Conning said in the report that last year the dollar value of insurance industry merger and acquisition activity reached its highest level since 1998 even as the number of transactions continued to decline. The study found total transactions fell by almost 7 percent.

Transaction value, Conning said, increased by more than 600 percent due to a flurry of insurance-related deals at the end of 2003. The late-year deals, the firm said, ranked among the ten largest mergers in the world, totaling $43.6 billion.

The study said that there was one mega-merger from each of the three major insurance sectors. The $59.9 billion industry total in 2003 was six times the total of 2002 and the second largest value behind $165.4 billion in 1998.

"While the M&A hyperactivity of the late 1990's did not spur substantive consolidation in the property-casualty and life industries, the current environment appears more conducive to growth through acquisitions," said Mr. Harris.

The study found that most trends for M&A remained as they have for the past two years. P-C and life insurers focused on seller-motivated sales of business units. Consolidation drove the health and distribution sectors, and the services sector continued in a relatively depressed state since the technology bubble burst, Conning said.

"We expect that 2004 will present a change in industry transactions from what we have seen over the past few years," said Stephan Christiansen, director of research for Conning Research.

Mr. Christiansen added: "As the industry's performance picks up, transactions will move from defensive and opportunistic to growth-seeking in their goals. Insurers will seek to repeat their 2003 performances this year, but they will be hard-pressed to do so organically. That is why we expect 2004, despite the lack of current pipeline, to finish with strong momentum for M&A."

The study can be purchased by calling (888) 707-1177 or via the Internet at www.conningresearch.com.