Case Study - Managing Currency Exposure and Ensuring Global Insurance In Place

Type of Client
US Subsidiary of a European Company

Geography
Mexico, US, Europe

Challenge 1
The client, a subsidiary of a European company based in the U.S., first engaged with EMW when the company needed assistance with currency management. The client was buying in Euros from the parent company and selling to its customers in US dollars, resulting in heightened currency exposure and potential foreign exchange losses. The client did not have a Treasury Manager or a system to manage its foreign currency exposures.   

Solution 1 
For this first challenge, EMW facilitated the creation of a system to forecast anticipate foreign currency cash flow demands, namely Euros, against the client’s product costing methods to monitor the effects of the Euro/USD rate movements on the subsidiary’s financial results.  Secondly, EMW assisted the CFO to draft a foreign currency policy outlining the parameters to hedge any exposure over certain thresholds. Finally, working with the company’s lead bank assisted the client to hedge the foreign currency exposures.   

Result 1
The client successful instituted a foreign currency structure and hedged against any major Euro/USD movements. In addition, the structure could be used with other currencies and gave the company flexibility both in selling and purchasing in non-USD currencies.

Challenge 2
The second engagement was when the client asked for assistance in finding appropriate international business travel insurance to cover an employee based in Mexico.  While the first concern was with a Mexican representative EMW quickly identified that the client did not have adequate health and travel insurance for US based employees traveling outside of the USA.  This is a risk to any international traveler where hospitals can refuse emergency care if payment is not guaranteed in advance and/or the level of care in many parts of the world is lacking by US standards.

Solution 2
For this second challenge, EMW used its extensive worldwide network to connect with the needed trusted professionals - namely an insurance broker with full international coverage capabilities - to jointly put together a comprehensive policy for all their employees.

Result 2
The client established a solid travel insurance plan to cover all the client’s traveling employees wherever they traveled worldwide including the USA.  

Follow-up Note
This project is an example of EMW flexibility and dedication to each client relationship.  The two project were years apart and limited in scope.  Currently EMW is readily available to service the client as needed without a retainer or pre-set contract.