Howard Rubenstein, a spokesman for Larry Silverstein, responded to Swiss Re’s press release of Feb. 4, that criticized Silverstein in his attempt to collect insurance money from the Sept. 11, 2001 attack on the World Trade Center.
“Swiss Re’s remarks are a cynical and manipulative attack on Silverstein Properties’ efforts to collect the insurance bought and paid for on the World Trade Center, and in turn, an attack on the rebuilding lower Manhattan,” Rubenstein said. “To compensate for the weakness of their legal position, Swiss Re has engaged in a scurrilous personal attack on Mr. Silverstein and his legal counsel, and has twisted the facts. The barrage of misleading press releases by Swiss Re reveals the depths of its concern about its case.”
According to Rubenstein, the key points that should be noted about the lawsuit are as follows:
*Silverstein did not underinsure the WTC complex. Silverstein purchased coverage on the four WTC buildings in the amount of $3.5468 billion “per occurrence.” This may well represent the largest amount of insurance coverage ever purchased on a multi-building real estate complex. By contrast, the Port Authority carried only $1.5 billion “per occurrence” on all of its properties (including the four WTC buildings) before leasing these buildings to Silverstein for 99 years.
Recovery of two policy limits would not be a “windfall” for Silverstein.
*The insurance companies sold Silverstein “per occurrence” coverage. In doing so, they took the risk that two separate “occurrences” might result in the destruction of the Twin Towers – thereby subjecting them to liability for two “per occurrence” limits. That’s simply the way “per occurrence” coverage works, as these sophisticated insurance companies well understood. Having taken that risk and lost, the insurance companies are now scrambling to find ways to convince the courts and the public that what the whole world saw on Sept. 11 – two separate planes hitting two separate buildings causing two separate fires that led to two separate building collapses – was somehow only one “occurrence” and they should only pay one-half of the coverage for which they contracted. New York insurance law provides that, in determining the number of occurrences, courts are to look to the immediate event that caused the insured’s injury, and not some earlier event in the causal chain. Thus, under New York law, there were two separate occurrences on Sept. 11.
*The terms of Silverstein’s leases with the Port Authority do not allow him to simply “take the money and run.” Rather, those leases require Silverstein to dedicate the insurance proceeds to rebuilding and to pay rent for the full 99-year lease terms – even though the buildings have been destroyed and Silverstein is not collecting rent from any of the former tenants.
According to Rubenstein, Swiss Re’s press release engages in a misleading and selective quotation from Rubenstein’s Sept. 12 memo to Silverstein. Larry Silverstein has repeatedly stated that he is committed to the rebuilding of the WTC – together with an appropriate memorial honoring the thousands of victims – to show the world that America will not succumb to terrorism. That commitment is reflected in the portion of the Sept. 12 memo that Swiss Re’s press release omits: “The WTC will be rebuilt. ‘It will stand again as a symbol of not only this city but against tyranny and evil.'”
As to the note to Rubenstein regarding Silverstein having taken his “advice” on the number of occurrences, Swiss Re is grasping at straws. When the insurers argued to the district court that this note was “relevant” and warranted Rubenstein being deposed, the court denied their application.
Marc Wolinsky, a lawyer for Silverstein, added, “Swiss Re’s assertion that in the immediate aftermath of the September 11 tragedy, the insurance professionals for the insured parties ‘uniformly understood . . . that the WTC tragedy represented one insurance loss’ is simply false.” To the contrary, Wolinsky said, the record shows that:
Willis, the Silverstein Parties’ broker, did not conclude that the events of Sept. 11 constituted a single occurrence. Witnesses testified that at a Sept. 12 conference of Willis brokers, many expressed the view that the events of 9/11 constituted two “occurrences” for insurance purposes. Indeed, when Willis’s brokers learned that one of their competitors had been telling London underwriters that the events constituted only one “occurrence,” the Willis brokers “laughed and said (the competitor) doesn’t have a clue.”
Sandy Vietor, head of Willis’ WTC claims task force, reportedly testified that he independently reached the conclusion on the evening of Sept. 12th that the events of 9/11 might constitute two occurrences and raised it with his colleagues the morning of Sept. 13th. Willis’s consensus view was that the issue could only be determined by reference to the specific policy language and would ultimately be determined by the courts.
Silverstein’s risk manager, Robert Strachan, reportedly was simply mistaken when, on Sept. 12, he faxed the WilProp occurrence definition to the Port Authority’s counsel with a note referring to it as the “Willis policy that we are working with.” The reasons for Strachan’s mistake can be found in the circumstances. Strachan had no part in the actual negotiations, which were left entirely to Willis. Moreover, because he had been out for surgery for a period of some ten days at the end of August, Strachan had lost touch with the state of negotiations between Willis and Travelers. And along with the rest of the nation, Mr. Strachan experienced the events of Sept. 11 with horror and shock. He suffered the loss of four of his co-workers the day before at the World Trade Center. Distraught relatives besieged the Silverstein offices seeking information about their loved ones. In this context, Mr. Strachan’s error is understandable.
The Port Authority reportedly concurs in Silverstein’s position that Travelers is the lead policy form and that, under that form, the insureds are entitled to recover for two occurrences. That Harbor Group and Westfield were apparently unaware of Travelers’ emergence as the lead underwriter is not surprising. They, too, were not involved in the policy negotiations and left this detail to Willis.
Wolinsky also stated that, “Swiss Re once again makes the baseless accusation that Silverstein and his attorneys have created a ‘post-loss fiction’ that a Travelers form was the lead policy form in the placement. The evidence that Travelers was indeed the ‘lead’ insurer is documented by overwhelming evidence.” The evidence includes the following:
On July 12, the lead broker on the Willis team circulated an e-mail to his colleagues that “I intend to bind as follows. Use Travelers and accept form . . . .”
Boyd proceeded to so advise both the other insurers he was dealing with and the other Willis brokers involved in the placement. Indeed, the federal district judge presiding over the litigation has denied summary judgment motions filed by insurers claiming that they bound coverage on the basis of the WilProp form in view of the evidence that Boyd advised these insurers that the Travelers form would be used instead.
Swiss Re was not only advised that the Travelers form would be used, but on July 23, Swiss Re was concededly sent a copy of the Travelers form by Willis’s U.K. office and – with that form in hand – Swiss Re’s underwriter executed a revised binding slip that concededly replaced the slip he had previously furnished.
Travelers was the only insurer who engaged in policy form negotiations once coverage was bound and the Travelers form was the only form negotiated. On Aug. 13, 2001, Travelers wrote Willis: “Am assuming we are the lead relative to form changes.”
Moments after the tragic events of 9/11, Travelers underwriter James Coyle advised the company’s director of major case claims (William Guernsey) that the Travelers form was to be used by all of the insurers on the placement.
At a Sept. 21 meeting of insurers, Guernsey distributed copies of the Travelers policy in the belief that the other insurers were following Travelers form. Swiss Re was recently ordered to produce to Silverstein the notes of the Swiss Re executive who attended this (and other) insurer meetings.
Minutes of an Oct. 3 meeting of the insurers’ Steering Committee, attended by Guernsey, state: “It is the Travelers position that its form was to be used by this entire market by its underwriter.”
Mr. Rubenstein added: “We look forward to the day when a New York jury finally has the opportunity to hear the actual evidence in this case. Mr. Silverstein is confident in the outcome.”
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