Bank of Montreal confirmed a definitive agreement to buy American International Group Inc.'s Canadian life-insurance business for about C$375 million ($313 million).

The Canadian chartered bank said the purchase of AIG Life Insurance Co. of Canada, which is based in Toronto, will affect its Tier 1 Capital by fewer than 15 basis points and is expected to contribute to earnings within one year.

The purchase price is subject to any change in book value at the time of closing, expected by June 1.

Bank of Montreal said the Canadian operation of AIG has 300 employees and 400,000 customers. The operations will be integrated with the bank's existing insurance operations over the next six to 12 months. The combined operation will be known as BMO Life Insurance Co. and will operate under the BMO Insurance brand.

AIG is trying to sell off or contain huge risks it amassed in its financial-products unit, where multi-billion-dollar problems led to a government rescue in September.

BMO Capital Markets acted as financial adviser to Bank of Montreal, while J.P. Morgan Securities acted as AIG's financial adviser.

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