One cold scottish afternoon in 1995, a young Eric Bischof
sat with his fellow Lehman Brothers Holdings bankers in the
back of a black Daimler limousine. Bischof alone would brave
the Edinburgh snows to meet potential investors in
RenaissanceRe Holdings, a reinsurer planning an initial
public offering. At the time, Lehman doubted that its
Bermuda-based client would pull off the IPO, because its
portfolio was too specialized, recalls Samuel Weinhoff, then
Bischofs boss and now a New Yorkbased board member
of Swiss insurer and reinsurer Allied World Assurance Company
Holdings. Not Bischof, says Weinhoff: Eric was highly
regarded because, first, he understood the concept when no one
else did and, second, he got the deal done.
Today, Bischof, 47, co-heads the financial institutions
group at Morgan Stanley in New York. Promoted with Jonathan
Pruzan early last year, the Los Angeles native joined the bank
from Lehman in 1996 as a senior associate and climbed the ranks
by focusing on insurance. Among his many deals, hes
advised Zurichs Swiss Re on its $6.8 billion
takeover of GE Insurance Solutions in 2005, Boston-based
Liberty Mutual Insurance Co. on its $6.2 billion buyout of
auto insurer Safeco Insurance Co. in 2008 and the Federal
Reserve Bank of New York on its restructuring of American
On the AIG deal, his biggest to date, Bischof co-led a team
of 30 bankers after the New York Fed hired Morgan Stanley in
October 2008. AIG was almost bankrupt because of bad bets on
credit default swaps linked to subprime mortgages, and the U.S.
Federal Reserve had authorized the New York Fed to lend it as
much as $85 billion in return for a 79.9 percent stake in
Bischof, who has an MBA from Dartmouth Colleges Tuck
School of Business, knew he had to stabilize AIGs credit
rating and protect its most valuable assets. AIG, which then
operated in some 130 countries and had more than
30 million U.S. policyholders, saw its market cap plunge
to $945 million from a $240 billion peak.
The Morgan Stanley team decided that AIG would dispose of
its international units. New Yorks Metropolitan Life
Insurance Co. bought AIGs American Life Insurance Co.
(Alico) for $16.1 billion in March 2010. Last October,
Hong Kongbased American International Assurance (AIA)
went public. The two transactions reportedly will net
$51 billion to help pay back the $180 billion in
bailouts that AIG ultimately received.
In early 2009, Bischof created two special-purpose vehicles
in which Alico and AIA could sit until the market stabilized.
In exchange for putting all of the subsidiaries common
shares into the SPVs, the New York Fed got preferred stock and
agreed to cancel as much as $26 billion of AIGs
loans. Meanwhile, the U.S. Department of the Treasury offered
AIG a credit facility of about $30 billion via the
Troubled Asset Relief Program.
A big part of the Federal Reserve loan was repaid at
the time, says Bischof, who began his career as a
corporate strategist at San Franciscobased Providian
Financial Corp. and covered European insurers and reinsurers at
Morgan Stanleys London office from 1999 to 2003.
The combination of those actions did a lot to stabilize
the rating situation and some of the external pressure on AIG
and from there allowed the company to get back on its
As of last month AIGs market cap topped
$43 billion, while the bailout tab had been reduced to
about $50 billion.
Bischof recently led equity offerings for RenaissanceRe,
Swiss Re and New Yorkbased Transatlantic Holdings, but
insurance mergers and acquisitions are scarce. Ranked second in
2010 for insurance deal volume, with $65 billion, Morgan
Stanley has dropped to No. 6 with just $4 billion so
far this year, according to Dealogic.
Bischof admits that hed hoped for a better 2011.
What is clear as we engage with our clients is that one
of the keys to success for Morgan Stanleys financial
institutions franchise is its global reach, he says.
Its also clear Bischof can take the heat and fight off