AIG's 7.3% Plunge: Leadership Shake-Up Sparks Investor Exodus

Summary
• AIG's stock tumbles 7.3% intraday to $78.215 amid CEO transition chaos
• Eric Andersen named CEO-elect after John Neal's abrupt exit
• Turnover surges 1.54% as market digests succession uncertainty
• 52-week range of $69.97–$88.07 now threatens key support levels

American International Group (AIG) faces a seismic shift as Peter Zaffino steps down as CEO by mid-2026, triggering a 7.3% intraday selloff. The stock's sharp decline from $80.48 to $77.05 reflects investor anxiety over leadership instability, compounded by John Neal's recent withdrawal from the role. With Eric Andersen's appointment as CEO-elect and the sector's mixed performance—Berkshire Hathaway A (BRK.A) up 0.23%—the insurance giant's near-term trajectory hinges on market confidence in its succession plan.

Leadership Transition Sparks Investor Uncertainty
AIG's 7.3% intraday plunge stems from a cascading leadership crisis. CEO Peter Zaffino's transition to executive chair by mid-2026, coupled with John Neal's last-minute withdrawal from the incoming president role, has eroded investor confidence. The abrupt exit of Neal—formerly Lloyd's of London CEO—after a personal relationship scandal and subsequent legal issues has amplified concerns about governance. While Eric Andersen's appointment as CEO-elect offers some stability, the stock's collapse reflects fears of operational disruption during the transition. The 52-week low of $69.97 now looms as a critical psychological barrier.

Insurance Sector Mixed as AIG's Leadership Drama Distracts
The broader insurance sector remains fragmented, with Berkshire Hathaway A (BRK.A) rising 0.23% despite AIG's turmoil. Recent sector news highlights mergers like Baldwin and CAC's $1.03B deal, while cyber risk and AI-driven threats dominate industry discourse. AIG's leadership instability contrasts with peers' strategic expansions, creating a divergence in investor sentiment. While the sector's 1.1 renewals report suggests capacity growth, AIG's governance issues have isolated its stock from broader market trends.

Bearish Options Play Amid Volatility Expansion
• 200-day MA: $81.21 (above) | 30-day MA: $81.42 (above) | RSI: 46.73 (neutral)
• MACD: 1.77 (bullish) vs. Signal Line: 2.05 (bearish) | Bollinger Bands: $77.02–$91.04 (oversold)

AIG's technicals signal a bearish reversal, with price near the lower Bollinger Band and RSI hovering near oversold territory. The 200-day MA at $81.21 and 30-day MA at $81.42 suggest a breakdown in momentum. Short-term traders should monitor the $77.05 intraday low as a potential support level. The MACD histogram's negative divergence (-0.28) confirms weakening bullish momentum.

Top Options:
• AIG20260116P75 (Put):
- Strike: $75 | Expiry: 2026-01-16 | IV: 31.49% | Leverage: 156.64% | Delta: -0.2029 | Theta: -0.0238 | Gamma: 0.0659 | Turnover: 172,975
- IV (Implied Volatility): Elevated, reflecting market uncertainty
- Leverage (Leverage Ratio): High, amplifying potential returns
- Delta (Price Sensitivity): Moderate, indicating directional exposure
- Theta (Time Decay): Low, suitable for short-term holding
- Gamma (Delta Sensitivity): Strong, enhancing responsiveness to price swings
- Turnover: High liquidity ensures trade execution
- Payoff (5% downside): $3.215 (max profit if AIG drops to $74.30)
- This put offers asymmetric risk/reward with high leverage and liquidity, ideal for capitalizing on a potential breakdown below $75.

• AIG20260116P77 (Put):
- Strike: $77 | Expiry: 2026-01-16 | IV: 23.59% | Leverage: 111.89% | Delta: -0.3260 | Theta: -0.0029 | Gamma: 0.1123 | Turnover: 35,595
- IV (Implied Volatility): Moderate, aligning with sector trends
- Leverage (Leverage Ratio): Elevated, enhancing directional exposure
- Delta (Price Sensitivity): Strong, indicating high responsiveness
- Theta (Time Decay): Minimal, suitable for holding until expiry
- Gamma (Delta Sensitivity): Exceptional, amplifying delta changes
- Turnover: Robust liquidity supports active trading
- Payoff (5% downside): $1.215 (max profit if AIG drops to $74.30)
- This put's high gamma and delta make it ideal for a sharp selloff, with turnover ensuring trade execution.

Action: Aggressive bears should prioritize AIG20260116P75 for its high leverage and liquidity. If AIG breaks below $75, the $77 put offers a safer entry with strong gamma to capitalize on accelerating declines.

Backtest American Stock Performance
The backtest of AIG's performance after a -7% intraday plunge from 2022 to now shows that the event had no impact on the stock, and the market exhibited a positive trend in the following days. The 3-Day win rate was 56.01%, the 10-Day win rate was 59.41%, and the 30-Day win rate was 65.31%. The maximum return during the backtest period was 2.87%, which occurred on day 59 after the plunge.

AIG at Crossroads: Leadership Risks Overshadow Fundamentals
AIG's 7.3% selloff underscores the market's skepticism toward its leadership transition. While the stock trades near its 52-week low of $69.97, the insurance sector's mixed performance—led by BRK.A's 0.23% gain—suggests AIG's governance issues are isolating its stock. Technicals point to a breakdown scenario, with the $75 level acting as a critical pivot. Investors should monitor the $77.05 intraday low and the $75 support level. For those seeking directional exposure, the AIG20260116P75 put offers a high-leverage, high-liquidity play on a potential breakdown. Watch for a resolution in the CEO transition and sector-wide volatility shifts to gauge AIG's next move.