Carl Icahn May Not Be Successful In His Attempt To Break Up AIG

Carl Icahn stated in his latest letter to American International Group Inc

board, "my hope [is] that...the board will take matters into its own hands if management still resists drastic change." Analysts at Barclays view this as "Mr. Icahn taking every effort to pressure AIG's board to push CEO Peter Hancock to break up the company," however, the firm is not sure if Mr. Icahn will be successful. Barclays noted that they do not see any "major retrenchments," while AIG is currently under "heavy pressure" to improve results from Carl Icahn. The Activist investor currently owns a 3.4 percent stake in AIG. "Despite MET's decision this month to jettison a significant portion of its US life and annuity business, we doubt AIG will announce a break-up because AIG depends on its US life and retirement services business to service debt and fund significant buybacks," Barclays noted. "If AIG broke up, it could also result in losing at least one-third of its $15bn ($11/share) deferred tax assets (Mr. Icahn disputes this). If AIG's plan falls short of Mr. Icahn's expectations, we expect increased pressure on AIG's board to act decisively." "AIG will likely announce a spin-off of its mortgage insurance business as part of its strategic update on January 26 based on media reports," Barclays commented. "We anticipated this result and doubt it would result in much value being unlocked within the scope of AIG's current $68bn market cap," the firm noted in a research note Friday. The firm sees AIG's commitment to large share buybacks and increased expense savings targets as "likely", however does not see any break-up to be announced by AIG of its life and annuity units.