NEW YORK–New York's governor and insurance superintendent announced today that the World Trade Center developer and seven insurers had reached a $2 billion settlement of all claims arising from terrorist destruction of the twin towers.
The agreement between Silverstein Properties and the carriers was described by Gov. Eliot Spitzer and Superintendent Eric R. Dinallo as the largest settlement in regulatory history.
Their announcement at New York Insurance Department offices in Manhattan was a crowded affairs crowded with local, state and federal officials and insurance executives.
The arrangement, they said, ends nearly six years of legal conflict and removes the last major obstacle to development at the Ground Zero Trade Center site.
This might not be the end of WTC-related coverage disputes, however. The day following the agreement, Paris-based reinsurer SCOR announced it would seek arbitration over its share of its reinsurance contract with Allianz, saying the settlement "does not respect the terms and conditions" of its reinsurance contract.
"SCOR has already informed Allianz that this settlement exceeds the contractual requirements and contains exgratia elements," the company said in a statement, indicating it felt the settlement payment was made voluntarily, and not out of any legal obligation under its contract.
Overall, this latest settlement would bring total 9/11-related insured losses to nearly $37 billion, according to the Insurance Information Institute, which reported that up until last week's deal, the insurance industry as a whole had paid, in 2006 dollars, $35.9 billion in claims for terrorist attacks in New York, Washington, D.C., and Pennsylvania.
According to the governor and superintendent, resolution of the claims means that Silverstein Properties and the New York and New Jersey Port Authority that share the site can now obtain financing and forge ahead with a rapid construction schedule.
The insurance companies involved in today's settlement are:
o Travelers Companies, Inc.
o Zurich American Insurance Company
o Swiss Reinsurance Company
o Employers Insurance Company of Wausau
o Allianz Global Risks US Insurance Company
o Industrial Risk Insurers (now owned by Swiss Reinsurance Company)
o Royal Indemnity Company
Pierre Ozendo, chief executive officer of Swiss Re America and Andreas Shell, Claims Crisis Coordinator of Allianz Group and representative of Travelers were on hand to praise the settlement.
The governor called the agreement that he and Mr. Dinallo negotiated a reflection of his administration's commitment to World Trade Center redevelopment as a top priority.
He said in a statement it would "ensure that all parties have the necessary resources available to make the World Trade Center a symbol of New York's global commercial leadership."
Silverstein Properties, Inc. leased the World Trade Center from the Port Authority in July 2001. When terrorists destroyed the twin towers Sept. 11, 2001 paperwork on the insurance policies for the Trade Center had not been completed.
Suits were filed in October 2001 to resolve disputes over how much the insurance companies owed and whether two separate insurable events were involved.
The courts eventually determined that the most Silverstein Properties could collect was $4.68 billion. Until now, the insurance companies have paid about half of that total, leaving the remaining sum in dispute.
Officials said that in late March, Mr. Dinallo began holding dozens of meetings with Silverstein Properties and the insurance companies.
"This had to come to an end it was hurting the public confidence in government and the insurance industry," Mr. Dinallo said today.
This month, when several outstanding issues remained unresolved, Governor Spitzer became personally engaged in the negotiations.
As part of the agreement, Silverstein Properties and the insurance companies have signed confidentiality agreements requiring that specific amounts paid by each company will not be disclosed. The total for all seven companies is $2 billion. These agreements settle all outstanding court cases and related proceedings, according to the state's announcement.
Silverstein Properties and the Port Authority reached a global agreement last September for comprehensively rebuilding the World Trade Center site. The agreement called for the Port Authority to construct Towers 1 and 5, for Silverstein Properties to construct Towers 2, 3 and 4 along the eastern portion of the site.
The arrangement called for the Port Authority to prepare the "East Bathtub" foundation for construction of those towers. In order to help finance this rebuilding, Silverstein Properties and the Port Authority agreed to a split of the remaining insurance proceeds of approximately 56 percent to Silverstein and 44 percent to the Port Authority.
In announcing the settlement it was noted that the two sides have spent hundreds of millions of dollars on legal fees and other court-related costs. The authorities said the agreements will save additional tens of millions in further legal costs.
The governor and Mr. Dinallo had words of praise for a number of officials they said had been integral in helping to reach this agreement.
They said Democratic Assembly Speaker Sheldon Silver had fostered a discussion of the insurance issue at his hearings and sent letters to insurers and U.S. Sen. Chuck Schumer; D-NY had sent letters to insurance companies and pressed for Senate hearings on this matter.
They called Rep. Anthony Weiner, D-NY, one of initiative's first political advocates who not only sent letters to insurance commissioners urging their involvement but also got the rest of New York delegation to join him.
Assemblyman Adriano Espaillat and State Sen. Frank Padavan, they noted, had sponsored legislation in support of resolving this issue and Comptroller Bill Thompson sent repeated letters to the insurers and New York Councilman Alan Gerson held Council hearings and sent letters to insurance companies.
Also listed for praise were U.S. Sen. Hillary Clinton, City Council Speaker Christine Quinn, City Public Advocate Betsy Gotbaum, Rep. Jerry Nadler, Rep. Carolyn Maloney; Rep Steve Israel, Rep. Vito Fossella, Local 32-BJ and the Building Trades.
The agreement, according to Gov. Spitzer, "ensures that the Port Authority and Silverstein Properties will have the financial resources to meet their obligations and rebuild at the World Trade Center site in a way that will make all New Yorkers proud and fuel the revitalization of Lower Manhattan."
Superintendent Dinallo said, "This is government at its best, working with industry to solve a problem, rather than using the courts or fines or other adversarial procedures. This case highlights the essential role that insurance plays in modern society."
Port Authority Chairman Anthony R. Coscia said, "A year ago, the Port Authority assumed the enormous responsibility to build the World Trade Center Memorial, Transportation Hub and Freedom Tower. That commitment also requires us to protect our public investment in these projects by ensuring that the appropriate level of insurance proceeds are recovered. I'd like to thank Governor Spitzer and Insurance Superintendent Dinallo for assisting us in settling these issues so the vision we have for the site will be realized."
Mr. Silverstein said, "Gov Spitzer and Superintendent Dinallo deserve huge credit for recognizing the importance of settling all outstanding insurance issues, and their tireless work made sure we got it done."
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