Silverstein Claims Pair of Losses in WTC Disaster

The man who held the master lease on the World Trade Center is standing by his claim that the loss of the Twin Towers on Sept. 11 was two losses, not one, despite the call by insurer Swiss Re that there was only one loss involved. Now, Larry Silverstein waits for a court decision to sort out the matter.

On Oct. 22, Swiss Re announced that it would offer an initial payment to all those insured for the WTC property, including The Authority of New York and New Jersey, so that they could meet term obligations. On Nov. 6, Swiss Re advanced its share of a $75-million initial payment.

In a move to speed up the claims process, Swiss Re requested that the U.S. Federal Court for the Southern District of New York in Manhattan confirm that the collapse of the buildings is one insured loss. However, Silverstein Properties and Westfield America, who acquired the master lease on the WTC this past July, are hoping to recover more than $7 billion for the loss of both buildings as separate loss incidents, as opposed to recovering $3.5 billion for the loss of one property.

Making the matter all the more difficult to determine is the fact that there wasn’t an insurance policy completed at the time of the property’s destruction. Swiss Re has acknowledged that it is liable for 22 percent of the loss(es), with an additional 22 companies who were part of negotiating the final terms of coverage at the time of the attack.

In a move on Nov. 5, Silverstein filed suit against Bermuda insurers ACE Ltd. and XL Capital Ltd., looking to force them to resolve disputes over the Sept. 11 claims. In the lawsuit, Silverstein requested a federal court in New York to rule that all disputes related to the attacks be settled there, challenging both ACE and XL Capital, which are requesting that the disputes be settled by arbitration in the United Kingdom. According to a spokesperson for ACE, the policy that the company issued stipulates that any disputes be handled through arbitration in London.

Marv Garrett, a senior litigation partner for Allen Matkins Leck Gamble & Mallory in Los Angeles, commented that Silverstein’s case could be difficult.

“It would seem to me that [Silverstein] has an enormous problem of proof that those were not interrelated acts,” Garrett said. “…If you’re on Silverstein’s side, you’re going to want to force the carriers to deal with this, put reserves up. That would help you get some leverage. In terms of winning the case based on the facts we’re all aware of surrounding Sept. 11, and with regard to what I would expect to be the customary language for interrelated acts, I suspect he has a very tough case. If there is no interrelated acts provision, then it is a very different analysis. He wouldn’t have filed that suit unless there was.”

Garrett added that he talked to several people and noted that the premium that Silverstein paid to the carriers when the policy was taken out in August was based on the combined value of both towers.

In a suit filed in late October, Swiss Re is alleging that Silverstein made comments to the media that Silverstein Properties is entitled to double the face value of insurance that Swiss Re and other insurers provided under the trade center coverage.

In a statement from the insurer, Swiss Re remarked that it “cannot responsibly pay the proceeds over to Mr. Silverstein without regard for the interests of other entitities. For this reason, Swiss Re is seeking a declaration from the court apportioning any payments among the parties in interest.”

Topics New York Profit Loss Claims Swiss Re