Berkshire Hathaway paid $2.3 billion to acquire the remaining stake in GEICO in 1996.
Berkshire had been a major GEICO shareholder for years before the transaction. Its subsidiaries owned roughly 34.25 million GEICO shares, and GEICO’s repurchases of its own stock had increased Berkshire’s ownership from about 33% in 1980 to nearly 51% immediately before the merger.
In January 1996, Berkshire completed a merger that bought the publicly held shares it did not already own. The consideration for those shares totaled approximately $2.3 billion, giving Berkshire full ownership of the auto insurer. The deal is sometimes described as a purchase of GEICO’s remaining 49%, although the exact percentage is commonly rounded.
GEICO became one of Berkshire’s central insurance businesses. Its importance reflects Warren Buffett’s long-standing interest in insurers, whose premium float can be invested while claims are paid over time. The 1996 transaction consolidated an investment Berkshire had first begun building decades earlier.