C&D Bonding

CD BondingC&D Bonding takes its clients to the next level with its industry expertise and solid reputation among surety bond companies.

By Janice Hoppe-Spiers

Philip Vega’s tenure in the surety bond business began in 1982 when he started as an underwriter for Aetna Casualty & Surety Co. After nearly two decades in the industry, Vega founded C&D Bonding in 2001 to specialize in providing bonds to contractors in the public and private sectors.

“My company is the largest contract-surety-only, independently owned brokerage firm in the seven western states,” he attests. “Contractors and developers come to us for advice on how to maximize their ability to get surety credit because the greater their ability to secure surety credit, the more opportunity they have to pick up new work that will translate into greater profit.”

The Covina, Calif.-based company offers nearly 100 years of combined expertise among its nine employees located in Covina and Pismo Beach, Calif., as well as Lake Havasu, Ariz. The family owned firm prides itself on many years of experience in the bond business for small and large contractors, possessing a thorough knowledge of all surety-related products and credibility among surety underwriters.

Contract surety bonds guarantee the contractor will perform according to the specifications of the construction contract. If the contractor fails to perform according to contract, the insurance company is responsible to the obligee for completion of the project, which includes paying relevant subcontractors and suppliers. “We are the liaison between the bond companies we do business with and our clients,” Vega explains. “Bond companies appoint my company to go out and secure business. We bring that business to the surety company and present the account to them. We do all of the legwork in terms of collection of information.”

Key Relationships

C&D Bonding meets with its clients as often as twice per month to discuss market trends and offer advice on what projects are available to pursue, which owners are contractor-friendly and which owners to stay away from. C&D Bonding also helps its clients develop relationships with new CPA firms or banks in order to meet their expanding needs. “Our clients come to us for expertise when they outgrow their insurance agent that only dabbles in bonding,” Vega says. “We bring a new level of sophistication and knowledge that they would not get from their insurance agent.”

The company works with all levels of contractors, including those that are using bonds for the first time and large firms that need assistance in tax planning or presenting to the bond company to maximize their surety credit. “Each stage is a whole different mindset,” Vega explains. “The beginning is about getting credit-based underwriting. With decent credit and no prior bankruptcy or liens, it’s relatively easy to get bonding up to $1 million with internally prepared financial statements and copies of bank statements – both business and personal.”

Entry-level contractors first need to establish bonding and partner with a good CPA and banker to ensure their internal accounting system is up to par. This allows C&D Bonding to help them get to the next level.

Middle market contractors require a more thorough presentation and review of their financials while larger firms require audited financial statements. “We try to understand our clients and what they want to do so we can map out how to get them to the next level,” Vega says. CD bonding box

C&D Bonding continuously works to maintain its relationships with the surety bond companies. “We get together with underwriters on a business level regularly to maintain the ongoing relationship and discuss current as well as future developments in the industry,” Vega says. “I think it’s our expertise and ability to be what we consider a strong broker that sets us apart. We aren’t afraid to ask [our clients] the tough questions in front of the underwriters and the underwriters really like that.

“Surety companies gravitate to us and this company because we understand our clientele better than others who don’t ask those tough questions and are basically ‘yes’ men,” he continues. “We get a lot of respect from the surety companies we do business with because of that. In our world, it’s imperative that we tell them good news, but if there’s bad news we have to tell them that too.”

Vega says he learned early on in his career that hiding things or hoping the bad will go away gets you nowhere in the surety bond business. “It will hinder your reputation in the business and if you lose your reputation you might as well be doing something different,” he adds.

Market Experts

An understanding of the marketplace is mandatory in the surety bond business and it is how C&D Bonding is able to provide expert advice to its clients, Vega says. “There are questions about the job and every single project has its own identity, owners, inspectors, site conditions, subs and a whole litany of things,” he adds. “Our knowledge, being out in front of the market and knowing what’s coming down the road is one of the things that sets us apart.”

C&D Bonding says the economy is getting better and banks are beginning to lend more regularly with less stringent terms and conditions. “Related to the housing market, the overall inventory of homes has gone way down and lending has been rather difficult because of regulations, but that’s starting to change,” Vega says. “There is a lot of optimism in the construction industry. It was hit the worst during the recession and it’s lagging in terms of recovery, but there is recovery coming.”

The company predicts 2017 through 2019 will be “fantastic” years for construction and homebuilding, but expects another recession in 2020. “Work is so plentiful now. Contractors should look to maximize its surety credit and fill their backlog before 2020 because a downturn in the marketplace is expected,” Vega predicts.

To ensure it stays up-to-date on the latest products and work opportunities, C&D Bonding is actively involved in the organizations Construction Financial Management Association, Engineering Contractors’ Association, Associated General Contractors, Associated Builders and Contractors and the Southern California Contractors Association. The company also hosts seminars on surety bonding, hoping to attract a variety of industry professionals. “That’s how we keep our name out there, educating a larger group of people who hopefully aren’t all our clients,” Vega says.

Customer Service

C&D Bonding says it has taken on more new clients based on referrals in the past five years, but Vega also enjoys marketing to select comapnies. “I’m old school and like the ‘smile and dial’ or cold calls,” Vega says. “I enjoy doing cold calling and frankly that’s how we picked up what are now our largest accounts. I called at the right time, got them involved with the right surety company and in some cases have taken their surety capacity from $15 million to $250 million.”

Vice President Kevin Vega, Vega’s son, says helping a company increase its surety bond capacity results in customer loyalty. “We look for a way to get it done,” he says. “Having the right market presence is extremely important to the success of that.”

Although C&D Bonding is an independent broker with a majority of its business in the seven western states, it does have international capabilities. “We have written a number of bonds in Canada as well as other countries with a fair number of federal work contractors working for the Air Force, Navy or Marines at the bases in Germany, South Korea, at Guantanamo Bay and in the South Pacific,” Vega says. “We have the capabilities and knowledge needed in those territories.”

C&D Bonding is selective when it comes to taking on new clients. “We have our arms around our business and who our clients are. Our client base is very, very solid,” Philip Vega says. “As a broker, we are the eyes and ears of the surety companies, so we have to know what’s going on with our clients. If you get too big you have to manage clients by reports rather than a hands-on basis. We don’t want to dilute from what we do now, which has proven successful. Why change something that’s working?”

When Vega retires, Kevin Vega will take control of the company to continue providing personalized, 24/7 service to all its clients. Moving forward, C&D Bonding plans to continue to grow organically while maintaining its foothold as the go-to surety bond brokerage firm because of its dedication and industry expertise. 

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