What is a Bond Underwriter?
A Bond Underwriter is the person that actually approves a bond. In the performance bond context, they are the person that works for the surety and they review the bond application and then approves it and provides the cost for the bond. Let's break this down.
First, an Obligor needs to apply for a surety bond, like a performance and payment bond. So, they will take the job contract and then use it for the specifications to fill out the bond application. Then, they will submit this bond application to their favorite surety bond company, Swiftbonds (shameless, I know), and then we will review the bond application. We determine which surety is the best submittal point and then we send them the application.
The bond underwriter will take the application and first determine the size of the contract. The size makes a difference as there are different review processes. In general, if the contract is under $400,000, then it's a simple credit check and then a quick approval.
If the job is more than $400,000, but less than $800,000, the bond underwriter can use company financials, plus a personal financial statement from the owner to get the bond written.
Finally, if the job is large (or if the company has any sort of glitch in their credit or financials), the bond underwriter will want to do a full underwriting. This full underwriting can include such things as work-in-progress, plus company financials.