Abstract
Geico 's ratings implied stable outlook pertaining to FSR or financial strength rating and ICR or issuer credit rating. The company has several positive factors to propel the company ahead; nevertheless, it also has certain features, which has stunted the company's growth.
A.M Best Co., has predicted that if the company is able to annul them, it is sure to do well in near future.
Geico or Government Employees Insurance Company is Berkshire Hathaway's wholly owned subsidiary and offers auto insurance to the people. This American company had auto insurance coverage for as many as 10 million trucks, motor vehicles (as of 2007). It is also an underwriter, offering insurance for private passenger vehicles. This service is extended to all of United States of America, including the District of Columbia. However, falling outside the purview of this service is Massachusetts.
Company ratings are done for finding out the solvency and their preparedness to meet financial stalemates if the company is subjected to any such instance. There are many rating agencies like Standard & Poor 's, Fitch Ratings, Moody's Investor Services and A.M Best Co. Geico 's rating details provided below are those of A.M Best Co.
Geico 's ratings:
The financial strength-rating grade was A++. As far as issuer credit rating is concerned, the grade assigned was “aaa”. These ratings were conferred on Government Employees Group as well as the operating subsidiaries dealing in casualty insurance and property insurance. The “immediate holding company” known by the name Geico Corporation was assigned a grade of “aaa” as debt rating. It was found that Geico 's ratings stable outlook.
Inference from Geico 's ratings:
Favorable Aspects
It indicates that the company has a sound financial strength. Brand identification is sound. Operating performance is strong. As far as underwriting is concerned, the company occupies one among the 10 positions in the field of underwriting for motor vehicles in USA.
Unfavorable Aspects:
Even though, the above factors are encouraging, these positive points are somewhat underplayed by the following drawbacks, the company encounters.
The investment leverage of the company is “above average”.
Another factor, which acts, as an inhibiting factor is the fact that the company is subject to various regulatory issues in most of the states.