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Moody's Investors Service Inc.

Moody's Affirms GEICO's Aa1 Insurance Financial Strength Rating

Strategic Insights

— 1 min read

Moody's Ratings has confirmed the Aa1 insurance financial strength rating of Government Employees Insurance Company, the lead member of a group of US auto insurers owned by GEICO Corporation. The rating reflects GEICO's strong market presence, excellent brand recognition, low cost structure, and robust capitalization, as well as explicit and implicit support from National Indemnity Company, the flagship reinsurer owned by Berkshire Hathaway Inc. GEICO's stable rating outlook is a result of its ability to maintain a low underwriting expense ratio through direct response marketing methods and its robust capitalization.

Key Takeaways:

  • GEICO's Aa1 IFS rating reflects its strong market presence as the third-largest US auto insurer with excellent brand recognition.
  • The rating is supported by GEICO's low cost structure and robust capitalization, including explicit and implicit support from National Indemnity Company.
  • GEICO's investment style is aggressive, with a high proportion of common stocks and speculative grade bonds, which partly offsets the group's strengths.
  • The group's pretax underwriting profit was $2.2 billion in the first quarter of 2025, compared to $1.9 billion in the prior year period, driven by higher average premiums per auto policy and lower claims frequencies.
  • Net premiums written increased slightly to $11.5 billion for the first quarter of 2025 relative to the prior year period.
  • Factors that could lead to a rating upgrade include a shift toward lower-risk investments and gross underwriting leverage remaining below 2x.
  • Factors that could lead to a rating downgrade include deterioration in underwriting results, gross underwriting leverage above 3x, a downgrade of NICO's IFS rating, or a negative rating action on the US government.

Statistics:

  • GEICO's pretax underwriting profit was $2.2 billion in the first quarter of 2025, a $300 million increase from the prior year period.
  • The combined ratio improved to 79.8% in the first quarter of 2025, a decrease from 81.2% in the prior year period.
  • Net premiums written increased to $11.5 billion for the first quarter of 2025, a slight increase from the prior year period.
  • GEICO generated net written premiums of $42.9 billion and a pretax underwriting profit of $7.8 billion in 2024.

Sources:

  • Moody's Ratings, "Moody's Affirms GEICO's Aa1 Insurance Financial Strength Rating"
  • Berkshire Hathaway Inc. segment results, 2025
  • Moody's Rating Methodologies, Property and Casualty Insurers, published in April 2024
  • Berkshire Hathaway Inc. segment results, 2024

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