Verisk Analytics, Inc.

the instructions for you at that time. For opening remarks and introductions, I would like to turn the call over to Verisk's Head of Investor Relations, Ms. Stacey Broadbur. Ms. Broadbur, please go ahead.

Thank you, Operator, and good day, everyone. We appreciate you joining us today for a discussion of our second quarter 2024 financial results. On the call today are Lee Schavel, Verisk's President and Chief Executive Officer, and Elizabeth Mann, Chief Financial Officer. The earnings release referenced on this call, as well as our traditional quarterly earnings presentation and the associated 10Q, can be found in the Investors section of our website, Verisk.com. The earnings release has also been attached to an 8K that we have furnished to the SEC. A replay of this call will be available for 30 days on our website and by dial-in. As set forth in more detail in today's earnings release, I will remind everyone today's call may include forward-looking statements about Verisk's future performance, including those related to our financial guidance. Actual performance could differ materially from what is suggested by our comments today. Information about the factors that could affect future performance is contained in our recent SEC filings. A reconciliation of reported and historic non-GAAP financial measures discussed on this call is provided in our 8 and today's earning presentations. posted on the investor section of our website, Verisk.com. However, we are not able to provide a reconciliation of projected adjusted EBITDA and adjusted EBITDA margin to the most directly comparable expected GAAP results because of the unreasonable effort and high unpredictability of estimating certain items that are excluded from projected non-GAAP adjusted EBITDA and adjusted EBITDA margin, including, for example, tax consequences acquisition-related costs, gains and losses from dispositions, and other non-recurring expenses, the effect of which may be significant. And now, I'd like to turn the call over to Lee Schabel.

Thanks, Stacey. Good morning, and thank you for participating in this morning's call. As we mark the halfway point in 2024, I can confidently say that we are on track to deliver against the strategic, operational, and financial goals that we articulated at Investor Day and in our 2024 full-year guidance. Elizabeth will provide the detailed financials, but at a high level, Verisk delivered solid organic constant currency revenue growth, led most importantly by strong subscription growth of 8.3% that was broad-based across most of our businesses. This was partly offset in the quarter by modest declines in our transactional business related to historically high volumes in auto shopping and elevated weather-related activity in the prior year quarter, which made for tough comparisons to normalized activity this quarter. We also experienced a drag on our transactional growth from the conversion of transaction-based contracts to subscriptions, which enhances the consistency of our growth going forward. To put this quarter in perspective, and minimize the transaction to subscription conversion impact on a two-year compound annual growth rate basis. Our total organic constant currency revenue growth has been 8% at the high end of our investor day revenue growth targets. We are driving subscription growth through strong renewals and improved price realization as our customers recognize the innovation and value added upgrades we have incorporated into existing solutions. This is something that we've heard repeatedly in our renewal discussions with our largest clients. Our focus on cost discipline and operating efficiency resulted in healthy organic constant currency adjusted EBITDA growth and strong margin expansion, translating into 15% adjusted EPS growth. We delivered these results while continuing to invest in innovation and technologies that can help our clients improve speed, efficiency, and accuracy through deeper insights, improved data, and increased automation. Our strategy is unchanged as we focus on building long-term value for the insurance ecosystem while delivering consistent and predictable growth with high returns on capital for shareholders. The industry backdrop in which we are currently operating is one marked by continued strong premium growth as rate increases continue to earn in. In fact, in the first quarter of 2024, industry-wide direct premium growth increased 10%, and Swiss Re's forecast is for 8% growth for the full year. Profitability across the sector has improved, and industry-wide combined ratios have come down, though there is variability by line and geography. Carriers continue to be cautious in an uncertain environment and focused on driving profitability. Specific to the homeowner's line of insurance, 2023 was the worst year on record for catastrophic losses, with $15.2 billion in losses, and direct combined ratios in 17 states were above the break-even threshold of 100. This has driven carriers to restrict underwriting in certain markets and, in some cases, exit challenging states and lines of business. We are working with our clients and innovating new solutions that target these problem areas, including introducing new roof analytics that leverage aerial imagery and engaging with the respective departments of insurance in Western states to share the updates we have made to our wildfire solutions. In the near term, these market conditions may present some headwinds for our predominantly subscription property business, but in the longer term, we continue to believe it highlights the need for the most accurate information to best price the risk. Technological and regulatory change also continue to challenge the industry structurally, and we continue to partner with clients to help them address the rapid pace of technological change, as well as increased regulatory scrutiny on data privacy, fairness, generative AI, and climate risk. As another example of our work to support understanding of broad industry challenges, we recently co-authored a paper along with research organization RAND Corporation analyzing the impact of social inflation in insurance casualty claims payments with a focus on better understanding the trends, impact, and potential structural factors in growing jury verdicts and trial awards. At the center of our growth strategy is our effort to engage with our clients on a more strategic level As an example of what I've been hearing recently from clients, I've had conversations with both client CEOs and CIOs about the importance to them of integrating data sets across their enterprise for efficiency and consistency. We are the natural trusted technology partner to help with this data asset convergence, as we are best positioned given our deep data and domain expertise, our position in the industry, and our proven track record of aggregating and integrating industry data at scale. These C-suite level and strategic conversations are opening up broader and enterprise-wide opportunities and applications of our data and analytics with the industry and new avenues for growth for Verisk. For example, in capital T, an area of focus for carriers due to the rise in claim severity, our liability navigator is an analytic solution that objectively assesses bodily injury claims to help carriers improve settlement consistency across claim teams. By integrating our proprietary medical provider fraud data and our discovery navigator medical record review technology, we transform previously unstructured and disparate medical data into actionable insights at the point of decision. thus improving efficiency and accuracy in bodily injury claims outcomes. Also key to our growth strategy is building upon our 50-plus year history in insurance and our competitive advantages in positioning to serve as a network for the insurance industry. For that end, in our specialty business solutions, we are delivering solid double-digit growth as we build out an interconnected ecosystem built upon the white space platform for the participants in the London market, including brokers, underwriters, and managing general agents. We are continuing to win new clients, adding 15 new clients in the quarter, and placement volumes are growing rapidly as the scale of the platform builds. This network effect is also active across our claims platforms. as we continue to add new partners to our claims solutions ecosystem. The ClaimSearch partnership enables insurance technology providers to integrate with the ClaimSearch platform, allowing insurers to select the technology that best fits their individual business needs. Earlier this year, we announced two new collaborations with Frist and Globloom Technologies, who are integrating with our ClaimSearch platform. This integration will facilitate advanced fraud analysis and detection, including more complex scoring and triaging to improve decision-making. Additionally, it should minimize the manual fraud detection process, saving valuable time and reducing operational costs for our clients. Finally, we continue to focus on innovation as a key pillar of our growth strategy. To that end, earlier this month, we officially launched ISO Experience Index, a new benchmarking tool which is part of our Core Lines Reimagine initiative. The ISO Experience Index is designed to modernize how actuaries in the insurance industry analyze risk patterns by addressing the increasing volatility and scale of loss patterns in the industry and offering a responsive and up-to-date indicator of observed underwriting experience. Experience Index empowers our clients to be more responsive to changing conditions across various geographic markets by offering quarterly releases with more frequent updates compared to traditional lost cost reviews. This enables our customers to make more informed decisions in real time. Experience Index is available for the homeowner's line and will be expanded over time to other lines of insurance. Our customers are realizing the value we are delivering through core lines reimagined, and we are benefiting from this investment through better price realization and improved client dialogues. In a recent conversation with the CEO of a national carrier, he expressed appreciation for our quarterly emerging issues updates. These reports are just one example of listening to our customers' requests to not only provide data, but to also deliver more valuable and actionable insights. And with that, Let me turn it over to Elizabeth for the detailed financial review.