2. Space Insurance Experience and Outlook: A Statistical Review of Volatility Tel:(+1) 212-859-3690 Fax:(+1) 212-344-1381 Mobile:(+1) 201-214-1138 Email: ckunstad@usau.c om Web:www.usau.com Christopher T.W. Kunstadter Executive Vice President U.S. Aviation Underwriters, Inc. 199 Water Street New York, NY, 10038, USA May 2005

3. 2 11/1/2015 USAIG When Bad Things Happen To Good Hardware

4. 3 11/1/2015 USAIG High Profits Relaxed UnderwritingFlight to Quality Inadequate Reserves Increased Capacity Seek Market Share Inadequate Rates Mounting Losses Profits Rise Rates Increase Capacity Decrease Insolvencies/Withdrawals The Insurance Market Cycle Rates Decrease Hard Market Soft Market

5. 4 11/1/2015 USAIG Non-Pricing Factors Affecting Insurance Volatility Increased complexity of risks » Frequency and severity of losses Lower investment income » Interest rates and equity markets Uncertain global economic situation » Globalization, dollar, oil, consumer prices, hedge funds, terrorism More scrutiny by regulators and rating agencies

6. 5 11/1/2015 USAIG What Is Space Insurance? Loss due to the failure of, or physical damage to, satellites, launch vehicles and other space payloads » Physical damage only (including hardware failure) » May include business interruption when specified Types of coverage » Launch (launch vehicle flight and/or initial operations) » In-orbit Geostationary communications satellites are 85-90% of the business volume Clients are launch vehicle and satellite manufacturers, operators and users

7. 6 11/1/2015 USAIG Characteristics of Space Insurance Constantly changing technology Each risk is unique “Generic” or “serial” nature of anomalies Volatility of underwriting results

8. 7 11/1/2015 USAIG Insured Satellites Launched Source: IUAI SRSG

9. 8 11/1/2015 USAIG Insured Launches – Success vs. Failure Source: IUAI SRSG

10. 9 11/1/2015 USAIG In-Orbit Insured Satellites and Exposures Source: IUAI SRSG *Excludes constellations (Iridium, Globalstar, Orbcomm) **Includes MEO (ICO, Sirius) GEO Population (as of Apr 05)

11. 10 11/1/2015 USAIG First Year Satellite Reliability (based on year launched) Western-built geostationary communications satellites only Figures are percentage of capability lost for satellites launched in the year noted Capability lost is calculated as the total claims as a percentage of the sum insured, for each separate loss Includes known and quantifiable uninsured failures on satellites that had previously been insured Source: IUAI SRSG

12. 11 11/1/2015 USAIG Satellite Failure Rates, by Model (first year – cumulative since 1990) Western-built geostationary communications satellites only Figures are percentage of capability lost Capability lost is calculated as the total claims as a percentage of the sum insured, for each separate loss Includes known and quantifiable uninsured failures on satellites that had previously been insured >45%!! Source: IUAI SRSG **** * Satellite models no longer marketed

13. 12 11/1/2015 USAIG Satellite Failure Rates, by Model (second and subsequent years – cumulative since 1990) Western-built geostationary communications satellites only Figures are percentage of capability lost Capability lost is calculated as the total claims as a percentage of the sum insured, for each separate loss Includes known and quantifiable uninsured failures on satellites that had previously been insured Source: IUAI SRSG 122 satellites95 satellites **** * Satellite models no longer marketed

14. 13 11/1/2015 USAIG Losses – Launch Vehicle vs. Satellite (paid and potential outstanding) Source: IUAI SRSG

15. 14 11/1/2015 USAIG Cumulative Market Results Source: IUAI SRSG

16. 15 11/1/2015 USAIG Warren Buffett said... “Nothing sedates rationality like large doses of effortless money.”

17. 16 11/1/2015 USAIG Space Insurance Market Profit Margin Since 1994 1.2% cumulative profit margin over 11 years Source: IUAI SRSG

18. 17 11/1/2015 USAIG Market Capacity vs. Activity Projected Source: IUAI SRSG

19. 18 11/1/2015 USAIG The Three Six Biggest Client Concerns in Space Insurance Price Exclusions for generic anomalies Claims handling / scope of coverage PRICE PRICE! PRICE!!! PRICE!!!

20. 19 11/1/2015 USAIG Where Do We Go From Here? Plenty of capacity for growth among launch vehicle and satellite manufacturers and operators Growth areas are DTH/HD, mobile radio and mobile comm’s New technologies and market pressures dominate industry Space insurance is still a catastrophe business Insurance market consolidation will continue We price our product often long before knowing its cost Insurers recognize that their capital can be much more effectively deployed elsewhere Insurance companies require larger operating margins to justify the allocation of capital to this volatile business

21. 20 11/1/2015 USAIG Winston Churchill said… “If you’re going through hell, keep going”