American International Group Inc. said Peter Zaffino intends to retire as chief executive officer by midyear, ending a five-year run of improved returns that was marred by recent managerial turmoil. He’ll be replaced by Aon Plc’s Eric Andersen.
The announcement sent AIG shares tumbling by 6.9% at 9:57 a.m. in New York trading Tuesday, the largest decline since April.
Andersen, most recently a member of Aon’s executive committee, will join AIG as president and CEO-elect, effective Feb. 16, AIG said in a statement Tuesday. He’ll take the reins from Zaffino and join the board on June 1, and Zaffino will transition to executive chair.
“As we onboard Eric, we are grateful to benefit from Peter’s continued leadership as CEO, and then as executive chair, where he will continue to drive AIG’s future-focused digital and data initiatives and strategic relationships,” John Rice, AIG’s lead independent director, said in the statement.
The lack of explanation for Zaffino stepping down could be a negative for investors, said Jimmy Bhullar, an analyst at JPMorgan Chase & Co.
“At a minimum, the announcement creates uncertainty, discontinuity and distraction in management ranks, and we see no reasons how it improves the investment case for AIG shares,” Bhullar said in a note to clients. Still, the analyst believed the change would not result in major strategic shifts at the insurer.
Over almost three decades at Aon, Andersen held senior positions including president, CEO of Aon Benfield and CEO of Aon Risk Solutions Americas, according to the statement.
“We were wondering where Mr. Andersen would resurface after his departure from Aon and think he is a good fit for the job, but there will be a learning curve given AIG’s complexity compared to his experience in insurance brokerage,” wrote Evercore ISI analysts in a note to clients.
Since taking the helm in 2021, Zaffino has focused on improving AIG’s underwriting profitability, keeping it positive after billions of losses in the years that preceded. AIG’s shares rose 92% under his tenure, beating an index of insurance peers.
The CEO also streamlined the insurer and steered it away from life insurance, by spinning off its dedicated arm Corebridge Financial Inc. More recently, he led the acquisition of stakes in Convex Group and alternative asset manager Onex Corp. for a combined value of more than $2.7 billion.
Read More: AIG Joins Private Equity Firm Onex to Acquire Re/Insurer Convex Group
Last March, Zaffino unveiled a new three-year strategic plan which included profitability metrics.
In recent months, the company has been rocked by turmoil among its top ranks. Last year, AIG parted ways with former Lloyd’s of London CEO John Neal, who was supposed to join as president, before he even started. The move came as his previous employer announced an investigation into his conduct that centered around a relationship he allegedly had with an employee.
Photograph: Eric Andersen; Photo credit: Krisztian Bocsi/Bloomberg
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