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Surety Market Outlook

Construction Executive Magazine has published its annual “Surety Market Outlook” (November 2011 Edition).  Some of the major conclusions and observations are:

  • Only well capitalized contractors with a solid record of success will find significant bonding capacity in 2012
  • Small contractors have been hit hardest over the past three years and those that have survived can secure surety credit due to the entrance of new sureties in the market
  • Medium size contractors are in the most competitive market since the largest contractors have moved down to compete
  • Large contractors are still feeling the effects of reduced backlogs
  • Mega contractors have fared the best
  • Sureties avoided high levels of loss in 2011 but loss frequency is up and increasing among small and medium sized contractors
  • Sureties have still been profitable in 2011 but…..
  • It is predicted that in 2012 losses for sureties will increase and achieve historically normal loss ratios with few, if any, catastrophic losses.