Frequently Asked Questions

How can I get a letter of interest (LOI)?

Before financiers and investors will consider providing any funds for your film or television series, you are often asked to submit a letter from the bond company to demonstrate its willingness to consider bonding your project. To receive a letter of interest from us, please complete the Picture Information and send it to us via email with a request for a letter of interest. Provided your film or television series meets our current underwriting prerequisites, we will usually send our letter of interest to you within one or two days following your request.

What is a completion bond?

A completion bond is an agreement under which the financiers and investors of a film or television series are guaranteed that the film or television series will be completed on schedule and budget, and properly and timely delivered to various distributors. Often a distributor will condition the payment of its license fee payment upon the proper and timely delivery of the film or television series. To ensure your film or television series will be properly and timely delivered, financiers and investors usually require the producer to obtain a completion bond for their behalf as a condition of funding. Provided the strike price has been made available to produce a film or television series, the financiers and investors will be reimbursed the production costs they have advanced if the film or television series is not completed and timely and properly delivered to distributors. However, if the film or television series is completed and delivered as promised, a completion bond does not provide any guaranty that a distributor will pay its license fee or that proceeds from the distribution of the film or television series will be sufficient to provide an adequate return on investment to financiers or investors.

Why do I need a completion bond?

As a producer of a film or television series, you are often required to obtain a completion bond for the benefit of the financiers and investors of your film or television series as a pre-condition to funding. Some financiers and investors will not require completion bonds for small budget projects. However, for any film or television series with a budget of $2 million or more, a completion bond is highly recommended and often mandated by financiers and investors. A completion bond will protect the financial interests of your financiers and investors in the event your film or television series is not completed on time and budget, or is not timely and properly delivered to distributors. In that case, subject to the terms of a completion bond, your financiers and investors will be repaid the production costs they advanced provided they made the strike price available to you to produce your film or television series.

How can I get a completion bond?

Our Production and Business Affairs departments must carefully review and evaluate all significant factors to determine if your film or television series presents an acceptable risk. We do not have any formal application or submission process. How We Work describes the steps to getting a completion bond. During this process, we may ask you to provide Picture Information, Production Information, Legal Information, Basic Insurance Coverages, and other information or documents for our review and approval.

Before we issue a completion bond, we must evaluate and accept the production risks associated with your film or television series. In making this evaluation, we will review your production elements and usually request meetings with your production team members to solicit their ideas and opinions on the budget, schedule, and any unusual or challenging conditions.

After we accept the risks and underwrite your project, our in-house Business Affairs staff will promptly prepare the Completion Guaranty, the Completion Agreement, and related documents for your or your legal counsel’s review and comment. Under the terms of the Completion Agreement, you will (1) undertake to produce, complete, and deliver your film or television series as therein contemplated; (2) permit us to monitor and take control of the management of the film or television series for so long as we believe it is necessary to ensure the film or television series is produced, completed and delivered properly and on time and budget; and (3) grant the completion guarantor a charge or a security interest over your rights and interests in your film or television series.

If there are any inconsistencies between your rights and undertakings, our rights and undertakings, or those of your financiers, investors, or distributors, then the affected parties will enter into an interparty agreement to resolve such differences. The inter-party agreement is customarily prepared by your lead financier’s or investor’s legal counsel.

What documents and reports are needed?

First, after you provide us with your Picture Information and so long as your film or television series meets our then-current underwriting prerequisites, we will ask you to submit Proof of Funds (POF). Proof of funds (POF) typically takes the form of a summary describing each financier and investor that has committed to advance production funds, the amount of and, if applicable, any pre-conditions (e.g., script or cast approval, completing pre-sales) to its funding commitment, together with a fully signed copy of a term-sheet, commitment letter or funding agreement. We do not require all production funds to be on deposit. We simply want to see proof you have secured the funding commitments needed to fully cover the budgeted production costs of your film or television series.

Once we have accepted your POF, our Production Department will request copies of the approved screenplay or teleplay(s), budget, cash flow schedule, shooting schedule, post-production calendar, and locations (shooting and post-production) for your film or television series.

Next, you will furnish the Production Information to our Production Department and the Legal Information to our Business Affairs Department for our review and approval.

If we approve your submission for underwriting, our Business Affairs department will prepare and negotiate the Completion Guaranty, the Completion Agreement, and related documents including the Director’s Undertaking, Completion Guarantor’s Power of Attorney, Producer’s Power of Attorney, and Copyright Mortgage and Assignment. You will also need to furnish (or have your insurance broker-agent furnish) proof you have obtained the Basic Insurance Coverages. The legal counsel representing your financiers and investors will typically prepare their respective Funding Agreements and collateral assignments. The legal counsel representing your principal financier or investor will typically prepare related documents including the Interparty Agreements, Intercreditor Agreements, Notices of Assignment, Letters of Credit, Laboratory Control Agreements, and Deposit Account Control Agreements. If a collection account will be opened, then the legal counsel for the collection agency will usually prepare the Collection Account Management Agreement.

Throughout photography and post-production, you will need to regularly provide us with copies of daily call sheets, daily wrap reports, daily production reports, cost reports (weekly during principal photography and monthly during post-production), and notices of availability or delivery to distributors until your film or television series has been completed and fully delivered. Other reports or notices may be required upon request.

Do I need an insurance broker?

You will need to engage an insurance broker or agent to assist you in obtaining the Basic Insurance Coverages for your film or television series, which is a prerequisite to our issuing a completion bond. We work closely together with many insurance broker-agents in that role. We greatly appreciate their assistance and the risk management advice and support they provide to our customers. If needed, we can recommend and refer you to many experienced and reputable insurance broker-agents.

We may have to use the services of a local broker-agent and/or local insurance carrier to qualify all or part of the completion bond premium for certain governmental rebates, credits, or subsidies. Additional fees and taxes may apply in such circumstances.

Except as indicated above, we do not use insurance brokers or agents to market or sell our completion bond to you. To achieve the most efficient, expedient, and economical bonding procedures, we believe we must develop close working relationships with our customers and promote direct and forthright communication. This allows us to offer 24/7, worldwide support to you and your production team without delay. Adding intermediaries to the line of communication can often cause information dilution and other inefficiencies that would increase the cost for our product and service and diminish our ability to serve and support you.

 

Do I need a lawyer?

Financiers and investors will typically engage internal or external legal counsel to represent their interests. Once we underwrite your project, you will need to enter into a Completion Agreement and related documents, which our in-house Business Affairs staff will prepare for your or your legal counsel to review and comment on. These agreements and documents will affect your legal rights and interests. We do not provide legal advice to our customers as we are neither licensed nor qualified to do so. We highly recommend you seek the advice of legal counsel of your choosing to become fully apprised of the legal implications agreements and documents you will need to enter in connection with bonding your film or television series.

What is the Strike Price?

The strike price is an amount specified in a completion bond that represents the total costs that you and UniFi determine are needed to produce, complete, and deliver your film or television series as contemplated. The strike price includes (1) the budgeted above-the-line and below-the-line production costs including union fringes, guild residual reserves if applicable, and insurance costs, (2) an appropriate contingency allowance that you and UniFi agree upon, and (3) the fee or premium payable to UniFi. Under the terms of the Completion Guaranty, the Completion Guarantor has no liability if your financiers and investors fail to make the full amount of the strike price available to you according to a pre-approved cash flow schedule.

What should I budget for the contingency?

The contingency is a part of your budget to cover cost overruns from unlikely or unintended events. It is not meant to cover production costs that are known, anticipated, or reasonably foreseeable. Historically, the standard contingency has been 10% of all other budgeted costs of production excluding the bond fee and financing costs to the extent included in the budget. However, we recognize that sometimes a different contingency allowance may be appropriate. Once our Production staff has had the opportunity to review your production elements and meet with your production team, we will be in a much better position to find the right level of contingency needed for your budget. Producers or others often pledge a portion of their fees to make up the difference if the amount of the contingency allowance included in the budget is less than what UniFi needs.

What should I budget for the bond fee?

Many of our customers choose to enter into an exclusive, long-term, or multi-project arrangement with us. Although we still must evaluate and underwrite every production individually, we generally offer those customers our best rate (i.e., a percentage of each budget) that applies to all of their covered projects. Otherwise, our fee is determined on a project-by-project basis depending on several factors including the budget size, the sufficiency and comprehensiveness of the budget, shooting schedule, and post-calendar, the quantity and conditions of the shooting and post-production locations, the experience and expertise of the production team, the quantity and complexity of action and visual effects, and other associated production risks. In either case, we will do our best to provide unparalleled service and support at an extremely competitive rate. Our fee is usually paid to us on the first drawdown of your production financing. Please contact us for a personalized quote.

Will the bond fee qualify for any production tax credits or rebates?

Production tax credit or rebate programs usually exclude financing costs, insurance premiums, and bond fees from qualification. However, a few such programs allow bond fees to qualify for tax credits or rebates subject to meeting certain conditions, which often require the issuance of a completion bond through a local insurance broker and/or insurance company. We will do our best to assist you in meeting the qualification conditions if your production will shoot or post in any state or country that will allow all or any portion of the completion bond fees to qualify under its production tax credit or rebate program. Additional fees and taxes may apply.

Will UniFi escrow production funds?

We are often able to accommodate a customer’s request for us to hold in trust some or all of the funds being advanced by financiers and investors. Our Business Affairs staff has the expertise and experience to assist you, your financiers, and investors in preparing escrow-type arrangements. Unless instructed otherwise, the funds we hold in trust cannot be withdrawn and made available to cover any costs of production until a completion bond is fully executed. Once a completion bond is in effect, the funds we hold in trust may be disbursed according to the escrow instructions. Except for passing through any fees and expenses we incur, we usually provide this service free of charge and keep any accrued interest to help defray our costs.

Do I need to protect against currency risk?

We highly recommend you do it if your production costs will be spent in multiple currencies. Budgeted costs may be significantly impacted by the fluctuation of currency rates during production. A completion bond does not protect against any losses that result from variations in currency exchange. The risk or currency exchange loss can often be reduced through simple hedging, which limits the impact of foreign exchange movement. If your financiers and investors do not offer foreign exchange hedging services, we can recommend risk and asset management advisors with expertise and experience in executing currency transactions and managing your foreign exchange exposure.

Does UniFi offer a single policy that bundles production insurance coverages and the completion bond?

No.

It is not the industry standard to offer these coverages together in one stand-alone policy. We believe any advantages a “bundled policy” may have are far outweighed by the disadvantages. The terms and conditions of the bundled policy and how the insurance and bond coverages interact, including how and for what purposes the contingency could be used, can be confusing and ambiguous, and leave coverage gaps. Furthermore, you will likely need to bind your film insurance package and other insurance coverages well before a completion bond is ready to be issued. The risks covered by your film insurance policy and those covered by your completion bond are different. We firmly believe each set of risks should be evaluated and underwritten at different times by different teams who have specialized expertise, knowledge, and experience.

We are big proponents of giving consumers the right and freedom to choose to engage the insurance broker or agent, insurance company, and bond company that is capable of giving them the best product, service, and support at competitive rates. That choice may be compromised if customers are required to use the same insurance company to meet both its insurance policy and completion bond requirements. However, we encourage your insurance broker or agent to get a quote from Intact Insurance Entertainment for your insurance needs.

What are the bond company’s rights and obligations?

A completion guarantor is responsible to pay your financiers and investors the sum of the funds they have advanced if your film or television series is not completed and timely and properly delivered to various distributors. The completion guarantor will have the right to monitor and oversee the progress of production and take necessary steps to ensure you keep to schedule and budget, and timely and properly complete and deliver your film or television series as promised.

During production and post-production, you will be responsible for regularly furnishing us call sheets, wrap reports, production reports, and cost reports. If you are having difficulty keeping your production on schedule and budget, we will provide guidance and support to help put it back on track. In most cases, we try meeting with you and the production team to have an open exchange of ideas leading to shared, practical solutions. We always strive to act timely, sensibly, and collaboratively if, in the rare instance, we feel that we need to take over management of the production.

If we advance completion sums (i.e., funds needed to cover cost overruns and covered losses) then we will have the right to recover such funds from the proceeds coming from the sales and distribution of your film or television series. Our recoupment position usually comes before any proceeds are distributed to profit participants but only after your financiers and investors have fully recovered the production funds they advanced.

Is UniFi licensed?

Yes.

UniFi is a California licensed property/casualty broker-agent (License#: 0I48780).

Unifi is a general managing underwriter of completion bonds for Intact Financial Corporation (Intact) and Intact Insurance Group USA, LLC (Intact Specialty), and our completion bonds are issued through their subsidiary insurance companies.

Atlantic Specialty Insurance Company is an admitted carrier authorized to write surety coverage in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, and provides our completion bonds to customers based in the United States. Intact Insurance Company is an admitted carrier authorized to write surety coverage throughout Canada and provides our completion bonds to customers based in Canada. Our completion bonds may be issued through other insurance carriers to customers based outside North America.

An admitted carrier is one that is licensed by a particular state to do business as an insurance company and which must conform to state laws and regulations including charging only rates that have been approved by the Department of Insurance. The fundamental reason for government licensing regulation of insurance is to protect consumers and ensure that promises made by insurers are kept. Licensing provides crucial safeguards for consumers both in terms of financial and policy regulation. An added benefit of working with an admitted carrier is that the state has the responsibility to pay an admitted insurer’s claims, up to state-specified limits, in the event of the insurance company’s insolvency.

Licensed insurers are subject to periodic financial examinations. Examiners investigate a licensed insurer’s accounting methods, procedures, and financial statement presentation. These exams verify and validate what is presented in the insurer’s annual statement to ascertain whether the company is in good economic standing and has the financial ability to pay policyholders’ claims. Moreover, licensed insurers are subject to state laws and regulations establishing how and when policy claims must be investigated, adjusted.

The regulation of insurance companies also provides an outlet for consumers to seek redress if a licensed insurer makes promises it does not keep. States have established special consumer units to receive and handle any complaints and work with policyholders and insurance companies to resolve any disputes.

Not all competing completion bond companies are licensed insurers. Unlicensed completion bond companies may not be subject to the same laws and regulations. You, your financiers, and investors may lose significant rights and protections under insurance laws and regulations by choosing to accept a completion bond from a non-licensed bond company.

We provide extreme legal and financial protection to our customers by issuing our completion bonds directly by and in the name of an admitted, subsidiary insurance company of Intact or Intact Specialty.

Do I need a cut-through endorsement letter?

No.

Financiers and investors need proof that a completion guarantor has the financial resources to satisfy any potential covered losses. A bond company that is not a licensed insurance company or which lacks financial strength must secure reinsurance. Under a reinsurance policy, a financially strong, licensed reinsurance carrier (the reinsurer) agrees to accept all or a portion of the risk covered by the completion bonds issued by the completion guarantor. Few completion bonds are issued directly from a reinsurer and many are issued by unlicensed or non-admitted companies.

A cut-through endorsement letter also referred to as a loss payee endorsement or an assumption agreement, is a confirmation that any part of a loss covered by reinsurance will be paid directly to the bondholder by the reinsurer if the completion guarantor fails or is unable to pay all or any portion of a covered loss. The cut-through endorsement is so named because it provides that the reinsurance claim payment “cuts-through” the usual route of payment from the completion guarantor-to-bondholder and then reinsurer-to-completion guarantor, substituting instead the payment route of reinsurer-to-bondholder.

There may be disadvantages if your completion bond is issued by an unlicensed or unadmitted bond company.

Firstly, financiers and investors are not placed in direct contractual privity with a financially strong insurance company. Speak with your legal counsel about the benefits of having a direct relationship with a financially strong insurer.

Secondly, in such instances, the completion guarantor’s risk is usually backed by multiple reinsurers. Each reinsurer typically takes responsibility to pay only a certain proportion of any loss and no reinsurer usually accepts the risk of nonpayment by any other reinsurer.

Thirdly, a licensed insurer must comply with various state laws and regulations that govern its activities and are established to protect policyholders. An unlicensed or non-admitted completion bond company may not have to follow, and the terms and conditions of the completion bonds it issues may not be subject to, those laws and regulations.

You, your financiers, and investors may lose the rights and protections provided by those laws and regulations if you choose to accept a completion bond from an unlicensed or non-admitted bond company.

Unifi is a general managing underwriter of completion bonds for Intact Financial Corporation (Intact) and Intact Insurance Group USA, LLC (Intact Specialty), and our completion bonds are issued through their subsidiary insurance companies.

Atlantic Specialty Insurance Company is an admitted carrier authorized to write surety coverage in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, and provides our completion bonds to customers based in the United States. Intact Insurance Company is an admitted carrier authorized to write surety coverage throughout Canada and provides our completion bonds to customers based in Canada. Our completion bonds may be issued through other insurance carriers to customers based outside North America.

Intact and Intact Specialty’s insurance company subsidiaries consistently receive an A+ (superior) financial rating within the XV ($2 Billion or greater) size category from A.M. Best. Your financiers and investors are placed in direct contractual privity with an Intact or Intact Specialty subsidiary insurance company that takes full responsibility to adjust all claims and pay 100% of covered losses. Accordingly, your financiers and investors, (1) should only need to confirm Intact’s excellent financial strength rating and avoid the need to pore over the financial strength ratings of numerous insurance and reinsurance companies, and (2) will not have to separately resolve and enforce claims through multiple actions, in various jurisdictions, against multiple reinsurers, which is often a prerequisite to any loss recoveries when dealing with other bond companies.

UniFi’s re/insurance structure, which differs from that of competing completion bond companies, is designed to provide direct and uncomplicated legal and financial security and protection to producers, financiers, and investors.

Your financiers and investors should not need a cut-through endorsement letter because our completion bonds are issued directly by an Intact or Intact Specialty subsidiary insurance company with superior financial strength and ratings that takes full responsibility for paying 100% of covered losses.

Does UniFi offer products and services other than completion bonds?

Yes. Even when you may not need the full protection of a completion bond, we can still support your production in many ways. Check out Beyond Bonds to learn about innovative alternative products we have introduced. We support filmmakers at all levels of experience and productions in development, production, or post-production. We take pride in our ability to provide personalized and customizable services to fit the particular production, filmmakers, and investors.

Please do not hesitate to contact us to find out how we can tailor our advisory and consultation services to fit your unique needs.

What if I have another question?

We want to hear from you. If you have any questions, please don’t hesitate to contact us.