Four top-level executives at American International Group Plc (AIG), including its CFO, will leave the insurer as part of a massive management shake-up aimed at simplifying operations and cutting costs amid shareholder pressure.
The news comes as tensions mount between AIG Chief Executive Peter Hancock and activist investor Carl Icahn over the billionaire’s suggestion in October that the company split into three and improve profitability.
Shares in AIG were down 0.9 percent at $61.60 in early trading on Thursday.
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.
CFO David Herzog will be replaced by Chief Risk Officer Sid Sankaran. Herzog will continue as CFO through the filing of AIG’s 2015 10-K annual report, AIG said in a statement.
Last year’s 10-K report was filed with the Securities Exchange on Feb. 20.
Alessa Quane will replace Sankaran as chief risk officer and continue in the role of chief corporate actuary.
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.
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, with the support of hedge fund manager John Paulson, recommended that AIG break itself apart to help rid itself of stringent capital requirements placed on it as a systemically important insurer.
Since then, Hancock has stressed that a breakup would not “make financial sense” and reiterated that the company is pushing hard to cut costs and return money to shareholders.
Icahn said last month that he may propose adding to AIG’s board a new director who would agree to succeed Hancock as CEO if asked to do so by the board.
The activist investor said at the time that he would formally reach out to shareholders over the matter soon.
Icahn could not be immediately reached for comment.