Buffett's Geico offers $2.5 billion credits as coronavirus cuts driving
Reuters
Published Apr 07, 2020 06:10PM ET
By Jonathan Stempel
(Reuters) - Geico Corp, part of billionaire Warren Buffett's Berkshire Hathaway (NYSE:BRKa) Inc, said on Tuesday it will offer about $2.5 billion of credits to its 19 million auto and motorcycle policyholders, reflecting the decline in driving stemming from the coronavirus pandemic.
The insurer said it will offer a 15% credit on policies up for renewal between April 8 and Oct. 7, averaging about $150 per auto policy and $30 per motorcycle policy.
Geico said it has about 18 million auto customers and 1 million motorcycle customers.
The announcement came one day after Allstate Corp (NYSE:ALL) said it would return more than $600 million to policyholders, mostly through a "payback" of 15% of premiums for April and May on about 18 million policies. [nL1N2BU0PO]
Many Americans are driving less because of stay-at-home orders aimed at curbing the pandemic.
Geico said vehicle accidents are down considerably, though it expects a return to near-normal levels as the pandemic subsides.
"The ongoing crisis has widespread effects that will linger," Geico Chief Executive Todd Combs said in a statement. "Our customers have been loyal, and we are committed to doing all we can to help them."
State Farm and Progressive Corp (NYSE:PGR) are also reviewing their premium practices in light of the decline in driving.
Geico earned $35.57 billion of premiums in 2019, and paid out $28.94 billion, or 81.3%, to cover loss claims.
Pretax underwriting gains totaled $1.51 billion, after accounting for underwriting expenses.
Berkshire, based in Omaha, Nebraska, has owned all of Geico since 1996.
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Written By: Reuters
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