Word: geico
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Dates: during 1990-1999
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...Buffett has been buying more whole companies than company shares in recent years. Just last week he signed a deal to buy all of Jordan's Furniture, a New England retailer with $250 million in annual sales. His biggest deals, though, have been in insurance, starting with auto insurer Geico in 1996 and then the $22 billion acquisition of reinsurer General Re at the end of 1997. (Insurance companies need to lay off risk, hence reinsurance companies...
...business in fractional ownership of aircraft. With revenues projected at $900 million for 1998 and climbing an average rate of 35% annually, the company instantly became the fastest-growing division in Buffett's Berkshire Hathaway empire, which includes stakes in American Express and Coca-Cola and ownership of Geico insurance...
Warren Buffett, the investor and head of Berkshire Hathaway, noted some of these trends two years ago, when his Geico insurance subsidiary doubled its projected 4% profit margin because the number of claims was decreasing. Last year margins were well over the target again. Buffett warned that such stellar results would not persist because they would soon invite competition. That's what has happened, and now he expects the industry's margins to contract as insurers cut prices to battle for market share--bad news if you own the stocks but not if you're a policyholder...
...Geico and State Farm have been among the leaders cutting prices, and others will be forced to match them. So pull out your policy and see if your insurer is following suit. If not, play hardball. As when asking for a lower credit-card or mortgage rate, if you make it clear that you're ready to shop around, you'll probably get the best results. Don't think it's worth your time? Fair enough. A 3%-to-5% reduction may not amount to much, and many companies will give it to you automatically when you renew. But chances...