Filed Under:Markets, Commercial Lines

Icahn urges drastic AIG shift, says CEO credibility on the line

(AP Photo/Richard Drew)
(AP Photo/Richard Drew)

(Bloomberg) -- Activist investor Carl Icahn, who’s pushing American International Group Inc. Chief Executive Officer Peter Hancock to shrink the insurer and boost returns, said the CEO’s presentation next week on his vision must offer “a drastic strategic shift.”

“It would be a mistake to squander this opportunity to present a bold new strategy and instead waste investors’ time providing excuses for past underperformance,” Icahn said Tuesday in a letter on his website. “Even the announcement of isolated asset sales without a clear commitment to a transformative strategy would be a disappointment and further destroy value.”

Related: MetLife unit's SIFI off-ramp may pressure AIG as Icahn looms

Icahn is looking to increase urgency ahead of New York-based AIG’s Jan. 26 presentation, while the insurer has been seeking a more patient approach. Hancock said in a letter to staff last week that “we will no doubt continue to hear more noise in the next few days.” The CEO said he would pursue a “prudent, insightful plan” with the backing of the board.

Hancock has sold some small units, including operations in Central America and Taiwan. Those deals pale in comparison to the announcement by MetLife Inc. last week that it will sell, spin off or have an initial public offering for a U.S. retail business with $240 billion in assets.

Icahn cited MetLife’s strategy, which is designed partly to limit regulation on operations including U.S. annuities. MetLife and AIG have been designated by a U.S. panel as systemically important financial institutions, a tag that can lead to tighter capital rules.

“There is only one sensible path for AIG to follow: become a smaller, simpler company with a path to de-SIFI,” Icahn wrote. If Hancock’s strategy update is limited to small-scale asset sales and cost cutting, “then the little credibility management now has will be lost.”

Related: AIG chief rebuffs Icahn plan, says split doesn't make sense

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