Billionaire investor Carl Icahn said he may seek to shake up
leadership at American International Group Inc. after Chief Executive
Officer Peter Hancock rebuffed his plan to split the insurer into three
companies.
Icahn will push for a measure that would enable
shareholders to communicate directly with the board and possibly seek
the addition of a director “who would agree in advance to succeed Mr.
Hancock as CEO if asked by the board to do so,” the activist investor
said in a statement on his website Monday.
The statement
intensifies a conflict with AIG that began in late October, when Icahn
disclosed a stake in the New York-based company and mocked Hancock for
failing to meet the insurer’s return targets. Hancock, who became CEO
last year, has said AIG benefits from having a diversity of operations
and that separating into three would be harder than Icahn thinks because
of hurdles from regulators and credit-rating firms.
“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,” Icahn said. “He failed to lay
out any alternative strategic plan with the potential to unlock value
for shareholders or to provide compelling reasons as to why these
businesses belong together.”
The insurer rose 53 cents to $62.74
at 10:52 a.m. in New York trading. That compares with $60.92 on Oct. 27,
the day before Icahn sent a letter urging the company to split into
three separate entities, one selling life insurance, another offering
property-casualty protection, and the third backing mortgages.
‘No Sacred Cows’
Hancock, 57, told analysts this month that there are “no sacred cows”
as he seeks to narrow the company’s focus, meaning he would be prepared
to sell more units after divestitures in Central America and Taiwan and
the exit from an aircraft-leasing business. He said that separating
life and property-casualty segments could be negative for bondholders,
and reiterated that AIG has still been able to repurchase billions of
dollars of stock in recent years.
The insurer said Monday that it
will “accelerate its previously announced strategy” and will provide
further details before reporting fourth-quarter results.
“AIG
maintains an active dialogue with shareholders, including Carl Icahn,”
according to a statement from AIG. “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.”
Icahn disclosed in Monday’s statement that his
firm has more than 42 million shares of AIG. That would make him the
fifth-largest investor in the company, according to data compiled by
Bloomberg.
‘Too Important’
“AIG is too important, and the
current situation is too time-sensitive, to wait years,” Icahn said in
Monday’s statement. “In fact, we believe the current situation is too
time-sensitive to even wait until the company’s annual meeting next
spring, especially when all of the stakeholders who have reached out to
us believe management’s current plan (or lack thereof) is insufficient.”
AIG
trades for less than book value, while the stocks of many of its
property-casualty insurance peers sell for more than the measure of
assets minus liabilities. The activist also said the insurer suffers
from being deemed a systemically important financial institution by the
U.S. government, which can add compliance costs and stricter capital
rules.
Icahn cited in his October letter the support of
billionaire hedge fund manager John Paulson, who also is among the
largest holders of AIG. Paulson & Co. could also support a plan to
sell life and mortgage insurance assets as an alternative to spinoffs,
people familiar with the firm’s thinking said earlier this month.
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