Slide 1: Verisk Analytics Investor Day
Verisk Analytics Investor Day December 1, 2015 Verisk Analytics, Inc. All rights reserved.
Slide 2: Strategy
Verisk Analytics Investor Day December 1, 2015 Verisk Analytics, Inc. All rights reserved. Strategy Scott Stephenson, CEO Verisk Analytics, Inc. All rights reserved.
Slide 3: Forward-Looking Statements, Safe Harbor, and Non-GAAP Financial Measures
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, and other factors
Slide 4: The Verisk Formula
The Verisk Formula Steadily Growing Increasing Financial Newly Acquired Businesses Powered Capacity Businesses at by Innovation, with Reasonable Prices Expanding Margins with Similar and Low Capital Characteristics Intensity Stronger and Larger Company Verisk Analytics, Inc. All rights reserved. 5 T
Slide 5: Verisk Strength Built on P&C Foundation
Verisk Strength Built on P&C foundation • Unique data sets, enhanced over time, have enabled growth into more decision processes at our customers − Since 1971, our P&C business has served as the industry standard − Leveraging long-standing relationships with innovation and new solutions has enabled
Slide 6: Core Competencies
Core Competencies Original (ISO) Core A Different World Current and Future Verisk Core Actuarial analysis Explosion in data volume Large-scale data integration Regulatory process (insurance) High-speed networks Multi-tier, multi-spectral imaging Templated data collection Compute power and management
Slide 7: Large-Scale Data Integration
1. Large-Scale Data Integration i Domain Data Category Number of Primary Unit Other Units of Observation Data Stores of Observation Insurance Policy Records 25 Policy Individual/Business, Property, Geo-location Claims Records 27 Claims (estimates and actual filngs ) Individual/Business, Property, Ge
Slide 8: Consumability and Geo-Location; Stochastic Modeling
3. Consumability and Geo-Location Verisk Analytics, Inc. All rights reserved. 13 4. Stochastic Modeling Catastrophe Models Need to Simulate Thousands of Potential Hurricanes to Provide a View of Risk Verisk Analytics, Inc. All rights reserved. 14
Slide 9: Localization
5. Localization Major steps to make Xactimate useful in Australia: Australia Pricing Research Data • 14 databases (~4,000 person-hours) Local Currency and Language Support • Tweak translations and terminology Australia Custom Product Features (minimum viable product) • Tendering estimates out to sup
Slide 10: Technology and Infrastructure; Analytic Environment
A. Technology and Infrastructure Example: Cloud Strategy Corporate Systems Client-Facing Back-End Data Management Delivery Systems and Processing • Systems providing general • Systems providing direct client • Systems providing data corporatewide functionality, access with responses and management,
Slide 11: Analytic Environment, continued; Regionalization
B. Analytic Environment, continued Machine Learning Methods Social Network Analysis (SNA) Model high-level abstractions using Use of network and graph theory — multiple processing layers and complex characterizing networked structures in structures (e.g., Bayesian networks, terms of nodes and the ti
Slide 12: Big Five Operational Priorities
“Big Five” Operational Priorities Strong Team/Talent Deeper Customer Intimacy Robust Technical Environment Focused Attention on Cross-BU Opportunities Global Platform Verisk Analytics, Inc. All rights reserved. 21 Technical Talent and Advanced Degrees Growing DBA/Developer/Programmer — 79% increase
Slide 13: Global Platform
Global Platform Edinburgh Guildford Minneapolis Bath London Moscow Ontario Copenhagen Quebec Munich Astana Beijing Calgary Boston Seoul San Francisco Vienna New York Nepal Tokyo Fleet Salt Lake City Hong Kong Jersey City Tel Aviv Carlsbad Annapolis Kuala Lumpur Columbia Dubai Singapore Chicago Houst
Slide 14: Wood Mackenzie: An Introduction
Questions Verisk Analytics, Inc. Verisk Analytics, Inc. All rights reserved. All rights reserved. 25 Wood Mackenzie An Introduction by Stephen Halliday, CEO Verisk Analytics, Inc. All rights reserved.
Slide 15: Wood Mackenzie Mission Statement
Wood Mackenzie Mission Statement We enrich lives by empowering people with unique insight on the world’s natural resources Verisk Analytics, Inc. All rights reserved. 27 We have evolved over 40 years to become the leading provider of commercial intelligence in the natural resources sector “Follow th
Slide 16: Wood Mackenzie is a Verisk business with matching values
Wood Mackenzie is a Verisk business with matching values Verisk Distinctives Unique Data Assets and Decision-Making Models Deep Domain Expertise Data & Analytics First-Mover Advantage Embedded in Customer Workflows Company-Specific Attributes Global Data-Rich Business Vertical Track Record of Growth
Slide 17: Oil & Gas Industry—Engine of the World Economy
Wood Mackenzie Oil & Gas Industry— Engine of the World Economy Verisk Analytics, Inc. All rights reserved. Oil & Gas Industry—Engine of the World Economy What drives the demand for oil and gas? Where are the oil and gas reserves? Who are the key stakeholders? What sets the oil price? How does the in
Slide 18: Global hydrocarbon fuels underpin global energy demand
One of our most fascinating, hi-tech, and vital industries Underpins the way we live today Fuel to transport Raw materials Energy to heat Energy to goods and for everyday homes power industry people items • Cosmetics • Food • Medicine • Plastic • Gasoline • Clothing Verisk Analytics, Inc. All rights
Slide 19: Where are the oil and gas reserves?
Where are the oil and gas reserves? Natural Gas Oil Verisk Analytics, Inc. Source: Wood Mackenzie All rights reserved. 35 OPEC and New Discoveries Total remaining oil & gas reserves Discovered volumes over the last decade (1,535 bnboe*) 60 South Iolotan Yoloten DW DW*Brazil Brazil Russia 50 Rest of
Slide 20: National oil companies control reserves
National oil companies control reserves, only the biggest international oil companies can compete Global reserves held by company, split by region N = national oil company (NOC) 300 N N Integrated 250 N Large caps NOCs Mid caps 200 N Supply chain Small caps N Bnboe* 150 Financial Professional instit
Slide 21: What sets the price of oil?
What sets the price of oil? Factors influencing oil price benchmarks Select events affecting global oil prices (Average monthly – Brent $/bbl) 140 Arab Spring Demand Cost 120 Supply 100 & Asia Geo- Growth Supply Demandpolitics Oil Price 80 60 Invasion of Iraq Speculation/ OPEC Trading 40 Global OPEC
Slide 22: Gaining access to O&G blocks/licenses
Gaining access to O&G blocks/licenses Around 50,000 active blocks around the world 100 • Various routes to being awarded a block/license 90 The larger and higher-quality – Licensing rounds 80 resources have the highest – Direct negotiations with government take 70 Government Take % governments 60 –
Slide 23: Development
Development Discovery to project sanction takes an average of 8+ years Concept Concept Concept Project screening & generation selection definition sanction Verisk Analytics, Inc. Source: Wood Mackenzie All rights reserved. 43 Some amazing innovation to develop increasingly difficult reserves... 0 Em
Slide 24: High cost base for the industry
…which has led to a high cost base for the industry Upstream industry development Development costs per barrel Cost curve pre-FID capex: costs per barrel (US$ real) by company type (US$ real) (2015–2030) 20 30 100 Deepwater 19 90 LNG Capex per boe of production (real terms) 25 Conventional 18 80 Pos
Slide 25: Production from unconventionals is driving supply growth
Production from ‘unconventionals’ is driving supply growth Total production 2004 vs 2014 % breakdown by theme 2004 vs ‘14 OPEC oil market share 130 +2% 8% 2008 120 N. 19% America OPEC 110 100 Million boed 90 80 70 Non- 60 OPEC 50 40 30 2014 20 10 0 2004 2014 2004 2014 GTL Oil sands Shale gas Deepwat
Slide 26: Ongoing demand growth and production decline
Ongoing demand growth and production decline — higher cost new developments needed Supply gap >10m b/d develops (2014 – 2020)… …requiring a greater call on OPEC, tight oil drilling, and conventional oil projects Demand Existing Non- Supply 100 Growth OPEC Supply Gap 12 Call on OPEC Non-OPEC Reserve
Slide 27: Refining & Marketing Summary
Refining & Marketing Conversion into finished products for distribution and consumption Verisk Analytics, Inc. All rights reserved. 51 Summary A vital, innovative, and dynamic industry—across the value chain Demand for oil and gas will keep growing Oil and gas found everywhere, but OPEC controls oil
Slide 28: Wood Mackenzie Overview and Opportunity
Wood Mackenzie Overview and Opportunity Verisk Analytics, Inc. All rights reserved. Wood Mackenzie: An Overview What do we do? How do we win? How have we What will drive future grown? growth? Provide leading Differentiated Strong financial Large and diverse commercial value proposition record addres
Slide 29: Reference source for commercial intelligence
We are the reference source for commercial intelligence across the natural resource value chain Consistent and integrated view across commodities and the Oil/oil value chain products Commodities Gas/LNG Coal Bottom-up approach combined with corporate/macro perspective Metals Historic/ Petro- forecas
Slide 30: Our clients are active in complex, capital-intensive industries
Our clients are active in highly complex and capital-intensive industries and need our help Complex OUR CLIENTS INSTITUTIONAL INVESTMENT INVESTORS BANKS Capital COAL E&P Partner- intense ships SERVICE INTEGRATED COMPANIES UTILITIES METALS NOC, GOVERNMENTS, NGO Dynamic Verisk Analytics, Inc. All righ
Slide 31: Integrated research, sales & marketing, and consulting model
Integrated research, sales & marketing, and consulting model designed to best serve client needs Integrated Model Insight & information Access & feedback Research Sales & Database & expertise Research Consulting Demonstration of value Marketing Expert network Client Long-term relationships Consultin
Slide 32: Unrivaled breadth and depth in assets coverage
We have developed unrivaled breadth and depth in our assets coverage Upstream Data • 30,000 oil & gas fields (assets) Valuation • 52,000 blocks • 5,500+ commercial upstream • 55+ million data points valuations Plus… • 1,300+ technical upstream • 500+ exploration basins valuations • 200 unconventiona
Slide 33: Deeply embedded in clients' workflows
…and are deeply embedded in clients’ workflows User workflow example: Opportunity screening (oil & gas business developer) Review and filter all regional assets Wood Mackenzie Upstream Data Tool content/tool Understand upside potential Exploration Service Market supply and Regional demand dynamics G
Slide 34: Right talent and culture; diverse customer base
Having a business with the right talent and culture is key to driving long-term sustainable growth 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 i
Slide 35: Growing client base and industry leading renewal rates
We have consistently grown our client base and have industry leading renewal rates Growth in number of Clients Consistently High Renewal Rates(1) 900 7% 98% 98% 98% Total Customers Customer Growth CAGR since 2009 900 822 772 722 735 642 590 2009 2010 2011 2012 2013 2014 2015 2010 2014 2015 (YTD) (YT
Slide 36: Large addressable market (circa US$6bn)
Energy and commodities information has a large addressable market (circa US$ 6bn) Existing Wood Mackenzie markets, emerging verticals, and adjacent categories Sector Vertical Industrial Oil Gas Coal Utilities PetChems Renewables Markets Commercial Commercial Market Market Consulting2 Market Size: c.
Slide 37: The moat widening
However, we have also seen the moat widening Year-to-Date Changes Through Q3 2015 +25% +34% Portal Usage Portal Super Users +24% +98% Client-Facing Use of Macro Oils Calls/Meetings Service and Global Gas Tool Trusted relationships established over 40 years and embedded way of working are key to main
Slide 38: Product development and enhancement
Product development and enhancement strengthen our market position and give access to adjacent categories Example: North American Well Analysis Tool (NAWAT) Visualization 4 billion data tool with points from interactive 75+ sources maps, charts, for 2.3m type curve wells generator Integrated analysi
Slide 39: Verisk and Wood Mackenzie stronger together
Verisk and Wood Mackenzie are stronger together, with both cross-sell and n+1 opportunities Opportunities for developing new proprietary data and strengthening growth Maplecroft Insurance GIS Platform Cross-sell of current Repackaging and Developing a common content between repurpose of Wood databas
Slide 40: Financial Performance
Questions Verisk Analytics, Inc. Verisk Analytics, Inc. All rights reserved. All rights reserved. 77 Financial Performance Mark Anquillare, CFO Verisk Analytics, Inc. All rights reserved.
Slide 41: Historical Performance Summary
Historical Performance Summary Metric 2005-2009 2010-2014 Key Takeaways Total Revenue 10.8% 15.2% CAGR • Summary Organic Revenue Growth 7.8% 8.4% AVG − Strong growth across the board EBITDA 12.2% 15.0% CAGR − Organic revenue growth EBITDA Margin 43.4% 46.6% AVG accelerated while EBITDA margins expan
Slide 42: EBITDA
EBITDA 15.0% CAGR (in $ millions) margin 803 90 0,00 0,0 00 80 .0% 80 0,00 0,0 00 12.2% CAGR 745 75 .0% 70 0,00 0,0 00 671 70 .0% 60 0,00 0,0 00 555 65 .0% 50 0,00 0,0 00 459 60 .0% 367 396 40 0,00 0,0 00 343 55 .0% 250 289 46.6% 47.6% 46.7% 30 0,00 0,0 00 45.0% 46.3% 46.0% 50 .0% 44.2% 43.6% 42.6%
Slide 43: Adjusted EPS
Adjusted EPS 17.9% CAGR (in $/share) 3.0 0 growth 15.1% CAGR $2.40 45 1.0% $2.22 2.5 0 40 1.0% $2.03 35 1.0% 2.0 0 $1.63 30 1.0% 1.5 0 $1.24 25 1.0% $0.91 $1.02 20 1.0% $0.85 $0.70 1.0 0 $0.58 15 1.0% 10 1.0% 0.5 0 41.4% 20.9% 20.7% 21.9% 31.2% 24.2% 6.9% 12.4% 9.4% 8.3% 51 .0% 0.0 0 1.0 % 2005 2006
Slide 44: Diverse, High Recurring Revenue Sources
Diverse, High Recurring Revenue Sources 3Q 2015 Revenue Distribution 3Q 2015 YTD Subscription Base Energy & Specialized Healthcare 20% 15% Transaction Revenue Financial 25% Services Risk Subscription 5% Assessment Revenue 31% 75% DA Insurance 29% Decision Analytics 69% Verisk Analytics, Inc. All rig
Slide 45: Consistent Quarterly Top-Line Progression
Consistent Quarterly Top-Line Progression Decision 450 Analytics Revenue (in $ millions) 379 400 350 326 287 300 288 300 242 257 260 247 262 250 223 224 236 195 200 168 150 100 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Risk 200 Assessment Revenue (in $ millions) 190
Slide 46: Decision Analytics: Enhancing Our Future
Decision Analytics: Enhancing Our Future • New, large verticals with data analytic needs • Cross-vertical themes (antifraud, predictive modeling, benchmarking, optimization) • Leveraging existing assets − Repurposing of data (n + 1) − Technology infrastructure − Replatforming 3Q YTD Revenue 3Q YTD E
Slide 47: Verisk's Differentiated Financial Model
Verisk’s Differentiated Financial Model 3Q Year-to-Date (YTD) Strong, Stable Revenue Growth Leading EBITDA Margin (in $ millions) (%) 1,507 47.1% 47.6% 1,179 1,282 45.9% 2013 2014 2015 2013 2014 2015 Low Capital Intensity Strong Free Cash Flow (as reported, CapEx as a % of Revenue) (as reported, in
Slide 48: Strong Capital Structure to Support Growth
Strong Capital Structure to Support Growth as of 9/30/2015 Investment Grade Ratings ($ in millions) S&P: BBB- Bonds $2,300 Moody’s: Baa3 Revolver Drawn 0,900 Fitch: BBB+ Total Debt $3,200 850 Revolver expanded to Debt/ EBITDA(1) 2.9x $1,750M, due May 2020 Covenant level(2) 3.75x 900 900 450 350 350
Slide 49: Two Paths to Growth – Organic and M&A
Two Paths to Growth – Organic and M&A Eva Huston, SVP and Treasurer Verisk Analytics, Inc. All rights reserved. Long Runway Remains for Organic Revenue Growth • While we have grown well for many years, our opportunity remains robust − 8.4% average organic revenue growth over five years − Multiple ve
Slide 50: P&C Addressable Market
P&C Addressable Market $7.5 Billion • AIR • Commercial Lines UW • ISO Solutions • Personal Lines UW • Claims P&C Current Verisk Revenue Opportunity Note: Revenue reflects TTM through September 2015. Verisk Analytics, Inc. All rights reserved. 97 Energy and Specialized Addressable Market $6.0 Billion
Slide 51: Healthcare Addressable Market
Healthcare Addressable Market $5.0 Billion • Revenue Solutions • Payment Solutions • Population Health Solutions • Quality Solutions Healthcare Current Verisk Revenue Opportunity Note: Revenue reflects TTM through September 2015. Verisk Analytics, Inc. All rights reserved. 99 Financial Addressable M
Slide 52: Verisk Addressable Market
Verisk Addressable Market $21 Billion Addressable Market Current Verisk P&C Revenue Financial Healthcare Energy & Specialized Note: Revenue reflects TTM through September 2015. Verisk Analytics, Inc. All rights reserved. 101 M&A Has Been Effective • Driven by strategy • Valuation discipline crucial
Slide 53: M&A Has Been Effective
Summary of Acquisitions By Time Period 2010 – 2014 23% Total Deals ~$4.8 billion 2005 – 2009 13% 2000 – 2004 2015 4% 59% 1990’s 1% By Deal Size By Vertical < $25mm Insurance 2% 14% Deals $25mm - $100mm Financial 13% 9% Mortgage > $500mm 2% 59% Energy Healthcare 59% $100mm - 13% $500mm Specialized 26
Slide 54: Summary of Acquisitions
Strong Acquisition Revenue Growth Across Verticals Revenue Growth by Vertical 18.5% 17.4% 15.8% 14.7% 14.8% 13.7% Financial Healthcare Insurance Mortgage Specialized Revenue CAGR (Year 1-3) Corp. Avg. Acquisition Revenue CAGR Note: Excludes Wood Mackenzie. Revenue CAGR is weighted. Verisk Analytics,
Slide 55: Strong Acquisition Revenue Growth Across Verticals
Multiple Paths to Growth • Strong track record of both organic revenue increases and effective M&A − 8% historical organic revenue growth − 16% average acquisition revenue growth • Opportunities remain large and growing − Working to execute on both organic and acquisitions to drive growth • Share re
Slide 56: Multiple Paths to Growth; Senior Management Q&A
SPEAKER BIOGRAPHIES Scott G. Stephenson Stephen J. Halliday President and Chief Executive Officer Chief Executive Officer – Wood Mackenzie Scott G. Stephenson is president Stephen J. Halliday is chief executive and chief executive officer of officer of Wood Mackenzie, a global Verisk Analytics. lead
Slide 57: Speaker Biographies
Mark McCafferty Mark V. Anquillare Head of Upstream Oil and Gas Research for Group Executive, Risk Assessment the EMEARC region – Wood Mackenzie Executive Vice President and Chief Financial Officer Mark McCafferty is Wood Mackenzie’s head of Upstream Oil and Gas Research Mark V. Anquillare is execut
Slide 58: Speaker Biographies: Mark McCafferty, Mark V. Anquillare
Eva F. Huston Senior Vice President, Treasurer, and Chief Knowledge Officer Eva F. Huston is the senior vice presi- dent, treasurer, and chief knowledge officer of Verisk Analytics. She joined the company in 2009 as head of investor relations, playing an important role in Verisk’s initial public off