PA in latest WTC insurance battle.
The Port Authority has already received $950 million for damages incurred on September 11. However, as both the PA and Silverstein are still pressed for money to complete the reconstruction of the entire WTC site, the agency has asked its insurers for more than $1 billion in additional funds.
According to Lloyd's of London, the properties were leased to Silverstein Properties at the time of the attacks and it is Silverstein's insurance coverage that should be used for rebuilding. The PA, on the other hand, wants to seek damages for two catastrophic events instead of one, making it eligible for about $1.5 billion more in insurance money.
According to Robert Hartwig, chief economist with the Insurance Information Institute, it is highly unlikely the lawsuit will be resolved in the PA's favor.
"Insurers have already paid nearly a billion dollars to the Port Authority, but [the agency] is owed money from Larry Silverstein and he needs to make those payments out of his insurance proceeds," Hartwig explained. "If he can't afford to pay, it doesn't obligate the insurers to pay the Port Authority. The issue is between Silverstein and the Port Authority."
Hartwig does concede, however, that the money Silverstein is set to receive from his insurers--at the current moment, that sum constitutes $4.6 billion--is not enough for the reconstruction process. Ultimately, the PA and Silverstein might have to raise additional funds from private investors or ask the state for help.
"The litigation could go on for more than a year or two years," he noted. "And from what I can tell, so much of Silverstein's insurance proceeds have already been spent, there is not enough money to build. They will need a tremendous amount of new private capital or [state] money to bring the project to completion. There is simply not enough insurance money or enough resources available from Silverstein."
Silverstein is still embroiled in litigation over his insurance coverage, with several claims and counterclaims filed by both Silverstein and his insurers awaiting resolution by the court. The developer has often repeated that he would need at least $7 billion to rebuild the WTC site.
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|Publication:||Real Estate Weekly|
|Date:||Jun 15, 2005|
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