Insurance settlement removes obstacles to rebuilding at WTC site

Calling it "a monumentally important step forward," Governor Eliot Spitzer announced Wednesday that Silverstein Properties and seven insurance companies reached a $2 billion settlement of all outstanding insurance claims arising from the destruction of the World Trade Center. The agreement, the largest in regulatory history, ends almost six years of legal wrangling and removes the last major obstacle to the redevelopment of Ground Zero.

The pact gives the rebuilding plan, which includes the Freedom Tower, four other skyscrapers, a train station, and a memorial, a dose of financial certainty.

Beginning in late March, State Insurance Superintendent Eric Dinallo held dozens of meetings with Silverstein Properties and the insurance companies. This month, when several outstanding issues remained unresolved, Spitzer became personally engaged in the negotiations.

"It is essential that the rebuilding at the World Trade Center site proceed as quickly as possible," Spitzer said. "The unsettled insurance claims were the last major barrier to rebuilding and have been bitterly and intensely contested for almost six years. The settlement is the result of an extensive collaborative effort by many, and it ensures that the Port Authority and Silverstein Properties will have the financial resources to meet their obligations and rebuild at the World Trade Center site in a way that will make all New Yorkers proud and fuel the revitalization of Lower Manhattan."

The insurance companies involved in today's settlement are Travelers Companies, Inc., Zurich American Insurance Company, Swiss Reinsurance Company, Employers Insurance Company of Wausau, Allianz Global Risks Insurance Company, Industrial Risk Insurers (now owned by Swiss Re), and Royal Indemnity Company. It's not clear how much each insurer has agreed to pay.

More than 20 insurance companies held pieces of the original $3.55 billion policy on the Twin Towers. Shortly after the attack, Silverstein claimed that the two planes that hit the towers constituted two events, entitling him to double the payout from the insurers. Silverstein won partial court victories in that claim, boosting the total possible payout to $4.6 billion. The insurers have already paid around $2.4 billion in claims on the trade center policy. Among other things, that money has been used for site preparation work, payments to lawyers, and paying back Silverstein's $563 million mortgage on the property.

"Governor Spitzer and his team, Silverstein Properties, and the insurance companies are to be commended for today's agreement," Mayor Michael Bloomberg said. "Ensuring sufficient funding to al the reconstruction of the World Trade Center site to proceed has been one of the chief challenges we've faced. Today's announcement is another major step forward in our efforts to ensure that the redevelopment of the full World Trade Center site occurs as quickly as possible and that Lower Manhattan's resurgence continues to grow stronger."