Construction industry leaders and business development experts came together on Jan. 10, 2019, to present a special forum and outlook session for business owners in the construction and real estate arena. This slideshow presentation, presented by Rea & Associates and Overmyer Hall Associates is geared toward helping business owners and industry leaders gain valuable insight into the industry for the year ahead. Doug Houser, director of construction and real estate services with Rea & Associates, presented "Using Your Advisory Relationships To add Value & De-Risk; A Future Outlook. He was followed by Joseph Urquhart, vice president, and Jack Kehl, surety manager, of Overmyer Hall Associates, who presented "2019 Insurance, Risk Management, and Surety Outlook. To learn more about this presentation, or to inquire about upcoming presentations, contact us at https://www.reacpa.com/contact-us.

2. Using your Advisory
Relationships to Add Value
& De-Risk; Future Outlook
Doug Houser
director of construction & real estate services

3. Relationships
Industry expertise
Decision making
 Where; how many layers
Technology
 Bank: treasury management & cyber-risk
 CPA: accounting services & software
Ability to grow
Regulatory
 Bank: pressures - loan review & segment ‘buckets’
 CPA: guidance regarding new accounting & tax standards

4. Mitigating Risk & Creating Value
Bank Financing Structure
 Line of credit – demand, commitment, borrowing base (eligible
collateral definition & advance rates)
 Guaranty – limited, continuing, secured, spouse or primary
residence exclusion
 Collateral – cross-collateralization; outside ventures co-mingled
 Covenant definitions – debt service coverage, fixed charge
coverage, net worth (tangible), working capital, leverage, etc.
 Hidden risks – asset sale/purchase limits, change in control vs.
change in ownership, material adverse change clause, cross-
default, swap agreements, change in law/statute
 Outlook – rate environment, industry exits, flavor of the month

5. Mitigating Risk & Creating Value
CPA: Not just a provider of financials & tax returns
 Benchmarking & Beyond – baselining, industry metrics/analytics
 Bank relationship guidance – independent evaluation
 Succession/exit planning – company, personal/family, community
• 5 year plan: de-risk, harvest value
• Tax strategy/planning – integrate with long-term goals
 Valuation, Quality of Earnings – what is your business truly worth
 HR Consulting – assistance with hiring/screening, benefits
 Accounting Services – bookkeeping, payroll/taxes
 Outlook – SALT liability, technology, asset concentration

6. Forecast: be prepared for rising interest rates in 2019 (definitely) & a
slowdown in 2020 (likely)

7. Forecast: be prepared for rising interest rates in 2019 (definitely) & a
slowdown in 2020 (likely)

8. Forecast: be prepared for rising interest rates in 2019 (definitely) & a
slowdown in 2020 (likely)

9. Interest Rate Forecast: Short term rates up 0.50% in ‘19

10. Inflation Forecast: 3-4% in ‘19

11. Best Practice:
Communicate and coordinate your
CPA, surety, insurance, bank, and
legal relationship!

12. Questions/Comments
Contact info – 614.314.5937
doug.houser@reacpa.com

13. 2019 Insurance, Risk Management,
and Surety Outlook
Presented by
Joseph Urquhart, Vice President
Jack Kehl, Surety Manager
Overmyer Hall Associates
January 10, 2019

14. Agenda
 2018 Review
 2019 Rate Outlook
 2019 Risk Management Issues
 2019 Surety Outlook

15. Review
 Great Year in Central Ohio Construction
 Labor Market Shortage
 Construction Defect Claims
 Frequency and Severity
 Builders Risk
 Rates and Coverage
 Auto Rates
 ONU vs Charles Construction Supreme Court
Decision
 Faulty Workmanship Not Covered?
 Increase in Wrap-Up Programs

16. 2019 Rate Outlook
 Property – Flat to +5%
 Contractors Equipment – Flat
 General Liability – Flat to +5%
 Auto - +5% to +20%
 Heavy Fleets, Trucks, Losses
 Builders Risk – Flat
 Builders Risk – Frame
 Rates are up/Controls
 Umbrella/Excess – Flat
 Professional – Flat to -5%
 Revenues are up

17. 2019 Risk Management Issues
 ONU vs Charles Construction Supreme Court
Decision – what does it mean?
 Contractual Risk Transfer – Owner, GC
 Auto – Fleet Safety
 Cyber Crime – Risk Assessment and Training
 Medical Marijuana
 Employment Practices Liability – #MeToo
 Wrap-ups/OCIP/CCIP

18. 2019 Surety Outlook

19. 2019 Surety Outlook

20. 2019 Surety Outlook

21. 2019 Surety Outlook

22. 2019 Surety Outlook

23. 2019 Surety Outlook

24. More Questions?
Joseph Urquhart, Vice President Jack Kehl, Surety Manager
Overmyer Hall Associates Overmyer Hall Associates
jurquhart@oh-ins.com jkehl@oh-ins.com
614.453.4410 614.453.4407