NEW YORK (Reuters) - US property-casualty insurers could see a surge in takeover interest as various factors mean the time is ripe for foreign buyers to open their wallets.

Analysts and industry executives say would-be acquirers in Europe and Asia are emboldened by their ability to negotiate aggressively on price amid lower valuations, not to mention their increased buying power because of the weakened dollar.

US insurers may also be more receptive to deals than in past years, choosing a sale over weathering a slump in insurance pricing predicted to last several more years.

"I would not underestimate what is going to happen from overseas," said Vincent Dowling, managing partner at Dowling & Partners Securities, who was a panellist at a Standard & Poor's insurance conference on Tuesday.

"If you look at (US) property-casualty companies now, relative to peers around the world, we are pup size," said Dowling, who tracks 36 companies in the sector.

To be sure, the acquisition landscape is not entirely a bed of roses. Panellists said acquisitions could be thwarted by price wrangling and concerns about an even weaker dollar eating away at post-deal returns. There is also the thorny problem of the claims liabilities that can go hand-in-hand with a property-casualty (P&C) insurance deal.

"If you look at the top 10 (P&C) companies in the United States relative to Europe, the capital over there is three times as big, every one of our companies in the US is in range of someone from Europe coming over," Dowling said. "The question is whether they want to deal with our liabilities."

Some major deals in past years have left buyers with hefty claims bills from previously sold coverage for liabilities such as asbestos. There is also the risk of costly property claims from a predicted rise in natural disasters, especially in coastal areas prone to hurricanes.

Risks aside, John DelSanto, head of consulting firm Accenture's insurance practice, said in an interview he sees an appetite from Europe and Asia. And deals will take all shapes and sizes, from major company acquisitions to smaller sales of books of business, he added.

Small deals could also outnumber blockbusters, as they have in recent years. "With the insurance industry being conservative by nature, I would expect to see lots of these (multi-million-dollar) deals," DelSanto said. Robust deal activity is also expected among life insurers, but the complexity of the sector's products may scare off buyers not already active in the area.

"I believe the industry is going to consolidate," said Edward Spehar, a managing director with Merrill Lynch & Co , also speaking at the conference. He sees a group of "10 top players" eventually emerging. But here as well, pricing could be a sticking point. "There is a wide gap between expectations (of sellers) and where the stocks are trading," Spehar said.

Steven Goulart, senior vice president, corporate development at big life insurer MetLife Inc, said deals could be spurred on by an increasing number of companies looking to shed parts of their businesses that no longer fit.

"I see a strategic focus on the industry," he said. "And if that means selling businesses that don't fit, we will see that."

Among international buyers, there is a "huge appetite" for businesses in the retirement sphere, said John Johns, chief executive of Protective Life Corp, who has overseen about 40 deals.

"Transactions have become much more complex than even a (few) years ago," Johns added.

While buyers need to carefully monitor the various risks that could emerge from a deal's integration, MetLife's Goulart said firms with seasoned financial expertise can even find bargains in "distressed" areas.

"Are there transactions out there that have a distressed aspect, and you have the financial wherewithal (to handle them) ... Then, yes, absolutely it is a buyer's market," he said.

Joel Strauch, senior vice-president at Pacific Investment Management Co, said investors are now warming to some investments in sub-prime mortgages, the main driver of credit market turmoil that has gripped the world since last year.

"If you have not been in a sub-prime area, now may be a better time," Strauch said.