Warren Buffett has made many astute investments over the years, but few have paid off as handsomely as his basket of Geico Corp. shares.

The big home and auto insurer has roared back from the brink of disaster in the 1970s, turning Buffett's $45.7 million stake into more than $1 billion, and bolstering the Omaha-based Buffett's reputation as one of the premier investment minds of the times.

But now rumors are swirling that Buffett wants out, that he has been shopping Geico around and that when he gets the right price, his 45 percent stake -- and possibly the whole company -- will be sold.

Such a deal would appear contrary to Buffett's well-known " 'til death do us part" philosophy of holding on to solid investments. While neither he nor Geico will comment on the situation, some analysts have concluded that Buffett's interest is for sale.

And sources close to the big French property-casualty insurer Axa-Midi Assurances say that Geico recently "made a presentation" to that company concerning a sale.

Axa-Midi is known to be seeking a major U.S. company. It had sought to buy Farmers Group of Los Angeles but the deal fell through.

Analysts say that the likely factor behind any decision to sell would be the current regulatory and political climate for auto insurance.

"I think the auto insurance business is changing -- and not for the better," said Herbert Goodfriend, an analyst with Prudential-Bache Capital Funding. "It's getting to take on a much more populist, anti-private-sector orientation" as motorists clamor for relief from rising rates.

"The public wants a gimmee," with the result that regulators are moving to curb rates and thus growth in some states, Goodfriend said. That would limit the investment potential of insurers, he said, adding that "perhaps Mr. Buffett, who has always taken the long view, is coming to that opinion. I don't know ... but that is my surmise."

Some stock traders also appear to believe that a sale is possible. Geico stock has been racking up gains notable even amid the current market rally. Trading in the high $140s a month ago, Geico's shares climbed to $160 earlier this week and closed yesterday at $161.50.

If Geico is sold, particularly to a foreign owner, it would be an ironic end to one of the great business success stories of the past 15 years.

Geico was founded in 1936 as Government Employees Insurance Co. to sell car insurance to government workers and military personnel, and it grew from that tiny niche into a nationwide writer of automobile and homeowners coverage.

A series of management mistakes in the mid-1970s that brought the company close to insolvency gave Buffett his opportunity. Realizing that Geico was, as he put it recently, "a marvelous business" that faced "a one-time huge, but solvable, problem," Buffett in 1976 made a large investment in the company.

Geico Inc. is a holding company for subsidiaries including Government Employees Insurance Co., which has returned to serving only the government market; Geico General Insurance Co., which sells car insurance to nongovernment good drivers -- "preferred risks," as they are called; Geico Indemnity Co., which insures standard-risk drivers; and, through another subsidiary, Criterion Casualty Co., which handles higher-risk drivers.

The two preferred-risk auto companies generated 90 percent of Geico's premium revenue last year.

The key to Geico's operations today is its efficiency. For most of its operations, the company does not use agents, eliminating commissions, but markets its policies directly by mail and telephone.

By using tight cost controls and being choosy about whom it will insure, Geico has succeeded in keeping its underwriting ratios below 100 for all but one year of the past decade. This means that Geico takes in more in premiums than it pays out in claims, setting it apart from most of the industry.

By contrast, most property-casualty companies pay out more in claims than they take in in premiums -- a ratio of more than 100 -- and rely on investments for their profits.

"They are very good at what they do," said Charles T. Akre Jr., who heads a money management firm in Alexandria and is a Geico investor.

But Akre and others suggested that Geico's success may be part of the problem. Geico has been piling up excess capital, and unless it can figure out productive uses for it, the company will build up assets without corresponding increases in income, and its return on equity will fall.

Past attempts at diversification have not lived up to expectations, and the company is now going in the opposite direction, returning to its core businesses and shedding its small life insurance and reinsurance subsidiaries.

In addition, if more regulators decide that the rates of highly profitable companies are by definition too high, Geico could end up "in the dangerous position of being penalized because they are so good at what they do," Akre said.

These worries are not enough to trigger a sale, however, he added. The idea of selling "makes no economic sense to me from the point of view of shareholders or the managers," he said.

Geico Inc. President Edward H. Utley, while conceding that consumers have unrealistic expectations about premiums -- "the tooth fairy theory of economics" -- he sees "rays of hope" about the regulatory situation. Some consumers and politicians are beginning to realize, he said, that "you can't decrease the amount of money coming into the pool {of insurance} without doing something about the money paid out of the pool."

In a tight but reasonably regulated environment, he said, a highly efficient company like Geico stands to do very well.

But others point out that Geico's emphasis on good drivers limits its growth somewhat. Moreover, under regulatory agreements dating from the 1970s, Buffett is limited in the role he can play at Geico. He does not sit on its board and cannot vote his shares, under these agreements.

Several analysts suggested that sale of the whole company, or even of Buffett's stake, would command a premium over the present market price because Geico is an established, profitable player in the market. For a company like Axa-Midi, it would provide an immediate nationwide presence.

"I think Warren Buffett is coming to believe that these {auto insurance} companies cannot operate satisfactorily and cannot make a satisfactory return for shareholders in this market," said Michael Smith, an analyst with Shearson Lehman Hutton Inc.

"That being the case, he may feel he wishes to deploy his resources elsewhere so he can make a better return," Smith said.