Financial terms of the agreement were not released.

MSI serves about 100,000 customers and has nearly 150 agent offices throughout Iowa, Minnesota, North Dakota and Wisconsin. It receives some $162 million annually in net premium income.

The two firms said that MSI and its agents will be talking with their customers to explain the operational transition to Country Insurance and provide details on the benefits.

MSI customers will continue to work with their current MSI agents, the two companies said. The MSI customers will have access to a 24-hour customer service call center run by Country Insurance. They also will have access via their agents to a wide range of auto, home and life insurance, along with annuities, investments and other financial services.

But despite the operational consolidation, the two companies are not technically merging at the moment. "We will still be intact as separate entities from a legal standpoint when this process is completed," Ms. Oloffson told National Underwriter.

The reason for this technicality, Ms. Oloffson noted, is that MSI also has operations in California, but Country Insurance is not licensed to operate in that state. "So MSI will continue to operate for those agents in California--agents in California will still be called MSI agents," she said.

MSI joining Country offers a number of advantages for both companies from a business standpoint, Ms. Oloffson added. "One, it allows us to pool our risks. And also by expanding our reach into more states, we reduce our risks by expanding geographically," she said. "We can also take advantage of the economies of scale. Consolidation of operations, such as accounting and computer systems, is going to save the company money, and ultimately those savings will be beneficial to our clients."

Additionally, the fact that Country and MSI serve different markets will make the integration of the two businesses easier for clients, agents and employees, the two companies said. MSI has 400 employees at its home office in St. Paul, and its 250 agents conduct business in Minnesota, Wisconsin, Iowa, North Dakota and California.

Country Insurance has 3,000 employees and 1,700 agents who do business primarily in Illinois, Missouri, Oklahoma, Kansas, Arizona, Colorado, Nevada, Oregon, Washington and Alaska.