We are a data analytics provider serving customers in insurance, energy and specialized markets, and financial services. Using various technologies to collect and analyze billions of records, we draw on numerous data assets and domain expertise to provide first-to-market innovations that are integrated into customer workflows. We offer predictive analytics and decision support solutions to customers in rating, underwriting, claims, catastrophe and weather risk, global risk analytics, natural resources intelligence, economic forecasting, commercial banking and finance, and many other fields. Around the world, we help customers protect people, property, and financial assets.
We were established to serve as the parent holding company of Insurance Services Office, Inc. ("ISO") upon the completion of the initial public offering ("IPO"), which occurred on October 9, 2009. ISO was formed in 1971 as an advisory and rating organization for the property and casualty ("P&C") insurance industry to provide statistical and actuarial services, to develop insurance programs and to assist insurance companies in meeting state regulatory requirements. Over the past decade, we broadened our data assets, entered new markets, placed a greater emphasis on analytics, and pursued strategic acquisitions. We trade under the ticker symbol "VRSK" on the Nasdaq Global Select Market.
Our accompanying unaudited condensed consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the U.S. ("U.S. GAAP"). The preparation of financial statements in conformity with these accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include acquisition purchase price allocations, the fair value of goodwill, the realization of deferred tax assets and liabilities, acquisition-related liabilities, fair value of stock-based compensation for stock options granted, and assets and liabilities for pension and postretirement benefits. Actual results may ultimately differ from those estimates.
Recent Accounting Pronouncements
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Accounting Standard
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Description
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Effective Date
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Effect on Consolidated Financial Statements or Other Significant Matters
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Income Tax (Topic 740)
In December 2019, FASB issued ASU No. 2019-12, "Simplifying the Accounting for Income Taxes" ("ASU No. 2019-12")
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The amendments in this guidance reflect the FASB’s effort to reduce the complexity of accounting standards while maintaining or enhancing the helpfulness of information provided to financial statement users. Changes include treatment of Hybrid tax regimes, tax basis step-up in goodwill obtained in a transaction that is not a business combination, separate financial statements of legal entities not subject to tax, intraperiod tax allocation, ownership changes in investments, interim-period accounting for enacted changes in tax law, year-to-date loss limitation in interim-period tax accounting, income statement presentation of tax benefits of tax-deductible dividends, and impairment of investment in qualified affordable housing projects accounted for under the equity method.
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Fiscal years beginning after December 15, 2020 with early adoption permitted.
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We adopted this amendment on January 1, 2021. We evaluated ASU No. 2019-12 and determined that there was no material impact on our Consolidated Financial Statements.
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Compensation-Retirement Benefits-Defined Benefit Plans - General (Subtopic 715-20),
In August 2018, the FASB issued ASU No. 2018-14, "Changes to the Disclosure requirements for defined benefit plans" ("ASU No. 2018-14")
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This amendment removes certain disclosures that are not considered cost beneficial, and helps clarify certain required disclosures along with adding additional disclosures. This impacts employers that sponsor defined benefit pension and/or other postretirement plans. The amendment clarifies guidance in ASC 715-20-50-3 to disclose projected benefit obligation (PBO) and accumulated benefit obligation (ABO).
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Fiscal years ending after December 15, 2020 with early adoption permitted.
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We adopted ASU No. 2018-14 on December 31, 2020 on a retroactive basis and applied to each comparative period presented in our Consolidated Financial Statements. The adoption of ASU No. 2018-14 did not have a material impact on our Consolidated Financial Statements.
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3. Revenues:
Disaggregated revenues by type of service and by country are provided below for the three and six months ended June 30, 2021 and 2020. No individual customer or country outside of the U.S. accounted for 10.0% or more of our consolidated revenues for the three and six months ended June 30, 2021 or 2020.
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|
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Three Months Ended June 30,
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|
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Six Months Ended June 30,
|
|
|
|
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2021
|
|
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2020
|
|
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2021
|
|
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2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Insurance:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Underwriting & rating
|
|
$
|
388.4
|
|
|
$
|
349.3
|
|
|
$
|
765.5
|
|
|
$
|
699.3
|
|
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Claims
|
|
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161.6
|
|
|
|
142.9
|
|
|
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320.1
|
|
|
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288.2
|
|
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Total Insurance
|
|
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550.0
|
|
|
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492.2
|
|
|
|
1,085.6
|
|
|
|
987.5
|
|
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Energy and Specialized Markets
|
|
|
162.3
|
|
|
|
148.6
|
|
|
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318.5
|
|
|
|
302.8
|
|
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Financial Services
|
|
|
35.2
|
|
|
|
38.0
|
|
|
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69.5
|
|
|
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78.3
|
|
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Total revenues
|
|
$
|
747.5
|
|
|
$
|
678.8
|
|
|
$
|
1,473.6
|
|
|
$
|
1,368.6
|
|
|
|
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Three Months Ended June 30,
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Six Months Ended June 30,
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|
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2021
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|
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2020
|
|
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2021
|
|
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2020
|
|
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Revenues:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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United States ("U.S.")
|
|
$
|
568.8
|
|
|
$
|
523.0
|
|
|
$
|
1,129.9
|
|
|
$
|
1,046.7
|
|
|
United Kingdom ("U.K.")
|
|
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50.3
|
|
|
|
44.0
|
|
|
|
98.7
|
|
|
|
89.8
|
|
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Other countries
|
|
|
128.4
|
|
|
|
111.8
|
|
|
|
245.0
|
|
|
|
232.1
|
|
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Total revenues
|
|
$
|
747.5
|
|
|
$
|
678.8
|
|
|
$
|
1,473.6
|
|
|
$
|
1,368.6
|
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Contract assets are defined as an entity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time. As of June 30, 2021 and December 31, 2020, we had no contract assets. Contract liabilities are defined as an entity's obligation to transfer goods or services to a customer for which the entity has received consideration (an amount of consideration is due) from the customer. As of June 30, 2021 and December 31, 2020, we had contract liabilities of $656.2 million and $468.2 million, respectively, which relates to future performance obligations that have not been satisfied. The $188.0 million increase in contract liabilities from December 31, 2020 to June 30, 2021 was primarily due to billings of $412.4 million that were paid in advance, partially offset by $224.4 million of revenue recognized in the six months ended June 30, 2021. Contract liabilities, which are current and noncurrent, are included in "Deferred revenues" and "Other noncurrent liabilities" in our condensed consolidated balance sheets, respectively, as of June 30, 2021 and December 31, 2020.
Our most significant remaining performance obligations relate to providing customers with the right to use and update the online content over the remaining contract term. The disclosure of the timing for satisfying the performance obligation is based on the requirements of contracts with customers. However, from time to time, these contracts may be subject to modifications, impacting the timing of satisfying the performance obligations. These performance obligations, which are expected to be satisfied within one year, comprised approximately 99% of the balance at June 30, 2021 and December 31, 2020.
We recognize an asset for incremental costs of obtaining a contract with a customer if we expect the benefits of those costs to be longer than one year. As of June 30, 2021 and December 31, 2020, we had deferred commissions of $81.9 million and $73.8 million, respectively, which have been included in "Prepaid expenses" and "Other noncurrent assets" in our accompanying condensed consolidated balance sheets.
4. Fair Value Measurements:
We have certain assets and liabilities that are reported at fair value in our accompanying condensed consolidated balance sheets. To increase consistency and comparability of assets and liabilities recorded at fair value, Accounting Standards Codification ("ASC") 820-10, Fair Value Measurements ("ASC 820-10"), established a three-level fair value hierarchy to prioritize the inputs to valuation techniques used to measure fair value. ASC 820-10 requires disclosures detailing the extent to which companies measure assets and liabilities at fair value, the methods and assumptions used to measure fair value and the effect of fair value measurements on earnings. In accordance with ASC 820-10, we applied the following fair value hierarchy:
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Level 1 -
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Assets or liabilities for which the identical item is traded on an active exchange, such as publicly-traded instruments.
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Level 2 -
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Assets or liabilities valued based on observable market data for similar instruments.
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Level 3 -
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Assets or liabilities for which significant valuation assumptions are not readily observable in the market; instruments valued based on the best available data, some of which are internally-developed, and considers risk premiums that market participants would require.
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The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and short-term debt approximate their carrying amounts because of the short-term nature of these instruments. Our investments in registered investment companies, which are Level 1 assets measured at fair value on a recurring basis, were $4.5 million and $4.1 million as of June 30, 2021 and December 31, 2020, respectively. Our investments in registered investment companies are valued using quoted prices in active markets multiplied by the number of shares owned and were included in "Other current assets" in our accompanying condensed consolidated balance sheets.
We elected not to carry our long-term debt at fair value. The carrying value of the long-term debt represents amortized cost, inclusive of unamortized premium, and net of unamortized discount and debt issuance costs. We assess the fair value of these financial instruments based on an estimate of interest rates available to us for financial instruments with similar features, our current credit rating and spreads applicable to us. The following table summarizes the carrying value and estimated fair value of these financial instruments as of June 30, 2021 and December 31, 2020, respectively:
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2021
|
|
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2020
|
|
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Fair Value
|
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Carrying
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Estimated
|
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Carrying
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Estimated
|
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Hierarchy
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Value
|
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Fair Value
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|
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Value
|
|
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Fair Value
|
|
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Financial instruments not carried at fair value:
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|
|
|
|
|
|
|
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Senior notes (Note 10)
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Level 2
|
|
$
|
2,691.3
|
|
|
$
|
3,055.4
|
|
|
$
|
3,140.8
|
|
|
$
|
3,652.2
|
|
On February 1, 2020, the sale of the aerial imagery sourcing group was completed. We contributed the assets related to the disposed business and cash of $63.8 million in exchange for a noncontrolling 35.0% ownership interest in a nonpublic company, Vexcel Group, Inc. ("Vexcel"). On May 25, 2021, we made an additional $15.0 million cash investment in Vexcel for an additional 3.7% ownership. As of June 30, 2021 and December 31, 2020, we had an investment of $144.1 million and $129.1 million, respectively, related to such interest. This investment was included in "Other noncurrent assets" in our accompanying condensed consolidated balance sheets. Refer to Note 7. Dispositions for further discussion.
As of June 30, 2021 and December 31, 2020, we had securities of $158.2 million and $143.1 million, respectively, which were accounted for as cost-based investments. We do not have the ability to exercise significant influence over the investees’ operating and financial policies. As of June 30, 2021 and December 31, 2020, we also had investments in private companies of $50.1 million and $49.5 million, respectively, accounted for in accordance with ASC 323-10-25, The Equity Method of Accounting for Investments in Common Stock ("ASC 323-10-25") as equity method investments. These investments were included in "Other noncurrent assets" in our accompanying condensed consolidated balance sheets. For the three and six months ended June 30, 2021, there was no provision for credit losses related to these investments.
5. Leases:
We have operating and finance leases for corporate offices, data centers, and certain equipment that are accounted for under ASC 842, Leases ("ASC 842"). Our leases have remaining lease terms ranging from one year to thirteen years, some of which include the options to extend our leases for up to twenty years, and some of which include the options to terminate our leases within one year. Extension and termination options are considered in the calculation of our right-of-use ("ROU") assets and lease liabilities when we determine it is reasonably certain that we will exercise those options.
The following table presents lease cost and cash paid for amounts included in the measurement of lease liabilities for finance and operating leases for the three and six months ended June 30, 2021 and 2020, respectively:
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|
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Three Months Ended June 30,
|
|
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Six Months Ended June 30,
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|
|
|
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2021
|
|
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2020
|
|
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2021
|
|
|
2020
|
|
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Lease cost:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease cost (1)
|
|
$
|
13.1
|
|
|
$
|
12.9
|
|
|
$
|
26.4
|
|
|
$
|
25.2
|
|
|
Sublease income
|
|
|
(0.4
|
)
|
|
|
—
|
|
|
|
(0.8
|
)
|
|
|
—
|
|
|
Finance lease costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of finance lease assets (2)
|
|
|
3.3
|
|
|
|
1.4
|
|
|
|
6.8
|
|
|
|
3.1
|
|
|
Interest on finance lease liabilities (3)
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.4
|
|
|
|
0.3
|
|
|
Total lease cost
|
|
$
|
16.1
|
|
|
$
|
14.4
|
|
|
$
|
32.8
|
|
|
$
|
28.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Other information:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash outflows from operating leases
|
|
$
|
(12.9
|
)
|
|
$
|
(12.0
|
)
|
|
$
|
(25.4
|
)
|
|
$
|
(25.6
|
)
|
|
Operating cash outflows from finance leases
|
|
$
|
(0.1
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
(0.3
|
)
|
|
Financing cash outflows from finance leases
|
|
$
|
(1.8
|
)
|
|
$
|
(2.5
|
)
|
|
$
|
(3.7
|
)
|
|
$
|
(4.4
|
)
|
_______________
(1) Included in "Cost of revenues" and "Selling, general and administrative" expenses in our accompanying condensed consolidated statements of operations
(2) Included in "Depreciation and amortization of fixed assets" in our accompanying condensed consolidated statements of operations
(3) Included in "Interest expense" in our accompanying condensed consolidated statements of operations
The following table presents weighted-average remaining lease terms and weighted-average discount rates for finance and operating leases as of June 30, 2021 and 2020, respectively:
|
|
|
June 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Weighted-average remaining lease term - operating leases (in years)
|
|
|
8.9
|
|
|
|
9.5
|
|
|
Weighted-average remaining lease term - finance leases (in years)
|
|
|
1.8
|
|
|
|
2.2
|
|
|
Weighted-average discount rate - operating leases
|
|
|
3.9
|
%
|
|
|
4.1
|
%
|
|
Weighted-average discount rate - finance leases
|
|
|
4.1
|
%
|
|
|
3.4
|
%
|
Our ROU assets and lease liabilities for finance leases were $23.8 million and $23.6 million, respectively, as of June 30, 2021. Our ROU assets and lease liabilities for finance leases were $27.1 million and $24.7 million, respectively, as of December 31, 2020. Our ROU assets for finance leases were included in "Fixed assets, net" in our accompanying condensed consolidated balance sheets. Our lease liabilities for finance leases were included in the "Short-term debt and current portion of long-term debt" and "Long-term debt" in our accompanying condensed consolidated balance sheets (see Note 10. Debt).
Maturities of lease liabilities for the remainder of 2021 and the years through 2026 and thereafter are as follows:
|
|
|
June 30, 2021
|
|
|
Years Ending
|
|
Operating Leases
|
|
|
Finance Leases
|
|
|
2021
|
|
$
|
25.4
|
|
|
$
|
12.1
|
|
|
2022
|
|
|
47.7
|
|
|
|
12.0
|
|
|
2023
|
|
|
45.3
|
|
|
|
0.7
|
|
|
2024
|
|
|
37.0
|
|
|
|
0.1
|
|
|
2025
|
|
|
33.4
|
|
|
|
—
|
|
|
2026 and thereafter
|
|
|
173.5
|
|
|
|
—
|
|
|
Total lease payments
|
|
|
362.3
|
|
|
|
24.9
|
|
|
Less: Amount representing interest
|
|
|
(61.7
|
)
|
|
|
(1.3
|
)
|
|
Present value of total lease payments
|
|
$
|
300.6
|
|
|
$
|
23.6
|
|
6. Acquisitions:
2021 Acquisitions and Purchase of Controlling Interest
For the six months ended June 30, 2021, we had acquisitions and purchase of controlling interest totaling $36.3 million.
On June 17, 2021, we acquired 100% of the stock of Roskill Holdings Limited ("Roskill") for a net cash purchase price of $22.1 million, of which $4.8 million represents indemnity escrows. Roskill, a provider of metals and materials supply chain intelligence, has become part of our Energy and Specialized Markets segment. Roskill’s capabilities reinforce our ability to provide comprehensive analysis across the energy, and metals and mining value chain while adding analysis, data, and insight on battery raw materials metals. The preliminary purchase price allocation of the acquisition is presented in the table below.
On March 2, 2021, we acquired a 51% ownership in Whitespace Software Limited ("Whitespace") for a net cash purchase price of $13.3 million. The remaining 49% ownership interest in Whitespace will be acquired by us, in three equal proportions over the next three years, at a purchase price determined based upon a fixed revenue multiple and adjusted for any free cash flow shortfall. Whitespace, a provider of digital placing technology to the (re)insurance market, has become part of the underwriting & rating category within our Insurance segment. We expect our investment in Whitespace to enable a seamless real-time quote-to-bind electronic placing and global distribution solution, with straight-through submissions for our customers. In July 2021, we funded the cash of Whitespace for $3.5 million, which reduced current liabilities within the preliminary purchase price allocation of the acquisition.
The preliminary purchase price allocation of the 2021 acquisitions and purchase of controlling interest resulted in the following:
|
|
|
Total
|
|
|
Cash and cash equivalents
|
|
$
|
5.7
|
|
|
Accounts receivable
|
|
|
2.3
|
|
|
Other current assets
|
|
|
0.9
|
|
|
Fixed assets
|
|
|
0.2
|
|
|
Operating lease right-of-use assets, net
|
|
|
0.9
|
|
|
Intangible assets
|
|
20.4
|
|
|
Goodwill
|
|
|
43.3
|
|
|
Other assets
|
|
|
4.8
|
|
|
Total assets acquired
|
|
|
78.5
|
|
|
Current liabilities
|
|
|
5.1
|
|
|
Deferred revenues
|
|
|
1.5
|
|
|
Operating lease liabilities
|
|
|
0.9
|
|
|
Deferred income tax, net
|
|
|
4.4
|
|
|
Other liabilities
|
|
|
4.8
|
|
|
Total liabilities assumed
|
|
|
16.7
|
|
|
Net assets acquired
|
|
|
61.8
|
|
|
Less: Noncontrolling interest
|
|
19.8
|
|
|
Less: Cash acquired
|
|
|
5.7
|
|
|
Net cash purchase price
|
|
$
|
36.3
|
|
The preliminary amounts assigned to intangible assets by type for the 2021 acquisitions and purchase of controlling interest are summarized in the table below:
|
|
|
Weighted Average Useful Life (in years)
|
|
|
Total
|
|
|
Technology-based
|
|
6
|
|
|
$
|
7.6
|
|
|
Marketing-related
|
|
4
|
|
|
|
1.8
|
|
|
Customer-related
|
|
11
|
|
|
|
11.0
|
|
|
Total intangible assets
|
|
|
|
|
$
|
20.4
|
|
The preliminary allocations of the purchase price for the 2021 and 2020 acquisitions and purchase of controlling interest with less than a year of ownership are subject to revisions as additional information is obtained about the facts and circumstances that existed as of each acquisition date. The revisions may have a significant impact on our condensed consolidated financial statements. The allocations of the purchase price will be finalized once all the information that was known and knowable as of the acquisition date is obtained and analyzed, but not to exceed one year from the acquisition date. The primary areas of the purchase price allocation that are not yet finalized relate to income and non-income taxes, deferred revenues, the valuation of intangible assets acquired, and residual goodwill. The goodwill associated with our acquisitions includes the acquired assembled work force, the value associated with the opportunity to leverage the work force to continue to develop the technology and content assets, as well as our ability to grow through adding additional customer relationships or new solutions in the future. Of the $43.3 million in goodwill associated with our acquisitions and purchase of controlling interest, $42.4 million is not deductible for tax purposes. The preliminary amounts assigned to intangible assets by type for these acquisitions and purchase of controlling interest were based upon our valuation model and historical experiences with entities with similar business characteristics.
For the three and six months ended June 30, 2021, we incurred transaction costs of $0.3 million and $0.8 million, respectively. For the three and six months ended June 30, 2020, we incurred transaction costs of $0.0 and $1.4 million, respectively. The transaction costs were included within "Selling, general and administrative" expenses in our accompanying condensed consolidated statements of operations. The 2021 acquisitions and purchase of controlling interest were immaterial to our condensed consolidated financial statements for the three and six months ended June 30, 2021 and 2020, and therefore, supplemental information disclosure on an unaudited pro forma basis is not presented.
Acquisition Escrows and Related Liabilities
Pursuant to the related acquisition agreements, we have funded various escrow accounts to satisfy pre-acquisition indemnity and tax claims arising subsequent to the applicable acquisition dates. At June 30, 2021 and December 31, 2020, the current portion of the escrows amounted to $18.0 million and $1.7 million, respectively, and the noncurrent portion of the escrows amounted to $4.8 million and $18.5 million, respectively. The current and noncurrent portions of the escrows have been included in "Other current assets" and "Other noncurrent assets" in our accompanying condensed consolidated balance sheets, respectively.
The acquisitions of Arium Limited and Rebmark Legal Solutions Limited included acquisition-related contingent payments, for which the sellers of these acquisitions could receive additional payments by achieving the specific predetermined revenue, EBITDA, and EBITDA margin earn-out targets for exceptional performance. We believe that the liabilities recorded as of June 30, 2021 and December 31, 2020 reflect the best estimate of acquisition-related contingent payments. The associated current portion of contingent payments were $0.4 million and $0.6 million as of June 30, 2021 and December 31, 2020, respectively. The associated noncurrent portion of contingent payments were $0.0 and $0.2 million as of June 30, 2021 and December 31, 2020, respectively.
7. Dispositions:
On February 1, 2020, the sale of the aerial imagery sourcing group was completed. We contributed assets related to the disposed business, including cash of $63.8 million, in exchange for a noncontrolling 35.0% ownership interest in a nonpublic company, Vexcel. We determined the fair value of the securities associated with the noncontrolling ownership interest in Vexcel with the assistance of valuations performed by third-party specialists, including the discounted cash flow analysis and estimates made by management. The securities were concluded not to have a readily determinable fair value and did not qualify for the practical expedient to estimate fair value. The contributed assets approximated the fair value of the equity securities related to the noncontrolling ownership interest; therefore, there was no gain or loss recorded in conjunction with this disposition for the six months ended June 30, 2020.
On February 14, 2020, the sale of the compliance background screening business was completed for net cash proceeds of $23.1 million. A gain of $15.9 million was included in "Other operating income" within our accompanying condensed consolidated statements of operations for the six months ended June 30, 2020.
On March 1, 2020, the sale of the data warehouse business within the Financial Services segment was completed. We recorded a gain of $3.5 million in "Other operating income" within our accompanying condensed consolidated statements of operations for the six months ended June 30, 2020.
8. Goodwill and Intangible Assets:
The following is a summary of the change in goodwill from December 31, 2020 through June 30, 2021, both in total and as allocated to our operating segments:
|
|
|
Insurance
|
|
|
Energy and Specialized Markets
|
|
|
Financial Services
|
|
|
Total
|
|
|
Goodwill at December 31, 2020
|
|
$
|
1,208.6
|
|
|
$
|
2,423.6
|
|
|
$
|
475.9
|
|
|
$
|
4,108.1
|
|
|
Acquisitions and purchase of controlling interest
|
|
|
28.6
|
|
|
|
14.7
|
|
|
|
—
|
|
|
|
43.3
|
|
|
Purchase accounting reclassifications
|
|
|
1.1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1.1
|
|
|
Current period adjustment (1)
|
|
|
15.8
|
|
|
|
(15.8
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Foreign currency translation adjustment
|
|
|
5.5
|
|
|
|
11.3
|
|
|
|
(0.4
|
)
|
|
|
16.4
|
|
|
Goodwill at June 30, 2021
|
|
$
|
1,259.6
|
|
|
$
|
2,433.8
|
|
|
$
|
475.5
|
|
|
$
|
4,168.9
|
|
_____________
(1) Of which $15.8 million relates to a segment reclassification, refer to Note 14. Segment Reporting
Goodwill and intangible assets with indefinite lives are subject to impairment testing annually as of June 30, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. Goodwill impairment testing compares the carrying value of each reporting unit to its fair value. If the fair value of the reporting unit exceeds the carrying value of the net assets, including goodwill assigned to that reporting unit, goodwill is not impaired. If the carrying value of the reporting unit’s net assets, including goodwill, exceeds the fair value of the reporting unit, then an impairment loss is recorded for the difference between the carrying amount and the fair value of the reporting unit. We completed the required annual impairment test as of June 30, 2021, and concluded that there was no impairment of goodwill.
Our intangible assets and related accumulated amortization consisted of the following:
|
|
Weighted Average Useful Life (in years)
|
|
Cost
|
|
|
Accumulated Amortization
|
|
|
Net
|
|
|
June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology-based
|
7
|
|
$
|
569.5
|
|
|
$
|
(382.4
|
)
|
|
$
|
187.1
|
|
|
Marketing-related
|
15
|
|
|
279.9
|
|
|
|
(123.4
|
)
|
|
|
156.5
|
|
|
Contract-based
|
6
|
|
|
5.0
|
|
|
|
(5.0
|
)
|
|
|
—
|
|
|
Customer-related
|
13
|
|
|
1,019.0
|
|
|
|
(396.1
|
)
|
|
|
622.9
|
|
|
Database-based
|
18
|
|
|
506.4
|
|
|
|
(153.9
|
)
|
|
|
352.5
|
|
|
Total intangible assets
|
|
$
|
2,379.8
|
|
|
$
|
(1,060.8
|
)
|
|
$
|
1,319.0
|
|
|
December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology-based
|
7
|
|
$
|
559.6
|
|
|
$
|
(349.5
|
)
|
|
$
|
210.1
|
|
|
Marketing-related
|
16
|
|
|
275.2
|
|
|
|
(113.4
|
)
|
|
|
161.8
|
|
|
Contract-based
|
6
|
|
|
5.0
|
|
|
|
(5.0
|
)
|
|
|
—
|
|
|
Customer-related
|
13
|
|
|
1,004.3
|
|
|
|
(354.2
|
)
|
|
|
650.1
|
|
|
Database-based
|
19
|
|
|
501.0
|
|
|
|
(138.2
|
)
|
|
|
362.8
|
|
|
Total intangible assets
|
|
$
|
2,345.1
|
|
|
$
|
(960.3
|
)
|
|
$
|
1,384.8
|
|
Amortization expense related to intangible assets for the three months ended June 30, 2021 and 2020 was $50.5 million and $41.0 million, respectively. Amortization expense related to intangible assets for the six months ended June 30, 2021 and 2020 was $95.5 million and $82.0 million, respectively. Estimated amortization expense for the remainder of 2021 and the years through 2027 and thereafter for intangible assets subject to amortization is as follows:
|
Years Ending
|
|
Amount
|
|
|
2021
|
|
$
|
92.4
|
|
|
2022
|
|
|
161.8
|
|
|
2023
|
|
|
149.1
|
|
|
2024
|
|
|
143.4
|
|
|
2025
|
|
|
119.2
|
|
|
2026
|
|
|
114.7
|
|
|
2027 and thereafter
|
|
|
538.4
|
|
|
Total
|
|
$
|
1,319.0
|
|
9. Income Taxes:
Our effective tax rate for the three and six months ended June 30, 2021 was 35.6% and 29.3% compared to the effective tax rate for the three and six months ended June 30, 2020 of 20.4% and 20.6%. The effective tax rate for the three and six months ended June 30, 2021 was higher than the effective tax rate for the three and six months ended June 30, 2020 primarily due to the deferred tax impact of the tax rate increase in the United Kingdom that was enacted and recorded in the current period, as well as the impact of reduced stock option exercises resulting in lower tax benefits from equity compensation in the current period versus the prior period. With respect to the effective tax rate for the six months ended June 30, 2021, the impact of the U.K. tax rate increase and lower stock benefits were partially offset by non-recurring tax expense recorded in the prior period in connection with our disposition of the aerial imagery sourcing group resulting from differences in the book and tax basis of the assets and entities disposed. The difference between statutory tax rates and our effective tax rate is primarily due to tax benefits attributable to equity compensation, offset by additional state and local taxes.
10. Debt:
The following table presents short-term and long-term debt by issuance as of June 30, 2021 and December 31, 2020:
|
|
Issuance Date
|
Maturity Date
|
|
2021
|
|
|
2020
|
|
|
Short-term debt and current portion of long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
Syndicated revolving credit facility
|
Various
|
Various
|
|
$
|
390.0
|
|
|
$
|
50.0
|
|
|
Senior notes:
|
|
|
|
|
|
|
|
|
|
|
|
5.800% senior notes, less unamortized discount and debt issuance costs of $(0.1)
|
4/6/2011
|
5/1/2021
|
|
|
—
|
|
|
|
449.9
|
|
|
Finance lease liabilities (1)
|
Various
|
Various
|
|
|
13.2
|
|
|
|
14.4
|
|
|
Short-term debt and current portion of long-term debt
|
|
|
403.2
|
|
|
|
514.3
|
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
Senior notes:
|
|
|
|
|
|
|
|
|
|
|
|
3.625% senior notes, less unamortized discount and debt issuance costs of $(10.5) and $(10.7), respectively
|
5/13/2020
|
5/15/2050
|
|
|
489.5
|
|
|
|
489.3
|
|
|
4.125% senior notes, inclusive of unamortized premium, and net of unamortized discount and debt issuance costs of $11.6 and $12.4, respectively
|
3/6/2019
|
3/15/2029
|
|
|
611.6
|
|
|
|
612.4
|
|
|
4.000% senior notes, less unamortized discount and debt issuance costs of $(4.8) and $(5.4), respectively
|
5/15/2015
|
6/15/2025
|
|
|
895.2
|
|
|
|
894.6
|
|
|
5.500% senior notes, less unamortized discount and debt issuance costs of $(4.3) and $(4.3), respectively
|
5/15/2015
|
6/15/2045
|
|
|
345.7
|
|
|
|
345.7
|
|
|
4.125% senior notes, less unamortized discount and debt issuance costs of $(0.7) and $(1.1), respectively
|
9/12/2012
|
9/12/2022
|
|
|
349.3
|
|
|
|
348.9
|
|
|
Finance lease liabilities (1)
|
Various
|
Various
|
|
|
10.4
|
|
|
|
10.3
|
|
|
Syndicated revolving credit facility debt issuance costs
|
Various
|
Various
|
|
|
(1.4
|
)
|
|
|
(1.6
|
)
|
|
Long-term debt
|
|
|
2,700.3
|
|
|
|
2,699.6
|
|
|
Total debt
|
|
$
|
3,103.5
|
|
|
$
|
3,213.9
|
|
_______________
(1) Refer to Note 5. Leases
As of June 30, 2021 and December 31, 2020, we had senior notes with an aggregate principal amount of $2,700.0 million and $3,150.0 million outstanding, respectively, and were in compliance with our financial and other debt covenants.
As of June 30, 2021, we had a $1,000.0 million committed senior unsecured Credit Facility (the "Credit Facility") with Bank of America N.A., HSBC Bank USA, N.A., JP Morgan Chase Bank, N.A., Wells Fargo Bank, National Association, Citibank, N.A., Credit Suisse AG, Cayman Islands Branch, Morgan Stanley Bank, N.A., First Commercial Bank, Ltd., Los Angeles Branch, TD Bank, N.A., and the Northern Trust Company. The Credit Facility may be used for general corporate purposes, including working capital needs and capital expenditures, acquisitions, dividend payments, and the share repurchase program (the "Repurchase Program"). As of June 30, 2021, we were in compliance with all financial and other debt covenants under the Credit Facility. As of June 30, 2021 and December 31, 2020, the available capacity under the Credit Facility was $604.9 million and $944.6 million, net of the letters of credit of $5.1 million and $5.4 million, respectively.
11. Stockholders’ Equity:
We have 2,000,000,000 shares of authorized common stock as of June 30, 2021 and December 31, 2020. Our common shares have rights to any dividend declared by the board of directors (the "Board"), subject to any preferential or other rights of any outstanding preferred stock, and voting rights to elect all current members of the Board. At June 30, 2021 and December 31, 2020, the closing price of our common stock was $174.72 and $207.59 per share, respectively.
We have 80,000,000 shares of authorized preferred stock, par value $0.001 per share. The preferred shares have preferential rights over the common shares with respect to dividends and net distribution upon liquidation. We did not issue any preferred shares as of June 30, 2021 and December 31, 2020.
On February 17, 2021 and April 28, 2021, our Board approved a cash dividend of $0.29 per share of common stock issued and outstanding to the holders of record as of March 15, 2021 and June 15, 2021, respectively. Cash dividends of $94.2 million and $87.9 million were paid during the six months ended June 30, 2021 and 2020 and recorded as a reduction to retained earnings, respectively.
Share Repurchase Program
Since May 2010, we have authorized repurchases of up to $4,100.0 million of our common stock through our Repurchase Program, inclusive of the $300.0 million authorization approved by our Board on February 16, 2021. Since the introduction of share repurchase as a feature of our capital management strategies in 2010, we have repurchased shares with an aggregate value of $3,771.2 million. As of June 30, 2021, we had $328.8 million available to repurchase shares through our Repurchase Program. We have no obligation to repurchase stock under this program and intend to use this authorization as a means of offsetting dilution from the issuance of shares under our 2021 Equity Incentive Plan (the "2021 Incentive Plan"), our 2013 Equity Incentive Plan (the "2013 Incentive Plan"), our 2009 Equity Incentive Plan (the "2009 Incentive Plan"), our sharesave plan ("U.K. Sharesave Plan"), and our employee stock purchase plan ("ESPP") while providing flexibility to repurchase additional shares if warranted. This authorization has no expiration date and may be increased, reduced, suspended, or terminated at any time. Shares that are repurchased under our Repurchase Program will be recorded as treasury stock and will be available for future issuance.
In December 2020 and March 2021, we entered into Accelerated Share Repurchase ("ASR") agreements to repurchase shares of our common stock for an aggregate purchase price of $50.0 million and $125.0 million with HSBC Bank USA, N.A and Citibank, N.A., respectively. The ASR agreements are each accounted as a treasury stock transaction and forward stock purchase agreement indexed to our common stock. The forward stock purchase agreement is classified as an equity instrument under ASC 815-40, Contracts in Entity's Own Equity ("ASC 815-40") and deemed to have a fair value of zero at the respective effective date. Upon payment of the aggregate purchase price on January 4, 2021 and April 1, 2021, we received an aggregate delivery of 192,687 and 565,963 shares of our common stock at a price of $207.59 and $176.69, respectively. Upon the final settlement of the ASR agreements in February 2021 and May 2021, we received an additional 70,787 and 121,965 shares, respectively, as determined by the volume weighted average share price of our common stock during the term of the ASR agreements. The aggregate purchase price was recorded as a reduction to stockholders' equity in our condensed consolidated statements of changes in stockholders' equity for the six months ended June 30, 2021. These repurchases of 951,402 shares for the six months ended June 30, 2021 resulted in a reduction of outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share ("EPS").
During the six months ended June 30, 2021, we repurchased 1,394,538 shares of common stock with an aggregate value of $250.0 million as part of the Repurchase Program, inclusive of the ASR, at a weighted average price of $179.27 per share. We utilized cash from operations and borrowings from our Credit Facility to fund these repurchases.
Treasury Stock
As of June 30, 2021, our treasury stock consisted of 382,076,719 shares of common stock, carried at cost. During the six months ended June 30, 2021, we transferred 503,331 shares of common stock from the treasury shares at a weighted average treasury stock price of $11.33 per share.
Earnings Per Share
Basic EPS is computed by dividing net income attributable to Verisk by the weighted average number of common shares outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding, using the treasury stock method, if the dilutive potential common shares, including vested and nonvested stock options, nonvested restricted stock awards, nonvested restricted stock units, nonvested performance awards consisting of performance share units ("PSU"), and nonvested deferred stock units, had been issued.
The following is a presentation of the numerators and denominators of the basic and diluted EPS computations for the three and six months ended June 30, 2021 and 2020:
|
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Numerator used in basic and diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Verisk
|
|
$
|
154.0
|
|
|
$
|
179.0
|
|
|
$
|
322.6
|
|
|
$
|
350.7
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares used in basic EPS
|
|
|
162,007,784
|
|
|
|
162,371,920
|
|
|
|
162,324,802
|
|
|
|
162,633,113
|
|
|
Effect of dilutive shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential common shares issuable from stock options and stock awards
|
|
|
1,038,754
|
|
|
|
2,731,168
|
|
|
|
1,416,826
|
|
|
|
2,780,491
|
|
|
Weighted average number of common shares and dilutive potential common shares used in diluted EPS
|
|
|
163,046,538
|
|
|
|
165,103,088
|
|
|
|
163,741,628
|
|
|
|
165,413,604
|
|
The potential shares of common stock that were excluded from diluted EPS were 785,547 and 975,710 for the three months ended June 30, 2021 and 2020, and 866,055 and 992,615 for the six months ended June 30, 2021 and 2020, respectively, because the effect of including these potential shares was anti-dilutive.
Accumulated Other Comprehensive Losses
The following is a summary of accumulated other comprehensive losses as of June 30, 2021 and December 31, 2020:
|
|
|
2021
|
|
|
2020
|
|
|
Foreign currency translation adjustment
|
|
$
|
(267.0
|
)
|
|
$
|
(292.2
|
)
|
|
Pension and postretirement adjustment, net of tax
|
|
|
(81.9
|
)
|
|
|
(83.5
|
)
|
|
Accumulated other comprehensive losses
|
|
$
|
(348.9
|
)
|
|
$
|
(375.7
|
)
|
The before tax and after tax amounts of other comprehensive income (loss) for the three and six months ended June 30, 2021 and 2020 are summarized below:
|
|
|
Before Tax
|
|
|
Tax (Expense) Benefit
|
|
|
After Tax
|
|
|
For the Three Months Ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
$
|
16.5
|
|
|
$
|
—
|
|
|
$
|
16.5
|
|
|
Pension and postretirement adjustment before reclassifications
|
|
|
2.0
|
|
|
|
(0.6
|
)
|
|
|
1.4
|
|
|
Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (1)
|
|
|
(0.9
|
)
|
|
|
0.3
|
|
|
|
(0.6
|
)
|
|
Pension and postretirement adjustment
|
|
|
1.1
|
|
|
|
(0.3
|
)
|
|
|
0.8
|
|
|
Total other comprehensive income
|
|
$
|
17.6
|
|
|
$
|
(0.3
|
)
|
|
$
|
17.3
|
|
|
For the Three Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
Pension and postretirement adjustment before reclassifications
|
|
|
4.1
|
|
|
|
(0.9
|
)
|
|
|
3.2
|
|
|
Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (1)
|
|
|
(2.1
|
)
|
|
|
0.5
|
|
|
|
(1.6
|
)
|
|
Pension and postretirement adjustment
|
|
|
2.0
|
|
|
|
(0.4
|
)
|
|
|
1.6
|
|
|
Total other comprehensive income
|
|
$
|
1.9
|
|
|
$
|
(0.4
|
)
|
|
$
|
1.5
|
|
|
|
|
Before Tax
|
|
|
Tax (Expense) Benefit
|
|
|
After Tax
|
|
|
For the Six Months Ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
$
|
25.2
|
|
|
$
|
—
|
|
|
$
|
25.2
|
|
|
Pension and postretirement adjustment before reclassifications
|
|
|
4.1
|
|
|
|
(1.0
|
)
|
|
|
3.1
|
|
|
Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (1)
|
|
|
(2.0
|
)
|
|
|
0.5
|
|
|
|
(1.5
|
)
|
|
Pension and postretirement adjustment
|
|
|
2.1
|
|
|
|
(0.5
|
)
|
|
|
1.6
|
|
|
Total other comprehensive income
|
|
$
|
27.3
|
|
|
$
|
(0.5
|
)
|
|
$
|
26.8
|
|
|
For the Six Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
$
|
(172.7
|
)
|
|
$
|
—
|
|
|
$
|
(172.7
|
)
|
|
Pension and postretirement adjustment before reclassifications
|
|
|
6.2
|
|
|
|
(1.5
|
)
|
|
|
4.7
|
|
|
Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (1)
|
|
|
(3.1
|
)
|
|
|
0.8
|
|
|
|
(2.3
|
)
|
|
Pension and postretirement adjustment
|
|
|
3.1
|
|
|
|
(0.7
|
)
|
|
|
2.4
|
|
|
Total other comprehensive loss
|
|
$
|
(169.6
|
)
|
|
$
|
(0.7
|
)
|
|
$
|
(170.3
|
)
|
_______________
|
(1)
|
These accumulated other comprehensive loss components, before tax, are included under "Cost of revenues" and "Selling, general and administrative" in our accompanying condensed consolidated statements of operations. These components are also included in the computation of net periodic (benefit) cost (see Note 13. Pension and Postretirement Benefits for additional details).
|
12. Equity Compensation Plans:
On May 19, 2021 (the "Approval Date"), our shareholders approved the Verisk Analytics, Inc. 2021 Incentive Plan, which replaced the 2013 Incentive Plan for any new grants made after the Approval Date. As of the Approval Date, the number of shares of our common stock available for issuance under the 2021 Incentive Plan was 16,000,000, reduced by (i) one share for every one share that was subject to an option or stock appreciation right granted after December 31, 2020 and prior to the Approval Date under the 2013 Incentive Plan, and (ii) two and one-half shares for every one share that was subject to any award other than an option or stock appreciation right granted after December 31, 2020 and prior to the Approval Date under the 2013 Incentive Plan. All of our outstanding stock options, restricted stock awards, deferred stock units, and PSUs are covered under our 2021 Incentive Plan, our 2013 Incentive Plan, or our 2009 Incentive Plan. Awards under our 2021 Incentive Plan may include one or more of the following types: (i) stock options (both nonqualified and incentive stock options), (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, (v) performance awards, (vi) other share-based awards, and (vii) cash. Employees, non-employee directors and consultants are eligible for awards under our 2021 Incentive Plan. We transferred common stock under these plans from our treasury shares. As of June 30, 2021, there were 14,920,947 shares of common stock reserved and available for future issuance under our 2021 Incentive Plan. Cash received from stock option exercises for the six months ended June 30, 2021 and 2020 was $21.0 million and $42.1 million, respectively.
We grant equity awards to our key employees. The nonqualified stock options have an exercise price equal to the adjusted closing price of our common stock on the grant date, with a ten-year contractual term. The fair value of the restricted stock is determined using the closing price of our common stock on the grant date. The restricted stock is not assignable or transferable until it becomes vested. PSUs vest at the end of a three-year performance period, subject to the recipient’s continued service. Each PSU represents the right to receive one share of our common stock and the ultimate realization is based on our achievement of certain market performance criteria and may range from 0% to 200% of the recipient’s target levels of 100% established on the grant date. The fair value of PSUs is determined on the grant date using the Monte Carlo Simulation model. We recognize the expense of the equity awards ratably over the vesting period, which could be up to four years.
On January 15, 2021, we granted 706,507 stock options, 134,777 shares of restricted stock, and 59,144 performance share units to key employees. The stock options and restricted stock have a graded service vesting period of four years, and the performance share units have a three-year performance period, subject to the recipients' continued service.
A summary of the status of the stock options, restricted stock, and PSUs awarded under our 2021, 2013 and 2009 Incentive Plans as of December 31, 2020 and June 30, 2021 and changes during the interim period are presented below:
|
|
|
Stock Option
|
|
|
Restricted Stock
|
|
|
PSU
|
|
|
|
|
Number of Options
|
|
|
Weighted Average Exercise Price
|
|
|
Aggregate Intrinsic Value
|
|
|
Number of Shares
|
|
|
Weighted Average Grant Date Fair Value Per Share
|
|
|
Number of Shares
|
|
|
Weighted Average Grant Date Fair Value Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2020
|
|
|
5,611,777
|
|
|
$
|
98.28
|
|
|
$
|
613.4
|
|
|
|
390,054
|
|
|
$
|
131.63
|
|
|
|
145,609
|
|
|
$
|
170.75
|
|
|
Granted
|
|
|
713,848
|
|
|
$
|
190.04
|
|
|
|
|
|
|
|
136,172
|
|
|
$
|
190.04
|
|
|
|
59,144
|
|
|
$
|
210.07
|
|
|
Dividend reinvestment
|
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
543
|
|
|
|
N/A
|
|
|
Exercised or lapsed
|
|
|
(298,161
|
)
|
|
$
|
71.65
|
|
|
$
|
32.6
|
|
|
|
(156,053
|
)
|
|
$
|
118.33
|
|
|
|
(42,610
|
)
|
|
$
|
140.70
|
|
|
Canceled, expired or forfeited
|
|
|
(81,438
|
)
|
|
$
|
151.80
|
|
|
|
|
|
|
|
(16,702
|
)
|
|
$
|
153.86
|
|
|
|
—
|
|
|
|
|
|
|
Outstanding at June 30, 2021
|
|
|
5,946,026
|
|
|
$
|
108.91
|
|
|
$
|
391.3
|
|
|
|
353,471
|
|
|
$
|
158.46
|
|
|
|
162,686
|
|
|
$
|
192.99
|
|
|
Exercisable at June 30, 2021
|
|
|
3,997,980
|
|
|
$
|
85.77
|
|
|
$
|
355.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2020
|
|
|
3,494,164
|
|
|
$
|
76.84
|
|
|
$
|
456.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested at June 30, 2021
|
|
|
1,948,046
|
|
|
|
|
|
|
|
|
|
|
|
353,471
|
|
|
|
|
|
|
|
162,686
|
|
|
|
|
|
|
Expected to vest at June 30, 2021
|
|
|
1,729,503
|
|
|
|
|
|
|
|
|
|
|
|
316,269
|
|
|
|
|
|
|
|
90,587
|
(1)
|
|
|
|
|
|
(1)
|
Includes estimated performance achievement
|
The fair value of the stock options granted was estimated using a Black-Scholes valuation model that uses the weighted average assumptions noted in the following table for the six months ended June 30, 2021 and 2020:
|
|
|
2021
|
|
|
2020
|
|
|
Option pricing model
|
|
Black-Scholes
|
|
|
Black-Scholes
|
|
|
Expected volatility
|
|
|
23.61%
|
|
|
|
18.21%
|
|
|
Risk-free interest rate
|
|
|
0.37%
|
|
|
|
1.58%
|
|
|
Expected term in years
|
|
|
4.3
|
|
|
|
4.3
|
|
|
Dividend yield
|
|
|
0.63%
|
|
|
|
0.71%
|
|
|
Weighted average grant date fair value per stock option
|
|
|
$ 36.28
|
|
|
|
$ 25.48
|
|
The expected term for the stock options granted was estimated based on studies of historical experience and projected exercise behavior. However, for certain awards granted, for which no historical exercise pattern exists, the expected term was estimated using the simplified method. The risk-free interest rate is based on the yield of U.S. Treasury zero coupon securities with a maturity equal to the expected term of the equity award. The volatility factor is calculated using historical daily closing prices over the most recent period that is commensurate with the expected term of the stock option awards. The expected dividend yield was based on our expected annual dividend rate on the date of grant.
Intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the adjusted closing price of our common stock as of the reporting date. Excess tax benefits from exercised stock options were recorded as income tax benefit in our condensed consolidated statements of operations. This tax benefit is calculated as the excess of the intrinsic value of options exercised and restricted stock lapsed in excess of compensation recognized for financial reporting purposes. The weighted average remaining contractual terms were 6.1 years and 4.9 years for the outstanding and exercisable stock options, respectively, as of June 30, 2021.
For the six months ended June 30, 2021, there was $112.3 million of total unrecognized compensation costs, exclusive of the impact of vesting upon retirement eligibility, related to nonvested stock-based compensation arrangements granted under our 2021 and 2013 Incentive Plans. That cost is expected to be recognized over a weighted average period of 2.60 years. The total grant date fair value of options vested was $11.0 million and $10.1 million during the six months ended June 30, 2021 and 2020, respectively. The total grant date fair value of restricted stock vested during the six months ended June 30, 2021 and 2020 was $11.9 million and $11.0 million, respectively. The total grant date fair value of PSUs vested during the six months ended June 30, 2021 and 2020 was $5.7 million and $4.1 million, respectively.
Our U.K. Sharesave Plan offers qualifying employees in the United Kingdom the opportunity to own shares of our common stock. Employees who elect to participate are granted stock options, of which the exercise price is equal to the average of the closing price on the five trading days immediately preceding the plan invitation date discounted by 5%, and enter into a savings contract, the proceeds of which are then used to exercise the options upon the three-year maturity of the savings contract. During the six months ended June 30, 2021 and 2020, we granted no stock options under our U.K. Sharesave Plan. As of June 30, 2021, there were 454,453 shares of common stock reserved and available for future issuance under our U.K. Sharesave Plan.
Our ESPP offers eligible employees the opportunity to purchase shares of our common stock at a discount of its fair market value at the time of purchase. During the six months ended June 30, 2021 and 2020, we issued 19,716 and 17,549 shares of common stock at a weighted discounted price of $166.93 and $145.90 for the ESPP, respectively. As of June 30, 2021, there were 1,240,550 shares of common stock reserved and available for future issuance under our ESPP.
13. Pension and Postretirement Benefits:
We maintain a frozen qualified defined benefit pension plan for certain employees through membership in our Pension Plan for Insurance Organizations (the "Pension Plan"), a multiple-employer trust. We also apply a cash balance formula to determine future benefits. Under the cash balance formula, each participant has an account, which is credited annually based on the interest earned on the previous year-end cash balance. We also have a frozen non-qualified supplemental cash balance plan ("SERP") for certain employees. The SERP is funded from our general assets. During the first quarter of 2021, we changed the investment guidelines on our Pension Plan assets to target investment allocation of 50% to equity securities and 50% to debt securities from our previous target allocation of 55% to equity securities and 45% to debt securities as of December 31, 2020.
We also provide certain healthcare and life insurance benefits to certain qualifying active and retired employees. Our Postretirement Health and Life Insurance Plan (the "Postretirement Plan"), which has been frozen, is contributory, requiring participants to pay a stated percentage of the premium for coverage. The components of net periodic (benefit) cost for the three and six months ended June 30 are summarized below:
|
|
|
Pension Plan and SERP
|
|
|
Postretirement Plan
|
|
|
|
|
For the Three Months Ended June 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Interest cost
|
|
$
|
2.8
|
|
|
$
|
3.6
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
Expected return on plan assets
|
|
|
(8.2
|
)
|
|
|
(6.8
|
)
|
|
|
—
|
|
|
|
(0.1
|
)
|
|
Amortization of prior service cost (credit)
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
Amortization of net actuarial loss
|
|
|
0.9
|
|
|
|
1.9
|
|
|
|
—
|
|
|
|
0.2
|
|
|
Net periodic (benefit) cost
|
|
$
|
(4.4
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
Employer contributions, net
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.8
|
|
|
$
|
1.2
|
|
|
|
|
Pension Plan and SERP
|
|
|
Postretirement Plan
|
|
|
|
|
For the Six Months Ended June 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Interest cost
|
|
$
|
5.6
|
|
|
$
|
6.9
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
Expected return on plan assets
|
|
|
(16.4
|
)
|
|
|
(14.4
|
)
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
Amortization of prior service cost (credit)
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
Amortization of net actuarial loss
|
|
|
1.9
|
|
|
|
2.9
|
|
|
|
0.1
|
|
|
|
0.2
|
|
|
Net periodic (benefit) cost
|
|
$
|
(8.8
|
)
|
|
$
|
(4.5
|
)
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
Employer contributions, net
|
|
$
|
0.4
|
|
|
$
|
0.4
|
|
|
$
|
0.4
|
|
|
$
|
0.8
|
|
The expected contributions to the Pension Plan, SERP and Postretirement Plan for the year ending December 31, 2021 are consistent with the amounts previously disclosed as of December 31, 2020.
14. Segment Reporting:
ASC 280-10, Disclosures About Segments of an Enterprise and Related Information ("ASC 280-10"), establishes standards for reporting information about operating segments. ASC 280-10 requires that a public business enterprise reports financial and descriptive information about its reportable operating segments. Operating segments are components of an enterprise for which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker ("CODM") in deciding how to allocate resources and in assessing performance. Our President and Chief Executive Officer is identified as the CODM as defined by ASC 280-10. Our operating segments are the following: Insurance, Energy and Specialized Markets, and Financial Services. These three operating segments are also our reportable segments.
Each of the reportable segments, Insurance, Energy and Specialized Markets, and Financial Services, has a portion of its revenue from more than one of the three revenue types described within our revenue recognition policy. Below is the overview of the solutions offered within each reportable segment.
Insurance: We are the leading provider of statistical, actuarial and underwriting data for the U.S. P&C insurance industry. Our databases include cleansed and standardized records describing premiums and losses in insurance transactions, casualty and property risk attributes for commercial buildings and their occupants, and fire suppression capabilities of municipalities. We use this data to create policy language and proprietary risk classifications that are industry standards and to generate prospective loss cost estimates used to price insurance policies, which are accessed via a hosted platform. We also develop solutions that our customers use to analyze key processes in managing risk. Our combination of algorithms and analytic methods incorporate our proprietary data to generate solutions. We also help businesses and governments better anticipate and manage climate and weather-related risks. In most cases, our customers integrate the solutions into their models, formulas or underwriting criteria in order to predict potential loss events, ranging from hurricanes to earthquakes. We develop catastrophe and extreme event models and offer solutions covering natural and man-made risks, including acts of terrorism. We further develop solutions that allow customers to quantify costs after loss events occur. Our multitier, multispectral terrestrial imagery and data acquisition, processing, analytics, and distribution system using the remote sensing and machine learning technologies helps gather, store, process, and deliver geographic and spatially referenced information that supports uses in many markets. Additionally, we offer fraud-detection solutions including review of data on claim histories, analysis of claims to find emerging patterns of fraud, and identification of suspicious claims in the insurance sector. Our underwriting & rating, insurance anti-fraud claims, catastrophe modeling, loss quantification, and weather risk solutions are included in this segment. During the first quarter of 2021, due to management restructuring, our CODM reorganized Atmospheric and Environmental Research ("AER"), an immaterial component of the Energy and Specialized Markets segment, to the Insurance segment. Consequently, AER became part of the underwriting and rating category within the Insurance segment. The inclusion of AER within our Insurance segment better aligns with how our CODM makes operating decisions, assesses the performance of the business, and allocates resources. Our prior year results have been recast to reflect this change. The related impact to our condensed consolidated financial statements was not material for all periods presented.
Energy and Specialized Markets: We are a leading provider of data analytics via hosted platform for the global energy, chemicals, and metals and mining industries. Our research and consulting solutions focus on exploration strategies and screening, asset development and acquisition, commodity markets, and corporate analysis in the areas of business environment, business improvement, business strategies, commercial advisory, and transaction support. We gather and manage proprietary information, insight, and analysis on oil and gas fields, mines, refineries, and other assets across the interconnected global energy sectors to advise customers in making asset investment and portfolio allocation decisions. Our analytical tools measure and observe environmental properties and translate those measurements into actionable information based on customer needs. In addition, we provide market and cost intelligence to energy companies to optimize financial results. We further offer a suite of data and information services that enable improved compliance with global Environmental Health and Safety requirements related to the safe manufacturing, distribution, transportation, usage, and disposal of chemicals and products. Our energy business and environmental health and safety services are included in this segment.
Financial Services: We maintain a bank account consortia to provide competitive benchmarking, decisioning algorithms, business intelligence, and customized analytic services that help financial institutions, payment networks and processors, alternative lenders, regulators, and merchants make better strategy, marketing, and risk decisions. Customers apply our solutions in the areas of tailored data management and media effectiveness that include business intelligence platforms, profile views, mobile data solutions, enterprise database services, and fraud risk scoring algorithms for marketing, fraud, and risk mitigation. In addition, our bankruptcy management solutions assist creditors, debt servicing businesses, and credit services to enhance regulatory compliance by eliminating stay violation and portfolio valuation risk.
The three aforementioned operating segments represent the segments for which discrete financial information is available and upon which operating results are regularly evaluated by our CODM in order to assess performance and allocate resources. We use EBITDA as the profitability measure for making decisions regarding ongoing operations. EBITDA is net income before interest expense, provision for income taxes, and depreciation and amortization of fixed and intangible assets. EBITDA is the measure of operating results used to assess corporate performance and optimal utilization of debt and acquisitions. Operating expenses consist of direct and indirect costs principally related to personnel, facilities, software license fees, consulting, travel, and third-party information services. Indirect costs are generally allocated to the segments using fixed rates established by management based upon estimated expense contribution levels and other assumptions that management considers reasonable. We do not allocate interest expense and provision for income taxes since these items are not considered in evaluating the segment’s overall operating performance. In addition, our CODM does not evaluate the financial performance of each segment based on assets. See Note 3. Revenues for information on disaggregated revenues by type of service and by country.
The following tables provide our revenue and EBITDA by reportable segment for the three and six months ended June 30, 2021 and 2020, and the reconciliation of EBITDA to income before income taxes as shown in our accompanying condensed consolidated statements of operations:
|
|
|
For the Three Months Ended
|
|
|
|
|
June 30, 2021
|
|
|
June 30, 2020
|
|
|
|
|
Insurance
|
|
|
Energy and Specialized Markets
|
|
|
Financial Services
|
|
|
Total
|
|
|
Insurance
|
|
|
Energy and Specialized Markets
|
|
|
Financial Services
|
|
|
Total
|
|
|
Revenues
|
|
$
|
550.0
|
|
|
$
|
162.3
|
|
|
$
|
35.2
|
|
|
$
|
747.5
|
|
|
$
|
492.2
|
|
|
$
|
148.6
|
|
|
$
|
38.0
|
|
|
$
|
678.8
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues (exclusive of items shown separately below)
|
|
|
(172.8
|
)
|
|
|
(67.2
|
)
|
|
|
(24.9
|
)
|
|
|
(264.9
|
)
|
|
|
(151.3
|
)
|
|
|
(62.0
|
)
|
|
|
(22.5
|
)
|
|
|
(235.8
|
)
|
|
Selling, general and administrative
|
|
|
(66.7
|
)
|
|
|
(36.9
|
)
|
|
|
(7.8
|
)
|
|
|
(111.4
|
)
|
|
|
(57.7
|
)
|
|
|
(34.4
|
)
|
|
|
(4.3
|
)
|
|
|
(96.4
|
)
|
|
Investment income (loss) and others, net
|
|
|
0.2
|
|
|
|
(0.6
|
)
|
|
|
(0.1
|
)
|
|
|
(0.5
|
)
|
|
|
(0.2
|
)
|
|
|
(0.6
|
)
|
|
|
0.1
|
|
|
|
(0.7
|
)
|
|
EBITDA
|
|
$
|
310.7
|
|
|
$
|
57.6
|
|
|
$
|
2.4
|
|
|
|
370.7
|
|
|
$
|
283.0
|
|
|
$
|
51.6
|
|
|
$
|
11.3
|
|
|
|
345.9
|
|
|
Depreciation and amortization of fixed assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(53.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(45.9
|
)
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(50.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(41.0
|
)
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(31.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34.2
|
)
|
|
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
235.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
224.8
|
|
|
|
|
For the Six Months Ended
|
|
|
|
|
June 30, 2021
|
|
|
June 30, 2020
|
|
|
|
|
Insurance
|
|
|
Energy and Specialized Markets
|
|
|
Financial Services
|
|
|
Total
|
|
|
Insurance
|
|
|
Energy and Specialized Markets
|
|
|
Financial Services
|
|
|
Total
|
|
|
Revenues
|
|
$
|
1,085.6
|
|
|
$
|
318.5
|
|
|
$
|
69.5
|
|
|
$
|
1,473.6
|
|
|
$
|
987.5
|
|
|
$
|
302.8
|
|
|
$
|
78.3
|
|
|
$
|
1,368.6
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues (exclusive of items shown separately below)
|
|
|
(346.0
|
)
|
|
|
(132.2
|
)
|
|
|
(49.1
|
)
|
|
|
(527.3
|
)
|
|
|
(318.5
|
)
|
|
|
(128.6
|
)
|
|
|
(46.4
|
)
|
|
|
(493.5
|
)
|
|
Selling, general and administrative
|
|
|
(141.4
|
)
|
|
|
(74.8
|
)
|
|
|
(15.0
|
)
|
|
|
(231.2
|
)
|
|
|
(127.3
|
)
|
|
|
(72.1
|
)
|
|
|
(9.1
|
)
|
|
|
(208.5
|
)
|
|
Other operating income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15.9
|
|
|
|
—
|
|
|
|
3.5
|
|
|
|
19.4
|
|
|
Investment income (loss) and others, net
|
|
|
1.5
|
|
|
|
(0.2
|
)
|
|
|
(0.1
|
)
|
|
|
1.2
|
|
|
|
(1.4
|
)
|
|
|
(1.1
|
)
|
|
|
(0.4
|
)
|
|
|
(2.9
|
)
|
|
EBITDA
|
|
$
|
599.7
|
|
|
$
|
111.3
|
|
|
$
|
5.3
|
|
|
|
716.3
|
|
|
$
|
556.2
|
|
|
$
|
101.0
|
|
|
$
|
25.9
|
|
|
|
683.1
|
|
|
Depreciation and amortization of fixed assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(101.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(92.0
|
)
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(95.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(82.0
|
)
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(66.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(67.6
|
)
|
|
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
452.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
441.5
|
|
Long-lived assets by country are provided below:
|
|
|
June 30, 2021
|
|
|
December 31, 2020
|
|
|
Long-lived assets:
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
3,513.3
|
|
|
$
|
3,525.0
|
|
|
U.K.
|
|
|
2,823.5
|
|
|
|
2,775.8
|
|
|
Other countries
|
|
|
458.1
|
|
|
|
466.8
|
|
|
Total long-lived assets
|
|
$
|
6,794.9
|
|
|
$
|
6,767.6
|
|
15. Related Parties:
We consider our stockholders that own more than 5.0% of the outstanding stock within the class to be related parties as defined within ASC 850, Related Party Disclosures. As of June 30, 2021 and December 31, 2020, we had no material transactions with related parties owning more than 5.0% of the entire class of stock.
16. Commitments and Contingencies:
We are a party to legal proceedings with respect to a variety of matters in the ordinary course of business, including the matters described below. With respect to ongoing matters, we are unable, at the present time, to determine the ultimate resolution of or provide a reasonable estimate of the range of possible loss attributable to ongoing matters or the impact these matters may have on our results of operations, financial position or cash flows. Although we believe we have strong defenses and have appealed adverse rulings to us, we could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on our results of operations, financial position or cash flows.
Xactware Solutions, Inc. Patent Litigation
On October 8, 2015, we were served with a summons and complaint in an action titled Eagle View Technologies, Inc. and Pictometry International Group, Inc. v. Xactware Solutions, Inc. and Verisk Analytics, Inc. filed in the United States District Court for the District of New Jersey (the "Court"). The complaint alleged that our Roof InSight (now known as Geomni Roof), Property InSight product (now known as Geomni Property) and Aerial Sketch product in combination with our Xactimate product infringe seven patents owned by Eagle View and Pictometry namely, Patent Nos. 8,078,436 (the "436 patent"), 8,170,840 (the "840 patent"), 8,209,152 (the "152 patent"), 8,542,880 (the "880 patent"), 8,818,770 (the "770 patent"), 8,823,732 (the "732 patent"), and 8,825,454 (the "454 patent"). On November 30, 2015, plaintiffs filed a First Amended Complaint adding Patent Nos. 9,129,376 (the "376 patent") and 9,135,737 (the "737 patent") to the lawsuit. The First Amended Complaint sought an entry of judgment by the Court that defendants have and continue to directly infringe and/or indirectly infringe, including by way of inducement, the Patents-in-Suit, permanent injunctive relief, damages, costs and attorney’s fees. On May 19, 2017, the District Court entered a Joint Stipulated Order of Partial Dismissal with Prejudice dismissing all claims or assertions pertaining to the 880 and 732 patents, and certain asserted claims of the 436, 840, 152, 770, 454, 376 and 737 patents (collectively the "Patents in Suit"). Subsequently, Eagle View dropped the 152 patent and the 737 patent and reduced the number of asserted claims from the five remaining Patents in Suit to six asserted claims. On September 25, 2019, following a trial, the jury determined that we had willfully infringed the six asserted claims, and assessed damages in the amount of $125.0 million. After trial, Eagle View moved for a temporary restraining order ("TRO") and a permanent injunction preventing our sales of the Geomni Roof, Geomni Property and Aerial Sketch products in combination with Xactimate. The Court granted the motion for a TRO on September 26, 2019 and on October 18, 2019, issued an Order permanently enjoining our sales of the Geomni Roof, Geomni Property and Aerial Sketch products in combination with Xactimate. On March 2, 2020, the Court signed an Order staying execution of the $125.0 million judgment pending our appeal, and we subsequently secured a supersedeas bond in the amount of $137.5 million to satisfy the New Jersey court rule requiring a bond in the amount of 110% of the monetary judgment. In addition, Eagle View asked the Court to award enhanced damages by trebling the jury's damages award, together with attorneys' fees, costs, and pre- and post-judgment interest. We opposed all of Eagle View's requests and asked the Court for judgment as a matter of law and for a new trial. Eagle View opposed our requests. On September 9, 2020, the Court denied our motion seeking judgment as a matter of law and a new trial. We timely filed our Amended Notice of Appeal on October 8, 2020. Eagle View filed a motion to dismiss or deactivate the appeal for lack of appellate jurisdiction on November 4, 2020 which was denied by the Federal Circuit on December 15, 2020. We filed our appellate brief on December 24, 2020. On February 16, 2021, the Court granted Eagle View's motion for enhanced damages and attorneys' fees. The Court trebled the jury's award of $125.0 million, awarding enhanced damages for a total of $375.0 million, and also awarded Eagle View pre-judgment and post-judgment interest. The Court's award of Eagle View's attorneys' fees was limited to the period just before the commencement of trial through the trial, and did not include the earlier approximately four-year period in the case. On March 17, 2021, we filed an unopposed application with the Federal Circuit seeking consolidation of our appeals addressing the trial Court’s findings on infringement, the denial of our motion for judgment as a matter of law and a new trial, and the Court’s Order on enhanced damages. As of June 29, 2021, the appeal was fully briefed with oral argument likely to proceed in the Fall 2021. Following the outcome of the trial in 2019, we established a $125.0 million reserve in connection with this litigation, which was included in selling, general and administrative expenses in our consolidated statements of operations for the year ended December 31, 2019. Since the appeal to the Federal Circuit remains pending, it is not reasonably possible to determine the ultimate resolution of this matter at this time. While the ultimate resolution of this matter remains uncertain at this time, should our appeal be unsuccessful, we could incur additional expenses up to the amount by which the enhanced damages award, plus pre-judgment and post-judgment interest and attorneys' fees, exceeds the existing $125.0 million reserve. On April 15, 2021, the Court signed an order continuing the stay of execution of the monetary judgment. In light of the Court’s Order enhancing damages, we posted an additional bond in the amount of $305.0 million.
ERISA Litigation
On September 24, 2020, former employees Jillyn Peterson, Gabe Hare, Robert Heynen and Adam Krajewski ("Plaintiffs"), filed suit in the United States District Court, District of New Jersey (No. 2:20-cv-13223-CCC-MF) against Defendants Insurance Services Office Inc. ("ISO"), the Plan Administration Committee of Insurance Services Office Inc. and its members ("Committee Defendants"), and the Trust Investment Committee of Insurance Services Office Inc. and its members. The class action complaint alleges violations of the Employee Retirement Income Security Act, ("ERISA"). The class is defined as all persons who were participants in or beneficiaries of the ISO 401(k) Savings and Employee Stock Ownership Plan ("Plan"), at any time between September 24, 2014 through the date of judgment. The complaint alleges that all defendants are fiduciaries with respect to the Plan. Plaintiffs challenge the amount of fees paid by Plan participants to maintain the investment funds in the plan portfolio and the amount of recordkeeper fees paid by participants. Plaintiffs allege that by permitting the payment of excessive fees, the Committee Defendants breached their ERISA duties of prudence and loyalty. Plaintiffs further allege that ISO breached its ERISA duty by failing to monitor the Committee Defendants who they allege committed known breaches of their fiduciary duties. The complaint does not specify damages but alleges the fiduciary breaches cost Plan participants millions of dollars. Defendants filed their motion to dismiss the complaint on January 12, 2021, which the Court partially denied on April 13, 2021. The case is currently proceeding into the discovery phase. At this time, it is not possible to reasonably estimate the liability related to this matter.
ISO Claims Partners Litigation
On October 23, 2020, Cara Jane Penegar, as Executrix of the Estate of Johnny Ray Penegar, Jr., filed a putative class action lawsuit in the United States District Court for the Western District of North Carolina, 3:20-cv-585-RJC-DCK, against Liberty Mutual Insurance Company and Liberty Mutual Fire Insurance Company (collectively "Liberty Mutual"), as well as Verisk Analytics, Inc. and ISO Claims Partners, Inc. (collectively "we"). The complaint alleges that Liberty Mutual violated the Medicare Secondary Payer Act ("MSPA") by failing to reimburse Medicare for medical services that should have been covered by its policies, with the result that Medicare bore the cost instead. The suit alleges that we are jointly and severally liable because of our involvement in Medicare reporting and/or other plan management. The complaint pleads a North Carolina class and a nationwide class, each composed of: all Medicare enrollees (within the respective geographic areas) for whom Medicare paid for an item or service where Liberty Mutual was the carrier and/or we were involved in claims administration; where defendants were demonstrated to be responsible for payment of the medical services via a workers’ compensation judgment, settlement, award, or contractual obligation; where defendants provided notice to the government of the fact of the settlement, judgment or award establishing their responsibility on or after October 23, 2017; but where defendants failed to make timely payment. The complaint does not identify the amount of damages sought but seeks double damages under the MSPA on behalf of all class members for all amounts at issue, as well as interest and attorneys’ fees. The Plaintiffs subsequently amended the complaint to add agency and conspiracy claims against us and Liberty Mutual. We filed a motion to dismiss the amended complaint. The court has not yet set a hearing date on our motion. At this time, it is not possible to reasonably estimate the liability related to this matter.
Jornaya Litigation
On December 10, 2020, we were served with a putative class action lawsuit brought by Erica Jackson in the Court of Common Pleas of Lackawanna County, Pennsylvania against Lead Intelligence, Inc. d/b/a Jornaya ("we" or "us"), Case No. 2020 CV 03695. The class complaint alleges that we violated Pennsylvania’s Wiretap Act ("PWA"), 18 Pa. Const. Stat. § 5701 et seq. by "wiretapping" and "intercepting" the plaintiff’s communications on the website colleges.educationgrant.com. The plaintiff alleges a class of all persons whose electronic communications were intercepted through the use of our wiretapping on the website. The complaint claims damages pursuant to the PWA for actual damages, but not less than liquidated damages computed at the rate of $100 a day for each day of violation, or $1,000, whichever is higher, punitive damages, and reasonable attorney's fees and other litigation costs. On February 16, 2021, we filed preliminary objections to the plaintiff’s complaint, the plaintiff opposed, and the Court ultimately denied our preliminary objections. We subsequently filed a petition to compel arbitration and a motion to stay this action pending the completion of the parties’ arbitration proceedings. A hearing date on the motions has not been set. At this time, it is not possible to reasonably estimate the liability related to this matter.
Financial Services Government Inquiry
We are cooperating with an inquiry by the United States Attorney’s Office for the Eastern District of Virginia related to government contracts within our financial services segment. The inquiry is ongoing, we have voluntarily produced documents, and we cannot anticipate the timing, outcome or possible impact of the inquiry, financial or otherwise.
Breach of Contract Litigation
On April 2, 2021, Leica Geosystems ("Leica") and its subsidiary, Intergraph Corporation filed a lawsuit against Verisk Analytics and Geomni, Inc. ("we" "our" or "us") in the Circuit Court of Madison County, Alabama, titled Leica Geosystems AG, et al. v. Geomni, Inc., Verisk Analytics, Inc., Vexcel Imaging, Inc., et al. Co-Defendant, Vexcel Imaging, through its subsidiary, GV Air, is alleged to have breached a master lease agreement related to Leica’s aerial sensor units. The complaint further alleges breach of a license agreement for royalties earned from the sale of aerial imagery data, and breach of a mutual nondisclosure agreement related to the alleged disclosure of confidential to co-defendant, Vexcel Imaging. Leica seeks compensatory and punitive damages, as well as attorney’s fees and costs. We filed a motion to dismiss the Plaintiffs’ claims and the hearing date on our motion is scheduled for September 2021. At this time, it is not possible to reasonably estimate the liability related to this matter.
17. Subsequent Events:
In June 2021, we entered into an additional ASR agreement with HSBC Bank USA, N.A. to repurchase shares of our common stock for an aggregate purchase price of $150.0 million. Upon payment of the aggregate purchase price on July 1, 2021, we received an initial delivery of 686,813 shares of our common stock at a price of $174.72 per share, representing approximately $120.0 million of the aggregate purchase price. Upon the final settlement of the ASR agreement in September 2021, we may be entitled to receive additional shares of our common stock or, under certain limited circumstances, be required to deliver shares to the counter-party. See Note 11. Stockholders' Equity for further discussion.
On July 1, 2021, we granted 4,552 shares of common stock, 4,560 non-qualified stock options that were immediately vested, 12,380 non-qualified stock options with a one-year service period that vest ratably over twelve months, and 7,850 deferred stock units to our Directors. On July 20, 2021, we granted 11,254 non-qualified stock options to participants under the U.K. Sharesave Plan.
**************