2021 Annual Report

"Arthur Ashe said this about success, 'Success is about the journey, it is not about the destination. The doing is often more important than the outcome.' Merchants' journey is certain to be exciting ahead."

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2021 Financial Highlights

Direct Premium

Loss Ratio

Surplus

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SFAA Market Share

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Contract Production Highlights

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$ 111.2 million

Premium

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+ 6.3 %

Premium Growth

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$ 18.1 million

Premium from
New Accounts

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22.1 %

Loss Ratio

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$ 91.6 million

Premium from Leaderboard
Surety Elite Program

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+ 8.4 %

Premium growth from Leaderboard
Surety Elite Program

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1,053

New Accounts

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2,801

Submissions

Commercial Production Highlights

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$ 43.5 million

Premium

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+ 23 %

Premium Growth

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$ 29.5 million

Premium from
New Bonds

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7.0 %

Loss Ratio

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$ 21.8 million

Premium from Pacesetters
Surety Elite Program

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+ 23 %

Premium growth from Pacesetters
Surety Elite Program

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45

Agencies Achieving Higher
Pacesetters Status

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+ 15 %

Key Agency Relationships

2021 Year in Review

Vision

Innovation & Responsible Growth

Introducing Specialty Solutions and SBA Partnership

On October 1, Merchants introduced Specialty Solutions, a new underwriting division focused on providing solutions to small and emerging contractors working to qualify for surety credit and enhancing the ways Merchants can help its agent partners and their contractor clients.

4 New Tools in the Merchants Toolbox
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Collateral

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Funds Administration

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Subdivision Bonds

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Small Business Administration

SBA Surety Bond Guarantee Program

Merchants joined the short list of companies participating in the Small Business Administration’s (SBA) Preferred Surety program. Through a unique broker partnership with Foundation Surety & Insurance Solutions led by Peter C. Gibbs, former director of the SBA Office of Surety Guarantees, Merchants has positioned itself as an industry leader in providing expertise and access to surety for disadvantaged companies.

 

New & Improved Bond Programs

  

The 2021 release of Merchants’ Rapid Access Program (RAP) introduced increased program limits and general indemnity agreements expedited with e-signatures.

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+ 80 %
RAP Premium Growth

ERISA

Merchants’ new ERISA program features Inflation Guard included at no extra cost, pre-executed blanket bond form for all plan officials, online instant issuance and competitive rates.

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+ 62 %
ERISA Premium Growth

Custom Bonds

In late 2021, Merchants entered the customs bonds marketplace through a new partnership with C.A. Shea & Company, Inc., a leading broker for U.S. customs bonds.

Non-Construction Performance Bonds (NCP)

Merchants began writing NCP bonds through the commercial department. Added benefits to agents include commercial rates and commissions, and ease of applying on the Merchants Bonding Company Hub™

Geographic Expansion

7 New Offices in Key Geographic Areas

 

Telemarketing

Telemarketing efforts to qualify new agency leads began in 2015 and remains a key growth strategy for commercial business.

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2,000 +

Agencies Tele Marketed

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92

New Qualified Agency Prospects

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$ 555,000

Premium from Tele Marketed Agencies

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$ 1.7 million

Premium from Telemarketing Program Agencies Since 2015

Values

Continuous Improvement

Making E-Bonding Easy

Merchants’ significant investment in technology and common sense approach to underwriting continues to make issuing commercial bonds easier than ever.

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358 E-Signatures Completed

Agents can seamlessly send an email containing commercial documents needed for electronic signature directly to indemnitors.

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325,000 +  Signatures Waived

Signed indemnity agreements are no longer required on commercial surety bonds up to $75,000

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5,717 Bonds Automatically Approved
(compared to 650 in 2020)

Automated underwriting increased due to API integrations with agency partners and improvements to the Hub’s approval rules processes.

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220 E-Applications Submitted

Agents can send a commercial bond application directly to their clients, easing the data collection process for agents.

Integration Solutions

The award-winning Merchants Bonding Company Hub™ API allows for seamless integration with trusted partners.

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Merchants launched a new agency integration that allows agents to send bond orders directly from their website to the Merchants Bonding Company Hub™, resulting in 150% premium growth with the agency.

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Merchants’ integration with the California State Contractors License Board provides an industry-leading level of service for issuing and electronically filing Contractor License Bonds (CLB).

Modernized Accounting Systems

In 2021, Merchants formally began the migration off a legacy system to a web environment resulting in more nimble access to accounting transactions and enhancing the opportunity to utilize analytics. This modernization of our accounting systems will add new features to benefit both internal and external users.

 

Commitment to Quality Assurance

Merchants’ error ratio has decreased 85% since 2017. This achievement highlights Merchants’ commitment to consistency, accuracy and regulatory compliance of our core processes.

 

Error Ratio

 

First Class Experience     

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Continued investments in the award-winning Merchants Bonding Company Hub™ provide industry-leading solutions for agents to issue bonds quickly and efficiently.

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211,816

Bonds Issued

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34 %

Increase in Bonds Issued

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1,135,336

Hub Activities

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35 %

Increase in Hub Activity

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To broaden our reach and engage with up and coming agents, Merchants hosted three surety-focused continuing education webinars.

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655

CE Webinar Attendees

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4.7 out of 5

Overall Satisfaction

In-Person Events

In the latter half of 2021, as virtual weariness spread, marketing pivoted to hosting live events.

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8

In-person Agent Events

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142

Agent Attendees

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4.3 out of 5

Choose Merchants Score
(We ask participants if attending the event makes them more likely to choose Merchants)



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3,520 Agency Visits

Face-to-face communications with agents remained a priority. As communities and businesses began to lift social distancing requirements, Merchants’ underwriters pivoted from Zoom meetings to in-person visits.

Digital Content Marketing

Driving digital engagement of contractors and surety-related audiences through social media and digital advertising was a key marketing strategy. Messaging directed audiences to merchantsbonding.com, which provided information about Merchants’ first class surety services and a directory of our surety elite agent partners.

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64,913

Unique Website Visitors

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13 %

Increase in Website Views

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51 %

Increase in Find An Agent Directory Views

Positive & Collaborative Workplace Culture

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Recognition from these programs provides validation we are focusing on the right areas that make Merchants a top workplace. Feedback from our associates provides insights on where we need to continue to grow and learn.

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93 %

of associates say Merchants is a great place to work

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98 %

of associates believe Merchants’ management is honest and ethical

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97 %

of associates feel good about the ways Merchants contributes to the community

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Merchants’ communications hub connects associates located across the U.S. through company news posts, committee and interest group updates, and photo galleries.

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399

Associate News Posts

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24,025

Total Views

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2,300

Reactions

Human Resources in 2021

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170

Total Associates

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30

New Associates Hired

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20 %

Associates Promoted

Develop Potential

Interns

For the second year in a row, Merchants Bonding Company’s Internship Experience was named a Rising Insurance Star Executive (RISE) Elite 50 Internship award winner, an annual program that publishes 50 of the best insurance internship programs in the U.S. Merchants interns have a voice in program content, pursue projects of interest to develop their skills and actively contribute to Merchants’ success.

WayUp Top 100 Internship Programs 2020

Merchants’ new online training platform allows all associates development and training opportunities for their current and future roles. Courses are recommended based on core competencies identified for the position.

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74

Role-Based Development Playlists

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1,714

Training Hours Completed

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

Mental Wellness

Merchants made mental wellness a key focus for 2021. Revamped offerings help eliminate the stigma surrounding mental illness and provide associates with additional support and resources to balance work and life.

New Benefits
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Ulliance Life Advisor

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5 to THRIVE

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Free Life Coach, Legal & Financial Consulting

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Child & Eldercare Referral Network

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On Demand Webinars

Work-Life Integration

In response to the COVID-19 pandemic and the evolution of how, where and when work is done, Merchants introduced a new work-life integration policy that allows greater flexibility for associates while maintaining a collaborative and relationship-driven culture.

 

Healthy Workplace Finalist

For the third consecutive year, Merchants was selected as a finalist for the 2021 Healthiest State Award recognizing workplaces that are working to improve the physical, social and emotional wellbeing of Iowans.

Celebrate Success & Have Fun!

Recognition & Rewards

The Bucketlist Rewards platform allows associates to recognize and celebrate their peers’ contributions and successes.

Matching Gifts

97 %

of associates recognized

Associate Engagement

Maintaining a collaborative and relationship-driven culture remained a priority as associates adjusted to hybrid work schedules. A mix of in-person, hybrid and virtual events connected associates from across the country to participate in special activities throughout the year.

WayUp Top 100 Internship Programs 2020

Following the development of its DEI task force, Merchants implemented recruitment strategies to grow a more diverse team, educated associates on unconscious bias and inclusion, and developed employee resource groups where associates can make deeper connections with one another.

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46 %

New Hires Were Diverse for Their Teams

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3

Employee Resource Groups

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4

Countries Represented By Interns

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100 %

Associates Completed Unconscious Bias Training

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100 %

Leaders Completed DEI for Leaders Training

DEI Workplace Excellence
WayUp Top 100 Internship Programs 2020

Merchants was awarded the Diversity Equity & Inclusion (DEI) Workplace Excellence Award from the West Des Moines Chamber of Commerce. The award recognizes companies who exemplify an inclusive culture through their workforce, programs and employee development initiatives.

Scholarship for Underrepresented Students

4 Merchants Interns Awarded Scholarships

Merchants gives interns the opportunity and support to apply for The Surety & Fidelity Industry Intern and Scholarship Program for Underrepresented Students (SFIISP). The program is meant to encourage students’ consideration of the surety industry as a career choice.

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!