Item 8. Consolidated Financial Statements and Supplementary Data

Index to Consolidated Financial Statements and Schedule

Verisk Analytics, Inc. Consolidated Financial Statements as of December 31, 2015 and 2014 and for the Years Ended December 31, 2015, 2014 and 2013.
Management’s Report on Internal Controls Over Financial Reporting	50
Report of Independent Registered Public Accounting Firm	51
Report of Independent Registered Public Accounting Firm on Internal Controls Over Financial Reporting	52
Consolidated Balance Sheets	53
Consolidated Statements of Operations	54
Consolidated Statements of Comprehensive Income	55
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)	56
Consolidated Statements of Cash Flows	57
Notes to Consolidated Financial Statements	59
Financial Statements Schedule
Schedule II, Valuation and Qualifying Accounts and Reserves	98

MANAGEMENT’S REPORT ON INTERNAL CONTROLS OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that internal controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework set forth in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

Based on this assessment, management concluded that our internal control over financial reporting was effective at December 31, 2015.

Management excluded from its assessment the internal control over financial reporting at Wood Mackenzie Limited ("Wood Mackenzie"), which was acquired on May 19, 2015, Infield Systems Limited ("Infield"), which was acquired on November 6, 2015, and The PCI Group ("PCI"), which was acquired on November 20, 2015. The excluded financial statements of the acquisitions constitute approximately 4.9% of total assets and 10.2% of total revenues collectively included within our consolidated financial statement amounts as of and for the year ended December 31, 2015. Due to the timing of the acquisitions, management did not assess the effectiveness of internal control over financial reporting for Wood Mackenzie, Infield and PCI.

Deloitte & Touche LLP, the independent registered public accounting firm that audited the consolidated financial statements included in this annual report on Form 10-K has also audited the effectiveness of our internal control over financial reporting as of December 31, 2015, as stated in their report which is included herein.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Verisk Analytics, Inc.

Jersey City, New Jersey

We have audited the accompanying consolidated balance sheets of Verisk Analytics, Inc. and subsidiaries (the "Company") as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2015. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Verisk Analytics, Inc. and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2015, based on the criteria established in Internal Control ---- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2016 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ Deloitte & Touche LLP

Parsippany, New Jersey

February 23, 2016

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Verisk Analytics, Inc.

Jersey City, New Jersey

We have audited the internal control over financial reporting of Verisk Analytics, Inc. and subsidiaries (the "Company") as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in Management’s Report on Internal Controls over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Wood Mackenzie Limited, which was acquired on May 19, 2015, Infield Systems Limited, which was acquired on November 6, 2015, and The PCI Group, which was acquired on November 20, 2015. The financial statements of these acquisitions constitute 4.9% of total assets and 10.2% of revenues collectively of the consolidated financial statements of the Company as of and for the year ended December 31, 2015. Accordingly, our audit did not include the internal control over financial reporting at WoodMackenzie Limited, Infield Systems Limited or The PCI Group. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2015 of the Company and our report dated February 23, 2016 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ Deloitte & Touche LLP

Parsippany, New Jersey

February 23, 2016

VERISK ANALYTICS, INC

CONSOLIDATED BALANCE SHEETS

As of December 31, 2015 and 2014

	2015				2014
	(In thousands, except for share and per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	138,348			$	39,359
Available-for-sale securities		3,576				3,801
Accounts receivable, net		320,099				220,668
Prepaid expenses		40,741				31,496
Deferred income taxes, net		—				4,772
Income taxes receivable		48,853				65,512
Other current assets		52,952				18,875
Total current assets		604,569				384,483
Noncurrent assets:
Fixed assets, net		418,168				302,273
Intangible assets, net		1,376,745				406,476
Goodwill		3,134,826				1,207,146
Pension assets		32,922				18,589
Other assets		48,697				26,363
Total assets	$	5,615,927			$	2,345,330
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	245,664			$	180,726
Short-term debt and current portion of long-term debt		874,811				336,058
Pension and postretirement benefits, current		1,831				1,894
Deferred revenues		356,951				252,592
Total current liabilities		1,479,257				771,270
Noncurrent liabilities:
Long-term debt		2,293,179				1,100,874
Pension benefits		12,971				13,805
Postretirement benefits		1,981				2,410
Deferred income taxes, net		396,430				202,540
Other liabilities		60,098				43,388
Total liabilities		4,243,916				2,134,287
Commitments and contingencies
Stockholders’ equity:
Verisk common stock, $.001 par value; 2,000,000,000 and 1,200,000,000 shares authorized, respectively; 544,003,038 shares issued and 169,424,981 and 157,913,227 shares outstanding, respectively		137				137
Unearned KSOP contributions		—				(161	)
Additional paid-in capital		2,023,390				1,171,196
Treasury stock, at cost, 374,578,057 and 386,089,811 shares, respectively		(2,571,190	)			(2,533,764	)
Retained earnings		2,161,726				1,654,149
Accumulated other comprehensive losses		(242,052	)			(80,514	)
Total stockholders’ equity		1,372,011				211,043
Total liabilities and stockholders’ equity	$	5,615,927			$	2,345,330

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

VERISK ANALYTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For The Years Ended December 31, 2015, 2014 and 2013

	2015				2014				2013
	(In thousands, except for share and per share data)
Revenues	$	2,068,010			$	1,746,726			$	1,595,703
Expenses:
Cost of revenues (exclusive of items shown separately below)		803,274				716,598				622,523
Selling, general and administrative		312,690				227,306				228,982
Depreciation and amortization of fixed assets		120,620				85,506				66,190
Amortization of intangible assets		94,864				56,870				63,741
Total expenses		1,331,448				1,086,280				981,436
Operating income		736,562				660,446				614,267
Other income (expense):
Investment income and others, net		17,003				158				609
Gain on derivative instruments		85,187				—				—
Interest expense		(121,316	)			(69,984	)			(76,136	)
Total other expense, net		(19,126	)			(69,826	)			(75,527	)
Income before income taxes		717,436				590,620				538,740
Provision for income taxes		(209,859	)			(219,755	)			(196,426	)
Income from continuing operations		507,577				370,865				342,314
Income from discontinued operations, net of tax of $0, $25,305 and $4,753, respectively (Note 10)		—				29,177				6,066
Net income	$	507,577			$	400,042			$	348,380
Basic net income per share:
Income from continuing operations	$	3.07			$	2.24			$	2.04
Income from discontinued operations		—				0.17				0.03
Basic net income per share	$	3.07			$	2.41			$	2.07
Diluted net income per share:
Income from continuing operations	$	3.01			$	2.20			$	1.99
Income from discontinued operations		—				0.17				0.03
Diluted net income per share	$	3.01			$	2.37			$	2.02
Weighted average shares outstanding:
Basic		165,090,380				165,823,803				168,031,412
Diluted		168,451,343				169,132,423				172,276,360

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

VERISK ANALYTICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For The Years Ended December 31, 2015, 2014 and 2013

	2015				2014				2013
	(In thousands)
Net income	$	507,577			$	400,042			$	348,380
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment		(162,742	)			(1,286	)			(840	)
Unrealized holding gain (loss) on available-for-sale securities		113				(35	)			(147	)
Pension and postretirement adjustment		1,091				(35,705	)			46,659
Total other comprehensive (loss) income		(161,538	)			(37,026	)			45,672
Comprehensive income	$	346,039			$	363,016			$	394,052

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

VERISK ANALYTICS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For The Years Ended December 31, 2015, 2014 and 2013

								Unearned KSOP Contributions				Additional Paid-in Capital				Treasury Stock				Retained Earnings				Accumulated Other Comprehensive Losses				Total Stockholders’ Equity
	Common Stock Issued			Par Value
	(In thousands, except for share data)
Balance, January 1, 2013	544,003,038			$	137			$	(483	)		$	1,044,746			$	(1,605,376	)		$	905,727			$	(89,160	)		$	255,591
Net income	—				—				—				—				—				348,380				—				348,380
Other comprehensive income	—				—				—				—				—				—				45,672				45,672
Treasury stock acquired (4,532,552 shares)	—				—				—				—				(278,938	)			—				—				(278,938	)
KSOP shares earned	—				—				177				14,753				—				—				—				14,930
Stock options exercised, including tax benefit of $57,065 (4,076,750 shares reissued from treasury stock)	—				—				—				119,236				18,523				—				—				137,759
Restricted stock lapsed, including tax benefit of $991 (150,668 shares reissued from treasury stock)	—				—				—				333				658				—				—				991
Employee stock purchase plan (27,879 shares reissued from treasury stock)	—				—				—				1,533				129				—				—				1,662
Stock based compensation	—				—				—				21,087				—				—				—				21,087
Other stock issuances (8,109 shares reissued from treasury stock)	—				—				—				418				37				—				—				455
Balance, December 31, 2013	544,003,038				137				(306	)			1,202,106				(1,864,967	)			1,254,107				(43,488	)			547,589
Net income	—				—				—				—				—				400,042				—				400,042
Other comprehensive loss	—				—				—				—				—				—				(37,026	)			(37,026	)
Treasury stock acquired (10,802,087 shares)	—				—				—				(100,000	)			(675,446	)			—				—				(775,446	)
KSOP shares earned	—				—				145				15,206				—				—				—				15,351
Stock options exercised, including tax benefit of $15,438 (1,091,746 shares reissued from treasury stock)	—				—				—				34,011				5,781				—				—				39,792
Restricted stock lapsed, including tax benefit of $550 (134,713 shares reissued from treasury stock)	—				—				—				(148	)			698				—				—				550
Employee stock purchase plan (26,953 shares reissued from treasury stock)	—				—				—				1,414				149				—				—				1,563
Stock based compensation	—				—				—				20,011				—				—				—				20,011
Net share settlement from restricted stock awards (27,159 shares withheld for tax settlement)	—				—				—				(1,625	)			—				—				—				(1,625	)
Other stock issuances (3,975 shares reissued from treasury stock)	—				—				—				221				21				—				—				242
Balance, December 31, 2014	544,003,038				137				(161	)			1,171,196				(2,533,764	)			1,654,149				(80,514	)			211,043
Net income	—				—				—				—				—				507,577				—				507,577
Other comprehensive loss	—				—				—				—				—				—				(161,538	)			(161,538	)
Treasury stock acquired (1,088,474 shares)	—				—				—				100,000				(120,456	)			—				—				(20,456	)
KSOP shares earned (47,686 shares reissued from treasury stock)	—				—				161				13,588				327				—				—				14,076
Shares issued from equity offering (10,604,000 shares reissued from treasury stock)	—				—				—				651,258				69,590				—				—				720,848
Stock options exercised, including tax benefit of $27,992 (1,739,847 shares reissued from treasury stock)	—				—				—				57,503				11,730				—				—				69,233
Restricted stock lapsed, including tax benefit of $1,238 (177,252 shares reissued from treasury stock)	—				—				—				68				1,170				—				—				1,238
Employee stock purchase plan (25,599 shares reissued from treasury stock)	—				—				—				1,625				173				—				—				1,798
Stock based compensation	—				—				—				30,116				—				—				—				30,116
Net share settlement from restricted stock awards (32,882 shares withheld for tax settlement)	—				—				—				(2,350	)			—				—				—				(2,350	)
Other stock issuances (5,844 shares reissued from treasury stock)	—				—				—				386				40				—				—				426
Balance, December 31, 2015	544,003,038			$	137			$	—			$	2,023,390			$	(2,571,190	)		$	2,161,726			$	(242,052	)		$	1,372,011

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

VERISK ANALYTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For The Years Ended December 31, 2015, 2014 and 2013

	2015				2014				2013
	(In thousands)
Cash flows from operating activities:
Net income	$	507,577			$	400,042			$	348,380
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of fixed assets		120,620				86,501				70,279
Amortization of intangible assets		94,864				56,982				64,299
Amortization of debt issuance costs and original issue discount		12,899				2,638				2,713
Allowance for doubtful accounts		1,305				1,814				2,482
KSOP compensation expense		14,076				15,351				14,930
Stock based compensation		30,542				20,253				21,087
Gain on derivative instruments		(85,187	)			—				—
Gain on sale of subsidiary		—				(65,410	)			—
Realized loss (gain) on securities, net		200				(257	)			92
Gain on exercise of common stock warrants		(15,602	)			—				—
Deferred income taxes		(4,050	)			24,491				44,140
Loss on disposal of fixed assets		379				1,048				628
Excess tax benefits from exercised stock options		(40,147	)			(22,566	)			(109,946	)
Loss on extinguishment of convertible note		547				—				—
Other operating activities, net		—				—				448
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable		(14,609	)			(54,515	)			2,106
Prepaid expenses and other assets		12,000				(9,625	)			(2,386	)
Income taxes		51,580				13,760				39,661
Accounts payable and accrued liabilities		(8,832	)			12,675				34,022
Deferred revenues		(43,546	)			22,114				26,970
Pension and postretirement benefits		(13,704	)			(14,802	)			(11,392	)
Other liabilities		2,775				(1,042	)			(41,593	)
Net cash provided by operating activities		623,687				489,452				506,920
Cash flows from investing activities:
Acquisitions, net of cash acquired of $40,803, $304 and $0, respectively		(2,858,233	)			(35,192	)			(983	)
Purchase of non-controlling interest in non-public companies		(101	)			(5,000	)			—
Proceeds from sale of subsidiary		—				151,170				—
Proceeds from extinguishment of convertible note		453				—				—
Escrow funding associated with acquisitions		(83,411	)			—				—
Proceeds from release of acquisition related escrows		—				—				280
Proceeds from the settlement of derivative instruments		85,187				—				—
Capital expenditures		(166,138	)			(146,818	)			(145,976	)
Purchases of available-for-sale securities		(165	)			(203	)			(5,870	)
Proceeds from sales and maturities of available-for-sale securities		388				513				7,484
Cash received from the exercise of common stock warrants		15,602				—				—
Other investing activities, net		101				—				(561	)
Net cash used in investing activities		(3,006,317	)			(35,530	)			(145,626	)

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

VERISK ANALYTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

For The Years Ended December 31, 2015, 2014 and 2013

	2015				2014				2013
	(In thousands)
Cash flows from financing activities:
Proceeds from issuance of long-term debt, net of original issue discount		1,243,966				—				—
Repayments of current portion of long-term debt		(170,000	)			—				(180,000	)
Repayments of long-term debt		(50,000	)			—				—
Proceeds from issuance of short-term debt with original maturities greater than three months		830,000				—				—
Repayment of short-term debt with original maturities greater than three months		(15,000	)			—				—
(Repayments) proceeds from short-term debt, net		(105,000	)			160,000				(10,000	)
Payment of debt issuance costs		(23,942	)			(465	)			(605	)
Repurchases of common stock		(20,456	)			(778,484	)			(277,411	)
Net share settlement of taxes from restricted stock awards		(2,350	)			(1,625	)			—
Excess tax benefits from exercised stock options		40,147				22,566				109,946
Proceeds from stock options exercised		38,831				24,648				80,368
Proceeds from issuance of stock as part of a public offering		720,848				—				—
Other financing activities, net		(6,031	)			(5,718	)			(6,770	)
Net cash provided by (used in) financing activities		2,481,013				(579,078	)			(284,472	)
Effect of exchange rate changes		606				(1,286	)			(840	)
Increase (decrease) in cash and cash equivalents		98,989				(126,442	)			75,982
Cash and cash equivalents, beginning of period		39,359				165,801				89,819
Cash and cash equivalents, end of period	$	138,348			$	39,359			$	165,801
Supplemental disclosures:
Taxes paid	$	158,494			$	205,498			$	126,846
Interest paid	$	106,098			$	67,231			$	75,084
Non-cash investing and financing activities:
Repurchases of common stock included in accounts payable and accrued liabilities	$	—			$	—			$	3,038
Deferred tax liability established on the date of acquisitions	$	213,048			$	2,654			$	1,187
Tenant improvement allowance	$	1,588			$	9,134			$	—
Capital lease obligations	$	1,720			$	6,044			$	10,512
Capital expenditures included in accounts payable and accrued liabilities	$	2,777			$	76			$	5,960

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

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

1. Organization:

Verisk Analytics, Inc. and its consolidated subsidiaries (“Verisk” or the “Company”) enable risk-bearing businesses to better understand and manage their risks. The Company provides its customers proprietary data that, combined with analytic methods, create embedded decision support solutions. The Company is one of the largest aggregators and providers of data pertaining to property and casualty (“P&C”) insurance risks in the United States of America (“U.S.”). The Company offers 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.

Verisk was established to serve as the parent holding company of Insurance Services Office, Inc. (“ISO”) upon completion of the initial public offering (“IPO”), which occurred on October 9, 2009. ISO was formed in 1971 as an advisory and rating organization for the P&C insurance industry to provide statistical and actuarial services, to develop insurance programs and to assist insurance companies in meeting state regulatory requirements. For over the past decade, the Company broadened its data assets, entered new markets, placed a greater emphasis on analytics, and pursued strategic acquisitions. Verisk trades under the ticker symbol “VRSK” on the NASDAQ Global Select Market.

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

The accompanying consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the United States of America (“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, the realization of deferred tax assets, acquisition related liabilities, fair value of stock based compensation, assets and liabilities for pension and postretirement benefits, and the estimate for the allowance for doubtful accounts. Actual results may ultimately differ from those estimates. As of December 31, 2013, the Company's mortgage services business qualified as assets held-for-sale. The mortgage services business was sold on March 11, 2014. The results of operations for the Company's mortgage services business are reported as a discontinued operation for the years ended December 31, 2014 and 2013 (See Note 10).

Significant accounting policies include the following:

(a) Intercompany Accounts and Transactions

The consolidated financial statements include the accounts of Verisk. All intercompany accounts and transactions have been eliminated.

(b) Revenue Recognition

The following describes the Company’s primary types of revenues and the applicable revenue recognition policies. The Company’s revenues are primarily derived from sales of services and revenue is recognized as services are performed and information is delivered to customers. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, fees and/or price is fixed or determinable, and collectability is reasonably assured. Revenue is recognized net of applicable sales tax withholdings.

Industry-Standard Insurance Programs

Industry-standard insurance programs, statistical agent and data services and actuarial services are sold to participating insurance company customers under annual agreements covering a calendar year where the price is determined at the inception of the agreement. In accordance with Accounting Standards Codification (“ASC”) 605, Revenue Recognition, the Company recognizes revenue ratably over the term of these annual agreements, as services are performed and continuous access to information is provided over the entire term of the agreements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Property-Specific Rating and Underwriting Information

The Company provides property-specific rating information through reports issued for specific commercial properties, for which revenue is recognized when the report is delivered to the customer, provided that all other revenue recognition criteria are met.

In addition, the Company provides hosting or software solutions that provide continuous access to information about the properties being insured and underwriting information in the form of standard policy forms to be used by customers. As the customer has a contractual right to take possession of the software without significant penalty, revenues from these arrangements are recognized ratably over the contract period from the time when the customer had access to the solution in accordance with ASC 985-605, Software Revenue Recognition (“ASC 985-605”). The Company recognizes software license revenue when the arrangement does not require significant production, customization or modification of the software and the following criteria are met: persuasive evidence of an agreement exists, delivery has occurred, fees are fixed or determinable, and collections are probable. These software arrangements include post-contract customer support (“PCS”). The Company recognizes software license revenue ratably over the duration of the annual license term as vendor specific objective evidence (“VSOE”) of PCS, the only remaining undelivered element, cannot be established in accordance with ASC 985-605. The PCS associated with these arrangements is coterminous with the duration of the license term.

Insurance

Insurance services primarily consist of term-based software licenses. These software arrangements include PCS, which includes unspecified upgrades on a when-and-if available basis. The Company recognizes software license revenue ratably over the duration of the annual license term as VSOE of PCS, the only remaining undelivered element, cannot be established in accordance with ASC 985-605. The PCS associated with these arrangements is coterminous with the duration of the license term. In certain instances, the customers are billed for access on a monthly basis for the term-based software licenses and the Company recognizes revenue accordingly.

There are also services within insurance, which are comprised of transaction-based fees recognized as information is delivered to customers, provided that all other revenue recognition criteria have been met.

Financial Services

Financial services include various types of services to customers. The Company primarily recognizes revenue ratably for these services over the term of the agreements, as services are performed and continuous service is provided over the entire term of the agreements. In addition, there are certain services which are comprised of transaction-based fees; in these instances, revenue is recognized as information is delivered to customers, provided that all other revenue recognition criteria have been met.

Healthcare

The Company provides software hosting arrangements to customers whereby the customer does not have the right to take possession of the software. As these arrangements include PCS throughout the hosting term, revenues from these multiple element arrangements are recognized in accordance with ASC 605-25, Revenue Recognition — Multiple Element Arrangements (“ASC 605-25”). The Company recognizes revenue ratably over the duration of the license term, which ranges from one to five years, since the contractual elements do not have stand alone value.

There are also services within healthcare, which are comprised of transaction-based fees recognized as information is delivered to customers, provided that all other revenue recognition criteria have been met.

Energy and Specialized Markets

The Company provides hosting solutions that give continuous access to research information such as data analytics and commercial intelligence for the energy, chemicals, metals and mining verticals. For the hosting arrangements, whereby the customer does not have the right to take possession of the software, which include PCS throughout the hosting term, revenues from these multiple element arrangements are recognized in accordance with ASC 605-25. The Company recognizes revenue ratably over the duration of the license term, since the contractual elements do not have stand alone value. Specialized markets consist of term-based software licenses. These software arrangements include PCS, which includes unspecified upgrades on a when-and-if available basis. The Company recognizes software license revenue ratably over the duration of the annual license term as VSOE of PCS, the only remaining undelivered element, cannot be established in accordance with ASC 985-605. The PCS associated with these arrangements is coterminous with

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the duration of the license term. In certain instances, the customers are billed for access on a monthly basis for the term-based software licenses and the Company recognizes revenue accordingly. In addition, specialized markets are comprised of transaction-based fees recognized as information is delivered to customers, provided that all other revenue recognition criteria have been met.

The Company services long-term contract arrangements with certain customers. For these arrangements, revenue is recognized in accordance with ASC 605-35, Revenue Recognition — Construction-Type and Production-Type Contracts (“ASC 605-35”), using the percentage-of-completion method, which requires the use of estimates. In such instances, management is required to estimate the input measures, based on hours incurred to date compared to total estimated hours of the project, with consideration also given to output measures, such as contract milestones, when applicable. Adjustments to estimates are made in the period in which the facts requiring such revisions become known. Accordingly, recognized revenues and profits are subject to revisions as the contract progresses to completion. The Company considers the contract substantially complete when there is compliance with all performance specifications and there are no remaining costs or potential risk.

There are also services within energy and specialized markets, which are comprised of transaction-based fees recognized as information is delivered to customers, provided that all other revenue recognition criteria have been met.

(c) Deferred Revenues

The Company invoices its customers in annual, quarterly, monthly or milestone installments. Amounts billed and collected in advance of earnings are recorded as “Deferred revenues” in the accompanying consolidated balance sheets and are recognized as the services are performed and the applicable revenue recognition criteria are met.

(d) Fixed Assets and Finite-lived Intangible Assets

Property and equipment, internal-use software and finite-lived intangibles are stated at cost less accumulated depreciation and amortization, which are computed on a straight-line basis over their estimated useful lives. Leasehold improvements are amortized over the shorter of the useful life of the asset or the lease term.

The Company’s internal software development costs primarily relate to internal-use software. Such costs are capitalized in the application development stage in accordance with ASC 350-40, Internal-use Software. The Company also capitalizes software development costs upon the establishment of technological feasibility for a product in accordance with ASC 985-20, Software to be Sold, Leased, or Marketed (“ASC 985-20”). Software development costs are amortized on a straight-line basis over a three-year period, which management believes represents the useful life of these capitalized costs.

In accordance with ASC 360, Property, Plant & Equipment, whenever events or changes in circumstances indicate that the carrying amount of long-lived assets and finite-lived intangible assets may not be recoverable, the Company reviews its long-lived assets and finite-lived intangible assets for impairment by first comparing the carrying value of the assets to the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the assets. If the carrying value exceeds the sum of the assets’ undiscounted cash flows, the Company estimates and recognizes an impairment loss by taking the difference between the carrying value and fair value of the assets.

(e) Capital and Operating Leases

The Company leases various property, plant and equipment. Leased property is accounted for under ASC 840, Leases (“ASC 840”). Accordingly, leased property that meets certain criteria is capitalized and the present value of the related lease payments is recorded as a liability. Amortization of assets accounted for as capital leases is computed utilizing the straight-line method over the shorter of the remaining lease term or the estimated useful life (principally three to four years for computer equipment and automobiles).

All other leases are accounted for as operating leases. Rent expense for operating leases, which may have rent escalation provisions or rent holidays, is recorded on a straight-line basis over the non-cancelable lease period in accordance with ASC 840. The initial lease term generally includes the build-out period, where no rent payments are typically due under the terms of the lease. The difference between rent expensed and rent paid is recorded as deferred rent. Construction allowances received from landlords are recorded as a deferred rent credit and amortized to rent expense over the term of the lease.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(f) Investments

The Company’s investments at December 31, 2015 and 2014 included registered investment companies and equity investments in non-public companies. The Company accounts for short-term investments in accordance with ASC 320, Investments-Debt and Equity Securities (“ASC 320”).

There were no investments classified as trading securities at December 31, 2015 or 2014. All investments with readily determinable market values are classified as available-for-sale. While these investments are not held with the specific intention to sell them, they may be sold to support the Company’s investment strategies. All available-for-sale investments are carried at fair value. The cost of all available-for-sale investments sold is based on the specific identification method, with the exception of mutual fund-based investments, which is based on the weighted average cost method. Dividend income is accrued on the ex-dividend date.

The Company performs reviews of its investment portfolio when individual holdings have experienced a decline in fair value below their respective cost. The Company considers a number of factors in the evaluation of whether a decline in value is other-than-temporary including: (a) the financial condition and near term prospects of the issuer; (b) the Company’s ability and intent to retain the investment for a period of time sufficient to allow for an anticipated recovery in value; and (c) the period and degree to which the market value has been below cost. Where the decline is deemed to be other-than-temporary, a charge is recorded to “Investment income and others” in the accompanying consolidated statements of operations, and a new cost basis is established for the investment.

The Company’s equity investments in non-public companies are included in “Other assets” in the accompanying consolidated balance sheets. Those securities are carried at cost, as the Company owns less than 20% of the stock and does not otherwise have the ability to exercise significant influence. These securities are written down to their estimated realizable value when management considers there is an other-than-temporary decline in value based on financial information received and the business prospects of the entity.

(g) Fair Value of Financial and Non-financial Instruments

The Company follows the provisions of ASC 820-10, Fair Value Measurements (“ASC 820-10”), which defines fair value, establishes a framework for measuring fair value under U.S. GAAP and expands fair value measurement disclosures. The Company follows the provisions of ASC 820-10 for its financial assets and liabilities recognized or disclosed at fair value on a recurring basis. The Company follows the provisions of ASC 820-10 for its non-financial assets and liabilities recognized or disclosed at fair value.

(h) Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable is generally recorded at the invoiced amount. The allowance for doubtful accounts is estimated based on an analysis of the aging of the accounts receivable, historical write-offs, customer payment patterns, individual customer creditworthiness, current economic trends, and/or establishment of specific reserves for customers in adverse financial condition. The Company assesses the adequacy of the allowance for doubtful accounts on a quarterly basis.

(i) Foreign Currency

The Company has determined local currencies are the functional currencies of the foreign operations. The assets and liabilities of foreign subsidiaries are translated at the period-end rate of exchange and statement of operations items are translated at the average rates prevailing during the year. The resulting translation adjustment is recorded as a component of “Accumulated other comprehensive losses” in the accompanying consolidated statements of changes in stockholders’ equity.

(j) Stock Based Compensation

The Company follows ASC 718, Stock Compensation (“ASC 718”). Under ASC 718, stock based compensation cost is measured at the grant date, based on the fair value of the awards granted, and is recognized as expense over the requisite service period.

Other equity awards, including restricted stock, are valued at the closing price of the Company’s common stock on the grant date. Restricted stock generally has a service vesting period of four years and the Company recognizes the expense ratably over this service vesting period.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company estimates expected forfeitures of equity awards at the date of grant and recognizes compensation expense only for those awards expected to vest. The forfeiture assumption is ultimately adjusted to the actual forfeiture rate. Changes in the forfeiture assumptions may impact the total amount of expense ultimately recognized, as well as the timing of expense recognized over the requisite service period.

(k) Research and Development Costs

Research and development costs, which are primarily related to the personnel and related overhead costs incurred in developing new services for customers, are expensed as incurred. Such costs were $22,737, $25,508 and $21,426 for the years ended December 31, 2015, 2014 and 2013, respectively, and were included in the accompanying consolidated statements of operations.

(l) Advertising Costs

Advertising costs, which are primarily associated with promoting the Company’s brand, names and solutions provided, are expensed as incurred. Such costs were $7,125, $6,360 and $8,457 for the years ended December 31, 2015, 2014 and 2013, respectively.

(m) Income Taxes

The Company accounts for income taxes under the asset and liability method under ASC 740, Income Taxes (“ASC 740”), which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

Deferred tax assets are recorded to the extent these assets are more likely than not to be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. Valuation allowances are recognized to reduce deferred tax assets if it is determined to be more likely than not that all or some of the potential deferred tax assets will not be realized.

The Company follows ASC 740-10, Income Taxes (“ASC 740-10”), which clarifies the accounting for uncertainty in income taxes recognized in the financial statements. ASC 740-10 provides that a tax benefit from an uncertain tax position may be recognized based on the technical merits when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes. Income tax positions must meet a more likely than not recognition threshold in accordance with ASC 740-10. This standard also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying consolidated statements of operations. Accrued interest and penalties are included within “Other liabilities” on the accompanying consolidated balance sheets.

(n) Earnings Per Share

Basic and diluted earnings per share (“EPS”) are determined in accordance with ASC 260, Earnings per Share, which specifies the computation, presentation and disclosure requirements for EPS. Basic EPS excludes all dilutive common stock equivalents. It is based upon the weighted average number of common shares outstanding during the period. Diluted EPS, as calculated using the treasury stock method, reflects the potential dilution that would occur if the Company’s dilutive outstanding stock options and stock awards were issued.

(o) Pension and Postretirement Benefits

The Company accounts for its pension and postretirement benefits under ASC 715, Compensation — Retirement Benefits (“ASC 715”). ASC 715 requires the recognition of the funded status of a benefit plan in the balance sheet, the recognition in other comprehensive income (loss) of gains or losses and prior service costs or credits arising during the period, but which are not included as components of periodic benefit cost, and the measurement of defined benefit plan assets and obligations as of the balance sheet date. The Company utilizes a valuation date of December 31.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(p) Product Warranty Obligations

The Company provides warranty coverage for certain of its solutions. The Company recognizes a product warranty obligation when claims are probable and can be reasonably estimated. As of December 31, 2015 and 2014, product warranty obligations were not material.

In the ordinary course of business, the Company enters into numerous agreements that contain standard indemnities whereby the Company indemnifies another party for breaches of confidentiality, infringement of intellectual property or gross negligence. Such indemnifications are primarily granted under licensing of computer software. Most agreements contain provisions to limit the maximum potential amount of future payments that the Company could be required to make under these indemnifications; however, the Company is not able to develop an estimate of the maximum potential amount of future payments to be made under these indemnifications as the triggering events are not subject to predictability.

(q) Loss Contingencies

The Company accrues for costs relating to litigation, claims and other contingent matters when such liabilities become probable and reasonably estimable. Such estimates are based on management’s judgment. Actual amounts paid may differ from amounts estimated, and such differences will be charged to operations in the period in which the final determination of the liability is made.

(r) Goodwill

Goodwill represents the excess of acquisition costs over the fair value of tangible net assets and identifiable intangible assets of the businesses acquired. Goodwill and intangible assets deemed to have indefinite lives are not amortized. Intangible assets determined to have finite lives are amortized over their useful lives. Goodwill and intangible assets with indefinite lives are subject to impairment testing annually as of June 30 or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. The Company completed the required annual impairment test as of June 30, 2015, which resulted in no impairment of goodwill in 2015. This test compares the carrying value of each reporting unit to its fair value. If the fair value of the reporting unit exceeds the carrying value of the net assets, including goodwill assigned to that reporting unit, goodwill is not impaired. If the carrying value of the reporting unit’s net assets, including goodwill, exceeds the fair value of the reporting unit, then the Company will determine the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then an impairment loss is recorded for the difference between the carrying amount and the implied fair value of the goodwill.

(s) Recent Accounting Pronouncements

In April 2015, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") 2015-03, Simplifying the Presentation of Debt Issuance Costs ("ASU No. 2015-03"). The amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU No. 2015-03 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. The Company has elected not to early adopt. The adoption of ASU No. 2015-03 is not expected to have a material impact on the Company's consolidated financial statements.

In April 2015, the FASB issued ASU 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement ("ASU No. 2015-05"). This guidance is intended to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement, primarily to determine whether the arrangement includes a sale or license of software. ASU No. 2015-05 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. The Company has elected to adopt ASU No. 2015-05 in 2016. The adoption of ASU No. 2015-05 is not expected to have a material impact on the Company's consolidated financial statements.

In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date ("ASU No. 2015-14"). The amendments in this update defer the effective date of ASU No. 2014-09, Revenue from Contracts with Customers ("ASU No. 2015-09"), for all entities by one year. Public business entities will apply the guidance in ASU No. 2015-09 for annual reporting periods beginning after December 15, 2017. The Company is currently evaluating ASU No. 2015-09 and has not determined the impact this standard may have on its financial statements nor decided upon the method of adoption.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In August 2015, the FASB issued ASU No. 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements ("ASU No. 2015-15"). ASU No. 2015-15 clarifies that ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, does not address the presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. As a result, an entity may present debt issuance costs related to line-of-credit arrangements as an asset instead of as a direct deduction from the carrying amount of the debt. The Company has elected not to early adopt ASU No. 2015-15. The adoption of ASU No. 2015-15 is not expected to have a material impact on the Company's consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments ("ASU No. 2015-16"). ASU No. 2015-16 requires, for business combinations, that the acquirer record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. ASU No. 2015-16 is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted for reporting periods for which financial statements have not been issued. The Company has elected to early adopt ASU No. 2015-16 on a prospective basis. Adoption of this guidance did not have a material impact on the results of operations or financial position (see Note 9).

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes ("ASU No. 2015-17"). This ASU requires that deferred tax assets and liabilities be classified as non-current in a statement of financial position. The Company early adopted ASU No. 2015-17 effective December 31, 2015 on a prospective basis. Adoption of this ASU resulted in a reclassification of the net current deferred tax asset to the net non-current deferred tax asset in the accompanying consolidated balance sheet as of December 31, 2015. No prior periods were retrospectively adjusted. The Company applied this guidance to its current fiscal year ending December 31, 2015. Adoption of this guidance did not have a material impact on the results of operations or financial position (see Note 12).

3. Concentration of Credit Risk:

Financial instruments that potentially expose the Company to credit risk consist primarily of cash and cash equivalents, available for sale securities and accounts receivable, which are generally not collateralized. The Company maintains its cash and cash equivalents in higher credit quality financial institutions in order to limit the amount of credit exposure. The total domestic cash balances are insured by the Federal Deposit Insurance Corporation (“FDIC”) to a maximum amount of $250 per bank at December 31, 2015 and 2014. At December 31, 2015 and 2014, the Company had cash balances on deposit that exceeded the balance insured by the FDIC limit by approximately $85,000 and $16,316 with six banks. At December 31, 2015 and 2014, the Company also had cash on deposit with foreign banks of approximately $52,092 and $21,886, respectively.

The Company considers the concentration of credit risk associated with its trade accounts receivable to be commercially reasonable and believes that such concentration does not result in the significant risk of near-term severe adverse impacts. The Company’s top fifty customers represent approximately 36% of revenues for 2015, 41% for 2014 and 38% for 2013 with no individual customer accounting for more than 2% of revenues during the year ended December 31, 2015, and 5% for 2014 and 3% for 2013. No individual customer comprised more than 3% of accounts receivable at December 31, 2015 and 7% at December 31, 2014.

4. Cash and Cash Equivalents:

Cash and cash equivalents consist of cash in banks, commercial paper, money-market funds, and other liquid instruments with original maturities of 90 days or less at the time of purchase.

5. Accounts Receivable:

Accounts receivable consisted of the following at December 31:

		2015				2014
Billed receivables	$	283,509			$	203,339
Unbilled receivables		41,660				23,324
Total receivables		325,169				226,663
Less allowance for doubtful accounts		(5,070	)			(5,995	)
Accounts receivable, net	$	320,099			$	220,668

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

6. Investments:

Available-for-sale securities consisted of the following:

		Adjusted Cost				Gross Unrealized Loss				Fair Value
December 31, 2015
Registered investment companies	$	3,622			$	(46	)		$	3,576
December 31, 2014
Registered investment companies	$	4,045			$	(244	)		$	3,801

In addition to the available-for-sale securities above, the Company has equity investments in non-public companies in which the Company acquired non-controlling interests and for which no readily determinable market value exists. These securities were accounted for under the cost method in accordance with ASC 323-10-25, The Equity Method of Accounting for Investments in Common Stock. At December 31, 2015 and 2014, the carrying value of such securities was $8,487, and has been included in “Other assets” in the accompanying consolidated balance sheets.

Realized gain (loss) on securities, net, including write downs related to other-than-temporary impairments of available-for-sale securities and other assets, has been included in "Investment income and others" in the accompanying consolidated statements of operations. Realized gain (loss) on securities, net, was as follows for the years ended December 31:

		2015				2014				2013
Gross realized gain on sale of securities	$	15,718			$	285			$	966
Other-than-temporary impairment of securities		(316	)			(28	)			(84	)
Other-than-temporary impairment of non-controlling interest in non-public companies		—				—				(974	)
Realized gain (loss) on securities, net	$	15,402			$	257			$	(92	)

7. Fair Value Measurements:

Certain assets and liabilities of the Company are reported at fair value in the accompanying consolidated balance sheets. Such assets and liabilities include amounts for both financial and non-financial instruments. To increase consistency and comparability of assets and liabilities recorded at fair value, ASC 820-10 establishes a three-level fair value hierarchy to prioritize the inputs to valuation techniques used to measure fair value. ASC 820-10 requires disclosures detailing the extent to which companies’ measure assets and liabilities at fair value, the methods and assumptions used to measure fair value and the effect of fair value measurements on earnings. In accordance with ASC 820-10, the Company applied the following fair value hierarchy:

Level 1 — Assets or liabilities for which the identical item is traded on an active exchange, such as publicly-traded instruments.

Level 2 — Assets and liabilities valued based on observable market data for similar instruments.

Level 3 — Assets or liabilities for which significant valuation assumptions are not readily observable in the market; instruments valued based on the best available data, some of which is internally-developed, and considers risk premiums that a market participant would require.

The following table provides information for such assets and liabilities as of December 31, 2015 and 2014. The fair values of cash and cash equivalents (other than money-market funds which are recorded on a reported net asset value basis disclosed below), accounts receivable, accounts payable and accrued liabilities, deferred revenues, Business Combinations (“ASC 805”), short-term debt, and short-term debt expected to be refinanced approximate their carrying amounts because of the short-term nature of these instruments.

The following table summarizes fair value measurements by level for cash equivalents and registered investment companies that were measured at fair value on a recurring basis:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Total				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)
December 31, 2015
Registered investment companies(1)	$	3,576			$	3,576			$	—
December 31, 2014
Cash equivalents – money-market funds	$	3,707			$	—			$	3,707
Registered investment companies(1)	$	3,801			$	3,801			$	—

(1) Registered investment companies are classified as available-for-sale securities and are valued using quoted prices in active

markets multiplied by the number of shares owned.

The Company has not elected to carry its long-term debt at fair value. The carrying value of the long-term debt represents amortized cost. The Company assesses the fair value of its long-term debt based on quoted market prices if available, and if not, an estimate of interest rates available to the Company for debt with similar features, the Company’s current credit rating and spreads applicable to the Company. The fair value of the long-term debt would be a Level 2 liability if the long-term debt was measured at fair value on the consolidated balance sheets. The following table summarizes the carrying value and estimated fair value of the long-term debt as of December 31, 2015 and 2014 respectively:

	2015								2014
	Carrying Value				Estimated Fair Value				Carrying Value				Estimated Fair Value
Financial instrument not carried at fair value:
Long-term debt excluding capitalized leases	$	2,290,862			$	2,328,134			$	1,265,848			$	1,371,213

8. Fixed Assets

The following is a summary of fixed assets:

	Useful Life		Cost				Accumulated Depreciation and Amortization				Net
December 31, 2015
Furniture and office equipment	3-10 years		$	250,673			$	(167,148	)		$	83,525
Leasehold improvements	Lease term			71,061				(30,104	)			40,957
Purchased software	3 years			130,760				(99,820	)			30,940
Software development costs	3 years			410,872				(152,204	)			258,668
Leased equipment	3-4 years			33,098				(29,020	)			4,078
Total fixed assets			$	896,464			$	(478,296	)		$	418,168
December 31, 2014
Furniture and office equipment	3-10 years		$	199,199			$	(131,055	)		$	68,144
Leasehold improvements	Lease term			65,212				(27,884	)			37,328
Purchased software	3 years			116,089				(80,794	)			35,295
Software development costs	3 years			266,559				(111,766	)			154,793
Leased equipment	3-4 years			32,776				(26,063	)			6,713
Total fixed assets			$	679,835			$	(377,562	)		$	302,273

Depreciation and amortization of fixed assets for the years ended December 31, 2015, 2014 and 2013 were $120,620, $85,506 and $66,190, of which $34,842, $19,000 and $12,806 related to amortization of internal-use software development costs, respectively. Amortization expense related to development of software for sale in accordance with ASC 985-20 was $9,228, $4,497 and $3,623 for the years ended December 31, 2015, 2014 and 2013, respectively. The Company had unamortized software development costs that had been capitalized in accordance with ASC 985-20 of $94,733, $34,749 and $29,149 as of December 31, 2015, 2014 and 2013, respectively. Leased equipment includes amounts held under capital leases for automobiles, computer software and computer equipment.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

9. Acquisitions

2015 Acquisitions

On May 19, 2015, the Company acquired 100 percent of the stock of Wood Mackenzie Limited ("Wood Mackenzie") for a net cash purchase price of $2,889,629, including $78,694 of an indemnity escrow, which the Company financed through a combination of debt and equity offerings, borrowings under the Company's new credit facility, and cash on hand. Due to the fact that a portion of the purchase price was funded in pounds sterling and the remainder in U.S. dollars, the Company entered into a foreign currency hedging instrument to purchase pounds sterling. The Company recorded a gain on the hedge of $85,187 within "Gain on derivative instruments" in the accompanying consolidated statements of operations. The proceeds from the gain were utilized to partially fund the acquisition of Wood Mackenzie. Wood Mackenzie is a global provider of data analytics and commercial intelligence for the energy, chemicals, metals and mining verticals. This acquisition advances the Company’s strategy to expand internationally and positions the Company in the global energy market. Wood Mackenzie is included in the energy and specialized markets vertical, formerly named the specialized markets vertical, of the Decision Analytics segment.

On November 6, 2015, the Company acquired 100 percent of the stock of Infield Systems Limited ("Infield"). Infield is a provider of business intelligence, analysis, and research to the oil, gas, and associated marine industries. Infield has become part of Wood Mackenzie and continues to provide services to enhance Wood Mackenzie's upstream and supply chain capabilities in the Decision Analytics segment. The Company paid a net cash purchase price of $13,804. The preliminary purchase price allocation of the acquisition is presented as “Others” in the table below.

On November 20, 2015, the Company acquired 100 percent of the stock of The PCI Group ("PCI"). PCI is a consortium of five specialist companies that offer integrated data and subscriptions research in the chemicals, fibers, films, and plastics sectors. PCI has become part of Wood Mackenzie, a Verisk Analytics business, and continues to provide services to enhance Wood Mackenzie's chemicals capabilities in the Decision Analytics segment. The Company paid a net cash purchase price of $37,387. The preliminary purchase price allocation of the acquisition is presented as “Others” in the table below.

The preliminary purchase price allocations of the acquisitions resulted in the following:

	Wood Mackenzie				Others				Total
Cash and cash equivalents	$	35,398			$	5,405			$	40,803
Accounts receivable		80,825				1,954				82,779
Current assets		97,505				419				97,924
Fixed assets		71,929				267				72,196
Intangible assets		1,111,950				22,172				1,134,122
Goodwill		1,994,018				36,328				2,030,346
Other assets		2,007				5,022				7,029
Total assets acquired		3,393,632				71,567				3,465,199
Current liabilities		110,000				3,437				113,437
Deferred revenues		142,457				2,801				145,258
Deferred income taxes, net		209,032				4,016				213,048
Other liabilities		7,116				4,717				11,833
Total liabilities assumed		468,605				14,971				483,576
Net assets acquired		2,925,027				56,596				2,981,623
Less: Cash acquired		35,398				5,405				40,803
Net cash purchase price	$	2,889,629			$	51,191			$	2,940,820

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The preliminary allocations of the purchase price above are subject to revisions as additional information is obtained about the facts and circumstances that existed as of the acquisition date. The revisions may have a significant impact on the consolidated financial statements. During the year ended December 31, 2015, the Company revised the preliminary allocation of purchase price and estimated valuation of intangible assets by recording a decrease to intangible assets of $182,994, a decrease in deferred tax liabilities of $49,944, a decrease in other items of $3,871, and an increase to goodwill of $136,921. These adjustments have been reflected in the above preliminary allocations of the purchase price. The impact of all adjustments have been reflected in the consolidated financial statements as of and for the year ended December 31, 2015. The allocations of the purchase price will be finalized once all information is obtained, but not to exceed one year from the acquisition date. The primary areas of the purchase price allocation that are not yet finalized relate to fixed assets and operating leases, income and non-income taxes, deferred revenues, the valuation of intangible assets acquired, and residual goodwill. The Company determined the estimated fair values of the assets and liabilities of Wood Mackenzie with the assistance of valuations performed by third party specialists, discounted cash flow analysis and estimates made by management. The preliminary amounts assigned to intangible assets by type for all other acquisitions were based upon the Company's valuation model and historical experiences with entities with similar business characteristics. The preliminary amounts by type for the Wood Mackenzie acquisition are summarized in the table below:

	Weighted Average Useful Life			Total
Technology-based		7 years		$	104,663
Marketing-related		20 years			232,935
Customer-related		15 years			278,106
Database-related		20 years			496,246
Total intangible assets				$	1,111,950

The goodwill associated with the stock purchases of PCI, Infield and Wood Mackenzie is not deductible for tax purposes. For the year ended December 31, 2015, the Company incurred transaction costs related to these acquisitions of $27,637 included within "Selling, general and administrative" expenses and $13,336 included within "Interest expense" in the accompanying consolidated statements of operations.

Supplemental information on an unaudited pro forma basis is presented below as if the acquisition of Wood Mackenzie occurred at the beginning of 2014. The pro forma information for the year ended December 31, 2015 and 2014 presented below is based on estimates and assumptions, which the Company believes to be reasonable but not necessarily indicative of the consolidated financial position or results of operations in future periods or the results that actually would have been realized had this acquisition been completed at the beginning of 2014. The unaudited pro forma information includes intangible asset amortization charges and incremental borrowing costs as a result of the acquisition, net of related tax, estimated using the Company’s effective tax rate for continuing operations for the periods presented.

	2015				2014
	(unaudited)
Pro forma revenues	$	2,207,724			$	2,121,241
Pro forma income from continuing operations	$	507,416			$	425,397
Pro forma basic income from continuing operations per share	$	3.07			$	2.57
Pro forma diluted income from continuing operations per share	$	3.01			$	2.52

2014 Acquisition

On December 8, 2014, the Company acquired 100% of the stock of Maplecroft.Net Limited (“Maplecroft”), a provider of global risk analytics and advisory services, for a net cash purchase price of $30,141, which includes $2,725 of indemnity escrows held by the seller. Using a proprietary data aggregation and analytical approach, Maplecroft enables its customers to assess, monitor, and forecast a growing range of worldwide risks, including geopolitical and societal risks. Within the Company's Decision Analytics segment, this acquisition establishes the Company's position as a provider of value chain optimization tools, providing comprehensive quantitative risk analytics and platforms by which customers can visualize, quantify, mitigate, and manage risk.

The preliminary purchase price allocation of the acquisition resulted in the following:

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Maplecroft
Accounts receivable	$	1,833
Current assets		543
Fixed assets		98
Intangible assets		13,270
Goodwill		21,369
Total assets acquired		37,113
Current liabilities		4,318
Deferred income taxes, net		2,654
Total liabilities assumed		6,972
Net assets acquired	$	30,141

The preliminary amounts assigned to intangible assets by type for the acquisition are summarized in the table below:

		Weighted Average Useful Life			Total
Technology-based		10 years		$	3,202
Marketing-related		10 years			458
Customer-related		10 years			9,610
Total intangible assets		10 years		$	13,270

The goodwill associated with the stock purchase of Maplecroft is not deductible for tax purposes. For the year ended

December 31, 2014, the Company incurred transaction costs related to this acquisition of $349 included within “Selling, general and administrative” expenses in the accompanying consolidated statements of operations. In accordance with ASC 805, the allocation of the purchase price for Maplecroft was revised during the measurement period. Refer to Note 11. Goodwill and Intangible Assets for further discussion.

Acquisition Escrows

Pursuant to the related acquisition agreements, the Company has funded various escrow accounts to satisfy pre-acquisition indemnity and tax claims arising subsequent to the acquisition dates, as well as a portion of the contingent payments. During the year ended December 31, 2015, the Company released $5,144 and $37,005 of indemnity escrows related to the MediConnect Global, Inc. acquisition and the Wood Mackenzie acquisition, respectively. At December 31, 2015 and 2014, the current portion of the escrows amounted to $38,690 and $5,583, and the noncurrent portion of the escrows amounted to $4,591 and $0, respectively. The current and noncurrent portions of the escrows have been included in “Other current assets” and "Other assets" in the accompanying consolidated balance sheets, respectively.

10. Discontinued Operations:

On March 11, 2014, the Company sold 100% of the stock of the Company’s mortgage services business, Interthinx, which was a guarantor subsidiary, in exchange for a purchase price of $151,170. At the completion of the sale, Interthinx ceased being a guarantor. The cash received was adjusted subsequent to close to reflect final balances of certain working capital accounts and other closing adjustments. The Company recognized income from discontinued operations, net of tax, of $29,177 during 2014. Results of operations for the mortgage services business are reported as a discontinued operation for the year ended December 31, 2014 and for all prior periods presented.

The mortgage services business met the criteria for being reported as a discontinued operation and has been segregated from continuing operations. The following table summarizes the results from the discontinued operation for the years ended December 31:

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	2014				2013
Revenues from discontinued operations	$	11,512			$	109,151
Income from discontinued operations before income taxes (including gain on sale of $65,410 in 2014)		54,482				10,819
Provision for income taxes (including tax on the gain on sale in 2014)		(25,305	)			(4,753	)
Income from discontinued operations, net of tax	$	29,177			$	6,066

11. Goodwill and Intangible Assets:

Goodwill represents the excess of acquisition costs over the fair value of tangible net assets and identifiable intangible assets of the businesses acquired. Goodwill and intangible assets deemed to have indefinite lives are not amortized. Intangible assets determined to have finite lives are amortized over their useful lives. The Company completed the required annual impairment test as of June 30, 2015, 2014 and 2013, which resulted in no impairment of goodwill. Based on the results of the impairment assessment as of June 30, 2015, the Company determined that the fair value of its reporting units exceeded their respective carrying value. There were no goodwill impairment indicators after the date of the last annual impairment test.

The following is a summary of the change in goodwill from December 31, 2013 through December 31, 2015, both in total and as allocated to the Company’s operating segments:

	Risk Assessment				Decision Analytics				Total
Goodwill at December 31, 2013 (1)	$	55,555			$	1,126,126			$	1,181,681
Current year acquisitions		—				22,740				22,740
Acquisition related escrow funding		—				2,725				2,725
Goodwill at December 31, 2014 (1)		55,555				1,151,591				1,207,146
Current year acquisitions		—				2,030,346				2,030,346
Purchase accounting reclassifications		—				1,589				1,589
Foreign currency translation adjustment		—				(104,255	)			(104,255	)
Goodwill at December 31, 2015 (1)	$	55,555			$	3,079,271			$	3,134,826

(1)	These balances are net of accumulated impairment charges of $3,244 that occurred prior to December 31, 2013.

During the year ended December 31, 2015, the Company finalized the purchase accounting for the acquisition of Maplecroft, which resulted in an increase in goodwill of $1,589, an increase in fixed assets of $355, an increase in current liabilities of $163, an increase in other liabilities of $288, a decrease in intangible assets of $2,494, and a decrease in deferred income taxes, net of $1,001. The impact of the finalization of the purchase accounting for these acquisitions was not material to the consolidated statements of operations for the years ended December 31, 2015 and 2014.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s intangible assets and related accumulated amortization consisted of the following:

	Weighted Average Useful Life		Cost				Accumulated Amortization				Net
December 31, 2015
Technology-based	8 years		$	417,884			$	(219,975	)		$	197,909
Marketing-related	16 years			292,012				(66,214	)			225,798
Contract-based	6 years			6,555				(6,555	)			—
Customer-related	13 years			653,223				(155,804	)			497,419
Database-based	20 years			470,367				(14,748	)			455,619
Total intangible assets			$	1,840,041			$	(463,296	)		$	1,376,745
December 31, 2014
Technology-based	8 years		$	299,705			$	(195,698	)		$	104,007
Marketing-related	5 years			71,504				(54,745	)			16,759
Contract-based	6 years			6,555				(6,555	)			—
Customer-related	13 years			399,011				(113,301	)			285,710
Total intangible assets			$	776,775			$	(370,299	)		$	406,476

Amortization expense related to intangible assets for the years ended December 31, 2015, 2014 and 2013, was approximately $94,864, $56,870, and $63,741, respectively. Estimated amortization expense in future periods through 2021 and thereafter for intangible assets subject to amortization is as follows:

Year		Amount
2016	$	120,523
2017		119,616
2018		118,870
2019		117,410
2020		115,955
2021 and thereafter		784,371
Total	$	1,376,745

12. Income Taxes:

Domestic and foreign income from continuing operations before income taxes was as follows:

	2015				2014				2013
U.S.	$	605,777			$	584,658			$	532,933
Foreign		111,659				5,962				5,807
Total income from continuing operations	$	717,436			$	590,620			$	538,740

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The components of the provision for income taxes from continuing operations for the years ended December 31 were as follows:

	2015				2014				2013
Current:
Federal	$	181,536			$	167,683			$	134,014
State and local		25,565				26,333				18,764
Foreign		3,414				1,470				1,201
Total current provision for income taxes		210,515				195,486				153,979
Deferred:
Federal		21,969				27,220				37,894
State and local		1,671				(2,740	)			4,287
Foreign		(24,296	)			(211	)			266
Total deferred provision for income taxes		(656	)			24,269				42,447
Provision for income taxes	$	209,859			$	219,755			$	196,426

The reconciliation between the Company’s effective tax rate on income from continuing operations and the statutory tax rate is as follows for the years ended December 31:

	2015			2014			2013
Federal statutory rate	35.0	%		35.0	%		35.0	%
State and local taxes, net of federal tax benefit	2.6	%		2.7	%		2.6	%
Foreign tax differentials	(6.5	)%		(0.1	)%		(0.1	)%
UK legislative change	(2.0	)%		—	%		—	%
Other	0.2	%		(0.4	)%		(1.0	)%
Effective tax rate for continuing operations	29.3	%		37.2	%		36.5	%

The decrease in the effective tax rate in 2015 compared to 2014 was due to tax benefits related to the Wood Mackenzie acquisition and a U.K. legislative rate reduction.

The tax effects of significant items comprising the Company’s deferred tax assets as of December 31 are as follows:

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	2015				2014
Deferred income tax asset:
Employee wages, pension and other benefits	$	26,086			$	29,756
Deferred revenue		—				1,835
Deferred rent		6,935				5,463
Net operating loss carryover		2,593				4,292
State tax adjustments		4,334				2,472
Capital and other unrealized losses		3,358				3,255
Other		11,193				4,956
Total		54,499				52,029
Less valuation allowance		(873	)			(789	)
Deferred income tax asset		53,626				51,240
Deferred income tax liability:
Fixed assets and intangible assets		(443,990	)			(242,857	)
Other		(6,066	)			(6,151	)
Deferred income tax liability		(450,056	)			(249,008	)
Deferred income tax liability, net	$	(396,430	)		$	(197,768	)

During November 2015, the FASB issued ASU No. 2015-17, which simplifies the presentation of deferred income taxes. This ASU requires that deferred tax assets and liabilities be classified as non-current in a statement of financial position. The Company early adopted ASU No. 2015-17 effective December 31, 2015 on a prospective basis. Adoption of this ASU resulted in a reclassification of the net current deferred tax asset to the net non-current deferred tax asset in the accompanying consolidated balance sheet as of December 31, 2015. No prior periods were retrospectively adjusted. The Company applied this guidance to its current fiscal year ended December 31, 2015. Adoption of this guidance had no material impact on the results of operations or financial position.

The net deferred income liability of $396,430 consists primarily of timing differences involving depreciation and amortization.

The ultimate realization of the deferred tax assets depends on the Company’s ability to generate sufficient taxable income in the future. The Company has provided for a valuation allowance against the deferred tax assets associated with the net operating losses of certain subsidiaries. The Company’s net operating loss carryforwards expire as follows:

Years	Amount
2016-2023	$	3,428
2024-2028		12,418
2029-2035		40,720
Total	$	56,566

A valuation allowance has been established based on the Company’s evaluation of the likelihood of utilizing these benefits before they expire. The Company has determined that the generation of future taxable income from certain subsidiaries to fully realize the deferred tax assets is uncertain. Other than these items, the Company has determined, based on the Company’s historical operating performance, that taxable income of the Company will more likely than not be sufficient to fully realize the deferred tax assets.

It is the practice of the Company to permanently reinvest the undistributed earnings of its foreign subsidiaries in those operations. As of December 31, 2015, the Company has not made a provision for U.S. or additional foreign withholdings taxes on approximately $102,837 of the unremitted earnings. The Company does not rely on these unremitted earnings as a source of funds for its domestic business as it expects to have sufficient cash flow in the U.S. to fund its U.S. operational and strategic needs. Consequently, the Company has not provided for U.S. federal or state income taxes or associated withholding taxes on these undistributed foreign earnings.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company follows ASC No. 740-10, which prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. For each tax position, the Company must determine whether it is more likely than not that the position will be sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation. A tax position that meets the more likely than not recognition threshold is then measured to determine the amount of benefit to recognize within the financial statements. No benefits may be recognized for tax positions that do not meet the more likely than not threshold. A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:

	2015				2014				2013
Unrecognized tax benefit at January 1	$	10,637			$	9,524			$	17,883
Gross increase in tax positions in prior period		7,137				2,679				541
Gross decrease in tax positions in prior period		(2,666	)			—				(4,241	)
Gross increase in tax positions from stock acquisitions		—				—				—
Settlements		(285	)			—				(390	)
Lapse of statute of limitations		(348	)			(1,566	)			(4,269	)
Unrecognized tax benefit at December 31	$	14,475			$	10,637			$	9,524

Of the total unrecognized tax benefits at December 31, 2015, 2014 and 2013, $11,444, $5,771 and $4,658, respectively, represent the amounts that, if recognized, would have a favorable effect on the Company’s effective tax rate in any future periods.

The total gross amount of accrued interest and penalties at December 31, 2015, 2014 and 2013 was $2,815, $2,818 and $2,619, respectively. The Company’s practice is to recognize interest and penalties associated with income taxes as a component of “Provision for income taxes” in the accompanying consolidated statements of operations.

The Company does not expect a significant increase in unrecognized benefits related to federal, foreign, or state tax exposures within the coming year. In addition, the Company believes that it is reasonably possible that approximately $472 of its currently remaining unrecognized tax positions, each of which is individually insignificant, may be recognized by the end of 2016 as a result of a combination of audit settlements and lapses of statute of limitations, net of additional uncertain tax positions.

The Company is subject to tax in the U.S. and in various state and foreign jurisdictions. The Company joined by its domestic subsidiaries, files a consolidated income tax return for the Federal income tax purposes. With few exceptions, none of which are material to the Company’s consolidated financial statements at December 31, 2015, the Company is no longer subject to U.S. federal, state, and local or non-US income tax examinations by tax authorities for tax years before 2011. The Internal Revenue Service is conducting an audit for Mediconnect for the year ended March 30, 2012, with a statute extension until December 31, 2016. In New Jersey, the Company is being audited for the years ended December 31, 2007 through 2013. The Company is also under audit in New York for the years ended December 31, 2010 through 2012 with a statue extension until July 29, 2016. The Company is also under audit in Illinois for the years ended December 31, 2012 through 2013. The Company does not expect that the results of these examinations will have a material effect on its financial position, results of operations or cash flow.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

13. Composition of Certain Financial Statement Captions:

The following table presents the components of “Other current assets”, “Accounts payable and accrued liabilities” and “Other liabilities” as of December 31:

	2015				2014
Other current assets:
Acquisition related escrows	$	38,690			$	5,583
Other current assets		14,262				13,292
Total other current assets	$	52,952			$	18,875
Accounts payable and accrued liabilities:
Accrued salaries, benefits and other related costs	$	101,259			$	87,729
Escrow liabilities		38,632				5,565
Trade accounts payable and other accrued expenses		105,773				87,432
Total accounts payable and accrued liabilities	$	245,664			$	180,726
Other liabilities:
Unrecognized tax benefits, including interest and penalty	$	17,290			$	13,455
Deferred rent		33,093				22,386
Other liabilities		9,715				7,547
Total other liabilities	$	60,098			$	43,388

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

14. Debt:

The following table presents short-term and long-term debt by issuance as of December 31:

	Issuance Date		Maturity Date			2015				2014
Short-term debt and current portion of long-term debt:
Syndicated revolving credit facility	Various		Various		$	870,000			$	160,000
Prudential shelf notes:
5.84% Series H shelf notes	10/26/2007		10/26/2015			—				17,500
6.28% Series I shelf notes	4/29/2008		4/29/2015			—				85,000
New York Life shelf notes:
5.87% Series A shelf notes	10/26/2007		10/26/2015			—				17,500
6.35% Series B shelf notes	4/29/2008		4/29/2015			—				50,000
Capital lease obligations	Various		Various			4,811				6,058
Short-term debt and current portion of long-term debt						874,811				336,058
Long-term debt:
Senior notes:
4.000% senior notes, less unamortized discount of $4,532 and $0, respectively	5/15/2015		6/15/2025			895,468				—
5.500% senior notes, less unamortized discount of $1,175 and $0, respectively	5/15/2015		6/15/2045			348,825				—
4.125% senior notes, less unamortized discount of $1,860 and $2,137, respectively	9/12/2012		9/12/2022			348,140				347,863
4.875% senior notes, less unamortized discount of $1,023 and $1,361, respectively	12/8/2011		1/15/2019			248,977				248,639
5.80% senior notes, less unamortized discount of $548 and $654, respectively	4/6/2011		5/1/2021			449,452				449,346
Prudential shelf notes:
6.85% Series J shelf notes	6/15/2009		6/15/2016			—				50,000
Capital lease obligations	Various		Various			2,317				5,026
Long-term debt						2,293,179				1,100,874
Total debt					$	3,167,990			$	1,436,932

Accrued interest associated with the Company’s outstanding debt obligations was $18,584 and $16,265 as of December 31, 2015 and 2014, respectively, and included in “Accounts payable and accrued liabilities” within the accompanying consolidated balance sheets. Interest expense associated with the Company’s outstanding debt obligations was $121,316, $69,984 and $76,136 for the years ended December 31, 2015, 2014 and 2013, respectively.

Senior Notes

On May 15, 2015, the Company completed issuances of senior notes in aggregate principal amounts of $900,000 and $350,000 due on June 15, 2025 and June 15, 2045, respectively, that accrue interest at a rate of 4.000% and 5.500%, respectively. Interest is payable semiannually on both series of senior notes on June 15th and December 15th of each year, beginning on December 15, 2015. The senior notes were issued at a discount of $4,833 and $1,201, respectively, and the Company incurred debt issuance costs on the senior notes of $7,560 and $4,138, respectively. The discount and debt issuance costs were recorded in "Long-term debt" and "Other assets," respectively, in the accompanying consolidated balance sheets and these costs will be amortized to "Interest expense" in the accompanying consolidated statements of operations over the life of the respective senior note. The net proceeds from the issuance of these notes was utilized to partially fund the acquisition of Wood Mackenzie. The indenture governing the senior notes restricts the Company's ability to, among other things, create certain liens, enter into sale/leaseback transactions and consolidate with, sell, lease, convey or otherwise transfer all or substantially all of the Company's assets, or merge with or into, any other person or entity. As of December 31, 2015 and 2014, the Company had senior notes with an aggregate principal amount of $2,300,000 and $1,050,000 outstanding, respectively.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On April 22, 2015, the Company signed an agreement to enter into a $1,750,000 committed senior unsecured Syndicated Revolving Credit Facility (the "new Credit Facility") with Bank of America N.A., JP Morgan Chase, N.A., Sun Trust Bank, Wells Fargo Bank N.A., Citizens Bank, N.A., Morgan Stanley Senior Funding, Inc., HSBC Bank USA, N.A., Royal Bank of Canada, BNP Paribas, TD Bank, N.A., The Northern Trust Company, and Capital One N.A. The new Credit Facility became effective on May 15, 2015. The new Credit Facility has a single borrower, Verisk Analytics, Inc,. and there are no guarantor subsidiaries of the debt. In accordance with the indenture governing our senior notes, the guarantor subsidiaries of the senior notes were automatically released as they were no longer guarantor subsidiaries under the new Credit Facility. On July 24, 2015, the Company entered into the First Amendment to the new Credit Facility which modified the definitions of Consolidated EBIT and Consolidated EBITDA to permit the adding back of certain non-recurring expenses related to the acquisition of Wood Mackenzie.

The Company utilized borrowings of $930,000 from the new Credit Facility to partially fund the purchase of Wood Mackenzie. The new Credit Facility may also be used for general corporate purposes, including working capital needs and capital expenditures, acquisitions and the share repurchase program (the "Repurchase Program").

The new Credit Facility has replaced the previously existing $990,000 Syndicated Revolving Credit Facility (the "old Credit Facility"). The new Credit Facility contains certain financial and other covenants that, among other things, impose certain restrictions on indebtedness, liens, investments, and capital expenditures. These covenants also place restrictions on mergers, asset sales, sale/leaseback transactions, payments between the Company and its subsidiaries, and certain transactions with affiliates. The financial covenants require that, at the end of any fiscal quarter, the Company have a consolidated interest coverage ratio of at least 3.0 to 1.0 and that it maintains, during any period of four fiscal quarters, a consolidated funded debt leverage ratio of 3.75 to 1.0, which ratio steps down to 3.5 to 1.0 at the end of the fourth fiscal quarter ending after the consummation of the acquisition of Wood Mackenzie. The Company was in compliance with all financial covenants under the new Credit Facility as of December 31, 2015. Interest on borrowings under the new Credit Facility is payable at an interest rate of LIBOR plus 1.125% to 1.625%, depending upon the consolidated funded debt leverage ratio. A commitment fee on any unused balance is payable periodically and may range from 12.50 to 25.00 basis points based upon the consolidated funded debt leverage ratio. As of December 31, 2015 and 2014, the Company had outstanding borrowings under the new Credit Facility and old Credit Facility of $870,000 and $160,000, respectively. In January and February 2016, the Company repaid a total of $165,000 of the $870,000 outstanding borrowings at December 31, 2015 under the new Credit Facility.

As of December 31, 2015, the Company no longer has any outstanding private placement debt. On April 29, 2015, the Company repaid $85,000 and $50,000 of private placement debt with Prudential Capital Group and New York Life, respectively, that came due utilizing $55,000 from cash from on hand and $80,000 from borrowings under the Credit Facility. On May 14, 2015, the Company prepaid the remaining private placement debt with New York Life of $17,500, which had been due on October 26, 2015, and $17,500 and $50,000 of remaining private placement debt with Prudential, which was due on October 26, 2015, and June 15, 2016, respectively. To prepay this debt, the Company utilized $25,000 of cash on hand and borrowings from its old Credit Facility of $60,000. The contractual costs for the prepayment of this debt was $4,786 and was recorded to "Interest expense" in the accompanying consolidated statements of operations for the year ended December 31, 2015.

On March 10, 2015, in connection with the Company's agreement to acquire Wood Mackenzie, the Company entered into a commitment letter for a $2,300,000 364-day bridge financing arrangement with Bank of America N.A. and Morgan Stanley Bank N.A. acting as joint lead arrangers. This financing arrangement was only to be utilized in the event the Company did not complete the debt and equity offerings relating to its acquisition of Wood Mackenzie by a certain date, and was terminated upon the closing of the acquisition. See Note 9. The Company paid fees associated with this financing arrangement of $9,100. Due to the completion of the debt and equity offerings, this arrangement was terminated and the full $9,100 of fees were recorded to "Interest expense" in the accompanying consolidated statements of operations for the year ended December 31, 2015.

The Company was in compliance with all financial covenants at December 31, 2015 and 2014.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Debt Maturities

The following table reflects the Company’s debt maturities:

Year	Amount
2016	$	874,811
2017		1,411
2018		618
2019		250,210
2020		48
2021 and thereafter		2,050,030
Total	$	3,177,128

15. Stockholders’ Equity:

The Company has 2,000,000,000 and 1,200,000,000 shares of authorized common stock as of December 31, 2015 and 2014, respectively. The common shares have rights to any dividend declared by the board of directors, subject to any preferential or other rights of any outstanding preferred stock, and voting rights to elect all twelve members of the board of directors.

The Company has 80,000,000 shares of authorized preferred stock, par value $0.001 per share. The preferred shares have preferential rights over the common shares with respect to dividends and net distribution upon liquidation. The Company did not issue any preferred shares as of December 31, 2015.

Equity Offering

The Company completed an equity offering of its common stock on May 12, 2015 in order to finance the acquisition of Wood Mackenzie. The Company received total proceeds of $721,867, net of underwriting discount of $20,413, from the offering of 10,604,000 treasury shares at a net public offering price of $68.075 per share. In conjunction with the offering, the Company incurred $1,019 of costs related to the issuance of the common stock. The proceeds from the offering, net of underwriting discount and related issuance costs, was recorded as a decrease to treasury shares at the weighted average price of the Company's treasury shares, with the remainder of the net proceeds recorded as an increase to additional paid in capital in the accompanying condensed consolidated balance sheets and condensed consolidated statements of changes in stockholders' equity.

Share Repurchase Program

Since May 2010, the Company has authorized repurchases of up to $2,300,000 of its common stock through its Repurchase Program, including the additional authorization of $300,000 announced on December 1, 2015. Since the introduction of share repurchase as a feature of the Company's capital management strategies in 2010, the Company has repurchased shares with an aggregate value of $1,830,649. As of December 31, 2015, the Company had $469,351 available to repurchase shares. The Company has no obligation to repurchase stock under this program and intends to use this authorization as a means of offsetting dilution from the issuance of shares under the ISO 401(k) Savings and Employee Stock Ownership Plan ("KSOP"), the Verisk 2013 Equity Incentive Plan (the "2013 Incentive Plan"), the Verisk 2009 Equity Incentive Plan (the “2009 Incentive Plan”), and the ISO 1996 Incentive Plan (the “1996 Incentive Plan”), while providing flexibility to repurchase additional shares if warranted. This authorization has no expiration date and may be increased, reduced, suspended, or terminated at any time. Shares that are repurchased under the Repurchase Program will be recorded as treasury stock and will be available for future issuance.

In December 2014, the Company entered into an accelerated share repurchase program ("ASR") to repurchase shares of its common stock for an aggregate purchase price of $500,000. Upon payment of the aggregate purchase price in December 2014, the Company received an initial delivery of 6,372,472 shares of the Company's common stock. Upon final settlement of the ASR agreement in June 2015, the Company received an additional 809,021 shares of the Company's common stock. These repurchases of 7,181,493 shares resulted in a reduction of the outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share ("EPS").

During the years ended December 31, 2015 and 2014, the Company repurchased 279,453 and 10,802,087 shares of common stock as part of the Repurchase Program at a weighted average price of $73.20 and $62.53 per share, respectively. The Company utilized cash from operations and borrowings from its Credit Facility to fund these repurchases.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Treasury Stock

As of December 31, 2015, the Company’s treasury stock consisted of 374,578,057 shares of common stock. During the years ended December 31, 2015 and 2014, the Company reissued 12,600,228 and 1,257,387 shares of common stock, under the 2013 Incentive Plan, 2009 Incentive Plan and the 1996 Incentive Plan, from the treasury shares at a weighted average price of $6.59 and $5.29 per share, respectively.

Earnings Per Share

Basic EPS is computed by dividing income from continuing operations, income from discontinued operations and net income, respectively, by the weighted average number of common shares outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding, using the treasury stock method, if the dilutive potential common shares, including stock options, nonvested restricted stock, nonvested restricted stock units, and the impact from the ASR program, had been issued.

The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations for the years ended December 31:

	2015				2014				2013
	(In thousands, except for share and per share data)
Numerator used in basic and diluted EPS:
Income from continuing operations	$	507,577			$	370,865			$	342,314
Income from discontinued operations		—				29,177				6,066
Net income	$	507,577			$	400,042			$	348,380
Denominator:
Weighted average number of common shares used in basic EPS		165,090,380				165,823,803				168,031,412
Effect of dilutive shares:
Potential common stock issuable from stock options and stock awards		3,360,963				3,308,620				4,244,948
Weighted average number of common shares and dilutive potential common shares used in diluted EPS		168,451,343				169,132,423				172,276,360

The potential shares of common stock that were excluded from diluted EPS were 1,221,301, 1,633,670 and 656,499 at December 31, 2015, 2014 and 2013, respectively, because the effect of including those potential shares was anti-dilutive.

Accumulated Other Comprehensive Losses

The following is a summary of accumulated other comprehensive losses as of December 31:

	2015				2014
Foreign currency translation adjustment	$	(165,828	)		$	(3,086	)
Unrealized gains (losses) on available-for-sale securities, net of tax		3				(110	)
Pension and postretirement adjustment, net of tax		(76,227	)			(77,318	)
Accumulated other comprehensive losses	$	(242,052	)		$	(80,514	)

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The before tax and after tax amounts of other comprehensive income for the years ended December 31, 2015, 2014 and 2013 are summarized below:

	Before Tax				Tax Benefit (Expense)				After Tax
December 31, 2015
Foreign currency translation adjustment	$	(162,742	)		$	—			$	(162,742	)
Unrealized holding gain on available-for-sale securities before reclassifications		398				(162	)			236
Amount reclassified from accumulated other comprehensive losses (1)		(200	)			77				(123	)
Unrealized holding gain on available-for-sale securities		198				(85	)			113
Pension and postretirement adjustment before reclassifications		5,197				(2,105	)			3,092
Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (2)		(3,242	)			1,241				(2,001	)
Pension and postretirement adjustment		1,955				(864	)			1,091
Total other comprehensive loss	$	(160,589	)		$	(949	)		$	(161,538	)
December 31, 2014
Foreign currency translation adjustment	$	(1,286	)		$	—			$	(1,286	)
Unrealized holding loss on available-for-sale securities before reclassifications		(314	)			121				(193	)
Amount reclassified from accumulated other comprehensive losses (1)		257				(99	)			158
Unrealized holding loss on available-for-sale securities		(57	)			22				(35	)
Pension and postretirement adjustment before reclassifications		(56,635	)			21,629				(35,006	)
Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (2)		(1,134	)			435				(699	)
Pension and postretirement adjustment		(57,769	)			22,064				(35,705	)
Total other comprehensive loss	$	(59,112	)		$	22,086			$	(37,026	)
December 31, 2013
Foreign currency translation adjustment	$	(840	)		$	—			$	(840	)
Unrealized holding loss on available-for-sale securities before reclassifications		(1,122	)			433				(689	)
Amount reclassified from accumulated other comprehensive losses (1)		882				(340	)			542
Unrealized holding loss on available-for-sale securities		(240	)			93				(147	)
Pension and postretirement adjustment before reclassifications		80,773				(30,611	)			50,162
Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (2)		(5,699	)			2,196				(3,503	)
Pension and postretirement adjustment		75,074				(28,415	)			46,659
Total other comprehensive income	$	73,994			$	(28,322	)		$	45,672

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(1) This accumulated other comprehensive losses component, before tax, is included under “Investment income and others” in the accompanying consolidated statements of operations.

(2) This accumulated other comprehensive losses component, before tax, is included under “Cost of revenues” and “Selling, general and administrative” in the accompanying consolidated statements of operations. This component is also included in the computation of net periodic benefit (credit) cost (see Note 17 Pension and Postretirement Benefits for additional details).

16. Compensation Plans:

KSOP

The Company has established the KSOP for the benefit of eligible employees in the U.S. and Puerto Rico. The KSOP includes both an employee savings component and an employee stock ownership component. The purpose of the combined plan is to enable the Company’s employees to participate in a tax-deferred savings arrangement under Internal Revenue Service Code Sections 401(a) and 401(k) (the “Code”), and to provide employee equity participation in the Company through the employee stock ownership plan (“ESOP”) accounts.

Under the KSOP, eligible employees may make pre-tax and after-tax cash contributions as a percentage of their compensation, subject to certain limitations under the applicable provisions of the Code. The maximum pre-tax contribution that can be made to the 401(k) account as determined under the provisions of Code Section 401(g) is $18, $18 and $18 for 2015, 2014 and 2013, respectively. Certain eligible participants (age 50 and older) may contribute an additional $6 on a pre-tax basis for 2015, 2014 and 2013. After-tax contributions are limited to 10% of a participant’s compensation. The quarterly matching contributions are primarily equal to 75% of the first 6% of the participant’s contribution.

The Company established the ESOP component as a funding vehicle for the KSOP. The common shares acquired by the KSOP were pledged as collateral under an intercompany loan agreement ("ESOP loan") between the KSOP and Company. The Company made quarterly cash contributions to the KSOP equal to the KSOP’s debt service. As the debt was repaid, shares were released from collateral and are used to fund the quarterly 401(k) matching and profit sharing contributions before being allocated to active employees in proportion to their annual salaries in relation to total participant salaries. The Company accounted for its ESOP in accordance with ASC 718-40, Employee Stock Ownership Plans (“ASC 718-40”) and ASC 480-10, Distinguishing Liabilities from Equity (“ASC 480-10”). As shares were committed to be released from collateral, the Company reported compensation expense at the then-current fair value of the shares, and the shares become outstanding for EPS computations. As of December 31, 2015, the KSOP no longer has any outstanding ESOP loan balance with the Company. The Company issued 47,686 shares of common stock at a weighted average per price of $77.51 to fund quarterly matching contributions for the year ended December 31, 2015.

In accordance with the ESOP loan, the Company is also required to contribute a total of $17,000, plus interest, of cash or shares to the KSOP by the end of 2016. Earlier contribution is at the Company's discretion. As of December 31, 2015, the Company had no allocated ESOP shares. For the years ended December 31, 2015, 2014 and 2013, there were no ESOP contributions.

In 2005, the Company established the ISO Profit Sharing Plan (the “Profit Sharing Plan”), a defined contribution plan, to replace the qualified pension plan for all eligible employees hired on or after March 1, 2005. The Profit Sharing Plan is a component of the KSOP. Eligible employees participated in the Profit Sharing Plan if they completed 1,000 hours of service each plan year and were employed on December 31 of that year. The Company can make a discretionary contribution to the Profit Sharing Plan based on the annual performance of the Company. Participants vest once they have completed four years and 1,000 hours of service. For the years ended December 31, 2015, 2014 and 2013, there were no profit sharing contributions.

At December 31, 2015, 2014 and 2013, the fair value of Verisk common stock was $76.88, $64.05, and $65.72 per share, respectively. KSOP compensation expense for 2015, 2014 and 2013 was approximately $14,076, $15,351 and $14,930, respectively.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Equity Compensation Plans

All of the Company’s outstanding stock options and restricted stock are covered under the 2013 Incentive Plan, 2009 Incentive Plan or the 1996 Incentive Plan. Awards under the 2013 Incentive Plan may include one or more of the following types: (i) stock options (both nonqualified and incentive stock options), (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, (v) performance awards, (vi) other share-based awards, and (vii) cash. Employees, directors and consultants are eligible for awards under the 2013 Incentive Plan. The Company issued common stock under these plans from the Company's treasury shares. On May 15, 2013, the Company’s shareholders approved the 2013 Incentive Plan. The number of shares of common stock available for issuance under the 2013 Incentive Plan is 15,700,000 and such amount shall be reduced on a 1-for-1 basis for every share issued that is subject to an option or stock appreciation right and on a 2.5-for-1 basis for every share issued that is subject to an award other than an option or stock appreciation right. Shares that were subject to an award under the 2013 Incentive Plan that become forfeited, expired or otherwise terminated shall again be available for issuance under the 2013 Incentive Plan on a 1-for-1 basis if the shares were subject to options or stock appreciation rights, and on an 2.5-for-1 basis if the shares were subject to awards other than options or stock appreciation rights. As of December 31, 2015, there were 10,351,157 shares of common stock reserved and available for future issuance. Cash received from stock option exercises for the years ended December 31, 2015, 2014 and 2013 was $38,831, $24,648 and $80,368, respectively.

The Company has granted equity awards to key employees and directors. The nonqualified stock options have an exercise price equal to the closing price of the Company’s common stock on the grant date, with a ten-year contractual term. The fair value of the restricted stock is determined using the closing price of the Company's common stock on the grant date. The restricted stock is not assignable or transferable until it becomes vested. The Company recognizes the expense of the equity awards over the vesting period. A summary of the equity awards granted for the year ended December 31, 2015 is presented below.

Grant Date		Service Vesting Period		Stock Options			Restricted Stock			Common Stock
April 1, 2015		Four-year graded vesting		1,177,191			211,756			—
April 1, 2015		Not applicable		—			—			840
May 19, 2015		Immediate vesting on grant date		255,473			52,960			—
May 19, 2015		Four-year graded vesting		225,363			42,064			—
May 19, 2015		Four-year cliff vesting		127,931			28,445			—
July 1, 2015		Immediate vesting on grant date		27,047			1,131			—
July 1, 2015		One-year cliff vesting		51,876			9,988			—
July 1, 2015		Not applicable		—			—			3,873
July 1, 2015		Four-year graded vesting		2,244			418			—
July 8, 2015		Four-year graded vesting		3,778			692			—
July 13, 2015		Four-year graded vesting		1,304			244			—
August 3, 2015		Four-year graded vesting		927			173			—
August 10, 2015		Four-year graded vesting		1,776			335			—
August 24, 2015		Four-year graded vesting		3,737			691			—
November 9, 2015		Four-year graded vesting		5,615			1,107			—
				1,884,262			350,004			4,713

The fair value of the stock options granted was estimated on the date of grant using a Black-Scholes option valuation model that uses the weighted-average assumptions noted in the following table during the years ended December 31:

	2015				2014				2013
Expected volatility		19.51	%			20.53	%			29.27	%
Risk-free interest rate		1.29	%			1.48	%			0.70	%
Expected term in years		4.5				4.4				4.5
Dividend yield		—	%			—	%			—	%
Weighted average grant date fair value per stock option	$	13.58			$	11.86			$	15.58

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The expected term for a majority of the awards granted was estimated based on studies of historical experience and projected exercise behavior. However, for certain awards granted, for which no historical exercise pattern exists, the expected term was estimated using the simplified method. The risk-free interest rate is based on the yield of U.S. Treasury zero coupon securities with a maturity equal to the expected term of the equity award. The volatility factor is calculated using historical daily closing prices over the most recent period that is commensurate with the expected term of the stock option awards. The volatility factor for stock options granted prior to 2014 was based on the average volatility of the Company's peers as the Company did not have a history of stock price sufficient to cover the expected term of those awards. The volatility factor for stock options granted in 2014 and 2015 was based on the volatility of the Company's stock. The expected dividend yield was based on the Company’s expected annual dividend rate on the date of grant.

A summary of options outstanding under the Incentive Plan and the Option Plan and changes during the three years then ended is presented below:

	Number of Options				Weighted Average Exercise Price Per Share				Aggregate Intrinsic Value
	(In thousands, except for share and per share data)
Outstanding at January 1, 2013		12,573,298			$	22.21			$	361,653
Granted		888,038			$	61.10
Exercised		(4,076,750	)		$	19.79			$	168,056
Cancelled or expired		(149,266	)		$	43.14
Outstanding at December 31, 2013		9,235,320			$	26.67			$	360,611
Granted		1,242,428			$	59.83
Exercised		(1,091,746	)		$	22.29			$	43,863
Cancelled or expired		(180,312	)		$	55.23
Outstanding at December 31, 2014		9,205,690			$	31.11			$	303,267
Granted		1,884,262			$	72.20
Exercised		(1,739,847	)		$	23.71			$	87,008
Cancelled or expired		(232,372	)		$	64.05
Outstanding at December 31, 2015		9,117,733			$	40.17			$	334,691
Options exercisable at December 31, 2015		6,541,229			$	29.81			$	307,924
Options exercisable at December 31, 2014		7,159,895			$	24.00			$	286,728

A summary of the status of the Company’s nonvested options and changes is presented below:

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Number of Options				Weighted Average Grant-Date Fair Value Per Share
Nonvested balance at January 1, 2013		3,776,302			$	9.43
Granted		888,038			$	15.58
Vested		(2,448,843	)		$	8.81
Cancelled or expired		(149,266	)		$	12.18
Nonvested balance at December 31, 2013		2,066,231			$	12.61
Granted		1,242,428			$	11.86
Vested		(1,082,552	)		$	11.71
Cancelled or expired		(180,312	)		$	13.56
Nonvested balance at December 31, 2014		2,045,795			$	12.55
Granted		1,884,262			$	13.58
Vested		(1,121,181	)		$	13.24
Cancelled or expired		(232,372	)		$	13.05
Nonvested balance at December 31, 2015		2,576,504			$	12.95

Intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the quoted price of Verisk’s common stock as of the reporting date. The aggregate intrinsic value of stock options outstanding and exercisable at December 31, 2015 was $334,691 and $307,924, respectively. In accordance with ASC 718, excess tax benefit from exercised stock options is recorded as an increase to additional-paid-in capital and a corresponding reduction in taxes payable. This tax benefit is calculated as the excess of the intrinsic value of options exercised in excess of compensation recognized for financial reporting purposes. The amount of the tax benefit that has been realized, as a result of those excess tax benefits, is presented as a financing cash inflow within the accompanying consolidated statements of cash flows. For the years ended December 31, 2015, 2014 and 2013, the Company recorded excess tax benefit from exercised stock options of $29,230, $15,988 and $58,056, respectively. The Company realized $40,147, $22,566 and $109,946 of tax benefit within the Company’s tax payments through December 31, 2015, 2014 and 2013, respectively.The Company estimates expected forfeitures of equity awards at the date of grant and recognizes compensation expense only for those awards that the Company expects to vest. The forfeiture assumption is ultimately adjusted to the actual forfeiture rate. Changes in the forfeiture assumptions may impact the total amount of expense ultimately recognized over the requisite service period and may impact the timing of expense recognized over the requisite service period. Stock based compensation expense for 2015, 2014 and 2013 was $30,542, $20,253 and $21,087, respectively.

A summary of the status of the restricted stock awarded under the 2013 Incentive Plan and changes is presented below:

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Number of Shares				Weighted Average Grant Date Fair Value Per Share
Outstanding at January 1, 2013		331,013			$	42.78
Granted		241,674			$	61.12
Vested		(150,668	)		$	37.82
Forfeited		(25,270	)		$	53.00
Outstanding at December 31, 2013		396,749			$	52.82
Granted		246,003			$	59.86
Vested		(163,280	)		$	49.94
Forfeited		(37,162	)		$	55.53
Outstanding at December 31, 2014		442,310			$	56.84
Granted		350,004			$	72.24
Vested		(211,265	)		$	58.64
Forfeited		(47,281	)		$	63.10
Outstanding at December 31, 2015		533,768			$	66.25

For the year ended December 31, 2015, certain employees had restricted stock vesting and covered the aggregate statutory minimum tax withholding of $2,350 through a net settlement of 32,882 shares. The payment of taxes related to the vesting was recorded as a reduction to additional paid-in-capital. This transaction is reflected within "Net share settlement of restricted stock awards" within cash flows from financing activities in the accompanying consolidated statements of cash flows.

As of December 31, 2015, there was $53,536 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the 2013 Incentive Plan and the 2009 Incentive Plan. That cost is expected to be recognized over a weighted-average period of 2.66 years. As of December 31, 2015, there were 2,576,504 and 531,278 nonvested stock options and restricted stock, respectively, of which 2,125,711 and 441,089 are expected to vest. The total grant date fair value of options vested during the years ended December 31, 2015, 2014 and 2013 was $16,780, $12,780 and $16,468, respectively. The total grant date fair value of restricted stock vested during the year ended December 31, 2015, 2014 and 2013 was $16,316, $9,839 and $7,153, respectively.

The Company also offers eligible employees the opportunity to participate in an employee stock purchase plan ("ESPP"). Under the ESPP, participating employees may authorize payroll deductions of up to 20.0% of their regular base salary and up to 50.0% of their short-term incentive compensation, both of which in total may not exceed $25 in any calendar year, to purchase shares of the Company’s common stock at a 5.0% discount of its fair market value at the time of purchase. In accordance with ASC 718, the ESPP is noncompensatory as the purchase discount is 5.0% or less from the fair market value, substantially all employees that meet limited employment qualifications may participate, and it incorporates no option features. During the years ended December 31, 2015, 2014 and 2013, the Company issued 25,599, 26,953 and 27,879 shares of common stock at a weighted average discounted price of $70.27, $57.98 and $59.62, respectively.

17. Pension and Postretirement Benefits:

The Company maintained a qualified defined benefit pension plan for certain of its employees through membership in the Pension Plan for Insurance Organizations (the “Pension Plan”), a multiple-employer trust. The Company applied a cash balance formula to determine future benefits. Under the cash balance formula, each participant has an account, which is credited annually based on salary rates determined by years of service, as well as the interest earned on the previous year-end cash balance. The Company also has a non-qualified supplemental cash balance plan (“SERP”) for certain employees. The SERP is funded from the general assets of the Company. Effective February 29, 2012, the Company instituted a hard freeze, which eliminated all future compensation and service credits, to all participants in the Pension Plan and SERP. In 2015, the Pension Plan and the SERP had a plan amendment due to the adoption of the updated mortality table.

The Pension Plan’s funding policy is to contribute annually at an amount between the minimum funding requirements set forth in the Employee Retirement Income Security Act of 1974 and the maximum amount that can be deducted for federal income tax purposes. In April 2012, the Company completed a voluntary prefunding to the Pension Plan of $72,000. Due to the

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

prefunding, the minimum contribution requirement was and is expected to be $0 in 2015 and 2016, respectively. The Company contributed $970 and $1,177 to the SERP in 2015 and 2014, respectively, and expects to contribute $971 in 2016.

The Company also provides certain healthcare and life insurance benefits for both active and retired employees. The Postretirement Health and Life Insurance Plan (the “Postretirement Plan”), which has been frozen, is contributory, requiring participants to pay a stated percentage of the premium for coverage. The Company expects to contribute $879 to the Postretirement Plan in 2016.

The following table sets forth the changes in the benefit obligations and the plan assets, the (funded) unfunded status of the Pension Plan, SERP and Postretirement Plan, and the amounts recognized in the Company’s consolidated balance sheets at December 31:

	Pension Plan and SERP								Postretirement Plan
	2015				2014				2015				2014
Change in benefit obligation:
Benefit obligation at January 1	$	471,259			$	420,664			$	18,773			$	20,399
Interest cost		18,102				19,073				520				593
Actuarial loss (gain)		(44,159	)			61,804				(1,584	)			(411	)
Plan amendments		3,830				—				—				—
Plan participants’ contributions		—				—				1,903				2,635
Benefits paid		(29,406	)			(30,282	)			(4,464	)			(4,834	)
Federal subsidy on benefits paid		—				—				739				391
Benefit obligation at December 31	$	419,626			$	471,259			$	15,887			$	18,773
Accumulated benefit obligation at December 31	$	419,626			$	471,259
Change in plan assets:
Fair value of plan assets at January 1	$	475,281			$	467,912			$	15,231			$	16,601
Actual return on plan assets, net of expenses		(8,220	)			36,474				14				743
Employer contributions, net		970				1,177				(396	)			(305	)
Plan participants’ contributions		—				—				1,903				2,635
Benefits paid		(29,406	)			(30,282	)			(4,464	)			(4,834	)
Subsidies received		—				—				739				391
Fair value of plan assets at December 31	$	438,625			$	475,281			$	13,027			$	15,231
(Funded) unfunded status at December 31	$	(18,999	)		$	(4,022	)		$	2,860			$	3,542
Amounts recognized in the consolidated balance sheets consist of:
Pension assets, noncurrent	$	(32,922	)		$	(18,589	)		$	—			$	—
Pension, SERP and postretirement benefits, current		952				762				879				1,132
Pension, SERP and postretirement benefits, noncurrent		12,971				13,805				1,981				2,410
Total Pension, SERP and Postretirement benefits	$	(18,999	)		$	(4,022	)		$	2,860			$	3,542

The pre-tax components included within accumulated other comprehensive losses as of December 31 are summarized below:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Pension Plan and SERP								Postretirement Plan
	2015				2014				2015				2014
Prior service benefit	$	3,830			$	—			$	(854	)		$	(1,000	)
Actuarial losses		116,400				120,735				6,725				8,321
Accumulated other comprehensive losses, pretax	$	120,230			$	120,735			$	5,871			$	7,321

The pre-tax components of net periodic benefit (credit) cost and the amounts recognized in other comprehensive loss (income) are summarized below for the years ended December 31:

	Pension Plan and SERP												Postretirement Plan
	2015				2014				2013				2015				2014				2013
Interest cost	$	18,102			$	19,073			$	17,860			$	520			$	593			$	608
Expected return on plan assets		(34,432	)			(33,942	)			(30,480	)			(563	)			(786	)			(919	)
Amortization of prior service benefit		—				—				—				(146	)			(146	)			(146	)
Amortization of net actuarial loss		2,828				763				5,078				560				517				767
Net periodic benefit (credit) cost		(13,502	)			(14,106	)			(7,542	)			371				178				310
Amortization of actuarial loss reclassified from accumulated other comprehensive losses		(174	)			(354	)			(1,320	)			—				—				—
Amortization of prior service benefit reclassified from accumulated other comprehensive losses		—				—				—				146				146				146
Net loss recognized reclassified from accumulated other comprehensive losses		(2,653	)			(409	)			(3,758	)			—				—				—
Plan amendments		3,830				—				—				—				—				—
Actuarial gain (loss)		(1,508	)			59,272				(70,065	)			(1,596	)			(886	)			(77	)
Total recognized in other comprehensive loss (income)		(505	)			58,509				(75,143	)			(1,450	)			(740	)			69
Total recognized in net periodic benefit (credit) cost and other comprehensive loss (income)	$	(14,007	)		$	44,403			$	(82,685	)		$	(1,079	)		$	(562	)		$	379

The estimated amounts in accumulated other comprehensive losses that are expected to be recognized as components of net periodic benefit (credit) cost during 2016 are summarized below:

	Pension Plan And SERP				Postretirement Plan				Total
Amortization of prior service benefit	$	163			$	(146	)		$	17
Amortization of net actuarial loss		3,017				506				3,523
Total	$	3,180			$	360			$	3,540

The weighted-average assumptions used to determine benefit obligations as of December 31, 2015 and 2014 and net periodic benefit (credit) cost for the years 2015, 2014 and 2013 are provided below:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Pension Plan and SERP									Postretirement Plan
Weighted-average assumptions used to determine benefit obligations:	2015			2014						2015			2014
Discount rate	4.73	%		3.99	%					3.25	%		3.00	%
Expected return on plan assets	7.50	%		7.50	%					4.00	%		4.00	%
Weighted-average assumptions used to determine net periodic benefit (credit) loss:	2015			2014			2013			2015			2014			2013
Discount rate	3.99	%		4.73	%		3.98	%		3.00	%		3.45	%		2.75	%
Expected return on plan assets	7.50	%		7.50	%		7.50	%		4.00	%		5.00	%		5.00	%

The following table presents the estimated future benefit payments for the respective plans. The future benefit payments for the Postretirement Plan are net of the federal Medicare subsidy.

	Pension Plan and SERP				Postretirement Plan
	Gross Benefit Amount				Gross Benefit Amount				Medicare Subsidy Payments				Net Benefit Amount
2016	$	30,037			$	2,583			$	(365	)		$	2,218
2017	$	30,157			$	2,401			$	(354	)		$	2,047
2018	$	29,751			$	2,207			$	(344	)		$	1,863
2019	$	30,046			$	2,003			$	(332	)		$	1,671
2020	$	29,791			$	1,803			$	(319	)		$	1,484
2021-2025	$	145,032			$	6,276			$	(963	)		$	5,313

The healthcare cost trend rate for 2015 was 8.50% gradually decreasing to 5.00% in 2023. Assumed healthcare cost trend rates have a significant effect on the amounts reported for the healthcare plan. A 1.00% change in assumed healthcare cost trend rates would have the following effects:

	1% Increase				1% Decrease
Effect of total service and interest cost components of net periodic postretirement healthcare benefit cost	$	13			$	(12	)
Effect on the healthcare component of the accumulated postretirement benefit obligation	$	394			$	(366	)

The expected subsidy from the Medicare Prescription Drug, Improvement and Modernization Act of 2003 reduced the Company’s accumulated postretirement benefit obligation by approximately $2,453 and $3,182 as of December 31, 2015 and 2014, and the net periodic benefit cost by approximately $7, $10 and $19 in fiscal 2015, 2014 and 2013, respectively.

The expected return on the Pension Plan assets for 2015 and 2014 was 7.50%, which was determined by taking into consideration the Company’s analysis of its actual historical investment returns to a broader long-term forecast after adjusting for the target investment allocation and reflecting the current economic environment. The Company’s investment guidelines target investment allocation of 60% equity securities and 40% debt securities. The Pension Plan assets consist primarily of investments in various fixed income and equity funds. Investment guidelines are established with each investment manager. These guidelines provide the parameters within which the investment managers agree to operate, including criteria that determine eligible and ineligible securities, diversification requirements and credit quality standards, where applicable. Investment managers are prohibited from entering into any speculative hedging transactions. The investment objective is to achieve a maximum total return with strong emphasis on preservation of capital in real terms. The domestic equity portion of the total portfolio should range between 40% and 60%. The international equity portion of the total portfolio should range between 10% and 20%. The fixed income portion of the total portfolio should range between 20% and 40%. The asset allocation at December 31, 2015 and 2014, and target allocation for 2016 by asset category are as follows:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Asset Category	Target Allocation			Percentage of Plan Assets
2015			2014
Equity securities	60.00	%		60.00	%		56.80	%
Debt securities	40.00	%		39.60	%		41.30	%
Other	—	%		0.40	%		1.90	%
Total	100.00	%		100.00	%		100.00	%

The Company has used the target investment allocation to derive the expected return as the Company believes this allocation will be retained on an ongoing basis that will be commensurate with the projected cash flows of the plan. The expected return for each investment category within the target investment allocation is developed using average historical rates of return for each targeted investment category, considering the projected cash flow of the Pension Plan. The difference between this expected return and the actual return on plan assets is generally deferred and recognized over subsequent periods through future net periodic benefit costs. The Company believes that the use of the average historical rates of returns is consistent with the timing and amounts of expected contributions to the plans and benefit payments to plan participants. These considerations provide the basis for reasonable assumptions with respect to the expected long-term rate of return on plan assets.

The Company also maintains a voluntary employees beneficiary association plan (the “VEBA Plan”) under Section 501(c)(9) of the Internal Revenue Code to fund the Postretirement Plan. The asset allocation for the VEBA Plan at December 31, 2015 and target allocation for 2016 are 100% in debt securities.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For the year ended December 31, 2015, the Company reclassified $142,117 of Pension Plan assets from Level 2 to Level 1. These assets, primarily consist of mutual funds used to be in the pooled separate accounts, were reinvested in a managed equity account. For assets that were transferred between Level 1 and Level 2 during the year, fair values are ascribed as if the assets had been transferred as of the beginning of the year. There were no transfers among Levels 1, 2 or 3 for the year ended December 31, 2014. Refer to Note 7. Fair Value Measurements for further discussion with respect to fair value hierarchy. The following table summarizes the fair value measurements by level of the Pension Plan and Postretirement Plan assets:

	Total				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
December 31, 2015
Equity
Managed equity accounts (1)	$	215,637			$	215,637			$	—			$	—
Equity — pooled separate account (2)		47,314				—				47,314				—
Equity — partnerships (3)		214				—				—				214
Debt
Fixed income manager — pooled separate account (2)		173,641				—				173,641				—
Fixed income manager — government securities (4)		13,027				13,027				—				—
Other
Cash — pooled separate account (2)		1,819				—				1,819				—
Total	$	451,652			$	228,664			$	222,774			$	214
December 31, 2014
Equity
Managed equity accounts (1)	$	83,690			$	83,690			$	—			$	—
Equity — pooled separate account (2)		186,102				—				186,102				—
Equity — partnerships (3)		240				—				—				240
Debt
Fixed income manager — pooled separate account (2)		196,034				—				196,034				—
Fixed income manager — government securities (4)		15,231				15,231				—				—
Other
Cash — pooled separate account (2)		9,215				—				9,215				—
Total	$	490,512			$	98,921			$	391,351			$	240

(1)	Valued at the closing price of shares for domestic stocks within the managed equity accounts, and valued at the net asset value (“NAV”) of shares for mutual funds at either the closing price reported in the active market or based on yields currently available on comparable securities of issuers with similar credit ratings for corporate bonds held by the Pension Plan in these managed accounts.

(2)	The pooled separate accounts invest in domestic and foreign stocks, bonds and mutual funds. The fair values of these stocks, bonds and mutual funds are publicly quoted and are used in determining the NAV of the pooled separate account, which is not publicly quoted.

(3)

Investments for which readily determinable prices do not exist are valued by the General Partner using either the market or income approach. In establishing the estimated fair value of investments, including those without readily determinable values, the General Partner assumes a reasonable period of time for liquidation of the investment, and takes into consideration the financial condition and operating results of the underlying portfolio company, nature of investment, restrictions on marketability, holding period, market conditions, foreign currency exposures, and other factors the General Partner deems appropriate.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(4)

The fund invested in the U.S. government, its agencies or instrumentalities or securities that are rated AAA by S&P, AAA by Fitch, or Aaa by Moody’s, including but not limited to mortgage securities such as agency and non-agency collateralized mortgage obligations, and other obligations that are secured by mortgages or mortgage backed securities, and valued at the closing price reported in the active market.

The following table sets forth a summary of changes in fair value of the Pension Plan’s Level 3 assets for the years ended December 31:

	Equity-partnerships
	2015				2014
Balance at January 1	$	240			$	635
Realized and unrealized loss on plan assets, net		(26	)			(395	)
Balance at December 31	$	214			$	240

18. Segment Reporting

ASC 280-10, Disclosures About Segments of an Enterprise and Related Information (“ASC 280-10”), establishes standards for reporting information about operating segments. ASC 280-10 requires that a public business enterprise reports financial and descriptive information about its reportable operating segments. Operating segments are components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s President and CEO is identified as the CODM as defined by ASC 280-10. To align with the internal management of the Company’s business operations based on service offerings, the Company is organized into the following two operating segments, which are also the Company’s reportable segments:

Decision Analytics: The Company develops solutions that its customers use to analyze key processes in managing risk. The Company’s combination of algorithms and analytic methods incorporates its proprietary data to generate solutions. In most cases, the Company’s customers integrate the solutions into their models, formulas or underwriting criteria in order to predict potential loss events, ranging from hurricanes and earthquakes to unanticipated healthcare claims. The Company develops catastrophe and extreme event models and offers solutions covering natural and man-made risks, including acts of terrorism. The Company also develops solutions that allow customers to quantify costs after loss events occur. Fraud solutions include data on claim histories, analysis of claims to find emerging patterns of fraud, and identification of suspicious claims in the insurance and healthcare sectors. The Company further leverages predictive models and proprietary data to advise customers to make asset investment and portfolio allocation decisions in the global energy market. On March 11, 2014, the Company sold the Company's mortgage services business, Interthinx. Results of operations for the mortgage services business are reported as a discontinued operation for the year ended December 31, 2014 and for all prior periods presented. Refer to Note 10 for more information.

Risk Assessment: The Company is the leading provider of statistical, actuarial and underwriting data for the U.S. P&C insurance industry. The Company’s databases include cleansed and standardized records describing premiums and losses in insurance transactions, casualty and property risk attributes for commercial buildings and their occupants and fire suppression capabilities of municipalities. The Company uses this data to create policy language and proprietary risk classifications that are industry standards and to generate prospective loss cost estimates used to price insurance policies.

The two aforementioned operating segments represent the segments for which separate discrete financial information is available and upon which operating results are regularly evaluated by the CODM in order to assess performance and allocate resources. The Company uses EBITDA as the profitability measure for making decisions regarding ongoing operations. EBITDA is net income before interest expense, provision for income taxes, depreciation and amortization of fixed and intangible assets. Operating expenses consist of direct and indirect costs principally related to personnel, facilities, software license fees, consulting, travel, and third-party information services. Indirect costs are generally allocated to the segments using fixed rates established by management based upon estimated expense contribution levels and other assumptions that management considers reasonable. The Company does not allocate interest expense and provision for income taxes, since these items are not considered in evaluating the segment’s overall operating performance. The CODM does not evaluate the financial performance of each segment based on assets or geographical locations. On a geographic basis, no individual country outside of the U.S. accounted for 10.0% or more of the Company's consolidated revenues for the years ended December 31, 2015, 2014 and 2013.

The following table provides the Company’s revenue and EBITDA by reportable segment for the years ended December 31, as well as a reconciliation to operating income for all periods presented in the accompanying consolidated statements of operations:

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

		2015												2014												2013
		Decision Analytics				Risk Assessment				Total				Decision Analytics				Risk Assessment				Total				Decision Analytics				Risk Assessment				Total
Revenues	$	1,379,819			$	688,191			$	2,068,010			$	1,096,074			$	650,652			$	1,746,726			$	977,427			$	618,276			$	1,595,703
Expenses:
Cost of revenues (exclusive of items shown separately below)		(603,309	)			(199,965	)			(803,274	)			(508,411	)			(208,187	)			(716,598	)			(427,978	)			(194,545	)			(622,523	)
Selling, general and administrative		(230,844	)			(81,846	)			(312,690	)			(153,453	)			(73,853	)			(227,306	)			(151,557	)			(77,425	)			(228,982	)
Investment income and others, net		16,885				118				17,003				—				158				158				(16	)			625				609
EBITDA from discontinued operations		—				—				—				55,588				—				55,588				15,466				—				15,466
Gain on derivative instruments		85,187				—				85,187				—				—				—				—				—				—
EBITDA		647,738				406,498				1,054,236				489,798				368,770				858,568				413,342				346,931				760,273
Depreciation and amortization of fixed assets		(94,834	)			(25,786	)			(120,620	)			(64,826	)			(20,680	)			(85,506	)			(51,739	)			(14,451	)			(66,190	)
Amortization of intangible assets		(94,511	)			(353	)			(94,864	)			(56,517	)			(353	)			(56,870	)			(63,388	)			(353	)			(63,741	)
Investment income and others, net		(16,885	)			(118	)			(17,003	)			—				(158	)			(158	)			16				(625	)			(609	)
EBITDA from discontinued operations		—				—				—				(55,588	)			—				(55,588	)			(15,466	)			—				(15,466	)
Gain on derivative instruments		(85,187	)			—				(85,187	)			—				—				—				—				—				—
Operating income	$	356,321			$	380,241				736,562			$	312,867			$	347,579				660,446			$	282,765			$	331,502				614,267
Investment income and others, net										17,003												158												609
Gain on derivative instruments										85,187												—												—
Interest expense										(121,316	)											(69,984	)											(76,136	)
Income from continuing operations before income taxes									$	717,436											$	590,620											$	538,740

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Operating segment revenue by type of service is provided below for the years ended December 31:

	2015				2014				2013
Decision Analytics
Insurance	$	647,161			$	598,757			$	539,150
Financial services		116,556				96,763				81,113
Healthcare		307,291				315,628				271,538
Energy and specialized markets		308,811				84,926				85,626
Total Decision Analytics		1,379,819				1,096,074				977,427
Risk Assessment
Industry-standard insurance programs		524,606				495,065				471,130
Property-specific rating and underwriting information		163,585				155,587				147,146
Total Risk Assessment		688,191				650,652				618,276
Total consolidated revenues	$	2,068,010			$	1,746,726			$	1,595,703

Long-lived assets by country are provided below:

	2015				2014
Long-lived assets:
U.S.	$	2,200,417			$	1,893,660
U.K.		2,799,392				37,219
Other countries		11,549				29,968
Total long-lived assets	$	5,011,358			$	1,960,847

19. Related Parties:

The Company considers its stockholders that own more than 5% of the outstanding stock within the class to be related parties as defined within ASC 850, Related Party Disclosures. The Company had no related parties owning more than 5% of the entire class of stock as of December 31, 2015 and 2014.

In addition, the Company had no revenues from related parties for the years ended December 31, 2015, 2014 and 2013.

20. Commitments and Contingencies:

The Company’s operations are conducted on leased premises. Approximate minimum rentals under long-term noncancelable leases for all leased premises, computer equipment and automobiles are as follows:

Years Ending	Operating Leases				Capital Leases
2016	$	46,245			$	4,976
2017		45,466				1,457
2018		37,398				641
2019		37,714				220
2020		40,276				53
2021 and thereafter		239,465				31
Net minimum lease payments	$	446,564				7,378
Less amount representing interest						250
Present value of net minimum lease capital payments					$	7,128

Most of the leases require payment of property taxes and utilities and, in certain cases, contain renewal options. Operating leases consist of office space. Capital leases consist of computer equipment, office equipment, and leased automobiles. Rent expense on operating leases approximated $45,423, $35,149 and $32,186 in 2015, 2014 and 2013, respectively.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In addition, the Company is a party to legal proceedings with respect to a variety of matters in the ordinary course of business, including the matters described below. With respect to ongoing matters, the Company is unable, at the present time, to determine the ultimate resolution of or provide a reasonable estimate of the range of possible loss attributable to these matters or the impact they may have on the Company’s results of operations, financial position or cash flows. This is primarily because the matters are generally in early stages and discovery has either not commenced or been completed. Although the Company believes it has strong defenses and intends to vigorously defend these matters, the Company could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations, financial position or cash flows.

Intellicorp Records, Inc. Litigation

On September 9, 2015, the Company was served with a nationwide putative class action complaint filed in the Court of Common Pleas, Cuyahoga County in Ohio naming the Company’s subsidiary Intellicorp Records, Inc. (“Intellicorp.”) titled Sherri Legrand v. Intellicorp Records, Inc. and The Cato Corporation et al. Defendants removed the case to the United States District Court for the Northern District of Ohio on October 8, 2015. Plaintiffs filed their First Amended Class Action Complaint on November 5, 2015 (“Amended Complaint”), which like the prior complaint claims violations of the Fair Credit Reporting Act and alleges two putative class claims against Intellicorp, namely (i) a section 1681k(a) claim on behalf of all individuals who were the subjects of consumer reports furnished by Intellicorp which contained public record information in the “Government Sanctions” section of the report on or after September 4, 2013 and continuing through the date the class list is prepared and (ii) a section 1681e(b) claim on behalf of all individuals who were the subjects of consumer reports furnished by Intellicorp which contained public record information in the “Government Sanctions” section of the report where the address or social security number of the subject of the report do not match the social security number or address contained in the government database on or after September 4, 2013 and continuing through the date the class list is prepared. Count I of the Amended Complaint alleges that defendant Cato violated the FCRA by procuring consumer reports on the plaintiff and other class members without making the stand-alone disclosure required by FCRA section 1681b(b)(2)(A)(i). Counts II and III allege that Intellicorp violated the FCRA section 1681e (b) by failing to follow reasonable procedures to assure maximum accuracy of the adverse information included in its consumer reports and FCRA section 1681k (a) by failing to maintain strict procedures to assure that the public record information reported which was likely to have an adverse effect on the consumer was complete and up to date, respectively. The Amended Complaint alleges that defendants acted willfully and seeks statutory damages for the classes in an amount not less than one hundred dollars and not more than one thousand dollars per violation, punitive damages, equitable relief, costs and attorney’s fees.

At this time, it is not possible to determine the ultimate resolution of, or estimate the liability related to this matter.

On February 1, 2016, the Company was served with a nationwide putative class action complaint filed in the United States District Court for the Eastern District of North Carolina naming the Company’s subsidiary Intellicorp Records, Inc. (“Intellicorp.”) The complaint titled Frank DiSalvo v. Intellicorp Records, Inc. claims violations of the Fair Credit Reporting Act and alleges a section 1681b(b)(1) claim on behalf of all individuals residing in the United States who were the subjects of consumer reports furnished by Intellicorp for employment purposes within the period prescribed by the FCRA, 15 U.S.C. Section 1681p without first obtaining from the user of the report a certification that such user had complied with the obligations under Section 1681b(b)(2) as to the subject of the consumer report. The class complaint alleges that Intellicorp violated the FCRA section 1681b(b)(1) by failing to obtain the required specific certification from its customers to whom Intellicorp furnished consumer reports as to each consumer report provided before providing the specific consumer report that was the subject of the certification. The complaint alleges that the violations were willful or in the alternative negligent and seeks statutory damages for the class in an amount not less than one hundred dollars and not more than one thousand dollars per violation, punitive damages, equitable relief, costs and attorney’s fees.

At this time, it is not possible to determine the ultimate resolution of, or estimate the liability related to this matter.

Xactware Solutions, Inc. Patent Litigation

On October 8, 2015, the Company was served with a summons and complaint in an action titled Eagle View Technologies, Inc. and Pictometry International Group, Inc. v. Xactware Solutions, Inc. and Verisk Analytics, Inc. filed in the United States District Court for the District of New Jersey. The complaint alleges that the Company’s Roof InSight, Property InSight and Aerial Sketch products infringe seven patents owned by Eagle View and Pictometry namely, Patent Nos. 436, 840, 152, 880, 770, 732 and 454 (collectively the “Patents-in-Suit.”) On November 30, 2015, plaintiffs filed a First Amended Complaint (“Amended Complaint”) adding Patent Nos. 376 and 737 to the Patents in Suit. The Amended Complaint seeks an entry of judgment by the Court that defendants have and continue to directly infringe and/or indirectly infringe, by way of inducement the Patents in Suit, permanent injunctive relief, damages, costs and attorney’s fees.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At this time, it is not possible to determine the ultimate resolution of, or estimate the liability related to this matter.

Interthinx, Inc. Litigation

On April 20, 2015, the Company was served with a putative class action titled John Weber v. Interthinx, Inc. and Verisk Analytics, Inc. The plaintiff, a former employee of the Company’s former subsidiary Interthinx, Inc. in Missouri, filed the class action complaint in the United States District Court for the Eastern District of Missouri on behalf of all review appraisers and individuals holding comparable positions with different titles who were employed by Interthinx for the last three years nationwide and who were not paid overtime wages. The class complaint claims that the review appraiser employees were misclassified as exempt employees and, as a result, were denied certain wages and benefits that would have been received if they were properly classified as non-exempt employees. It pleads a Collective Action under section 216(b) of the Fair Labor Standards Act for unpaid overtime and seeks overtime wages, liquidated damages, declaratory relief, interest, costs and attorneys’ fees.

On March 11, 2014, the Company sold 100 percent of the stock of Interthinx, Inc. At this time, it is not possible to determine the ultimate resolution of, or estimate the liability related to this matter.

MediConnect Global, Inc. Litigation

On October 11, 2013, the Company was served with a summons and complaint in an action titled Naveen Trehan v. MediConnect Global, Inc., Amy Anderson and Verisk Health, Inc. filed on October 9, 2013 in the United States District Court for the District of Utah. The complaint, brought by a former minority shareholder of the Company’s subsidiary, MediConnect Global, Inc., arises from MediConnect’s buyout of Naveen Trehan and his family members’ shares on October 15, 2010. Plaintiff claims that the sale of the shares was based on MediConnect’s representations concerning third parties that had expressed interest in an acquisition, merger or investment in MediConnect at that time. Plaintiff claims that MediConnect did not disclose the Company, which purchased MediConnect on March 23, 2012, as a possible suitor. The complaint alleges four causes of action: (1) breach of fiduciary duty against MediConnect and Amy Anderson for failure to disclose the Company's interest in acquiring, merging with or investing in MediConnect prior to the buyout of his shares; (2) fraud against Amy Anderson and MediConnect for intentionally providing false information to plaintiff with the purpose of inducing him to agree to sell his shares at an artificially low price; (3) negligent misrepresentation against Amy Anderson and MediConnect for their negligent failure to discover and disclose the Company's interest in acquiring MediConnect prior to the buyout of plaintiff’s shares and (4) a violation of SEC Rule 10b-5 against Amy Anderson and MediConnect for defrauding plaintiff and failing to disclose material information in connection with the sale of securities. The complaint seeks joint and several recoveries from Amy Anderson and MediConnect for compensatory damages, punitive damages, and disgorgement of all profits earned through the investment of plaintiff’s funds, attorneys’ fees, interest and an order from the court that plaintiff’s funds be held in a constructive trust. On November 2, 2015, the court issued a judgement in favor of the defendants and dismissed all claims with prejudice. Plaintiff filed a Notice of Appeal on November 30, 2015.

At this time, it is not possible to determine the ultimate resolution of, or estimate the liability related to this matter.

Insurance Services Office, Inc. Litigation

On August 1, 2014, the Company was served with an Amended Complaint filed in the United States District Court for the District of Colorado titled Snyder, et. al. v. ACORD Corp., et al. The action is brought by nineteen individual plaintiffs, on their own behalf and on behalf of a putative class, against more than 120 defendants, including the Company and its subsidiary, Insurance Services Office, Inc. ("ISO"). Except for the Company, ISO and the defendant Acord Corporation, which provides standard forms to assist in insurance transactions, most of the other defendants are property and casualty insurance companies that plaintiffs claim conspired to underpay property damage claims. Plaintiffs claim that the Company and ISO, along with all of the other defendants, violated state and federal antitrust and racketeering laws as well as state common law. On September 8, 2014, the Court entered an Order striking the Amended Complaint and granting leave to the plaintiffs to file a new complaint. On October 13, 2014, plaintiffs filed their Second Amended Complaint, which was re-filed by plaintiffs to correct errors as the Third Amended Complaint. The Third Amended Complaint similarly alleges that the defendants conspired to underpay property damage claims, but does not specifically allege what role the Company or ISO played in the alleged conspiracy. It claims that the Company and ISO, along with all of the other defendants, violated state and federal antitrust and racketeering laws as well as state common law, and seeks all available relief including, injunctive, statutory, actual and punitive damages as well as attorneys’ fees. On January 15, 2016, the court granted defendants’ motions to dismiss all claims asserted in the Third Amended Complaint and plaintiffs filed a Motion for Reconsideration on February 16, 2016.

At this time, it is not possible to determine the ultimate resolution of, or estimate the liability related to this matter.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On February 19, 2016, the Company was served with a notice of a summons and complaint filed on January 29, 2016 against the Company’s subsidiary Insurance Services Office, Inc. (“ISO”) in the U.S. District Court for the District of Connecticut titled Halloran et al. v. Harleysville Preferred Insurance Co. et al. The putative class action is brought on behalf of four policyholders and similarly situated policyholders in eastern Connecticut who complain that their homeowner’s insurance carriers denied their claims for the deterioration and collapse of their foundations caused by defective concrete. The lawsuit alleges a breach of contract claim against insurers Harleysville, Nationwide and Kemper and an anticipatory breach of contract claim against insurer MetLife. It also alleges that ISO as the drafter of the standardized policy language at issue participated with over 100 insurance companies to deny claims for defective concrete and collapsed foundations and violated the Connecticut Unfair Trade Practices (CUTPA) and the Connecticut Unfair Insurance Practices Act (CUIPA). The plaintiffs ask that the Court certify a class of persons similarly situated and seek recovery from over 100 insurance carriers equal to the cost for the replacement of their concrete foundations, injunctive relief, attorneys’ fees, costs and interest.

At this time, it is not possible to determine the ultimate resolution of, or estimate the liability related to this matter.

21. Subsequent Events:

The Company continues to explore strategic alternatives for the Healthcare business within the Decision Analytics operating segment as it initially announced in October 2015. There is no assurance that the exploration of strategic alternatives will result in any transaction.

---

Schedule II

Valuation and Qualifying Accounts and Reserves

For the Years Ended December 31, 2015, 2014 and 2013

(In thousands)

Description		Balance at Beginning of Year				Charged to Expenses (1)				Deductions— Write-offs(2)				Adjustment (3)				Balance at End of Year
Year ended December 31, 2015
Allowance for doubtful accounts	$	5,995			$	1,305			$	(2,230	)		$	—			$	5,070
Valuation allowance for income taxes	$	789			$	175			$	(92	)		$	—			$	872
Year ended December 31, 2014
Allowance for doubtful accounts	$	4,415			$	1,814			$	(161	)		$	(73	)		$	5,995
Valuation allowance for income taxes	$	741			$	48			$	—			$	—			$	789
Year Ended December 31, 2013
Allowance for doubtful accounts	$	4,753			$	2,468			$	(2,284	)		$	(522	)		$	4,415
Valuation allowance for income taxes	$	595			$	673			$	(527	)		$	—			$	741

(1)	Primarily additional reserves for bad debts

(2)	Primarily accounts receivable balances written off, net of recoveries, and the expiration of loss carryforwards

(3)	Related to discontinued operations

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 23, 2016.

	VERISK ANALYTICS, INC. (Registrant)
	/S/ Scott G. Stephenson
	Scott G. Stephenson
	President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 23, 2016.

Signature		Capacity
/S/ SCOTT G. STEPHENSON		President and Chief Executive Officer (principal executive officer and director)
Scott G. Stephenson
/S/ MARK V. ANQUILLARE		Executive Vice President and Chief Financial Officer (principal financial officer and principal accounting officer)
Mark V. Anquillare
/S/ FRANK J. COYNE		Non- Executive Chairman of the Board of Directors
Frank J. Coyne
/S/ J. HYATT BROWN		Director
J. Hyatt Brown
/S/ BRUCE E. HANSEN		Director
Bruce E. Hansen
/S/ CHRISTOPHER M. FOSKETT		Director
Christopher M. Foskett
/S/ CONSTANTINE P. IORDANOU		Director
Constantine P. Iordanou
/S/ JOHN F. LEHMAN, JR.		Director
John F. Lehman, Jr.
/S/ SAMUEL G. LISS		Director
Samuel G. Liss
/S/ ANDREW G. MILLS		Director
Andrew G. Mills
/S/ THOMAS F. MOTAMED		Director
Thomas F. Motamed
/S/ THERESE M. VAUGHAN		Director
Therese M. Vaughan
/S/ DAVID B. WRIGHT		Director
David B. Wright

EXHIBIT INDEX

Exhibit Number	Description
2.1	Deed, dated as of March 10, 2015, among Verisk Analytics, Inc. and the sellers named therein, incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K, dated March 11, 2015.
3.1	Amended and Restated Certificate of Incorporation, incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, dated May 29, 2015.
3.2	Amended and Restated By-Laws, incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, dated May 29, 2015.
4.1	Form of Common Stock Certificate, incorporated herein by reference to Exhibit 4.1 to Amendment No. 6 to the Company’s Registration Statement on Form S-1, dated September 21, 2009.
4.2	Senior Notes Indenture, dated as of April 6, 2011, among Verisk Analytics, Inc., the guarantors named therein and Wells Fargo Bank, National Association, as Trustee, incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, dated April 6, 2011.
4.3	First Supplemental Indenture, dated as of April 6, 2011, among Verisk Analytics, Inc., the guarantors named therein and Wells Fargo Bank, National Association, as Trustee, incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, dated April 6, 2011.
4.4	Second Supplemental Indenture, dated as of December 8, 2011, among Verisk Analytics, Inc., the guarantors named therein and Wells Fargo Bank, National Association, as Trustee, incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, dated December 8, 2011.
4.5	Third Supplemental Indenture, dated as of September 12, 2012, among Verisk Analytics, Inc., the guarantors named therein and Wells Fargo Bank, National Association, as Trustee, incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, dated September 12, 2012.
4.6	Fifth Supplemental Indenture, dated as of May 15, 2015, between Verisk Analytics, Inc. and Wells Fargo Bank, National Association, as Trustee, incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, dated May 15, 2015.
10.1	401(k) Savings Plan and Employee Stock Ownership Plan, incorporated herein by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1, dated August 12, 2008.
10.2	Verisk Analytics, Inc. 2009 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.2 to Amendment No. 6 to the Company’s Registration Statement on Form S-1, dated September 21, 2009.

Exhibit Number	Description
10.3	Form of Letter Agreement, incorporated herein by reference to Exhibit 10.3 to Amendment No. 1 to the Company’s Registration Statement on Form S-1, dated October 7, 2008.
10.4	Form of Master License Agreement and Participation Supplement, incorporated herein by reference to Exhibit 10.4 to Amendment No. 1 to the Company’s Registration Statement on Form S-1, dated October 7, 2008.
10.5	Schedule of Master License Agreements Substantially Identical in All Material Respects to the Form of Master License Agreement and Participation Supplement, incorporated herein by reference to Exhibit 10.5 to Amendment No. 2 to the Company’s Registration Statement on Form S-1, dated November 20, 2008.
10.6	Form of Change of Control Severance Agreement, incorporated herein by reference to Exhibit 10.8 to Amendment No. 6 to the Company’s Registration Statement on Form S-1, dated September 21, 2009.
10.7	Insurance Services Office, Inc. 1996 Incentive Plan and Form of Stock Option Agreement thereunder, incorporated herein by reference to Exhibit 10.9 to Amendment No. 7 to the Company’s Registration Statement on Form S-1, dated September 29, 2009.
10.8	Form of Stock Option Award Agreement under the Verisk Analytics, Inc. 2009 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, dated November 16, 2009.
10.9	Insurance Services Office, Inc. Supplemental Cash Balance Plan dated January 1, 2009 as amended by the Amendment to the Insurance Services Office, Inc. Supplemental Cash Balance Plan dated February 10, 2012 incorporated by reference to Exhibit 10.13 to the Company's annual report on Form 10-K dated February 25, 2014.
10.10	Insurance Services Office, Inc. Supplemental Executive Retirement Savings Plan dated January 1, 2009 incorporated by reference to Exhibit 10.14 to the Company's annual report on Form 10-K dated February 25, 2014.
10.11	Verisk Analytics, Inc. 2013 Equity Incentive Plan, incorporated herein by reference to Appendix A to the Company's Proxy Statement on Schedule 14A, dated April 1, 2013.
10.12	Form of Stock Option Award Agreement under Verisk Analytics, Inc. 2013 Equity Incentive Plan, incorporated herein by reference to Exhibit 99.2 to Company’s Registration Statement on Form S-8 dated May 15, 2013.
10.13	Form of Restricted Stock Award Agreement under Verisk Analytics, Inc. 2013 Equity Incentive Plan, incorporated herein by reference to Exhibit 99.3 to Company’s Registration Statement on Form S-8 dated May 15, 2013.
10.14	Second Amended and Restated Credit Agreement dated April 22, 2015 among Verisk Analytics, Inc., as borrower, and the lenders and agents party thereto, incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 24, 2015.
10.15	First Amendment to Second Amended and Restated Credit Agreement dated July 24, 2015 among Verisk Analytics, Inc., as borrower, and the lenders and agents party thereto, incorporated herein by reference to Exhibit 10.2 to the Company’s quarterly report on Form 10-Q dated July 28, 2015.

Exhibit Number	Description
21.1	Subsidiaries of the Registrant.*
23.1	Consent of Deloitte & Touche LLP.*
31.1	Certification of the Chief Executive Officer of Verisk Analytics, Inc. pursuant to Rule 13a-14 under the Securities Exchange Act of 1934.*
31.2	Certification of the Chief Financial Officer of Verisk Analytics, Inc. pursuant to Rule 13a-14 under the Securities Exchange Act of 1934.*
32.1	Certification of the Chief Executive Officer and Chief Financial Officer of Verisk Analytics, Inc. pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS	XBRL Instance Document.*
101.SCH	XBRL Taxonomy Extension Schema.*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.*
101.DEF	XBRL Taxonomy Definition Linkbase.*
101.LAB	XBRL Taxonomy Extension Label Linkbase.*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.*

*	Filed herewith.