The enlarged Sun Life organisation, which will still be majority owned by Axa-UAP, will have pounds 30bn in funds under management and have a stock market value of pounds 2.5bn. Some 60 per cent of Sun Life's shares are owned by the French group which, under the terms of the deal, will see its stake increased to 72 per cent.
Sun Life said there would be one-off merger costs to the life operation of pounds 35m in the next two years. But it will also lead to annual cost savings of more than pounds 25m by 2000.
Among the planned cost reductions is the closure of Axa's headquarters in High Wycombe, with the transfer of staff to Sun Life's offices in Bristol.
The takeover will also lead to a single fund management company, Sun Life Asset Management (Slam), creating the UK's fifth-largest life company fund managers. Slam will be responsible for managing all assets of the combined organisation, plus UK securities sourced by other areas of the French company's overseas operations. This is expected to lead to additional cost reductions of pounds 3m.
Lord Douro, chairman of Sun Life and Provincial, said: "The announcement is a significant move forward for Sun Life and Provincial.
"Combining Axa Equity & Law and Sun Life creates a powerful, dynamic business at the centre of the financial services market. The enlarged group will be able to build on both companies' leading positions in a number of key markets and proven track records."
The merger between Sun Life and Axa brings to an end months of speculation over the future of the two UK companies, which had operated at arm's length in the wake of the merger of their French parents last year.
Last November, Axa in effect took over UAP, which was privatised by the French government in 1994. The merged group created the world's second- largest insurance company, after Nippon Life of Japan, with pounds 290bn in joint assets under management.
Earlier last year, UAP part-floated Sun Life and Provincial. Figures provided at the time of the two French companies' merger suggested that Sun Life, valued at about pounds 1bn, was not only bigger than Equity & Law, but also more successful in terms of premium income from policies sold and in its curbing of management costs.