Verisk (VRSK) Buys Validus-IVC, Boosts Claims Solutions

Verisk Analytics, Inc. (NASDAQ:VRSK) yesterday announced the acquisition of U.K.-based claims management and insurance company, Validus-IVC but did not reveal the amount it paid for the same.

The buyout will see the integration of Validus-IVC's subrogation platform with Verisk’s data-driven claims solution set. The combined entity is expected to offer an improved and automated claims settlement process that lowers expenses and increases claims outcome consistency with the help of improved analytical tools.

A glimpse at Verisk’s price trend reveals that the stock has had an impressive run on the bourse in the past year. Shares have returned 33.1%, significantly outperforming the Zacks S&P 500 Composite and industry’s rally of 13.8% and 28.2%, respectively.

One-Year Price Performance

Deal Benefits

The acquisition is expected to expand Verisk’s claims solutions, thereby boosting its Insurance segment. In first-quarter 2018, the Insurance segment contributed the largest chunk (around 71%) to Verisk’s total revenues. Revenues from this segment were $412.6 million, up 12.5% year over year on a reported basis and 8.7% on an organic constant-currency basis.

Revenues from Claims accounted for almost 32% of the Insurance segment’s total revenues in first-quarter 2018. Claims revenues were $132 million, up 16.1% on a reported basis and 12.6% on an organic constant-currency basis in the quarter.

Additionally, we believe that Validus-IVC, which has offices in Norwich and Bath, will strengthen Verisk’s position in the U.K. insurance market.

Bottom Line

Acquisitions have been one of the key growth catalysts for Verisk. The company has been continuously acquiring and investing in companies globally to expand its data and analytics capabilities across industries. Internally, it is focused on evaluating and integrating acquisitions that are valuable for its shareholders.

From 2015-2017, Verisk completed 21 acquisitions. In early 2018, the company acquired two companies — Business Insight Limited on Feb 21 and Marketview Limited on Jan 5. Acquisitions positively impacted its first-quarter 2018 earnings.

Since Verisk’s long-term business strategy includes growth through acquisitions, it continues to look out for such prudent purchases.

Zacks Rank & Stocks to Consider

Currently, Verisk is a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Business Services sector include The Dun & Bradstreet Corporation (NYSE:DNB) , TransUnion (NYSE:TRU) and FLEETCOR Technologies, Inc. (NYSE:FLT) . While Dun & Bradstreet sports a Zacks Rank #1, TransUnion and FLEETCOR carry a Zacks Rank #2.

The long-term expected earnings per share (three to five years) growth rate for Dun & Bradstreet, TransUnion and FLEETCOR Technologies is 4.5%, 10% and 16.5%, respectively.

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