$2 billion settlement set for WTC policies

BUSINESS DIGEST

May 24, 2007|By Bloomberg News

Developer Larry Silverstein and seven insurance companies agreed yesterday to a $2 billion settlement to end an almost six-year dispute over the value of the insurance policies covering New York's World Trade Center.

The agreement will bring to about $4.55 billion the total insurance proceeds Silverstein and the Port Authority of New York and New Jersey will receive.

Silverstein, the leaseholder on the World Trade Center, had battled with insurance companies in federal court since a month after the Sept. 11, 2001, terrorist attacks over how much the policies were worth. The settlement gives the developer and the Port Authority, the site's owner, the cash to help rebuild the 16-acre property. The insurers have already paid about $2.55 billion.

"This is a monumentally important step forward," New York Gov. Eliot Spitzer said at a news conference. "The essential fact is that there is now $2 billion net present value available for construction."

The seven insurers in the settlement are Travelers Cos., Zurich American Insurance Co., Swiss Reinsurance Co., Employers Insurance Company of Wausau, Allianz Global Risks U.S. Insurance Co., Industrial Risk Insurers and Royal Indemnity Co., Spitzer said.

The accord "fairly and conclusively resolves all disputes involving Swiss Re's WTC coverage," Roger Ferguson Jr., chairman of Swiss Re America Holding Corp., said in a statement. The deal will finance the "rebirth of Lower Manhattan," he said.

Andreas Shell, Allianz claims crisis coordinator, said he wasn't worried that the case had set a precedent for policyholders to receive more insurance than they paid for. The trade center attacks were "a very unique experience," he said. "There is no precedent set."

Spitzer compared the insurance dispute to a Stanley Cup hockey playoff series in which the two sides play a "very hard match" and "at the end of the series they always shake hands and move on."

Silverstein, 75, had been seeking $7 billion from the insurers, double the limit of his policy, arguing that the two hijacked planes that crashed into the twin towers represented two attacks instead of one.

In 2004, two federal juries said Silverstein was entitled to a maximum of $4.68 billion in insurance payments, said Andrew Mais, a state insurance department spokesman. The settlement means Silverstein's insurers are obligated to pay 97.2 percent of that maximum, he said.

In separate trials, federal juries found in 2004 that 10 of his insurers, including Swiss Re and a Lloyd's of London syndicate, owed Silverstein only one payment, based on restrictive language in preliminary contracts they signed. Nine more insurers who had agreed to more vague policy language, including St. Paul Travelers, were found to owe double their policy limits.

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