AIG CEO says Icahn’s break up plan does not “make financial sense”

After-tax operating income was $691 million or 52 cents per diluted share.

Icahn last week disclosed a large stake in AIG.

It also intends to take more restructuring charges in the coming quarters, and it expected to hit a total of about $500 million. Those layoffs represent roughly 20% of top-level positions, this person added. In extended shares changed hands at $61.80, down $1.94, or 3 percent.

Mr. Hancock will have another opportunity to respond Tuesday during a scheduled conference call with analysts.

“AIG’s results were very disappointing”. Icahn said splitting up AIG would boost shareholder value and also make it more competitive. Icahn has mocked Hancock for being unable to reach 10%.

By making three, separate companies small enough they would then not qualify to be designated a “systemically important financial institution” as AIG as a whole is now, he said. Hancock did not specify which lines these were, but told employees he plans to “narrow our focus on businesses where we can grow profitably”. The insurer said it will spend about $300 million in severance and termination benefits, with the plan initially targeting senior levels of management. There are further reductions in jobs that are expected next year. The property-casualty segment contributed $569 million, compared with $952 million.

But the unit’s combined ratio edged up slightly to 102.7 from 102.1, meaning AIG spent $1.027 on claims and expenses for every dollar it collected in premiums. Margins were hurt by claims costs on commercial auto coverage and property insurance.

The SIFI label was created in the wake of the financial crisis, when AIG received $182 billion in federal assistance, as regulators attempted to avoid a repeat by curbing excessive risk-taking at companies so large their collapse would threaten the broader economy. The company’s institutional markets business didn’t fare any better, with profits down 45%.

At the consumer business run by Kevin Hogan, operating income fell by nearly half to $657 million.

AIG shares were down 1.9% after the bell. Personal insurance contributed $62 million. He went on to say that “by separating into three independent companies, reducing unnecessary corporate overhead, operating at average industry returns, and buying back stock, AIG can trade at over $100 per share-66% above its current $60 price”.

Hancock attributed the loss to lower income from hedge fund investments as well as the volatility of certain global markets. It posted a profit of $2.19 billion in the same period a year earlier.