© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO Yellow R= 255 G= 255 B= 0 Orange R= 244 G= 121 B= 32 Magenta R= 236 G= 0 B= 14- Red R= 237 G= 28 B= 36 Lt Green R= 141 G= 198 B= 63 Green R= 57 G= 181 B= 74 Cyan R= 0 G= 174 B= 239 Dk Blue R= 45 G= 49 B= 146 Yellow 2 R= 213 G= 206 B= 146 Orange 2 R= 203 G= 125 B= 101 Mag 2 R= 182 G= 114 B= 146 Red 2 R= 239 G= 63 B= 107 LG2 R= 156 G= 162 B=63 Green 2 R= 0 G= 137 B= 143 Cyan 2 R= 0 G= 182 B= 190 DB2 R= 0 G= 65 B= 89 Business / Legal Working Group Outbrief Chris Kunstadter (Chair) & Russ McMurry (Vice Chair)

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO BLWG agenda topics  MPL methodology review  GSO and NGSO forecasts  Waivers for many payloads and other Part 440 Mods  Development of a legal framework for private exploitation and utilization of space resources  Long-term extension of third-party risk-sharing regime  Strengthening of informed consent protection from unrestricted second-party litigation  Inclusion of spaceflight participants in third-party indemnification  NASA termination liability 2/19

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO MPL methodology review (1/2)  Telcon Jan 25, 2013 – 50+ participants  Recommendations for organizations to perform MPL review  ACTA  White Sands Research and Development  Various “cat” modelers – catastrophe risk analysis for the insurance industry  AIR, Eqecat, RMS, etc.  Recommendations forwarded to FAA AST 3/19

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO MPL methodology review (2/2)  FINDING: COMSTAC finds that FAA AST’s assigned task has been addressed, and remains ready to support further work on the MPL methodology review. 4/19

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO GSO and NGSO forecasts (1/2)  Forecasts completed and ready for issuance  Forecasts show strong near-term growth in NGSO launch activity and steady level of GSO launch activity  Realization factors temper optimistic forecasts; but expanding applications and markets in communications, earth observation, technology demonstration, and human spaceflight drive future growth  Forecasts will be available shortly on FAA AST web site 5/19

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO GSO and NGSO forecasts (2/2)  FINDING: COMSTAC finds that the annual GSO and NGSO reports are important resources, not just for FAA AST but also for industry and other government agencies. These reports are extensively used for planning and business development throughout the space industry, and should continue to be produced annually. 6/19

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO Waivers for many payloads and other Part 440 Mods (1/2)  FAA AST requested COMSTAC’s views on customer flow-down:  Require licensee to sign cross-waivers only with customers that have directly contracted with the licensee.  A customer of a customer contracting with a licensee would sign cross-waiver only with the original customer, not all launch participants  A “second-tier” customer would still have to agree to waive claims against all launch participants, and  The original customer would have to indemnify other launch participants if it failed to obtain such a waiver from the “second-tier” customers 7/19

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO Waivers for many payloads and other Part 440 Mods (2/2)  “Clean-up” issues  Third-party beneficiaries  Cross-waiver with no customer  FINDING: COMSTAC finds that FAA AST’s work on (a) the customer flowdown issue, pending clarification of the relationships and potential interactions of contractors, customers, and others (e.g., aggregators); and (b) the “clean-up” issues should be pursued. 8/19

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO Develop a legal framework for private utilization of space resources (1/2)  Appropriation  Responsibility  Ownership  Property rights  Treaty applicability  Commercial vs commercial  Licensing  Intersection of law, politics and enlightened self- interest  Priority is for interested parties to co-operate 9/19

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO Develop a legal framework for private utilization of space resources (2/2)  RECOMMENDATION: COMSTAC recommends that FAA AST support efforts in Congress and through the Department of State to confirm the right of private sector companies to enjoy the benefits of resources extracted from the surface or subsurface of the Moon and other celestial bodies, subject to appropriate regulation supervision by a relevant U.S. government entity such as FAA AST. 10/19

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO Long-term extension of third party risk-sharing regime (1/2)  FINDING: COMSTAC finds that, under the current U.S. launch indemnification regime, licensees are required to protect the U.S. government from legal liability up to the maximum probable loss (MPL), at no direct cost to the government, with the expectation that the government will continue to be authorized to seek an appropriation to pay certain excess claims above the MPL, on behalf of all launch participants. 11/19

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO Long-term extension of third party risk-sharing regime (2/2)  RECOMMENDATION: COMSTAC recommends that FAA AST urge Congress to permanently extend the current U.S. launch indemnification regime because it protects the U.S. government from substantial third- party liability claims up to the MPL, at no direct cost to taxpayers. 12/19

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO Strengthening of informed consent protection from unrestricted second- party litigation (1/4)  OBSERVATION: COMSTAC observes that, while the Commercial Space Launch Act requires that licensees obtain informed consent from their spaceflight participant customers, it is silent on the issue of does not preclude potential claims from participants and their heirs and estates in the event of a flight incident or accident. 13/19

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO Strengthening of informed consent protection from unrestricted second- party litigation (2/4)  FINDING: COMSTAC finds that, to encourage the successful growth of the commercial space flight industry, operators, manufacturers, suppliers, and other contractors, should enjoy a predictable and consistent legal environment where they can be held accountable for deliberate malfeasance or gross negligence, but not for the inherent risks associated with human spaceflight. 14/19

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO Strengthening of informed consent protection from unrestricted second- party litigation (3/4)  OBSERVATION: COMSTAC observes that commercial spaceflight activities legally implicate the federal government because the U.S. is a signatory to international treaties making nation-states liable for certain losses arising from space activities of non-governmental entities. 15/19

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO Strengthening of informed consent protection from unrestricted second- party litigation (4/4)  FINDING: COMSTAC finds that cross-waivers of liability among all parties on the licensee side of the launch activity should be required, and Federal courts should decide legal cases regarding any element of the federal license, including the legal validity of any waivers of claims signed by spaceflight participants, after being fully informed as to the risks of the spaceflight. 16/19

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO Inclusion of spaceflight participants in third-party indemnification  RECOMMENDATION: COMSTAC recommends that FAA AST work towards modifying CSLA language to specifically include spaceflight participants in third-party indemnification. Spaceflight participants are explicitly excluded from Federal indemnification, and not listed in law as a party to be protected by the licensee’s insurance. 17/19

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO NASA termination liability  RECOMMENDATION: COMSTAC recommends that FAA AST support termination liability reform at NASA in order to protect commercial and NASA programs from being exposed to overly burdensome termination liability costs. Specifically, a reasonable ceiling should be set on termination liability assessments that reflects historic programmatic cancellation rates at NASA. [WITHDRAWN] 18/19

© 2013, XL Group plc companies. All rights reserved. MAKE YOUR WORLD GO Thank you! Christopher T.W. Kunstadter Senior Vice President XL Insurance /19