Bank of Montreal's $309 million deal for American International Group Inc.'s Canadian life insurance business should diversify Bank of Montreal's revenue stream, analysts said Tuesday.

Analysts said the acquisition would likely broaden the Toronto company's wealth management operations and position it well if Canada's federal government relaxes the ban on insurance sales in bank branches.

But they said the addition of $2 billion of AIG assets would have little impact on earnings. "The acquisition looks immaterial to near-term earnings, but it is positive for optics," Desjardins Securities said in a research note. John Aiken at Dundee Securities said. "This is not a transformational acquisition."

Michael Goldberg at Desjardins said AIG's Canadian life operations earned $15.4 million in 2005, $34.3 million in 2006, and $49 million in 2007. It had an operating loss of $14.4 million for the first three quarters of last year.

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