EADS Insurance Risk Management (“IRM”), centralised at EADS headquarters, is responsible for all corporate insurance activities and related protection for the Group. It includes continuously and consistently identification, evaluation, prevention and protection of insurable risks. Insurance techniques are used to manage these risks professional and to protect the assets and liabilities of EADS against financial consequences due to unexpected events. Harmonised insurance policies and standards are in place for all insurable risks underwritten by the Group.

An integrated reporting and information system is in place to enable IRM, in close relationship with insurance managers named by the EADS Business Divisions and Business Units to respond to insurance related risks of the Group. EADS pursues an insurance risk management strategy that includes operating procedures as well as policies regarding procurement and sales agreements.

A systematic review and monitoring procedure is in place to asses the exposure and protections systems applicable to all EADS sites, (i) ensuring comprehensive and timely identification and evaluation of risks, (ii) initiating of appropriate mitigation and risk avoidance measurements (iii) and/or related adjustments of insurance coverage.

EADS’ insurance programmes cover high risk (Core) and low risk (Non-Core) exposures.

Core Insurance Policies underwritten by IRM for the Group cover risks such as:

• Property Damage and Business Interruption;
• Aviation Third Party Liabilities including Product Liabilities;
• Manufacturer’s Aviation Hull Insurance up to the replacement value of each aircraft;
• Space Third Party Liabilities including Product Liabilities;
• Commercial General Liabilities including non-aviation and non-space Product Liabilities and risks related to environmental accidents; and
• Directors & Officers Liability.

Claims related to Property Damage are covered up to a limit of €2 billion per loss and €2 billion as an annual aggregate. Aviation Liability Coverage is provided up to a limit of €2 billion per loss, with an annual aggregate cap of €2 billion for product liability claims. Certain sub limits are applicable for Core Insurance Policies as outlined above.

Non Core Insurance Policies cover risks such as:

• Personal Accidents;
• Company Automobiles;
• Personal and property exposures during business trips; and
• Life insurance.

Insurance amounts for Non Core Insurance Lines are covered up to respective sums and replacement values.

EADS follows a policy of obtaining external insurance coverage for all main and individual risks that can be insured at reasonable rates, on sufficient terms and limits provided by the international insurance markets. All insurance policies are required to satisfy EADS’ mandatory standards of insurance protection.

However, to be more independent from volatilities of the insurance markets, EADS uses the capabilities of a corporate-owned reinsurance captive as a strategic tool with respect to the Property Damage, Business Interruption Programme and Aviation Insurance Programme. The captive is sufficiently capitalised and protected so as to ensure its ability to reimburse claims without limiting the scope of coverage of the original insurance policies and not additionally exposing financial assets of EADS.

The insurance industry is still undertaking efforts to reduce its overall exposure. These efforts include increasing premiums, raising deductible amounts and limiting the scope of coverage. Furthermore, the number of insurers underwriting industrial risks is still shrinking. No assurance can be given that EADS will be able to maintain its current levels of coverage on similar financial terms in the future.