Virginia Leaders in Export Trade (VALET)

1. Virginia Leaders in Export Trade (VALET) MARSH TRADE CREDITTom Corbett 28 October 2011

2. Introduction

3. The Marsh Global Trade Credit & Political Risk Practice Trade Credit Practice • 277 global specialists in 43 countries • Globally coordinated • Multinational service team crosses geographic boundaries • Significant investment in people and technology • 15 specialists in the US Political Risk & Structured Credit Practice • 27 global specialists in US, UK, Paris, Spain, Canada, Australia, China, India and Singapore • Wholesale single debtor team based in London access alternative markets • Expertise in contract risk cover, medium term vendor financing and direct investment risks which complements our trade credit team • Expertise in structuring equity policies which insure company’s assets (property and equipment) in emerging markets

4. Marsh Global Trade Credit Network Marsh Trade Credit Personnel Marsh Office Marsh Correspondent No Marsh Affiliation

5. Trade Credit Insurance

6. Key Benefits of Trade Credit Insurance • Risk Mitigation (Balance Sheet Protection): Insolvency and Protracted Default (late payment) protection for receivables • Increase Sales and expand competitiveness: Extend more credit to customers while reducing the risk of non-payment • Facilitate Financing (Increase Borrowing Power): Increase borrowing power and reduce financing costs by using the insured A/R as collateral, Increase availability of credit lines, and reduce interest rate. • Reduce Bad-debt Allowance: Reduce your allowance for bad debts reserve. • Improve Cash-flow: Receive payments for insured, undisputed, unpaid invoices

7. What Credit Insurance Isn’t SOLUTION SELECTION • It is not the solution when your customer is on the steps of the bankruptcy court • It is not the solution when your customer’s newest employee is the • “Chief Restructuring Officer” • It is not the solution when your customer’s phone is disconnected

8. Trade Credit Insurance You can make credit insurance sound very complicated, use specialized terminology and describe it in sophisticated financial terms but it is in fact a simple productCredit insurance can cover all your receivables, part of your receivables, key customers, separate business units, international, domestic or even single buyers

9. Credit Insurance Basics Three Critical Issues • Customer Credit Limits • Premium amount • Risk Retention

10. Customer Credit Limits First and foremost you need to have the credit insurer review your largest customers and determine whether the credit limits you need can be approved, without adequate coverage there is little to consider.

11. Premium amount If there is coverage available for your customers then the next question is at what cost? The policy premium either will or won’t make sense to your company based on your risk appetite and your profit margins.

12. Risk Retention • Deductible aka AFL (Aggregate First Loss) No losses are payable under the policy until the dollar amount of the deductible is met • Coinsurance Percentage participation in losses by the insured, usually 80%-95%, most commonly 90% Adjustments in Deductibles and Coinsurance will impact premium

13. Policy Variables Policy conditions to be considered: • Cancelable or non-cancelable limits • Insured percentage • Annual deductible • Non-qualifying loss amount • Individual buyer limits • Discretionary limit • Insurer’s maximum policy liability • Covered terms of sale

14. Closing No fees or costs of any kind to investigate and apply for trade credit insurance and you will receive the insurers credit assessment of your customers as well as they view/price the risk in your accounts receivable portfolio

15. Tom Corbett Vice President Marsh Trade Credit Practice 12 Fox Run Denville, NJ 07834 Office:973-394-0523 Mobile: 973-879-6614 Fax: 973-215-2594 Tom.f.corbett@marsh.com http://global.marsh.com/services/tradeCredit.php

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