AIG To Sell Canada Life Unit To BMO

New York-based American International Group Inc. said it will sell AIG Life Insurance Company of Canada to BMO Financial Group, headquartered in Toronto.

Under the terms of the transaction, BMO will acquire AIG Life of Canada for approximately Canadian $375 million (approximately U.S. $308 million) in cash, subject to any change in net worth between Sept. 30, 2008 and closing.

The sale is the latest in AIG's liquidation of assets to pay off more than $100 billion in government loans it required to keep it afloat after a credit crisis brought on by subprime mortgage loan investments. On Dec. 22 the company announced it was selling its Hartford Steam Boiler unit to German reinsurer Munich Re for $742 million, a price that drew criticism from major stockholder Maurice Greenberg, the chairman of C.V. Starr and former chairman and chief executive officer of AIG.

David Monfried, a spokesman for AIG's divestiture effort said the life company sale had attracted a fair price based on current book value according to U.S. accounting. Concerning Mr. Greenberg's criticism, he suggested. “He's welcome to bid, but at the end of the day the market speaks.”

He said he did not know how long AIG has owned the life company.

AIG Life of Canada, headquartered in Toronto, offers a range of products, including universal life and term life insurance plans, critical illness plans, permanent plans, and immediate annuities.

The transaction is subject to certain conditions, including approvals by the appropriate regulatory authorities and is expected to close by June 1.

“Our management team is excited about becoming an integral part of one of Canada's premier financial institutions,” Peter McCarthy, president and chief executive officer of AIG Life of Canada, said in a statement.

“As part of the 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,” said Mr. McCarthy.

“We look forward to welcoming the 300 employees and 400,000 customers of AIG Life of Canada,” said Bill Downe, president and CEO, BMO Financial Group. “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 line up of products.”

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.