Silverstein is confident WTC verdict will stick.
"Everybody will agree that this case was thoroughly debated and that every angle was examined," said the source, who asked to remain unnamed. "The jury took its time here to make its decision, combing carefully over all the arguments made, and so it seems unlikely that a court would see that this case needs to be retried or that a different verdict could have been reached. This case yielded a definitive decision."
While the trial's verdict doubled the insurers' exposure, according to the insurers it did not guarantee in itself that a doubled payout would be awarded. A spokesperson at Allianz, one of the insurers who had a policy with Silverstein worth up to about $500 million, indicated that regardless of the possibilities of a successful appeal, an upcoming appraisal process could determine that what is actually owed and wouldn't necessarily award Silverstein the full $2.2 billion verdict.
It is up to a three party appraisal process to determine the value of the towers and whether it is necessary to award the maximal value of the insurance policy to the policyholder.
Comprising the three are appraisers representing the policyholder and appraisers representing the insurer as well as a court appointed mediator.
Although in such court ordered appraisals, the opposing sides often differ in their valuation of the property in question, a well-known city appraiser who has done valuation work for the WTC and consequently asked to remain unnamed, said that it is highly unlikely Silverstein won't collect the full $2.2 billion amount.
"The two World Trade Center towers were roughly $6 billion combined," the appraiser said. "There's no way in my mind that the appraisal process could lessen the insurance company's payout when the value of the destroyed property is that high.
Silverstein will easily get the $2.2 billion. If the insurers think they are going to get off with a lesser amount in the appraising process they're in for a surprise."
The victory brings Silverstein's total insurance payout to roughly $4.6 billion, less than the $7 billion he was originally seeking but greater than the $3.5 billion single occurrence payout the insurers were hoping to defend.
Unlike the first trial, which determined solely if a group of WTC insurers used Willis Property forms in their underwriting of the Twin Towers, the second trial focused on whether the terrorist attacks of 9/11 constituted one occurrence of two. Because it is typically too expensive to individually insure each property in a portfolio of assets, building owners will insure a group of buildings under one policy.
Under this kind of policy, regardless of how much damage a single occurrence, such as a storm, might wreak on multiple properties, the insurers are only responsible for one payout. If two occurrences cause two instances of damage however, the insurers are then responsible for double the payout.
Although in the recent trial, the insurers' lawyers contended that the events of 9/11 represented a single coordinated attack, and therefore one occurrence, Silverstein's attorneys produced pivotal testimony from Frank Teterus, an executive at Industrial Risk Insurers.
Teterus cited an incident where the some storm twice passed over certain areas and caused two separate incidences of damage, but was treated as two occurrences by insurance companies because it favored a lesser payout because two occurrences doubled the policyholders' deductibles.
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|Title Annotation:||Larry Silverstein's case on insurance industry|
|Publication:||Real Estate Weekly|
|Date:||Dec 15, 2004|
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