Allied Dunbar is set to dramatically bolster its Franchise Network through parent Zurich's £100m to buy Abbey Life's salesforce and new business book.
Zurich will pay £80m cash on completion of the deal and a £20m performance related payment, on the proviso of the new recruits generating agreed levels of new business two years after completion.
The deal, expected to be completed by the end of March 2000, clears the way for Dunbar to woo 900 of Abbey Life's 1,350 distribution network into its franchise in a package Allied Dunbar chief executive Keith Baldwin describes as “extremely attractive”.
Dunbar is offering the 900 salesmen it has identified as being “entrepreneurs” the option of opening a franchise with it whilst still retaining their client base and renewal commission.
According to Baldwin, Zurich will not be taking on Abbey Life's product range and the group is not interested in administering the existing business book.
Abbey Life will be closed to new business except for increments to existing policies for which Dunbar will receive the fees. Lloyds TSB, which put Abbey Life up for sale, will retain the existing book, but the group's press spokesperson Helen Thompson says: “We always keep our businesses under review.”
Dunbar chairman and Zurich Financial Services UK chief executive Sandy Leitch says: “It will enable us to achieve a step change in Dunbar's new business production, improve our use of existing infrastructure and will generate very attractive returns for ZFS shareholders.”