What do underwriters primarily assess when reviewing a surety bond application?

When underwriters review a surety bond application, they primarily assess the applicant's credit history and financial stability. This is crucial because surety bonds are essentially a guarantee that the applicant will fulfill their contractual obligations. Therefore, the underwriters need to evaluate how likely the applicant is to meet these obligations based on their financial background.

A strong credit history indicates reliability and a higher likelihood that the applicant will honor their commitments, while financial stability reflects their ability to manage project costs and any unforeseen financial challenges that may arise. These factors provide a comprehensive picture of the applicant's overall risk profile and help ensure that the surety company can manage its exposure to potential defaults.

Assessing only the applicant's prior bond history, the project size and scope, or previous projects does not provide the necessary insight into the applicant's current financial health and capacity to perform, which are vital components in determining the viability of issuing a surety bond.