Lee M. Shavel
President, CEO at Verisk Analytics
Thank you, Stacy. Good morning, and thank you for participating in today's call. I'm pleased to share that our operating momentum continued as Verisk delivered another quarter of strong financial results, led by our subscription revenue growth of 9.1% with contributions from both underwriting and claims.
Transactional revenues were down slightly due to the strong double-digit growth from weather and shopping activity in the prior year, as well as the ongoing conversion of transactional revenues into committed subscription contracts. Returning to overall revenue growth, unaffected by contract transitions from last year, organic constant-currency revenue growth was 8% on a two-year compound annual growth basis at the high-end of our longer-term targets established at Investor Day. Elizabeth will provide much more detail in her financial review, but these results demonstrate the compounding power of our subscription-based business model, driven by the value we create for our clients. I am confident that 2024 is on-track to be another year delivering on the strategy and financial targets we established at Investor Day.
There are two fundamental drivers to the strong subscription growth we've been achieving. First is our enhanced go-to-market approach, which elevates and intensifies our strategic dialog with clients. The second is the strength of our products and solutions built on proprietary datasets and continuously enhanced as we scale innovation and invest on behalf of the industry.
On the first lever, with our client engagement, as I engage across the property and casualty insurance industry, we are seeing improving industry-wide financial metrics, helped by continued strong premium growth. Swiss Re now forecasts that 2024 direct written premiums will grow 9.5%, so there will be variability by line. Profitability across the sector is also improving as net industry-wide combined ratios have improved by over 2 points to 99.4, indicating underwriting profits. While catastrophe losses are expected to be elevated for the remainder of the year due to recent hurricanes, the expectation is that insurance and reinsurance industry participants are in a stronger financial position than in prior years and better able to absorb these cat-related losses.
Since our last call, I've had the opportunity to participate in several industry events, including the Rendez-Vous de Septembre in Monte Carlo, the CIAB Insurance Leadership Conference and our own Verisk Insurance Conference in London. At each of these, the opportunities to engage with the highest levels of leadership has enhanced our understanding of our clients' enterprise needs, broadened and strengthened our relationships and opened new doors to opportunities to work with them. What I have heard consistently and we are acting on is a strong desire to see us connect more of our datasets and analytics for enterprise solutions directly and with our partners. We are pursuing several product initiatives between underwriting claims, extreme events and specialty business solutions to deliver on that very objective.
Another reflection of our broader engagement to find, develop and leverage solutions for the industry is the opportunity I'll have to engage with insurance constituencies as a member of the Federal Advisory Committee on insurance. With heightened focus on the importance of the insurance industry in the midst of severe weather events, being at the table with industry partners to find ways to improve is an important responsibility for Verisk. I have already participated in discussions on improving community resilience and managing the impact of severe weather events.
In addition, we believe the opportunity to serve a broader range of agencies beyond our role in supporting the National Flood Insurance Program and Community rating system for FEMA and the Terrorism Risk Insurance Act program for the Department of Treasury is an important opportunity to support communities and industry. With all client engagements, the follow-up on these opportunities is focused, supported by the enhancements we've made in our client engagement structure and investments in our sales coverage. I believe the strength in our subscription growth reflects in-part the progress we are making in elevating our dialog and relationships and then capitalizing on the opportunities we create.
The second factor driving our subscription revenue growth is the strength of our data and solutions and our ability to innovate through data enhancement and responsibly combining datasets. Let me give you some examples of our progress this quarter. Our most significant initiative to drive more value for our clients is Core Lines Reimagine, which we have discussed with you at length. We continue to advance our progress in delivering proprietary content to clients more digitally, integrating more seamlessly into their workflows and providing more analytics and insights.
To that end, in the third quarter, we had the first release of an initiative we call the Future of Forms. Future of Forms addresses our clients' challenge of understanding and managing through the complexity of major policy updates. The future of Forms introduces a data visualization for our Forms filing with its first release focused on general liability. This new digital experience allows insurers to save time analyzing our content by interacting with our forums filings in an entirely new way. And the early response from our clients has been very positive with specific feedback saying that this new solution is easy to navigate and a significant time saver for their teams.
Additionally, as we have previously discussed, we continue to receive interest and inbound inquiries from our clients through the release of our Executive Insights reports, which leverage our statistical data to provide key trends. In the third quarter, we added to our library of reports by introducing Executive Insights for personal auto and general liability. We now have executive insights covering 5 of the 6 major lines of business with plans to introduce reports for commercial auto in the first-half of 2025.
Executive Insights not only provides our clients with benchmarking analysis for their book of business, but also provides a deeper look into the broader market. These reports reinforce Verisk's thought leadership position in the industry by providing this granular and unique view of the data in a timely manner. And the new product creates additional fuel for our client engagement teams, serving as a touch point for new C-level conversations and delivers on a consistent request for more insights.
As I mentioned earlier, we are also driving value by continuing to enhance our solutions by combining datasets across the Verisk family. To that end, we recently combined Verisk's claims data into Opta's enhanced payroll score for the Canadian market. The payroll score is powered by predictive analytics and location-specific data to predict severity and the likelihood of claims at a property. The addition of the Varisk claims data has enhanced the model, driving more insightful signals for our clients and leading to reinvigorated sales growth of this solution.
Our commitment to driving value and improving efficiency and automation is also a focus within the four walls of Verisk as we innovate around our internal data collection and management processes. We recently launched a new fully mobile application that allows our field representatives to complete engineering assessments and loss cost surveys directly from the field. We expect this initiative to speed-up cycle times for surveys, while also including more data validations and further automation of our quality-control process.
As you might imagine, our continued engagement focuses on issues that are top-of-mind for our clients and often top-of-mind for our shareholders as well. Most recently, Hurricanes Beryl, Helene and Milton have brought renewed attention to climate risks, catastrophe losses and resilience. Our conversations are focused on the comprehensive suite of solutions we currently offer that help our clients plan for, react and respond to climate risks.
In our Extreme Events business, we help our clients evaluate and price catastrophe risks by modeling a view of probable outcomes and impacts on their book of business before the events make landfall. Our catastrophe models calculate a view of loss outcomes, incorporating not only the most advanced weather signs, but also detailed understanding of local building codes and construction standards. Investing in mitigation efforts to manage and reduce losses is one of the keys to containing the industry losses from climate change.
To that end, Verisk's work in conjunction with FEMA's National Flood Insurance Program helps assess community-level efforts to reduce and avoid flood damage to insurable properties. Known as the community rating system, this program is based on technical data on flood plane mitigation that is collected and analyzed by Verisk. Through this program, communities can achieve discounts on flood insurance premiums for their property owners, making flood insurance more affordable for the end-consumer.
And finally, our Property Estimating Solutions and Anti-Fraud solutions help insurance ecosystem participants respond after the impact of storms. Our solutions power a network that allows carriers, independent adjusters and restoration contractors to estimate the cost to repair and rebuild storm impacted property in an automated and efficient way while also identifying fraud to make sure that only the valid claims get paid. I'm energized by the opportunity that lies ahead. In my conversations with the leaders of our clients, there is strong appetite to invest in technologies that can drive value in the form of better risk selection, more automation and efficiency, and they are turning to Verisk as the trusted partner to help them.
Now let me turn the call over to Elizabeth to review our financial results for the third quarter and year-to-date basis.
