Verisk Analytics (VRSK) Q3 Earnings call transcript Oct 30, 2024

Verisk's third-quarter earnings call for 2024 revealed a strong financial performance, driven by a 9.1% increase in subscription revenues and a 7% overall revenue growth. This growth was largely attributed to the company's strategic engagement with clients and the strength of its data and solutions, which have been enhanced by proprietary data sets and a focus on innovation.

Strategic Dialogue with Clients and Industry Engagement

Verisk's strategic dialogue with clients has been a significant factor in its growth. The company has seen improving financial metrics in the insurance industry, with direct written premiums expected to grow by 9.5% and underwriting profits improving. Verisk's client engagement efforts have been bolstered by its participation in key industry events, including the Rendez-Vous de Septembre in Monte Carlo, the CIAB Insurance Leadership Conference, and its own Verisk Insurance Conference in London. These events have allowed Verisk to understand the enterprise needs of its clients, strengthen relationships, and identify opportunities for collaboration.

Data and Solutions: The Power of Proprietary Data and Innovation

Verisk's data and solutions have been a key driver of its growth. The company's most significant initiative, Core Lines Reimagine, is aimed at providing clients with proprietary content more digitally and integrating it more seamlessly into their workflows. This has led to the release of the Future Reforms initiative, which allows insurers to save time analyzing forms filings and has received positive feedback from clients. Verisk's Executive Insights reports have also been well-received, providing clients with benchmarking analyses and deep insights into the broader market. The integration of Verisk's claims data into Opta's enhanced peril score for the Canadian market is another example of the company's innovation, driving more insightful signals for clients and leading to reinvigorated sales growth.

Financial Highlights

Verisk's financial performance in Q3 2024 was robust, with a consolidated revenue of $725 million, up 7% from the previous year. Income from continuing operations was $220 million, up 17.4% from the prior year, driven by strong operating performance and a lower effective tax rate. The company's adjusted EBITDA growth was 7.2% in the quarter, with a total adjusted EBITDA margin of 55.2%, up 120 basis points from the reported results in the prior year. Verisk also returned $455 million to shareholders through repurchases and dividends, demonstrating its commitment to capital allocation.

Looking Ahead: Momentum for 2025

Looking ahead to 2025, Verisk's momentum is expected to continue, driven by the tailwinds of strong premium growth and the subscription momentum. However, there are also potential headwinds, including the third year of elevated premium growth, the focus on profitability by insurance companies, and the normalization of attrition. Verisk is well-positioned to navigate these challenges, with a strong pipeline of new initiatives and a focus on innovation and client engagement.

Conclusion

Verisk's Q3 2024 earnings call revealed a company in a strong financial position, with a clear strategic focus on client engagement and innovation. The company's data and solutions, built on proprietary data sets, have been a significant driver of its growth, and its strategic dialogue with clients has positioned it well for the future. With a robust financial performance and a clear strategic direction, Verisk is well-positioned for continued success in the insurance industry.