Perelman says fire faded his $410M paintings in insurance lawsuit

by Chris Dolmetsch and Anika Arora Seth 

Ron Perelman told a judge that five of his paintings totaling over $400 million in value lost their luster from a fire in his Hamptons home, at the trial of his lawsuit seeking to force his insurers to cover the cost. 

Perelman says the artworks, which include paintings by Andy Warhol and Cy Twombly, were damaged in the 2018 fire. The 82-year-old, once considered America’s richest person, took the witness stand on Tuesday morning in the third week of the trial over his 2020 lawsuit against affiliates of Lloyd’s of London Ltd., Chubb Ltd. and American International Group Inc. 

“They were not as vibrant — the contrast was not as deep,” Perelman testified in a lower Manhattan courtroom before New York State Supreme Court Justice Joel M. Cohen, who is overseeing the trial without a jury. “They just did not have the same impact as they had before, to my eye.” 

The insurers question that the artwork at issue was damaged, and note that they paid out more than $100 million to Perelman for more than 30 pieces of art that were harmed in the fire, including about 11 on the same floor where the contested works were hanging. They say he never claimed damage to the five works until 2020, and then only because he was in dire straits and facing margin calls from his lenders.  

Rare Glimpse 

The trial provides a rare look into the world of wealthy art collectors and disputes with their insurers. Those fights are normally contested behind closed doors to keep the details of the collectors’ holdings from the marketplace and preserve a competitive advantage.  

The case has also helped pull back the curtain on the current state of Perelman’s wealth, which has declined in recent years after the business most closely associated with him, Revlon Inc., filed for bankruptcy in 2022. The case revealed that he sold art worth nearly $1 billion after shares of the company he was using as collateral plunged and lenders demanded payment.  

The legal battle stems from a fire that broke out in the attic of Perelman’s Hamptons estate, the Creeks, in September 2018, which damaged the residence and destroyed art and furniture. 

The five artworks were insured for many times their market value so they could be replaced by art of similar quality regardless of whether a collector was planning to sell, according to testimony in the case. Unlike many insurance policies that cover the cost of repair, Perelman’s policies allow him to exchange damaged artwork for its full value, even if the damage was nominal.  

For example, one of the paintings in dispute, Warhol’s Campbell’s Soup Can, was insured for $100 million despite being appraised at $12.5 million in 2018, according to a court filing. 

‘Sense of Lyricism’ 

Perelman told the judge on Tuesday that the colors on Edward Ruscha’s Box Smashed Flat and the Warhol soup can “were no longer popping” and that one of his Twombly paintings had lost its intensity, luster and “sense of lyricism.” 

The insurers also question his testimony that he never considered selling the art, noting that two pieces later bought by Citadel founder Ken Griffin were hanging in the same room as the contested pieces. Though Griffin isn’t a party in the case, his testimony is part of the evidence. 

Perelman’s holding company, MacAndrews & Forbes Inc., has owned various high-profile brands, including Marvel, Coleman and New World Entertainment. Today it owns stakes in two small biotechnology firms and Vericast, a check printing and financial solutions business that underwent a distressed debt exchange last year.  

His wealth was estimated at $19 billion by the Bloomberg Billionaires Index in 2018 but had fallen to $3.3 billion by the time his calculation was discontinued in 2021. 

The case is AGP Holdings Two LLC v. Certain Underwriters at Lloyd’s of London, 654742/2020, New York State Supreme Court, New York County (Manhattan).