Swiss Re: WTC's True Value $2.4 Billion

A Swiss Re subsidiary, SR International Business Insurance Co. Ltd. is an excess insurer of the WTC embroiled in Mr. Silverstein's $7 billion insurance lawsuit against various layers of insurers.

Specifically, Swiss Re said that Pearson Partners, an independent real estate appraiser, estimates the actual cash value of the WTC complex at $2.156 billion under the Willis Property form (Wilprop). Mr. Silverstein used the Wilprop to bind the insurance coverage just before the Sept. 11 destruction of the Twin Towers by terrorists.

In any event, Mr. Silverstein is not entitled to actual cash value proceeds at this time, said Swiss Re, because the Wilprop form mandates that he first disclaim any intention to rebuild.

According to Swiss Re, Mr. Silverstein's only recourse is to seek replacement cost value proceeds up to the $3.5 billion policy limit.

Regardless of what form it takes or who rebuilds it, "the WTC will be rebuilt over eight or nine years," Swiss Re predicted.

Calculating rebuilding costs at slightly less than $300 per square foot, Swill Re said the replacement cost value of the property will approach the policy limit of $3.5 billion. When discounted to net present value, the amount is approximately equal to Mr. Silverstein's own pre-litigation estimate of $2.4 billion, according to Swiss Re.

Swiss Re cautioned that not all of these proceeds will be available for rebuilding, due to the amounts of business-interruption proceeds that would be paid from the same policy limit.

Swiss Re America Holding Company Chairman and CEO Jacques Dubois said, "Silverstein's most recent attempt to recreate the coverage limit he purchased is just more of the same nonsense and should be dismissed out of hand."

He continued that when seeking insurance coverage in 2001, "Silverstein told us that the value of the property, including business interruption insurance, was $5 billion, but he refused to pay the price for that amount and bought only $3.5 billion of coverage."

He added that Mr. Silverstein's "arch over-reaching claims demonstrate that he was pennywise and pound foolish," and that he is now trying to rectify that error by concocting new values.

Mr. Dubois also stated, "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. Dubois also said that Mr. Silverstein himself "admitted that the coordinated attack on Sept. 11 was a single occurrence in his one-occurrence settlements with insurers Ace and XL."

Mr. Dubois was referring to a $365 million settlement announced in February between Mr. Silverstein and two Bermuda-based WTC insurers, Ace Ltd. and XL Capital Ltd. Although none of the parties to the settlement would disclose its terms, it was widely reported that Mr. Silverstein conceded in the settlement that there was only one attack on the WCT on Sept. 11.

At the time, a Silverstein representative said the real estate developer had agreed to settle because the Ace and XL policies were worded differently from the other WTC insurers. Swiss Re then countered that all of the insurers had agreed to the same policy.

Comment from the Silverstein camp was not immediately available.