Aviva and Friends Life have agreed on a £5.6bn merger of the two life offices.
In a joint statement, the insurers said the merger would secure the larger group's position as the leading insurance and savings business with 16 million customers in the UK
The insurers also said it is anticipated that, Andy Briggs, the current group chief executive of Friends Life, will become Chief Executive Officer of Aviva UK Life and will join the board of Aviva as an Executive Director.
It is expected that Sir Malcolm Williamson, the current chairman of Friends Life, will join the board of Aviva as senior independent director and it is anticipated that a further non-executive director of Friends Life will join the board of Aviva.
The proposed acquisition values will value each Friends Life Share at 370p, which represents a premium of 8% to the closing price of 343p per Friends Life Share on 20 November 2014.
The proposed acquisition would result in Friends Life Shareholders owning approximately 26% of the issued ordinary share capital of the new Aviva Group.
Mark Wilson, CEO of Aviva, said: "This acquisition is financially and strategically compelling. It is one of those rare transactions where the two organisations fit with surgical precision, building on each other's strengths and addressing the challenges.
"Consistent with our investment thesis of cash flow plus growth, this transaction will increase our cash flows and reduce our leverage and support continued growth in our dividend. It secures our leadership position in our home market and gives greater flexibility to drive growth in other parts of the Aviva group.
"This is good for shareholders and customers alike who will benefit from being part of a stronger, more diversified and resilient business with a wide range of products."
Sir Malcolm Williamson, chairman of Friends Life, said: "The Board is pleased to recommend the offer which strongly supports our focus on generating value for shareholders.
"Friends Life has built a strong and successful business under Andy Briggs' leadership. By combining the market-leading strengths of the two businesses, we will create the UK's leading insurance, savings and asset management business, delivering additional scale and efficiencies. This will provide enhanced outcomes for the increased customer base and for new customers into the future."
