After close scrutiny from activist investor Carl Icahn (Trades, Portfolio), insurer American International Group (AIG, Financial) today released its plans for the future of the firm which include some substantial changes but fall short of the leading shareholder's demands.
Holding approximately 42 million shares of the outstanding stock of AIG, Icahn wrote an open letter to the firm’s management on Oct. 28 suggesting the firm break up into three independent companies. Outspoken in his suggestions, the activist investor’s urgings follow much speculation from shareholders and market experts on the optimal business structure for the firm, specifically following trends in the industry that have increased regulatory burdens for insurance companies.
On Jan. 26, AIG followed some of the urgings of its shareholders and released a plan for reform at the company that includes an IPO for United Guaranty Corporation and the divestiture of AIG Advisor Group. The company’s plan also includes the formation of nine business units with greater transparency and accountability. Additionally, AIG will focus on reducing costs with $1.6 billion in expense reduction plans to be incorporated, and shareholders can expect to receive a total of $25 billion returned through dividends and stock buybacks over the next two years.
In a press interview, Peter Hancock, the firm's CEO, had the following comments.
Disclosure: I do not own any shares of AIG.
