Credit Insurance Overview

1. Credit Insurance Overview Prepared by: Gary Tripp 212-502-0512 Gary.Tripp@eulerhermes.com www.eulerhermes.com

2. Euler Hermes ACI • 50,000 Policyholders worldwide - • Over 119 years of experience. • Headquartered in Baltimore, MD, Ultimate parent is Allianz Group • Staff of 6000 worldwide; 300 in U.S. with local offices across US, Mexico and Canada • Rated Standard & Poor AA-, AM Best A+(Superior) • Guarantee over $600 Billion in sales annually and providing coverage in over 200 countries. • Offices in 49 countries • EOLIS On-Line Database • 40 million companies in our database • 2000 debtors processed on-line each day • 12,000 credit limit requests per day • Turnaround times: • 1 day domestic (95%) • 4-7 days export (95%) • 5 to 10 claims per Policyholder per year • Explicit “Limits-Underwriter” Mono-Line Carrier

3. Business Credit Insurance Indemnifies Policy Holder against losses due to commercial and/or political risks. Provides coverage against nonpayment, slow payment or insolvencies. • Reduce…Risk • Prevents Catastrophic Losses to one of the company’s largest, unprotected assets • Credit Risk Evaluation & Reduction of Key Account concentration levels • Provides a Credit Management Tool • Caps Exposure to Bad Debt Loss • Key Account Monitoring and back-up support and assistance to your existing credit function • Decrease Bad Debt Write-Offs • Expand…Safe Sales Expansion • Growth of Existing Accounts • New Market Penetration • Export Sales • Improve…Utilization of A/R as an Asset • Through Financing… more capital at reduced rates taking full advantage of A/R • High Concentration with Key Accounts • ‘Cross-Aging Language’ on A/R • Borrowing against Export Receivables • Reduction in Bad Debt Reserves • Frees up Working Capital • Converts non-taxable deductible provisions into a fully tax deductible insurance premium

4. Why Credit Insurance? • What assets are insurable and insured? • Odds as to where your client will experience a loss is with the A/R. • Where does their A/R fall on their Balance Sheet? • Typically represents 40% of a company’s assets • Most Vulnerable to unexpected losses • More likely affected by business cycles • Provides cash flow for the business • Only asset “under-leveraged” • What amount of loss would seriously impact the company’s financial stability or annual profit? How many accounts have credit extended over that amount?

5. Bankruptcy Data ??? • Bankruptcies are inevitable…and can happen to big and small name companies alike. • Failures come from increasingly unpredictable sources. • Large bankruptcies can cause a “domino effect” with suppliers. • Public Company Bankruptcy Statistics: • 1st Qtr 2007 = 16 companies w/ assets of $1,079,774,604 • 1st Qtr 2008 = 30 companies w/ assets of $11,638,611,188 • 1st Qtr 2009 = 64 companies w/ assets of $100,967,544,123

6. Sales Expansion Operating Facts Typical Company with $25 Million in Sales, Average A/R $3.1 Million, Gross Margin: 10%, Account Turns Per Year: 8 Objective Company has a few large/new accounts that offer additional selling opportunities but had reached their “comfort” exposure level.Interested in a credit risk protection program that would allow to safely increase sales. Profit/Payout (on just ONE approved account) “Comfort” Exposure $ 250,000 Approved Coverage $ 500,000 Sales Opportunity $ 250,000 By Account Turns 8 Incremental Annual Revenue $2,000,000 By Gross margin percent 10% Increased Gross Profit $ 200,000 Appendix

7. Increase Borrowing Power Additional Capital Total annual sales $25,000,000 Average accounts receivable (6 turns) $4,200,000 Existing bank arrangements: Advance Rate 75% with credit insurance 85% Maximum borrowing $3,150,000 with credit insurance $3,570,000 Increased borrowing with credit insurance $420,000 Reduction in interest costs paid Maximum borrowing $4,200,000 Bank borrowing rate 5.25% with credit insurance 5.00% Current interest costs $220,500 with credit insurance $210,000 Reduced interest cost with credit insurance $10,500 Appendix

8. Effect of Bad Debt Loss Appendix

9. Export Coverage Export Credit Insurance can provide your client with increased sales, cost savings and protection from unexpected losses • Eliminates…Need for Letters of Credit • Credit Insurance reduces the charge compared to LC • Covers shipments for the year • Open terms allows your clients customer to keep their working capital line of credit available for other uses • Borrow…Export Receivables are no longer non-performing assets, but may become recognized collateral that can open up opportunities for better financing • Competitive Edge …Offering open terms compared to your client’s competition may be the difference • Political Risk… Export protection against • Inability to obtain hard currency • Changes in Import/Export regulations • Contract frustration due to Act of War • Foreign government non-payment

10. Managing for Foreign Risk • Argentine Economic Crisis • Venezuela’s strikes and failed coup • Guerilla War in Columbia • Fighting in the Middle East; Afghanistan • Economic Slowdown in European Union • Russian Economic Crisis – Corruption • Protracted Recession in Japan

11. Portfolio Coverage Full A/R coverage Establish Premium Rate Policy Type & Term Buyers and Industry Risk Term quoted on % of sales basis Structure Key Accounts Arrange Discretionary Credit Limit Risk Sharing Minimum Claim Amount Per Policy Deductible Coinsurance Sharing Aggregate Loss Limit-DCL Policy Payout Insolvency Slow Pay Key Account Coverage (Logical & consistent segmentation -top tier, export only, 2nd tier, etc.) Establish Premium Rate Policy Type & Term Buyers and Industry Risk Term quoted on % of sales basis Structure Key Accounts Explicitly Underwritten Risk Sharing Minimum Claim Amount Per Policy Deductible Coinsurance Sharing Policy Payout Insolvency Slow Pay Euler Hermes ACI Policy Structuring

12. Euler Hermes ACI Benefits Summary Service CompanyFirst, Insurance CompanySecond • Protectsagainst large credit losses. • Provides increasing borrowing and purchasing power. • Reduces bad debt reserve. Place an effective cap on a clients exposure to credit losses, improving budgeting for allowance for credit losses and enhancing the company balance sheet. • Credit Management Tool – Provides key account monitoring, and back-up support and assistance to your clients existing credit function. • Allows for safe sales expansion into new and existing markets. • Accommodates profitable cooperation between your clients sales and credit functions. • Provides effective collection and account resolution assistance. • Allows your client to convert non-tax deductible provisions for bad debt reserve losses into fully tax deductible credit insurance premiums.