Best’s News & Research Service - September 14, 2011 02:33 PM (EDT)
Lloyd's Syndicate Sues Saudi Arabia to Recoup $215 Million in Sept. 11 Claims
- By Meg Green
- September 14, 2011 02:33 PM (EDT)
JOHNSTOWN, Pa. //BestWire// - Lloyd's Syndicate 3500 has filed a federal lawsuit against Saudi Arabia and a host of charitable groups and individuals with alleged ties to al-Qaida for $215 million.
Brighton, England-based Lloyd's Syndicate 3500, in its own right and as a successor to Lloyd's Syndicate 271, filed the lawsuit against the Kingdom of Saudi Arabia, the Saudi High Commission for Relief of Bosnia & Herzegovina, Saudi Joint Relief Committee for Kosovo and Chechnya, Saudi Red Crescent Society, National Commercial Bank and several others to recoup the $215 million in claims that the syndicate paid out from the Sept. 11, 2001 terrorist attacks.
The lawsuit was filed Sept. 8, just days before the 10th anniversary of the attacks, in the U.S. District Court for the Western District of Pennsylvania in Johnstown, Pa. The court has jurisdiction for Shanksville, Pa., the site where one of four planes seized by the 19 al-Qaida terrorists crashed.
The ambitious 154-page lawsuit traces the early roots of al-Qaida, and its funding, back to the Russian occupation of Afghanistan in the 1980s. It recounts the history of financial support for the terrorist organization across several decades and continents.
"The success of al-Qaida's agenda, including the Sept. 11 attacks themselves, has been made possible by the lavish sponsorship al-Qaida has received from its material sponsors and supporters over more than a decade leading up to Sept. 11, 2001. Each of the defendants named herein was a knowing and material participant in al-Qaida's conspiracy to wage jihad against the United States, its nationals and allies," the lawsuit said.
Referencing a number of U.S. government sources, including the Final Report of the National Commission on Terrorist Attacks Upon the United States (the 9/11 commission), the lawsuit outlines how al-Qaida relies on an international financial network for funding.
"This organization included a financial support network that came to be known as the 'Golden Chain,' put together mainly by financiers in Saudi Arabia and Persian Gulf States," the lawsuit said. The nonprofit groups named in the lawsuit were funded by the Saudi government and other benefactors, the lawsuit said.
In the wake of the Sept. 11 attacks, U.S. counter-terrorism officials estimated that al-Qaida required $35 million annually to sustain its infrastructure.
"While any single terrorist attack may be relatively inexpensive to carry out, terrorist groups continue to need real money," Stuart A. Levey, undersecretary of terrorism and financial intelligence, testified before Congress in 2004. "They depend on a regular cash flow to pay operatives and their families, arrange for travel, train new members, forge documents, pay bribes, acquire weapons and stage attacks," the lawsuit quotes Levey as saying.
Stephen A. Cozen of the Philadelphia-based law firm Cozen O'Connor filed the lawsuit on behalf of the Lloyd's syndicate.
Nearly 3,000 people died on Sept. 11, 2001 in Virginia, New York and Pennsylvania as the terrorists hijacked four commercial airplanes. Two planes crashed into and destroyed the landmark Twin Towers of the World Trade Center in New York, one crashed into the Pentagon in Washington, and the fourth crashed in Pennsylvania as passengers fought to regain control of the aircraft.
For property/casualty insurers and reinsurers, the Sept. 11 terrorist attacks were at the time the largest cumulative claims payout in global insurance history, producing insured losses of about $32.5 billion, or $40 billion in 2010 dollars. Only Hurricane Katrina in 2005 caused a greater insured loss, $45 billion in 2010 dollars, according to the Insurance Information Institute.
In a recent report on terrorism, reinsurance broker Guy Carpenter & Co. said terrorism continues to "pose a serious risk" to insurers and reinsurers. Although big, costly attacks such as those of Sept. 11, the 2003 train bombings in Spain and the 2007 London bombings, have not been repeated in recent years, Guy Carpenter said "global recorded terror attacks are at historically high levels" (Best's News Service, Aug. 22, 2011).
Guy Carpenter noted capital supply remains abundant at an estimated $6 billion to $8 billion of terrorism capacity currently available in the U.S. market. "However, a portion of that capacity remains unclaimed, as much of the U.S. terror risk resides in the program originally created by the Terrorism Risk Insurance Act of 2002, which provides a governmental backstop for terror loss but does not purchase reinsurance," the broker said.
(By Meg Green, senior associate editor, BestWeek: Meg.Green@ambest.com)