Home service insurer Royal London is to acquire rival United Assurance Group in a £1.5 billion agreed deal.
The two companies say the takeover will create "a leading force" in the home service sector, with combined premium income of around £1 billion and total assets of over £16bn.
General insurance accounts for about 10% of the combined group, though both companies outsource their products, which are mainly in household, motor and commercial.
United sells through Churchill, while Royal London sells through Norwich Union - soon to be CGNU.
Royal London chairman Hubert Reid said: "This acquisition will enhance our position in the home service sector, allowing us to benefit from substantial economies of scale."
The merged group will have more than three million customers, and funds under management of about £20 billion.
Redundancies are also expected in the new group - which will have a total workforce of 6,200.
Royal London says it wants to minimise them by redeployment and retraining, and making most redundancies voluntary.
The new company plans to merge the home service field forces, which currently number 1,750 advisers in 175 area offices.
At the same time, United announced its results for 1999, showing a pre-tax operating profit up 16.5% to £268.7m.