Market Overview

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


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

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), 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
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
Action Press Releases

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

View Comments and Join the Discussion!