Munich Re, a global reinsurance leader, has signed a definitive agreement to acquire NEXT Insurance, a digital-first small business insurer, in a deal worth $2.6bn.

Following the acquisition, NEXT Insurance will become part of ERGO Group, Munich Re’s primary insurance subsidiary.

The acquisition aims to strengthen ERGO’s presence in the US small business insurance market, leveraging NEXT Insurance’s technology-driven approach and Munich Re’s re/insurance expertise. The transaction, announced on 19 March 2025, is expected to close in the third quarter of 2025, pending regulatory approvals.

Founded in 2016 and headquartered in Palo Alto, California, NEXT Insurance is a leading digital-first Property & Casualty insurer catering to US small businesses. The company provides General Liability, Worker’s Compensation, and other tailored insurance solutions through its proprietary technology stack and digital underwriting platform. In 2024, NEXT Insurance reported $548m in revenue, serving over 600,000 customers with a workforce of approximately 700 employees.

Munich Re has been involved with NEXT Insurance since 2017, with ERGO Group AG already holding a 29% stake in the company. As part of ERGO Group, NEXT Insurance is expected to contribute mid-triple-digit million-dollar earnings to ERGO’s net results in the medium term, with further significant growth potential beyond this.

The US small business insurance market remains highly fragmented, with an estimated total addressable market of $175bn. More than 30 million small businesses operate across over 1,000 professions in the US, yet 75% are considered underinsured. Munich Re sees this acquisition as a key opportunity to penetrate a high-growth sector and further diversify its business portfolio.

Ardea Partners LP served as the lead financial advisor to NEXT Insurance, while Goldman Sachs & Co. and J.P. Morgan Securities LLC also acted as advisors. On Munich Re’s side, Kirkland & Ellis LLP, Barnea Jaffa Lande, Bain & Company, and Morgan Stanley provided advisory services.

ERGO Group CEO Markus Rieß said, “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.”

NEXT Insurance CEO Guy Goldstein said, “Today marks a significant moment for NEXT Insurance, our customers, agents, and partners alike. Over the past few years, we have transformed the US 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-recognised re/insurance know-how, we are poised to lead the charge in reimagining small business insurance in the USA.”

TLV Partners co-founder & managing partner Eitan Bek commented on the acquisition: “Guy, Nissim, and Alon took on one of the most traditional industries and built a category-defining company from the ground up. Investing in them for the second time was an easy decision, following my first journey with them when they built Check, which was acquired by Intuit. NEXT Insurance’s $2.6bn acquisition by Munich Re is a testament to their vision and execution, and we’re proud to have been part of the journey from day one.”