Munich Re, a German reinsurer, has entered into a definitive agreement to acquire Next Insurance, a digital insurance company, for $2.6 billion, as announced by the companies on Thursday. The acquisition is set to expand Munich Re’s presence in the digital insurance market.

Next Insurance, founded in 2016 and headquartered in Palo Alto, specializes in providing insurance services to small and medium-sized businesses. The company’s valuation stood at $2.5 billion in late 2023, following a funding round that raised $265 million.

The company’s investor base includes prominent names such as Group 11, Allstate, Allianz X, Battery Ventures, Capital G, Redpoint Ventures, Nationwide, Amex Ventures, Ribbit Capital, and others. According to Crunchbase, Next Insurance has raised approximately $1.2 billion in funding throughout its lifetime.

Similar to other fintech companies, Next Insurance’s valuation has experienced a decline in recent years. The company’s valuation reached $4 billion in 2021 but has since decreased. However, Next Insurance reported a top line of $548 million in 2024, serves over 600,000 customers, and employs around 700 people.

Following the acquisition, Next Insurance will become a part of Munich Re’s Ergo unit. The deal is expected to be completed in the third quarter of 2025, pending regulatory approvals and customary conditions.

Group 11, an investor in Next Insurance since 2017, confirmed the acquisition to TechCrunch. The investment firm has participated in multiple funding rounds for the insurtech company, including rounds in 2018, 2019, and 2020.

According to reports, Munich Re is acquiring the remaining 71% of Next Insurance shares that it does not already own, with the deal valuing the company at $2.6 billion.