A.M. Best Removes From Under Review and Affirms Ratings of BMO Life Assurance Company; Assigns Stable Outlook

OLDWICK, N.J., Oct 30, 2009 (BUSINESS WIRE) -- A.M. Best Co. has removed from under review with developing implications and affirmed the financial strength rating of A (Excellent) and issuer credit rating of "a" of BMO Life Assurance Company (BMOLAC) (Toronto, ON). The assigned outlook for both ratings is stable.

These rating actions follow the completion of A.M. Best's review of the acquisition of BMOLAC (formerly AIG Life Insurance Company of Canada). The ratings were placed under review with developing implications following the announcement that Bank of Montreal (BMO) had agreed to purchase AIG Life Insurance of Canada from American International Group, Inc. The company was renamed BMO Life Assurance Company following the close of the transaction.

The ratings consider BMOLAC's long history of solid operating profitability under prior ownership (despite a net loss in 2008 resulting from weak economic conditions and tax charges), favorable position in several market niches and expected benefits derived from its association with BMO as its new owner. A.M.

Best believes the operating risk during this transition period is low and expects that BMOLAC will have continued support from BMO as needed. While BMOLAC recorded investment write-offs in 2008 and remains exposed to a few troubled credits, A.M. Best believes that BMOLAC's investment risk is manageable.

Partially offsetting these factors are the overall modest market position of BMOLAC in the concentrated Canadian life insurance marketplace, its recent earnings, volatility and short-term challenges in rebuilding distribution and brand awareness. It is A.M. Best's opinion that the company may require parental support to meet its growth objectives, reflecting its somewhat modest capitalization on a stand-alone basis. Accordingly, the ratings reflect the strength and expected support from BMO. In affirming the ratings of BMOLAC, A.M.

Best reviewed the financial statement of BMO, as well as other available public information, including public credit ratings, all of which support the affirmation of the ratings.

BMOLAC underwrites a portfolio of individual life insurance products including term life, whole life, universal life, critical illness and annuities. It also has a very strong niche position in structured settlements. The company distributes its products across Canada through independent agents and on a direct basis to the public. The most significant impact BMOLAC experienced from the very public problems of its former parent was a marked decline in agent activity and new business production.

For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

SOURCE: A.M. Best Co.

CONTACT: A.M. Best Co. Analysts William Pargeans [phone], ext. 5359 [e-mail] or Stephen Irwin [phone], ext. 5454 [e-mail] or Public Relations Jim Peavy [phone], ext. 5644 [e-mail] or Rachelle Morrow [phone], ext. 5378 [e-mail] Copyright Business Wire 2009 -0- KEYWORD: Ontario

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