Chapter 7
Acquisition of GEICO
“ The Security I Like Best”
What is the single best investment on a large scale that you have made?1
GEICO—twice, three times in my life. It was a good investment when I was 20 years of age when I put three-fourths of my net worth in GEICO and that caused my net worth to double or something like that. That was great at the time. In 1976, the company got in trouble and what we bought turned out to be half of the company for $40 million. Then, in 1995, we bought the other half for $2.3 billion and that was a good deal. It’s been a triple play.2
Right after year-end, we completed the purchase of 100% of GEICO, the seventh largest auto insurer in the United States, with about 3.7 million cars insured. I’ve had a 45-year association with GEICO, and though the story has been told before, it’s worth a short recap here.
I attended Columbia University’s business school in 1950-51, not because I cared about the degree it offered, but because I wanted to study under Ben Graham, then teaching there. The time I spent in Ben’s classes was a personal high, and quickly induced me to learn all I could about my hero. I turned first to Who’s Who in America, finding there, among other things, that Ben was Chairman of Government Employees Insurance Company, to me an unknown company in an unfamiliar industry.
A librarian next referred me to Best’s Fire and Casualty insurance manual, where I learned that GEICO was based in Washington, ...

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