Government Employees Insurances Co. yesterday announced tentative settlement of a lawsuit that has alleged overstatement of certain assets and a breach of duties by the auto insurer's former management.

Under proposed terms of a settlement with Paul Bershin of Los Angeles, who filed a class action on behalf of warrant owners of Geico, warrants now scheduled to expire in August would be extended for five years.

As reported earlier, Geico also has reached an agreement in principle to settle other class actions pending in U.S. District Court here against the firm, its accountants, and former or current officers and directors.

Coupled with the accord announced yesterday, Geico apparently is close to settling all of the lawsuits filed by investors after the company's financial condition declined in 1975 and 1976. Under new management, Geico since has started a strong recovery and recently reported record earnings during 1977.

Involved in the settlement announced yesterday is a suit related to 1,863 owners of 648,552 warrants to buy Geico common stock, issued as part of a 1971 capital offering.

If the settlement is approved by Geico stockholders at a special meeting, by U.S. District Court here and by a "substantial majority" of the warrant holders, the warrants would be extended until August 1983 and the exercise price would be reduced from $31 to $24 a share.

At an exercise price of $24 a share, warrant owners would be able to buy 2.08 shares of Geico currently is trading in the over-the-counter market at about $8 a share.

Exact terms and conditions of the proposed settlements for two other class actions against Geico alleging violations of securities laws and failure to establish sufficient reserves for losses have not been announced.

Geico said yesterday that such details will be announced when a formal agreement is reached. The auto insurance firm said in its annual report recently that reserves sufficient to cover any liability which may arise from the settlements were provided in 1977 accounts.