Insurer American International Group Inc AIG.N on Monday said its board approved a plan to separate the life and retirement business from the rest of the company, and named President Peter Zaffino as chief executive officer, effective next year. Zaffino will be AIG’s seventh CEO since 2005. The insurer, which ranks among the top 10 U.S. carriers by market value, said it has yet to make a decision on how to carry out the separation, beyond the board voting to establish two independent, market-leading companies. The separation of the business could take “a couple of years” and may be done in phases through sales of minority stakes, according to two people familiar with the matter. The board’s decision does not rule out a single sale and any proposed transactions will also need board approval, AIG said. The life and retirement business accounted for 34% of AIG’s $49 billion (37.62 billion pounds) 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, 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 reducing losses in the 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. Zaffino joined AIG as global chief operating officer in 2017. His ascension to CEO was widely expected after being named president in December, but AIG had not indicated timing for the change. 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. The separation of AIG’s life insurance business echoes a move pushed by billionaire activist investor Carl Icahn, who targeted the insurer in 2015 with a break-up plan that was also supported by former hedge fund manager John Paulson. Icahn, who wanted AIG to become a smaller, simpler company, demanded that AIG spin off its life insurance unit and now former mortgage insurance business. The move would return more cash to shareholders, Icahn had said at the time. Icahn sold his AIG stake in 2018. Analysts have also seen logic in a separation. While the general insurance business is prone to swings from hurricanes, wildfires and other catastrophic events, the life and retirement unit’s large investment portfolio makes it highly sensitive to interest rates - and current low rates have dragged on earnings. 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. The losses were broadly in line with what analysts expected. AIG also recorded a $9 million pre-tax charge in its life insurance businesses after conducting and annual review of assumptions it has used to write life insurance policies.