BMO buys AIG Life of Canada: What does it mean for existing AIG life insurance policy holders?

Posted on January 14, 2009 in Life Insurance Canada News
AIG

I’ve sold a lot of AIG Life of Canada policies to my friends and clients over the last three plus years. They are great policies from a historic giant of the insurance industry. But I have to say that I was pretty shocked when AIG’s parent company in the US needed to be bailed out in September 2008.

The risks to policyholders are minimal as I wrote to you then as AIG policies are covered by Assuris which means the greater of $200,000 or 85% of policies face value is guaranteed by Assuris in the case of insolvency.

But the bloom was off the rose and our AIG sales have nosedived since the bailout. Clearly AIG Life of Canada was losing ground quickly and something needed to be done to maintain the value of the business.

 

BMO

Well that something has been done and it’s a dozy. AIG Life of Canada has been sold to the Bank of Montreal for $375 million in cash.

How does that affect existing AIG Life of Canada policy holders?

It’s great news.

Your insurance policies are still backed by Assuris in a worst case scenario, but first they are backed by the Bank of Montreal who has over $416 billion in assets. So you don’t hold the greater of $200,000 of 85% of your original policy any more (worst case) but 100%.

It’s also great news for us and future policy purchasers, as we like AIG Life of Canada policies. If the Bank of Montreal keeps the current policy packages more or less the same, that’s another set of superb and balanced policies out in the Canadian insurance market available to consumers.

In my opinion, the sale was really the best move possible for all sides, as:

  • AIG Life of Canada was struggling to attract the same volume of business as in the past and risked significant internal downsizing and a loss in value.

  • The Bank of Montreal needed a substantial insurance purchase to be able to compete effectively in life insurance against other major Canadian insurance players.

  • Canadian consumers need multiple strong players in the life insurance market.

  • Independent brokers benefit from confidence in the insurance market.

Let me know your own thoughts or if you have any questions.

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12 Comments

  1. David Morris 02/18/2009 at 2:36 pm

    I am an AIG policy holder and am wondering when I might expect notification from the Bank of Montreal of their purchase.

    I find it strange that AIG continue to advertise on TV and the ads fail to mention the bank.

  2. LSM Insurance 02/18/2009 at 2:48 pm

    Thanks for the note David. You would have to contact AIG regarding this. Their toll free number is 1 800 387 9855.

    It is possible they will keep seperate branding like London Life and Great West Life.

    Regards … Lorne

  3. sherry 04/17/2009 at 6:43 pm

    imagine my surprise when the automatic deduction for my policy showed bmo and not aig. I have had my policy for 20+ years and feel I should have received some kind of notice from someone. I worry, and this is why I am investigating online

  4. LSM Insurance 04/17/2009 at 7:01 pm

    Hi Sherry,

    Thanks for the note. There is really nothing to worry about. The provisions in your insurance policy remain intact. Moreover, your insurance policies are still backed by Assuris in a worst case scenario, but first they are backed by the Bank of Montreal who has over $416 billion in assets.

    Regards … Lorne

  5. Dawn Thompson 04/23/2009 at 7:09 am

    This morning with no notice or warning, my automatic bank withdrawal for my insurance premium read BMO instead of AIG. Do you not think AIG could have had the courtesy to notify me? What if I want to speak to someone at BMO about my policy – there are no contacts, no information. Talk about being blindsided!

  6. LSM Insurance 04/23/2009 at 8:49 am

    Hi Dawn,

    Thanks for the note. AIG did send out notices to our clients letting them about the change in name (please note – the policy provisions remain unchanged). We also contacted each our AIG clients to let them know.

    Most insurance companies leave the personal contact to the broker since he/she is the one who has the personal relationship with the client.

    Regards … Lorne

  7. Mary 05/13/2009 at 10:51 am

    I have been notified by letter of the buyout. However, I have a loan against my Universal Life AIG policy and that loan was backed by the National Bank. However, with declines in market, my $100,000 investment has dwindled and the bank wrote me a letter demanding that I pay half of my loan now or they will take it from my investments within the policy. Is Bank of Montreal taking over these loans?

  8. LSM Insurance 05/13/2009 at 3:48 pm

    Hi Mary,

    Thanks for the note. You would have to contact AIG or your broker of record regarding the specifics of your policy. The BMO acquisition should not of changed any of the features of provisions of your policy.

  9. Althea 05/18/2009 at 3:41 pm

    I realize that the staff of BMO, involved with the acquisition of AIG is receiving many inquiries etc. I no longer have any information about my insurance with AIG not even my policy number. $38.00 per month is an automatic deduction from our chequing account. The letter I received implies that this has been transferred to BMO When things “settle down” I wonder if I could have a copy of my policy. There seems to have been a mix up when the original policy was transferred to AIG, Thank You Althea

  10. LSM Insurance 05/18/2009 at 6:09 pm

    Hi Althea,

    Your formerly AIG policy remains unchanged. BMO Life Assurance now handles the policy administration but they are not issuing new policies.

    You may find the attached article interesting regarding getting a replacement policy link to lsminsurance.ca

    Regards … Lorne

  11. Gloria 06/27/2009 at 8:05 am

    I noticed the deduction for BMO in my checking account in April/09. I realize BMO has acquired AIG so I now have an account with BMO—my deductions are for my son’s education. I guess it’s considered an RESP. So, I now have an RESP with the BMO, but I have no information about my account number, policy number or whatever. How do I access information about my RESP at the BMO? I need this information because I want to apply for a Canada Education Savings Grant.

  12. LSM Insurance 06/27/2009 at 9:15 am

    Hi Gloria,

    Thanks for the note. Your account would remain in tact – just the company administering the account has changed

    I would recommend contacting your broker or BMO directly if you have questions on the account.

    1-800-387-4483 (BMO Life Assurance Company)

    Regards … Lorne

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