Best’s Special Report: Infrastructure Projects Spur Growth and Help Fuel Profits for U.S. Surety Insurers

JANUARY 19, 2026 07:56 AM (EST)

Best's Special Report: Infrastructure Projects Spur Growth and Help Fuel Profits for U.S. Surety Insurers

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FOR IMMEDIATE RELEASE

OLDWICK - JANUARY 19, 2026 07:56 AM (EST)
Federally funded infrastructure projects continue to drive premium growth for U.S. surety bond writers, with underwriting profits in this construction-oriented line of business exceeding $2 billion for a third consecutive year in 2024, according to a new AM Best report.

As federally funded projects connected to the Infrastructure Investment and Jobs Act of 2021 (IIJA) continue to fuel public construction spending, direct premium through the first nine months of 2025 is up by close to 10% from the same period a year ago. The report also notes that funding from the IIJA will wind down as the law expires in September 2026, which could result in public spending stalling as well.

However, hi-tech manufacturing projects, the creation of data centers, and other capital expenditure projects are also creating opportunities where there is a need for surety bonds. "As technologies become more advanced and insurers consider expansion opportunities in 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," said David Blades, associate director, AM Best.

Surety premiums have been increasing steadily despite relatively stable pricing over the past few years. This trend has continued well into 2025, with profitability remaining strong. 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 same period in 2024. With aggregate premiums higher and a decline in the loss ratio during the recent nine-month period, surety insurers may experience an uptick in bottom-line profits for the year. "Results through the first nine months of 2025 show both continued growth for surety insurers and favorable underwriting trends," said Robert Valenta, senior financial analyst, AM Best.

Surety insurers have maintained underwriting and operating profitability, producing net profit margins over 30% during each of the past 11 years (2014-2024). From a comparative perspective, the surety line's net profit margin has outperformed every other major U.S. commercial line of insurance over that same period. While this consistency is noteworthy, in terms of the impact on the profit margin for the overall property/casaulty industry, the relatively low premium volume for the surety line limits that benefit.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=361720.