Munich Re has announced its acquisition of Next Insurance, a digital insurance company that will join its primary insurance business, Ergo. The deal values Next Insurance at $2.6 billion. Notably, Ergo already held nearly 30% of Next Insurance’s shares, and Munich Re was an early investor in the company.
The acquisition is set to close in the third quarter, pending regulatory approvals. Markus Rieß, CEO of Ergo, expressed excitement about the partnership, highlighting the potential to tap into new markets and enhance their business portfolio. He emphasized the importance of combining Next Insurance’s advanced technology with Ergo’s expertise to foster sustainable growth.
Next Insurance, based in Palo Alto, California, focuses on providing insurance solutions for small businesses. The company has around 700 employees and serves approximately 600,000 customers. It offers various coverage options, including general liability and workers’ compensation, using a unique digital platform for underwriting.
The small business sector is significant, contributing 44% to the U.S. GDP, yet 75% of these businesses are underinsured. The market for small business insurance is estimated to be around $175 million. In this context, Next Insurance is expected to add mid triple-digit million dollar earnings to Ergo’s net results in the medium term.
Guy Goldstein, CEO of Next Insurance, noted that joining forces with Munich Re and Ergo will allow his company to expand its technology-driven approach, helping even more small business owners access innovative insurance solutions. He believes that this collaboration will lead to a new era in small business insurance in the U.S.