Amwest Surety Insurance Company, in Liquidation

COLLATERAL RELEASE – SURETY BONDS
Frequently Asked Questions

Question: For bonds that do not have claims filed against them, will collateral be returned to the principal?

Answer: Collateral held in a fiduciary capacity will only be returned when Amwest receives an acceptable exoneration with regard to all Obligees named in bonds written for a particular principal and verification that no amounts are due Amwest per the General Indemnity Agreement.

Question: How will collateral be returned? 

Answer: Collateral will be released upon the receipt of a Release of Liability and Discharge of Liability by the Obligee, or a replacement bond containing language releasing Amwest Surety Insurance Company of any and all obligations, subject to the approval of the Liquidator or his representatives.  If collateral is held subject to multiple bonds, all bonds must be exonerated or replaced prior to the collateral release.

Question: Will the Liquidator pay claims from any bond specific or account specific collateral that has been deposited with Amwest?

Answer: Generally, no. Until the proof of claim process is complete, the exposure on a bond may not be known. On a case-by-case basis the Liquidator can satisfy undisputed claims, where there is full cash collateral (or equivalent) to pay the claim and payment of the claim will result in a release of the surety from all parties who could claim against the bond and full exoneration of the bond.

Question: I was under the impression that since my bond was cancelled on July 6, 2001, collateral is no longer needed. Can you please provide me instructions on how I can I receive it back?

Answer: The mere fact that a bond has been cancelled does not necessarily mean that the collateral can be released. Amwest will not release collateral until Amwest has been exonerated (released, discharged, etc.) from its obligations under the bond. Further, in most circumstances, just because a bond is cancelled, it doesn’t mean a claim cannot be filed against the bond. Therefore, prior to Amwest releasing collateral, Amwest needs to confirm that ALL bonds issued to that principal have been exonerated, any amounts owed to Amwest have been paid, such as premium and that there is NO possibility that a valid claim can be made against the bond.

Question: The liability on my bond was still open at the time of cancellation. Will the obligee sign a full release and discharge of liability so that I can get my collateral back?

Answer: The obligee may require you to obtain a replacement bond in lieu of executing a full exoneration on your existing bond. If the obligee requires you to obtain a replacement bond, there is specific language that must be written into the new bond, and the new bond must be executed and accepted by the obligee. For a copy of the language, please refer to the Collateral Release section of this website. Please be aware, however, that all bonds issued by Amwest on behalf of the principal must be exonerated and/or replaced as in accordance with the above to release the subject collateral.

Question: How long will it take for the collateral to be released once Amwest has received all the necessary release documents.

Answer: All requests to release collateral must be submitted in writing and subject to approval from Accounting, Claims, Underwriting, and the Special Deputy Liquidator. Once approved, the turnaround time in estimated to be 15-20 working days.

Question: Where do I mail my written request for release of collateral?

Answer: You may mail your request to: Amwest Surety Insurance Company, In Liquidation
Attention: Collateral Department
P.O. Box 4500
Woodland Hills, CA 91365

Question: Is there a specific form that Amwest can provide me that the obligee can use to expedite the full exoneration on my bond?

Answer: Yes. There is a form called “Release and Discharge of Liability Under Bond” that can be used by the obligee. For a copy of this form, please refer to the Collateral Release Section of this website.

Question: Should I obtain releases/exonerations on all bonds or only for the bond number referenced on the Notice of Cancellation that I received?

Answer: Many Agents and Principals are taking it upon themselves to obtain releases only for bonds listed on the Notice to All Policyholders, Principals, Obligees and Agents of Amwest Surety Insurance Company. This list only contains bonds that will be cancelled due to the Liquidation. It does not contain all bonds that will require a release/exoneration, in order to return the Principal’s collateral. The Agent and/or Principal should contact the Collateral Department in order to obtain a conclusive list of what will need to be exonerated.

Question: How does the Statute of Limitations affect the collateral release procedures?

Answer: Even though a bond has been cancelled, the Surety is still liable for any claims proven to have occurred during the time the bond was in force. The only exception would be if the Statute of Limitations to file a claim has expired. This means the Principal could have completed a job 2 years ago, however, the Statute of Limitations to file a claim for the state in which the work was done is 5 years. Since the Statute of Limitations (SOL) has not expired a release of liability or exoneration must be obtained from the Obligee.

Question: I am having a difficult time obtaining a release from the Federal Highway
Administration. Can you assist with an explanation?

Answer: ICC Broker Bonds – Collateral taken to secure an ICC Broker bond is not eligible for release until after the Claims Bar Date and it has been confirmed there are no pending claims against the bond. The Federal Highway Administration (the “Obligee”) will not release the Surety of their liability incurred prior to the cancellation of the bond. The replacement of the bond by another Surety does not relieve the prior Surety of their liability.

The only exception would be if the ICC Broker Bond had previously been cancelled and the 2 year Statue of Limitations to file a claim has expired.

Question: I am unable to obtain a release/exoneration from the Obligee on one of my bonds. What should I do?

Answer: Collateral held for bonds where a release of liability or exoneration could not obtained, will be eligible for release following the Claims Bar Date. However, before collateral can be released all Proof of Claims forms submitted must be logged in. Once this process has been completed and it can be confirmed there are no pending claims or outstanding premium, the collateral may be released.