AIG's stock rose more than 1 percent immediately following the report. (Get the latest quote here.)
In a letter to shareholders, the billionaire activist investor said: "It is abundantly clear to me there is only one sensible path for AIG to follow: become a smaller, simpler company," on a path toward eventually becoming a non-systemically important financial institution (SIFI).
Icahn said that he recently had a discussion with AIG Chairman Douglas Steenland, who agreed that if shareholders' wishes go against those of the CEO Peter Hancock, "the board would definitely listen, take notice, and pay attention to what shareholders want."
Icahn added that he believes the company management's credibility with shareholders is "all but gone."