AIG's Future Is in the Hands of This Low-Profile Executive

NEW YORK (The Deal) -- Brian Schreiber, a critical behind-the-scenes player at insurance giant American International Group  (AIG) for several years, looks increasingly important to its future under new CEO Peter Hancock.

AIG appointed Schreiber, an 18-year veteran, to a new role of executive vice president and chief strategy officer, where he will sit on a 13-member operating committee Hancock created after he took over the top job from Bob Benmosche in September.

"You're a smart guy but you're running a fucked-up process," J.P. Morgan Chase (JPM) CEO Jamie Dimon told Schreiber, according to Andrew RossSorkin's book, Too Big To Fail. Spokesmen for AIG and J.P. Morgan declined to comment.

Schreiber's relationships with potential buyers, from Wall Street investment bankers to private equity firms, made him the go-to AIG executive during the most harrowing part of the financial crisis, according to Roddy Boyd, author of Fatal Risk: A Cautionary Tale of AIG's Corporate Suicide. "He probably wouldn't say that, but no one on the New York Federal Reserve Board was interested in hearing from anybody but Brian Schreiber during Lehman weekend because he was the guy who was seen as understanding risks and liabilities better than anybody at the time, " Boyd said.

A call to Robert Willumstad, who was CEO of AIG at the time of the crisis, wasn't returned.

One investor who has known Schreiber for years said the fact that he has survived as long as he has at AIG is due to his smarts. "In some ways you can be a drone and survive by not being noticed. That's totally not what he is. He's very smart and was always very much on top of what the issues were and trying to figure out ways to solve them."

One task Schreiber may take over in his new role is looking for acquisitions so AIG can accelerate earnings to more quickly use a nearly $20 billion deferred tax asset. The DTA, left over from roughly $110 billion in losses AIG suffered in 2008-2009, means AIG won't have to pay any taxes on its next $33 billion in earnings, according to an analysis of AIG's latest annual filing by tax expert Robert Willens of Robert Willens LLC.

If AIG can acquire profitable companies, it can use its DTA to shelter the profits so it doesn't have to pay taxes on them. Due to the time value of money, the quicker AIG can use the DTA the better. "If instead of using them in six years you can cut it down to three years that would make a pretty good-sized difference," Willens said.

Charles Sebaski, an analyst with BMO Capital Markets agrees that AIG's deferred tax asset is a key reason it trades at a lower price to book multiple than peers. He says the DTA comprises 20% of AIG's book value and because it's a non-earning asset, investors value it at a discount. Still, he doesn't expect AIG to make any major acquisitions. "Scale is not what they need. What they need is laser focus on underwriting profitability," he said in an interview. Sebaski expects the DTA to be fully used in seven to eight years, which he says is in keeping with company projections.

But if AIG decides to move more quickly, they've got someone who is accustomed to a breakneck pace.

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