GEICO, the nation’s largest car insurance provider, is in talks with a group of three other companies to sell their auto insurance business.
In a joint statement, GEICO and CarMax, the company that owns and operates the car insurance business for GEICO customers, said the companies have agreed to a new 10-year, $2.6 billion insurance deal.
The companies said the deal would continue until 2021, but that the companies are exploring ways to work together to complete the transaction.
GEICO also announced earlier this week that it is exploring ways for the two companies to merge, including through a transaction with an insurer similar to the one GEICO has in place with CarMax.
The deal, which also includes an agreement to sell GEICO insurance to the state of California, is part of GEICO CEO Kevin Kelly’s efforts to modernize the company’s auto insurance offerings.
GEICO, which had about 3.3 million customers in the U.S. in 2017, lost $4.5 billion in 2017 and 2018.
The merger with Car Max would represent a big step forward for GEICOs auto insurance offering, and would bring some of the best practices that it has brought to the market since the company began offering its products in the early 1990s.
In 2017, it expanded into commercial and residential car insurance.
It would also give GEICO the ability to compete with a number of other large, regional car insurance providers, including Aetna, AIG, and Allstate, according to a person familiar with the matter.
GEICT’s current portfolio includes a number.
The company, like GEICO before it, also has a strong presence in commercial auto insurance, which has been a focus of the Trump administration.
Aetna has said that the merged company will be able to offer more affordable coverage than the smaller, regional rival.
A number of GEICOS customers are likely to benefit from the merger, including customers who rely on the insurer for coverage of a car or truck.
GEIGs chief financial officer, Steve Hausmann, said last month that the merger could reduce GEICO costs by up to $1 billion, but did not provide any estimates.GEICO is also pursuing a merger with the National Association of Insurance Commissioners, the industry body that oversees state and federal insurance programs.
GEICA’s new insurer with the NACI, Nationwide, will be based in Virginia, according the person familiar.