Tuesday, November 30, 2010

"Loss picture bleak for WTC art," by Sara Martin,

November 19 2001, Business Insurance, "Loss picture bleak for WTC art," by Sara Martin,

NEW YORK - Among the tens of billions of dollars of losses arising from the terrorist attacks on the World Trade Center is "well over'' $100 million worth of destroyed fine art, one insurer estimates.

Though the amount of insurance covering that lost art has yet to be determined, fine-art specialists say it is common for the value of corporate art collections to be much higher than the amount for which they are actually insured.

With so much art lost in the collapse of the WTC towers, the amount of insured losses on these collections could approach $100 million, one fine-art insurance expert says.

It will be some time, though, before it is known exactly which works of art were destroyed or damaged in the Sept. 11 WTC attacks. For many tenants, the loss of their employees and their relocation concerns have taken a far higher priority over the filing of insurance claims for lost artwork.

What is known is that private art collections were commonplace among the corporate tenants of the twin towers. Some, including Cantor Fitzgerald L.P. and Silverstein Properties Inc., had extensive private and-in the case of Silverstein-public art collections that were destroyed.

"There was a lot of art throughout the buildings,'' said Greg Smith, director of the fine-art and jewelry division of New York-based insurance adjuster Cunningham Lindsey International. "If you went through the 200 floors of the two buildings, with all the major corporations there, you'd see some significant art losses,'' he said.

Mr. Smith said he would not be surprised if insured art losses ended up totaling $100 million. "There are multiple companies with little exposures, which add up to big numbers,'' he said. "Every company had some art.''

He also noted that many companies located near the WTC complex also had artwork that was damaged by debris and soot following the towers' collapse. Those works must be cleaned and, in some cases, restored, which will add to insured loss figures.

But as Robert Salmon, president of Fine Arts Risk Management Inc., an Arlington, Va.-based unit of the Near North Insurance Group, points out: "It might take a great deal of time for actual claimants to come forward, because they've got tremendous other priorities right now.''

The WTC and the plaza area surrounding it were home to more than $10 million worth of public art, which was acquired by the Port Authority of New York & New Jersey and later transferred to Silverstein Properties as part of its long-term lease of the center. Among the destroyed pieces was a $2.25 million Alexander Calder mobile; a $2 million Joan Miro tapestry, a $1 million Fritz Koenig fountain and a $1 million Masayuki Nagare sculpture.

New York-based AXA Art Insurance Corp., a subsidiary of Paris-based AXA S.A., insured the eight public art pieces that Silverstein acquired in the lease deal.

According to information supplied by the Port Authority, those eight pieces of art had insurance appraisals totaling nearly $10.2 million. An AXA spokeswoman said that the art was insured on a scheduled policy, meaning that each of the art pieces was insured to its full value.

In addition to Silverstein Properties' public art collection, AXA also insured two private corporate art collections in the WTC, the spokeswoman said. It expects to pay out a total of $20 million in art losses, or $2.5 million net of reinsurance, to its three clients, she said. In all, AXA estimates that "well over $100 million'' of art was destroyed in the WTC collapse.

The spokeswoman noted that for two policyholders the value of their collections is "much higher'' than the amount AXA will pay out in insurance claims. This is because the clients, never anticipating that their entire collections might be destroyed in a single event, opted for a ``loss-limit'' policy, which is based on probable maximum loss scenarios.

"It's very, very typical...that insureds buy only a certain amount of coverage'' for their entire corporate art collection as a means to save money, said Grace Thomas, assistant vp in the marine division of Atlantic Mutual Insurance Co. in Madison, N.J. Under probable maximum loss scenarios, "no one ever considered that all of a collection would be lost in one event,'' Ms. Thomas said. So it's not unreasonable for a corporate art collection to be worth $100 million but only be insured for $25 million per event, she said.

Fine-arts market sources say that AXA insured Cantor Fitzgerald's art collection, which at one time included 100 Auguste Rodin sculptures and drawings. According to Art News magazine, all but four of the Rodin works were removed from the 105th floor of the North Tower in 1996, after the death of the firm's founder, B. Gerald Cantor. What might have been added to the corporate collection since then remains unclear, the article notes.

Cantor Fitzgerald, which lost 700 members of its staff of 1,000 in the Sept. 11 attacks, did not return phone calls for this story.

In addition to AXA, other major players in the fine-arts insurance community include ACE USA Inc., Atlantic Mutual, Chubb Corp. and underwriters at Lloyd's of London. All but ACE, which would not comment, reported that they had little, if any, art exposure at the WTC.

But it was not only art collections housed in and around the WTC that were destroyed in the Sept. 11 terrorist attacks. About 25 military art pieces also were destroyed in the attack on the Pentagon, according to the four branches of the U.S. military.

The U.S. Army, for example, lost eight paintings and watercolors, said Renee Klish, art curator for the U.S. Army Center of Military History in Washington.

"They were not Picassos or Rembrandts; they were all soldier art,'' Ms. Klish said. ``There's more of a historical value than a fiscal value,'' she said, adding that the art that was destroyed was valued at about $7,100.

Ms. Klish said that since World War I, the Army has commissioned artists to provide firsthand interpretations of the scenes of Army involvement all over the world. The attack on the Pentagon destroyed paintings depicting scenes of military engagement in World War II, Vietnam, the Gulf War, Bosnia and Panama. A portrait of former President Dwight D. Eisenhower also was destroyed, Ms. Klish said.

Martin, Sara. "Loss picture bleak for WTC art.(Brief Article)(Statistical Data Included)." Business Insurance. 2001. HighBeam Research. (October 4, 2010). http://www.highbeam.com/doc/1G1-80236931.html

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