American International Group Inc plans to use an IPO to sell part of its life and retirement business, while Blackstone Group Inc agreed to buy a sizeable stake, according to a person familiar with the matter. AIG and Blackstone said on Wednesday the private equity firm would pay $2.2 billion in cash for 9.9 percent of the unit, sending the insurer’s shares more than 6 percent higher in after-market trading. AIG had been fielding inquiries from potential investors about taking a 19.9 percent stake in the life and retirement unit, which sells insurance and annuities, but Chief Executive Officer Peter Zaffino in May said the company would use an IPO to sell the stake instead, dashing the hopes of bidders. “This does not derail the IPO plan,” the source said. The moves are part of AIG’s effort to split its life insurance and retirement businesses off from its property and …