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Lynn M. Schubert to Retire as SFAA President

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WASHINGTON, Dec. 11, 2017 /PRNewswire/ — The Surety & Fidelity Association of America (SFAA) announced that President Lynn M. Schubert will retire on December 31, 2018. Ms. Schubert will continue to lead the SFAA through the end of her tenure and also will assist the Search Committee to be established by the Board of Directors in finding her replacement to ensure a smooth transition. Ms. Schubert has served as president of the SFAA since 1996, becoming the first woman to head a national insurance trade association. Over her 22 years of leadership, Ms. Schubert transformed the organization to meet the needs of its members in the modern world. The Surety Association of America originally provided statistical and actuarial materials for its members and regulators, gradually adding services such as bond form review, advocacy and promotion. In 1996, the search committee had a vision to enhance its mission by promoting and preserving the use of surety and fidelity bonds. Ms. Schubert embraced that vision and passionately promoted the industry through the Surety Information Office, SFAA communications, various publications, both federal and state level advocacy, legal advocacy, developing strategic partnerships and testifying before Congress and state legislatures on the benefits of bonding. Under her leadership, Ms. Schubert relocated the organization from New Jersey to Washington, D.C. in order to better serve its members and established an in-house Government Affairs department. She grew the organization by offering services to foreign affiliates, subscribers and legal advisors. Recognizing changing demographics in the U.S., Ms. Schubert led the association to create the Model Contractor Development Program to make surety bonds more accessible to emerging contractors and The Surety Foundation, the 501c3 arm dedicated to the development and expansion of the industry through offering internships and scholarships to minority students. On the international level, SFAA through Ms. Schubert, was a founding member of the International Surety Association, where she continues to serve on the Executive Committee. She played an integral role in helping to develop the International Chamber of Commerce’s Uniform Rules for Contract Bonds & Model Forms to promote conditional bonds over demand guarantees. These rules have been supported by the World Bank, the Inter-American Development Bank, the European Commission and the United Nations Commission on International Trade and Law. “I have known Lynn Schubert for many years and have been fortunate to work closely with her for the last several,” said Ross Fisher, Head of Specialty Commercial Businesses and SFAA Chair. “She has been a visible and influential leader for our industry. During her tenure she built an excellent team and helped to ensure that the mission and important work of our industry and the many participants is understood, valued and constantly improving. She has been a thought partner and a friend to many in our business and I thank her for her service, her commitment and her inspired leadership.” “The last 22 years with the SFAA have been an honor and so fulfilling,” said Ms. Schubert. “The success of the SFAA is a result of the commitment and work of its members and staff. I have been so fortunate to work with so many wonderful board members, members, foreign affiliates, partners and staff throughout my tenure. I am excited to watch the future of surety and fidelity unfold over the next 22 years.” Ms. Schubert was a recipient of the 2017 Trending 40’s Top Association CEOs, the 2015 Martin J. Andrew Award for Lifetime Achievement from the American Bar Association Fidelity & Surety Law Committee, the Women Builders Council 2008 Champion Award, and the 2008 Private Sector Leadership Award of the Jamaica Business Resource Center for work in leading the surety industry in efforts to assist women and minority contractors to become bondable businesses. She has been a frequent international lecturer on the topics of fidelity and surety bonds, antitrust, procurement, and diversity and inclusion. The Surety & Fidelity Association of America (SFAA) is licensed as a rating or advisory organization in all states and it has been designated by state insurance departments as a statistical agent for the reporting of fidelity and surety experience. SFAA serves as a trade association of more than 400 insurance companies that write the vast majority of surety and fidelity bonds in the U.S. http://markets.businessinsider.com/news/stocks/Lynn-M-Schubert-to-Retire-as-SFAA-President-1010993276

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Insurer wins reversal of seven-figure judgment in surety bond case

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Lexon Insurance Company appealed a trial court decision and got it overturned An insurance company won a reversal of a court decision that the company breached about $7.7 million of surety bond contracts in connection with a residential development in Cape Coral. In 2005, Lexon Insurance Company issued two surety bonds of about $7.7 million to ensure the completion city-ordered site improvements at the Village at Entrada residential development in Cape Coral in case the developer failed to do so. The project’s original developer stopped paying a general contractor in 2007, putting Village at Entrada in limbo until 2012, when a company called Coco of Cape Coral LLC bought the project for $6.2 million. About seven months after Coco bought the project, the city filed a lawsuit against Lexon for breach of contract and subsequently assigned its claims to Coco. The court sided with Coco entered a judgment against Lexon in March 2016. On appeal, however, attorneys with law firm Greenspoon Marder successfully argued that the claim by Coco came after the expiration of a five-year statute of limitations that began in 2007 when the original developer abandoned the Village at Entrada project. The Second District Court of Appeal of Florida on Nov. 29 agreed with that argument and reversed the trial court’s judgment against Lexon. The Greenspoon Marder team that represented Lexon included shareholders John H. Pelzer and Victor Kline with the assistance of Bruce L. Maas of Harris Beach, PLLC, in Pitsford, New York. – Mike Seemuth https://therealdeal.com/miami/2017/12/10/insurer-wins-reversal-of-seven-figure-judgment-in-surety-bond-case/

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Canada: Court Restates Law On The Defence Of Material Alteration To Guarantees

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Ms. Zuk provided a personal guarantee for the business her husband founded (“Silverado”). Ms. Zuk was also an accountant, and was Silverado’s sometime bookkeeper and shareholder prior to her divorce from Mr. Zuk, Silverado’s principal. When Silverado defaulted on its loans, RBC called on the guarantee. Ms. Zuk argued that there had been material alterations to the credit advanced to Silverado, which absolved her of liability under the guarantee in respect of those later advances. In considering this defence, the Court provided a comprehensive restatement of the law on the defence of material alteration. The Court applied a two-step test: are the challenged alterations to the underlying loan arrangement material? and does the language of the guarantee permit the material alterations? When discussing how to apply this test, the Court set out the law on the duty of disclosure to a guarantor, specific vs. continuing/all accounts guarantees, and compensated vs. accommodation sureties. Each of these three factors influences the Court’s interpretation of the guarantee and the level of scrutiny the Court will capply to the language of the guarantee. In this case, the Court found it relevant that Ms. Zuk had an interest in Silverado, which the Court found made her a compensated guarantor – similar to a bond company. She was not an accommodation surety, like a spouse who receives no compensation for his or her guarantee. These latter types of sureties receive more protection from the Court and the terms of such guarantees will be construed more strictly. The Court found that the guarantee was a continuing/all accounts guarantee that had explicitly contemplated the type of alteration that in fact occurred. This case is notable for all guarantors as a restatement of the law on the defence of material alteration, and it is also helpful when drafting guarantees that the parties contemplate might evolve over time. http://www.mondaq.com/canada/x/653964/Insolvency+Bankruptcy/Court+Restates+Law+On+The+Defence+Of+Material+Alteration+To+Guarantees

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Old Republic Surety Increases Limits of Their Fastbond Program

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Old Republic Surety Company announced today that they have increased the limits of their FastBond product. Old Republic Surety’s Fastbond program has increased from $250,000 to $400,000 for the credit-only. Additionally, the single limit/aggregate of their FastBond program has increased from $750,000 to $1,250,000. Old Republic Surety’s FastBond program is designed for smaller, growing contractors, or for contractors who have occasional bond needs. The underwriting of their FastBond program is primarily credit based. Surety bonds based primarily on credit, or FastBonds, simplify the bonding process for independent agents as well as for contractors. Our FastBond program has been extremely successful since its inception,” states Alan Pavlic, President and COO of Old Republic Surety, “We strive to respond to the needs of the marketplace. Our strong underwriting principles will help ensure that this program continues to be a tremendous asset for our appointed agents and their contractors”. Old Republic Surety’s FastBond program targets fast turn projects for all construction trades. Old Republic Surety Company is a standard market for general contractors, supply contractors, and all major subcontractor trades. The company writes bond programs in all 50 states and has a contract bonding capacity of $50 million. Insurance contracts are underwritten and issued by Old Republic Surety Company, rated “A” by A.M. Best. Contract bonds guaranty the performance and fulfillment of all undertakings promised in a contract. About Old Republic Surety Company Old Republic Surety Company ranks among the nation’s top underwriters of contractors’ performance and payment bonds, miscellaneous surety, and commercial fidelity, offering thousands of types of bonds. More than 4,000 independent insurance agencies market Old Republic Surety financial indemnity products throughout the United States. Headquartered in Brookfield, Wisconsin, Old Republic Surety Company is part of the Old Republic General Insurance Group, the largest business segment within Old Republic International Corporation, one of the nation’s 50 largest publicly held insurance organizations. http://markets.businessinsider.com/news/stocks/Old-Republic-Surety-Increases-Limits-of-Their-Fastbond-Program-1008947343

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Developers Surety and Indemnity Co. (AmTrust) seeks damages over alleged breach of indemnity agreements

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PITTSBURGH – A surety bond issuer alleges it was damaged by several contractors/subcontractors because of a breach of indemnity agreements. Developers Surety and Indemnity Co. (Amtrust) filed a complaint on Oct. 19 in the U.S. District Court for the Western District of Pennsylvania against Iron City Constructors Inc., Iron City Constructors Inc. as general partner of MV Holdings, Chrisellie Corp., et al. alleging breach of contract, breach of indemnity agreement and other counts. According to the complaint, the defendants were either general contractors or subcontractors for projects in Pennsylvania. The suit states the defendants applied for surety credit from the plaintiff in 2009 and 2011. The plaintiff holds Iron City Constructors Inc., Iron City Constructors Inc. as general partner of MV Holdings, Chrisellie Corp., et al. responsible because the defendants allegedly breached their contractual agreement with the plaintiff by failing to indemnify, exonerate and save the plaintiff from loss and reimburse it as demanded. The plaintiff seeks damages, court costs, interest and any further relief the court grants. It is represented by W. Alan Torrance Jr. of Dickie, McCamey & Chilcote P.C. in Pittsburgh. https://pennrecord.com/stories/511254202-developers-surety-and-indemnity-co-seeks-damages-over-alleged-breach-of-indemnity-agreements

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Construction boom is great chance to build business

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Contract surety could be a good business to get into in the next few years. A Canadian construction boom is needed to address the infrastructure deficit across the country – and that means an increased demand for contract surety bonds. One player on top of the trend is Trisura Guarantee Insurance Company, which focuses on small to mid-market surety business. “The next few years are going to be very interesting. It’s common knowledge that there’s quite a large infrastructure deficit in Canada and a lot of infrastructure renewal and new-build that needs to be done,” said Chris Sekine, senior vice president, Surety, Trisura Guarantee. “We anticipate that the government will up its spending on infrastructure work and construction projects, which is good news from a surety business standpoint. “Lots of the new projects will be large but there will also be work for regional contractors and subcontractors. At Trisura Guarantee, we hope the work comes into fruition as anticipated and we want to ensure that our contractor clients and our broker partners can provide the surety support their customers need in order to take advantage of that work.” Trisura Guarantee recently made a “strategic deal” with RSA Canada, where it agreed to take on RSA’s Canadian surety portfolio of about 450 contract and commercial surety accounts with annual premium in excess of $6 million. This is the company’s latest move in a quest to expand its surety business and enhance its service offerings in the small to mid-size contractor space. Trisura Guarantee expects to finish 2017 with an overall revenue for surety exceeding $50 million, according to Sekine. Achieving “market-leading” status and building business is not just about effective market consolidation; it also comes down to top quality services and innovation, said Sekine. “We’ve been extremely innovative in the electronics side of our business,” he told Insurance Business. “We’re the first surety company to deliver an e-bonding platform, which is an electronic delivery platform for surety bonds. This is important because a lot of public construction work is moving towards electronic procurement. “These days, a lot of contractors have to submit electronic documents to procure work, which means the surety bonds also need to be submitted electronically. To date, this has only been possible through third-party providers, but Trisura Guarantee has now rolled out its own electronic bond platform.” The transition of RSA Canada’s contract and commercial surety business over to Trisura Guarantee should be complete by the end of the year. http://www.insurancebusinessmag.com/ca/news/construction/construction-boom-is-great-chance-to-build-business-84265.aspx

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Supreme Court of Canada hears surety bond dispute

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A construction subcontractor that was not fully paid and whose claim on a surety bond was denied had its case heard Tuesday before the Supreme Court of Canada. In 2009, Langford Electric Ltd. subcontracted directional drilling work to Valard Construction Ltd. on a Suncor Energy oil sands project near Fort McMurray, Alta. Langford was a subcontractor for Bird Construction Company, Suncor’s general contractor. Langford’s contract with Bird required Langford to obtain a bond. Langford’s surety was the Guarantee Company of North America, which in 2008 issued a $659,671 surety bond with Langford as principal and Bird as obligee. “Generally labour and material payment bonds are a form of risk management directed at mitigating the financial risks associated with non-payment,” Bird Construction wrote in a factum to the Supreme Court of Canada. “Labour and material payment bonds require the Surety who issued the bond, to pay unpaid suppliers of labour and material in the event of the Principal’s default, thereby keeping the construction project free from liens and minimizing delay.” Bird had been sued by Valard, which claims that Bird “had a fiduciary duty” to inform Valard of the existence of the bond. Valard had not been paid in full by Langford and tried to make a claim on Langford’s surety bond. In 2010, Valard obtained a default judgement of $660,000.17 against Langford. The Guarantee denied Valard’s claim because it had not provided timely notice. In a ruling released Feb. 27, 2016, Justice Gerald Verville of the Alberta Court of Queen’s Bench ruled that Bird was not obliged to provide notice to Valard of the existence of the bond, which “expressly states that the obligee is not obliged to do or take any act, action or proceeding against the surety on behalf of any of the claimants to enforce the provisions of the bond.” The bond does provide that “claimants may use the name of the obligee to sue on and enforce the provisions of the bond.” Justice Verville’s ruling in favour of Bird Construction was upheld in 2016 in a divided ruling. Valard appealed to the Supreme Court of Canada, which heard the case Nov. 7, 2017. “On April 19, 2010, Valard made an inquiry of Bird as to whether there was a Bond,” Justice Verville wrote in 2015. “Bird responded in the affirmative and provided contact information for GCNA. Valard submitted its claim to GCNA on April 19, 2010, which claim was denied on June 14, 2010.” Valard commenced an action against The Guarantee in 2010 but filed for discontinuance in 2013. The Alberta Court of Appeal ruling in favour of Bird “requires a finding that the legislature determined that trustees under labour and material payment bonds (which are usually the owner or the general contractor) should be free of any obligation to try to notify those below them of the existence of the Bond except on Public Works projects,” Valard wrote in its factum to the Supreme Court of Canada. “This is a fallacy. The legislature’s decision to provide lien claimants with rights to information and to mandate posting of bonds on government projects in no way shows a ‘legislative intent’ to free owners and general contractors from duties that arise from the law of trusts.” Two of the three Alberta appeal court judges ruled that Valard “had the means,” under the Alberta Builders’ Lien Act, to “legally compel” Bird to provide information about a bond. Valard “remained ignorant of the existence of its entitlement to claim under this specific labour and material payment bond” because it “elected not to make inquiries, all the while knowing that such inquiries would definitively confirm or refute the existence of a bond,” Justice Frederica Schutz of the Alberta Court of Appeal wrote on behalf of herself and Justice Patricia Rowbotham, in their 2016 ruling. Dissenting was Justice Thomas Wakeling. “As a general rule, if a beneficiary or a potential beneficiary would derive a benefit from knowing that a trust exists and the criteria identifying a beneficiary, a trustee must undertake reasonable measures to make available to a sufficiently large segment of the class of beneficiaries or potential beneficiaries information about the trust’s existence and the criteria identifying a beneficiary,” Justice Wakeling wrote, adding “the costs of a communications strategy designed to bring the bond’s existence to the attention of all undertakings that did business with Langford Electric was relatively low.” Bird argued that the surety bond “has certain unique characteristics which distinguish it from a business or reliance based fiduciary trust.” Under a surety bond, a claimant “has no absolute entitlement to be paid under a labour and material payment bond as any claim is subject to compliance with the notice requirements in the labour and material payment bond and the claim is subject to investigation and analysis by the surety,” Bird wrote. “It is an important and prudent practice, in the construction industry, for potential claimants to make a request as to the existence of a labour and material payment bond.” https://www.canadianunderwriter.ca/construction/supreme-court-canada-hears-surety-bond-dispute-1004123404/

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SBA Names Most Active Surety Partners for FY17

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WASHINGTON, Nov. 7, 2017 /PRNewswire-USNewswire/ — The U.S. Small Business Administration announced today its most active surety companies and agencies for fiscal year (FY) 2017, which contributed to increases in the Surety Bond Guarantee (SBG) Program’s activity. “FY2017 yielded impressive numbers that would not have been possible without our top performing surety partners and bond agencies,” said Peter Gibbs, Acting Director for the Office of Surety Guarantees. “The SBA is very pleased with the results that we have seen, and the tremendous impact made on small businesses by not only contributing to the economy, but also by creating economic opportunities for other Americans.” The SBA’s Surety Bond Guarantee Program provides surety bond guarantees for small businesses on federal, state, local and private projects. Commercial construction, service and supply contracts and subcontracts are eligible as long as the contract requires a surety bond. The SBA guarantees surety bonds in direct partnership with surety companies and their agents. In FY2017, the SBA’s guaranteed bid and final bonds were more than $6.0 billion in total contract value. With the work of the SBA’s top performing surety partners and bond agencies, over 1,600 small businesses were assisted and over 26,000 jobs were supported. The top performing surety partners for FY2017 are: Tokio Marine/HCC Travelers Casualty and Surety Co. of America Navigators Insurance Company RLI: Contractors Bonding & Insurance Co. Amtrust Companies The Guarantee Company of North America Markel: Suretec Insurance Co. Westchester Fire Insurance Co. The Cincinnati Insurance Co. CNA: Western Surety Co. The top performing bond agencies in FY2017 follow: CCI Surety, Inc. KOG International, Inc. Nielson, Hoover and Company Preferred Bonding Services The Fedeli Group Valley Surety Insurance Agency Pinnacle Surety & Insurance Services, Inc. Bond Specialist Insurance dba Marcia Smith Surety Insurance Construction Bonds, Inc. Thomas Sauer Bond Agency The standing of each surety partner and agent was determined by the number of bonds they wrote through the SBG Program. The mission of the SBA’s Office of Surety Guarantees is to provide and manage surety bond guarantees for qualified small and emerging businesses, in direct partnership with surety companies. The SBA helps small contractors by guaranteeing bid, performance, and payment bonds issued by participating surety companies for contracts up to $6.5 million. The SBA can guarantee a bond for a contract up to $10 million if a Federal contracting officer certifies that SBA’s guarantee is necessary for the small business to obtain bonding. The SBA also guarantees QuickApps for contracts up to $400,000 with limited paperwork that is approved within hours. For questions regarding the program, please visit the program website at www.sba.gov/osg or contact Peter Gibbs at [email protected] or (202) 205-6540. https://www.prnewswire.com/news-releases/sba-names-most-active-surety-partners-for-fy17-300551027.html

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Contractor Files $6M Surety Bond Suit Over DC Hotel Work

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United States of America vs Walsh Construction Company II, LLC, Walsh Global, LLC and Travelers Casualty & Surety Company 1:2017cv04460 A Chicago-based contracting firm on Tuesday sued an insurance company and a surety bond provider for at least $6 million in D.C. federal court, alleging they failed to cover a subcontractor’s shoddy work on a hotel construction project in the Adams Morgan neighborhood of Washington. https://www.law360.com/insurance/articles/980455/contractor-files-6m-surety-bond-suit-over-dc-hotel-work

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Great American Insurance Company offers credit insurance in Canada

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Great American Insurance Company, Canadian Branch, the specialty property and casualty insurer, is pleased to announce that Great American Insurance Company – Canadian Branch has obtained licenses to write Trade Credit Insurance in AB, BC, MB, NS, ON, and SK. This expands Great American Insurance Company and its affiliates’ footprint in Trade Credit Insurance from the U.S. and Europe to Canada. Great American has been writing trade credit insurance through one of its affiliates in the U.S. since 1962, supporting companies and financial institutions against nonpayment risk on international or domestic accounts receivable and trade loans. Great American Insurance Company’s Trade Credit Insurance policies offer companies a wide array of flexible coverages. You can insure a broad multibuyer receivable portfolio, a smaller select receivable portfolio (key accounts), or a single buyer receivable. Specialty coverage products are also available for more unique contract structures. Short term repayment terms can be insured on tenors of up to one year and medium term repayment terms can be insured on tenors of up to five years. For more information on products please see our Trade Credit Insurance Products. http://www.insurancebusinessmag.com/ca/industry-news/gaic/great-american-insurance-company-offers-credit-insurance-in-canada-78830.aspx

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