Swiss Re’s liability for the World Trade Center (WTC) is to be limited to $877 million, after a jury backed the firm’s interpretation of the insurance policy.
The WTC leaseholder had argued the September 11 attacks on the twin towers constituted two insured events, meaning he could collect twice on the policy.
The jury in New York supported Swiss Re’s claim that it had signed up to a policy which clearly defined the destruction of the twin towers as one event, rather than two.
The Zurich-based company is the most exposed of the insurers of the WTC. It underwrote 22 per cent of insurance, which means it faces a bill of $877 million (SFr1.14 billion). Its liability could have doubled if the leaseholder, Larry Silverstein, had prevailed.
“For us, it’s an important matter of principle,” said Jacques Dubois, boss of Swiss Re’s American unit. “You cannot change the terms of an insurance contract after the loss.”
Shares in Swiss Re rallied on news of the ruling in New York, rising by 2.5 per cent to SFr88.10 during early trading on Tuesday.
The jury’s decision means two other trials will be needed to decide how much insurance money Silverstein will receive.
Last week, the same court ruled in favour of most other WTC insurers, which had also argued that the September 11 attacks constituted one insured event.
“Of course, I am disappointed that the jury did not see things our way with respect of most insurers,” Silverstein said in a statement. “But… a defeat in the courtroom is not a defeat for rebuilding. Whatever happens in court, we are determined to rebuild.”
The verdicts in favour of the insurers mean that Silverstein’s maximum insurance payout is likely to be limited to the value of the policy, around $3.5 billion. He had been hoping to collect around $7 billion.
Silverstein, 72, leased the 6.4-hectare complex just six weeks before the September 11 attacks destroyed the towers, killing over 2,700 people.
The WTC insurers, led by Swiss Re, have since been embroiled in a lengthy and acrimonious battle with Silverstein over the small print of the insurance policy, which was still being ironed out when the attacks took place.
The original policy drawn up by the leaseholder’s broker, Willis, defined the destruction of the lower Manhattan landmark as one insured event.
But a second policy from Travelers insurers, drawn up some weeks later, did not make clear whether the felling of the twin towers would constitute one or two insured events.
Silverstein had argued that the second contract should apply, which meant he could potentially collect twice on the policy. The insurers – led by Swiss Re – insisted on sticking to the terms of the original agreement.
The Travelers contract was emailed to Swiss Re before the September 11 attacks, but the reinsurer never responded. The jury had therefore to decide whether Swiss Re’s silence on the matter constituted agreement.
Silverstein has outlined an ambitious project to redevelop the site.
Both he and city officials said they would need at least $7 billion in insurance money to proceed with the plans, which include a vast twisting skyscraper called “Freedom Tower”, over half a kilometre high.
swissinfo with agencies
Following the district court ruling, Swiss Re’s faces a bill of $877 million.
The World Trade Center was insured for $3.5 billion.
More than 2,700 people were killed when two planes crashed into the twin towers on September 11, 2001.