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Silverstein, insurers continue claims battle

Silverstein, insurers continue claims battle

NEW YORK—Allianz A.G. said last week it is in mediation to determine how much it owes leaseholder Larry A. Silverstein in the latest round of the fight over insurance payments for the destroyed World Trade Center.

Silverstein Properties Inc. also announced last week that it has reached a $12.5 million settlement with TIG Insurance Co., another one of its World Trade Center insurers (see story, page 21).

Meanwhile, Silverstein Properties, related affiliates and the Port Authority of New York and New Jersey are seeking more than $1 billion from London-based Royal & Sun Alliance Group P.L.C. in connection with their WTC claim.

Silverstein Properties claims that Allianz Global Risks US Insurance Co., a unit of Allianz A.G. of Germany, is responsible for up to $553 million in insurance proceeds.

Allianz contends its payments are current, no insurance money is currently due and no insurance money is now needed.

According to Allianz, the insurer has already paid Mr. Silverstein and the Port Authority almost $550 million, including $313 million to Mr. Silverstein's businesses and $236 million to the Port Authority.

In a separate but related matter, Allianz has said that under an anti-transfer provision in its policy, modified rebuilding plans for the WTC site limits its obligation to pay claims for the complex's Sept. 11, 2001, destruction (BI, Aug. 14, 2006).

RSA has also taken this position. Five other insurers that have chosen not to invoke the anti-transfer provision in their policies have been dropped from a suit filed last year by Silverstein Properties, The Port Authority and WTC Retail L.L.C. over the issue. The insurers are: Zurich American Insurance Co.; Employers Insurance Co. of Wausau; Industrial Risk Insurers, formerly owned by GE Insurance Solutions and now a unit of Swiss Reinsurance Co., the WTC's lead insurer; Travelers Indemnity Co., part of Travelers Cos. Inc; and Gulf Insurance Co., a Travelers affiliate.

Meanwhile, a World Trade Center Properties suit that seeks more than $1 billion from RSA was filed Feb. 23, three days after Delaware Insurance Commissioner Matthew Denn conditionally approved RSA's disputed sale of its U.S. operations, Royal & SunAlliance USA Inc., to a management group, Charlotte, N.C.-based Arrowpoint Capital Corp.

The suit says RSA USA has paid only $5.6 million of a total coverage obligation of $255.6 million, and charges that its sale to Arrowpoint "is a fraudulent device that is intended to shield the RSA Group from the consequences of the liabilities incurred by its long-time U.S. insurance operations."

In addition to the $250 million claim, the suit seeks $750 million in punitive damages plus interest, costs and attorney's fees.

An RSA spokesman said, "It's the same old allegations. I think they are completely without foundation."

An Arrowpoint spokesman said also, "This case is without merit.... We have paid every cent we currently owe Silverstein Properties and intend to pay any future claims amounts if and when they become due."

Separately, Auburn Hill, Mich.-based DaimlerChrysler Corp. reached a settlement with RSA USA in connection with its $33 million claim.

DaimlerChrysler had unsuccessfully attempted to stay the approval of the sale of RSA USA in Delaware's Superior Court. But on appeal it won a stay by the Delaware Supreme Court, which granted the automaker's request March 2.

The two sides then embarked on their ultimately successful negotiations, said a DaimlerChrysler spokesman, who did not provide additional details of the settlement agreement.

With that hurdle overcome, RSA officially announced completion of RSA USA's sale to Arrowpoint on March 5.

Major policyholders, including World Trade Center Properties and DaimlerChrysler, had contended the deal would leave the U.S. operations with insufficient capital.