Pay up: Silverstein, PA warn insurers

Real Estate Weekly, Feb 14, 2007 by Daniel Geiger

The Delaware Department of Insurance is expected to issue a ruling by Monday whether it will allow World Trade Center insurer, Royal Indemnity, to spin off from its parent company, UK-based Royal & SunAlliance PLC in a decision that could jeopardize a portion of the WTC's insurance proceeds.

The insurer owes the WTC site's stakeholders, Silverstein Properties and the Port Authority, roughly $250 million in insurance payouts for the attacks of 9/11.

With support from some of the state's top political figures, both Silverstein and the Port Authority have alleged that Royal Indemnity is attempting to spin off into a separate company of limited financial means as a way to buffer Royal & SunAlliance from having to make the payment. The payout, along with over $500 million owed by German insurer Allianz, constitutes the last uncollected portion of the billions in insurance proceeds that Silverstein and the Port Authority are using as a major source of funds to rebuild the WTC site. Allianz however, although it has been stalling as long as it is legally allowed, has agreed to make the payment.

Sources at both Silverstein and the Port Authority, who couldn't speak on the record because the ruling by Delaware's Insurance Commissioner Matt Denn had not yet been made, both said that losing or receiving only part of the $250 million would deal a blow to the massive project's financing and could potentially delay work on the site. "It's time for Royal Indemnity Company to do the right thing and satisfy its responsibilities," the Port Authority announced in a statement. "We hope the Delaware Insurance Commissioner does nothing that would adversely impact on our receipt of the money owed for the World Trade Center. Royal must commit to pay what it owes."