(Bloomberg) — Evan Greenberg just took dealmaking to the nextlevel.

The chief executive officer of property-and-casualty insurer AceLtd. on Wednesday announced a $28 billion deal for rival ChubbCorp. It's the biggest acquisition in the industry since the 2008government bailout of American International Group Inc., theinsurance giant formerly led by Greenberg's father, Hank.

After the busiest quarter for insurance dealmaking in at least12 years, the magnitude of this latest takeover is going to driveeven more “M&A fever” across the industry, according to CliffGallant of Nomura Holdings Inc. Insurers from W.R. Berkley Corp. toHartford Financial Services Group Inc. rallied on the news amidtakeover speculation.

The scale gained through acquisitions is crucial for insuranceproviders struggling with falling policy rates and curtailedprofitability. Reinsurers have been merging in droves and insurancebroker Willis Group Holdings Plc just struck a more than $8 billiontransaction for consultant Towers Watson & Co. Now,property-and-casualty providers are getting in on dealmaking in abig way, too.

“The management teams of virtually every large property-casualtycompany will be having a conversation today about whether theyshould be more active acquirers,” said Paul Newsome of SandlerO'Neill & Partners. “These are two well-run companies thatprobably could have done very well on their own but they're tryingto build something even bigger.”

Ace shares rose as much as 9% on the news of the takeover. Thatmay embolden other competitors to consider acquisitions, said JoshStirling of Sanford C. Bernstein & Co.

Sellers' Expectations

While Ace is offering a higher-than-average premium to buyChubb, its bid values the provider of coverage for mansions andyachts at about 1.7 times book value. That's a discount to whathigh-quality businesses in the industry have typically commanded,according to Newsome of Sandler O'Neill.

Would-be sellers may want to take that into account and not waitaround for too high a price. That's especially true for smallerinsurers, which may face greater pressure as market leaders geteven bigger.

“It actually lowers sellers' expectations for what they canget,” the Chicago-based analyst said. “I probably need to reassesswhat I'm holding out for because I'm never going to get that bigprice-to-book multiple now. If a much-vaunted, well- regarded shopgets 1.7 times book value, what should the mid-cap company thatlacks scale and is kind of struggling get?”

Buyers Club

AIG, Allstate Corp. and Travelers Cos. are among insurers thatcould look to make a big purchase. Their smallerproperty-and-casualty peers surged on speculation they could betargets.

W.R. Berkley and Arch Capital Group Ltd. both rose the mostsince 2012 on an intraday basis, while XL Group Plc surged the mostsince last July and Cincinnati Financial Corp. climbed the mostsince December. All are valued at less than $15 billion.

Hartford Financial with a market capitalization of $18 billion,surged as much as 5.9%.

“There is now literally no deal that cannot be contemplated inP&C,” Todd Bault, an analyst at Citigroup Inc., wrote in areport on Wednesday.

–With assistance from Selina Wang in New York.

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