The 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.