Munich Re has increased its stake in Next Insurance, by investing an additional US$250m (£203m). The reinsurer will now own 27.5% of the Californian firm, which provides bespoke digital insurance solutions to SMEs in the US market.

Digital Partners, a Munich Re business unit, has worked closely with the US-based company since 2016. The German reinsurer has for some time held shares in Next through its Munich Re Ventures unit.

Munich Re is confident that “together, they will tap the business potential of digital insurance solutions for SMEs in the USA”.

Upon completion of the transaction, Next’s valuation will increase to around US$1bn (£812m).

Chairman Joachim Wenning said that Next’s data- and technology-driven business model offers outstanding growth opportunities and that the company would benefit from Munich Re’s expertise in primary insurance and reinsurance.

“This investment emphasises Munich Re’s commitment to be the leading provider of digital insurance solutions,” he added. “It also helps Munich Re expand its footprint in the promising insurance market for small and medium-sized commercial customers in the United States.

“We are confident that building on our proven collaboration will benefit both Munich Re and Next Insurance.”

The transaction is subject to regulatory approval.

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