Federally funded infrastructure projects continue to fuel premium growth for US surety bond writers, with underwriting profits in the construction-focused segment surpassing $2 billion for a third consecutive year in 2024, according to AM Best.
Direct premium through the first nine months of 2025 rose by close to 10% compared to the same period a year earlier. The increase is attributed to ongoing public construction spending tied to the Infrastructure Investment and Jobs Act of 2021.
AM Best noted that funding from the IIJA will wind down as the legislation expires in September 2026, which could result in a slowdown in public spending. However, other sectors are presenting growth opportunities for surety insurers.
Swiss Re Corporate Solutions CEO Ivan Gonzalez said credit and surety are expected to see continued demand in 2026, alongside insurance solutions supporting renewables, data centers, and infrastructure required to meet surging power needs.
Hi-tech manufacturing projects, data center construction, and other capital expenditure initiatives are generating demand for surety bonds.
David Blades, associate director at AM Best, said that as technologies advance and insurers explore emerging risk areas, "the build-out through additional projects may spur future premium growth attributable to public and private infrastructure initiatives over the near term."
Surety premiums have risen steadily despite relatively stable pricing in recent years, with profitability remaining strong through 2025. The industry's direct incurred loss ratio for surety business declined by more than four percentage points year-to-date through the third quarter of 2025, compared to the same period in 2024.
Robert Valenta, senior financial analyst at AM Best, said that with aggregate premiums higher and loss ratios lower during the nine-month period, surety insurers may see an increase in bottom-line profits for the year. He noted that results through the first nine months of 2025 "show both continued growth for surety insurers and favorable underwriting trends."
Surety insurers have maintained underwriting and operating profitability, producing net profit margins above 30% during each of the past 11 years from 2014 to 2024. AM Best reported that the surety line's net profit margin has outperformed every other major US commercial line of insurance over that period.
However, the report noted that the surety segment's relatively low premium volume limits its impact on the overall property/casualty industry profit margin.
