#8 Jack Byrne: Buffett’s ‘Babe’

Under the current ownership of Buffett's Berkshire Hathaway holding company, GEICO has become one of the country's most widely recognized consumer brands and a huge force in the Personal Auto space.

But it wasn't always so: The insurer was on the brink of bankruptcy until Byrne stepped in as leader and saved it from insolvency.

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At the time of GEICO's near-collapse, Byrne was working at Travelers, where he had risen through the ranks to become an executive vice president. But when it came time to pick a new president, the board of directors passed him over.

Byrne says regulators and members of the industry then began to put pressure on him to take on the task of running GEICO to prevent the insurer from going under.

"Why in the world did I accept? I don't know, other than I had just been severely disappointed" by being passed over for president at Travelers, he says.

But his choice paid off quickly. He came into the position at GEICO in 1976, and the company was in the red for the second, third and fourth quarters that year.

But by the first quarter of 1977, it was back in the black. The company's stock soared, return on capital was good, and profits were huge, Byrne says of the company after its fast turnaround.

Byrne modestly credits good fortune for the quick fix. "It was just a miracle," he notes. "A lot of very lucky things had to break for me."

But others credit the comeback to the strategy executed by Byrne, which involved raising $75 million in capital through a common-stock offering, obtaining reinsurance to cover a portion of the company's risks, and re-underwriting and re-pricing GEICO's book of business to the extent regulators would allow.

Byrne says he's proud of the personal investment he made in GEICO. "One policy I've always followed: I wanted to take a big personal stake in whatever you ask me to do," he says. If he takes on a failing company, he adds, he won't ask for a large salary—but will ask for a big stake in the company if his efforts are successful.

In this case, he reveals, "They gave me a very large piece of GEICO."

Such a payoff, of course, was hardly guaranteed when he first walked in. He reflects on his decision to take the reins: "Looking back on it, I say, 'What a screwball I was to take that job.' Why would a sound man with a heavy mortgage and two kids in school take that job?"

Looking back, Byrne says he might have been happy finishing his career at GEICO. But having achieved enormous success, "I kept looking for new challenges," he says. "I did not know how to be happy. Do you know a lot of 40-year-olds who know how to be happy?"

So when a new opportunity presented itself, Byrne jumped.

American Express owned Fireman's Fund—and while the insurer had been a good money-maker in the past, says Byrne, "suddenly it was an embarrassment to them" as profit margins plummeted.

One investment banker working for American Express suggested taking Fireman's Fund public, but in order to do that Byrne says they needed to "put a pretty face on the cover." He was offered 10 percent of the company's profits if he could "make magic things happen like at GEICO."

Byrne says Buffett was also involved in the deal to sell Fireman's Fund off to the public. "They wanted another pretty face," he recalls. "Mine wasn't pretty enough."

The company went public in 1985, and Byrne ran Fireman's Fund until 1991 when it was sold to Allianz Group.

Like he did at GEICO, Byrne executed a remarkable turnaround at Fireman's. "We did indeed make a much better company out of it," he says.

When Fireman's Fund was sold to Allianz, Byrne retained its holding company, Fund American Enterprises Inc., which exists today as the White Mountains Insurance Group, a Top-40 carrier based on net premiums written. Byrne retired in 2007, and two years later he was inducted into the Insurance Hall of Fame.