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aig bailout

BMO to buy AIG Canada

by Glenn on January 13, 2009

Good news! BMO (Bank of Montreal) is buying AIG’s Canadian life insurance operations. They picked it up for about $375 million. Full news here: Cnn Money

BMO will merge AIG’s operations with their own. And by ‘merge’ I mean if you work at AIG, you’d best get your resume sent over to Manulife tout-suite. The end result, they’ve bought the block of business but going forward AIG life insurance operations in Canada as an entity are gone.

The reason I say this is good news is that for existing policyholders this likely means business as usual – except now if you’re an existing AIG life insurance client your policies should basically be moved over to BMO for administration with no other changes (including changes to premiums and any other contractual provisions). In short, your life insurance policy should be just like it was before but now backed by BMO instead of AIG. That’s good news.

It’s also good news for those of us in the life insurance industry because it removes a source of uncertainty from the industry and shows once again that the business is stable.

Update: Here’s the link to the announcement from AIG.

Update 2: I also wanted to comment that this points to only good things about the Canadian life insurance industry.  Not only was AIG in Canada in good shape despite their parent company’s problems, but look how fast the company was snapped up by another insurer.  The regulators seem to be doing whatever they need to to ensure the industry is strong for consumers.

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Manulife to buy AIG Life of Canada

by Glenn on October 7, 2008

Manulife to buy AIG Canada! There, I said it first. :)
Of course, that comment is complete speculation on my part!

AIG Life of Canada today released a document to it’s partners, a copy of which can be read here.. Two things it points out. First, the US government has bailed out the parent company in the US.

Secondly, as part of that bailout they expect to sell off their non-core businesses off, including quite likely AIG Life insurance Company of Canada.

SO! AIG Life insurance Company of Canada is for sale. And who’s big enough to buy them?

Manulife.

Manulife is now the largest life insurance company in the world (since AIG’s decline). They seem to be weathering this financial crisis just fine. Furthermore Manulife has a voracious appetite for buying life insurance companies. Well, they call it ‘merging’ but when Manulife ‘merges’ with another life insurance company, the resulting company is always called ‘Manulife’ :).

In the last couple of decades Manulife has bought just about every Canadian life insurance company that could be bought. And they’ve bought aggressively into the US as well – John Hancock being one example. Unfortunately the list of companies available to be taken over has shrunk to virtually nobody recently. The opportunity to take over a large block of business in short order likely has the execs at Manulife rubbing their hands with glee.

There’s your speculation for the day. We know AIG is up for sale, we know Manulife is big enough and bad enough to buy them out. And ultimately should that transpire that can only be good for AIG policyholders.

(*) Manulife buying out AIG is pure speculation on my part. I bet I’m right :) but it’s speculation nonetheless.

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