Saturday, August 27, 2011

dream builder

A famous man you probably never knew Unlike Edward Cone, author of the article, “Who is Chico Sabbah?” ( that appeared September 30, 2002, I wasn’t a member of the press so I didn’t need or want to talk to Mr. Sabbah in the same way Cone did. In fact, Mr. Sabbah and I talked mostly with written words.

They were mostly mine. When my older daughter, Chana, enrolled at the American Hebrew Academy, I quickly became appreciative of Sabbah’s vision, his generosity, and his tenacity. Idyllic by almost any standard, AHA offered a pristine yet dynamically futuristic campus. Students there did double duty; their course load matched that of the best high schools. However, added to that curriculum were required courses in Jewish studies. By the time they graduated, students were expected to be proficient in Hebrew.

And they knew that going in. When I found that Mr. Sabbah and I were both enthusiastic supporters of Israel (each in our own unique way), I suggested that he might be interested in reading my essays. “Please send them,” he told me.

So I did. Rarely did he comment on what I’d written. However, when I chose him to receive one of the handmade walking sticks I’d crafted, he thanked me with a brief note about my comparison of him to Moses. His message was clear and simple; he explained that he had never been much of writer. But he thanked me for being able to do that.

Although, in more than seven years, I’d only given away five of my walking sticks to people who I’d regarded as most deserving, I was never more sure that giving one to Chico was essential. By that time, he was always attached to his oxygen canister. Even so, it was hard to believe him when he said that his breathing problems had slowed him down.

By my daughter’s senior year, I had sent countless essays to Mr. Sabbah. Because he didn’t seem to mind receiving them, I was never reluctant to e-mail them to him. Not until late in my daughter’s stay at AHA did he ever call me.

“Barry,” he said, “does your daughter really want to go to Brandeis?”

I had written about her hopes of attending Brandeis, hopes that were dashed when they rejected her. Like most parents who believed that any university with an astute administrative staff would openly welcome their daughter’s application, I was as sorely disappointed as she seemed to be. That’s why I wrote an essay about how very fine universities can, unfortunately, make very bad decisions.

Not accepting my daughter definitely made little sense to me. At least that’s what I wrote in my very pointed essay. After reading it, Mr. Sabbah called me.

“Your daughter deserves to go to Brandeis,” he told me. “I know how good a student she is,” he said. “And I’m on the board. If she wants to go, I’ll get her in.”

That was the longest conversation he and I ever had. When I called him back to report that my daughter had wanted me to thank him for his concern but she still felt that she wanted to be accepted on her own merits, he seemed to understand. I promised to call him if she changed her mind.

Not long after that, while Chana was reconsidering Sabbah’s offer, he passed away. She never mentioned Brandeis again.

As for me, I knew I would miss his rarely offered remarks. At his funeral, I told him that as I shoveled dirt onto his casket. Stunned by the void I felt he’d left, I didn’t see his wife, Zmira approach me.

“Thank you, Barry,” she said.

I stopped. Why would she thank me?

“He loved reading your essays. And he always shared them with me. He looked forward to seeing them.”

I was speechless as I clasped her outstretched hand in hopes that she would know that I, too, felt her loss. I tried not to cry, tried not to linger.

Instead, I tried to listen to my daughter. It seemed she had made peace with not going to Brandeis, and had probably done that before either Mr. Sabbah or I had been able to.

“I want to carry his vision with me,” she said. “I’ll never forget him.”

Since then, more than four years have passed. Next week, while my newly married daughter and her husband are visiting me, I hope that the three of us will return to AHA. I’ve been told that Mrs. Sabbah can often be found on the campus.

My hope is that all four of us will find that, in addition to being a stellar academic setting, AHA will be, for us, a great place to reminisce.

Koplen 8/28/11

The Forbes 400
Who Is Chico Sabbah?
Edward Cone, 09.30.02

How last year's terror attacks uncovered--and imperiled--a long-secret fortune.
On Sept. 10, 2001 the American Hebrew Academy welcomed the first students to its 100-acre campus in Greensboro, N.C. The only Jewish boarding school in the U.S. with a non-Orthodox curriculum, AHA had a secret benefactor--one Maurice (Chico) Sabbah. Sabbah had accumulated immense wealth in the reinsurance business and poured $100 million of it into the school. As Sabbah took in the excitement of opening day, he had the extra satisfaction of knowing that he had succeeded in creating both AHA and the fortune behind it while remaining almost completely unknown to the public.

The next day put an end to Sabbah's anonymity and destroyed the companies that had made him rich. Fortress Re, based in nearby Burlington, had dominated a critical niche of the commercial aviation reinsurance business, while a sister company, a Bermuda-chartered reinsurer called Carolina Re, was distributing a small fortune in dividends to Sabbah and his partner, Kenneth Kornfeld. The terrorist attacks devastated Fortress and the big Japanese reinsurers it represented. One of those companies, Taisei Fire & Marine Insurance, has filed for bankruptcy, and another, Nissan Fire & Marine Insurance, is suing Fortress and its principals for fraud. Fortress says it did nothing wrong.

Sabbah, 73, had never spoken with the press, and for three years he rebuffed our requests for an interview. This summer, though, with his cover blown and his school in need of publicity, he agreed to speak. He says that anonymity always seemed the natural course for him, a private man in a secretive business. "I don't hide, but I don't advertise," he says. "I don't get satisfaction for what I did by having you tell me it was good."

Sabbah did not become rich until late in life. At 45 he was making a good living at an obscure unit of a big insurance company, but there was nothing to suggest that he would one day be making nine-figure gifts to anything. When the big money hit, he wasn't interested in yachts or a trophy wife. "I was faced with all this wealth, and I just wasn't geared for it. I wasn't about to change my lifestyle," he says. "I came into this world with nothing, and I will leave with nothing."

The demise of Fortress and Carolina Re raises the question of Hebrew Academy's future. It appears that Nissan's lawyers want to learn more about Sabbah's charitable contributions and personal wealth, suggesting that they would come after those assets if given the chance. Other donors may step up to the plate: Members of the school's board of trustees include p.r. guru Gershon Kekst and financier Michael Steinhardt.

Sabbah insists that the school is here to stay. He says that at least $50 million, covering the next ten years of operating expenses, is in the bank, and that his (for now) ample estate will go to the school. If other donors can be persuaded to finish the $250 million construction plan, he can focus on creating an endowment of up to $500 million, he says.

Everything about the AHA has been conceived on a grand scale, in keeping with Sabbah's vision of a boarding school that could compete almost overnight with the elite New England prep schools. In 1998 the school paid $10 million for prime acreage in a high-end Greensboro neighborhood and commissioned Aaron Green, a protégé of Frank Lloyd Wright, to design the campus (Green died last year). Buildings constructed of imported Jerusalem stone are heated and cooled by a massive network of geothermal wells. The first academic building completed, a behemoth rising from the North Carolina clay, has electronic whiteboards in every classroom. Dorms are spacious; the swimming pool will be 25 yards long. Sabbah's grant allowed the school to cover tuition for the first classes of ninth- and tenth-graders, about 80 kids in all, who started last fall. Students joining this fall are paying $15,000, including room and board. The plan is to have 200 students spread across four grades a year from now.

Grandiose philanthropy had not been the style for Chico Sabbah and his wife, Zmira, who live modestly in a ranch-style house within walking distance of their Greensboro synagogue. Their previous giving included endowing homes for handicapped people in Israel (the Sabbahs have a retarded adult daughter). If Sabbah was all but unknown, though, his partner, Kenny Kornfeld, cut a higher profile. Kornfeld entertained lavishly and lives in an old textile baron's mansion across from the second fairway of the Greensboro Country Club.

Sabbah, raised in Brooklyn and suburban Great Neck, N.Y. by an Egyptian-born father and an idealistic Zionist mother, attended the University of California, Davis to study agronomy of subtropical environments-those similar to the climate of the land that became Israel halfway through his college years. "I wanted to be a farmer in Israel," says Sabbah. His voice still suggests Brooklyn, and it is easy to see that his frame, though frailer with age, was hardened by his days cutting alfalfa on a kibbutz in Israel. After that (and after serving in both the Israeli and U.S. armies) he joined Public Service Mutual Insurance in New York. There he helped build a reinsurance business that thrived as a series of disasters, including Hurricane Betsy in 1965, laid low many competitors.

In 1972 he was working in a Burlington, N.C. office of Penn General Agencies, where he replaced the traditional high-fee structure for placing reinsurance with low fees plus commissions on profits. Fortress Re, as the business was eventually called, escaped the notice of regulators because it was only a managing agent, not an insurer. In 1979 Penn General sold the business to Sabbah and Kornfeld for $700,000. Sabbah and his family kept two-thirds, Kornfeld the rest. "We had been making maybe $35,000 per year, but we paid off our debt in a few years by working our butts off," says Sabbah.

Sabbah and Kornfeld built strong relationships with the Japanese reinsurers they represented--Nissan, Taisei and Aioi Insurance. Sabbah and Kornfeld made annual trips to Tokyo to stroke them. Insurers and other reinsurers dealt with Fortress in order to do businesses with the Japanese firms it represented, and because Fortress had a good reputation for claims payment. But why stop at being a mere agent when you could get a piece of the action? In 1984 Sabbah and Kornfeld created Carolina Re as a risk-taker in airline liability. Following the common practice in the reinsurance industry, they got a Bermuda charter for Carolina. State insurance regulators in North Carolina paid no mind to its potential liabilities or the assets covering them.

By the 1990s aviation had become the predominant business of Fortress. In time, it was acting as middleman for nearly half of the reinsurance premiums covering losses amounting to $50 million to $400 million per crash. Profits flowed, for both Fortress and the insurers it represented. Fortress claims it produced $2 billion of profits for its clients.

Companies Sabbah and Kornfeld represented were on the hook for a portion of the liability on all four of the planes hijacked on Sept. 11, including liability on the ground. Carolina Re was supposed to cough up about 25% of the $843 million in claims against the Fortress pool, according to court documents. It had but $62 million in capital and surplus. Bermuda authorities declared it bankrupt on Dec. 3, 2001. Fortress is still operating, but not underwriting new business.

Nissan claims in its suit, pending in federal district court in Greensboro, that it was unaware of the extent of the obligations to which Fortress had committed it, and that Fortress had relied too heavily on so-called financial reinsurance. That peculiar beast is like a line of credit reinsurers draw on from other reinsurers to pay claims. But in this arrangement little risk is transferred. Nissan also alleges that while Carolina Re lacked the funds to pay its obligations, Sabbah and Kornfeld had managed to extract, over the years, on the order of $400 million in the form of commissions and dividends from their companies. Nissan wants the two men to put that money back on the table. Glenn Drew, Sabbah's nephew and general counsel of Fortress Re, says the Japanese companies got all the information they requested and that Fortress and Carolina played by the rules.

If Sabbah's fortune and his charitable endeavor survive the legal battle, it still remains to be seen whether America needs a non-Orthodox Jewish boarding school. Sabbah puts this daring venture in self-deprecating terms: "We want others to participate, but it always helps to have a crazy person to get things started."

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