Munich Re and NEXT Insurance have signed a definitive agreement regarding the full acquisition of NEXT Insurance by Munich Re on March 19, 2025.
The envisaged transaction will have NEXT Insurance become “part of ERGO, the major primary insurance business of Munich Re.”
More than 30 million small businesses across more than 1,000 professions operate in the USA, making up “99 percent of all national companies and 44 percent of the U.S. Gross Domestic Product (GDP).”
However, the insurance penetration among this type of companies remains relatively low as “75 percent of U.S. small businesses are considered underinsured.”
The total addressable market is “highly fragmented and estimated at around $175 billion, offering significant growth potential.”
Founded in 2016 and headquartered in Palo Alto, California, NEXT Insurance is a leading technology-first Property & Casualty insurer “focusing on the specific needs of U.S. small business owners.”
Through its technology stack and its digital underwriting/pricing platform, the company offers 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 closely “accompanying NEXT Insurance since 2017.”
As of today, ERGO Group AG is a major “shareholder of NEXT Insurance, holding around 29 percent of the company’s outstanding share capital.”
As part of ERGO Group, NEXT Insurance is expected “to contribute mid-triple-digit $ million earnings to the company’s net result in the medium-term, with further significant earnings potential beyond this.”
The definitive agreement was concluded at “a valuation of $2.6 billion, for 100 percent of NEXT Insurance’s shares.”
The closing of the transaction is subject to “customary conditions, including the required regulatory approvals, and is expected in the third quarter of 2025.”
Ardea Partners LP acted as lead financial advisor and Latham & Watkins LLP served as legal advisor to NEXT Insurance.
Goldman Sachs & Co. LLC, and J.P. Morgan Securities LLC also acted as financial advisors to NEXT Insurance.
Kirkland & Ellis LLP, Barnea Jaffa Lande & Co., Bain & Company, Inc., and Morgan Stanley & Co. LLC acted as advisors to ERGO / Munich Re.
ERGO is one of the major insurance groups in Germany and Europe.
The Group is represented in over 20 countries worldwide, “with a focus on Europe and Asia.”
ERGO offers its retail and corporate customers “a broad product portfolio in all the main classes of insurance as well as comprehensive assistance and other services.”
Three units operate under “the umbrella of ERGO Group AG: ERGO Deutschland AG, ERGO International AG and ERGO Technology & Services Management AG.”
The German and international businesses as well as “the global management of IT and technology services are organized in these units.”
About 37,000 people work either “as salaried employees or self-employed sales representatives for the Group.”
In the 2024 financial year, ERGO reportedly generated insurance revenue of “20.8 billion euros and a net result of 791 million euros. ERGO is part of Munich Re, one of the world’s leading reinsurers and risk carriers.”
