Insurance giant American International Group Inc. (AIG) said Monday that it plans to cut as many as 400 senior-level jobs in restructuring initiatives, less than a week after activist investor Carl Icahn wrote a public letter to CEO Peter Hancock urging the company to split up.

The insurer said it plans to spend about $500 million in severance and termination fees, and said that the job cuts will continue into 2016. Terming the cutbacks “urgent – yet disciplined,” the company said it expected to save $400 million to $500 million annually after completing the restructuring exercise.

Shareholder pressure on AIG has mounted since Icahn published a letter last Wednesday advising Hancock to spin off AIG's life insurance and mortgage units into public companies. The move would help AIG rid itself of a regulatory burden and return more cash to shareholders, Icahn wrote, in the letter.

"We believe there is no more need for procrastination, the time to act is now," Icahn wrote, adding that many large shareholders "are frustrated with the lack of clear progress and are supportive of an AIG break up."

Icahn's move, termed one of the biggest campaigns by an activist investor this year, also blamed a lack of cost controls at the company that was one of the "too big to fail" entities to be bailed out at the height of the global financial crisis.

Dismissing the company’s recent attempts to rid itself of loss-making ventures, Icahn said the company had shown no urgency in closing the gap with its peers and instead chose a "wait and see … for years strategy” to avoid taking tough measures.

On Monday, the company also reported adjusted third-quarter earnings of 52 cents a share – well below Wall Street’s expectations of $1.03 per share, according to a consensus estimate from Thomson Reuters. The company’s shares slipped 2.7 percent to $62.01 in extended trading in New York.

“The management is going to have to walk a tightrope in coming days to satisfy already skeptical investors,” Josh Stirling, an analyst at Sanford C. Bernstein & Co., told Bloomberg.