Two transatlantic insurance firms to go fishing for an errant satellite

In an effort to shave their losses, two insurance companies - one British and one American - are financing a satellite salvage mission in November. The National Aeronautics and Space Administration signed an agreement earlier this month with the insurers to retrieve an Indonesian telecommunications satellite, Palapa B-2, which didn't reach the right orbit. The companies have the rights to acquire and renovate an ailing satellite that is now parked some 600 miles above earth.

In the rescue mission, tentatively set for Nov. 2, an astronaut from the space shuttle would hoist the satellite into the shuttle's cargo bay and return it to Earth. On the ground, the satellite would be refurbished and sold to the highest bidder, possibly in time to relaunch it next summer.

For the insurance companies, led by Merritt Syndicates Ltd. of London and International Technology Underwriters of Washington, the salvage effort is an attempt to recoup some of the losses they have had from paying out compensation to the satellite's former owner, the government of Indonesia.

The insurance bodies had to pay Indonesia $75 million after Palapa B-2 went astray during its deployment by the space shuttle Challenger in February. Because of a fault with a rocket motor, it ended up much nearer Earth than it should have and is virtually useless.

Under the agreement, the insurance companies will pay up to $4.8 million for the salvage operation. If a second satellite, Westar 6, which also went into the wrong orbit, is retrieved in the same mission, the cost would be a maximum of $2 .75 million for each satellite. Both had misfirings of booster rockets. Their intended orbit was 22,300 miles above Earth; both are now between 600 and 700 miles out. NASA will maneuver the satellites closer to Earth by remote control before the salvage operation.

If all goes to plan, the satellite will be sold for up to $35 million. For an extra outlay of $10 million, the insurance underwriters would reduce their net losses from $75 million to $50 million. The deal has required complex negotiations among more than 100 underwriters in the United Kingdom and United States which were involved in the original package to insure Palapa. Underwriters at Lloyd's of London have been heavily involved.