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 of the World Trade Center are nothing more than a reaction to the true figures, said a representative of real estate developer Larry Silverstein.

Earlier this week, New York-based Swiss Re declared that there are no circumstances under which World Trade Center leaseholder Larry Silverstein can ever recover more than $3.5 billion in insurance 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's interests, said those remarks are a mere reaction to an Aug. 2 statement.

On Aug. 2, Silverstein Properties stated that reports by Tishman Construction Co.?which originally erected the Twin Towers?and accounting firm Deloitte & Touche put the actual cash value of rebuilding the WTC complex at $5.7 billion.

Mr. Wolinsky said this figure represents replacement cost minus depreciation of the two towers and surrounding edifices, including a shopping mall.

The Silverstein statement also indicated that business interruption losses for the office components of the complex would exceed $2.5 billion.

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

According to Swiss Re, "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."

Swiss Re America Holding Company Chairman and CEO Jacques Dubois said, "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."

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

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

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

Regarding the settlement, Mr. Wolinsky said that there were strategic and business reasons for taking a single policy limit from Ace and XL. A big factor was the existence of a mandatory arbitration clause that would have required taking the matter to London, he indicated.

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

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

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Silverstein: Swiss Re Numbers Equal Bad Math

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