AIG Sells Life Insurance to BMO
January 13th, 2009 at 4:41 pm - by admin
Canadian Bank of Montreal will purchase AIG’s life insurance subsidiary, AIG Life of Canada for just about $375 million Canadian.
American International Group, Inc., once the largest insurance company and 18th largest company internationally, has routinely sold off parts of itself since the liquidity and financial crisis it has led since September. AIGs primary U.S.-based division has received over $150 billion in funding from the U.S. government to prevent collapse.
BMO, Canada’s fourth largest bank (measured by assets) said it will inherit AIG Life of Canada’s 300 employees and over 400,000 Canadian customers. After details of the announcement were released, shares rose about 1 per cent on an otherwise slow trading day for the company.
“We look forward to welcoming the 300 employees and 400,000 customers of AIG Life of Canada, 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.” said BMO President and CEO, Bill Downe.
Final details - including valuation will be based on the unit’s value on the closing date, which is expected at the end of May, pending regulatory approval.
Analysts are impressed with BMOs performance, seeing a bank during a financial industry crisis with liquidity to purchase a $375 million corporation, while still paying out nearly 9 per cent dividend yield. BMO’s Q4, which ended October 31st “reported a 24% year-over-year increase in net income, earning $560 million. Earnings per share were $1.06, up $0.19 or 22%.”
