How is surety underwritten?
Surety is similar to credit and surety underwriters look at a bond risk basically the same as a bank would look at a loan. Large loans require detailed financial information, corporate information, management biographies, introductions to key employees and more. Small loans require less information, sometimes just a credit report, sometimes no information, just a personal signature guaranteeing the loan. The surety company however is not looking at the ability of the Principal to repay a loan, but to fulfill an obligation. The obligation may be simply to comply with certain laws, or to pay bills on time, or it may involve the performance of a complex task, as with construction. Surety companies look at a great deal of information when they consider a large bond risk. They want to understand the company they are dealing with and they want to be seen as partners in the event something goes wrong. Surety companies also want to be able to act quickly if their Principal requires another bon
