Rancho Mesa's Alyssa Burley and Director of Surety Matt Gaynor break down the types of no-contract bonds and their significance.
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Producer/Director/Host: Alyssa Burley
Guest: Matt Gaynor
Editor: Megan Lockhart
Music: "Home" by JHS Pedals, “News Room News” by Spence
© Copyright 2023. Rancho Mesa Insurance Services, Inc. All rights reserved.
Transcript
Alyssa Burley: Hi, this is Alyssa Burley with Rancho Mesa's Media Communications and Client Services Department. Thank you for listening to today's top Rancho Mesa news, brought to you by our Safety and Risk Management Network, StudioOne. Welcome back, everyone. My guest is Matt Gaynor, Director of Surety with Rancho Mesa. Today, we're going to talk about non-contract bonds. Matt, welcome to the show.
Matt Gaynor: Good morning, Alyssa. Great to be back in the studio.
AB: Now, during our recent budget discussions for the 2024 fiscal year, like all of our departments, the Rancho Mesa Surety Department looked at a breakdown of the bonds that we wrote in 2023. What was the breakdown between the different types of bonds?
MG: So as expected, 90% of our bond revenue was represented by the typical performance in payment bonds, subdivision bonds, bid bonds, bond riders and consents of surety for our construction clients.
AB: Okay. So was there anything that surprised you when you reviewed the numbers?
MG: Yes, there was one area that surprised us was the volume of bonds classified as non-contract bonds that we provide for both our construction and human resource clients. While these type of bonds are small in size, the bond amounts are usually 25,000 or below, they make up a large volume of bonds since many of our accounts require at least one or two of these.
AB: Okay. So what are the different categories of non-contract bonds?
MG: So I've broken them down into four categories. There's court and fiduciary bonds, license and permit bonds, federal official and U.S. government bonds, and then miscellaneous bonds.
AB: Okay. So will you break down those further for our listeners so we all know what you're talking about?
MG: I'll try to do my best. The first group is court and fiduciary. So court bonds include plaintiff bonds where the client wants to attach a property or money. And these include replevin, mechanic's lien and garnishment bonds. On the other side, the defendant wants a clear property or title. So these bonds include release of lien, temporary restraining order appeal and supersedes bonds. Whereas fiduciary bonds are made up of various probate bonds to cover executors, administers, guardians and conservators. Category two includes license and permit bonds for businesses and professionals. These include mortgage broker bonds, California contractor license bonds, which we issue a lot of, sales and use tax bonds, alcohol bonds, and compliance bonds. Our third group of bonds are made up of federal official and U.S. government bonds. A few examples would contain public official bonds, U.S. custom bonds, and notary public bonds. Last, but not least, is a large group of miscellaneous bonds. They could include financial guarantee bonds, utility deposit bonds, insurance program bonds and loss securities bonds. A quick story on loss securities bonds, Alyssa. A few years ago, one of our clients misplaced a stock certificate that listed $34 million of his company. Of course, now they don't issue stock certificates. It's all done electronic. But in this case, the company issuing a replacement stock certificate required us to put up a bond to protect the issuing company. In the event someone else cashed the stock certificate. Now, we all know the risk was zero because nobody can walk into a brokerage facility and try to sell 34 million shares of stock with our client's name on it. But we still had to provide the bond before they would issue a replacement.
AB: Well, that's probably something that doesn't happen very often.
MG: No, not at all.
AB: All right. So do you think that that covers all non-contract type bonds that our clients might have?
MG: Ironically, it does not. We have over a thousand types of bonds classified as non-contract. It can be overwhelming to determine which category of bond might fit a circumstance. And that is where a Rancho Mesa Bond Agent brings value to provide direction and assist in placing the correct form of coverage.
AB: And that's why you really do need a professional to help you get the right bonds for that situation. So, Matt, if listeners have questions about their bond program, what's the best way to get in touch with you since you seem to be an expert in all of these different types of bonds?
MG: Well, not an expert, but I can be reached at 619-937-0165 or mgaynor@ranchomesa.com
AB: All right. Well, Matt, thank you so much for joining me in StudioOne.
MG: I appreciate the opportunity. Alyssa.
AB: This is Alyssa Burley with Rancho Mesa. Thanks for tuning into our latest episode produced by StudioOne. For more information, visit us at ranchomesa.com and subscribe to our weekly newsletter.
