Merchants Bonding Co. has a great location on Fleur Drive, but you can drive by the building without quite noticing it, tucked behind the levee as it is. Likewise, the company has an admirable niche in the insurance industry that doesn’t attract much attention from outsiders.

The numbers, however, stand out.

A $2.5 million expansion is nearly complete at the headquarters building at 2100 Fleur Dr. The additional 13,000 square feet will allow the company to bring in its accountants from off-site and provide space for future staff increases.

Founded in Des Moines in 1933 during the Great Depression, Merchants in 2004 ranked as the top writer of surety bonds in Iowa and No. 22 in the United States in terms of direct premiums written.

The company now provides bonds for more than 1,200 contractors in Iowa and more than 6,500 across the nation.

E. H. Warner and Merle Milligan started the company when Warner’s employer went broke. He was already here in Des Moines, he had some business contacts across Iowa and he knew the bond business, so he created Merchants Mutual Bonding Co.

The company has slightly altered its name since then and expanded its geographic range tremendously – Merchants now writes business in about 43 states, but expects to be registered in all 50 within a year – but one thing has never changed. Throughout its history, the company has been controlled exclusively by family members.

Other companies have inquired about buying in, but “we don’t see any benefit to selling,” said Larry Taylor, who became president in 1996. He succeeded the late William Warner, who had followed W.W. Warner, son of the founder.

W.W. Warner, 85, who served as president from 1962 to 1985, still spends time in the office and serves on the board. That board is composed of family members, but the members do bring a range of experience from outside Merchants. For example, William Taylor is an account manager for Cisco Systems Inc., Jeffrey Taylor is the director of marketing for Nortel Networks Corp. and Lloyd Taylor of Des Moines is a retired vice president of Cargill Inc.

“We would like to stay controlled by the family,” Larry Taylor said.

Merchants specializes in surety bonds, which are guarantees that the policy buyer will fulfill a commitment. Most often, the bonds are sold to building contractors, and the usual arrangement is a long-term agreement with a contractor, not a project-by-project approach.

Direct premiums written by the company exceeded $25 million for the first time in 1997 and topped $30 million in 2001. In 2004, the figure surpassed $37 million, and the loss ratio, a measure of financial success, was 11 percent, far lower than most of the other 50 largest writers of surety bonds.

“We’re proud of being 22nd on the list, but more proud of our loss ratio,” Taylor said.

Most of Merchants’ largest competitors are full-service insurers with a surety division. “We’re more similar to a commercial bank than to an insurance company,” Taylor said. “Our goal is to not have any losses.”