Carl Icahn Takes Large Stake In AIG, Says It's A 'No Brainer' To Split Up The Company

Shares of American International Group Inc (NYSE: AIG) spiked more than 4 percent Wednesday morning. At 9:04 a.m. ET, Carl Icahn tweeted an open letter to AIG CEO Peter Hancock, urging him to "[p]ursue tax free separations of both its life and mortgage insurance subsidiaries to create three independent public companies" and to "[e]mbark on a much needed cost control program to close the gap with peers."

Icahn said AIG continues to severely underperform its peers and now faces an "increasingly onerous regulatory burden" that will further erode its competitive position. Icahn noted that AIG is "too big to succeed."

Shares of AIG recently traded up 3.9 percent at $63.35 in Wednesday's pre-market session.

The legendary investor said he has "already heard from several large shareholders who are frustrated with the lack of clear progress and are supportive of an AIG break up. I cannot fathom how you could ignore repeated requests from shareholders to execute a plan that would release billions of dollars of capital, free the company from onerous excess regulation, and leave shareholders owning stock in three separate, market leading insurance franchises."

Commenting on the company's competitive cost structure, Icahn said, "The one thing we do agree on is AIG’s lack of competitiveness. Do you honestly think now is not the time for the inevitable AIG transformation? You must be proactive and commit to closing 100% of the ROE gap between AIG and its peers."

In a press release, AIG responded to Icahn's open letter. The company said it maintains an open dialogue with all shareholders and welcomes their feedback. AIG said it remains on course and has taken "important and significant steps to reposition" the company.

Shares of AIG are up about 9 percent year-to-date, hitting a high of $64.93 in July.