Icahn Pens New Letter to AIG Board; Renews Push for Breakup

Jan 19 2016 | 8:37pm ET

(Reuters) - Activist investor Carl Icahn took another swing at American International Group Inc on Tuesday, saying the only "sensible" option for the insurer was to split up.

Tensions have been mounting between AIG Chief Executive Peter Hancock and Icahn over the billionaire' s suggestion in October that the company should split into three - an idea Hancock promptly rebuffed.

The move would return more cash to shareholders, Icahn had said, helping AIG rid itself of the regulatory burden of being a systemically important financial institution (SIFI), which require higher capital cushions.

"There is only one sensible path for AIG to follow: become a smaller, simpler company with a path to de-SIFI," Icahn said in an open letter to the insurance company's board on Tuesday.

AIG's cost structure has remained a cause of concern for investors, and its underwriting operations have suffered from falling rates for commercial property and casualty insurance.

The insurer was quick to reply, saying it continued to be in talks with Icahn and would provide an update on its strategy on Jan. 26.

The news comes a week after MetLife Inc, the largest U.S. life insurer, said it would split a substantial portion of its U.S. retail business from the core company due to the "regulatory environment".

Icahn disclosed in November that he owned a 3.4 percent stake in AIG, making him the insurer's fifth-largest shareholder, according to Thomson Reuters data.

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