News

 

 

Construction figures released in October 2025 showed a mixed picture, with overall activity still growing over the latest three-month period but monthly output moving lower.

 

 

Office for National Statistics data published on 16 October showed that total construction output increased by 0.3% in the three months to August 2025. Repair and maintenance grew by 1.3%, while new work fell by 0.4%.*

 

 

Monthly construction output fell by 0.3% in August. The fall came from a 1.5% reduction in repair and maintenance, while new work increased by 0.5%. Private housing new work was one of the weaker areas over the three-month period, falling by 1.8%.*

 

 

The Insolvency Service reported 2,000 registered company insolvencies in England and Wales during September 2025. This was 2% lower than August but 2% higher than September 2024. Insolvency levels during the first nine months of 2025 remained slightly above 2024 and broadly similar to 2023, when annual company insolvencies reached a 30-year high.**

 

 

Against that backdrop, contractors may find that some surety providers are taking a cautious approach to particular risks. A declined bond application, however, does not always mean that the requirement cannot be placed.

 

 

A Decline Is Usually About a Specific Underwriting Concern

 

 

Surety providers assess risk according to their own appetite, limits and underwriting criteria.

 

 

An application may be declined because of one particular issue rather than because the contractor is fundamentally unsuitable for surety support.

 

 

Common reasons can include:

 

 

•    
• weaker recent financial results;


•    
• negative net assets;


•    
• loss-making accounts;


•    
• limited trading history;


•    
• a significant increase in contract size;


•    
• insufficient available bond capacity;


•    
• unacceptable wording;


•    
• an SPV or unusual group structure; or


•    
• the requirement simply falling outside that surety's appetite.


 

 

 

Our Declined Surety Bonds guide explains why an alternative market may sometimes take a different view.

 

 

 

 

Different Sureties Have Different Risk Appetites

 

 

The UK surety market is not a single underwriting model.

 

 

One provider may have strict requirements around financial strength, contract size or wording, while another may have greater appetite for that particular type of case.

 

 

Differences can arise around:

 

 

•    
• sector appetite;


•    
• minimum financial requirements;


•    
• maximum individual exposure;


•    
• aggregate exposure;


•    
• bond wording;


•    
• new companies and SPVs;


•    
• group structures; and


•    
• the use of parent-company support.


 

 

 

This is why understanding the reason for a decline is important before simply submitting the same application elsewhere.

 

 

Negative Net Assets Do Not Automatically Mean No

 

 

A company showing negative net assets can be more difficult to place, but it is not necessarily an automatic decline across the entire market.

 

 

The underwriter may consider why the balance sheet is negative and whether there are stronger factors elsewhere in the business.

 

 

These may include:

 

 

•    
• strong current trading;


•    
• positive management accounts;


•    
• good liquidity;


•    
• a healthy order book;


•    
• support from a stronger parent company;


•    
• shareholder or group funding; and


•    
• successful delivery of similar contracts.


 

 

 

Our Surety Bonds With Negative Net Assets guide explains how these cases may be approached.

 

 

Loss-Making Accounts Need Context

 

 

A reported loss can also trigger concern, particularly where the surety is relying on historic statutory accounts.

 

 

However, the cause and current position matter.

 

 

A loss may have resulted from:

 

 

•    
• a one-off bad debt;


•    
• a specific loss-making contract;


•    
• investment in growth;


•    
• exceptional costs;


•    
• restructuring;


•    
• delayed project completion; or


•    
• another non-recurring event.


 

 

 

Where more recent trading has improved, current management information can help provide a clearer picture.

 

 

Our Surety Bonds for Loss-Making Companies guide explains how underwriters may consider these circumstances.

 

 

Current Management Accounts Can Change the Picture

 

 

Filed accounts can be many months old by the time a bond is required.

 

 

For businesses whose position has changed materially since year end, current management accounts may therefore be particularly important.

 

 

They can help demonstrate:

 

 

•    
• more recent profitability;


•    
• current cash levels;


•    
• working capital;


•    
• changes in debt;


•    
• improved net assets; and


•    
• the financial impact of recent contracts.


 

 

 

Our Surety Bond Information Required guide explains the information that may help an underwriter assess the current position.

 

 

Contract Size Can Be the Problem Rather Than the Contractor

 

 

A contractor may have a good record but still face difficulty where a new contract represents a substantial step up in scale.

 

 

A surety may question whether the business has sufficient:

 

 

•    
• working capital;


•    
• management resource;


•    
• experience at that contract size;


•    
• operational capacity; and


•    
• available surety headroom.


 

 

 

Our Contract Growth & Surety Capacity guide looks at how larger contracts can alter the underwriting assessment.

 

 

Existing Bonds May Be Using More Capacity Than Expected

 

 

A contractor can also encounter a decline because too much surety exposure is already outstanding.

 

 

This may include bonds on projects that are substantially complete but have not yet been formally released.

 

 

Reviewing existing bonds can sometimes identify obligations that may be capable of reduction or discharge.

 

 

Our Bond Capacity Explained guide explains how individual exposure, aggregate exposure and available headroom interact.

 

 

Wording Can Cause a Decline

 

 

Sometimes the financial position is acceptable but the requested bond wording is not.

 

 

A surety may decline wording because it:

 

 

•    
• operates on an on-demand basis;


•    
• contains an unusually broad claim mechanism;


•    
• has no satisfactory expiry provision;


•    
• automatically extends exposure;


•    
• creates obligations beyond the underlying contract; or


•    
• otherwise falls outside the surety's standard appetite.


 

 

 

Our Conditional vs On-Demand Bonds guide explains why wording can materially alter the risk.

 

 

SPVs and New Companies Need a Different Presentation

 

 

A newly incorporated company may have little financial history of its own.

 

 

That can lead to a decline if the application is assessed only on the standalone applicant.

 

 

Where appropriate, the underwriting presentation may instead need to explain:

 

 

•    
• the wider group structure;


•    
• parent-company strength;


•    
• committed funding;


•    
• the project economics;


•    
• the experience of the management team; and


•    
• the support available to the SPV.


 

 

 

Our Surety Bonds for New Companies & SPVs and Parent Company & Group Support guides explain these issues in more detail.

 

 

Security Requirements Can Differ Between Markets

 

 

One surety may request security that another market does not consider necessary.

 

 

Depending on the case, potential support can include:

 

 

•    
• a corporate indemnity;


•    
• parent-company support;


•    
• cash collateral;


•    
• personal guarantees; or


•    
• other forms of security.


 

 

 

These requirements are not universal and should not be assumed simply because one provider has asked for them.

 

 

Our Bond Security and Personal Guarantees & Surety Bonds guides explain how security requirements can vary.

 

 

A Stronger Presentation Can Help

 

 

Where a case has already been declined, simply forwarding the same documents to another market may not produce a different result.

 

 

A stronger submission should address the reason for the original concern directly.

 

 

That may mean providing:

 

 

•    
• current management accounts;


•    
• a clear explanation of historic losses;


•    
• cash-flow information;


•    
• details of parent-company support;


•    
• a work-in-progress schedule;


•    
• evidence of relevant project experience;


•    
• a schedule of existing bonds; or


•    
• alternative wording.


 

 

 

The aim is to give the next underwriter enough information to understand why the risk may be stronger than the initial decline suggests.

 

 

Urgent Declined Cases Need Focused Information

 

 

A bond decline can become particularly difficult where contract signing or mobilisation is imminent.

 

 

In urgent situations, identifying the precise issue quickly and gathering the right supporting information can be more useful than approaching multiple markets with an incomplete submission.

 

 

Our Urgent Surety Bond Requirements guide explains the information that can help where time is limited.

 

 

One Decline Does Not Define the Whole Market

 

 

The October construction and insolvency figures show why surety providers continue to assess financial resilience carefully.

 

 

However, underwriting appetite varies significantly across the market.

 

 

Where an application has been declined, understanding the reason, strengthening the presentation and approaching a market with a more suitable appetite can sometimes produce a very different outcome.