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A History of Serving Canadians Since 1872
Document Contents
- Guarantee Bonding Comes to North America
- Building on Early Success
- Developing a Continental Presence
- A New Century of Growth and Development
- A Growing Force in Constuction Surety Bonding
- The Millennium Plaque
When The Guarantee Company of North America was founded in 1872, the directors of the Company believed that the best way to build a successful business was through product specialization and financial strength. Today, the Company still conducts its business based on those original principles.
The Guarantee was the first company to offer fidelity bonds in North America. It has developed and grown over time to become the largest contract surety and fidelity bonding company in Canada. The Guarantee Company's continued growth and trusted reputation are a testimony to the vision of its founders.
The Guarantee Company, however, is about more than just corporate success. The Company's founders believed that The Guarantee, "would become a valuable
institution to the country". In its early years the Company provided essential fidelity bonds for the employees of railways and banks, and later on it would
do the same for other private businesses and governments. Together these enterprises constituted the economic foundation from which Canada developed as a nation,
eventually reaching from the Atlantic to the Pacific. Today, The Guarantee Company continues to make a valuable contribution to the nation's growth, just as it did
137 years ago.
The Company is proud of its legacy as the pioneer underwriter of fidelity and surety bonding in North America. Its financial strength and stability, which have been the cornerstones of its success in the past, are in large measure the reason that The Guarantee Company of North America remains confident of its continued growth and success in the years ahead.
Guarantee Bonding Comes to North America
In 1862, when the Grand Trunk Railroad of Eastern Canada began, its directors realized the need for protection from the possible dishonesty of the railway's money-handling employees. At that time, however, no company existed in Canada to provide such coverage. Personal fidelity bonds, when required as a condition of employment, could only be obtained by individuals from their relatives or friends. While this system worked to a limited degree, it left the bondsman vulnerable and with limited resources in the case of defalcation.
Sir Alexander Galt, a director of the Grand Trunk, traveled to London, England in search of an insurance company that might be interested in establishing a fidelity bonding operation in Canada. He convinced the European Life and Guarantee Company that there was a promising opportunity to expand its business in North America. In 1863 they dispatched a twenty-four year old manager by the name of Edward Rawlings to establish a branch office in Montreal.
The branch office prospered from the start, but The European Life and Guarantee Company in London suffered losses in their other lines and shortly thereafter went out of business. Rawlings was left with a successful operation in Canada and a growing list of clients, but he lacked the financial backing of a company. He quickly arranged to set up a Guarantee branch for the Citizens Insurance Company of Canada enabling him to continue providing fidelity insurance for his clients.
After a few years the agreement with that company proved to be unsatisfactory and in 1872 Edward Rawlings, together with his client and friend Sir Alexander Galt, made plans to jointly establish their own company which would specialize in fidelity bonding.
They discovered that in 1851, an Act of the Legislative Council of the Province of Canada had incorporated a bonding company under the name of The Canada Guarantee Company. The two men acquired the charter and on April 9, 1872, at the first meeting of the shareholders, a board of directors was elected including Sir Alexander Galt as president and Edward Rawlings as manager. The Company began with $100,000 of authorized capital of which $15,525 was paid in and it immediately commenced operations from offices at 237 St. James Street. Montreal.
The new company was an immediate success as the business of Guarantee bonding was quickly gaining acceptance in North America. Sir Alexander Galt and Edward Rawlings had predicted as much at the first annual meeting of the Company, held in October 1873, at their new offices at 40 St. John Street, Montreal -
...the Company is destined to become both a valuable institution to the country and a profitable enterprise to its proprietors, and they fully expect that an early day will see the system of giving Guarantee bonds instead of private suretyships become universally adopted.
In its first year the Company issued 559 policies and reported a surplus of $5,539.
Beyond the benefits to companies who used their services, the founders realized the wider implications of Guarantee bonding on the country's work-force. Under the private suretyship system, the growing numbers of people moving from rural areas to the cities looking for work would have found it difficult to find employment due to their lack of an established reputation, or their knowing people of means who would be willing to bond them. However, The Guarantee Company changed all that. Since the Company would issue a bond on behalf of anyone who met its requirements, it meant these new arrivals had a better chance to secure a trusted position at a bank, railway or commercial enterprise where many jobs were to be found.
Building on Early Success
Edward Rawlings' stewardship of The Guarantee Company during its early years was instrumental in building the Company's reputation and good name, as well as its financial position.
He had drawn up strict guidelines by which the Company would determine an individual's eligibility for fidelity bonding. This included background checks on everything from a person's character to their known habits and acquaintances. If they didn't meet the standards that The Guarantee Company deemed acceptable, they would not be bonded. It was this high level of scrutiny that the founders believed was the key to reducing risk, not only for the Company, but also for their clients. As a result of these demanding standards, The Guarantee was quickly becoming one of the most highly regarded bonding institutions in North America.
In 1879 alone, the Company received nearly 13,000 applications from businesses in Canada and the United States to bond their employees. The Guarantee always undertook to investigate applicants at its own expense, and sometimes went to great lengths to dissuade a client from hiring an undesirable candidate. As Edward Rawlings wrote in 1880 explaining this practice to the Company's stockholders -
The Company, in fact, had sometimes to incur considerable outlay in order to justify them in not transacting business that was offered, this, of course, told materially on the item of 'working expenses,' but the expenditure in the first instance had often proved but a tithe of what might have had to be paid out ultimately, under a different heading, had the business been undertaken.
It became commonly accepted that a bond from The Guarantee Company was a sign of good character.
The Guarantee Company's abilities were so well regarded that their employee screening procedures and loss prevention techniques were adopted as the standard in the field of banking across North America and widely copied by competitors. The Guarantee had the distinction of becoming the first company in Canada whose bonds were accepted by the federal government when, until that time, it had refused to accept any Guarantee bonds at all.
As the good name of the Company grew by the reputation of its standards, Edward Rawlings aggressively expanded the Company's business connections. Throughout the early years of The Guarantee, he traveled extensively throughout Canada and the United States to promote the Company's bonding products and to set up agencies in major cities. Often the directors of these institutions and railways would also become shareholders of The Guarantee Company.
In response to its growing business across the continent, the Company's directors applied to the Canadian Parliament for a name change, "one more in accordance with the proposed extension of its operations", and on February 17, 1881, the Company became known as The Guarantee Company of North America.
After two earlier re-locations to larger premises at 103 St. Francois-Xavier Street and 157 St. James Street, the Company moved uptown in 1881 out of the heart of Montreal's financial district to the YMCA building on Dominion Square. Several years later it purchased and moved to the former Montreal Metropolitan Club building on Beaver Hall Hill.
Developing a Continental Presence
By the late 1880's The Guarantee Company was the largest fidelity Guarantee company in the USA. It had over 300 clients including railroads, banks, express and telegraph companies, and directorates in all the major American cities including New York, Chicago and Boston and as far away as Denver.
In 1890 the Company incorporated a subsidiary under the name of The United States Guarantee Company in response to its growing volume of business from that country. The Company enjoyed immediate success and boasted a distinguished board of directors which included George H. Pullman, J.P. Morgan and Asa Potter.
The Guarantee Company's dual incorporation put it in a unique position to pursue those defaulters who fled either country under the cover of vague laws, and the absence of an extradition treaty between Canada and the USA. Private detectives, like those from Pinkerton's National Detective Agency, would be hired to pursue and apprehend those dishonest employees that had caused the Company to pay bonded losses.
The 1888 annual report describes a particular loss involving one Mr. Pitcher who stole securities from an American bank whose employees were bonded by The Guarantee Company. He had transferred the certificates to England, and then fled over the border into Canada. Through its agents, The Guarantee was able to trace Mr. Pitcher, arrest him, turn him over for prosecution, and recover the stolen securities.
In 1894 Edward Rawlings was appointed president of the Company following the death of the founding president Sir Alexander Galt.
A New Century of Growth and Development
In the early 1900's as the country was experiencing an economic boom, the Company was prospering despite finding itself embattled by what Edward Rawlings described as "suicidal competition", particularly in the United States. In 1909 the Company recorded an accumulated surplus of over one million dollars.
During this time the Company was planning the construction of its new office building on land adjacent to its Beaver Hall Hill office. The new structure would be Montreal's first skyscraper and would cost over $200,000. The building was completed in 1913 and was an impressive ten story structure. It was lavishly furnished in oak and marble with fire places in the executive offices and cuspidors beside the elevator cages. Edward Rawlings did not live to see the completion of the new offices. He died on December 11, 1911, at the age of seventy-two and was succeeded as president by Hartland S. MacDougall.
Since its inception, The Guarantee Company prided itself in being a company that only issued fidelity bonds. However in 1915, for the first time it began writing a small volume of surety Guarantee bonds. While Canadian troops were fighting overseas in Europe, the Company acknowledged repeated calls for its services by writing certain supply contract Guarantees for companies furnishing munitions and commissariat supplies.
In 1917 Edward Rawlings' son, Henry C. Rawlings, became the Company's president and general manager. In the following year legislative requirements dictated the sale of the Company's interest in The United States Guarantee Company. Subsequently The Guarantee Company of North America would conduct its business in the USA exclusively through local agencies.
Throughout the inter-war years of the 1920's and 1930's, the Company's business continued to expand. By the end of its fiftieth year of operations, The Guarantee was writing nearly half-a-million dollars in premiums per year, and recorded a total surplus of nearly two million dollars. In that year alone the Company received over 19,500 applications for individual bonding coverage.
In 1928 a more practical "blanket" fidelity bond was beginning to be offered by the Company to cover certain of its client's employees. However, it wasn't until the late 1940's that The Guarantee began to write comprehensive blanket bonds and Bankers and Brokers blanket bonds.
A Growing Force in Construction Surety Bonding
H. Millar Rawlings was elected president of the Company after the death of his father Henry C. Rawlings in 1949. During Henry's tenure as president, despite the Great Depression and two world wars, the Company's surplus had increased from $1.5 million to over $3.5 million.
The Guarantee Company became increasingly involved in construction surety underwriting as Canada's economy expanded during the post-war period. It participated in the bonding of the construction of the country's first subway system in Toronto, and in various stages of the construction of the Trans-Canada Highway system.
By the end of the 1950's, construction surety had grown to become the Company's most important line of business.
In 1955 the Company extended its business in Canada as it developed its personal lines and other fire and casualty business through a growing agency network in the provinces of Ontario and Quebec.
The Company's fortunes declined in the late 1950's owing to a series of unsuccessful reinsurance treaties and underwriting losses. Daniel Doheny was appointed president in 1960 and was followed by C.E. Pacaud in 1962 and G.W. Millar in 1965.
In 1967 the Company sold its aging Beaver Hall Hill office building which it had occupied for over fifty years, and the business relocated to modern offices in the Place du Canada complex near Dominion Square. By this time controlling ownership of the Company had passed to Frank Cowan and his associates.
George A. Savage was appointed president and chief executive officer in 1971. During this time the Company began to re-focus its activities on underwriting surety and fidelity bonds and general insurance lines. The decade of the 1970's ushered in renewed vitality for the Company, marked by improved underwriting profits and growth in capital through accumulated retained earnings.
In the years that followed, the Company built upon this success under Gordon Horne, who was appointed president and chief executive officer in 1983. Directors and Officers Liability insurance was added as a new line of business in 1986.
At the beginning of the 1990's, The Guarantee Company strengthened its position as the leading surety bonding underwriter in Canada by acquiring the business of two of its competitors. At this time Jean La Couture was president and chief executive officer. In 1991 the personal lines product was expanded through the introduction of Guarantee Gold®.
The Guarantee Company of North America under Jules Quenneville, president and chief executive officer since 1994, remains the foremost surety and fidelity bonding company in Canada. The Company continues to grow and now operates from offices in Montreal, Toronto, Halifax, Quebec, Woodstock, Edmonton and Vancouver.
The Company's steady growth, conservative underwriting, and financial stability have earned it the trust of its clients and the support of the international reinsurance community. It is this support and recognition that allows the Company to continue to provide coverage for some of the largest clients and projects in Canada, and to be a leader and a major underwriter of its selected products. In the future, The Guarantee Company of North America will remain a steadfast partner in the growth of Canada while serving the interests of its shareholders and clients as it has done so proudly for the last 137 years.
The Millennium Plaque
Plaque Scene (left to right)
The GCNA former head office building Beaver Hall Hill, Montreal; Confederation Bridge linking PEI and New Brunswick; Canada Place, Vancouver; The Rocky Mountains; Grant McEwan College, Edmonton; GCNA Building, Woodstock; Skydome and CN Tower, Toronto; Place Ville-Marie, Château Champlain and Place du Canada, Montreal; Le Château Frontenac, Quebec City; The Citadel, Halifax.
The Guarantee Company of North America created this original, hand-made plaque to celebrate the new millennium and to recognize our valued associations with brokers and clients.
The double serigraph image, on beveled and polished plate glass, represents the cities and regions across Canada from which the Company serves its customers. The design expresses the Company's dynamic development from its early years in Montreal as Canada's pioneer underwriter of guarantee bonds in North America. The rising perspective culminates in the modern graphic depiction of the company name and logo etched on a traditional banner.
The colour of Gold represents the high standard of specialized insurance products and our people, and reflects the Company's established values of conservative underwriting and financial strength. The plate glass is mounted on 400 million year old ordovician slate, quarried by hand in Hants County, Nova Scotia and finished to enhance the golden highlights of the stone found in that region. Natural slate is created slowly under the earth's heat and pressure, and once formed, has a remarkable ability to maintain its resilience and texture. It is a material with durable and dependable characteristics... traits that we value at The Guarantee Company of North America.
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