The following is an excerpt from ANGELO YOUNG | January 19, 2016 | ibtimes.com |
Billionaire activist investor Carl Icahn renewed his call Tuesday to break up American International Group Inc., once again berating the insurance giant’s chief executive, Peter Hancock, for not doing enough to maximize shareholder returns. Icahn is AIG’s largest investor and has disputed AIG’s strategy of selling assets rather than breaking off large parts of its operations.
“It is abundantly clear to me there is only one sensible path for AIG to follow: become a smaller, simpler company,” Icahn said in a letter to AIG’s board of directors. The renewed call comes a week after MetLife Inc., the largest U.S. insurer, announced it plans to spin off a large part of its U.S. retail business into a separate, publicly listed company to reduce regulatory scrutiny.
Institutions like MetLife and AIG have been deemed by U.S. regulators as systemically important financial institutions (SIFIs). In the wake of the 2007-09 financial crisis, SIFIs have been required to hold more cash in reserve because of the threat they pose to the U.S. economy if they collapse. Icahn is concerned about the “enhanced regulations” AIG faces as a SIFI. He called on AIG to sell off units and focus on its core strength in property casualty coverage.
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