Bond companies ordered to cease and desist

The Texas Department of Insurance ordered two bonding companies in the Houston area to cease operating in Texas. Both companies, International Fidelity & Surety Ltd. and Providential Surety Company Ltd., were issuing surety bonds without a license and were engaged in the unauthorized business of insurance, TDI said.

The department began investigating International Fidelity & Surety Ltd., based in Connecticut, after a construction company attempted to file a claim on a bonded subcontractor and the bonding company failed to acknowledge the claim. Inter-national was found to be operating without a license, and was ordered to cease and desist from further insurance business in the state.

Providential Surety, an offshore company headquartered in the British West In-dies, was found to be operating without a license in July 2005 and was fined $100,000, in addition to being issued a cease and desist order. TDI found that the company continued writing bonds, however, so TDI requested the Texas Attorney General to issue temporary and permanent injunctions against Providential.

A surety bond is a contract whereby the surety guarantees the faithful performance of the contractor to the entity requiring the bond. There are many different types of contract surety bonds, including bid bonds, performance bonds, payment/labor bonds and material bonds, and maintenance bonds.

More information about surety bonds and companies licensed to write them may be found online at www.tdi.state.tx.us/company/ pcbond.html.

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