Warren Buffett’s Berkshire Hathaway took a bath this year. But in Buffett’s annual letter to shareholders, he seems pumped about how GEICO is faring in the car insurance market. Buffett noted that under GEICO chief executive Tony Nicely, GEICO did its part to keep Berkshire Hathaway profitable, increasing GEICO’s market share to 7.7% of the auto insurance market last year (over 19% in Maryland). Buffett makes clear in his report 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.
This is a funny quote but, then again, everything sounds a little funnier when coming from a billionaire.
One thing is for sure: GEICO’s business model in recent years has included a willingness to absorb more litigation costs because GEICO is far more willing to eschew reasonable settlements in favor of forcing injured accident victims to file a lawsuit than GEICO was seven years ago. I don’t say this derisively. Obviously, this business model is working for GEICO. But it does create a lot more work for Maryland accident lawyers and delays justice for injury victims.