Germany: Export Credit Insurance

2. Germany: Export Credit Insurance Marc CAMBOURAKIS

3. Agenda • • Credit Insurance in General • • What is an Export Credit Guarantee (ECG) ? • Why ECG support by the German Government ? • Main characteristics of the ECG programs • • ECG for Argentina • A public and private partnership: Euler Hermes

4. Credit insurance in General • Trade Credit Insurance is purchased by corporations to insure their accounts receivables against losses that are caused by insolvency or “slow pay” of the debtors. • » Private : domestic, export • » National: Export Credit Guarantee Scheme by the Federal Republic of Germany

5. What is the purpose of an Export Credit Guarantee (ECG) ? • » Protecting enterprises from the bad debt risks involved in export transactions • Insurance (pure cover) • by the Federal Republic of Germany • arising from an export transaction (or its financing) • by an exporter resident in Germany • against political and economic risks • for a fee commensurate to the risk and with a percentage-based uninsured portion

6. What risks are typically covered by of an Export Credit Guarantee (ECG) ? » Commercial risks are non-payment of the buyer, various forms of insolvency such as bankruptcy, schemes of arrangement »Political risks like war or hostilities, payment moratorium, non-conversion or non-transfer of funds

7. Why ECG support by the German Government? • Promotion of German export as key objective of the Government’s economic policy • Securing jobs in Germany • Consolidation of existing trade relations • Opening of new business especially in emerging markets • Support for our partners abroad also in difficult phases of development and restructuring • Key to financing facilities • Technology and know-how transfer (economic development)

8. Support for German export • 80 years of experience in export credit cover • 2005 results • - 20 bn € newly covered business - 2,5% of German export Hermes covered - 76% of cover applications by SME - 200,000 jobs secured by Hermes Guarantees

9. Criteria for the granting of ECG • Eligibility for cover • Justifiable risk • Contract terms • Budgetary constraints

10. German overall export to Argentina and ECG

11. mandate ECG – a public private partnership • Federal Republic of Germany • entrusts consortium with management of ECG • takes basic and important decisions • bears budgetary responsibility • Consortium of EH and PwC • management of the ECG • acts on behalf of and for the accountof the Government • remuneration by the Government

12. “Chinese wall” within Euler Hermes • Operating the business under one roof “Euler Hermes” … but • Strict differentiation between state and “own account” business • Data collection, accounting, business processes, legal issues etc. separated • No need for reinsurance capacity »Best Export Credit Agency 2005

13. Euler Hermes – Shareholding

14. Euler Hermes – Key figures • 2,008 millioneuros consolidated turnover • 55,000 clientsworldwide • Almost 700 billion €of business transactions protected worldwide • 40 millioncompanies monitored in the risk databases • 20,000credit limit requests per day • In average,83% of requestsare processed in48h or less • Presence in45 countries • 5,400staff members • AA- financial ratingby Standard + Poor’s

15. Thank You!