Munich Re Acquires Next Insurance, Expanding into Small Business Coverage
Munich Re has made a significant move in the insurance industry, announcing the acquisition of Next Insurance. This strategic purchase, valued at $2.6 billion, will see Next Insurance become part of Ergo, Munich Re’s primary insurance business.
“Together with Next Insurance, we will tap into a highly attractive market overseas, unlocking significant growth opportunities while further diversifying our existing business portfolio,” said Markus Rieß, chief executive officer of Düsseldorf, Germany-based Ergo, in a statement.
Ergo already held a near 30% stake in the digital insurance company, and Munich Re was an early investor in Next Insurance. The closing of the acquisition is expected in the third quarter, pending regulatory approvals.
Next Insurance specializes in providing insurance solutions for small businesses. The company currently serves approximately 600,000 customers and employs around 700 people. They utilize a proprietary technology stack and digital underwriting platform to offer various coverages like general liability, business owners policies, and workers’ compensation.
Guy Goldstein, CEO of Next Insurance, noted the strategic benefit of the acquisition, stating that it will allow the company 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 U.S.,” he added in a statement.
Munich Re anticipates that Ergo will generate $23.1 billion in general insurance revenue by 2025. Next Insurance is expected to contribute hundreds of millions of dollars to Ergo’s net result in the medium term, according to the announcement. The companies highlighted that small businesses constitute 44% of the U.S. GDP, yet face a significant underinsurance gap, with 75% of them being underinsured. The market opportunity is estimated at $175 million.
Written By Chad Hemenway
Chad is National News Editor at Insurance Journal. He has been covering the insurance industry since 2007, reporting on trends and coverage in most lines of insurance as well as natural catastrophes, modeling, regulation, legislation, and litigation. Chad can be reached at [email protected]
