WTC insurers in $2 billion settlement

Insurers have agreed to pay an additional $2 billion to developers of the World Trade Center in New York Keystone

Seven insurers – including Swiss Re and Zurich Financial Services – will pay an additional $2 billion (SFr2.45 billion) to developers of the World Trade Center (WTC).

The payment resolves all outstanding claims from the September 11, 2001 attacks and speeds redevelopment of the site, New York State officials announced on Wednesday.

Details of the settlement were not disclosed, but Zurich, which said it had already reserved funds for the payouts, said its additional payment was $19.34 million, beyond the $76 million it had previously paid.

The settlement, which will be split between the Port Authority of New York and New Jersey, which owns the Ground Zero site, and developer Larry Silverstein, who held the lease on the buildings when they were destroyed, ends more than five years of litigation between Silverstein and the insurers.

“I don’t think anyone thought it would ever end,” said Eric Dinallo, New York State insurance superintendent, who helped broker the settlement.

The insurance companies include Allianz, Employers Insurance Company of Wausau, Royal Indemnity Company, Swiss Re and its Industrial Risk Insurers affiliate, The Travelers Companies Inc. and Zurich Financial Services, according to a statement from Dinallo and New York Governor Eliot Spitzer.

Officials consider the settlement the last major obstacle to redeveloping Ground Zero. Wrangling over the size of the payouts, together with questions about design and security, have slowed the rebuilding of the site, which many see as crucial to restoring lower Manhattan’s role as one of the city’s key business districts.

Redevelopment

Silverstein’s firm, Silverstein Properties, had won a maximum $4.68 billion from insurers in lawsuits, only about two-thirds of what the developer had sought.

Silverstein had collected nearly $2.5 billion of that amount. The size of the remaining payment depended in part on the amount of damages Silverstein could prove.

Silverstein Properties and the Port Authority had agreed in 2006 to split remaining insurance proceeds, with about 56 per cent going to Silverstein and about 44 per cent to the Port Authority, and the additional $2 billion secured by the settlement will be divided along those lines.

The Port Authority and Silverstein are both redeveloping the WTC site. The settlement will allow the rebuilding project to tap tax-free bonds and other credit markets.

Construction of the World Trade Center’s Freedom Tower, considered the project’s centrepiece, restarted in April 2006 after delays.

One or two?

The WTC insurers had 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 – had insisted on sticking to the terms of the original agreement.

In October 2006 a New York appeals court ruled in Swiss Re’s favour.

swissinfo with agencies

In brief

In 2004 New York court found Swiss Re’s liability for the destruction of the WTC was limited to $877 million after the jury backed the firm’s interpretation of the insurance policy.

An appeals court on Wednesday confirmed that the destruction of the WTC in the September 11, 2001 terrorist attacks was a single insured event. The leaseholder had claimed it was a double event.

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.