Ronald O. Perelman, once one of America’s richest individuals, is currently in a New York State Supreme Court courtroom. He is involved in a legal battle with major insurance companies, including Lloyd’s of London, Chubb Ltd., and American International Group Inc. The case revolves around five valuable paintings that Perelman claims were damaged in a fire at his East Hampton estate in 2018.
Perelman testified that the fire, which started in the attic of his property known as “The Creeks,” caused irreversible damage to artworks by renowned artists such as Andy Warhol, Cy Twombly, and Ed Ruscha. Although the insurers have already compensated him over $100 million for other items affected by the fire, they are disputing his claim for $410 million related to these five specific pieces.
During his testimony, Perelman expressed his deep concern for the artworks, stating, “I could tell something was gone. The impact, the power – it wasn’t the same.” He believes that the paintings have lost their original vibrancy and nuance, a claim supported by expert witnesses who discussed the harsh conditions the artworks faced during the fire suppression efforts.
The trial, now in its third week, raises significant questions about what constitutes “damage” under fine art insurance policies. Perelman’s policy was designed to cover full replacement value, even for minor aesthetic changes. For example, Warhol’s iconic Campbell’s Soup Can was appraised at $12.5 million but insured for $100 million.
Perelman argues that his policy entitles him to full reimbursement due to the loss of artistic quality. However, the insurers challenge the validity of his claims, noting that he did not mention damage to the five paintings until 2020, nearly two years after the fire. They suggest his lawsuit is a strategic move to recover losses from other financial struggles, particularly related to his stake in Revlon Inc., which has seen its market value decline.
This financial pressure intensified during the pandemic, leading to margin calls from lenders. Court records indicate that Perelman sold 71 artworks between 2020 and 2022, raising nearly $1 billion. His attorney, Jonathan Rosenberg, argued that the timing of Perelman’s claim indicates it is more about financial recovery than genuine concern for the art.
The trial is shedding light on the often-hidden world of high-value art ownership and the insurance policies that protect such investments. With the outcome likely to influence future art insurance cases, this trial is significant for both the art and insurance industries.
Adding to the intrigue, Citadel founder Ken Griffin and gallerist Larry Gagosian have been mentioned in connection with the case. The insurers point to Griffin’s visit to Perelman’s estate in 2020 and subsequent art purchases as evidence that the contested works may have been for sale.
As the trial continues, the court will not only weigh the physical integrity of the paintings but also the credibility of Perelman, who has been a key figure in high-stakes investing. Justice Joel M. Cohen is presiding over the case without a jury, and the upcoming week is expected to feature testimony from art conservators and chemical analysts, as well as video depositions from notable figures in the art and finance sectors.
The case is officially referenced as AGP Holdings Two LLC v. Certain Underwriters at Lloyd’s of London, 654742/2020, in the Supreme Court of the State of New York, County of New York.