Leadership, Knowledge, Solutions…Worldwide. Credit insurance A guide for your supply chain Ian Watts Date

Marsh—Leadership, Knowledge, Solutions…Worldwide. 1 Issues related to credit in the supply chain Supplier credit  Be transparent – why and how  Cash flow prioritise suppliers  Understand which suppliers credit insure and rules attached to the policy  Negotiate on payment terms  Be wary of small print in contract related to payment terms  Make friends with the credit insurers  Assess the strength of your receivables Supplier credit worthiness  Who are your suppliers’ suppliers  What is their financial performance like - sustainability  Do they have sufficient credit lines  Have you got contingencies in place  Where payments are in advance who controls the cash

Marsh—Leadership, Knowledge, Solutions…Worldwide. 2 Atradius / Coface / Euler Hermes Net Loss Ratio Evolution Source – Moody’s

Marsh—Leadership, Knowledge, Solutions…Worldwide. 3 Average market price (1997 – 2009) Expressed as a percentage of turnover Average premium rates fell by 32.3% between 1997 and 2009 but increased by 16.8% between 2008 and 2009 Source – Association of British Insurers

Marsh—Leadership, Knowledge, Solutions…Worldwide. 4 Outlook  Competition for business is increasing  Rates are under pressure  Cover and capacity is increasing  New entrants into the credit insurance market  Improved risk management around credit  Clients more willing to share financial data  Levels of sector based underwriting constraints are reducing.

Leadership, Knowledge, Solutions…Worldwide. This PowerPoint™ presentation is based on sources we believe reliable and should be understood to be general risk management and insurance information only. Registered in England Number: , Registered Office: 1 Tower Place West, Tower Place, London EC3R 5BU In the United Kingdom, Marsh Ltd is authorised and regulated by the Financial Services Authority for insurance mediation activities only. © Copyright 2010 Marsh Ltd. All rights reserved