Munich Re has signed a definitive agreement to acquire NEXT Insurance, which is to become part of ERGO, Munich Re’s primary insurance arm, marking a significant expansion into the US small and medium-sized businesses (SMB) segment.
Over 30 million small businesses, spanning more than 1,000 professions, operate in the US, accounting for 99% of all the country’s companies and contributing 44% to the Gross Domestic Product (GDP).
Despite their significant contribution, insurance penetration among these small businesses remains low, with 75% considered underinsured.
The total addressable market for small business insurance, estimated at $175 billion, is highly fragmented, at the same time, it presents substantial growth opportunities.
Munich Re’s acquisition of NEXT Insurance is seen as a strategic move to leverage the company’s advanced technology and digital-first approach to address this market gap.
NEXT Insurance’s shares were valued at $2.6 billion, with the definitive agreement including 100% of the company’s shares.
Markus Rieß, CEO of ERGO Group, stated: “This transaction marks the start of a new chapter for ERGO. Together with NEXT Insurance, we will tap into a highly attractive market overseas, unlocking significant growth opportunities while further diversifying our existing business portfolio.
“At the same time, we will work with NEXT Insurance to leverage their cutting-edge technology and our technical excellence, contributing to our commitment to sustainable, profitable growth.”
Headquartered in Palo Alto, California, NEXT Insurance is a technology-first Property & Casualty insurer focusing on the specific needs of US small business owners founded in 2016.
The company leverages its proprietary technology stack and its digital underwriting/pricing platform to offer simple, digital insurance coverage, including General Liability and Workers’ Compensation.
Since its creation, NEXT Insurance has witnessed significant growth and generated a top line of $548 million in 2024. Today, the company serves more than 600,000 customers and counts around 700 employees.
ERGO and Munich Re have been supporting NEXT Insurance since 2017. Currently, ERGO Group AG is a major shareholder of NEXT Insurance, holding approximately 29% of the company’s outstanding share capital.
NEXT Insurance is anticipated to bring mid-triple-digit $ million earnings to ERGO Group’s net result in the medium term. This is part of the significant earnings potential NEXT Insurance has as a member of the Group.
The deal is anticipated to close in the third quarter of 2025, subject to customary regulatory approvals.
Today marks a significant moment for NEXT Insurance, our customers, agents, and partners alike. Over the past few years, we have transformed the U.S. small business insurance market by delivering a simple, seamless, tailored experience for business owners.
“This transaction will propel us forward, allowing us to scale our technology-driven approach and empower even more small business owners with innovative insurance solutions. With the strength and expertise of ERGO and Munich Re and their well-recognized re/insurance know-how, we are poised to lead the charge in reimagining small business insurance in the USA.”
Ardea Partners LP served as lead financial advisor and Latham & Watkins LLP was the legal advisor to NEXT Insurance. NEXT Insurance used Goldman Sachs & Co. LLC, and J.P. Morgan Securities LLC services as financial advisors.
Kirkland & Ellis LLP, Barnea Jaffa Lande & Co., Bain & Company, Inc., and Morgan Stanley & Co. LLC acted as advisors to ERGO / Munich Re.
