NEW YORK (Bloomberg) — Carl Icahn, the billionaire investor known for picking fights with corporate boards, disclosed a stake in American International Group and said it should split into three companies, one offering property-casualty coverage, another selling life insurance and a third backing mortgages. The stock rallied in New York trading.

“There is no more need for procrastination,” Icahn said in a letter posted on his website Wednesday and addressed to AIG chief executive officer Peter Hancock.”The time to act is now.” Icahn said on Twitter that he holds a “large stake” in AIG.

While AIG climbed about 8.8 per cent this year through Tuesday’s close, the insurer still trades for less than 80 per cent of book value, a measure of assets minus liabilities. Travelers Cos, the lone property-casualty insurer in the Dow Jones Industrial Average, trades for more than 1.4 times book value. AIG jumped 3.2 per cent to $62.88, the most intraday since August.

Icahn, 79, said a split would help AIG limit regulation. The insurer has been deemed a non-bank systemically important financial institution by a US panel because of its size. The designation brings increased Federal Reserve oversight.

“You must acknowledge that enhanced regulation is intended to be a tax on size,” Icahn wrote in the letter.

Hancock, 57, who took over as CEO last year, reorganised AIG into two main divisions with one focusing on commercial clients and the other on individual consumers. He said the arrangement responds to customer demand and makes more sense than the previous split, which had a life unit and a property-casualty operation. AIG also has been shedding assets to boost capital, exiting its stake in aircraft-lessor AerCap Holdings NV and selling shares of consumer-finance company Springleaf Holdings Inc.

The insurer has “taken important and significant steps to reposition AIG by both simplifying and de-risking the company,” Hancock said in a separate statement. “We remain on course and are determined to continue and accelerate these efforts.”

John Paulson, the billionaire hedge fund manager who is also an AIG investor, is quoted in the letter saying that the insurer could trade for $100 a share if it split into three, reduced expenses, repurchased stock and matched average industry returns. Paulson in 2012 urged Liam McGee, then the CEO of Hartford Financial Services Group, to separate its life insurer from the property-casualty operation.

McGee subsequently sold assets to simplify his company and won praise from Paulson. Travelers and life insurer Prudential Financial are among AIG rivals that sold units in prior years to narrow their focus.

“AIG is frankly overdue in following in the footsteps of all other major multi-lines in breaking up life and P&C,” Paulson is quoted as saying in the letter.

Hancock’s predecessor at AIG, Robert Benmosche, resisted calls in 2011 for a break-up, saying the insurer benefits from having a variety of businesses. Harvey Golub, the former AIG chairman, said that year that the company should be broken up eventually because its two main businesses have “no strategic fit between them.”