Knight Specialty Insurance and Surety Bonds

One of the articles that discuss Knight Specialty not filing the paperwork is here:

Donald Trump’s $175m Bond Rejection Raises Questions (

I don’t know the requirements for Surety Bonds, but I was able to look up Knight Specialty on the NAIC website.

Consumer Insurance Search Results - CIS (

I see that there is both Knight Specialty and KnightBrook as part of the Group.

KnightBrook does have their financial statements publicly available on the California Department of Insurance website.

Knight Specialty is domiciled in Delaware. You can view the financial examination report from 2019 on the Delaware Department of Insurance website. The NAIC website shows 138 million in capital and surplus for Knight Specialty.

Guilderland Re which is listed also, has like 5 million in assets so that is useless to the bond.

Anyone know the requirements for posting a Surety Bond in NY? Do you have to have enough liquid assets or what is the minimum?

I suspect that Knight Specialty doesn’t have enough liquid assets to meet the criteria. Maybe they have some money in the Cayman’s through Knight Insurance Company, Ltd.


I used to work in Commercial/Construction bonds.

I thought this was a jail bond.

I don’t think there is jail involved. Arent theses associated with the civil cases?

I think it’s just simply credit enhancement, like MBIA.

Can the liquidity/capital constraint be met on a group basis or does it have to be on a standalone basis for these type of surety bonds?

From the OPs link it does deem like they don’t meet the criteria for the standalone basis.

For at least certain kinds of bonds, there is a requirement to limit face value to essentially 10% of surplus.

However, I don’t know whether that applies to appeal bonds.

EDIT: Knight doesn’t appear on the Department of the Treasury’s T-list.

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It looks like Knight Specialty listed assets from a parent organization to justify the bond.

This notice from the AG says they now responsible for the surety even if they don’t qualify. ViewDocument (

It would appear that Knight Specialty is insolvent depending on liability they need to post without an immediate transfer of assets into the company. Does the Delaware Insurance Commissioner know they may have insolvent insurance company?

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I’ve been away from insurance law and I’m not admitted in New York.

The New York Insurance Law authorizes a certificate of qualification to be issued to any company by the NY insurance superintendent, who is authorized to to state the company’s capital and surplus based on its latest examination or financial statement, whichever is latest and can specify a limit on the largest single risk that the certificate covers. KSIC should have filed its financials last month, but I haven’t found them yet. The resources of any third party affiliate or reinsurer aren’t relevant because they do not directly assure the obligations. The insurance superintendent has broad discretion to refuse the certificate if it “will not promote the best interests of the people of this state.”

Assuming $138 million, that would be the maximum single risk that the superintendent would approve. I don’t think it would actually be anywhere near that. Assuming that an affiliate contributed capital, it’s likely that it would have to be reflected in a new financial statement. There will be a quarterly statement due for the first quarter but yet. The superintendent, if presented with updating the annual but not an “official” form, I don’t know if that would pass muster. And, of course, if the superintendent refuses the certificate, Trump will sue. I’m not sure where, but he’ll need also to get a stay of enforcement from the appellate department. Even if he brings the action in the state Supreme Court (which is actually a trial court, confusingly), it’s hard to see how they issue a stay in competition with an adverse decision of a higher court. And, should a mandatory injunction issue, the AG will appeal that … you can see where the line tends.

I coughed up $26 for KSIC’s 2023 NAIC financials. Apparently, they have been been writing lines in NY, though not surety bonds. It’s possible that no one asked for a certificate. But their capital and surplus is $138 million, short of the face amount of the Trump bond, On the T-List, they would be limited to any single cover of $13.8 million, max.


I think the A.G. is asserting that although the surety bond issuer may fail to receive a certificate of qualification and the appeal bond requirement to stay execution of judgment will not be met that Knight will be on the hook anyway until another bond is accepted, if ever. This makes sense because Knight presumably has liens on Trump assets.

Is this article accurate?

Seems to be a real shady deal. If you read Seth Abramson, here is a freebie from his substack.

It’s sloppy…but that probably isn’t unexpected if someone unfamiliar with the nuances of insurance regulation is trying to dig into the subject.

But it is accurate that Knight Specialty doesn’t appear on the list of approved surplus lines writers for New York, and I believe that surplus lines for surety is very, very unusual. Neither fact damns the bond, however…and I can very easily believe the (oft-ignored) “diligent search” requirement was satisfied before turning to a surplus lines carrier.

The primary flaw I see with the bond (and with the caveat that while I’ve worked around surety, I’m not a surety expert) is that for certain classes of bonds, the face value should not exceed 10% of the carrier’s surplus.

Knight Specialty’s surplus shown in the court filing is $138.4m.
Their parent’s surplus, as shown in the court filing, is $1.005b.

However, I still don’t know whether appeals bonds fall under that rule. I do, however, know that when I’m doing capital work, my company’s surety team is focused on the capital of the legal entity they’re writing under, NOT the group.

If Trump did post sufficiently liquid collateral, the risk is low. However, the operative words are “sufficiently liquid”; if the collateral is real estate and Trump’s valuations were relied upon…

I can’t comment about the language angle, aside from observing that the language of certain court filings is frequently weird. Presumably if it were too weird, the AG would object.

I don’t want to think about the political :poop:storm that will happen if the appeal fails because the bond is rejected. The cult and many politicians catering to the cult won’t appreciate the nuances of collateral valuation, credit risk, and capital requirements.

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Still digesting that, I’ve never worked anywhere near this sort of thing so it’s hard for me to take it all in. But I really appreciate your insights, thank you for taking the time to write that up.