UNCERTAINTY surrounds hundreds of UK insurance jobs across the North after confirmation of a £5.6bn merger.

Aviva has agreed to buy pensions company Friends Life.

Bosses say the move will create the UK's biggest insurance, savings and asset management company by number of customers.

Aviva employs 12,000 UK staff, and operates sites in York, with Friends Life employing 3,500.

However, the takeover is expected to deliver job cuts, with Aviva chief executive Mark Wilson admitting changes will be made.

He refused to confirm speculation as many as 2,000 people could go.

Shareholders are expected to back the takeover ahead of changes in the spring.

Mr Wilson said the deal will give Aviva an extra five million customers and save £225m by the end of 2017.

He added: "Of course there may be some job losses, but there are also a lot of areas not related to jobs where you can get some of this cost out.

“We need to consult with staff and look at the options to minimise job losses."

The deal is the biggest in the industry since the merger of CGU and Norwich Union created Aviva in 2000.

Under the terms of the proposed all-share offer, Friends Life shareholders will own about 26 per cent of the enlarged group.

Friends investors will receive 0.74 new Aviva shares for every share they own, with the deal worth 394p a share.

Sir Malcolm Williamson, Friends Life chairman, is expected to become a senior independent director at Aviva, with Andy Briggs, Friends Life's group chief executive, due to take on the role of Aviva UK chief executive and join Aviva's board as an executive director.

The move by Aviva comes after a resurgence in its fortunes under Mr Wilson, who took charge nearly two years ago after predecessor Andrew Moss was ousted in the wake of a humiliating shareholder revolt over his pay and the faltering pace of the business.

Since then Mr Wilson has cut hundreds of jobs and disposed of several businesses.

Friends Life was created in 2011 after the amalgamation of Friends Provident, the majority of Axa UK Life and Bupa Health Assurance.

The Friends name is likely to be lost through a rebrand under Aviva.