AIG to spin off mortgage unit, cut jobs in sweeping overhaul
By Richa Naidu
(Reuters) - American International Group Inc (AIG.N: Quote) said it would spin off its mortgage insurance unit, cut jobs and sell its broker-dealer network as part of a sweeping overhaul promised to shareholders to fend off activist investor Carl Icahn.
The insurer said in a statement on Tuesday that it plans to cut $1.6 billion of costs and return at least $25 billion to shareholders over the next two years.
In a separate filing, AIG said it had frozen its pension plan and let about 300 of its "top 1,400 employees" leave. Further job cuts are planned this year.
Shares of the biggest U.S. commercial insurer by premiums was up 1.3 percent at $56.08 in afternoon trading.
As rock-bottom commercial property and casualty insurance rates across the industry have battered underwriting, AIG's cost structure has been a worry for investors.
Tensions have been mounting between Chief Executive Peter Hancock and Icahn over the billionaire's repeated suggestion that the insurer should split into three - an idea that Hancock has rejected.
Instead, AIG said it planned to streamline its business through divestitures, including the sale of AIG Advisor Group, a network of independent broker-dealers, to Lightyear Capital LLC and PSP Investments.
It will also sell up to 19.9 percent of United Guaranty Corp in mid-2016 as a first step toward separating the business. Continued...