Investors tend to shy away from taking on shares in one-stop-shops. After all, it’s generally far safer to place your faith in a meticulously focused business that’s simple to understand and easier to manage. That’s why the banking and insurance sectors have seen a record number of spinoffs over the past couple of years – and it’s also why infamously active investor Carl Icahn (Trades, Portfolio) has called for a breakup of American International Group (NYSE:AIG).
Last week, Icahn delivered a scathing open letter to AIG’s CEO, Peter Hancock, in which he argued that AIG is simply "too big to succeed." According to Icahn, the $82 billion insurer’s status as a Systemically Important Financial Institution (SIFI) has created an “increasingly onerous regulatory burden” that is ultimately restricting the company’s overall potential. Consequently, Icahn would see AIG split its three primary businesses into separate companies: property and casualty, mortgage and life. Peter Hancock wasn’t necessarily pleased by Icahn’s letter, but the news did lift shares by 4.4% on Wednesday. Continue Reading »