As improbable as it sounds, billionaire activist investor Carl Icahn's campaign to break up American International Group (AIG - Get Report) -- the poster child of the financial crisis -- into three units is being regarded by some as a sign the one-time corporate raider may be styling himself as a protector of the global economy.

Icahn already has gained accolades from some progressives seeking to break up large financial institutions. But even they agree that Icahn's focus on AIG and its regulatory issues is simply a means to boost the stock price.

"Icahn is like Donald Trump," said one attorney who helped draft the Treasury Department's post-crisis legislative proposals. "If it is convenient to tap into the sentiment of the too-big-to-fail crowd then Icahn will do it."

Nevertheless, Icahn's effort to split AIG into three distinct businesses, life, property & casualty and mortgage insurance, could indeed convince a council of regulators in Washington to drop a so-called "Systemically Important Financial System" or SIFI, categorization that subjects the insurance giant to a variety of tougher restrictions, including time-consuming and costly Federal Reserve Board-run stress tests to see if it can survive a future financial crisis.

The Financial Stability Oversight Council designated AIG as a SIFI, in part, because it deemed the global insurer as a potential threat to economic stability. And progressives would likely hoist Icahn on their shoulders as a hero of reducing systemic risk if AIG were broken up. Icahn explained his campaign in a letter he submitted to AIG Wednesday. 

However, the result that Icahn will accept and AIG would agree to may be far short of the kind of breakup that regulators would consider necessary for a SIFI de-designation.

Icahn plans to meet Thursday with AIG CEO Peter Hancock at the fund manager's offices, according to people familiar with the situation. Nevertheless, regulatory observers are watching the clock with a focus on AIG's Jan. 14-to-Feb. 13 window for nominating dissident director candidates to the $78 billion-market-capitalization company's board at the upcoming 2016 annual meeting.

It is conceivable that Icahn could try to expedite his agenda by seeking to hold a special shareholder meeting, but that would be an extremely time consuming tactic, since 25% of AIG share capital must be held by an investor or group of investors before they can call a special meeting for a board fight. Icahn could also seek to solicit the written consent of shareholders for dissident director candidates, also bypassing an annual meeting, but he likely wants to give AIG time to respond. 

In any event, Icahn is certainly aware that any contest to take over the unclassified AIG board would be the largest proxy fight in history and a super-costly effort for both sides. Still, Icahn launched a big proxy fight at eBay (EBAY - Get Report) after that company rejected his call for them to split off its PayPal (PYPL - Get Report) unit, so a contest at AIG is a real possibility.

But Icahn himself owns only about a 2% of AIG, according to people familiar with the activist. And John Paulson of Paulson & Co., an Icahn ally in the AIG effort, likely controls only an additional 1.2%, according to an August securities filing.

As a result, Icahn would need the backing of a large number of long-term institutional investors because the support of new investors following him into the stock wouldn't be nearly enough. No activist has won a contest at a company with a market capitalization of $50 billion or more, so both sides have lots of reasons to reach some sort of an amicable agreement.

That deal could come with a board seat for an Icahn candidate. In addition, in one possible scenario, AIG could agree to just divest of its mortgage insurance unit, United Guaranty, as a means to achieve some partial element of the share-price improvement catalyst Icahn is seeking and avoid a director contest.

Activists like Icahn often seek to break up companies with disparate divisions based on the argument that shareholder value is hidden within their conglomerate structures. A separately traded mortgage insurance company could help provide some of the return Icahn is seeking.

Josh Esterov, analyst at CreditSights, told The Deal that he believes the divestiture could happen partly because it would be the easiest division to spin off due to its small size and limited connection to the rest of AIG's businesses.

In addition, he notes that pure-play mortgage insurers such as Mortgage Guaranty Insurance (MTG - Get Report) and Radian (RDN - Get Report) trade at higher price-to-book multiples, suggesting that AIG could unlock some shareholder value given that its mortgage insurance unit is doing well. However, he pointed out that the United Guaranty unit represented about 5% of AIG's ongoing operating income and a divestiture of it wouldn't be enough for the remaining AIG business to lose its SIFI designation and stigma.

If Icahn, who did not return calls, does decide to push further, he could focus on existing and expected costs associated with the SIFI categorization.

Capital requirements for non-bank SIFIs like AIG haven't been introduced by regulators yet. But in addition to the possibility of having to raise more capital, AIG could face liquidity requirements that its non-SIFI rivals would not be subject to.

A split-up of AIG's property-casualty unit from its life insurance business would be much more difficult.

AIG's Hancock told analysts and investors Tuesday that he sees "tremendous benefit" in having those two units together and that a split would actually require more capital at each business. AIG also announced, presumably in response to Icahn's campaign, an annual cost-cutting initiative of $400 million.

But even if AIG did agree to split into three units, particularly the division of AIG's property & casualty business from its life insurance unit, it wouldn't necessarily mean regulators would de-designate each unit.

University of Minnesota Law Professor Daniel Schwarcz points to the the fact that MetLife (MET - Get Report) and Prudential Financial (PRU - Get Report) , both predominantly life insurance companies, are designated as SIFIs as an indication that regulators may consider an AIG life insurance business as systemically important even if splits off.

"There is a pretty broad consensus that large life insurance companies pose systemic risks," Shwarcz said. "Just breaking it up into three insurance entities doesn't mean that the businesses will engage in activities that are safe."

Most observers agree that breaking up AIG would help reduce systemic risk even if it doesn't mean de-designation. For that, critics of too-big-to-fail are appreciative of Icahn's move no matter his motivation.

"Icahn is like the slimy used auto salesman that will still give you a good deal on a car," said one ex-Obama administration Treasury Department adviser.

Presidential candidate Trump says he would name Icahn as Treasury Secretary in his administration. If that were to happen, Icahn might have the power to break up AIG on his own.