December 23, 2019 / 2:44 PM / 2 months ago

Buffett protege Todd Combs to become Geico CEO

(Reuters) - Geico, the auto insurer owned by Berkshire Hathaway Inc (BRKa.N), on Monday named Todd Combs, one of Warren Buffett’s portfolio managers, as its chief executive officer, adding new responsibilities for a man widely seen as a potential successor to Buffett.

FILE PHOTO: Todd Combs, investment manager at Berkshire Hathaway Inc., attends the annual Allen and Co. Sun Valley media conference in Sun Valley, Idaho, U.S., July 12, 2019. REUTERS/Brendan McDermid/File Photo

Combs, 48, will take over the second-largest U.S. auto insurer on Jan. 1, 2020, replacing Bill Roberts, a 35-year Geico veteran who became chief executive in June 2018. Roberts will become a Geico vice chairman and plans to retire at the end of 2020.

Geico, which has about 40,000 employees, said Combs will continue managing $14 billion of investments at Berkshire, the Omaha, Nebraska-based conglomerate he joined in 2010.

“That’s an awful lot of work for one person,” said Meyer Shields, a Keefe, Bruyette & Woods analyst with a “market perform” rating on Berkshire.

“Warren Buffett has talked about the overlap between being a good investor and a good businessperson,” Shields said. “This puts that into action, letting Combs broaden his operational expertise.”

Many investors and analysts consider Combs and Buffett’s other portfolio manager, Ted Weschler, top candidates to succeed the billionaire as Berkshire’s chief investment officer.

Combs, who once worked at Progressive Insurance, is also a JPMorgan Chase & Co (JPM.N) director and helped launch Haven, the project Berkshire, JPMorgan and Amazon.com Inc (AMZN.O) launched to reduce their employees’ healthcare costs.

Berkshire and Geico did not immediately respond to requests for comment.

Combs is nine years younger than Berkshire Vice Chairman Greg Abel, widely considered a top candidate to succeed Buffett, 89, as Berkshire’s CEO.

“I don’t think this is a predecessor to [Combs] being Berkshire’s CEO,” Shields said, referring to the Geico appointment. “There is more experience embedded in Greg Abel, and if he takes over it is good for Berkshire to have a deep bench.”

Geico is one of Buffett’s oldest investments, dating from 1951, when he plowed more than half his net worth into the insurer.

Berkshire took full control of Geico in 1996, paying $2.3 billion for the 49% it did not already own.

From January to September, Geico generated $1.18 billion of underwriting profit as premiums rose 7% to $26.49 billion.

Tony Nicely, Geico’s executive chairman and Roberts’ predecessor, said Roberts told him in early November he was turning 70 and planned to step aside.

Roberts joined Geico in 1984 in its marketing department. He was a key driver of its humorous ad campaigns, some featuring a talking gecko. Rivals such as Allstate, Liberty Mutual and Progressive now also use humor in ads.

Reporting by Jonathan Stempel in New York; Additional reporting by Abhishek Manikandan in Bengaluru; Editing by Maju Samuel, Edmund Blair and Dan Grebler

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