1. BULGARIAN EXPORT INSURANCE AGENCY JSC. BULGARIAN EXPORT INSURANCE AGENCY JSC. Credit risk insurance at BAEZ

2. What is credit risk insurance? The credit risks insurance is a specific insurance product Essence – insurance of receivables under trade deals on the domestic market on the international market BULGARIAN EXPORT INSURANCE AGENCY JSC. BULGARIAN EXPORT INSURANCE AGENCY JSC.

3. INSURANCE OF RECEIVABLES (on the domestic and the international market) Risks covered  commercial risks (under domestic and international trade deals) – risks related to the buyer: protracted default insolvency of the buyer  non-commercial (or political) risks – risks related to the buyer’s country: war, strike, embargo, coup d'etat moratorium on payments confiscation and nationalization changes in the payment regime etc. BULGARIAN EXPORT INSURANCE AGENCY JSC. BULGARIAN EXPORT INSURANCE AGENCY JSC.

4. Credit risks insurance scheme BULGARIAN EXPORT INSURANCE AGENCY JSC. BULGARIAN EXPORT INSURANCE AGENCY JSC.

5. Stages of the insurance process BULGARIAN EXPORT INSURANCE AGENCY JSC. BULGARIAN EXPORT INSURANCE AGENCY JSC.

6. Why to insure?  The receivables are an asset, which deserves protection  The insurance is an instrument for a business promotion competitive advantage assessment of buyers prevention and monitoring financial stability guarantee easier access to financing  The insurance is an instrument for a business expansion new partners new markets higher turnover  The insurance is part of the corporate strategy BULGARIAN EXPORT INSURANCE AGENCY JSC. BULGARIAN EXPORT INSURANCE AGENCY JSC.

7. Main functions of the Credit Risk Insurance  loss prevention current and detailed financial information of the buyer credit limit recommendation for each buyer constant qualified credit control  loss reduction contract dependant on the risk situation of the insured assistance in overdue debts collection  payment of insurance indemnification in case the previous two did not work out BULGARIAN EXPORT INSURANCE AGENCY JSC. BULGARIAN EXPORT INSURANCE AGENCY JSC.

8. Disadvantages when providing credit terms  BUYER – ADVANTAGES: receives credit terms no need to dispose of proper free funds at the moment of the delivery  SELLER - DISADVANTAGES: payment insecurity the deferred payment engages financial resources possible problems with the debt colelction BULGARIAN EXPORT INSURANCE AGENCY JSC. BULGARIAN EXPORT INSURANCE AGENCY JSC.

9. The risk nature is constantly changing  poor economic situation  changes in the market conditions  necessity of expansion new clients internationalization  insufficient working capital  difficulties in the financial sector BULGARIAN EXPORT INSURANCE AGENCY JSC. BULGARIAN EXPORT INSURANCE AGENCY JSC.

10. AVERAGE PAYMENT TERMS IN EUROPE Research of Intrum Justitia in 2013 – European Payment Index 2013 Country Private sectorPublic sector Contractual payment (days) Real payment (days) Contractual payment (days) Real payment (days) Austria25353042 Finland20252023 France40554060 Germany25352535 Sweden30353032 United Kingdom25402540 Portugal508580135 Spain608580155 Greece355550155 Italy659580170

11. And not to forget… Credit risk insurance = additional financing security  Option 1: The insurance policy is transferred in favour of a third beneficiary  Option 2: The bank insures the credit BULGARIAN EXPORT INSURANCE AGENCY JSC. BULGARIAN EXPORT INSURANCE AGENCY JSC.

12. Option 1: Insurance of receivables in favour of third beneficiary BULGARIAN EXPORT INSURANCE AGENCY JSC. BULGARIAN EXPORT INSURANCE AGENCY JSC.

13. Option 2: Bank credit insurance BULGARIAN EXPORT INSURANCE AGENCY JSC. BULGARIAN EXPORT INSURANCE AGENCY JSC.

14. Who is BAEZ?  “Bulgarian Export Insurance Agency” JSC. Is a specialized insurance company  Founded in 1998  Shareholder – 100% Republic of Bulgaria (Ministry of economy)  The Bulgarian analogue of well-known international export credit and investment insurers  Aim: to stimulate and support the Bulgarian exporters on the international market to protect them from risks  Other insurance products: insurance of Bulgarian investments abroad L/C insurance bank guarantee insurance BULGARIAN EXPORT INSURANCE AGENCY JSC. BULGARIAN EXPORT INSURANCE AGENCY JSC.

15. Why BAEZ?  created to stimulate and support exporters SMEs priority economic sectors  solid resources for insurance indemnifications  undertake higher risks, the profit is not major motive BULGARIAN EXPORT INSURANCE AGENCY JSC. BULGARIAN EXPORT INSURANCE AGENCY JSC. BAEZ business credit risks

16. You never know...... Your best partners could be seen on this slide... ……… BULGARIAN EXPORT INSURANCE AGENCY JSC. BULGARIAN EXPORT INSURANCE AGENCY JSC.

17. …because even the best professional need a safety net! BULGARIAN EXPORT INSURANCE AGENCY JSC. BULGARIAN EXPORT INSURANCE AGENCY JSC.

18. BULGARIAN EXPORT INSURANCE AGENCY JSC. Sofia 1301, 55 Alexander Stamboliiski Blvd. Tel.: (+359 2) 923 69 11, fax: (+359 2) 987 06 65 е-mail: baez@baez.bg, www.baez.bg The state guarantee for your business