Investors like AIG's alternative to Icahn plan: CEO

Billionaire investor Carl Icahn may not be happy with American International Group's new restructuring plans, but AIG CEO Peter Hancock said Wednesday that doesn't hold true of all investors.

"Shareholders like the basic elements of the plan. It increases transparency. It returns capital to them, and it recognizes some of the unique tax attributes that AIG has, and the loss of those tax attributes if you were to break it up in an aggressive way in the short term," he told CNBC's "Squawk Box."

AIG said last week it would spin off its mortgage insurance unit and sell its broker-dealer network as part of the sweeping changes it has been promising shareholders as it fends off Icahn.

The activist investor has said the giant insurer should split into three — an idea that Hancock has rebuffed. The move would return more cash to shareholders, Icahn has said, helping AIG rid itself of the regulatory burden of being a too-big-to-fail insurer, which requires higher capital cushions in the United States.

Icahn called AIG's alternative proposal inadequate and said he is moving forward with plans to assemble a number of directors he would like to place on its board.

Hancock said he and his chairman have had several conversations with Icahn during which they have tried to make him understand the opportunities the company has to optimize its capital structure and narrow its focus.

The insurer also said it would cut $1.6 billion of costs and return at least $25 billion to shareholders over the next two years.

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 and PSP Investments.

In a note, BMO Capital Markets said AIG was correct in its assessment that a quick breakup would not be in shareholders' best interest. But it called management "overly optimistic" in predicting that improved underwriting will contribute to $25 billion in shareholder returns over the course of two years.

FBR Capital Markets said it believed the initiatives would be well received by investors. "That said, we think the ability to execute on reserve and margin goals in particular is going to be challenging," the firm added.

— Reuters contributed to this story. CNBC's Kirsten Chang contributed reporting.

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