GEICO has certainly ceded market share to Progressive which has been growing and posting underwriting profits. I think GEICO is still behind on telematics and Progressive seems to have a better handle on pricing. I’m sure Ajit will be asked about GEICO at the annual meeting.
Agreed on Progressive. I look at GEICO's recent trade-off of growth for profits as a way to stop the bleeding after six straight quarters in the red -- but not something that can continue for the long term. Now that GEICO has righted the ship, so to speak, it will be interesting to see how they manage to balance going back into growth mode without losing this newfound profitability.
With the loss ratio down to 76.9% in Q4, I am hopeful that pricing is now adequate enough to keep the loss ratio at 80% or lower. This will allow the expense ratio to get back into a more normal 13-15% range which will permit more advertising and, hopefully, regain some market share. An expense ratio under 10% is abnormally low and can't really be sustained. a 80% loss ratio and a low teens expense ratio seems like the sweet spot to me for restoring some growth, but time will tell ... the good news is that the Gecko won't be demanding pay increases commensurate with inflation!
I was surprised to see that they brought back the GEICO Caveman commercials during the NFL playoffs. Maybe a sign of things to come on the advertising front.
Most financial and bank stocks are well outside my circle of competence, so I don't really follow them as closely as other industries. As such, I don't really have any good guesses about what the mystery stock might be. In general, though, it would not surprise me at all if Buffett were to invest in a company run by Jamie Dimon considering he holds him in such high regard.
GEICO has certainly ceded market share to Progressive which has been growing and posting underwriting profits. I think GEICO is still behind on telematics and Progressive seems to have a better handle on pricing. I’m sure Ajit will be asked about GEICO at the annual meeting.
Agreed on Progressive. I look at GEICO's recent trade-off of growth for profits as a way to stop the bleeding after six straight quarters in the red -- but not something that can continue for the long term. Now that GEICO has righted the ship, so to speak, it will be interesting to see how they manage to balance going back into growth mode without losing this newfound profitability.
With the loss ratio down to 76.9% in Q4, I am hopeful that pricing is now adequate enough to keep the loss ratio at 80% or lower. This will allow the expense ratio to get back into a more normal 13-15% range which will permit more advertising and, hopefully, regain some market share. An expense ratio under 10% is abnormally low and can't really be sustained. a 80% loss ratio and a low teens expense ratio seems like the sweet spot to me for restoring some growth, but time will tell ... the good news is that the Gecko won't be demanding pay increases commensurate with inflation!
I was surprised to see that they brought back the GEICO Caveman commercials during the NFL playoffs. Maybe a sign of things to come on the advertising front.
Thoughts on the mystery stock being J.P. Morgan? Dimon sells off $125 million of his own holdings...
Most financial and bank stocks are well outside my circle of competence, so I don't really follow them as closely as other industries. As such, I don't really have any good guesses about what the mystery stock might be. In general, though, it would not surprise me at all if Buffett were to invest in a company run by Jamie Dimon considering he holds him in such high regard.