Swiss Re Determines Actual Value Amount for WTC

August 6, 2002

Swiss Re announced that there are no circumstances under which World Trade Center leaseholder Larry Silverstein can ever recover more than $3.5 billion of insurance proceeds under the coverage he purchased.

Swiss Re’s experts established the true value of Silverstein’s claim in the range of $2.4 billion, an amount consistent with Silverstein’s internal calculations. Swiss Re reported that Pearson Partners, an independent real estate appraiser has estimated the actual cash value of the WTC complex at $2.156 billion under the Willis Property form (Wilprop) that Silverstein used to bind the insurance coverage.

Swiss Re further reported that, in any event, Silverstein is not entitled to actual cash value proceeds at this time, because under the Wilprop form he must first disclaim any intention to rebuild. Silverstein’s only course of action then is to seek replacement cost value proceeds up to the policy limit of $3.5 billion. Regardless of what is rebuilt, or by whom it is rebuilt, the WTC will be rebuilt over eight or nine years. Calculating rebuilding costs at slightly less than $300 per square foot, the replacement cost value of the property approaches the policy limit of $3.5 billion. When discounted to net present value, the amount is approximately equal to Silverstein’s own pre-litigation estimate of $2.4 billion. Not all of these proceeds will be available for rebuilding, given the amounts of business interruption proceeds that would be paid from the same policy limit.

Swiss Re America Holding Company chairman and CEO Jacques Dubois stated, “Silverstein’s most recent attempt to recreate the coverage limit he purchased is just more of the same nonsense and should be dismissed out of hand. When seeking the insurance coverage in 2001, Silverstein told us that the value of the property, including business interruption insurance, was $5 billion, but he refused to pay the price for that amount and bought only $3.5 billion of coverage. Silverstein’s arch over-reaching claims demonstrate that he was pennywise and pound foolish and is now attempting to rectify that mistake by confecting new values.”

Dubois added, “The WTC was destroyed only once and under the property insurance coverage purchased, in fact, under any property insurance coverage, Silverstein is entitled only to a maximum of the policy limit of $3.5 billion. It bears reminding that Silverstein himself has already admitted that the coordinated attack on September 11 was a single occurrence in his one-occurrence settlements with insurers Ace and XL.”

According to Swiss Re, Silverstein has routinely provided “internally inconsistent and enormously wrong data,” and “has now revved up his relentless attempts to inundate the public and the media with false and misleading information. In addition to announcing grossly exorbitant property value and business interruption claims, he has now extended his misinformation campaign in a desperate attempt to smear Swiss Re’s corporate brand advertising. Curiously, Silverstein has decided to pick a fight over advertising while his own media blitz has bombarded the public almost daily with propaganda designed to support his reinvention of history.”

Barry Ostrager, Swiss Re attorney at Simpson Thacher stated, “This new media initiative has less to do with advertising itself and more to do with the shambles in which Silverstein finds his own case. Perhaps seizing on irrelevancies that play on emotional aspects of this dispute is how Silverstein desperately hopes to resurrect his case at trial. Silverstein may believe that if you cynically repeat misinformation long enough people will believe it.”

Ostrager went on to say, “So brazen is the Silverstein press initiative that it was commented upon in a prominent national news story published in Newsweek magazine denigrating Silverstein’s attempts to reap a financial windfall from his ‘loser case.'”

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