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Court ruling bodes well for Swiss Re

Swiss Re's chances of limiting its exposure to the September 11 attacks have received a boost following a US court ruling in favour of three insurers.

This content was published on September 26, 2002 - 17:33

A New York judge ruled that the leaseholder of the World Trade Center was not entitled to collect twice from the attacks, even though two planes hit the towers.

US district court judge, John S Martin, said the wording in the contracts with the Hartford Fire Insurance Co., the Royal Indemnity Co. and the St Paul Fire and Marine Insurance Co. allowed them to consider the terrorist attacks as a single occurrence.

The ruling has significantly increased the chances that Swiss Re, which is the most exposed insurer to the twin towers, will also be able to treat the claim as one insured event, rather than two, as demanded by the WTC leaseholders, Silverstein Properties.

"[The decision] was definitely positive for the whole insurance and re-insurance sector," said Rene Locher, insurance analyst at Bank Sarasin. "It will be quite hard for Mr Silverstein to prove now that it was two events [when the other insurers challenge the claim in November]," he told swissinfo.

Liable

The Swiss insurance company is liable for 22 per cent of the coverage under the WTC's multi-layer policy. The value of the policies is $3.5 billion, but would be double that if the court agreed to consider the attacks as two separate events.

Swiss Re and 16 other insurance companies are still waiting for a decision to be made in their case.

Jacques Dubois, chairman of Swiss Re American Holding Corp., was hopeful about the ruling. "It will inevitably lead to the conclusion that the rest of the insurers were protected from having to pay twice," he said.

However, Silverstein Properties expressed its disappointment and said the three insurance companies together were responsible for only $112 million of the coverage.

"Obviously, we disagree with the ruling and will consider an appeal at the appropriate time," said Gerald McKelvey, a spokesman for Silverstein Properties.

Silverstein estimates the losses incurred from the September 11 terrorist attacks at $8.2 billion. This amount includes $5.7 billion for the two 110-storey towers, retail property at the site and buildings 4 and 5 that were destroyed.

swissinfo with agencies

Key facts

A US judge ruled that the September 11 attacks are to be considered as one insured event for three insurers.
The ruling has increased Swiss Re's chances of limiting its exposure.
Swiss Re must foot 22 per cent of the insurance bill.
Swiss Re and 16 other insurance companies are still waiting for a decision to be made in their case.

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