When former President Donald Trump told a New York court Monday that posting a $464 million bond was a “practical impossibility” he was relying on the advice of Avon insurance broker Gary Giulietti, president of the Lockton Companies, the world’s largest privately held insurance brokerage.
An affidavit by Giulietti recounting his ultimately unsuccessful effort to satisfy the bond by “scouring the market” and spending “countless hours” in talks with one of the world’s biggest insurance companies is at the center of Trump’s latest legal attempt to have the appeal bond lifted.
“Based on my more than 50 years in the insurance industry as well as my actual experience over the past several weeks during which I have been in contact with some of the largest insurance carriers in the world in an effort to try and obtain a bond for defendants, it is my opinion that obtaining an appeal bond for $464 billion is not possible under the circumstances presented,” Giulietti wrote in the affidavit.
For a variety of reasons, including internal policies, he said major global bond underwriters such as XL, The Hartford and Travelers won’t accept real estate as collateral. Many will only issue a single bond up to $100 million.
For those and other reasons, Giulietti said Trump could be required to produce $1 billion to collateralize the bond and associated costs while maintaining sufficient cash on hand to run his business.
“While it is my understanding that the Trump organization is in a strong liquidity position, it does not have $1 billion in cash or cash equivalents,” Giulietti said.
Giullietti could not be reached at his Avon office and did not respond to an email invitation to discuss the Trump case.
The affidavit is one of the grounds on which Trump’s lawyers are trying to persuade a state appeals court to waive the bond while he challenges the civil fraud judgment on which it is based. If Trump loses and can’t post a bond, New York Attorney General Letitia James, who sued him and won the judgment, has said she will attempt to seize his assets.
Giulietti is Lockton president and former vice-chairman of Willis, another major international broker, where he was responsible for the company’s real estate and construction portfolio. Over his career, he said, has “worked closely with virtually every major insurance company on almost every type of insurance product.”
He said his clients have included Fortune 1000 companies, as well as some of the largest private equity funds and real estate developers in the world. He said the Big Dig in Boston and the Port Authority in New York are among the projects for which he has arranged surety.
Giulietti said a $464 million bond is so large it “is rarely, if ever, seen.” If an unusual circumstance arose to issue a bond of that scale, he said it would involve the largest public companies in the world and not individual or privately held businesses like Trump’s.
“In the surety world, a bond of $100 million is considered large; an appeal bond of $464 million is commercially unattainable for a privately owned company,” Giulietti said. “Such would be the case even for a company with billions of dollars in real estate unless they have cash or cash equivalents approaching $1 billion so as to collateralize the bond and have sufficient capital to run the business and satisfy its other obligations.”
“While it is my understanding that the Trump organization is in a strong liquidity position, it does not have $1 billion in cash or cash equivalents,” Giulietti said.
