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How AIG Will Return $25 Billion to Shareholders While Rebuffing Icahn


  •   Returning at Least $25 Billion of Capital to Shareholders over Next Two Years
  •  Executing IPO of up to 19.9 percent of United Guaranty Corporation as a First Step
    Towards a Full Separation
  • Streamlining the Business through Divestitures and Exits, including Sale of
    AIG Advisor Group
  •  Reorganizing Operating Model into Separate Business Units to Enhance
    Transparency and Accountability, Driving Performance Improvement and
    Strategic Flexibility over Time
  • Separating Legacy Assets in New Portfolio to Provide Greater Transparency
    and Highlight Progress on ROE from Operating Portfolio
  • Reducing $1.6 Billion in Expenses within Two Years
  • Improving Commercial P&C Accident Year Loss Ratio by Six Points by 2017
  • Targeting ~9 percent consolidated ROE by 2017, over 10 percent ROE in the Op


AIG, the bailed-out insurer that Carl Icahn wants to break up, rejected the activist’s proposal Tuesday and said it would instead spin off part of the mortgage insurance business, sell its broker-dealer unit and return $25 billion to stockholders within two years.

The moves, approved by the company’s board, are the latest in a standoff between CEO Peter Hancock,  and Icahn, who has criticized the company for lagging its peers in the aftermath of the financial crisis and sustaining losses in its mammoth property and casualty unit.

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“The board’s actions reflect its full support for the plans that Peter Hancock and his management team have put forward, ” Chairman Douglas Steenland said in a statement. “A full breakup in the near term would detract from, not enhance, shareholder value.”

Both Icahn, who holds a 3.4% stake in AIG valued at about $2.34 billion, and John Paulson, with an $808 million position, have been urging the company to split into three leaner segments: property and casualty, mortgages, and life insurance. That strategy would allow AIG to escape stricter government oversight of how it invests capital that accompanied the company’s designation as a systemically important financial institution, Icahn has said.

 Read the full story at Insurance Journal, by James Langford




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