Ushering in new leaders at AIG won’t change the company’s fundamental problems, but it could bring long-term stability to the company.

Changes in the executive offices could actually serve AIG well, if they bring about a sense of permanence, says Joyce Sharaf, an analyst at A.M. Best. Edward Liddy, AIG’s chairman and CEO, announced May 21 that he would leave the company once suitable replacements were found. The long-time insurance executive had come out of retirement to steer the insurer back on track, but his impending departure coincides with company efforts to rebuild its image and transform several key businesses into stand-alone operations. “Any change creates concern,” Sharaf told CI on May 26. “However, if they’re seeking stability and this provides [it], that’s good.”
Two things will determine how smooth the transition is, Sharaf says.
First, it has to be timely: “If the replacement is done quickly, it would alleviate concerns,” she said. “A.M. Best would not want to see a protracted time period in appointing a successor.”

The replacements—Liddy has suggested that the company split the role into two positions, appointing a chairman and a separate CEO position—would also face extremely high expectations to carry out the company’s ongoing strategy. “They’ve established the path of where they want to go,” Sharaf says, but getting there will depend on how the newcomers perform. Having two people take on the role that Liddy shouldered himself would be a positive step, she says, noting that, “two executive minds are better than one, providing that they are compatible.”

Both the Fed and the Treasury are expected to have some input into the selection process. AIG also faces other major changes at the board level: on May 19, the company announced six new independent director nominees–including a former Boeing Company executive and the former CEO of Sears—a move that will give new directors a majority on the reconfigured board.

Having a troubled company change leaders in the middle of its restructuring isn’t common, Sharaf said, noting that “this is a unique situation and unique situations call for unique circumstances.” That being said, “change in leadership may not necessarily alter how the company is viewed.”