ERGO Acquires Next Insurance for $2.6 Billion
Palo Alto, CA – German insurance giant ERGO is entering the U.S. market with the acquisition of Next Insurance in a deal valued at $2.6 billion. The announcement revealed on Friday (March 21) will allow ERGO, which is owned by Munich Re, to target the small business sector in the U.S.
Next Insurance provides property and casualty insurance focusing on small businesses.
Next Insurance was founded in 2016 and is based in Palo Alto, California. The company provides property and casualty insurance with a focus on small businesses, offering general liability and workers’ compensation coverage. According to the news release, Next has experienced “significant growth” over the last eight years, generating a top line of $548 million in 2024.
“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,” said Guy Goldstein, Next’s CEO. “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.”
The acquisition is expected to benefit from the substantial growth potential in the small business insurance market. The news release stated that while there are approximately 30 million small businesses in the U.S., the insurance penetration rate among these companies remains relatively low. 75% of U.S. small businesses are considered underinsured. The total addressable market is estimated at around $175 billion.
In related news, PYMNTS recently spoke with One Inc. Chief Revenue Officer Kevin Ostrander about the insurance industry’s ongoing digital transformation.
Ostrander noted that while the sector has been undergoing a “massive digital transformation over the last 20 years,” payments within the industry can still be inefficient and often paper-based.
Carriers have been striving to streamline various processes to optimize customer experiences, Ostrander told PYMNTS. He added that, when considering payments in general, the act of accepting or pushing a payment is not overly complex. The core difficulty lies in enabling insurers and their clients to conduct transactions in the desired manner, time, and place.
“Paper is still dominant within the insurance industry, both on the inbound premium side as well as on the disbursement side,” Ostrander said.
