"I am perfectly willing to spend whatever it takes to get everyone in the country to check our price," says Warren Buffett. Berkshire Hathaway's (BRK.A, BRK.B) Geico's ubiquitous ads - the company spent $1.2B last year (and Buffett says it will be more in 2014) - account for nearly 25% of all U.S. insurance companies' advertising spending. And it made Berkshire Hathaway the 7th largest advertiser in the country in 2013.
Since shortly after current CEO Tony Nicely took the top job at Geico in 1993, the insurer's market share in personal auto insurance has about quadrupled to 10%, and last year the company became the 2nd largest U.S. auto insurer - behind State Farm, but ahead of Allstate and Progressive. Pretax underwriting profit of $393M in 2013 was up 17% from a year earlier.
One reason for the need for the lavish ad spending for this otherwise thrifty company: Geico doesn't use agents, but instead sells policies directly to consumers via the Web or the phone.
Geico execs are "cost-conscious connoisseurs," says the author of an upcoming book on Berkshire. "At headquarters, they're as thrifty as can be….Geico is the quintessential Berkshire company."