Ronald O. Perelman, the financier once ranked among America’s wealthiest men, took the witness stand in a New York State Supreme Court courtroom this week, describing how five of his most prized paintings lost their visual brilliance following a fire at his East Hampton estate in 2018. The case, now in its third week before Justice Joel M. Cohen, pits Perelman against insurance powerhouses including affiliates of Lloyd’s of London, Chubb Ltd., and American International Group Inc.
The lawsuit centers on Perelman's claim that the fire – which erupted in the attic of his waterfront compound known as “The Creeks” – inflicted subtle but irreversible damage on masterworks by Andy Warhol, Cy Twombly, and Ed Ruscha. Although insurers had already paid over US$100 million for other pieces damaged in the same incident, they now challenge Perelman’s attempt to recover US$410 million for these five specific paintings.
“I could tell something was gone,” Perelman testified Tuesday. “The impact, the power – it wasn’t the same.”
At the heart of the trial is the question of what qualifies as “damage” under a bespoke fine art policy. Unlike typical insurance plans focused on restoration costs, Perelman’s coverage was designed to provide full replacement value – even in cases of minor aesthetic diminishment. According to court documents, Warhol’s Campbell’s Soup Can, appraised at US$12.5 million in 2018, was covered for US$100 million.
Perelman and his legal team argue that his policy entitles him to full reimbursement because the paintings no longer possess their original vibrancy and nuance – an argument reinforced by expert witnesses and testimony about the harsh conditions the artworks endured on the night of the blaze. Fire suppression efforts soaked the property and exposed the paintings to dampness for hours.
“They lost their intensity, their lyricism,” Perelman told the court, specifically referencing one Twombly canvas.
The defendant insurers question the legitimacy of the claims, pointing out that Perelman made no mention of damage to the five contested pieces until 2020 – nearly two years after the fire. Their legal team frames the lawsuit as opportunistic, coinciding with mounting financial strain on Perelman amid collapsing collateral from Revlon Inc., a key holding of his MacAndrews & Forbes empire.
That financial pressure became especially acute when lenders issued margin calls following Revlon's declining market value during the pandemic. Court records reveal Perelman eventually sold 71 works between 2020 and 2022, generating $963 million through Sotheby’s and private channels – a liquidation that included pieces from the same room where the now-contested paintings had hung.
“He filed this claim at a time when he needed the cash,” said Jonathan Rosenberg, an attorney representing the insurers. “This isn’t about damaged art. It’s about recovering losses from elsewhere.”
The trial has exposed a world typically shrouded in discretion: ultra-high-value art ownership and the complex insurance structures that support it. Insurance for fine art, especially when held by high-net-worth individuals, often involves valuations far beyond market appraisals, allowing collectors to replace unique works with pieces of “comparable quality” should damage occur.
Such arrangements are rarely tested in open court, making this case a significant moment for the art insurance industry. Observers note that the outcome could influence how policies are structured and litigated in the future, particularly where damage is subjective rather than physical.
Adding intrigue is the involvement – indirectly – of Citadel founder Ken Griffin and gallerist Larry Gagosian. The insurers contend that Griffin’s 2020 visit to the estate and subsequent art purchases cast doubt on Perelman’s claim that the five works were never for sale. Griffin is expected to feature in the evidentiary record, though he is not a party to the litigation.
Perelman, now 82, has long been synonymous with aggressive dealmaking and high-stakes investing. Through MacAndrews & Forbes, he amassed interests in cosmetics, media, biotechnology, and more. But the trial – like his recent financial reversals – marks a sharp contrast to the era when his fortune peaked near US$20 billion.
Today, the court is not just weighing the integrity of canvas and pigment, but the credibility of a businessman who helped define the financial ambitions of late 20th-century America. Justice Cohen, presiding without a jury, will have to determine whether Perelman’s losses are artistic, financial – or both.
The case continues next week, with testimony expected from art conservators and chemical analysts, along with video depositions of key figures from the art and finance worlds.
Case reference: AGP Holdings Two LLC v. Certain Underwriters at Lloyd’s of London, 654742/2020, Supreme Court of the State of New York, County of New York.
