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By Mark S. Murphy
By Mark S. Murphy
Last week Starkweather & Shepley Insurance Brokerage Inc. acquired Byrne Bonding & Insurance for an undisclosed sum.
BBI, which specializes in surety bonding for the construction market, and Starkweather expect the combination of the two firms to strengthen existing relationships as well as develop new ones.
David J. Byrne III, who founded BBI, will be vice president and bond manager for the bond accounts department at Starkweather.
He took some time to answer questions about what changes with the merger.
PBN: Byrne Bonding & Insurance and Starweather & Shepley have had mutual clients for years. What will you be able to offer differently now than before with those existing clients?
BYRNE: Our mutual clients will now have the benefit of our combined resources. One contact with any of the seven Starkweather & Shepley offices by phone, fax or email will enable our client to obtain all the necessary surety support and insurance service required for any specific contract requirement.
PBN: Does the merger make it easier for the new company to gain new clients? Why?
BYRNE: The merger should make it easier to attract new clients. First, Starkweather is very well known, having been in business since 1879. Starkweather has seven offices located in East Providence, East Greenwich and Westerly. There are three offices in Martha’s Vineyard and another in Westwood, Mass. The company is well established in these communities and known for its integrity and insurance acumen. This established reputation makes it easier to approach prospective clients to discuss their current bonding or insurance needs.
PBN: Do these potential new clients resemble the ones you have currently? If not, how are they different?
BYRNE: New clients being sought will be very similar to ones currently being served. Surety support is provided to contractors and companies that have the experience and financial strength to complete the contractual obligation that requires bonding. We will continue to seek those companies that are responsible members of the construction community.
PBN: As the construction business has slowed, contractors are bidding on work they are not accustomed to doing. How has that changed the work that you do?
BYRNE: The economic slowdown being experienced in this marketplace has certainly impacted the construction industry. Unlike the past, contractors may be looking for bonds on larger projects than previously sought, or for bonded work in a different geographical area or for an unknown owner with whom the contractor has never previously worked. As such, the contractor is taking on more risk which may make bonding more difficult to obtain. Fortunately, we are able to respond to this change in market conditions. This may require multiple marketing efforts on our part to find the surety company that can underwrite the desired request on a timely and cost effective basis. Our combined strength with Starkweather & Shepley provides access to a large number of surety companies so we can obtain the desired result necessary.
PBN: Are there markets that the skills you have gained in the surety bond business that can be transferred to other businesses? Are you looking to expand in that direction soon or more gradually?
BYRNE: The greater portion of our revenue is generated from bonding for construction contractors. Public construction projects in excess of $50,000 have to be bonded by law. In addition, more private construction projects are being bonded since owners and financial lenders want to be guaranteed that their project will be completed according to contract, with all construction bills paid for a very reasonable bond fee. As such, we do want to expand our surety services beyond the construction industry and more aggressively pursue miscellaneous surety opportunities that may arise from the manufacturing and international business sectors. The contractual obligations that arise from these businesses are often secured by irrevocable letters of credit provided by financial institutions. A surety bond may be a reasonable alternative.