Swiss Re seeks to limit WTC insurance exposure

Silverstein Properties, the owner of the World Trade Centre, yesterday insisted it was entitled to $7bn (£4.8bn) in claims resulting from the destruction of the twin towers and accused insurers of trying to avoid their obligations.

The move came after Swiss Re, the largest insurer of the World Trade Centre, filed papers in a US federal court to try to establish legal backing for its belief that the terrorist atrocity constituted one event rather than two. The case will determine whether 22 insurers in America and the UK that covered the towers collectively must pay a total of $3.5bn, the value of the insurance policy when Silverstein took over the buildings in July, or up to $3.5bn on each tower.

A spokesman for Silverstein said: "Swiss Re's action is absolutely without merit. We believe it is an attempt to avoid their obligations."

Swiss Re's move to seek a judicial "declaratory judgement" is potentially risky because the judgment could go against the reinsurer, leaving it with a massive bill and little room for negotiation with Silverstein later. It is likely that both sides will appeal if the decision goes against them. Jacques Dubois, a board member of Swiss Re, said the company had sought more than one legal opinion and "strongly believed" the Southern District of Manhattan Court would find in its favour.

Swiss Re has 22 per cent of the primary cover on the towers as well as a large part of the reinsurance from other insurers. The case's outcome will also determine the final liability of a number of other large insurers in the US and the UK.

The others could ally themselves with Swiss Re, but may choose to hold back due to the sensitivity of the case. One senior UK insurer said: "There will be plenty of litigation about the losses after 11 September, but this is the most sensitive of them all because the buildings were a symbol of national pride and so many people were killed."

So far Silverstein is understood to have received only negligible payouts from insurers, to meet immediate costs such as cleaning up lower Manhattan and for loss of rental revenue. Swiss Re denies that it is trying to avoid honouring the policy and says it has sought a court judgment so that the matter can be settled swiftly.