AIG partner Two Sigma adds data scientist from Google

(Bloomberg) -- Two Sigma hired scientist Mike Schuster, who worked on the Google Brain team, to expand artificial intelligence at the $52 billion quantitative hedge fund, which is known in the insurance industry for its work with AIG and Hamilton Insurance Group on a digital underwriting platform for small-business insurance, Attune.

Schuster, who started at Two Sigma last week, is leading a new team of coders and engineers to bring together AI efforts in areas like machine learning and deep learning scattered across the firm. The group will also focus on advancements in the technologies.

Schuster will report to Alfred Spector, the firm’s chief technology officer and another Google alum. The pair had worked together during their time at the tech company.

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Multicolored lights illuminate a rack of computer server units in the Sberbank PJSC data processing center (DPC) at the Skolkovo Innovation Center, in Moscow, Russia, on Tuesday, Dec. 26, 2017. Sberbank PJSC, Russia’s most valuable company, will boost its dividend payout to 50 percent of profit or higher, just not as quickly as some investors had hoped. Photographer: Andrey Rudakov/Bloomberg

“There are big questions on how to do predictions on very large data sets,” Spector said in an interview Monday. “We want to do more.”

In the war for talent between financial firms and Silicon Valley, Two Sigma has hired a hard-to-find AI expert with years of experience. Schuster was senior staff research scientist at Alphabet Inc.’s Google for 12 years, conducting basic research on machine learning and neural networks and working on the Android speech recognition system and Google Translate, according to his LinkedIn profile.

Two Sigma owns a third of Attune, which was launched by it, AIG and Hamilton Insurance in 2016. The platform leverages extensive third-party information and Two Sigma data-science expertise to price small business risk. When Brian Duperreault was hired as AIG's CEO in 2017, he announced an increased focus on data science and analytics in underwriting, supported by a technology partnership between AIG and Two Sigma.

“Data science and technology open a world of opportunity for this industry, from more practical protection and smarter processes to a better understanding of risk," David Siegel, co-founder and co-chairman of Two Sigma, said at the time.. "This can be done while also lowering costs and more efficiently utilizing resources."

Two Sigma, which has about 1,300 employees, is looking to expand Schuster’s team, Spector said. Two-thirds of the hedge fund’s head count are involved in research and development.

Two Sigma is one of the biggest hedge funds to use machine learning and big data to make systematic trades. David Siegel, a former chief technology officer at Tudor Investment Corp., and John Overdeck from D.E. Shaw & Co. founded the New York firm in 2001.

Two Sigma assets surged from $2.5 billion over a decade ago, but it struggled to make money in January and February in some funds as volatility has risen.