Munich Re, a leading German reinsurer, has signed a definitive agreement to acquire Next Insurance, a digital insurance company focused on providing insurance to small-to-medium-sized businesses, for $2.6 billion. The acquisition, announced on Thursday, marks a significant move in the insurtech space.

Founded in 2016, Palo Alto-based Next Insurance has raised nearly $1.2 billion in its lifetime from a list of prominent investors, including Group 11, Allstate, Allianz X, Battery Ventures, Capital G, Redpoint Ventures, Nationwide, Amex Ventures, Ribbit Capital, and others. The company was last valued at $2.5 billion in late 2023 when it raised $265 million.

Like many fintechs, Next Insurance's valuation has taken a hit in recent years. The startup was valued at $4 billion in 2021, but its valuation has since declined. However, the company has reported significant growth, generating a top line of $548 million in 2024, with more than 600,000 customers and employing roughly 700 people.

With the acquisition, Next Insurance will become part of Munich Re's Ergo unit. The deal is expected to close in the third quarter of 2025, subject to regulatory approvals and customary conditions. Munich Re is purchasing the 71% of Next Insurance shares that it does not already own, according to Globes.

The acquisition is a strategic move for Munich Re, as it looks to expand its presence in the digital insurance space. Next Insurance's technology and customer base will likely complement Munich Re's existing offerings, enabling the company to tap into the growing demand for digital insurance solutions.

The deal also marks a significant exit for Next Insurance's investors, including Group 11, which confirmed the acquisition to TechCrunch. Group 11 has been an investor in the insurtech since 2017, investing in follow-on rounds in 2018, 2019, and 2020.

The acquisition is expected to have significant implications for the insurtech industry, as traditional insurers increasingly look to digital startups for innovation and growth. The deal is likely to spark further consolidation in the space, as companies look to stay competitive in a rapidly evolving market.

In conclusion, the acquisition of Next Insurance by Munich Re is a significant development in the insurtech space, highlighting the growing importance of digital insurance solutions. As the industry continues to evolve, it will be interesting to see how this deal shapes the future of insurance and the role of traditional insurers in the digital age.