The UK surety market was recovering well from several difficult years before the recent insolvency of Ardmore Construction Group, according to Gallagher Specialty's mid-year 2026 market update, with claims and losses having returned to levels sureties can reasonably expect.
That recovery now faces a real test: Ardmore's collapse could result in market-wide losses of up to £100 million.
Ardmore Construction Group entered administration on June 11, 2026, alongside related businesses including Ardmore Major Projects, Ardmore Regeneration, Ardmore Fitout and Landmark Facades. The group pointed to a £14.9 million Building Liability Order handed down by the Technology and Construction Court under the Building Safety Act 2022, which extended historic building safety defect liabilities from Ardmore's collapsed contracting arm to related companies within the wider group, in connection with fire safety defects at the Admiralty Quarter development in Portsmouth, completed in 2009.
The administration led to roughly 275 job losses.
The scale of the recovery now at risk is significant. Bond premiums in UK construction had risen sharply to more than £1 billion at their peak from around £200 million in 2022-23, driven by a wave of high insolvency in the sector, which saw roughly 4,370 companies collapse in the year to November 2023, the highest of any UK industry. Sureties had responded by tightening underwriting criteria and requesting stricter indemnities from contractors, making bonds harder and more expensive to obtain.
Niki Setchell (pictured), surety partner at Gallagher Specialty, said prior to Ardmore's collapse the market had been recovering well, with claims and losses returning to levels that do not exceed the probable maximum losses sureties might reasonably expect. She said the potential large market losses from Ardmore, of up to £100 million, may erode some of that confidence and slow the perceived recovery, with tightened criteria and indemnities likely to remain in place for the foreseeable future.
The Ardmore loss would follow a run of costly recent contractor failures that have already strained the market. Surety providers are understood to have recovered nothing from the collapses of Buckingham Group, ISG, Readie and Henry Construction, with Henry Projects' collapse alone estimated to have cost the market around £160 million, larger than Ardmore's anticipated hit but still a significant addition to a market already absorbing hundreds of millions in losses over recent years.
Despite the pressure, new entrants have continued joining the market, helping support capacity. Rokstone, Advent and Intact have all recently entered UK surety, with Rokstone in particular building out a dedicated surety division backed by A- rated capacity under head of surety Darren Guymer, alongside its existing surety and credit treaty offering.
That expansion follows the withdrawal of established players including QBE and First Underwriting from the market in 2024, which had reduced available capacity and pushed contractors toward more restrictive terms even before Ardmore's collapse.
Gallagher Specialty said client order books remain strong, with more bonds being requested than in previous years, and that the Ardmore insolvency is not symptomatic of a wider market downturn. Contractors in a stronger negotiating position are being advised to seek a 5% bond rather than the standard 10% where possible, a step that can help manage the capacity strain sureties are under.
Looking ahead, the update flags the government's Small Business Protections (Late Payments) Bill, introduced to the House of Lords in May 2026, which proposes an outright ban on cash retentions in construction contracts.
Retentions, typically 3% to 5% of contract value withheld from interim payments, have long exposed subcontractors to losses when money is retained upstream through an insolvency, with parliamentary estimates putting between £3 billion and £6 billion tied up in the system in England alone at any given time. The bill would also introduce a 60-day cap on payment terms and impose penalties of 50% of the retention debt on businesses that continue to withhold funds unlawfully.
Gallagher Specialty said that should these proposals progress, surety bonds could play an increasingly important role as an alternative form of security in place of cash retentions, with market participants actively assessing the practical implications.
The Ardmore case illustrates how building safety liability, rather than simple project overrun or cash-flow failure, is becoming a distinct and significant driver of surety losses in its own right, since the Building Liability Order mechanism at the heart of Ardmore's collapse specifically allows historic defect liabilities to reach beyond an original contracting entity into a wider corporate group years after a project completed.
For brokers advising contractors, that combination, a market still absorbing a run of large losses, new capacity entering to offset it, and a potential structural shift in how retentions work, makes early and thorough engagement with sureties more important than ever, precisely the point Gallagher Specialty's update itself makes in recommending clients submit information as early as possible ahead of contract start dates.
