What Do Commercial Surety Underwriters Look for in Financial Statements?

By Matt Brazalovich of Crum & Forster

When reviewing a new account, one of the most critical steps we take as commercial surety underwriters is analyzing corporate and personal financial statements. Why? Because suretyship is built on trust—and trust is measured through financial transparency and strength.

🔍 On the Corporate Side
We begin with the company’s balance sheet, income statement, and cash flow to evaluate:

• Liquidity & Working Capital – Can the company meet short-term obligations without stress? Current ratio, quick ratio, and available cash reserves all matter.
• Leverage & Debt Profile – How reliant is the business on borrowed funds? Long-term debt relative to equity is a key indicator of financial resilience.
• Net Worth & Equity Position – A strong capital base shows staying power and the ability to absorb losses.
• Profitability Trends – Consistent earnings and healthy margins reflect sound management and business stability.
• Cash Flow Health – Positive, predictable cash flow supports bond obligations and reduces risk.

📊 On the Personal Side
For closely held companies or privately owned businesses, we often review personal financial statements of owners or indemnitors to assess:

• Liquidity of Personal Assets – Cash, marketable securities, and other easily available resources.
• Net Worth – The overall financial strength behind the indemnity agreement.
• Leverage – Personal debts relative to assets can affect an owner’s ability to stand behind the company.
• Contingent Liabilities – Guarantees, lawsuits, or obligations that may not yet be reflected on the balance sheet but could impact repayment.

🤝 Why This Matters
Commercial surety is different from insurance—we don’t assume losses as part of the model. Instead, we expect full reimbursement if a claim occurs. That’s why underwriters place such weight on the financial responsibility of both the company and its owners. Strong financials translate into stronger trust, broader bonding capacity, and better opportunities for growth.

At the end of the day, surety underwriting is about balancing risk with opportunity—protecting tomorrow while empowering businesses today.

Matt Brazalovich brings 15 years of underwriting experience, beginning in residential mortgages before transitioning to surety. Based in Florida, he currently serves as the Commercial Surety Underwriter for Crum & Forster’s Southeast territory, where he earned his AFSB designation in March 2025 and completed both Level I and Level II of the NASBP Commercial Surety School. Matt is a relationship-driven underwriter who combines technical expertise with a collaborative approach. He cares deeply about helping agents and clients succeed, believing that strong partnerships and clear communication are the foundation of lasting results. He welcomes opportunities to connect, share insights on surety, and build lasting professional relationships. He can be reached at Matt.Bravalovich@cfins.com.