Verisk Analytics, Inc. — 2024 Q1

Thank you, Andrew. I've assessed the strength of our client as being very solid. And I would say in contrast to, I think, where we were 2 or 3 years ago, you are clearly seeing -- across the industry, and if you follow the quarterly releases of the property and casualty insurers, you are seeing very strong premium growth, which is a reflection of that hard market and the improving profitability as reflected in stronger combined ratios for the business.

Yes. Thank you, Jeff. I think that's an accurate observation. I think we are beginning to see some early signs that marketing is picking up. Within the industry, there is a lag impact. And so we will continue to look forward to hopefully seeing some of that translate into our business. That is a small business, so it may not be discernible overall within our business. But we do think that's a positive trend.

Thank you, Ashish. Let me take the first question since you're kind of referencing Investor Day, and I'll let Elizabeth add to this if she feels necessary. But what we outlined at Investor Day was incorporated into our guidance in terms of where we felt we could achieve incremental revenue growth.

Yes, I agree with Lee there. And I think in terms of examples of new products gaining traction, you've heard us talk about them on some of the recent calls, the Discovery Navigator product in claims, which is one that does -- now uses GenAI as well. We've talked about image forensics in the antifraud space and -- as well as a variety of innovations that we talked about in this call on our core products, including Core Lines Reimagine and the Next Generation Models in extreme events.

Yes. And if I -- thanks, Elizabeth, for kicking off the first part of the question. We talked with Jeff's question on some of the headwinds we're facing on marketing, but I would also say, in terms of new product adoption in our life insurance offering, we are seeing very strong uptake in that category with the applicability of the low no-code solutions to the life business within our specialty business solutions area where we have seen very strong adoption on some -- from some major industry players onto the white space platform, which is a new product that we are growing.

This is Tom Roesch on for Andrew. I wanted to ask about the pricing environment. It sounds like insurers are starting off the year on good footing. So I was wondering just kind of how the pricing environment, how you think about it this year relative to last year? And then also as it relates to those contracts that are tied to prior year net premium, just kind of how you think about those, too, this year.

Sure.

Thanks, Tom, for the question. Yes, it's good context. You heard Lee talk about the industry and the relative strength in the industry as well as the hard market that we are in. So as he highlighted for our contracts that have a tie to net written premium growth, we're seeing generally positive tailwinds in line -- I would say, in line overall with last year.

Yes. And Tom, I'd say that on that, we are -- we see a receptive environment because I think the industry is doing well. We're seeing recognition of the value of the products. But I would also mention that I think with some of our efforts to improve our go-to-market strategy, we're seeing a more effective sales organization that is contributing to good outcomes on the pricing side as well.

Certainly. Thank you, Toni. And the short answer is, and first, it was a small financial impact for us. The simple answer is that the entities that were providing that data to us decided to discontinue collecting that data. And so there was really not sufficient analytical value in that without the data that was being provided. And I think it's fair to assume that it's a function of some of the media attention to collect connected car data. So that really was the simple reason.

Yes. Faiza, thanks for the question. In terms of quarterly variations, there can always be minor puts and takes as things move from quarter-to-quarter, but nothing that we see at this point that would indicate significant quarterly changes.

Yes. And Faiza, maybe to add a little additional color, and we use this as an opportunity to say we talked about the environment. We've talked about the benefit of engaging as partners with our leading clients, which I think has helped us on that front, probably most primarily at a senior level to help our clients understand the value that we are providing to them across the enterprise.

Yes. Thanks for the question, Jeff. We don't break out sort of specific areas of investment by element. I think on the last quarter call, I mentioned those as some of the top areas for investment this year. And I think our investment in those areas is pretty much in line with our expectation for the year and embedded in the margin that you're seeing and the guidance for the full year.

Yes. Happy to cover that, Greg. Thanks. You are right that we do see headwinds on the transactional revenue side largely because the comps from last year have been so strong. You saw double-digit transactional growth for about a 1-year period last year.

Thank you, Manav. I think I heard that. I think the focus is on capital allocation and how does the outlook for small- and medium-sized M&A opportunities. I would describe them as they are out there, that I think that valuations remain really high for those entities.

Thanks -- yes. Thanks, Surinder. I can't break it out numerically. I would say that there are -- we've talked about the various projects that we are investing in now. Those are finite projects, which we will finish, and we've talked about the time lines for each.

And I think what I would add to that, Surinder, is, I think, the short answer is that the ability for us to integrate generative AI technology as an expansion of a new form of artificial intelligence within the existing products is something that our businesses are effectively absorbing into their current financial models and thinking about where they're deploying capital within their own businesses.

Yes. Thank you, Russell. So first on the Next Generation Models, I think that this is a major upgrade in terms of the sophistication of the models, allowing our clients to better estimate and quantify the uncertainty of their losses across the industry.

Thank you, Alex. It's a great question. So I think the first question relates to the overall growth. And I think when we look at the businesses on an organic basis, I think we are generally viewed, as we've spoken before, and we continue to believe that they have and will continue to drive double-digit growth within the -- within our business. And so I think that's kind of the baseline. We continue to see opportunity on that front.

Yes. Thanks, Heather. Yes, it is a strong market. I think it's -- what's driving it is both the need -- the increased catastrophe risk and the need for diversifying the set of investors in that space of risk. And for new investors, it's their own desire to diversify and find uncorrelated areas of investment. So that's been driving strength in that cat bond market.

And Heather, the -- what we are seeing that is driving that is both demand from investors for noncorrelated returns and interest, particularly in this hard market from an insurance standpoint, what are perceived to be more attractive returns. We're also seeing that in terms of more capital being attracted into excess and surplus lines and reinsurance generally.

Yes. Thanks, George. We don't forecast subscription growth for you. We do -- we obviously give our medium-term target range for total revenue growth. That's 6% to 8% organic constant currency, and subscription has historically been 80% of that. So that's kind of what we can say numerally.

Thanks, Greg, and thanks for coming back for seconds. We appreciate it. So I think that we are seeing -- I would first challenge that we are seeing kind of continued pressures on the industry, both in terms of ongoing inflation as well as increased risk that they are experiencing, that seemingly is continuing to support premium growth as well as kind of natural expansion in coverage for the industry.