10-Q 1 vrsk20220930_10q.htm FORM 10-Q vrsk20220930_10q.htm
0001442145 Verisk Analytics, Inc. false --12-31 Q3 2022 17.7 21.3 0.001 0.001 2,000,000,000 2,000,000,000 544,003,038 544,003,038 156,842,018 161,651,639 387,161,020 382,351,399 1,603,586 171,481 3,061 2,747 13,964 798,242 274,052 1,294 1,204 11,647 6,217,296 1,205,559 49,803 118,350 98,321 33,963 2,192,780 572,213 182,824 57,020 35,287 0 0 17.4 5.7 0 97 0 1 2 13.6 4.9 0 0 0.0 4.125 0.4 3.625 3.625 10.1 10.3 4.125 4.125 9.7 10.9 4.000 4.000 3.3 4.1 5.500 5.500 4.0 4.1 2,350.0 2,000,000,000 0 0 0.31 0.31 10 3 1 4 4 3 0 These accumulated other comprehensive loss components, before tax, are included under "Cost of revenues" and "Selling, general and administrative" in our accompanying condensed consolidated statements of operations. These components are also included in the computation of net periodic (benefit) cost (see Note 13. Pension and Postretirement Benefits for additional details). See Note 6. Acquisitions for more information. Includes estimated performance achievement See Note 7. Dispositions for more information. Included in "Depreciation and amortization of fixed assets" in our accompanying condensed consolidated statements of operations Included in "Interest expense" in our accompanying condensed consolidated statements of operations Refer to Note 5. Leases Refer to Note 11. 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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

 

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to                     

Commission File Number: 001-34480

 

VERISK ANALYTICS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

26-2994223

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

  

545 Washington Boulevard

 

Jersey City

 

NJ

07310-1686

(Address of principal executive offices)

(Zip Code)

 

(201) 469-3000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange where registered

Common Stock $.001 par value

VRSK

NASDAQ Global Select Market

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

☒

 

Accelerated filer

 

☐

       

Non-accelerated filer

 

☐

 

Smaller reporting company

 

☐

       
    

Emerging growth company

 

☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

 

As of October 28, 2022, there were 156,387,950 shares outstanding of the registrant's Common Stock, par value $.001.

 

 

 
Table of Contents

 

 

Verisk Analytics, Inc.

Index to Form 10-Q

 

Table of Contents

 

 

 

Page Number

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

  

Condensed Consolidated Balance Sheets

 1

Condensed Consolidated Statements of Operations

 2

Condensed Consolidated Statements of Comprehensive (Loss) Income

 3

Condensed Consolidated Statements of Changes in Stockholders’ Equity

 4

Condensed Consolidated Statements of Cash Flows

 6

Notes to Condensed Consolidated Financial Statements

 7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 25

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 38

Item 4. Controls and Procedures

 38

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

 39

Item 1A. Risk Factors

 39

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 39

Item 3. Defaults Upon Senior Securities

 39

Item 4. Mine Safety Disclosures

 39

Item 5. Other Information

 40

Item 6. Exhibits

 40

SIGNATURES

 41

Exhibit 31.1

  

Exhibit 31.2

  

Exhibit 32.1

  

 

 
Table of Contents

 

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial Statements

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

  

September 30, 2022

  

December 31, 2021

 
  

(in millions, except for share and per share data)

 

ASSETS

 

Current assets:

        

Cash and cash equivalents

 $276.8  $280.3 

Accounts receivable, net of allowance for doubtful accounts of $17.7 and $21.3, respectively

  458.4   446.3 

Prepaid expenses

  102.4   102.6 

Income taxes receivable

  40.4   36.7 

Other current assets

  40.4   36.7 

Total current assets

  918.4   902.6 

Noncurrent assets:

        

Fixed assets, net

  652.0   658.2 

Operating lease right-of-use assets, net

  213.5   253.1 

Intangible assets, net

  1,090.5   1,225.9 

Goodwill

  3,655.6   4,331.2 

Deferred income tax assets

  4.2   6.6 

Other noncurrent assets

  440.4   430.5 

Total assets

 $6,974.6  $7,808.1 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Current liabilities:

        

Accounts payable and accrued liabilities

 $312.2  $320.7 

Short-term debt and current portion of long-term debt

  1,067.7   971.3 

Deferred revenues

  560.1   501.0 

Operating lease liabilities

  35.2   41.2 

Income taxes payable

  5.1   9.0 

Total current liabilities

  1,980.3   1,843.2 

Noncurrent liabilities:

        

Long-term debt

  2,343.7   2,342.8 

Deferred income tax liabilities

  384.5   470.5 

Operating lease liabilities

  217.9   254.7 

Other noncurrent liabilities

  42.2   54.4 

Total liabilities

  4,968.6   4,965.6 

Commitments and contingencies (Note 16)

          

Stockholders’ equity:

        

Common stock, $.001 par value; 2,000,000,000 shares authorized; 544,003,038 shares issued; 156,842,018 and 161,651,639 shares outstanding, respectively

  0.1   0.1 

Additional paid-in capital

  2,733.5   2,608.7 

Treasury stock, at cost, 387,161,020 and 382,351,399 shares, respectively

  (5,814.6)  (4,638.1)

Retained earnings

  5,986.1   5,240.4 

Accumulated other comprehensive losses

  (916.1)  (394.6)

Total Verisk stockholders' equity

  1,989.0   2,816.5 

Noncontrolling interests

  17.0   26.0 

Total stockholders’ equity

  2,006.0   2,842.5 

Total liabilities and stockholders’ equity

 $6,974.6  $7,808.1 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

1
Table of Contents
 

 

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

   

Three Months Ended September 30,

    

Nine Months Ended September 30,

  
   

2022

    

2021

    

2022

    

2021

  
   

(in millions, except for share and per share data)

  

Revenues

   $ 745.3     $ 759.0     $ 2,267.1     $ 2,232.6  

Operating expenses (income):

                                

Cost of revenues (exclusive of items shown separately below)

     246.7       265.3       773.3       792.6  

Selling, general and administrative

     125.9       115.1       387.1       346.3  

Depreciation and amortization of fixed assets

     51.7       52.1       151.1       153.9  

Amortization of intangible assets

     36.6       37.6       121.0       133.1  

Other operating loss (income), net

     7.8       —       (353.7 )     —  

Total operating expenses, net

     468.7       470.1       1,078.8       1,425.9  

Operating income

     276.6       288.9       1,188.3       806.7  

Other income (expense):

                                

Investment income

     3.1       0.1       7.4       1.3  

Interest expense

     (34.5 )     (29.9 )     (97.6 )     (96.8 )

Total other expense, net

     (31.4 )     (29.8 )     (90.2 )     (95.5 )

Income before income taxes

     245.2       259.1       1,098.1       711.2  

Provision for income taxes

     (55.7 )     (54.2 )     (205.0 )     (186.7 )

Net income

     189.5       204.9       893.1       524.5  

Less: Net income attributable to noncontrolling interests

     (0.1 )     (3.2 )     (0.3 )     (0.2 )

Net income attributable to Verisk

   $ 189.4     $ 201.7     $ 892.8     $ 524.3  

Basic net income per share attributable to Verisk

   $ 1.21     $ 1.25     $ 5.63     $ 3.24  

Diluted net income per share attributable to Verisk

   $ 1.20     $ 1.24     $ 5.59     $ 3.21  

Weighted-average shares outstanding:

                                

Basic

     156,940,608       161,366,544       158,531,439       162,005,382  

Diluted

     157,978,606       162,792,791       159,580,262       163,425,349  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

2
Table of Contents
 

 

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

 

   

Three Months Ended September 30,

    

Nine Months Ended September 30,

  
   

2022

    

2021

    

2022

    

2021

  
                                 

Net income

   $ 189.5     $ 204.9     $ 893.1     $ 524.5  

Other comprehensive (loss) income, net of tax:

                                

Foreign currency translation adjustment

     (234.2 )     (80.4 )     (525.5 )     (55.2 )

Pension and postretirement liability adjustment

     0.3       0.7       1.3       2.3  

Total other comprehensive loss

     (233.9 )     (79.7 )     (524.2 )     (52.9 )

Comprehensive (loss) income

     (44.4 )     125.2       368.9       471.6  

Less: Comprehensive (loss) income attributable to noncontrolling interests

     1.2       (2.7 )     2.5       0.4  

Comprehensive (loss) income attributable to Verisk

   $ (43.2 )   $ 122.5     $ 371.4     $ 472.0  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3
Table of Contents
 

 

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

For The Three Months Ended September 30, 2022 and 2021

 

  

Common Stock Issued

  

Par Value

  

Additional Paid-in Capital

  

Treasury Stock

  

Retained Earnings

  

Accumulated Other Comprehensive Losses

  

Total Verisk Stockholders' Equity

  

Noncontrolling Interests

  

Total Stockholders’ Equity

 
  

(in millions, except for share data)

     

Balance, July 1, 2022

  544,003,038  $0.1  $2,707.1  $(5,517.4) $5,845.5  $(683.4) $2,351.9  $18.1  $2,370.0 

Net income

  —   —   —   —   189.4   —   189.4   0.1   189.5 

Other comprehensive loss

  —   —   —   —   —   (232.2)  (232.2)  (1.2)  (233.4)

Investment in noncontrolling interests

  —   —   0.5   —   —   (0.5)  —   —   — 

Common stock dividend (1)

  —   —   —   —   (48.8)  —   (48.8)  —   (48.8)

Treasury stock acquired (1,603,586 shares)

  —   —   —   (300.0)  —   —   (300.0)  —   (300.0)

Stock options exercised (171,481 shares transferred from treasury stock)

  —   —   13.9   2.6   —   —   16.5   —   16.5 

Restricted stock lapsed (3,061 shares transferred from treasury stock)

  —   —   —   —   —   —   —   —   — 

Stock-based compensation expense

  —   —   11.3   —   —   —   11.3   —   11.3 

Net share settlement from restricted stock awards (2,747 shares withheld for tax settlement)

  —   —   (0.4)  —   —   —   (0.4)  —   (0.4)

Other stock issuances (13,964 shares transferred from treasury stock)

  —   —   1.1   0.2   —   —   1.3   —   1.3 

Balance, September 30, 2022

  544,003,038  $0.1  $2,733.5  $(5,814.6) $5,986.1  $(916.1) $1,989.0  $17.0  $2,006.0 
                                     

Balance, July 1, 2021

  544,003,038  $0.1  $2,534.9  $(4,423.6) $4,991.0  $(348.9) $2,753.5  $16.7  $2,770.2 

Net income

  —   —   —   —   204.9   —   204.9   —   204.9 

Other comprehensive loss

  —   —   —   —   —   (79.7)  (79.7)  —   (79.7)

Comprehensive loss attributable to noncontrolling interest

  —   —   —   —   (3.2)  —   (3.2)  2.7   (0.5)

Common stock dividend (1)

  —   —   —   —   (47.0)  —   (47.0)  —   (47.0)

Treasury stock acquired (798,242 shares)

  —   —   —   (150.0)  —   —   (150.0)  —   (150.0)

Stock options exercised (274,052 shares transferred from treasury stock)

  —   —   20.1   3.2   —   —   23.3   —   23.3 

Restricted stock and performance share units lapsed (1,294 shares transferred from treasury stock)

  —   —   —   —   —   —   —   —   — 

Stock-based compensation expense

  —   —   11.2   —   —   —   11.2   —   11.2 

Net share settlement from restricted stock awards (1,204 shares withheld for tax settlement)

  —   —   (0.2)  —   —   —   (0.2)  —   (0.2)

Other stock issuances (11,647 shares transferred from treasury stock)

  —   —   1.4   0.2   —   —   1.6   —   1.6 

Balance, September 30, 2021

  544,003,038  $0.1  $2,567.4  $(4,570.2) $5,145.7  $(428.6) $2,714.4  $19.4  $2,733.8 

_______________

(1) Refer to Note 11. Stockholders' Equity for discussion related to quarterly cash dividends declared per share

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4
Table of Contents

 

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

For The Nine Months Ended September 30, 2022 and 2021

 

  

Common Stock Issued

  

Par Value

  

Additional Paid-in Capital

  

Treasury Stock

  

Retained Earnings

  

Accumulated Other Comprehensive Losses

  

Total Verisk Stockholders' Equity

  

Noncontrolling Interests

  

Total Stockholders’ Equity

 
  

(in millions, except for share data)

 

Balance, January 1, 2022

  544,003,038  $0.1  $2,608.7  $(4,638.1) $5,240.4  $(394.6) $2,816.5  $26.0  $2,842.5 

Net income

  —   —   —   —   892.8   —   892.8   0.3   893.1 

Other comprehensive loss

  —   —   —   —   —   (520.4)  (520.4)  (2.7)  (523.1)

Investment in noncontrolling interests

  —   —   (0.5)  —   —   (1.1)  (1.6)  (6.6)  (8.2)

Common stock dividend (1)

  —   —   —   —   (147.1)  —   (147.1)  —   (147.1)

Treasury stock acquired (6,217,296 shares)

  —   —   —   (1,196.3)  —   —   (1,196.3)  —   (1,196.3)

Stock options exercised (1,205,559 shares transferred from treasury stock)

  —   —   94.0   17.1   —   —   111.1   —   111.1 

Performance share units lapsed (49,803 shares transferred from treasury stock)

  —   —   (0.6)  0.6   —   —   —   —   — 

Restricted stock lapsed (118,350 shares transferred from treasury stock)

  —   —   (1.6)  1.6   —   —   —   —   — 

Stock-based compensation expense

  —   —   50.2   —   —   —   50.2   —   50.2 

Net share settlement from restricted stock awards (98,321 shares withheld for tax settlement)

  —   —   (20.4)  —   —   —   (20.4)  —   (20.4)

Other stock issuances (33,963 shares transferred from treasury stock)

  —   —   3.7   0.5   —   —   4.2   —   4.2 

Balance, September 30, 2022

  544,003,038  $0.1  $2,733.5  $(5,814.6) $5,986.1  $(916.1) $1,989.0  $17.0  $2,006.0 
                                     

Balance, January 1, 2021

  544,003,038  $0.1  $2,490.9  $(4,179.3) $4,762.2  $(375.7) $2,698.2  $—  $2,698.2 

Net income

  —   —   —   —   524.5   —   524.5   —   524.5 

Other comprehensive loss

  —   —   —   —   —   (52.9)  (52.9)  —   (52.9)

Comprehensive loss attributable to noncontrolling interest

  —   —   —   —   (0.2)  —   (0.2)  (0.4)  (0.6)

Investment in noncontrolling interest

  —   —   —   —   —   —   —   19.8   19.8 

Common stock dividend (1)

  —   —   —   —   (140.8)  —   (140.8)  —   (140.8)

Treasury stock acquired (2,192,780 shares)

  —   —   —   (400.0)  —   —   (400.0)  —   (400.0)

Stock options exercised (572,213 shares transferred from treasury stock)

  —   —   38.0   6.6   —   —   44.6   —   44.6 

Restricted stock and performance share units lapsed (182,824 shares transferred from treasury stock)

  —   —   (2.1)  2.1   —   —   —   —   — 

Stock-based compensation expense

  —   —   47.4   —   —   —   47.4   —   47.4 

Net share settlement from restricted stock awards (57,020 shares withheld for tax settlement)

  —   —   (11.2)  —   —   —   (11.2)  —   (11.2)

Other stock issuances (35,287 shares transferred from treasury stock)

  —   —   4.4   0.4   —   —   4.8   —   4.8 

Balance, September 30, 2021

  544,003,038  $0.1  $2,567.4  $(4,570.2) $5,145.7  $(428.6) $2,714.4  $19.4  $2,733.8 

_____________

(1) Refer to Note 11. Stockholders' Equity for discussion related to quarterly cash dividends declared per share

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2022

  

2021

  

2022

  

2021

 
  

(in millions)

 

Cash flows from operating activities:

                

Net income

 $189.5  $204.9  $893.1  $524.5 

Adjustments to reconcile net income to net cash provided by operating activities:

                

Depreciation and amortization of fixed assets

  51.7   52.1   151.1   153.9 

Amortization of intangible assets

  36.6   37.6   121.0   133.1 

Amortization of debt issuance costs and original issue discount, net of original issue premium

  0.2   0.4   0.9   1.1 

Provision for doubtful accounts

  1.5   4.3   4.4   13.0 

Loss (gain) on sale of assets

  7.8   —   (427.4)  — 

Stock-based compensation expense

 

11.3

   11.2   50.2   47.4 

Impairment of long-lived assets

  —   —   73.7   — 

Deferred income taxes

  (11.9)  1.3   (61.3)  33.9 

Loss on disposal of fixed assets

  0.1   0.1   0.8   0.1 

Changes in assets and liabilities, net of effects from acquisitions:

                

Accounts receivable

  21.0   (7.9)  (82.3)  (48.9)

Prepaid expenses and other assets

  6.0   (4.4)  (11.5)  (27.5)

Operating lease right-of-use assets, net

  16.6   9.9   35.3   30.9 

Income taxes

  24.9   10.9   2.3   11.5 

Accounts payable and accrued liabilities

  36.4   49.2   (27.2)  29.2 

Deferred revenues

  (93.4)  (71.2)  134.3   116.5 

Operating lease liabilities

  (18.0)  (10.5)  (38.2)  (31.0)

Other liabilities

  (0.1)  (2.7)  (9.2)  (20.6)

Net cash provided by operating activities

  280.2   285.2   810.0   967.1 

Cash flows from investing activities:

                

Acquisitions and purchase of additional controlling interest, net of cash acquired of $0.0 and $0.0; $17.4 and $5.7 respectively

  —   (17.9)  (448.9)  (49.4)

Proceeds from sale of assets

  —   —   1,073.3   — 

Investments in nonpublic companies

  (2.1)  (6.0)  (43.9)  (21.1)

Capital expenditures

  (65.8)  (61.4)  (195.0)  (183.1)

Escrow funding associated with acquisitions

  —   (2.4)  (2.3)  (7.2)

Payment of contingent liability related to acquisition

  —   —   —   (1.2)

Other investing activities, net

  —   —   —   0.8 

Net cash (used in) provided by investing activities

  (67.9)  (87.7)  383.2   (261.2)

Cash flows from financing activities:

                

Proceeds from short-term debt

  290.0   15.0   330.0   355.0 

Repayment of current portion of long-term-debt

  (350.0)  —   (350.0)  (450.0)

Proceeds from issuance of short-term debt with original maturities less than three months

  —   —   125.0   — 

Repurchases of common stock

  (300.0)  (150.0)  (1,196.3)  (400.0)

Proceeds from stock options exercised

  18.6   23.9   111.6   44.9 

Net share settlement of taxes from restricted stock and performance share awards

  (0.4)  (0.2)  (20.4)  (11.2)

Dividends paid

  (48.6)  (46.8)  (147.2)  (141.0)

Other financing activities, net

  (9.4)  (11.1)  (13.5)  (14.8)

Net cash used in financing activities

  (399.8)  (169.2)  (1,160.8)  (617.1)

Effect of exchange rate changes

  (16.4)  (2.5)  (35.9)  (5.5)

Net (decrease) increase in cash and cash equivalents

  (203.9)  25.8   (3.5)  83.3 

Cash and cash equivalents, beginning of period

  480.7   276.3   280.3   218.8 

Cash and cash equivalents, end of period

 $276.8  $302.1  $276.8  $302.1 

Supplemental disclosures:

                

Income taxes paid

 $42.6  $45.8  $264.4  $144.7 

Interest paid

 $13.7  $21.2  $74.3  $90.9 

Noncash investing and financing activities:

                

Deferred tax liability established on date of acquisition

 $—  $1.1  $16.5  $5.5 

Net assets sold as part of the disposition

 $—  $—  $607.4  $— 

Finance lease additions

 $1.4  $1.9  $4.9  $4.5 

Operating lease additions, net

 $7.6  $11.6  $15.9  $21.0 

Fixed assets included in accounts payable and accrued liabilities

 $0.2  $10.5  $0.2  $10.5 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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VERISK ANALYTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in millions, except for share and per share data, unless otherwise stated)

 

 

1. Organization:

 

Verisk Analytics, Inc. is a data analytics provider serving customers in insurance and energy. Using various technologies to collect and analyze billions of records, we draw on numerous data assets and domain expertise to provide first-to-market innovations that are integrated into customer workflows. We offer predictive analytics and decision support solutions to customers in rating, underwriting, claims, catastrophe and weather risk, global risk analytics, natural resources intelligence, economic forecasting, and many other fields. Around the world, we help customers protect people, property, and financial assets.

 
 

2. Basis of Presentation and Summary of Significant Accounting Policies:

 

Our accompanying unaudited condensed consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the U.S. ("U.S. GAAP"). The preparation of financial statements in conformity with these accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include acquisition purchase price allocations, the fair value of goodwill and intangibles, the realization of deferred tax assets and liabilities, acquisition-related liabilities, fair value of stock-based compensation for stock options and performance share units granted, and assets and liabilities for pension and postretirement benefits. Actual results may ultimately differ from those estimates.

 

Our condensed consolidated financial statements as of  September 30, 2022 and for the three and nine months ended September 30, 2022 and 2021, in the opinion of management, include all adjustments, consisting of normal recurring items, to present fairly our financial position, results of operations, and cash flows. Our operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year. Our condensed consolidated financial statements and related notes as of and for the three and nine months ended September 30, 2022 have been prepared on the same basis as and should be read in conjunction with our annual report on Form 10-K for the year ended December 31, 2021. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules of the SEC. We believe the disclosures made are adequate to keep the information presented from being misleading.

 

Our operating segments have historically been Insurance, Energy and Specialized Markets, and Financial Services. On March 11, 2022 and  April 8, 2022, we sold our environmental health and safety business, which represented the “specialized markets” in our Energy and Specialized Markets segment, and our Financial Services segment, respectively. See Note 7. Dispositions for further discussion. For the remainder of 2022, we will continue to show only the historical results of these dispositions in their respective previous operating segments.

 

Recent Accounting Pronouncements

 

Accounting Standard

Description

Effective Date

Effect on Consolidated Financial Statements or Other Significant Matters

Business Combinations (Topic 805) In October 2021, the FASB issued Accounting Standards Update "ASU" No. 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers" ("ASU No. 2021-08")

This amendment requires an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification "ASC" 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with ASC 606 as if it had originated the contracts. An acquirer should assess how the acquiree applied ASC 606 to determine what to record for the acquired revenue contracts. If the acquiree prepared financial statements in accordance with GAAP, this should result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements. In circumstances in which the acquirer is unable to assess or rely on how the acquiree applied ASC 606, the acquirer should consider the terms of the acquired contracts, such as timing of payment, identify each performance obligation in the contracts, and allocate the total transaction price to each identified performance obligation on a relative standalone selling price basis as of the date the acquiree entered into the contracts to determine what should be recorded at the acquisition date.

Fiscal years beginning after December 15, 2022 with early adoption permitted.

We elected to early adopt ASU No. 2021-08 on January 1, 2022 on a prospective basis to all business combinations that occurred on or after the date of adoption. The adoption of ASU No. 2021-08 did not have a material impact on our Condensed Consolidated Financial Statements.

 
 

3. Revenues:

 

Disaggregated revenues by type of service and by country are provided below for the three and nine months ended September 30, 2022 and 2021. No individual customer or country outside of the U.S. accounted for 10.0% or more of our consolidated revenues for the three and nine months ended September 30, 2022 or 2021.

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2022

  

2021

  

2022

  

2021

 
                 

Insurance:

                

Underwriting & rating

 $436.2  $390.5  $1,290.0  $1,156.0 

Claims

  173.9   167.4   516.5   487.5 

Total Insurance