(Bloomberg)—Berkshire Hathaway Inc. and Fairfax Financial Holdings Ltd. may benefit from buying XL Group P.L.C. and boosting the insurer’s investment returns, according to FBR Capital Markets.

Berkshire and Fairfax could “take a more aggressive approach to investing XL’s invested asset base, as these larger companies have higher risk tolerances and a greater ability to absorb market volatility given their capital positions,” Bijan Moazmi, an analyst at Arlington, Va.-based FBR, wrote in a note to clients Tuesday.

Berkshire CEO Warren Buffett said at the company’s May 1 annual meeting in Omaha, Neb., that Berkshire would be prepared to spend as much as $10 billion on its next acquisition.

Fairfax agreed to buy Zenith National Insurance Corp. for about $1.3 billion in cash on Feb. 18, the biggest deal in Fairfax’s two decades under Prem Watsa.

Insurance takeovers are headed for the biggest year since the peak of the last merger boom as financial services firms from Bank of America Corp. to Aegon NV of the Netherlands jettison assets. Deals in the industry have jumped 60% to $44.8 billion so far this year, according to data compiled by Bloomberg.

A spokeswoman for Berkshire Hathaway didn’t immediately have a comment, while a spokesman for Toronto-based Fairfax didn’t immediately return a phone call and e-mail for comment. An XL spokeswoman declined to comment.

XL, which sells property, casualty, and specialty insurance and reinsurance, has a market capitalization of about $6.5 billion. The company operates in 27 countries, with the most premium volume originating in the United States, Europe and Bermuda, and 55% of its volume coming from outside the United States in 2009, according to FBR.

The Dublin-based firm’s geographic diversity makes it an attractive acquisition for an international insurer, Mr. Moazmi said. He named Munich Reinsurance Co., Swiss Reinsurance Co., Allianz SE, and Zurich Financial Services Group “the more likely suitors.”

Representatives of Munich Re, Allianz and Zurich declined to comment. A spokeswoman for Swiss Re didn’t immediately return a call and e-mail for comment.