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Surety Bond Financial Analysis

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by

Anastasia Hillel

on 26 August 2014

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Transcript of Surety Bond Financial Analysis

Client B
Background Information:

Building construction, commercial construction, commercial remodeling, design to construction,
Located in Roanoke, VA
Began commercial building construction in 1987
Financial Statements
Client C
Key Takeaways
Surety Underwriting & Bonding Capacity
Client A
Surety Bond Financial Analysis
Presentation Overview
1. What is a Surety Bond?

2. How does the Surety Underwriter determine bonding capacity?

3. Client Case Studies & Financial Analysis

4. Key takeaways
Surety Bonds
Three basic types of bonds:
Bid Bond
Payment Bond
Performance Bond
Past Projects
Financial Analysis
Work in Progress
Tracks progress and financial performance of uncompleted projects
Background Information:
Install, maintain and service heating, ventilation and air conditioning systems
Located in Mechanicsville, VA
Founded in 1995
Family-owned business
Average Revenue = $5.5 Million
Estimated Bonding Program
Client A
- Clients overall needs
- Working Capital: $385,597
- Net Worth: $623,488
- Analysis of WIP

Past Projects:
Background Information:
Founded in 1995
25 employees
Began by constructing water and sewage pump stations
Have expanded into water and waste water treatment plants
Family-owned business
Work In Progress: Project X
Estimated Bond Program
Client C
2010:
$5,000,000 Single Range
$20,000,000 Aggregate

Present Day:
Difficulty bonding a
$400,000
project
Client D
Background Information:
Started in 2008 with $40,000 in capital
Company is a Service Disabled Veteran Owned Small Business
Focus on management processes specializing in mechanical work within heating and cooling
Financial Statements
Past Projects
Work in Progress
Estimated Bonding Program
Client D
Based on:
$1,500,000 Single Range
$3,000,000 Aggregate

Estimated Bonding Program
Client B
Based on:
- Clients overall needs
- Working Capital: $344,469
- Net Worth: $1,513,664
- Analysis of WIP

$3,000,000 Single Range
$6,000,000 Aggregate
Where did they go wrong?

Inadequate leadership
Unrealistic project size
Project finished 2.5 years late
Difficulties with internal accounting
Based on:
- Clients overall needs
- Working Capital: $2,233,574
- Net Worth: $2,749,144
- Analysis of WIP
$25,000,000 Single Range
$35,000,000 Aggregate

Building strong relationships
Essential role of the bond producer
Bond programs are fluid and flexible
Importance of the clients bonding needs
Client's internal accounting and finances
Full transcript