AIG Announces New CEO And Plan To Spin Off Retirement Operations

By Amit Chowdhry ● October 27, 2020
  • This week, American International Group Inc (NYSE: AIG) announced that its board approved of a plan to separate its life and retirement operations from the rest of the company. And AIG also announced it is naming President Peter Zaffino as CEO, effective next year.

This week, American International Group Inc (NYSE: AIG) announced that its board approved of a plan to separate its life and retirement operations from the rest of the company. And AIG also announced it is naming President Peter Zaffino as CEO, effective next year.

Zaffino, 53, will be succeeding 73-year-old Brian Duperreault. Zaffino will officially take charge in March. And Zaffino will be AIG’s seventh CEO since 2005.

The insurer has not announced how it is planning to handle the separation yet, beyond the board voting to establish two independent companies.

And the separation of the operations could take “a couple of years” and it may happen in phases through the sales of minority stakes, according to sources with Reuters.

The decision by the board does not rule out a single sale. And any of the proposed transactions with not need board approval.

The life and retirement business had accounted for 34% of AIG’s $49 billion in 2019 adjusted revenue compared to 64% for its general insurance business.

Under the leadership of Duperreault, AIG has been pushing for a turnaround. Duperreault has been pushing for stronger underwriting and investing in technology, hiring stronger talent, and reduce costs.

Zaffino had joined AIG as the global COO in 2017. And his path to becoming CEO was expected after he was named president in December.

Back in 2008, AIG had received a $182 billion U.S. taxpayer bailout in order to avoid collapsing. And since then, the company sold off portions of its business to repay the debt along with a $22.7 billion return. Plus the company had to get through losses from claims that had occurred in prior years, which lead to over $11.2 billion in unexpected reserve increases since 2015. Those losses mostly occurred under previous leadership.

Last year, AIG had reported its first general insurance underwriting profit since 2008. And the separation of the life insurance business was a goal that billionaire activity investor Carl Icahn pushed for along with former hedge fund manager John Paulson. Icahn ended up selling his stake in AIG a couple of years ago.

On Monday, AIG also said it incurred about $790 million in catastrophe losses for Q3, net of reinsurance and before tax — which includes $185 million of estimated catastrophe losses for claims related to COVID-19. Analysts were expecting these losses.