American International Group has tapped a successor to veteran CEO Brian Duperreault, who could oversee a restructuring which includes a plan to split off the carrier’s life insurance business into a separate company.
The New York-based insurer said Monday that Peter Zaffino would take over as CEO from Duperreault on March 1, retaining his current role as AIG’s president. Zaffino was also appointed to the company’s board of directors, effective immediately.
Zaffino’s election to the post marks an important step toward a widely anticipated transfer of power between the two executives, who had worked together at broker Marsh & McLennan in the wake of the 2008 financial crisis and are now credited with turning around the U.S.’ largest commercial insurance underwriter.
Duperreault, who took the top job at AIG in 2017 and recruited Zaffino to the company, praised his soon-to-be replacement as a key component of AIG’s recent progress toward efficiency and profitability.
“Peter has been instrumental in the significant turnaround and transformation at AIG, and his vision, determination and pursuit of excellence will help ensure the company’s future success,” he said.
The outgoing CEO will become executive chairman, according to AIG.
In August, AIG moved Zaffino out of the company’s property and casualty division and into the role of president, adding to his existing enterprise-wide responsibilities as AIG’s chief executive officer in a move signaling that his promotion to CEO could be imminent.
Duperreault said at the time that Zaffino had made “tremendous contributions” to the transformation of the general insurance business, which helped the insurer catch up to rivals it had been lagging behind since AIG nearly folded in 2008.
Now, Zaffino could be responsible for separating the company from its life and retirement unit, which AIG said Monday it intended to do. While terms of the divorce haven’t yet been worked out and a split isn’t guaranteed, the carrier said the right deal could boost shareholder value.
According to Duppereault and Zaffino, AIG has been enabled to jettison the division, which is facing pressure from low interest rates and reduced interest income, following a multi-year push to streamline its operations and boost liquidity.
The unit represented about half of AIG’s total assets of $569 billion as of June, the Wall Street Journal reported.
“This foundational work has positioned AIG to pursue a separation [between it and the life and retirement unit] enabling both companies to prosper as stand-alone entities,” Duperreault said.
AIG’s long-running effort to turn around its struggling P&C business was given a spark with the 2019 debut of AIG 200, a plan designed to shed the carrier’s reputation for inefficiency by pledging to cut over $1 billion in operating expenses. On an August earnings call, Zaffino told analysts that AIG was “on track” to fulfill its run-rate savings targets through 2022.
AIG will release its financial results for the third quarter on Nov. 5 and hold a follow-up conference call on Nov. 6, the company said.