By John Revill

ZURICH (Reuters) -Helvetia and Baloise plan to merge to create Switzerland's second-largest insurance group with a combined business volume of 20 billion Swiss francs ($24.69 billion), the pair said on Tuesday.

The new group, to be called Helvetia Baloise Holding, will become one of the ten largest insurers in Europe, under what the two companies called a "merger of equals" with an even spread of senior executives and board members.

The deal, which is expected to be completed in the fourth quarter of 2025, is the latest in the insurance sector after Belgium's Ageas agreed to buy British car and home insurer esure for 1.3 billion pounds last week.

Helvetia CEO Fabian Rupprecht will take the helm of the new firm while Thomas von Planta, currently chairman at Baloise, will lead the combined group's board of directors.

Before the deal was announced, Helvetia had a market capitalisation of 9.6 billion Swiss francs, while Baloise was valued at around 8.5 billion francs.

The exchange ratio will be 1.0119 new Helvetia shares for each Baloise share, with shareholders asked to give their approval at special meetings on May 23. Helvetia shareholders will hold 53% of the combined group, which will have a logo based on the one used by Baloise, whose base in Basel will be also be the new head office.

"The transaction will ensure the long-term attractiveness and competitiveness of the two long-standing Swiss companies in the local and international insurance market and generate superior value for customers, partners, employees, the public and shareholders," von Planta said.

In addition to the companies' existing cost improvement plans, the merger is expected to generate annual savings of around 350 million Swiss francs ($433 million) before taxes.

Around two thirds of the savings will come from cuts to the 22,000-strong combined workforce, although the company said it was too early to give a figure.

Activist investor Cevian Capital Partners, which holds a 9.4% stake in Baloise had been campaigning for changes at the company. It declined to comment on the deal.

The merger does not come as a complete surprise following speculation in recent months, said Zuercher Kantonalbank analyst Georg Marti.

"The new group will be an important competitor, from which shareholders can benefit with better financial figures," he said.

($1 = 0.8101 Swiss francs)

(Writing by John Revill and Miranda Murray; Editing by Edwina Gibbs, Kirsten Donovan)

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