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Travis Remick
Bond Manager
Contract Surety
(206) 473-3638
Travis.Remick@LibertyMutual.com
Three C’s of Surety
Capital
Capacity
Character
“Capital” – Analyzing Financial
Statements
Liquidity
Cash Flow
Where is cash parked? Marketable Securities?
Receivables
Quality of Underbillings
Debt
Quantity
Structure
How Much Capacity?
Which Bank(s)?
“Capital” – Analyzing Financial
Statements
Equity Analysis
Static or Decreasing?
Equity Components
Impact of Related Party Transactions
Distributions
Profitability Analysis
Profit Margins
Overhead
Equipment Utilization
“Capital” – Analyzing Financial
Statements
Trend Analysis
WIP Analysis
Track jobs (margin) over time. Profit Fade.
Underbillings
How much profit in the pipeline?
Future WIP Cash Flow
Footnotes
Contingent Liabilities
Related Party transactions
Equipment Utilization
Taxes (Current and Deferred)
“Capacity” - Financial
Bank LOC/Covenants
Personal Indemnity
Assets and Liabilities
Accounting Software
Timeliness of Reporting
Professional Partnerships
“Capacity” – Other Factors
Experience
Appetite
Ownership/Continuity
Management Team
Sophistication of Organization
Market/Work Availability
Subcontractors
Contract Verbiage
Questions?
Surety Losses and Profitability
100%
83%
80% 70%
60%
60% 46% 49%
40%
40% 24%
25%
16%18%13%20% 18%19%
20%
0%
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 10 11 12
Calendar Years