What's going on?

AIG�s CEO announced on Thursday that he�d be stepping down from the helm of the American insurance giant � and that could lead to the insurer splitting itself up.

What does this mean?

AIG almost collapsed in 2008 when its overexposure to the financial crisis led to a $182 billion bailout from the US government. Its current CEO, Peter Hancock, was brought on as top dog in 2014 to speed up AIG�s turnaround, but things haven�t quite gone according to plan. The company has posted four quarters of losses since 2015 (thanks partly to continued restructuring costs). Also, earlier this year AIG paid Warren Buffett $10 billion for insurance on itself, a sign that AIG may have made same bad choices within its own insurance business. Alongside last month�s disappointing earnings report, it seems that Hancock lost the confidence of some key shareholders and has consequently resigned.

Why should I care?

The bigger picture: Not every turnaround plan is a winner.

There are lots of examples of new CEOs (and management teams) joining companies, turning things around and, ultimately, delivering high returns for the shareholders that bought stock at the start of their tenure (McDonald�s is a pertinent recent example). However, AIG is a good reminder that not every new CEO can enact a successful turnaround.

For the stock: AIG�s new leader might bring forth a radical plan to restructure the company. �

Well-known investor Carl Icahn (who owns a significant part of AIG) doesn�t think that AIG can live with the status quo for much longer. Back in 2015, he openly criticized Hancock�s �wait and see� strategy for the business, and called for AIG to be split into three separate companies. Icahn argues this would reduce some of its regulatory costs, which have increased considerably since the 2008 financial crisis, and thus boost profits. It�s possible AIG�s next CEO could move the company in this direction.