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At the end of October, hedge fund billionaire and activist investor Carl Icahn wrote a note to insurance behemoth AIG's CEO outlining his proposals for the company, and then followed that with another letter on Monday...
We believe AIG would benefit from selling low [return on equity (ROE)] businesses to better owners near book value, but also believe it would be a mistake for AIG to sell high a ROE business like [United Guaranty Corp] -- the company's [private mortgage insurance] business.
In a very simplistic characterization, some investors seek to harvest the value of UGC by converting it to cash and then to use that cash to buy back AIG shares.
We believe you must acknowledge that the current multiline strategy is not generating competitive returns.
If a buyer or the public wishes to overpay for this asset, AIG should be willing to part with it.