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

Good morning, everybody. Thank you for being here at our financial services conference. For those of you who don't know me, my name is Manav Patnaik. I cover the information services space for Barclays. And I'm very pleased to kick off, my conference at least, today here with Verisk Analytics and thank you, Elizabeth, for being here, the CFO of Verisk.

Thanks a bunch for having me and thanks all for joining.

Elizabeth, maybe I can start with -- I think this is just about 2 years you've been at the company. I think when you first started, you came to this event as well. So I appreciate you coming back. But maybe just give us a kind of a 2-year summary of what you've done at the finance organization, has things changed? Just a little bit overview once you've taken control.

Yes. It's been quite an exciting 2 years. You're right. It's just exactly coming up on 2 years now. And the beginning was a real whirlwind because when I joined, we were still a multi-industry company, we sold the energy business just shortly after I arrived. So my first few months at the company, were very tied up with the divestiture from a financial standpoint, working through the pro forma financials and above all setting the stage and setting the strategy for who we were and who we would be as an insurance-only, pure-play data and analytics solutions provider. So we kind of laid out that story at our Investor Day in March of 2023. And I think since then, we've been really executing against that strategy and observing the trends and things that have changed in the insurance industry but the strategy remains as it stands. I think even 2 years in, we are equally excited as we were then about the secular opportunity regardless of insurance industry cycles. We are at a point in time where the insurance industry knows that they have some challenges, some profitability challenges, some elevated losses in certain spaces and a real focus on driving profitable underwriting. And what they best need to do in order to do that is have the best data and analytics to select the right risk and know how to price it. And that's what we were set up to do in the 1970s. But the ways we can help them do that in 2024 are so much more exciting than what was possible in the past, that we are -- I think we are still in the early days of pairing -- partnering with the industry to do that. I think we see it fundamentally on a go-to-market perspective that we've focused on the change and on the product development and innovation side that we've focused on the change. So that's been kind of the key trajectory of the company from a business standpoint, is executing against that vision. And then from a finance standpoint, within that, supporting that with my organization, we've focused on developing a best-in-class finance team with best-in-class tools and that we're still working on. We've mentioned that some of the investments that the company is doing overall. We're upgrading our ERP system. That's something that the finance team is deeply engaged on doing and we're excited about that as the benefits start to unroll in 2025, start to unfold, that we can, I think finance can be a real enabler of the business opportunity as we have the best data and analytics from our own business that help enable our partners.

Got it. And just a quick follow-up on that. I mean I think everyone appreciates an ERP upgrade. But what else around that, have you changed or needs to change to be kind of best-in-class from your standpoint, from the finance organization? Yes.

Within the finance organization, yes, there's all kinds of interesting dialogues in the CFO community about what it means to be a best-in-class finance organization. I think they all fundamentally rely on having the best tools, data and analytics. And so it's not just updating kind of what software you have on the ERP system but making sure that your processes and the way you think about using the data and information are up to speed. And that fundamentally as a finance organization, you're not thinking of yourself as a reporter of the numbers but as a forward-looking organization, how do you help the business plan, how do you help the business be nimble and adjust? Things are always going to change. You can't -- your own forecast is never going to be static. Business environments are going to change. So how are you -- how can you be the leading indicator for the business to help them understand the changes where they should respond and whether it should change their resource investment or total expense or anything else.

Got it. And you -- when you first joined, like you said, you were busy cleaning up the portfolio and you got down to a pure-play insurance business, which is, I think, very important to the investment community. So maybe this is a good time to just remind us on the capital allocation priorities because you are pure-play, you have a pretty healthy balance sheet, so how should we think about how the capital gets allocated?

Yes. The great thing about -- first of all, is that we have the benefit of starting with very good and very strong free cash flow. So strong free cash flow generative business, strong margins and strong free cash flow generation that we can deploy according to our capital allocation framework, which is focused on returns. We measure our returns on invested capital. And indeed, we benchmark and are compensated on -- based on that information. So we hold ourselves pretty strictly accountable. As you rightly point out, insurance only is one of the key filters, first of all, that we are now applying, we see so much opportunity in the insurance industry. That's where we're going to focus. And then our framework is to drive the strongest returns, obviously the strongest returns -- well, first of all, we need to make sure that our balance sheet is strong, which it certainly is. So we're doing that. But yes, we want to invest in the business, both organically and inorganically. We continue to do that. We -- organically, we invest both in technology and fundamentally in our people which helps drive and use that technology. Our CapEx is almost entirely internally developed software, no hardware, very little laptops and stuff like that. We've migrated almost entirely to the cloud now. So we are focusing primarily on software investments. On the internal side, we've got some great examples of what that has been able to drive but we track the returns on that. That's very positive. From an M&A standpoint, we are active in the market. We continue to look at what's out there. 2023, not just for us but in the landscape overall, was a relatively lighter year from an M&A standpoint. We continue to be in dialogue across the insurance landscape. Our own -- we are primarily based in the P&C insurance industry but we are looking at other adjacencies as well, including life insurance and the specialty business markets and others. So we look across the landscape and geographically as well. We are looking for great businesses where Verisk is the right owner or the strong owner for those businesses. So we will continue to acquire businesses that we think really add something to our portfolio. And beyond that, if we don't see good opportunities on a risk-weighted basis to drive strong returns, we will return capital to shareholders. We increased the dividend, the regular dividend is at a very strong 15% this year. We will continue to grow the dividends. And beyond that, we'll return to shareholders.

Got it. Maybe if you can go backwards on each of those points. So on the buyback, what is your typical philosophy? Is it more of a consistent stream? And then do you like to get opportunistic if there's a dislocation and pick that up? Or how should we think about how you approach that front?

Yes. I think we view it a little bit of a mix of both. So I think we view a consistent steady stream, a steady base to shareholders. And then on top of that, if we see opportunities to be opportunistic, we will.

Okay. Got it. And then on the M&A front, can you just give us some characteristics of the pipeline? I think we all know broader macro, obviously, things are light. But in terms of your specific pipeline, size, activity level, do you look at small, medium, large because there is no other Verisk in Europe or something, which should be an easy one. So how do you look at the characteristics there?

Yes. We look -- we do look at a range of sizes, small, medium, large. There hasn't recently been a large business that, that we thought we needed to have or that was available at an attractive price point for what it was. So we do -- but we don't -- so we don't have strict parameters in terms of size. We do look for businesses that are leaders in what they do, so they have a product set or something that is -- that we think is best-in-class. And that's kind of the most important to us. One example would be the life insurance business, the FAST business that we acquired 5 years ago, which we thought had a phenomenal product. It was only growing mid-single digits. But one of the things that we are very aware of in the insurance industry is, it can be a difficult or a slow, long sales cycle for start-ups and insurtech to be proven out by -- and fundamentally be adopted by large carriers who often have very large organizations and potentially legacy technology that they need to adapt to. So if there are places like that business where we think we can acquire the product and bring it to the attention to carriers and to customers with the knowledge that it has been proven out by Verisk or with -- potentially with the knowledge that those -- that good data set or products has been integrated into some of our work. That's a great opportunity for us.

Got it. And just to take some of those M&A examples. So let's just start with life. I think -- so can you help us appreciate what Verisk brought to FAST? And why does life insurance makes sense? I understand it's still insurance but life and P&C are 2 different animals.

Yes. They are 2 different animals and very different characteristics of the industry. But there is -- there can be overlap. So we found that 40% of our P&C customers were also underwriting in the life insurance space. So there was a significant amount of customer overlap. I think I said the business, when we acquired it in 2019, was only growing mid-single digits. We accelerated the growth at the Investor Day. We said it was over 20% CAGR in the 5 years and it continues with very strong double-digit growth. So I think what we brought to the customers was kind of the proof point and the knowledge that now it's owned by a very large public investment-grade company that will be there for the long term.

Got it. The other area is international. You guys have done a bunch there. And again, like I said, there is no big Verisk out there for you to consolidate. So can you just help us appreciate the international strategy? And what is it that you've acquired thus far or are you looking for? And is the end game to build a Verisk of Europe? Or that's just not a possibility?

So if by the Verisk of Europe, I think what most people mean when they say that, is having the contributory dataset. And that probably for a number of reasons, exists in the U.S. for some reasons that are specific to the U.S., specifically the fragmentation of the market and the regulatory regime, where insurance is regulated across 50 different states. That -- those 2 things create a need for a carrier to share their data and for Verisk to bring in operational efficiency that they couldn't do themselves. That probably is not as suited in -- at least in the markets in Western Europe which are more narrowly defined and in some cases, more concentrated. So we're not trying to create the contributory database overseas. What we are trying to do is something that we've done, I think, very successfully so far in the U.K., and we are kind of on the path to creating something similar in Germany, which is we've looked at those markets carefully, we've thought about what is an attractive platform acquisition. In the U.K., it was our acquisition of Sequel in 2017. In Germany, we started our play there with the acquisition of ACTINEO at the end of '21. So both -- in both of those cases, those were, as I said, leading businesses in their markets with a good product. In the U.K., around Sequel, that was a software policy administration system for the specialty business solutions market centered around Lloyd's. And we have been building around that both organically and with follow-on acquisitions to create what is now a truly unique end-to-end workflow for the Specialty Business Solutions market. So that's what we've done in the U.K., sort of start with one platform acquisition and then build it into something that's really a one plus one, one plus half with the half of half there, plus the half equals 5 or something because we've put some stuff on our own. And then similarly, in Germany, ACTINEO covered the bodily injury claims workflow space. We've acquired a couple of other businesses there, each of which serve in the claims workflow, the technology-based workflow associated with claims in different markets, ACTINEO covered bodily injury, Krug covers auto, which has a lot of overlap on the insurance space with bodily injury, unfortunately, and then Rocket with property. So each of those are point solutions that serve -- give a workflow product with certain claims verticals. And so we're building those together, now reorienting our teams not to kind of which business they came from but what insurance vertical they're serving.

Got it. And is the strategy, you need a footprint so you acquired like into Germany, ACTINEO? And then is the analytics and experience you have in the U.S. pretty similar to adopt in Germany, in U.K., is that the added value, I guess?

Yes. Yes. Or rather, it may not be -- it's not -- it may not be one for one, not everything we do is exactly applicable but there are a lot of synergies, a lot of experience that we have in the U.S. that is -- yes, that is directly applicable.

Got it. And in terms of just appreciating the global expansion strategy, I think U.K. is 7%, the rest is 9%, of the international. Is it mainly Europe as a target? Or how should we think about how broad and wide you willing to go?

So that is where we've started here. Those are the markets that have probably the most direct adjacencies to what we do in the U.S. We haven't talked about -- we have a life, health and travel business that is based in the U.K. and that is now being pulled by our customers internationally. We have a presence in Australia, New Zealand and a couple now in other APAC countries. So in some cases, we're being pulled by our customers. I would also add -- by the way, our Extreme Event Solutions business covers risks that are global and has customers kind of globally throughout the world, including Japanese insurance companies and others throughout Asia and India. So at the moment, we are for outside kind of the U.S. and Western Europe, we are looking where we are being pulled by our customers. I think we will be kind of thoughtful about the profitability of expansion in regions where we don't yet have a presence.

Got it. Fair enough. The other area you acquired your way into is on the marketing side. So can you just help us with the backdrop on why marketing and why within insurance marketing as well?

Yes. So marketing -- so this came out of -- we were looking -- as we were thinking about the TAM in the insurance industry and keep in mind that our own revenues add up to 40 basis points of the OpEx of the U.S. P&C industry. So there's a tremendous wallet there that we are not capturing. Not all of it do we want to capture, not all of it will we ever necessarily target to address. But we ask ourselves where -- were there attractive areas of spend that we thought could be opportunities for us. That was one, for example, that kind of line of questioning led us to think about the life insurance space and specialty business but it also led us to ask about marketing. What do carriers spend a tremendous amount on? Marketing. You only have to turn on the TV to see it, go to the U.S. Open and see Chubb and others there as sponsors. So the marketing businesses that we acquire are true to our heart to the Verisk heart, they are data analytics and workflow tools that help the carriers best target their advertising spend. So we did that with the theory that we can help them not only buy the lead, which is what the marketing teams do but best target and optimize their spending on those leads.

Got it. So is that business primarily in your transaction revenue? Or can you just help us how it breaks up?

So it is primarily a subscriptional revenue business but it is subscriptions that is based on volumes and volumes of advertising. And sometimes the timing of these things doesn't work out all that well, as we acquired that business, was just as the insurance industry was going into its profitability challenges, particularly on the auto side, which is a heavy area of marketing in 2022. We also -- we acquired a business that -- while our primary focus is insurance, the businesses that we acquired hadn't necessarily been primarily focused on insurance. They were multi-industry. So we've also had kind of the headwind of some of the other digital marketing businesses that they -- the industries that they target.

Got it. And is the plan for that noninsurance, or you still keep that but you don't focus on it? Is that...

Yes. I think we will have a balanced approach. I mean, we will focus on the insurance areas of it but we're also going to continue to serve the customers that are...

Okay. Fair enough. So maybe moving back up to the capital allocation. That on the CapEx side, you talked about lot of internally developed software and the returns and you have many examples. I was just hoping maybe a couple of examples that you could share on -- I guess it comes to the question of innovation and the returns there.

Yes. So one of the very exciting things about Verisk is we have a lot of products that are there, they're in the market, they're proven and tested by our customers and the value proposition is known but there's more that we can do with them today. And so that has been a great focus of our investment spend, which is innovation around existing products. So Core Lines, we imagine is probably the one that we've talked about the most and is maybe the largest single program in that internally developed software bucket, which is for us to reimagine our forms, rules and loss cost business. It's actually an umbrella of -- sorry, 20 different programs in there, rethinking the way our customers contribute data to us, the way we process and manage and analyze that data to provide them more insights faster and then the way that they can access that data, not just from a -- literally, we started the business by mailing them out circulars that had the loss cost information. We updated that. We had been delivering it to, say, downloadable PDF but all of this stuff should be being done on a data-first potentially API-driven way, if that's the way the customer is ready to receive it, not all of them are. So we've been working on the platforms and the ways that they can interact with our data and our contributory data. That's 1 example. On the Extreme Events business. We've been investing -- we -- there's constant appetite to make sure that the catastrophe models that customers are using to price risk are based on the most current and up-to-date science. So on the Extreme Events side, we have upgraded to our next-generation models and we are rebuilding the platform on which customers can access that to be a SaaS-enabled platform.

Got it. Before going into some of the [indiscernible] business, if I might as well just check up the debt component as well. I think 2 to 3x is your target leverage, you're below that. You just got an upgrade from Moody's. So should we expect it to be at 2 to 3x any given year and so you make up the difference of doing big buybacks if you have to? Or how should we think about that range?

Yes. I think 2 to 3x is our -- is a good and healthy long-term target for us. It is important for our customers that we stay investment grade, which that maps to. So we're not going to push the envelope from a leverage standpoint. You're right, we are below that right now. You may see us -- just as if we made a large acquisition, we might go slightly above it and then come back down within a couple of years. Right now, we are slightly below that range. We may come back up. So I think that's where we will navigate to. Just right now, I haven't seen the need to take on more debt than we needed today given where rates are.

Got it. You mentioned earlier that Verisk was only 40 basis points of the OpEx of the industry. And then you talked about how there's a lot more you can do and sell into the insurance company. So does that -- like, I guess, what is the -- does 40 basis point become 80 basis points? Can you double what you're doing? Just some perspective on what the TAM, the way you guys think about it?

Yes. The interesting thing about that TAM is that their OpEx itself is not -- I think is not as optimal as it could be. In other words, there's a lot of spend that the carriers are doing on processes or manual work that could be much more efficient. And I think the perspective on that is shifting as many companies have shifted their attitudes towards technology. Historically, they might say my underwriters need to do XYZ to analyze the risk because that's my -- the carrier's secret sauce. That's their value-added proposition. Now I think they are coming to recognize that there's a lot of time that underwriters are spending, gathering data from multiple sources and the time that they're spending just to have the information at their fingertips to be able to do their value-added processes and their secret sauce. So I think as we try to help them make that process become more efficient, then yes, the share of it could increase. It may increase by the overall spend becoming much more efficient and us capturing a bit of value of that. So I don't have an answer as to what 40 basis points goes to. But I think both, it can grow and the outside can become more efficient.

Understood. And then I think part of this strategy of doing more, you had made some changes to your sales organization. So I was just hoping you could take a step back and just help us what the changes were and maybe just some results of that?

Yes. So that's something -- I came in 2 years ago. Lee, who had been relatively recent as CEO at that point. I think one of the things -- one of the key changes he has made, he has pushed us to become more client-centric as an organization versus what had previously been fairly product-centric. So we had sales forces in each of our different businesses that were very focused on their own particular widgets. And we had and continue to have, very deep relationships within the insurance industry but they were at sort of the user level of our products and we would focus on maybe the Chief Claims Officer or the Chief Underwriting Officer at a large carrier, we didn't focus as much on having C-suite engagement. That's something that Lee has very much focused on. He mentioned a while ago that he has met with CEO level executives at over half of the industry by premium within an 18-month period. So that's -- I mean that alone gives you a sense of the coverage and reach that Verisk will have. What that has done is elevated the dialogue to be much more strategic and create opportunity for cross-sell, for building across and that creates both sales opportunity for us and also product development, dialogue and opportunity and partnership opportunities that I continue to think, while that engagement has been going on for some time, I think the opportunities coming out of it are just starting to scratch the surface.

Got it. I guess, somewhat tied to that but just moving a little bit into the pricing dynamics in the market. I'm sure you get this question all the time. But first, broader question is, Verisk used to grow around 6.5%, call it, in that average and now it's stepped up a bit. And I think you said part of that is due to the pricing environment. So just any help on if you can quantify how much that has helped the hard insurance market? And also, maybe if you can just add to that to the extent you can.

Yes. The hard insurance market has been a benefit -- for those of you who are -- some of our contracts have a pricing component that's driven by the premium growth of that particular customer. The model was set up that as our customers grow, we grow with them. So that has been a tailwind to pricing. And we said at the Investor Day that of our 6% to 8% organic revenue growth range, about half of it, so about 300 to 400 basis points comes from pricing in an average year. The last 2 years have not been average years. The insurance industry pricing has been increasing probably in the high single-digit percent range from -- on a net premium growth basis. So that has been a positive tailwind for us. But we are not sitting back and just kind of waiting for that premium to come or eventually for that premium to decline. It is very much on us and that strategic engagement with our customers has helped us to drive the dialogue of making sure that our customers understand the value proposition that is being generated by our product.

Got it. And just that pricing dynamic, can you just talk about that 2-year lag of your contract because that gives you, I guess, a little bit more time to catch up in case pricing comes down?

Yes. So this came from -- when Verisk was first separated out from the insurance industry as an independent for-profit company and had to create a revenue model, we said that we would grow as our customers grow. And so their contract -- the annual price increase on an evergreen contract would be based on their premium growth. So if it's 2024, the invoices were sent out in late 2023, at which point 2023 premiums were not yet final. And so there -- so they refer to the 2022 premium growth over '21. So there is a lag effect in that, which is beneficial. It gives us some visibility. But I wanted to say very clearly that the third year into a hard market, again, you can't just walk into a customer and say, "Well, nothing's changed but your prices are up X percent from last year." That doesn't go very well and we don't want to be doing that. So our conversation is much less around what the premium is, although that is an input to the dialogue and it's much more around what are you doing strategically, what -- how have our products changed? What are we investing in? And how are we helping you save costs elsewhere? Which is where we talked about the Core Lines Reimagine program, again, that's innovation focused around our most core product, which is driving benefit for our customers because they can use the information much more efficiently and effectively and that's supporting the price increase.

Got it. So I guess, is it fair -- so you have benefited from the hard insurance market and the pricing. And so is it fair to -- I guess your strategy would be, when that cools down or as it cools down, the Core Lines Reimagine, innovation and cat modeling, all that kind of stuff makes up and we can kind of maintain the elevated level of growth?

That's -- yes, that's right. And to give you -- to point back historically, in the early 20 teens was a cycle of a soft -- soft pricing cycle for the insurance industry for several years, where, in some cases, premium growth dipped into negative territory. Again, we -- I should say, we focus -- our customers know that our revenue -- our price increases have not been as much as the highest premium increases. They're not going to be -- we don't expect them to be negative and they were not negative historically in that cycle.

Got it. Maybe just a few kind of near-term guidance type questions. So firstly, the recent -- actually, let me step back, the transaction mix of your revenues. Can you just help us appreciate what's in that component?

Yes. So our business overall for Verisk as a whole is about 80% subscription, 20% transactional. And for each product, we sell it, we go to the customer the way the customer wants to receive it. So each product has its own business model, revenue model, most of them have some mix of subscription and transactional even within the different products. The biggest components inside our transactional revenue, our -- in our underwriting business, what we call the underwriting data and the analytics solutions part of that, that gives an underwriter access to all kinds of information and data that they might want to know to underwrite a risk. As it happens, our property data in that is really primarily subscription with some transactional but the auto data within that business is more transactional than subscription. And that's why, as we've been talking -- as we've talked over the past several quarters about drivers of our transactional revenue, we've talked a lot about the auto underwriting space there. Other drivers of our transactional revenue, the property estimating solutions business in our Claims business, which helps both the carriers and the contractors do the work, us doing the work, assess the pricing and the workflow for property repairs associated with a claim, that can be -- that has a transactional component because the subscriptions are based on usage tiers and when there's overages, which sometimes happens in light of very active weather patterns, that typically gets counted as transactional. That can move the needle on the transactional front. And then finally, just to round it out, our life insurance business is a fantastic SaaS-based platform but does have a services implementation component. And then on the Extreme Events business, they serve the securitization or ILS market on a transactional basis.

Got it. So just a few follow-ups there. Last quarter, you talked about one large customer kind of transition to subscription. And then even before that, I think you've talked about a steady flow of converting. Can you just talk about what's going on there? Which one of these areas? And does that mean the 80-20 is going to shift dramatically over the next few years?

Yes. So what I've seen, the 80-20 has been really remarkably consistent within 1 point or 2, certainly in my time here and even going back before that. And what happens is that as our business grows, some of our customers either want more visibility, or their business grows and what had if last year been an overage charge, they want to build into the base subscription. All of those reasons are sort of a shift from transactional to subscription. In some cases, we target certain customer segments with a product for them that is subscription-based. So there's kind of a steady flow from transactional to subscription. And then the final point, yes, we mentioned last time we did have 1 contract with a government agency. We've been doing the work with them for a significant amount of time but they do a -- they have an RFP cycle. And so while something is in RFP, we will report it as transactional. So -- and that converts to subscription. So all of those are reasons and drivers why transactional revenue may lock into subscription. We think that's a good thing. But meanwhile, we also kind of refill the bucket of transactional revenue as we have new products that are introduced. Maybe they're add-ons or upsell. And for a new product, customers often want to have that pricing be more usage based and a little bit more flexible for them. So that kind of re-ups the transactional revenue. As we expand into new markets, we talked a little bit about our international acquisition strategy in those claims businesses in Germany. That market has been more -- is more transactional based. So kind of as we grow with acquisitions and other new businesses, that kind of refills the transactional bucket. Eventually over time, that shifts into subscription and the subscription growth. So it may moderate a bit over time. I can't exactly forecast where it's going but I think it will be gradual. Certainly, both buckets continue to grow. That's very helpful there.

But no particular headwinds or any lags to call out in the next...

No. Other than the business specific reasons why -- or rather environment specific reasons why transactional revenue inherently has more variable drivers than our subscription drivers.

Got it. And then on the auto shopping side, obviously, things -- there's a lot of shopping going on out there. I think LexisNexis put out some shopping monitor, which saw things accelerate in the second quarter but I think you called out deceleration on the auto side. So just curious, like, is that -- is there some different mix dynamics within your business or...

So our overall -- the auto business within the underwriting data and analytics solutions business continued to grow year-over-year but not at the rate at which it had been growing previously. For us, that's a function of this elevated shopping level -- auto consumer insurance shopping level has -- it's now fully overlapped the higher level from 1 year ago. So while it is strong, it is kind of at the levels in line with where it was 1 year ago. We're not seeing kind of year-over-year growth from that shopping activity. And then we also called out some of the strength for us transactionally last year was a nonrate action deal, which is a, if you like, a countercyclical product that we had, a 1-year contract with a auto insurer that took place throughout 2023, that we always knew would -- was a 1-year program that we called it out in '23.

Got it. Just 1 quick one on guidance. So far, obviously, it's on plan. You haven't really adjusted your guidance. The only 1 component, I think, in the second half of the year, it's the weather activity that you assumed. I think that's a little bit more on the conservative side, if I could say that. But just if you could just help us appreciate what you've assumed on that side?

Yes. We say that historically, we assume an average storm year or average levels of weather activity, which is what we assumed for our full year guidance in 2024. As of the second quarter, so as of the end of June, when we reported, I think it was fair to say that 2024 was actually shaping up to be a light weather year, at least relative to 2023. So from a year-over-year standpoint, it's been lighter from an insured loss standpoint and kind of insured losses is probably what's most proportional to our revenue in this property estimating solutions business. By the way, activity is still elevated relative to longer 5-year trends or other things. And then as we look towards the end of the year and kind of mid-September, I think some of the early expectations of a strong hurricane here have not yet played out, again, from an insured loss standpoint. And we continue to hope that, that will be the case.

Okay. And then just last question for you. I know this is a financials conference but you are a proprietary data company. And so GenAI basically, is there anything we should be looking out for Verisk on the GenAI front? Or how should we think about the innovation there?

Yes. So there's a lot of time and energy going into it. We are exploring and doing various pilots with our customers. The entire industry is engaged on it. They are focusing on making sure that data is being handled in an auditable way, with integrity and with traceability. So we want to make sure that we are engaged in the discussions on all of those things. And I think the industry is converging on a goal of making decisions with AI as an enabler or as a helper but with a human in the loop on judgment-based decisions. I think the most important for us is to be deeply engaged with regulators, with insurance kind of industry third parties and with our customers on the dialogue and we are kind of engaged in all of those discussions.

Got it. And maybe just a last follow-up to that. Are you seeing that technology springing up competition maybe in the space? Or has the competitive dynamics at all changed?

Not that we have seen. If anything, it has further added to the importance for our customers of dealing with a trusted counterparty that they know will be handling the data, paying attention to data use rights, paying attention to ethical use of data and regulatorily compliant use of data.

Perfect. Well, we are almost on time there. So thank you so much, Elizabeth. We really appreciate the time and thanks, everyone, for being here.

Thanks so much for joining.

Thank you.