NEW YORK ( TheStreet) -- Slowly but surely the insurance industry is consolidating, but don't look for a flurry of activity anytime soon.
However, industry watchers say the potential U.K deal is just the tip of the iceberg for major activity that will also spill into the U.S.
"The consolidation in the insurance industry is being driven by the excess capital insurance companies are holding," Jim Ryan, senior analyst with Morningstar told The Street.Insurers have little opportunity for organic growth into new products or customer segments as a result of the shaky economy and new financial regulations. But with significant amounts of cash on their balance sheets, insurers are debating what is the best option for their shareholders; make a strategic acquisition or do a buyback. Although the industry has seen its fair share of buybacks -- Aetna's ( AET) repurchase of $1 billion of its common stock being one of the most recent -- many companies are also considering acquisitions. The life sector will be most acquisitive, says Nicholas Potter, a partner at the law firm of Debevoise & Plimpton. "There is likely to be consolidation in the life area