How many more sureties will be out of business

Well, here it is April 16th and we already have five sureties going out of the surety business:

Capital Indemnity (out of contract surety)
Harleysville
Navigator
Crum & Forester
and most recently (yesterday) XL

Who's next?

[Riskwriter]

I was aware of most of those, but I was unaware of Harleysville getting out as well. The funny thing is, a year ago right now, harleysville was making this huge push for contract accounts with lines of 5/10 and 10/20.

This business is nutty.

[Surety Guy]

I'm guessing we will see trickling effects of the soft market for a couple more years yet. Think about how different the market is from a couple of years back. I know an agent who was able to write a 6 million dollar performance bond for a contractor in the Caribbean with negative financials!

As far as who is actually next...It is hard to say, but we will definitely see more to follow. Keep in mind, sometimes it won't be the surety department that is to blame, like in Gulf's case. So the next to go is just a guessing game.


Unregistered, I encourage you to register if you haven't already, it seems that you have a lot you can offer our forums. If you are registered, be sure to log in so we know who you are!

[mrbond]

Surety Guy,
Like I said a few weeks back in a different thread, it is irrelevant how long the parent company has been in business. Heck, it's irrelevant how long they have been writing surety. IMO, a better indicator of longevity is the track record of the leader.

Hey --- leaders aren't sticking around that long anymore...
why just today found out that head of International Fidelity Matt Klimczek has left. Matt has been around forever. Reasons cited -- difference in underwriting philosophy with owners.

By the way . new position of Chief Underwriting Officer has been formed and already filled from within the comany ranks

[mrbond]

You can say that again. Klimczak was only there a couple of years.

[Surety Guy]

Originally Posted by mrbond

Surety Guy,
Like I said a few weeks back in a different thread, it is irrelevant how long the parent company has been in business. Heck, it's irrelevant how long they have been writing surety. IMO, a better indicator of longevity is the track record of the leader.

I don't think it can be simplified down to the leader (however it is a huge factor). There are countless variables at play for when any large company goes down.

The bottom line is that INSURANCE execs are getting tired of HUGE losses coming from a small department Cut and run!

Vicious cycle
- We need more profit from you - write more business
- We need to write more business, loosen up underwriting
- We've loosened up underwriting - oops- losses
- Losses? Sorry, you aren't contributing to the bottom line - watchi it
- Tighten up underwriting - less premium - but losses still come in from previous underwriting
- Losses increase - loss ratio increases due to smaller premium and more losses
- Sorry - we are closing down surety operation and sticking to profitable lines
- While at another company - lots of business out there due to company a getting out of business - go pick it up we need more business so we can get more profit and on and on and on

What is a 6 letter word for "doesn't learn from the past"

S _ R _ T Y

[Riskwriter]

That was quite amusing, yet insightful and as scary as it may be, it is reality.

very good post.

[mrbond]

Unregistered, you missed one.

There's always someone new who enters the market and thinks he can do it better.