Blog

City says contractor submitted forged bond paperwork for Brownsville construction project

Workers who built the Southmost Hike and Bike Trail in Brownsville claim they haven’t been paid. Jorge Contla said he worked on the hike and bike trail project as a subcontractor for ARRCO General Construction Group. The city of Brownsville, though, provided documents to CBS 4 News showing Contla presented himself as a representative of ARRCO. Contla and other workers claim ARRCO hasn’t paid them in months. ARRCO didn’t respond to a request for comment Monday. “The city says ‘Yes, you are going to get paid’ but we haven’t seen any results,” Contla said. When ARRCO submitted a bid for the project, the company included standard paperwork for what’s called a performance bond. A performance bond is basically an insurance contract for the construction project. If ARRCO couldn’t complete the job, the insurance company would hire a new contractor to complete the work. ARRCO submitted records to the city showing a performance bond from a company called Texas Indemnity Contractor. CBS 4 News called the Texas Department of Insurance, which couldn’t find any record of a company called Texas Indemnity Contractor. In response to questions from CBS 4 News, the city of Brownsville released a statement about ARRCO and Contla: The city provided CBS 4 News a business card that identifies Contla as a project manager for ARRCO, a photo showing Contla wearing an ARRCO hard hat, and a sign-in sheet where Contla listed himself as a representative of ARRCO. Contla said he worked as a subcontractor for ARRCO; he flatly denied ever working directly for ARRCO. To document his claim, Contla provided a subcontractor agreement between a company called Ziur Corporation and ARRCO. Brownsville referred the matter to the Cameron County District Attorney’s Office for investigation. http://valleycentral.com/news/local/city-contractor-submitted-forged-bond-for-brownsville-construction-project

City says contractor submitted forged bond paperwork for Brownsville construction project Read More »

Aviva asks 16,000 staff if their jobs can be done by robots

The feared robot takeover of insurance jobs may soon press ahead – UK industry giant Aviva, which sold its Aviva USA operations in 2013, is planning to consult its 16,000 employees on possible automation of roles, The Sunday Times reports. According to the report, Aviva will ask its workers whether their jobs could be better done by robots. Those who will answer “yes” will be retrained for other roles in the company. Employees who are most likely to have to retrain are those involved in the calculation of insurance policy prices, assessment of customers’ credit ratings and those at call centres, the report said. Aviva finance chief Tom Stoddard devised the insurer’s automation programme, according to the publication. He laid out his plan during a meeting with top managers last week. The latest report follows recent studies on the impact of automation on insurance. Earlier this month, Oxford University director Carl Frey reported new research findings which showed that underwriters face the highest risk of being automated among middle-income jobs, while in January, consultancy firm Accenture released a report which revealed that 74% of customers worldwide would get robo-advice and services for insurance, although two-thirds of consumers still want human interaction. In the same month, the McKinsey Global Institute also reported that the finance and insurance sectors have an overall automation potential of 43%. According to its research, robots would take over back-office administrative jobs, while true relationship-based roles will continue to need humans. http://www.insurancebusinessmag.com/us/news/breaking-news/aviva-asks-16000-staff-if-their-jobs-can-be-done-by-robots-61147.aspx

Aviva asks 16,000 staff if their jobs can be done by robots Read More »

How to Calculate Work-In-Process

Work-in-process, or WIP, is an account on the balance sheet where all the costs referring to a product or asset in production are recorded. It covers costs related to direct labor, direct materials, and MOH (applied manufacturing overhead). The “WIP” account is debited (increased) by direct materials used in production, direct labor involved in production, and by the amount calculated for MOH. When an asset goes through all the stages of the production process, it becomes a finished good that can be sold. When this happens, the amount associated with the respective product is credited to “WIP” and debited to “finished goods”. Needless to say, any errors in calculating WIP will mess up the entire balance sheet, so it is important to pay attention to every step and number in the calculation process. The following steps should ensure an accurate WIP calculation. How to Calculate WIP in 5 Steps 1. Find out the direct materials amount issued for production within the reported period. It is recorded as a debit to “WIP” and credit to “direct materials”. To calculate used direct materials, take the initial direct materials balance, add material purchases, and subtract the resulting balance in “direct materials”. 2. Find out the direct labor amount involved in the production process within the reported period. It is recorded as a debit to “WIP” and as a credit to “salaries/wages payable”. The salary/wage expenses related to the production within the reported period represent the direct labor amount. 3. Calculate the MOH amount for the reported period. It is an estimate used for calculating WIP. A cost driver is used to apply MOH. To calculate the overhead rate, take the overhead costs budgeted, and divide them by the estimated cost driver (e.g. machine or labor). Multiply the resulted overhead rate by the cost driver referring to actual production units. You will obtain the MOH amount that needs to be debited to “WIP” and credited to “overhead”. 4. Debit the MOH amount obtained at the previous step to the “WIP” account. The actual MOH costs cover indirect materials and labor, as well as other costs indirectly related to the production process. These are debited directly to “MOH”. In theory, the applied MOH credit will match the actual costs debited, and the amounts corresponding to applied and actual overhead will be the same. If a debit balance remains after you debit actual costs to “MOH”, it means overhead was under-applied. A remaining credit balance suggests that you over-applied the overhead. Adjustments become necessary when the amount corresponding to over/under-applied MOH has a material impact on the WIP balance and will impact further use of the information as well. 5. Calculate the ending balance in the WIP report on the balance sheet. Add the initial WIP balance to the amounts obtained at the first three steps. Subtract the finished goods inventory (debited to “finished goods” and credited to “WIP”). The result should be the final balance of the WIP account, and it should coincide with the reported amount on the balance sheet. http://cabbage.upwith.net/blog/58ab134abe6f810004dc02be

How to Calculate Work-In-Process Read More »

A.M. Best Affirms Credit Ratings of Accredited Surety and Casualty Company, Inc.

OLDWICK, N.J.–(BUSINESS WIRE)–A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Accredited Surety and Casualty Company, Inc. (Accredited) (Orlando, FL). The outlook of these Credit Ratings (ratings) is stable. Accredited is wholly owned by Randall & Quilter Investment Holdings Ltd. (R&Q) (AIM:RQIH). R&Q owns non-life insurance portfolios in runoff, services companies active in insurance and insurance entities that are open for live business. The ratings reflect Accredited’s solid risk-adjusted capitalization level, positive operating earnings and niche market position within the bail bond industry. Since 2011, Accredited has generated increasing underwriting profits due to its low bail bond loss experience. Offsetting the positive rating factors is Accredited’s current product concentration, which exposes the company to changes in regulation related to bail bonds, high expense structure and the execution risk associated with its business expansion plan. Although management plans to expand Accredited’s writings into specialty property/casualty lines to broaden its offerings, the majority of business currently remains in the surety sector. The stable outlooks reflect A.M. Best’s expectation that operating results will continue to be profitable, and that Accredited’s risk-adjusted capitalization level will remain supportive as planned growth and diversification of product offerings begins to occur http://www.businesswire.com/news/home/20170216005703/en/A.M.-Affirms-Credit-Ratings-Accredited-Surety-Casualty

A.M. Best Affirms Credit Ratings of Accredited Surety and Casualty Company, Inc. Read More »

Understanding Your Surety’s Indemnity Agreement

Contractors on public and private projects are often required to obtain surety bonds to secure their bidding, payment, and performance obligations under a construction contract.[1] A bond is a three-party contract entered into by the surety, the principal (contractor) and the obligee (owner) in which the surety guarantees to the obligee that the principal will perform certain obligations under the contract between the obligee and the principal. For example, a surety on a performance bond guarantees the owner that the contractor will complete the project; and a surety on a payment bond guarantees the owner that the contractor will pay all intended claimants under the bond.[2] Most surety companies are subsidiaries or divisions of insurance companies and both surety bonds and insurance policies are regulated by state insurance departments. However, a surety bond is not an insurance policy. One major difference between insurance policies and bonds is that sureties do not expect to incur a loss under the bonds they issue. Before agreeing to bond a contractor, sureties typically require those with a financial interest in the contractor to sign a General Agreement of Indemnity (“GAI”). The GAI provides the surety with a means to be reimbursed in the event that it incurs costs and losses under the bonds it issues to the contractor. But is the surety’s right to be reimbursed under the GAI absolute? No, but the case of Cagle Construction, LLC v. The Travelers Indemnity Co.[3] illustrates why contractors should understand the scope and application of their GAIs when a claim is made on a bond. In this case, Cagle Construction, a general contractor, contracted with the Georgia Department of Defense (“GDoD”) to perform work on four separate projects. Cagle Construction and its members (collectively “Cagle”) executed a GAI in favor of the surety, which provided, in part, that “[Cagle] will indemnify and save Surety harmless from and against every claim, demand, liability, cost, charge, suit, judgment and expense which the Company may pay or incur in consequence of having executed, or procured the execution of, such bonds, . . . including fees of attorneys, . . . and the expense . . . in bringing suit to enforce the obligation of any of the Indemnitors under this Agreement. In the event of payment by [the surety], [Cagle] agree[s] to accept the voucher or other evidence of such payment as prima facie evidence of the propriety thereof, and of [Cagle’s] liability therefor to Surety.” “[i]n the event of any breach, delay or default asserted by [GDoD] in any said Bonds, or [Cagle Construction] is suspended or ceased work on any contract or contracts covered by any said Bonds, . . . Surety shall have the right, at its option and in its sole discretion, and is hereby authorized . . . to take possession of any part or all of the work under any contract or contracts covered by any said Bonds, and at the expense of [Cagle] to complete or arrange for the completion of the same, and [Cagle Construction] and [Cagle] shall promptly upon demand pay to Surety all losses, and expenses so incurred.” Before completion of the projects, the GDoD dismissed Cagle Construction and made demand on the surety to complete each of the four bonded projects, which it did, paying more than $700,000 above the unpaid balance of the contracts to do so. After completion of the projects, the surety sought reimbursement for the cost overrun from Cagle. Cagle refused to pay. The surety then sued Cagle seeking reimbursement under the terms of the GAI. Cagle did not believe the surety was entitled to reimbursement for at least three reasons. First, Cagle argued that Cagle Construction was never in default of the GDoD construction agreement. Second, Cagle argued that the amount paid by the surety to complete the work was unreasonable. Third, Cagle argued that the surety did not bring its lawsuit within the 1-year time period from substantial completion required for a claim on a public works payment bond under Georgia law. Cagle Construction admitted that it was “ordered off the premises,” but it denied that it was in default on any of the contracts. The Court held that that Cagle was obligated to reimburse the surety because the indemnity obligation under the GAI was triggered by the GDoD’s assertion that Cagle Construction was in default, irrespective of whether Cagle Construction was truly in default.[4] The Court also rejected Cagle’s position that the surety paid too much to complete the work because the GAI provided that “[i]n the event of payment by Surety, [Cagle] agree[s] to accept the voucher or other evidence of such payment as prima facie evidence of the propriety thereof, and of [Cagle’s] liability therefor to [Gulf].” The Court held that the surety’s summary of expenses was sufficient to establish a right of indemnification, unless Cagle could show either bad faith by the surety or direct evidence that the surety did not in fact incur the expenses, even if the work could have been completed at a lower cost. Cagle’s final contention was that the surety’s indemnification claim was barred by the one-year statute of limitation for claims on a public works payment bond under Georgia’s “Little Miller Act,” O.C.G.A. § 13-10-65. The Court found that the surety’s suit was brought under the terms of the GAI, which the parties entered into separate from the surety bonds on the four contracts, making the statute of limitations for a Little Miller Act claim inapplicable. Thus, the surety’s claim for indemnification under the GAI was a claim on a contract, not a claim on a payment bond. Normally a claim on a written contract that is not for the sale of goods, like the GAI, would have a six (6) year statute of limitations in Georgia.[5] But in this case, the GAI was signed “under seal” because it included a recitation in the body and above the signature lines that stated “the [i]ndemnitors have hereunto set their hands and affixed

Understanding Your Surety’s Indemnity Agreement Read More »

Lawsuit Filed Against University Estates

Once again, the University Estates development in northwest Athens is the subject of litigation, with a bonding company called Developers Surety & Indemnity filing a complaint against UE and its former developer Dr. Richard Conard, along with secretary Elizabeth Conard. During Conard’s time developing University Estates, the allotment off Ohio Rt. 682 and Armitage Road was the subject of multiple lawsuits either filed by Conard or against him. In 2009, Conard, who lives in Palmetto, Florida, filed suit against the city of Athens after officials signed a memorandum of understanding with another developer that had agreed to purchase a mortgage note on more than 600 acres of UE’s mixed-use development site. Eventually, that lawsuit was dismissed without prejudice in U.S. District Court. In 2010, Citizens Bank of Logan acquired the property after the bank said a default had occurred. In early 2014, H2 Development LLC, which is co-owned by local businessman Brent Hayes, purchased 566 acres of land that had not been platted for homes from Citizens Independent Bankcorp Inc. for slightly over $1.1 million. On Jan. 6, Developers Surety & Indemnity Co., of Irvine, California, filed its lawsuit against the Conards in Athens County Common Pleas Court, seeking $55,943. This amount, according to the lawsuit, was paid to the city of Athens as settlement of a claim the city made on the bond. The city did this in an effort to complete streets within the development. That work was completed in 2013 after a struggle with road issues since the land was annexed into the city in 2000. Athens had refused to accept the UE roads into the city until all of the roadways were completed to meet city standards. Eventually, an agreement was struck to assess UE property owners to pay for the road-improvement project, which cost $715,700. In addition to the $55,943 bond settlement, Developers Surety claims in the lawsuit that they have incurred “costs, expenses and attorneys fees” in the past and will continue to do so, requesting the court to award both the settlement and the other costs, as well as any other relief deemed just and appropriate. As of Friday, Conard had not filed an answer to the complaint. http://www.athensnews.com/news/local/lawsuit-filed-against-university-estates/article_85ce1780-db50-11e6-a898-cf62482b3c6a.html

Lawsuit Filed Against University Estates Read More »

legislation

Evansville Company’s Bankruptcy Stalls Progress On Several Major Construction Projects

EVANSVILLE, IN (WFIE) – Court documents show Peyronnin Construction filed for Chapter 7 bankruptcy on Monday. That means several multi-million dollar construction projects are in the lurch, including the McLean County Regional Water Treatment Plant, the International Blue Grass Museum, Owensboro Community and Technical College, and a gravity-fed sewer line in Mt. Vernon. Owensboro Community and Technical College – $12-million contract International Bluegrass Museum – $9.6-million contract McLean County water treatment plant – $8.5-million contract Mt. Vernon gravity-fed sewer line – $860,000 contract Owensboro city attorney Ed Ray says as of Tuesday morning construction on the museum was shut down and the project will be turned over to the surety company, The Great American Insurance Company. He says they will be responsible for finding a “new contractor at the contractor price.” Ray says the city gets a lot of pushback over using performance bonds for projects like this, but he says this is the perfect example of why they exist. The bond is like an insurance policy and it means Owensboro won’t be out any money now that the contractor hired to do the project has folded. Museum Project Director Ted Lolly says the news came as a “total surprise” because the company has been in business for at least 70 years. Lolly says construction of the museum is only 20 percent done, but he says the city has a surety bond for this type of situation. He says while Peyronnin’s bankruptcy will ultimately slow construction, the city will be okay financially. McLean County Judge Executive Kelly Thurman says the water plant project engineer called him Tuesday morning and told him about the bankruptcy filing. He says he was shocked by the news. Work on the plant has come to a halt and Judge Thurman expects crews to pack up and leave in the next few days. The bankruptcy isn’t going to impact the project getting done or add any extra cost because the county has a performance bond in place. A new contractor will be selected to finish the work. Judge Thurman says the water plant is almost finished. It was supposed to be completed this spring, but with the bankruptcy filing, Thurman expects the plant to be up and running this fall. http://m.wave3.com/wave/pm_/contentdetail.htm?contentguid=od:hdBWupfS

Evansville Company’s Bankruptcy Stalls Progress On Several Major Construction Projects Read More »

Markel to Acquire SureTec Financial Corp

RICHMOND, Va. and HOUSTON, Feb. 1, 2017 /PRNewswire/ — Markel Corporation (“Markel”) (NYSE: MKL) and SureTec Financial Corp. (“SureTec”) announced today that they have entered into a definitive agreement for Markel to acquire SureTec for approximately $250 million, inclusive of a three-year earn out. The transaction is subject to customary closing conditions, including insurance regulatory approvals, and is expected to close in the first half of 2017. Following the acquisition, SureTec will operate as a separate business unit, with John T. Knox, Jr., SureTec’s current Chairman and Chief Executive Officer, leading his seasoned team in his current capacity. The operating unit will become part of Markel’s Specialty division and US Insurance segment. Richard R. Whitt, Co-Chief Executive Officer of Markel, commented, “We are very excited to have John and the SureTec team join Markel. Since its start in 2002, SureTec has grown its surety business prudently and profitably with a diversified product and geographic mix. It has become a top 20 player in the surety market nationwide through its offerings of contract, commercial, and court bonds. As with all our acquisitions, we look forward to exploring opportunities to profitably grow the business.” John T. Knox, Jr., Chairman and Chief Executive Officer of SureTec, remarked, “We could not be happier to be joining Markel. I look forward to leading what will become Markel Surety and building upon SureTec’s success while benefiting from Markel’s financial strength and (re)insurance capabilities, which will position us to better serve our customers and grow our business.” TigerRisk Capital Markets & Advisory served as financial advisor and Sidley Austin LLP served as legal advisor to Markel. Locke Lord LLP served as legal advisor to SureTec. About Markel Corporation Markel Corporation is a diverse financial holding company serving a variety of niche markets. The Company’s principal business markets and underwrites specialty insurance products. In each of the Company’s businesses, it seeks to provide quality products and excellent customer service so that it can be a market leader. The financial goals of the Company are to earn consistent underwriting and operating profits and superior investment returns to build shareholder value. Visit Markel Corporation on the web at markelcorp.com. About SureTec Financial Corp. SureTec is one of the largest privately owned surety companies in the US. SureTec’s largest subsidiary, SureTec Insurance Company, is rated A (Excellent) by A.M. Best. In partnership with professional surety producers and independent agents, the company has offices in Atlanta, Austin, Dallas, Houston, San Antonio, San Diego, and Orange County, California. SureTec operates in 50 states and has one international affiliate. Visit SureTec on the web at suretec.com.

Markel to Acquire SureTec Financial Corp Read More »

Tampa Housing Authority Wishes, Fired Developer Gets Another Crack At Building Tempo Housing Project

TAMPA — The Tampa Housing Authority thought it had seen the last of the Siltek Group when in July it fired the contractor building a signature $25.6 million The Tempo at Encore was behind schedule and had fallen prey to shoddy workmanship and poor management, said Housing Authority officials. And Siltek owner Ana Silveira-Sierra continued to let her husband, Rene Sierra, work as project manager even after he had pleaded guilty in a multi-million dollar kickback scheme involving affordable housing in South Florida. So Housing Authority officials were outraged to learn that Berkley Surety Group, the firm that underwrote the project, has hired a new company owned by Silveira-Sierra to finish the seven-story building. Officially Berkley has contracted with Tron Construction. But records show that the firm was established by Silveira-Sierra less than one month after Siltek was terminated from the Tempo project and operates out of the same Plantation office. It means that completion of the 203-unit building intended to provide affordable housing will effectively be in the hands of the same developer that the Housing Authority and its development partner, Banc of America Community Development Corp., are suing for botching construction. Housing Authority attorney Felix Rodriguez expressed frustration at Berkley’s decision in an October letter. He said the underwriting agreement gives the New Jersey firm the right to choose its own contractor. “The Housing Authority was extremely disappointed with the surety’s selection,” he said. “We can’t do anything about it without losing our rights to surety.” The letter sent to Berkley by Rodriguez put it more bluntly: “In short, the owner has no confidence in Siltek’s or Tron’s ability to complete the job.” Silveira-Sierra declined to comment on the selection of her new firm. The decision to go back to the same developer is likely about protecting the bottom line, said Jack Neu, a surety bonding specialist with Nielson, Wojtowicz, Neu & Associates. “If they brought in someone new, that entity would have to investigate everything that was put in place previously,” Neu said. Still, he expects Berkley to keep close tabs on Tron’s work. Originally scheduled to open fall 2016, Tempo is part of a 28-acre, $450 million mixed-income housing development replacing Central Park Village. It will include public housing and market-priced apartments. The development partnership opted to fire Siltek with the project about 80 percent complete, stating in a letter to the firm that it was not employing enough construction workers or complying with inspectors. Siltek had also created an adversarial relationship with its subcontractors, the letter stated. Among other problems, drywall had been installed before the building had been closed off to rain, said Housing Authority chief operating officer Leroy Moore. After Siltek was fired, some drywall had to be removed because of dampness. Housing Authority officials were also concerned that Silveira-Sierra’s husband was still involved in Tempo even after he admitted to federal investigators that he conspired with Miami developers to inflate construction costs to earn additional federal tax credits and grants through his company, Siltek Affordable Housing. Sierra was officially removed from the project, but Housing Authority emails show that he returned to Tampa to work as project manager on Tempo. In December, he was sentenced to three years of probation including six months of home detention with electronic monitoring. He was also ordered to repay $1.2 million to the government. Tempo, which was partly funded through a Choice Neighborhood Grant awarded by the U.S. Department of Housing and Urban Development, is unlikely to be finished until at least the summer, said Rodriguez, the Housing Authority attorney. But after sitting vacant for months, the construction site is now bustling with about 60 workers each day. http://www.tampabay.com/news/against-tampa-housing-authority-wishes-fired-developer-gets-another-crack/2308312

Tampa Housing Authority Wishes, Fired Developer Gets Another Crack At Building Tempo Housing Project Read More »

sba

SBA Recognizes Surety Bond Companies; Increases Bond Guarantees to 90 Percent

Several surety bond companies that are partners with the U.S. Small Business Administration (SBA) in helping small contracting businesses with their surety bond needs were recently honored by SBA’s Office of Surety Guarantees at a ceremony held at the Agency’s headquarters in Washington, D.C. Michael Konzen, with CCI Surety Inc., was recognized as Surety Agent of the Year. Carol Nevin with Tokyo Marine HCC Company, and Kenneth Turner, Bruce Allen and Greg Allen with KOG International Inc. were also honored as Surety Partner of the Year and Surety Agency of the Year, respectively. All three firms have excelled in their participation, activity, claims and recovery as well as in their commitment to continue growing and helping small businesses obtain and perform contracts with both government entities and the private sector. SBA increased its guarantee percentage for bonds issued in the Preferred Surety Bond Program from no more than 70 percent to no more than 90 percent, per Public Law 114-92 of the National Defense Authorization Act of 2016. SBA guarantees will be 90 percent if the original contract is $100,000 or less, or if the bond is issued on behalf of a small business owned and controlled by socially or economically disadvantaged individuals, veterans, service disabled veterans, or qualified HUBZone and 8(a) businesses. In all other cases, the guarantee will be 80 percent. The increase will be effective Nov. 25, 2016. The new guarantee limits will expand bonding opportunities for many small businesses. For more information about the Surety Bonds Guarantees Program, please visit https://www.sba.gov/surety-bonds. http://www.prnewswire.com/news-releases/sba-recognizes-surety-bond-companies-increases-bond-guarantees-to-90-percent-300365404.html

SBA Recognizes Surety Bond Companies; Increases Bond Guarantees to 90 Percent Read More »

Scroll to Top
Document