By David Benoit and Anne Steele 

Carl Icahn said he intends to take his fight to break up American International Group Inc. directly to shareholders, a move that could ramp up the pressure on the insurance giant with a vote over its strategy.

The company quickly fired back Monday, reiterating that Mr. Icahn's plan to split its various insurance offerings "did not make financial sense." However, the insurer added that it will update shareholders on its own strategy changes faster than it originally planned.

Mr. Icahn said he owns more than 42 million AIG shares, the first time he has disclosed the size of his positions since he called on the giant insurer to pursue a split into three separate companies last month. 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.

Mr. Icahn's stake is worth $2.61 billion and would give him about a 3.4% stake in AIG, making him the fifth-largest shareholder, according to FactSet data.

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.

AIG last week held meetings with large investors and analysts during which it signaled it would take increased steps to boost shareholder value, including reviewing costs and capital returns, analysts said. The company is "actively pursuing at least one sale" of a business, but investors shouldn't expect a flurry of deals, Sanford C. Bernstein's Josh Stirling said after last week's meetings.

AIG has told employees that it has been approached by a party interested in its broker-deal network, and The Wall Street Journal has reported AIG is also considering the separation of its mortgage-insurance unit.

Mr. Icahn said his consent solicitation may include a proposal to add a new director who he hopes could be a candidate to replace Mr. Hancock as CEO. Mr. Icahn didn't name a nominee.

Since making his breakup proposal public, the billionaire investor said many large institutional shareholders and analysts have expressed their support for his views.

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.

Mr. Icahn is betting the majority of shareholders will support him and said he wasn't willing to wait until the spring annual meeting date to show the company that support.

"AIG is too important, and the current situation is too time-sensitive, to wait years," he said.

Any shareholder proposals urging a breakup would be nonbinding, though a clear victory would present challenges for the board to ignore it. For instance, proxy advisory firms can withhold support for directors who reject such a vote in the subsequent year, which adds to the pressure to seriously review such a proposal.

Any shareholder proposal, including the removal and addition of any director outside of an annual meeting, requires a majority of all shares outstanding, a higher bar than just the majority of shares that vote at a meeting. That threshold makes such challenges rare.

In 2013, Relational Investors LLC and the pension giant California State Teachers' Retirement System, or Calstrs, successfully led a shareholder vote to urge the breakup of steel company Timken Co. While Timken had previously resisted the split, the company initiated a new review after the vote and ultimately did break up.

That result led some activists and corporate advisers to expect to see a wave of such nonbinding proposals, and while several have been threatened or discussed, they remain few and far between. Mr. Icahn initially proposed a motion to break up eBay Inc. last year, but dropped the matter. This year, eBay and PayPal Holdings Inc. separated and Mr. Icahn maintains a stake and board representation in PayPal.

With AIG, 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.

Leslie Scism contributed to this article.

Write to David Benoit at david.benoit@wsj.com and Anne Steele at Anne.Steele@wsj.com

 

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(END) Dow Jones Newswires

November 23, 2015 13:01 ET (18:01 GMT)

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