GEICO, the Government Employees Insurance Company, has never been a government agency. Leo Goodwin Sr. had worked at USAA since 1925 but hit a ceiling as a civilian, so in 1936 in San Antonio he and his wife Lillian put up $25,000 and Fort Worth banker Cleaves Rhea added $75,000. They sold auto insurance by mail directly to federal employees, a stable, low-risk group, cutting out agent commissions, and moved to Washington, D.C., in 1937. In 1948 Rhea sold his stake, and half the company went to Benjamin Graham’s Graham-Newman partnership. The purchase broke an SEC limit on investment firms owning insurers, so in 1949 the partnership distributed shares to its own investors, making GEICO public at around $27 a share. By 1972 Graham’s stake was worth $400 million. In 1951 a young Warren Buffett visited headquarters on a Saturday and learned the business from vice president Lorimer Davidson, who later ran the company from 1958.

In 1974, under David Lloyd Kreeger, GEICO used newly available computerized driving records to open its policies to the general public, just as the 1973 to 1975 recession pushed up repair and medical costs. It lost over $126 million in 1975, its stock fell from $42 to $5, and a consortium of 45 insurers absorbed a quarter of its policies to stabilize the market. John J. Byrne and underwriting veteran Alvin E. Krauss rebuilt it over five years with Buffett’s backing. Without local agents, GEICO turned to advertising, spending over $1.1 billion in 2012, about 7 percent of revenue, on the gecko, the cavemen and a stack of money with eyes. It became the second or third largest private U.S. auto insurer, now a Berkshire Hathaway subsidiary.

• The episode explains auto insurance as a grudge purchase, with humorous mascots replacing the friendly local agent.
• GEICO sponsored racing teams and stock car series through 2024, plus professional tractor pulling.
• A 2015 lawsuit over pricing by education and occupation ended in a $6 million settlement.
• A $5.2 million Missouri judgment over a disease contracted in an insured car was unanimously overturned by the state Supreme Court.
• In late 2023 GEICO ordered staff back to the office and laid off 2,000 employees, about 6 percent of its workforce.