Two for Tuesday - December 24, 2019

December 24, 2019

In This Issue:

Bonds - Goldleaf | Special Feature | End of Year Letter | Webinars | TRIVIA! Answers

ARMR.Network, LLC specializes in environmental risks, including restoration contractors, commercial properties, trade contractors, and underground storage tanks.

Provides affordable coverage for those people who operate small home-based businesses as most HO policies usually explicitly exclude coverage.

Commercial Auto Options for your clients. Not all carriers available in every state.

Surety-Oriented Considerations at Year-End

With the end of 2019 fast approaching, Goldleaf Surety wants to remind agencies and their clients that how a company deals with year-end planning issues can have a significant effect on what kind of surety support Goldleaf can achieve for them in the upcoming year.

Owners/managers whose businesses are profitable and growing sometimes fail to prioritize year-end issues with their future surety support in mind. They may consult other professionals - for example, their attorneys, bankers and tax accounts. However, good advice from these perspectives may not further and actually can compromise and destroy a company's surety capacity. Therefore, if continued or expanded surety support is critical to a company's growth next year, they need to weigh surety-oriented considerations against the other considerations that guide their year-end planning.

Consider upgrading the company's year-end financial statements. Increased surety capacity depends greatly on the "reliability" of the financial information provided to the surety company. Generally, surety companies prefer to see financial statements prepared by a respected certified public account (CPA) that is familiar with the company's industry. In all cases, you should have your year-end statements prepared on the "accrual basis." Statements prepared on the "income tax basis" or "cash basis" will present the weakest picture of the company's financial position.
Build equity. If a company is an "S-Corp," accumulating equity may seem counter-intuitive. After all, owners are paying personal income tax on the company's earnings, and it may seem right to take out what you have been taxed on. However, a company's bonding capacity depends, in large part, on company equity.
Do not over-emphasizes tax planning. No one wants to make money and send it all to Washington, D.C. However, if a company has had a profitable year and wants to continue growing with contracts that require bonds, they need to balance their tax planning against the other goals of the company. Reducing taxable income means reducing the net income that otherwise can be used to show profitability and equity growth on the company's financial statements.
Owners should check their personal credit scores. Individuals are now entitled to obtain a free copy of their personal credit report from the three major credit-reporting agencies each year. Owners should take advantage of this as all surety companies check personal credit when underwriting for surety support.
Improve the company's "working capital" position. Positive working capital is a major factor in bonding.
Improve the company's "liquidity." Before year-end, clean up as many of the accounts receivable as possible and convert to cash.
Obtain an increase on the company's operating line of credit. As a company's revenues grow, its operating credit facilities should be growing as well.
Do not undertake ownership changes without considering the surety implications. Depending on how they are financed, buy-outs and other ownership changes can compromise (and, in some cases, can destroy) a company is bonding capacity. Anyone planning to stay in the company should be aware that if an ownership change in not handled properly from the surety company's perspective, the resulting loss of bonding capacity would drastically drop the value of the surviving company.

It is not only at year-end when companies may be making decisions, which will affect their financial statement. During anytime of the year when decisions arise which may impact the financial statement, companies should contact Goldleaf to discuss the impact of those decisions on their bonding support. Goldleaf Surety can provide counsel to agents and their insureds - with both year-end considerations as well as other surety considerations - needed to grow and improve the company's surety support. For more information on bonds - or for help with your clients' bonds needs - log in to www.bigmarkets.com or email us at bigimarkets@iiaba.net and an underwriter will contact you.

SPECIAL FEATURE
Free January Agency Risk Management Webinar: "Let's Talk Limits"

When it comes to limits of liability, it's often said that the highest limit is best but in practice, agents must help their clients settle on the amount that is "just right" for the situation at hand. How can you ensure your approach to limits is correct? Do you feel confident that proper policy limits are in place for your clients? Do you worry about whether your own agency is appropriately protected? When your customers are under-insured, it creates claims against your agency. When your agency is under-insured, it limits the defense your carrier can provide.

Don't let the fear of a large claim keep you up at night. Take action by joining Big "I" Professional Liability and Swiss Re Corporate Solutions on Wednesday, Jan. 22nd, 2020 at 2 p.m. EST. for an Agency Risk Management Essentials webinar, Let's Talk Limits: How Much is Enough for You AND Your Customer?

During the hour-long webinar, Swiss Re Corporate Solutions panelists Matt Davis, claims manager and Mark Shackelford, senior underwriter, will discuss how to approach choosing liability limits for both your clients and your own agency. The webinar will feature scenarios for you take into consideration and provide lessons learned from a claims and underwriting perspective.

This webinar series is offered by Big "I" Professional Liability at no cost as an exclusive Big "I" member benefit. Big "I" members in good standing may register unlimited attendees from the member agency to attend. No CE is received for this session.

More risk management information is available 24/7 at www.iiaba.net/EOHappens.

A Year End Letter

I hope this letter finds you well.

Another year has passed, and it has been an interesting one. I finally sold that house over on Bleecker Street after I stopped telling prospective buyers it was haunted. - REAL ESTATE E&O

Annabelle's husband gave her a beautiful diamond necklace for their first anniversary. He said it's a family heirloom. Her best friends all say they've been replaced. - JEWELRY INSURANCE

Ella got married and they moved back to town to open a restaurant named after themselves - Sam & Ella's Sushi Bar. Business is slow; I think people are afraid of getting sick. - SMALL COMMERCIAL

Remember how good Patti's pies were at the neighborhood picnics? Turns out she's set up a full kitchen in her garage and sells them all over the state. I ordered one for you. - HOME BUSINESS INSURANCE

Carl's delivery driver Spike wrecked his brand-new delivery truck. He claimed he was avoiding a squirrel, but I always thought there was something wrong with that boy. Can you believe he swears that the squirrel was high fiving another squirrel? Doctor said he didn't hit his head, but we're still watching him closely for signs of concussion. - COMMERCIAL AUTO

Speaking of Carl, he got a nasty cold and sneezed on his keyboard and was so afraid he'd given his computer a virus he called his doctor who told him to call an IT guy who convinced him that sneezing was irrelevant but that he needed insurance anyway. - CYBER INSURANCE - COALITION

Your aunt Rose finally bought one of those giant recreational vehicles as she'd been promising to do for years. She and her friend Agnes spent the summer driving through almost every state before settling in Florida for the winter. I stopped getting acid reflux right around the same time. That reminds me, she didn't sell her house yet and said it was ok to set up a scary maze for Halloween. The Blevins kid got so scared he nearly knocked himself out running into a wall. - RECREATIONAL VEHICLES & NON-STANDARD HOMEOWNERS, RENTERS, CONDOMINIUM, RENTAL DWELLINGS, VACANT DWELLINGS.

With all the rain we had in back in October the basement flooded. Your father joked that he always wanted an indoor swimming pool. I didn't think it was funny. I do like the new furniture and carpeting, but don't tell him that. He thinks he's still in the doghouse because I'd been telling him we needed to floodproof. - FLOOD - PERSONAL

Remember that shed in the Martin's backyard? It caught on fire and burned down quickly. Cheryl claimed somebody did it on purpose, but her husband said it was struck by lightning. She's already started planning her new chi-chier she shed. - AUTO & HOME

Your father finally convinced Grandpa to stop stuffing his money in his mattress since it was over two feet high. You should have seen the bank manager's eyes bug out when they went in there with two wheelbarrows of cash. He even joked he was wondering if Grandpa was there to buy the bank and wouldn't you know it, Grandpa bought a share of the bank. We bought Grandpa a new mattress since his old one was now barely 2 inches thick. - COMMUNITY BANKS

Your cousin Roger is still trying to impress everyone with how well he's doing selling second-hand doorknobs and is loving the huge house he had built. He did discover the steam room was installed too close to the wine cellar when he left the door open and it steamed off all the wine labels. Now he can't tell his Burgundy from his Bordeaux, poor fella. - AFFLUENT HOMEOWNERS

Well those are all our updates for now. We hope you have a great holiday and a happy new year!

Best Wishes,
B. I. Markets

WEBINARS

Virtual University

WEBINARS - Two-hours with CE in select states.

January 21 or 23 - 1:00 p.m. EST - NEW Condominiums and How to Insure Them
January 23 - 10:30 a.m. EST - NEW Why Certificates of Insurance – Just Why?
January 23 - 5:00 p.m. EST - NEW Workers’ Compensation: 5 Mistakes Every Agent Makes

View the complete calendar, registration links and see what states have CE approval online. Registration includes live webinar, on-demand recording and a transcript.

E&O Risk Management

WEBINARS

January 22 - 2:00 p.m. EST - NEW Let's Talk Limits: How Much is Enough for You AND Your Customer?

TWO FOR TUESDAY TRIVIA

Prizes will be to the first response with the correct answers and then four selected at random from all received by 6p.m. EDT on Wednesday. Win a $5 gift card (Starbucks, Dunkin' Donuts, Baskin Robbins, or Krispy Kreme).

Congratulations to this week's winners - Katie Vaughan (TX), Julie Singley (AL), Rebecca Carroll (WA), Tara Burkeen (KY) & Mary Catherine Shaver Frey (LA).

1. In the ACORD article above under the "Big 'I'-ACORD License web page" link, what is written in the gold box? - Access & download form(s) via AMS

2. On this date (12/17) in 1843 Henry Cole commissioned the first commercial version of what? - CHRISTMAS CARD

3. In the "Read more..." link in the Healthcare Cyber article above, in which state is the healthcare organization used as an example? - MICHIGAN

TIE BREAKER
TB - Thieves stole what from outside Emmy Lou's gift shop in Glastonbury, CT? - A 200 YEAR OLD RED SLEIGH

LAST WEEK'S MOST CLICKED LINKS

Here are the top three items that got BIM agents clicking from our last edition... see what you missed!

BIG "I" MARKETS SALE OF THE WEEK

Congratulations to our agent in Florida on a Bonds - Bid, Contractor, Performance, Surety sale of $38,922 in premium!

Resources:

TFT Archives | Big "I" Markets Help Desk | Email Us | 703-647-7800 (9am-5pm ET) | BACK TO TOP

Two for Tuesday is a weekly newsletter designed to provide you with information concerning commercial products and services available to you through Big "I" Markets. (Product availability varies by state.) IIABA, your professional association, along with its subsidiaries, including Big "I" Advantage, Inc., works hard to bring information to you about valuable products and services that could enhance your ability to succeed in the industry's competitive environment.

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