“After trying unsuccessfully to negotiate a lower bill, the biggest insurer of the World Trade Center went public with a conflict yesterday. The insurer, Swiss Re, sued to limit how much it will pay to half of what the buildings’ managers are asking,” writes Stephen Labaton in today’s New York Times.

“The real estate executive whose companies hold a 99-year lease on the property, Larry A. Silverstein, has said he will seek $7 billion from insurers. He argues that each of the two hijacked airliners that crashed into the towers constituted a separate attack covered by $3.5 billion in insurance.”

“Swiss Re, the insurer liable for the largest share of the claims, formally balked at that figure yesterday. It asked the Federal District Court in Manhattan to determine that it and the other insurers would be liable for only $3.5 billion because both crashes amounted to a single insurable incident.”

“The dispute involves Mr. Silverstein, who took over management of the World Trade Center just weeks before the attack; his lenders, who have committed many billions of dollars more than Mr. Silverstein and now have an investment collateralized by a set of buildings lying in rubble; the Port Authority of New York and New Jersey, the owners of the land that issued the lease, now suffering a disruption of income from the notes it holds from Mr. Silverstein; and Swiss Re, the reinsurance company providing more than a fifth of the overall insurance coverage for the trade center. Chester Higgins Jr./The New York Times Larry A. Silverstein, whose companies hold a 99-year lease on the World Trade Center, is seeking $7 billion from his insurers.”

“Complicating the picture is the fact that there was no insurance policy yet issued on the properties when they were destroyed. Since the Port Authority transferred management of the properties to a group of investors led by Mr. Silverstein shortly before the attack, the insurance policy was under negotiation at the time the buildings collapsed and final wording had not been completed. The insurers have agreed to be bound by the ‘binder’ agreements on the coverage although differences of opinion emerged yesterday about their interpretation.”

“The lawsuit was described by lawyers involved in the case as the latest step after failed negotiations trying to resolve the competing claims for a limited insurance pool. Lenders involved in those talks have included the GMAC Commercial Mortgage Corporation, Wells Fargo and UBS Warburg.”

” ‘There has been an ongoing dialogue among the parties and it will continue,” said Barry R. Ostrager, a partner at Simpson Thacher & Bartlett, which represents Swiss Re. ‘What we are seeking is a clarification by the court of the rights and obligations of all of the parties.’ “

“Mr. Silverstein — who, like many real estate developers, invested relatively little in the deal and was highly leveraged — has said he intends to use the insurance proceeds to construct new buildings on the site. But lawyers say that some of his lenders fear the insurance may be inadequate to cover both the loss of the buildings and the lost rental income that had been viewed as crucial to making the interest payments on the loans that were secured by Mr. Silverstein’s company to acquire the lease last summer.”

“Swiss Re, the world’s second-largest reinsurance company after Munich Re, said yesterday that it faced the largest exposure to loss from the destruction of the trade center buildings. As with any large insurance policy, the major insurers turned to reinsurers — companies that insure the insurers — to spread the risk of possible loss. Of the 22 companies involved in providing coverage to the World Trade Center, the exposure of Swiss Re is the largest. For all losses over $10 million, Swiss Re agreed to pay 22 percent of the claims.”