NEW YORK (Bloomberg) — American International Group Inc.'s agreements to sell a pair of life divisions for more than $50 billion in the first quarter may snap a two-year streak of declining insurance deals.

Insurance mergers and acquisitions worldwide fell 5.6 percent last year to $52.4 billion, according to a report from Hartford, Connecticut-based advisory firm Conning & Co. The total for 2007 was $138.4 billion. Companies that were hobbled by declining investments and reduced access to credit markets may now seek to expand through deals, said Jerry Theodorou, vice president of research at Conning.

"One result of two back-to-back years of stunted insurance mergers and acquisition activity has been an accumulation of deal-making demand by deferring transactions until economic conditions improve," Theodorou said in the report. "In early 2010, it appears we are going beyond the inflection point, as increased deal flow indicates that the lid is being released."

AIG chief executive officer Robert Benmosche agreed to sell the life units to repay loans within the firm's $182.3 billion government bailout. The insurer, once the world's largest, said March 1 it was selling AIA Group Ltd. to Prudential Plc for $35.5 billion. A week later, MetLife Inc. agreed to buy AIG's American Life Insurance Co. for $15.5 billion.

Royal Bank of Scotland Group Plc, the UK's biggest government-owned bank, said last month it plans a sale or initial public offering of its insurance unit. Prudential Financial Inc.'s CEO John Strangfeld has called the Newark, New Jersey based company, which is unrelated to the U.K. firm buying AIA, an "attractive buyer" of competitors.

Sun Life Financial Inc., Canada's third-largest insurer, is considering acquisitions in the US life insurance and group benefits markets, CEO Jon Boscia told investors in November.

Fairfax Financial Holdings Ltd., the Toronto-based insurer run by Prem Watsa, agreed in February to buy Zenith National Insurance Corp. for about $1.3 billion in cash.

Property-casualty mergers fell by half last year to $15 billion, from $30.3 billion in 2008, according to the report.

New York-based AIG's $1.9 billion sale of its US auto unit to Zurich Financial Services AG was part of a "recurring element of distress" in last year's deals, Theodorou said.

Life insurer transactions surged to $24.4 billion last year from $5.5 billion in 2008. AIG agreed to sell a Taiwan life unit to a group led by Primus Financial Holdings Ltd. for $2.15 billion.

AIG has struck deals to raise $63 billion since its September 2008 bailout. The largest agreements were for AIA, with customers in nations including China, India and Vietnam, and Alico, which operates in more than 50 countries including parts of Europe, Latin America and Japan.