Gary Giulietti, an executive with the largest privately held insurance brokerage firm in the world, said the bond required of former President Donald Trump is very rarely issued by surety companies, making it a “practical impossibility” to obtain.
Mr. Giulietti, president of the Northeast region for the Lockton Companies, is one of four insurance brokers that Trump attorneys say have been retained to get the $464 million bond while he appeals his civil fraud verdict.
New York Attorney General Letitia James has threatened to seize President Trump’s assets if he does not post that amount.
“As an initial matter, only a handful of sureties are approved by the U.S. Department of Treasury to underwrite bonds for a sum as high as the Judgment Amount,” he wrote.
Of those, he said, many have internal policies to limit single bonds, and “will generally only issue a single bond up to $100 million.”
Trump attorneys had offered to put up a $100 million bond. An appeals court has yet to rule on whether this will be sufficient to stay the civil fraud judgment, which includes disgorgement of more than $350 million.
30 Companies Said No
Mr. Giulietti detailed his “extensive surety risk experience,” stating that during his 50-year career, he’s worked closely with every major insurance company and specialized in real estate in a previous position.“Lockton has an entire department devoted to surety and underwrites thousands of bonds a year, including numerous appeal bonds,” he added. “I have never heard of nor seen an appeal bond of this size for a private company or individual.”
Over the “last several weeks,” he and several other brokers “diligently” sought to obtain the $464 million bond even before a New York trial court judge finalized judgment.
In the “countless hours negotiating with the largest insurance companies in the world,” they have “been unsuccessful.”
More than 30 companies have turned the defendants down, according to Trump attorneys.
A $100 million bond is considered large, and $464 million is “commercially unattainable for a privately owned company,” Mr. Giulietti wrote, even if the company had “billions of dollars in real estate.”
This is primarily because sureties big enough to write a $464 million bond won’t accept hard assets like real estate as collateral.
This includes AXA XL, Hartford, Nationwide Sompo, Travelers, Berkshire Hathaway, CNA Casualty, Liberty Mutual, and others, Mr. Giulietti stated. These surety companies generally are not equipped to “manage, control, or dispose of real property” and therefore cannot take on the risk of needing to sell real estate quickly should a bond claim be made.
A company would need “cash or cash equivalents approaching $1 billion” to obtain a bond of that size because most sureties require collateral of 120 percent, upfront premiums, and cash left over for operations, he estimated.
Negotiation Fell Through
Attorney Alan Garten stated in a separate affidavit that every surety company approached was unwilling to take real estate as collateral.He revealed that Chubb was the only company willing to consider real estate as collateral but after actively negotiating for a week they turned it down.
Three defendants in the case are special purpose companies whose sole assets are real estate, and two defendants are holding companies whose main assets are real estate.
“As a result, there is simply no way for Defendants to tap into the substantial equity in these properties needed to collateralize a bond for $464 million without causing irreparable harm,” Mr. Garten argued.
