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Surety

Today’s competitive marketplace demands certainty of contractual promises, constant focus on cost reduction, and increased working capital. Our specialists provide organizations with innovative surety bond advisory services to support their business resilience and growth objectives.
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To run a business, companies need guarantees for contracts and other financial obligations.

Surety guarantees, including bank-fronted solutions, offer the advantage of freeing up cash or preserving bank capacity, and can result in material cost savings compared to bank letters of credit.

Marsh’s dedicated team of global surety specialists can help businesses implement strategies and solutions to release credit capacity and mitigate financial risks.

We leverage our industry expertise within the practice, along with our experience, to develop unique surety solutions across different industries and geographies. We also support your business’s profitable growth by going beyond your balance sheet to explore tailored solutions based on your underlying assets.

Credit Specialties Market Update: H1 2024

Our latest Market Update provides insights to support risk allocation and management strategies to enable business growth. It considers the changing risk landscape and the insurance market response across trade credit, surety, structured credit, and political risk.

Find out more

Featured insights

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Redefining possibility in the aviation sector: Navigating macroeconomic risks and protecting capital

Despite the tough macroeconomic conditions facing the aviation sector, there are reasons for optimism regarding its resilience and the prospects of increasing demand and revenue.

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11/16/2022

How decommissioning surety guarantees can help improve oil and gas operators’ financial position

While contractual requirements are usually in place for the decommissioning of assets, oil and gas operators always maintain the primary responsibility. Surety guarantees can be used as an alternate form of collateral (security).

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01/04/2021

Four Ways Surety Credit Can Benefit Your Organization

The availability of surety credit capacity has increased dramatically as a method of replacing or complementing the use of bank instruments such as letters of credit.

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US$1.5

billion placed annually — largest global surety brokers by volume

320

Global network of around 320 surety specialists

US$350

billion handled in surety facilities globally

FAQs

Surety bonds are guarantees issued by an insurance company on behalf of a firm in favor of a beneficiary. They are used to guarantee completion of a project or the supply of a good or service.

The most common beneficiaries of surety bonds are government entities, for example, in relation to a road project financed by a government using taxpayer funds. Such entities may also include taxation authorities, customs authorities, courthouses, and environmental protection agencies.

In the private sector, a beneficiary is the party serving as the employer, project owner, or buyer of construction projects or manufactured products.

Surety bonds also can be used as a (permissible) payment guarantee and are either regulatory or commercial/contractual in nature.

Those that are regulatory in nature include:

  • Bonds required by government in connection with a construction project, i.e., roads, airports, harbors, or rail.
  • Bonds required of importers in favor of a customs authority to guarantee payment of taxes and duties.
  • Bonds required for the proper care of public lands when extracting or exploiting natural resources.
  • Payment bonds connected with legal disputes with a government over a tax assessment.
  • Litigation bonds covering the appeal of fines, penalties, or damages arising out of legal disputes for unfair market competition.

Non-regulatory bonds are issued as contract or payment security to support contractual or payment obligations. The surety acts as a third-party guarantee.

Surety is the insurance sector equivalent of a bank guarantee (i.e., letter of credit). However, surety can help generate additional liquidity for banks and corporations – and the market overall. It plays an important role with capital relief and preserving valuable liquidity resources, especially during volatile economic times.

Surety allows a business to participate in contracts that require third-party contingent collateral. It can also help improve a business’s liquidity position, as surety bonds sit off the balance sheet, and therefore do not use lending facilities. Surety can further improve liquidity positions as bonds can be posted in lieu of capital payments.

Many businesses make use of surety, including, for example:

  • Construction
  • Energy and power
  • Food and beverage
  • Retail
  • Manufacturing
  • Communications, media, and technology
  • Financial institutions
  • Mining

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Contact us to get in touch with an industry or risk subject matter expert, learn more about a specific solution or submit a sales/RFP inquiry.

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