NU Online News Service, April 17, 12:00 p.m.EDT

Pennsylvania has become the first of four states needed toapprove a merger between Nationwide Mutual Insurance Co. andHarleysville Mutual Insurance Co.

The deal is said to be valued at about $800 million.

Regulators in Michigan, Ohio and New Jersey still need toapprove the transaction. A majority of Harleysville Mutual membersalso need to approve it.

If all approvals go through, Harleysville Mutual will merge withColumbus, Ohio-based Nationwide Mutual, and Harleysville Group, thepublicly traded company, will become a newly-formed subsidiary ofNationwide Mutual under the terms of a deal announced last September. Public stockholdersare set to receive $60 per share in cash.

As part of Pennsylvania Insurance Commissioner Mike Consedine'snod, for three years Nationwide cannot close, re-domesticate orcease business activity from the corporate officeinHarleysville,Pa.or any other location without hisconsent.

“Harleysville and Nationwide have complementary product lines,and together the companies offer more choices to policyholders,”Consedine says in a statement. “I also applaud Nationwide'sdecision and commitment to preserve the Harleysville culture and tokeep jobs here in Pennsylvania.”

Harleysville, which has operated since 1917, will continue towrite business under its brand for at least two years, Consedineadds.

The companies say the combined operations will have an estimatednet surplus of more than $13.5 billion and over $16 billion inannual direct-written premiums.

Moody's Investors Service did not have great things to say aboutthe deal when it was announced. The credit rating agency saidnegative implications of the merger offset the positives.

Nationwide's surplus will only grow 3 percent but its grosspremiums and gross loss reserves will increase 8 percent and 14percent, respectively. Nationwide's catastrophe exposure will alsoincrease after integrating Harleysville policyholders in theMid-Atlantic and Northeastern states.

Nationwide ended 2011 by turning a profit in the fourth quarter,although net income for the period was down 87 percent compared to2010.

The insurer took a $582 million loss for the year due to a record amount ofweather-related claims paid.