Slide 1: Verisk Analytics Investor Day
INVESTOR DAY 2016 Verisk Analytics Investor Day December 8, 2016 © 2016 Verisk Analytics, Inc. All rights reserved. 1
Slide 2: Forward-Looking Statements, Safe Harbor, and Non-GAAP Financial Measures
INVESTOR DAY 2016 Forward-Looking Statements, Safe Harbor, and Non-GAAP Financial Measures Forward-Looking Statements This presentation contains forward-looking statements. These statements relate to future events or to future financial performance and involve known and unknown risks, uncertainties,
Slide 3: Strategy
INVESTOR DAY 2016 Strategy Scott Stephenson President, Chairman, and Chief Executive Officer © 2016 Verisk Analytics, Inc. All rights reserved. © 2016 Verisk Analytics, Inc. All rights reserved. 3
Slide 4: How Do We Achieve Leading End-Market Positions?
INVESTOR DAY 2016 How Do We Achieve Leading End-Market Positions? Distinctives by Vertical Insurance Financial Services Natural Resources © 2016 Verisk Analytics, Inc. All rights reserved. 4
Slide 5: Good Past Performance — Sticking with Our Design — Driving Shareholder Value
INVESTOR DAY 2016 Good Past Performance — Sticking with Our Design — Driving Shareholder Value Growth* Exceptional Value Efficient Use of Capital (*esp to Customers and Colleagues Organic) Investing Vertical Scalable Products Innovating with Distinctive IP Proactive M&A Customers Skilled Well Capita
Slide 6: Investing
INVESTOR DAY 2016 Investing (in $ millions) 138 115 105 Internally Developed Software 53 43 30 26 28 20 23 Hardware/Third-Party Software Non-IT 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 CapEx as a % of Revenue 3.0% 4.0% 2.9% 3.0% 3.0% 3.9% 4.5% 7.9% 8.0% 7.8% Note: Non-IT includes items such
Slide 7: Skilled Workforce
INVESTOR DAY 2016 Skilled Workforce DBA/Developer/Programmer — 79% increase MBA — 45% increase CAS Fellow — 71% increase Master of Science — 55% increase PhD — 15% increase © 2016 Verisk Analytics, Inc. All rights reserved. 7
Slide 8: Reasonably Optimized
INVESTOR DAY 2016 Reasonably Optimized Enterprise Data Assets (JDE) Emphasis on Customer and Employee Engagement Increased Spend on Innovation (CapEx) 2013 2014 2015 2016 YTD Adjusted 46.7% 46.0% 48.1% 50.9% EBITDA Margin % Subscription 69.6% 72.3% 74.7% 82.4% All years exclude mortgage. 2016 YTD (y
Slide 9: Where Speed and Focus Will Matter Most
Where Speed and Focus Will Matter Most Development and Commercialization of Breakout Solutions Capable champions, fully dedicated, incented Execution of Major Technology and Platform Projects Agile methods, careful scoping, time-bound Talent Development: Acquisition and Pruning Thinking ahead, frank
Slide 10: An Existential Matter: The Competition Between Content and Methods
INVESTOR DAY 2016 An Existential Matter: The Competition Between Content and Methods Content Ownership Machine & Data Rights Hyper- Learning connectivity © 2016 Verisk Analytics, Inc. All rights reserved. 10
Slide 11: Deep Learning, Subset of Machine Learning Causing Flurry of Disruptions
INVESTOR DAY 2016 Deep Learning, Subset of Machine Learning Causing Flurry of Disruptions ARTIFICIAL INTELLIGENCE Early artificial intelligence stirs excitement MACHINE LEARNING Machine learning begins to flourish DEEP LEARNING Deep learning breakthroughs drive AI boom 1950s 1960s 1970s 1980s 1990s
Slide 12: Accelerants to Deep Learning/AI
INVESTOR DAY 2016 Accelerants to Deep Learning/AI Data Explosion Moore’s Law • People Shrinking chips 40 ZETTABYTES 2.5 QUINTILLION Number and length of transistors bought per $ (43 TRILLION GB) BYTES • Cloud 20m 20m DATA CREATED BY (2.3 TRILLION GB) • Social 19m 16m YR 2020, 300x CREATED DAILY 28nm
Slide 13: Machine Learning Use Cases
INVESTOR DAY 2016 MACHINE LEARNING USE CASES Automated Attribute & Change Object Recognition & Classification Detection © 2016 Verisk Analytics, Inc. All rights reserved. 13
Slide 14: Machine Learning Use Cases
INVESTOR DAY 2016 MACHINE LEARNING USE CASES Image Forgery Image Forgery Detection & Scoring – Banking Detection & Scoring – Claims © 2016 Verisk Analytics, Inc. All rights reserved. 14
Slide 15: Growth Rates of AWS and Usage at Verisk Demonstrate Value Proposition of Cloud
INVESTOR DAY 2016 Growth Rates of Amazon Web Services (AWS) and Usage at Verisk Demonstrate the Value Proposition of Cloud Verisk monthly cloud spend AWS annual run rate exceeds $10B ~37% growth compounded monthly over within 10 years from launch last 12 months © 2016 Verisk Analytics, Inc. All righ
Slide 16: It's more on my racquet than on anyone else's
INVESTOR DAY 2016 “It’s more on my racquet than on anyone else’s” © 2016 Verisk Analytics, Inc. All rights reserved. 16
Slide 17: Operating Priorities in 2017
INVESTOR DAY 2016 Operating Priorities in 2017 Technical Faster Exchanges Infrastructure Software for IoT Data Development Customer Global Intimacy Effectiveness © 2016 Verisk Analytics, Inc. All rights reserved. 17
Slide 18: Areas of Focus in Our Technical Infrastructure
INVESTOR DAY 2016 Areas of Focus in Our Technical Infrastructure Client Application Operational Sensitivity Re-architecting Model Security Model Economics © 2016 Verisk Analytics, Inc. All rights reserved. 18
Slide 19: Software Development, Delivery and Deployment Models
INVESTOR DAY 2016 Software Development, Delivery and Deployment Models Waterfall Agile Years/Months Weeks Though not January May Some learning required, cloud REQUIREMENTS architectures enable migration to continuous DESIGN deployment model Very little DEVELOPMENT learning Continuous Hours/Minutes T
Slide 20: Growth in the Internet of Things
INVESTOR DAY 2016 Growth in the Internet of Things The number of connected devices expected to exceed 50 billion by 2020 50.1 billion 50 40 Billions of devices 30 20 1 million 10 Source: Cisco 1988 1992 1996 2000 2004 2008 2012 2016 2020 © 2016 Verisk Analytics, Inc. All rights reserved. 20
Slide 21: Our Vision: The Verisk Data Exchange
INVESTOR DAY 2016 Our Vision: The Verisk Data Exchange Automakers U.S. Insurer Connected-Home/ Verisk Buildings Providers Data Exchange U.S. Insurer Security System Companies U.K. Insurer Industial Equipment Manufacturers Insights Normalized Filings Predictive Data Analytics German Insurer Data Wear
Slide 22: Improving the Experiences of Our Customers
INVESTOR DAY 2016 Improving the Experiences of Our Customers 2014 2015 2016 ~10,000 people responded to the enterprise-wide NPS initiative in 2016. © 2016 Verisk Analytics, Inc. All rights reserved. 22
Slide 23: Customer Experience Evolution
INVESTOR DAY 2016 Customer Experience Evolution STAGE 5: EMBEDDED (Fully integrated and scaled solution) STAGE 4: ENGAGED Omnichannel STAGE 3: COMMITTED VOC Dashboard STAGE 2: INVESTED Usage Monitoring STAGE 1: INTERESTED Salesforce Enhancements Invoice Follow-Up Improvements Tracking Journey Mappin
Slide 24: Operational Excellence
INVESTOR DAY 2016 Operational Excellence Lean Office LEAN PROJECTS 21st Century Kaizen Black Belt IMPACT Customer Experience Distribution Excellence Operational Excellence Profitable Growth Just Do It Don’t Do It EFFORT © 2016 Verisk Analytics, Inc. All rights reserved. 24
Slide 25: Accelerating Our Global Enterprise Platform
INVESTOR DAY 2016 Accelerating Our Global Enterprise Platform Enterprise Prioritize Execute Attract & Resolve: Be Native Local Opportunity with Speed Reward Best Leadership, Market Experts with Wisdom & Focus… Local Talent Vision, Partners, & Act & Patience Capital Local customer Prioritize Develop,
Slide 26: Global Expansion through Investment and Acquisition
INVESTOR DAY 2016 Global Expansion through Investment and Acquisition Organic Tuck-In Commercial Investment Acquisitions Partnerships © 2016 Verisk Analytics, Inc. All rights reserved. 26
Slide 27: Verisk Strategy Statement
INVESTOR DAY 2016 Verisk Strategy Statement Our vision is to be the world’s Purpose most effective and responsible Business Model data analytics company in Our Distinctives pursuit of our customers’ most Our People strategic opportunities. Core Capabilities The Verisk Way — to serve, add value, and
Slide 28: Our Emerging Contours
INVESTOR DAY 2016 Our Emerging Contours Cloud Computing Global © 2016 Verisk Analytics, Inc. All rights reserved. 28
Slide 29: CEO Priorities for 2017
INVESTOR DAY 2016 CEO Priorities for 2017 Visits with Customer CEOs Encouraging Our Senior Leaders to Become Better: International Advisors/Advisory Board • Coaches • Design Thinkers Acceleration of Move to Cloud • Promoters of Lean, Agile Methods Computing Drive the Organization toward Higher Frequ
Slide 30: Insurance
INVESTOR DAY 2016 Insurance Mark Anquillare Chief Operating Officer © 2016 Verisk Analytics, Inc. All rights reserved. © 2016 Verisk Analytics, Inc. All rights reserved. 30
Slide 31: Verisk and Property/Casualty Industry Growth
INVESTOR DAY 2016 Verisk and Property/Casualty Industry Growth $1,400 $1,200 8.4% CAGR $1,000 $800 1.9% $600 CAGR $400 $200 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Verisk Insurance Revenue ($ millions) P&C Industry DWP ($ billions) Verisk revenue: Highly recurring and predictable (
Slide 32: U.S. P&C Market Overview and Growth Dynamics
INVESTOR DAY 2016 U.S. P&C Market Overview and Growth Dynamics U.S. P&C 2015 DWP • U.S. property/casualty insurance market is the largest in the world • Moderate 4% premium growth in 2015 and market remains soft in 2016 $591B – Personal lines grew 5% in 2015, with rates in auto increasing in 2016 –
Slide 33: Customer and P&C Insurance Technology Trends
INVESTOR DAY 2016 Customer and P&C Insurance Technology Trends Customer Themes 4 Industry themes: InsureTech funding tripled • Big Data between 2014 and 2015* − Big Data + Predictive Analytics − (Great Good Good Great + > + 3 $2.7B Data Model Data Model • Automation − Opportunity to improve efficien
Slide 34: Building on Our Unique Heritage
INVESTOR DAY 2016 Building on Our Unique Heritage Primary Solutions for the Insurance Life Cycle ISO was formed as an industry consortium in 1971 Expansion of solution sets to complement valuable core Verisk Insurance Solutions brand introduced 2010 Increased global focus Product Development/ Actuar
Slide 35: Actuarial Analysis
INVESTOR DAY 2016 Actuarial Analysis Industry-Standard Programs Advisory Information Loss Costs Rules Policy Language Advisory loss cost Classification and rating rules ISO policy language in information based on line, (the commercial 26 insurance lines class, occupancy, etc. and personal lines manu
Slide 36: Private Passenger Auto: Rating Variables
INVESTOR DAY 2016 Private Passenger Auto: Rating Variables ~$200B in Direct Written Premium Vehicle 2016 Sports Car Loss Cost: $1,631 323 ISO Vehicle Series 2,759 2006 Compact unique ten-digit Loss Cost: $556 vehicle identifiers 17,500,000 cars and light trucks sold 260 million vehicles in the U.S.,
Slide 37: Private Passenger Auto: Rating Variables
INVESTOR DAY 2016 Private Passenger Auto: Rating Variables Geography 2016 Sports Car 2016 Sports Car New York, NY West Des Moines, Iowa Loss Cost: $2,201 Loss Cost: $1,203 1,493 Driving Behavior & Usage Rating Territories 41,195 ZIP Codes 220,334 2016 Sports Car Good Behavior 2016 Sports Car Bad beh
Slide 38: Disruptive Innovation: Verisk Telematics Data Exchange
INVESTOR DAY 2016 Disruptive Innovation: Verisk Telematics Data Exchange OEMs Insurers Verisk Telematics There are currently There are currently Data Exchange 18 major ~300 auto insurers automakers making up a market collecting driving data for automakers’ from their U.S. customers driving data With
Slide 39: Underwriting: Private Passenger Auto
INVESTOR DAY 2016 Underwriting: Private Passenger Auto Comprehensive suite of underwriting analytics to expedite accurate underwriting decisions Verisk provides data and analytics needed to support auto underwriting: Motor vehicle reports / Moving violations Claims loss history Odometer readings and
Slide 40: Disruptive Innovation: LightSpeed
INVESTOR DAY 2016 Disruptive Innovation: LightSpeed Case Study: Large Personal Auto Insurer Current 12–40 questions 480,000 qualified buyers 70,000 15 minutes from consumer (35% experience new sales a rate change) 1,000,000 leads Quote Inquiry Processing, Coverage & Cross-Sell Bind* of Auto/Others L
Slide 41: Underwriting: Commercial Lines
INVESTOR DAY 2016 Underwriting: Commercial Lines ~$170B in Direct Written Premium* Unique database of 3.9M commercial buildings, 26M businesses, and ratings on ~47,000 fire protection areas provide differentiated methods to underwrite Verisk verifies application information is correct: Buildings Bus
Slide 42: Structural and Personal Property Claims Cost Estimating
INVESTOR DAY 2016 Structural and Personal Property Claims Cost Estimating Industry-standard estimating and claims management solutions for efficient claims handling, improved customer satisfaction, and reduced indemnity spend Deeply embedded and highly valuable within our customers’ workflow: • Pric
Slide 43: Claims Management and Fraud Detection
INVESTOR DAY 2016 Claims Management and Fraud Detection Claims management and fraud detection solutions to reduce cycle time, lower combined ratio, and increase customer satisfaction Innovative Fraud Detection Advanced Analytics Unique Cross-Industry Claims Perspective Insight from more than1Billion
Slide 44: Industry Challenge: Auto Claims Fraud Continues to Impact Results
INVESTOR DAY 2016 Industry Challenge: Auto Claims Fraud Continues to Impact Results $133B Insurers incurred a total of $133B in auto insurance losses in 2015* $5.6B – $7.7B Fraud added $5.6B to $7.7B in excess payments to auto injury claims in 2012** 15% Inflated claims represent 15% of total payout
Slide 45: Disruptive Innovation: Fraud Analytics and Claim Automation
INVESTOR DAY 2016 Disruptive Innovation Fraud Analytics and Claim Automation Optimized first notice Policyholder of loss triaging collaboration Mitigating Optimized damage operational exposure costs Real-time analytics Loss forensics Suspicious Reduced claim cycle identification time Increased custo
Slide 46: Personal Auto Claims – Hurricane Matthew
4 6 INVESTOR DAY 2016 Personal Auto Claims – Hurricane Matthew October 5 through October 9, 2016 Visualization of actual path of Hurricane Matthew To view video go to www.verisk.com/matthew Phys. Damage other than Collision Water / Flood Claims Other Claims © 2016 Verisk Analytics, Inc. All rights r
Slide 47: Hurricane Andrew
INVESTOR DAY 2016 1992 Hurricane Andrew $16 Billion 12 Insolvencies Product Development/ Actuarial Analysis Underwriting Claims Management Compliance Portfolio Analysis Risk Transfer Mgmt © 2016 Verisk Analytics, Inc. All rights reserved. 47
Slide 48: Worldwide Catastrophes (2011)
Worldwide Catastrophes (2011) INVESTOR DAY 2016 2011 Catastrophes United States New Zealand $108 Billion 1 Insolvency Japan Thailand Product Development/ Actuarial Analysis Underwriting Claims Management Compliance Portfolio Analysis Risk Transfer Mgmt © 2016 Verisk Analytics, Inc. All rights reserv
Slide 49: Underwrite and Price Account Cat Risk in Context of Portfolio
INVESTOR DAY 2016 Underwrite and Price Account Cat Risk in Context of Portfolio Understand Account Makeup Assess Underwriting Guidelines Attribute Indicator Distance to Coast Storm Surge Potential Distance to Nearest Fault Soil Type Flood Zone Dynamically Update Portfolio Price for Expected Losses a
Slide 50: Case Study: Portfolio Analysis
INVESTOR DAY 2016 Case Study: Portfolio Analysis U.S. Commercial Portfolio Touchstone: All-Peril Analysis Time in 3 Hours ~300K Locations ~$200B Countrywide 300 Total Insured Value 251 250 200 $ Millions 186 167 150 100 50 12 14 18 0 Avg. Annual Loss 100 Years All-Peril Analysis, Hurricane Only (HU)
Slide 51: Verisk Provides Industry-Leading Solutions and Analytics
INVESTOR DAY 2016 Verisk Provides Industry-Leading Solutions and Analytics Primary Risk Assessment Competitive Advantage Competitors Industry-Standard Insurance 5 petabytes of time-series data and Internal Programs coverage language in >200M policies Comprehensive database of 3.9M Property Informati
Slide 52: Growth Opportunities: Cross-Sell 2013–2016
INVESTOR DAY 2016 Growth Opportunities Cross-Sell 2013–2016 Average Number of Products Across 27 Product Categories 16.0 2013 2016 13.9 10.7 10.3 8.5 6.6 5.0 3.9 1-10 11-25 26-100 101-500 Top Customers Based on VRSK Revenue © 2016 Verisk Analytics, Inc. All rights reserved. 52
Slide 53: Growth Opportunities
INVESTOR DAY 2016 Building on Our Unique Heritage Growth Opportunities Industrywide Focus New Solutions New Customer Sets • Big Data & Predictive Analytics • Telematics / IoT • Global • Automation: Flow Underwriting • Remote Imagery • Excess & Surplus Lines & Claims Adjudication • Digital Engagement
Slide 54: Acquisitions
INVESTOR DAY 2016 Acquisitions Acquisition Strategic Rationale Overview Risk Intelligence Global focus Provider of fraud detection, compliance, risk Ireland (Ireland) control, and process automation services GeoInformation Global focus Provider of essential geospatial information for (UK) those seek
Slide 55: Our Vision
INVESTOR DAY 2016 Our Vision Be our customers’ preferred partner to accelerate innovation, excellence, and profitable growth through analytics and insights © 2016 Verisk Analytics, Inc. All rights reserved. 55
Slide 56: Driving Growth with Deep Domain Expertise
INVESTOR DAY 2016 Driving Growth with Deep Domain Expertise Name Role Tenure (years) Underwriting & Rating Neil Spector President, Underwriting Solutions 14 Beth Fitzgerald President, ISO Solutions 36 Claims Bill Raichle President, Verisk Insurance Solutions – Claims 35 Mike Fulton President, Xactwa
Slide 57: Break
INVESTOR DAY 2016 Break © 2016 Verisk Analytics, Inc. All rights reserved. © 2016 Verisk Analytics, Inc. All rights reserved. 57
Slide 58: Natural Resources
INVESTOR DAY 2016 Natural Resources Stephen Halliday Group President © 2016 Verisk Analytics, Inc. All rights reserved. © 2016 Verisk Analytics, Inc. All rights reserved. 58
Slide 59: Mission Statement
INVESTOR DAY 2016 Mission Statement We enrich lives by empowering people with unique insight on the world’s natural resources © 2016 Verisk Analytics, Inc. All rights reserved. 59
Slide 60: Leading provider of commercial intelligence in the natural resources sector
INVESTOR DAY 2016 Leading provider of commercial intelligence in the natural resources sector – we are now active in all target areas “Follow the molecule – an integrated view” © 2016 Verisk Analytics, Inc. All rights reserved. 60
Slide 61: Key Messages for Today
INVESTOR DAY 2016 Key Messages for Today Cyclical trough, however, with resilient business model, client relationships & great team, we are outperforming Organic growth is in our DNA. Organic build model is the foundation Subscription customers up from less than 1,000 at time of Verisk acquisition t
Slide 62: WM Evolution: Strong Structure for Renewed Organic Growth
INVESTOR DAY 2016 WM Evolution: Strong Structure for Renewed Organic Growth Infield WM DNA: PCI Grow from Optimizing GTM Our Assets the Core Quest Organic Targeted Growth M&A Organic Growth, Niche M&A © 2016 Verisk Analytics, Inc. All rights reserved. 62
Slide 63: Great Global Platform in Place – Future Scale Will Be Client-Led
INVESTOR DAY 2016 Great Global Platform in Place – Future Scale Will Be Client-Led People Balanced to Win Total Headcount: ~1,100 28% of staff are located 53% of staff are located 19% of staff are located in the Americas in EMEARC in APAC © 2016 Verisk Analytics, Inc. All rights reserved. 63
Slide 64: Simple Business Model Focused on Clients
INVESTOR DAY 2016 Simple Business Model Focused on Clients Integrated Model Insight & information Access & feedback Research Sales & Data & expertise Research Consulting Demonstration of value Marketing Expert network Client Long-term relationships Consulting Bespoke Strategic New business solutions
Slide 65: We count the world's key blue chip institutions and governments among our clients
INVESTOR DAY 2016 We count the world’s key blue chip institutions and governments among our most loyal clients In the past 5 years we have delivered over 2,000 consulting projects to 800 clients globally © 2016 Verisk Analytics, Inc. All rights reserved. 65
Slide 66: Bespoke support for clients with a broad array of offerings
INVESTOR DAY 2016 Bespoke Positioning our clients for support for success in today’s complex and competitive clients with a marketplace. broad array of offerings Providing a competitive advantage to help clients Business Transaction understand the market and Environment Support the value drivers of
Slide 67: We Are Focused on Our People
INVESTOR DAY 2016 We Are Focused on Our People High-Performing, Diverse, and Engaged Team Organization Rewards & Talent Culture & Resourcing Recognition Supported by effective process and systems Wood Mackenzie has received public recognition for its investment in staff and the quality of its work e
Slide 68: Our clients' exposure to commodity cycles
INVESTOR DAY 2016 Our clients’ exposure to commodity Complex cycles, reduction in industry workforce, INDUSTRIALS and geopolitical uncertainty INSTITUTIONAL INVESTMENT increases their INVESTORS BANKS need for analysis Capital COAL E&P Partner- intense ships SERVICE INTEGRATED COMPANIES UTILITIES MET
Slide 69: What Has Been Happening to Our Clients?
INVESTOR DAY 2016 What Has Been Happening to Our Clients? Severity of market conditions on clients Equity Performance Comparison Region 180 Americas EMEARC AsiaPac 160 E&P and 140 Integrated 120 Metals & Indexed = 100 Client Category Mining 100 NOCs, Govs 80 & NGOs 60 Financials MSCI World Energy 40
Slide 70: Diverse Subscription Customer Set across Energy, Chemicals, Metals and Mining
INVESTOR DAY 2016 Diverse Subscription Customer Set across Energy, Chemicals, Metals and Mining Value Chains Growing No. of Customers1 End User Mix2 >2000 E&P and Integrated Other, 20% 36% +7% 822 913 722 735 772 642 2010 2011 2012 2013 2014 2015 2016 Low Customer Concentration 1 Financials, 24% <4%
Slide 71: Focus on Oil and Gas: Signs of Increased Activity
INVESTOR DAY 2016 Focus on Oil and Gas: Signs of Increased Activity Global upstream spend ($B) Onstream Under development • E&P investment low 800 Probable development expected in 2016 at Yet-to-drill North America around $40B 700 Exploration spend Capex Investment ($B) • Capital investment now 600
Slide 72: Higher Cost Sources of Supply Required to Meet Supply Gap by 2026
INVESTOR DAY 2016 Higher Cost Sources of Supply Required to Meet Supply Gap by 2026 (which stands at 22 million b/d) Supply Gap 10 Years from Now High-Cost Supply Crucial to Fill Gap 110 25.0 OPEC Spare Capacity 20.0 100 15.0 Million b/d Million b/d 90 OPEC Capcity Growth 10.0 Non-OPEC Other Sources
Slide 73: Commercial Energy & Commodities Information: Large Addressable Market
INVESTOR DAY 2016 Large Addressable Market Existing Wood Mackenzie Markets, Emerging Verticals and Adjacent Categories Sector Vertical Industrial Oil Gas Coal Utilities Chems Renewables Markets De-carb Commercial Upstream Costs Market Market Consulting2 Size: Size: Wood Oil Price Tool c.$0.3B c.$0.2
Slide 74: Competitors across Wood Mackenzie's Markets: An Evolving Picture
INVESTOR DAY 2016 Competitors across Wood Mackenzie’s Markets: An Evolving Picture Frontrunners/Leaders Established Global Established Regional Emergent Competitors Upstream Renewables Gas Downstream Chemicals Metals & Mining Macro Energy © 2016 Verisk Analytics, Inc. All rights reserved. 74
Slide 75: The Portal Is the Window to Access Wood Mackenzie's Content, Tools, and Data
INVESTOR DAY 2016 The Portal Is the Window to Access Wood Mackenzie’s Library of Content, Tools, and Proprietary Data 60+ tools and models, 14,000 reports, and vital analysis Portal Through the portal, our clients can: • Access objective integrated analysis on assets, companies, and markets • Use to
Slide 76: Case Study: PetroView
INVESTOR DAY 2016 Case Study: PetroView A comprehensive upstream database of licenses, fields, wells, platforms, pipelines, and cultural layers With our content, clients can: • Review specific basins, plays, wells, fields, companies, and upstream assets • Access key data with a global view • Define
Slide 77: Case Study: Solar
INVESTOR DAY 2016 Case Study: Solar GTM’s coverage of decarbonisation and decentralization trends includes: Solar power, electric grid, and energy storage technologies With our content clients can: • Evaluate the global solar supply chain • Review grid market technology analysis and data services •
Slide 78: Case Study: Chemicals
INVESTOR DAY 2016 Case Study: Chemicals Chemicals, polymers, and fibres coverage realises the connections from feed stocks through to end products With our content, our clients can: • Access integrated commercial knowledge and robust proprietary data from the refinery through to end-use applications
Slide 79: Multiple Avenues for Organic Growth
INVESTOR DAY 2016 Multiple Avenues for Organic Growth Content Areas User Interface Sales Avenues Spend Partners Management 1 2 3 $1.2B TAM Partnerships Chemicals $425M TAM Contour Subsurface E-commerce $750M TAM Decarbonisation Fusion $200M TAM User Interface(s) Data as a Service (DaaS) Calculation
Slide 80: Summary
INVESTOR DAY 2016 Summary • Commodity cycles continue to evolve: light is emerging • Wood Mackenzie has used the disruption to undertake targeted M&A; we are active on all fronts now • Organic activity and M&A have increased subscription customer count from less than 1,000 in 2015 to more than 2,000
Slide 81: Q&A
INVESTOR DAY 2016 Q&A © 2016 Verisk Analytics, Inc. All rights reserved. © 2016 Verisk Analytics, Inc. All rights reserved. 81
Slide 82: Financial Services
INVESTOR DAY 2016 Financial Services Nana Banerjee Group President © 2016 Verisk Analytics, Inc. All rights reserved. © 2016 Verisk Analytics, Inc. All rights reserved. 82
Slide 83: Argus: Leader in Information & Analytic Solutions for Banks & Regulators
INVESTOR DAY 2016 Leader in Information & Analytic Solutions for Banks & Regulators Strategy Our Distinctives… Advertising Regulation • Unique & Proprietary Consortia Data Sets • Deep Domain Expertise Argus in Analytics & Consumer Banking Risk & Fraud Product • Steady Stream of First- to-Market Inno
Slide 84: Growth… Geographic Expansion & Innovation
INVESTOR DAY 2016 Growth… Geographic Expansion & Innovation Company Milestones 1997 2006 2008 2010 2014 2016 Track Record of Innovation © 2016 Verisk Analytics, Inc. All rights reserved. 84
Slide 85: Our Solution Groups
INVESTOR DAY 2016 Our Solution Groups Benchmarking Studies Product Solutions Help Understand the External Environment Make Proprietary Data Accessible & Actionable • Customized… Ever-green subscriptions • Customized… recurring licenses • Pricing… annual with modest inflation-type cost • Pricing… ins
Slide 86: Data Management Solutions
INVESTOR DAY 2016 Data Management Solutions… Industry Standard for GRC and ADW Requirements • Turnkey… IP on Data Models, Edit Checks, Workflow Tools, ADW Automation, Reporting GRC • User Access… Granular, MIS Reports, OLAP/BI, Algorithms (SQL/No-SQL, SAS, R, Tableau) 34 > 2x • Extensively used for
Slide 87: Bank: What Off-Us Incentive Did Customers Have for Decreasing Spend Share?
INVESTOR DAY 2016 Bank: What Off-Us Incentive Did Customers Have for Decreasing Spend Share on Our Card? Spend Share Decliners Spend Share Decliners by Potential Drivers 100% = 45K Customers Total Customers: 45K 1 15%: Higher Line 1 30%: Lower APR No Driver 27% Identified Potential Winning Card Winn
Slide 88: Market-Level Benchmarked Acquisition Report Produced Quarterly
INVESTOR DAY 2016 The Market-Level Benchmarked Acquisition Report Is Produced Quarterly to Improve Sales & Customer Onboarding Quarterly Market Acquisition Report… allows user to rapidly find segments of Segmentations by opportunity by comparing within the bank and to the benchmark • Customer age •
Slide 89: Unique Data Enabling Valuable & Differentiated Solutions
INVESTOR DAY 2016 Unique Data Enabling Valuable & Differentiated Solutions Argus- Credit Payment Payment Description Verisk* Bureaus Networks Processors Daily POS POS & online transaction detail Transactions (merchant, location, amount, date) Payment Credit card, deposits, checking, and Instruments
Slide 90: Significant Runway (TAM)
INVESTOR DAY 2016 Significant Runway (TAM) $2B+ UK/W. Europe ~$400M North America ~$900M Asia Pacific ~$500M Mid-East & Africa ~$75M Latin America ~$150M * Calculations based on est. median price x est. number of credible clients ** TAM for products that do not require new data assets ~$1.5B © 2016
Slide 91: Strategic Priorities
INVESTOR DAY 2016 Drive Revenue Growth • Strong retention, farm smart & drive customer intimacy Strategic • New markets & partners, add new clients Priorities • Innovation ventures… seeding accelerated growth Manage Margins & Productivity • Adopt best practices, leverage cloud… an eye toward ease of
Slide 92: Strong Retention, Farm Smart & Drive Client Intimacy
INVESTOR DAY 2016 Strong Retention, Farm Smart & Drive Client Intimacy Improved Solutions New Studies • Digital “binders” • Personal loans • SME wallet models • SME deposits • Turnkey GRC reports • Brokerage accounts • Retail alert • Cost study prioritization • Aus. deposits • Store & employee score
Slide 93: New Markets & Partners, Add New Clients
INVESTOR DAY 2016 New Markets & Partners, Add New Clients New Markets New Partners New Clients • APAC serviced from • Deepen existing • Italy: major bank Singapore partnerships • ME: major processor • ACE study: Indonesia, • Credit reporting agencies • Vietnam: big bank Malaysia (x-sell access) • Cl
Slide 94: Innovation Ventures… Seeding Accelerated Growth
INVESTOR DAY 2016 Innovation Ventures… Seeding Accelerated Growth Market Indices Digital Marketing Cost Benchmarking What are the Opportunities for Supplier Rationalization Who are the Suppliers, How robust are where are they the processes located What is SPEND ANALYSIS company What are the spending
Slide 95: Argus's Innovation Pipeline Is Strong
INVESTOR DAY 2016 In Addition to Breakthrough Opportunities, Argus’s Innovation Pipeline Is Strong In development … FRAUD Retail Retail analytics: SME wallet Media: Fraud: brokerage bm, predictive models through billboard, mobile Transaction- strategy/ fraud modeling CRA & & digital ads, level scori
Slide 96: Manage Margins & Productivity
INVESTOR DAY 2016 Manage Margins & Productivity Cloud Global/Outsource Reorganize • Major install for alt-lending • Implementation of • Reorg, retrain, shed & client regulatory solutions recruit to realign org • Migrating all new readiness • Maintenance & development refinement of BAU • Supplement f
Slide 97: Recent and Past Successes Validate the Multipronged Path for Growth
INVESTOR DAY 2016 Recent and Past Successes Validate the Multipronged Path for Growth 20%-25% Project Based $117M 75%-80% Recurring $97M $81M $54MM 2012 2013 2014 2015 2016 © 2016 Verisk Analytics, Inc. All rights reserved. 97
Slide 98: Q&A
INVESTOR DAY 2016 Q&A © 2016 Verisk Analytics, Inc. All rights reserved. © 2016 Verisk Analytics, Inc. All rights reserved. 98
Slide 99: Break
INVESTOR DAY 2016 Break © 2016 Verisk Analytics, Inc. All rights reserved. © 2016 Verisk Analytics, Inc. All rights reserved. 99
Slide 100: Financial Review
INVESTOR DAY 2016 Financial Review Eva Huston Chief Financial Officer © 2016 Verisk Analytics, Inc. All rights reserved. © 2016 Verisk Analytics, Inc. All rights reserved. 100
Slide 101: Attractive Business Model
INVESTOR DAY 2016 Attractive Business Model Recurring revenue stream and high barriers to entry • More than 80% subscription and long-term revenue, majority prepaid • Long-standing and deep relationships; high customer retention • Analytics built on unique data sets Strong cash-flow generation • Bui
Slide 102: Historical Performance Summary
INVESTOR DAY 2016 Historical Performance Summary Metric 2006-2010 2011-2015 Key Takeaways Revenue 8.6% 12.8% CAGR • Revenue growth, benefiting from Organic Revenue Growth 6.9% 7.6% AVG insurance strength, addition of Argus (organic in 2014), and Wood % Subscription Revenue -- 81.6% AVG Mackenzie EBI
Slide 103: Total Revenue
INVESTOR DAY 2016 Total Revenue (in $ millions) 2,000 growth 1,800 1,761 91.0% 81.0% 1,431 1,600 1,400 1,324 71.0% 1,185 1,088 61.0% 1,200 934 860 51.0% 1,000 808 748 671 41.0% 800 23.0% 31.0% 600 400 12.4% 11.5% 16.4% 21.0% 11.8% 8.0% 8.6% 8.9% 8.1% 200 6.4% 11.0% 0 1.0% 2006 2007 2008 2009 2010 20
Slide 104: Organic Revenue Growth
INVESTOR DAY 2016 Organic Revenue Growth 7.6% Avg. 6.9% Avg. 8.5% 8.5% 7.8% 7.8% 8.0% 7.7% 6.9% 7.1% 5.6% 4.6% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Note: Organic growth includes businesses owned for a full year or more at measurement. All figures exclude mortgage and healthcare © 2016 V
Slide 105: Global Platform
INVESTOR DAY 2016 Global Platform International Revenue: > 20% of Total © 2016 Verisk Analytics, Inc. All rights reserved. 105
Slide 106: Subscription Revenue
INVESTOR DAY 2016 Subscription Revenue (% of total revenue) Subscription Transactional 120% 100% 21% 20% 17% 17% 17% 18% 80% 60% 40% 79% 80% 83% 83% 83% 82% 20% 0% 2011 2012 2013 2014 2015 2016 YTD All figures exclude mortgage and healthcare © 2016 Verisk Analytics, Inc. All rights reserved. 106
Slide 107: EBITDA
INVESTOR DAY 2016 EBITDA (in $ millions) 1,000 margin 898 78.0% 900 73.0% 728 800 700 665 68.0% 590 526 600 63.0% 500 452 392 58.0% 366 400 329 50.2% 50.9% 51.0% 275 49.8% 53.0% 300 48.4% 48.4% 45.2% 45.6% 44.0% 48.0% 200 41.1% 43.0% 100 0 38.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Note
Slide 108: Adjusted EPS (As Reported)
INVESTOR DAY 2016 Adjusted EPS (As Reported) ($ per share) growth 3.50 $3.09 94.0% 3.00 84.0% $2.40 $2.21 74.0% 2.50 $2.03 64.0% $1.75 2.00 54.0% 1.50 44.0% 28.8% 25.0% 34.0% 1.00 16.0% 24.0% 8.9% 8.6% 0.50 14.0% 0.00 4.0% 2011 2012 2013 2014 2015 Notes: 2010-2011 Adjusted EPS includes mortgage. 201
Slide 109: Capital Expenditures
INVESTOR DAY 2016 Capital Expenditures (in $ millions) 138 115 105 Internally Developed Software 53 43 30 26 28 20 23 Hardware/Third-Party Software Non-IT 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 CapEx as a % of Revenue 3.0% 4.0% 2.9% 3.0% 3.0% 3.9% 4.5% 7.9% 8.0% 7.8% Note: Non-IT includes
Slide 110: Diverse, High-Recurring Revenue Sources
INVESTOR DAY 2016 Diverse, High-Recurring Revenue Sources 3Q2016 Revenue Distribution 3Q2016 YTD Subscription Base RA: Insurance Energy & Specialized 22% 82% Subscription 36% Financial 7% Services 18% 35% Nonsubscription DA: Insurance © 2016 Verisk Analytics, Inc. All rights reserved. 110
Slide 111: Disciplined Capital Allocation
INVESTOR DAY 2016 Disciplined Capital Allocation Acquisitions and earn-outs Share Repurchase (in $ millions) 1 2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Share Repurchase $205 $392 $47 $437 $382 $163 $279 $778 $20 $183 Acquisitions and earn-outs $170 $101 $69 $222 $143 $808 $1 $35 2,856 $50
Slide 112: Strong Aggregate IRRs on M&A
INVESTOR DAY 2016 Strong Aggregate IRRs on M&A • $2.1 billion invested 2002–2015 (excluding Wood Mackenzie) • Increase in value at 10x multiple: ~ $1.6 billion • Annualized return1: ~ 19% 2002 83 2003 16 2004 33 2005 93 2006 232 2007 170 2008 101 2009 69 2010 222 2011 143 2012 808 2013 2014 35 2015
Slide 113: Strong Aggregate IRRs on Repurchases
INVESTOR DAY 2016 Strong Aggregate IRRs on Repurchases • $2.2 billion repurchased since 2010 • Increase in value at current share price: ~ $1.8 billion • Annualized return1: ~ 15% 2010 227 Secondary 210 2011 382 2012 163 2013 279 2014 778 2015 20 2016 183 Total 2,242 Current Market Value 4,013 1. Ba
Slide 114: Aggregate Success of Key Deals
INVESTOR DAY 2016 Aggregate Success of Key Deals AIR Worldwide All deals > $50M purchase price (including earnouts)1 Xactware D2Hawkeye Total Paid ($M) 1,639 Crowe Paradis EV/Yr 1 EBITDA 9.0x 3E Company Actual Revenue CAGR 15% Bloodhound thru Yr 3 Actual EBITDA CAGR Health Risk Partners thru Yr 3 25
Slide 115: 2016 Acquisitions
INVESTOR DAY 2016 2016 Acquisitions Quest Offshore Date Nov 2016 Nov 2016 Oct 2016 Aug 2016 Jul 2016 Apr 2016 Description Provides Provides large- Provides Provides Delivers Provides value- market scale a software strategic market business-to- added services intelligence mapping analytics suite inte
Slide 116: Guidelines for Capital Allocation Future Success
INVESTOR DAY 2016 Guidelines for Capital Allocation Future Success For M&A • Reasonable prices for good businesses – Identify businesses that fit strategy and grow cash flow – Seek sticky subscription revenue • ROIC provides an additional measure with nearer-term horizon For Buyback • Remain discipl
Slide 117: Strong Capital Structure to Support Growth
INVESTOR DAY 2016 Strong Capital Structure to Support Growth as of 9/30/2016 Investment-grade ratings ($ millions) S&P: BBB- Bonds $2,300 Moody’s: Baa3 Revolver drawn 0 Fitch: BBB+ Total debt $2,300 Gross debt/EBITDA1 2.1x Covenant level 3.5x 1,500 Revolver expanded to $1,500M, due May 2021 900 450
Slide 118: Verisk Addressable Market
INVESTOR DAY 2016 Verisk Addressable Market $16 Billion Addressable Market Financial P&C Energy & Specialized © 2016 Verisk Analytics, Inc. All rights reserved. 118
Slide 119: Innovation Opportunities
INVESTOR DAY 2016 Innovation Opportunities Price i Innovation “Small i” innovation may be bundled into existing offerings • Discrete programs, not built materially off of existing solutions • Material incremental revenue streams • Genuinely staffed with a 24/7 champion, i.e., someone whose success i
Slide 120: Corporate Objectives: Path to 2021
INVESTOR DAY 2016 Corporate Objectives: Path to 2021 Our People Customers Innovation Performance © 2016 Verisk Analytics, Inc. All rights reserved. 120
Slide 121: Conclusion
INVESTOR DAY 2016 Conclusion On average, outlook over time: • Organic revenue growth consistent with long-term historical performance • Measured margin expansion • Drive free cash-flow growth to increase enterprise and shareholder value • Long-term compounding of growth © 2016 Verisk Analytics, Inc.
Slide 122: Q&A
INVESTOR DAY 2016 Q&A © 2016 Verisk Analytics, Inc. All rights reserved. © 2016 Verisk Analytics, Inc. All rights reserved. 122
Slide 123: Verisk Analytics Investor Day
INVESTOR DAY 2016 Verisk Analytics Investor Day December 8, 2016 © 2016 Verisk Analytics, Inc. All rights reserved. 123
Slide 124: Appendix
INVESTOR DAY 2016 Appendix © 2016 Verisk Analytics, Inc. All rights reserved. © 2016 Verisk Analytics, Inc. All rights reserved. 124
Slide 125: Non-GAAP Reconciliations: Adjusted EPS
INVESTOR DAY 2016 Non-GAAP Reconciliations: Adjusted EPS ($ per share) 2015 2014 2013 2012 2011 Diluted EPS – GAAP 3.01 2.37 2.02 1.92 1.63 Plus: Amortization of intangibles 0.56 0.34 0.37 0.30 0.20 Less: Income tax effect on amortization of intangibles (0.16) (0.13) (0.14) (0.12) (0.08) Plus: Nonre
Slide 126: Non-GAAP Reconciliations: EBITDA
INVESTOR DAY 2016 Non-GAAP Reconciliations: EBITDA ($ millions) 2015 2014 2013 2012 2011 Net Income 508 400 348 329 283 Depreciation and amortization 215 142 130 99 79 Interest expense 121 70 76 73 54 Provision for income tax 210 220 196 182 178 Less: Nonrecurring items related to Wood Mackenzie acq