In early May, the developer Larry Silverstein lost his suit to have the destruction of the World Trade Center's twin towers declared two separate events for insurance purposes.
"Of course, I am disappointed that the jury did not see things our way with respect to most of the insurers in the WTC coverage," Silverstein said. "But let me be clear: a defeat in the courtroom is not a defeat for rebuilding."
Silverstein, whose firm holds the lease on the WTC property, argued that all the insurers were collectively bound to the Travelers form, which defines the attacks as two separate occurrences. He was seeking $7 billion in insurance payments, money that, he said, was vital if the entire 10 million square feet of office space were to be replaced.
The jury found, however, that 10 of Silverstein's insurers, including Swiss Reinsurance, were bound by the Wilprop form defining the towers' destruction as one compensable event. The 10 insurers have combined gross property coverage of approximately $1.96 billion. Swiss Re's share accounts for nearly a quarter of the entire gross coverage of $3.55 billion.
Three insurers, Royal Specialty Underwriting, Twin City Fire Insurance, and Zurich America Insurance, are not bound by Wilprop, the jury decided. On a single-occurrence basis, the gross WTC property coverage for these companies is approximately $227 million. These three will join Allianz, Gulf, IRI, TIG, Tokio Fire and Marine, and Travelers in the next phase of the trial.
Silverstein is optimistic about the outcome of the second phase. "We feel the evidence is strongly in our favor and look forward to our next day in court," he said. "And we're looking forward to the day when this litigation ends so we can focus all of our attention on rebuilding."
Silverstein hopes to break ground for the 1,776-foot Freedom Tower on July 4, and to have construction finished by 2009. The rebuilding at Seven World Trade Center already has begun and is expected to be completed by the end of next year.
The verdict has raised speculation that Silverstein will lack sufficient funding to realize all of the plans for rebuilding, which call for four buildings on the trade center site and a fifth to replace the Deutsche Bank building across the street. The original design for the site was based on 10 million square feet of office space, which was the square footage before the trade center buildings were destroyed, and approximately 500,000 square feet of retail space.
At a recent luncheon, Governor George E. Pataki said that the rebuilding time line is on track and that ground breaking for the Freedom Tower is months ahead of schedule. Other construction in the area surrounding the site includes a federally-funded Fulton Street transit station. A damaged Con Ed substation was scheduled to reopen at the end of May.
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