(Reuters) - Four top-level executives at American International Group Plc (AIG.N), including its finance head, will leave the insurer as part of a management shake-up aimed at simplifying operations and cutting costs.
The news comes amid mounting tensions between AIG Chief Executive Peter Hancock and activist investor Carl Icahn over the billionaire's suggestion in October that the company should split into three - an idea Hancock promptly rebuffed.
AIG's cost structure has remained a cause of concern for investors, and its underwriting operations have suffered from falling rates for commercial property and casualty insurance as pension funds have flooded the industry in search of yield.
The insurer, whose shares were down as much as 1.2 percent in morning trading, has said managing expenses and reducing structural costs are key focus areas. It is currently targeting reducing 23 percent of senior management.
"Hancock is putting in place people he feels more comfortable with," Brett Horn, an analyst from Morningstar said.
"(It) may also be a reaction to the criticism by Carl Icahn, I think that has prompted a greater sense of urgency at the company."
Icahn disclosed last month that he owned 42 million shares in AIG, making him the insurer's fifth largest shareholder, according to Thomson Reuters data.
The billionaire, who recently took stakes in Xerox Corp (XRX.N) and Freeport-McMoran Inc (FCX.N), has cultivated a reputation for sweeping changes, often controversial, in the companies he invests in.
Icahn, who could not immediately be reached for comment, has indicated that he may propose adding to AIG's board a new director who would succeed Hancock as CEO if asked to do so by the board.
As part of Thursday's announcement, CFO David Herzog will be replaced by Chief Risk Officer Sid Sankaran. Herzog will continue as CFO through the filing of AIG's annual report, the company said in a statement.
AIG's head of commercial insurance, John Doyle, head of Asia Pacific operations, Jose Hernandez, and Eric Martinez, executive vice president of claims and operations, will also leave.
Shares of the company were down 1 percent at $61.54 on Thursday. They have gained 2 percent since Icahn first called for a breakup of the company.
Reporting by Richa Naidu and Sweta Singh in Bengaluru; Editing by Shounak Dasgupta