MONACO (Reuters) - Conditions look right for takeovers among the world's reinsurers, but they are ruling out using their considerable cash piles to snap up rivals at rock-bottom prices.

With risk prices falling and competition increasing, reinsurers are facing a slide in their revenues. At this point in past market cycles, companies have used spare cash to make up for falling top-line growth by swallowing rivals.

It would seem like a good time to buy. Reinsurers' balance sheets are the strongest they have been in years, with rating agency Standard & Poor's (S&P) estimating that the industry has excess capital of around $23 billion.

Meanwhile valuations in the sector are cheap, with shares trading at a big discount to book value, hit by a widespread sell-off in financial stocks as a result of the credit crisis.

But industry players gathered in this Mediterranean resort for their annual meeting predict reinsurers will be more disciplined with their cash than in the past.

"I wouldn't predict we're going to see a slew of blockbuster M&A (mergers and acquisitions) over the next 12 months," said Peter Grant, analyst at credit rating agency S&P. "Most of the top 10 don't stand to gain a lot from M&A activity, unless they were to merge with each other, and I don't see a prospect of that."

A primary reason is that companies do not want to repeat their bitter experiences of the late 1990s, when a spate of large M&A deals caused problems which haunted acquiring companies for years.

"There are still people around with painful memories of that time," said group managing director Ted Collins of credit rating agency Moody's, while David Brown, CEO of Bermuda-based Flagstone Re, said: "In my opinion nine out of 10 reinsurance acquisitions have been a failure."

Companies found black holes in the reserves of rivals they bought which required billions of dollars to plug, cultural differences led to key staff leaving and hoped-for synergies never materialised, said Mr. Brown.

"In the past reinsurers didn't return capital, they deployed it in buying other firms. But ... they haven't deployed capital, they've destroyed it. They sought to acquire volume by buying companies at irrational prices.

"The fact that boards are now prepared to return capital to shareholders indicates to me they have discipline," Mr. Brown added.

The heads of Munich Re, Hannover Re and Scor have all said they would rather forego business than be drawn into a merger frenzy.

"It's very unlikely that Munich Re would buy another big reinsurer," board member Torsten Jeworrek said.

French reinsurer Scor, which has been one of the most acquisitive players in recent years and which last year bought Swiss rival Converium, said it had no plans to make a further major takeover.

"We have the means and critical size to operate in all the markets in which we want to operate," Scor chief executive Denis Kessler said.

Hannover Re chief executive Wilhelm Zeller said his company would examine buying a small life reinsurer which is expected to come up for sale in the fourth quarter, but was unwilling to pay too high a price in such a deal.

Swiss Re said it prefers to acquire life units that are closed to new business rather than look for reinsurance deals.

Even in parts of the market where consolidation seems overdue, such as among the clutch of Bermuda-based reinsurers founded following a string of powerful hurricanes in 2005, deals may be hard to get done, though some exceptions exist.

An opportunistic buyer could make a play for XL Capital Ltd., argue analysts. Its exposure to troubled bond insurer SCA has led to it posting large losses and forced it into an emergency capital raising, while its shares have lost three quarters of their value in the past 15 months.

An ambitious company such as Axis Capital could see buying XL as a way of turning itself into a major force, analysts say. Axis CEO John Charman last week named XL as a possible target but yesterday he stopped short of saying he wanted to acquire the company, saying investors should draw their own conclusions.