GEICO associates who know their company well know the names of Leo and Lillian Goodwin.
It was the Goodwins who in the mid-1930s — while the Great Depression was still in full fury — took a calculated risk to start up what has become one of the most successful and highly respected companies in the nation … the Government Employees Insurance Company … GEICO.
Leo Goodwin hammered out the basic business plan during his early career days in Texas. He believed that if he lowered costs in the company by marketing directly to carefully targeted customer groups, he’d be able to pass along lower premiums and still earn a profit. He was right. The business began its upward climb and, in 1936, Goodwin established GEICO operations in Washington, D.C.
Lillian Goodwin worked alongside her husband to launch the company and took an active role in virtually all aspects of the early operation. Lillian, a bookkeeper by profession, took on the accounting tasks but also worked to underwrite policies, set rates, issue policies and market auto insurance to GEICO’s target customers, federal employees and the top three grades of noncommissioned Military officers. By the end of 1936, there were 3,700 GEICO policies in force and a total staff of 12 people.
In 1948, a pivotal figure joined the company. Lorimer Davidson, an investment banker and a friend of the Goodwins, helped them find new investors when the original investors chose other opportunities. Among those new investors was Benjamin Graham, a business professor at Columbia University in New York, who would one day find Warren Buffett in his class. The link between GEICO and Warren Buffett was thereby established, and in 1951 Buffett made his first official appearance in GEICO’s history.
That year, Buffett recounts that he took the train to Washington on a Saturday to learn more about GEICO and found that the office was closed. A janitor directed him to Davidson and that conversation echoed through the years. On the basis of that impromptu meeting, Buffett learned enough to make his first purchase of GEICO stock.
When Leo Goodwin chose to retire in 1958, he named Davidson to be his successor. It was Davidson who would preside at the opening of GEICO’s new headquarters in Chevy Chase, Md., in 1959 after more than 20 years of steady growth.
The 1960s proved to be similarly successful and GEICO experienced virtually unbroken growth. GEICO passed the 1 million policyholder mark in 1964. Insurance premiums reached $150 million in 1965. Net earnings doubled to $13 million in 1966. GEICO opened a number of sales and service offices for walk-in customers and its first drive-in claims office in 1965.
The 1970s were not nearly so good to the company. While in retirement, first Lillian Goodwin passed away in 1970, followed by Leo Goodwin the following year. By the mid-70s, the years of aggressive expansion were starting to show some weaknesses in the company’s loss reserves. It led to a difficult period for the company.
GEICO used the experience to strengthen its underwriting and reserving activities which helped build the company’s current reputation as a fiscally superior organization. Warren Buffett made another appearance in 1976 for a second purchase of GEICO stock, reported to total 1 million shares. Lou Simpson joined the company in 1979 as GEICO’s chief investment officer.
Prudent underwriting prevailed in the 1980s and expansion was slow but steady from then on. GEICO introduced 24-hour, 365-day telephone service for claims, sales and service in 1980 as its emphasis on customer service deepened.
In 1993, Olza “Tony” Nicely was named GEICO’s new chairman, president and CEO, and worked to expand the customer base through a new four-company strategy. Along with it came an increased advertising budget which propelled GEICO toward much higher national visibility.
Warren Buffett liked what he saw. In 1995, his Berkshire Hathaway investment firm made a generous bid for the remaining shares of GEICO’s outstanding stock, and by 1996, GEICO was a subsidiary of one of the most profitable organizations in the country.
That led to national advertising on an enormous scale. GEICO’s ads and direct mail pieces flooded the airwaves and filled mailboxes around the country and the company’s growth shot upward. The GEICO Gecko made its first appearance during the 2000 television season and has quickly become an advertising icon.
In 2001, Leo Goodwin was named to the International Insurance Society Hall of Fame. His ideas have endured and helped GEICO grow into a national favorite.
Late in 2002, GEICO passed the 5 million policyholder mark, and reached 6 million policyholders in 2004.
In 2005, with Buffalo up and running early in 2004, yet another big announcement came in the summer when GEICO declared the “good news” about its reentering the New Jersey auto market at a press conference that made local, regional and national news. In December, company growth pushed GEICO to 6 million policyholders.
In 2006, GEICO reached 7 million policyholders.
Today, GEICO celebrates its founders Leo and Lillian Goodwin who would be quite proud of the organization’s success and its return to New Jersey. Celebrating with them are the company’s 20,000 associates in 12 major locations around the country.
GEICO’s assets have climbed to $21.2 billion and Tony Nicely has said that the company’s growth will only be limited by the time it takes to hire knowledgeable associates committed to GEICO’s way of thinking, which can be summed up in these words: