SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 29, 2011
VERISK ANALYTICS, INC.
(Exact name of registrant as specified in its charter)
|(State or other jurisdiction
|(Commission File Number)
|545 Washington Boulevard, Jersey City, NJ
|(Address of principal executive offices)
Registrants telephone number, including area code: (201) 469-2000
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
TABLE OF CONTENTS
Item 7.01. Regulation FD Disclosure
On March 29, 2011, Verisk Analytics, Inc. (Verisk, we, us or our) filed with the
Securities and Exchange Commission a preliminary prospectus supplement (the Prospectus
Supplement) to its Registration Statement on Form S-3 (File No. 333-173135), which included the
We enable risk-bearing businesses to better understand and manage their risks. We provide
value to our customers by supplying proprietary data that, combined with our analytic methods,
creates embedded decision support solutions. We are the largest aggregator and provider of detailed
actuarial and underwriting data pertaining to United States, or U.S., property and casualty, or
P&C, insurance risks. We offer solutions for detecting fraud in the U.S. P&C insurance, healthcare
and mortgage industries, and sophisticated methods to predict and quantify loss in diverse contexts
ranging from natural catastrophes to health insurance.
Our customers use our solutions to make better risk decisions with greater efficiency and
discipline. We refer to these products and services as solutions due to the integration among our
services and the flexibility that enables our customers to purchase components or the comprehensive
package. These solutions take various forms, including data, statistical models or tailored
analytics, all designed to allow our clients to make more logical decisions. We believe our
solutions for analyzing risk positively impact our customers revenues and help them better manage
their costs. In 2010, our U.S. customers included all of the top 100 P&C insurance providers,
numerous health plans and third-party administrators, five of the six leading mortgage insurers,
and 16 of the top 20 mortgage lenders. We believe that our commitment to our customers and the
embedded nature of our solutions serve to strengthen and extend our relationships.
We help those businesses address what we believe are the four primary decision making
processes essential for managing risk as set forth below in the Verisk Risk Analysis Framework:
The Verisk Risk Analysis Framework
These four processes correspond to various functional areas inside our customers operations:
|our loss prediction solutions are typically used by P&C insurance and healthcare
actuaries, advanced analytics groups and loss control groups to help drive their own
assessments of future losses;
|our risk selection and pricing solutions are typically used by underwriters as
they manage their books of business;
|our fraud detection and prevention tools are used by P&C insurance, healthcare and
mortgage underwriters to root out fraud prospectively and by claims departments to
speed claims and find fraud retroactively; and
|our tools to quantify loss are primarily used by claims departments, independent
adjustors and contractors.
We add value by linking our solutions across these four key processes; for example, we use the
same modeling methods to support the pricing of homeowners insurance policies and to quantify the
actual losses when damage occurs to insured homes.
We offer our solutions and services primarily through annual subscriptions or long-term
agreements, which are typically pre-paid and represented approximately 70.0% of our revenues in
2010. For the year ended December 31, 2010, we had revenues of $1,138.3 million and net income
of $242.6 million. For the five year period ended December 31, 2010, our revenues and net
income grew at a Compound Annual Growth Rate, or CAGR, of 11.7% and 14.9%, respectively.
We organize our business in two segments: Risk Assessment and Decision Analytics.
Risk Assessment Segment
Our Risk Assessment segment serves our P&C insurance customers and focuses on the first two
decision making processes in our Risk Analysis Framework: loss prediction and selection and pricing
of risk. Within this segment, we also provide solutions to help our insurance customers comply with
their reporting requirements in each U.S. state in which they operate. Our customers include most
of the P&C insurance providers in the U.S.
Decision Analytics Segment
In the Decision Analytics segment, we support all four phases of our Risk Analysis Framework.
We develop predictive models to forecast scenarios and produce both standard and customized
analytics that help our customers better predict loss, select and price risk, detect fraud before
and after a loss event, and quantify losses.
As we develop our models to quantify loss and detect fraud, we improve our ability to predict
the loss and prevent the fraud from happening. We believe this provides us with a significant
competitive advantage over firms that do not offer solutions which operate both before and after
Our Competitive Strengths
We believe our competitive strengths include the following:
|Our Solutions are Embedded In Our Customers Critical Decision Processes. Our
customers use our solutions to make better risk decisions and to price risk
appropriately. In the U.S. P&C insurance industry, our solutions for prospective loss
costs, policy language, rating/underwriting rules and regulatory filing services are
the industry standard. In the U.S. healthcare and mortgage industries, our predictive
models, loss estimation tools and fraud identification applications are the primary
solutions that allow customers to understand their risk exposures and proactively
|manage them. Over each of the 5 years ended December 31, 2010, we have retained
approximately 98% of our customers across all of our businesses, which we believe
reflects our customers recognition of the value they derive from our solutions.
|Extensive and Differentiated Data Assets and Analytic Methods. We maintain what we
believe are some of the largest, most accurate, and most complete databases in the
markets we serve. Much of the information we provide is not available from any other
source and would be difficult and costly for another party to replicate. As a result,
our accumulated experience and years of significant investment have given us a
competitive advantage in serving our customers.
|Culture of Continuous Improvement. Our intellectual capital and focus on
continuous improvement have allowed us to develop proprietary algorithms and
solutions that assist our customers in making informed risk decisions. Our team
includes approximately 565 individuals with advanced degrees, certifications and
professional designations in such fields as actuarial science, data management,
mathematics, statistics, economics, soil mechanics, meteorology and various
engineering disciplines. Our compensation and benefit plans are
pay-for-performance-oriented, including incentive compensation plans and substantial
equity participation by employees. As of December 31, 2010, our employees owned
approximately 18% of the company.
|Attractive Operating Model. We believe we have an attractive operating model due
to the recurring nature of our revenues, the scalability of our solutions and the low
capital intensity of our business.
Our Growth Strategy
For the five-year period ended December 31, 2010, we have grown our revenues and net income at
a CAGR of 11.7% and 14.9%, respectively, through the successful execution of our business plan.
These results reflect strong organic revenue growth, new solutions development and selected
acquisitions. We have made, and continue to make, investments in people, data sets, analytic
solutions, technology, and complementary businesses. The key components of our strategy include:
|Increase Sales to Insurance Customers. We expect to expand the application of our
solutions in insurance customers internal risk and underwriting processes. Building
on our deep knowledge of, and embedded position in, the insurance industry, we expect
to sell more solutions to existing customers tailored to individual insurance
segments. By increasing the breadth and relevance of our offerings, we believe we can
strengthen our relationships with customers and increase our value to their decision
making in critical ways.
|Develop New, Proprietary Data Sets and Predictive Analytics. We work with our
customers to understand their evolving needs. We plan to create new solutions by
enriching our mix of proprietary data sets, analytic solutions and effective decision
support across the markets we serve. We constantly seek to add new data sets that can
further leverage our analytic methods, technology platforms and intellectual capital.
|Leverage Our Intellectual Capital to Expand into Adjacent Markets and New Customer
Sectors. Our organization is built on nearly four decades of intellectual property in
risk management. We believe we can continue to profitably expand the use of our
intellectual capital and apply our analytic methods in new markets, where significant
opportunities for long-term growth exist. We also continue to pursue growth through
targeted international expansion. We have already demonstrated the
this strategy with our expansion into healthcare and non-insurance financial
|Pursue Strategic Acquisitions that Complement Our Leadership Positions. We will
continue to expand our data and analytics capabilities across industries. While we
expect this will occur primarily through organic growth, we have and will continue to
acquire assets and businesses that strengthen our value proposition to customers. We
have developed an internal capability to source, evaluate and integrate acquisitions
that have increased our revenues. As of December 31, 2010, we have acquired 15
businesses in the past 5 years.
|In implementing our acquisition strategy, we are constantly evaluating targets and
expect to make acquisitions that add incremental value to our existing product
offerings. This could also include acquisitions which are materially larger than our
historical transactions, if we believe they present a strategic opportunity for our
business. We expect to fund the purchase price for any acquisition with cash on hand,
borrowings under our revolving credit facility, proceeds of debt, including the notes,
or equity. If we choose to use debt, including drawings under our credit facility, to
finance our acquisitions in whole or in part, this may increase our leverage and
potentially impact our ratings.
The disclosure in this Form 8-K 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 that may cause our actual results, levels of activity,
performance, or achievements to be materially different from any future results, levels of
activity, performance, or achievements expressed or implied by these forward-looking statements. In
some cases, you can identify forward-looking statements by the use of words such as may, could,
expect, intend, plan, target, seek, anticipate, believe, estimate, predict,
potential, or continue or the negative of these terms or other comparable terminology. You
should not place undue reliance on forward-looking statements because they involve known and
unknown risks, uncertainties, and other factors that are, in some cases, beyond our control and
that could materially affect actual results, levels of activity, performance, or achievements.
Other factors that could materially affect actual results, levels of activity, performance, or
achievements can be found in Verisks quarterly reports on Form 10-Q, annual reports on Form 10-K,
and current reports on Form 8-K filed with the Securities and Exchange Commission. If any of these
risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual
results may vary significantly from what we projected. Any forward-looking statement in this Form
8-K reflects our current views with respect to future events and is subject to these and other
risks, uncertainties, and assumptions relating to our operations, results of operations, growth
strategy, and liquidity. We assume no obligation to publicly update or revise these forward-looking
statements for any reason, whether as a result of new information, future events, or otherwise.
The information in this Form 8-K shall not be deemed to be filed for purposes of Section 18
of the Securities Exchange Act of 1934, as amended, nor shall it be deemed to be incorporated by
reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly
set forth by specific reference in such filing.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|VERISK ANALYTICS, INC.
|Date: March 29, 2011
|/s/ Kenneth E. Thompson
|Kenneth E. Thompson
Counsel and Corporate