Insurance mergers and acquisitions increased by 35 percent in 2010, according to a new report from Hartford, Conn.-based Conning Research & Consulting. The researcher’s new study found that deal values went up 224 percent, with buyers particularly interested in insurance service providers and distribution targets.

The increase is significant, said Jerry Theodorou, analyst at Conning Research & Consulting, who noted that the 35 percent spike in 2010 represents a reversal after a five-year decline in merger activity.

The study analyzes the global insurance industry across property-casualty, life, health and distribution and services sectors. The spike in certain types of deals, according to Conning, is a potential leading indicator of market shift.

Despite the increase, insurers were still playing it safe. Activity seemed especially centered on midsized, targeted "bolt-on" acquisition of specialized units, rather than large-scale consolidations, said Stephen Christiansen, director of research at Conning. Buyers zeroed in on specialty underwriting units and specialty distribution groups. Marquee underwriters or underwriting teams, as well as managing general agents, were popular targets.

Theodorou attributes the rise in M&A deals to the ongoing soft insurance market environment, coupled with better conditions for general M&A – including an improving economy, more buoyant equity markets and insurers’ stronger capital positions.