Euler Hermes: Risk business model

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Euler Hermes Risk business model

• Ulrich Noethel, Risk Director Euler Hermes
  Forderungsmanagement GmbH, Hamburg
• Press conference Moscow July 1st 2008

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Agenda

• Risk Business Model
• Meeting local challenges
• Performance in Russia

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Risk Business Model

• Concept of world sharing (proximity to the risk)
• Development of risk offices network in countries
  where Euler Hermes has a significant presence.
• Euler Hermes Quality Standards among others-
  answering 70 of all credit limit requests on
  Russian buyers within 4 working days- visiting
  companies if credit limit requests exceed certain
  thresholds
• Grading system ( common language) reflecting
  probability of default of buyers worldwide
• Permanent risk monitoring taking into account all
  available sources (incl. information from trade
  fairs and conferences, newspapers, journals etc.)

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Workflow
Supplier ( Policyholder)
Request for credit limit
Request for credit limit
Local EH Business Unit
Recommendation for credit limit for
finalunderwriting by local EH business unit

• - information gathering
• - risk analysis
• grading

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Information base EH gt 40 mio. companies

• EULER HERMES-WORLD
• EH branches analysis
• Sales staff
• Information from Policyholder
• Information from Buyers of Policyholder

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Internal resource

• Information agencies
• Rating agencies
• Collecting agencies

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Information agencies

• ICISA Partners
• Financial Institutes
• Non-commercial organization

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International Organization

• Internet
• ?V/Radio
• Business reports
• Press releases

External resource
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Euler Hermes micro/macro economic forecasting
Euler Hermes globaloffices
EH research department Publishes macro-economic
and sector forecasts
Macro-economy
Micro-economy
EH credit analysts Provide information and
financial analysis on companies
EH risk underwriters Deliver warranties on
customer (seller) requests
local organisation
sectorial organisation
Companies (buyers)
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IRP Euler Hermes IT platform for risk
underwriting

• Unique Risk IT system worldwide
• Worldwide access to a common data base of
  information
• Common risk underwriting process
• Online automatic decisions worldwide
• Specific features to comply with local
  requirements

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Agenda

• Risk Business Model
• Meeting local challenges
• Performance in Russia

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Economic conditions in Russia Limited exposure
to global financial market crisis

• Russia is somewhat affected by the global
  economic downturn
• some smaller banks have faced problems to roll
  over short-term external debt which may result in
  financial problems among their local clients
• the global downturn may eventually jeopardise
  external demand for Russian products
• a potential fall in commodity prices would affect
  output growth
• Moreover, rapid private sector credit growth and
  rising inflation are indicators of a potential
  overheating of the economy which would be
  followed by a soft landing
• Overall, we expect GDP growth to moderate to 7
  in 2008 (from 8.1 in 2007) while a modest rise
  in insolvencies is likely

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Information Environment

• When its comes to providing information to third
  parties, Russian entrepreneurs are
• - Very cautious
• - Hesitating to provide information
• - Often only provide official information (no
  consolidated or internal information's
  which are necessary for assess the
  creditworthiness of a company).

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Agenda

• Risk Business Model
• Meeting local challenges
• Performance in Russia

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Credit limit requests on Russian
buyersthroughout last 12 months
1,350
867
Increase of 56 between May 2007 and May 2008
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Portfolio development for Russian
buyersthroughout last six months (exposure in )
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Current portfolio of Russian buyers(in , by end
May of 2008)
S 1.9bn exposure 5,324 limits 3,381 buyers
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Response times for Russian buyers(May 2008)
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Euler HermesBusiness insured. Success ensured.
Ulrich Noethel, Risk Director ofEuler Hermes
Forderungsmanagement GmbHFriedensallee
254D-22763 HamburgDeutschland49 (0)40 88
34-3900 Ulrich.Noethel_at_eulerhermes.com