What is My Underwriter Talking About When She Refers to the “Four C’s”?

Goldleaf Surety Calculator.4 C'sThe first C refers to Capital.  The surety underwriter analyzes the company’s financial position as represented by its financial statements.  A company’s financial statements show its current state, including its working capital, its debt to equity ratio, and how profitable it is.

The second C is Capacity.  The surety underwriter needs to be comfortable in a company’s ability to perform the bonded project.  For this C, the surety company will look at non-financial information such as resumes of key employees, current work on hand, project history and project references, and continuity plans.

The third C is Credit.  The surety underwriter will review the personal credit reports of the company’s owners and spouses, as well as a company’s credit report, to determine how a company handles its financial obligations.  Credit will provide the surety an understanding of a company’s, as well as its owners’, willingness to meet its financial obligations.

The fourth C is Character.  Although the most difficult for a surety underwriter to evaluate, it is probably the most important.  Underwriters like to meet with their clients in order to help them evaluate this C.  A company’s reputation and the references of its clients and suppliers are key items as well in helping a surety underwriter evaluate Character.