- The Washington Times - Monday, February 25, 2002

It was so unthinkable to real-estate developer Larry Silverstein that anything short of a nuclear bomb could destroy the World Trade Center that he deliberately underinsured its twin towers last July.
Then came the September 11 terrorist attacks in which two hijacked jetliners smashed into the World Trade Center, even before a formal insurance policy was printed out of a computer and issued.
Now Mr. Silverstein, landlord of the gaping 16-acre pit where the towers once stood, is battling 25 insurance companies in court.
It is a high-stakes court fight, in which the initial $2.2 billion policy has risen to $7.1 billion for the destruction of the twin towers.
The name-calling and accusations aside, it is clear that if his insurance claim is not paid in full there could be nowhere near enough money to rebuild the twin monuments symbolizing America's financial dominance.
Insurance lawyers told a federal judge that Mr. Silverstein's company acknowledged in financial papers for a bond issue that his coverage was "significantly less" than would be needed to rebuild the World Trade Center in the unlikely event of a catastrophe.
"[Mr. Silverstein] bought insurance almost sufficient to rebuild without regard to any possible loss of rental income," said the lawsuit by Swiss Reinsurance International Business Insurance Co. Ltd., the major player among 25 companies that insured the World Trade Center against destruction.
Mr. Silverstein recently reached a $365 million settlement with two of the companies that insured the complex and its twin towers.
Units of Ace Ltd. and XL Capital Ltd. will pay Mr. Silverstein $298 million and $67 million, respectively, within 30 days.
But it is also now virtually certain that whatever skyscrapers are rebuilt no longer will compete for the height records the 110-story towers once held. When the 1,368-foot north tower was completed in 1972, it was the world's tallest building, a mantle assumed two years later by the Sears Tower in Chicago.
However, even at 70 stories or so, the replacements still would dominate lower Manhattan's skyline and house the same 10 million square feet of workspace that made the World Trade Center the largest office complex in the world.
Mr. Silverstein says his insurance policy provides nearly $3.55 billion "per occurrence." His contentious double-indemnity theory asserts there were "two occurrences" on September 11 so he is due just over $7 billion.
"It seems to me there were two separate planes, hitting two separate towers at two separate times," Mr. Silverstein said.
Insurers have called that an "audacious theory" in legal filings that have begun to pile up at Manhattan's U.S. District Court.
"It's a complete and total fiction. He is not entitled to multiply by two the face value of insurance," said Barry Ostrager, the New York attorney for Swiss Reinsurance, a group liable to pay 25 percent of losses.
In court, the insurance companies contend:
The deadly attack was one continuing terrorist conspiracy designed by a single source, Osama bin Laden.
In any event, coverage does not double even if a judge rules that two losses occurred because an executive of Swiss Reinsurance Co. scrawled "subject to wording to be agreed" on a placing slip circulated by Mr. Silverstein's broker, Willis Limited.
That is further complicated by Willis Limited's solicitation form defining "occurrence" as all losses attributable to "one cause or to one series of similar causes … irrespective of the period of time or area over which such losses occur."
That language never was written into the policy, however, and advocates for Mr. Silverstein have compared it to "junk e-mail."
Mr. Silverstein's lawyers say Travelers Indemnity Co. agreed to issue the master policy solely on condition it use its own time-tested language, which they say leaves "occurrence" to be defined by New York law that favors Mr. Silverstein. Other insurers say the Travelers form doesn't bind them.
Recognizing risk is a key factor in keeping insurance companies profitable, so it did not surprise actuaries that page 10 of the 14-page Travelers policy specifically covers collapse of the buildings caused by an aircraft. Some risks were specifically excluded entirely and coverage was limited to $10 million if a collapse was triggered by an earthquake, volcanic eruption, or the weight of rain on the roof.
Mr. Silverstein and his lawyers have repeatedly said that the policy requires double payment to the maximum amount.
"The reason that we went to court first is that Silverstein was issuing press statements like that, false statements. This is a very litigious person," counters Mr. Ostrager, adding that Mr. Silverstein has no basis for claiming two total losses.
Despite published rumors apparently untrue that Mr. Silverstein would require tenants of demolished offices to continue paying rent, he must pay annual ground-lease fees of $120 million to the Port Authority owners, and keep his mortgages current.
He also would have to use insurance to pay off those mortgages before he could begin using insurance money to rebuild.
City, state and federal officials seem to take rebuilding for granted, while quibbling over whether the ultimate memorial will fulfill former Mayor Rudolph W. Giuliani's vision for something "soaring, monumental, beautiful."
However, Mr. Giuliani, Mayor Michael Bloomberg, and Gov. George Pataki have publicly turned a blind eye to prospects that taxpayers would have to underwrite reconstruction of the buildings if insurance companies win in federal court.
Some of Mr. Silverstein's opponents including Mr. Ostrager accuse him of intending not to rebuild at all, despite contracts that require him to do so.
Mr. Ostrager says that Mr. Silverstein's urgency to receive a lump-sum settlement indicates he wants to bail out and reap a bonanza on a personal investment estimated at just $12 million.
"He could get a phenomenal windfall of up to $1 billion and change," Mr. Ostrager said.
For its part, Swiss Reinsurance Co. has said it is liable for only the basic $778.1 million, while affiliated Swiss Reinsurance U.K. covers an additional $99.4 million of the loss. They would each pay twice those amounts if Mr. Silverstein wins.
Mr. Silverstein denies he has any nefarious intentions and insists he will rebuild in world-class style. But he does confirm that he's lowered expectations for the replacement buildings.
Mr. Silverstein said that despite "thousands of letters from around the globe urging us to put back those buildings at not one floor less than 110 stories," the new World Trade Center will not reach anywhere near the heights that previously brought it world fame and led terrorists to target it like two huge bowling pins.
"The reality is that I don't think that is pragmatic today. I think the tenants would be concerned about going higher than 60 to 65 stories," Mr. Silverstein said.
Agreeing is John C. Whitehead, czar of the new city-state commission to oversee all improvements in New York's financial district south of Houston Street.
"I think there is a developing consensus that it is not either practical or appropriate to build another 100-story building," Mr. Whitehead said.

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