Satellite industry observers are discussing the potential for the EUTELSAT 5 West B geostationary satellite to become a total loss, which could cost the insurance market at least $192 million.
We were Named EUTELSAT 5 West B, the vehicle faced a potential malfunction related to a solar array which industry insiders suggest may not have extended fully, or even at all, when the satellite reached initial orbit.
The satellite was launched successfully on October 10th this year and passed all its immediate systems checks.
However, Eutelsat reported the malfunctioning solar array on October 24th and then responded to our enquiries to tell us that the satellite is fully covered by insurance, should a loss occur, with no retention before the claim would kick in to the satellite operators benefit.
The 5 West B satellite is designed to replace the EUTELSAT 5 West A vehicle, to ensure continuity in service of over 300 TV channels broadcast from that position in space.
The outgoing 5 West A satellite had generated roughly EUR 30 million of revenues per-year for Eutelsat, so is one of its more significant communication satellites and as a result the new 5 West B replacement is an important vehicle for the firm and those whose programming it broadcasts.
It’s now understood that Eutelsat 5 West B is insured for approximately $192 million, which was launch plus one year coverage and with zero retention, as the satellite operator had told us at Reinsurance News.
Eutelsat told us today that the incident remains under investigation, to try and identify the cause and the impact to the satellites future performance.
Industry experts now believe that as there hasn’t been any official update from Eutelsat the malfunction persists and it’s assumed may now prove fatal to the future of Eutelsat 5 West B, which could not operate effectively on a single solar array.
Both of the solar array’s are required to enable the satellite to operate on full-power and to fulfil its role as a replacement for the outgoing 5 West A, industry experts believe.
As a result, the expectation is that Eutelsat may wait until it reports its results on October 30th to reveal that the satellite may be facing a complete failure, which if that turns out to be the case would create a total loss for the satellite launch insurance market and its reinsurance providers.
That would mean a total loss of the roughly $192 million launch plus one year insurance cover. But there could be more.
As we also reported last week, the Eutelsat 5 West B satellite vehicle had an additional payload, an orbit node for the European Geostationary Navigation Overlay System which was accommodated on the vehicle under a contract valued at EUR 102 million.
It’s not clear how that contract is insured at this time (if at all) and whether this could lead to an additional loss in the satellite and space insurance market.
Given the specialty nature of satellite launch and space insurance and reinsurance in general, it is likely that a sizeable chunk of any Eutelsat loss would fall to market participants at Lloyd’s of London, as well as major global players.
