NOVEMBER 03, 2021 12:41 PM (EDT)
AM Best Affirms Credit Ratings of GEICO Corporation and Majority of Members of GEICO
Senior Financial Analyst
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FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 03, 2021 12:41 PM (EDT)
AM Best has affirmed the Financial Strength Rating (FSR) of A++ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aaa” (Exceptional) for majority of the members of Government Employees Group (GEICO) (Chevy Chase, MD). AM Best also has affirmed the Long-Term ICR of “aaa” (Exceptional), as well as the Long-Term Issue Credit Rating of “aaa” (Exceptional) on $150 million 7.35% senior unsecured debentures, due 2023, of the immediate parent holding company, GEICO Corporation (Wilmington, DE). In addition, AM Best has upgraded the FSR to A++ (Superior) from A+ (Superior) and the Long-Term ICR to “aaa” (Exceptional) from “aa” (Superior) of GEICO Marine Insurance Company (GEICO Marine) (Omaha, NE), which is now a member of GEICO. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed list of the companies and ratings.)
The ratings of GEICO reflect the group’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, very favorable business profile and appropriate enterprise risk management (ERM).
The ratings also reflect GEICO’s robust capitalization, consistent track record of 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 business model. In addition, the group continues to produce generally favorable loss experience while benefiting from a steady stream of investment income, and capital gains in its investment portfolio given the favorable performance of equity markets in recent years. The group’s investment portfolio is actively managed in conjunction with its ultimate parent, Berkshire Hathaway Inc. (Berkshire) [NYSE: BRKa and BRKb].
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 Berkshire, whose financial profile included approximately $478.8 billion of stockholders’ equity at June 30, 2021, modest debt and a long history of strong profitability. Moreover, GEICO Corporation maintains minimal financial leverage and sufficient cash flows to fund fixed charges.
The rating upgrades for GEICO Marine reflects the explicit and implicit support the company receives from NICO. The company is fully integrated into the group’s operations and management, carries the group’s name and remains necessary for licensing purposes for the group. Furthermore, the parent company is willing to provide support in the form of capital contributions if needed. This was demonstrated in recent years as the parent provided $56.5 million of capital contributions to GEICO Marine.
The FSR of A++ (Superior) and the Long-Term ICRs of “aaa” (Exceptional) have been affirmed with stable outlooks for the following members of Government Employees Group:
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.