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Government Employees Insurance Company
(doing business as GEICO)

Type	Subsidiary
Founded	Fort Worth, Texas, U.S. (1936)
Headquarters	Chevy Chase, Maryland, U.S.
Key people	Tony Nicely, Chairman, President & CEO
Industry	Insurance
Products	Auto insurance
Revenue	US$9.212 billion (2004)[1]
Employees	24,000
Parent	Berkshire Hathaway
Website	www.geico.com

GEICO headquarters in Chevy Chase

The Government Employees Insurance Company (better known as "GEICO") is an American auto insurance company. GEICO is a wholly owned subsidiary of Berkshire Hathaway that as of 2007 provided coverage for more than 10 million motor vehicles owned by more than 9 million policy holders. GEICO writes private passenger automobile insurance in the District of Columbia and in all 50 U.S. states. The company is notable for its copious television advertising, with several prominent campaigns running simultaneously in national markets. Its mascot is a gecko that originally had an American accent but for marketing reasons^{[citation needed]} was changed to a Cockney accent.

History

GEICO was founded in 1936 by Leo Goodwin and his wife Lillian to provide auto insurance directly to federal government employees and their families.^[2] Goodwin had worked since 1925 for USAA, an insurer which specialized in insuring only military personnel; he decided to start his own company after rising as far as a civilian could go in USAA's military-dominated hierarchy. Based on Goodwin's experience at USAA, GEICO's original business model was predicated on the assumption that federal employees as a group would constitute a less risky and more financially stable pool of insureds, as opposed to the general public. Despite the presence of the word "government" in its name, GEICO has always been a private corporation.

The Goodwins immediately relocated GEICO in 1937 to Washington, D.C. and reincorporated as a D.C. corporation after realizing that their business model would work best in the place with the highest concentration of federal employees.

An important figure in GEICO's history is David Lloyd Kreeger, who became president of the company in 1964 and helped steer it into a major insurance enterprise. In 1948, he formed a group of investors who bought into GEICO right before it went public that year. He became senior vice president and general counsel of the company. Six years after becoming president of GEICO in 1964, he was named chairman and chief executive officer. He retained those titles until he retired in 1974. He continued as chairman of the executive committee until 1979, when he was named honorary chairman.^[3] Intriguingly, the GEICO web site avoids any mention of Kreeger.^[2]

In 1973, under Kreeger's leadership, GEICO began to insure the general public, after real-time access to computerized driving records became available throughout the United States, and it was briefly the fifth-largest U.S. auto insurer. Unfortunately, by 1975, it was clear that GEICO had expanded far too rapidly (during the brutal 1973–75 recession) when it reported an embarrassing $126.5 million loss. To prevent GEICO from collapsing, a consortium of 27 insurance companies agreed to take over a quarter of its policies, and it was forced to issue a stock offering (thus diluting existing stockholders) to raise money to pay claims. It took five grueling years (during which the company shrank significantly) and a massive reorganization to set GEICO on the path to recovery.

Besides auto insurance, GEICO also offered other types of insurance during its history. From 1949 to 1981, GEICO's sister company, the Government Employees Life Insurance Company (GELICO), offered life insurance, and from 1960 to 1995, GEICO offered homeowners' insurance. Although GEICO has since focused on its core competency of auto insurance, it uses its established direct sales infrastructure to market homeowners' insurance and many other types of insurance underwritten by other insurance companies.

In 1996, after many years as a publicly-traded firm, GEICO became a wholly owned subsidiary of Berkshire Hathaway.

GEICO generally deals directly with consumers via the telephone and the Internet, freeing up capital that would otherwise be spent on employing insurance agents in the field. The company is now the third largest direct writer of private auto insurance in the United States.^[4] Warren Buffett, chairman and CEO of Berkshire Hathaway, made clear in his 2009 annual letter to shareholders that he is bullish on GEICO: "As we view GEICO's current opportunities, Tony and I feel like two hungry mosquitoes in a nudist camp. Juicy targets are everywhere."^[5]

Advertising campaigns

GEICO has many well known ad campaigns, most involving the tagline "Geico, fifteen minutes could save you fifteen percent or more on car insurance." Ads have also included well-known mascots "Mallory the GEICO gecko" (an anthropomorphic Day Gecko) and the GEICO Cavemen (from ads claiming using their website is "so easy, a caveman could do it") who were the stars of the short-lived sitcom (unrelated to GEICO) Cavemen. There are also GEICO ads that feature stories from GEICO customers about situations in which the company assisted them, but are narrated by celebrities like Little Richard.

Parodies and references to the ads have appeared on programs like Robot Chicken and The Late Show with David Letterman.

Competition

GEICO's major competitors include State Farm, Allstate, Progressive, Nationwide, and USAA. Progressive is targeted in many GEICO commercials in order to counter Progressive's claims of being able to quote their rates and those of several of their competitors' by stating that GEICO quotes are only available at GEICO.com.

See also

• List of United States insurance companies

References

External links

• GEICO official website

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