(Bloomberg) -- American International Group Inc., the insurer being pressured by billionaire investor Carl Icahn to split up, agreed to nominate one of the activist’s allies to the board of directors along with hedge fund manager John Paulson.

The board will be expanded to 16 directors from 14, the New York-based insurer said Thursday in a statement. The second nominee is Samuel Merksamer, a managing director at Icahn Capital.

AIG Chief Executive Officer Peter Hancock and Chairman Doug Steenland are seeking to assuage Icahn, who faulted the insurer in October for failing to meet profitability targets and then pressured AIG to focus primarily on property-casualty coverage. Icahn has said the plan announced in January by the insurer to exit smaller assets, including the mortgage guaranty business and Advisor Network, is not enough of a drastic change.

“I myself declined to go on the board because of my involvement in so many other companies at this time,” Icahn said in a separate statement. “We continue to believe that smaller and simpler is better and look forward to working collaboratively with the board and management to help catalyze a turnaround .”

Hancock has urged patience from investors while selling stakes in an aircraft lessor, a consumer finance company and some operations overseas. He has repeatedly rebuffed Icahn’s plan to strip down to property-casualty operations, citing diversification benefits, and has said a split could squander at least a third of AIG’s more than $15 billion in tax assets.

Merksamer has joined boards of companies targeted by Icahn including Cheniere Energy Inc., Transocean Ltd., Hertz Global Holdings Inc., Talisman Energy Inc. and Navistar International Corp. Paulson is known for his bets against subprime mortgages before the financial crisis.

“John and Samuel will bring financial and business expertise to the Board, and we look forward to benefiting from their insights as we move forward with our strategy to create a leaner, more profitable and focused AIG,” Steenland said.

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AIG names John Paulson and Icahn ally Merksamer to board

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