Under the deal, which is expected to close early next year, Harleysville Mutual will merge with Nationwide Mutual while Harleysville Group, the publicly traded company, will become a newly formed subsidiary of Nationwide Mutual. Shareholders will receive $60 per share in cash.

According to Google finance, there are more than 27 million shares outstanding of Harleysville. A Nationwide company spokesman explained that under a complicated scenario the number of publicly held shares Nationwide would pay for amounts to somewhere between $760 million to $800 million. The remaining outstanding shares held by Harleysville Mutual would be acquired by Nationwide and retired.

Under the agreement, Harleysville will join Nationwide's property and casualty independent agency business unit under the Harleysville brand. Its current headquarters in Harleysville, Pa., will “serve as an integral part of the combined company's national, independent agency-based platform.”

Browne will become the president and chief operating officer of the Harleysville company.

The companies say that the combined operations will have an estimated net surplus of more than $13.5 billion and over $16 billion in annual direct written premiums.

The agreement between Harleysville and Columbus, Ohio-based Nationwide is still subject to regulatory approval. The companies say they expect the treansaction to close by early next year

Talks between the two companies were reported earlier this week.

Moody's Investor Service issued a statement affirming the financial strength rating of Nationwide Mutual and its P&C affiliates at “A1.”

Moody's analyst Paul Bauer says in a statement that the acquisition of Harleysville by Nationwide is “to be a modest credit negative,” but the added risk from the acquisition “is manageable for Nationwide without affecting the company's current rating.”

On the positive side, he went on to say, the acquisition is expected to improve the company's “scale and geographic diversification by adding a strong presence in the mid-Atlantic and Northeastern states.” It will also help strengthen product diversification by increasing Nationwide's position in small commercial lines market.

Late in the day, Moody's placed Harleysville financial strength rating of “A3″ on review for possible upgrade.

Nationwide has both independent agents and captive agent distribution. It has a presence in P&C, life insurance and financil services markets.

This story was updated at 3:44 p.m. EDT with updated information about the valuation and Moody's statements.