Swiss Re: Silverstein WTC Case in Shambles

By E.E. Mazier

NU Online News Service, Sept. 27, 9:52 a.m. EST?The judgment of a federal trial judge yesterday in favor of three World Trade Center insurers shows that the WTC leaseholders' case is "falling apart," according to Swiss Reinsurance.

U.S. District Court Judge John S. Martin, in Manhattan, ruled that the terrorist actions, which destroyed the twin towers Sept. 11, 2001, constituted one $3.5 billion incident rather than two claims worth $7 billion as leaseholders contend.

"I think that in the end the whole Silverstein case will prove to have been a grandiose waste of everyone's time, money and energy," declared Jacques DuBois, Swiss Re America Holding Company chairman and chief executive officer in New York.Judge Martin, in ruling against leaseholders including Silverstein Properties, granted three insurers a summary judgment.

The three insurers were let out of the case after a declaratory judgment action initiated by a Swiss Re unit. The carriers involved are Hartford Fire Insurance Co. of Hartford, Conn., Royal Indemnity Co. of Nashville, and The St. Paul Fire and Marine Insurance Co. of St. Paul, Minn.

In arriving at his ruling, the judge found that in issuing insurance binders, the three insurers had agreed to be bound by the provisions of the so-called WilProp form, a proprietary insurance policy provided by the Willis Group of New York Inc.Mr. DuBois told National Underwriter that the court's ruling "inevitably" means "that the London market players, including Swiss Re, are also bound by WilProp."

Mr. DuBois stressed that the insurance purchased by the Silverstein parties on the WTC "was intended as a common or uniform program by Willis and by Silverstein. It's what they wanted. It's the best way to write a program, they know that."

At any rate, "when property is destroyed, it's destroyed only once unless you had a chance to rebuild it in between," Mr. DuBois stated.As for Swiss Re's immediate plans, Mr. DuBois said that the company will go to trial, where it expects to prevail.

Silverstein Properties has said it disagrees with Judge Martin and will consider an appeal "at the appropriate time."

The company also said that the three insurers coverage amounts to a total of approximately $112 million, "so that limiting these insurers to a single occurrence does not have a material effect on the overall amounts of $6.7 billion that will be recovered in the litigation."

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Swiss Re: Silverstein WTC Case in Shambles

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