ViaSat’s decision to launch ViaSat-2 on an Ariane 5 instead of the new Falcon Heavy will be a relief for its broker Aon ISB, which has been working on placing insurance for the HTS satellite for more than a year. Elsewhere, three placements in Asia are due to set new lows for net premiums, while Iridium Communications expects the premium for its NEXT constellation to rise.
ViaSat’s (NASDAQ:VSAT) decision to launch ViaSat-2 on an Ariane 5 instead of the new Falcon Heavy will be a relief for its broker Aon ISB, which has been working on placing insurance for the HTS satellite for more than a year.
The insurance market will be far more comfortable with a launch early next year on Arianespace’s workhorse, which celebrated its 70th launch success in a row with Intelsat 29e at the end of January.
SpaceX was due to launch ViaSat-2 this year on one of its first missions for Falcon Heavy, whose repeated deployment delays likely influenced the operator’s decision to switch vehicles.
However, the large amount of coverage that the broker has been looking to secure is also thought to have complicated the insurance process.
In an unusual step, it is understood the market was told how much coverage was needed early on in the process, which was relatively high at around US$450m for the giant Ka-band bird that will offer more than double the huge 140Gbps capacity offered by ViaSat-1.
The switch to Arianespace is unlikely to have done much to reduce the sum that needs to be insured because of Ariane 5’s higher launch services cost. Sources said an Ariane 5 option was already written into the original insurance paperwork as a backup, which should simplify renegotiations, but the rates were influenced by its primary Falcon Heavy focus.
“If the placement had just been written for an Ariane 5 from the beginning it would have been straight forward,” noted one underwriter.
“Now they’re in a bit of a pickle because they’ve contractually locked in some markets on Falcon Heavy and Ariane 5.”
Another source not connected to the ViaSat-2 placement said there was likely to be a difference of more than 2% between the Ariane 5 and Falcon Heavy launch flight rates.
When contacted by SatelliteFinance, ViaSat satellite systems and corporate development EVP Keven Lippert reaffirmed the group’s confidence in SpaceX and said the previous placement had been on track to close despite the schedule delays.
“At the end of the day we had confidence that we could have executed our insurance according to our original plan,” he said.
Instead of ViaSat-2, a Falcon Heavy is now set to launch a ViaSat-3 satellite around 2020. Aon ISB will likely be picked again to place insurance for the three ViaSat-3 birds that, like ViaSat-2, are being built by Boeing.
‘Perfect storm’ in Asia to set new net premium benchmarks
The market is as aggressively competitive as it has ever been, with placements doing the rounds right now due to set new lows for net premiums being charged by insurers.
Willis is working on Japan’s BSAT-4a and Marsh is out with placements for Indonesia’s Telkom-3s and BRIsat.
BSAT-4a is being built by Space Systems Loral for Japanese operator B-Sat, which chose Arianespace to launch it in late 2017. The satellite will replace the ageing BSAT-3a, which along with the two satellites in B-Sat’s fleet—BSAT-3b and the BSAT-3c it shares with local player SKY Perfect JSAT —were built by Lockheed Martin and launched by Arianespace.
The European launcher is also due to launch Telkom-3s and BRIsat this year. Space Systems Loral is building Telkom- 3s for Indonesian telco Telkom, which will use it to replace a communications satellite it lost in a 2012 rocket crash. Telkom-3 was destroyed along with Russian satellite operator RSCC’s Express-MD2 satellite after its Proton rocket failed to reach orbit in a federal mission.
SatelliteFinance understands that Telkom-3 was insured for US$180m through Marsh, while Express-MD2 was covered for US$40m through Aon ISB. BRIsat will be the first satellite for BRI, Indonesia’s largest bank, and is being built by Thales Alenia Space.
All three placements represent the “perfect storm” for bringing down rates, according to a source, boasting favourable launch vehicles and satellite platforms, as well as established customers.
However, as is typically the case in Asia, these placements will involve local insurance companies, brokers, and other third parties that will bring additional costs into play, pushing up the gross premiums that an operator would ultimately pay.
Iridium Communications (NASDAQ:IRDM) expects the insurance premium for its second generation NEXT constellation to immaterially exceed its quoted US$125m ceiling, after changing the launch sequence of its 72-satellite system because of Russian red tape.
CFO Thomas Fitzpatrick said the premium hike was “very manageable”, and that the group planned to cover the final 10% of the insurance placement three months prior to the new initial launch in July.
The US MSS operator had planned to launch the first two Iridium NEXT satellites in April on a Russian Dnepr rocket.
However, Dnepr operator Kosmotras has been unable to obtain Russian government approval in time, and now SpaceX will first launch a batch of 10 in July, followed by another 10 in October. Five remaining launches will then take place every 60 days.
Iridium had three different insurance policies for the constellation through its broker Marsh, one covering the initial two that had been due to fly with Dnepr, one for seven SpaceX launches, and a constellation aggregate insurance policy.
It had bought supplemental insurance to cover the first three launches as a group, and the first launch on a standalone basis. The operator also has nine ground spares and, under the SpaceX policy, the first loss due to a launch failure would be covered using one of them with an initial relaunch right. Any insurance proceeds would then pay for the tenth satellite.
It is understood that Marsh recently successfully completed the in orbit placement for Venezuela’s Venesat-1 (a DFH 4 platform) and VRSS-1 (CAST 2000) satellites. In line with current favourable market conditions, premiums are understood to be at “competitive levels” despite the somewhat non-standard risk profiles.
It is believed that Marsh now handles all the in orbit insurance for DFH 4 satellites currently insured on orbit, and their expertise and knowledge of this platform helped them achieve the favourable result.
