Carl Icahn And John Paulson Want AIG To Split Up; Directors Reportedly Discussing A Spinoff
- Shares of American International Group Inc (NYSE: AIG) were trading slightly lower by 0.30 percent Friday morning.
- The Wall Street Journal reported that the company's directors are discussing a potential spinoff or sale of certain divisions.
- Carl Icahn and John Paulson want to break the company into three entities: mortgages, life, and property-casualty.
The Wall Street Journal reported on Thursday evening that the company's directors are discussing a potential spinoff or sale of its mortgage-insurance business.
AIG faces shareholder pressure from activist investors to break apart the company. Carl Icahn described the company as "too big to succeed." Icahn, along with John Paulson want the company to be broken up into three separate companies which consists of mortgages, life, and property-casualty.
AIG's mortgage-insurance business represents roughly 5 percent of the company's pretax operating profit in the second quarter. WSJ noted that the separation of just the mortgage-insurance business "would fall short" of what the billionaire investors are expecting.
Icahn and Paulson believe that a three-way breakup would boost the company's stock. Icahn published a public letter to the company's Chief Executive Officer Peter Hancock earlier this week while Paulson approached senior management in March, WSJ pointed out.
According to a "person close to the matter," AIG's mortgage-insurance segment is "not really core" to the overall business. Separating the segment now would be easier than a breakup of its two major businesses, the person said while also adding that company executives don't believe AIG's best strategy involves "radical changes to keep Carl Icahn in line."
AIG is scheduled to report its third-quarter results on Monday.
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.