Liberty Mutual Group Inc., a property and casualty insurer, announced it is buying Safeco Corp. (NYSE: SAF) for about $6.2 billion. The sale is the biggest U.S. property and casualty insurance deal since St. Paul Cos. and Travelers Property Casualty Corp. completed a $17.9 billion merger four years ago.

Industry analysts expect more deals to come as a soft economy has created attractive pricing and more willingness to deal. The property and casualty insurers that are cash-rich often take such opportunities to make attractive acquisitions.

"The addition of Safeco significantly expands and strengthens [Liberty Mutual]", CEO Ted Kelly said in a statement. The deal will create the fifth-largest U.S. property and casualty insurer according to the press release for the news.

More than strengthening Liberty Mutual, the deal strengthens the pocketbooks of Safeco shareholders. Liberty Mutual will pay $68.25 a share in cash for Safeco, a 51 percent premium over yesterday's $45 closing price.

Safeco shares are up over 46% as of morning trading to over $66 a share.

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