Verisk Analytics, Inc. (VRSK) Earnings Call Transcript & Summary

Can everyone please take their seats? We're going to begin. Okay. Good morning, everyone. It's nice to see everyone here. I'm Stacey Brodbar, and I'm Verisk's Head of Investor Relations. I'm pleased to welcome you all to our 2023 Investor Day. We are so excited to be able to be together both in person and also those on the webcast virtually to detail for you the new Verisk, a predictable growth company. Before we begin, let me take this opportunity to note the disclaimer on the screens and on the webcast and remind you that some statements made in today's presentation may relate to future events or to future financial performance, including those related to our financial guidance such as our non-GAAP long-term growth targets. These forward-looking statements 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. Other factors that could materially affect actual results, levels of activity, performance or achievements can be found in our various periodic reports filed with the SEC. With that behind us, we have a full agenda today. We will begin with Verisk's President and CEO, Lee Shavel, who will provide a strategic overview of the business. Then 3 of our key business unit presidents will offer details on their businesses and their plans to drive future growth. We will then mix it up a bit and feature a panel discussion with the business leaders of some of our newer growth businesses. And finally, Elizabeth Mann will wrap it all up with her financial review. We will also have 2 breaks today during the program, which will provide you with a great opportunity to stretch your legs, but more importantly, we'll provide a chance to visit our solutions gallery where you can experience some of our leading innovations across underwriting and rating and claims. And lastly, at your request, we have dedicated and allocated lots of time for your questions, and we will take in questions both from the live audience and those on the webcast. So please don't be shy. And with that, let me turn the stage over to Verisk's President and CEO, Lee Shavel. [Presentation]

So good morning, everyone. First of all, Stacey isn't the only one who can do boiler plate announcements. So I want to let you know that no animals were harmed in the production of that video. It was also internally produced at a very reasonable cost. But I want to thank all of you for coming this morning. It's great to see a lot of familiar faces here in the crowd. And as Stacey indicated, great to be together in person again. Welcome to exotic and luxurious Jersey City. We appreciate you making the trip over. And we did have a couple of requests from a few investors asking why we couldn't have the session in Manhattan, and Stacey very directly pointed out, if you want higher margins, you're coming to Jersey City. We are actually taking advantage of a COVID credit that we had so this is actually working out very well for all of us. So with that, let's get started. What you will hear today is a description of the new Verisk, what we see as our opportunity and our strategy for delivering on that opportunity. Many of you know, we have been a great business for a long time, and what we've been focused on is becoming an even better company. And you've seen that with what we've accomplished in 2022, and you will continue to see that in 2023. I also want to make certain that you hear the confidence, the focus and the teamwork that this organization is bringing to bear against this opportunity. And I want you to listen for validation of what I'm saying from a strategic perspective, how we're describing the opportunity in the descriptions of the businesses and the sense of momentum from each of our business leaders that you'll hear for our 3 major businesses today and then 3 of the growth businesses that we're pursuing as well. We are expecting that this is a coherent effort where we're tying together pieces of the puzzle with more energy and more focus than we ever had before. And a great place to start on that front would be what we accomplished in 2022. It was a busy year. We delivered a lot of change, structural change with the sale of our noninsurance subsidiaries; governance change with the destaggering of our Board, the separation of the Chairman and CEO role, and we continue to expect to make other changes. Many of you have asked the question, we have been evaluating the size of our Board given some of the structural changes, and we'll be happy to announce that we expect to see a smaller Board at our Annual Shareholder Meeting, which emphasizes our focus and our efficiency across the organization. So we think that will be a continued benefit and structural change on the governance front. We've also had a lot of organizational change. And I want to take the opportunity to thank the over 7,000 employees that have been able to maintain their focus on clients, maintain business momentum and continue to do what Verisk does very well every day, which is focus on our clients and make certain that we are delivering value to them, which in turn drives value for our shareholders. In a larger sense, our ability to maintain that momentum through 2022, and you saw it, I think, most strongly in the fourth quarter, is a demonstration of, I think, of what we're capable of when we organize around a broad strategic objective. And I'm incredibly proud of what we've accomplished in 2022, and my confidence is bolstered given what I know we can accomplish in 2023 with the team that we have behind it. So the other aspect that we'll talk about is what's different about the new Verisk. And I always find comparisons useful. What's changed? Well, there are only 3 things that I'm going to emphasize, the others, I think you all understand. But as I mentioned, we're more integrated and coordinated. I can feel that difference. I can feel it in the Senior Operating Committee that has been reconstituted with a greater focus on what we want to accomplish across the insurance industry. I can feel it in the engagement that we feel around our client initiatives. And I can tell you all our thought is bent on how we serve the insurance industry and create value for them and for our shareholders. The second element I want to emphasize here is the go-to-market shift. We have always been a very product-oriented, and I think a very good product-oriented company, but I think that we can lift our focus to the client and making certain that we are listening to our clients, understanding their concerns, understanding how we can do better. It's part of what I'm excited about, bringing from my long client experience to the organization, in engaging in that dialogue not only one-to-one with clients but also with the industry as a whole because I think in that -- in those conversations, we can better discern what are the industry opportunities that we're pursuing. We've already instituted a number of CEO roundtables that I'll be hosting, CIO roundtables hosted by our Chief Information Officer, Nick Daffan, to encourage more of that industry dialogue. And I think that will be really beneficial both in terms of strengthening existing client relationships and finding new ways to serve them. And the final thing that I want to emphasize is I think we've always been an aspirational culture, excited about what data and analytics can do for the insurance industry and industries broadly. We continue to be aspirational in that regard, but we are heightening our focus on results. And probably the best manifestation that I know many of you in the room are happy about is that with the fourth quarter, we initiated financial guidance for 2023. You'll hear us also talk about our updated long-term guidance through 2025 that Elizabeth will talk about. And it reflects an improved focus of defining what we want to accomplish and then putting all of our effort behind achieving that. It also is a reflection of the higher degree of predictability within our business. And the theme for my section, is delivering a more predictable growth company. And so this is something that you will see expressed not only the financial guidance but in the goals that we set for the Senior Operating Committee, the way that we integrate that into our compensation and our overall culture for the organization. So that's what I would ask you to emphasize. So with those changes, let's turn to the foundations of how we are delivering a predictable growth company. We'll start with the platform and where we sit with our insurance-only focus. I think you're certainly familiar with the scale of our revenues, $2.4 billion in revenues with very high recurring revenue elements, a very strong retention in our client base and the diversification across both function in terms of underwriting and claims and geographically, domestically and international. So we start with a very solid and scaled base. And we also see that over the past 5 years, this insurance-only dimension of the business has been growing successfully with a 7.6% organic constant currency EBITDA growth above revenue growth. And I would point out that despite the impact of the global pandemic, we grew in each and every year, which I think is a testament to the stability and the underlying growth dynamics of our business to absorb the impact in a variety of ways across the economy to claims activity, underwriting activity. So this is the growth business and the results that we've been able to achieve over the past 5 years. Let's take a minute and look under the hood. We serve the global insurance industry. We touch nearly every dimension of insurance like no other company that I'm aware of. We have extraordinary diversity across the line of business for insurance as well as the functions that we address. And I'm hopeful that you'll get a sense of that in the solutions room where you can see the variety of businesses and functions that we serve, creating value by delivering data and technology to serve it. And I'd also emphasize this, of course, is a global opportunity. We are based and started in the U.S., but the opportunity to address global needs for this insurance industry remain very strong. So with that, how do we connect with the industry? Well, primarily, it's through the deep data that we have that powers the insurance industry decision-making and processes. And there's a lot on this page, but what I want to convey is the deep data sets. Over 19 petabytes of information is the fuel within the engine. And the spark for our engine is the innovative technology that we apply: artificial intelligence, machine learning, modeling, digital forensics, robotic process automation. And that creates the energy that we transmit through a drive shaft -- multiple drive shafts of the products that we deliver to our clients that help them make better decisions, help them improve their efficiency, improve the customer experience. So that's at the core of what we do and how we transmit it. Now when we pull back to the vehicle, we have a really exceptional business model. With that, advantaged market position, that centrality, with the growing recurring revenues and the operating leverage that drives very strong cash flow, it creates an ability for us to generate a lot of capital that we can reinvest in the business to create more returns, better value for our clients or return capital to our shareholders. Now I'm going to shift metaphors on you here from the vehicle. Any time we see a spiral at Verisk, we tend to think of hurricanes. It's an occupational hazard. And one thing that's fascinating about hurricanes, as I've learned a lot from our extreme events team, is that they're naturally extremely powerful weather phenomenon. But they're driven by a simple economic principle, and it's basic temperature and pressure differentials that drive the extraordinary energy of a hurricane. And in our model, there are some very similar, simple economics that I'd ask all of you to be aware of when we think about the future growth prospects for Verisk. And they consist of, very simply, investing in new data sets and technology at scale for the industry where we can create value, monetize that very quickly across a global industry, and then that delivers top line growth and very strong returns. That's a dynamic that we see continuing to play out again and again and again across multiple insurance business lines and product functions, particularly as technological change continues to accelerate for an industry that is facing a lot of new challenges. So how did we get to this point? I think it's important that we talk about how we got here because it gives us some sense of where we're headed. We, of course, started out as an industry utility for the U.S. property and casualty insurance industry. And that provided our centrality, it provided our scale. And with that came data, and that accumulated into data infrastructure which is now part of our criticality, the defensibility of our business model. And with that data infrastructure, we were able to apply technology innovations through software analytics approaches that created value, drove growth within our business. But now, with that position and you think about that data moving, increasingly, we are becoming a network for the global insurance ecosystem. You can see that in our Specialty Business Solutions business that Tim Rayner will talk about later today. You'll hear that in Maroun Mourad's discussion of the claims ecosystem where we are tying together more and more partners in the overall claims processing. And many of you are aware of the extraordinary value of network companies, whether they're card associations or from an industry that I spend a lot of time in, the exchange industry. And we want to be thinking about how we develop those networks with our centrality with our ability to manage data. To me, that represents a great horizon for how we can create a lot of value for the industry by improving efficiency and speed and data sharing as well as creating value for our company. So this has been very conceptual to this point. But behind any company, of course, there have to be great people and great leaders. And I'm really thrilled to identify our senior team that we have reconstituted, we have shifted. We have increased the amount of business unit leader participation in this group of 10 individuals, 60% of the people on the Senior Operating Committee are new to this role. So we have a new, energized next generation of leadership that is integrated across our overall business. It's diverse from a gender perspective, ethnically, racially. But also importantly, it also reflects a great diversity of external experience. We have experience from JPMorgan with Kathy Card Beckles; we have experience from Chubb and American Express with Sunita Holzer; S&P and Goldman Sachs from Elizabeth; from Zurich and AIG with Maroun Mourad, and a lot of internal experience. Neil Spector has been with Verisk for 20 years. I just signed your congratulatory note, Neil, so you can expect that in the mail in the next couple of days. But we're able to balance a lot of that external perspective also with a great knowledge of our clients and our business. And I think that's exciting. I naturally bring some outside experience that I think has been helpful, and I hope will continue to be helpful for the business. So we're excited about this team, and this team will share a common set of goals that we've discussed with the Board that we're all working towards. And they're very specifically defined. They're measurable, they're achievable, they're realistic and timely, classic smart goals. And they are focused on client objectives, product objectives, team objectives, all of which support our financial objectives. And we will be tracking these on a quarterly basis. So this is a reflection of our focus on results, and they will be downstreamed to our individual business units with distinct goals that support each of these. And this will drive our results-oriented culture, the compensation systems that we'll take this into account, and, I think, deliver a very strong outcome in shifting that orientation of the company. So having defined what the new Verisk is, let's talk about the industry, the challenges it faces and the opportunity. The U.S. insurance industry, as we've depicted here on the left, is massive economically. It's massively complex. You can see the scale of what we're talking about. And it's also critical to the global economy and generally insensitive to economic trends because of its importance. We all need insurance, we all need to buy it every year, that provides tremendous stability. Now notwithstanding that scale, Verisk's revenues represent still a relatively small portion, less than 0.5% of their gross written premium, less than 0.5% of industry expenditures. And it demonstrates both our opportunity to become a more important part and a larger part of the insurance industry in delivering efficiencies. But it also, I think is important to understand how much and how significant the issues are that we can address. If we can find a solution that improves -- reduces industry expenditures by 2%, that's a pretty big number. There's a lot of savings to be had there. If we can reduce fraud by 3%, that's a big amount of value for the industry. And so that, in many ways, propels the economic opportunity that we have to create value for the industry and for our shareholders. It's been part of the equation, and I think will continue to be an important part of the equation. So we know it's a big and it's complex. But is it growing? So when we look out over the long term, a recent report from Swiss Re Institute predicts that the global -- we're now shifting out to a global perspective, the global property and casualty gross written premium market is expected to more than double in the next 20 years, driven by increases in risk from climate, technology, societal and geopolitical risk and a changing legal and regulatory landscape. And that over $2 trillion of gross written premium is split almost equally between the advanced markets and emerging markets. Now right now, we're focused on advanced markets. You'll see the developments and the expansion that we have in a variety of ways within Continental Europe. But we believe longer term, the emerging markets will mature and create opportunities for us to deliver our data sets and our technology to those economies that, in many ways, can leapfrog legacy technologies and jump to newer, more data-oriented and more software-oriented solutions. So what are the primary challenges that the industry faces? Well, we see them in 3 large categories: certainly, rapidly changing technology, the advent of cloud technology, low-code, no-code solution development, digitalization, growing regulatory burden certainly around data privacy, fairness where we're playing a critical role in helping insurance companies evaluate the fairness of their underwriting decisions and, of course, climate and a continued challenging macro environment. High inflation is something that I hear in almost every conversation that I have with CEOs that they are dealing with, how do they manage the costs, how do they incorporate those rising costs into their underwriting decisions and how do they manage the efficiency of their claims element. But they're also dealing with talent retention as the insurance industry has a significant number of generations that are retiring. And value creation continues to be a challenge. But before we get into how we're going to address this, we thought it would be an opportunity to hear from one of our clients and the challenges that they face and how they view Verisk as a partner. And so this is Steve... [Presentation]

I am Steve Rulison. I'm Senior Vice President and Manager of Product Solutions, which supports our U.S. product management organization here at Liberty Mutual. There are so many emerging risks that we're going to be exposed to. I think there's an opportunity for Verisk and Liberty Mutual to really partner in what those emerging risks are and what solutions could be put in place to help manage those risks for the organization and for our customers as well. One of the great things we did last year was we held a strategy session at our Liberty Mutual offices, where members of the Verisk team came and visited with us. What we did is we shared some of our problems that we're facing in the industry, and then Verisk in return shared a lot of the solutions that they had that we could think about and test and implement in the future. Verisk is one of our top partners, and I'm not going to use the word vendors here, it's one of our top partners here in terms of what we spend and the value that we get.

So didn't put those words in his mouth, partner, not a vendor. That's what we aspire to. I can't guarantee that we're at that point with every single client, but I can guarantee we have the potential, we have the opportunity, and that's what we're working towards. How do we leverage that competitive position? Well, the simple straightforward point is we are at the center of this large complex ecosystem, connecting insurers, reinsurers, contractors, brokers, underlying policyholders, regulators. And if you think about the information that flows through that ecosystem and the transactions that occur between all of those, you can begin to get a feel for the network dynamic that exists here and our ability to improve the efficiency and the effectiveness of all of those interactions. If you spend time in the solutions gallery, you'll begin to see how we are connecting and tying those together on the contractor solutions, in allowing insurance companies to communicate not only with contractors but with their policyholders in our claims experience program. I was recently at our Elevate Conference focused on the insurance and the claims side, and one of the top executives at Allstate gave a presentation talking about how they have taken our claims experience product and found new ways to use it that creates value for them. That was thrilling. He found ways to use it that we hadn't even thought of. And we're going to be able to incorporate that and expand that to create values. And he was sharing that with the industry. So this is where I think the data is increasingly the transaction, and refining ways to connect elements that hadn't been connected before and reengineering the efficiency of that operation. So how do we estimate the size of this opportunity? You'll hear today from each of the business units, their TAMs for underwriting and rating of about $15 billion, of which we currently have about a 12% market share. And we continue to expect that we will grow faster than the market as we apply our data and our technology to the opportunities that exist within the underwriting and rating in section. And in claims, we estimate approximately a $5 billion total addressable market with a 15% market share, also where we're growing faster by disrupting and automating much of the legacy process. But embedded in here are also TAMs that didn't exist 5 years ago in life insurance and in marketing. And so as we are able to develop the horizon for new technology applications, part of the way we expand these TAMs is by creating new TAMs. And so why will we continue to succeed at capturing these TAMs and creating new ones? The competitive advantages that we have are pretty substantial. The long-standing industry relationships, our deep insurance expertise and the ability to deliver the data and technology is absolutely critical. And this is where -- I think when you think about the opportunity and the strengths that we bring and the stability and the established data sets, it's hard to imagine better positioning. So how will we succeed against this? And what do we hope to deliver? So we have very clear execution priorities for the business. We're going to drive consistent growth. we're going to deliver margin expansion, and we're going to maintain exceptional capital discipline. So let's drill into each one. We're going to drive consistent and predictable growth by extending our reach. You will hear each of our business unit leaders address both sides of this equation. Number one, in the darker blue, in those businesses where we have a high penetration, how we are continuing to invest in creating new value for our clients that we can leverage through value-based pricing to improve and strengthen our growth rates within each of those, adding more value to our clients and capturing a portion of that value. You'll hear about the initiatives like core lines reimagined, the Touchstone migration and the growing ecosystem on the claims side. And then supplementing that, the next level is our ability to build leadership in new markets where we are penetrating a new opportunity as we are in life insurance. Marketing, our specialty business solutions that Tim Rayner will talk about, where we are developing a new data and ecosystem for the Lloyd's nonstandard market and in resilience and sustainability through our Verisk Maplecroft subsidiary. And these represent opportunities to build strong positions that ultimately can migrate into our highly penetrated businesses where we sustain, accelerate and tie them together. Now these are discrete, but we're also focused from a go-to-market standpoint on how we can expand the -- our clients' utilization of all of these through cross-sell. And what you see on this page is a depiction of the number of products that we sell to each customer categorized by the size of our customers. So we have the top 10, 11 to 25, 25 to 100 and 100 to 500. And you can see in each of these categories that we have increased the number of products that we sell to them and done that across each of the size categories and in each year or each period from 2016, 2018, 2020, '22. These numbers reflect our current portfolio of products. And I want to emphasize that you can see in our top 10 customers that on average, they're purchasing 16.9 products, and that only represents about 50% penetration of our total number of addressable product categories of 33. And it also shows that our smaller and midsized clients, as they grow and I think -- and increase their sophistication, they have an even greater potential to utilize a broader set of products that we have to offer, additional opportunities for growth. And part of how we support both the expansion of that opportunity, as I described on the previous slide and this cross-sell is through a very diverse innovation strategy. You can talk about innovation broadly, but I think it's important to break it down. We think about innovation from a sustainable innovation perspective where we're adding value to existing products, as we are with the Touchstone SaaS migration, portions of the core lines reimagined. But we're also looking for transformational innovation as we have with LightSpeed. You'll hear Neil talk about the LightSpeed product and how we were able to address a need for our client carriers that needed to deliver a bindable quote more quickly to their -- to the point of sale. And that was transformational for that industry, responding to industry evolution. We're also looking for disruptive innovations where we can capture market share from established and legacy businesses as we are in life, critical illness and some automated risk tools in -- for medical products in Asia. And innovation isn't just about revenue. We're also looking for how we can innovate to improve our efficiency. And if you -- again, sorry, for the repeated plugs, but in the solutions gallery, hopefully you'll see our field data innovation of our future of data collection for our field professionals that are gathering data on commercial properties. This is an opportunity for us not only to improve their efficiency but also to gather more data that we can utilize for our clients. So all of these are areas that will continue to utilize to drive overall growth within the business. The second priority, margin expansion. Multiple levers to do that. I want to start with making clear that our business has great operating leverage on a native basis. It's a function of us -- our subscription business and the high incremental returns of building a product once and selling it many times. But we've supplemented that with the cost actions that we've taken in order to achieve the 300 to 500 basis points margin expansion within our business. And Elizabeth will talk about that in more detail, but we'll continue to look for those types of step changes within our organization to boost that margin. And then we also have to understand, as Elizabeth will describe, is that we also have investments that we're making in new growth businesses that we think generate tremendous value through growth and high returns as well as in acquisitions where we can create value, as we have with our FAST acquisition, which we'll highlight, that will come in initially at a lower margin but we believe have strong operating leverage and actually driving very strong improvements in margin over time, adding to our overall margin momentum. And then finally, we're going to make certain that we continue to maintain our capital discipline. We have strong internal returns on our investments in our products. We think we have very attractive returns in the selective M&A that we've done, where we can bring our scale to bear within acquisitions like Jornaya and Infutor, Opta and FAST. And we'll continue to maintain that strong balance sheet. Probably more important this week than anywhere else, knowing for our clients that our stability, our financial sustainability is something that they can rely on. We do think it's a competitive differentiator. And where we can't deploy capital efficiency, we're going to return that capital to shareholders. So all of these contribute to what we expect to deliver in our long-term growth expectations through 2025. I won't read through these. Elizabeth will talk about them in detail. But you're going to hear in each of the presentations how we are working to achieve this and hopefully achieve this at the highest level possible. We're all incented in order to deliver on these and all of our focus and our results are oriented to delivering on these results. So in summary, what you've heard is our laser focus on the insurance business, how we're leveraging our extraordinary competitive position to deliver value to our clients and ultimately to our shareholders and the financial results in terms of clear growth, profitability and our capital allocation discipline. That is at the center of the new Verisk, which we believe is a focused and predictable growth company. So with that, thank you for your patience. I'd be delighted to take questions at this point, and then we'll have a break.

So if you just give a moment here for the folks. Thank you, Kevin. Why don't we go to Manav first here. Yes, John -- I'm sorry, Greg.

The first question, Lee, was in the TAM chart that you showed on the 12% to 15% share. How much of that remaining share is just internal solutions that you need to sell more of your product you showed that other slide? Or can you just talk briefly about some of the other major competitors in there, maybe if there, are that you're going after? And then the second one was you highlighted those faster growth areas in the slide. Can you just help quantify like how big those are in the mix of the business?

Yes. So thank you, Manav. So question is on the TAMs and what some of the composition of that is going to be. And then on the growth side, I'm going to defer that question to Elizabeth's section where she'll go into more detail. So I think she may answer some of those questions in the course of her remarks. So the question on the TAM is these TAMs are aggregations of each of the individual business units. And so it may be -- it's hard to summarize them because each of them are kind of specific to their individual business units. I will say they are a blend of internal costs that we believe the industry bears in the underwriting side or on the claims side as well as a collection of external vendors, some of whom are competitors to us, some of whom are in adjacent areas that we believe we have an opportunity to recapture value. Some of them, I think, interestingly, are vendors who have taken the Verisk product and found ways to add value to it or integrate it in some other way or some other function that represents an opportunity for us in a way to reabsorb that value. So it's a combination of each of those elements. But I think when we get into the question-and-answer session, we can probably provide a little bit more granularity. I don't want to go through each one of them at this stage. Okay. I think Greg has a -- and then Andrew, we'll come to you. Greg?

Greg Peters with Raymond James. I was particularly interested in your slide about top customers based on revenue -- Verisk revenue. And you showed in a trajectory of -- a positive trajectory of increasing products for each different customer set. Have you gone through and sort of road mapped out each grouping what your targets are when we get to 2025 in terms of products per customer? And maybe -- I know -- gives us sort of your go-to-market strategy on that, how do you intend to improve that?

Yes. Greg, thank you very much for the question. The question is when you look at those average products per customers by client group, do we map that out in our go-to-market strategy? And so delighted, Glenn Brooks is here in our audience, Head of our Sales team for underwriting. And he and the rest of the sales team for claims and extreme events have what they refer to as a white space chart where, for each client, we look at what are we selling to that client, what are their needs and then what are our opportunities to tie in or introduce those products and expand that. And beyond the sales effort, how do we find ways to make those products more valuable by integrating them into the system or the function that we're dealing with? And who are the relevant decision makers and where can we communicate the value of those products? So it is a very distinct element of how we think about the -- our go-to-market strategy and our efforts to expand that over time. I would add to that, on the client front, we are expecting that the strengthening of a client dialogue at a senior level, at the strategic level is helpful because if we can make it very clear how that product will reduce costs, help them manage their overall revenue growth within the business, we have found that, that then provides a lot of downstream support. And we've experienced that in one specific client who is a substantial client that had expressed some frustration around our orientation toward their objective, and now we have multiple initiatives along that line. So that is very much part of our go-to-market strategy and one that we think we'll be able to further enhance with this focus on the client as well as at the industry level, if we can find new solutions to expand that. Okay. Andrew.

It's Andrew Steinerman at JPMorgan. I was also intrigued by that $19.7 billion TAM on Slide 26. You can imagine, I brought with me today the Verisk 2018 TAM. It was $9 billion for Verisk insurance, including international underwriting and claims. And so basically, over 5 years, the company is presenting a doubling of TAM. So do you feel like maybe the definition changed? Or do you feel like Verisk opportunities have doubled over the last 5 years? And of the $19.7 billion, is this truly addressable by Verisk? And do you see an increasing outsourcing of new time opportunities?

Yes. Andrew, thank you. So Andrew, who I remember from my first Investor Day back in 2017, always has great questions. It also keeps us honest to what we have done historically. So we appreciate that. And so the short answer is yes. And I want to describe how that is. I think that we have seen with -- relative to where we were previously, the industry's engagement around cloud, the cloud, the receptivity to it, a next generation of more data-forward thinking and analytic-forward thinking has created, I think, more receptivity to many of these data and analytics elements to the business. So there is a, I think, more receptivity, more familiarity. They've also experienced more competitive pressure from new entrants to the market, and LightSpeed would be a perfect example. And so probably 5 years ago, the LightSpeed opportunity would be TAM that didn't exist, and so we're now capturing that. In addition, have new areas such as Verisk Marketing Solutions, where we, in this more digitized environment, we now have an ability to address their marketing spend. which is a massive amount of spend. Anybody that watches television can understand the insurance industry spends an awful lot on advertising. And so our ability to address that spend is significant. We've also added the life insurance market with the FAST acquisition. So that is another significant area. And I think our expansion or the opportunity internationally has increased as they've become more receptive. And so yes, it's a significant amount. But when you think about the components and receptivity, I think it's a fair representation of how we think the opportunity has increased. Let's go over here on the right, Toni?

Toni Kaplan from Morgan Stanley. I wanted to ask about sort of the higher growth areas, the marketing, the international, the life insurance. I guess, when you think about Verisk's position in those faster-growth areas versus sort of the core, just give a sense of how far are you along. Do you have most of the capabilities that you need? Are there more that you would need to really become leaders in those particular areas? Maybe if you could give us a sense on how far in each of those areas you are.

Yes. Thank you, Toni. So the question is on these growth areas, how do we feel about where we are in those and what do we need, if anything, supplementally in order to penetrate those. And I think I'd start off by saying that in each of these areas, we have a product that has clearly delivered value for an insurance company that we believe, because of their -- the validation. When we -- if it's an acquisition or a product that we've developed, it has to demonstrate that someone really sees value there. And so in that respect, I think the short answer is yes, we have what we need in order to create value for our clients. Can we supplement that by tying new data sets in or integrating it into an existing workflow to magnify that value? Yes. And we'll look for opportunities to do that. I'll use our Specialty Business Solutions business as an example. We started off with the Sequel workflow product in the nonstandard market. We've added Rulebook as a ratings engine, we've added Whitespace as a placement environment. We continue to add elements that strengthen that proposition. But at the core level, we knew that we had the value there. So -- and in marketing, for instance, the initial acquisition of Jornaya, that focus on insurance, the differentiation of our ability to help the carrier understand, are they getting an effective economic yield off of their marketing spend was sufficient in and of itself and creating value. But we then were able to add additional data sets through Infutor that gave them additional insight on those customers. So I believe that, that's case -- we want to start with something that we know works and we can expand on. I'll leave it there, but you may have an opportunity to hear directly from our business leaders on each of those topics. Okay. Actually, pardon me, I think this gentleman was before over on the other side.

Joel Riechers with Truist Securities. You guys called out a 4.5% 20-year CAGR. And I was really kind of curious as to what you see prevents Verisk from growing faster than the market and maybe how you guys would tap EMs to accelerate growth there?

And I'm sorry, I wanted to make sure that I centered on the number that you had put out. What...

Yes. I thought I saw a 4.5% 20-year CAGR. You guys had like the 2040 outlook...

Was this the global -- looking at the global P&C growth? Is that what you're referring to?

Yes, yes.

Yes. So that's the market as a whole. So for global P&C, the Swiss Re Institute, if we're talking about the same page, that's the growth, the $880 billion of growth from their basis. So that's the overall market expansion. That's not what our growth -- what we expect our growth rate to be. We think that we're actually able to penetrate that market more quickly. And so I would direct you to the 2025 ranges of CAGRs of 6% to 8% organic revenue growth and the 7% to 10% EBITDA growth. That's what we expect to deliver out of a global growth market that is probably mid-single digits growth. Okay. I'll come right to you. Thank you.

This is Stephanie Moore with Jefferies. I wanted to think -- or maybe you could speak a bit on how you are balancing margin expansion as well as you outlined, industry challenges around just technology trends and changing technology requirements and kind of as you think about investing in your own product and technology needs over time.

Yes. Thank you, Stephanie. So it is a balancing act. And what we first start with are what are the results that we have said and committed to. And so we have made a very clear statement in terms of what our expectations are for margin improvement. That's our first priority, we need to deliver on that. And then we are then also looking at how we will invest for growth given the opportunities that we have as well as for returns on capital. Now so when you look at these goals, we are trying to achieve a balance between what investors are looking for in terms of our operating leverage and expressing that through margin improvement while, at the same time, optimizing to the extent that we can in achieving the growth objectives and return objectives that we have. And the business guidance that what we're providing, we think is an appropriate balance of that. But it is something that we have to look at and we look at probably most carefully in any acquisition that we are looking at, because, as I've described, that in some ways reflects a bigger impact on our margin. And so we have to be doubly certain that we can create value through that acquisition by accelerating the revenue growth or improving their efficiency. But it also applies to significant investments that we're making in products like LightSpeed or in our core lines reimagine. But we do believe that there are significant value-creating opportunities that we can then balance against our margin improvement objective.

Andrew Nicholas with William Blair. There was an earlier slide kind of pairing up or comparing the old Verisk versus the new Verisk. And one of the rows was organization. I think you went from siloed to integrated. Is that primarily a function of the divestitures? Or are there -- could you kind of outline some of the examples of within the insurance business where you've become more integrated over the past 12 to 18 months?

Yes. So thank you for the question. The question is, does that shift from silo to integration, was that a function of the divestiture? I think certainly that was the kicking off point. And so with that structural change and the separation of the noninsurance businesses, it created the environment where we were able to think about, right, how do we manage this business and how do we make certain that we're thinking across the industry, lifting that focus to the client and the industry. So that was certainly the catalyst. But it also is a cultural change and making certain that we are encouraging that dialogue that we now have at the Senior Operating Committee where we're thinking about this client or the industry and how we tie our product sets and our opportunities across that. And so that's something that we want to encourage within the culture, and it will become part of what we do at a senior level. And then that will also, I think, encourage or, I should say, accelerate the level of dialogue that we have between the business units. And we're already seeing that. And I will ask you to perhaps revisit that question in our session with the business unit leaders because I think each of them will be able to discuss how they are tying one of their products or multiple of their products to different data sets or different functionalities we have in the other business units. One, for instance, is on the reinsurance side, tying together the Touchstone platform what we're doing in our specialty business solutions. But I don't want to give away too much, but I think it will be a really good discussion when we have all the business unit leaders up here. Okay. Gentleman here? Thank you, Jeff.

Yes. Thanks. Both on the earnings call and a couple of times this morning, you've talked about an opportunity to kind of enhance your focus on the customer or the client or your relations with them. Just help me understand where that's coming from. Was there a bubbling up issue at the business? Is this just a change as you take over the CEO role? And just how do you operationalize that? Just how much opportunity comes from it?

Yes. Thank you, Jeff. So the question is this discussion of elevating the client focus and the industry focus. What is that, and what is that addressing? I think fundamentally, the starting point was that we have been a great product-oriented culture focused on the Head of Claims, the Head of Underwriting and those functions, and that's the way the business naturally evolved. And the opportunity, I think, to engage at the C-suite level in understanding what our clients' financial objectives are from a revenue growth, from a risk management, from a client engagement perspective, exists at that level where we haven't had as much contact. And it's, to me, very addressable. It's strategic. I think we have to develop a broader skill set. I tend to -- I expect to lead that effort and bring our senior leadership team into that. It's -- I've had a great amount of reception from almost the entire senior operating team and their willingness to engage in it. And it facilitates, I think, a better industry engagement, so partly we at the client level, but also in being more engaged in industry events and understanding the issues that the industry is struggling with to elevate Verisk's participation in that dialogue where we can take advantage of that centrality and that data. So I think it is just a cultural opportunity to increase that dialogue, think more holistically about the needs of our clients and the industry as a whole that expands that horizon of what we can be addressing. Okay. I think we have time for one more question before we go to break. Sorry, he beat you just by 1 second.

It's Jeff Silber with BMO Capital Markets. You've talked about a lot of changes that have gone on over the past year or so. I'm just curious internally how has the employee receptivity been to that, turnover rates, anything you can talk about would be great.

Yes. Jeff, thank you very much. It's a very important question. I want to address it both at the employee level, where you addressed the question of how is the organization adjusting to this change, but also at the client level. And so first, on the employee side. We think the energy has been really strong and positive. We did an engagement survey recently in -- I think it was in November. And the -- we had 77% engagement on that. I think the return of the focus to insurance has been something that the organization has embraced. In a lot of ways, that's the cultural core of the organization. I also think that the elevation of the next generation of leadership and the energy that they bring is refreshing for the organization. So, so far, the feedback that we've had both directly in town halls as well as in anonymous surveys has been positive. On the client side, we have gotten a very positive reception. I felt it directly and heard it directly at our Elevate Conference in Lehi with the claims side of the business. Multiple CEOs and leaders on the claims side have said, "Look, we really appreciate the openness and the receptivity to opening our ecosystem on the claims side to integrate more value." And the feedback that I've gotten from probably a dozen in-person CEO meetings to talk about the breadth of what we are doing for them and how we can improve on that has been very positive as well. So -- and finally, I think the momentum that we demonstrated in the fourth quarter certainly demonstrates that with all this change, we have been able to maintain a really strong financial performance. Okay. So with that, thank you, again. Please spend some time with our solutions gallery, and we look forward to continuing the discussion today. [Break]

Okay. We're set. Great. Thank you. Welcome back from the break. It's great to be here with you this morning. My name is Neil Spector. I lead the Underwriting Solutions business for Verisk. And as Lee mentioned, I've been with the organization for 20 years, and I've never been as excited as now to be in the insurance industry, serving them during a very challenging time of rapid change and opportunity for both the industry and Verisk. When you think about an industry that hasn't changed much over the years, over the last 5 is there has been rapid change with the advent of new data analytics technology and the macroeconomic environment and the challenges that inflation is creating for our customers. The underwriting function is very important to a customer because it's not only the engine that drives growth for an insurance company, but it's also part of how they determine whether they're going to be profitable or not because you can grow your company in insurance and not be profitable as claims increase, costs increase, you have to get that pricing right. So there's never been a more important time for the industry to rely on a company like Verisk. I'm going to start off with a customer testimonial before I begin.

Hi. I'm Jim Hagerty. I'm the Head of Underwriting Governance at QBE Insurance. We rely on Verisk to be able to provide detailed and granular data across the insurance industry, which is used to be able to develop loss costs or pricing solutions for insurance. My favorite thing about using Verisk Solutions, it's a comprehensive resource and partnership to be able to provide data underwriting solutions, product solutions and claims solutions to help our business become more profitable and to grow.

As Lee mentioned, we strive to be partners with our customer. And as you heard from Jim, we've used this as a partnership. He also described the importance of the industry data that we use to provide solutions to our customers. So now I'm going to get into more detail around our business. You can see here that the underwriting part of our business is a significant part of Verisk's overall revenues at $1.3 billion in revenue. Also, you can see a breakdown of how our revenues are created, 60% of them are what I will call our insurance programs or insurance standard programs, which I'll get into more detail, but that is our forms, rules and loss cost business. 24% of our business comes from underwriting products that insurers use to underwrite specific risks for both commercial and personal lines of insurance. And 16% of our business is in the new exciting growth vectors that Lee talked about in the areas of life, marketing and international expansion. I'll get into more detail there. And you can see that data drives a significant competitive advantage for us because we sit at the center of the industry, and we gain contributory data. We get the losses and premiums from the industry, and that allows us to create market-leading solutions. But also technology and investments in platforms are becoming a bigger part of what we can do to support our customers. Now let's turn to our financial performance. Over the past 5 years, you can see even in cyclical markets, we've had steady, predictable organic growth of 6%. And in addition to that, our revenues kind of break out into -- 84% of them are what I would call high recurring subscription-based revenue with our customers. And you can also see that we have extremely high customer retention rate. And that just goes to show the importance that our solutions are for our customers regardless of market conditions. The industry is going through a lot of rapid change. There's a lot of new data and analytics and technology that's available, the advent of cloud computing, but also the digitization of the insurance product. And if you think about all of this change, we're in the center of helping our customers both lean into these changes and deliver on them. Often customers will tell me, there's no other company besides Verisk that can do the things for us that you do. We help our customers across a number of lines of business of insurance. We help them price and understand risk. Our forms, rules and loss costs are what we also call core line services. That part of our business is where we take in premium and loss data from the industry, we create advisory loss costs that are then filed and approved in over 50 jurisdictions around the country. Insurance is regulated at the state level. We also developed the policy forms or the insurance contracts that define what is covered in an insurance policy. And that consistency, that standard product is something that our customers rely on. Also, we do a lot of work, as [ Steve Rollinson ] from Liberty Mutual mentioned around emerging issues One of the things we're doing is trying to figure out what are the next issues that insurers need to deal with. An example of that will be PFAS or the forever chemicals that you may be reading about that are becoming exposures that companies are worried about. In addition to that, we have the largest commercial property database in the country with commercial properties, and we have a field staff of over 400 engineers that go out and look at individual properties to assess those risks for our customers and database that information. And in the solution center, you can see some of the new advanced technology that Lee had referenced that we're investing to improve the efficiency and the quality by which we collect that data. Lastly, I just want to highlight that we actually evaluate 60,000 communities across the United States for fire protection, flood and for building code effectiveness enforcement. This not only helps our customers to use this data to price risk, but it also helps communities make justifications for investments in new fire protection equipment and new personnel that will actually help lower overall insurance costs in their communities. So now I'm going to describe a little bit more the market opportunities that we have, and I know there were several questions around TAM. So I'll try to address those. When you look at this particular TAM of $4 billion for U.S. P&C and our 30% market position, this TAM is combined of the opportunities for our existing products to expand. It also represents internal spend that carriers might have where we can outsource or do functions for them more efficiently. And it also represents competitive positions that we have an opportunity to take from competition. And Lee also highlighted the fact that several companies have really been able to build on our content, and we have an opportunity to recapture some of that value. Also, you can see here that our growth historically has been much higher than the average for P&C. And our goal, and I'll be talking about how we'll drive accelerated revenue growth. The underwriting area in property and casualty has some specific challenges. In 2021, there was an independent study done by the institutes in [indiscernible] which essentially said that underwriters care most about these 3 things. One is the efficiency and automation by which they can do their job. The second is the accuracy by which the data and analytics that they use is and that drives profitability. And thirdly is the ability to deliver an enhanced customer experience in a more digital way. And that's never been more important over the -- since the last 3 years of the pandemic. This all leads to an increased desire for Verisk products and services. Now let's turn to our strategy to drive growth. So a question was asked before about the expanding TAM and how our addressable market has expanded significantly over the last 5 years. And these are 3 of the areas that we've been able to do that. The life insurance marketing solutions and international expansion for underwriting represents significant new opportunity. In addition to that, our business is there, while they have small market share today, they're growing double digit-ly and they will become a larger part of our business over time. So now I'm going to describe our 4-point plan for delivering accelerated revenue growth. And the way we'll measure success is by growing our revenues by 50 to 100 basis points faster than our historical growth average of 6%. Turning to our first growth driver. We are constantly enhancing our products and services. We sit in a position, where I call the virtuous circle, where we get -- industry data comes into our company. And using that industry data, we create market-leading products and solutions that then turn into subscription revenues from our customers. The more customers use our products, the more they have the need to give us data to enhance those products and services. And it's a wheel that just kind of spins. Lee used the analogy of a hurricane, and I think that kind of spinning motion is appropriate here too, because the more data the customers give us, the more value we can bring back. An example of that is how we can benchmark for a carrier, how they're performing against the industry. And we can do that at a line of business level and in geographic regions. And they can't do that without them providing us data. Over the last 3 years, over 100 new companies have committed to give us data, which will increase the size of our database by 25%. Now I'm going to turn to our next growth driver, which is the modernization of our core line services. Lee mentioned our Reimagine program. This is a modernization effort where we're taking the forms, rules and loss costs and we're digitizing and creating a new platform. You can see the demonstration of the new platform in the solution center. This is a large multistage investment that we're making to ensure that these products are the core products for the industry for the next 50 years. And I just want to provide an example on the growth side of how this can generate new opportunities for Verisk. A customer recently shared with us that they have over 10,000 policy forms to manage across all their lines of business. Using our technology and tools, we were able to rationalize that, and we have found in one particular situation, they had 14 different versions of similar policy language across the organization. And using our tools, we were able to bring that down to 1. That drives internal efficiencies for our customers, which drives value in developing these new tools creates new opportunities for sales. Another way that we're driving value for customers and revenue growth is through the expanded coverage of underwriting data. So what you see here is that in our commercial property database, we had just over 5 million properties in the database 3 years ago. And over the last 3 years, we've been able to expand that to almost 16 million properties. And we've done that using advanced data and analytics as well as our field staff with our advanced technology. That drives more opportunities for our customers to use this when they're quoting property business. And also, you can see on the right, we've not just focused on the amount of data, but the quality of that data. And what this is telling you is that in 2022, for these 5 primary characteristics, they get 100% data quality every time they access the database. This is driving accelerated revenue growth for our commercial property business. Lee mentioned LightSpeed earlier. The insurance product itself is becoming more digital as our expectations as consumers are to buy more things online, through apps and more virtual interaction. So our customers are driving to provide a better experience. I'm not sure if any of you have had this experience, but I know that when I've purchased car insurance in the past, sometimes the price can change from that initial quote you get to when they go to buying the policy. And the reason that happens is because the insurers order a lot of the expensive underwriting information on the back end. And that saves money, but sometimes creates a change in the price, and it's not a good customer experience. So with LightSpeed, with 3 simple pieces of information, your name, date of birth and address, we can in seconds provide a bindable quote that won't change. And the value is, a customer has a much better shopping experience. But for our customers, they -- in some cases, we've seen a doubling in the number of quotes they've gotten and an increase in their conversion ratio from quotes to a bound policy by 30% to 60%. LightSpeed is available not only for auto but also for home and small business. And it also allows us to help our customers cross-sell their products because if you're coming in to buy an auto policy, they can then cross-sell you a home policy as well. And it's deeply embedded in the workflow of our customers. I wanted to show you an example, Lee talked about our effort to penetrate our customers through more products and services over time, growing the number of products and services. I think in his example, he showed on average large customers are about 17 products on average versus the 33%. This is an example of a large carrier over a 10-year period. And you can see that their growth with us is over 9% per year. And the reason for that growth is because we're increasing the number of products and services that we're selling to them as they're growing as their needs are changing and as we're innovating and launching new products. This is another example. In this case, this is a company that formed in 2017. And when they first formed, they came to Verisk because we had the tools and the solutions they needed to go into business. And you can see their revenues went from [ 20,000 ] in the beginning to over [ 3 million ] over a couple of year period. So it just goes to show the power of being able to sell all the solutions. And these are -- all these circles on here are various products that we have sold them over time, culminating in LightSpeed. Now I want to turn to some of our new growth vectors and talk about the opportunities we have to grow there. Lee highlighted FAST as one of the acquisitions that we made. Back in 2019, when we purchased FAST, we did an analysis and found that the life insurance market was significantly behind property and casualty in its use of data and analytics. And we felt this was a great opportunity to take our know-how from property and casualty into the life space. And FAST is a full enterprise software for life insurers. It's cloud based. It's SaaS, it's low code, no code. And the value proposition is really to drive down the total cost of ownership of a product. If you think about these large system implementations, they cost companies a lot of money and FAST is able to put out new programs or new insurance products for customers in weeks instead of months or years. You'll learn more about this business from Tom Famularo at the panel session that will be coming up. And the other opportunity we have with FAST is to embed our data and analytics into their platform for our customers. Over the last 3 years since the acquisition, FAST has grown greater than 25%. The next growth vector I'd like to highlight, and Lee talked a bit about this was in the marketing space. When we think about property and casualty insurers, we really didn't have anything on the marketing side. And if you think about the opportunities for growth, insurers spend a lot of money to acquire new business. And so this was an opportunity for us to help insurers through the acquisition of both Jornaya in 2020 and Infutor in 2022. And really, what we do is, we help identify who's in the market shopping, what products they should go to those customers with and when they should approach those customers. And this helps our customers drive down acquisition costs and increase conversions of new business. When you connect that together to all the underwriting capabilities we have and the claims capabilities, we're the only company that can provide a true life cycle from acquiring new business through underwriting and claims. Matt Lohman, who leads this business will also be on our panel coming up and will give you more insight into the business. And lastly, I want to talk about our opportunities to grow and expand internationally. Now insurance is a very localized product. Every market has its own unique characteristics. So you can't just take the U.S. products and take them overseas. So what we've done over the past several years is, made some strategic acquisitions that have created an opportunity for us. Today, in the U.K. and Ireland, we have a set of underwriting products for personal and commercial lines. Last year, we purchased Opta, up in Canada, which is the largest and leading property solution provider in Canada. And we're able to then take some of the capabilities we have around aerial imagery, building codes and loss costs for commercial buildings and enhance the data up in Canada to provide enhanced solutions to our customers there. And lastly, we have analytics that help travel insurance for companies to find pre-existing conditions to be able to better price travel insurance globally. And that business is -- we are the leader in the U.K., and we have opportunities for expansion in Asia. Again, our international efforts are growing at double digits. So finally, our success will be measured based on our ability to accelerate our revenue growth by 50 to 100 basis points starting this year. And the keys to driving growth are investment in our core. So you talked -- we talked about our Reimagine program, our loss cost rules and forms business, driving out industry costs and increasing value for customers. Our LightSpeed strategy around the digitization of the underwriting process and the expansion of both data quality, increase in data quality and expansion of data in our commercial properties business. And lastly, on our new growth vectors of life, marketing and international. These will help us achieve Verisk's overall goals of expanded margins, accelerated revenue growth and increase in return on invested capital. I've been with the company for over 20 years, and I've never been more excited than I am today about our opportunities for growth and to support the insurance industry. Our strong competitive position with contributory data and Advantage products that will drive efficiencies for the industry. Our dependable track record of launching market-leading products into the market as well as our new growth opportunities in life, marketing and international, these will all help us deliver on our goals of expanded revenue growth in the coming years. I want to thank you for your time this morning. And now I'm going to turn it over to my colleague, Bill Churney.

Well, good morning, everyone. Pleasure to be with you here. Again, my name is Bill Churney. I have the honor of leading our Extreme Event Solutions business, one which I've also been with for over 20 years now. I'm also very glad to see that so many of you are actually here in the room, and we didn't have a Nor'easter to take this out. My colleagues laugh because I would have gotten blamed somehow if that had affected this event. So that's all good. So I'm going to talk about how we're going to try to drive growth through strong execution and bringing best-in-class science and analytics to our clients. So I'll give you an overview of our business, talk about the market opportunities that are in front of us and then what's our strategy to drive growth. So if you think about the Extreme Event Solutions business today, there's really 3 component companies that make this up. First is our catastrophe modeling business that historically, many of you would be familiar with as AIR. We have our Verisk Maplecroft business, which provides ESG risk analytics to corporations, investors and insurers and also AER, which does climate and weather research for government and industry. All told, we're about $300 million in revenue. Our client base, primarily in the insurance industry, you can see it's relatively split between insurers, reinsurers and brokers but we're also serving an increasing number of corporations and government clients as well. Now from a reporting perspective, on a Verisk level, we sit within the underwriting and rating group. What are some key characteristics that describe our business today? Well, we have over 100 PhDs on staff. So think meteorologists, hydrologists, seismologists, engineers of all type. So it's quite a brain trust that we have, and that's before you even consider the very talented software development teams that we have. Now these teams come together to build both a global suite of over 170 ESG risk indices for clients as well as models that support over 110 countries around the world. Our client base is accordingly global, over 500 customers around the world. And today, more than 35% of our revenue comes from companies that are based outside the U.S. Now if you think about the value that our clients derive from our solutions, one way to look at that is the concern that they themselves place on the types of risks we're helping them to manage. So each year in the run-up to Davos, the World Economic Forum puts out what they call their Global Risks Report. And if you were to look in that, you would see that because of the solutions embedded in the 5 circles here, we're helping clients manage 8 of those top 10 risks. So this is natural disaster risk, climate change, biodiversity risk, geopolitical risk and more. Now we deliver these risks and analytics through enterprise-grade software. You've heard the Touchstone platform mentioned several times. I'd encourage you to give a look at that in the solutions gallery. And clients embed these analytics into their workflow through this software. So they can do things like risk management and pricing, portfolio management, risk transfer. And if we were to look a little deeper into the world of extreme events and the impact on the insurance industry, we're helping the industry deal with one of the more significant loss drivers that it faces each year. So if you look at our global suite of models, we have kind of advised the industry that on average, the global industry should expect over $120 billion of insured catastrophe losses each year. Now in the wheel around this, you can see it comes from a range of different perils. You might be surprised to see that on an average basis, though, the top driver is not hurricanes or earthquakes, but actually severe storms. So think hail and tornado. But in the end, what this leads our clients to -- encourage us to do is to continue to update, improve and expand those models. And our ability to do that to deliver the analytics through enterprise-grade software has led to some solid and consistent financial performance. So over the last 5 years, we've been able to grow at an 8.5% annual rate. And if you break that down, about 87% of our revenue comes from subscription clients, typically through multiyear deals. The growth has also been well supported by high client retention rates over 95%. But if we look a little deeper, what are some of the key strengths that our clients have pointed out to us in our conversations with them. Well, first, it does come from the models. And I think one interesting proof point for us is that when a insurer or reinsurer issues a catastrophe bond to the financial markets, they have the option to choose which model they want to use. They're not necessarily limited by the model they use internally. And the fact that Verisk models have supported over 70% of risk transfer since 2018, we think, it's a good sign of the confidence the industry has in our models. It's also through our enterprise-grade software, which delivers them efficiency in their workflows. And it's also, in particular, our ability to lay out a technology road map and actually deliver to that, which helps with their planning. And then a last point, which may be a little counterintuitive given the very technical nature of extreme event modeling is our client service. This really comes to shine through when we're transitioning a client from their incumbent solution over to the Verisk models. We had a good example over the past couple of years. We were transitioning a client over to the Verisk models. They laid out a 2-year transition time frame. They thought it would take quite some period of time to do this. Due to the experience of our team, we were able to make that transition for them in 1 year. It was great for the client. But it was also great for Verisk because we're actually within the contract to move forward to the production, higher level license fees that were associated with that transition. But this is me talking about it. Let's turn now and hear directly from 1 of our clients on the value that we're bringing.

My name is Carl Kearney and I'm the Chief Actuary and Chief Risk Officer for CNA's international business. Within CNA International, we are prodigious users of Verisk software. On the extreme event modeling side, we use Analyze Re, Sequel Impact and Touchstone. What if we didn't have Verisk products? In some respects, that would be the equivalent of trying to land a jet plane with the blinds pulled down in the cockpit. We wouldn't be able to really understand the severity of the risk that we face, akin to not knowing what altitude we're at. We wouldn't be able to understand how to manage the volatility, akin to not knowing exactly where the runway is.

Speaks of the reliance and value clients place on that and the responsibility we have, which our team certainly embraces. So let's now turn and talk about the market opportunities in front of us. Well, as Lee and Neil have already highlighted, there are certainly a range of challenges the insurance industry faces and the world of extreme event risk is no different. A couple of things happening here. One, we have a rising cost of catastrophes, which I'll come back to in just a moment. But the industry is also trying to deal with how do they manage and deal with longer-term climate risk or the incorporation of ESG risk and you see new regulatory regimes like what the SEC is proposing, potentially driving that. And then as with all other parts of their business, driving operational efficiency, the world of risk management and extreme events is very data intensive. These are large data sets, going through very computationally intensive models. And so clients are looking for solutions that help them do the analyses faster, so they can be more responsive. We think this comes together to bring a growing need for Verisk solutions. To this point of increased losses. So what the industry, insurance and reinsurance industry has faced is, if you look at the time period 2012 to 2016, the industry experienced on average about $50 billion in loss per year. But over the last 5 to 6 years, that's gone up to over $100 billion. Now a lot of fingers have been pointed at climate change as the primary or sole culprit in this. But at Verisk, we've been clear in saying, look, there's many factors going in. And actually, the #1 factor is a increase in the number and value of properties at risk. And this is not going away. In fact, I was at a recent industry event a couple of weeks ago and a leading economist for the insurance industry pointed out that over the last 3 years, the -- over 50% of the new housing permits in the United States were issued in Florida, Texas and California, our 3 highest hazard states. So there's some natural variability going on. Yes, climate change is a part of this. There's also some man-made drivers. But Verisk is well positioned to help companies understand each of these drivers of loss in turn. And then finally, one thing that may be a little surprising to some of you, most natural disaster losses in the world are uninsured. And we think this presents a bit of a longer-term growth driver for us. Even in the United States, only about half of natural peril risk is insured today. No one buys flood insurance, no one buys earthquake insurance. You get to a place like Asia, the problem is magnified on a much greater scale, as we're seeing it play out in Turkey and Syria. But over time, we expect these protection gaps to gradually narrow through regulatory pressure or just people moving into the middle class in developing markets and buying more insurance. So if we bring that together, we feel we're operating in a healthy and growing market. So putting together both the market for extreme event modeling as well as global ESG analytics that we see is about a $2.5 billion market. Verisk today is addressing about 12% of that. And we think that market is growing in the mid-single digit range on an annual basis. So let's turn to the strategy to drive growth. We also have a 4-point plan, which I'll step through. And by executing on this plan, we expect to drive growth, 50 to 100 basis points higher than what we've experienced in the recent past. So let's step through these one by one. Our first growth driver is to continue to drive growth through market share gains in our core insurance and reinsurance markets. So if you think about the growth we've experienced in the past few years, that's also ahead of what we see as the market we're addressing, which if you look at the growth in global non-life insurance premiums, that's grown about 5% over the same time period. Now one reason we've been able to grow at a faster rate than the overall market is our success at transitioning a number of large clients from their incumbent solution over to the Verisk solution. As you can see here, over 30 clients have made that switch and those companies in aggregate represent over $40 billion in nonlife premium. And we see continued opportunities for that going forward, in part delivered by or spurred on by the positive recommendations we get from those clients who made that switch. But we're also bringing new clients onto the platform. And I thought I'd give you a case study of the journey that one such company has taken with us. This is a start-up treaty reinsurer who formed in 2020, as part of the so-called Class of 2020 reinsurers. And this organization before they wrote $1 of premium, came to us, they licensed key payroll models in our Touchstone aggregate platform, models for the U.S., Europe and Japan to get them started. They then moved on to a global suite of models as they started to get some business coming in. They added our detailed Touchstone solution to do higher resolution analyses. And then we've been able to provide them with other services, cloud hosting, APIs to drive efficiency and then on a going-forward basis, as their business grows and expands, there's opportunities to expand that license going forward, whether into insurance, liability and so forth. Now over the last several years, we've been able to move them from roughly about a $500,000 a year license up to an increase of over 2x up to over 1.2 million. But within this, this is growth really leveraging our existing models, our existing technology platform. To continue to achieve our goals, we've got to invest in bringing new value to the industry, which brings me to growth driver #2, which is the migration of our core Touchstone platform to a fully SaaS-based solution over the next several years. This is going to enable us to do several things. We'll be able to deliver more quick and rapid deliveries of new technology and functionality with moving away from an annual release cycle to more rapid cycles, leverage the scalability of the cloud to help clients become more efficient, do their analyses more quickly and importantly, be able to deliver updated models to clients on a more frequent basis. And back to the point of the rising cost of catastrophes, this is something that our clients want to see from us. For clients, we expect to see the total cost of ownership on the SaaS platform come down. It will enable them to incorporate these models into their workflows in a shorter period of time. For us, being on the cloud enables us to extend these models to other markets more easily, smaller insurance companies or into noninsurance markets. We'll be able to grow overall hosting revenue by doing this for our entire client base and get clients to revenue more quickly by having the models build on the cloud. Third growth driver is to grow the ESG risk analytics business that I've described to you. We feel we have quite a differentiated offering in the market. It's driven by a few things. One, the breadth of issues that we cover; climate change, biodiversity, human rights risk, geopolitical risk. But the indices we're providing to clients are geospatial in nature, meaning based on where a company is operating or a supplier is operating we can help them understand the risk based on the characteristics of that particular location, provides transparency and a dynamic approach to the risk. So how do we grow this business? Well, first of all, it is growing the current client base. You may be interested to know that today, we have clients that represent over 50% of the total market cap of the S&P 500 and investors representing over $25 trillion in assets under management, some of whom are actually in the room today. So we can continue to grow that. It could be 75% of the total market cap in the coming years and bring it into insurance. This is highly aligned with how insurers think about the risk, and we're off to a, we think, a good start on this. Munich Re recently announced that they're licensing our human rights data sets and bringing that into their workflow. Last point, and this is really, I think, a good showcase of some synergies across the organization where we're taking some existing data sets, combining it with technology to solve a new and pressing use case for the industry. So I mentioned earlier that rising catastrophe losses in large part are being driven by increase in the number and value of properties. Now the data that Neil talked about on the commercial property and also on residential properties is well used by carriers at the point of underwriting. It gets much more difficult for a variety of reasons for both insurers and particularly reinsurers to leverage that data when a reinsurance transaction is going on. And what we're going to be able to do is, take that fantastic data from Neil's team, put it together in a cloud-based solution that overcomes some of these obstacles and bring to market for both insurers and reinsurers a more portfolio-level solution that will help them use better data in their workflow and achieve better pricing and outcomes overall. It also will enable us to bring to market new benchmarking and portfolio solutions that weren't available previously. So how are we going to measure success? Building on this strong track record of growth, by executing on delivering on market share gains, moving the platform to a SaaS-based model, the ESG risk analytics growth and the new product development that I talked about here, we are confident we can get to 50 to 100 basis points growth in excess of the historical number. So to conclude, I think we've got a strong track record of growth. We have a large and healthy market that's growing, high-quality science, enterprise-grade software, which we think will lead to both continued revenue growth and supporting the overall margin growth of the business. So with that, I will conclude and turn the floor over to my colleague, Maroun Mourad.

Thank you, Bill. Good morning, everyone. Short disclaimer. I get slightly more excited about the insurance business than about 99.9% of humans. So I'm fully aware of that. So please bear with me. My name is Maroun. I lead our claims business. I've been in the insurance space for -- well, next month, it will be precisely 50% of my life, about 16 years on the balance sheet side, insurers and reinsurers, and I'm coming up on 8 years here at Verisk. And I've had different roles. I worked for Neil in underwriting. I worked with Tom Famularo on the life side. and with Bill and Mr. Rayner here on the international front. And I can honestly say that I am super excited about this role because of the value that we deliver to the industry and the opportunity that claims provides in terms of network effect through the entire world. As anyone in this room who's ever had an experience with a burst pipe, leaking roof, been involved in a car accident, I see a lot of people nodding their heads, you probably agree that the only thing that matters really in the insurance value proposition is the claims servicing at that ultimate moment of truth, when we restore lives and put communities and businesses back on their feet. And of course, the ability to pay and willingness to pay to put people in the same economic position they were in pre-claim. Claims is at the heart of the insurance business, and it's a pretty expensive proposition. Lee had pointed to an $800 billion premium bucket, out of which more than $500 billion amounts for the largest cash outflow bucket, which represent claims, claims adjustment as well as indemnity payments. And this is where Verisk's opportunity lies, to deliver more value to the insurance industry and society at large and also grow our business at a more accelerated rate and scale it while at it. Though I'm new to the claims space, I'm not new to insurance, and I'm blessed and fortunate to have an absolutely rock-solid team that is newly appointed, that comes to the table with passion, ambition, focus and get stuff done attitude in order to help us accelerate our growth. So with that, I'm going to give you an X-ray of our business today, point you to a couple of growth opportunities that we have identified and walk you through how we will deliver accelerated growth over the next 3 years. So I lead a $700 million business there in claims. It's nicely diversified in terms of product solutions with 2 areas where we have market-leading positions in property estimating solutions as well as fraud analytics and antifraud analytics with an international portion of the business that is growing faster than our traditional markets. We have grown, as you could see on the right-hand -- left-hand side of the slide at a rate of 5.8%. Since 2018 at about 2x plus the underlying market premium growth rate. And you'll see in 2020 the dip there that is due to pandemic softness, particularly in our transactional business. And if you go to the right-hand side of the slide, you'll see that the vast majority of our revenue is subscription driven, 74%, there is a bit, 26% that is transactional. This is inclusive of our storm revenue, transactional revenue. And though that transactional bit does carry some cyclicality and variability, it also offers us an opportunity when selling new solutions to existing customers, when selling new solutions to new customers and particularly in the international space. We start with subscription and then move on -- we start with transactional business and move customers to subscription with very, very high retention rates north of 90%. What you may find striking is that only 54% of our revenue comes from insurers. This again speaks to the network effect in the claims business. The rest of the revenue, about 20% comes from independent adjusters and third-party administrators as well as about 20% from contractors on the restoration space, and there's an opportunity for us, again, to amplify the network effect and expand our solutions that exists in the restoration contractor space over to the remodeling space. The solutions we provide cut across all lines of business and help the industry solve some of its most pressing problems. As Neil and Bill and Lee have highlighted, the industry is struggling with workflow automation challenges, digitization and straight-through processing challenges in claims, it's antifraud and expanding on the network effect. And we sit in the middle of the industry to amplify their opportunity and connect the players. Our key strength -- our key market -- our leading market position and property estimating solutions as well as the antifraud space, best in-place -- in-class contributory data that is delivered to customers through APIs and market services along with predictive analytics with the highest quality as well as our ecosystem that is amplifying that network effect. But I'm sure you'd rather hear that from a customer than for me. So let's go over to listen to Sean Burgess, the CCO of Lemonade.

Sean Burgess, I am the Chief Claims Officer at Lemonade. The Verisk solutions that we use are many, in particular, in the claims arena, the property estimating, tools and systems and data are very useful to Lemonade and ones that we use every single day. What we've seen in real life is that our cycle times on a day-to-day claim have dropped anywhere from 10% to 30% just by using these tools. That has a real impact on our bottom line. It's been a great ride with Verisk being able to help people recover from the smallest disaster to the worst disasters that happen. To me, that's what a partnership is about.

Too quick. Okay. As you heard from plenty of our customers, there's a lot of opportunity for Verisk to deliver value across the entire policy life cycle, whether you start with marketing, rating and underwriting, claims, extreme event solutions, as well as software. Within the claims business, I will walk you through our $4.7 billion opportunity across several areas. Let's go straight to the right-hand side of the slide. Even in the property space, where we have a market-leading position and a 53% market share, we believe there's tremendous opportunity still in a couple of areas. One, in our existing traditional market on the residential side. Two, again, to answer one of the questions around how we are connecting the dots, we have a market-leading position on the underwriting side with commercial property. Our position can be enhanced in the claims side for commercial properties. So we've been working very closely with Neil's team in order to leverage that position. Over on the far left, you see antifraud. The coalition against fraud in insurance has identified the fraud problem in the United States across P&C and Life, at $300 million a year. Neil had mentioned a -- Lee had mentioned a [ 3% ] opportunity to help the industry. That's a lot of zeros. And we do have a leading position in the antifraud space, and we will continue to deliver value here for our customers across the policy life cycle. Again, another example of connectivity. Fraud is a lot cheaper to solve at point of sale and underwriting than it is at point of claims. So with Neil's team, we're hyper-connected to deliver antifraud solution at that front and working with Tom Famularo and his crew on the life side to also extend our solutions over to the life space. And casualty represents a big opportunity. I will walk you through how we're delivering value into the casualty, otherwise called also liability space. But before that, let me just highlight that the casualty space represents 50%, about $400 billion of premiums in the United States in the P&C space. And if you recall from a few slides earlier, the revenue only represents 10% of our business here at Verisk. So naturally, we see an opportunity to help customers. So if you're handling -- if you're an adjuster and you're handling a bodily injury claim, you are faced with a lot of manual procedures, a lot of paper shuffling that is laborious, time-consuming and particularly over the past 2 to 3 years, you're not even able to find nurses, doctors, sufficient lawyers to actually help you solve those cases. So we have identified an opportunity working with our customers to deploy OCR, optical character recognition technology as well as APIs and artificial intelligence solutions to help adjusters extract insights like ICD codes, comorbidities, prescription drugs, so on and so forth, highlight them, tag them and serve them up to the adjusters in order to enable them to conduct their business with a lot more speed, precision and productivity. And my colleague, Kate in the solutions gallery can walk you through Discovery Navigator, which is the name of the solution that enables workflow automation. And to the right-hand side here, this is a real client benefit of increased productivity of over 90%, 13x return on investment with the highest accuracy in the industry. And now what I'll do is turn to our growth drivers. And I'll walk you, I hope you see consistency here, our 4-point plan to deliver an accelerated growth of 70 to 200 bps of accelerated growth by 2025. The first point is around our enhanced go-to-market strategy. Let me just stress that we're not operating in a bubble to come up with these strategies. Our enhanced go-to-market strategy has benefited from intense intentional and frequent customer engagement. Since I took on this role in July, I have engaged with over 120 senior claims executives and more than 3 dozen Chief Claims Officers that have given me a lot of very, very, candid feedback, which is -- which we found helpful to drive our strategy forward. One is, we should be more focused on innovations of both existing solutions and new solutions that deliver the most value for our customers. As such, we have intensified our focus on our innovation agenda and also upscale our capabilities and marketing as well as sales to drive that agenda forward. Customers have also encouraged us to bundle more, in order to deliver a more seamless experience and make it easy to -- or easier to connect with Verisk. We have a good track record, on the right-hand side here of the slide of driving cross-sell over the past few years, and we are very confident that we'll be able to accelerate that cross-sell opportunity over the coming period. Here is an example of a tech-based car sharing firm that started contracting with Verisk back in 2017. I'll give you the quick highlights. We started with 1 product. Now we have a bundle of over 9, since 2021 the revenue went from $200,000, and we expect it to hit 1 million, driving a 5x revenue increase. Because of our bundling strategy, they started with auto claims search to help fight fraud, added public records. A couple of years later, moved to vehicle records, which is, again, an opportunity for us to connect across underwriting and claims because that sits in Neil's area and other products to help them conduct their business with more speed, accuracy and productivity. The second growth driver, also has benefited from quite a bit, a very candid customer feedback around Verisk being more siloed than the market would like it to be, not only across the different areas at Verisk, but also within claims. One example of an opportunity is the provider data. As you know, claims is a network problem. And unless you connect the dots across that network, you can now identify efficiencies as well as opportunities to fight fraud. So we have a lot of very rich data that is helpful, sitting in our ClaimSearch database, contributory database that has [ 1.6 billion ] claims as well as our casualty and workers' comp databases. Customers encouraged us, with proper permissions of course, to combine those data and be more engaged with the larger ecosystem to also augment our existing data capabilities with third-party data to deliver more lift, more powerful insights to help them with automation and conduct their business more efficiently. And this is exactly what we're doing. The third driver is international, a very exciting space. I've worked in that space and run this playbook when I worked with Neil on the international side. I'm very excited that we have a growing business. On the international front, that is accretive to our overall claims business here domestically. And we're growing this business in a couple of ways. One, as we have done in the U.K., we move into a territory, initially, we focused on bodily injury and then leveraged our client relationships and network in order to move into other products such as auto and property. And more recently, in Continental Europe, with Germany, France, Spain, Italy and most recently in Scandinavia and Sweden, we are delivering that same growth playbook, solid bodily injury and expand out into property as well as auto. And the fact that we have multi territories and in Continental Europe an operational base will enable us to grow that business and also deliver operational leverage. And last but not least, I gave you a warning earlier about getting excited about insurance. Well, I get super excited about the ecosystem and the network effect. One of the pieces of feedback we've received from the market is that though Verisk is well connected into the ecosystem, we should be more integrated, more deeply integrated in the workflow, great point. Two, we should make it easier for us and for the ecosystem to do business with us in order for us to serve customers holistically, another great point. And we are obsessively focused on our API, data forward and microservices deployment agenda in order to help the industry and the ecosystem deal with us with more ease. I've gotten on the road and similar to talking to our customers, I spoke to the leaders, the founders of the category that you may call the frenemies or coopetition space and assure them that we want to be a good network and ecosystem partner. And that message has been extremely well received. I'll give you 2 data points. About a month ago, at Elevate in Utah at and our property estimating solutions conference, we had over 800 attendees, more than 133 from partners representing over 40 companies. It was great. And next week, I'm heading out to California on Saturday to be with customers and partners at IFM, Insurance Fraud Management Conference, where we have over 300 attendees and over 30 partners that will be present. Of course, we need to not just talk about it but deliver on our commitment and our promise and various benefits from the economics of this ecosystem model. I'll give you a quick example. There's a company under integrated solutions partners called HOVER, it plays in the property estimating space. They have technology that enables an insured consumer to take a picture of a damaged area similar to some of the technology we have outside, under claims experience and the solutions gallery. Then HOVER delivers a 3D model that algorithmically and automatically connects with Xactimate that helps deliver an estimate in a very seamless way. So handheld technology, 3D model, Xactimate estimate is delivered. So what you may ask. Well, everybody wins in the equation. The policyholder, the end consumer wins because they have just been able to avoid making an appointment, waiting at home, having a stranger come into the house, they use handheld technology. The third-party administrator, the adjuster and the insurance company were able to save a ton of money and increase speed and accuracy in that process. And Verisk finally gets to participate and benefit from the economics of these connectivities. So take that example on property estimating solutions and HOVER and amplify it across the entire network and the ecosystem, and this is where the magic happens on that fourth point. And of course, we need to hold ourselves accountable and measure our success. The way we will measure it is by delivering 75 to 200 bps of accelerated growth by 2025. So let me -- before I invite my colleagues to join me on the stage, let me thank you for listening to me for the past 19 minutes. I'm super fired up about the claims opportunity. I am, again, blessed and fortunate to be working with this team and also with the newly formed claims team that comes to the table with a lot of passion, deep experience, ambition focus, which gives me great confidence that we can achieve the results that I've just walked you through. Thank you.

Greg?

There we go. Greg Peters with Raymond James. So Maroun, in your presentation, you talked about feedback from customers and where I think you highlighted, my words not yours, but you highlighted that they wanted you to focus more on innovation and new products. So my question is, in the context of budgets around investment in new products and investments in technology for the 3 business leaders, how do you square that with Lee's mandate to improve margin over the next couple of years? And maybe give us an idea of how the budget looks this year versus last year, et cetera, some sort of color on those points.

Thank you for the question. Actually, the customer feedback and lease mandate marry up very nicely because the customer's feedback was to be more focused on the innovation agenda and focus on opportunities that deliver the most value. Admittedly, we had been focused on perhaps too many things. We have a lot of innovative ideas. I like extreme focus myself and we've gone through the list of innovations, consulted with customers and decided to innovate and focus on a smaller subset of ideas that deliver immediate value and then we will come back and revisit the rest of the ideas in the future.

Ashish? Can we give it to Ashish and then we'll come back to you, Manav?

This is Ashish Sabadra from RBC. Thanks for these disclosures. It was very helpful to see those details out there. So thank you very much for that. A question for all the 3 business leaders would be about value-based pricing. How should we think about as you bring in more innovation and greater value prop for your customer, how do you charge for -- charge higher for it? And how should we think about that being part of the growth algorithm as well?

Sure. Neil, do you want to kick that off?

Sure. Yes. Thank you for the question. And what I would say is, we have a lot of different products and we have a lot of different pricing methodologies. So it's hard to answer that singularly. But what I would say is, first of all, by adding new value, so for example, our investment in our core lines Reimagine program, will create new software workflow technologies that will then sell as additional products. So part of it will just be, there is something new that our customers haven't had before and now they can begin to license that from us. In addition to that, I would say there is an inherent, in some of our pricing ties to policies and transactions. So as I mentioned that we're increasing the number of buildings in the database, the more buildings that are in there, that's going to drive more transactions, the better the quality of the data, the whole LightSpeed concept bundles multiple products together. So where customers used to buy one product from us, through LightSpeed, they might buy 5. So it's a combination of additional products, bundling them together and also creating new value that justifies the fact that as they grow, some of our pricing mechanisms are tied to their growth.

And given the importance of the question, I just want Bill and Maroun just also to comment around how they are looking at value, how we deliver that to customers and kind of capture that on the pricing side, just to kind of give you a full picture here. Bill?

So I think the factors that Neil just highlighted apply for the Extreme Event Solutions as well. They'd be in a bit of a different dimension. So as we're bringing new models to the fore, those can be additions to the license, you're helping clients move into something like liability modeling or new solutions that bring, as Neil said, added value. So the last one I was highlighting takes existing data sets that we have and help solve a new use case to that. But in addition, there's elements associated with the size of the organization and so on that come into that.

Thank you, Ashish. The discussions we've been having with customers have been very, very healthy, and there is a, they've been very, as I mentioned, challenging with respect to focus and innovation. And they're all, like my colleagues mentioned, center around value. Two quick examples in the antifraud space. If you think about the network effect and the power of the contributory claim search database. You could conclude that we probably saved the industry tens of billions of dollars and avoided fraud. Added to this, and I see my colleague, Shane Riedman in the room here, who along with Helena Cornell leads our antifraud solutions business, customers are asking us to deploy image forensics, solutions in order to help them further identify fraud. And I gave you an example on the casualty front, we're really reducing the average time cycle of handling 1 page from 2 minutes to sub 10 seconds, can deliver immense value, productivity while maintaining high-quality insights and accuracy.

I want to tie this together because underneath all of this, what you've heard is there are strong economics where we've seen in, I think, each of the presentations a return on investment that is 5:1, 10:1 in these elements. It becomes a very easy conversation if you can speak to a client about and demonstrate that other clients have achieved that type of return on investment by reducing their costs or improving their growth opportunities or the efficiency of their market or their marketing spend. And so they're happy to pay it because they're getting a substantial benefit. And I think that's the dynamic that we look for in a product development perspective, where can we deliver real ROIs. And just the economics of gravity becomes very clear and convincing. Okay. Manav, please.

I just had one question for Maroun and one for Bill. On the claims side, your colleagues talked about 95% to 99% retention rates. You called out 90%. So just can you help appreciate why it's lower than the other 2? And I presume that's improving, that is a big part of the -- I think you had the most acceleration in your revenue growth that you're targeting. And then, Bill, just for you, like what's in ESG risk and analytics today? If you can just help what's in there, quantify it and maybe how it's growing so far?

Thank you, Manav. As you saw, we have the composition of our revenue in terms of subscription and claims is 74%, which is slightly lower than the other units. This is a combination of the international business, some of the transactional business that comes with -- in the property estimating solutions, which is storm dependent as well as the casualty space. And the -- which had -- the biggest line of business in the casualty space is workers' comp. And as I hope you noticed also we have a very intentional strategy that we're executing on from a go-to-market perspective to move subscription revenue, to move transactional revenue over to the subscription side.

And maybe just to amplify that, Manav, to your question, which you related to the relative turnover, I think when you think about that chart or the pie chart that Maroun showed, where it's 50% insurers and contractors and adjusters, that's a client base that has more natural turnover in it within that sector that is going to contribute to probably lower retention rates, just going to give a natural churn within that business. Okay.

So Manav, to your question on ESG risk analytics. The way I would describe it is, if you think about a company who's thinking about ESG risk, they're thinking about supply chain risk. They know where their locations are, where their suppliers are. These are geospatial risk indices. So they help them understand based on where they're operating or the supplier is operating, what's the climate change risk there, what's human rights, corruption risk and so on, not dependent on what they disclose, but depending on where they're operating and moderated or adjusted rather by the industry that they're in. It could vary greatly. So it's helping companies take a, in our view, a more transparent approach that across a pretty broad range of risk factors and help them develop either their own view of risk or how they would like to look at that, develop their own scoring approach and then how they could disclose that onward. And I think investors are trying to do the same thing. And we're also trying to help -- there the challenge for many of you will be, well, how do I know what the locations are, where do they operate, and we're trying to assist on that. So hopefully that helps in some way.

And Manav, I understand you're looking for scale. It's small. We don't break that out at this point, but it is growing attractively. It's additive to the overall growth rate. And we think the ongoing potential for us to integrate those risk data sets and models into that existing Maplecroft base as well as taking those geospatial risks and integrating into the insurance is the -- an opportunity that we have on both sides. Okay. we'll come right back to you, Andrew.

Thank you. Heather Balsky at Bank of America. Neil, I was hoping you could talk a little bit more about what's going on internationally and what's really driving that double-digit growth? And then Maroun and Neil, I was hoping you could both talk about -- elaborate on -- sorry, I am losing my thoughts, the competitive dynamics internationally as well.

Yes. Great. Well, thank you for the question. So first, in the U.K. and Ireland, we have a series of underwriting products for motor, which is the auto line of business, home and commercial lines. And we've actually created in the U.K., a similar technology to LightSpeed. We call it the data insights hub. And it moves data forward into the quote flow. So very similar themes that are going on. We have smaller market positions internationally. So part of that accelerated growth is just that we start with a smaller market position. We also -- I mentioned it briefly, but travel insurance outside of the United States is a major line of insurance because when people travel, they need health insurance in the countries they're going to travel to. And we actually help insurers identify preexisting conditions and price that risk. That business was impacted during COVID when the global market shut down. But now that we're all traveling again, it's a great opportunity for growth, and we've been able to expand organically into Asia Pacific with that solution specifically. There's a lot of need in that market. And then through acquisition, for example, up in Canada, we added Opta and one of the things that we're looking for is synergies that we can create with these acquisitions. So we have access to aerial imagery and building code data and also building loss costs from those -- that huge commercial property database. And we can use those solutions to actually create new solutions in Canada now that we have market-leading positions with those customers. It gives us the ability to cross-sell and upsell our solutions there. So those are just some of the factors that are delivering the double-digit revenue growth.

Thank you for the question. So as Neil mentioned, the underwriting and also the claims sides internationally are relative newcomers, really started growing around 2016 or so versus the Extreme Events business that I think you've been a lot more international than these 2 business. And we've been able to accelerate the growth on the international side and compete with more established players since 2016 and accelerate the organic growth by combined go-to-market strategy, leveraging our existing customer network as well as the operations. And I'm most excited also now about our growth in Continental Europe where we could effectively deploy our -- the playbook that we used in the U.K. around leveraging the existing platform in order to deliver growth at scale. Naturally, as we go into a new territory, we run into more established players. But I'm very pleased with the underwriting as well as claims teams' abilities to really grow in that market and be able to attract local, well-connected senior leaders that help us in Germany, you need to be German, in Sweden, you need to be Swedish, France, so on and so forth. I've worked internationally for over a decade, and that's a critical component and Verisk is doing just that, have a local face to our solutions and leadership.

And so Heather, I'm going to wrap that question. I'm going to answer Bill's part of it because I think it's the most straightforward, which is that AER is our -- kind of our most naturally global business in dealing with those risks. But what you've heard is that there is a multilayer strategy to us tapping into that international growth opportunity. Part of it is most directly by selling the products that we have, that's kind of Bill's area. Part of it is by taking the products that we have here in the U.S. adapting them to those local markets. And so you've heard elements of that in Maroun's comments and Neil's comments. And the third element is looking for those acquisitions where we can add value and establish a base with an ecosystem or a network that allows us to build on that by adding our data sets or adding other technology. So we're attacking it at those multiple levels. Let's go to -- Andrew has been patient here.

It's Andrew Steinerman, JPMorgan. Neil, I'm going to ask you about the ISO core lines Reimagine. You mentioned an example of a workflow software being bundled in, to add more value, to add more spend. That makes sense. My question is, what is the time line for these new core line products coming to market -- and then sort of curious, obviously, ISO core lines is like the flagship of Verisk. Why hasn't there been kind of new product innovation in core lines until now?

Yes. Great question, Andrew. So let me address the second part of your question first. If you go back in time, let's call it 5, 6 years ago, our systems were mainframe-based, legacy based, so over a 5-year period, which kind of wrapped up about a year ago, we modernized the entire tech stack into the cloud. So now the entire core lines business is cloud-based, new technology, modern technology. It was technology that was really holding us back from making the changes over a longer period of time, say, the last 10 years. The Reimagine program is a multiyear program that started over a year ago. You can actually see in the solution center we launched in January a new platform that we developed last year. And that platform will expand over time. And really, what we found is that we provided a lot of the solutions to our customers, and they were mission-critical, but customers would then take that, and they would bring it into other systems to use it. And now we're providing them direct engagement, a direct portal. You can go in if you're a commercial auto underwriter, you can go to one place for everything you need for commercial auto. We've made it much easier for customers to find the information and to leverage that information. So our goal is to increase the value of what we provide by 4x, part of that will be just the way they interact with it. And part of it will be faster, more speed to market. We're trying to accelerate the time the data comes into Verisk that we can provide insights to executives to make decisions. So we're cutting that down and some of the custom insight reports that I described to you before, those are new that we're able to then take that data, benchmark in real time. An example for you, real time with homeowners. If you think about the cost of inflation and the rising cost of construction in the U.S., sometimes a homeowner's writer will write a policy, and within 6 months, that policy is no longer covering the cost of claims because of the high inflation that we've experienced. It started during COVID, and it's continued. And so our ability to help them more rapidly, kind of see what the market changes are is really the type of insight that we're providing.

[indiscernible]

Yes. So that's a good question. So as far as the acceleration, I lost my mic. As far as the acceleration of the growth, we're already starting to see that in there. So that is going to come slowly over time, but we're already seeing the benefits from the investments we've made already.

Yes, over the back, is that Faiza in the back?

It's Faiza Alwy from Deutsche Bank. I had a question for Maroun. You talked about the innovation and how your customers have been asking for innovation on the claims side. Maybe talk a little bit more about how the competitive environment has evolved over the last few years and how you're sort of better positioned to attack the market given your new innovation?

Thank you for the question, Faiza. The market has, as you probably noticed on the ecosystem slide, the market has evolved quite a bit over the past few years with a lot of innovative companies within the ecosystem coming online. We are addressing this opportunity and challenge in a couple of ways. One, we have upped our game in terms of innovation and delivering on innovative solutions faster into the market over the past few years. But we've really accelerated that since last summer, accelerated it by focusing on innovations that deliver the most value that we are confident we can deploy into the market quickly. That's one side from homegrown innovations. One example, Faiza, would be the claims experience in the solutions gallery, mobile health technology that you can see. On the other side, innovation is not just product innovation, it's process and connectivity innovation. And we have, as I mentioned, a very intentional microservices and API-driven strategy to connect with different parts of the players in the ecosystem and network in order to amplify the value of the opportunity for Verisk, for the industry and deliver more value for our customers.

Toni?

Toni Kaplan from Morgan Stanley. You talked a lot about product development and innovation today. And wanted to understand how much sales processes and go-to-market strategy, where you are now in terms of if you had to rank how good Verisk is versus how good can you get? Is that part of the growth acceleration? And what can you do in terms of sales processes to get better?

Thank you, Toni. I'm going to ask Neil. Neil has spent a lot of time in -- coming from the sales side. And so I think can provide an internal perspective of where we've made a lot of progress and then also some sense of where we're going in terms of where we think we can improve.

Thank you for the question. Well, first of all, we evaluate our sales effectiveness annually, and we make adjustments to compensation and goals to match our business strategy. So that's kind of an annual process that we go through. We also include our sales team in the conversations around product development and customer feedback. So a lot of the feedback, like Maroun talked about a lot of the claims feedback that we get, some of that comes through our sales team. So they're an integral part of delivering feedback to the business on what customers are saying. And we've seen sales effectiveness increasing year-over-year. I think where we have an opportunity for improvement is looking at some external benchmarks around how we perform relative to others. And I also think that -- and Lee said this well earlier, we have done a really good job in the functional areas of our customers. So Head of Underwriting, Head of Claims, Head of Product. But where we haven't had the conversations to the level that we're starting to is at the C-suite level. And so Lee has really encouraged us all to really up the conversation level. Because once you get to that level, you're having a different conversation. It's not really just about the product that we can deliver, it's about what can we do to partner with our customers to help drive value there. And I think that, that is something that we're starting to do now. And we will work more to build that into our go-to-market so that over time, more and more of our customers use that P word, "partner", versus the V word "vendor," right? That is really the ultimate goal. And so I feel good where we are, but I feel like we definitely have room to improve. And we're definitely on the right journey.

So -- and just to add to that. And I want to point out, we've made substantial progress in the sales function. One thing that we look at is overall revenue growth relative to commission growth. And fortunately, we were seeing revenue growth ahead of commission and compensation for that. So that's one gauge of efficiency. But I think we can be doing a better job of where are we directing resources and what is that producing? We're also going to be looking -- we've already updated for 2023, the commission structure to give more credit for cross-sell within the organization, competitive takeaway, which are important points for us. But we'd like to look at, on a more enterprise basis, how efficiently are -- what type of returns are we generating from what we're spending within the sales function. And I think that will also be enhanced by the ability to engage at that senior level. We've seen this in a number of specific instances where if we are selling the value proposition effectively and clearly, then that creates a lot of momentum downstream. And in some ways, it's an easier way to get uptake, then pushing it up from the bottom where you run into budgetary constraints or the rest. And so I think that will be additive, but we'll be monitoring that. One of the challenges that we have to address is tying our data sets across these businesses together. So one thing that we're working on is a common go-to-market sales dashboard so that we can have the data to better assess what we're doing effectively. But I would -- hard to quantify, but I think there's a substantial opportunity for improvement there.

Jeff?

Yes. One specific one for Bill, and then a broader one for the group. Bill your business has historically had good growth and market share gain has been a part of that. I think it's been a good environment for you having a competitor that had some challenges with a tech replatforming. Your multiyear targets assume accelerated growth like for many of your other businesses. I guess help us understand how you continue to take share or if there are other factors that increased their contribution to drive the accelerated growth given that your competitor is under new ownership and has a new tech platform in market? And then for the broader group, maybe just a broader comment on the competitive landscape. You have several scaled competitors that have undergone ownership changes in the last couple of years. The vertical software providers have grown well in the space. There was a reference to a lot of innovative companies in claims. So is competition getting more intense? Is it even noticeable for you?

So I'll start. So Jeff, I think from a competitive standpoint, yes, we're in a very healthy and strong competitive relationship -- or market with our main competitor. I think it really starts with listening to our clients, and I think it's delivering on the road maps has helped us kind of propel that. I see there's more room for that. I was highlighting that case study that we have been able to bring new companies on board. They're still -- in terms of where we see growth prospects that are coming from the market share gains, there's still a lot of clients who insurers in the U.S. outside who don't use a model internally. I think our movement to the cloud will help me reduce some obstacles for them to bring that on board. So I think that will be a growth driver. A little longer term, I mentioned liability modeling, that will be in there. And then for the group as a whole, we talked a little bit about the ESG risk analytics piece, and I think that will continue to push things forward. So we see we have multiple drivers there, but a strong base off of which to build that and some strong relationships with clients that we're continuing to look at them and say, "Just as everybody else did, where can we understand what their pain points are beyond just, hey, it's the modeling?" And I think we're uncovering those as we have a lot of the conversations -- the types of conversations we've been talking about so.

And maybe just Neil and Maroun 30 seconds on your assessment of the competitive environment.

So first of all, there's competition out there. We take it seriously. Maroun has an expression. Act as if the competitor is right behind you, and you can hear them breathing in your ear. We are hyper-focused on competition because you can become complacent if you're not. That being said, I think we've never been in a better situation to compete in the marketplace with the integration of our product capabilities and the bringing together of our data and software platforms. I feel like we're in a better competitive advantage position today than we were in the past. We still have traditional competitors out there like CoreLogic and LexisNexis. On the underwriting side, insurers own programs against core line services, but we feel like we're making good gains.

Yes. In addition to the comments of my colleagues and Lee's earlier comment on sales effectiveness. I'd like to also highlight that we do see more intense competition. We welcome it. I think it also helps us to up our game. And I just want to point out that on the marketing side, which is also another effect of the life blood of the business, we have also been focused on better integrated communications across our customer base and solution sets to highlight the value of the solutions that we're bringing to the market. And I think you will continue to see us get more effective and better at our marketing messaging, which also helps.

And there's a gentleman on the back right there. And this will have to be our last question, but we'll have another Q&A session after the panel.

In seeing your product demos this morning, a lot of those products seem to make a huge amount of sense for clients and to have a very compelling ROI if used correctly. But how are you making sure that the customers are using them correctly and that they don't just fall into a black hole where it's bought and not really used and not much value is gained from it?

I think any one of these can address it. Do you want to go first, Maroun?

Sure. Thank you for the question. Very valid point, particularly given the legacy technology that exists in the insurance space. And we accompany customers on that adoption journey. We have learning tools, educational tools to ensure that they are using the solutions in the most effective and productive way. In some areas, we charge for that service. And in most areas, we don't. Just making sure that customers are successful and getting the highest ROI on their spend.

I'll just add that in the past, we used the analogy, "You drive the truck up, you drop off the stuff and you leave." That's not our motto. We're engaging deeply with customers in the implementation process. So we work through them. For example, LightSpeed, how do they want to use the data? That is a custom setup by customer where they want the data to come in. So the teams are highly engaged to get the customer up and running in the shortest amount of time to make sure that they're getting the value.

Bill, anything you want to add?

I'd just say in the modeling world, we have a certification program. So a user can come and get certified so the client knows or a prospective employer would know, "Hey, this person knows how to use our software."

Well, so thank you very much. And thanks in particular for directing so many questions to this very experienced team. I know -- I sure appreciate it, and I know it's probably more helpful to all of you. So we're going to take a break, and then we'll come back. And Elizabeth will lead a panel of the leaders of several of our growth businesses. Thank you. [Break]

Welcome back, folks. I'm Elizabeth Mann. So far, we've had the chance to take you through the biggest parts of our business, but we're really excited for this panel discussion right now to highlight several of our growth area businesses. I know from the questions already that there's going to be a lot of interest in this space. And selfishly, I'm really excited to do it because I don't get to play a cool customer video in the financial section. So I'm glad to talk to this crew live, who are driving our growth. So I'm going to -- I'm here with Tom Famularo, Matt Lohman and Tim Rayner. I'm going to let them introduce themselves. I'll ask them a couple of questions, but then we'll also open it up to the audience for Q&A, so you can start thinking about questions for this group. But why don't you guys each start by giving a little introduction, and then tell us about the products that you deliver and what problems they help your customers solve.

Thank you, Elizabeth. Hi, everyone. Tom Famularo. I was the Co-Founder and CEO of FAST. We were acquired by Verisk at the end of 2019, so a little over 3 years ago. And FAST was the leading provider in technology platforms core for life, annuity and retirement. And so as being part of FAST, we were able to help our customers who are a little bit at a crossroads in terms of some of the issues that they were dealing with because of the complexities of their technology. And so those issues really are threefold. First is they can't get products out to the market fast enough or more flexible products. The second is struggling to be more digitally engaged with their customers as well as their distribution. And the third is just the total cost of ownership is just way too high. So we have developed a no-code platform that's true SaaS that's there to help solve those 3 problems. And we've been able to help customers be able to do things much quicker. So for example, customers can get products out 3 to 4x faster. From a TCO perspective, they can reduce their cost significantly on both the IT side as well as the operations side. And then the third is they're able to get business agility as we saw in the last few years where they've needed to be able to pivot, and it prepares them for the future as well.

Hi, everybody. I'm Matt Lohman. I have the honor and the privilege of leading us into the marketing solutions space, having come in with the Jornaya acquisition in December 2020. We subsequently acquired another formidable business in Infutor in February of '22. And as a slide highlights, we are out to help improve customer acquisition, make that more profitable and increase retention performance. And we have a unique data set that allows us to do so. We are seeing hundreds of millions of consumer shopping events every year. And to put that into a tangible example, as a consumer goes online, comparison shops for their insurance, we're able to witness and see the origin and history of that lead event happening. We're able to ensure then certify that consent was given by the consumer so that the carrier can comfortably reach out and contact. And then mostly, we are there to discern the true buying intent of that lead so that there is the efficiency play there. And carriers who are using this process today are seeing a 20% increase in conversions with 0 incremental cost to do so. So that's just one way that we're out there in the market, and we're highlighting some of that in the solutions demo out in the lobby today. So I encourage you to stop by there. I'll turn it over to Tim.

Thank you, Matt, and good morning, everyone. So my name is Tim Rayner, and I have the privilege to lead our Specialty Business Solutions business unit. The -- position that I've held since July of last year, having spent the previous 4.5 years at Specialty Business Solutions in various client-facing roles. Specialty Business Solutions was acquired by Verisk in 2017 under the name of Sequel, the name that you may be familiar with having followed Verisk like you do. Specialty Business Solutions provide solutions from "all the way through to outwards reinsurance for the global specialty market." By global specialty market, if you think of Lloyd's being the predominant marketplace that underwriting specialty products. And by specialty products, if you think of oil rigs, space exploration and complex marine, with one of the largest claim events in the specialty marine market being the Costa Concordia disaster in 2012 that resulted in over $2 billion loss. Prior to the pandemic, a lot of the business that is trading Lloyd's has traded face-to-face and on paper, with underwriters literally stamping the insurance contracts using traditional rubber stamping pad. One of our key focuses in line with Neil and the underwriting business unit is the digitization of that. Combine that with the network effect that we're looking to build through the Whitespace platform and digitize that approach us to then have the common benefit of leveraging the capital and the operational efficiencies to deliver a better tomorrow and a more efficient marketplace that benefits every party in the distribution chain. Elizabeth back to you.

Great. Thanks. So one point of commonality here that you each referenced, each of your businesses came to Verisk through an acquisition, and you we reach there kind of before and after. Can you talk a little bit about the impact of coming into the Verisk family?

Yes. So the reason that we sold to Verisk was because of the data and the analytics that everybody talked about earlier today. So we had realized years ago that companies needed to be able to drive all of their decisions, their automations and their processes based on data. And we have a platform that's architected to be able to do that. So when you look at some of the things that we heard earlier today and if you go into the solution gallery, you'll see, our electronic application process is connected to LightSpeed. And we're connected to Matt on the marketing side of things. So each and every part of the value proposition, value chain across the policy life cycle is able to be driven by data, both within what Verisk has as well as compared to other parts, as Maroun mentioned before, the network effect. And so one of the other aspects that we're able to do is because there's a lot of commonality of companies in P&C and Life, it gives us a much bigger footprint and helps us with the scale. And since we've been acquired in just 3 years, we've been able to win about 90% of the RFIs that we've competed in, in our core space. We've been able to double our customer base. We've doubled our revenue, more than doubled our margins. And we've done that while shifting to more of a recurring revenue on the subscription side.

Yes. And so for marketing, each of these businesses that were acquired were formidable businesses in their own right, but more point solutions. And we are in the early days of combining these solutions into a strategic partnership to go work with the CMOs and the insurance business. And the early returns have been very good. We just entered the market as a Verisk entity with combined offerings late last year. And we've got a lot of great client relationships already happening. We, in the last quarter, have extended contracted revenue values in 2 of the top 10 P&C insurers by over 30%. Equally important on the margin side of the house, one of our largest cost base is the cost of cloud computing as smaller businesses that can be a drain on our growth. But with Verisk and the enterprise value, that's an advantaged position for us with these marketing solutions to continue to drive really high-margin solutions to market for the foreseeable future.

And from a Specialty Business Solutions perspective, over the past 5 years, our revenues have doubled and our client base has quadrupled over that time. Together with underwriting and extreme events, we are able to bring solutions together that we wouldn't be able to do so alone. And like Tom and our life business, leveraging the data assets that Verisk has, combine that with the power of the software that SBS has and provide solutions to some of the biggest industry problems is a unique differentiator for Verisk. And we, at SBS, are very proud to lead some of those initiatives into the global specialty market that I highlighted earlier. Elizabeth?

Great. Thanks. So now I want to turn to sort of more specific questions in each of your areas. We'll go in order, and then after that, we'll open it up to this crew for questions. So I mean, Tom, on the life business, Verisk has always been known for its presence in property and casualty. Why move into the life industry? Or why should Verisk do that? And why now at this moment in time?

So thank you, Elizabeth. So Neil mentioned earlier today that the life insurance industry is about 10 years behind P&C in terms of being driven by data. And it's at a major disruptive point at this time. So we're seeing 3 major trends right now that are going on in the industry. The first is you're seeing a lot of big company carriers selling off their books of business over to asset-backed or PE firms who want to be able to run it for $0.25, $0.30 on a dollar in terms of an operation cost. So that's the first trend. The second one we're seeing is a lot of start-ups. So it's pretty interesting that for those of us who've been in the industry for more than 30 years, and you could have never imagined being able to start up a life insurance company. Well, now with the technology that's out there, outsourcing different aspects, finding distribution, buying a shell company, companies are able to get out there very quickly. And we're seeing companies going from 0 to $1 billion to $2 billion in just a year or 2. So it's a really fascinating thing to see. And then the third is the traditional carriers have to modernize because they are at that disruption point. And the good news is we're sitting here on all 3 sides of this. So that puts us into a pretty good position. And obviously, that creates a very high demand. It creates, obviously, a big TAM. And at the same time, we're positioned to be able to help our customers to be able to take advantage of this. We have the proof points, and we're backed up by -- validated by -- if you look at the Gartner Magic Quadrant, we're not only in the upper right or upper most right of that, same with ISG and our customers are also getting a lot of benefits that we've seen with sell and impact awards. So definitely industry validated. And so I guess, in short, I would say that it's the right time, we have the right stuff, and we're in the right position.

Great. So Matt, on the marketing side, switching gears, we've worked on it a lot together. And this audience has heard us talk about, marketing in the insurance industry is facing some headwinds right now, particularly kind of given by the losses and challenge on profitability on the personal lines auto side. What are you and your business doing within those headwinds?

Yes. Well, we're to -- accretive to Verisk, we're a purely data-driven business. And I'm proud to say that even in a downmarket in some of those areas, we're still growing the business. So we're very confident. The future is bright for us. Yes, we do have products that help with customer acquisition. We've seen carriers pull back on marketing spend as they reset price. That's a short-term challenge for us, but we're shifting focus to cross-sell and retention use cases, which we have very strong capabilities there. I'll point back to the consumer shopping experience I mentioned a minute ago. As the consumer is out there shopping, we're also able to keep the carrier who currently owns that policy with that consumer informed. And so we aid in alerts for the current customer portfolio monitoring product. So that current carrier has the ability to engage and have real timely interactions, oftentimes 3x earlier than their historical retention campaigns can drive. So we've seen some really good returns there. We continue to lean in there, and we'll catch the upside swing when carriers are right priced and back into the market.

Great. Tim, on the Specialty Business Solutions side, you mentioned the original Sequel acquisition in 2017. There have been a couple of follow-on acquisitions that Verisk has done Whitespace and Rulebook and others. Can you tell us about what products those have enabled? And what they've added to the Specialty Business portfolio?

Absolutely. Very happy to do so. So Rulebook and Whitespace are two products that we're demoing in the solution gallery. So my colleague, Danny, is here. And I'd encourage you all to take a look at these 2 platforms. If I distill it down, Rulebook, in essence, removes the underwriter reliance upon the Excel spreadsheet from a pricing rating perspective. It creates an enterprise rules engine with an insurance bias on it. And it allows the distribution of those insurance products to automate risk transfer to the high-volume, low-value business. And then the combination of Whitespace, which is a face-to-face negotiation platform that is being brought online. So one of the challenges I talked about pre-pandemic from the global specialty market and in particular, Lloyd's, with all of these risks being traded and placed on a face-to-pace basis, Whitespace takes it into the online world. It creates a 2-sided marketplace. And one of the key things that we're looking to explore at the moment is integrating the automated risk transfer, the high-volume business into the complexity of the negotiated placements to deliver that ultimate network and then to drive that forward. With the Whitespace transaction alone, they added over 120 trading partners and clients to our base. And it's that network that Lee talked about, the ecosystem that Maroun talked about, that we have a unique position, combined with the data sets and assets from Extreme Event Solutions, to provide the end-to-end service that delivers ultimate value to the brokers, insurers and reinsurers as well as the ultimate policyholder. So exciting time to be in this position. We're very privileged to be here with you all today and explain our vision for the future.

Great. So I could keep going with questions for these guys all day, but let me open it up to see if there's questions from this group. Yes, Ashish?

Matt, a question for you on the marketing solution. You talked about how you've launched it as part of an integrated Verisk solution. I was just wondering if you can talk about the cross-sell opportunity? How big of an addressable market do you see for your products? How well you are penetrated? I guess it's very, very early days in terms of penetrating Verisk existing customers. And then obviously, Lee had talked about changing the sales structure and putting in more focus on cross-sell. And I was wondering if marketing solution also, if you're doing and focusing a lot on that as well?

Yes, just to reframe it for those on the webcast, it's marketing solutions, your cross-sell opportunity across Verisk.

Yes. So to your point, Ashish, it's early days for us in marketing. I will say that Jornaya, as a ground-up business, was verticalized in insurance. So we do have an existing formidable footprint there, a beachhead. But what we're really excited about is we've historically a start-up spend point solutions. And we want to be a strategic partner, emphasizing that client relationship that we brought up. That's something that is afforded to us now as part of Verisk. With the extensive relationships Verisk has, Neil often referenced. Beforehand, we never had anything to go further to the edges. And that's what I'm excited to lead for Verisk because we can get further the edges of that customer life cycle. So while we have a good foundational base, we want to become more strategic. We've put together these assets. I think Tony asked the question earlier about, do we have what we need? We're pretty well positioned now with a holistic strategic data asset that we think is really going to resonate as we get more conversations happening in the C-suite with the marketing executive team.

Great. Greg, gentleman right there.

Great. Tom, I know you sort of hinted or talked about and mentioned it in your presentation, but among the property casualty customers that Verisk have, and I'm thinking Allstate, American Financial Group and AIG, 2 of them have sold their life businesses, the other one spinning out their life businesses -- their life business, excuse me. How do I think about that transition of ownership and its impact on your business? And I guess you mentioned some of that in your comments, but maybe give us some more color.

Yes, thank you for that. That's actually a great opportunity for us because we're on both sides of this. So when some of those companies sell off, as you mentioned, they sell over to a financial provider who really wants to be able to just run it at a much lower TCO. That's where we come in to help them consolidate that down and be far more efficient. So we help the PE firm and the asset-backed firm to be able to do that. At the same time, most of those companies, while they are selling off, they're not actually getting out of the business. What they're really doing is starting over, and then they end up going greenfield. And again, we're sitting on that side of it as well as helping them get themselves launched back up.

So should I think about that as some of that just transactional and onetime in nature? Or is there a lot of recurring aspects to what you're talking about?

Yes, the way we do everything. So we have an end-to-end platform that cuts across the product design the buying experience, the lead generation, the underwriting as well as policy administration through claims and distribution management. So we cut across everything. So when we talk about cross-selling, we have the opportunity because we're -- we are that platform that everything sits on. So we're constantly able to help add more value to our customers. At the same time, they are able to consolidate their business from many different systems on to us. So that gives us the ability to extend both within on both sides of that -- the companies that are doing the consolidation as well as the ones that are starting up. And then the last point is it was mentioned a few times today around just pricing to value. Part of what we do is we bet on our customer success, and we price everything to value. So as they roll out more products and they get more value out of what we do, then we take a piece of that as well. We win together.

Yes. Faiza?

I was hoping if you could just maybe size each of these businesses for us sort of where they are at the moment and maybe where you expect them to be in 2025?

Yes. I'll refer back to -- they had introductory slides, I think, with each. Maybe we can just flip through those one more time just to make sure it wasn't missed. So the Life Solutions business at about $75 million in revenue. Matt, the Marketing Solutions at about $80 million in revenue. And then Specialty Business Solutions also at about $80 million in revenue. So -- and then in terms of a future trajectory, I'll come back to that actually when we talk about the financials. Other questions? Over here.

Andrew Nicholas with William Blair. Another question for Tom. I think one of the things that was discussed at the time of the acquisition about being unique to FAST was its ability to be kind of a quick implementation relative to whether it's competitors or any other kind of re-technology or re-ramping initiative at these insurers. So can you talk a little bit more about that? What makes you unique there? And maybe just more holistically, what that conversation looks like when you're talking to a carrier about pulling out a legacy infrastructure and what that time line and process looks like?

Thank you. Yes. So it starts with simplification. So a big part of our approach is to take this complex ecosystem that the customers have put in place over 40 years of good decisions and help them simplify what they need to be able to do. And we do that through modern architecture in terms of being able to integrate anything that they need to do as well as the no-code configuration tools that really allows us to be able to do things in a far more agile way, where the people that are closest to the knowledge of the capabilities that need to be extended are able to do the configuration. I would say probably the biggest thing is the cultural mindset that comes with buying a SaaS offering versus this is an industry that, for 40 years, they buy custom -- they buy applications from vendors, and then they customize it to no end. And then everything just takes so much longer and is much more complex. So that's how we're able to reduce the cost significantly. Our goal, when we started the company, was to be able to do things that typically would cost 20x amount of dollars and do it for X. So 20x differential. And we've been able to do that. And at the same time, what would happen is these implementations would go on and on and on. Initial implementations could take 18 months, 36 months. We try to aim to get those done in 3 to 6 months. And we look at it as less of an implementation and more of to standing up a SaaS.

Okay. Yes, back here.

A question for Tom, but anyone else who -- this is relevant for. You mentioned that the ability to take advantage of Verisk's data was important in your consideration. Could you give -- expand upon examples of how you utilize Verisk's rich data resources to enhance your products? And then in a similar vein, how -- could you bring to life how you leverage the customer relationships among the business units of Verisk?

Maybe I'll start on the data, and then so...

That one I'll ask, a question about how we leverage -- how these businesses leverage Verisk's data and customer relationships? I also after Tom goes, I think Tim probably has some good comments.

So yes, on the data side, just some real-life examples. You can see this in the gallery. When you think about the way buying an application works in the insurance industry, whether it's agents sold or direct to consumer, they type in a lot of information. And if you've ever gone on one of these sites where you're just clicking next, next, next and going for a long time. What we've been able to do is basically allow using one of our products, LightSpeed, allow them to start off with the phone number, start off with some basic information. Look it up, be able to get back some of the demographic information and then go out to a series of different data sources and allow it to drive the entire user experience. We compare it is the difference between the ways would help you with navigation versus the way you did it with MapQuest in the past, right, where you'd have to print out everything and follow it on a static piece of paper versus dynamically being driven by data. In addition to that, on the claims side, the fraud side, working with Matt on the marketing side to not only go -- be able to identify better leads for the customer to be able to further carry itself to their customer, but also based on the data that comes back, what products should they offer to complete that full cycle.

And then from an SBS perspective, there's 2 key events, so prebind and postbind. So prebind we can help with risk selection. We can augment the data that is provided by the insurer, the cover holder of the MGA or the broker to help the insurer make a better decision on how they leverage their capital and how they achieve an optimal rate. And then post-buying from an exposure management perspective, overlaying in Sequel impact, our exposure management tool, data assets such as water line to allow them to take a more informed view of the exposure they have prior to the modeling through Extreme Event Solutions. So leveraging the data, combine it with the software products, providing that overall solution that I talked about earlier, is a key differentiator that we, at Verisk, bring to market and leverage the power of the data and the software together to answer those problems the industry faces.

Okay. More questions? All right. I'll throw in -- I'll throw another one in here. Some of the -- a question that's come up earlier today has been competition and talking about competitors in your markets. Could you each comment on competitive dynamics in your market?

Yes. So from a competition perspective, it is one of the rare industries where companies sell their products to their customers. And you have to support whatever they were thinking about 40 years ago, 50 years ago, from a regulation perspective, actuarial marketing perspective. And so there's a lot of complexity that's built into that. So the majority of companies have been just standing still for the longest time. And now that they're at this disruption point, they really don't have a choice because it's either in the examples that were given before they're either going to get sold off they're just not going to be able to be competitive. So they have to do something different. So our biggest competition for years has been doing nothing and just staying with the status quo. But now they don't really have a choice. And by the status quo, there are companies out there that did acquisitions over the years, if you look at DXC, CSC, now DXC. They did a lot of acquisitions and a lot of legacy platforms, and there are a lot of policies sitting out on those legacy platforms that are just really easy to move over at a much lower cost perspective.

I think when you think competition for us in marketing, the interesting dynamic in insurance is there's really no pure player for insurance marketing. And so that's a void. We are really excited about filling. Most carriers work with what I would call the usual suspect, more horizontal data providers, which have capabilities in their outright, but they don't possess the same amount of expertise, depth, connectivity and trust in the insurance market that Verisk does. And when you look at the size, e-marketer sizes, digital ad spending alone in '23 is going to top $12 billion. There's a ton of inefficiency there. And with our unique capabilities, again, we're very excited about how we can extend into what Neil had highlighted before with our kind of data forward strategy with LightSpeed and the carriers being able to now assess the value of that consumer even before I touch the underwriting process, which we can bring with marketing purpose-built data that has never been owned by Verisk before. It's a huge opportunity for us.

Great.

And some of the competitive threats that we face is the merchant with low-code and no-code has lowered the barrier to entry for some of the insurtech entering this and also the ability for internal IT departments to build solutions themselves. But coming back to that ever-present theme today of the network effect and the broader ecosystem, we genuinely believe that, that competitive advantage that we have by leveraging all the assets and data sets and software solutions across the group is unrivaled, and we can deliver that value to our clients across the distribution chain.

Great. I'll give another chance for questions here. Yes, Stephanie.

Matt, you just brought up an interesting point about just a lot of inefficiencies in the insurance marketing world. I wonder if we hit a cycle where companies are just a little bit more focused on cost, whether it's a recession or what is it. Do you think that's a really good opportunity for you guys to come in and really accelerate what you do and kind of provide some efficiencies in the market? And have you seen that in the past during some of these kind of cost-cutting cycles?

Yes, it's a great question. And coming into this Verisk full insurance focus, we have some other adjacent markets that are near and dear the consumers' heart, right, where they have to have services such as insurance, such as lending products. And we've seen these cycles before, and insurance has always been a bellwether for us to be a very steady and stable marketplace for us to be. So that again, highlights our excitement to be here digging in deeper there. And with the inefficiencies, I can say this because I've been in the marketing space. Most people think of marketing as arts and crafts. But as you saw on our slide, we're proud to say 90% of our revenues are subscription-based. So we have the variability to set that subscription level at the right size and still gain in some of the transactions at same margins, same upside potential. So it's been a very stable space for us. and with carriers really focused on profitability, again, what they're getting better at and as we're going to lead into the future on is the sophistication and the data with marketing to say, before I go spend that dollar, let me make sure I'm going to like what that underwriting story looks like or to Tom's point, what's the product that I can build upfront when I see that person hitting my doorstep to really serve that customer a great experience.

Great. Great. Go ahead. And I think the last question.

I just wanted to follow up on that, Matt. Have you been through your data and your technology, been able to narrow the gap on the so-called new business penalty versus the renewal? I feel like if you could prove to the carriers that all of a sudden through your marketing initiatives, you're able to produce some business that has comparable loss ratios to renewal book, you'd kill it?

You're in the right place where I think we have huge opportunity. Because, again, as Verisk, we're a partner to these carriers and now being able to carry that forward and help them under really understand inside of their policy in force database where the sweet spots are to say what else can I go market to that brings me similar type of new business? That is the ultimate sweet spot for us to help these carriers.

I think that's a great spot to end it. So thank you. Thanks, guys. So I now get the pleasure of wrapping us up today with the financial section. As I said, no videos here, but had a great time with the panel. And so I'm going to talk about our financials, give you a recap for you the strengths of our financial model as it stands today and then give you an update and a deeper dive on our 2025 financial targets that we talked about. So let me start by talking about the consistent, stable growth of the Verisk revenue model. So the consistency of the Verisk insurance revenue, this is insurance only, has been tremendously remarkable over the last 15 years. On the top bars, you see our reported revenue that's averaged 8.1% annually over the last 15 years on a reported basis. In the bottom line beneath the bar, as you see the organic constant currency, or OCC, as we call it, revenue growth. That's averaged 6.9% over that time. And we give you every one of the annual numbers. What's really amazing over that 15-year period is that it has been consistently in that 6% to 8% band the entire time with only the exceptions of the global financial crisis and the first year of the COVID pandemic. As a former mathematician, I can't resist observing to you that the compounding effect of stable revenue growth is greater than the compounding effect of more volatile revenue growth with the same average. And so this unique characteristic of ours really pays off in our revenue as it compounds over time. But how do we achieve this consistent, stable revenue growth? It goes back to something that Lee mentioned on our advantaged business model. So it's our market position with our customers that we've talked about throughout the day that drives that recurring revenue base, it feeds into our operating leverage, and it enables us to invest at scale and monetize across the industry for our customers, which starts the virtuous circle all over again. Another reason for the consistency of our revenue growth is in the high proportion of our subscription revenue. You see here in the bars our total revenue broken into the subscriptions on the left-hand side and the transactional revenue on the right-hand side, and the first observation is that the left-hand bars are much bigger, as we've highlighted, subscription revenues comprise over 80% of our total revenue base. And both are growing well with subscriptions at 8.5% on a reported basis and transactions at 10.4%. In the lines above the bars, you see the organic constant currency growth rates of each of those businesses. So the OCC subscription revenue growth has been really remarkably stable around that 7% range. And the transactions have been in recent years more impacted by the pandemic and by the recovery period. But we think that as those normalize, that creates a tailwind for growth in the coming years. Now here's another perspective on our revenue growth. And having just talked with the growth businesses, this now shows -- this highlights the mix impact as our business has shifted from more penetrated businesses to a greater proportion coming from the growth businesses. So what you see in the pie charts is the breakdown of our revenues between the penetrated products and the growth products. The penetrated ones are the ones that were in lease circles as the more core businesses. The growth businesses here represent the ones that we just talked about on the panel together with our Maplecroft business and our international businesses. And what you'll see is back in 2018, that was only 5% of our revenues. Through 2022 through both organic growth and also acquisitions, that has now grown to be 14% of our revenue base. And in both time periods, as we've highlighted, they have been growing at double-digit growth rates. So that in 2022, those businesses added nearly 2% to the Verisk total revenue growth. Let me now turn to focus on our commitment to margin expansion. So we see multiple levers for margin expansion across the business. This slide highlights some of the ones that we have already talked to you about in discussing our margin expansion targets through 2024. On the left-hand side, you see the areas of opportunity that we've been focusing on with 50% coming from headcount actions, about 25% coming from IT and tech actions and about 25% coming from third-party services, which includes real estate here. On the right-hand side, you see our original target of 300 to 500 basis points expansion in the dark blue bar. And we highlighted to you on the earnings call that we have already achieved 60% on a run rate basis. Of those actions, about half of those or about 30% of the total was already realized in the 2022 financials. So what we've already achieved against those targets gives us confidence in delivering the guidance that we talked about for 2023 margins. You see here the walk from the 2022 pro forma on the left-hand side of 52%, to the 2023 guidance range of 53% to 54% on the right. And in here, we see core operating leverage delivering 200 to 300 basis points of margin expansion. That's offset by 2 categories. One is there's 60 basis points of headwinds that I called out in more detail on our last earnings call. There's also an impact here from the portfolio mix shift. Lee mentioned this briefly when he was talking about it. But as these growth businesses scale to be a bigger part of our portfolio, they start off at a lower margin than Verisk overall. And so there's a mix shift as the become a bigger part. That is, though, the good news -- those businesses are themselves scaling margin quite quickly, as you heard them talk about. And so that headwind is actually offset set by their own margin expansion delivery, which is sitting inside that green bar. So overall, even given the mix shift headwind, this is a trade-off that we're really happy to make, given the contribution that those businesses make to the growth overall. The final comment I'll make on this page about 2023 is that this guidance range, the 53% to 54% already includes now 90% of the results of the original margin target program. So that's baked into the 2023 guidance. So given our confidence in delivering the 2023 range and given the fact that, that is already at the low end of what had been our original target, we now have the ability to raise the bar on ourselves for 2024. Our original target was 53% to 56%. You can see here on the slide, the steady walk, the expansion trajectory that we've already achieved. So 2022 included 150 basis points of margin expansion against the original -- the normalized baseline. And then we're talking about 100 to 200 basis points delivery in 2023. Given that, we now have the confidence to commit to a higher floor of 54%, so a range of 54% to 56% in 2024. Let me now talk about our disciplined capital allocation. And I want to start the capital allocation discussion by talking about the impact of our recent portfolio divestitures on the Verisk total return on invested capital metric. So the 3 divestitures we've done over the course of the past year, year and a little bit, have unlocked a significant amount of capital in the Verisk balance sheet, most of which has been delivered -- has been returned to shareholders in return of capital. And the result of those 3 divestitures has been nearly a doubling of the ROIC metric from 14% to 27% for Verisk overall, which we think highlights the value generation inherent in the insurance business. We're excited not just about the step-up in this floor, but about the foundation that it creates for future value delivery as we continue to deploy incremental capital with this new, more efficient capital generation machine. So with that, I'll talk about our four pillars of capital allocation going forward from here. Lee already highlighted in these in brief. I'm going to talk through each one of them in turn. So the first pillar of our capital allocation strategy is on our organic investments via CapEx spending. On the graph here, you see the increase of the -- this is the insurance only CapEx over time. You can see that was $200 million in 2022. You also see that the type of the CapEx spending has shifted quite a bit over time. So today, it's almost entirely based on internally developed software versus 10 years ago when there was a mix of some hardware and some non-tech spending in there as well. Now another point is that in past years, we had quoted to you a target for CapEx as a percent of revenue with a target to be in the mid-single digits over time. Our business portfolio has changed quite a bit. And with the increased presence of software-like businesses and growth businesses in that portfolio and also with the new specific lens of here through 2025, on financial targets, we want to highlight that we would expect CapEx as a percent of revenue to be in a similar range as it's been in recent years. And we think that as long as we continue to see those attractive opportunities to invest, and as long as we drive financial discipline on those initiatives, we think this is a great place for us to continue driving return for shareholders. But rather than saying that in general, let me give a specific example of what we have done with some of that CapEx spending. So this is the LightSpeed case study. You've heard Neil talk about that as a product and the benefit it delivers kind of from a business profile. I want to talk about it as a financial investment here. So Neil described the product is the one that can help an underwriter to deliver a bindable quote in real time using just 3 data points from a customer started with our auto underwriting businesses, but I think you've heard a couple other places that are starting to use the platform as well. From a financial standpoint, we saw the need for this and we built the technology platform that integrated multiple different products that our customers had been using on more of a point basis but creating a new platform for them. And then Neil highlighted the ease of use that it creates for our customers and their end user base and the higher conversion rate that it's generated. And so based on those attractive returns for our customers, we've driven incremental new sales of this product over fivefold to about $60 million. The CapEx we deployed on this project has generated over 30% return on invested capital. So this is exactly the kind of thing that we want to keep doing with our CapEx spending. The second pillar of our capital allocation strategy is on M&A, particularly focused on tuck-in M&A, focused on the insurance industry and in places where Verisk can bring unique capabilities, customer relationships or growth to the table. One great example of this that Tom just talked about was the life business starting with the acquisition of FAST. And again, let me talk about that from a financial investment standpoint. We acquired that business in the end of 2019 for just under $200 million. At the time, the business was growing mid-single digits. But we saw the market opportunity. We saw the unique moment in time that Tom had talked about. And we saw ways for Verisk to bring scale to the business. And so based on -- post acquisition, that business has grown at 28% CAGR in those 3 years. And it benefited, as Tom talked about, from the Verisk umbrella, the customer relationships and our investment capacity. Besides just the revenue growth, FAST has scaled margins very quickly and has delivered double-digit return on invested capital. So this is -- we're looking for opportunities to run this playbook again in multiple similar situations. Let me turn to the third pillar of our capital allocation strategy, which is always to maintain our strong balance sheet. We prioritize the investment-grade ratings at mid-BBB category and a target leverage ratio of 2x to 3x. You probably saw 2 weeks ago, we issued a bond for $500 million to term out revolver debt. That leaves us with a current leverage ratio of 2.25x, so well within that target range. This is probably also a good point for me to observe. We have no deposits at Silicon Valley Bank. So we are stable from that perspective as well. And more generally, particularly in an environment which prioritizes liquidity and cash availability, we have great confidence in our balance sheet because of the high proportion of our EBITDA into cash flow. And the very positive working capital characteristics of the business, almost all of our customers pay us upfront at the beginning of the contract. So that's a positive. The final pillar of our capital allocation strategy is the consistent return of capital to shareholders. Since 2018, we've returned a cumulative -- from 2018 to '22, we've returned a cumulative $4 billion through both dividends and share buybacks. And then on the right-hand side, you see the capital return as a percent of our free cash flow. It was clearly elevated in 2022, which incorporates the return of proceeds from the divestitures to shareholders. But even before that, for the past several years, we consistently maintained a return of capital proportion of above 60%. Continuing on the theme of shareholder returns. On the left-hand side, you see our dividend growth. It's been 7% annually on average since initiating in 2019. And in the first quarter of this year, we grew that dividend 10% year-over-year, showing the confidence in the new insurance-only platform. On the share repurchase side, we've reduced the share repurchases -- we've reduced the share count by a total of 12% since the beginning of 2018, including the initial delivery of shares, the 10 million shares returned in our $2.5 billion accelerated share repurchase program that we just contracted last week. So where does all of this get us? Our stable growth, our margin expansion, our capital allocation discipline enable us to confidently set a road map for the next 3 years with clear deliverable targets for 2025. The first -- the element that gives us the most confidence in stating those targets to you so clearly, and our ability to execute them -- execute on them is the tremendous stability of the business, the high subscription revenue, the deep customer relationships, the high retention rates. All of that means, again, as we look at those past 15 years, the worst years for Verisk have been the ones where we only delivered 5% revenue growth, pretty remarkable. The stability provides a really strong base above which the growth businesses can continue to provide upside. And we think those growth businesses that we've highlighted -- I highlighted in the middle, they were 14% of our revenue in '22. We think they grow to about 20% of the portfolio by 2025. And that would mean on a contribution basis that they would add 2% to 3% to the Verisk total growth metrics. Here is a different perspective on how we can bridge to our organic growth targets, thinking about it from how we engage with our customers, the pricing contributes 3% to 4% on average with additional growth coming from new customers, cross-sell and upsell, entirely new initiatives. And then there's also a headwind that we do budget for every year on consolidation. So attrition for Verisk typically happens when there is liquidation of a customer or industry M&A. We've seen that happen over time. We've grown through it, and so it's something that we continue to monitor and grow to offset. These together bring us to our 2025 financial targets. On a revenue growth, we target 6% to 8% each year on an OCC basis. For adjusted EBITDA, 7% to 10% each year on an OCC basis. For adjusted EBITDA margin, we restated our goal for 2024 in the 54% to 56% range. And we anticipate expanding 25 to 75 basis points for 2025 off of 2024. And all of this together should result in double-digit EPS growth each year. In summary, we're excited about our long track record and continuing it to deliver predictable, stable revenue growth. We are recommitted to our margin expansion targets and to our disciplined capital allocation. And we think we have multiple levers to drive accelerated earnings share growth from here. Thanks. I'll bring everyone up now for questions.

Glad we were able to count the chairs correctly here. Stephanie?

Elizabeth, thank you for all the color just to achieve the 6% to 8% organic growth target for 2025. I was kind of going through everyone's presentations, and I think if you look at the targets provided by underwriting, I think the goal is close to 6.5% to 7%. Claims based on the historical growth rate, it looks like -- and your target to grow above that, you're at 7%. I think extreme events is also growing kind of high double digits, low double digits. And at the same time, you kind of pointed out a lot of opportunities for you to see accelerated growth. So just kind of trying to reconcile the 6% to 8% target, which does seem to be more in line with your historical growth, would think there would be an opportunity for upside here. So maybe just kind of reconcile the numbers there.

Happy to comment on that. So if you took a look -- if you took the blended average of each of the 3 -- each of my 3 colleagues' kind of growth targets, you get 60 to 130 basis points of acceleration. So from where we're starting today, whether it's 6.5% in '22 or the 6-ish range of the CAGR, if you add those 60 to 130 basis points, we still end up within that target range. We also have, again, that 15 years of trajectory that says that's where we are coming from. I think you are right in seeing from this group a lot of enthusiasm for the opportunity. So I think we're excited about continuing to deliver on those targets, which would put us at the upper end of our 6% to 8% range. We're balancing that with wanting to give you a strong commitment to a target that endures over multiple years through potentially multiple economic environments. So that's kind of our longer-term range. But absolutely, we're also looking, as we did on the margin side to -- if we can start with a commitment to a deliverable level, we're happy to raise the bar on ourselves in the future if that's an opportunity.

Toni Kaplan from Morgan Stanley. Elizabeth, one more for you. So I think you mentioned that CapEx should stay around the current level as a percent of revenue. I guess in the past, the guidance was more like long term, we'll get to mid-single digits. I understand there's a lot of growth opportunities that you want to address here. But like when I look at Verisk versus other information services companies, the CapEx is a little bit higher across the group. So is there something structurally different here that we should be thinking of? Or long term, could you get to that mid-single-digit level and it's just near term, you want to spend a little bit more? Like, I guess, maybe just bridge why the change in the guidance?

Yes. I think the guidance had been -- 2 things. The guidance -- the mid-single-digit guidance had been sort of indefinite period in the future. And also, it had been developed, as we said, at a time when we might not have seen all the opportunities that we see today. We're excited. We talked about some of the investments today. And in addition to those, we're excited about the core lines we imagine, project. So the upshot is that in the next couple of years, we continue to see real opportunities to drive value from those investments. After 2025 is a long time away, so we'll come back to you with more thoughts then on the later trajectory.

Elizabeth, I know that 6% to 8% is each year. It's not really a CAGR and I heard you also make a comment about, hey, we want to consider different economic backdrops. So are you saying that you think you could be within range in a recessionary year within that 6% to 8%? And let me just ask my second question. And then on the algo for double-digit EPS growth annually, I noticed as it's always been, that you don't have an OCC on that. So I just wanted to make sure that the EPS growth goal annually is on a reported basis?

Great. Yes, great questions. So the first one on the 6% to 8% is in each year target. In terms of macro environment that we've assumed in that, we've assumed a range of what I would call normalized environment. So could be from here, potentially a mild recession could absorb that rate. Again, I think the advantage that we have in our connection to the insurance industry, nobody is entirely immune, but they are kind of less macro correlated than many other industries. So we think we can absorb a range of economic environments in that program.

We have -- actually have a question from the webcast. So why don't we share that? Who's reading that?

Actually, while we read that out, let me just clarify to Andrew's second question was the EPS growth. Yes, we don't ever quote an OCC EPS growth, so we always quote adjusted EBITDA growth. So that is -- yes, that is what that means.

Okay. The question is from David Phillips at Shelter Insurance. Please discuss your M&A strategy, in particular, goals, parameters, constraints? And how much of expected financial performance comes from acquisitions?

Great question. So I think we talked a little bit about the targets, insurance focused and really focused on leading businesses that have a unique position where Verisk can add value to that business. And most of what we see at the moment is on the tuck-in scale of that. The second part of the question is what part of that is assumed in the targets? So the financial targets that we quoted are based on the portfolio that we see today based on -- and including -- up into, including businesses that have been acquired and signed as of today, the most recent of which was Mavera earlier this year. There's no future M&A assumed in those targets.

I wanted to pivot to margins a little bit. I think you've done really well in terms of your margin trajectory just over the last year and having achieved the goals and you've raised the target for 2024. I'm curious if there are other opportunities that you're seeing on the margin side, in particular, I don't think you've -- like have you thought about offshoring, for example? Is there more of an opportunity there? Are there other potential areas to think about. And secondly, I just wanted -- Elizabeth, if you could comment on -- you did have that bond offering post earnings. Just maybe there was a question around interest expense as we -- as it relates to 2023 EPS. Maybe just talk about that a little bit and the pacing of the ASR program?

Yes. Great. Let's see I will have to -- I'll come back to each of those in turn. On the margin side, the question was what future opportunities do we see? In 2024, that's a new target for us. We don't have a very specific laundry list of initiatives coming out of that. But what we do have, we have confidence in the exit run rate coming out of 2023, the operating leverage of the business. And then as you highlight a number of categories for opportunity and for efficiency across the business, global talent optimization is one of those that we are actively engaging on with my colleagues and other sort of efficiency measures going forward. The question on interest expense. So we know the bond we did 2 weeks ago at $500 million at 5.75% coupon. I think our interest rate assumptions, as I've clarified in 2023, we're somewhere between the fourth rate -- the fourth quarter of 2022 annualized and -- versus the 2022 full year basis so we're assuming in there. The accelerated share repurchase contract that we just did, $2.5 billion. Our press release highlighted that we already received just over 10 million shares on that. And the full program will continue through the fourth quarter of '22.

Gentleman in the back there, Kevin.

It's Jeff Silber with BMO Capital Markets. I'm not going to ask a numbers question. How's that? It's more from a strategic perspective, how do you decide whether you're going to buy versus build your new capabilities?

Thanks. It's Jeff. So 2 dimensions. One, how can we create the most value and weighing our costs and the risks into this. So we try to look at all of those opportunities on a relative basis. And a question that we always ask before we look at an acquisition is, could we do this ourselves? Do we have the data sets? Do we have the relationships or the expertise? And if we can, then we're happy to pursue that. We work that through our CapEx budgeting process and evaluate does that fit into what we want to accomplish. But in many cases, and I would -- I think that the gentleman that you had up here with FAST, with Various Marketing Services and SQL, demonstrated that within those areas, there was an established product that we would not be able to easily replicate and would have something to add to. So when we look at an acquisition, it has to be something that we don't believe we can do ourselves and that there is value that we are adding to it. A little bit of a shift in the M&A strategy that has occurred. This isn't something prospectively, but I think we put in place 2 or 3 years ago, when we're beginning to see the benefits of it is that each acquisition has to be sponsored from the business unit level because they will be the entity that can drive value out of it as opposed to a top-level portfolio orientation that we had, I think, run into problems within the past. So how are we adding value, whether it's data? I think you heard great examples, Tom talking about the acceleration by leveraging our relationships, with Matt talking about the ability to access data sets, with Tim talking about our ability to integrate some of their products into the rest of it. That is kind of the essence of how we're focused on creating value and how we balance both the internal investment opportunity versus the external side. And there's a third dimension, which is, do we have an opportunity to partner with someone to create that value? And I think that's a dimension that we are more open to. Maroun referred to that on the claims side, and that's an area that we're dedicating more time to thinking about the great thing about data is it's -- it can move easily. So our ability to associate data sets in a partnership relationship will give us broader scope to create value for our clients and potentially participate, particularly as we think about that network role that we play. Okay. Manav?

Okay. Thank you. Sorry, back to you, Elizabeth. Just could you help us with free cash flow guidance looking forward, whether that's as a percentage of EBITDA or in line with EPS growth. Just the last 3-year CAGR of 8% seems a little low. So that's the first one. And the second one, I think the 200 to 300 operating leverage is obviously a little exaggerated today because of the cost savings, I think. But what is the ongoing steady state operating leverage in the business, just to appreciate how much you're reinvesting to get to that 25% to 75% that you talked about?

Yes. Great questions. Thanks. On the free cash flow guidance side, we're not going to give guidance on that at this time. In the pro forma adjustments, I think you know in the '22 10-K, we have not separated out the historical cash flow from an insurance and noninsurance basis. I think we do have -- free cash flow has not been a concern for Verisk. So I think we generate a fair amount. And I can say with confidence that we become more efficient at generating free cash flow from EBITDA than we were before. So that's kind of the forward-looking thoughts that we can do on that front. Your second question. Yes, yes, the operating leverage. So you're right. So we had the very specific margin expansion targets through 2024 that we've continued to clarify. You saw us then give a step from 25 -- to 25 from 2024 of 25 to 75 basis points. Now out into the future is a long way away. But I think we are -- on an ongoing basis, we are kind of balancing growth with investment in the business. So that could be kind of a proxy for how we might balance those in the future.

Great. So I'll have 2 questions for you. The first question is in your OCC walk, you included one chunk was related to price increase. And considering the inflationary pressures that the markets experienced over the last year, I'm wondering if that's changed from historical patterns and more importantly, if there's a swing in inflation, does that change your -- those assumptions going forward? The second question is in the pie chart where you talked about the growth businesses. And you said, I think in '25, you expect the growth business to be about 20%. You made a comment, Elizabeth, I think that you said -- or maybe Lee it was, made a comment regarding the growth businesses operating at a lower margin. Is it your expectation by the time we get to '25, that those margins in the growth business will be comparable with where the consolidated Verisk is?

Yes. Great questions. I'm going to answer the second one first on the growth businesses. So yes, they operate at a lower margin today. Yes, they are scaling their margins very rapidly. They're scaling the margins more quickly than Verisk portfolio overall. It's -- within that growth segment, there's a number of different businesses at different stages and with slightly different characteristics. I think it's fair to say, though, for them to get to the low 50s margin, which is where Verisk is overall. That's a pretty tall order. So while some of them may get there, I think even in 2025, they would be lower than the overall portfolio. Going back to your first question on pricing and how that fits. So the 300 to 400 basis points in the build to the 6% to 8% organic growth. Again, that 6% to 8% is a sort of multiyear, potentially multi-cycle target. So that pricing number is kind of consistent with our historical average and could embed different economic environments. I think it's fair to say that in the immediate term, what we are seeing in '23, given the inflationary dynamics, it may be a bit stronger of a pricing year versus a historical average.

Yes. And I just want to underscore, Greg, this is the concept that Elizabeth alluded to, which is in these growth businesses, it's -- if we were to limit ourselves to say, look, we're only interested in businesses that operate at our traditional businesses, I think we would be forgoing a pretty substantial value creation and growth opportunity. Now what we're doing is we're trying to balance that. And as Elizabeth said, there's great operating leverage within this business. And I also want to encourage everyone to think about the fact that some of these new businesses, as Tom described, create broader opportunities for some of our existing businesses and our ability to monetize that data set. So in some ways, they are expanding the profitability because there's high incremental value capture from utilizing our data in an additional way or utilizing that data more broadly. So I just want to kind of recognize, we've talked about the portfolio effect that I want everyone to be mindful of that, that's something that we manage in our overall margin objectives. Okay. Beth? I'm sorry? Yes.

It's okay. Heather Balsky. No problem. It's okay. I appreciate it. When you think about your sales targets, Elizabeth, you've had a couple of near-term challenges in your business right now, the things that are going on in Florida, carriers sort of holding off on marketing right now because they wait for price approvals? And then some things going on in the auto market. I was hoping you could talk about how that's factored into your outlook, how you see those recoveries trending? That would help a lot.

Those are factored into our -- into kind of the range guidance. So we do kind of incorporate those. I think we took a more specific view and incorporated them in more detail when we gave you 2023 guidance for the specific year. So I think we've talked about recovery in those markets. For example, on the auto space, probably anticipating something in the -- by the middle to second half of this year. So I think that gives us confidence. Again, even the 2023 guidance, we're comfortable would be within the range. And so that -- yes, our range can sustain that.

Okay. Ashish?

Just maybe a question on the margins. You've talked about how much cost you've realized and actioned on by the end of last year. I was wondering, as part of your guidance, if you can elaborate on how much do you expect to be actioned and realized by end of 2023? And then maybe a question on the growth. It's great to see that the growth businesses are going from 5% of revenue to 14% to 20% of revenue. And then 10% to 15% growth in these growth businesses is phenomenal, but it's a modest slowdown compared to where we are right now at 19%. Is that just a large number? Or is that baking in some conservatism there?

Yes. Great question. So to your first point on how much of the cost actions is embedded in 2023? I think I said it, just to highlight again to make sure it doesn't get missed. We were assuming sort of 90% kind of action that included in the 2023 financials, which is what gives us confidence, obviously, to raise the bar in '24. On the question of the growth businesses and the 10% to 15% range, I think there was -- yes, there's multiple factors going on there. One is, again, 2025 is a long ways away. We're not going to bake into their very specific outperformance assumptions even though we may see those today.

Jeff?

Yes. Growth question, I guess, in 2 parts. So I get that there's nice compounding sustained growth model that's underpinned by continuous improvement. But what are the call-outs on like organically developed new products that have been hit products? You gave the sales metric on LightSpeed, but what else would you highlight in terms of, like, really successful organic innovation. That's like a new product category or a significant improvement. And then on the M&A angle, the 3 growth initiatives that you featured on a panel were all acquired into Verisk in the longer term, I guess, trajectory or trend exact where -- in AIR where once upon a time acquisitions. Have you passed on a lot of things that you could have done or should have done because you're focused on M&A outside of the insurance vertical? Just would love any sense of how rich that opportunity set may be in the future?

Yes. And Jeff, to address your question, I might ask Maroun, Bill and Neil to talk about some of the areas of organic investment and the success that we've had in different areas and also those elements to kind of build that out. It is kind of embedded within those businesses. And then that will probably address the first part. And then the second part of your question was...

Can you do more in terms of tuck-in M&A within insurance that you've been passing on a lot of things...

Great. I'll come back to that. Maroun, do you want to go first on the...

Sure. Thanks, Jeff, for the question. We have, as I mentioned earlier, renewed intense focus on a limited set of innovations that we have in market in order to ensure that we deliver on rapid growth. I'll give you 3 examples. One is the workflow automation solution called Discovery Navigator out in the Solutions hall that is helping customers in the casualty space, automate a lot of manual processes. Two, another solution that's out in the hall is claims experience, enabling effectively individual insurance, consumers to interact with claims adjusters and insurance companies through video or images in order to reduce that time cycle, the cash-to-cash cycle, if you will, payment the customers put people, communities and businesses back on their feet. And thirdly, image forensics in the antifraud solution space, where it is a bolt-on onto an existing large set of anti-fraud solutions that we're delivering into the market to help the industry fight that $300 billion number of fraud that exists in the United States across P&C and Life. So continued focus on organic innovation and with renewed energy on the sales side as well as marketing effectiveness, we have confidence that we can grow in this one?

Bill?

Sure. So historically, I think the introduction of our Touchstone platform a decade ago was a nice growth driver for us. And now as you heard me speak about a decade later, we're on the move to the SaaS-based platform. So I think that will drive continued growth. One product we didn't talk about. It's a nice joint collaboration between the extreme events team and the SBS team, new product we're bringing out that helps clients manage their overall global sets of exposures in a way that couldn't be done before through the use of cloud-based technology, processing billions of records of -- up to billions of records of data. So that's also back to the point of being able to work together more efficiently across the teams and drive new value and new solutions.

And I'll give you 3 quick examples. One is we've taken the content, the core content, ISO content, and we've developed a rating service and we've actually platformed it on Tim's rule book platform. So we offer rating as a service to our customers, and we now offer that as a cloud-based solution so that they can call out to our cloud-based solution and get the actual rates calculated for ISO content. So that's a new product that we've launched that's done very well and has a lot of interest. The second is the example I used about that customer with the forms, the 10,000 forms. We have a platform called Mozart, which is a forms management platform. We not only sell that to insurers, but several regulators have actually bought the platform in order to manage the forms that are coming in from our customers that helps them manage the approval process. So that platform goes across the regulators and the insurers. And then the third example I'd give you is on the underwriting side in the small commercial space. We developed a small commercial LightSpeed program, which actually uses machine learning and AI takes information from the Internet and from other third-party data sources in aerial imagery and creates an image of a small commercial risk so that our insurers can automate the underwriting for small commercial similar to an auto or a home policy. So with a business name and address, you can all of a sudden pull all the information and make an evaluation and actually price that risk. And we launched that a couple of years ago, and that's been growing tremendously with customers. So just 3 examples of organic investment.

So a lot of that embedded within the product -- in the product enhancement level. And some of them could be like the document management aspect is more potentially a stand-alone. I want to tell you a very brief anecdote, one of the first client meetings after I stepped into this role was with the Head of Product Development of a major insurance company. In fact, we would have been happy to provide a testimonial. But we felt as though we had enough, but his quote at the time was, Lee, we need Verisk's help to address this problem. More importantly, the industry needs Verisk's help to address this issue. And it kind of goes to the centrality and that partnership with clients. On your second part of your question, and very fortunate to have Yang Chen, who's our Head of Strategy, here with us also part of our Senior Operating Committee. The number of InsureTech opportunities out there are in the hundreds. I mean, it's really -- if you ask an investment banker, we have a couple of our bankers in the audience here. They will give you a list of logos that is overwhelming. And the short answer is we turned down a massive amount of those when they become opportunities because either we don't think that the business model is fundamentally attractive or more importantly -- well, equally importantly, we don't think that we can add a lot of value there. Now we do survey with Yang and her team's efforts to understand where do we see potential opportunities, where is there a fit between our data sets. And so we're constantly evaluating how is this evolving? What can we do internally to Jeff's question internally to potentially develop that? But if an opportunity were to arise, this is an entity that we're really interested in. So before we made the FAST acquisition, Maroun and Neil had been very focused on defining what is our opportunity in life insurance and how can we pursue it. And we understood the landscape. We looked at a couple of players, and we decided and obviously, Tom and his team mutually decided that was a very good fit. So there is a lot out there, which is good, but we are being very selective in where we think we can add value and what fits with value creation from our perspective.

All right. We have a question here from Russell Quelch. What metrics are management short-term and long-term incentive plans linked to?

Certainly. Thank you. So the metrics that we are tied to are -- as we have been traditionally from a short-term incentive cash compensation, we are tied to revenue growth and EBITDA growth. And so we have defined with the Compensation Committee a range of revenue and EBITDA that we have to deliver on. And to the extent that we're successful in delivering on that, it will determine what our payout ranges are. In addition to that, from a long-term incentive compensation, we have a diverse package of restricted stock that is tied to our relative performance versus the S&P 500. We introduced 2 years ago, an incremental return on invested capital, PSU, that I was very excited about as we kind of talked through how do we incent greater capital discipline. And then as we are moving forward, we have allocated LTI to more specific goal-oriented objective. So consistent with our results orientation and the goal structure that we're defining in key initiatives, we are tying some supplemental awards below the Senior Operating Committee to those individuals that can deliver strategic value to it. It could be on the execution of our M&A opportunities or significant internal investments. And that performance against goals will be an increasing portion of our LTI compensation. In addition, I want to make one other point. One area that we've been focused on has been on retention. And so we have allocated a portion of LTI awards to individuals that have been with us for 3 to 5 years. That's been where we've experienced some higher levels of attrition as I think their experiences become more valuable in the marketplace as well as specific skill sets where we're facing broader competition from the information technology environment more generally. So those are a collection of the metrics. Is there anything that I missed, Suneeta? Great. Thank you. Thank you for the question. So I think we've exhausted yet. Thank you for your questions. Thanks to the team for addressing all of this.

I do want to wrap up here. So you've heard what we hope to do, which is delivering a more predictable growth company, the incredible competitive position that we have, the scale of the opportunity, how we are working together on a more coordinated and integrated basis. I'm sure that having heard this, you have a lot of the pieces and a lot of the dots that you connect to understand the potential value of this franchise and how we expect to deliver on it. We also, again, want to thank all of you for the input that you have provided over the past year, that we have responded to in a variety of ways from a structural, organizational and from a governance standpoint. We continue to welcome that input. We are excited about what we can accomplish at Verisk and the opportunity ahead and look forward to keeping in touch with you. We also want to make certain that all of you have an opportunity to give us feedback. We hope that what you also heard in terms of the format was a very focused and effective presentation of our business. And if you have suggestions in terms of improvements, we would ask you to respond. We'll provide this link out to the participants so that we get the benefit of that feedback as well. And so with that, thank you all very much. It's great seeing you.