Breaking American International Group Inc. into separate property/casualty, life and mortgage insurance units might be good for shareholders, but not necessarily for risk managers.

Activist investor Carl Icahn, who's been calling for an AIG breakup for months, scored at least a partial victory last week, when AIG said it would expand its board to 16 members from the current 14. AIG proposed that John Paulson, president of Paulson & Co., and Samuel Merksamer, a managing director of Icahn Capital L.P., be elected as members at its annual meeting this year.

Mr. Icahn and others view a split as necessary to increase shareholder value and get AIG off the list of systemically important financial institutions. AIG is one of three insurers — MetLife Inc. and Prudential Insurance Co. are the others — designated as SIFIs and subject to increased federal oversight.

The moves came late last week as AIG reported a fourth-quarter 2015 loss of $1.84 billion due to poor property/casualty results and $2.20 billion in net income for the year, down 70.8% from 2014.

During an earnings call Friday, AIG President and CEO Peter Hancock said he was “pleased we have reached a solution” that avoids a “distracting” proxy fight.

While splitting up the insurer might enhance shareholder value, policyholders may not benefit.

“Breaking up AIG from a risk management standpoint would not necessarily be a good thing because I believe the strength of having the full spectrum of risk solutions under one umbrella is a positive,” said a risk manager who asked not to be named. “However, I do believe the challenge that AIG does have is that the organizations that fall under the AIG umbrella are very siloed.”

“AIG is losing talented people at an alarming rate, and they (the company) appear to be completely consumed with self-preservation versus underwriting and serving their clients,” said a broker who asked not to be named. “Until there is a clear game plan, including leadership that isn't constantly looking over its shoulder for fear of being axed, its customers will suffer.”

Market analysts say the new board members could well move AIG closer to a split.

The move “largely eliminates the possibility of a messy proxy battle by the shareholder activists this year, adds additional incentives for management to improve its financial returns and moves AIG further towards making major structural changes that might include a split-up of the company,” Paul Newsome, managing director at Sandler O'Neill+Partners L.P. in Chicago, said in an investor note.

Adding the activists' directors “to the board should add some urgency to AIG's various initiatives and will keep alive the possibility of a more comprehensive breakup of the company at some point,” said Mark Dwelle, an insurance analyst at RBC Capital Markets Inc. in Richmond, Virginia.

“Letting the activists behind the curtain will allow them to engage with the full board — and a full set of nonpublic financials — to both challenge management's plan, as well as explore other strategic alternatives — like more aggressively selling assets and pursuing an explicit plan to de-SIFI,” Josh Stirling, a senior analyst at Sanford C. Bernstein & Co. L.L.C. in New York, said in an investor note.

AIG already is streamlining. Last month, it said it would put up to 19.9% of its mortgage insurance business in an initial public offering this year, with an eye to selling the entire business. It also said it had reached an agreement to sell its broker-dealer AIG Advisor Group for an undisclosed price.

In a statement on his website, Mr. Icahn discussed the agreement to add two board members and said he declined to go on the board because of his “involvement with so many other companies.”

“We welcome John Paulson's addition to the board and believe his involvement will be additive, especially in that we both have stated the same goals for AIG,” Mr. Icahn wrote. “We commend the board for adopting a number of our recommendations over the last few months. We continue to believe that smaller and simpler is better and look forward to working collaboratively with the board and management to help catalyze a turnaround in core P/C operations, a more transparent operating structure and the ultimate shedding of the SIFI designation. We believe that AIG stockholders will benefit from our agreement.”