GEICO ends 2024 with $7.8 billion profit

GEICO has ended 2024 with a $7.8 billion underwriting profit, more than doubling its profit from 2023.

The underwriting profit reflected higher average premiums per auto policy, lower claims frequencies and improved operating efficiencies. These effects were partially offset by less favorable development of prior accident years’ claims estimates, increases in average claims severities and losses from catastrophe events.

Premiums written increased $3.1 billion (7.7%) in 2024 compared to 2023, reflecting an increase in average written premiums per auto policy of 7.8%, primarily attributable to rate increases, partially offset by a 0.5% decrease in policies-in-force over the past year. The rate of decline in policies slowed in the first half of 2024, with growth experienced in the second half of the year. Premiums earned in 2024 increased $3 billion (7.6%) compared to 2023.

Losses and loss adjustment expenses decreased $1.5 billion (4.7%) in 2024 compared to 2023. GEICO’s loss ratio (losses and loss adjustment expenses to premiums earned) was 71.8% in 2024 and 81% in 2023. The loss ratio decline reflected the impact of higher average earned premiums per auto policy and lower claims frequencies, partially offset by increases in average claims severities and less favorable development of prior accident years’ claims estimates.

Underwriting expenses increased 7.7% in 2024 compared to 2023. GEICO’s expense ratio (underwriting expense to premiums earned) was 9.7% in 2024, unchanged from 2023, as improved operating efficiencies and increased operating leverage were offset by increased advertising expenses.

GEICO had 28,247 employees at the end of 2024, a decrease of 7.6% and 26% compared to 2023 (30,584) and 2022 (38,285), respectively.

“Our insurance business also delivered a major increase in earnings, led by the performance of GEICO. In five years, Todd Combs has reshaped GEICO in a major way, increasing efficiency and bringing underwriting practices up to date. GEICO was a long-held gem that needed major repolishing, and Todd has worked tirelessly in getting the job done. Though not yet complete, the 2024 improvement was spectacular.” – Warren Buffett.