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AIG selling broker-dealer segment, cutting expenses

Insurer AIG is selling its broker-dealer segment, starting an initial public offering for its mortgage-insurance division and slashing expenses after coming under pressure from activist investor Carl Icahn.

Icahn has been pushing New York-based AIG to break itself into three separate companies.

AIG shares rose more than 2 percent in morning trading Tuesday.

American International Group Inc. said that it will sell AIG Advisor Group to private equity firm Lightyear Capital LLC and Canadian pension investment manager PSP Investments. Terms were not disclosed. The transaction is expected to close in the second quarter.

The company said the IPO for up to 19.9...

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