AIG TO RETURN AT LEAST $25BN TO SHAREHOLDERS IN NEXT TWO YEARS

AIG has outlined its strategy to create a "leaner, more profitable and focused insurer" in response to recent shareholder pressure from activist investors Carl Icahn and John Paulson to shrink and simplify its business. The company’s board of directors said it has committed to return at least $25bn of capital to shareholders over the next two years through buybacks and dividends. This will be in addition to the $12bn returned in 2015. AIG is also targeting expense reductions of $1.6bn within two years. The reductions would represent 14% of the company’s gross general operating expenses in 2015. It is also planning to take "aggressive actions" to improve its problematic commercial property/casualty sector by addressing unprofitable clients purchasing one or two products, expanding and optimising the use of reinsurance and exiting or remediating targeted segments of underperforming portfolios. AIG said the capital return was expected to be sourced from a combination of improved operating performance, divestures, reinsurance transactions, a shift in asset allocation, a modest increase in leverage and the release of capital over time from low-earning legacy assets.