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Ohio-Based Insurer Provides Surety Bonds For Ohio Medical Marijuana Control Program

Blog, Legislation, Repost / /

CLEVELAND, May 2, 2017 /PRNewswire/ — Continental Heritage Insurance Company today announced a program to provide surety bonds to applicants for Ohio’s Medical Marijuana Program. Continental Heritage, based in Mayfield Heights, Ohio, is an insurance carrier rated A- by AM Best. Edward Feighan, an owner and director of Continental Heritage, is leading the new bond program. Mr. Feighan is a former Member of Congress from Cleveland (1983-1993), the founding CEO of CBIZ, Inc., and Chairman and CEO of ProCentury Corp., a national property and casualty insurance company. The Ohio Medical Marijuana Control Program recently finalized application rules for marijuana cultivation licenses. In lieu of posting cash collateral to demonstrate their financial reliability, applicants can post a surety bond issued by an authorized insurance company. The cash or bond amounts required are $750,000 and $75,000 for Cultivation Categories I & II, respectively. “Continental Heritage has over thirty years of experience writing surety bonds,” stated Mr. Feighan. “We have been monitoring the marijuana industry and are eager to help Ohio applicants that qualify as financially stable cultivators of medical marijuana.” Continental Heritage plans to expand its program for processing and dispensation applicants once the applicable rules are finalized. “It’s exciting to see the national trend towards legalization of medical marijuana reach our home state,” observed Charles Hamm, President of Continental Heritage. “Our heritage is helping clients in emerging markets navigate bonding requirements, so this is right in our wheelhouse – not to mention our backyard.” The Ohio Legislature and Gov. John Kasich approved the medical marijuana program last year. The Ohio Medical Marijuana Control Program is the official State agency promulgating the rules and regulations regulating the cultivation, distribution and use of medical marijuana in Ohio. ABOUT CONTINENTAL HERITAGE INSURANCE COMPANY: Continental Heritage Insurance Company is an insurance carrier specializing in surety with executive offices in Mayfield Heights, Ohio. The company has an A- rating from AM Best. The senior management team has been engaged in providing risk management solutions for a variety of industries since 1980. http://www.prnewswire.com/news-releases/ohio-based-insurer-provides-surety-bonds-for-ohio-medical-marijuana-control-program-300449857.html

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Canadian insurer Intact to buy U.S.-based OneBeacon for $1.7 billion

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Intact Financial Corp (IFC.TO), Canada’s largest property and casualty insurer, said it would buy U.S.-based specialty insurer OneBeacon Insurance Group Ltd (OB.N) for $1.7 billion, creating a specialty insurer focused on small- and mid-sized businesses. The $18.10 cash offer represented a 15.3 percent premium to OneBeacon’s Tuesday close. Shares of OneBeacon, controlled by White Mountains Insurance Group Ltd, were trading at the offer price in after-hours trading. The deal will create an insurer with over C$2 billion ($1.46 billion) of annual premiums, the company said. Intact said it plans to finance the deal and related expenses using a combination of C$700 million of equity financing, about C$700 million of excess capital and about C$1 billion of financing consisting of loans, notes and preferred shares. OneBeacon’s debt of about $275 million will remain outstanding, Intact said. Goldman Sachs is the financial adviser for Intact, while Credit Suisse advised OneBeacon. http://www.reuters.com/article/us-onebeacon-insur-m-a-intact-financial-idUSKBN17Y2GJ

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legislation

Fidelity & Deposit Co. of Maryland (Zurich) Agrees To Pay $9.9M To End Fee Suit

Blog, Claims, Repost / /

Law360, New York (April 24, 2017, 5:18 PM EDT) — A surety bond company has agreed to pay just under $10 million to settle claims that a customer, debt-settlement payment processor Meracord LLC, charged illegal fees to debt-relief customers. Fidelity and Deposit Co. of Maryland will pay $9.875 million to the class if the settlement is approved, according to a motion for approval filed Friday in the U.S. District Court for the Western District of Washington. F&D, as it’s known, had written surety bonds in 19 states for Meracord, a payment processor accused of charging illegal fees. “The proposed settlement easily clears the hurdles for preliminary approval. This court is aware of the risk faced by settlement class members of no recovery, especially considering that Meracord is no longer in business and has no remaining assets — including insurance policies — with which to compensate settlement class members. The surety bonds represent the last remaining avenue of recovery,” the document said. The deal will hand out money “based in large part on [class members’] proportionate losses and according to the amounts available under the surety bonds issued in each relevant state,” the document said. The 153-page complaint, filed in February 2016, says that Meracord fleeced customers of $400 million but that the surety bond companies had not paid out on the bonds that Meracord was required to carry for cases just like this. The suit had its roots in another one filed against Meracord in July 2011 by one of the same lead plaintiffs here, Amrish Rajagopalan. That was originally against NoteWorld LLC, which later changed its name to Meracord, and was joined with another suit filed in July 2012. That consolidated action yielded a $1.45 billion settlement in March 2015, according to the motion. The settlement class here covers anyone who had a Meracord account from which debt-settlement fees were deducted and who lived in certain states. F&D wrote surety bonds for Meracord in 19 states and codefendant Platte River in 28 states. A settlement with Platte River was given final approval in August 2016, according to the document. Class reps — there are 28 — will get $500 to $1000 each under the plan. The document also said the class fulfills all necessary requirements under Rule 23, including commonality and typicality. “All settlement class members were injured by the Meracord enterprise’s illegal activity, and this court already found that Meracord’s ‘violations of Washington consumer protection laws are typical of class members,’” the document said. A lawyer for F&D was not immediately available for comment. This was not the only lawsuit over Meracord’s fees. In October 2013, the Consumer Financial Protection Bureau and Meracord agreed to settle allegations that the company helped collect more than $11 million in illegal up-front fees from debt-settlement customers. The CFPB said that Meracord had charged more than 11,000 consumers up-front fees since 2010. That’s illegal under the Telemarketing Sales Act because customers aren’t guaranteed any actual debt settlement relief when they pay. The CFPB alleged that 5,000 customers charged fees did not have any of their debts settled. It was a continuation of the CFPB’s “chokepoint” strategy, which has aimed to curb illegal upfront payments in the debt-settlement industry. According to CFPB officials, payment processors are the “lifeblood” of the market. The plaintiffs are represented by Steve Berman and Thomas Loeser of Hagens Berman Sobol Shapiro LLP and Stuart Paynter and Celeste Boyd of The Paynter Law Firm PLLC. Fidelity and Deposit Co. is represented by Bert Markovich and Claire Rootjes of Schwabe Williamson & Wyatt. The case is Rajagopalan, et al. v. Fidelity and Deposit Co. of Maryland, case number 3:16-cv-05147, in the U.S. District Court for the Western District of Washington. https://www.law360.com/articles/916170/insurer-agrees-to-pay-9-9m-to-end-fee-suit

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Surety Experts Say Managing Risk Can Be Contractors’ New Competitive Advantage

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Shift since the Great Recession toward increasingly complex projects with shorter deadlines has placed increased, novel risks on construction contractors A major shift in the construction industry as it has recovered from the Great Recession is increasingly complex building projects with shorter deadlines. The dynamic has created increased and novel risks. Since bonding is a crucial risk-management tool in construction, surety-bonds experts need to constantly keep their finger on the pulse of the industry. Based on sureties’ understanding of how construction risk is changing, here are the top perspectives surety specialists share about the future of the U.S. construction industry. They are extracted from the reports Managing Risk in the Construction Industry and the 2016 AGC/FMI Survey on Managing and Mitigating Risk in Today’s Construction Environment. Subcontractor default is a major risk Surety experts see the inability of subcontractors to complete contractual obligations as a top risk for general contractors today. According to the reports, subcontractors have not yet managed to adapt to new factors in the industry, such as increased project complexity, new margins that require business model adjustments, and shortage of skilled labor. These shortcomings make it difficult for subcontractors to deliver on deadlines and handle their existing workloads. Many end up struggling with cash problems, which creates obstacles for their operation and prevents them from getting bonded. Risks are shifting towards contractors An important trend that surety specialists notice is the growing shifting of risk from project owners towards contractors. Owners aim for ‘sole-source responsibilities’ in contracts instead of having multiple entities take different parts of the risk. This means they would like to see contractors take the complete risk management process onto themselves. While this is certainly a challenge for contractors, it’s also an opportunity to attract more clients and projects. With a proper risk management system in place, contractors can develop a serious competitive advantage. Proven strategies for risk mitigation include using building information modeling, drones and robotics, and prefabrication. On larger projects, surety experts recommend splitting the work into multiple sets, which makes them easier to handle. The growing complexity of risks in construction makes contract bonds ever more important. They can provide a safety net for project owners and investors and are a guarantee that contractors can deliver on their contractual obligations. Skilled workers shortage remains a problem For both subcontractors and general contractors, the shortage of labor is a major challenge in recent years. Construction employment was at 6.5 million in 2016, while it hit 8 million in 2006 before the economic turbulences. The biggest difficulty is at the level of specialty trades. With the changing generations in the industry, experienced craftsmen are retiring, while young newcomers offer a more limited skillset. In the same time, there is a growing demand for qualified workers stimulated by the increased number of project opportunities. Surety experts see the combination of these factors as a strong pressure on the industry that needs a long-term solution. Overall industry perspective Surety experts express moderate optimism for the construction industry in the short and long terms. Experts expect private investment to decrease in the next few years, while public spending on building projects is likely to go up. Margin growth is seen as insufficient, which may pose a risk to contractors in the coming years. Margins have increased, but at lower levels than projected. In the same time, this factor can also prove beneficial for the field. With tighter margins, contractors can also move towards better controlling of risks and thus improved management. What do you see as the biggest risks and opportunities for the construction industry today? Please share your thoughts in the comments below. http://www.forconstructionpros.com/business/article/20858822/surety-experts-say-managing-risk-can-be-contractors-new-competitive-advantage

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Issues plaguing the surety-bond industry

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There are two main issues, involving the general public, hounding the surety-bond industry. First is the proliferation of fake bonds. Second is the presence of delinquent bonding companies. With respect to fake bonds, it is usually government offices that fall victim to this nefarious activity. A number of administrative circulars have been issued by the Insurance Commission (IC) to counter this practice. At present, the principal regulation is Insurance Memorandum Circular (IMC) 1-77, dated March 1, 1977, which provides for the rules and regulations governing the issuance of bonds in the Philippines. The circular provides for the following measures: a) to set in place a system of verification, bond forms must be issued in duplicate and they must be consecutively and serially prenumbered (with serial numbers); b) a bond-registry book must be maintained, which may be inspected by the public and by the IC. Every bond issued by an insurance company shall be entered and recorded in numerical and chronological order. Other data are required to be indicated; c) issuance of signed blank bond forms are prohibited; and d) nine liability registers corresponding to the general classification of bonds shall be maintained; Another precautionary measure that government offices are required to take was provided for by Circular Letter (CL) dated February 21, 1973, implementing Memorandum Circular 622 of the Office of the President of the Philippines. This provides that government agencies dealing with insurance companies must furnish the IC with reports of their transactions within three days from their consummation indicating a number of information. Conversely, surety companies were required to submit monthly reports of bonds issued in favor of the government in CL 2015-04, dated January 22, 2015. Having been victimized by fake bonds so often, the Supreme Court (SC), through its administrator, issued a memorandum dated September 10, 1993, for which the IC issued a counterpart CL 8-2000 to regulate the issuance of judicial bonds. Under this circular, surety companies issuing judicial bonds shall confirm every first 10 days of the following month the bonds it had issued to a particular court copy furnished the SC and the IC. The surety company is sanctioned for failing to submit the list of judicial bonds it has issued for a particular month. Under the memorandum dated September 10, 1993, the Clerk of Court is tasked to determine the authenticity of every judicial bond and to submit to the court administrator a quarterly report. The second problem plaguing the surety-bond industry is presence of delinquent bonding companies. Under Administrative Order 96, dated June 4, 1964, (Amendment to Authority Granted to Insurance and Surety Companies to Become Sureties Upon Official Recognizances, Stipulations, Bonds and Undertakings), “The moment a surety company becomes indebted to any government instrumentality or political subdivision thereof, or to any government-owned or -controlled corporation in the total amount of P50,000 accruing from the issuance of bonds, the same having been due and demandable, the insurance company must voluntarily desist from writing or issuing all kinds of bonds until the outstanding liabilities in government bonds shall have been fully paid or settled”. Under CL 7-2000, dated June 5, 2000, the settlement of customs bond liabilities may be made a requirement for the renewal of the Certificate of Authority of nonlife-insurance companies. However, in Department of Justice Opinion 287, dated October 21, 1954, it was opined that a head of government agency may not unilaterally refuse to accept surety bonds issued by a surety company that has a pending obligation with the said government office. The power to deal with delinquent insurers and bonding companies is a prerogative of the IC and not of the unpaid government agencies. http://www.businessmirror.com.ph/issues-plaguing-the-surety-bond-industry/

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Surety bonds: an alternative form of pension funding

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Historically, it could be said that corporate pension scheme funding represented a topic which had long occupied a lowly position on the agendas of many employers. However, with regulation tightening and market conditions negatively impacting on un-hedged schemes – coupled with increased media attention – employers’ obligations are coming under intensified scrutiny, and shortcomings in funding positions have never been more apparent. In the immediate wake of the Brexit result of June 2016 and the accompanying falling gilt yields, the Financial Times reported that the UK’s defined benefit (DB) pension deficit had widened by £80bn (US$100bn) to £900bn – against an estimated £250bn back in 2000. To put the latest figure into context, one FTSE 100 employer confided that their deficit gap had widened by approximately £100m overnight, following the outcome of the June 23 referendum. In this period of political uncertainty – and with sterling falling to its lowest level in more than 30 years – it has never been more important for employers and trustee boards to address their respective deficit funding arrangements to ensure schemes are adequately protected in the long term. The main challenge for sponsors in addressing funding shortfalls is arguably the conducting of an effective balancing act between the scheme trustees and company shareholders. The trustees must be satisfied with the level of funding committed by the sponsor. At the same time the employer must make sure that the contributions required are affordable, as shareholders may have concerns when considering the potential knock-on effects that large contributions could have on dividends. The trustees do, of course, have a strong vested interest in the performance of the sponsor, as it is ultimately the company’s financial standing which governs the degree of protection the employees enjoy. While it will often be the aim of the trustees to achieve the maximum injection of capital into the scheme, without unduly weakening the covenant of the employer, allowing the sponsor to preserve and improve its own covenant is still therefore firmly in the interests of the trustees. Potential methods for achieving this include: 1. Holding sufficient capital on the balance sheet, and thus not sparking concern in the minds of creditors. 2. Allowing the company to explore investment strategies that may require a capital injection in the short term, but potentially yielding significant dividends longer-term. 3. Exploring alternative forms of security that can be pledged to the trustees, thus replacing the need for some capital requirements. Since the financial crash of 2008, the long-term credit ratings of traditional high street banks have, in several cases, been seen to deteriorate, with many insurers’ ratings surpassing those of their banking counterparts. This has contributed to insurance companies’ product offerings widening and allowing them to compete more effectively with the banks in areas such as security provision. Preceding the financial crisis, trustees were generally happy to accept various forms of collateral, the reliability of which never coming into question, such as government bonds (gilts). Sponsors also benefited from this, having been able to satisfy trustees with forms of security at no capital cost for the employer, for example parent company guarantees (PCGs). While in an ideal world this securitisation arrangement would exist indefinitely, it is also unrealistic to suppose that the waters will not at some point be tested around further requirements and alternative forms of collateral. This is now being realised by many employers in the UK and also globally in respect of their UK pension liabilities. Amid the recent volatility seen in markets across various business sectors, Mercer, part of the Marsh & McLennan group, found in in its Pension Risk Survey 2016 that the accounting deficit of defined benefit pension schemes for the UK’s 350 largest listed companies increased – from £127bn at the end of November 2016 to £137bn as of 30 December 2016 – even though the FTSE 100 index ended the year at an all-time high that day, and trebled from £39bin in November 2015. Strengths of surety bonds Looking ahead, it can be expected that due to Brexit, a change of leadership in the US, and other major events such as the French elections, trustees and sponsors are facing significant uncertainty over the remaining months of 2017. According to Mercer’s research, schemes will have to be responsive on a variety of issues, with the best outcomes being achieved by tackling all of covenant, funding and risk management issues together. One form of alternative security that is becoming increasingly popular among sponsors is that of surety bonds. These bonds are constituted as a contract of guarantee, not insurance, issued in favour of the scheme trustees by a third-party insurance company on behalf of the sponsor’s insolvency and inability to pay contribution payments when required. Surety bonds are not a new instrument to the market and may best be known to some for their use in construction contracts and general transactions, which require securitised payment obligations. Although using surety bonds in conjunction with pension scheme funding is a relatively new solution, we are now seeing consistently more deals being completed in the marketplace – it is therefore a product now proving effective for both employers and trustee boards alike. The insurers issuing these guarantees are highly rated (A to AA Standard & Poor’s) and are showing a growing appetite for writing this type of obligation. As they indicate on the basis of having a right of recourse to the employer, however, should they be required to pay out to the trustees, it is usually the stronger sponsors for which the sureties will reserve significant capacity. A key benefit for the sponsor here is the ability to pledge a third-party guarantee in lieu of capital into the scheme, therefore providing significant easing of pressure on the cash position. For some schemes, actual or potential trapped surplus may be a problem; surety bonds can help with this issue by delaying cash contributions so the situation is not unduly exacerbated. These bonds, by accounting standards, are also classed as

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More States Are Adopting Electronic Surety Bonds

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Many professionals in the financial and real estate industries undergo their licensing procedure via the National Multistate Licensing System and Registry (NMLS). The NMLS handles the licensing data of numerous types of specialists such as mortgage brokers, originators and lenders, money transmitters, and collection agencies, among others. While the licensing bodies for different states and trades varies, all documents enter the NMLS databases. The electronic surety bond (ESB) was introduced in 2016 as a method to streamline the collection of licensing information in the system. The electronic submission of surety bonds aims to make the collection, storage and scrutiny of the NMLS surety bond requirements easier and smoother. State licensing bodies in nine states adopted the electronic surety bonds in 2016. In January 2017, 11 more states joined them. One more will follow in April 2017. Let’s take a look at the professionals in different states who are now required to use the electronic surety bond. The first phases of adopting electronic surety bonds The volume of licensing information that the NMLS needs to handle is considerable. The choice to move to electronic surety bonds thus is a part of its efforts to better manage the data. The electronic submission aims to make the process faster and more secure and it does not affect the surety bond costs of licensees. In 2016, the first nine states adopted the ESB system. They are Texas, Indiana, Wisconsin, Washington, Iowa, Vermont, Massachusetts, Wyoming and Idaho. In each state, a different set of professionals had to comply with the new rule and the change had different deadlines. As of January 23, 2017, 11 more states moved to electronic surety bonds: Alaska, Montana, Illinois, North Dakota, South Dakota, Minnesota, Mississippi, Georgia, North Carolina, Rhode Island and Indiana (partially). Any new licensee after that date needs to submit the bond electronically. Businesses that currently hold a license in these states need to move to ESBs by the end of 2017. Additionally, Oregon is about to join the new system as of April 15, 2017. Who needs to submit an ESB today? In each of the states that have adopted NMLS surety bond requirements, a different set of professionals have to comply with them. Below you can find a list of the 21 states and the various types of specialists who have to post ESBs in each. Alaska – mortgage brokers, mortgage lenders and registered depository institutions Georgia – money transmitters, mortgage brokers, mortgage processors, mortgage lenders and sellers of payment instruments Idaho – collection agencies Illinois – residential mortgage brokers and exempt companies Indiana – debt managers, exempt companies, first lien mortgage lenders, money transmitters, subordinate lien mortgage lenders and loan brokers Iowa – closing agents, debt managers, exempt companies, money servicers, money bankers and mortgage brokers Louisiana – pawnbrokers with main in-state and out-of-state offices, residential mortgage brokers, sellers of checks and money transmitters Massachusetts – check sellers, debt collectors, foreign transmittal agencies, mortgage brokers, mortgage lenders and exempt companies Minnesota – accelerated mortgage payment providers, credit services organizations, currency exchange agents, electronic financial terminal providers, money transmitters, residential mortgage originators and residential mortgage servicers Mississippi – mortgage brokers and mortgage lenders Montana – deferred deposit lenders, escrow businesses, independent contractor lenders, mortgage brokers, mortgage lenders and mortgage servicers North Carolina – money transmitters North Dakota – collection agencies, debt settlement service providers, exempt companies, money brokers and money transmitters Oregon – collection agencies, consumer finance servicers, debt management service providers, exempt companies, mortgage lenders and money transmitters Rhode Island – check cashier and debt management servicers, electronic money transmitters, lenders, loan brokers, sellers of checks, small loan lenders and third party loan servicers South Dakota – exempt mortgage company registration, mortgage brokers and mortgage lenders Texas – money transmitters Vermont – debt adjusters, lenders, loan servicers, mortgage brokers, money transmitters and litigation funders Washington – mortgage brokers and consumer loan companies Wisconsin – mortgage brokers and mortgage bankers Wyoming – exempt companies, money transmitters, mortgage brokers, mortgage lenders and supervised lenders You can also consult the State Adoption of ESBs Table by the NMLS to see the exact adoption dates for each state and specialist type. http://realtybiznews.com/more-states-are-adopting-electronic-surety-bonds/98739676/

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SOMPO Holdings Completes Acquisition of Endurance Specialty Holdings

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Launches Sompo International, to be its first fully integrated global commercial insurance and reinsurance platform TOKYO and HAMILTON, Bermuda, March 28, 2017 (GLOBE NEWSWIRE) — Further to the announcement made on 5 October 2016, SOMPO Holdings, Inc. (“SOMPO”) is pleased to announce that following approval of the applicable regulatory authorities, as well as the satisfaction of other customary closing conditions, it has completed its acquisition of 100% of the outstanding ordinary shares of Endurance Specialty Holdings Ltd. (“Endurance”). The total consideration for the acquisition is US$ 6.3 bn. Endurance’s ordinary shares will cease trading following the market close on 28 March 2017. Endurance will be integrated into SOMPO Holdings through the creation of Sompo International, which will be based in Bermuda and will be a highly attractive fully integrated global commercial insurance and reinsurance platform. Sompo International will also encompass SOMPO’s existing international commercial insurance and reinsurance businesses. The creation of a common underwriting platform and systems aims to set a new global standard of conducting business, providing customers with a wide array of products across insurance markets to help manage their risks. As of this date all Endurance business, with the exception of ARMtech, will be conducted under the Sompo International brand. Sompo America and SJNK Europe will also be rebranded Sompo International. Sompo Canopius will remain as a separate brand, working in close collaboration with Sompo International. Sompo International will have its own board, led by John Charman, as Chairman and Chief Executive, reporting to the SOMPO CEO, Kengo Sakurada. Commenting on the completion, Kengo Sakurada, President and CEO of SOMPO Holdings, Inc, said: “The closing of our acquisition of Endurance marks the beginning of an exciting new chapter in SOMPO’s story. The integration of Endurance within Sompo International will significantly enhance SOMPO’s presence in international markets and provides the group with greater opportunities to deepen and expand its geographic footprint by offering global diversification via its new and innovative structure leading to global integration. “Clients will benefit from our increased scale, expanded product offering and a common underwriting platform. Our employees will also be presented with new opportunities to use and develop their skills within a much larger, stronger business. “I would like to welcome John Charman and the Endurance team to the SOMPO family. John will be heading Sompo International, creating our exciting new global commercial insurance and reinsurance platform. I look forward to working closely with him as we embark on the next phase of our exciting growth.” John Charman, Chairman and CEO of Sompo International, added: “I am delighted we are joining SOMPO Holdings today. I am fully committed to our shared vision of future growth for SOMPO’s international platform and I am looking forward to developing it further alongside Endurance’s executive leadership team and my new colleagues under the new Sompo International brand. I would like to thank our highly valued partners and colleagues for their loyalty, support and trust over the last few years and I look forward to working closely with them in the future.” https://globenewswire.com/news-release/2017/03/28/946083/0/en/SOMPO-Holdings-Completes-Acquisition-of-Endurance-Specialty-Holdings.html

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legislation

Supreme Court of Canada to hear appeal from subcontractor arguing trustee must notify potential claimants of existence of surety bond

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The Supreme Court of Canada announced Thursday it will hear an appeal from a subcontractor on an oilsands project who is trying to sue a general contractor for failing to inform it of the existence of a surety bond. Court records indicate that Langford Electric Ltd. was a subcontractor to Bird Construction Company, which required Langford to obtain a labour and material payment bond. Langford was issued a bond by the Guarantee Company of North America. Bird Construction was general contractor to Suncor Energy on a project near Fort McMurray, Alberta. A third contractor – Valard Construction Ltd. – was a subcontractor to Langford Electric. Valard was not fully paid for its services and tried to make a claim on the bond, but The Guarantee “denied the claim on the basis that Valard had not provided timely notice,” wrote Mr. Justice Gerald Verville, of the Alberta Court of Queen’s Bench, in a ruling released Feb. 27, 2015. Valard sued Bird, claiming that Bird “had a fiduciary duty” to inform Valard of the existence of the bond. The lawsuit was dismissed by the Alberta Court of Queen’s Bench. Valard was unsuccessful on appeal to the provincial appeal court, which issued a divided ruling last year. “Bird was not obliged to provide notice” to Valard of the existence of the bond, Justice Verville ruled. “In any event, a simple standard inquiry by Valard would be a more reliable means of obtaining the information. While it may be that employees of subcontractors may not always be aware of the possibility of a bond, this does not explain why a large and sophisticated entity such as Valard would not have in place a mandatory protocol under which bond information is requested on all subcontracts, especially given the state of the law on the issue. In this case, we are not dealing with the disadvantaged and infirm, but rather with a large sophisticated company with five or six hundred employees in Canada which has its own surety or bonding company.” Valard applied in October, 2016 for leave to appeal to the Supreme Court of Canada, which announced March 9, 2017 that leave to appeal is granted. Neither Langford nor The Guarantee are parties in the case. Valard was contracted by Langford to perform directional drilling between March and May, 2009. The following year, Valard filed a statement of claim against Langford and obtained a default judgment of $660,000.17. “On April 19, 2010, Valard made an inquiry of Bird as to whether there was a Bond,” Justice Verville wrote. “Bird responded in the affirmative and provided contact information” for The Guarantee. Valard then submitted a claim to The Guarantee in 2010, which The Guarantee denied because Valard failed to provide notice “within 120 days after the date upon which it performed the last of the work.” Valard sued The Guarantee and added Bird as a defendant and then discontinued its suit against The Guarantee. The bond uses a form issued by the Canadian Construction Documents Committee and is “explicit that the respondent obligee/trustee is not obliged to do or take any act, action or proceeding against the surety on behalf of the claimants to enforce the provisions of the bond,” wrote Madam Justice Frederica Schutz of the Alberta Court of Appeal. “The bond imposes no positive obligations of any other kind upon the respondent.” Concurring in that ruling, released Aug. 29, 2016, was Madam Justice Patricia Rowbotham. “Canadian courts have rejected the appellant’s proposition that the trustee/obligee under a labour and material payment bond has a positive legal duty to take steps to bring the existence of a labour and material payment bond to the attention of potential claimants,” Justice Schutz wrote on behalf of herself and Justic Rowbotham. Dissenting was Mr. Justice Thomas Wakeling. “The fundamental principle is that a trustee has a duty of loyalty,” Justice Wakeling wrote. “This includes the duty to undertake reasonable measures to make available to a sufficiently large segment of beneficiaries or potential beneficiaries information that announces the existence of the trust and the markers of a beneficiary if a beneficiary or potential beneficiary would derive a benefit from knowing that a trust existed and the criteria defining a beneficiary.” http://www.canadianunderwriter.ca/commercial-lines/supreme-court-canada-hear-appeal-subcontractor-arguing-trustee-must-notify-potential-claimants-existence-surety-bond-1004109956/

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Markel International to Start Writing Surety Business

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According to Markel International, brokers have been asking for it – and now they’re going to get it. The company followed up on its announcement that it will enter the surety market last month by declaring earlier today that it is starting to write surety business after making two key appointments – with the business to initially focus on the UK, Ireland and Europe before expanding to other regions outside North America. In coming are Damian Manning, who will lead the team, and David Chandler, as senior underwriter. Manning has more than 19 years of experience in the credit and surety business, beginning his career as a broker at Aon Trade Credit and moving to Aon Surety and Guarantee in 2002. For the last six years he has worked as London markets surety manager for Aviva and immediately prior to that as surety manager for the UK and Ireland at Coface. Meanwhile, Chandler joined the industry as claims handler with Euler Hermes in 2006, moving to Coface as credit risk underwriter in 2007. Here, he joined the surety operation in 2010 and most recently worked as risk director- bonding for Euler Hermes UK. Speaking about the new arrivals and prospects for the business going forward, Ewa Rose, managing director of the trade credit, political risk and surety business at Markel International, noted that both are highly respected and will lead the firm in a new line that brokers have been calling for. “The addition of surety is a natural extension to our offering and provides a full range of complementary products across our portfolio,” she explained. “The new launch is in response to high broker and client demand and we look forward to providing much needed capacity to the market. It also increases our ability to design new and exciting products by combining the skillsets and experience across our underwriting team.” http://www.insurancebusinessmag.com/uk/news/breaking-news/markel-international-to-start-writing-surety-business-62355.aspx

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