Verisk Reports 3Q Results

Buoyed by broad-based growth across all of its segments, Verisk VRSK reported third-quarter revenue of $287 million, which represents an increase of 11.2% over the same period in 2009. As expected, the company's analytics business (53% of total revenue) had another strong quarter (17.8% year-over-year growth), and its solid performance was driven by both new client additions and increased traction for its products among existing clients. During the earnings call, management noted that the company recently signed an agreement with one of the U.S.'s largest employers to implement its health-care analytics solutions. We believe this will open up additional revenue streams for health-care analytics products as it's typically easier to sign up new business when you have a marquee client in the list. Revenue from risk assessment business (47% of total revenue) grew 4.8% year over year, to $136 million. The growth prospect of this business is closely tied to P&C insurance industry fundamentals and for the first time in 13 quarters, net written premiums grew in the P&C insurance space. We think this augurs well for risk assessment business in the coming quarters. Verisk's adjusted EBITDA margin increased to 45% from 42.4% in the third quarter of 2009. During the quarter, the company benefited from increased operating leverage and lower pension costs.