A history of consolidation.

From the primary market standpoint, there has been considerable consolidation in the surety line in recent years. In fact, a look at the leading surety writers in 1992 vs. the lineup 10 years later shows that six of the top 10 in 1992 no longer are in surety, said Joseph Dhuey, senior vice president of the Lovitt & Touche Inc. insurance agency.

And the trend continues: St. Paul Cos. and Travelers Property Casualty Corp., the two leading surety providers in the United States, have announced plans to merge.

"With that situation, you have eliminated or consolidated into one company several companies that formerly existed independently such as USF&G, Reliance, Aetna Casualty & Surety, Seaboard and Fireman's Fund," said Harry C. Rosenberg, chairman of Rosenberg & Parker Inc., one of the largest regional U.S. agencies writing surety bonds exclusively.

Here's how these surety operations came into the Travelers and St. Paul folds:

* St. Paul acquired Seaboard Surety from Home Insurance Co. in January 1982 for $84 million.

* Travelers acquired Aetna Casualty & Surety through the acquisition of Aetna Property Casualty Corp. in 1996.

* St. Paul merged with USF&G Corp., which specialized in reinsurance, surety and alternative risk transfer, in April 1998.

* Reliance Group Inc., facing a cash crunch, decided to sell its lucrative surety business to Travelers Property Casualty for $580 million in 2000. Reliance later filed for Chapter 11 bankruptcy protection.

* In December 2001, Fireman's Fund Insurance Co. announced plans to exit surety business in performance and construction bonds. It sold the right to renew that business to St. Paul. At the time, a spokesman for Fireman's Fund said the company had concluded it would have to double, or even triple, its business to remain a viable player in this tough market.

"And with the merger of St. Paul and Travelers, we have, in effect, lost another surety company," Rosenberg said.

Also, Kemper Insurance Cos. announced in February 2003 the sale of renewal rights to its contract and specialty surety products to Arch Insurance Group. Kemper had been selling various segments of the company in an effort to downsize and become profitable again.

Meantime, some new insurance companies have appeared on the scene to write surety, Rosenberg said.

Nevertheless, with the paring down in the number of these companies, agents are finding the field has narrowed. "You have less competition and you're dependent upon fewer companies, but they will have more capital, and therefore more capacity, which is certainly needed," he said.