Under pressure from dissatisfied investors to improve results, American International Group announced Wednesday a plan to repurchase another $3 billion in company shares.
The move will lift the company to authorized buybacks of $4.3 billion.
AIG has already repurchased about $9.7 billion this year.
It is the latest effort the insurer has made to return to profitability, following the sale of assets in aircraft lessor AerCap Holdings NV and consumer lender Springleaf Holdings Inc. President and Chief Executive Officer Peter Hancock hopes the efforts will help streamline the company and fund additional buybacks.
Hancock also approved the sale of shares in China’s PICC Property & Casualty Co., which raised more than $700 million.
According to AIG Chairman Douglas Steenland, the buybacks will “enable AIG to continue returning excess capital to shareholders, while finalizing authorization plans for 2016.”
He added that “the timely return of excess capital to shareholders is one of AIG’s strategic priorities.”
Analysts have been less sanguine about the efficacy of these plans. Meyer Shields, managing directors of Keefe, Bruyette & Woods, said earlier this week that selling stock and eliminating 23% of top executives doesn’t address the real issues plaguing AIG.
“CEO Peter Hancock described the sale as de-risking AIG’s PICC P&C position and improving its financial flexibility, but to us, this move looks more like a response to investor pressures than to internal risk management strategies,” Shields said in a research note. He added that the sale “isn’t really a big deal either way” and “we view the current focus on selling or spinning pieces of AIG s much less valuable than the admittedly drastic decisions needed to repair its underperforming P&C business.”
Instead, investors want AIG to consider splitting the company into three separate units – property/casualty, life and mortgage insurance.
These efforts are led by billionaire Carl Icahn, who has been vocal in his criticism of Hancock and other AIG leadership. Icahn has called for AIG to be broken into three companies – property/casualty, life and mortgage insurance – and thereby up stockholder value.
Instead, Hancock has attempted to take a more moderate route via selling stock and letting go of senior management.
The insurer gained 0.8% in trading to $61.40 in New York.
