Solid growth and low debt levels among insurers will make 2019 conducive to continued merger and acquisition activity in the sector, according to a report Friday from Deloitte Services LLP.

Wavering financial markets, however, could play a role in either facilitating or curtailing deals, the report warned.

“Sustained U.S. economic growth, rising interest rates, and higher investment income are among the positive factors bolstering insurance companies’ results in 2018,” the report said, adding “debt rates are relatively low, available capital remains abundant, and 2018 deal volume and value are supportive of sustained and/or increased deal-making.”

Markets, however, may have their say, although Deloitte remains bullish for 2019.

“One factor likely to be a potential influencer — either positive or negative — is the whipsawing stock market. If falling prices and sell-offs extend far into 2019, they may spur companies with strong balance sheets to scoop up distressed assets or, conversely, ratchet up corporate uncertainty and reduce M&A activity,” the report said. “Of the two possibilities, we anticipate an uptick in M&A, given current industry dynamics.”

Other headwinds could also include a general economic slowdown or “full-fledge recession” by 2020, as well as trade tensions with China and other nations. Deloitte said.

2018 saw 87 recorded transactions through Dec. 31, up a modest 4% from 84 in 2017, while deal value soared some 189% to approximately $42.7 billion from approximately $14.8 billion in 2017, largely on the backs of two large deals: AXA SA’s $15.3 billion acquisition of Bermuda-based XL Group Ltd. and American International Group Inc.’s $5.5 billion acquisition of Bermuda reinsurer and specialist insurer Validus Holdings Ltd.

Property/casualty deals made up the lion’s share — some $34.1 billion — of the deals, while life and health accounted for $8.6 billion, according to Deloitte data.

One force driving property/casualty deals is “the need for P&C companies to increase growth in the low-to-no rate adjustment environment and the desire to diversify into niche markets,” Deloitte said.

There were 594 recorded broker transactions through Nov. 16, up 11% from 537 in 2017, as deal value rose 50% to $8.1 billion from $5.4 billion in 2017.

Those 594 deals made 2018 the most active year on record for broker deals as five companies each announced 20 or more deals, Deloitte said.

Deloitte’s forecast is for a healthy deal market in 2019 as insurance companies continue to seek inorganic growth, with deals falling mainly into five categories: cross-border deals, middle-market matchups, portfolio optimization, insurtech investment and private equity participation.