Allied Dunbar

Allied Dunbar was a large British life assurance group. In its early years it was known as Hambro Life Assurance and was listed on the London Stock Exchange and was once a constituent of the FTSE 100 Index. However, it was acquired by BAT Industries, merged with Eagle Star, and sold to Zurich Financial Services in 1998.

The company was founded by Sir Mark Weinberg, Lord Joffe and Sir Sydney Lipworth after Abbey Life was taken over, with seed finance from Hambros Bank, and set up its headquarters in Swindon town centre in 1970 under the name Hambro Life Assurance. It was first listed on the London Stock Exchange in 1975. The asset management department was hived off to form Threadneedle Investments, and it was bought out by Zurich Financial Services in 1998.

Allied Dunbar's business, like its predecessor Abbey Life's, was unit linked: the direct investment risk and reward due to market changes was very largely exclusive to the individual investors, rather than the company, its shareholders or other planholders. Despite its initial form as an Assurance Company, Allied Dunbar was always essentially a retail investment group. Its initial sales proposition was to offer unit linked bonds, which could be sold door to door (unlike unit trusts at the time), and including property investment, when property unit trusts were not then authorised. Although nominally single premium life policies, these offered only nominal life cover, and were not subject to ad valorem stamp duty on life policies. Equity exposure was obtained by investing via a range of feeder funds into Allied Unit Trusts, whose manager was owned by Hambros; and property via Berkeley Hambro. As far as possible, Allied Dunbar avoided all direct financial exposure to policyholder funds and liabilities. The company took the minimum responsibility for its sales force, even after tied agents were regulated under the Financial Services Act 1986, and the hard sell tactics of some of its self employed "sales associates", soon gave it the soubriquet of 'Allied Crowbar'. The company's financial responsibility for the sales force, in the form of "indemnity commission" paid in advance to profits accruing from premium payments, was largely passed back to its self employed sales managers. Most mortality risk was reassured, and every other kind of risk was ruthlessly designed out or managed out as far as practicable; the company was thus highly successful in comparison with traditional life offices. To take advantage of regulatory, tax and trust law, the group was successively expanded to provide pensions, investment bonds, unit trusts, banking services, and offshore policies.