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Auto Insurance Companies Geico Business Insurance Dynomoon

Auto Insurance Companies Geico Business Insurance Dynomoon

The Government Employees Insurance Company (GEICO) is an American auto insurance company with headquarters in Maryland. It is the second-largest auto insurance company in the United States, after State Farm. GEICO is a wholly-owned subsidiary of Berkshire Hathaway that provided coverage for more than 24 million motor vehicles owned by more than 15 million policyholders in 2017.

The Government Employees Insurance Company

GEICO writes private passenger car insurance in all 50 U.S. states and the District of Columbia. Insurance agents sell policies through local agents, called GEICO Field Representatives, by phone directly to consumers through licensed insurance agents, and through their websites. Its mascot is a gold dust day gecko with a Cockney accent, voiced by British actor Jake Wood from 2005 until his termination due to a pay dispute in 2015. GEICO is well known in popular culture for its commercials, has created many ads intended to entertain viewers.

Geiko Offers Property Insurance

GEICO also offers property insurance, as well as umbrella coverage that GEICO sells, but the policy risks being transferred to a third-party company. GEICO manages the policy as an "insurance agent" and has a separate customer service team that handles property and umbrella policies.

History of The Government Employees Insurance Company

The Government Employees Insurance Company (GEICO) was founded in 1936 by Leo Goodwin Sr. and his wife Lillian Goodwin to provide direct auto insurance to federal government employees and their families. Since 1925, Goodwin has worked for USAA, an insurance company that specializes in insuring military personnel only.

He decided to start his own company after rising to the extent that a civilian could go in USAA's military-dominated hierarchy. The Goodwins funded the creation of GEICO with $25,000 of their own money and $75,000 from Fort Worth, Texas-based banker Cleaves Rhea, with legal assistance from future GEICO CEO Lorimer Davidson.

Based on Goodwin's experience at USAA, GEICO's initial business model was based on the assumption that federal employees, as a group, would form a smaller risk group of insureds and be more financially stable compared to the general public. Despite the word "government" in its name, GEICO has always been a private company not affiliated with any U.S. government organization.

  • The Government Employees Insurance Company in 1937 

Goodwins moved GEICO from San Antonio, Texas to Washington, D.C., and recombined the company as a D.C company after realizing that their business model would work best in a place with the highest concentration of federal employees.

  • The Government Employees Insurance Company in 1948

The Rhea family sold its 75% stake in GEICO to a coalition of investors, led by Benjamin Graham's Graham-Newman Partnership taking 50% (worth $712,000 at the time); This sale inadvertently violated SEC rules, which forced Graham-Newman to relinquish some of their holdings in 1949, resulting in GEICO becoming a public company for ~$27/sh. Graham-Newman's investment in GEICO finally resulted in a $400 million position in 1972, which was by far Graham-Newman's best investment and outperformed their entire combined portfolio.

  • The Government Employees Insurance Company in 1951

Warren Buffett, then a Columbia University graduate student under Benjamin Graham, interviewed Lorimer Davidson (then a VP) and called GEICO "The Security I Like The Most." From 1948 to 1958, GEICO's market capitalization grew nearly 50-fold.

  • The Government Employees Insurance Company in 1958

Goodwin retired and was replaced by Lorimer Davidson, who increased the company's insurance premiums at a compound interest rate of 16% per year from $40 million to $250 million during his tenure. Davidson retired and was replaced in 1970 by Ralph Peck (President and COO) and David Lloyd Kreeger (Chairman and CEO), who had become one of the other investors in 1948.

  • The Government Employees Insurance Company in 1974

Under Kreeger's leadership, GEICO began insuring the general public after real-time access to computerized driving records became available throughout the United States. Geico is currently the fifth-largest U.S. auto insurance company. By 1975, it was clear that GEICO had grown too fast (during the 1973-75 recession) when it reported a loss of $126.5 million. Kreeger retired in 1975, although he continued in his role as executive committee chairman until 1979 when he was appointed honorary chairman, and Peck left in 1976 after GEICO's share price dropped from $42 to $5.

To prevent GEICO from collapsing, a consortium of 45 insurers agreed to take over a quarter of its policies and was forced to issue a share offer (thus weakening existing shareholders) to raise money to pay the claim. It took five years (during which the company shrank significantly) and a massive reorganization (led by John J. Byrne, and substantially supported by Buffett) to set GEICO on the road to recovery.

Alvin E. Krause (Retired from GEICO) was given full authority by the director to help carry out a massive reorganization of GEICO's underwriting operations — including promotions and terminations. He helped nurse the insurance company back to financial health. He is a director of GEICO Corp. from 1978 to 1983 and was an honorary director at the time of his death. He was chairman of Criterion from 1978 to 1981. He joined GEICO in 1938. (Washington post-Sept 1987, obituary)

GEICO has also offered other types of insurance besides cars, including homeowner's insurance from 1962 to 1996. A similar company, the Government Employee Life Insurance Company (GELICO), offered life insurance from 1975 to 1985. Geico has since focused on its core cars. In competency insurance (selling GELICO to Legal &General), it uses an established direct sales infrastructure to market homeowners and other types of insurance covered by other companies.

  • The Government Employees Insurance Company in 1996

After many years as a public company, GEICO became a wholly-owned subsidiary of Berkshire Hathaway.

GEICO generally deals directly with consumers over the phone and the internet; However, the local agency program has more than 240 offices throughout the United States. GEICO is now the second-largest private car insurance writer in the country.

  • The Government Employees Insurance Company in 2015

GEICO began offering coverage to drivers of ridesharing companies in certain states, including in high-population states such as Texas, Pennsylvania, Ohio, and Georgia. The policy, issued through GEICO's commercial department, has won praise from insurance experts and quickly launched GEICO as the largest insurance provider for ridesharing company drivers.

That's some information about The Government Employees Insurance Company, Auto Insurance Companies: Geico Business Insurance, auto insurance companies Geico business insurance dynomoon.

Source: www.dynomoon.com


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