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Verisk meets investor pressure with insurance focus, new directors

21st March 2022 - Author: Matt Sheehan

Verisk has responded to demands from activist investors by agreeing to reposition itself as a pure-play insurance focused business and seek further margin expansion, while also nominating three new independent directors for election to its board.

Last week, a letter was sent to Verisk’s Board of Directors on behalf of certain investment funds advised by D. E. Shaw & Co., L.P., a member of the D. E. Shaw Group, calling on the firm to make a number of changes to improve its performance.

This included a commitment to becoming a pure-play insurance data company, the formation of an operations review committee of the board to conduct a review of Verisk’s insurance businesses, and enhancements to the board with shareholder input.

The letter from D. E. Shaw did acknowledge that some steps had been taken, but argued that further change is needed at Verisk if the firm is serious about addressing the underperformance gap.

In response to the letter, Verisk said that its board has engaged in a constructive private dialogue with D. E. Shaw since October of last year.

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And now, the company has issued an update on precisely what activities it is undertaking in order to advance its corporate governance and drive enhanced shareholder value.

Firstly, after reviewing its non-insurance businesses and overall portfolio composition, Verisk has determined that moving towards being a global insurance-focused data analytics solutions provider represents the “optimal path towards enhancing shareholder value.”

Verisk therefore intends to evaluate “all strategic alternatives” for separating its Energy business, with the review expected to be concluded 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.

Additionally, Verisk will look to target improved cost efficiencies that produce of 300-500 basis points of EBITDA margin expansion in the consolidated remaining insurance-focused business by 2024, while maintaining string organic revenue growth.

And finally, it has nominated three new independent directors to its board to help improve its ongoing governance enhancements and business initiatives.

These are: Jeffrey Dailey, an 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  expertise in technology, finance and digital innovation.

“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,” said Christopher M. Foskett, Lead Independent Director of Verisk.

“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.”

Michael O’Mary, Managing Director at DESCO, also commented: “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.”

“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.”

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