GEICO, the auto insurer owned by Warren Buffett’s Berkshire Hathaway Inc., will charge drivers more after margins worsened.
The pretax underwriting gain at GEICO fell to $160 million in the first quarter from $353 million a year earlier, according to a report Friday from Omaha, Nebraska-based Berkshire.
“We experienced increases in claims frequencies and severities in several of our major coverages,” according to the filing. “As a result, we are implementing premium rate increases as needed.”
GEICO is the largest insurance unit by revenue at Berkshire. Buffett counts on insurers to generate funds that he can invest in stocks or takeovers.
The business is the second-largest U.S. car insurer, behind State Farm Mutual Automobile Insurance Co., which is owned by its policyholders. No. 3 Allstate Corp. is scheduled to report first-quarter results May 5. Mayfield Village, Ohio-based Progressive Corp., which is the fourth-largest, said April 15 that margins improved.