Larry Silverstein, the leaseholder of the World Trade Centre in New York, is to be left with no more than $4.7bn (£2.6bn) of the $9bn he needs to redevelop the site, after yet another court judgment went against him this week.
Concluding the first stage of a trial to determine the liabilities of Mr Silverstein's insurers, held in New York on Monday, a jury cleared Swiss Re of having to pay twice, ruling that its policy wording prevented Mr Silverstein from classifying the terrorist attack on the twin towers as two events rather than one.
Swiss Re, the world's second largest reinsurer, carried the biggest liability among Mr Silverstein's insurers, with coverage of $877.5m. A doubling of its liability would have left it facing a payout of up to $1.7bn, for which Swiss Re had made reserves of just $778m.
Swiss Re's US chairman, Jacques Dubois, said: "We are pleased that the jury has confirmed the contractual basis of our coverage. We had an important obligation to resist the insured's claim that they were entitled to twice the maximum payout of the policy. We believe that paying anything more than the full amount of the sum insured is both outside the terms of the coverage and wrong."
Chris Hitchings, an analyst at Commerzbank, said it was glad to see the end to the uncertainty that the trial had brought. "It's uncertainty that the market hates, and if the company had lost after assuring us that it was going to win, it would have had much greater implications beyond the court case," he said.
"But with the short-term uncertainty removed, I think you'll now see Swiss Re perform strongly relative to its sector going forward."
Last week, eight other insurers, including a Lloyd's of London syndicate led by Hiscox, were cleared from a potential doubling of their losses.
However, the jury ruled against Royal & SunAlliance, Zurich Financial Services and Hartford Financial Services, asserting that their policy wording was not tight enough to exclude a double payout.
A second trial will now decide whether or not the terrorist attack can legitimately be classified as two events - one for each plane that crashed into the two buildings. If the verdict goes against RSA, it could face paying up to double the $127.8m it currently owes. Zurich's liability is a relatively small $45.7m.Reuse content