Originally published by Space Intel Report on March 4, 2025. Read the original article here.
SES’s mPower network. (Source: SES)
LA PLATA, Maryland — Satellite fleet operator SES, which is the biggest commercial customer for the world’s space insurance industry, remains locked in a year-long battle with its underwriters over SES’s $472-million claim for defects on the first four O3b mPower satellites.
Over a year after SES first made its claim, most of the underwriters on the policy have refused to pay it.
The insurers do not question the claim’s basic premise: that the first mPower satellites exhibit intermittent switch-offs of their power modules, a defect that makes them less productive and may also reduce their expected 12-year design lives.
The argument is over whether SES’s insurance policy, which like most policies covers demonstrated anomalies or failures, should not also cover a reasonable expectation of future losses based on an extrapolation of how failures evolve. SES argues that it should; the underwriters have said otherwise.
“Our policies cover observed what happened,” said one insurer. “They don’t cover what might happen at some point based on a projected rate of decline. Those could be future losses, which are beyond the scope of most policies.”
SES’s claim of $472 million is about 70% of the total insured value of $674 million for the first for mPowers, which were launched in pairs in December 2022 and April 2023. The company is calculating a failure rate based on what it has seen with the four mPowers so far.
A third pair was launched in November 2023. While these two have the same power shutoff anomaly, they are not included in the claim because SES was aware of the defect well before the launch. SES wanted six mPowers in orbit, even if it meant launching satellites with issues, because it needed at least six spacecraft in mPower’s 8,000-kilometer equatorial medium-Earth orbit to begin commercial service.
Prime contractor Boeing Satellite Systems International and SES reached an agreement wherein Boeing would not only correct the defect for the remaining five mPower satellites on order, but would divide with SES the cost of building two more, bringing the constellation to thirteen.
The first two satellites launched after the corrective measures, mPower 6-7, were launched in December and are scheduled to arrive at their orbital positions in a matter of days, with commercial operations starting in April.
In response to Space Intel Report queries, SES on Feb. 26 said:
“Claim for satellites 1-4 has been submitted and is taking longer than usual due to the predictive nature of the claim. We continue to engage and progress with the large group of insurers. Timing remains subject to negotiation.”
In its 2024 annual report, published March 4, SES said:
“[H]ealth issues emerged with the initial four mPower satellites, prompting SES to initiate insurance claims under its ‘Launch plus sixteen months’ insurance policies. The Company submitted Proof-of-Loss documentation to its insurers and negotiations with those companies were initiated in 2024 and will continue beyond the year-end.
“In the absence of formal acceptance of the claims by most of the external insurers, management is of the view that these claims qualify as contingent assets in the sense of IAS [International Financial Reporting Standards] 37. Accordingly, income is only recognized when claims with individual insurers are agreed and settled.”
Boeing’s BSS-702 design. (Source: Boeing)
In late 2024 there was a concern that the two sides would end up in court, in which case the underwriters’ case would be based on their policies’ language. But SES would surely ask insurers to account for their own violation of the policy language in the early 2000s.
In response to a design defect in Boeing’s initial six of its new BSS 702 geostationary orbit satellites, the customers for these satellites filed claims totaling around $1 billion.
Part of their case was that the anomaly, which generated fogging on the mirrors of the solar arrays’ concentrators, would inevitably lead to the satellites being declared a total loss within a few years.
In the event, several of these first six BSS 702 models ended up remaining in service, albeit with reduced power, for many years.
In perhaps the most notable example, Telesat’s Anik F1 satellite, launched in 2000, was expected to be retired in 2008, seven years before its designed operating life.
Telesat continued to operate Anik F1 until November 2024, when it was placed into a graveyard orbit above the geostationary arc.
“It’s true, insurers have set that precedent,” one insurance official said when reminded of underwriters’ payments for the BSS 702 failures. “But that was different. It was a degradation that you could reasonably assume would continue because of thermal and solar effects. In this [mPower] case, it’s a case of individual components that are presumed to fail at a certain rate.”
The arrival of large LEO constellations has made it less costly for operators to launch additional satellites to account for future anomalies rather than purchase insurance. That, plus the decline in the number of large geostationary satellites launched each year, has caused space insurers’ premium revenue to plummet.
That makes underwriters vulnerable to losses in the event of even just one or two large claims.
If there is one customer the underwriters cannot afford to lose, it’s SES. Not only does SES have its own fleet of 50-plus satellites, but it will add another 50 to its portfolio following its the scheduled acquisition of Intelsat late this year. The combined company likely will reduce that as part of merger synergies, but SES will remain a large purchaser and insurer for some time to come.
Originally published by Space Intel Report on March 4, 2025. Read the original article here.
