Verisk Analytics

Verisk exhibits multiple, mutually reinforcing advantages. Intangibles and regulatory embedment: ISO’s industry‑standard policy language, loss costs and rating rules are filed across all states and territories, processed via some 2,000 filings annually, and supported by 240 experts and specialized lawyers.

Regulators rely on ISO constructs and statistical agent services to standardize the market. This creates legal and procedural inertia that is hard to replicate. Switching costs: Insurers build products, underwriting rules and workflows around ISO content, Verisk property and auto attributes, and claims tools (e.g., estimating and anti‑fraud).

Migration would mean multi‑year retooling, retraining, and regulatory re‑filing, so churn is minimal. Network effects: contributory data and statistical submissions scale Verisk’s databases to tens of billions of records, improving model accuracy and actuarial outputs as more carriers contribute.

The value of analytical outputs improves with breadth and quality of data. Efficient scale and cost advantages: As the designated statistical agent in all states, Verisk spreads fixed data ingestion, quality controls (~3,000 checks), and modeling R&D over a very large base, yielding structural cost efficiency.

Catastrophe models further benefit from scale and are gaining incremental regulatory validation in California. Competitive dynamics: In catastrophe modeling Verisk competes primarily with Moody’s RMS; in underwriting and claims, LexisNexis and CoreLogic feature.

Despite credible rivals, Verisk’s embedded regulatory infrastructure plus data gravity provide resilience.

Evidence of pricing power is clear: 2024 underwriting revenue growth was driven in part by annual price increases tied to enhancements in models and content for ISO forms, rules and loss costs, while claims solutions (anti‑fraud and property estimating) also expanded.

Subscription/hosted arrangements are the bulk of revenue, enabling systematic CPI‑plus or value‑based step‑ups. The franchise is a low single‑digit percent of a carrier’s expense base yet mission‑critical to regulatory compliance and profitability, supporting continued monetization.

Occasional pushback from contractors and public discourse around Xactimate pricing illustrates localized friction, but this has not impaired Verisk’s ability to grow prices and mix over time.

California’s acceptance of Verisk’s wildfire model for ratemaking should support pricing of catastrophe analytics to a broader customer set in a constrained market, further reinforcing pricing power.

Predictability is underpinned by subscription and long‑term contracts: approximately 81 percent of Insurance segment revenue is hosted subscriptions or multi‑year agreements that are prepaid and renew annually, producing steady cash inflows and limited cyclicality.

Organic constant currency growth has been mid‑single to high‑single digits, with adjusted EBITDA margins around 55 percent and strong free cash conversion. TTM free cash flow through Q3 2025 is roughly 1.1 billion on about 3.0 billion of revenue.

While severe weather can modestly affect transactional components (management cited a ~1 percent headwind from unusually low severe weather in Q3 2025), the diversified subscription base and breadth of workflows keep outcomes stable.

Geographic concentration is largely U.S. (about 2.386 billion of 2024 revenue), a favorable jurisdiction that reduces geopolitical risk and currency noise, but it does concentrate regulatory and macro exposure.

Verisk’s balance sheet is solid for a data software company with durable cash flows. At 2024 year‑end, total debt was about 3.06 billion; in March 2025 the company issued 700 million of 2035 notes and later retired the 500 million 2025 notes.

With 2025 adjusted EBITDA guided to roughly 1.69–1.72 billion and cash generation over 1 billion, net leverage is comfortably within investment‑grade territory and maturities are laddered out to 2033–2035. Operating cash flow was 1.144 billion and free cash flow 920 million in 2024, with Q1 2025 and Q3 2025 each showing strong year‑on‑year FCF growth, reinforcing liquidity.

Dividends are fully covered. Key watch items include higher interest expense from refinancing and any incremental debt tied to M&A, though discipline has been evident.

Management, catalyzed by shareholder engagement, executed a high‑quality portfolio simplification in 2022–2023, divesting Financial Services and Energy (Wood Mackenzie) to focus on insurance. Since then, capital allocation has prioritized organic investment in core workflows, selective bolt‑ons, a rising dividend, and material repurchases.

In 2024 Verisk completed 1.05 billion of ASR and raised the dividend; authorization for repurchases remains 1.2 billion as of Q3 2025. The pending AccuLynx deal fits the strategy of deepening the contractor‑insurer claims ecosystem, but it is under FTC Second Request and timing is uncertain; we expect disciplined adherence to returns thresholds.

CEO Lee Shavel (former CFO of Moody’s and Verisk) has sharpened focus on insurance, improved margin discipline, and maintained balanced capital returns. His appointment to the Federal Advisory Committee on Insurance underscores industry stature and access, valuable for navigating regulatory trends.

CFO Elizabeth Mann has communicated clear growth, margin and capital frameworks. While insider ownership is not founder‑like, execution since the refocus has been strong and the culture appears operationally rigorous.