Silverstein: Swiss Re Numbers Equal Bad Math

By E.E. Mazier

NU Online News Service, Aug. 8, 3:10 p.m.EST?Swiss Re's recent numbers on the replacement cost ofthe World Trade Center are nothing more than a reaction to the truefigures, said a representative of real estate developer LarrySilverstein.

Earlier this week, New York-based Swiss Re declared that thereare no circumstances under which World Trade Center leaseholderLarry Silverstein can ever recover more than $3.5 billion ininsurance proceeds.

Swiss Re said its experts had established the true value of Mr.Silverstein's claim in the range of $2.4 billion.

Marc Wolinsky, an attorney in Wachtell, Lipton, Rosen &Katz, the New York law firm representing Mr. Silverstein'sinterests, said those remarks are a mere reaction to an Aug. 2statement.

On Aug. 2, Silverstein Properties stated that reports by TishmanConstruction Co.?which originally erected the Twin Towers?andaccounting firm Deloitte & Touche put the actual cash value ofrebuilding the WTC complex at $5.7 billion.

Mr. Wolinsky said this figure represents replacement cost minusdepreciation of the two towers and surrounding edifices, includinga shopping mall.

The Silverstein statement also indicated that businessinterruption losses for the office components of the complex wouldexceed $2.5 billion.

The Swiss Re statement accused Mr. Silverstein of revving up"his relentless attempts to inundate the public and the media withfalse and misleading information."

According to Swiss Re, "in addition to announcing grosslyexorbitant property value and business interruption claims, he hasnow extended his misinformation campaign in a desperate attempt tosmear Swiss Re's corporate brand advertising."

Swiss Re America Holding Company Chairman and CEO Jacques Duboissaid, "The WTC was destroyed only once and under the propertyinsurance coverage purchased, in fact, under any property insurancecoverage, Silverstein is entitled only to a maximum of the policylimit of $3.5 billion."

Mr. Wolinsky responded that "the Traveler's policy has adefinition of actual cash value that is not substantively differentfrom the Wilprop, and we think the proper reading is you get thevalue to replace what was there."

Mr. Silverstein's position is also that if he were to buildsomething else that costs more, he would be "entitled to get thedifference later," Mr. Wolinsky said.

Mr. Dubois also highlighted the fact that in a $365 millionsettlement announced in February between Mr. Silverstein and twoBermuda-based WTC insurers, Ace Ltd. and XL Capital Ltd., Mr.Silverstein had conceded that there was only one attack on the WTCon Sept. 11.

Regarding the settlement, Mr. Wolinsky said that there werestrategic and business reasons for taking a single policy limitfrom Ace and XL. A big factor was the existence of a mandatoryarbitration clause that would have required taking the matter toLondon, he indicated.

He also said that there is general agreement that "Ace and XLwere never told about the Travelers form and that their binder hasan express reference to Wilprop." Mr. Wolinsky explained that theAce and XL documents expressly stated that "the form is Wilpropuntil something else comes along."

He said that "rather than buck the fact that they had thisunique language in their binder, we settled." Best of all, "we gotmoney?there's nothing wrong with money," Mr. Wolinsky stated.