Munich Re has announced the acquisition of Next Insurance, which will now operate under its primary insurance arm, Ergo.
The deal values Next Insurance at $2.6bn.
Prior to the acquisition, Ergo already held nearly a 30% stake in the digital insurer. Munich Re had also been one of Next Insurance’s early backers.
Closing is expected during the third quarter pending regulatory approvals.
Munich Re anticipates generating $23.1bn in general insurance revenue from its Ergo division in 2025. The recent acquisition of Next Insurance is expected to add mid triple-digit million-dollar earnings to Ergo’s net result in the medium term.
According to both companies, small businesses—while accounting for 44% of the US GDP—remain significantly underinsured, with 75% lacking adequate coverage.
They estimate the potential market opportunity in this segment to be around $175bn.
This article was previous published by The Financial Times and Insurance Insider US.