FILE PHOTO: AIG CEO Peter Hancock speaks during the White House summit on cybersecurity and consumer protection in Palo Alto, California February 13, 2015. REUTERS/Robert Galbraith

(Reuters) - American International Group Inc's AIG.N directors are discussing whether to penalize or oust Chief Executive Peter Hancock over a major setback in the insurance firm's turnaround plan, the Wall Street Journal reported, citing people familiar with the matter.

Fifteen directors are expected to debate on various potential actions at a board meeting in early March, the report said. (on.wsj.com/2lYNS53)

The goals for AIG’s two year restructuring plan include returning $25 billion to shareholders and becoming a “leaner, more profitable and focused insurer” by trimming its property and casualty business and shedding unwanted assets.

AIG’s fourth quarter marked a critical midpoint in the ambitious two-year strategic plan aimed at turning the company around. AIG’s net loss widened to $3.04 billion, or $2.96 per share, in the fourth quarter ended Dec. 31, from $1.84 billion, or $1.50 per share, a year earlier.

“AIG’s Board of Directors and management team have agreed on a clearly defined transformation plan for the company to deliver high quality, sustainable earnings,” the company said in a statement on Monday. “At this point every year, we actively review our past and future expected performance against our plan, and this year is no exception,” the company said.

The restructuring plan, unveiled early last year, followed pressure from billionaire activist investors Carl Icahn and John Paulson in 2015 to split the company in three because of AIG’s poor performance that year.

By slimming down, AIG could shed its designation as a non-bank systematically important financial institution (SIFI), Icahn has said.

AIG has had the label since its near collapse in 2008 and the government bailout that followed, driving regulators to consider some non-bank companies as “too big to fail.”