In a brief filed Feb. 4 with the United States Court of Appeals for the Second Circuit, Swiss Re reports in a company statement that it provides detailed, unequivocal evidence not previously presented to the public that within 24 hours after the tragic loss of nearly 2,800 lives, World Trade Center leaseholder Larry Silverstein developed plans to spin the facts for the sole purpose of maximizing his personal financial gain.
According to the statement, with the aid of his lawyers and his publicist, Silverstein, within several days of the disaster, determined that the best way to benefit financially was to attempt to rewrite the history of the WTC insurance placement in order to seek double the insurance recovery.
Silverstein reportedly deliberately insured the WTC as a single property for billions of dollars less than its full replacement value. Notwithstanding that fact, he seeks to convert a $14 million equity investment into more than a $1 billion potential insurance windfall, by claiming that he is entitled to twice the $3.5 billion total loss limit of his property insurance. The statement goes on to say that contrary to the express understanding of insurance professionals for Silverstein and the other insured parties, Silverstein and his representatives trumpet at every opportunity that the attack on the WTC was two separate occurrences.
“In our view, Silverstein Properties knowingly and deliberately underinsured the WTC complex,” Jacques Dubois, Swiss Re America Holding Corp. chairman and CEO, remarked. “We believe the record establishes that in order to save on premium dollars, Silverstein intentionally refused to insure against the risk of loss in excess of $3.5 billion. Rather than face this uncomfortable fact, Silverstein has led an aggressive media campaign aimed at rewriting history and inappropriately seeking to obtain funds in excess of the coverage he purchased. Despite his posturing that a double recovery insurance windfall is for the good of New York City, Silverstein’s fantastic story is to no one’s benefit but his own.”
“The evidence produced in discovery shows without a doubt that Mr. Silverstein’s elaborate two-occurrence argument is a hoax,” Barry Ostrager of Simpson Thacher & Bartlett, counsel to Swiss Re, commented. “In this filing, we believe we have compiled a record that establishes with meticulous detail – including names, times and places – that the entire Silverstein case is a fiction conceived by lawyers and public relations advisors immediately after Sept. 11, 2001.”
The evidence in today’s brief reportedly reveals that Silverstein actually wanted to insure the WTC up to a $1.5 billion limit, less than half of the coverage he eventually bought. He only reluctantly agreed to obtain the higher $3.5 billion total loss limit after his lenders required it in order to protect their debt exposure.
“Significantly, Silverstein’s lenders had more than 50 times as much money at risk in the WTC transaction as Silverstein, who invested only $14 million in the deal through limited liability investment vehicles,” Ostrager continued. “The transaction was actually structured in a manner that would have allowed Silverstein to simply default and walk away from the lease in the event of a catastrophic loss, which is why, at the time he purchased the coverage, Silverstein wasn’t that concerned about the amount of insurance.”
The terms of the lease reportedly include a clause that if the WTC were totally destroyed and Silverstein and the other insured parties elected not to rebuild, they are entitled to cash out the insurance proceeds and walk away from the deal. After repaying the lenders the principal of their loans, and paying the Port Authority $1.5 billion, Silverstein and his investors arguably could claim the balance of more than $1 billion. This was one scenario Silverstein reportedly had contemplated when his PR counsel, Howard Rubenstein, proposed a public relations strategy labeling the World Trade Center site “hallowed ground,” on which nothing would be rebuilt.
Editor’s Note: What are your thoughts on the destruction of the WTC on Sept. 11, 2001? Was it one occurrence or two? See our Insurance Journal Web site poll and cast your vote.