Verisk Analytics Q2 2026 Earnings Call Transcript

Verisk Analytics (NASDAQ: VRSK ) held its second-quarter earnings conference call on Wednesday. Below is the complete transcript from the call. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

8%, underpinned by an 8% increase in subscription revenues, demonstrating a sequential acceleration from the previous quarter. 83 billion. S. tropical cyclone model, enhancing its Catastrophe and Risk Solutions business, and completed the acquisition of McKenzie Intelligence Services.

Client engagement remains strong, with significant discussions around AI, resulting in early traction with AI solutions like Xact AI and the integration of AI capabilities with Anthropic's Claude. 3% increase in diluted adjusted EPS due to capital return activities. Full Transcript OPERATOR Good day everyone, and welcome to the Verisk Second Quarter 2026 Earnings Results Conference Call. This call is being recorded; currently, all participants are in a listen-only mode.

After today's prepared remarks, we will conduct a question-and-answer session, where we will limit participants to one question so that we can allow everyone to ask a question. We will have further instructions for you at that time. For opening remarks and introductions, I would like to turn the call over to Verisk's Senior Vice President of Finance and Investor Relations, Ms. Stacy Broadbar.

Ms. Broadbar, please go ahead. Stacy Broadbar, SVP Finance and Investor Relations Thank you, operator, and good day everyone. We appreciate you joining us today for a discussion of our second quarter 2026 financial results.

On the call today are Lee Shavel, Verisk's President and Chief Executive Officer, and Elizabeth Mann, Chief Financial Officer. com. The earnings release has also been attached to an 8-K that we have furnished to the SEC. A replay of this call will be available for 30 days on our website and by dial-in, as set forth in more detail in today's earnings release.

I will remind everyone that today's call may include forward-looking statements about Verisk's future performance, including those related to our financial guidance. Actual performance could differ materially from what is suggested by our comments today. Information about the factors that could affect future performance is contained in our recent SEC filings. com.

However, we are not able to provide a reconciliation of projected adjusted EBITDA, adjusted EBITDA margin, and adjusted EPS to the most directly comparable expected GAAP result because of the unreasonable effort and high unpredictability of estimating certain items that are excluded from projected non-GAAP adjusted EBITDA, adjusted EBITDA margin, and adjusted EPS, including, for example, tax consequences, acquisition-related costs, gains and losses from dispositions, and other nonrecurring expenses, the effect of which may be significant. And now I'd like to turn the call over to Lee Shavel. Lee Shavel, President and CEO Thanks, Stacy.

Good morning, everyone, and thank you for joining us today. I will provide a broad overview of our second quarter financial results. We'll also offer perspective on our industry engagement, including client discussions focused on the use of advanced technologies, including the evolution of AI and the current operating environment. Finally, I will wrap up with some updates on recent groundbreaking innovations we have introduced into the market, including the release of Verisk Synergy Studio for the catastrophe risk market.

I will then hand the call over to Elizabeth for more detail in her financial review. 8% with balanced growth across underwriting and claims and demonstrating the sequential acceleration that we previously anticipated. Revenue growth was underpinned by an 8% increase in subscription revenues, demonstrating the stability and value of the solutions we provide to the insurance industry, helping them make better decisions. These are supported by the broad connectivity and deep client relationships we have within the industry.

4%, delivering another quarter of very healthy margins. Growth was modestly ahead of our expectations and reflected the short-term factors we previously described, namely the carryover impact of the very low weather activity, tough compares from strong renewals last year, and a work stoppage in a federal government contract. We continue to have confidence that the resolution of these short-term factors and core growth momentum will result in continued sequential improvement in revenue growth as we move through the second half of the year.

Moreover, we expect 2026 to be another year of performance in line with our Investor Day targets and reaffirm our 2026 financial guidance. Throughout the quarter, our client engagement was very active. We held several executive sessions across underwriting with top national and regional carriers, discussing how we can support clients in the current operating environment as well as our broader strategic plans, including our AI strategy.

Additionally, we hosted client-specific emerging issues workshops within underwriting, focusing on topics including data centers, AI risks and regulations, and quantum computing, where we discussed company-specific exposures for one top-20 carrier. We hosted three different sessions on artificial intelligence that were attended by almost 400 underwriting professionals across their enterprise. These engagements are a further demonstration of the critical role we play in the industry through our deep industry expertise, data analytics, and thought leadership. That same combination is why we continue to win new data contributions.

So far this year we have onboarded eight new core lines contributors and 10 contributors to our new excess and surplus data set. And with those excess and surplus contributors now online, our data set covers over $18 billion in historical and current premium. Specific to the operating environment, the first half of 2026 has continued on the trends experienced in 2025, namely improved combined ratios and robust industry profitability, helped by unusually low catastrophe losses. In fact, 2026 is currently tracking for global catastrophe losses to be below the $100 billion mark for the first time since 2020.

With profitability improvements and rate adequacy satisfied across many lines, carriers have turned their attention to driving growth, resulting in price competition and softening markets. As we mentioned last quarter, this dynamic is most pronounced in property, and commercial property in particular, where pricing is soft and volumes are lighter. We continue to watch how these dynamics shape client activity, particularly as it relates to transactional usage. It is in these types of markets that carriers are increasingly focused on underwriting discipline and risk selection, rather than relying on broad-based rate increases.

Our comprehensive data sets and analytic insights, underpinned by our continued investments in data currency and data coverage, can best help segment and understand risk, helping our clients navigate through these dynamic times. In our conversations with clients, AI remains one of the most important topics, and Verisk has partnered with the industry to help them move from experimentation into production deployments and ultimately to scaled adoption when the industry is ready. As carriers expand their use of AI, they continue to turn to Verisk as the trusted source of data in the industry.

Currently, those conversations are increasingly centered on accuracy, efficiency, and repeatability, as well as driving return on investment from their investments. To meet these needs, we are investing in techniques such as retrieval-augmented generation, or RAG, and broader context engineering capabilities that help improve the quality of AI-driven outputs by better managing how large language models access, interpret, and apply information.

This is all further enhanced by our highly cleansed and structured data sets and deep industry expertise, which is leveraged through the semantic layer of AI processes, where we provide data structure, context, and rules that make large language models work more effectively to deliver consistent and predictable outcomes.

More importantly, our goal is not simply to adopt the latest AI tools, but to apply them in ways that deliver measurable return on investment and value for clients by combining advanced AI capabilities with Verisk's high-quality and proprietary data assets, deep industry expertise, and established industry-standard workflows, while also creating connections across the broader ecosystem. We believe this positions us well to help clients navigate the next phase of AI adoption while strengthening Verisk's role as a trusted strategic partner across the insurance ecosystem.

As a specific example, in May we announced our first collaboration with Anthropic, launching two Verisk MCP connectors for Claude, which bring our trusted regulatory-grade data and analytics directly into conversational AI workflows in an underwriting and claims use case. These connectors enable clients to interact with Verisk's proprietary underwriting intelligence and claim solutions using natural language, helping them access insights when, where, and how they need them.

These connectors were developed in partnership with Anthropic on an expedited timeline from initial discussion to production and public launch, and we are the first insurance data provider with MCPs available with Claude. This was made possible by the earlier foundational investments we made in data organization and infrastructure, making our data entirely AI-ready, as well as experimentation and development of independent large language model applications. Importantly, the architecture is designed to maintain the governance, security, and trust our clients expect, with data retrieved only within the client's Claude session and not used for model training.

Interest levels across our client engagement are building along with usage, with a top-10 carrier already using the MCP. We're excited by the early client feedback we've received, and we are actively developing additional connectors, both with Anthropic and with other frontier model companies, that can deliver value to our clients. Additionally, we are excited by the opportunities to develop agentic capabilities in coordination with and on behalf of our clients. Last quarter we disclosed one of those initiatives to develop a next-generation digitally native agentic underwriting platform with a global insurance firm, and we are excited with the progress that we are making.

We are also in the development stage of agentic capabilities in our life solutions that will build on our conversational Ask Max feature to embed autonomous capabilities within the platform. We're also encouraged by the early traction we're seeing with our generative AI solutions that have had scaled engagement, and Premium Audit AI is a good example. Premium Audit AI brings natural language access to our premium audit rules and classification content directly into our clients' underwriting and audit workflows. It's still early, as we are now in the first renewal cycle post the launch, but we're beginning to see it show up commercially.

The incremental value we have added is supporting stronger renewal growth. It's a proof point for how we're embedding AI into our proprietary content to make our offerings more valuable to clients in our claims business. We continue to see strong momentum in Xact AI, which we launched in the fourth quarter of 2025 and have continued to enhance with new capabilities. Xact AI embeds AI directly into the workflows of insurers, adjusters and restoration professionals, helping clients automate time-consuming tasks such as summarizing claim information, labeling photos, extracting key data from documents, and generating estimating recommendations.

The result is faster claims handling, improved productivity and more consistent outcomes for policyholders. Adoption has accelerated significantly since March. The number of Xact AI users has increased nearly 10 times and we now have almost 7,000 licensees on the platform. The feedback from clients has been overwhelmingly positive with strong demand for additional functionality.

As a result, we are continuing to invest in our innovation roadmap and expand Xact AI capabilities across the broader Xactware suite, helping clients realize even greater efficiency and value from their claims operations. The rapid adoption we are seeing reinforces our conviction that AI will become an increasingly important driver of efficiency, consistency and better outcomes across the property claims life cycle. S. tropical cyclone model and Verisk Synergy Studio, our new cloud-native platform for integrated catastrophe modeling and risk analytics.

S. S. hurricane risk modeling by integrating significant advances in climate science, hazard modeling and vulnerability analytics to provide a more accurate, transparent and realistic view of individual risk and portfolio exposure across insurance, reinsurance and capital markets. Specifically, the model includes key scientific advancements which provide a more physically realistic view of how tropical cyclones evolve, including the impacts of wind, storm surge and inland flooding.

Additionally, as catastrophe models are used to increasingly inform decisions in industries outside of insurance, including housing, infrastructure, capital markets and climate risk disclosure, this new updated model is designed to support risk evaluations with results that can be used across all segments. Verisk Synergy Studio, our cloud-native platform, is designed to help clients make better decisions in an increasingly complex risk environment.

The platform brings together advanced analytics, high-performance computing and modern workflows in a single environment, allowing clients to analyze larger and more complex portfolios, generate insights faster and better understand the drivers of risk and loss across their exposures. The first release of Verisk Synergy Studio includes our complete global model suite in our latest next-generation modeling framework, giving our clients immediate access to our latest views of catastrophe risk for every model around the world.

This allows clients to run more sophisticated analyses, evaluate risk more efficiently, and make more informed underwriting and capital allocation decisions without having to navigate a patchwork of model vintages. By combining leading science with modern technology, we are helping clients gain deeper insights into risk while improving the speed, scale and transparency of their workflows. We have already onboarded our first clients onto the system and the initial feedback on performance, scalability and keeping our commitment to deliver on the schedule we promised has been incredibly positive.

We have a robust pipeline of additional clients scheduled to migrate to the platform through the remainder of the year. As a further enhancement to our Catastrophe and Risk Solutions business, we closed this week on the strategic tuck-in acquisition of McKenzie Intelligence Services, a geospatial intelligence and event response company specializing in global real-time catastrophe and conflict event analysis. MIS will become part of Verisk's Catastrophe and Risk Solutions.

We believe that the strategic combination of MIS's real-time geospatial intelligence together with Verisk's catastrophe models, risk analytics, weather analytics and claim solutions will give clients a more complete view of unfolding events so they can assess impacts, prioritize response and support stakeholders more effectively. Before I close, I want to announce that Nick Daffan, our Chief Information Officer, is leaving Verisk after two decades.

I want to thank Nick for his partnership and key contributions to Verisk, which include leading the modernization of our computing platform, successfully migrating from the mainframe to the cloud, strengthening the infrastructure, supporting reliable delivery of client solutions, and helping position the company well for this next phase of AI innovation. With Nick's departure, Jeffrey Negrete, our CTO, will step into the role of Interim Chief Information Officer. We are confident in the bench strength we have in place within our corporate IS&T organization and will commence a search for a permanent replacement. I'll now turn the call over to Elizabeth.

Elizabeth Mann, CFO Thanks, Lee, and good day to everyone on the call.