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WTC getting paid Actual Cash Value?

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Posted by tonyb on November 19, 2001 at 03:07:11:


NEW YORK, Nov 15 (Reuters) - Larry Silverstein, the leaseholder of the World Trade Center, and
Swiss Re , his leading insurer, traded more blows in their highly public battle over insurance
payments on Thursday, as Swiss Re said Silverstein's claim for the full value of the World Trade
Center policy -- about $3.5 billion -- ruled out any plans to rebuild it.Silverstein, along with the
Port Authority of New York and New Jersey, which owns the complex, rejected the argument,
saying its claim for immediate payment of the cash value of the center had no bearing on its
plans to rebuild in the area.

Lurking behind the row is Silverstein's contention that he and the other insurance holders are
entitled to two payouts of the $3.5 billion policy, on the ground that the destruction of the World
Trade Center comprised two events.

Swiss Re is challenging that view, and the two are set to decide the matter in court, unless they
reach a settlement. That is unlikely in the near future, people close to the legal proceedings
said. In the latest round of the row, Swiss Re said on Thursday that Silverstein's claim for the
``actual cash value'' of the center, filed with insurers last week, meant that he, and the Port
Authority, could not claim again for rebuilding the center. ``By electing actual cash value, they
have renounced any intention to rebuild,'' said Barry Ostrager, a lawyer representing Swiss Re,
which stands to pay out about $750 million of the $3.5 billion policy.

'TOTAL AND COMPLETE FICTION' - ``It's just like with your car,'' Ostrager said. ``You can have
coverage that gives you the actual cash value of your car, or coverage that gives you the
replacement cost. If you elect actual cash value, the insurance company doesn't have to pay to
replace your car.'' Silverstein, who says he does plan to rebuild, but wants insurance payments
immediately, rejected the insurer's reading of the contract. ``Swiss Re's claim ... is a total and
complete fiction,'' he said in a statement circulated to reporters. ``The choice of the method of
settling the claim has no relationship whatsoever to whether the Port Authority and the
Silverstein Group intend to rebuild.''

Silverstein, along with the Port Authority, want actual cash value of the center paid over to them
now, as that would likely be worth more than replacement value payments, made over a long
period of time, and would entitle them to interest on the lump sum, which would otherwise go to
insurers like Swiss Re. The Port Authority could not be reached for comment on the matter.
Swiss Re said it is ready to that pay the cash value, but on the understanding that there are no
plans to rebuild -- which would give rise to further insurance claims.

Swiss Re, which has already paid its share of an initial $75 million payment to the insurance
holders, said that if the full value of the $3.5 billion policy were paid out now, $1.5 billion would
go to the Port Authority, $663 to General Motors Acceptance Corp. (GMAC) and UBS Warburg,
which lent Silverstein money to take on the lease, and a maximum if $1.3 billion to Silverstein
and Westfield Holdings Ltd. his partners in the lease.

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