Geico Promotes Roberts as Insurer Takes on Allstate
Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) promoted Bill Roberts to president and chief operating officer of the Geico unit as it competes with Progressive Corp. and Allstate Corp. (ALL) for auto insurance customers.
Roberts had been executive vice president of Geico since 2000 with duties including marketing, advertising and the Internet business unit, the insurer said in a statement today. Geico, the third-largest U.S. auto insurer, has been signing up customers through its website to win business from No. 2 Allstate, which traditionally relied more on agents for sales.
“Allstate is trying to make up ground with Geico with advertising spending on Esurance,” which it bought in 2011 to expand direct sales, Cliff Gallant, an analyst at Nomura Holdings Inc., said in an interview. “It’s an intense business, and I’d expect the fight for market share to continue.”
Berkshire has been preparing for a new generation of leaders for the company built by Buffett, 82, and Vice Chairman Charles Munger, 89. The Omaha, Nebraska-based firm has hired money managers Ted Weschler, 52, and Todd Combs, 42, after announcing in 2010 the departure of Lou Simpson, 76, who made investments for Geico for more than three decades.
“I will continue to be very actively involved in the overall management of the company, but I could not be more confident that Bill is ready to tackle these new responsibilities,” Geico Chairman and Chief Executive Officer Tony Nicely said in the statement.
Geico led U.S. property-casualty insurers in advertising last year, spending about $1.1 billion, according to a report by SNL Financial. Northbrook, Illinois-based Allstate ranked next, after increasing spending 15 percent to $828.8 million.
Allstate last year hired Sanjay Gupta as chief marketing officer after he led the rebranding of Ally Financial Inc.’s bank. Policyholder-owned State Farm Mutual Automobile Insurance Co., the largest U.S. auto insurer, cut ad spending in 2012.
Geico is also being challenged by Progressive Corp., which holds patents on technology that sets pricing by monitoring a motorist’s driving habits.
“I don’t think their selection method is better than ours,” Buffett said at his company’s annual meeting in May. “I may even feel that ours is a little bit better.”
Geico is Berkshire’s largest insurance unit by employees, with a staff of more than 27,000, according to the company’s annual report. Underwriting profit at the unit last year climbed 18 percent to $680 million.
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