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Carl Icahn letter: AIG should be broken up; it is 'too big to succeed'

Activist investor Carl Icahn turned up the pressure on insurance giant American International Group to separate into three public companies, saying it's "too big to succeed."

In late October, Icahn wrote a letter to AIG CEO Peter Hancock outlining a plan to shrink the company. In a statement Monday, Icahn said he has met with Hancock more than once to discuss the issue.

Shares of AIG were up slightly in early trading Monday.

"In all of our discussions with Mr. Hancock it was abundantly clear to us that he is not willing to take the bold steps that we, and so many other shareholders, believe are long overdue," Icahn said in Monday's statement. "In addition, in those conversations he failed to lay out any alternative strategic plan with the potential to unlock value for shareholders or to provide compelling reasons as to why these businesses belong together."

Icahn Capital owns over 42 million shares of AIG — making it one of the company's largest shareholders. AIG is one of the largest insurance companies in the country.

In the letter, Icahn said he plans to continue discussions with Hancock, but he does not think the proposal to split is being "sincerely considered."

"As a result, we intend to commence shortly a consent solicitation that will enable shareholders to express their views directly to the board, which may include a proposal to add a new director who would agree in advance to succeed Mr. Hancock as CEO if asked by the board to do so."

Icahn repeated his contention that the company is "too big to succeed." In addition to splitting AIG into smaller companies, he called for accelerating cost cutting.

In a statement on Monday, AIG said the company "has taken numerous steps to streamline its businesses, narrow focus, improve financial performance and return capital to shareholders..."

"AIG maintains an active dialogue with shareholders, including Carl Icahn. As previously stated, the company does not believe a separation of its businesses as proposed by Mr. Icahn makes financial sense."