Is Account Receivables Your Largest Asset? Unleash the Hidden Values A/R Insurance Can Deliver to Your Company. Presented by Glenn Robins

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1 Is Account Receivables Your Largest Asset? Unleash the Hidden Values A/R Insurance Can Deliver to Your Company Presented by Glenn Robins

2 US Companies Profile On Insuring Assets Compare Balance Sheet Assets with Most Insurance Portfolios Cash Accounts Receivables Finished Goods Work in Progress Plant & Equipment Insured Not Insured Why - For the asset Accounts Receivable they are willing to take the risk. Can A/R Insurance be an investment to a company instead of an expense?

& Equipment Insured Not Insured Why - For the asset Accounts Receivable they are

3 Insure the full Sales Cycle to Protect Your Return on Investment Accounts Receivable Travel & Accident Cargo Property Workers Compensation

4 BENEFITS OF A/R INSURANCE

5 A/R Insurance : Leverage Internal Case Studies 1) Improve Liquidity 2) Increase Sales Growth 3) Maintain Bad Debt Reserve Expense

6 Case 1: Achieved a 3,233% ROI on Advance Rate Without A/R Insurance With A/R Insurance A/R Balance $5 million $5 million Advance Rate 60% 90% Working Capital $3 million $4.5 million Premium $45k A/R Insurance increased working capital available by $1,455,000 The ROI for this benefit considered in isolation is 3,233% ($1,500,000 - $45,000)/$45,000 = 3,233% Our bank loves the fact that our receivables are insured. Because of this we have been able to negotiate a larger advance rate on our receivables and a lower interest rate on our loan.

5 million Premium $45k A/R Insurance increased working capital available by $1,455,000 The ROI for this benefit considered in isolation

7 Case 2: Achieved a 567% ROI by Leveraging A/R Insurance Without A/R Insurance With A/R Insurance Sales $45 million $45 million Terms of Sale 60 Days 60 Days Additional Coverage $1 million New Sales $45 million $51 million 5% gross margin $2,250,000 $2,550,000 Premium $45k Premium paid is $45,000 at a rate of 0.10% on $45MM Gross margin dollars gained is $255,000 ROI of 567% ($300K - $45K)/$45K

Sales $45 million $51 million 5% gross margin $2,250,000 $2,550,000 Premium $45k Premium paid is

8 Case 3: Capping Bad Debt Reserve at the Policy Deductible Testimonials from Existing Insureds: Our company auditors have been comfortable with A/R insurance allowing us not to increase our bad debt reserve (P&L expense) above the policy s deductible. Having been with AIG Trade Credit Insurance for 10 years, it s allowed our multibillion dollar Corporation to not increase our Bad Debt allowance while being able to increase revenue in all parts of the world. During the downturn in AIG proved themselves to be a great partner and offered our Corporation a lot of market intelligence about various buyers.

Having been with AIG Trade Credit Insurance for 10 years, it s allowed our multibillion dollar Corporation to not increase our Bad Debt allowance while

9 A/R Insurance: Benefits to our Insureds I. Improve Liquidity II. III. IV. Increase Sales - average increase in insureds credit exposure is 18% per year Reduce/Maintain the Allowance For Bad Debt Cost Reduction V. Smooth and Stabilize Cash Flow acts as a second source of repayment VI. Minimize Concentration Risk VII. Global Markets Risk Mitigation Strategy

Reduce/Maintain the Allowance For Bad Debt Cost Reduction V.

10 Premium at $0.10 Per $100 of Coverage The cost of A/R insurance is reasonable Premium Calculation: Annual Company Revenue: $45MM (AR $5MM) Premium Rate: 10 cents (.10%) Premium cost: $45,000 Price is subject to additional risk factors Country risk, Industry risk, Customer risk

11 WHY AIG

12 AIG s West Coast Underwriting Group Underwriting Group West Coast team experience in A/R Insurance ranges from 6 to 18 years of service Real Time Underwriting AIG Global Footprint Superior Product AIG provides a NON-CANCELABLE LIMITS policy form; indemnity is guaranteed when you need it most

Time Underwriting AIG Global Footprint Superior Product AIG provides a

13 AIG West Coast Portfolio Over 200 policies Revenue levels range from $5 million to $100 Billion 50% of our insureds on the West Coast have maintained policies for over 10 years. Industries Covered 128 SIC Codes

our insureds on the West Coast have maintained

14 Risk Mitigation

15 Weighing the Cost Benefit of Self Insurance vs. A/R Insurance Self Insurance A/R Insurance Bad Debt Reserve to fund write offs Reduce/Maintain Bad Debt Expense Requires expense on credit information, analysis and review Expanded Credit Team to include underwriters and economists Requires expense on credit information, analysis and review Access to additional Credit Information and AIG Global Limits System Sales reduced based on Risk Tolerance Allows Company to increase Risk Tolerance and sales to new customers Impact on Capital Allocation to the Balance Sheet Improved access to Capital through favorable advance rates

analysis and review Expanded Credit Team to include underwriters and economists Requires expense on credit information, analysis and review Access to

16 Credit Approval Process: Evaluating Customers Risk Is Art, Not Science Your credit department analyzes key, historical documents before selling to a customer on credit Financial statements dated within the last 12 months Credit reports within the last 12 months Bank and Trade references dated within the last 12 months How helpful is looking backwards in an effort to predict what will happen in the future?

within the last 12 months Credit reports within the last 12 months Bank and Trade references dated

17 When Bank Credit Was Unavailable, Accounts Receivable Insurance Kept Companies Afloat Commercial and Industrial Lending AIG $522MM Claims Paid Since 2007 $122 $110 $61 $87 $74 $ Commercial and Industrial Lending AIG Paid Claims

$522MM Claims Paid Since 2007 $122 $110 $61 $87 $74 $69 2007

18 AIG s Claims Paying Ability

19 AIG s Claim Paying Commitment to A/R Insurance Customers Received over 11 thousand claims since the inception of our A/R insurance program in Paid $1.376 billion in claims to clients. Recovered $259 million of paid claims from third parties, which was shared with policyholders.

1982. Paid $1.376 billion in claims to clients.

20 A/R Insurance: Key Values Improve Liquidity NON-CANCELABLE LIMITS Coverage Increase Sales Risk Free Extension of Credit Department Improve ROI Global Footprint To Get Started: Complete Application Sales Volume Loss History Aging List of Buyers

Department Improve ROI Global Footprint To Get Started:

21 Thank You! Glenn Robins Assistant Vice President Trade Credit 777 South Figueroa Street Los Angeles, CA Telephone

22 Disclaimer Certain statements provided herein are based solely on the opinions of AIG and are being provided for general information purposes only. Any opinions provided on economic trends should not be relied upon for investment decisions and are solely the opinion of AIG. Certain information may be based on information received from sources AIG considers reliable; AIG does not represent that such information is accurate or complete. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements which do not reflect actual results and are based primarily upon applying retroactively a hypothetical set of assumptions to certain historical financial information. Any opinions, projections, forecasts and forward-looking statements presented herein are valid only as of the date of this document and are subject to change. AIG is not soliciting or recommending any action based on any information in this document. AIG is the marketing name for the worldwide property-casualty, life and retirement, and general insurance operations of American International Group, Inc. Products and services are written or provided by subsidiaries or affiliates of American International Group, Inc. Not all products and services are available in every jurisdiction, and insurance coverage is governed by actual policy language. Certain products and services may be provided by independent third parties. Insurance products may be distributed through affiliated or unaffiliated entities. Certain propertycasualty coverage's may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds and insured s are therefore not protected by such funds.

Trade Credit Insurance Bad Debt Protection

Trade Credit Insurance Bad Debt Protection Bad Debt Protection What is? > Coverage provided to companies who sell products to other businesses (b2b) on short-term credit (30/60/90 days) for both domestic and export sales > Indemnification for bad