The insurance titan American International Group (AIG) was rocked yesterday by the unexpected resignation of Chief Executive Officer Peter Zaffino, triggering a 7.4% drop in the company’s stock price and raising questions about the future direction of one of America’s most storied financial institutions.
Zaffino, who took the helm in March 2021 following a carefully orchestrated succession plan from former CEO Brian Duperreault, announced his departure amid what sources describe as mounting tensions with the board over strategic priorities. The timing has stunned Wall Street analysts, coming just as AIG appeared to have regained solid footing after years of restructuring.
“This is not just another CEO departure,” noted Jamie Dimon, JPMorgan Chase Chairman and CEO. “Zaffino was widely credited with successfully completing AIG’s turnaround. His exit creates significant uncertainty at a critical moment for the insurance industry.”
The resignation follows three consecutive quarters of stronger-than-expected earnings, with AIG reporting a 14% year-over-year increase in adjusted operating income last quarter. The company had also recently completed its multi-year “AIG 200” transformation program, which delivered over $1.3 billion in cost savings according to their Q3 earnings report.
According to sources familiar with the matter who requested anonymity due to the sensitivity of the situation, disagreements between Zaffino and the board intensified in recent months over capital allocation strategies and the pace of digital transformation initiatives. The board reportedly favored more aggressive share buybacks while Zaffino prioritized technology investments and strategic acquisitions.
The Federal Reserve’s latest Financial Stability Report had highlighted growing risks in the insurance sector from climate-related events and cyber threats—areas where Zaffino had been pushing for greater organizational focus and capital deployment.
“The timing couldn’t be worse,” said Sarah Krause, senior insurance analyst at Goldman Sachs. “With interest rates still elevated and property-casualty claim severity trending upward, AIG needs steady leadership to navigate these complex market conditions.”
The company announced that board member and former Chubb executive John Keogh will serve as interim CEO while a search committee identifies a permanent replacement. This transition marks the fifth leadership change at AIG since 2008, continuing a pattern of instability that has troubled investors.
During his tenure, Zaffino orchestrated the successful spinoff of AIG’s life and retirement business into Corebridge Financial in 2022, a move that was initially met with skepticism but ultimately created significant shareholder value. He also strengthened the company’s general insurance business through disciplined underwriting and reduced exposure to catastrophe-prone regions.
Market reaction was swift and severe. Beyond the immediate stock price decline, credit default swaps on AIG debt widened by 15 basis points, reflecting increased investor concern about the company’s strategic direction. Major institutional shareholders, including BlackRock and Vanguard, have requested emergency meetings with board members.
“The resignation creates a leadership vacuum at precisely the wrong moment,” explained Robert Hartwig, president of the Insurance Information Institute. “Insurance carriers face unprecedented challenges from inflation, climate change, and technological disruption. AIG’s competitors will undoubtedly try to capitalize on this uncertainty.”
Industry insiders speculate that several senior executives loyal to Zaffino may follow him out the door, potentially creating a broader talent exodus. The company’s Chief Financial Officer Shane Fitzsimons and Global Chief Underwriting Officer Tom Bolt are seen as particularly flight-prone, according to sources at executive search firm Korn Ferry.
A recent McKinsey & Company report on insurance industry leadership found that CEO transitions at major carriers typically result in a 12-18 month performance lag as new strategies take shape and relationships with key distribution partners are reestablished.
For AIG, a company that required a controversial $182 billion government bailout during the 2008 financial crisis, leadership stability remains an elusive goal. The organization has worked diligently to rebuild its reputation and financial strength, with its risk-adjusted capital ratio improving from 179% to 214% under Zaffino’s watch according to AM Best ratings.
“This is a significant setback for a company that seemed to finally have found its footing,” observed David Einhorn, president of Greenlight Capital. “The board now faces critical decisions about AIG’s strategic direction that will determine its competitive position for years to come.”
As speculation about Zaffino’s next move intensifies, industry observers wonder whether his departure might signal coming consolidation in the insurance sector. With his operational track record and strategic vision, Zaffino could emerge as a candidate for leadership roles at competing carriers or become the driving force behind private equity investments in the insurance space.
For now, AIG employees, shareholders, and clients face an uncertain future as the insurance giant navigates yet another leadership transition in its tumultuous modern history.
