'Oracle' Says Insurer's Future Looks Promising: Warren Buffe

Friday, May 08,2009, 8:55:57 AM Click:

May 7--OMAHA, Neb. -- Warren Buffett is bullish on Geico.

The "Oracle of Omaha" discussed many topics during a four-hour question-and-answer session at Saturday's annual Berkshire Hathaway shareholders meeting.

But Geico, which has a regional headquarters in Stafford County and is one of the area's biggest employers, factored in heavily. The insurer is a subsidiary of the investment conglomerate controlled by Buffett.

The one-hour movie that always precedes the meeting featured about a dozen clips from Geico commercials over the past decade or so.

One questioner in the audience of the Qwest Center asked Buffett whether all those ads -- which feature talking lizards, cave- men, washed-up celebrities and more -- are worth the cost. The Richmond-based Martin Agency creates the Geico ad campaigns.

Buffett said Geico will spend about $800 million this year on advertising, far more than its competitors. In 1995 the company spent $20 million.

"We will spend more and more," Buffett said. "We are getting more than our money's worth for what we spend."

The core of the message from these advertisements is that customers can save money on car insurance by switching to Geico. Buffett said the recession has led thousands more people to call the company or check out its Web site.

"Suddenly saving $100 means something to people," Buffett said.

Geico has become the country's third-largest car insurer -- trailing only State Farm and Allstate. Buffett sees a bright future.

"The fundamentals are in place to take us much higher," he said, commending CEO Tony Nicely and even hinting that they might someday consider offering Geico insurance in China.

The company's growth has been felt locally. Geico now employs about 3,200 people at its Stafford office. It's even caused a bit of a parking crunch there.

The company now uses 300 parking spaces at the University of Mary Washington's College of Graduate and Professional Studies a mile up U.S. 17 and shuttles employees to the office.