Verisk (Nasdaq: VRSK) recently provided an update on its ongoing activities to advance corporate governance and drive enhanced shareholder value. The Verisk Board of Directors, in consultation with management and informed by input received from D.E. Shaw & Co., L.P. (“DESCO”) and other shareholders, has determined to take the following actions:
Intention to Move Towards Being a Global Insurance-Focused Data Analytics Solutions Provider: As it continues its ongoing and comprehensive bottom-up review of Verisk’s non-insurance businesses and overall portfolio composition, the company has determined that moving towards being a global insurance-focused data analytics solutions provider represents the optimal path towards enhancing shareholder value. The company continues to actively evaluate all available strategic alternatives for separating the Energy business, with relevant workstreams underway.
Subject to market conditions and shareholder value considerations, Verisk expects to conclude this strategic review and provide details on which transaction structure it intends to pursue for the Energy business no later than the end of the fiscal third quarter of 2022, with an expectation that any such transaction would be executed by the fiscal first quarter of 2023.
Commitment to Achieving Margin Expansion: In connection with its comprehensive portfolio review, and under the active supervision of the board, Verisk’s management has been undertaking a proactive study of the company’s cost structure to better align costs with the scale and requirements of the ongoing Verisk insurance-focused businesses. As this work continues, and as the company continues moving towards being a global insurance-focused data analytics solutions provider, Verisk expects to deliver sustainable cost efficiencies that produce a target of 300-500 basis points of EBITDA margin expansion in the consolidated remaining insurance-focused business by 2024, while maintaining industry-leading rates of organic revenue growth. The company expects to be able to provide additional detail on the timing and pathway to achieving this target and opportunities for further margin expansion on subsequent quarterly earnings calls as operational improvements continue to be implemented.
Verisk also announced that it will nominate three new independent directors to its board: Jeffrey Dailey, a longtime insurance industry veteran who currently serves as Chief Executive Officer of Farmers Group, Inc.; Wendy Lane, a member of the Willis Towers Watson Board of Directors and a former director at MSCI and Corelogic; and Kimberly S. Stevenson, a senior operating executive with deep expertise in technology, finance and digital innovation and an experienced independent board member at leading publicly traded technology companies. As will be detailed in the company’s 2022 proxy statement, Dailey, Lane and Stevenson each will be included in the company’s slate of nominees for election at Verisk’s 2022 Annual Meeting of Shareholders. DESCO recommended the addition of Lane to the board and has indicated its support for all three of these director candidates as well as for Verisk’s ongoing governance enhancements and business initiatives.
Christopher M. Foskett, Lead Independent Director of Verisk, said, “Verisk’s ongoing efforts to maximize the value of our assets, drive revenue growth and expand margins across our global insurance-focused data analytics solutions businesses will help ensure that Verisk continues to deliver enhanced value for our shareholders. We look forward to welcoming Jeff, Wendy and Kim to our board and know they share our commitment to furthering Verisk’s efforts to deliver mission-critical solutions to customers and position the company for sustainable growth and success.”
“The additions of Jeff, Wendy and Kim to Verisk’s board, along with Verisk’s commitment to position itself as a pure-play Global Insurance-Focused Data Analytics Solutions Provider and its commitment to significantly enhance operational efficiency, will enable the company to further extend its leading position as a world-class data franchise,” said Michael O’Mary, Managing Director at DESCO. “We are appreciative of the constructive approach taken by Verisk’s Board of Directors and believe that the company is well-positioned to drive significant value for all shareholders. We look forward to continuing our collaborative dialogue with Verisk’s management team and board.”