Royal London's boss yesterday pledged its Colchester site will remain a vital part of the company when it buys out another insurance firm.

The Colchester-based insurance company has launched an agreed £1.5 billion takeover for United Assurance.

The deal will allow the companies to merge their sales forces and head offices.

The merged group, which will keep the Royal London Mutual Insurance Society name, will have its headquarters in Colchester.

Royal London chief executive Mike Yardley said it was hoped the deal with the Cheshire-based firm would be struck in two months.

He said: "As far as employees are concerned they should benefit from the strength and position of the group. It is our intention to stay in Colchester."

Mr Yardley said it represented a "good deal for Royal London and a good deal for Colchester," and would give the firm a better profile to develop its business.

The two groups said they had agreed a 445p-a-share offer for United from Royal.

The merged group will have a combined premium income of £1 billion, total assets of £16 billion and three million customers.

A spokesman for the Manufacturing, Science and Finance Union said the firms had promised to negotiate with the unions before they made any decisions on the future impact of the merger on staff.

Converted for the new archive on 19 November 2001. Some images and formatting may have been lost in the conversion.