2015 New Business Presentation

Presented by:
Janelle Foy – Senior Agent
(404) 642-9553
janelle.foy@eulerhermes.com
Accounts Receivable
Management Solutions from
Euler Hermes

Euler Hermes
Trade Credit Insurance Program
AGENDA:
1. Your Business
2. Who Is Euler Hermes?
3. Why Credit Insurance?
4. Credit Insurance Overview
5. Credit Insurance Value
Proposition
6. Case Studies

3Date | © Copyright Euler Hermes Presentation title
Euler Hermes North America Insurance Company | 400 Perimeter Center Terrace, Suite 150 Atlanta, GA 30346
CONFIDENTIAL
A Few Things I Would Like to
Know about You…
 Tell me about your business
- Projected Sales
- Margins
- Bad Debt Write Off / Allowance for Bad Debt
- Normal Terms / Number of Active Customers
 Plans for growth
- One year / Five years
- How will you achieve that growth (organic/new business)
 Explain your credit process
- Size of Department
- New Client Approval process
- Turnaround time
 Concentration Accounts?
 Financing?
 Credit Pains?

Who is Euler Hermes?

CONFIDENTIAL
Who Is Euler Hermes?
 Largest Credit Insurance provider in the world, oldest in North America.
- 120 years of experience
- 34% Worldwide Market Share
- >6,000 Employees – International network of Analysts, Underwriters and Risk Associates
- 57,000 Policyholders worldwide
- Subsidiary of Allianz Group
 Global Presence
- 6 Continents
- 50 Countries
- Serving over 200 Markets
 Account Monitoring
- 40,000,000 companies monitored in our risk database
- 25,000 credit limits processed daily
- 200,000 debt collections handled in 130 countries
 Rated Standard & Poor AA-, AM Best A+ (superior)
 Explicit “Limits-Underwriter” Mono-Line Carrier

CONFIDENTIAL
Euler Hermes
2014 Financial Highlights
2014 Financial Results
2014 Revenue $2,713,000,000
Claims Paid 115,000
$1,510,000,000
Loss Ratio 48.8%
Client Retention 90%
Total Global Exposure $1,000,000,000,000
*Results converted from Euro to Dollars

CONFIDENTIAL
Our Global Network
Presence in over 50 countries across five continents
Argentina Germany Morocco Slovakia
Australia Greece Netherlands South Africa
Austria Hungary New Zealand South Korea
Bahrain India Norway Spain
Belgium Indonesia Oman Sweden
Brazil Ireland Philippines Switzerland
Canada Israel Poland Taiwan
China Italy Portugal Thailand
Chile Japan Qatar Tunisia
Colombia Kuwait Romania Turkey
Czech Republic Luxembourg Russia UAE
Denmark Malaysia Saudi Arabia United Kingdom
Finland Mexico Singapore United States
France Vietnam
Your trade receivables management partner, where ever you do
business.

Why Credit Insurance?
What do you really know about your clients?

CONFIDENTIAL
Accounts Receivable:
The Only Major Asset Left Uninsured
What assets are insurable?
What assets are insured?
• There is a greater chance that a business will
experience a loss within their accounts receivable
than any other asset.
Where does the A/R fall on a client’s
Balance Sheet?
• Typically represents 40% to 70% of a company’s
assets
• Most vulnerable to unexpected losses
• Highly likely to be affected by business cycles
• Provides cash flow for the business
• Only under-leveraged asset
• Few companies can effectively compete without
extending credit to their buyers
What amount of loss would seriously
impact a company’s financial stability or annual profit?
How many accounts have credit extended over that limit?

Bankruptcy Data
“My customers aren’t in trouble ”
 Bankruptcies are inevitable …regardless of
business size
 Failures come from increasingly unpredictable
sources
 Large bankruptcies can cause a “domino
effect” with suppliers

CONFIDENTIAL
Surprise Bankruptcies
“I’ve worked with my customer’s for years”
K-Mart
Date: January 2002 Assets: $17 Billion
EH Exposure: >$90MM Co Age: 40 years
Target Canada (subsidiary of Target Corp.)
Date: January 2015 Corp. sales: $73 Billion
EH Exposure: >$35MM Canada Losses: $5 Billion
Once the largest retailer in the US, Kmart failed to invest in their stores and upgrade their supply chain
management. An aggressive pricing strategy to compete against the now largest retailer, Walmart, created a
liquity crisis. Kmart was the largest retail bankruptcy at the time.
Within two years of entering the Canadian market, Target Corp. decide to exit Canada by allowing the subsidiary
to file bankruptcy. With no indication of an exit, the company was ordering goods and paying suppliers until the
day of filing.
AFA Foods Inc.
Date: April 2012 Revenue: $958 Million
Total Employees: 850 Co Age: over 80 years
In March ‘12, ABC News reported on “Pink Slime”, a FDA approved beef additive used in 70% of US ground beef.
This caused a public outcry making restaurants and grocery stores to pull the product from the shelves. Overall
lack of demand for beef forced the largest beef producer into bankruptcy within 30 days. Another large
processor is currently suing ABC for defamatory statements.
OW Bunker
Date: November 2014 Revenue: $17 Billion
EH Exposure: >$40MM Co Age: 35 years
In March 2014, the third largest company in Denmark filed for IPO with a $1B evaluation. Eight months later
they filed bankruptcy, citing employee fraud and bad risk management.

CONFIDENTIAL
Top 10 largest U.S. Bankruptcies
“ I only work with large companies ”
Rank Company Dated
Filed
Total Assets Reason
1 Lehman Brothers Holdings 9/15/2008 $691 Billion Credit Crisis, not bailed out by Federal
Government
2 Washington Mutual (WaMu) 9/26/2008 $327.9 Billion “Domino Effect” of Lehman Brothers, client
panic
3 WorldCom 7/21/2002 $103.9 Billion Considered the largest case of corporate fraud
in US History
4 General Motors 6/1/2009 $91 Billion Once the largest company in the US
5 CIT 11/1/2009 $71Billion Concentrated in high risk industry and risky
expansion
6 Enron 12/02/2001 $65.5 Billion Internal fraudulent accounting
7 Conseco 12/17/2002 $61 Billion Aggressive acquisition
8 MF Global 10/31/2011 $41 Million Victim of the European Debt Crisis
9 Chrysler 4/30/2009 $39 Billion Ordered into bankruptcy by the Federal
Government
10 Thornburg Mortgage 5/01/2009 $36.5 Billion Jumbo Loan Provider - Housing Crash and
Credit Crunch
Seven of the ten largest bankruptcies in our country’s history occurred since 2008.

CONFIDENTIAL
Effect of a Bad Debt Loss
The table shows the amount of sales required to recover from a
bad debt loss.
A $50,000 loss @ 8% profit margin requires you to generate an
additional $625,000 to just to BREAK EVEN.
BAD DEBT AMOUNT
Profit
Margin
$10,00
0
$50,000 $100,00
0
$250,00
0
$1,000,0
00
2% $500,000 $2,500,000 $5,000,000 $12,500,00
0
$50,000,00
0
4% $250,000 $1,250,000 $2,500,000 $6,250,000 $25,000,00
0
6% $166,667 $833,333 $1,666,667 $4,166,667 $16,666,66
7
8% $125,000 $625,000 $1,250,000 $3,125,000 $12,500,00
0
10% $100,000 $500,000 $1,000,000 $2,500,000 $10,000,00
0

How Do You Protect Yourself?

CONFIDENTIAL
Trade Credit Insurance
Protection against unexpected bad debt loss on domestic and
foreign receivables due to insolvency, slow pay or political risk.
 Insolvency - Ch. 7, 11, 13, bulk sale, receivership, general meeting of creditors,
etc.
• Claims are filed within 10 days of receiving notice of insolvency from customer
• Claims are paid within 30 days of the release of the ‘Schedule F’ of the bankruptcy
 Protracted Default – i.e. Slow Pay
• Slow pay claims must be filed within 90 days from the due date or 180 days from the
ship date, whichever is longer.
• We act as collection company with a guarantee....if we don’t collect, we pay.
• If we collect, than a collection fee is assessed, deductible or coinsurance do not apply.
 Political Risk
• For countries outside of United States, Canada and Puerto Rico
• Coverage for non-payment due to currency issues, political unrest, expropriation, etc.

CONFIDENTIAL
Trade Credit Insurance - Export
Export Credit Insurance can provide your organization with increased sales,
cost savings and protection from unexpected losses
Eliminates… Need for Letters of Credit
• Significant savings over Letters of Credit
• Covers shipments for the year
• Open terms allows your buyer 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 competition may be the difference
Political Risk… Export protection against:
• Inability to obtain hard currency
• Changes in Import/Export regulations
• Contract frustrations due to Act of War
• Foreign government non-payment
LETTERS OF CREDIT VS. INSURED
TERMS
Annual Export Sales $10,000,000
Gross Profit 10%
Annual Gross Profit $1,000,000
LOC Cost (1 – 3%) $200,000
Adjusted Gross Profit $800,000
Policy Cost $25,000
Increased Gross Profit $175,000

Credit Insurance
Value Proposition

CONFIDENTIAL
Why Trade Credit Insurance?
Key Drivers for purchasing Trade Credit Insurance:
Catastrophic Risk Protection:
•Prevents disruption to cash flow and protects one
of the company’s largest assets
•Cap exposure to bad debt loss
•Reduction of risk to key account’s concentration
levels
Sales Expansion
•Expand sales into riskier or new markets
•Enhance a customer relationship by offering
more favorable terms without additional risk
•Grow with existing accounts, offer open terms to
new accounts
Credit Function
•Provides a structure and discipline for credit
decision making
•FAST fact-based credit decisions of customers,
prospects, industries and countries.
•Consistent monitoring of credit risk allowing for
up-to-date credit management decisions.
Export Sales Protection:
•Offer for open terms for entire year and
eliminate the need for letters of credit.
•Political risk protection (currency, import/export
changes, foreign government.
•Borrow against you export AR with your bank
line of credit.
Bank Financing
•Enhance lending relationship
•Eliminate concern on high concentration with
key accounts.
•More capital at reduced rates, taking full
advantage of A/R
Reduction of Bad Debt Reserves
•Frees up working capital
•Converts non-taxable deductible provisions into
fully tax deductible insurance premium.

CONFIDENTIAL
Credit Management
 Indemnifies policyholder against unforeseen bad debt losses due to
commercial and/or political risks.
 Integrates into your current credit practice, utilizing the power of a
worldwide network of risk underwriters.
 Part of Sound Risk Management Strategy
Manage Expected Risk
“GOOD DECISIONS”
Information
Your Credit Expertise
Manage Unexpected Risk
“PROTECTION”
Insurance
Self-Insurance

CONFIDENTIAL
Customize Policy
 Structure
- Coverage – entire portfolio or logical segmentation
- Named Accounts
- EZ Cover
- Discretionary Credit Limit (DCL)
 Premium – 1 years
- Industry, Buyers, Annual Sales
- Rate is quoted as percentage of Annual Sales
 Risk Sharing
- Coinsurance – 90% Idemnity
- Aggregate first loss (deductible)
- Non-Qualifying loss
 Past Due Reporting
- 60 days past due – over $10,000
 EOLIS On-Line Database
- Proprietary financial information on 48+ million companies
- Turnaround times:
− 1 day domestic (95%)
− 4-7 days export (95%)
 Policy is Dynamic – make it work for you!

Case Studies

CONFIDENTIAL
Sales Expansion – Policy pays for itself!
(increase existing credit limit)
Operating Facts
Company: $40 Million in Sales
Average A/R: $6 Million
Gross Margin: 10%
Account Turns Per Year: 8
Objective
Company has a few large/new accounts that offer additional selling
opportunities but reached their “comfort” exposure level. Interested in a credit
risk protection program that would allow to safely increase sales.
$500,000
$750,000
$250,000
10.00%
8
$2,000,000
$200,000
Gross Profit
A/R Turns
Increased Revenue
Increased Gross Profit
"Comfort" Exposure
Approved Coverage
Additional Sales Opportunity
One Account Can Make A Difference

CONFIDENTIAL
Financing Export Growth
The benefit of credit insurance isn’t
measured solely against the claims
we pay, it’s measured in the goals
we help our clients achieve.
Euler Hermes helps you make the right decisions based on the best available
information. We help stimulate safe sales expansion, strengthen the balance
sheet, protect & grow profits.
$10,000,000
10.00%
$1,000,000
$200,000
$800,000
$40,000
$960,000
Export Sales & Letter Of Credit
Annual Export Sales
Gross Profit
Annual Gross Profit
LOC Cost (1-3%)
Adjusted Gross Profit
Policy Cost
Readjusted Gross Profit
Monthly
A/R
Advance
Rate
W/O Credit
Insurance
Advance
Rate
With Credit
Insurance
Domestic $6,000,0
00
80% $4,800,000 85% $5,100,000
Foreign $2,400,0
00
0% $0 85% $2,040,000
$4,800,000 $7,140,000
Additional Working Capital $2,340,000/m
o

CONFIDENTIAL
Service Company First,
Insurance Company Second
 Protects against large credit losses.
 Provides increasing borrowing and purchasing power.
 Reduce your bad debt reserve.
 Credit Management Tool – Provides key account monitoring, and
back-up support and assistance to your existing credit function.
 Allows for safe sales expansion into new and existing markets.
 Accommodates profitable cooperation between your sales and credit
functions.
 Provides effective collection and account resolution assistance.
 EOLIS
 Industry leading web based policy management tool
 45 million companies monitored and risk graded
 17,000 coverage limit requests processed each day

CONFIDENTIAL
We thank you for the opportunity to present
our company and our services.
We look forward to becoming a trusted and
important resource to your company.

2015 New Business Presentation

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