Good day, everyone, and welcome to the Verisk Fourth Quarter 2019 Earnings Results Conference Call. This call is being recorded. At this time, all participants are in listen-only mode. After today's presentation, there will be a question-and-answer session. At this time for opening remarks and introduction, I would like to turn the call over to Verisk's Head of Investor Relations, Stacey Brodbar. Ms. Brodbar, please go ahead.

Thank you, Sara, and good morning, everyone. We appreciate you joining us today for a discussion of our fourth quarter and full year 2019 financial results. Today's call will be led by Scott Stephenson, Verisk's Chairman, President and Chief Executive Officer, who will provide a brief overview of our business. Eric Schneider, our Chief Technology Officer, will then provide an update on our technology strategy, including our cloud migration. Lastly, Lee Shavel, Chief Financial Officer, will highlight some key points about our financial performance. Mark Anquillare, Chief Operating Officer, will join the team for Q&A. The earnings release referenced on this call as well as the associated 10-K can be found in the Investors section of our website, verisk.com. The earnings release has been attached to an 8-K 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. Finally, as set forth in more detail in today's earnings release, I will remind everyone that today's call may include forward-looking statements about Verisk's future performance. 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. Now, I will turn the call over to Scott.

Thanks, Stacey. Good morning, everyone. I'm pleased to share that 2019 was another strong year for Verisk marked by solid financial results, while we continue to invest for future growth. Normalizing for the revenue impact of the injunction related to our roof measurement solutions, we delivered organic constant currency revenue growth of 6.9%, and organic constant currency adjusted EBITDA growth of 7.7%, demonstrating organic margin improvement in 2019. Moreover, our growth was driven by broad-based strength across our Insurance vertical and marked improvement in energy and specialized markets. The consistency of our growth comes from four sources: First, intimacy with our customers; second, ever deeper levels of integration between our solutions and their environments; third, a steady stream of innovative new solutions; and fourth, the cross-sell of existing solutions to existing customers. Within Insurance, we continue to enjoy strong market uptake of our platformed analytic environments, including LightSpeed for automated underwriting and Touchstone for catastrophe modeling. These solutions are being well received by both the traditional P&C insurers as well as the InsurTech start-ups, who need data analytics to effectively price and sell in a competitive market. We've experienced great success with the InsurTech segment with more than 100 new sales wins in 2019 alone. Our Energy and Specialized Markets segment delivered improved growth in 2019, driven by particularly strong results in our market and cost intelligence solutions, as well as improvements within our core research at Wood Mackenzie. In addition, we delivered strong top line growth and improving profitability from our breakout areas, including the Lens platform and our chemicals and energy transition solutions. As always, we are in close conversation with our customers as they navigate the near-term macro environment. In financial services, 2019 was a year of transition as we evolved from a top-down orientation to a…

Thank you, Scott. Technology is mission-critical to our business. And as such, we are continually working to optimize our technology environment and are always striving to be best-in-class. Working in partnership with our business units, we have identified four strategic areas of equal importance dedicating much of our focus energy to them as we believe these are the areas most impactful for driving growth and efficiency in our business. The four areas are: First, Data Stewardship; second, Analytics; third, our Cloud First strategy that Scott referenced; and fourth, our people. I'd like to take a few minutes to describe each of these and what we are doing. Let me start with data stewardship. One of our key distinctives is our unique data assets as data is the core of everything we do. Within this area of strategic focus, we are advancing how we protect data, how we acquire new data assets, and how we process data more efficiently. Our relentless focus on data stewardship continuously increases the usefulness of our data and analytics for our customers. To reach the next level, we recently added the role of Chief Data Officer in each of our industry verticals. This role is responsible for driving our data agenda together our three Chief Data officers are sharing best practices across verticals to amplify the value of our data. More specifically, the Chief Data Officers are identifying new and valuable data assets, making our assets more usable, improving and unifying data stewardship, modernizing our data processing pipelines, and standardizing data governance across the enterprise. For example, they champion the standardization and adoption of data protection methods like tokenization for sensitive information across our broad portfolio of products. For new data sets, our Chief Data Officers discover and align both internal and partner data for valuable…

Thanks, Eric. First, I would like to bring to everyone's attention that we have posted a quarterly earnings presentation that is available on our website. Moving to the financial results for the quarter on a consolidated and GAAP basis, revenue grew 10.2% to $677 million. Net income decreased 9.6% to $132 million, while diluted GAAP earnings per share decreased 8% to $0.80 for the fourth quarter of 2019. The year-over-year decrease in GAAP net income and EPS is primarily the result of acquisition-related earn-out expenses of $28 million, as many of our acquisitions are on target to achieve payments for strong performance. In addition, a higher effective tax rate due primarily to higher option exercises in the prior year period related to expiring options associated with our IPO 10 years ago reduced net income and EPS in the quarter. Moving to our organic constant currency results, adjusted for non-operating items as defined in the non-GAAP financial measures section of our press release, we believe that our operating performance remains solid. On an organic constant currency basis and including the impact of the injunction, Verisk delivered revenue growth of 5.4% for the fourth quarter of 2019. Growth was led by the Energy and Specialized Markets segment, which was our fastest growing segment for the second consecutive quarter. Insurance also delivered solid growth, while Financial Services results were stable. Organic constant currency adjusted EBITDA growth was 9%, reflecting leverage from organic growth across all three segments. Total adjusted EBITDA margin for the quarter was 47.1% flat with the prior year period, including substantial investment. This total adjusted EBITDA margin includes both organic and inorganic revenues and adjusted EBITDA. Normalizing for the revenue impact of the injunction, organic constant currency revenue grew 6.3%; organic constant currency adjusted EBITDA, increased 11%; and total adjusted…

Thank you. [Operator Instructions] Your first question comes from the line of Manav Patnaik from Barclays. You may ask your question.

Thank you. Good morning. My question is around the cloud first strategy. So just kind of a two-parter. So one, Scott, when you referenced you were talking to your customers and they are supportive of your move. Other customers also sort of in this cloud move and are ready to adopt it, or will there be a transition period of duplicate cost in order to serve the customer better. And then Lee. I was just hoping you could put some financial parameters around it, like how much of spend, savings, et cetera, we might start thinking about?

Yes. So I'll start with that, Manav, good morning. Our customers are in various stages of considering how they're going to manage their own technical infrastructure. I would say in general, that our company has moved faster, probably considerably faster in modifying our compute environment relative to our customers. But it doesn't really create an added burden for our customers or put more cost into the system as we work with them. In fact, if anything, the interface between us and the customer becomes a little bit easier to manage. So there is no systemic increase in cost. We -- obviously, as we've talked many times, we are adding the cloud dimension to our business even as we are working to retire the premise dimension of our business. The premise dimension comes off sort of in shelves, the cloud, it sort of grows in a linear fashion as Eric said before. But we've absorbed all that into our P&L and are just -- we continue to head in the same direction at the same pace. And so it all feels very organic. With customers; it's really nothing, but good for customers. And it doesn't add an additional burden for them. And Lee, I don't know, if you want to just talk a little bit more about the specifics.

Sure. And Manav, thanks for the question. I appreciate that. Very simply, we aren't providing an estimate of the cost savings for a couple reasons; one is that this is a multi-year project as we are rolling out these transitions across many data sets, many individual businesses. And while we're tracking it on each of those bases, and we look at each of those situations as test cases, where we can see the savings, we can see the return on capital for the investments that we're making because of the rolling impact of us achieving some savings, investing in the transition over time. We don't want to create a fixed benchmark. I think from our perspective, our view is that, this activity will generate both operational improvements, in terms of lower OpEx relative to this function. And so there will be a margin benefit that supports our overall margin improvement objectives as well as EBITDA growth ahead of revenue growth as well as capital efficiencies that will boost our return over time. But given that it is deeply embedded within our businesses and something that we're managing as part of their full technology spend, it's not something that at an aggregate level we are going to provide that full estimates for that reason. But we absolutely have seen those benefits in the projects that we have executed within specific data sets in the businesses and we will expect that to kind of roll forward as we prosecute this initiative overtime.

Next question?

Your next question comes from the line of Andrew Steinerman from JP Morgan. You may ask your question.

Hi, Lee, it's a margin question. So the fourth quarter 2019 reported EBITDA margins were flat year-over-year, that's reported, that's including past acquisitions, as well as the drag from the roof report injunction. You were good to say how much that drag from the roof report injunction is? And also we're seeing the operating leverage coming from the breakout initiatives at the core. So as such, is Verisk positioned to see 2020 reported EBITDA margins to be flattish to perhaps leaning forward?

Yes. So, thank you, Andrew. I appreciate the question and the consistent focus on margin. We bring the same discipline in looking at our overall business. So I appreciate the fact that what you've recognized is at the core, we are generating very strong and consistent operating leverage in the businesses on a pre-investment basis. So in the fourth quarter, we did see that margin expansion for all of our core businesses before the impact of our breakouts, which include Geomni as well as the impact from our acquisitions. And so we -- it certainly shouldn't come as a surprise that Geomni was a significant impact in terms of investment in the fourth quarter of 2019, as it was in for the year as a whole. And so that element will certainly benefit from the transaction with Vexcel. So at least that component in 2020 should have a substantially reduced impact overall on margins, but that's balanced then again, of course, the ongoing investment in our businesses that we make on a return basis as well as the impact from acquisitions. Our long-term objective continues to be to generate EBITDA growth in excess of revenue growth on an organic basis and to improve that margin over time. And I think going into 2020, we feel as confident as ever in our ability to achieve that.

Thank you.

Your next question comes from the line of Toni Kaplan from Morgan Stanley. You may ask your question.

Thank you. Scott, just thinking about your strategy of getting out of the data collection in aerial imagery and also the data hosting business in Argus, it doesn't sound like your view on the value of data has changed. But maybe just some tangential ways of how you get the data? And what you do with it is slightly changing? And so I just wanted to understand like does the new partnership around that Argus Data Warehouse change anything with regard to the ownership of the data? And just how you're thinking of that? And then, Lee, if you could give some additional color on the financial impacts like the net cost savings from the Vexcel transaction? And how much revenue in total will be reduced by other portfolio actions? Thank you.

Yes. Thanks, Toni. So, first of all, our view of the value unique data assets is completely unchanged. And actually if anything, I think going forward unique data assets actually will be even probably more rare, not that we feel that there is any, there will be -- we will take any step back, in terms of the volume, or the value of the data that we've got. So our view of that as a part of our business is completely unchanged. Data remains the oxygen in our bloodstream and it always will. So the two changes that we made; first of all, what I would really like to emphasize around the Vexcel transaction is, that we actually put ourselves in position to have an even better dataset. Vexcel was -- as we've already described, already engaged in data capture. There are also one of the globe's leading providers of sensor technology. And so putting together our image capture process with their methods and some of the commitments they already had to creating this image library. We actually have access. We will have access and we have access to a better set of images than we had before and that substantially improved economics. So it's merely about how do we get to the data, not, are we interested in the data. And with the move with the Argus Data Warehouse, that's a little bit different, because the Argus Data Warehouse was not about our gathering of data from customers. It was really customers who would observed our facility with dealing with their data and they said, can you essentially white label your way of managing data to me. And we said, yes, as another benefit for our customers. And what happened over time is, this whole space of hosting data warehouses in particularly cloud-enabled has just sort of exploded over the last several years. And it was never founded -- the ADW [ph] work was never founded upon, providing us a data source which we then translate through our analytics. It was really more of an accommodation for our customers in their own workflows. So there's really no change in terms -- well, there is zero change, in terms of our access to data in the Financial segment. So, we view data as we always have. We have as much or better access to data than we used to and our economics have improved as a result of these changes that we made. Lee, anything you could add to that?

Yes. Toni, to give you some sense that from a financial impact standpoint, I understand, you want to get a sense from a revenue perspective, that we would kind of roughly estimate approximately on -- in the fourth quarter there were approximately $8 million of revenues associated with the image capture business that will be moving to Vexcel. So that gives you kind of some sense of the scale. From an EBITDA standpoint there is not a material impact from the impact of those revenues. So kind of roughly equivalent level of EBITDA expense associated with that. But on a year-over-year basis, we are expecting the benefit of eliminating the costs associated with the individuals and the flight operations associated with that image capture business that we will no longer continue to bear, even though we will continue to have access to all of that data on very preferential terms looking ahead. So, it will clearly be a benefit to us from an EBITDA perspective.

Thank you.

Your next question comes from the line of Gary Bisbee of Bank of America. You may ask your question.

Yes, thanks. Good morning guys. I wanted to ask just a bit more about the margins in the quarter. So a quarter ago, you'd talked about in the loss of revenue from the injunction not having enough time to really get at or reduce those costs, and yet the Insurance margin was quite strong. So obviously, you're able to get rid of a bunch of that cost. And on the energy business, we'd also thought there would be -- maybe more of a drag than it appeared there was from the Genscape deal that I think you on for a couple of months in the quarter. So just help us think about as we think moving into Q1 and moving forward, what the dilution from Genscape is, and what -- how we think about the Geomni lost sales and the impact of that all in with Vexcel? Thank you.

Yes. Thank you, Gary. So a lot of elements, I'm here, so let me try to give you a couple of components of that. So I think the statement that we made in the third quarter with regard to not being able to make substantial headway on the expense for Geomni in the fourth quarter is accurate kind of specific to the overall entity within our GAAP results. Naturally, the Vexcel transaction will be moving a substantial part of that expense, not all of it, we will have operating expenses associated with our analytics component of that business that will be retained. But in excess of the majority of the expenses will move out of the business. But the margin uplift with Insurance really wasn't driven by cost savings within Geomni. I think it was just the natural operating leverage within the business as a whole. And specific to the energy and specialized markets discussion there our market and cost intelligence business and the strong growth that we experienced within that business as well as cost discipline at Wood MacKenzie was really the primary contributor to the margin expansion within that business and for the business as a whole. And so there we are benefiting from a very strong growth in that product and relatively low associated expansion within that. So I think that is when we look at that margin strength there were certainly some component of it within Insurance. But a lot of that benefit came from those activities. So as I mentioned with regard to Andrews comments, I think all of those effects we think will put us in a very good position to continue to work towards that margin expansion objective that we have over the long-term in 2020.

Thank you.

Your next question comes from the line of Hamzah Mazari from Jefferies. Your line is open.

Good morning. Thank you. Historically you guys have not talked a whole lot about your commercial sales organization on calls. Maybe just give us an update, is that an opportunity, how do you measure sales force productivity? And any changes to incentives maybe that you've made there, or haven't made as you look forward the growth. It seems like you're doing a lot of acquisitions around software due to sort of penetrate customers, but any thoughts as to adding salespeople and going after more revenue? Thank you.

Yes. So obviously, an important dimension of our business across all the verticals we take a three-tier approach to selling. So we have account representation where -- we have people who are owning our end-to-end relationship with our customer. Then we have product specialists, whether they be data analytic solutions or software solutions. Almost everything that we do is very technical. And so we do need people who are focused on specific parts of our product suite to go in, present credentials, work on issues of integration, et cetera. And then thirdly, we have inside sales to help us cover what -- in some cases is the fairly long tail of smaller customers inside of our market spaces. Generally, we find it a good use of money to expand our go-to-market team and we're always looking to do that. And the only other thing, I would say and this ties a little bit to the point that Lee, was just on, as we make acquisitions, which are inside of verticals that we're already serving one of the things we think hard about is, how are we going to integrate the two. And I will say by the way that, that we had ambitious plans for Genscape integration and the team has met all of their marks. And so it's gone very, very well. But one of the places where we're fairly slow to take any cost out actually is with respect to market representation. So as we say integrate something that we acquired, we actually want to hold on to the go-to-market resources as much as, as we possibly can. And then we're always asking the question would more be helpful. I mean, in general, I would just say that, I've really been pleased and impressed with what our teams accomplished in 2019, in terms of building our book of business. So, yes, it's always on our mind. We've always had the same structure. We always lean into more investment in that area when it makes sense.

Thank you.

Next question?

Your next question comes from the line of Jeff Meuler from Baird. You may ask your question.

Yes. Thank you. With the preface that I fully recognize the importance of data and analytics as a source of value into solutions. Scott, I would love kind of your perspective on where you draw the lines or what types of software solutions you expect to provide. So just talking about the increased software intensity, the Life Insurance software acquisition and some other software acquisitions you've done. But you also continue to partner with the likes of Guidewire, and I think there was a relatively recent announcement with Duck Creek. So what types of software solutions do you expect to provide? Where do you look to partner? Do you increasingly compete against some of those vertical software providers over time? Thanks.

Yes. No, it's a good question, and it does relate to the fabric of our company. So bottom line for me is, that I would only want to see us in software businesses that have the potential to yield data assets that we can use and reuse for analytic purposes. That's really sort of the bottom line. So there are core transaction processing platforms that tend to exist in all the verticals that we serve. And to the extent that those particular platforms are unlikely to yield any sort of data rights, then it's just less likely to be of interest to us. That's the first dimension of it. And the second, sort of relates to the first. And that is, what we're really interested in is what we call platformed analytic environments. So we want to be the place where somebody who is trying to make a decision goes. They go in the morning and they stay there much if not all of the day. That's our ambition. That's where we want to be. Almost by definition, if that's the nature of the software you're providing, then you are close to the datasets. So, that's really the distinction that I would trace for you here.

Thank you.

Your next question comes from the line of Andrew Jeffrey from SunTrust. Your line is open.

Hi, good morning. I appreciate you taking the question. When I think about a few call out drivers that you discussed in Insurance, I'm thinking about the opportunities in life and InsurTech, which sounds pretty robust as well as the UK, which I think it was mentioned, Lee, I think you mentioned has been pretty strong. Can you over the next few years, perhaps quantify or dimensionalize how those may bend the growth curve in your Insurance business?

Sure. So, I'm going to -- I'll take a first cut at it. And I'm sure Mark can provide some broader perspective on it. So, I think, as it relates to the InsurTech dimension, our view is that it contributes to incremental growth across two dimensions; one is that we have a group of new clients that we are serving in a traditional context with our industry-standard products and other data sets. But the other dimension is that they are bringing innovation, new ways of doing things that is putting more of the focus around our traditional customers to utilize data more intensively than they may have in the past. And that is creating new opportunities for us to develop products to support their needs. And our LightSpeed suite of products is probably a perfect example of that dynamic. And so it is -- I would describe it one level as accelerating the demand and the expansion of analytic objects in demand for platform analytics that has enabled our underwriting and rating business to generate levels of growth as you've seen in this quarter and that probably wouldn't have been expected two years or three years ago. So I think that's one dimension of it. And we've spent a lot of time thinking about the life opportunity, and I'll hand it over to Mark to describe how we see that opportunity influencing and providing incremental growth for us.

So let me basically say it this way, I think, there's two types of InsurTech's. One is, I'm an insurer or probably a managing general agent on underwriting business or at least trying to find business. There what they are looking for is to get into business fast and automate. And that drive towards automation, drive towards technology has been a wonderful opportunity for us. And we have had some great sales there and it is accelerated growth across all of Insurance. There's also InsurTech, but they're trying to do some technology around data and information, and although probably on the outskirts could be competitive over time. So we certainly keep track of them. I guess the theme that I'll bring out, which kind of may tie together a couple of questions is, our customers are interested in content, that's King. But at the same time, they're pushing towards automation. They want is seamless ecosystem. So they can tap into any data, or any solution, whether it's their own or third-party. And they expect through a series of APIs and micro services to be able to consume that information or consume that application in a very seamless way. And I think that is a large part of why we're thinking that the fast acquisition will help us quite a bit. It is that light touch, quick implementation, low upfront cost, that life insurers are looking for. And we see the same thing, probably P&C is a little bit of ahead from an analytics perspective, but we see the same thing for our P&C customer. So, hopefully that provides a little broader color.

Thanks, Mark.

Your next question comes from the line of George Tong from Goldman Sachs. Your line is open.

Hi, thanks. Good morning. Your pace of M&A activity has picked up in recent quarters, particularly with the acquisition of Genscape. When you had a similar level of M&A activity in 2018, EBITDA margins did contract by about 100 bps. So diving deeper into margins in the year ahead, can you discuss how the margin profile Genscape compares to your earlier acquisitions particularly ones being integrated in 2018. And if you intend to change your pace of investment activity in the breakout opportunities this year ahead versus earlier years? Thank you.

Yes. Thanks, George. So whenever we talk about the margin impact, I wanted to kind of start with the fact that the important thing for all of our businesses is that they have fundamental operating leverage that allows us to deliver on EBITDA growth in excess of revenue growth, because we think that's the fundamental value creation driver for that business. And so we look at each of those businesses and every business has a different margin dynamic, but we want to make certain that, that dynamic is present, and we have the ability to improve upon that over time. So when we are looking at acquisitions, George, we are fundamentally making a capital decision and a growth decision, in terms of, is this going to be a good use of capital. Can we generate a good return on the business? And what we can do to enhance it? And beneath that is their operating leverage that will allow us to continue to generate that EBITDA growth over time. And so when we talk about our organic constant currency revenue growth, yes, we are making that adjustment, so that we see that dynamic across our business as a whole. We tend not to be overly focused on the portfolio impact of the acquisitions because if it is a good return acquisition and it has operating leverage, then it will allow us to generate that EBITDA growth over time. And I think talking about it in individual acquisition like Genscape, which is going to come in at a lower margin than the rest of the business, that will naturally have a portfolio impact. But what we can -- we hope to generate with that business and its association with Wood McKenzie and generating incremental returns and incremental margins should really drive what we're focused on, which is that EBITDA expansion ahead of revenue growth. So, I know that isn't a complete answer to your question, but philosophically, I think it's important to understand that's the way we think about those acquisitions and their contribution.

Your next question comes from the line of Kevin McVeigh from Credit Suisse. Your line is open.

Great. Thanks. Lee, you talked about kind of three different portfolio transactions in the area of Financial Services and Insurance. Can you give us kind of the overall revenue and margin impact from those dispositions?

So, I think, I gave the impact from the Vexcel -- from the Vexcel transaction. So I -- and the other, the other ones, I think, we can deal with in a follow-up call, they're not that material overall to the business, I think the $8 million is really the bulk of it. So we can probably find -- we can fine tune that with you offline, separately, but it's the Geomni Vexcel transaction that would have the more significant impact. The rest are less significant.

Super. Thank you.

Your next question comes from the line of Jeff Silber from BMO Capital Markets. Your line is open.

Thank you so much. Just wanted to step back and kind of look at your portfolio of assets. You did some pruning, I think over the past quarter or so. Is there anything else left to divest. And then also did you see synergies between your three major verticals? Obviously, within Insurance, there's a lot, but I'm just wondering across synergies with the other verticals? Thanks.

So we're always looking at the mix of assets we've got. But I would say that, I think we have done a fair amount of -- the kind of work that was expressed in those three moves. We'll always keep our eyes open, but there is nothing major, which is imminent. To your question about synergies across the verticals, we have re-purposed energy data into the Insurance vertical. We're looking at opportunities to tie together observations from retail banking with consumer forms of Insurance. So that work is always going on in the background. But the thing I would really highlight for you is, all of the technical work that Eric described before. This is the kind of work where it would be more burdensome for any one of our verticals or even a business unit inside of a vertical to take it on, on their own, because these are pretty large expenditures. And if you're going to do it right, you have to really commit to these things. Eric, talked about the work you have to do to transition to the cloud, or to create a data fabric inside of the platform data environment that we provide to all parts of Verisk. And not only does doing this work excellently in the center, provide acceleration to each of the businesses inside of each of the verticals, but it really represents a very cost efficient way of doing it as well. And so that is – that's actually to me one of the large major points of logic as to why we should be in multiple verticals. And another one is, all of what we do in these verticals, and not every vertical has this quality, but all the verticals that we're in, the opportunity for unique, differentiated data assets exists. And that's not true in a lot of verticals, but it is true in the places where we do business.

Okay. I would add as a case in point. We often -- you get questions about the relevance in of the Financial Services business. And as we've talked about the deal with a dataset that is in order of magnitude, if not more larger than many of our other businesses, but the expertise that we have developed in cloud technology and data analytics within that business generates a return on intellectual capital that we have leveraged in our Lens platform within the Insurance business as we're implementing that cloud technology and probably wouldn't be as effective in bringing those efficiencies and advantages, if we hadn't been dealing with that dataset and with that level of expertise. And so I think it's a great kind of case in point how we leverage that.

Yes. I'll just -- I don't want to answer too many times. But case in point is inside the London Insurance market. The expertise and technology associated with the Verisk Financial Services assets were combined with kind of ISO expertise to build a platform there that has been kind of changing some of the London market transaction processing. So it'll be very effective.

Next question?

Your next question comes from the line of Ashish Sabadra from Deutsche Bank. Your line is open.

Hi, thanks for taking my question. So quick question on Claims. Even excluding injunction, it was a bit soft because of the fewer other events. I was just wondering, if you can provide any color on how much of the revenues generated from these other events? And as we think about going forward should we see this business re-accelerate given the stability of the subscription business? Thanks.

So, this is Mark. Thanks for the question. So, first of all, I want to start with the Insurance business as a whole was very strong. We think of it as a portfolio and we're very pleased with the interaction with customers and where we've progressed. Specifically to Claims, I think there's three things that we've seen over the course of a little longer term and clearly short-term. One, I think we've talked about some of the extensions we've had really on the claims fraud or claims fraud detection side of the world related to outside of P&C health companies and like, where we've brought some kind of -- some big customers in and that has kind of rolled off. But more specifically as it relates to the fourth quarter, clearly the injunction affected us. We weren't able to deliver the growth that we've been delivering inside of Geomni, that was a negative. And the other thing that was clearly changed or different in the fourth quarter of 2019 relative to 2018 was a relatively modest set of storms. There was a very quiet storm season. This isn't about catastrophes. This is just severe weather throughout the nation that had quite a bit of impact on what I'll refer to as the Claims business. So those two things. We're kind of the anomalies in the quarter. I will reinforce the underlying business, the underlying economics remain very strong. Customer engagement very strong. And I think the mission we're on with regard to automation and automating claim adjusting is kind of the theme inside the industry. So we remain optimistic.

And Mark, let's just clarify real quick. When you talk about the effect of the health insurers coming into our ClaimSearch platform and you referred to as rolling off, what you meant was it provided -- it's not that they went away…

They certainly didn't.

They're still in the process as much as they ever worked.

The grow-over…

Right. It represented growth in 2018 and into 2019. But now they're in, and there's all that we have.

Next question?

Your next question comes from the line of Greg Peters from Raymond James. You may ask your question.

Good morning, and thank you for fitting me in. The large Insurance brokers seem to be pushing data analytics as a growth area for their business. Can you tell us, how you're working with them, or should we view their strategies is potentially encroaching on your business. They've also reported good organic revenue growth and it's in part due to the strong pricing environment and commercial lines. Can you talk to us about how your business is affected by pricing trends in commercial lines Insurance? And then finally on LightSpeed, can you give us an idea of the size of that business. I've been struggling to identify actual customers and our channel checks, but that doesn't mean, I'm looking in the right place. So any help there would be appreciated.

Well, you managed to get three questions in there at least.

I don't know. I think counted four.

I'll just take -- Mark, why don't you and I do this together? I'll just take the first part of that, which is the question about the brokers. So the brokers and we really do not have a lot of overlap. The brokers from time-to-time to attempt to put together some forms of data analytics, in order to try to add value inside of their customer relationships. But fundamentally they -- they're much more of a service-oriented kind of a business. We license subscription solutions to our customers. And the brokers touch a good number of situations and they have the data associated with the transactions that they're engaged in. But those datasets are really not overlapping of the datasets that we have got. And so, I mean, it's a practical matter out in the marketplace. We just don't compete with the brokers, and nor do I think, we will compete with the brokers. They're just a fundamentally separate kind of an environment. And in fact, they operate as customers because particularly our catastrophe modeling solutions are made available to them as well as to others. So, yes, you know, if I was running one of the major brokerages, actually, if I was running almost any business in the world, I would try to make it more data analytic, as a way of trying to achieve advantage. And that's what they're working on. But I don't, their business model and ours is very different basically, and I think will remain. So, Mark, you want to take on those other points?

Yes. And I'll just add to yours. I think from a brokering theme perspective, clearly, they're looking to differentiate themselves that they are providing analytics. I think most of that analytics, at least, the way we've seen it, is sold into and provided to the corporate customer, where we're more on the insurer side of that. I think your second question was around pricing and pricing impact. So commercial line's hardening market, if you will. I think the short answer is that, if our customers are growing quicker, there is more opportunity to focus on top line, focus on dancing and potentially purchasing new solutions to foster that growth. So, I think it's a friendly environment when everyone is growing and it's probably more opportunities to buy new solutions or extend them. We do have this wonderful solution inside of underwriting and rating our ISO business. When it is a difficult period or it's a soft market, people have to go back to the actuarial fundamentals. They have to go to fundamentals around how I underwrite because they want to be profitable. So clearly that supports our business as well, but I think everyone is in a better shape with a high tide floating all boats. Last question, I think, it was around LightSpeed. Let me say it this way. The way we've packaged up LightSpeed is, we are trying to take and in the world of Insurance, I'll use personal automobile, you can get online and you can get a quote pretty quickly. But what typically happens is after you get that quote, people then run all the different reports to get information about you, whether you're in an accident, whether you're impacting history, less accidents. And all of that motor vehicle record data, all that costs money. So they then run that information and they more or less changed price in about 35% of the cases. That's a customer-unfriendly way to go. So we are pushing this data forward strategy. We are trying to move to point of sale, so there is no separation between buying a quote that is more attractive for consumer. And we are very uniquely positioned in the commercial lines market because of the data and information we have, more so than even in personal lines. And that strategy, that approach has been gaining quite a bit of receptivity among major customers both large ones and those InsurTechs we're talking about. So, when we talked about LightSpeed, it's a package of solutions and products and many, many insurers are buying pieces, and a few very large ones have signed up for what I'll call the full package. So that has definitely been contributing to growth inside of our underwriting and rating business.

When customers use it, Mark, I just -- I would think a lot of them actually identify with Verisk rather than saying, "Oh, that's Touchstone," because it's a whole series of services.

Yes. [Indiscernible].

And we tie them together as Touchstone, but I think the customers are relating to the overall brand Verisk.

Thank you for your answers.

Welcome.

Your next question comes from the line of Bill Warmington from Wells Fargo. You may ask your question.

Good morning. And the question I had was to see, if we could get an update on the new product pipeline specifically around loan verifier, also some of the Life Insurance underwriting products? And then maybe also, if you could comment on, how you plan on leveraging some of the unstructured datasets, audio and images that Eric mentioned in his comments?

Why don't you take those on, Mark?

Sure. So let me kind of walk through those. I think you were talking about loan verifier. You were talking about Life Insurance and some unstructured data. So let me start with the final two, because in some ways they're connected. So Life Insurance, we think provides a pretty big opportunity for us. We do have some solutions already available. So think about our catastrophe modeling, what we refer to as extreme event modeling. We do work along longevity models, mortality shock model. Think of pandemic, coronavirus, we do that type of work and that fits into some of the Life Insurance models that are necessary and interested. What we're also doing is, we're doing work around model that it relates to specific underwriting decisions. So that is around partnerships with the medical inspection bureau, which represents a group inside of life around, I'll call it, physicals and health. We've done some work around electronic healthcare records and doing some analytics there. The two analytics that you're most focused on, we have done some work around tobacco. We've done some work around avocation. If you're kind of like the skydiving, that doesn't make you the best risk. And kind of combining some of the technology that Eric and his team were talking about with some of the specialists we have from an Insurance perspective, we have used some voice recognition technology, which allows us to understand things about your voice and whether there is an indication that may lead to tobacco use, as an example. So, hopefully you can kind of understand one small example of how it fits into a) a wonderful technology group helping Insurance business extend into Life Insurance. And FAST provides some of that. Hopefully, that responds.

Maybe talk a little bit also, Mark, about using imagery to interpret damage to vehicles.

Absolutely.

Without having to send a human being.

So, I think one of the things that we would love to do is part of automated adjusting is do a quick look. So this is a what I'll refer to as low severity type of crash, small dollars, but highly frequent. You can do a quick review and make payments. So we have some abilities to take a look at images. Just think about machine learning and understanding a couple of things. One is the image legitimate and accurate based upon time and date and stamp and things like that. Was it manipulated? But we go beyond that to do a few more things. One, we're saying is, it's eligible or not. Should it be complete loss. And then two, if it's eligible, we can do a quick estimate as to what it's going to cost to repair it. And those are the type of things that advanced analytics provide to automate this process. And it's a quick way to do things that have typically taken quite a bit of time and effort to in the past. Great. Bill, I think you also talked about loan verifier. Loan verifier is another important idea for us. What it does, though, with any of our really differentiated ideas, it does take us time to aggregate data. But what we are working with is, working with insurers to get information access to a lot of that information behind the scenes. So that we can connect those folks who are on the loan side of things, think of the banks, with those insurers who are kind of ensuring that risk and piece those together. Some of that information we have in-house. At the same time, we have a very strong standard stewardship approach to things. And we can only use data for use cases that have been provide to us. So we are working with insurers to validate the use case and I honestly bring on customers. So hopefully, maybe a little long-winded, but a full answer to your questions.

Well, thank you very much.

Your next question comes from the line of Andrew Nicholas from William Blair. You may ask your question.

Hi, good morning. Realizing your acquisitions of Genscape and FAST are still pretty fresh. I was hoping you could provide an update on how those integrations are trending. And then any commentary on the early pipeline builds for those products? Thanks.

Integrations are right on-track with both of them. We actually just reviewed that a week ago. And with respect to everything from cost factors to sales, they are performing almost exactly the way that we expected them to. And in both cases they nest very nicely inside of existing organizations. So these transitions have been very organic. And the pipelines are good. The pipelines are strong.

The other thing I would add is, I think that there is a genuine enthusiasm in the case of Genscape among the Wood MacKenzie team, for the ability to utilize that data and integrate it in their analysis and the products that they're serving for their clients. So every time I'm in contact with Wood MacKenzie, I hear their enthusiasm for utilizing that data. FAST is more recent, but I can tell you, I think the -- on the Insurance side, particularly on the life side, our ability to work with them as we described before high level of excitement about what we can potentially accomplish together.

Final question?

Your final question comes from the line of Joseph Foresi from Cantor Fitzgerald. You may ask your question.

Yes. So maybe I should ask like an 18-part question. I'm just -- I'll give you a softball to end the day. On the Insurance and energy side, maybe you could talk about the differences in the demand backdrop heading into 2020 versus 2019, either from a pipeline, or necessity on your customer part perspective? Thanks.

Yes. So let me just give you the perspective that really explains Verisk Analytics. We have -- and this has been true for a long period of time. Our company has grown faster than the end markets that we serve. And the reason is that our customers are rotating their own budgets in the direction of what it is that we do. They want to become more automated. And they want to become more deeply analytic in the way that they run their businesses. So you will see a lot of discussion about the level of technology spending on the part of the companies that populate the verticals that we serve. And that in and of itself is a very constructive trend. But you have to actually take that pool of spending and break that down further into sort of data center, keep the lights on, sort of spending versus the platformed analytic environments analytic objects that we provide. And even within the technology category there has been a rotation in the direction of what we do. So, if you're looking for explanation, in terms of where our business is, and where it's going to go, that is the driving force of what our companies are trying to do. And the fact that because of our vertical approach, we understand their issues. We have deeply intimate relationships because we sell -- in the case of Insurance, we may be selling up to 20 families of solutions to our customers. And from all this depth of relationship and all of the data that they make available to us, it is really the perfect place from which to try to think about the next thing that they need and work collaboratively with them to develop it. And that's why our business grows. The actual macro environments inside of Insurance and energy, I mean, they sort of wax and wane, a little bit. But I don't -- those will not -- in my view have explanatory power in terms of the growth of our business in 2020, 2021 and on.

Thank you.

You're welcome.

There are no further question at this time. Presenters, you may continue.

Yes, great. Well, thanks everybody for joining us. And as Lee mentioned, we'll have a number of follow-ups with you and look forward to those. Thanks for your interest. We'll speak with you soon.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.