In a major push to strengthen its foothold in the U.S. insurance market, Munich Re has announced plans to acquire the remaining 71% of California-based Next Insurance for a total valuation of $2.6 billion. The transaction, conducted through Munich Re’s primary insurance arm, Ergo, will make it the sole owner of the insurtech firm, which specializes in providing coverage to small businesses across the United States.
This strategic acquisition marks Munich Re’s latest move in the global insurance consolidation trend, positioning the German reinsurer to capitalize on what it calls a “highly attractive market overseas.” The company first invested in Next Insurance in 2017 and gradually increased its stake to 29% before sealing this full buyout.
Targeting Growth in the U.S. Small Business Sector
Founded in 2016, Next Insurance has grown to serve around 600,000 customers with a workforce of approximately 700 employees. The company reported roughly $550 million in revenue in 2024 but also faced a net loss of about $90 million. Despite past losses, Ergo projects that the acquisition will contribute a mid-triple-digit million dollar amount—estimated around $500 million—to its net results over the medium term.
“By fully acquiring Next, we’re unlocking significant growth opportunities in one of the most dynamic insurance markets globally,” said Markus Riess, CEO of Ergo. The deal is expected to close in the third quarter of 2025, pending regulatory approval.
Backed by Industry Giants
Prior to Munich Re’s full acquisition, Next Insurance was backed by a roster of major investors including Allianz, Alphabet (Google’s parent company), American Express, and venture capital firms like Redpoint Ventures and Battery Ventures. The startup had raised over $1 billion since its inception and was most recently valued at $2.5 billion in 2023, according to PitchBook.
Part of a Broader Industry Shift
The move is part of a busy week for German insurers, with other significant transactions also making headlines. Allianz, along with partners BlackRock and Japan’s T&D Holdings, acquired life insurance group Viridium for €3.5 billion. Meanwhile, Allianz exited a joint venture in India by selling its 26% stake to Bajaj Group for €2.6 billion.
With this latest acquisition, Munich Re not only expands its presence in the lucrative U.S. small business insurance sector but also underscores the growing importance of direct digital insurance platforms in the evolving global insurance landscape.
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