NEW YORK (Bloomberg) — American International Group chief executive officer Peter Hancock dismissed activist investor Carl Icahn’s proposal to split the company into three insurers, saying a division would limit earnings diversity and reduce the value of some tax assets. The stock declined 4.4 per cent in New York trading.

“Management and the board have carefully reviewed such a separation on many occasions, including in the recent past, and have concluded it did not make financial sense,” Hancock said of Icahn’s plan in a conference call yesterday. “We of course will meet with him to further share our conclusions and give him an opportunity to elaborate on his views.”

Icahn disclosed last week that he’d acquired a stake in New York-based AIG and said the insurer should divide into three companies, one offering property-casualty coverage, another selling life policies and a third backing mortgages. AIG trades for less than book value while the stocks of most large property-casualty insurers are above that metric. The activist investor also said that shrinking the company would help avoid the capital restrictions that are imposed on the largest financial institutions.

Hancock responded yesterday that the company has still been able to repurchase billions of dollars of stock. He also highlighted efforts to streamline the business, including a $500 million plan to restructure operations by cutting jobs and improving information technology.

AIG intends to dismiss about 23 percent of the top 1,400 members of senior management, he said. That would be a reduction of more than 320 jobs.

“No area of the firm is left untouched” by the cuts, which will targeted to match the prospects of various units, Hancock said. “With a more focused, narrower strategy going forward, we just need fewer generals on the field. These are quite talented and highly-paid individuals.”