Buffett puts protégé in charge at car insurer Geico
Warren Buffett’s investment protégé Todd Combs was named on Monday as chief executive of Geico, the US car insurance company which is one of the most important businesses inside Mr Buffett’s conglomerate Berkshire Hathaway.
Mr Combs will take over on January 1, succeeding Bill Roberts, a 35-year veteran of the insurer who has been in the chief executive role for the past 18 months.
The elevation is likely to be closely scrutinised by those who read the Berkshire tea leaves, having watched a series of promotions over the past several years intently as they attempt to identify candidates who might one day succeed Mr Buffett, or be in line to take an enhanced role in the company’s future.
Geico said that its new chief executive will also be retaining his role managing a $14bn investment portfolio for Berkshire.
Mr Combs, 48, joined Berkshire in 2010 after running a small hedge fund of his own. While he worked at the insurer Progressive before attending graduate school, he has limited industry experience. As well as investing for Berkshire and advising Mr Buffett, he has also led work on Haven, the healthcare joint venture between Berkshire, JPMorgan Chase and Amazon. He also has a seat on the JPMorgan board.
“What is surprising most to me is that he has been given the opportunity to serve in an operational capacity [rather] than an investing capacity,” said James Shanahan, an analyst at Edward Jones. “It’s such a senior level at such an important business for the company.”
Mr Roberts, who started his career at Geico in 1984, will become vice-chairman of the car insurer and is expected to retire in December 2020.
Mr Combs will report to Ajit Jain, who last year was promoted to vice-chairman of the company and is responsible for all of its insurance businesses. Mr Jain and Greg Abel, who was also named a Berkshire vice-chairman in 2018, are seen as the most likely potential successors to Mr Buffett as chief executive.
Geico is the second-largest car insurer in the US and, since it was acquired by Berkshire in 1996, has provided the company firepower to fund the acquisitions for which it is known.
The unit has generated more than $15bn of pre-tax underwriting profits since Berkshire bought it and it has commanded outsized attention from Mr Buffett, including in his most recent letter to shareholders when he thanked Mr Roberts’ predecessor, Tony Nicely, for increasing “Berkshire’s intrinsic value by more than $50bn”.
Mr Combs said on Monday that he was “looking forward to taking on the responsibilities of chief executive at Geico”, which he characterised as “a very successful insurance company”.