Optimism remains despite high rates and M&A uncertainties: Clyde & Co.

Challenges persist from 2023, even on Hong Kong’s new capital regime.

Whilst global deal volumes hit a decade-low in 2023, dipping 22.9% to 346 deals, activity picked up in the latter half of the year. High-interest rates may hinder private equity backing for deals, yet carriers with ample capital are poised to act. 

Despite AI's potential, significant investment awaits full testing and regulatory clarity. Clyde & Co.’s Insurance Growth Report for 2024 analyses M&A trends and organic growth opportunities in the face of geopolitical and macroeconomic challenges. 

The rise of digital assets and cryptocurrencies presents growth avenues for insurers, particularly in covering associated risks like cyber fraud and data theft. Embedded insurance, especially in flight/hotel bookings and retail, emerges as an acquisition and organic growth strategy. 

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However, challenges persist from 2023 catastrophes affecting property cover affordability, regulatory shifts like Hong Kong's new capital regime, and increased enforcement in the UAE and KSA.

Climate change regulations add complexity, with Australia anticipating expanded litigation against carbon-intensive industries. Regulatory changes, like the EU's MiCA framework and approval of spot ETFs in the US, create new opportunities. 

Despite high-interest rates impacting debt funding costs and claims, there's optimism for M&A growth in 2024 despite macroeconomic uncertainties.