1. GLOBAL DEMAND FOR CREDIT and how to address it using EXPORT CREDIT INSURANCE Presented 12 November 2014 by Mabel Luen Meridian Finance Group

2.  Global financial crisis not affecting every sector of economy  All countries linked but each region on its own path to recovery  Worldwide demand continues to engender international trade  U.S. is only 5% of world population and <25% of global GDP  20 free trade agreements with U.S.  Majority of exports from the U.S. is done through small to medium businesses Exporting in Economic Downturn

3. Export Payment Terms Seller Risk Buyer Risk Open Account Documentary Collection Letters of Credit Cash in Advance Letters of Credit Documentary Collection Open Account High Low

4. Exporters need to extend credit terms to expand international sales Customers refuse to pay cash in advance or open L/Cs Foreign buyers facing limited access to capital High foreign interest rates and exchange controls Competitive tactic vs other suppliers To develop and support distribution and fill supply chains To keep doors open in strategic markets Global Demand for Credit

5. But what happens if exporters don’t get paid? Foreign credit risks:  Debtor bankruptcy, receivership, or insolvency  Cash flow problems, balance sheet issues, financial fraud  General economic conditions (there or in USA)  Currency fluctuations, foreign exchange, transfer controls  Expropriation, war, strikes, sanctions, and other political risks Plus exporters may face working capital issues:  International sales require longer payment terms  Lenders may exclude foreign A/R from collateral Problem: International Credit Risks

6. Protect foreign receivables against virtually all default risks Extend competitive export payment terms with confidence Expand international sales and market share Increase international profitability Enhance borrowing capacity by including their foreign A/R Export Credit Insurance Solution: Export Credit Insurance

7. Export credit insurance enables lenders to:  Include foreign receivables in an exporter’s borrowing base  Offer more favorable financing terms to exporters  Take assignment of insurance proceeds as policy’s loss payee  Protect against borrower non-performance Export credit insurance enables exporters to:  Strengthen their balance sheets  Reduce their bad debt reserves  Facilitate securitization of foreign A/R Credit Insurance: Financing Tool

8. Federal Program: Ex-Im Bank Unique small-business policies 95% coverage Open in highest-risk markets Only available for products manufactured in USA Meridian Finance Group Specialized broker with 20 years of experience Most active Ex-Im Bank broker in the country Access to every insurance company in the market Private Sector: Insurance Companies No content restrictions Minimum annual premiums 90% coverage Less algorithmic, more flexible underwriting Export Credit Insurance Underwriters

9.  Types of Policies  Whole turnover, top buyers, reasonable spread of risk  Single buyer, adverse selection (cherry-picking)  Premium  Premium rates are a fraction of 1% of exporter’s invoice amounts  Pay-as-you-go with monthly reporting or paid annually in advance  Claim Filing  Immediately for some bankruptcy/insolvency or political risks  Flexible window of time for protracted defaults  Buyer Approvals  Named buyer credit limits from underwriter database  Decisions based on exporter, experience, transactions Export Credit Insurance Policies

10.  Insurance  Export credit insurance  Political risk insurance  Domestic Receivables Insurance  Policies for financial institutions  Trade Finance  Cross-border equipment financing  Revolving buyer credit facilities  Note purchase agreements  Custom financing structures Meridian Finance Group

11. Mabel Luen Regional Manager mluen@meridianfinance.com 1247 7 th Street, Suite 200 Santa Monica, CA 90401 Tel: 310 260 2130 Fax: 310 260 2140 www.meridianfinance.com San Francisco, Seattle, Phoenix, Raleigh, Miami, New York For More Inforamtion