Market and economic conditions are favorable for increased mergers and acquisition activity within certain segments of the insurance industry, a report released Tuesday by Deloitte L.L.P. finds.

The report “Top 10 Issues for Insurance M&A in 2013: Time for Mergers and Acquisitions to Take Off?” said a variety of factors are aligning that will likely trigger deal-making.

“Entering 2013, the environment seems more conducive to accelerating M&A activity than a year ago: Organic growth opportunities appear limited; insurance companies and private equity firms are holding large amounts of excess capital that need to be deployed; and the stock market is doing well overall, which generates confidence,” the report states.

Among insurance industry segments, the report places the property/casualty sector among the most likely to see increased deal activity.

“While deal volume slowed toward the end of 2012 as P&C companies sought to determine their exposure from Superstorm Sandy, it is expected to pick up in 2013 — albeit sporadically — as Sandy's impacts are absorbed and companies desiring to improve their performance or revenue expectations push for specialty line acquisitions that hold better value,” the report states.

Likewise, the report expects ongoing deals to continue in the insurance intermediary space.

“The broker and agent segment continues to be an industry bright spot,” the report states. “To drive growth, these organizations have been focusing on acquisitions that can provide additional clients and revenue sources.”

Deloitte is less optimistic about deals in the reinsurance sector, saying that a combination of low valuations and excess capital will likely suppress M&A activity.

“Many of the players in the reinsurance market are trading at discounts to their book value,” the report states. “This disconnect tends to add to the complexity of transactions — the buyer may likely need to issue more shares than contemplated and the seller may likely need to accept an offer below book value.”

The report is available here.