Shares of American International Group (AIG) tumbled nearly 8 percent Tuesday following the announcement that Chief Executive Officer Peter Zaffino would step down from his role in June. The company stated that Zaffino would transition to the role of executive chairman, while Eric Andersen, formerly a strategic advisor to the chief executive of Aon, would join AIG in February as interim chief executive, reporting to Zaffino. Andersen is slated to formally assume the chief executive position after June 1.

The announcement marks the latest in a series of executive changes at the $42 billion insurance giant. AIG's client base includes high-net-worth individuals, financial institutions, and major players in the global financial markets. The company's underwriting business has been credited to Mr. Zaffino.

In November, AIG had unexpectedly announced that John Neal, the incoming president, would no longer be joining the company due to personal circumstances. Neal had been considered a potential successor to Zaffino. The reasons for Zaffino's departure were not explicitly stated in the company's announcement, leaving analysts and investors to speculate.

The shift in leadership comes at a time when the insurance industry is facing increasing pressure from factors such as climate change, which is leading to more frequent and severe natural disasters, and evolving cyber threats. These challenges require insurance companies to adapt their risk assessment and pricing models, often leveraging advanced technologies like artificial intelligence (AI) and machine learning. AI is being used to analyze vast datasets to identify patterns and predict future risks, enabling insurers to make more informed decisions about underwriting and claims management.

The use of AI in insurance also raises important societal considerations. For example, algorithmic bias in AI models could lead to unfair or discriminatory outcomes in pricing or claims decisions. It is crucial that these systems are developed and deployed responsibly, with transparency and accountability to ensure fairness and prevent unintended consequences. The latest developments in AI governance and regulation are focusing on these issues, aiming to establish ethical guidelines and standards for the use of AI in various sectors, including insurance.

Andersen's appointment as interim and eventual chief executive suggests a focus on strategic continuity and potentially a renewed emphasis on leveraging data and technology to enhance AIG's competitive position. The company has not yet detailed specific strategic changes associated with the leadership transition.