The A.M. Best Co. sharply lowered to "weak" from "excellent" First Sealord Surety's credit rating, and the surety's apparent financial troubles have created problems for at least one general contractor with a few subs in default.
Big sureties such as Travelers and Liberty Mutual have remained profitable through the economic downturn by sticking to tight underwriting standards. First Sealord, based in Villanova, Pa., serves contractors whose bonded contract value averages $429,000. Surety industry executives predict increasing defaults by small subcontractors in 2012.