World Trade Center Developer, Port Authority Sue Insurers

June 26, 2006

The Port Authority of New York and New Jersey, together with World Trade Center developer Larry Silverstein, is suing seven insurers over delays in payments they say are needed to rebuild on the site of the Sept. 11, 2001 terrorist attacks.

The authority and Silverstein filed an action in the Supreme Court of the State of New York, New York County, Allianz Insurance Company; Industrial Risk Insurers; Travelers Indemnity Company; Royal Indemnity Company; Gulf Insurance Company; Zurich American Insurance Company; and Employers Insurance of Wausau.

According to Silverstein, some insurers have been suggesting they might halt monthly payments following a new deal, called the Conceptual Framework, which shifted responsibilities and financing between himself and the Port Authority. Silverstein has said that without the insurers’ funds, the World Trade Center site cannot be rebuilt.

“Over the last six weeks, we have tried to obtain confirmation from these insurers that they will not use the Conceptual Framework – an agreement that realigns the interests in the World Trade Center site in order to facilitate its prompt redevelopment – as an excuse to avoid their insurance obligations,” the Port Authority and Silverstein said in a statement.

“Time and again, they have refused to provide assurance that the insurance recovery will not be impacted by the Conceptual Framework. Not having received these assurances, we have brought an action in order to enlist the aid of the court in ensuring the prompt redevelopment of the World Trade Center site. ”

The complaint seeks a declaration that the Conceptual Framework does not impact the insureds’ rights to recover fully all amounts currently due and to be paid in the future by these insurers.

Just last month Kenneth Ringler, the executive director of the Port Authority told The Associated Press that he had written insurers that the Port Authority did not believe there was any issue in the new agreement that would affect insurers’ payments.

Silverstein has been using $4.6 billion being paid out in insurance proceeds to pay rent for rebuilding rights at ground zero and to build the 1,776-foot Freedom Tower, which began construction last month. Insurers still are challenging court rulings awarding the proceeds.

Source: The Port Authority

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