Merchants Bonding Company - Annual Report 2025

Historic Financial Results

Merchants’ 2025 financial performance reflects consistent, expert execution across underwriting, expense management, and investment performance.

Underwriting	2021	2022	2023	2024	2025
Direct Written Premium	$154.7 million	$197.5 million	$247.7 million	$269.4 million	$305.1 million
Surplus	$240.9 million	$254.9 million	$284.9 million	$332.6 million	$402.7 million
Combined Ratio	82.6%	77.9%	84.9%	79.0%	73.1%
Net Loss Ratio – Merchants	7.1%	7.7%	15.6%	10.4%	2.6%
Net Loss Ratio – Industry*	15.1%	10.8%	17.8%	15.9%	20.5% (Q3 2025)
SFAA National Ranking*	16th	11th	8th	8th	8th (Q3 2025)
SFAA Market Share*	1.9%	2.2%	2.5%	2.4%	2.6% (Q3 2025)

*Source: Surety & Fidelity Association of America Top 100 Writers of Surety Bonds

Financial Strength Rating: A (Excellent) with Stable Outlook*
Long-Term Issuer Credit Rating (ICR): a+ (Excellent) with Stable Outlook*
Financial Size Category: IX (USD 250 Million to Less than 500 Million)*

*AM Best Credit Ratings, May 2025

Major Milestones

Record setting net income of $74.1 million.
Surplus exceeded $400 million for the first time in company history.
Premium production surpassed $300 million for the first time in company history.
Proudly maintained our national #8 ranking with SFAA for the third consecutive year.*
Broke ground on a 34,000 square-foot addition to our West Des Moines, Iowa headquarters.

*SFAA results available through Q3 of 2025, Merchants predicted to maintain position through Q4.

Contract Production Highlights

$205.8 million

Premium

+8%

Premium Growth

3,519

New Accounts

$48 million

Premium from
New Accounts

8,450

Submissions

$168 million

Premium from Leaderboard
Surety Elite Program

Commercial Production Highlights

$77.3 million

Premium

+26.3%

Premium Growth

$47.5 million

New Premium

$51.7 million

Premium from Pacesetters
Surety Elite Program

+51.4%

Premium Growth from Pacesetters
Surety Elite Program

383

Number of Key Agencies at $25,000 Premium or More

Specialty Solutions Production Highlights

$22.1 million

Premium

+24.5%

Premium Growth

975

New Accounts

1,706

Submissions

$4.7 million

Premium from SBA

$16.2 million

Premium from Subdivision

Strategic Priorities

The strategic priorities pursued in 2025 focused on putting innovation into action—implementing new ways to improve how work gets done and how value is delivered. Together, the following initiatives strengthened core capabilities while supporting long-term, responsible growth.

Underwriting Automation

Implementation	Impact
Expanded automation across underwriting workflows to reduce manual effort and speed decision-making.	85% reduction in manual financial data entry, increasing productivity through proprietary underwriting automation 50% growth in instant endorsements, increasing speed and control for our agent partners

Tech Tools

Implementation	Impact
Enhanced and expanded go-to-market strategies for digital bonding tools that streamline transactional surety and improve the agent partner experience.	Accelerated Utilization: 321% growth in The Hub Express, more than doubling its annual premium goal 293% increase in API premium As a result of that growth, API and Hub Express transactions increased from approximately 1 in 10 commercial transactions in 2024 to nearly 1 in 3 in 2025.

AI Adoption

Implementation	Impact
Implemented an enterprise-wide AI strategy to augment decision-making and accelerate execution.	3,000+ associate hours saved across the organization 1,400 underwriting hours and 690 risk hours redirected to higher-value work 50% time savings in technology development

Personalization: Contract Agent Partners & Agency Onboarding

Implementation	Impact
Strengthened data, insights, and processes to deliver more personalized experiences for contract agent partners, and to simplify agency onboarding.	More targeted rewards and recognition for contract agent partners, supported by improved performance insights and reporting Greater clarity, control, and ease of administration within the onboarding process Faster onboarding and increased confidence for agency partners from day one

Remote Culture

Implementation	Impact
Implemented targeted initiatives to better support connection, clarity, and inclusion for remote associates.	More consistent and accessible training through expanded resources, and deeper cross-functional education Faster issue resolution through designated system experts serving as clear points of contact Increased engagement through consistent opportunities to recognize and celebrate success

Catalyst Initiative

From Ideas to Impact

As reflected throughout this report, innovation at Merchants is guided by purpose and practical application. The Catalyst Initiative exemplified this mindset by providing a structured framework for turning ideas into measurable business impact. Over 12 weeks, 15 associates from across the company collaborated to challenge assumptions, explore “what ifs,” uncover new and hidden value, and refine concepts with strong transformational potential and viability.

Five concepts were pitched, with two advancing to research and development for further exploration.

Catalyst Photo Gallery

Culture

Merchants’ culture supports sustained performance by investing in people. By encouraging collaboration and fostering shared accountability, associates are equipped not only to contribute, but to grow, succeed, and stay!