Saul Steinberg (business)
Encyclopedia
Saul Steinberg is a former financier, insurance executive, and corporate raider. He started a computer leasing company (Leasco), which he used in an audacious and successful takeover of the much larger Reliance Insurance Company
in 1968. He is best known for his unsuccessful attempts to take over Chemical Bank in 1969 and Walt Disney Productions
in 1984.
in Philadelphia. He is listed as a member of the class of 1959 although some accounts have said that he graduated in two years at age 18.
computers. While at Wharton, Steinberg had written a paper about IBM, and he had learned that IBM was charging premium prices to lease its computers. Steinberg discovered that he could offer computer leases that would undercut IBM's prices and still obtain bank financing for the entire purchase price of the computers by using the signed leases as collateral with lenders. Leasco grew rapidly, and in 1965 went public.
In an audacious move, Leasco bid to acquire Reliance Insurance Company
, a Philadelphia insurance company 10 times the size of Leasco. Reliance had been in business 150 years, having been established in 1817 to provide fire insurance. It was managed conservatively. Insurance companies have lots of liquid funds, which is just what computer leasing companies need. Steinberg offered the Reliance shareholders a combination of convertible subordinated debentures and common stock warrants (rather than cash). Reliance management resisted but eventually capitulated, and Leasco was successful in assuming control of Reliance in 1968. Steinberg was age 29 when he took over Reliance.
The following year, in 1969, when he was 30, Steinberg attempted to take over the $9 billion Chemical Bank, then one of the nation's largest financial institutions. The attempt failed and earned Steinberg the enmity of the New York financial community and a reputation for brashness.
Nonetheless, Steinberg became the CEO of Reliance, and he and his brother were the senior managers of Reliance for the next thirty years. Steinberg took on large amounts of debt during the junk bond era and grew, apparently by underpricing its insurance policies. The company paid out dividends to the shareholders, including the Steinberg family members as major shareholders, and paid Saul Steinberg large sums in compensation.
At Reliance, Steinberg hired dealmaker Henry Silverman
, who would later become widely known as the CEO of Cendant
. In 1986, while Silverman was at Reliance, he and Steinberg were involved in acquiring Spanish language television stations, and creating the Spanish-language media company, Telemundo
.
In 1995, Steinberg had a serious stroke, which he tried to keep quiet. He was forced to step back from management of the company. The high leverage, too-low pricing on insurance policies, and other problems eventually led Reliance to experience escalating financial problems. There was an attempt to sell the company. Reliance Group negotiated a transaction to be sold to Leucadia National
in 2000 for stock and the assumption of debt. However, this transaction fell apart in July, 2000.
Reliance filed for bankruptcy
in 2001 and entered into a long process of liquidation. Steinberg was forced to sell his extensive art collection and also to sell his duplex apartment at 740 Park Avenue
in Manhattan, which was bought for $37m by Stephen A. Schwarzman
of the Blackstone Group
.
. He served as chairman of Wharton's Board of Overseers for over 15 years and continues as a member of the board. The Steinberg name is highly visible at Wharton, most notably attached to Steinberg-Dietrich Hall, which served as the main undergraduate building, containing classrooms, lounges, computer labs, and departmental offices. The Steinberg Conference Center serves as home to the Executive Education Center and the Aresty Institute of Executive Education. Additionally, Steinberg endowed the Saul P. Steinberg Professor of Management chair.
host Maria Bartiromo
. Jono is the CEO of mutual fund
company Wisdom Tree. Steinberg's daughter, Laura, married Loews
executive Jonathan Tisch
. She and Tisch later divorced, and she married Stafford Broumand, a plastic surgeon.
Steinberg divorced his first wife after he met Laura Sconocchia Fisher in 1974; they married and had a son, Julian, before divorcing. In 1983, Steinberg married Gayfryd (McNabb McLean Johnson) Steinberg, who also had been married twice before. Steinberg would adopt Gayfryd's son from a previous marriage, and they had a daughter together. Gayfryd is a trustee of the New York Public Library
.
In 1989 Steinberg hosted an opulent 50th birthday party for himself that included live models depicting his favorite Renaissance paintings.
Steinberg's brother Robert or "Bobby" worked as a senior executive at Reliance, helping Steinberg run the company for many years. In 1999, as Reliance encountered severe financial problems, Saul Steinberg fired his brother, and the brothers became estranged from one another. Steinberg's mother, Anne Steinberg, sued him for unpaid loans in 2000.
In 2000 Steinberg sold his apartment at 740 Park Avenue
in New York City to financier Stephen Schwarzman of Blackstone Group
for a reported $30 million. The apartment had once belonged to John D. Rockefeller
.
Reliance Insurance Company
Reliance Insurance Company, now officially known as Reliance Insurance Company [in Liquidation], was founded in Philadelphia in 1817 and has undergone numerous corporate makeovers in the intervening years...
in 1968. He is best known for his unsuccessful attempts to take over Chemical Bank in 1969 and Walt Disney Productions
The Walt Disney Company
The Walt Disney Company is the largest media conglomerate in the world in terms of revenue. Founded on October 16, 1923, by Walt and Roy Disney as the Disney Brothers Cartoon Studio, Walt Disney Productions established itself as a leader in the American animation industry before diversifying into...
in 1984.
Background
Steinberg was born in 1939 and grew up in Brooklyn, NY where his father was involved with the Ideal Rubber Company of Brooklyn. Steinberg finished a degree from Wharton School of the University of PennsylvaniaWharton School of the University of Pennsylvania
The Wharton School is the business school of the University of Pennsylvania, an Ivy League university in Philadelphia, Pennsylvania. Wharton was the world’s first collegiate business school and the first business school in the United States...
in Philadelphia. He is listed as a member of the class of 1959 although some accounts have said that he graduated in two years at age 18.
Business career
In 1961, at the age 22, Steinberg founded Leasco Data Processing Equipment Corporation, a computer leasing company that leased IBMIBM
International Business Machines Corporation or IBM is an American multinational technology and consulting corporation headquartered in Armonk, New York, United States. IBM manufactures and sells computer hardware and software, and it offers infrastructure, hosting and consulting services in areas...
computers. While at Wharton, Steinberg had written a paper about IBM, and he had learned that IBM was charging premium prices to lease its computers. Steinberg discovered that he could offer computer leases that would undercut IBM's prices and still obtain bank financing for the entire purchase price of the computers by using the signed leases as collateral with lenders. Leasco grew rapidly, and in 1965 went public.
In an audacious move, Leasco bid to acquire Reliance Insurance Company
Reliance Insurance Company
Reliance Insurance Company, now officially known as Reliance Insurance Company [in Liquidation], was founded in Philadelphia in 1817 and has undergone numerous corporate makeovers in the intervening years...
, a Philadelphia insurance company 10 times the size of Leasco. Reliance had been in business 150 years, having been established in 1817 to provide fire insurance. It was managed conservatively. Insurance companies have lots of liquid funds, which is just what computer leasing companies need. Steinberg offered the Reliance shareholders a combination of convertible subordinated debentures and common stock warrants (rather than cash). Reliance management resisted but eventually capitulated, and Leasco was successful in assuming control of Reliance in 1968. Steinberg was age 29 when he took over Reliance.
The following year, in 1969, when he was 30, Steinberg attempted to take over the $9 billion Chemical Bank, then one of the nation's largest financial institutions. The attempt failed and earned Steinberg the enmity of the New York financial community and a reputation for brashness.
Nonetheless, Steinberg became the CEO of Reliance, and he and his brother were the senior managers of Reliance for the next thirty years. Steinberg took on large amounts of debt during the junk bond era and grew, apparently by underpricing its insurance policies. The company paid out dividends to the shareholders, including the Steinberg family members as major shareholders, and paid Saul Steinberg large sums in compensation.
At Reliance, Steinberg hired dealmaker Henry Silverman
Henry Silverman
Henry R. Silverman is an American entrepreneur and private equity investor. Silverman is best known for his role in building Cendant Corporation into a multibillion dollar business services company that provided car rentals, travel reservation services as well as real estate brokerage services and...
, who would later become widely known as the CEO of Cendant
Cendant
Cendant Corporation was a New York-based provider of business and consumer services, primarily within the real estate and travel industries. In 2005 and 2006, Cendant broke up and spun off or sold its constituent businesses...
. In 1986, while Silverman was at Reliance, he and Steinberg were involved in acquiring Spanish language television stations, and creating the Spanish-language media company, Telemundo
Telemundo
Telemundo is an American television network that broadcasts in Spanish. The network is the second-largest Spanish-language content producer in the world, and the second-largest Spanish-language network in the United States, behind Univision....
.
In 1995, Steinberg had a serious stroke, which he tried to keep quiet. He was forced to step back from management of the company. The high leverage, too-low pricing on insurance policies, and other problems eventually led Reliance to experience escalating financial problems. There was an attempt to sell the company. Reliance Group negotiated a transaction to be sold to Leucadia National
Leucadia National
Leucadia National Corporation is a holding company that, through its subsidiaries, engages in mining & drilling services, telecommunications, healthcare services, manufacturing, banking and lending, real estate, and winery businesses with a market cap of about $8.0 billion as of June 15, 2011. ...
in 2000 for stock and the assumption of debt. However, this transaction fell apart in July, 2000.
Reliance filed for bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
in 2001 and entered into a long process of liquidation. Steinberg was forced to sell his extensive art collection and also to sell his duplex apartment at 740 Park Avenue
740 Park Avenue
740 Park Avenue is a luxury apartment building on Park Avenue in Manhattan, which has been the home to many wealthy and famous residents. The building also carries the address 71 East 71st Street.-History:...
in Manhattan, which was bought for $37m by Stephen A. Schwarzman
Stephen A. Schwarzman
Stephen Allen Schwarzman is an American businessman and investor and the chairman and co-founder of the Blackstone Group, the private-equity and financial advisory firm.-Early life and education:...
of the Blackstone Group
Blackstone Group
The Blackstone Group L.P. is an American-based alternative asset management and financial services company that specializes in private equity, real estate, and credit and marketable alternative investment strategies, as well as financial advisory services, such as mergers and acquisitions ,...
.
Involvement with Wharton
Steinberg has been a major benefactor of The Wharton School at the University of PennsylvaniaUniversity of Pennsylvania
The University of Pennsylvania is a private, Ivy League university located in Philadelphia, Pennsylvania, United States. Penn is the fourth-oldest institution of higher education in the United States,Penn is the fourth-oldest using the founding dates claimed by each institution...
. He served as chairman of Wharton's Board of Overseers for over 15 years and continues as a member of the board. The Steinberg name is highly visible at Wharton, most notably attached to Steinberg-Dietrich Hall, which served as the main undergraduate building, containing classrooms, lounges, computer labs, and departmental offices. The Steinberg Conference Center serves as home to the Executive Education Center and the Aresty Institute of Executive Education. Additionally, Steinberg endowed the Saul P. Steinberg Professor of Management chair.
Family and personal life
Steinberg met his first wife, Barbara, in high-school, and they would have three children, Laura, Jonathan, and Nicholas, before divorcing in 1974. Steinberg's son, Jonathan ("Jono") is married to CNBCCNBC
CNBC is a satellite and cable television business news channel in the U.S., owned and operated by NBCUniversal. The network and its international spinoffs cover business headlines and provide live coverage of financial markets. The combined reach of CNBC and its siblings is 390 million viewers...
host Maria Bartiromo
Maria Bartiromo
Maria Bartiromo is an American television journalist, magazine columnist and author of three books. Bartiromo is a native of New York and attended New York University. She worked at CNN for five years before joining CNBC television...
. Jono is the CEO of mutual fund
Mutual fund
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities.- Overview :...
company Wisdom Tree. Steinberg's daughter, Laura, married Loews
Loews
The name Loews can refer to several articles in the Wikipedia:* Loews Theatres - Cinema chain* Loews Corporation - Holding company* Loews Hotels - Luxury hotel and resort chain with destinations in the United States and in Canada...
executive Jonathan Tisch
Jonathan Tisch
Jonathan M. Tisch has been Chairman and CEO of Loews Hotels since 1989, as well as being Co-Chairman of the Board and Member of the Office of the President of Loews Corporation, its parent company. He is the son of Founder Robert Tisch....
. She and Tisch later divorced, and she married Stafford Broumand, a plastic surgeon.
Steinberg divorced his first wife after he met Laura Sconocchia Fisher in 1974; they married and had a son, Julian, before divorcing. In 1983, Steinberg married Gayfryd (McNabb McLean Johnson) Steinberg, who also had been married twice before. Steinberg would adopt Gayfryd's son from a previous marriage, and they had a daughter together. Gayfryd is a trustee of the New York Public Library
New York Public Library
The New York Public Library is the largest public library in North America and is one of the United States' most significant research libraries...
.
In 1989 Steinberg hosted an opulent 50th birthday party for himself that included live models depicting his favorite Renaissance paintings.
Steinberg's brother Robert or "Bobby" worked as a senior executive at Reliance, helping Steinberg run the company for many years. In 1999, as Reliance encountered severe financial problems, Saul Steinberg fired his brother, and the brothers became estranged from one another. Steinberg's mother, Anne Steinberg, sued him for unpaid loans in 2000.
In 2000 Steinberg sold his apartment at 740 Park Avenue
740 Park Avenue
740 Park Avenue is a luxury apartment building on Park Avenue in Manhattan, which has been the home to many wealthy and famous residents. The building also carries the address 71 East 71st Street.-History:...
in New York City to financier Stephen Schwarzman of Blackstone Group
Blackstone Group
The Blackstone Group L.P. is an American-based alternative asset management and financial services company that specializes in private equity, real estate, and credit and marketable alternative investment strategies, as well as financial advisory services, such as mergers and acquisitions ,...
for a reported $30 million. The apartment had once belonged to John D. Rockefeller
John D. Rockefeller
John Davison Rockefeller was an American oil industrialist, investor, and philanthropist. He was the founder of the Standard Oil Company, which dominated the oil industry and was the first great U.S. business trust. Rockefeller revolutionized the petroleum industry and defined the structure of...
.
Further reading
- Insurance Journal: Reliance Files For Bankruptcy
- Forbes Face: Saul Steinberg June 18, 2001
- "Fall of the House of Steinberg" New York magazine, June 19, 2000, article by Johanna Berkman
- The Go-Go Years: The Drama and Crashing Finale of Wall Street's Bullish 60s by John BrooksJohn Brooks (writer)John Brooks was a writer and longtime contributor to The New Yorker magazine, where he worked for many years as a staff writer, specializing in financial topics...
(1999) ISBN 978-0471357551 - 740 Park: The Story of the World's Richest Apartment Building by Michael Gross, New York: Broadway Books, (2005), ISBN 978-0767917445