Analyst: Three Insurers Helped By WTC Ruling

By Michael Ha

NU Online News Service, Sept. 29, 4:02 p.m. EDT?The latest court ruling in the dispute over World Trade Center damage coverage is positive news for The Hartford, The St. Paul Companies and Royal Indemnity, according to a banking firm's analysis.

Brian Meredith, an analyst at Charlotte, N.C.-based Banc of America Securities, in his research note released today said the three insurers, under the ruling may be able to limit their total WTC payment to $112 million, rather than a figure double that amount sought by the trade center ownership group.

His comments followed a ruling Friday by the 2nd U.S. Circuit Court of Appeals in Manhattan.

Mr. Meredith said the appellate ruling limits the total payment from these three insurers collectively to a maximum of $112 million." We would view this news as positive," he said.

But Mr. Meredith also pointed out that the appellate court in a separate case upheld the district court's rejection of a summary judgment in WTC leaseholder Silverstein Properties' case against the Hartford, Conn.-based Travelers Property Casualty Corp.

"This means the Travelers case will proceed to trial where a jury will ultimately decide whether the attacks constitute one occurrence or two according to the policy language in the Travelers form," he said.

"The remaining 18 insurers involved in the Silverstein litigation will also proceed to trial for the ultimate decision on the number of occurrences since it appears that these insurers may not have included a definition of ?occurrence' as part of their respective binders as well."

At issue is insurers' contention that when terrorists piloted two jets into the twin towers to bring down the World Trade Center it constituted one event insurable for $3.5 billion. Silverstein Properties has been seeking $7 billion from WTC insurers arguing that two separate planes crashing into two separate towers constitutes two separate insurable occurrences.

In the decision regarding The Hartford in Hartford, Conn., The St. Paul Companies in St. Paul, Minn., and the Charlotte, N.C.-based Royal Indemnity, the appellate court upheld the ruling that the three insurers were tied to the original WilProp insurance policy form issued by Willis Group, which defines the WTC attacks as one occurrence by law.

Michael Barr, an attorney at Chicago-based law firm Sonnenschein, Nath & Rosenthal, which represents Royal Indemnity Company, told National Underwriter the ruling is a victory for his client. "We had the 2^nd Circuit affirm our victory in the district court. We thought that the district court decision accurately reflected the plain words on the policy page."

But unlike these three insurers, Travelers issued its own policy form during negotiations with Silverstein Properties over coverage terms for the WTC, Mr. Meredith observed. "This policy form did not specifically define ?occurrence', while the WilProp form did. The Travelers form was officially issued three days following the Sep. 11 attacks," he said.

"Silverstein contends that the Travelers form defines the WTC attacks as two separate occurrences and this is the form to which all the insurers were collectively bound."

Howard Rubenstein, spokesperson for Silverstein Properties stated that "while we had hoped that the 2^nd Circuit would rule that events of Sep. 11 constituted two occurrences as a matter of law, we are fully confident that a jury hearing all of the evidence will reject the insurers' attempts to avoid paying for the cost of rebuilding the World Trade Center."

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Analyst: Three Insurers Helped By WTC Ruling

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