Annual Report

2019 Brings Expansion
and Execution of Strategy

Watch President's Message

Merchants Bonding Company’s commitment to responsible growth continues to pay off. 2019 was a year for expansion at Merchants. From expanding our internal programs and offerings for associates, to growing our footprint nationwide with new local offices, to reaching record-setting production milestones, 2019 was an exceptional year for Merchants.

2019 Financial Highlights

Direct Premium

Loss Ratio

Surplus

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SFAA Market Share Ranking

Contract Production Highlights

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$ 102.7 million

Premium

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+ 11 %

Premium

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+ 7 %

New Premium

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11 %

Loss Ratio

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+ 11 %

Premium from Leaderboard
Marketing Program

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+ 75 %

Masters Qualifiers

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+ 10 %

Submissions (excluding RAP)

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+ 6 %

Credit Files
(excluding RAP)

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402

RAP Bonds Written

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$ 0

RAP Losses

This level of production is a demonstration of the hard work and commitment of our contract underwriters and assistants to providing common sense solutions and first class experiences to all of our agents.”

Josh Penwell
Sr. Vice President of Contract Underwriting
on surpassing the $100 million mark

Commercial Production Highlights

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$ 31.4 million

Premium

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+ 9 %

Premium

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+ 12 %

New Premium

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6.8 %

Loss Ratio

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+ 17 %

Key Agency Relationships
(From 140 to 164 agencies reaching $25,000 or more)

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+ 11 %

Premium from Pacesetters Marketing Program

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+ 80 %

Platinum Qualifiers

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+ 10 %

License and Permit

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+ 14 %

Probate/Court

Through a culture of teamwork, collaboration and common sense underwriting we have once again achieved growth that has outpaced the industry.”

Jim Holter
Vice President, Commercial Surety

Values

Continuous Improvement

Agency Relationship Survey

Agents from across the country provided valuable feedback in our 2019 agent relationship survey, which is conducted every three years. Merchants continued to trend upward as overall satisfaction in 2019 is at an all-time high of 9.5 out of 10.

Expansion in 2019

Commercial Expansion Project

Roughly 4,000 prospective commercial agencies were telemarketed, resulting in 151 new qualified surety agents in 2019.

Claims Loss Adjustment Expense (LAE)

-51%

Despite claims situations becoming increasing complex and the ever-rising cost of litigation, the department’s LAE spending has steadily decreased from $2,585,681 in 2014 to $1,262,010 in 2019.

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Investments in experienced claims attorneys and examiners has contributed to a staff with very high levels of expertise and decision-making ability. This enhanced ability to develop and direct claim handling/litigation strategy internally, combined with the Departments’ common sense and proactive approach to handling claims, has increased our ability to resolve claims and legal issues 'in house,' with significantly less reliance on outside attorneys and consultants.”

Steve Dorenkamp
Vice President, Claims Manager

Dun & Bradstreet Integration

Merchants integrated Dun & Bradstreet reports into the Hub for automated credit pulls on contract principals, commercial principals, and agencies to provide streamlined underwriting for our agents.

Vendor Management

Compliance onboarded and performed a risk analysis of 148 vendors.


First Class Experience

Erlon Integration

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Merchants worked directly with IAG Erlon to create a seamless integration to allow single data entry for our customers. After executing a bond on the Hub, with the mere click of a button, agents deliver bond information directly to their Erlon cloud-based agency management system.

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18 surety producers came to West Des Moines for a two-day course which covered topics and information geared to help them provide additional value to their accounts. Attendees ranked Merchants University 4.33 or better in every area surveyed.

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Continuing Education (CE) Webinar

The Introduction to Commercial Surety CE webinar course received a score of 4.7 out of 5 for overall satisfaction. Over 400 attendees tuned in live for the course, which provided two hours of CE credit.

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Modernized Agency Agreements

2,309 agency agreements were executed to modernize contractual agreements with agencies.

Direct Bill Payment Status

Live payment status was added in the Hub for all upcoming direct bill renewals on the improved “Upcoming Renewals” webpage.

NASBP Company Visit

Merchants Bonding Company was selected as a host company for the National Association of Surety Bond Producers (NASBP) Board of Directors and 5-15 Leadership Committee's annual company visit in May. Agents scored Merchants a 5 out of 5 for overall visit experience.

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Collaborative Workplace Culture

Cross-Department Interest Group Program Initiated

5 active groups in 2019

Destination X Projects

4 Major Interdepartmental Projects Completed

Agent Appointment Renewals

Implemented just-in-time producer appointments to improve compliance while significantly reducing cost.

Agency Reports

Created a customer-facing login to see agency’s reports and improved underwriters’ ability to share digital reports.

Agency Access Management

Provided agents with an easier way to gain access to the Hub.

Onboarding for New Associates

Launched a program to integrate new employees into the company and culture.

HR in 2019

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169

Total Associates

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8

New Positions

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18

Associates Hired

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98.9 %

Average Staffing Throughout the Year

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6.7 %

Turnover

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25

Associates Promoted


Develop Potential

Top Workplace

+6% overall score

For the second consecutive year, Merchants was recognized as one of Iowa’s Top Workplaces by the Des Moines Register. A total of 135 companies made the 2019 Top Workplaces list, which is based solely on employee feedback gathered on several aspects of workplace culture. Our 2019 score was 6% higher than 2018.

Training Program

644 attendees for various training through 2019

On-Boarding Program Initiated in 2019

10 associates have completed

Internship Program

6 interns for summer 2019 / 3 earned SFAA scholarships / 2 still employed at Merchants

Balance the Needs of the Company, Our Associates and Their Families

Infants in the Workplace Program/Parental Leave

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Merchants implemented a new employee benefit allowing new parents to bring their baby to work until six months of age. The program was created with the following benefits in mind: further promoting Merchants as a family friendly company; reduction of associate turnover; attraction tool for new talent; daycare savings for associates and increased engagement for other associates in the office.

We wanted this new benefit to demonstrate Merchants’ commitment to balancing the needs of the company, our associates and their families. We believe being family friendly with innovative solutions will help attract and retain great talent.”

Larry Taylor
Chairman of the Board and President

Healthiest State Finalist

Merchants was selected as a finalist for the 2019 Healthiest State Annual Awards. The Annual Awards recognize individuals, schools, workplaces and communities that are working to improve the physical, social and emotional well-being of Iowans.

Celebrate Success and Have Fun!

Texas 50 Year Anniversary

It was one giant leap for Merchants Bonding Company in 1969 with the launch of its first-ever branch office in Austin, Texas. Merchants’ presence in Texas marked the company’s first venture into national expansion through local offices. Merchants now ranks among the top 10 national surety writers in the state of Texas.

Formalized Incentive Bonus Program

Company max achieved at 125% of goal!

Premium Milestone

Merchants Bonding Company exceeded $100 million in contract premium for the first time in company history in 2019.

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The
Merchants
Commitment

Merchants Bonding Company's

Purpose:

To guarantee your investment in tomorrow with collaborative solutions.


Vision:

To be a top ten surety company through innovation and responsible growth.


Mission:

To provide common sense solutions, first class experiences for every relationship, and an engaging culture for all associates to achieve long term, profitable growth.


Values:

  • We value excellence, integrity, and continuous improvement in all that we do.
  • We value surpassing expectations by delivering a first class experience.
  • We value a positive and collaborative workplace culture through trust, loyalty, and respect.
  • We develop potential through learning, involvement, and the pursuit of opportunities.
  • We value balancing the needs of the company, our associates, and their families.
  • We support our communities.
  • We celebrate and have fun!