BMO Financial Group, which announced the acquisition of AIG Life of Canada on Jan. 13, plans to preserve the company’s distribution structure and business model. Financial advisors will now deal with BMO Life, which will integrate AIG.
BMO representative Ronald Monet confirmed the transaction in an interview with The Insurance Journal. He points out that AIG Life of Canada' s 400,000 insurance policies will more than double BMO's client base.
BMO is purchasing AIG Life of Canada for $375 million in cash. The transaction will close by June 1, 2009, subject to approval by the regulatory authorities. The transaction amount may differ if the book value changes by the closing date. The integration of AIG into BMO should be finalized within six to twelve months after that.
This acquisition lets BMO Life offer its clients a wider range of investment, financial planning and insurance products. "This acquisition is a perfect extension of our existing wealth management offering and our goal to become the one-stop location for all our clients' financial and investment needs," says Bill Downe, president and CEO, BMO Financial Group.
The 300 employees of AIG Life of Canada will transfer to BMO Life. Peter McCarthy, president and CEO of AIG Life of Canada, says he is "excited" about joining BMO. The Bank of Montreal confirmed to The Insurance Journal that Mr. McCarthy will remain with BMO Financial Group. His role, however, had not been determined at press time.
In a letter by AIG Life of Canada, obtained by The Insurance Journal, Mr. McCarthy assured clients that their policies are "safe and secure."
"Over the next few months our respective management teams will be working to develop plans to transform our business under the BMO Financial brand. I trust that this news will give you added confidence in AIG Life of Canada, knowing that in the near future, it will become an integral part of one of Canada's premier financial institutions."
AIG Life of Canada deals with over 5000 financial advisors across Canada. The sale follows a decision by American International Group to concentrate on its global property and casualty insurance activities after being hard hit by the current economic crisis and receiving an $85 billion bailout from the U.S. government.