Munich Re Acquires Full Control of Next Insurance for $2.6B
By Tom Sims and Alexander Hübner
FRANKFURT (Reuters) -Munich Re is buying the 71% of Next Insurance that it doesn't already own, strengthening its foothold in the United States and valuing the California-based company at $2.6 billion, a division of the German company said on Thursday. Ergo, the primary insurance business of reinsurer Munich Re, will become the sole owner of Next, which is focused on insuring U.S. small businesses. Until now, Next investors have included Allianz, Alphabet and American Express. It is the latest in a spate of deals affecting German insurance companies.
"We will tap into a highly attractive market overseas, unlocking significant growth," Ergo's CEO Markus Riess said.
Next was founded in 2016 and now has around 700 employees and 600,000 customers.
Munich Re and Ergo have been investors since 2017.
Ergo said the purchase will increase net results by a mid three-digit million dollar amount over the medium term, which suggests an amount of around $500 million.
The acquisition is expected to close in the third quarter pending regulatory approval.
Among recent activity in the industry, a consortium that includes Allianz, BlackRock and T&D Holdings are investing in Viridium Group in a 3.5 billion euro ($3.79 billion) deal that will see private equity company Cinven exit as a majority investor.
Allianz also said this week that it would exit a joint venture in India as it seeks a new partner there.
($1 = 0.9234 euros)
(Reporting by Tom Sims; Editing by Miranda Murray and Susan Fenton)
