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Munich Re has sealed a deal to acquire Next Insurance in a transaction that values the start-up’s equity at $2.6bn, in the latest of a series of moves towards consolidation in the insurance sector.
The cash deal, being undertaken via Munich’s Ergo subsidiary, provides one of the world’s biggest reinsurers with a deeper footprint in direct commercial insurance.
Munich will purchase the 71 per cent of Next Insurance’s shares that it does not already own. The company first took a stake in the California-based start-up in 2017 and built it up to 29 per cent.
The deal is the third significant deal this week by a German insurer. On Wednesday, a consortium including Allianz, BlackRock and Japan’s T&D Holding bought the life insurance group Viridium from private equity group Cinven in a €3.5bn deal.
On Monday, meanwhile, Allianz sold its 26 per cent stake in a joint venture in India to its local business partner Bajaj Group for about €2.6bn.
The Next Insurance deal would allow Ergo to tap into “a highly attractive market overseas, unlocking significant growth opportunities”, Ergo’s chief executive Markus Riess said in a statement on Thursday.
Next Insurance provides cover to smaller enterprises in the US. It was backed by several venture capital firms and insurance companies including Allianz, Alphabet, American Express, Redpoint Ventures, Battery Ventures, Group 11 and FinTLV.
Prior to Munich’s move, the company had raised more than $1bn since its founding in 2016, according to data provider PitchBook. PitchBook said the company was valued at $2.5bn in 2023.
Next Insurance serves approximately 600,000 customers and employs 700 staff. It reported revenues of around $550mn in 2024.
Ergo said it expected Next to contribute “mid-triple-digit” million earnings to the company’s net result “in the medium term”. Last year, the start-up made a net loss of around $90mn, according to a person familiar with the company.
Thursday’s announcement by Munich Re confirmed an earlier Financial Times story breaking news of the impending transaction.
