Transaction to Subscription Impact
Q: What's the impact of transitioning from transaction to subscription?
A: The shift from transactional to subscription revenue models is impacting growth comparisons. A significant contract transitioned from transactional last year to subscription this year, contributing to the weakness in transactional revenue growth this quarter. This transition is occurring across multiple products and may cause periodic impacts on growth, but it's expected to benefit long-term sustainability.

Drivers of Revenue Growth
Q: What are the components of the 8% growth and its sustainability?
A: Growth is driven by increased demand for Verisk's products as clients face challenges in underwriting and claims. Success in capturing more value from investments and innovations enables continued growth. Strong performance in Specialty Business Solutions, international markets, and the life insurance business contributes to sustainability. Elevated strategic dialogue with clients is opening new opportunities, supporting long-term growth.

Transactional Revenue Decline
Q: Why did transactional revenue decline by 3% this quarter?
A: The 3% decline in transactional revenue is due to exceptional high levels of auto shopping activity and weather-related claims in the prior year, creating tough comparisons. Additionally, the shift of revenues from transactional to subscription models is impacting year-over-year comparisons. Despite the year-over-year decline, transactional revenues grew sequentially from the first quarter.

Guidance and Margin Outlook
Q: Does maintaining guidance imply a slowdown in EPS growth?
A: Maintaining guidance reflects expectations of seasonality in margins, timing of spending, and planned investments in the business. Certain tax benefits realized in the first half are not expected to continue, affecting the EPS growth rate in the second half.

Pricing Dynamics and Market Outlook
Q: How will future pricing and the hard market affect growth?
A: While acknowledging that the hard market won't last forever, Verisk has historically grown through both hard and soft markets by continuing to deliver value to clients. Investments in core lines and innovations, such as the Experience Index, enhance client value and support their 3-4% pricing target. Strong client feedback suggests potential to achieve the higher end of pricing expectations.

Auto Insurance Market Share
Q: Is Verisk gaining or losing share in auto insurance?
A: Auto insurance shopping-related revenue continued to grow but is experiencing deceleration due to tough year-over-year comparisons. Verisk believes it is generally maintaining market share in the auto insurance market.

Client Relationships and Disintermediation
Q: How are relationships with smaller clients, and is there disintermediation risk?
A: Verisk continues to deliver value across all client segments, with smaller and midsized clients benefiting proportionally more from Verisk's scale and data. There is no evidence of higher attrition or disintermediation among smaller clients. Verisk's stability and reliability help mitigate risks associated with clients adopting new technology vendors.

Capital Deployment and M&A Strategy
Q: What are the plans for capital deployment and M&A?
A: With leverage at the bottom end of the target range (2-3x), Verisk is willing to deploy capital to support the business. They remain active in M&A markets, focusing on unique businesses in the insurance sector where Verisk has a unique reason to be the right owner.

Experience Index Reception
Q: How is the new Experience Index being received?
A: The Experience Index has received very positive feedback, providing clients with more current data and industry benchmarking. Clients are eager for expansion into other lines of business, indicating strong demand for this innovation.

Life Insurance Solutions Growth
Q: What's happening with life insurance solutions growth?
A: Life insurance solutions continue to contribute to growth, generally achieving double-digit growth rates. Although specific revenue breakdowns are not provided, life insurance remains a strong area of growth.

Underwriting Solutions Deceleration
Q: What's causing deceleration in underwriting revenue?
A: The deceleration is primarily due to a slowdown in auto insurance shopping activity, which impacts the underwriting data analytics solutions segment. While core growth is strong, transactional headwinds are affecting overall underwriting growth.

Impact of Insurance Cycle
Q: Does pricing peak in 2025 insulate Verisk into 2027?
A: Verisk does not consider itself insulated from market cycles. Even though 20-25% of revenue comes from contracts tied to premium growth with a two-year lag, they must continue delivering value to sustain growth through different market conditions.

Additional Products Moving to Subscription
Q: Will more products transition to subscription models?
A: The transition from transactional to subscription revenue is occurring across various businesses. While the overall subscription-to-transactional revenue mix remains steady at approximately 80-20, further conversions may periodically impact growth comparisons.

Underwriting Activity Drivers
Q: What factors are driving underwriting activity?
A: Underwriting activity is influenced by factors such as auto insurance shopping activity, which falls under underwriting data analytics solutions. Changes in transactional revenues and market conditions also play significant roles.