Swiss Re has received a favorable verdict more than two-and a half years after it filed a declaratory relief action against Silverstein Properties, the master leaseholder of the World Trade Center.
On Monday the federal jury ended its deliberations by accepting the giant reinsurer’s position that the parties were bound by the language of the “WilProp Form,” which defines the loss of the twin towers as one event, i.e. an “occurrence or series of occurrences.”
Swiss Re, the largest carrier in the group that insured the WTC, is thus liable for only one recovery of $877 million, roughly 25 percent of the total coverage. The jury decided in favor of eight other insurers in a decision reached last week (See IJ Website April 30).
The precise meaning of the Travelers form, however, is still at issue and will require a second trial. Three companies, Zurich American, Royal Indemnity (a unit of Royal&SunAlliance USA) and Twin City Fire Insurance were found by the jury to have accepted the terms of the Travelers form. They will join Travelers, Allianz as primary carrier and with SCOR as reinsurer, IRI, Tokyo Marine, Gulf and TIG as participants in the second trial to define their liability under the Travelers form, which does not have the restrictive language of the WilProp Form.
A third trial could be necessary to determine the exact amount each carrier is responsible for.
Swiss Re was obviously pleased with the outcome. Jacques E. Dubois, Chairman, Swiss Re America Holding Corp., expressed the company’s appreciation for the jury’s efforts, and then noted: “According to two prior court decisions in this litigation, today’s finding means that Swiss Re’s payout obligation is no more than our 25 percent share of the $3.5 billion loss limit property policy. We have always been convinced that the maximum payout under a loss limit property policy could never exceed the sum insured, in this case $3.5 billion.”
“Swiss Re played a leading role in this litigation,” he added. “We had an important obligation to resist the insureds’ claim that they were entitled to twice the maximum payout of the policy. We believe that paying anything more than the full amount of the sum insured is both outside the terms of the coverage and wrong.”
Larry A. Silverstein, President and CEO, Silverstein Properties, acknowledged the defeat and expressed disappointment with the decision. However, he stressed that “a defeat in the courtroom is not a defeat for rebuilding. Whatever happens in court, we are determined to rebuild the World Trade Center, under Governor Pataki’s leadership and in keeping with the Master Plan.” He pointed to rebuilding efforts already underway, and said that he expected the new buildings to be “ready for occupancy by the end of 2005.”
Silverstein also noted that “We are ready to move on to the second phase of the trial against ten insurers with more than a billion dollars worth of per occurrence coverage. We feel the evidence is strongly in our favor and look forward to our next day in court. And we’re looking forward to the day when this litigation ends so we can focus all of our attention on rebuilding.”
No date has benn set for the trial, but it is expected to get under way soon.
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