A bigger-than-expected quarterly loss gave an opportunity to the American International Group Inc to place billionaire John Paulson and its representative to the company board as it capitulated in its boardroom fight with activist investor Carl Icahn.
There was a marginal rise in the shares of the company in the after-hours trading which were boosted its share buyback program and dividend.
Just two days are left for AIG for shareholders submitting board candidates and the agreement with Icahn comes just days ahead of the deadline.
Icahn, the biggest U.S. commercial insurer, has been threatening a proxy fight at AIG as he pushes to break it up into three smaller companies.
"We continue to believe that smaller and simpler is better," the investor said in a statement on Thursday.
The deal does not signal the end of the tussle between AIG's management and Icahn, said Sandler O'Neill & Partners LP analyst Paul Newsome.
"If anything, it will continue behind the scenes rather than in public," he said.
Paulson, a billionaire investor and president of Paulson & Co, and Samuel Merksamer, a managing director at Icahn Capital LP were agreed by AIG to be nominated to its board, the company said.
Cheniere Energy Inc (LNG.N), Transocean Partners LLC (RIGP.N) and Hertz Global Holdings Inc (HTZ.N) are three of the ten companies in which Merksamer, 35, sits on the boards according to Reuters data.
Meyer Shields, an analyst at Keefe, Bruyette & Woods, North America said that the strategy proposed by Icahn is incredibly difficult to achieve.
"There are things AIG can do to increase value - mostly doing a lot less of the things that they are frankly terrible at," Shields said.
Hurt by weak underwriting and lower returns on investments in a turbulent market, AIG reported an after-tax operating loss attributable to the company of $1.35 billion, or $1.10 per share, for the fourth quarter ended December 31.
According to Thomson Reuters I/B/E/S, analysts on average had estimated a loss of 93 cents per share.
As its underwriting business struggles with falling rates for commercial property and casualty insurance, the company is cutting costs.
AIG is looking to cut its gross general operating expenses by another $1.6 billion by the end of 2017 and the insurer has already frozen its employee pension plan.
It would buy back an additional $5 billion of its shares and raised its quarterly dividend to 32 cents per share from 28 cents, said AIG which traces its roots to a two-room office in Shanghai in 1919. AIG repurchased about $10.7 billion of shares in 2015.
The company's shares closed at $50.52 on the New York Stock Exchange.
(Source:www.reuters.com)
There was a marginal rise in the shares of the company in the after-hours trading which were boosted its share buyback program and dividend.
Just two days are left for AIG for shareholders submitting board candidates and the agreement with Icahn comes just days ahead of the deadline.
Icahn, the biggest U.S. commercial insurer, has been threatening a proxy fight at AIG as he pushes to break it up into three smaller companies.
"We continue to believe that smaller and simpler is better," the investor said in a statement on Thursday.
The deal does not signal the end of the tussle between AIG's management and Icahn, said Sandler O'Neill & Partners LP analyst Paul Newsome.
"If anything, it will continue behind the scenes rather than in public," he said.
Paulson, a billionaire investor and president of Paulson & Co, and Samuel Merksamer, a managing director at Icahn Capital LP were agreed by AIG to be nominated to its board, the company said.
Cheniere Energy Inc (LNG.N), Transocean Partners LLC (RIGP.N) and Hertz Global Holdings Inc (HTZ.N) are three of the ten companies in which Merksamer, 35, sits on the boards according to Reuters data.
Meyer Shields, an analyst at Keefe, Bruyette & Woods, North America said that the strategy proposed by Icahn is incredibly difficult to achieve.
"There are things AIG can do to increase value - mostly doing a lot less of the things that they are frankly terrible at," Shields said.
Hurt by weak underwriting and lower returns on investments in a turbulent market, AIG reported an after-tax operating loss attributable to the company of $1.35 billion, or $1.10 per share, for the fourth quarter ended December 31.
According to Thomson Reuters I/B/E/S, analysts on average had estimated a loss of 93 cents per share.
As its underwriting business struggles with falling rates for commercial property and casualty insurance, the company is cutting costs.
AIG is looking to cut its gross general operating expenses by another $1.6 billion by the end of 2017 and the insurer has already frozen its employee pension plan.
It would buy back an additional $5 billion of its shares and raised its quarterly dividend to 32 cents per share from 28 cents, said AIG which traces its roots to a two-room office in Shanghai in 1919. AIG repurchased about $10.7 billion of shares in 2015.
The company's shares closed at $50.52 on the New York Stock Exchange.
(Source:www.reuters.com)
