“Returning Confidence”

FINANCE 4 GROWTH

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Department / author Department / author

Who we are

Allianz Group

▪ Global leader in insurance and financial services

▪ Leading Property and Casualty insurer globally

▪ €110,8 billion total revenues (2013) / €10,1 billion operating

profit (2013)

▪ 83 million customers worldwide, products and solutions in

insurance and asset management

▪ € 1.361 billion third party assets under management (end

2013)

▪ 182% solvency ratio (2013)

▪ Present in in over 70 countries

▪ 148.000 employees worldwide

▪ Standard & Poor’s AA / Very strong

Euler Hermes

▪ Global leader in credit insurance with 34% market share

▪ #1 Credit Insurer

▪ €2.5 billion consolidated turnover (+3.7% vs. 2012)

▪ 52,000+ clients worldwide

▪ Tracks companies active in markets representing 92% of

global GDP

▪ €789 billion of business transactions covered globally

▪ Present in over 50 countries

▪ 6,000+ employees worldwide, incl. 1,500 risk experts

▪ Standard & Poor’s AA-

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Department / author Department / author

Benefits of Credit Insurance

Allows you to grow your lending book securely

1. Ability to increase lending

2. Increase customer requirements through export

capabilities

3. Security taken from EH’s AA- S&P rating

4. Option to have assignment to the claims

… Allows you grow safely

1. Access to greater / improved lending facilities

2. Inclusion of export sales to a domestic facility

with insurance

3. Ability to find new sales on competitive trading

terms in export markets

4. Access to largest global network of proprietary

risk intelligence in the Credit Insurance market

…Enhanced three way

relationship with

insurance providing an

opportunity and the

security to grow

exports

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Department / author Department / author

Euler Hermes “Simplicity” … focus on the Basics

Basics• Cover by default at 60%

• No credit limit requests

• No turnover declaration

• No requirement for historical loss details

• Fixed premium based on Turnover Band

• Minimal Administration

• Cover Optional grade requests

• Depending on Grade:

o 0%, 60% or 90%

o Basic ML or Enhanced ML

• Standard 60% indemnity for “blind” cover

• No need to apply for credit limits (innovative in the Credit Insurance world!)

• No requirement for previous bad debts to be supplied

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Department / author Department / author

Euler Hermes “Simplicity” … focus on Pricing & Cover

1 Select estimated turnover band

for the next 12 months

2This provides the

premium figure to pay

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Ability to “upgrade” to a higher policy

liability (and premium) as required4

Maximum liability per

individual buyer

PricingTurnover Band Annual Policy

ML

Basic Buyer ML

60% Indemnity

Enhanced Buyer

ML 90% Indemnity

Premium

€100,000 to €500,000 €50,000 €5,000 €20,000 €4,310

€500,001 to €1,000,000 €75,000 €7,500 €30,000 €5,050

€1,000,001 to €1,500,000 €100,000 €10,000 €40,000 €6,620

€1,500,001 to €2,000,000 €125,000 €12,500 €50,000 €8,100

€2,000,001 to €2,500,000 €150,000 €15,000 €60,000 €9,770

€2500,001 to €3,000,000 €175,000 €17,500 €70,000 €10,610

€3,000,001 to €3,500,000 €200,000 €20,000 €80,000 €11,450

€3,500,001 to €4,000,000 €225,000 €25,000 €100,000 €12,400

€4,000,001 to €5,000,000 €250,000 €30,000 €120,000 €13,970

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Department / author Department / author

Euler Hermes “Simplicity” … focus on Export Markets

Insured Export

Markets

Austria, Belgium, Canada, Czech Republic, Denmark, Estonia, Finland,

France, Germany, Hungary, Italy, Luxembourg, Malta, Netherlands,

Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden,

Switzerland, United Kingdom, United States

✓ All markets endorsed as “standard”

✓ Open account terms

✓ No prior export experience required

✓ Common payment length allowed for all markets

✓ Commercial risks covered

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Bad Debt and Insolvency Matters...

40%of a Company’s assets are typically in the form of

its outstanding sales ledger

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Department / author Department / author

Case Study –

- An Irish SME founded in 1982 Kildare-based Com-Plas packaging supplies plastics pots, punnets, buckets

and bulk products, including a range of environmentally friendly biodegradable packaging, to the food,

pharmaceutical and chemical industries.

- “Simplicity has given us the confidence to seek new customers and quote for new business that we

might not have done in the past” (Financial Director Lorraine Ledingham)

- “When Simplicity came along we were able to get up to €25,000 cover per customer with no questions

asked, and up to €100,000 for our larger customers”. (Financial Director Lorraine Ledingham)

- “In the past year we have already made a couple of claims as a result of customers going into

liquidation. The claims process was all conducted via email and it all went very smoothly”. (Financial

Director Lorraine Ledingham)

- Simplicity has given them the confidence to export their products in support of their growth plans.

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Insolvencies could decrease by 2% worldwide

but remain 10% above their pre-crisis levels

Global business insolvencies: -2% in 2016 but still 10% above pre-crisis levels.

DSOs increasingly used as a financing tool.

Business insolvencies,

2015 vs 2003-2007 average

Source: Euler Hermes Sources: Bloomberg, Euler Hermes

Data takes into account listed companies only.

Days Sales OutstandingBusiness insolvencies,

annual growth in 2014 and 2015

Source: Euler Hermes

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United Kingdom Weight 2014 2015 2016 2017

GDP 100% 3.1 2.2 1.6 0.7

Consumer Spending 65% 2.2 2.5 2.5 1.0

Public Spending 20% 2.3 1.4 0.9 0.3

Investment 21% 5.9 3.5 -0.6 -2.3

Construction 9% 8.1 3.6 0.0 -1.6

Business investment 10% 3.9 5.0 -1.9 -3.9

Stocks * -3% 0.4 0.1 0.3 -0.1

Exports 30% 1.5 4.8 2.1 3.3

Imports 33% 2.5 5.8 3.2 1.3

Net exports * -3% -0.4 -0.5 -0.4 0.6

Current account ** -85 -100 -107 -114

Current account (% of GDP) -4.7 -5.4 -5.6 -5.8

Employment 2.4 1.3 1.7 1.8

Unemployment rate 5.7 5.1 5.1 5.2

Wages 2.3 3.3 3.2 2.0

Inflation 1.3 0.0 0.7 2.5

General government balance ** -102 -79 -81 -80

General government balance (% of GDP) -5.6 -4.2 -4.2 -4.1

Public debt (% of GDP) 88.2 89.2 88.0 88.0

Nominal GDP ** 1 822 1 870 1 920 1 953

Change over the period, unless otherwise indicated:

* contribution to GDP growth

** GBP bn

Recession risk has been delayed, but growth

remains depressed by uncertaintyEconomic forecasts UK

Sources: ONS, Eurostat, Euler Hermes forecasts

Higher volatility

Fragile business confidence

Strong GBP depreciation

Demand shock (slowing imports, consumption)

Contraction of domestic investment

Contraction of incoming Foreign Direct Investment

Trickle down of Brexit vote impact

Business nervousness has increased since Art.

50 was triggered (in March 2017?)

Source: Euler Hermes

Prolonged period of uncertainty ahead,

bouts of nervousness expected in H2 2017

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Firms’ payment behavior is expected to

deteriorate

Reversing decreasing trend in business

insolvencies: expect +8.5% in 2017Business insolvencies by sector

as of Q1 2016, last 4Q y/y

Sources: ONS, Euler Hermes

Several sectors are already suffering from

deteriorating payment behaviorPast dues as of Q2 2016(severity rates, 4Q/4Q y-1)

Sources: Euler Hermes proprietary data

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GBP Depreciation

Automotive; Chemicals; Paper

Aeronautics; Machinery and equipment; Agri-food;

Retail; Textile; Pharma; Metals

Construction; Utilities; Transport; IT services;

Energy

Less investments

Energy; Chemicals; Textile; Retail; Automotive; Machinery and equipment;

Metals

Agri-food; Construction; Machinery and equipment;

Aeronautics; IT services

Transport; Metal; Pharma; Paper

Domestic demandSlowdown

Textile; Agri-food; Automotive; Construction

Retail; Chemicals; Pharma; Household equipment; Metals;

Machinery and equipment; Transport; IT services;

Energy; Paper

Aeronautics

Expect future headwinds for sectors

Three main channels of impact for businesses: GBP depreciation (import cost), less

investments (domestic and foreign) and the domestic demand slowdown

Sources: ITC, OECD, Euler Hermes Economic Research

Main channels of impact for sectors by the official EU exit (2019?)

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Stay Leave Stay Leave StaySoft Leave -

exit with a FTA

Hard Leave -

exit w.o. a FTA

Real GDP growth 1.8% 0.7% 1.7% 1.0% 1.7% 0.2% -1.3%

Nominal GDP growth 3.3% 3.2% 3.3% 3.0% 3.2% 2.5% 1.2%

Goods export gains

(GBPbn)35 30 25 18 20 -9 -30

Services export gains

(GBPbn)10 6 12 3 14 -5 -11

GBP trend Stable~5%

depreciation

> 5%

appreciation

~2%

depreciation

> 5%

appreciation

> 10%

depreciation

> 20%

depreciation

Net investment from

abroad (GBPbn)> 50 < 10 > 50 < 10 > 50 -60 -210

Firms' turnover

(annual growth)3.5% 2.0% 4.0% 1.0% 4.0% 1.2% -1.0%

Firms' margins (pp) 0.5 -1.0 1.0 -1.5 1.0 -1.0 -2.0

Business insolvencies 3.0% 8.5% 1.0% 6.0% 0.0% 9.0% 15.0%

2017 2018 2019

The worst is yet to come…in 2019

The economy is expected to remain relatively resilient by 2019, the year when a formal

EU exit is expected

Sources: ONS, Eurostat, Euler Hermes forecasts

Impact of a Brexit on the United Kingdom (2017-2019)

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Brexit checklist for Irish companies

Source: Euler Hermes

Does Brexit have an impact on your business with or in the UK?

…exporting to the UK

…importing from the UK

…having a branch/subsidiary in the UK

GBP depreciation

Lower GDP growth in the UK (lower turnover growth and lower margins)

Rising insolvencies in the UK

Lower RoW investment in the UK

EU tariffs on imports from the UK

UK tariffs on imports from the EU

Changes in regulation and additional administrative costs

Restrictions on movement of people

Restrictions on capital flows

Restrictions on services

European companies… Impact

Ongoing

Ongoing

Q4 2016

Q4 2016

Early 2019 with the

EU exit

Early 2019

Early 2019

Early 2019

Early 2019

Early 2019

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Country Risk Map at end of 2015

The balance of risk has shifted towards higher level due to severe hot spots

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Europe will be go to region for Irish export growth

Eurozone will perform above global average

in 2016-2017 underpinned by improvements

in private consumption and investment

Large countries like US and China will see

mixed performance with sizeable gains but

below trend for import growth

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Corporate risk Assessment The EH Grading system

© Copyright Euler Hermes 16/06/2017

Exceptional Virtually no risk of loss

Very strong Minimal risk of loss

Strong Low risk of loss

Good Below average risk of loss

Average Average risk of loss

Watch Above average risk of loss

Weak Increased risk of loss

Distressed High risk of loss

Uninsurable Very high risk of loss

Failures

Good credit gradingof a company and/or sector

low default probability

Bad credit gradingof a company and/or sector

high default probability

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Thank you for your

attention

www.eulerhermes.com

michael.murtagh@eulerhermes.com