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.

12
Leave a Reply

avatar
  Subscribe  
Notify of
David Morris
David Morris

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.

sherry
sherry

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

Dawn Thompson
Dawn Thompson

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!

Mary
Mary

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?

Althea
Althea

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

Gloria
Gloria

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.