AIG names Aon's Andersen CEO as Zaffino shifts to executive chair role

By Manya Saini and Arasu Kannagi Basil

Jan 6 (Reuters) - American International Group AIG.N said on Tuesday Eric Andersen will succeed CEO Peter Zaffino, who turned around the insurance giant after years of turbulence following its $182 billion taxpayer bailout during the 2008 financial crisis.

Shares in AIG, one of the world's largest commercial insurers, fell nearly 7% in early trading on the news that Zaffino will step down and move to the executive chair's role, which drew a mixed response from Wall Street analysts.

Andersen will join AIG as CEO-elect on February 16 and take over the helm after June, reporting to Zaffino, the company said.

Zaffino, who has served as CEO since 2021, will continue to play an active role in strategy, according to a person with knowledge of the matter.

"Anderson is an (appropriately, we think) highly-respected insurance leader who is familiar to investors and who, we believe, has the gravitas and track record to lead AIG," analysts at brokerage KBW wrote in a note.

Andersen most recently served as a member of insurer Aon's AON.N executive committee and strategic advisor to the insurance broker's CEO.

Analysts at J.P. Morgan noted Anderson had strong credentials, but said the change created uncertainty for the company, adding: "We see no reasons how it improves the investment case for AIG shares."

Citi analysts, on the other hand, said they believed the transition maintained the status quo and did not create risks for AIG's shares.

An AIG spokesperson did not immediately comment when asked about J.P. Morgan's note.

POST-CRISIS RECOVERY

AIG struggled for more than a decade to regain its footing following its government rescue. In 2015, billionaire activist investor Carl Icahn took a minority stake in the company and pressured management to simplify its structure and divest non-core assets. Icahn exited his AIG stake in 2018.

After Zaffino joined in 2021, the company went on to spin off its life insurance and retirement business, Corebridge Financial CRBG.N, via an initial public offering, a deal widely seen as his crowning achievement.

He also led an effort to modernize the company's operations, including by integrating generative AI.

Under his leadership, the company has delivered five consecutive years of underwriting profitability, while its stock has soared more than 85%. AIG said it has returned more than $19 billion to shareholders over the past three years through stock repurchases and dividends.

"We have returned AIG to vastly improved profitability, significantly strengthened our balance sheet, and built tremendous financial flexibility," Zaffino said in a statement.

EXECUTIVE CHAIR ROLE

Zaffino's new role highlights a broader shift to the executive chair model in corporate America, which has gained traction as companies seek continuity in leadership transitions. Outgoing CEOs retain an active role in strategy and governance, while handing over day-to-day management to a successor, a structure investors often see as reducing execution risk.

Wall Street powerhouse Morgan Stanley MS.N used the approach in 2023, when it named longtime leader James Gorman executive chair, while elevating Ted Pick to the CEO's role.

Analysts said they do not expect Andersen to pursue major strategic changes and that the company will continue to focus on improving underwriting and boosting shareholder returns.

"We think this may also be a signal that AIG is moving from its restructuring phase to a growth phase," analysts at Piper Sandler wrote in a note.