Northeast construction partners secure improved surety support, greater bond capacity and eliminate personal indemnity.
The Challenge
Two prominent construction firms in the northeast operate as subsidiaries under a parent real estate developer. Both manage business portfolios that include bonded work, requiring significant surety support. The balance sheets for both firms are frequently used to support cash flow demands of the parent entity’s development projects. In addition, the parent company’s specialization in distinct real estate projects presents unique underwriting considerations. While both firms demonstrated a proven success record and financial strength, they had unfavorable bonding terms including limited capacity, inferior pricing, and full personal indemnity of each firm's owners.
The Solution
Partnering with Procore Risk Advisors, the leaders of the two construction firms immediately realized the benefits of working with a tech-enabled construction brokerage with deep surety expertise. The advisory team at Procore leveraged exclusive insights to perform a granular financial analysis and provided a detailed submission that highlighted cash flow, liquidity and a robust backlog. Within one week, the Procore Risk Advisors team secured formal proposals from two new surety providers, both offered substantial improvements to the contractors’ current programs. The construction firms selected a program that provided increased capacity, lower pricing, and eliminated personal indemnity.
The Results
Capacity and Efficiency Boost
Procore Risk Advisors achieved a 50% increase in both aggregate (from $40 million to $60 million) and single job (from $10 million to $15 million) capacities, thereby significantly enhancing project scope and potential revenue.
Elimination of Personal Indemnity
In a significant step towards financial risk mitigation, all personal indemnity for both parties was entirely removed.
Superior Surety Partnerships
Through smart partnerships, Procore Risk Advisors secured a bond program with a surety with not only a higher credit rating (A+) but also a significantly higher T-listing, thereby aligning with the specific needs of our customers.
Within one week, the Procore Risk Advisors team secured formal proposals from two new surety providers. Both offered substantial improvements to the contractors’ current programs.
