and should not be reproduced.

Z s

Four

N

Four

suretytoday

In this issue:

Join us in

sticking to basics…1

Zurich Surety

Express™ Release 2

is here…2

Zurich’s core

surety unit,

poised to grow…3

Surety Today, Zurich electronic surety newsletter for

distributors, keeps you informed about our products

and services and helps you market them to your

preferred customers. Our goal is to be your surety of

choice for your best accounts.

Please share your thoughts about this interactive

publication. Your input is important to us. Use the

buttons at the end of this e-newsletter to reply - or to

opt out of receiving further editions of this bulletin.

Best regards,

Bill Cheatham

President, Surety

volume I number 5 first quarter 2005

Bill Cheatham

suretytodayvolume I number 5 first quarter 2005

Join us in stickingto basicsBy William Cheatham, President, Surety unit

What does “return to basics” mean to you as

an agent or broker? Many of us think purely

in terms of underwriting, with specifics such

as audits, work in process (WIP) schedules or

contract terms and conditions coming to

mind. But, in my opinion, return to basics is

something even more fundamental. Should

basics mean a return to the more historical 10

percent working capital and equity case for

accounts requiring surety credit?

More underwriting information has not

demonstrated improved survivability for

construction clients. Consider how over the

last 30 years, the information available has

expanded from internal statistics to review

and certified audits. Today we have more

information then ever available about WIP,

claims, disputes and other topics.

What we seem to have lost is sound financial

advice. When sureties and distributors began

to drift from sound basic principles in the

struggle to win accounts, competition was

reduced to how thin an account could be

leveraged. The ability to absorb one bad

project has been diminished. Compounded

with our litigious environment, the industry

may have created the perfect storm.

The solution: raise standards,stick to basicsI submit that the surety industry should raise

the standards of financial information

available. We and our agents and brokers

should recommend that our customers in the construction businesses

grow their working capital and equity. Such behavior would support

contractors better during a bad economic cycle. In the long run, we’d

be providing better protection for their operations than simply finding

the market more attuned to the revenue driven solution. This would

require both you and sureties to lead rather than simply compete for

the short-term win.

Zurich has the characteristics of asuccessful surety facilityYou probably have a good idea about which characteristics identify a

successful surety. As shown in the list below, it’s clear that Zurich not only

possesses those qualities today, but, based on our strategy of sticking to

the basics, is committed to having them in the future.

Characteristics of a sound surety

Facts about Zurich

Adequate capital $22 billion in equity

Highly experienced humanresources staff

Zurich HR staff has average of30+ years experience

Highly experienced field officesenior management

Zurich’s senior management infield offices have 20+ yearsindustry experience

Reinsurance capacity Very favorable reinsurance treaty,historically over-subscribed

Technology Zurich Surety Express® is anindustry-leading electronic suretybond servicing platform

Strong cost containmentmeasures in place

Surety’s expense ratio runs in themid-40s

Underwriting discipline Zurich believes customers anddistributors are best served whenwe stick to the basics inunderwriting

suretytodayvolume I number 5 first quarter 2005

Zurich Surety Express™Release 2 is hereBy Frank Martin, Jr., Vice President e-Commerce, Surety Unit

March 14 marked the next step in the evolution of Zurich Surety Express™

(ZSE) as Release 2 became available to Zurich surety agents and brokers

nationwide. Many of you are already taking advantage of ZSE’s many

benefits to rate, issue and report new bonds. Now, Zurich Surety Express

allows you to service your book too, with new transaction capabilities for

renewals, cancellations, endorsements and reinstatements.

You can complete most transactions in just a few clicks:

• Get instant access to premium change and commission information

• See a history of transactions on the bond, and more.

Zurich Surety Express is fast, simple and intuitive to use. Most bonds can

be completed in just a few minutes. And it’s accessible anytime, anyplace

you have access to the Internet.

Existing functions enhancedIn addition to the new transaction types, we’ve made many improvements

to the existing “create bond” screens. A new, cleaner look and stream-

lined navigation, including “autosave” when moving from screen to

screen, make it easier then ever to book new business while maintaining

the same familiar steps and workflow to protect your learning investment.

And, if that’s not enough, Zurich now offers a direct billing option for

agents using Zurich Surety Express. One click and you’re done. Zurich

will handle the billing for you and credit your commission at the end

of the month.

The efficiency of Zurich Surety Express offers your organization a unique

way to manage customer relations while potentially reducing costs

significantly. Online access to the best products in the industry offers a

competitive advantage. Getting bonds to customers faster and with less

effort will enable you to focus on selling and developing and maintaining

customer relationships. Try ZSE today.

Save the dateA Zurich Surety Express Roadshow is coming

to a city near you. Plan to attend so you can

learn how to put ZSE to work for your agency.

ZSE Roadshow locations

Anaheim – March 2 (complete)

Baltimore – March 3 (complete)

New Orleans – March 4 (complete)

Burbank – March 9 (complete)

Miami – March 10 (complete)

Orlando – March 11 (complete)

Salt Lake City – March 15 (complete)

Indianapolis – March 15 and 16 (complete)

Richmond – March 16 and 17 (complete)

Cincinnati – March 17 (complete)

Cleveland – March 18 (complete)

San Francisco – March 21 (complete)

Dallas – March 21 (complete)

Schaumburg – March 22 and 23 (complete)

San Antonio – March 22 (complete)

Houston – March 23 (complete)

Philadelphia – March 30 (complete)

Parsippany – March 31 (complete)

Syracuse – March 31 (complete)

Seattle – April 1 (complete)

Pittsburgh – April 4 (complete)

Charlotte – April 5 (complete)

Boston – April 7 (complete)

Detroit – April 7 (complete)

Denver – April 8

Kansas City – April 11

Birmingham – April 13

New York City – April 15

* Contact your Surety Account Executive for

more information. If your area is not listed,

your Surety Account Executive will be happy to

provide you with more information about

Zurich Surety Express™ Release 2.

simple.fast. accessible.

suretytodayvolume I number 5 first quarter 2005

Zurich’s core surety Unit,poised to growBy Bill Mills, Vice President, Core Unit, Surety

Based on 2004 results, Zurich’s surety unit has grown by more than

100 percent over the last five years. While this growth has been broad

based, our “core” unit – serving mid-sized businesses and accounts

with backlogs under $100 million - has not grown at the same rate as

the other three segments (large, international and commercial surety

accounts). Today, we’re more focused than ever on writing profitable

business with this important core group.

Working more closely with fewer agents and brokersAs a result of our growth, we have experienced a distinct trend in our

distribution force: we’re writing ever more business with an ever smaller

group of distributors. We don't expect this to change any time soon, as

we find the most mutually satisfying outcomes when we work closely

with distributors whose view of surety is aligned with Zurich’s and who

appreciate what we bring to the table.

We specialize in the surety arena of commercial insurance. At Zurich, we

strongly believe that doing business primarily with distributors who are

similarly focused and experienced is in our long term best interests as

well as theirs. Together, we can provide the best solutions to the

contractors we both serve. Together, we will succeed.

The most productive and efficient manner for us to increase our franchise

value, and the value we bring to a distributor, is to deepen and broaden

existing relationships. At the same time, we are eager to establish select

new or reenergized relationships with similarly experienced and

professional surety distributors.

Maximizing the amount of surety credit providedThe cornerstone of our service is providing value-added counsel through

open and engaged communication, coupled with a desire to exchange

ideas that maximize the amount of surety credit we can provide.

As we have grown, we have invested significant resources in developing

systems, scoring techniques and underwriting processes to effectively

manage our overall book of business and spot

those accounts where we feel value-added

counsel could have a significant impact

toward maximizing surety credit. We use

these proactive approaches and benchmarks to

stay ahead of the curve with regard to credit

extension before areas of concern develop

into a full-blown credit crisis situation or

result in surprises to our distributors and

contractor customer.

We’re proud to be one of the last primary

surety markets that remains committed to the

full spectrum of surety customers. Zurich’s goal

is not to be just your "small account surety"

or "large account surety" or "international

account surety." Our goal is to be your surety

provider of choice - period. We seek healthy

and deep relationships across all our market

segments. So when you need a well-rounded

surety for all your customer groups, please

contact your local Zurich surety representative

or Bill Mills, Vice President Core Surety, at

william.mills@zurichna.com.

Zurich master mark - centeredFor use at 8mm and above, measured across the ‘z’ symbol.

To ensure visual consistency, you must always reproduce the elements from the master artworks. They must never be redrawn in any way.

The clear space indicated by a dotted keyline, should be free of any graphics and should not be reproduced.

Z symbol prints Zurich Blue 1

Four-color process: C: 100% M: 70%

Name prints Zurich Blue 2

Four-color process: C: 100% M: 83% K: 42%

(04/

05)

05-0

034

Zurich

3910 Keswick Road, Baltimore, Maryland 21211-2296800 382 2150 www.zurichna.com/surety

Publisher: Zurich Editor: Judith SamuelsonDesigner: Jeff BehrenhauserMarketing contact: Maria Adamski (maria.adamski@zurichna.com)

Zurich Financial Services (www.zurich.com) is an insurance-based financial services provider with a global network that focusesits activities on its key markets in North America and Europe. Founded in 1872, Zurich is headquartered in Zurich, Switzerland.Through its offices in more than 50 countries, 57,000 Zurich employees serve clients in more than 120 countries. In NorthAmerica, Zurich (www.zurichna.com) is a leading commercial property-casualty insurance provider serving the global corporate,large corporate, middle market, small business (not offered in Canada), specialties and programs sectors.

©2005 Zurich American Insurance Company