A report from consulting firm Deloitte says theinsurance industry appears to be primed for significantmerger-and-acquisition activity in 2013, following a 20 percentyear-over-year drop last year.

In its report, “Top 10 Issues for Insurance M&A in 2013;Time for Mergers and Acquisitions to Take Off?” Deloitte saysdeal-making activity will accelerate for several reasons:

• Insurer organic growth opportunities appearlimited.

• Insurance companies and private equity firms areholding large amounts of cash they need to deploy.

• The stock market is doing well overall, generatingconfidence.

• As the economy improves, there will be more demandfor insurance products, helping to stimulate insurers' M&Ainterest.

• Regulatory changes in Europe and the U.S. couldforce some carriers to exit businesses considered unattractive dueto increased capital requirements.

A sign the insurance industry is aiming to reinvigorate itsacquisition activity, says Dave Simmons, director/insurance M&Aleader for Deloitte, is that many companies that cut back on theiracquisition departments during the financial crisis are nowrebuilding them.

Deloitte says more companies are engaged in the preliminarystages of acquisition activity, developing playbooks and targetingcandidates. However, many appear to be waiting for marketdisruption to trigger the next move.

Adds Simmons, “I'm expecting slow and steady increase ininsurance M&A activity throughout 2013, but without an eventthat would accelerate that activity, I expect slowimprovement.”

Of the four industry segments the report briefly reviews, itdubs insurance brokers “the industry bright spot.”  

P&C companies slowed down their M&A activity in no smallpart due to Superstorm Sandy. In 2013, some of these carriers mayaim to improve earnings by acquiring specialty lines with bettervalue, or reaching out to faster-growing markets outside of theU.S.