Florida lottery bonds are sold for an annual premium that is determined by multiplying two numbers: the required bond amount established by the obligee and the premium rate set by the surety. The underwriters are primarily concerned about the risk of the surety not being repaid for claims initially paid on the principal’s behalf. Their assessment of that risk relies heavily on the principal’s personal credit score.
A high credit score is regarded as a sign of a low risk level, which earns the principal a low premium rate, potentially even lower than 1%. A low credit score, on the other hand, suggests a higher risk to the surety, which warrants a higher premium rate.