1. Surety Association of Wisconsin 2010

2. Surety Losses & Profitability

3. Top Writers of All U.S. Surety

4. 200820092010 Thorough underwriting More competition, fewer projects Continued Pressure on Margin Well capitalized sureties Stratification of capacity Increase in contractor failures Outlook for 2010

5. Surety Executives Analysis Healthy Construction Marketplace Initial Downturn Surety Market Capacity Unfavorable Surety Results Fewer Sureties – Large and Small Contractors Middle Contractors – Less Impact ?? Favorable Surety Results ? Higher Rates ?? Improved Underwriting Terms No new sureties – Status Quo Middle contractors – Still Most Competitive Increase to no Rate Change Increased Underwriting Terms Surety Market Capacity Flat Construction Marketplace Improving Construction Marketplace The Current Contract Surety Cycle

6. Economy Credit Crisis Decline in Housing Market Territory Expansion/Additional Discipline Subcontractor Risk

7. Change in construction partners financial strength Tighter cash flows Weaker financial statements Lower margin Older/worn down equipment Overextension of capacity to finance or manage work programs Ownership changes

8. Underwriting issues for 2010 Balance sheet management Joint ventures Warranty issues Onerous contract language Open communication with business partners

9. Balance Sheet Management CASH IS KING Control debt Adjust overhead Manage equipment utilization Manage receivables/know your owner Underbillings Maintain capital in operating entity Know your cash flow

10. Surety Executive Tips for Success - Maintain profit margin, bid job not competition - Preserve capital and stay liquid - Reduce overhead and fixed charges - Lock in prices early - Hold on to talent

11. Advice for Today's Market Know your Contractual Rights Utilize Construction Professionals Bank Capacity Conserve capital Prequalify subcontractors Contractors

12. Advice for Today's Market Stay within capabilities Manage growth & overhead Communicate Position for the market recovery Contractors

13. Position for Market Recovery Continuity Debt Retention or addition of key people Equipment/Fleet management Know and communicate business plan Seek input of business partners Know business partners needs to execute your plan Balance sheet strength

14. For More Information Thank You Surety Association of Wisconsin