on the contract

(1.) Issue a Payment Bond on the Purchase Agreement?
A. A vendors purchase agreement is not the same type obligation as a construction contract. A bond guaranteeing payment of the purchase agreement would be considered a Financial Guarantee Bond (Why?  See below *) They are more difficult to obtain than a Payment Bond, so that’s not be the best solution.

(2.) So what about issuing a Performance & Payment Bond on the Purchase Agreement?
A. This is also not an option due to the differences between the nature of a purchase agreement and a construction contract.  (Details below *).

(3.) Can we bond the contract in a normal way (100% Performance & Payment)? That Payment bond would cover all vendors, so it would cover the one in question.
A. Bonding a started project is always a red flag. The underwriters initial question is “Why do they want a bond now?” It does seem suspicious, like there may be a problem with the performance of the construction work or the owner received some negative info on the contractor. Maybe the contractor has a problem and the work is in jeopardy.
Another issue is the cost. If a bond was not originally required, the bond cost was not included in the contract price. This means a bond purchased subsequent to the execution of the contract will be paid for out of the contractor’s profit margin. The Principal / GC will be looking for the most inexpensive solution possible.
Keep in mind that the purchase order amount is less than the contract price, so bonding the contract would result in a bond higher (and more expensive) than actually needed.

(4.) Can we issue just a payment bond on the contract?
A. This too will be viewed as a red flag by the underwriters. Who asks for a payment bond but doesn’t want a Performance Bond? That would be unusual.

Summary
We have concluded that it will be difficult to retroactively bond the contract, the amount of the contract is more than the purchase order and only a financial guarantee bond can be issued on the purchase agreement, so a Performance Bond may not be the solution at all!

Our Solution
In this case, we offered Funds Administration instead of a bond. This was an inexpensive alternative, and provided an assurance for the vendor that bills would be paid in a routine manner. (The project owner pays the Funds Administrator who directly pays the vendor.)
Keep in mind, however, that the Funds Administrator has no obligation to the vendor. If there is an unexpected event, such as termination of the contract, the Funds Administrator does not guarantee to the vendor that they will be paid appropriately.  A bond would, if one had been written.

*The nature of purchase orders is different from construction contracts. When issuing a P&P bond on a contract, the surety depends on the fact that the obligee / beneficiary is paying for the work, and that money may be the key to solving any claim or default.

When bonding a purchase order, the obligee / beneficiary (vendor), is not paying – they are receiving payment. That is why a Financial Guarantee Bond must be used, and is why they are harder to obtain.

FIA Surety is a NJ based bonding company (carrier) that has specialized in Site, Subdivision, Bid and Performance Bonds since 1979 – we’re good at it!  Call us with your next one.

Steve Golia, Marketing Mgr.: 856-304-7348

First Indemnity of America Ins. Co.

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Alpacas vs. Llamas

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Look at that face!  Don’t you love it? That sure is a cute Alpaca! Uh…or is it a Llama?  Hard to tell,  but  it’s  OK.  You still love it.

For Surety Bond Producers, it can be hard to tell the difference between a performance bond and a site bond.  In this case, it does matter because the apps and markets you use for performance bonds may not get you the site bond your client requires. You need to know the difference!

Info #1.  You have at least one market that is a strong, stable player on Site and Subdivision Bonds.  FIA Surety is your go to market.  We have been writing these confidently since 1979.

Info #2. FIA offers a free, accredited CE course on Site and Subdivision Bonds.  In fact we have nine accredited courses you can attend and learn “everything” about surety bonds!  Click for info and to register.

Info #3. That’s an Alpaca!  Smaller than a Llama: 150 lbs vs. 400 lbs. llamas also have longer faces and banana sized ears.  (Trick to remember: The “ll’s” in Llama look like the long ears.)

Steve Golia, AVP of Underwriting
FIA Surety is First Indemnity of America Ins. Co.: A carrier providing A rated, T-listed bonds in all states!
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417
Visit us: www.fiagroup.com

Alpaca <–> Llama

186. Bonding Companies: Can’t Live With Them, Can’t Live Without Them

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  • “I don’t know what you want unless you tell me.”
  • “Nothing is ever enough for you.”
  • “No, those pants don’t make you look fat.”

Sound familiar?  Have you uttered these words?   Were you talking about your romance life, or your bonding company (except for the pants comment.)

It turns out that much of the frustration we have in life arises from a failure to see things from another point of view. Husbands and wives know this.  But the good news is that there is a common solution.  Open communication and good listening skills are the key.  Can this be applied to suretyship?  (For mood music, Click!)

“What’s with all the Questions?!”

This is a good place to start.  Why do bonding companies ask so many questions?  And just when you get to the end of round one, they think up more.  It’s like they don’t ever want it to end!

Answer: To a degree, it doesn’t ever end.  That’s because the credit analysis a surety performs is based on info that constantly changes – and will do so without notice to the surety. They have to keep a finger on the pulse to be confident when issuing bonds.

“Why do I have to give my personal indemnity AND pay a premium for the bonds?”

It seems like the bonding company is taking no risk and they get paid for it!

Answer: Actually, personal indemnity does not guarantee that a surety will not have a net loss on a bond claim.  When a claim occurs, the company owners may already be depleted (trying unsuccessfully to resolve the problem.) When the “stuff” hits the fan, the surety has to foot the bill and the indemnity may be worthless.

“Do these pants make me look fat?”

When contractors start to pursue an excessive work load the bonding company may put the brakes on. They don’t want the company spread too thin with insufficient management and financial resources. Actually, dying from an excessive amount of work (too fat) is more prevalent than the opposite.

The surety wants to be sure the client remains stable and able to perform their work – and thus avoid any possibility of a bond claim.

Conclusion

Are bonding companies unfathomable, impossible to understand? No, it’s just that, unlike insurance companies, they are risk averse.  They operate on a very thin margin and problems (claims) of any size can hurt them.  Their very survival depends on being prudent and conservative.  This means ask questions and move forward with caution.

So now, can you love your surety?  Maybe a little bit…

FIA Surety is a NJ based bonding company (carrier) that has specialized in Site and Subdivision Bonds since 1979 – we’re good at it!  Call us with your next one, Bid and Performance bonds, too.

Steve Golia: 856-304-7348
First Indemnity of America Ins. Co.

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Surety Bonds: How I Voted

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Last Tuesday was the big day: 

  • “The most consequential mid-terms of our lifetime!”
  • “Your mid-term vote is a chance to affirm / reject (choose one) the president’s agenda!”
  • “The end of life as we know it!”
  • “Blah-blah-blah!”

I’m not making a joke about voting.  I think it is a privilege.  As citizens of a democracy, we owe it to all who have suffered and died defending this noble right.

So on Tuesday, I awoke bursting with patriotism and planning to cast my ballot.  But I decided to do it differently.  You’ve heard the expression, “Vote With Your feet.” This time I’ll do it!

I identified myself to the voting lady and she sent me to booth #2.  I quickly removed my shoes and socks.  It was hard getting the curtain open.

I entered the booth and reviewed all the choices.  Here it comes.  I steadied myself and placed my big toe on the lever.  I need to flip the lever, slippery, hard to turn it… I got it!

It became easier as I proceeded.  At the end you push a button to register your choices.  My big toe wouldn’t fit so I used the side of my “pinky toe.” Awesome!

I must admit, voting with your feet is harder than I expected, and a lot less fun. Why do people like it so much?  Eventually… it dawned on me what the expression means.  My “foot voting” was a fiasco!

You don’t have to make the same mistake. It’s not too late for you to vote with your feet – the right way.  Choose what’s better for you.  You can do it on Surety Bonds:

  • Circular 570, T-Listed bonds in excess of $10 million
  • Increased commissions
  • Superior, 365 service.
  • Same day response on new submissions.

You can have all this.  You should have it all! Vote with your feet and come over to KIS Surety for all these benefits.  Give us a call with your next Bid or Performance Bond.

Steve Golia, National Surety Director, KIS Surety

856-304-7348

Secrets of Bonding #164: The Phantom of the Underwriting Department

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When it comes to surety bonds, you know your underwriter. You know the process.  There are questions and answers, then a decision.  Simple, right?

You rely on your rapport with the surety and know how to monitor the status of the underwriting.  Maybe you understand the underwriter you see.  But what about the invisible surety underwriter, a shadowy phantom who exists in every transaction, and whose opinion always affects the outcome. Call this mysterious one “The Phantom of the Underwriting Department.” 

For mood music, Click!

You cannot talk to the Phantom…  Invisible.

There are no emails, no Q. and A. 

And yet, the Phantom analyzes, reviews and influences every bonding decision.  Let’s pull back the curtain on this ethereal being.

Contractors Questionnaire

It all starts here.  Your underwriter looks at the basic info: How long in business?  Largest prior jobs? What do they do, what do they sub?

But the phantom yearns for more. What company ownership structure was chosen?  Is it a proprietorship, corporation or LLC?  Did the founders make prudent decisions? These choices affect taxes, profits and future liabilities.  They can help or hurt the company… and its surety.

If criminal history, litigation, tax problems or surety bond claims / losses are indicated, these may require further investigation.  The Phantom will make a deeper review.

Continuity of Ownership: Who succeeds the current stockholder in the event of death? Will the company maintain operations and complete its projects? These arrangements show that management has an eye toward the future.

The Work In Process Schedule

These are requested often.  They show the contracts in progress, their billing status and costs. The underwriter wants to know how much “work on hand.” Then, silently, the Phantom digs deeper.

The current expected profit is compared to the original estimate. What does this show? Is the profit expectation as predicted or better? Is the estimating department in sync with the field organization?  Is job site supervision highly efficient? Can an undeclared underbilling asset be added to Working Capital?

Is the expected profit sufficient to produce a net profit at year end?  The Phantom will compare the projected job profit percentage to the company Profit and Loss Statement. Based on historical expense trends, the likelihood of an upcoming profitable fiscal year-end can be verified.

Company Financial Statements

He loves these.  There is so much.  They talk to him. The Phantom takes full advantage of this document to determine more than just “the numbers.”

Beginning with the accountants cover letter, who has the contractor chosen for this important assignment? Are they using a construction expert? Did they pay for a quality presentation?  Is the best accounting method in use? Is the fiscal date at an advantageous point in their business cycle?

Obviously, underwriters look at working capital, net worth, ratios, profitability. But there is so much more.  The financial statements show how the stockholders / managers treat the company.  What does it mean to them? Do they nurture and respect it, growing the tiny acorn into a mighty oak?

Past borrowing practices are revealed.  Also, the relationship between financial performance and the ambitions of management.

Growth of the revenue stream is observed and management’s success in monitoring / controlling expense levels.

The Phantom reviews financial statements and tax returns to appreciate the owner’s commitment to the bonded company.  This commitment is a cornerstone of the underwriter’s confidence.

Banking Relations

Very important! There are similarities between banking and surety bonds.  The banker’s opinions help reaffirm the underwriting position.

The banking history can reveal good cash flow and prudent business practices.  It can indicate stability, reliability and good management skills.

Credit Reports

The pay record is just the tip of the iceberg.

Now there is a historical review which indicates the adequacy of cash flow, the quality of money management, planning and the applicant’s good moral character.

The Phantom is always there, making this deeper analysis that may never be discussed, but can always make a difference.

Meet Our Phantom

Now, Remove the Mask!

Sorry, we don’t actually have any Phantoms.  All our underwriters are regular people, with real experience and know-how when it comes to bid and performance bonds. Our surety professionals review the facts promptly and efficiently. 

Their deep analysis enables us to support opportunities that may have been declined elsewhere.

We hope you found this article entertaining, but more importantly, informative!  With us, the underwriting is deep and detailed, giving the applicant the highest likelihood of approval.

Call us with your next bid or performance bond, and speak to a real person. 856-304-7348 

(Don’t miss our next exciting article.  Click the “Follow” button at the top right.)

FIA Surety is a NJ based bonding company (carrier) that has specialized in Site Bonds since 1979 – we’re good at it!  Call us with your next one, Bid and Performance bonds, too.

Steve Golia, Marketing Mgr.: 856-304-7348

First Indemnity of America Ins. Co.