Silverstein Files Suit against Travelers

January 3, 2002

World Trade Center leaseholder Larry Silverstein is pursuing the legal battle regarding property claims resulting from the Sept. 11 terrorist attack on the twin towers. World Trade Center Properties LLC, an affiliate of Silverstein Properties Inc., filed suit against Travelers Indemnity Co., a subsidiary of Citigroup Inc., to recover losses related to the Sept. 11 event.

According to an A.M. Best report, Silverstein Properties, already engaged in a legal battle with Swiss Reinsurance Co. in relation to Sept. 11, has also sought the court’s permission to amend the lawsuit to include all other insurers of the World Trade Center, except for Ace Bermuda Ltd. and XL Capital Ltd.

The development company has a separate lawsuit filed against both Ace and XL, however Silverstein claimed negotiations with both insurers are ongoing.

Silverstein claims the case involving Travelers centers on the form it used when a program of insurance for the World Trade Centers was completed in July of last year.

Binders signed by both XL and Ace Bermuda both note a specific form used by Willis, the broker that put together the coverage earlier this year. Known as WilProp, the form indicates that occurrence means all losses or damages that can be attributed directly or indirectly to one cause or to one series of similar causes. All such losses are added together and the final amount of such losses will be looked at as one occurrence irrespective of the period of time or area over which such losses take place.

Silverstein is contending that Travelers distributed its own form last June that did not refer to a specific definition for occurrence, adding that Swiss Re and other insurers had been informed of the Travelers form prior to agreeing on July 26 to take part in the World Trade Center insurance program.

Silverstein’s attorneys claim that the bulk of the other insurers also bound coverage based upon the Travelers form, placing that Travelers lawsuit as an important piece of the puzzle to settling the majority of the legal questions existing with most of the other insurers.

According to a BestWire report in December, the matter is in dispute mainly because Silverstein’s insurers had penned coverage binders but had not finalized details when the twin towers were destroyed on Sept. 11. Swiss Re attorneys claim that the company had agreed to the WilProp form supplied by Willis, subject to agreement on some details of policy language.

Exhibits filed with Silverstein’s complaint against both Ace and XL, state that Travelers’ exposure to the loss is $210.6 million – which ranks as the seventh-largest loss exposure among the 25 insurers listed.

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