Verisk Analytics, Inc. · NASDAQ:VRSK
Verisk Analytics — Investor Day (December 2018)
121 slides from Verisk Analytics's investor day presentation, Dec 6, 2018
Slide 1: Investor Day
Investor Day December 6, 2018 © 2018 Verisk Analytics, Inc. All rights reserved. 1
Slide 2: Forward Looking Statements, Safe Harbor, and Non-GAAP Financial Measures
Investor Day 2018 Forward Looking Statements, Safe Harbor, and Non-GAAP Financial Measures Forward-Looking Statements This release contains forward-looking statements. These statements relate to future events or to future financial performance and involve known and unknown risks, uncertainties, and
Slide 3: CEO Perspective
CEO Perspective Scott Stephenson Chairman, President, and Chief Executive Officer © 2018 Verisk Analytics, Inc. All rights reserved. 3
Slide 4: CEO Perspective: Growth Initiatives
CEO Perspective Core Growth >7% Initiatives Core Business International Organic Growth Enterprise Ventures Geomni PowerAdvocate Subsurface+ + 4 + 5 Technology Focus Mainframe Cloud First Widespread Tokenization WoodMac 2.0 Operational Excellence ML Global Talent Optimization Lean Six Sigma Machine L
Slide 5: Embracing Disruption: Playbook
CEO Perspective Embracing Disruption: Playbook • No universally effective response to disruptive Stay Close to threats… Customers Monitor Continually • …but there are ways to increase the likelihood Emerging Refine of success Companies Strategy • No shortcuts: must concurrently follow all steps • Di
Slide 6: Award Winning Innovation
CEO Perspective Award Winning Innovation © 2018 Verisk Analytics, Inc. All rights reserved. 6
Slide 7: Evaluation of Potential White Space: Prioritization Filters
CEO Perspective Evaluation of Potential White Space: Prioritization Filters © 2018 Verisk Analytics, Inc. All rights reserved. 7
Slide 8: Conquering White Space with Big Bold Ideas
CEO Perspective Conquering White Space with Big Bold Ideas Big Bold Ideas Cyber • Cyber risk model and insurance solutions • Annual Big Bold Ideas competition • Potential new businesses Geomni – Enterprise • Leveraging big data across multiple business units – Business unit • Allocate capital to mos
Slide 9: Verisk Partnership Criteria
CEO Perspective Verisk Partnership Criteria Criteria Complementary Partnership Culture / Data Assets Successful Track Record Complementary Embedded in Capabilities Customer Workflows Connectivity to Global Footprint Verisk Target Industries © 2018 Verisk Analytics, Inc. All rights reserved. 9
Slide 10: International Expansion: Key Principles
CEO Perspective International Expansion: Key Principles 1 Look for attractive markets 2 Establish local Verisk identity and prioritize near-term wins 3 Build a path to scale and market leadership 4 Adopt new business models and work with local partners © 2018 Verisk Analytics, Inc. All rights reserv
Slide 11: Our Talent Today: A Foundation for Growth and Evolution
CEO Perspective Our Talent Today: A Foundation for Growth and Evolution Headcount (As of September 30) 17 9,000 INCREASE IN HIRING ACTIVITY 7,792 8,000 12 months ending 7,000 6,845 % Sep 30, 2017: 1,051 new hires Sep 30, 2018: 1,225 new hires 6,000 21 5,000 4,350 3,809 ACQUISITIONS 4,000 3,000 2017:
Slide 12: Talent Strategy
CEO Perspective Our Framework for Talent Strategy and Key Priorities Talent Strategy Attract – Grow – Retain Talent Leadership Learning Diversity Acquisition Employee Experience & Engagement and Measurement Employee value proposition, pulse surveys, Ambassador network, employee communication platfor
Slide 13: Voice of the Customer
CEO Perspective Voice of the Customer Verisk as the platform How can we improve integrating tech from the quality and speed others where needed of our decisions? How can we make Help us become better our processes at large-scale more efficient? data analytics © 2018 Verisk Analytics, Inc. All rights
Slide 14: Strategy Summary
CEO Perspective Strategy Summary Across All Verticals 1 Develop new analytics solutions 2 Develop or acquire new data sets 3 Find new ways to serve our clients 4 Observe and build our new market innovations 5 Partner with complementary data provider or technology platform © 2018 Verisk Analytics, In
Slide 15: Operational Excellence
Operational Excellence Mark Anquillare Executive Vice President and Chief Operating Officer © 2018 Verisk Analytics, Inc. All rights reserved. 15
Slide 16: Operational Excellence
Operational Excellence Operational Excellence Lean Global Machine Cloud Six Talent Learning and Migration Sigma Optimization Automation © 2018 Verisk Analytics, Inc. All rights reserved. 16
Slide 17: How Does Lean Six Sigma Work and Why Is It Important to Verisk?
Operational Excellence How Does Lean Six Sigma Work and Why Is It Important to Verisk? Lean Six Sigma LEAN SIX SIGMA Lean Six SPEED QUALITY Sigma Waste Variation Together, the Lean Six Sigma methodology: • Drives a continuous improvement culture • Measurably improves processes • Meets the critical c
Slide 18: Lean Six Sigma: Driving a Culture of Continuous Improvement
Operational Excellence Lean Six Sigma: Driving a Culture of Continuous Improvement Lean Six Sigma Establishment of a continuous improvement culture, robust training, Vision and professional project facilitation leading to improved processes, decreased cycle times, rapid productivity gains, and enhan
Slide 19: Lean Six Sigma Examples
Operational Excellence Lean Six Sigma Examples Lean Six Sigma Field Representative Improve Testing Code Productivity Complete Cycle • Business unit: ISO • Dept: IT Development • Project duration: 11 months • Project duration: 7 months • Annual project benefit: $1.1M • Annual project benefit: $0.3M •
Slide 20: Enhancing Our Global Footprint through Global Talent Optimization
Operational Excellence Enhancing Our Global Footprint through Global Talent Optimization Global Talent Optimization Our goals • Grow international revenue • Establish a select few locations with critical mass (>15 employees) outside the U.S. to locate employees • Attract talent and save costs • Supp
Slide 21: Enhancing Global Footprint through Global Talent Optimization
Operational Excellence Enhancing Global Footprint through Global Talent Optimization Strategy and Vision Global Talent Optimization Offshore Growth Offshore Outsource (over 5 years) Analytic talent Locations in India Data management 1 (data science, actuarial) and low-cost Europe type tasks +280 Tec
Slide 22: Machine Learning and Automation
Operational Excellence Machine Learning and Automation ML Artificial intelligence (AI): successfully perform any human intellectual task Machine Learning and Automation Machine learning (ML): ability of a machine to solve problems by automatically finding patterns, rules, and strategies from histori
Slide 23: Machine Learning and Automation
Operational Excellence Machine Learning and Automation ML Machine Learning and Automation 1 Proliferation of machine learning and automation 2 Investment in research to build market impact solutions with custom AI 3 Pairing ML and RPA for intelligent automation at Verisk Customer Use Cases Internal
Slide 24: Verisk AI Chatbot link
https://www.verisk.com/insurance/conferences/verisk-ai-chatbot/ © 2018 Verisk Analytics, Inc. All rights reserved. 24
Slide 25: Machine Learning and Automation
Operational Excellence Machine Learning and Automation ML Machine Learning and Automation 1 Proliferation of machine learning and automation 2 Investment in research to build market impact solutions with custom AI 3 Pairing ML and RPA for intelligent automation at Verisk Customer Use Cases Internal
Slide 26: Insurance
Insurance © 2018 Verisk Analytics, Inc. All rights reserved. 26
Slide 27: U.S. Property/Casualty Market Outlook
Insurance U.S. Property/Casualty Market Outlook U.S. P&C Premiums (2017) • P&C market showing premium growth of 4.7% • Personal lines continue to show stronger growth at 6.4% • Commercial lines growth is 2.9%, pressured $627B partially by declines in fire and allied lines • Reinsurance market challe
Slide 28: Vision for Insurance Industry
Insurance Vision for Insurance Industry Eliminate the Friction and Cost in the Insurance Workflow Industry Disruptive Innovation Stockbroker E*Trade (online trading) Travel Agent Expedia (travel booking) Insurance • Pareto Principle: Focus on the 20% most complex underwriting risks and large claims
Slide 29: Vision for Insurance Industry: The Flow of the Insurance Policy
Insurance Vision for Insurance Industry Themes: • Automation The “Flow” of the Insurance Policy • Digital Experience (Race to zero for 80% of commercial policies) • Big Data Analytics Risk Transfer Agents / Brokers / Underwriting Quote / Bind Insurer / Reinsurer / Direct to Consumer Capital Markets
Slide 30: Vision for Insurance Industry: Right Touch Claims Processing
Insurance Vision for Insurance Industry Themes: • Automation “Right Touch” Claims Processing • Digital Experience (80% of claims adjudicated no-touch or light-touch) • Big Data Analytics First Notice of Loss Loss Assessment and Claims Payment Subrogation (FNOL) Repair Estimate • Automated and • Auto
Slide 31: Industry-Leading Data Analytics and Insights
Insurance Industry-Leading Data Analytics and Insights Underwriting & Rating Solutions Claims Solutions Industry-standard insurance programs Integrated analytics solutions for improving Property-specific underwriting & rating info claims outcomes and fighting fraud at every Underwriting solutions st
Slide 32: Verisk Insurance Solutions Vision
Insurance Verisk Insurance Solutions Vision ISO Claims Be our customers’ preferred partner Commercial Lines Personal Lines Claims Analytics Xactware to accelerate innovation, excellence, and profitable growth through data analytics and insights Insurance Solutions Geomni AIR Objectives • Continuousl
Slide 33: Insurance Objectives and Growth Initiatives
Insurance VIS >7% Objectives Employees J Customers J Organic Growth Major Growth Initiatives International Remote Imagery IoT/Telematics Technology Focus Cloud First Data Security Sequel Integration Operational Excellence ML Global Talent Optimization Lean Six Sigma Machine Learning and Automation I
Slide 34: International Expansion: Executing on Our Plan
Insurance International Expansion: Executing on Our Plan International Implementing Global Significant Progress Strategic Focus Talent Optimization • Strong revenue growth and • Adding 400 team members in • Follow global insurers with ~1,000 team members global locations over 5 years operations in m
Slide 35: International Expansion: Rulebook Solution Set
Insurance International Expansion: Executing on Our Plan Rulebook: Providing Complete Solution Set to Customers Distribution Quote & Buy Administration MI Analytics Strategic Rationale Origin Portal & Origin Eclipse Limited • Powerful combination of Sequel workflow Workbench / Workflow Product Workf
Slide 36: Verisk Country Scoring: Insurance Vertical
Insurance Verisk Country Scoring: Insurance Vertical International Market BU Country Total Attractiveness Readiness UK/Ireland • Priority countries are English- Canada speaking markets with large written premiums and attractive customer Germany and regulatory environment. France • Well positioned in
Slide 37: Remote Imagery
Insurance Remote Imagery Remote Imagery Provides location-based property-related analytics used to: • Assess property and liability risk • Perform replacement cost valuations • Analyze property changes • Automate damage repair estimates ⎻ 2x adjuster productivity • Assess post-catastrophe damage and
Slide 38: IoT/Telematics
Insurance IoT/Telematics Verisk Data ExchangeTM – Connected Cars, Connected Homes, Connected Insurers IoT/Telematics Partnered with Growing Telemetry data Exchange drives industry leaders rapidly is highly predictive life cycle efficiency GM, Honda, Hyundai, Largest U.S. auto telematics A 6X differe
Slide 39: Verisk Insurance Solutions: Voice of the Customer
Insurance Verisk Insurance Solutions: Voice of the Customer Growth Opportunities: Cross-Sell 2013–2018 Average Number of Products Across 26 Product Categories 18.3 2013 2016 2018 16.0 16.2 13.9 11.6 10.7 10.3 8.5 6.6 5.7 5.0 3.9 1-10 11-25 26-100 101-500 Top Customers Based on Verisk Revenue © 2018
Slide 40: Competitive Scoreboard for 2018
Insurance Competitive Scoreboard for 2018 Entrenched Incumbent Verisk Incumbent No Prior Vended Solution Wins Losses Wins Losses Wins Losses Underwriting 30 27 7 1 23 7 & Rating Total Claims Total 13 4 5 2 8 4 InsurTech Start-ups: Engaged with 55 start-ups on 108 opportunities • Won 49 to date (3 wi
Slide 41: Insurance: Total Addressable Market (TAM)
Insurance Insurance: Total Addressable Market (TAM) $ in billion Underwriting & Rating (U.S.) $3.6 Claims (U.S.) $2.7 International $2.5 Worldwide Total TAM* ~$9.0 *Excludes TAM for construction, remote imagery, and other opportunities outside insurance © 2018 Verisk Analytics, Inc. All rights reser
Slide 42: Insurance: Underwriting & Rating
Insurance: Underwriting & Rating Neil Spector President of ISO © 2018 Verisk Analytics, Inc. All rights reserved. 42
Slide 43: Underwriting & Rating Strategy Statement
Insurance Underwriting & Rating Strategy Statement Our strategy is to drive transformation in the global property/casualty insurance industry. We strive to help customers improve operational efficiency and leverage n+1 data and advanced analytics to improve their profitability and growth. Our produc
Slide 44: Major Growth Initiatives in Underwriting & Rating
Insurance: Underwriting & Rating Major Growth Initiatives in Underwriting & Rating ISO LightSpeed Digital Engagement International AIR Cyber Global (Re)insurers © 2018 Verisk Analytics, Inc. All rights reserved. 44
Slide 45: LightSpeed
Insurance: Underwriting & Rating LightSpeed LightSpeed • Rapidly integrate required data and analytics into underwriting process at point of quote • Improve end-user experience: prefill to deliver quote/bind • Solutions for auto, property, and small commercial • 12 wins, including top 10 insurers an
Slide 46: Major Initiatives: Digital Engagement
Insurance: Underwriting & Rating Major Initiatives: Digital Engagement Digital Engagement Underwriting Actuarial Portal Growth and Workstation Modernized delivery of Profitability Analytics actuarial products Interactive workflow tool integrating multiple ISO platforms Telematics ISOnet 2.0 Statisti
Slide 47: International Presence
Insurance: Underwriting & Rating International Presence United Kingdom International AIR Lloyd’s Verisk Risk Rating (VRR) Business Insight Ireland GeoInfo VISI Global Property Germany Japan Canada AIR AIR AIR International Participation Spain China VRR VRR Hong Kong AIR Growth Strategy and Key Initi
Slide 48: Major Growth Initiatives for Extreme Event Modeling
Insurance: Underwriting & Rating Major Growth Initiatives for Extreme Event Modeling ISO LightSpeed Digital Engagement IoT/Telematics AIR Cyber Global (Re)insurers © 2018 Verisk Analytics, Inc. All rights reserved. 48
Slide 49: Cyber
Insurance: Underwriting & Rating Cyber Cyber Insurance “Out of the Box” Program: Full suite of modular coverage and primary and excess rating and underwriting options to help insurers grow profitably in the cyber space • Forms, Rules, and Loss Costs – An array of coverage options and extensive infor
Slide 50: Global (Re)insurers
Insurance: Underwriting & Rating Global (Re)insurers Global (Re)insurers • Become preferred extreme event modeler among global (re)insurers • Natively host all AIR products on Arch the cloud • Embed in global (re)insurer workflows through APIs and Recent wins with web services global (re)insurers St
Slide 51: Operational Excellence Drives Margin Leverage
Insurance: Underwriting & Rating Operational Excellence Drives Margin Leverage Lean Global Leverage Six Talent Technology Sigma Optimization • Projects: • Deploy 200 staff offshore • ML/AI accelerates product time ‒ PPC processing redundancy (over 5 years) to market for ISO Risk Analyzer ‒ India Com
Slide 52: Insurance: Claims
Insurance: Claims Mike Fulton President, Xactware Solutions © 2018 Verisk Analytics, Inc. All rights reserved. 52
Slide 53: VIS Claims Strategy Statement
Insurance VIS Claims Strategy Statement Revolutionize how the property/casualty claims function is managed, extend our core capabilities into global insurance and adjacent noninsurance markets, and be recognized by our customers as thought leaders who help them create their future © 2018 Verisk Anal
Slide 54: Major Growth Initiatives by Business Unit
Insurance: Claims Major Growth Initiatives by Business Unit VIS Claims “Right Touch” Adjusting Subrogation Noninsurance Construction International © 2018 Verisk Analytics, Inc. All rights reserved. 54
Slide 55: Right Touch Adjusting
Insurance: Claims “Right Touch” Adjusting High Touch Low Touch “Right Touch” No Touch Adjusting Liability Liability Assignment Assignment Fraud Fraud Valuation/ Valuation/ Detection Detection Estimate Estimate Claim Claim Details Details Subro/ Subro/ Collection Collection Salvage Salvage Claim Clai
Slide 56: Subrogation Solutions
Insurance: Claims Subrogation Solutions Subrogation Develop and launch a suite of solutions to reinvent the current Vision property/casualty subrogation process • Respond to customer need for greater automation and efficiencies Opportunity • Leverage Validus’s UK subro platform for U.S. market to au
Slide 57: Extending Beyond Insurance
Insurance: Claims Extending Beyond Insurance Noninsurance Construction XactRemodel Remodeling Design and Estimation • Entry into the residential remodeling market • Easy-to-use mobile & online platform for remodeling industry • Facilitates creation of photorealistic designs EstimateON / RepairWise S
Slide 58: International Presence
Insurance: Claims International Presence International United Kingdom Canada France Germany Spain Israel Growth Strategy and Key Initiatives Europe • Pursue organic/M&A growth in Germany and France • Fully integrate UK/EU claims organization Australia Canada • Leverage Aviva UK relationship for subr
Slide 59: Technology Investments
Insurance: Claims Technology Investments Visualized ISO ClaimSearch platform Xactware NextGen (X1) platform © 2018 Verisk Analytics, Inc. All rights reserved. 59
Slide 60: Operational Excellence Drives Margin Leverage
Insurance: Claims Operational Excellence Drives Margin Leverage Lean Global Leverage Six Talent Technology Sigma Optimization • Automation of Medicare • Deploy staff offshore • Benefits of cloud computing Set-Aside (MSA) process ‒ India • Use of graph database in repair • Xactware problem management
Slide 61: Insurance Q&A: Deep Domain Expertise
Insurance: Claims Insurance Q&A Verisk Insurance Solutions: Deep Domain Expertise Executive Role Tenure (years) Mark Anquillare Chief Operating Officer, Verisk Analytics 26 Neil Spector President, ISO (Underwriting & Rating) 16 Bill Churney President, AIR Worldwide (Underwriting & Rating) 16 Mike Fu
Slide 62: Insurance Q&A
Insurance Q&A © 2018 Verisk Analytics, Inc. All rights reserved. 62
Slide 63: Break
Break © 2018 Verisk Analytics, Inc. All rights reserved. 63
Slide 64: Energy and Specialized Markets
Energy and Specialized Markets Neal Anderson President, Wood Mackenzie © 2018 Verisk Analytics, Inc. All rights reserved. 64
Slide 65: Energy Strategy Statement
Energy and Specialized Markets Energy Strategy Statement The world’s most trusted partner for energy and natural resources solutions… Powering the best decisions, leading our industry © 2018 Verisk Analytics, Inc. All rights reserved. 65
Slide 66: Energy and Specialized Markets
Energy and Specialized Markets Energy and Specialized Markets Unique insight on the world’s energy resources and intelligent compliance solutions Energy Specialized Markets Energy and natural resources solutions across Improving our understanding of the global Research & Analytics and Advisory Servi
Slide 67: Underlying Industry Spend Is Returning
Energy and Specialized Markets Underlying Industry Spend Is Returning Cash margins of O&G companies highest since 2011 – What to do with it? Cash margin (after all costs, predistributions) 16 Cash margin Brent 120 14 Cash Margin (US$/boe) 100 12 Brent Oil Price (US$/bbl) 80 10 8 60 6 40 4 20 2 0 0 2
Slide 68: Voice of the Customer
Energy and Specialized Markets Voice of the Customer In 2018, we’ve implemented a quarterly program to deepen our understanding of customers’ perceptions, satisfaction, and priorities “ High-skilled consultants and “ Easy to use, offers great information “ Good support for helping to reach our “ Rel
Slide 69: Energy and Specialized Markets Objectives and Initiatives
Energy and Specialized Markets Objectives >7% Employees J Customers J Organic Growth Major Growth Initiatives WM 2.0 (Lens) Subsurface Power and Renewables Chemicals Analytics Lab Technology Platform Upgrades Cloud First Data Security WM 2.0 (Lens) Operational Excellence ML Global Talent Optimizatio
Slide 70: WoodMac Core: Customer Agenda Pivoting from Cost Reduction to Growth
Energy and Specialized Markets WoodMac Core: Customer Agenda Pivoting from Cost Reduction to Growth Customers entering planning season on the back of strong performance — Sweet spot for WoodMac product suite supporting growth decisions Current Performance1 Industry Conditions Implications 140% incre
Slide 71: Data Strategy and Lens Analytical Platform
Energy and Specialized Markets Data Strategy and Lens Analytical Platform: Leveraging Verisk’s Capabilities Our integrated platform is a cloud-native solution that will traverse the energy value chain to provide answers to customers’ most valuable questions Integrated along the value chain Dynamic r
Slide 72: Wood Mackenzie: Subsurface and Chemicals
Energy and Specialized Markets Wood Mackenzie: Subsurface and Chemicals Subsurface Chemicals ü Extending our commercial insights reputation into the subsurface Chemicals forecast to make up largest proportion of oil demand growth for next two ü Focused on adding differential content that makes valua
Slide 73: Wood Mackenzie: Power & Renewables and Analytics Lab
Energy and Specialized Markets Wood Mackenzie: Power & Renewables and Analytics Lab Power & Renewables Analytics Lab ü 2018 Successes ü Path to Commercialization • Brand unification with integrated P&R research portal and new • Developed predictive modeling case studies data hub • Attracted customer
Slide 74: PowerAdvocate and Wood Mackenzie: Powerful Combination
Energy and Specialized Markets PowerAdvocate and Wood Mackenzie: Powerful Combination • Provider of spend and cost intelligence to utility and energy customers driving ongoing P&L savings 1,200,000+ 300,000,000+ Energy Supply Chain • Optimizes procurement Participants $3,000,000,000,000 Transactions
Slide 75: Operational Excellence Drives Margin Leverage
Energy and Specialized Markets Operational Excellence Drives Margin Leverage Lean Global Leverage Six Talent Technology Sigma Optimization • Redesigning all core processes • Leveraging Verisk initiatives • New data and Lens and systems, employing LEAN in talent and labor arbitrage analytical platfor
Slide 76: Energy and Specialized Markets Q&A
Energy and Specialized Markets Q&A © 2018 Verisk Analytics, Inc. All rights reserved. 76
Slide 77: Financial Services
Financial Services Lisa Bonalle Hannan President, Verisk Financial Services © 2018 Verisk Analytics, Inc. All rights reserved. 77
Slide 78: Financial Services Strategy Statement
Financial Services Financial Services Strategy Statement Vision Leverage proprietary data assets, deep analytic and domain expertise, and cutting- edge technology to help our clients solve their most challenging problems Strategy We are relentless in our pursuit of value-added data and analytic solu
Slide 79: Verisk Financial Services
Financial Services Verisk Financial Services Powerful information, analytics, and data management solutions Portfolio Analytics, Regulatory Data Management, and Marketing Credit Risk Management, Fraud, and Abuse Solutions for financial institutions, including competitive benchmarking, decisioning Ri
Slide 80: Verisk Financial Solutions Meet Key Industry Needs
Financial Services Verisk Financial Solutions Meet Key Industry Needs Portfolio Credit Risk, Management Fraud & Abuse (30% Revenue) (30% Revenue) Portfolio Credit Risk, • Industry Benchmarking Management • Credit Risk & Fraud Scores Fraud & Abuse • Portfolio Scenario Planning • Bankruptcy Management
Slide 81: Verisk Financial Industry Trends
Financial Services Verisk Financial Industry Trends Portfolio Management Credit Risk, Fraud & Abuse • Cards borrowing highest level since 2008 • Payments fraud migrating to digital channels • Expansion of new payments forms • Loan losses climbing in key markets • New, non-bank lending entrants on th
Slide 82: Voice of the Customer
Financial Services Voice of the Customer Increasing customer analytics investments, shifting regulatory requirements, new market entrants, and the demand for integration of our solutions are driving our strategic growth agenda Customer Feedback Key Learnings Our Response • “We want access to the dat
Slide 83: Financial Services Objectives and Initiatives
Financial Services VFS >7% Objectives Employees J Customers J Organic Growth Major Growth Initiatives Argus Fraud Consortium Supervisory Platform Marketview Expansion Benchmarking 2020 Technology Platform Upgrades Cloud First Data Security G2 Single Platform Operational Excellence ML Global Talent O
Slide 84: Argus Fraud Consortium
Financial Services Argus Fraud Consortium Argus Fraud Consortium What We’re Building Problems Being Solved 1 2 3 Lack of total Fraud consortia AI and machine Country-specific visibility and exist only in a learning are Underlying framework transparency few markets with being used for solutions sourc
Slide 85: VFS Global Supervisory Platform for Regulators and Institutions
Financial Services VFS Global Supervisory Platform for Regulators and Institutions Supervisory Platform What We’re Building Problems Being Solved 1 2 3 A common platform Global and local New data VFS existing providing collaboration regulatory management relationships with A “clearinghouse utility”
Slide 86: Operational Excellence Drives Margin Leverage
Financial Services Operational Excellence Drives Margin Leverage Lean Global Leverage Six Talent Technology Sigma Optimization • 5-year program to move core • Expanded leverage of Fintellix • Evaluation and overhaul of processes from internal hardware acquisition with FTEs to be offshored core bench
Slide 87: Financial Services Q&A
Financial Services Q&A © 2018 Verisk Analytics, Inc. All rights reserved. 87
Slide 88: Break
Break © 2018 Verisk Analytics, Inc. All rights reserved. 88
Slide 89: Cloud Technology and Advanced Analytics
Cloud Technology and Advanced Analytics Nick Daffan Executive Vice President and Chief Information Officer © 2018 Verisk Analytics, Inc. All rights reserved. 89
Slide 90: Verisk Cloud First
Cloud Technology and Advanced Analytics “Glocal” Shared Model Scaling Verisk and Business Units Together Cloud Contribution Model Enablement & The Power of an ALIGNED Operations Architecture Whole Team e.g. Serverless Verisk Financial Management Cloud Frameworks First e.g. Cloud Native Best of the B
Slide 91: Advantages of the Cloud
Cloud Technology and Advanced Analytics Advantages of the Cloud 1,200 AWS Pace of Innovation: New Capabilities Daily Innovation 1,017 1,000 The New “Reality” 800 722 Resilience 600 Agility and 516 Scalability 400 Financial 280 200 159 Environmentally 82 61 Responsible — 24 48 It’s Green! 0 2008 2009
Slide 92: Cloud @ Verisk
Cloud Technology and Advanced Analytics Cloud @ Verisk Verisk AWS regions available AWS regions future AWS regions © 2018 Verisk Analytics, Inc. All rights reserved. 92
Slide 93: AWS Migration Business Case Review
Cloud Technology and Advanced Analytics AWS Migration Business Case Review Financial Summary ü Xactware Australia ü Verisk Data Exchange Telematics Platform ü Geomni ü IntelliCorp Five-year cash flow (CapEx/OpEx): Category 5-Year Net Save • On-premise – $57M Infrastructure $ 13 • AWS – $22M Hardware
Slide 94: Geomni Overview
Cloud Technology and Advanced Analytics Geomni Overview Initial on-premise environment Server Usage Comparison • 12 GPU servers • 3 PBs of storage • Limited capacity – challenged to process incoming images in timely manner • Challenged to address large ad hoc customer requests On-premise environment
Slide 95: AWS Server Offerings
Cloud Technology and Advanced Analytics AWS Server Offerings Amazon Elastic Compute Cloud (Amazon EC2) On Reserved Dedicated Spot Demand Instances (RIs) Hosts Instances • Virtual servers that you • Reserved server capacity • Physical EC2 server • Amazon EC2 Spot Instances pay for per hour used for e
Slide 96: Serverless Overview
Cloud Technology and Advanced Analytics Serverless Overview AWS Lambda • Run code without provisioning or managing servers • Pay only for the compute time consume; there is no charge when your code is not running • AWS Lambda is ideal for executing code in response to an event Benefits • No server t
Slide 97: Serverless: Pricing Example
Cloud Technology and Advanced Analytics Serverless: Pricing Example If you allocated 512MB of memory to your function, executed it 3 million times in one month, and it ran for 1 second each time, your charges would be calculated as follows: Monthly (512mb/1024gb) x 3,000,000 = 1,500,000 GB-s x $0.00
Slide 98: Migration Partnership: How It Happens
Migration Partnership: “How It Happens” Business Unit Team DevOps Business Unit Application Team Infrastructure as Code Software App-Specific Platform CI/CD Verisk Shared Capabilities Data Management DevOps Team App- VPC – Virtual Private Cloud, BU-Specific Big Data Publish, Specific (Hadoop) Discov
Slide 99: Why AI/ML?
Cloud Technology and Advanced Analytics Why AI/ML? • Fast progress on real-world problems • Proven benefits to business • Surpassing human performance on cognitive tasks • Fast adoption in progress Face recognition Source: https://medium.com/syncedreview/cust omer-success-with-machine-learning- goog
Slide 100: Analytics Innovation Process
Cloud Technology and Advanced Analytics Analytics Innovation Process BU Understand the Need customer context and product validation build into solution plans strategy Capabilities Product beyond New road map Verisk Market immediate needs possibilities engagement integration Analytics Co-opt customer
Slide 101: Case Study: Form Analytics
Cloud Technology and Advanced Analytics Case Study: Form Analytics BU product strategy: Mozart forms Leverage our leadership position in Mozart forms authoring forms to a deeper engagement in analytics platform environment customer workflows through analytics Forms consulting services Audacious goal
Slide 102: Financial Review and Capital Allocation
Financial Review and Capital Allocation Lee Shavel Executive Vice President and Chief Financial Officer © 2018 Verisk Analytics, Inc. All rights reserved. 102
Slide 103: Investor Outreach
Financial Review and Capital Allocation What have we accomplished? Investor Outreach Transparency Capital Discipline Compensation • Resegmentation • Framework • Tied to financial targets • Organic constant • Business reviews • Business unit alignment currency focus • Guidance policy • Segment analys
Slide 104: Focus Ahead
Financial Review and Capital Allocation Focus Ahead • Revenue and margin analysis • Capital management • Productivity • Strategy and business development • M&A process and integration © 2018 Verisk Analytics, Inc. All rights reserved. 104
Slide 105: Value Creation Strategy
Financial Review and Capital Allocation Value Creation Strategy Attractive + = Operating and Growing Value Cash Flow Returns on Creation Growth Capital • Organic revenue • Investment growth opportunities • Operating leverage (internal and external) • Expense discipline • Capital discipline © 2018 Ve
Slide 106: Capital Allocation Framework
Financial Review and Capital Allocation Capital Allocation Framework • Understand and optimize operating capital generation • Identify internal and external investment opportunities • Compare estimated returns on invested capital relative to risk-weighted WACC • Compare operating cash flow growth an
Slide 107: Revenue
Financial Review and Capital Allocation Revenue 11% CAGR 2,500 $2,145 M 55.0% 1,995 1,761 2,000 45.0% 1,431 1,500 1,324 1,185 35.0% 1,088 1,000 808 860 934 23.0% 748 25.0% 16.4% 11.5% 11.8% 13.3% 8.0% 8.6% 8.9% 8.1% 500 15.0% growth 6.4% 6.4% 0 5.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 108: Organic Constant Currency Revenue and EBITDA Growth and Drivers
Financial Review and Capital Allocation Organic Constant Currency Revenue and EBITDA Growth and Drivers OCC Revenue Growth OCC OCC (Adjusted) EBITDA Growth OCC OCC ex. storms, TSYS OCC ex. storms, TSYS 7.7% 7.3% 10.2% 6.3% 7.8% 5.8% 5.3% 5.9% 4.7% 5.8% 4.2% 2.5% 2015 2016 2017 3Q18 2015 2016 2017 3Q
Slide 109: Segment Trends
Financial Review and Capital Allocation Segment Trends Insurance Energy Financial OCC Revenue Growth (ex. storms and TSYS) OCC (Adjusted) EBITDA Growth (ex. storms and TSYS) 9.1% 15.2% 8.7% 8.4% 10.0% 10.7% 9.1% 7.1% 7.7% 7.9% 5.2% 6.8% 6.4% 5.0% 6.3% 4.2% 2.5% 1.6% 4.7% 3.1% 0.3% 4.4% 2.2% -7.8% -6
Slide 110: Adjusted EPS
Financial Review and Capital Allocation Adjusted EPS 17% CAGR 4.00 $3.74 180.0% 160.0% $3.11 3.50 3.00 $2.87 140.0% 120.0% $2.19 2.50 $1.98 100.0% 2.00 $1.78 $1.56 80.0% 1.50 $1.24 $1.02 60.0% $0.80 $0.91 30.8% 21.5% 25.5% 20.4% 1.00 13.9% 14.4% 40.0% 18.8% 12.2% 11.4% 10.7% 8.2% growth 0.50 20.0% 0
Slide 111: EPS and ROIC Growth Drivers
Financial Review and Capital Allocation EPS and ROIC Growth Drivers Adjusted EPS Adjusted EPS growth Return on Invested Capital (ROIC) 30.8% $4.00 8.2% 20.4% 29.5% 16.5% 50.0% $3.50 0.0% $3.00 12.8% 13.0% 13.3% -50.0% $2.50 $3.74 -100.0% $2.00 $1.50 $1.00 $2.87 $3.11 $2.37 $3.07 -150.0% -200.0% $0.5
Slide 112: ROIC Progression
Financial Review and Capital Allocation ROIC Progression Return on Invested Capital (ROIC) 15.1% 14.4% 13.3% 13.7% 12.8% 13.0% 2016 2017 2018 2019 2020 2021 Annualized at LT targets at LT targets at LT targets Recent M&A Impact on 2018 ROIC ROIC Discipline Initiatives • ROIC tracking by vertical and
Slide 113: Capital Expenditures
Financial Review and Capital Allocation Capital Expenditures ~$230 M CapEx as a % of revenue to come down 183 to mid-single-digit level over time 146 138 115 Internally Developed Software 105 53 43 Hardware/Third-Party Software 26 28 23 Non-IT 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 F
Slide 114: Cash Flow Utilization
Financial Review and Capital Allocation Cash Flow Utilization 2018 (in $ millions) 20151 20161,2 2017 3QYTD Net cash provided by operating activities $591M $656M $744M $761M Capital expenditures (139) (146) (184) (155) Free cash flow (FCF) 452 510 560 606 Acquisitions, net of cash acquired and gain
Slide 115: Reiterating Financial Targets
Financial Review and Capital Allocation Reiterating Financial Targets ORGANIC REVENUE GROWTH 7–8% on average, over time ORGANIC EBITDA GROWTH 100–200 bps faster than revenue growth ADJUSTED EPS INCREASE ROIC OVER TIME Double-digit growth © 2018 Verisk Analytics, Inc. All rights reserved. 115
Slide 116: Senior Management Q&A
Senior Management Q&A © 2018 Verisk Analytics, Inc. All rights reserved. 116
Slide 117: © 2018 Verisk Analytics, Inc. All rights reserved. 117
© 2018 Verisk Analytics, Inc. All rights reserved. 117
Slide 118: Appendix
Appendix © 2018 Verisk Analytics, Inc. All rights reserved. 118
Slide 119: Non-GAAP Reconciliations
Investor Day 2018 Non-GAAP Reconciliations Adjusted EBITDA1 ($ millions) 2017 2016 2015 2014 2013 Income from continuing operations 555.1 451.5 487.5 354.0 318.9 Interest expense 119.4 120.0 121.4 70.0 76.1 Provision for income taxes 135.9 202.2 196.6 208.5 184.8 Depreciation and amortization of fix
Slide 120: Non-GAAP Reconciliations
Investor Day 2018 Non-GAAP Reconciliations Adjusted EPS1 ($ millions, except shares and per share amounts) 2017 2016 2015 2014 2013 Income from continuing operations 555.1 451.5 487.5 354.0 318.9 Plus: Amortization of intangibles 101.8 92.5 70.4 30.1 36.2 Less: Income tax effect on amortization of i
Slide 121: ROIC Methodology
Investor Day 2018 ROIC Methodology ROIC • Numerator: NOPLAT + Fixed asset depreciation, where NOPLAT is net operating profit/loss after normalized tax • Denominator (Invested Capital): primarily purchase price including earn-outs + cumulative capex + net working capital © 2018 Verisk Analytics, Inc.