AIG stands firm in face of new Icahn calls for breakup

Activist investor Carl Icahn owns 42 million shares in AIG as of Oct. 28, making him the insurer's fifth-largest shareholder,/ REUTERS

American International Group Inc. on Monday reiterated its position that a breakup of the company is not in its best interests as activist shareholder Carl Icahn continues to press his case for a breakup and other changes.

“Management and the board have carefully reviewed a separation of AIG's businesses on many occasions, including in the recent past, and have concluded it did not make financial sense,” the company said in a statement, the latest salvo in a war of words with Mr. Icahn.

Earlier in the day, Mr. Icahn issued a statement disclosing his ownership of “over 42 million shares,” which he said makes him one of the company's largest shareholders

In that role, Mr. Icahn said he might seek to add to AIG's board and replace AIG CEO Peter Hancock.

“We intend to commence shortly a consent solicitation that will enable shareholders to express their views directly to the board, which 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,” Mr. Icahn said in his letter.

Mr. Icahn also disclosed that he had sent a public letter to Mr. Hancock on Oct. 28 saying that AIG was “too big to succeed,” and that he had been invited by Mr. Hancock to continue discussions.

“However, despite that invitation, in all of our discussions with Mr. Hancock it was abundantly clear to us that he is not willing to take the bold steps that we, and so many other shareholders, believe are long overdue,” said Mr. Icahn in his Monday statement.

AIG responded by saying it “maintains an active dialogue with shareholders, including Carl Icahn,” and that it “has taken numerous steps to streamline its businesses, narrow focus, improve financial performance and return capital to shareholders” and that it will “continue to take additional actions to further accelerate its previously announced strategy.”

At least one analyst did not see value in breaking up the company.

“Our earnings-based valuation actually anticipates little upside from breaking up AIG, unless significantly lower capital requirements can fund much-higher-than-expected share repurchases,” Meyer Shields, managing director at Keefe, Bruyette & Woods Inc. in Baltimore, said in a research note.