A.M. Best Affirms Credit Ratings of Members of GEICO and GEICO Corporation

August 24, 2018

OLDWICK, N.J.--(BUSINESS WIRE)--Aug 24, 2018--A.M. Best has affirmed the Financial Strength Rating (FSR) of A++ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aaa” for the members of Government Employees Group (GEICO) (Chevy Chase, MD). A.M. Best also has affirmed the Long-Term ICR of “aaa”, as well as the Long-Term Issue Credit Rating of “aaa” on $150 million 7.35% senior unsecured debentures, due 2023, of the immediate parent holding company, GEICO Corporation (Wilmington, DE). The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed list of the companies and ratings.)

The ratings reflect GEICO’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its strong operating performance, very favorable business profile and appropriate enterprise risk management.

The ratings reflect GEICO’s robust capitalization, consistent operating profitability, brand name recognition and pre-eminent national market position in the personal automobile insurance segment. GEICO’s solid operating results reflect a considerable underwriting expense advantage, driven by its direct distribution business model. In addition, the group continues to produce generally favorable loss experience while benefiting from a steady stream of investment income, and significant realized and unrealized capital gains in its investment portfolio given the favorable performance of equity markets in more recent years. As a result, GEICO’s substantial capital growth over the most recent five-year period has comfortably supported the steady growth in premiums.

Furthermore, these ratings continue to benefit from explicit support provided by GEICO Corporation’s parent company, National Indemnity Company (NICO), as well as implicit support from its ultimate parent, Berkshire Hathaway Inc. (Berkshire) [NYSE: BRKa and BRKb], whose financial profile included approximately $347.4 billion of stockholders’ equity at March 31, 2018, modest debt and a long history of strong profitability. Moreover, GEICO Corporation maintains minimal financial leverage and sufficient cash flows to fund fixed charges.

These positive rating factors are offset partially by GEICO’s high investment leverage derived from its significant allocation of invested assets to unaffiliated equities, which could lead to fluctuations in its risk-adjusted capitalization due to market swings or potential stock market downturns. In addition, GEICO maintains a modest geographic concentration that exposes it to legislative changes and judicial decisions, as its top five states account for slightly more than half of its direct premiums written. However, this risk is largely mitigated by GEICO’s geographic spread throughout the United States and management’s proven ability to quickly adapt to changing market conditions.

Downward rating pressure could result should risk-adjusted capitalization decrease significantly from an adverse earnings trend due to underwriting or investment losses. A change in the group’s relationship with Berkshire or NICO, which would result in a diminution of the business profile, also could create downward rating pressure.

The FSR of A++ (Superior) and the Long-Term ICRs of “aaa” have been affirmed for the following members of Government Employees Group:

Government Employees Insurance Company GEICO Indemnity Company GEICO Casualty Company GEICO General Insurance Company GEICO Advantage Insurance Company GEICO Choice Insurance Company GEICO Secure Insurance Company GEICO County Mutual Insurance Company

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s web page. For additional information regarding the use and limitations of Credit Rating opinions, please view . For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view .

A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit for more information.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Michael T. Venezia

Senior Financial Analyst

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Jacqalene Lentz, CPA


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Christopher Sharkey

Manager, Public Relations

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Jim Peavy

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PUB: 08/24/2018 11:35 AM/DISC: 08/24/2018 11:35 AM


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