AIG names new CEO, plans to spin off life and retirement unit

(Reuters) – Insurer American International Group Inc AIG.N on Monday named President Peter Zaffino as chief executive officer, and said it plans to spin off its life and retirement business unit.

FILE PHOTO: Banners commemorating the 100th anniversary of American International Group Inc. adorn the New York Stock Exchange in Manhattan, New York, U.S. October 10, 2019. REUTERS/Suzanne Barlyn/File Photo

AIG shares were up nearly 8% in extended trading.

Zaffino, who succeeds Brian Duperreault, will take charge in March. Zaffino will be AIG’s seventh CEO since 2005.

The insurer said it has yet to make a decision on how to execute the unit separation, saying the board has plans to establish two independent, market-leading companies.

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

AIG has been in the midst of a turnaround launched by Duperreault, 73, who took charge of AIG in 2017.

Duperreault has focused on sharpening underwriting, doing more with worthwhile customers, investing in technology, restoring talent and cutting costs.

Zaffino has been the point man to execute those goals, partly by mitigating losses in commercial property and casualty businesses and relying more on reinsurance while also modernizing technology and processes. He also helped to recruit a number of executives.

AIG has struggled to right itself after a $182 billion U.S. taxpayer bailout in 2008 to save it from collapse. Since then, the company has sold off big chunks to repay the debt plus a $22.7 billion return.

It also had to work through hefty losses from claims occurring in prior years that led to more than $11.2 billion in unexpected reserve increases since 2015, most of which occurred under prior leadership.

In May 2019, AIG reported its first general insurance underwriting profit since the 2008 financial crisis, a key goal.

AIG also on Monday said that it incurred an estimated $790 million in catastrophe losses during the third quarter, net of reinsurance and before tax, including $185 million of estimated catastrophe losses for claims related to COVID-19.

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