RESEARCH INSTITUTE O FCO NSTRUCTIO N AND ECO NO MY

m o n t h l y

No. 299

2014 1

CONTENTS

1

.

.

.

.

2

8

19

29

- 1 -

- 2 -

D.C.

2013 10 SFAA: The Surety & Fidelity Association of America) Robert J. Duke (

)

D.C.

Miller Act)Performance Bond Payment Bond

Bid Bond 1935

Little Miller Act

- 3 -

1

1-1 2012

27 102007 2008

1-1

Surety Information Office SIO

0

0.5

1

1.5

2

2.5

3

3.5

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Billio

ns o

f Dol

lars

Direct Premiums WrittenDirect Losses Incurred

Direct Premiums WrittenDirect Losses Incurred

- 4 -

2Loss Ratio 1 1-2

2012 37.1 1958 2012 55 432008 6.1

1-2

Surety Information Office SIO

200 10 11 1002-3 2011 5.5 2012 14.5 2013

1 22.9 2011 29.8 2012 35.62013 1 23.8

1

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%

100.0% 110.0%

LossRatio

Calendar Year

Contract Surety Industry Direct Loss RatiosCY 1958 - 2012

Source: The Surety & Fidelity Association of America

43

- 5 -

1-3

SFAA

3Combined Ratio

1-4 2012 92.41962 2012 51 105

100

1-4

2

100

2011 2012 2013 1Q

5.5% 14.5% 22.9%

29.8% 35.6% 23.8%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

50.0%

70.0%

90.0%

110.0%

130.0%

150.0%

170.0%

Contract Surety Industry Combined RatiosCY 1962 - 2012

AverageCombined Ratio=105%

Surety Information Office SIO

- 6 -

42000 IT

1-21-4

1994 15 20121994 12

1-510

1990 50 2012 65

1-5 15

Surety Information Office SIO

5

10 6535

35

1994 2012

Surety($millions) Premium Surety

1 Reliance Travelers 147.1 1 TRAVELERS BOND 754.22 USF&G St. Paul Travelers 144.1 2 LIBERTY MUTUAL GRP 725.73 F&D Zurich 142.5 3 ZURICH INSURANCE GRP 462.54 St Paul Group Travelers 140.9 4 CNA INSURANCE GRP 411.25 AIG AIU Holdings Chartis AIG 111.5 5 CHUBB & SON INC GRP 198.66 Aetna Travelers 106.6 6 INTERNATIONAL FIDELITY INS CO 161.47 Continental CNA 100.7 7 HCC SURETY GRP 160.68 Fireman's Fund Out of surety 97.3 8 HARTFORD FIRE & CASUALTY GRP 159.79 CNA Insurance Companies 92.8 9 ACE LTD GROUP 129.1

10 Safeco Liberty Mutual 88.9 10 RLI INSURANCE GRP 110.611 Chubb 77.7 11 GREAT AMERICAN 104.212 Hartford 74.0 12 LEXON/BONDSAFEGUARD 100.913 Amwest Gone 70.2 13 THE HANOVER INSURANCE GRP 85.714 Capsure CNA 55.3 14 NAS SURETY GRP 78.215 CIGNA Group ACE 49.7 15 MERCHANTS BONDING GROUP 72.8

($millions) Premium

- 7 -

6 2014ENR McGraw Hill Construction 2013 10

2014 9AGC: The Associated General Contractors of America 2014 3~4

6 10 3

SFAA 2014

CM PPP

4

3 ENR, November 11, 2013, p.50.

AGC of America, “Construction Spending, Labor & Materials Outlook,” Oct 2013. 4 62 2014 4

- 8 -

2013 11 14 15 19

19

1995 1

2-1

19 2013 11 142

6

2-2

- 9 -

Indonesia Infrastructure Week“Construction Economic”

“ Disaster Reduction” ODA

2-3

- 10 -

2-4

2-5

NoEarthquake Event Magnitude Loss of life Displaced

personDamaged Houses

DestroyedHouses

1 Aceh E/Q (and tsunami),December 26, 2004

M 9.4 110,000 700,000 57,137 69,932

2 Nias E/Q, March 28, 2005

M 8.6 850 40,000 71,891 12,010

3 Yogyakarta E/Q, May 27, 2006

M 6.8 5,700 600,000 260,000 154,000

4 Bengkulu E/Q, September 12, 2007

M 8.5 35 390,825 19,375

5 West Java E/Q, September 2, 2009

M 7.4 81 178,490 216,424 46,697

6 West Sumatra E/Q, September 30,2009

M 7.6 1,117 - 249,833 114,797

- 11 -

452009 2

2-6

- 12 -

2-7

1

- 13 -

2-8

2-9

PeninsularMalaysia Sabah Sarawak Malaysia

Total Land Area (km2) 131, 574 73,712 124,449 329,735

Flood hit areas (km2) 15,620 3,285 10, 895 29,800

Percentage of Total Land Area 11.90% 4.50% 8.80% 9%

Total Population 17, 670, 100 2, 519, 900 2, 012, 600 22, 202, 600

Population living in flood hit areas 3, 688, 600 652, 175 478, 490 4, 819, 265

Population living in flood hit areas as a percentage of total population 21% 26% 24% 22%

Average Damage Value per year (RM million) 616.5 141.0 157.5 915.0

Average Damage Value per year per sq. km of flood prone area (RM) 39, 470 42, 920 14, 460 30, 700

0

Malaysia

329,735

29,800

9%

22, 202, 600

4, 819, 265

22%

915.0

30, 700

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2-10

2-11

- 15 -

1960 1970

2-12

SMSShort Message Service

300 60,0001977

- 16 -

2-14

2-15

- 17 -

2-16

1970

2-17

Damage from Typhoon

1980s 1990s

80 /day(12-hour) intensive rain

18 days

38 days

1990s 2000s

$799M

$9.3B

$2.1B

119900ss

$2.1B

2000s

- 18 -

Special Act for the safety control of public structures 1995 110,000

5

2-18

- 19 -

2014 3 212

2013 12 2

19972009 3

5

3 40

5 2013 9 4 40

- 20 -

3

12

24

3

- 21 -

42.7 08 2

( 5.8 ) 5 9 26

25

49.3

5 9 25

24

- 22 -

2426.2 13 1

11 2

5 1 9 326 7

2

9.8

3.0

- 23 -

20.3 0.6

0.1 5.5

1.81.3 49.5

39.7 5 3 9 26 23

9 8 26 17

5 3

0.4 0.5

- 24 -

4 1.2 29.5

5 3

9 26 23

4 1.3 3 33

68

- 25 -

1 106

32.2

3 5 4

9 26 236

3.0 5 3

9 7 26 12 12 2

12

1.9 5 39 7 26 10

- 26 -

0.200.07

CF

CF

- 27 -

CF 3

- 28 -

- 29 -

28 1

28

350 47 3 8

1

2012 24,296 1999 20,67317.5 2004 22,314 8.9

1999 2000 20022004 2007 2008

- 30 -

1

25 3

2012 21 5 48.6% 11,797

1 31.1 7,563 10.4 2,5165 9

28 5 92.8%

2

25 3

0.0%

11.1%

10.4%

1.2%

33.3%

31.1%

34.0%

49.6%

48.6%

27.0%

4.7%

6.1%

37.7%

1.4%

3.8%

0% 20% 40% 60% 80% 100%

1000 1000 5000 5000 1 1

300

350

400

450

500

550

600

650

700

10

12

14

16

18

20

22

24

26

99 00 01 02 03 04 05 06 07 08 09 10 11 12

( )( )

( )

- 31 -

3

1999 84,291 201147,981 43.1 1999 4,441,731

2011 3,124,065 29.7%

3

23

4 2011

9,967 1999 1 8,327 45.6%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

0

20

40

60

80

100

99 00 01 02 03 04 05 06 07 08 09 10 11

( )

( )

- 32 -

4

23

25

5 1

5

23

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

99 00 01 02 03 04 05 06 07 08 09 10 11

( )( )

( )

- 33 -

61999 4,635 2011

2,103 54.6%1999 5,463 2011 2,236

59.1% 3,435 1,429 58.4%8,898 3,665 58.8%

6

2020

0

1,000

2,000

3,000

4,000

5,000

6,000

99 00 01 02 03 04 05 06 07 08 09 10 11( ) ( )

- 34 -