After much speculation, debate, commentary and analysis, Suncorp and Promina Group have entered into a merger implementation agreement that is expected to result in a $20 billion entity effective by late March.

It’s more than a week since the board of Promina revealed it had received a $7.9 billion takeover bid from Suncorp to which it was favourably disposed.

Suncorp says it will be more than three years before it reaps any earnings benefits, blaming integration costs of more than $400 million.

The combined group will have 28% of the insurance market, 35% of personal lines, 18% of commercial lines, 40% of motor vehicle insurance (IAG has a 39% share), 30% of the home insurance market (IAG 37%) and 35% of the CTP market (IAG 27%)

The bid is yet to receive approval from the Australian Competition and Consumer Commission, and there are concerns about regulatory hurdles in Queensland’s CTP market and NSW’s car insurance market.

But the deal is all but done. Suncorp CEO John Mulcahy and Promina MD Mike Wilkins told a media conference yesterday that if the deal is successful it will result in a company writing $6 billion of annual gross written premium.

Promina is believed to have negotiated a “break fee” amid rumours of a third-party bid for Suncorp.

Takeover targets are not usually entitled to a break fee, but the board of Promina is believed to have insisted on one.

And it’s clear now that Mr Mulcahy and Suncorp’s directors have stared down institutional investors over the issue of who is to lead the merged group. Under the agreement Mr Mulcahy is likely to be at the helm of the merged entity, and Mr Wilkins has agreed on a six-month consultative role. Other senior Promina executives are expected to take up positions in the new company.

Suncorp is believed to be in discussions with the Queensland Government on an overhaul of legislation aimed at preventing it being taken over. It is also trying to scrap a requirement that a majority of its directors should be residents of the state.

According to state laws and Suncorp’s constitution, the company’s HQ must remain in Brisbane and the MD must be a Queensland resident.

“Clearly, we’d like to change some of the directors rules,” Mr Mulcahy told yesterday’s media conference.

A booklet detailing the offer to shareholders may not be completed until the new year.