NEW YORK (Bloomberg) — American International Group posted its second-straight quarterly loss, adding to pressure on chief executive officer Peter Hancock, who lifted the dividend and announced a $5 billion share buyback as he fights demands from activist investor Carl Icahn for a management shake-up.

And the group agreed to nominate one of the activist’s allies to the board of directors along with hedge fund manager John Paulson, as the board is expanded to 16 directors from 14, the New York-based insurer said yesterday. Joining Paulson is Samuel Merksamer, a managing director at Icahn Capital.

Icahn faulted the insurer in October for failing to meet profitability targets, and he and Paulson pressured AIG to focus primarily on property-casualty coverage. Icahn has said the plan announced in January by the insurer to exit smaller assets, including the mortgage guaranty business and a broker-dealer network, is not enough of a drastic change.

“We continue to believe that smaller and simpler is better and look forward to working collaboratively with the board and management,” Icahn said in a separate statement, adding that he declined to join the panel because of his busy schedule.

The net loss was $1.84 billion, or $1.50 a share, in the three months ended December 31 and compares with profit of $655 million, or 46 cents, a year earlier, the New York-based company said last night in a statement. The operating loss, which excludes some investment results, was $1.10 a share, missing by 19 cents the average estimate of 16 analysts surveyed by Bloomberg.

Hancock is seeking to reshape the company’s business mix, curtail investment risks and improve underwriting margins to reverse a stock slide and protect his job. Fourth-quarter results were hurt by higher-than-expected claims costs on casualty coverage and deteriorating results from hedge funds. The CEO unveiled a plan last month to return $25 billion in capital to shareholders over the next two years, funded partly with proceeds from asset sales.

AIG will become a “leaner, more profitable and focused insurer,” Hancock said in the statement. Thursday’s buyback authorisation, and the 14 per cent increase of the quarterly dividend to 32 cents a share “are a strong start towards our goal of returning at least $25 billion.”

Hancock’s presentation in January failed to win support from Icahn, who said management needs to be more aggressive in shrinking the company and that the CEO wasn’t up to the job after announcing more than $3 billion in costs to fill a reserve shortfall.

AIG has declined 18 per cent this year to $50.52 as of 4pm yesterday, compared with a drop of about 11 per cent in the Standard & Poor’s 500 Index. Results were released after the close of regular trading.

Operating return on equity was 6.8 per cent in 2015 and 6.7 per cent in the fourth quarter. Icahn has knocked Hancock for failing to meet his long-time goal of a 10 per cent ROE.

The insurer was also unprofitable in the third quarter when AIG posted a $231 million loss as investment results worsened. For the full year, net income fell 71 per cent to $2.2 billion.

Book value, the measure of assets minus liabilities fell to $75.10 a share, from $79.40 three months earlier.