Up to 2,300 jobs are at risk after Aviva agreed to buy rival Direct Line in a £3.7bn deal.
The two insurance giants on Monday said they had reached an agreement to merge and create Britain's biggest insurance company, following weeks of talks.
Aviva has agreed to pay the equivalent of £2.75 per Direct Line shares, valuing the smaller company at £3.7bn.
The deal follows a preliminary agreement between the two companies earlier this month, which had a Christmas Day deadline for the transaction to complete.
Aviva has said it will increase its planned dividend for shareholders following the deal, but the transaction means imminent job cuts in the New Year.
Aviva is planning to cut between 5pc and 7pc of the two companies' combined workforce over three years as part of its bid to save £125m in costs. This means job losses of between 1,600 and 2,300, based on a combined workforce of 33,100.
Overlapping roles in shared service, head office and senior management will be scrapped.
Aviva said it expected these cuts would be partly delivered through natural attrition whereby staff left but were not replaced. Annual staff turnover at Aviva is 1,300 and the company has 800 UK vacancies.
Other cost-saving measures will be made as the companies integrate back-office IT systems and create new economies of scale.
The deal will combine two of Britain's biggest insurance companies into a giant with tens of millions of customers and is likely to draw scrutiny from competition regulators. Aviva alone has 19.2m customers across the UK, Ireland and Canada.
It is the latest sign that mergers and acquisitions activity is accelerating after a years-long drought in response to high interest rates and economic uncertainty.
But it will also mean the loss of another company from the London Stock Exchange, which is on course for its worst year for departures since the financial crisis. A total of 88 companies have delisted this year, while 18 have joined, in the biggest net outflow since 2009.
Aviva said the deal would mean "better outcomes for customers" as it would have more capacity to offer lower prices, process payment claims more quickly and invest more in technology.
Dame Amanda Blanc, the group chief executive of Aviva, said: "The financial strength and scale of the combined group means customers will benefit from competitive pricing, an enhanced claims experience and even better service.
"The acquisition of Direct Line by Aviva will bring together a number of the UK's leading brands in a more efficient business, which is very well positioned to generate strong returns for all shareholders."
Adam Winslow, Direct Line's chief executive, said: "Bringing Direct Line and Aviva together offers the opportunity to create a strengthened and enlarged business, with both organisations sharing a deep passion for serving customers and for supporting their people."