Royal London has reached an agreement with Aegon UK to acquire its individual protection line of business, subject to court approval.

As a result of the acquisition, the life insurance, critical illness and income protection policies for over 400,000 customers will transfer to Royal London.

Customers’ policies are expected to transfer to Royal London in 2024, following the completion of a court-approved Part VII transfer.

In the interim period, Aegon UK will reinsure the portfolio to Royal London.

There is no immediate change for customers or their advisers. All servicing and claims will continue to be processed in the usual way.

Royal London and Aegon will provide updates to customers and financial advisers as the acquisition progresses.

Royal London chief executive Barry O’Dwyer said: “We are delighted to be welcoming over 400,000 new protection customers and their advisers.

“Combined with over 900,000 existing customers who already trust Royal London to protect their families against life shocks, this transaction strengthens our position in the UK protection market.

“Our reputation for outstanding customer service means that customers and advisers will be reassured that they are in safe hands.

“The advised nature of Aegon’s individual protection customer base makes it a perfect strategic fit. We are strong champions of the adviser community and of impartial advice, and we look forward to supporting advisers through this transaction, making sure there is no disruption to their businesses or to their clients.”

Protection Guru’s chief executive Ian McKenna said it is “very disappointing” to see Aegon announced the closure of that UK protection book.

“This loss of capacity is potentially damaging to the competitive position of the UK life insurance market.

“While the policies are being transferred to a great company in Royal London, Aegon had for several years played valuable role in providing cover for large sums assured, especially for business protection cases advisers will miss this capacity. Hopefully Royal London will keep the sales and technical team together as a specialist unit.

“We are increasingly concerned about the level of competition in the UK life insurance sector, there are several players who it appears may be on the verge of selling up and exiting.

“The UK has an excellent life insurance market relative to the rest of the world with strong distribution and there should be space for two or three more providers. We hope to see other institutions not currently operating in protection seize this opportunity.

“Strong competition is essential for consumer protection and it would be disappointing to see the number of UK insurers slip to being sub optimal.”