Credit insurance, also called trade credit insurance or business credit insurance, is insurance for businesses for non-payment of commercial debt. It is generally offered by private insurance companies to businesses seeking insurance for non-payment due to a customer’s bankruptcy or other types of financial difficulties. It can be a critical information and hedging tool for businesses with income streams heavily dependent upon accounts receivable from customers with questionable credit worthiness or that may be facing an industry-based or regional-based financial downturn. The premium is generally based upon a financial review of the customers of the business. This webinar covers these and related topics. To listen to this webinar on-demand, go to: https://www.financialpoise.com/financial-poise-webinars/credit-insurance-101-2020/

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5. Disclaimer
The material in this webinar is for informational purposes only. It should not be considered
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6. Meet the Faculty
MODERATOR:
Chris Cahill - L&G Law Group LLP
PANELISTS:
Gary Mendell - Meridian Finance Group
John Gibbons - Blank Rome LLP
Joseph Panico - Flagstar Business Capital
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7. About This Webinar
Credit Issuance-101
Credit insurance, also called trade credit insurance or business credit insurance, is insurance
for businesses for non-payment of commercial debt. It is offered mainly by private insurance
companies to businesses seeking insurance for non-payment due to a customer’s bankruptcy
or other types of financial difficulties. It can be a critical information and hedging tool for
businesses with income streams heavily dependent upon accounts receivable from
customers with questionable credit worthiness or that may be facing an industry-based or
geographically-based financial downturn. The premium is based upon a financial review of the
customers of the business, but can take into account other factors. This webinar covers these
and related topics.
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8. About This Series
Cross-Training for Business Lawyers
Looking to strengthen and condition your cross-disciplinary skills? Develop your flexibility by
increasing your familiarity with issues affecting a vast array of businesses? This series delves
into cutting edge issues in dynamic fields to help the audience understand (i) the role of local
land-use and zoning laws in property use and development; (ii) the reliance on credit
insurance by businesses to protect against non-payment of commercial debt, (iii) the use,
types, and perceived benefits of employee stock ownership plans; and (iv) the complex maze
employers and employees must navigate in the quest for immigrant or non-immigrant visa
status for workers. These issues may present themselves in any number of contexts,
regardless of how you spend most of your working hours.
Each Financial Poise Webinar is delivered in Plain English, understandable to investors, business owners, and
executives without much background in these areas, yet is of primary value to attorneys, accountants, and other
seasoned professionals. Each episode brings you into engaging, sometimes humorous, conversations designed to
entertain as it teaches. Each episode in the series is designed to be viewed independently of the other episodes so that
participants will enhance their knowledge of this area whether they attend one, some, or all episodes.
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9. Episodes in this Series
#1: ESOPs-101
Premiere date: 4/2/20
#2: Immigration Law-101
Premiere date: 5/7/20
#3: Credit Insurance-101
Premiere date: 6/4/20
#4: Zoning & Land Use-101
Premiere date: 7/30/20
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10. Episode #3
Credit Insurance-101
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11. What is Credit Insurance?
• Insurance for businesses for non-payment of commercial debt
• Offered mainly by private insurance companies to businesses seeking insurance
for non-payment due to various reasons, including a customer’s bankruptcy or other
financial difficulties
• The premium is based upon a financial review of the customers of the business,
but can take into account other factors
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12. Why Your Customers Need More Credit Now
Demand for credit has been increasing for some time, but now your customers:
• Face limited access to working capital
• Have diminished financial flexibility
• Are getting paid slower by their customers
• Source goods through broken supply chains
• Operate remotely or with social distancing
• Contend with daily change and uncertainty
• Yet try to plan ahead for economic recovery

13. Why You Continue To Extend Credit
Same reasons as always, plus to help you:
• Book orders while opportunity still exists
• Outsell competitors who are still out there
• Produce or purchase more efficient quantities
• Strengthen your throughput and supply chains
• Get your distributors to take more inventory
• Stage your products nearer to local end users
• Maintain market share for coming recovery

14. But What Happens If You Don’t
Get Paid?
Nonpayment risks have always existed, but they’re becoming more acute now because of:
• Customer bankruptcies/insolvencies
• Liquidations, going out of business
• Cash flow or working capital issues
• Excess leverage, financial inflexibility
• Lockdowns and uncertain supply chains
• Pandemic masking underlying problems
• Economic conditions, supply/demand
• Government actions, political risks
• New country risks (for exporters)

15. And How Long Can You Wait
To Get Paid?
Payment terms are growing longer
• Economic impacts are extending trade cycles, driving demand for
60, 90, 120 days or more
Customers may be paying slower
• Depending on access to working capital, payment morality,
impacts of the pandemic
Receivables are more difficult to finance
• Banks/lenders face credit and regulatory challenges to
monetizing A/R with longer terms, slow pays, concentrations, and
generally during a downturn

16. How To Manage Evolving Demand For Trade Credit
• Carefully evaluate customers’ creditworthiness, then extend to them reasonable
credit terms
• Obtain trade credit insurance to protect your accounts receivable against
nonpayment risks
• If short on working capital, monetize your insured A/R with financing from a bank
or other asset-based lender

17. Customer Credit Evaluation
Sources of information for analyzing creditworthiness:
• Bank and trade references
• Your own ledger experience
• Financial statements / tax returns
• Credit bureau reports
• Industry creditor groups
• Online info, data, articles
• Virtual personal site visits, video dialogue with your customers, and their customers,
banks, et al

18. Trade Credit Insurance
Credit insurance protects accounts receivable against nonpayment risks
If a customer covered under your policy defaults and the debt can’t be collected, you can file
a claim and get indemnified
Trade credit insurance enables you to:
• Extend competitive payment terms
• Continue selling even in a downturn
• Increase the profitability of your sales
• Enhance your borrowing capacity

19. Credit Insurance Policies
• Types of Policies
Whole turnover, key buyers, spread of risk
Single/selected buyers (for strongest credits)
• Premium
Fraction of 1% of insured invoice amounts
Annually, quarterly, or monthly reporting
• Claim Filing
ASAP for bankruptcies, other insolvency events
Flexible window for protracted defaults
• Buyer Approvals
Named buyer underwriting by insurer or based on insured’s experience

20. Credit Insurance Underwriters
• Multiline Carriers
AIG, Chubb, Hartford, Allied, Zurich, et al
• Specialty Insurers
Great American, HCC, Liberty, Markel, et al
• Monoline Underwriters
Euler, Coface, Atradius, ReceivaSure, et al
• Government Agencies
EXIM Bank and other ECAs (for exporting)
• Lloyd’s Syndicates
Available in USA on surplus lines basis

21. Credit Insurance: Risk, Sales, And Financing
Tool
Risk Management Tool
• Protect your A/R against nonpayment
• Keep selling even during downturn
• Strengthen your balance sheet assets
Sales Tool
• Extend competitive payment terms
• Ship more, transfer inventory costs
• Maintain distributors, fill supply chains
Financing Tool
• Maximize your collateral/borrowing base
• Monetize your accounts receivable
• Negotiate favorable advance rates

22. Credit Insurance Industry Trends Early In
Downturn
• More U.S. companies obtaining coverage
• Greater demand amid spreading pandemic
• However, adoption level still below other countries
• Claim volume is level but surge is anticipated
• Underwriters are reaching out for payment data
• Policy terms are being liberalized for slow pays
• Buyer’s market has become seller’s market
• Insurers still underwriting but growing cautious
• Unknown how long policies will keep being issued
****If you’re thinking about it, apply now

23. Best Practices Now For Getting Policy Quotes
Equitable Spread of Risk
• Whole turnover or all largest buyers
• No cherry-picking or adverse selection (except for extremely creditworthy debtors)
Cogent Cover Memo
• Coronavirus impacts on company/sector
• Clear explanations for any past-due accounts
• Descriptions of favorable policies/procedures
Reasonable Expectations
• Overnight this has become a seller’s market
• Show willingness to share risk with insurer
• Be flexible regarding terms and conditions
• Any coverage is better than no coverage

24. What To Expect Now In Credit Insurance
Policy Quotations
Risk Sharing
• Deductible or annual first loss
• Indemnification percentages
• Excess vs bottom-up coverage
Premiums
• Rates still low vs. benefits
• Upfront deposit for policy year
• Some risks uninsurable at any price
Buyer Limits
• Non-cancelable limits still available for reasonably creditworthy buyers
• If cancelable limits are the only option, take whatever coverage you can get and use
insurer feedback to your benefit

25. Tips For Getting Buyer Limits Underwritten
Named Buyer Limits
• Credit info: financial statements, credit reports, trade references, industry info
• Write-up: credit memo, ledger experience, history, pandemic’s impact on buyer
• Transaction info: Insured’s need for product, one-off vs ongoing sales, payment leverage
Discretionary Credit Limits
• Powerful tool for experienced creditors
• Insure terms you extend are based on your own analysis or ledger history
• Worth the cost of (higher) deductible

26. Credit Insurance Indemnification
• Getting credit insurance claims paid is a function of compliance
• A credit insurance policy is no greater than the sum of its parts
• Read your policy and get answers for anything you don’t understand
• Do business in compliance with all policy terms and conditions
• Guiding principle: extend credit with as much care as if uninsured

27. Filing Credit Insurance Claims
Need to file within claim filing window:
• Waiting periods and deadlines are defined
• Insurers being flexible but you must comply
• Extensions can be requested in good time
Actions required following loss/claim:
• Insurer and/or insured control of collections
• Insured must cooperate, help minimize loss
• Approval for any acceleration/rescheduling
Claim filing documentation:
• Claim form and other insurer requirements
• Contracts, purchase orders, invoices, etc.
• Release/assignment of receivables (when claim is paid so insurer can pursue)

28. Cost Factors
• Deductible and coinsurance
• Insured’s sales volume
• Insured’s loss history
• Insured’s industry
• Insured’s credit practices
• Customers’ credit
• Customer’s locations, international customers
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29. Generally Non-Covered Events
• “Over-selling”
• Non-compliant reporting
• Customer disputes
 Necessity of obtaining judgment?
• Insolvency v. failure to pay issues
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30. Legal Issues
• Bankruptcy / insolvency proceedings of customers
• Subrogation
• Ability to negotiate policy terms on behalf of insured?
• Coverage litigation?
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31. Bankruptcy Issues
• “Preference payment” risk
 Preference risk may be excluded
 If covered, reporting requirements, litigation costs
• Coverage for non-bankruptcy insolvency proceedings (e.g., Assignment for Benefit of
Creditors)
• Preference risk issues? Changing terms with customer, e.g., C.O.D?
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32. Other Bankruptcy Issues
• Assignment of claim in bankruptcy case
• Reclamation claims
• Critical vendor status - earlier or greater distribution on account of claim
• Waiver of pre-petition claim in connection with negotiations regarding preference period
payments
• For all of these-
 Assignment issues?
 Consent of insurer issues
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33. Subrogation
• Insurer “steps into shoes” of insured to try to collect unpaid debt
 Issues regarding businesses customer contracts (anti-assignment, waiver of
subrogation clauses
 Customer relation issues
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34. About the Faculty
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35. About The Faculty
Chris Cahill - ccahill@lgcounsel.com
Mr. Cahill is Head of the Bankruptcy and Restructuring Practice Group at L&G Law Group
LLP, in Chicago, Illinois. He guides secured lenders, creditors, debtors, creditors’
committees, potential purchasers and others through bankruptcy cases, out-of-court
workouts, assignments for the benefit of creditors, and receiverships. Mr. Cahill has
substantial mega-case experience representing very large debtors, and counsels and litigates
on behalf of manufacturers and secured lenders in large and middle-market cases.
Mr. Cahill also publishes frequently and speaks regularly on commercial insolvency
issues. He is an executive editor of Commercial Bankruptcy Litigation, 2d Edition (Jonathan
P. Friedland, Elizabeth Vandesteeg & Christopher M. Cahill eds., 2020).
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36. About The Faculty
Gary Mendell - gmendell@meridianfinance.com
Gary Mendell is President of Meridian Finance Group, a company providing credit, insurance,
and trade finance tools that companies use to expand their U.S. and international sales.
A graduate of the University of Pennsylvania in 1976, Gary has over 40 years of experience in
domestic and international sales, distribution, credit, and finance.
Prior to Meridian Finance Group, he held positions managing U.S. and export business
development for companies in the pharmaceutical, aerospace, and plastics industries.
Gary has received the President’s “E” Award and currently serves on the federal
government’s Trade Finance Advisory Council
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37. About The Faculty
John Gibbons - JGibbons@blankrome.com
John Gibbons is a partner and Vice Chair of Blank Rome’s policyholder-only insurance
recovery practice. His national practice focuses on advising corporate policyholders about
their insurance policy rights and recovery insurance assets, either through negotiation or trial.
John maintains a particularly active trial practice that includes serving as trial counsel for
a Fortune 100 pharmaceutical company in a four-month trial, a Fortune 500 regulated utility in
two separate multiweek jury trials, and a large multinational engineering services corporation
in a multiweek jury trial involving more than $250 million of insurance. In the past decade,
John has, through negotiations, litigation, and trial verdicts, enforced clients’ rights to more
than one billion dollars’ worth of insurance. Recently, he has focused his attention on
emerging areas of interest for policyholders, including risks attendant to international business
operations, trade credit/credit risk insurance, assertions of various forms of liability for
business conduct, and product liability and environmental liability issues.
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38. About The Faculty
Joseph Panico - josephcpanico@gmail.com
Joe Panico is an asset based lending industry veteran. He has spent fifteen years helping
middle market businesses to expand, acquire, turnaround or improve their balance sheets by
creating liquidity through unlocking balance sheet assets. He has worked closely with
management teams to overcome unique and significant challenges in a wide array of
industries.
Most recently, Panico founded Flagstar Business Capital where he led the asset based
lending business. He has also spent time in various roles with CIBC, Woodforest National
Bank, and PNC.
Outside of work Joe is a committed husband and father to four young children. He is the Vice
President of the Ohio Chapter of the Secured Finance Network and on the Treasurer of Love
In The Name of Christ of Lorain County.
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39. Questions or Comments?
If you have any questions about this webinar that you did not get to ask during the live
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the name of the webinar in your email and we will do our best to provide a timely response.
IMPORTANT NOTE: The material in this presentation is for general educational purposes
only. It has been prepared primarily for attorneys and accountants for use in the pursuit of
their continuing legal education and continuing professional education.
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