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NEW YORK–(BUSINESS WIRE)–Apr 11, 2019–The XBRL US Surety Working Group, today announced the publication of a draft release of the Contractor Financials Taxonomy, which contains data standards to capture income statement and balance sheet information about contractors. The taxonomy was created by starting with an initial set of data standards contributed by Crowe LLP, a public accounting, consulting, and technology firm. The Surety Working Group, which is comprised of surety carriers, bond agents, and software companies, then further refined the data fields and definitions, and expanded on the initial set of standards. “We see a lot of variation in the financials prepared by contractors,” noted Kristen Sharpe, CPA, Credit Solutions Senior Product Manager at Crowe LLP, “XBRL standards for contractor financial statements will improve the consistency of data reported, and will also allow sureties, and bond agents to automate data collection and analysis.” Financial statement information must be collected and analyzed by bond agents and sureties during the surety underwriting process. The data is typically provided in PDF or spreadsheet format, which forces data users to manually rekey information into their financial systems before analysis can begin. The Contractor Financials Taxonomy contains approximately 420 concepts, many of which were drawn from the US GAAP Financial Reporting Taxonomy which is used today by over 6,000 public companies reporting financial statement data to the Securities and Exchange Commission. The Contractor Financials Taxonomy is designed to be used in conjunction with the Work in Process (WIP) Taxonomy to help contractors provide machine-readable data to carriers. The WIP Taxonomy was also developed by the Surety Working Group. During the 60-day public exposure period, contractors, sureties, bond agents, software providers and other stakeholders are encouraged to review the data standards in the taxonomy and provide input on definitions and on elements that should be added. The public review includes a Taxonomy Guide on how to work with the taxonomy, along with sample XBRL-formatted financial documents prepared using the taxonomy. To access the public review, go to: https://xbrl.us/xbrl-taxonomy/2019-contractor/ Sponsoring organizations in the Working Group include AIG, Crowe LLP, The Hartford, Liberty Mutual Surety, Marcum LLP, the NASBP (National Association of Surety Bond Producers), Travelers, and Zurich Insurance. Participating organizations, serving as observers and advisors, include SFAA (The Surety & Fidelity Association of America) and the FASB (Financial Accounting Standards Board). https://www.apnews.com/Business%20Wire/59f372ad997f4309a5d879027b9601aa

A continuing bond, also called continuous bond, is a financial guarantee or a suretyship that renews automatically until it is canceled. Continuing bonds do not expire as long as the client makes the required payment for each renewal. In other words, it has an indefinite term. A continuing bond does not expire, but is canceled by the obligee by formal notice of cancellation. In the absence of such formal notice of cancellation, the surety bond is deemed canceled if the Principal is able to satisfactorily show that the undertaking of the surety bond has been fully performed by it and the same is acknowledged in writing by the obligee. In Reparations Commission v. Universal Deep-Sea Fishing Corp., a continuing bond is one whose period of insurance is indefinite or with no fixed expiration date. The bond shall be in force unless canceled by the obligee, or by the Insurance Commissioner, or by a court of competent jurisdiction, as the case may be. As a consequence, the premium for furnishing the bond and the obligation to pay the same subsists for as long as the liability of the surety exists. In Country Bankers Insurance Corp. v. Lagman, the Warehouse Bond was deemed a continuing bond and remains in force until canceled by the Administrator of the National Food Authority (obligee) and cannot be unilaterally canceled by the general agent who obligated himself in the Indemnity Agreement. With respect to the premiums due, they are collected upon the issuance of the renewal certificates annually. However, the principal is still liable for the unpaid premiums notwithstanding the nonissuance of the renewal certificates. The obligation of the principal shall cease only when the obligee consents to it. The obligation to pay the premium subsists for as long as the liability of the surety exists. The principal is obliged to pay the annual premiums as it falls due until the contract of suretyship is canceled by the obligee or by the Commissioner or by a court of competent jurisdiction, as the case may be. Under Section 179 of the Amended Insurance Code: “In the case of a continuing bond, the obligor shall pay the subsequent annual premium as it falls due until the contract of suretyship is cancelled by the oblige or by the Commissioner or by a court of competent jurisdiction, as the case may be.” Two examples of continuing bonds would be (a) bonds required by courts in criminal and civil actions or special proceedings, also known as judicial bonds; and (b) bonds required by the National Labor Relations Commission (NLRC) in labor cases. For bonds in criminal and civil actions or special proceedings, Supreme Court A.M. 04-7-02 (Guidelines on Corporate Surety Bonds) provides that: “Unless and until the Supreme Court directs otherwise, the lifetime or duration of the effectivity of any bond issued in criminal and civil actions/special proceedings, or in any proceeding or incident therein shall be from its approval by the court, until the action or proceeding is finally decided, resolved or terminated.” Examples of judicial bonds are the injunction bond, attachment bond, replevin bond, and appeal bond. For judicial bonds, the court may order the cancellation of the bond. In case the court does not include in its order or judgment the cancellation of the surety bond filed, but nonetheless terminates with finality the case, the bond may be considered as already canceled. However, it is better to file a motion with the court for the cancellation thereof. In addition, per Supreme Court Resolution under Administrative Matter 03-03-19-SC, “the lifetime or duration of the effectivity of any bond issued in civil actions or proceedings or in any accident therein shall be from its approval by the court until the action or proceedings is finally decided, resolved, or terminated.” Under Section 179 of the Amended Insurance Code, the Insurance Commissioner is authorized to cancel a contract of suretyship. Moreover, both Supreme Court and NLRC guidelines provide that “Nonrenewal or cancellation of the Certificate of Authority by the Insurance Commissioner” shall be a ground for the cancellation of the Certificate of Accreditation and Authority of surety companies. In January 2019, following the order to liquidate Far Eastern Surety & Insurance Co., the Insurance Commission ordered the cancellation of all continuing bonds issued by the said company and directed the liquidator to notify the respective courts, obligees, and advise the obligors to secure replacement bonds. For bonds required by the NLRC, the NLRC in its En Banc Resolution 03-2013 (Guidelines for the Accreditation of Surety Companies) provided: “In accordance with Section 6, Rule VI of the 2011 NLRC Rules of Procedure, as amended, the surety bond shall be valid and effective from the date of deposit or posting, until the case is finally decided, resolved or terminated, or the award satisfied.” https://businessmirror.com.ph/2019/04/03/continuing-bonds/

Surety Market to 2027 – Global Analysis and Forecast by Bond Type. In terms of revenue, the global Surety market accounted for US$ 15.33 Billion in 2018 and is expected to grow at a CAGR of 7.5% over the forecast period 2019–2027, to account for US$ 28.77 Billion in 2027. Pune, India — (SBWIRE) — 03/06/2019 — The report highlights the trends prevalent in the global surety market and the factors driving the market along with those that act as deterrents to its growth. Currently, the surety market penetration rates in the North America region is higher than any other markets across the globe. This is attributed to most of U.S. State governments’ laws that mandate surety bonds. Both the U.S. and Canada Surety markets are majorly ruled by insurers, while banks also play a significant role. However, SAM and APAC region is anticipated to grow at the highest CAGR. The global surety market by geography is segmented into five regions including North America, Europe, Asia Pacific, Middle East & Africa and South America. Market is currently dominated by North America followed by Europe however, the market in South America is growing at a highest CAGR. Some of the major companies operating in the market include AmTrust Financial Services, Inc.; Crum & Forster; CNA Financial Corporation; American Financial Group, Inc.; The Travelers Indemnity Company; Liberty Mutual Insurance Company; Hartford Financial Services Group, Inc.; HCC Insurance Holdings; IFIC Surety Group; and Chubb Limited among others. Merger and acquisition is expected to be the key growth strategy to be adopted by players for next two-three years. However, this strategy could impact competition, it is also expected to generate new market as well as product opportunities as recently combined companies will thrive to maintain position and profitability. The major companies operating in the market include AmTrust Financial Services, Inc.; Crum & Forster; CNA Financial Corporation; American Financial Group, Inc.; The Travelers Indemnity Company; Liberty Mutual Insurance Company; Hartford Financial Services Group, Inc.; HCC Insurance Holdings; IFIC Surety Group; and Chubb Limited among others. The report focuses on an in-depth segmentation of the Surety market based on bond type. The geographic segmentation of the report covers five major regions including; North Americas, Europe, Asia-Pacific (APAC), Middle East and Africa (MEA) and South America (SA). The regional market has been further bifurcated by respective countries. By bond type, contract surety bond accounted for the largest share of the surety market in 2018. Read more… http://www.digitaljournal.com/pr/4194681

The economy could see more businesses becoming insolvent, with the number of trade credit insurance claims shooting up 41% in the December quarter from a year earlier. Data collected by National Credit Insurance (NCI) puts the value of each claim at about $97,000. Last year insurers paid out $64 million in trade credit claims, which was up 19% from 2017. “Our findings reveal a higher level of defaults from overdue payments and collection activity,” NCI MD Kirk Cheesman said. “Generally, an increase in these areas typically results in increased insolvency activity within 6-12 months.” The data indicates businesses are becoming caught up in the patchy economic conditions, which saw many retailers closing down during the December quarter – a period when consumer spending is usually at its strongest because of the festive season. Tasman Market Fresh Meats and Laura Ashley were among the big names that went out of business last year. “When it comes to overdue debts, we’re finding that businesses are increasingly willing to take early collection action against their customers and suppliers,” Mr Cheesman said. “And if they’re not paid promptly, they’re increasingly taking legal action.” The NCI Trade Credit Risk Index, a forward-looking indicator of company insolvencies, went up 4% to 798 points in the December quarter, the highest score in three years. The index is derived from combining insurance claims, collection actions and overdue payments data. It may be the ideal time for companies to review their trading terms to prepare for the worsening business outlook. “When companies collapse many others are left out of pocket, so it’s a good time for businesses to review their customers and suppliers and the credit levels they’re granting,” Mr Cheesman said. “All businesses need to remember that trade credit insurance is the best safety net against bad debts, enabling them to insure against customers defaulting on payments due to insolvency.” https://www.insurancenews.com.au/daily/trade-credit-claims-spike-points-to-growing-insolvency-risk

Duck Creek Technologies, the Boston-based insurance software company, has acquired Outline Systems LLC, a New Jersey-based provider of P&C insurance distribution channel management software, the companies announced Wednesday. “Outline’s distribution channel management software is a natural addition to Duck Creek’s platform and marks an important milestone in our growth strategy,” Duck Creek CEO Michael Jackowski said in a press release. Effective immediately, Outline’s flagship product was rebranded as Duck Creek Distribution Management, and will be offered alongside Duck Creek’s other P&C insurance solutions. Duck Creek also will capitalize on Outline’s software products and expertise to optimize their producer channels through onboarding, licensing, compliance, reporting, relationship management, and commission management capabilities. “Distribution management is keenly important to insurers as they expand channels, move into new territories, and add distributors,” said Karlyn Carnahan, head of Celent’s Property/Casualty practice for the Americas. “Coupling a distribution management solution with configurable core systems can offer insurers a distinct competitive advantage by assuring the consistent delivery of key processes while optimizing the ability to access and use data.” https://www.propertycasualty360.com/2018/10/18/duck-creek-acquires-distribution-software-provider

ACTION: Notification of temporary initiative to test lower fees; request for public comments. SUMMARY:This document announces a temporary decrease in the guarantee fees that the U.S. Small Business Administration (SBA) charges all Surety companies and Principals on each guaranteed bond (other than a bid bond) issued in SBA’s Surety Bond Guarantee (SBG) Program. DATES:Applicability Date: The fee decreases described in this document will apply to all SBA surety bond guarantees approved during the one year period beginning October 1, 2018 and ending September 30, 2019. Comment Date: SBA must receive comments on or before August 29, 2018. Read More … https://www.federalregister.gov/documents/2018/07/30/2018-16202/surety-bond-guarantee-program-fees

Lee Covington will become president of The Surety & Fidelity Association of America on Oct. 1. Lee Covington, the longtime senior vice president for governmental affairs and general counsel for the Insured Retirement Institute, will become president of The Surety & Fidelity Association of America (SFAA) on Oct. 1. Covington will replace retiring President Lynn Schubert, who has led the SFAA for more than two decades. The SFAA’s mission is to educate lawmakers and stakeholders about the benefits of surety and fidelity bonding and the critical role it plays to protect public and private interests. In 2017, the surety industry provided over $600 billion in protection to consumers, taxpayers and businesses. The organization represents more than 425 property and casualty insurance companies providing public policy advocacy and education, as well as statistical and actuarial services and information. SFAA members write over 97% of the surety and fidelity premium in the United States, the trade group said. “It is an honor to become president of the SFAA and I welcome the opportunity to lead the organization as it continues to achieve its mission and seize new opportunities to expand the use of the valuable products and services offered by the association’s members,” Covington said in a statement. In his current position at IRI since 2009, Covington leads the trade group’s legislative and regulatory initiatives at both the federal and state levels. Previous roles for Covington include serving as deputy commissioner of the Arkansas Insurance Department. He was director of the Ohio Department of Insurance from 1999 to 2002, where he served on the Executive Committee of National Association of Insurance Commissioners. Cathy Weatherford, IRI’s president and CEO, announced in late March that she will retire in December. https://www.thinkadvisor.com/2018/07/19/iri-general-counsel-covington-to-lead-surety-group/?slreturn=20180627195005

Technology is helping insurance firms around the world navigate uncertainties in global markets and capture market opportunities ahead of the competition. Companies tied down by legacy systems are feeling the heat as future-prepped firms adopt new ways to deliver value in the insurance marketplace. Duck Creek Technologies has a suite of enterprise solutions for the property & casualty insurance industry to help firms meet the demands of the modern marketplace. The company is enjoying strong result from its efforts in the US, the EMEA and APAC regions – and now its sights are set firmly on expansion in Canada. One of its long-time Canadian customers, Northbridge Financial Corporation, recently made the headlines when it was handed a 2018 Celent Model Insurer Award for Legacy and Ecosystem Transformation after incorporating Duck Creek solutions. The technology firm wants to build on that positive momentum to enhance its support for the needs of Canadian P&C insurers. “Duck Creek solutions have capabilities that extend to insurance markets worldwide, but we always look at each region in isolation and put together a content provision strategy to ensure we bring the best value to each unique market,” said Eugene Van Biert, chief revenue officer at Duck Creek Technologies. “In the Canadian market, we have customers like Northbridge Financial Corporation and Gore Mutual who are very well respected and are achieving tremendous results by using our technology. In the past two years, both Northbridge and Gore Mutual have received the Celent award for Legacy and Ecosystem Transformation, which proves our solution works for Canadian companies.” The Celent award focuses on projects related to upgrading core systems, including policy administration, billing, claims, and rating/underwriting. To secure a win for Legacy and Ecosystem Transformation, a carrier must not only modernize, but also transform their internal systems and how they interact with customers, counterparties, and regulators. Duck Creek is actively investing in expanding its footprint in Canada, including product development specific to the systems, regulatory environments, and processes unique to Canadian P&C insurers, with the hope of bringing on many more Canadian clients. “We believe the Canadian market is fertile ground for us to continue to grow our business. We’re investigating the establishment of a Toronto office and we anticipate new job opportunities as we look to increase our revenue stream and customer base in Canada,” Van Biert told Insurance Business. “Our aim for growth in Canada is part of a wider global expansion strategy. We’ve just appointed a new managing director for the European market and we will be making other international announcements in the near future. “We believe our value proposition holds up in geographies around the world. For example, we’re able to deliver Software as a Service (SaaS) capabilities that offer very compelling value propositions for companies of all sizes. Furthermore, our product is highly configurable and is built around an open strategy, so it can be upgraded and customized to each customer’s unique needs without impacting the product. That saves a lot of money in terms of the lifetime value of the investment.” Duck Creek’s Canadian market share is growing. Van Biert hopes others will view the successes of Northbridge and Gore Mutual as a testament of Duck Creek’s capabilities. He noted: “One thing Northbridge did particularly well was not only look at their systems’ requirements but also at business process improvements. Successful transformation requires new technologies as well as a supporting business strategy.” https://www.insurancebusinessmag.com/ca/news/breaking-news/duck-creek-eyes-canada-as-fertile-ground-for-expansion-106447.aspx

The Trump administration’s imposition of tariffs and the threat of an impending trade war with China could eventually result in reduced capacity and higher rates in the political risk and trade credit insurance market. But although there is already some evidence of increased submissions by policyholders, it is too soon to see how the situation will develop, experts say. “What I think everyone is potentially worried about is escalation into a full-scale trade war where doors shut,” said Andrew Grant, a London-based partner with law firm Clyde & Co, although the majority view is matters will not reach that point. The situation, though unpredictable, is clearly heating up: The Trump administration imposed tariffs on $34 billion of Chinese product as of Friday. And, as expected, China immediately retaliated, imposing a similar 25% tariff on 545 products, including cars, soybeans and lobsters, that are also worth a total of $34 billion, while charging the U.S. with starting “the largest trade war in economic history.” The Trump administration has also imposed tariffs on foreign steel, aluminum, solar panels and washing machines from countries including Canada, Mexico, the European Union and Japan, but China is of particular concern because of the extent of its trading relationship with the United States. The often-intertwined political risk and trade credit markets are competitive, with plenty of capacity for now, experts say. “The political risk and trade credit market continues to expand,” with more than 60 companies offering coverage and the total number increasing each year, said Daniel Riordan, president of political risk, credit and bond insurance in New York for XL Group Ltd., which does business as XL Catlin. “It continues to be a specialty area that is attractive to private carriers as well as government providers, who are still quite active in the market,” he said. But the current situation could lead to increased rates. “I would definitely look for increased insurance costs across the board for direct foreign investments in countries” where there is trade conflict, said Marc Wagman, New York-based managing director, trade credit and political risk practice group, for Arthur J. Gallagher & Co. “Anytime you’re operating in an environment where the cost of regulatory compliance increases … it’s reasonable to expect there would be inherent increases in the cost of insuring risks across a wide spectrum” because “that just makes insurers nervous,” he said. But the impact in the political risk and trade credit sector, if any, will take time to emerge, say experts. “On the short-term trade side at this point in time, there hasn’t been any change yet in underwriting appetite for risks both foreign and domestic,” said Mr. Wagman. “There’s a real lag in how long this is going to take to cycle through,” he said. “We’re not going to see it until I would say, at the earliest, one year from now.” Mr. Riordan also said steel and aluminum companies “prepurchase supplies six to 12 months in advance, sometimes longer.” “The issue we see now” is the situation “may lead to a change in how U.S. creditors are treated in foreign markets, especially China,” said Clay Sasse, New York-based managing director with Aon P.L.C.’s trade credit practice. “Foreign creditors don’t always have a simple and easy time” of going through other countries’ court systems, he said, and debtors “may feel emboldened” into believing they have more of a home court advantage than they did a year ago. Claims could arise from governments issuing punitive new rules that prevent companies from operating in foreign countries, Mr. Riordan said. Those can often be as equally difficult as tariffs, he said. Meanwhile, submissions are up, say observers. “We have seen some uptick in submission activity, particularly from trading companies and exporters,” said Mr. Riordan. “There’s heighted interest there,” which is normal, he said. “This is front-page news. If you’re on the board of directors of a major trading company or exporter, you’re going to be concerned about it. Your risk management teams should be thinking about it” and assessing the situation, said Mr. Riordan. Evan Freely, New York-based managing director for Marsh L.L.C., who leads its credit specialties practice, said, “Definitely, we’re seeing more submissions,” although “I can’t specifically attribute it to tariffs, because we don’t ask that question per se.” “It’s one of maybe three or four issues driving the increase in applications, especially in those industries affected by this, whose supply chain might include steel or aluminum” or the electronics sector, Mr. Freely said. Other issues of concern, he said, include political issues in Mexico, Turkey and Colombia, North Korea, and Brexit. In addition, U.S. relations with Russia, are a “burning issue that’s always there,” he said, in addition to the unrest in the Middle East. Capacity would lessen before rates go up, Mr. Freely said. “Rates typically go up after the industry collectively takes losses. It would be a capacity issue first and a rates issue second. There’s so much competition here now from an underwriting standpoint that there’s probably less pressure on the rates to go up.” https://www.businessinsurance.com/article/20180710/NEWS06/912322545/Political-risk-trade-credit-insurance-markets-may-hinge-on-Trump-tariffs

A circuit court judge on Wednesday approved a petition to place a Sioux Falls company that insures and services student loans into liquidation. ReliaMax Surety Co. will have all remaining assets liquidated by the South Dakota Division of Insurance, which filed the petition in Hughes County Circuit Court on June 12. Dawn Dovre, a spokeswoman for the division, said the state moved to liquidate ReliaMax because the company is insolvent. The order allows the Division of Insurance to take possession of the company’s property and conduct business in the interim while winding down its affairs. “The next step of the process includes notifying policy holders, claimants and other interested parties of the liquidation status and providing established procedures to file claims,” Division of Insurance Director Larry Deiter said in a release. Mark Payne, the company’s president, did not return a message left at his office. Founded in 2006, ReliaMax initially provided insurance to banks and other lenders in the private student loan industry. By 2014, the company insured $2 billion worth of student loans. Meta Financial Group, the holding company for Meta Bank, announced to shareholders that ReliaMax insured nearly $190 million worth of the bank’s student loan portfolio. “ReliaMax and its predecessor companies have been providing private student loan insurance for over 25 years, and we are disappointed to learn of their pending insolvency,” Meta Financial Group Chairman and CEO J. Tyler Haahr said in a release. “While we expect to ultimately recover a substantial portion of our unearned premiums, the timing and amounts are unclear at this time.” Although ReliaMax announced in 2014 that its line of business was expanding, behind the scenes there were problems. The Division of Insurance conducted a market conduct examination and found the company was violating state law by transacting business in states where it had no license. The state fined the company $25,000. The company and its founder and CEO, Michael VanErdewyk, were also sued by former employees who said they were swindled out of their investments into ReliaMax, including one employee who took out a second mortgage on his home to invest $50,000. VanErdewyk, the lawsuit said, had claimed to be a business guru who had built successful companies. But, the lawsuit said, he had “a pattern of raising money from investors and then losing money; and paying himself very well regardless of the success or failure of the company.” The lawsuit alleged that behavior continued after ReliaMax was formed. “VanErdewyk has squandered company assets, used them for non-business purposes, demanded and received compensation that reflects neither his actual talent nor the company’s actual profits, and has generally treated the assets and income of ReliaMax as ‘his’ money to do with as he pleased,” the lawsuit claimed. The lawsuit settled, and the terms were confidential. The last time the state liquidated an insurance company was in 2012, when the state liquidated Northern Plains Insurance Co. of Watertown, Dovre said. https://www.argusleader.com/story/news/2018/06/27/south-dakota-officials-move-liquidate-sioux-falls-based-reliamax/739878002/