Lee M. Shavel
President and Chief Executive Officer at Verisk Analytics
Thanks, Stacey. Good morning and thank you for participating in today's call. At our Investor Day in mid-March, we detailed the benefits of being an insurance-focused business and our comprehensive strategy to drive consistent, predictable growth at Verisk. Our first quarter results demonstrate the sharpened focus and results-oriented operating discipline at Verisk. We are operating on a more integrated basis across the Company and have been more engaged with our clients, as I'll describe in greater detail.
I will leave it to Elizabeth to walk through the details of the financials. But in summary, we delivered very strong organic revenue growth, combined with solid margin expansion yielding double-digit profit growth. The growth was broad based, with most businesses contributing to the result and we have strong business momentum. We delivered this performance despite a macroeconomic environment marked by high inflation, interest rate volatility and market anxiety.
Specific to the insurance industry, our customers are coming off a year marked by elevated underwriting losses and pressure on profitability. In fact, the U.S. property casualty insurers experienced a $27 billion net underwriting loss in 2022, the largest loss since 2011 according to industry data collected by Verisk, and the American Property Casualty Insurance Association. Moreover, profitability was under pressure as reflected in deteriorating combined ratios at 103% in 2022 versus almost 100% in 2021.
One consequence of this tough loss and profitability environment in 2022 has been a hardening insurance market, where rate increases are driving faster net written premium growth in the first quarter reports of many major insurers. Verisk is partnering with the industry to help them reduce costs, better select and price risk, read out fraud, and overall, operate more efficiently, given the macro environment. One problem area has been the state of Florida. As we've discussed in prior calls, the insurance crisis in Florida is being driven by a litigious environment, further complicated by extreme event vulnerability.
The combined impact is pushing insurers into insolvency. The state legislature has passed reforms to address the crisis and there are currently efforts being negotiated to bring increased oversight to the state's insurance market. That said, the risk for more liquidations remains and we continue to monitor both the primary and reinsurance markets closely, while leaning in with our customers to help them adapt to new legislation to better select and price risk in the state and to identify the systemic bad actors in the market.
A secondary of challenge has been auto underwriting, as insurers pulled back on writing new policies, as they awaited regulatory approval for rate increases. Rate actions have started to roll through and in the first quarter, we saw a rebound in policy holder shopping activity in response to higher rates, driving strong transactional revenue growth for Verisk this quarter. That said, we are yet to see behavior change on the part of the underwriters, as they are still cautious about spending on marketing and underwriting new policies. We continue to expect that improvement in the back half of the year.
One key pillar in our strategy that we discussed at Investor Day is being a more client-centric organization and the importance of strengthening the strategic dialog with our clients and intensifying our industry engagement. To that end, I've been leading the organization with direct client engagement through full relationship reviews at several of our largest clients, where we've been able to identify how we can better serve them and integrate new solutions to meet their specific objectives. I've also hosted our first CEO roundtable, where we brought together the leaders of our clients to discuss the issues that are foremost in their minds and where we can leverage our centrality and expertise to help address these issues.
This has been followed by a client Chief Information Officer roundtable, where we brought our technology leadership, headed by our CEO -- CIO, Nick Daffan and Chief Data Officer, Eric Schneider to discuss technology and analytics trends that are on the minds of insurance industry CIOs. In particular, generative AI was a hot topic and we discussed how we can help the industry develop safe, ethical and effective use cases and guide policy.
Our clients are recognizing the early benefits of change and focus at Verisk and have provided great feedback. A recent quote from an important client stated, I can't remember a meeting with this degree of transparent dialog where I felt like Verisk was listening. Our recent NPS scores also reflect this change in perception. Verisk conducts customer relationship surveys twice a year, and our recent NPS scores in the first quarter of 2023 were 47, up 4 points versus this time last year. Further, so far this year, we have hosted three in-person client events. At all our events, client can engage with our solutions and hear directly from those clients who use the products in the market and learn how effective they are in helping solve industry challenges.
More specifically, in February, our claims business hosted two events including Elevate, our signature event for claims and restoration professionals, which provided educational and networking sessions for over 600 industry professionals. We also hosted almost 300 industry participants at IFM, an industry-wide event, targeting the latest issues and advances in fraud management. In the U.S. alone, insurance fraud is estimated to cost the industry $300 billion annually, impacting industry profitability, and Verisk is uniquely positioned to help the industry. We host this event in partnership with the National Insurance Crime Bureau, both events included expert panel discussions, featuring our clients and partners, leading academics, and thought leaders in the industry, covering top-of-mind issues.
In April, we hosted the inaugural Verisk Insurance Conference, and hosted almost 600 clients for a four-day multi-track conference, designed to deliver a combination of product and thought leadership focused content, to key extreme events, life, and underwriting decision makers in insurance and reinsurance. This comprehensive event, which combined three previously separate events, enabled us to educate our clients and prospects about Verisk's end-to-end capabilities, while continuing to provide them with valuable content, applicable to their specific role in organization. It raised the awareness of the breadth and depth of solutions we offer to solve the industry's biggest challenges, and really highlighted the benefits of the integrated Verisk approach. We saw a great response to this event with almost half of the extreme events professionals attending underwriting sessions, and 40% of the underwriting attendees joining an extreme event session.
Our recent notable competitive contract win in our extreme events business is a great example of the benefits of being more focused and more integrated across Verisk. We recently signed a large multi-year contract expansion, with a global insurer for extreme events platform Touchstone. This client, who was already a subscriber to our property underwriting data solutions, will partner with Verisk on a workflow that will directly integrate those data solutions into the Touchstone platform. This partnership not only allows the client to obtain an enhanced view of their catastrophe loss potential based on Verisk Data, with minimal operational friction, but it also gives Verisk the opportunity to market the feasibility of the same solution to a broader range of market participants.
What struck me at both our claims and underwriting events, after dozens of client conversations, was the genuine enthusiasm our clients have for our ability to help them address industry issues with our scale and centrality. A commonly expressed sentiment is, Verisk has a unique perspective and we know you can help us. This is a tremendous privilege for us, and we are more mindful of our responsibility to create value for our clients and stakeholders. We are particularly excited about the opportunity it represents to find new channels for growth.
On the technological transformation front, we recently achieved a major milestone, as we have successfully sunset our mainframe. The scope and complexity of this project was massive, and our technology teams worked tirelessly to shutdown a 40-year-old mainframe in just five years. I want to thank my colleagues for their hard work and dedication, to modernizing our legacy technology footprint. This move allowed us to modernize our operations, and provide a better experience for our customers. Equally importantly, it enables Verisk to allocate more of our technology resources towards innovation to drive future growth.
Finally, I wanted to share that we recently published our 2022 Corporate Social Responsibility Report. This year's report offers a view of our ESG journey, and our work to help build global resilience for individuals, communities, and businesses. We continue to pursue sustainability and growth through the lens of a responsible ESG framework. On the environmental front, this year we established a Climate Advisory Council to glean strategic guidance on climate change, and receive climate-related feedback on our forthcoming solutions. Moreover, Verisk's sustainability team is currently working with an independent consultant, to help the Company complete a report, meeting the expectations set forth by the task force on climate-related financial disclosures.
As part of the exercise, we are conducting analysis, assessing the impact of climate change, both on Verisk's direct operations, and across key elements of its value chain and developing a realistic pathway to support science-based targets, and a commitment to net zero targets. The team is also engaging with internal stakeholders, regarding Verisk's current risk assessment activities, and framework, for identifying climate-related opportunities. We expect to publish the report in late 2023.
Regarding governance, over the last 12 months, Verisk took steps to enhance our governance at the Board level, including making changes to provide for the annual election of directors, and separating the role of Chair and CEO. We also took steps to refresh our Board, welcoming four new independent directors, who bring fresh perspectives and valuable skill and experience sets. As of the 2023 Annual Meeting of Shareholders, four Directors, namely Annell Bay, Chris Foskett, Dinos Iordanou, and David Wright will be retiring from the Board. I would like to express my gratitude to each of these directors for their leadership and guidance, which have been invaluable to Verisk's journey and transformation. These changes will bring our Board to a total of 10 members, 90% of whom are independent, and 60% are gender or racially diverse.
With that, I'll hand it over to Elizabeth, to review our financial results.
