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Credit Insurance policies protect commercial accounts receivable.

Most companies extend credit terms to their customers, so that payment can be made after their products have been shipped or services delivered. A credit insurance policy protects an insured company against unexpected or catastrophic losses due to its customers' insolvency or non-payment.

Accounts receivable are typically a large and liquid asset on a company's balance sheet.

Fixed assets like buildings and machinery are usually protected from loss by specific insurance coverage. However, accounts receivable are often protected only by internal credit management practices.

Credit Insurance provides additional security for valuable accounts receivable. Credit Insurance has been used in Europe for over 150 years and presently over forty percent of accounts receivable there are covered by insurance policies.

In North America the use of Credit Insurance to protect accounts receivable is at a much earlier stage of development and is growing rapidly.

What types of companies should use Credit Insurance?

While all companies should consider Credit Insurance it is particularly useful for companies that:

• Have large, concentrated receivables from a few buyers
• Are presently trading on letter of credit terms and wish to offer open account terms
• Have limited in-house collection / credit experience
• Operate in low profit margin industries and must minimize their bad debt losses
• Want to improve their financing terms and conditions
• Are experiencing a consolidation of the number of potential buyers
• Have developed a new product but are unfamiliar with the buyers or their financial stability
• Are expanding their sales into unfamiliar regions or countries
• Manufacture highly customized and client specific products
• Have profitability results that are very sensitive to economic recession
• Are exposed to the political risks of international customers.

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GATEWAY TO THE WORLD: A CO-OPERATION AGREEMENT

The Guarantee Company of North America (GCNA) has established a Co-operation Agreement with Gerling-NCM, one of the world's leading credit insurers.

Gerling-NCM - GLOBAL EXPERTISE

Gerling-NCM is one of the leading companies in the European Credit Insurance market. It was formed in 1925 by a group of financial institutions, including ABN AMRO Bank, Hermes and Trade Indemnity. Gerling-NCM has operations throughout Europe, USA and Japan (through an alliance with Tokio Marine). The Gerling-NCM Group's majority shareholder, Swiss Re, is one of the world's leading reinsurers. Swiss Re is rated "AAA" by Standard & Poors and "Aaa" by Moody's.

A GATEWAY TO THE WORLD

The GCNA - Gerling-NCM Co-operation Agreement provides access to a unique source of information on the credit worthiness of potential foreign buyers. The world-wide resources of Gerling-NCM are available to facilitate the collection of foreign accounts receivable.

POLITICAL RISK

Export sales to some countries carry a higher risk of being uncollectible due to the possibility of:

• Funds transfer difficulties
• Government restraint on currency movement
• War, civil disobedience
• Cancellation of export/import licences

The Guarantee Company of North America's association with Gerling-NCM enables our insureds to acquire additional insurance coverage against such risks.

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