BMO Financial Group Announces Agreement to Purchase AIG’s Canadian Life Insurance Business

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Expands BMO’s capability to develop and distribute a wider array of investment, financial planning, and insurance solutions to its clients

  • All-cash transaction valued at approximately $375 million, subject to any change in book value at the time of closing.
  • Accretive to earnings in Year 1.
  • Impact on BMO’s Tier 1 Capital under 15 bps.
  • The acquisition is expected to close by June 1, 2009, subject to regulatory approval.
  • BMO customers have access to a broader suite of BMO-branded wealth and insurance products.
  • Strong direct-marketing capabilities, agency relationships, and wealth management products of AIG Life of Canada provide a well-established platform for growth.

TORONTO, Jan. 13 2009 – BMO Financial Group today announced a definitive agreement with American International Group Inc. (AIG) to purchase AIG’s Canadian life insurance business – AIG Life Insurance Company of Canada (AIG Life of Canada). The acquisition, valued at $375 million, subject to any change in book value at the time of closing, provides BMO’s clients with a wider range of investment, financial planning and insurance solutions. The transaction will impact BMO’s Tier 1 Capital by less than 15 basis points and is expected to be accretive to earnings within one year.

“This acquisition is a perfect extension of our existing wealth management offering and our goal to become the one-stop location for all our lients’ financial and investment needs,” said Bill Downe, President and CEO, BMO Financial Group. “Our clients, especially those in or near retirement, are looking for security and peace of mind. Combined with our industry-leading advisors at BMO Nesbitt Burns, we will now be able to provide clients with the investment and tax-efficient insurance solutions they need to help them secure their lifestyle and retirement needs. Such insurance products and advice are offered through BMO Nesbitt Burns Financial Services Inc. by more than 800 licensed life insurance agents, and, in Quebec, financial security advisors.”

“We look forward to welcoming the 300 employees and 400,000 customers of AIG Life of Canada,” said Mr. Downe. “At the same time, acquiring AIG Life of Canada will strengthen BMO’s overall financial planning, wealth and retirement offering, giving us the ability to expand our client relationships through a comprehensive lineup of products.”

Peter McCarthy, President and CEO, AIG Life of Canada, said, “Our management team is very excited about becoming an integral part of one of Canada’s premier financial institutions. As part of BMO Financial Group, we look forward to serving our clients and distribution partners and building on our reputation for providing innovative insurance solutions for Canadians.”

“We look forward to building on AIG Life of Canada’s strong relationships with their Managing General Agents and on their reputation of outstanding support and service to more than 5,000 brokers across the country,” said Gordon Henderson, Senior Vice-President, Insurance, BMO Financial Group. “In addition, AIG Life of Canada’s leading direct marketing capabilities are highly complementary to our strategy of offering a broad range of easy-to-understand insurance products.”

The operations of AIG Life of Canada will be integrated with BMO’s existing insurance operations over the next 6-12 months. The company will be known as BMO Life Insurance Company and operate under the BMO Insurance brand.

BMO Capital Markets acted as exclusive financial advisor to BMO Financial Group on this transaction.

About AIG Life of Canada

AIG Life of Canada is based in Toronto with sales offices in Montreal, Calgary and Vancouver, and is a member of New York-based American International Group Inc.. AIG Life of Canada manufactures and sells a full suite of individual life insurance products including term life, whole life, universal life, annuities and critical illness insurance.

AIG Life of Canada is organized into three operating divisions: Agency (more than 5,000 active advisors across Canada), Direct (direct-to-consumer marketing operations) and Group (traditional employee benefits insurance).

About BMO

BMO Financial Group is a highly diversified North American financial services organization that provides a broad range of retail banking, wealth management, and investment banking products and solutions to more than seven million clients and customers across Canada. BMO offers a range of innovative and easy-to-understand insurance solutions that includes: life and disability insurance on mortgages, loans and lines of credit; MasterCard Outstanding Balance insurance; DirectTerm life insurance; Personal Accident Protection, critical illness, and travel insurance. BMO Nesbitt Burns and its predecessor companies have been helping investors meet their financial goals since 1912. Today, BMO Nesbitt Burns has more than 74 branches and 1400 Investment Advisors (as of December 31, 2008).