As you read in last week’s success story, Goldleaf version of success may be a bit different than other companies. The support, guidance, and advice that we provide to our clients is of utmost importance. With that being said, writing bonds for the companies we work with will always be a top priority. For this week’s success story, we wanted to highlight a company that had a very difficult bond request, but with some creative problem solving we were able to get their bond written.
Our President, Jack Anderson, received a new bond request from an Agent that we had worked with in the past. This Agent was handling the insurance for a company, but reached out to Jack to see if Goldleaf could handle their bond needs directly. After discussing the bond needs with the client, Jack learned that the project consisted of supplying and constructing seven separate buildings. This company had two divisions that would come into play with this bond request, the manufacturing division and the construction division. The manufacturing division was supplying the units in modules. Their portion of the contract was in excess of $50MM for the 7 buildings. The construction division would then be responsible for setting the units in place and connecting the units together. Their portion of the contract would be in excess of $25MM.
Upon Jack’s initial review of the underwriting information, he identified that the manufacturing division and the construction division would not qualify for bonds of that size. But Jack did not give up there. He brought up the idea of having each building separated into their own contract and having each building bonded separately. With Jack’s advice and guidance, the client was able to work with the prime contractor on getting this concept approved.
Once the contract had been separated, Jack received the first contract, which came in at roughly $7MM. They were then required to provide a supply bond for the $7MM instead of the full contract amount, which came in around $50MM. Jack was able to get the first building’s bond approved with a standard surety market without CPA financials. Once they have completed the first contract, the second contract will begin and the bond for the second building will be obtained.
Jack was able to think outside of the box to come up with a creative solution when the company was unable to qualify for the bond amount that was required. More importantly, Jack was able to provide them with the advice and counsel on how to get this approved by the prime contractor. At the end of the day, it would have been much easier for Jack to simply let the company know that they would not qualify for bonds of this size. But taking the easy route doesn’t fall into Goldleaf’s definition of success.
