Royal London/Axa protection deal could open up over-50s cover to advisers


Protection advisers believe a successful Royal London bid for Axa Wealth’s protection arm could open up the growing over-50s market, but have flagged concerns about how the deal would work in practice.

Last week Money Marketing revealed the mutual is in second round talks with the insurer, alongside several other potential buyers. A deal would be worth an estimated £40m.

Royal London is understood to be particularly interested in SunLife, which sells over-50s life cover direct to consumers.

Royal London and Axa Wealth have not commented on the deal.

Highclere Financial Services partner Alan Lakey says: “Over-50s has been a burgeoning market over the last few years, but it not an area that advisers are in. One hopes a Royal London deal could open up this market to advisers.

“Royal London has rationalised its brands away from Bright Grey and Scottish Provident, and has made a clear commitment to the protection market. Taking on SunLife has got to be good news in this context.”

Roxburgh Financial Management branch manager Garry Webb says Royal London would have to work out its place in a niche market.

But he adds: “The over-50s market is good where the client has health issues, and where they are unlikely to get cover elsewhere. If Royal London does open this up to advisers, it would give us another string to our bow. But this wouldn’t be a case of enhancing what Royal London  already offers – over-50s is a very different market.”

Master Adviser partner Roy McLoughlin says over-50s cover is dominated by small sums assured and limited underwriting, but argues the product could play a greater role post-pension freedoms. He believes as people spend down their pot, protection in later life will become more important.

McLoughlin says: “I subscribe to the argument that some cover is better than none at all. But there is a danger with this type of protection that clients wrongly believe they have sufficient cover in place.

“Direct-to-consumer business is not necessarily a threat to advisers as long as it is backed by a message that over-50s plans are unlikely to be enough.”

Protection Review marketing dir-ector Roger Edwards, who was previously managing director at Bright Grey and Scottish Provident, says a tie-up between Axa’s SunLife and Royal London could be a good fit but there would be branding issues as a result of any deal.

He says: “Royal London has tried to launch itself in the direct space with a funeral plan, which is not dissimilar to the SunLife offering. Depending on how successful Royal London’s D2C protection push has been, SunLife could provide a boost. But the difficulty is the SunLife brand is so strong, would Royal London look to keep this? That would seem to go against the work it has been doing to unify everything under the one Royal London brand.”