SWISS RE DETERMINES ACTUAL VALUE AMOUNT FOR WTC

Swiss Re announced that there are no circumstances under which World Trade Center leaseholder Larry Silverstein can ever recover more than $3.5 billion of insurance proceeds under the coverage he purchased. Swiss Re’s experts established the true value of Silverstein’s claim in the range of $2.4 billion, an amount consistent with Silverstein’s internal calculations. Swiss Re reported that Pearson Partners, an independent real estate appraiser has estimated the actual cash value of the WTC complex at $2.156 billion under the Willis Property form (Wilprop) that Silverstein used to bind the insurance coverage. Swiss Re further reported that, in any event, Silverstein is not entitled to actual cash value proceeds at this time, because under the Wilprop form he must first disclaim any intention to rebuild. Silverstein’s only course of action then is to seek replacement cost value proceeds up to the policy limit of $3.5 billion. Regardless of what is rebuilt, or by whom it is rebuilt, the WTC will be rebuilt over eight or nine years. Calculating rebuilding costs at slightly less than $300 per square foot, the replacement cost value of the property approaches the policy limit of $3.5 billion. When discounted to net present value, the amount is approximately equal to Silverstein’s own pre- litigation estimate of $2.4 billion. Not all of these proceeds will be available for rebuilding, given the amounts of business interruption proceeds that would be paid from the same policy limit.