AIG American International Group Inc

By Anne Steele 

Carl Icahn said he intends to begin a consent solicitation to give shareholders at American International Group Inc. the chance to express their views to the board, a move he hopes will offer a mandate to force the insurer to consider his breakup plan.

The activist investor, who said he owns more than 42 million AIG shares, is pushing the giant insurer to pursue a split into three separate companies. A key part of his case is that if AIG were split up, each of the companies would be small enough to avert the "systemically important financial institution" designation, which carries heightened scrutiny and requirements to hold robust capital buffers against losses.

In a statement released on his website Monday, Mr. Icahn said it has become "abundantly clear" in talks with AIG Chief Executive Peter Hancock that he isn't willing to "sincerely consider" the breakup idea.

Mr. Icahn said his consent solicitation may include a proposal to add a new director who would agree in advance to succeed Mr. Hancock as CEO if asked by the board to do so.

A representative for AIG wasn't immediately available for comment. The company has previously said it is already on course to simplify its operations and reduce risk.

Mr. Icahn's share count is worth $2.61 billion as of Friday's close and would give him about a 3.4% stake at AIG, making him the fifth-largest shareholder, according to FactSet data.

AIG is one of the world's biggest insurance companies, with a market value of about $77 billion. The company nearly collapsed in 2008 after taking on enormous amounts of exposure to securities linked to subprime mortgages. It was bailed out by U.S. taxpayers and took until late 2012 to repay the nearly $185 billion in aid, selling nearly 30 businesses totaling more than $90 billion in assets. At one point, the government owned about 90% of the company.

Since making his breakup proposal public, the billionaire investor said many large institutional shareholders and analysts have expressed their support for his views. He also said Mr. Hancock has failed to lay out any alternative strategic plan with the potential to unlock value for shareholders.

Financier John Paulson has made a similar push to encourage AIG to split. He bought into the company earlier this year and held 14.6 million shares, or just over a 1% stake, as of Sept. 30.

In Monday's letter, Mr. Icahn pointed to his previous success instigating change at companies--including Texaco, RJR Nabisco, Kerr-McGee, Time Warner, Motorola, ImClone, eBay and Forest Labs--but noted boards are typically hesitant to heed advice.

"AIG is too important, and the current situation is too time-sensitive, to wait years," he said. "In fact, we believe the current situation is too time-sensitive to even wait until the company's annual meeting next spring, especially when all of the stakeholders who have reached out to us believe management's current plan (or lack thereof) is insufficient."

Specifically, Mr. Icahn has called for the global insurer to separate both its life and mortgage insurance units from its core property-and-casualty business, and embark on a cost control program.

AIG shares edged up 0.5% and are up 12% so far this year.

Write to Anne Steele at Anne.Steele@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

November 23, 2015 10:16 ET (15:16 GMT)

American (NYSE:AIG)
Historical Stock Chart
From Mar 2024 to Apr 2024

American (NYSE:AIG)
Historical Stock Chart
From Apr 2023 to Apr 2024