The merger, officials with both firms say, is necessary to remain competitive in an insurance-sales market increasingly dominated by brokerage firms, banks and other large financial-services entities.

"That's one of the main reasons we merged ... ," says Bryan Moore, vice president of Insurance and Bonds Inc. "We have to protect ourselves and our independence with the changing market."

Bill Cadenhead, president and CEO of Cadenhead Shreffler Insurance, says the fundamental goal of the merger is to make the combined agency less susceptible to a buy-out bid from a larger industry player and to assure that the agency can keep its decision-making local.

"The underlying motive is to remain independent and not fall victim to a takeover or a purchase or buy-out by either financial institutions, banks or publicly traded insurance brokers," Cadenhead says.

Nathan Benge, agent and owner of locally based AHI Agency Inc. , says merging also allows insurance agencies to tap into more markets and be more competitive. Benge merged his own company with locally based Insurance One last December.

For example, Benge explains, some insurance companies may only offer group insurance to businesses and may want to branch out to offer individual policies. As a result, Benge says it may be easier for the insurance agency to merge with another firm that already offers individual policies.

"I think they're trying to tap into the markets for economic reasons, and they do not want to miss out on anything," Benge adds.

The merger will create one of the largest independent, locally owned insurance and construction surety bonding agencies in Texas. The combined firms have a total of five locations in San Antonio, Hurst and Beeville and approximately 90 employees.

Insurance and Bonds of Texas will continue to sell policies to several different industries across the state, including the distribution, manufacturing and construction sectors.

Some additional services that the newly combined firms will offer include workers' compensation claims management, personnel management services and safety communication programs.

Moore says Insurance and Bonds of Texas is in a growth mode and is presently looking to hire additional employees. In addition, he says, the company will be looking for a larger office space.

Cadenhead says the company will focus on growing the company internally, but adds that acquisitions may be in the company's future.

"Inevitably, there will be some acquisitions that will be made over the next three to 10 years," he says. "But, again, acquisition is not part of our growth strategy."