licensed and bonded

Licensed & Bonded

Bond insurance (also known as “financial guaranty insurance”) is a type of insurance whereby an insurance company guarantees scheduled payments of interest and principal on a bond or other security in the event of a payment default by the issuer of the bond or security. As compensation for its insurance, the insurer is paid a premium (as a lump sum or in installments) by the issuer or owner of the security to be insured. Bond insurance is a form of “credit enhancement” that generally results in the rating of the insured security being the higher of (i) the claims-paying rating of the insurer and (ii) the rating the bond would have without insurance (also known as the “underlying” or “shadow” rating).

The premium requested for insurance on a bond is a measure of the perceived risk of failure of the issuer. It can also be a function of the interest savings realized by an issuer from employing bond insurance or the increased value of the security realized by an owner who purchased bond insurance.

The economic value of bond insurance to the governmental unit, agency, or other issuer offering bonds or other securities is a saving in interest costs reflecting the difference in yield payable on an insured bond from that on the same bond if uninsured. The economic value of bond insurance to the investor purchasing or holding insured securities is based upon (i) the additional payment source provided by the insurer if the issuer fails to pay principal or interest when due (which reduces the probability of a missed payment to the joint probability that both the issuer and insurer default), (ii) rating downgrade protection so long as the insurer is more highly rated than the issuer, (iii) improved market liquidity, and (iv) services provided by the insurer such as credit underwriting, due diligence, negotiation of terms, surveillance, and remediation.

Surety Bonds
A surety bond is a legal document created between two parties, a principal and an obligee, guaranteeing the completion of a contract. Surety bonds require the person performing the job, known as the principal, to pay a set amount to be held by the bond company to guarantee the principal’s performance. When the principal does not perform according to the stated outcome, the surety bond requires a payment to the obligee for damages, time wasted or other problems associated with an incomplete performance. For instance, a business owner may create a surety bond to manage how a independent worker completes an important project. The surety bond might include a description of what work must be performed, the date on which the project must be completed and an amount to be paid if the obligation is not met.

Fidelity Bonds
A fidelity bond is a particular type of surety bond designed to protect a business owner or hiring party from damage or mismanagement by an employee. Fidelity bonds are typically created to manage long-term relationships and not individual projects. The bond is used to enforce proper dealings and honesty by employees and prevent damage and theft that might occur. When employee is represented by a union, the bond might require the union to pay any cost resulting from the dishonesty of — or damage committed by — the employee.

Fidelity Bond