Item 8. Consolidated Financial Statements and Supplementary Data

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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, 2020 and 2019 and for the Years Ended December 31, 2020, 2019 and 2018.
Report of Independent Registered Public Accounting Firm	46
Consolidated Balance Sheets	48
Consolidated Statements of Operations	49
Consolidated Statements of Comprehensive Income	50
Consolidated Statements of Changes in Stockholders' Equity	51
Consolidated Statements of Cash Flows	52
Notes to Consolidated Financial Statements	54
Financial Statements Schedule
Schedule II, Valuation and Qualifying Accounts and Reserves	89

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Verisk Analytics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Verisk Analytics, Inc. and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on 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, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill - Energy and Specialized Markets Reportable Segment - Refer to Notes 2 and 12 to the financial statements

Critical Audit Matter Description

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. The Company determines the fair value of its reporting units using the discounted cash flow model and the market approach. The determination of fair value using the discounted cash flow model requires management to make significant estimates and assumptions related to forecasts of future revenues, EBITDA margins, and the discount rate. The determination of fair value using the market approach requires management to make significant estimates and assumptions related to the selection of revenue and EBITDA multiples. Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both. The goodwill balance was $4,108.1 million as of December 31, 2020 of which $2,287.0 million was attributable to a reporting unit within the Energy & Specialized Markets reportable segment.

Given the significant judgments made by management to estimate the fair value of the reporting unit within the Energy and Specialized Markets reportable segment including management’s judgments in selecting significant assumptions to forecast future revenues, EBITDA margins, and the discount rate, as well as the selection of revenue and EBITDA multiples, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions for the reporting unit within the Energy and Specialized Markets reportable segment required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter was addressed in the Audit

Our audit procedures related to forecasts of future revenue and EBITDA margin, selection of the discount rate used within the income approach and selection of the Revenue and EBITDA multiples used in the market approach for a reporting unit within the Energy & Specialized Markets reportable segment included the following, among others:

	•	We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of the reporting unit within the Energy and Specialized Markets reportable segment such as controls related to management’s selection of the discount rate, forecasts of future revenue and Revenue and EBITDA multiples.
	•	We evaluated management’s ability to accurately forecast future revenues and EBITDA margins by comparing actual results to management’s historical forecasts.
	•	We evaluated the reasonableness of management’s revenue and EBITDA margin forecasts by comparing the forecasts to:

	◦	Historical revenues and EBITDA margins.
	◦	Internal communications to management and the Board of Directors.
	◦	Forecasted information included in Company press releases, as well as in analyst and industry reports for the Company and certain peer companies.

	•	With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodologies (2) Revenue and EBITDA multiples and (3) the discount rate by:

	◦	Testing the source information underlying the determination of the discount rate, the selection of the Revenue and EBITDA multiples and the mathematical accuracy of the calculations.
	◦	Developing a range of independent estimates and comparing those to the discount rate selected by management.

/s/ Deloitte & Touche LLP

Parsippany, New Jersey

February 23, 2021

We have served as the Company's auditor since 2001.

VERISK ANALYTICS, INC.

CONSOLIDATED BALANCE SHEETS

As of December 31, 2020 and 2019

	*2020*			*2019*
	(in millions, except par value and number of shares)
ASSETS:
Current assets:
Cash and cash equivalents	$	218.8		$	184.6
Accounts receivable, net		432.4			441.6
Prepaid expenses		81.2			60.9
Income taxes receivable		25.4			25.9
Other current assets		36.4			17.8
Current assets held for sale		—			14.1
Total current assets		794.2			744.9

Noncurrent assets:
Fixed assets, net		632.3			548.1
Operating lease right-of-use assets, net		267.6			218.6
Intangible assets, net		1,384.8			1,398.9
Goodwill		4,108.1			3,864.3
Deferred income tax assets		9.1			9.8
Other noncurrent assets		365.7			159.8
Noncurrent assets held for sale		—			110.8
Total assets	$	7,561.8		$	7,055.2

LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable and accrued liabilities	$	406.7		$	375.0
Acquisition-related liabilities		0.6			111.2
Short-term debt and current portion of long-term debt		514.3			499.4
Deferred revenues		466.7			440.1
Operating lease liabilities		38.7			40.6
Income taxes payable		3.8			6.8
Current liabilities held for sale		—			18.7
Total current liabilities		1,430.8			1,491.8

Noncurrent liabilities:
Long-term debt		2,699.6			2,651.6
Deferred income tax liabilities		396.9			356.0
Operating lease liabilities		271.6			208.1
Other noncurrent liabilities		64.7			48.8
Noncurrent liabilities held for sale		—			38.1
Total liabilities		4,863.6			4,794.4

Commitments and contingencies (Note 21)
Stockholders’ equity:
Common stock, $.001 par value; 2,000,000,000 shares authorized; 544,003,038 shares issued; 162,817,526 and 163,161,564 shares outstanding, respectively		0.1			0.1
Additional paid-in capital		2,490.9			2,369.1
Treasury stock, at cost, 381,185,512 and 380,841,474 shares, respectively		(4,179.3	)		(3,849.9	)
Retained earnings		4,762.2			4,228.4
Accumulated other comprehensive loss		(375.7	)		(486.9	)
Total stockholders’ equity		2,698.2			2,260.8
Total liabilities and stockholders’ equity	$	7,561.8		$	7,055.2

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, 2020, 2019 and 2018

	*2020*			*2019*			*2018*
	(in millions, except per share amounts and number of shares)
Revenues	$	2,784.6		$	2,607.1		$	2,395.1
Operating expenses:
Cost of revenues (exclusive of items shown separately below)		993.9			976.8			886.2
Selling, general and administrative		413.9			603.5			378.7
Depreciation and amortization of fixed assets		192.2			185.7			165.3
Amortization of intangible assets		165.9			138.0			130.8
Other operating (income) loss		(19.4	)		6.2			—
Total operating expenses		1,746.5			1,910.2			1,561.0
Operating income		1,038.1			696.9			834.1
Other income (expense):
Investment (loss) income and others, net		(2.4	)		(1.7	)		15.3
Interest expense		(138.2	)		(126.8	)		(129.7	)
Total other expense, net		(140.6	)		(128.5	)		(114.4	)
Income before income taxes		897.5			568.4			719.7
Provision for income taxes		(184.8	)		(118.5	)		(121.0	)
Net income	$	712.7		$	449.9		$	598.7
Basic net income per share	$	4.38		$	2.75		$	3.63
Diluted net income per share	$	4.31		$	2.70		$	3.56
Weighted average shares outstanding:
Basic		162,610,586			163,535,438			164,808,110
Diluted		165,320,709			166,560,115			168,297,836

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, 2020, 2019 and 2018

	*2020*		*2019*		*2018*
	(in millions)
Net income	$	712.7	$	449.9	$	598.7
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment		107.9		88.4		(154.1	)
Pension and postretirement adjustment		3.3		16.6		(24.8	)
Total other comprehensive income (loss)		111.2		105.0		(178.9	)
Comprehensive income	$	823.9	$	554.9	$	419.8

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, 2020, 2019 and 2018

		*Par Value*		*Additional Paid-in Capital*			*Treasury Stock*			*Retained Earnings*			*Accumulated Other Comprehensive Losses*			*Total Stockholders’ Equity*
		(in millions, except for share data)
Balance as of January 1, 2018	544,003,038	$	0.1	$	2,180.1		$	(3,150.5	)	$	3,308.0		$	(412.3	)	$	1,925.4
Adjustments to opening retained earnings related to Topic 606 and ASU 2016-01	—		—		—			—			35.9			(0.7	)		35.2
Net income	—		—		—			—			598.7			—			598.7
Other comprehensive loss	—		—		—			—			—			(178.9	)		(178.9	)
Treasury stock acquired (3,882,467 shares)	—		—		—			(438.6	)		—			—			(438.6	)
Stock options exercised (2,752,735 shares transferred from treasury stock)	—		—		66.8			24.0			—			—			90.8
Restricted stock lapsed (176,610 shares transferred from treasury stock)	—		—		(1.5	)		1.5			—			—			—
Stock-based compensation	—		—		38.5			—			—			—			38.5
Net share settlement from restricted stock awards (35,637 shares withheld for tax settlement)	—		—		(3.7	)		—			—			—			(3.7	)
Other stock issuances (44,602 shares transferred from treasury stock)	—		—		2.8			0.4			—			—			3.2
Balance as of December 31, 2018	544,003,038		0.1		2,283.0			(3,563.2	)		3,942.6			(591.9	)		2,070.6
Net income	—		—		—			—			449.9			—			449.9
Common stock dividend (1)	—		—		—			—			(164.1	)		—			(164.1	)
Other comprehensive income	—		—		—			—			—			105.0			105.0
Treasury stock acquired (2,178,151 shares)	—		—		—			(300.0	)		—			—			(300.0	)
Stock options exercised (1,131,970 shares transferred from treasury stock)	—		—		46.9			11.0			—			—			57.9
Restricted stock lapsed (192,109 shares transferred from treasury stock)	—		—		(1.8	)		1.8			—			—			—
Stock-based compensation	—		—		42.7			—			—			—			42.7
Net share settlement from restricted stock awards (40,578 shares withheld for tax settlement)	—		—		(5.5	)		—			—			—			(5.5	)
Other stock issuances (45,226 shares transferred from treasury stock)	—		—		3.8			0.5			—			—			4.3
Balance as of December 31, 2019	544,003,038		0.1		2,369.1			(3,849.9	)		4,228.4			(486.9	)		2,260.8
Adjustment to opening retained earnings related to Topic 326	—		—		—			—			(2.4	)		—			(2.4	)
Net income	—		—		—			—			712.7			—			712.7
Common stock dividend (1)	—		—		—			—			(176.5	)		—			(176.5	)
Other comprehensive income	—		—		—			—			—			111.2			111.2
Treasury stock acquired (2,155,084 shares)	—		—		—			(348.8	)		—			—			(348.8	)
Stock options exercised (1,623,740 shares transferred from treasury stock)	—		—		74.9			17.3			—			—			92.2
Restricted stock lapsed (142,362 shares transferred from treasury stock)	—		—		(1.5	)		1.5			—			—			—
Stock-based compensation	—		—		47.6			—			—			—			47.6
Net share settlement from restricted stock awards (27,890 shares withheld for tax settlement)	—		—		(4.1	)		—			—			—			(4.1	)
Other stock issuances (44,944 shares transferred from treasury stock)	—		—		4.9			0.6			—			—			5.5
Balance as of December 31, 2020	544,003,038	$	0.1	$	2,490.9		$	(4,179.3	)	$	4,762.2		$	(375.7	)	$	2,698.2

(1) Refer to Note 16. Stockholders' Equity for discussion related to quarterly cash dividends declared per share

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, 2020, 2019 and 2018

	*2020*			*2019*			*2018*
	(In millions)
Cash flows from operating activities:
Net income	$	712.7		$	449.9		$	598.7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of fixed assets		192.2			185.7			165.3
Amortization of intangible assets		165.9			138.0			130.8
Amortization of debt issuance costs and original issue discount, net of original issue premium		1.8			3.9			4.2
Provision for doubtful accounts		13.1			7.2			5.6
Realized gain on subordinated promissory note		—			—			(12.3	)
Other operating (income) expenses		(19.4	)		6.2			—
Stock-based compensation expense		47.6			42.7			38.5
Realized (gain) loss on available-for-sale securities, net		—			(0.9	)		0.1
Deferred income taxes		31.1			(29.3	)		18.3
Loss on disposal of fixed assets, net		0.6			0.3			0.3
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable		1.8			(70.3	)		(17.4	)
Prepaid expenses and other assets		(66.5	)		(19.7	)		(28.2	)
Operating lease right-of-use assets, net		43.1			51.3			—
Income taxes		(0.5	)		15.0			(2.9	)
Acquisition-related liabilities		(77.0	)		70.4			9.7
Accounts payable and accrued liabilities		24.3			150.9			58.1
Deferred revenues		21.2			11.4			0.8
Operating lease liabilities		(29.6	)		(49.5	)		—
Other liabilities		5.8			(6.9	)		(35.2	)
Net cash provided by operating activities		1,068.2			956.3			934.4
Cash flows from investing activities:
Acquisitions, net of cash acquired of $11.1 million, $10.4 million and $3.1 million, respectively		(275.8	)		(699.2	)		(138.2	)
Proceeds from sale of assets		23.1			—			—
Investments in non-public companies		(94.8	)		—			—
Escrow funding associated with acquisitions		(9.3	)		(4.5	)		(14.9	)
Proceeds from subordinated promissory note		—			—			121.4
Capital expenditures		(246.8	)		(216.8	)		(231.0	)
Other investing activities, net		7.8			(7.4	)		(2.7	)
Net cash used in investing activities		(595.8	)		(927.9	)		(265.4	)

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, 2020, 2019 and 2018

	*2020*			*2019*			*2018*
	(in millions)
Cash flows from financing activities:
(Repayment) proceeds of short-term debt, net		(445.0	)		80.0			(300.0	)
Repayments of current portion of long-term debt		—			(250.0	)		—
Proceeds from issuance of long-term debt, inclusive of original issue premium and net of original issue discount		494.8			619.7			—
Proceeds from issuance of short-term debt with original maturities greater than three months		20.0			—			—
Repayment of short-term debt with original maturities greater than three months		(20.0	)		—			—
Payment of debt issuance costs		(5.7	)		(6.3	)		—
Repurchases of common stock		(348.8	)		(300.0	)		(438.6	)
Net share settlement of taxes from restricted stock awards		(4.1	)		(5.5	)		(3.7	)
Payment of contingent liability related to acquisition		(34.2	)		—			—
Proceeds from stock options exercised		88.0			52.4			87.3
Dividends paid		(175.8	)		(163.5	)		—
Other financing activities, net		(14.4	)		(15.9	)		(14.8	)
Net cash (used in) provided by financing activities		(445.2	)		10.9			(669.8	)
Effect of exchange rate changes		6.7			6.1			(2.0	)
Net increase (decrease) in cash and cash equivalents, including cash classified within current assets held for sale		33.9			45.4			(2.8	)
Less: Increase (decrease) in cash classified within current assets held for sale		0.3			(0.3	)		—
Increase (decrease) in cash and cash equivalents		34.2			45.1			(2.8	)
Cash and cash equivalents, beginning of period		184.6			139.5			142.3
Cash and cash equivalents, end of period	$	218.8		$	184.6		$	139.5
Supplemental disclosures:
Income taxes paid	$	156.5		$	139.8		$	103.2
Interest paid	$	134.3		$	119.9		$	125.2
Noncash investing and financing activities:
Deferred tax liability established on date of acquisitions	$	13.0		$	43.4		$	5.6
Right-of-use assets obtained in exchange for new operating lease liabilities	$	—		$	247.6		$	—
Finance lease additions	$	30.9		$	20.2		$	21.3
Operating lease additions, net of terminations	$	87.8		$	13.7		$	—
Tenant improvements included in Operating lease right-of-use assets, net	$	—		$	1.7		$	0.3
Gain on sale of assets included in other current and long-term assets	$	3.5		$	—		$	—
Fixed assets included in accounts payable and accrued liabilities	$	0.8		$	1.6		$	0.3
Non-cash contribution of assets for a non-public company	$	65.9		$	—		$	—
Dividend payable included in other liabilities	$	0.7		$	0.6		$	—

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

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

1. Organization:

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

We were 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 property and casualty ("P&C") insurance industry to provide statistical and actuarial services, to develop insurance programs and to assist insurance companies in meeting state regulatory requirements. Over the past decade, we broadened our data assets, entered new markets, placed a greater emphasis on analytics, and pursued strategic acquisitions. We trade under the ticker symbol “VRSK” on the Nasdaq Global Select Market.

Since January 2020, an outbreak of the 2019 novel coronavirus ("COVID-19") has evolved into a worldwide pandemic. We have modified our operations in line with our business continuity plans due to COVID-19. While our facilities generally remain open, we are making extensive use of the work-from-home model at this moment. On a daily basis, management is reviewing our operations and there have been to date minimal interruptions in our customer facing operations. Given the digital nature of our business and the move toward cloud enablement, we expect to remain operationally stable and fully available to our customers. We are in compliance with all financial and non-financial covenants and have not observed a loss of any significant customers, a significant deterioration in the collectability of receivables, a significant reduction in our liquidity nor a significant decline in subscription renewal rates.

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

Our 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, 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 and liabilities, acquisition-related liabilities, fair value of stock-based compensation for equity awards granted, and assets and liabilities for pension and postretirement benefits. Actual results may ultimately differ from those estimates. Effective the first quarter of 2018, our operating segments are Insurance, Energy and Specialized Markets, and Financial Services. Certain reclassifications, including reflecting acquisition-related liabilities as a separate line item in 2020 and moving Maplecroft, an immaterial component, from the Energy and Specialized Markets segment to the underwriting and rating category within the Insurance segment, have been made within our consolidated balance sheets, consolidated statements of operations, consolidated statements of cash flows and in our notes to conform to our respective 2020 presentation.

Significant accounting policies include the following:

(a) Intercompany Accounts and Transactions

The consolidated financial statements include all of our accounts. All intercompany accounts and transactions have been eliminated.

(b) Revenue Recognition

The following describes our primary types of revenues and the applicable revenue recognition policies. We recognize revenues through recurring and non-recurring long-term agreements (generally one to five years) for hosted subscriptions, advisory/consulting services, and for transactional solutions. Each of our reportable segments, Insurance, Energy and Specialized Markets, and Financial Services, has a portion of its revenue from more than one of these revenue types. Our revenues are primarily derived from the sale of services where revenue is recognized when control of the promised services is transferred to customers in an amount that reflects the consideration that we expect to be entitled to in exchange for those services. Fees for services provided by us are non-refundable. Revenue is recognized net of applicable sales tax withholdings.

Hosted Subscriptions

We offer two forms of hosted subscriptions. The first and most prevalent form of hosted subscription is where customers access content only through our online portal (the "Hosted Subscription"). We grant a license to our customer to enter our online portal. The license is a contractual mechanism that allows our customer to access our online portal for a defined period of time. As the license alone does not provide utility to our customer, our customer has no contractual right to take possession of our online portal at any time, and our customer cannot engage another party to host our online portal and related content, it is not considered a functional license under Topic 606. Our promise to our customer is to provide continuous access to our online portal and to update the content throughout the subscription period. Hosted Subscription is a single performance obligation that represents a series of distinct services (daily access to our online portal and related content) that are substantially the same and that have the same pattern of transfer to our customer. We recognize revenue for Hosted Subscriptions ratably over the subscription period on a straight-line basis as services are performed and continuous access to information in our online portal is provided over the entire term of the agreements.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The second form of hosted subscription is where customers have access to our online portals combined with software content that is delivered via disk drive/download to our customer (“Hosted Subscription with Disk Drive/Download”) and is offered only on a limited basis. For this form of hosted subscription, we also grant our customer a license to enter our online portal as well as access the software content as needed and act as the same contractual mechanism as described for Hosted Subscriptions. The Hosted Subscription with Disk Drive/Download works in such a manner that our customer gains significant benefit, functionality, and overall utility only when the online portal and the software content are used together. The disk drive/download contains the models while the online portal contains the latest data and research which is updated throughout the subscription period. The models within the disk drive/download depend on the data and research contained within our online portal. The data and research within our online portal is only useful when our customer can utilize it within the models (e.g., queries, projections, etc.) so that they may use the most current information and alerts to forecast potential future losses. The software content is only sold together with our online portal to provide a highly interdependent and interrelated promise and therefore represents a single performance obligation. As our customer has no contractual right to take possession of our online portal at any time, and our customer cannot engage another party to host our online portal and related software content, it is not considered a functional license under Topic 606. Our promise to our customer is to deliver the disk drive/download, to provide continuous access to our online portal, and to update the software content throughout the subscription period. We recognize revenue for Hosted Subscriptions with Disk Drive/Download ratably over the subscription period on a straight-line basis as services are performed and continuous access to information is provided over the entire term of the agreements.

Subscriptions are generally paid in advance of rendering services either quarterly or annually upon commencement of the subscription period, which is usually for one year and in most instances automatically renewed each year.

Advisory/Consulting Services

We provide certain discrete project based advisory/consulting services, which are recognized over time by measuring the progress toward complete satisfaction of the performance obligation, based on the input method of consulting hours worked; this aligns with the results achieved and value transferred to our customer. The hours consumed are most reflective of the measure of progress towards satisfying the performance obligation, as the resources hours worked directly tie to the progress of the services to be provided. In general, they are billed over the course of the project.

Transactional Solutions

Certain solutions are also paid for by customers on a transactional basis. We recognize these revenues as the solutions are delivered or services performed at a point in time. In general, our customers are billed monthly at the end of each month.

We invoice our customers in annual, quarterly, monthly, or milestone installments. Amounts billed and/or collected in advance of services being provided are recorded as “Deferred revenues” and “Other noncurrent liabilities” in our accompanying consolidated balance sheets and are recognized as the services are performed, control is transferred to customers, and the applicable revenue recognition criteria is met.

(d) Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are generally recorded at the invoiced amount. Unbilled receivables are short-term in nature and expected to be billed within one year. The allowance for doubtful accounts or expected credit losses is estimated based on an analysis of the aging of the accounts receivable, historical write-offs, customer payment patterns, individual customer credit worthiness, current economic trends, reasonable and supportable forecasts of future economic conditions, and/or establishment of specific reserves for customers in adverse financial condition. We assess the adequacy of the allowance for doubtful accounts on a quarterly basis.

(e) Deferred Commissions

We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain sales incentive programs meet the requirements to be capitalized. The incremental costs of obtaining a contract with a customer, which primarily consist of sales commissions, are deferred and amortized over a useful life of five years that is consistent with the transfer to our customer the services to which the asset relates. We classify deferred commissions as current or noncurrent based on the timing of expense recognition. The current and noncurrent portions of deferred commissions are included in prepaid expenses and other assets, respectively, in our consolidated balance sheets as of December 31, 2020. Amortization expense related to deferred commissions is computed on a straight-line basis over its estimated useful lives and included in "Selling, general and administrative" within our accompanying consolidated statements of operations.

(f) Fixed Assets and Finite-lived Intangible Assets

Fixed assets 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.

Our 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 ("ASC 350-40"). We also capitalize 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.

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, we review our long-lived assets and finite-lived intangible assets for impairment by first comparing the carrying value of our assets to the sum of the undiscounted cash flows expected to result from the use and eventual disposition of our assets. If the carrying value exceeds the sum of our assets’ undiscounted cash flows, we estimate and recognize an impairment loss by taking the difference between the carrying value and fair value of our assets.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(g) Leases

We have operating and finance leases for corporate offices, data centers, and certain equipment that are accounted for under ASC 842. Our leases have remaining lease terms ranging from one year to fourteen years, some of which include the options to extend our leases for up to twenty years, and some of which include the options to terminate our leases within one year. Extension and termination options are considered in our calculation of the right-of-use (“ROU”) assets and lease liabilities when we determine it is reasonably certain that we will exercise those options.

We determine if an arrangement is a lease at inception. We consider any contract where there is an identified asset and that it has the right to control the use of such asset in determining whether the contract contains a lease. A ROU asset represents our right to use an underlying asset for the lease term and the lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As our operating leases do not provide an implicit rate, we use an incremental borrowing rate based on the information available on the adoption date in determining the present value of lease payments. The incremental borrowing rate was calculated by using our credit rating on our publicly-traded U.S. unsecured bonds and estimating an appropriate credit rating for similar secured debt instruments. Our calculated credit rating on secured debt instruments determined the yield curve used. We calculated an implied spread and applied the spreads to the risk-free interest rates based on the yield of the U.S. Treasury zero coupon securities with a maturity equal to the remaining lease term in determining the borrowing rates for all operating leases. Our operating lease ROU assets include any lease payments made prior to the rent commencement date and exclude lease incentives. Lease expense for lease payments are recognized on a straight-line basis over the lease term. Operating lease transactions are included in "Operating lease right-of-use assets, net", and "Operating lease liabilities", current and noncurrent, within our accompanying consolidated balance sheets. Finance leases are included in property and equipment under "Fixed assets, net", "Short-term debt and current portion of long-term debt", and "Long-term debt" within our accompanying consolidated balance sheets.

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

We follow 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. We follow the provisions of ASC 820-10 for our financial assets and liabilities recognized or disclosed at fair value on a recurring basis. We follow the provisions of ASC 820-10 for our non-financial assets and liabilities recognized or disclosed at fair value.

(i) Foreign Currency

We have determined local currencies are the functional currencies of our 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 our accompanying consolidated statements of changes in stockholders’ equity.

(j) Stock-Based Compensation

We follow 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.

Our nonqualified stock options have an exercise price equal to the closing price of our common stock on the grant date, with a ten-year contractual term. The expected term for our stock options granted 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 our historical daily closing prices over the most recent period that is commensurate with the expected term of the stock option awards. The expected dividend yield was based on our expected annual dividend rate on the date of grant.

The fair value of our restricted stock is determined using the closing price of our common stock on the grant date. Our restricted stock is not assignable or transferable until it becomes vested. Restricted stock generally has a service vesting period of four years and we recognize the expense ratably over this service vesting period.

Performance share units (“PSU”) vest at the end of a three-year performance period, subject to the recipient’s continued service. Each PSU represents the right to receive one share of our common stock and the ultimate realization is based on our achievement of certain market performance criteria. We determined the grant date fair value of PSUs with the assistance of a third-party valuation specialist and based on estimates provided by us. The valuation of our PSUs employed the Monte Carlo simulation model, which includes certain key assumptions that were applied to us and our peer group. Those key assumptions included valuation date stock price, expected volatility, correlation coefficients, risk-free rate of return, and expected dividend yield. The valuation date stock price is based on the dividend-adjusted closing price on the grant date. Expected volatility is calculated using historical daily closing prices over a period that is commensurate with the length of the performance period. The correlation coefficients are based on the price data used to calculate the historical volatilities. The risk-free rate of return is based on the yield of U.S. Treasury zero coupon securities with a maturity equal to the length of the performance period. The expected dividend yield was based on our and our peer group’s expected dividend rate over the performance period.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We estimate expected forfeitures of equity awards at the date of grant and recognize compensation expense only for those awards expected to vest. The forfeiture assumption is ultimately adjusted to the actual forfeiture rate. Estimated forfeiture is ultimately adjusted to actual forfeiture. 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.

Excess tax benefit from exercised stock options, lapsing of restricted stock and PSUs is recorded as an income tax benefit in our accompanying consolidated statements of operations. This tax benefit is calculated as the excess of the intrinsic value of options exercised and of the market value of restricted stock lapsed over the compensation recognized for financial reporting purposes.

(k) Research and Development Costs

Research and development costs, which are primarily related to personnel and related overhead costs incurred in developing new services for customers, are expensed as incurred. Such costs were $48.9 million, $60.0 million and $45.1 million for the years ended December 31, 2020, 2019 and 2018, respectively, and were included in our accompanying consolidated statements of operations.

(l) Advertising Costs

Advertising costs, which are primarily associated with promoting our brand, names and solutions provided, are expensed as incurred. Such costs were $8.5 million, $10.7 million and $9.0 million for the years ended December 31, 2020, 2019 and 2018, respectively.

(m) Income Taxes

We account 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, we consider 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.

We follow 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.

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

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(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 our dilutive outstanding stock options and stock awards were issued.

(o) Pension and Postretirement Benefits

We account for our 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 arising during the period, but which are not included as components of periodic benefit cost or credit, and the measurement of defined benefit plan assets and obligations as of the balance sheet date. We utilize a valuation date of December 31.

(p) Product Warranty Obligations

We provide warranty coverage for certain of our solutions. We recognize a product warranty obligation when claims are probable and can be reasonably estimated. As of December 31, 2020 and 2019, product warranty obligations were not material.

In the ordinary course of business, we enter into numerous agreements that contain standard indemnities whereby we indemnify 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 we could be required to make under these indemnifications; however, we are 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

We accrue 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 our 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. We completed the required annual impairment test as of June 30, 2020, which resulted in no impairment of goodwill in 2020. 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 our 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 an impairment loss is recorded for the difference between the carrying amount and the fair value of the reporting unit.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(s) Recent Accounting Pronouncements

Accounting Standard	Description	Effective Date	Effect on Consolidated Financial Statements or Other Significant Matters
Financial Instruments—Credit Losses (Topic 326) In June 2016, Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, "Measurement of Credit Losses on Financial Instruments" ("Topic 326")	Topic 326 replaces the current “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the Current Expected Credit Loss ("CECL") model. Under the CECL model, an entity is required to present certain financial assets carried at amortized cost, such as trade receivables, at the net amount expected to be collected. The measurement of expected credit losses is to be based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This measurement takes place at the time the financial asset is first added to the balance sheet and periodically thereafter. This differs significantly from the “incurred loss” model required under U.S. GAAP, which delays recognition until it is probable a loss has been incurred.	We adopted these amendments on January 1, 2020.	Refer to our accompanying consolidated statements of changes in stockholders' equity for the adjustment of the opening retained earnings and Note 7. Fair Value Measurements for further discussions.
Income Tax (Topic 740) In December 2019, FASB issued ASU No. 2019-12, "Simplifying the Accounting for Income Taxes" ("ASU No. 2019-12")	The amendments in this guidance reflect the FASB’s effort to reduce the complexity of accounting standards while maintaining or enhancing the helpfulness of information provided to financial statement users. Changes include treatment of Hybrid tax regimes, tax basis step-up in goodwill obtained in a transaction that is not a business combination, separate financial statements of legal entities not subject to tax, intraperiod tax allocation, ownership changes in investments, interim-period accounting for enacted changes in tax law, year-to-date loss limitation in interim-period tax accounting, income statement presentation of tax benefits of tax-deductible dividends, and impairment of investment in qualified affordable housing projects accounted for under the equity method.	Fiscal years beginning after December 15, 2020 with early adoption permitted.	We have decided not to early adopt the amendments. We are currently evaluating ASU No. 2019-12 and have not yet determined the impact of these amendments may have on our consolidated financial statements.
Reference Rate Reform (Topic 848) In March 2020, the FASB issued ASU No. 2020-04, "Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU No. 2020-04")	The amendment in this update provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendment in this update applies only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendment does not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.	The amendment in this update is effective for all entities as of March 12, 2020 through December 31, 2022.	We adopted this amendment on March 12, 2020. There was no impact to our consolidated financial statements as of and for the year ended December 31, 2020. We continue to monitor the transition of LIBOR to alternative reference rate measures that will likely become effective post December 2021.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3. 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.

4. Accounts Receivable:

Accounts receivable, net consisted of the following at December 31:

	*2020*			*2019*
Billed receivables	$	380.5		$	372.7
Unbilled receivables		69.6			80.6
Total receivables		450.1			453.3
Less allowance for doubtful accounts		(17.7	)		(11.7	)
Accounts receivable, net	$	432.4		$	441.6

5. Concentration of Credit Risk:

Financial instruments that potentially expose us to credit risk consist primarily of cash and cash equivalents as well as accounts receivable, net which are generally not collateralized. We maintain our 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 $250.0 thousand per bank as of December 31, 2020 and 2019. As of December 31, 2020 and 2019, we had cash balances on deposit with eleven and ten banks that exceeded the balance insured by the FDIC limit by approximately $92.8 million and $36.4 million, respectively. As of December 31, 2020 and 2019, we also had cash on deposit with foreign banks of approximately $122.5 million and $145.7 million, respectively.

We consider the concentration of credit risk associated with our accounts receivable to be commercially reasonable and believe that such concentration does not result in the significant risk of near-term severe adverse impacts. Our top fifty customers represent approximately 33% of revenues for 2020 and 2019, and 34% for 2018, with no individual customer accounting for more than approximately 3% of revenues for the years ended December 31, 2020, 2019, and 2018. No individual customer comprised more than approximately 2% and 3% of accounts receivable as of December 31, 2020 and 2019, respectively.

6. Revenues:

Disaggregated revenues by type of service and by country are provided below for the years ended December 31, 2020, 2019 and 2018. No individual country outside of the U.S. accounted for more than 10.0% of our consolidated revenues for the years ended December 31, 2020, 2019 or 2018.

	*2020*		*2019*		*2018*
Insurance:
Underwriting & rating	$	1,390.6	$	1,254.3	$	1,153.5
Claims		595.7		610.9		561.4
Total Insurance		1,986.3		1,865.2		1,714.9
Energy and Specialized Markets		641.6		563.9		504.3
Financial Services		156.7		178.0		175.9
Total revenues	$	2,784.6	$	2,607.1	$	2,395.1

	*2020*		*2019*		*2018*
Revenues:
United States ("U.S.")	$	2,133.6	$	2,005.6	$	1,849.4
United Kingdom ("U.K.")		181.6		177.3		148.2
Other countries		469.4		424.2		397.5
Total revenues	$	2,784.6	$	2,607.1	$	2,395.1

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Contract assets are defined as an entity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time. As of December 31, 2020 and 2019, we had no contract assets.

Contract liabilities are defined as an entity's obligation to transfer goods or services to a customer for which the entity has received consideration (an amount of consideration is due) from the customer. As of December 31, 2020 and 2019, we had contract liabilities that primarily related to unsatisfied performance obligations to provide customers with the right to use and update the online content over the remaining contract term of $468.2 million and $443.2 million, respectively. The $25.0 million increase in contract liabilities from December 31, 2019 to December 31, 2020 was primarily due to billings of $418.5 million that were paid in advance, partially offset by $393.5 million of revenue recognized for the year ended December 31, 2020. Contract liabilities, which are current and noncurrent, are included in "Deferred revenues" and "Other liabilities" in our consolidated balance sheets, respectively, as of December 31, 2020 and 2019.

Our most significant remaining performance obligations relate to providing customers with the right to use and update the online content over the remaining contract term. Revenues expected to be recognized in the future related to performance obligations, included within our deferred revenue and other liabilities, that are unsatisfied were $468.2 million and $443.2 million as of December 31, 2020 and 2019, respectively. Our disclosure of the timing for satisfying the performance obligation is based on the requirements of contracts with customers. However, from time to time, these contracts may be subject to modifications, impacting the timing of satisfying the performance obligations. These performance obligations, which are expected to be satisfied within one year, comprised approximately 99% of the balance as of December 31, 2020 and 2019.

We recognize an asset for incremental costs of obtaining a contract with a customer if we expect the benefits of those costs to be longer than one year. As of December 31, 2020 and 2019, we had deferred commissions of $73.8 million and $63.7 million, respectively, which have been included in "Prepaid expenses" and "Other assets" in our accompanying consolidated balance sheets.

7. Fair Value Measurements:

Certain assets and liabilities are reported at fair value in our 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 established 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, we 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 fair value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and short-term debt approximate their carrying amounts because of the short-term nature of these instruments. Our investments in registered investment companies, which are Level 1 assets measured at fair value on a recurring basis using quoted prices in active markets multiplied by the number of shares owned, were $4.1 million and $3.6 million as of December 31, 2020 and 2019, respectively. Our investments in registered investment companies have been included in "Other current assets" in our consolidated balance sheets as of December 31, 2020 and 2019.

We elected not to carry our long-term debt at fair value. The carrying value of our long-term debt represents the amortized cost, inclusive of unamortized premium, and net of unamortized discount and debt issuance costs. We assess the fair value of these financial instruments based on an estimate of interest rates available to us for financial instruments with similar features, our current credit rating, and spreads applicable to us. The following table summarizes the carrying value and estimated fair value of these financial instruments as of December 31, 2020 and 2019, respectively:

		2020				2019
	*Fair Value*	*Carrying*		*Estimated*		*Carrying*		*Estimated*
	*Hierarchy*	*Value*		*Fair Value*		*Value*		*Fair Value*
Financial instrument not carried at fair value:
Senior Notes (Note 15)	Level 2	$	3,140.8	$	3,652.2	$	2,650.4	$	2,902.2

On February 1, 2020, the sale of the aerial imagery sourcing group was completed. We contributed the assets related to the disposed business and cash of $63.8 million in exchange for a non-controlling 35.0% ownership interest in a nonpublic company, Vexcel Group, Inc ("Vexcel"). As of December 31, 2020, we had an investment of $129.1 million related to such interest. The value of our investment is based on management estimates with the assistance of valuations performed by third-party specialists. This investment was included in "Other noncurrent assets" in our accompanying consolidated balance sheet. For the year ended December 31, 2020, there was no provision for credit losses related to this investment. Refer to Note 11. Dispositions for further discussion.

As of December 31, 2020 and 2019, we had securities of $14.0 million, which were accounted for as cost-based investments under ASC 323-10-25, The Equity Method of Accounting for Investments in Common Stock ("ASC 323-10-25"). We do not have the ability to exercise significant influence over the investees’ operating and financial policies. As of December 31, 2020 and 2019, we also had an investment in private companies of $49.5 million and $13.1 million, respectively, accounted for in accordance with ASC 323-10-25 as an equity method investment. These investments were included in "Other non-current assets" in our accompanying consolidated balance sheet. For the year ended December 31, 2020, there was no provision for credit losses related to these investments.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

8. Leases:

We have operating and finance leases for corporate offices, data centers, and certain equipment that are accounted for under ASC 842. Our leases have remaining lease terms ranging from one year to fourteen years, some of which include the options to extend our leases for up to twenty years, and some of which include the options to terminate our leases within one year. Extension and termination options are considered in our calculation of our right-of-use ("ROU") assets and lease liabilities when we determine it is reasonably certain that we will exercise those options.

The following table presents our lease cost, cash paid for amounts included in our measurement of lease liabilities, ROU assets obtained, weighted-average remaining lease terms, and weighted-average discount rates for finance and operating leases for the years ended December 31, 2020 and 2019:

	*2020*			*2019*
Lease cost:
Operating lease cost (1)	$	52.2		$	48.4
Sublease income		(0.3	)		—
Finance lease cost
Depreciation of finance lease assets (2)		13.4			13.2
Interest on finance lease liabilities (3)		0.7			1.8
Total lease cost	$	66.0		$	63.4

Other information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows from operating leases	$	(52.0	)	$	(48.4	)
Operating cash outflows from finance leases	$	(0.7	)	$	(1.8	)
Financing cash outflows from finance leases	$	(14.4	)	$	(15.1	)
Weighted-average remaining lease term - operating leases (in years)		9.3			9.4
Weighted-average remaining lease term - finance leases (in years)		2.2			2.6
Weighted-average discount rate - operating leases		3.9	%		4.0	%
Weighted-average discount rate - finance leases		4.1	%		4.4	%

(1) Included in "Cost of revenues" and "Selling, general and, administrative" expenses in our accompanying consolidated statements of operations

(2) Included in "Depreciation and amortization of fixed assets" in our accompanying consolidated statements of operations

(3) Included in "Interest expense" in our accompanying consolidated statements of operations

The total rental expense for the year ended December 31, 2018, prior to the adoption of the new lease standard, was $44.9 million.

Our ROU assets and lease liabilities for finance leases were $27.1 million and $24.7 million, respectively, as of December 31, 2020. Our ROU assets and lease liabilities for finance leases were $9.9 million and $7.7 million, respectively, as of December 31, 2019. Our ROU assets for finance leases were included in "Fixed assets, net" in our accompanying consolidated balance sheets. Our lease liabilities for finance leases were included in the "Short-term debt and current portion of long-term debt" and "Long-term debt" in our accompanying consolidated balance sheets (See Note 15. Debt).

Maturities of lease liabilities for the years through 2026 and thereafter are as follows:

Years Ending	*Operating Leases*			*Finance Leases*
2021	$	50.5		$	15.0
2022		45.0			10.8
2023		42.9			0.3
2024		35.2			—
2025		31.9			—
2026 and thereafter		171.4			—
Total lease payments		376.9			26.1
Less: Amount representing interest		(66.6	)		(1.4	)
Present value of total lease payments	$	310.3		$	24.7

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

9. Fixed Assets

The following is a summary of fixed assets:

	*Useful Life (in years)*	*Cost*		*Accumulated Depreciation and Amortization*			*Net*
December 31, 2020
Furniture and office equipment	3 - 10	$	273.6	$	(215.8	)	$	57.8
Leasehold improvements	Lease term		118.3		(44.7	)		73.6
Purchased software	3		77.7		(68.6	)		9.1
Software development costs	3 - 7		924.6		(465.3	)		459.3
Leased equipment	3 - 4		68.3		(41.2	)		27.1
Motor vehicles and field equipment	2 - 10		6.8		(1.4	)		5.4
Total fixed assets		$	1,469.3	$	(837.0	)	$	632.3
December 31, 2019
Furniture and office equipment	3 - 10	$	268.9	$	(210.1	)	$	58.8
Leasehold improvements	Lease term		103.9		(41.7	)		62.2
Purchased software	3		89.8		(77.7	)		12.1
Software development costs	3 - 7		773.7		(373.7	)		400.0
Leased equipment	3 - 4		38.5		(28.6	)		9.9
Aircraft equipment	2 - 10		5.2		(0.1	)		5.1
Total fixed assets		$	1,280.0	$	(731.9	)	$	548.1

Depreciation and amortization of fixed assets for the years ended December 31, 2020, 2019 and 2018 were $192.2 million, $185.7 million and $165.3 million, of which $120.6 million, $100.2 million and $85.4 million 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 $11.3 million, $12.8 million and $9.7 million for the years ended December 31, 2020, 2019 and 2018, respectively. We had unamortized software development costs that had been capitalized in accordance with ASC 350-40 of $405.8 million and $353.3 million as of December 31, 2020 and 2019, respectively. We had unamortized software development costs that had been capitalized in accordance with ASC 985-20 of $53.5 million and $46.7 million as of December 31, 2020 and 2019, respectively. Leased assets include amounts held under finance leases for automobiles, computer software, and computer equipment.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

10. Acquisitions

2020 Acquisitions

On December 16, 2020, we acquired 100 percent of the stock of Lead Intelligence, Inc. ("Jornaya"), a provider of consumer behavioral data and intelligence, for a net cash purchase price of $125.2 million, of which $1.3 million represents indemnity escrows. The acquisition added Jornaya's proprietary view of consumer buying journeys to our growing set of marketing solutions for the insurance and financial services markets, as well as provide customers with the intelligence and agility to time and tailor interactions based on actual in-market behaviors. Jornaya has become part of the underwriting & rating category within our Insurance segment. The preliminary purchase price allocation of the acquisition is presented in the table below.

On September 9, 2020, we acquired 100 percent of the stock of Franco Signor LLC ("Franco Signor") for a net cash purchase price of $159.9 million, of which $8.0 million represents indemnity escrows. Franco Signor is a Medicare Secondary Payer compliance solutions provider to large employers, insurers and third-party administrators in the U.S. Franco Signor has become part of the claims category within our Insurance segment and enhanced the solutions we currently offer, as well as added professional administrative services for Medicare Set Asides to our suite of solutions. The preliminary purchase price allocation of the acquisition is presented in the table below.

The preliminary purchase price allocation of the 2020 acquisitions resulted in the following:

	*Franco Signor*			*Lead Intelligence*			*Total*
Cash and cash equivalents (1)	$	10.9		$	5.9		$	16.8
Accounts receivable		2.5			2.9			5.4
Other current assets		0.4			0.6			1.0
Fixed assets		0.4			0.7			1.1
Operating lease right-of-use assets, net		1.5			1.7			3.2
Intangible assets		59.1			64.4			123.5
Goodwill		100.3			71.4			171.7
Other assets		8.0			1.3			9.3
Total assets acquired		183.1			148.9			332.0
Current liabilities (1)		(6.4	)		(1.3	)		(7.7	)
Deferred revenues		(0.3	)		(2.3	)		(2.6	)
Operating lease liabilities		(1.5	)		(1.7	)		(3.2	)
Deferred income tax, net		(1.8	)		(11.2	)		(13.0	)
Other liabilities		(8.0	)		(1.3	)		(9.3	)
Total liabilities assumed		(18.0	)		(17.8	)		(35.8	)
Net assets acquired		165.1			131.1			296.2
Cash and cash equivalents		(10.9	)		(5.9	)		(16.8	)
Restricted cash (1)		5.7			—			5.7
Cash acquired		(5.2	)		(5.9	)		(11.1	)
Net cash purchase price	$	159.9		$	125.2		$	285.1

(1) Within cash and cash equivalents, there is $5.7 million of restricted cash related to Franco Signor's professional administrative services for Medicare Set Asides, with an offsetting liability of $5.7 million included within current liabilities.

The preliminary amounts assigned to intangible assets by type for our 2020 acquisitions are summarized in the table below:

	*Weighted Average Useful Life (in years)*	*Total*
Technology	11	$	30.8
Marketing	5		2.1
Customer	11		90.6
Total intangible assets		$	123.5

The preliminary allocations of the purchase price for the 2020 acquisitions with less than a year of ownership are subject to revisions as additional information is obtained about the facts and circumstances that existed as of each acquisition date. The revisions may have a significant impact on our consolidated financial statements. The allocations of the purchase price will be finalized once all the 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 income and non-income taxes, deferred revenues, the valuation of intangible assets acquired, and residual goodwill. The goodwill associated with our acquisitions include the acquired assembled work force, the value associated with the opportunity to leverage the work force to continue to develop the technology and content assets, as well as our ability to grow through adding additional customer relationships or new solutions in the future. Of the $171.7 million in goodwill associated with our acquisitions, $20.8 million is not deductible for tax purposes. The preliminary amounts assigned to intangible assets by type for these acquisitions were based upon our valuation model and historical experiences with entities with similar business characteristics.

For the year ended December 31, 2020, we incurred transaction costs related to acquisitions of $2.2 million, which are included within "Selling, general and administrative expenses in the accompanying consolidated statements of operations. Refer to Note 12. Goodwill and Intangible Assets for further discussion.

Our 2020 acquisitions were not significant, both individually and in the aggregate, to our consolidated financial statements for the years ended December 31, 2020, 2019 and 2018, and therefore, supplemental information disclosure on an unaudited pro forma basis is not presented.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2019 Acquisitions

On December 23, 2019, we acquired 100 percent of the stock of Flexible Architecture and Simplified Technology, LLC ("FAST"), a software company for the life insurance and annuity industry, for a net cash purchase price of $193.9 million, of which $1.9 million represents indemnity escrows. FAST offers a flexible policy administration system that helps insurers accelerate underwriting and claims to enhance the customer experience and support profitable growth. FAST has become part of the underwriting & rating category within our Insurance segment, and expanded and enhanced the suite of solutions that we are developing across the enterprise for life insurers looking to transform the customer experience throughout the life of the policy, from quote to claims. The final purchase price allocation of the acquisition is presented in the table below.

On December 19, 2019, we acquired selected assets of Commerce Signals, Inc. ("Commerce Signals"), a software company that offers a data sharing platform for retail, restaurant and entertainment marketers, for a net cash purchase price of $3.9 million, which consists of a holdback of $1.1 million as security for the indemnification obligations of the seller. Commerce Signals has become part of our Financial Services segment, and enhanced the existing solutions that we currently offer. The final purchase price allocation of the acquisition is presented as part of "Others" in the table below.

On November 5, 2019, we acquired 100 percent of the stock of Genscape, Inc. (“Genscape”), a global provider of real-time data and intelligence for commodity and energy markets, for a net cash purchase price of $351.0 million. Genscape has become part of the Energy and Specialized Markets segment, and enhanced our existing sector intelligence in energy data and analytics. The final purchase price allocation of the acquisition is presented in the table below.

On October 10, 2019, we acquired 100 percent of the stock of BuildFax, Inc. ("BuildFax") for a net cash purchase price of $40.2 million, which consists a holdback of $1.0 million. BuildFax uses building permit, contractor, and inspection data to provide information about the condition of properties to insurance and financial institutions. The data from BuildFax enhances property analytics under the underwriting & rating category within our Insurance segment while helping underwriters gain insight into changes in the property insured. The final purchase price allocation of the acquisition is presented in the table below.

On August 28, 2019, we acquired substantially all of the assets of Property Pres Wizard, LLC. ("PPW") for a net cash purchase price of $15.0 million, of which $1.5 million represents indemnity escrows. PPW is a web and mobile application that manages work order details and property status in the field services industry throughout the supply chain. PPW has become part of the claims category within our Insurance segment, and added a service order and project management application to our PropTech suite of solutions. The final purchase price allocation of the acquisition is presented as part of "Others" in the table below.

On July 31, 2019, we acquired 100 percent of the stock of Keystone Aerial Surveys, Inc. ("Keystone") for a net cash purchase price of $29.4 million, of which $2.7 million represents indemnity escrows, to expand our remote imagery business. Keystone sourced imagery by providing customers geospatial solutions and had become part of the claims category within our Insurance segment. Keystone was a component within the aerial imagery sourcing group, which was qualified as assets held for sale on December 2, 2019. On February 1, 2020, the sale of the aerial imagery sourcing group was closed. See Note 11. Dispositions for further discussion.The final purchase price allocation of the acquisition is presented as part of "Others" in the table below.

On March 29, 2019, we entered into an agreement with an enterprise application software provider to acquire their Content as a Service (“CaaS”) business, which included the Environmental Health and Safety Regulatory Content and Environmental Health and Safety Regulatory Documentation teams and data assets, for a net cash purchase price of $65.2 million. The CaaS business has become part of our Energy and Specialized Markets segment. This transaction strengthened our environmental health and safety services business and extended our global customer footprint and European operations. The final purchase price allocation of the acquisition is presented in the table below.

The final purchase price allocations, inclusive of closing adjustments, of our 2019 acquisitions resulted in the following:

	*FAST*			*Genscape*			*BuildFax*			*CaaS*			*Others*			*Total*
Cash and cash equivalents	$	2.9		$	0.2		$	0.4		$	3.7		$	3.1		$	10.3
Accounts receivable		4.7			13.6			1.8			—			3.9			24.0
Other current assets		0.4			1.4			0.1			0.7			0.6			3.2
Fixed assets		1.8			15.9			0.9			0.2			6.3			25.1
Operating lease right-of-use assets, net		1.4			7.4			0.4			—			0.5			9.7
Intangible assets		69.0			153.2			21.9			34.4			14.1			292.6
Goodwill		120.7			241.4			20.2			41.2			28.2			451.7
Other assets		0.1			—			—			0.1			4.4			4.6
Total assets acquired		201.0			433.1			45.7			80.3			61.1			821.2
Current liabilities		2.4			17.4			0.9			1.3			1.3			23.3
Deferred revenues		0.3			27.3			2.4			10.1			—			40.1
Operating lease liabilities		1.4			7.4			0.4			—			0.5			9.7
Deferred income tax, net		—			29.8			0.4			—			2.6			32.8
Other liabilities		—			—			1.0			—			5.3			6.3
Total liabilities assumed		4.1			81.9			5.1			11.4			9.7			112.2
Net assets acquired		196.9			351.2			40.6			68.9			51.4			709.0
Cash acquired		(3.0	)		(0.2	)		(0.4	)		(3.7	)		(3.1	)		(10.4	)
Net cash purchase price	$	193.9		$	351.0		$	40.2		$	65.2		$	48.3		$	698.6

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The final amounts assigned to intangible assets by type for our 2019 acquisitions are summarized in the table below:

	*Weighted Average Useful Life (in years)*	*Total*
Technology	6	$	81.9
Marketing	4		3.9
Customer	12		185.5
Database	10		20.7
Total intangible assets		$	292.0

For the year ended December 31, 2020, we finalized the purchase accounting for our 2019 acquisitions during the measurement periods in accordance with ASC 805, Business Combinations. The impact of finalization of the purchase accounting associated with these acquisitions was not material to our accompanying consolidated statements of operations for the years ended December 31, 2019 and 2018.

The goodwill of $307.1 million associated with the purchases of FAST, Commerce Signals, Genscape, BuildFax, PPW, Keystone, and CaaS is not deductible for tax purposes. For the year ended December 31, 2019, we incurred transaction costs related to acquisitions of $3.0 million, which are included within "Selling, general and administrative" expenses in our accompanying consolidated statements of operations. Refer to Note 12. Goodwill and Intangible Assets for further discussion.

Our 2019 acquisitions were not significant, both individually and in the aggregate, to our consolidated financial statements for the years ended December 31, 2019, 2018, and 2017, and therefore, supplemental information disclosure on an unaudited pro forma basis is not presented.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2018 Acquisitions

On December 14, 2018, we acquired Rulebook for a net cash purchase price of $86.5 million, of which $8.6 million represents contingent escrows. Rulebook’s proprietary pricing engine can be used for internal pricing and underwriting as well as external distribution for the insurance market through its platform. Rulebook furthers our goal of providing solutions to the global insurance market, including a comprehensive chain of solutions to specialty insurers for mitigating risk and optimizing total cost of operations. Rulebook is part of the underwriting and ratings category within our Insurance segment. The final purchase price allocation of the acquisition is presented in the table below.

On June 20, 2018, we acquired 100 percent of the stock of Validus-IVC Limited ("Validus"), a provider of claims management solutions and developer of the subrogation portal in the UK, verifyTM, for a net cash purchase price of $46.1 million, of which $5.9 million represents contingent escrows. Validus has become part of the claims category within our Insurance segment. The integration of Validus' verifyTM platform with our global claims analytic services allows insurers to take advantage of enhanced analytic and technology tools to help improve and automate the claims settlement process. The final purchase price allocation of the acquisition is presented in the table below.

On February 21, 2018, we acquired 100 percent of the stock of Business Insight Limited (“Business Insight”), a provider of predictive analytics for insurers in the U.K. and Ireland, for a net cash purchase price of $18.0 million. Business Insight has become part of the underwriting and ratings category within our Insurance segment. Business Insight offers a comprehensive set of peril models to support underwriting and rating for the commercial property and homeowners insurance market. The final purchase price allocation of the acquisition is presented as part of "Others" in the table below.

On January 5, 2018, we acquired 100 percent of the stock of Marketview Limited ("Marketview") for a net cash purchase price of $4.0 million, of which $0.4 million represents indemnity escrows. Marketview is a provider of consumer spending analysis and insights across the retail, hospitality, property, and government sectors in New Zealand. Marketview has become part of our Financial Services segment. The acquisition helps expand our solutions related to consumer spending analytics across the Australasia and Oceania regions by combining our domain expertise and proprietary data assets with those of Marketview. The final purchase price allocation of the acquisition is presented as part of "Others" in the table below.

The final purchase price allocations, inclusive of closing adjustments, of our 2018 acquisitions resulted in the following:

	*Rulebook*		*Validus*			*Others*			*Total*
Cash and cash equivalents	$	—	$	0.9		$	2.2		$	3.1
Accounts receivable		2.0		1.5			1.0			4.5
Current assets		0.1		6.3			0.2			6.6
Fixed assets		1.5		0.4			0.2			2.1
Intangible assets		25.1		20.9			8.4			54.4
Goodwill		58.9		24.8			15.8			99.5
Other assets		8.6		—			—			8.6
Total assets acquired		96.2		54.8			27.8			178.8
Current liabilities		0.6		3.9			1.0			5.5
Deferred revenues		0.4		0.1			1.1			1.6
Deferred income taxes, net		0.1		3.6			1.5			5.2
Other liabilities		8.6		0.2			—			8.8
Total liabilities assumed		9.7		7.8			3.6			21.1
Net assets acquired		86.5		47.0			24.2			157.7
Less: Cash acquired		—		(0.9	)		(2.2	)		(3.1	)
Net cash purchase price	$	86.5	$	46.1		$	22.0		$	154.6

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The final amounts assigned to intangible assets by type for our 2018 acquisitions are summarized in the table below:

	*Weighted Average Useful Life (in years)*	*Total*
Technology	6	$	30.3
Marketing	9		4.0
Customer	10		20.1
Total intangible assets		$	54.4

For the year ended December 31, 2019, we finalized the purchase accounting for our 2018 acquisitions during the measurement periods in accordance with ASC 805, Business Combinations. The impact of finalization of the purchase accounting associated with these acquisitions was not material to our accompanying consolidated statements of operations for the years ended December 31, 2018 and 2017.

The goodwill of $99.5 million associated with the purchases of Rulebook, Validus, Business Insight and Marketview is not deductible for tax purposes. For the year ended December 31, 2018, we incurred transaction costs related to acquisitions of $1.5 million, which are included within "Selling, general and administrative" expenses in our accompanying consolidated statements of operations. Refer to Note 12. Goodwill and Intangible Assets for further discussion.

Our 2018 acquisitions were immaterial, both individually and in the aggregate, to our consolidated financial statements for the years ended December 31, 2018 and 2017, and therefore, supplemental information disclosure on an unaudited pro forma basis is not presented.

Acquisition Escrows and Related Liabilities

Pursuant to the related acquisition agreements, we have 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 payment. During the years ended December 31, 2020 and 2019, we released $0.8 million and $25.2 million of indemnity escrows related to various acquisitions. At December 31, 2020 and 2019, the current portion of the escrows amounted to $1.7 million and $0.5 million, and the noncurrent portion of the escrows amounted to $18.5 million and $10.5 million, respectively.

Our acquisitions of Emergence Network Intelligence Limited, Validus, Arium Limited, and Rebmark Legal Solutions Limited include acquisition related contingencies, for which the sellers of these acquisitions could receive additional payments by achieving the specific predetermined revenue, EBITDA, and EBITDA margin earn-out targets for exceptional performance. We believe that the liabilities recorded as of December 31, 2020 reflect the best estimate of acquisition contingent payments. The associated current acquisition-related liabilities were $0.6 million and $111.2 million as of December 31, 2020 and December 31, 2019, respectively. The prior year acquisition-related liabilities were primarily due to PowerAdvocate. The associated noncurrent acquisition-related liabilities were $0.2 million as of December 31, 2020 and 2019.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

11. Dispositions:

On February 1, 2020, the sale of the aerial imagery sourcing group was completed. We contributed assets related to the disposed business, including cash of $63.8 million, in exchange for a non-controlling 35.0% ownership interest in a nonpublic company, Vexcel. We determined the fair value of the securities associated with the non-controlling ownership interest in Vexcel with the assistance of valuations performed by third-party specialists, including the discounted cash flow analysis and estimates made by management. The securities were concluded not to have a readily determinable fair value and did not qualify for the practical expedient to estimate fair value. The contributed assets approximated the fair value of the equity securities related to the non-controlling ownership interest; therefore, there was no gain or loss recorded in conjunction with this disposition for the year ended December 31, 2020.

On February 14, 2020, the sale of the compliance background screening business was completed for net cash proceeds of $23.1 million. A gain of $15.9 million was included in "Other operating (income) loss" within our accompanying consolidated statements of operations for the year ended December 31, 2020.

In the first quarter of 2020, our data warehouse business within the Financial Services segment qualified as assets held for sale and was sold on March 1, 2020. We recorded a gain of $3.5 million in "Other operating (income) loss" within our accompanying consolidated statements of operations for the year ended December 31, 2020.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

12. Goodwill and Intangible Assets:

We completed the required annual impairment test as of June 30, 2020, 2019 and 2018, which resulted in no impairment of goodwill. Based on the results of our impairment assessment as of June 30, 2020, we determined that the fair value of our 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, 2018 through December 31, 2020, both in total and as allocated to our operating segments:

	*Insurance*			*Energy and specialized markets*			*Financial services*			*Total*
Goodwill at December 31, 2018	$	833.8		$	2,054.7		$	473.0		$	3,361.5
Acquisitions		161.0			288.5			4.0			453.5
Businesses held for sale and disposition		(7.9	)		—			(0.7	)		(8.6	)
Purchase accounting reclassifications		(1.4	)		—			(0.1	)		(1.5	)
Foreign currency translation adjustment		13.3			46.3			(0.2	)		59.4
Goodwill at December 31, 2019		998.8			2,389.5			476.0			3,864.3
Acquisitions		171.7			—			—			171.7
Purchase accounting reclassifications		2.1			(6.0	)		(0.2	)		(4.1	)
Current period adjustment (1)		21.4			(19.5	)		—			1.9
Foreign currency translation adjustment		14.6			59.6			0.1			74.3
Goodwill at December 31, 2020	$	1,208.6		$	2,423.6		$	475.9		$	4,108.1

(1) Of which $19.5 million relates to a segment reclassification, refer to Note 19. Segment Reporting

Our intangible assets and related accumulated amortization consisted of the following:

	*Weighted*
	*Average*
	*Useful Life*			*Accumulated*
	*(in years)*	*Cost*		*Amortization*			*Net*
December 31, 2020
Technology-based	7	$	559.6		(349.5	)	$	210.1
Marketing-related	16		275.2		(113.4	)	$	161.8
Contract-based	6		5.0		(5.0	)	$	—
Customer-related	13		1,004.3		(354.2	)	$	650.1
Database-based	19		501.0		(138.2	)	$	362.8
Total intangible assets		$	2,345.1	$	(960.3	)	$	1,384.8
December 31, 2019
Technology-based	7	$	519.2	$	(291.9	)	$	227.3
Marketing-related	16		265.3		(94.3	)		171.0
Contract-based	6		5.0		(5.0	)		—
Customer-related	13		901.2		(278.0	)		623.2
Database-based	19		484.6		(107.2	)		377.4
Total intangible assets		$	2,175.3	$	(776.4	)	$	1,398.9

Amortization expense related to intangible assets for the years ended December 31, 2020, 2019 and 2018, was $165.9 million, $138.0 million, and $130.8 million, respectively. Estimated amortization expense in future periods through 2025 and thereafter for intangible assets subject to amortization is as follows:

Years Ending	*Amount*
2021	$	169.9
2022		156.9
2023		144.3
2024		139.4
2025		114.7
2026 and thereafter		659.6
Total	$	1,384.8

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

13. Income Taxes:

Domestic and foreign income before income taxes was as follows:

	*2020*		*2019*		*2018*
U.S.	$	834.0	$	553.9	$	700.2
Foreign		63.5		14.5		19.5
Total income before income taxes	$	897.5	$	568.4	$	719.7

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

	*2020*		*2019*			*2018*
Current:
Federal	$	111.0	$	109.9		$	69.0
State and local		23.1		21.4			22.1
Foreign		18.9		14.6			11.1
Total current provision for income taxes		153.0		145.9			102.2
Deferred:
Federal		22.6		(14.3	)		27.6
State and local		7.4		(0.2	)		2.8
Foreign		1.8		(12.9	)		(11.6	)
Total deferred provision for income taxes		31.8		(27.4	)		18.8
Provision for income taxes	$	184.8	$	118.5		$	121.0

The reconciliation between our effective tax rate and the statutory tax rate is as follows for the years ended December 31:


Federal statutory rate	21.0	%	21.0	%	21.0	%
State and local taxes, net of federal tax benefit	2.7	%	2.8	%	2.8	%
UK legislative rate change impact	1.5	%	—	%	—	%
Foreign Derived Intangible Income (FDII)	(0.8	)%	(1.2	)%	(0.9	)%
Stock-based compensation	(3.7	)%	(3.0	)%	(5.5	)%
Earn-outs	—	%	2.0	%	0.1	%
Other	(0.1	)%	(0.7	)%	(0.7	)%
Effective tax rate	20.6	%	20.9	%	16.8	%

The decrease in the effective tax rate in 2020 compared to 2019 was primarily due to the impact of higher tax benefits from equity compensation in the current period versus the prior period as well as lower nondeductible earn-out expenses in the current period. These benefits were partially offset by the deferred tax impact of the tax rate increase in the United Kingdom that was enacted and recorded in 2020.

The tax effects of significant items comprising our deferred tax assets as of December 31 are as follows:

	*2020*			*2019*
Deferred tax assets:
Employee wages, pension, and other benefits	$	7.3		$	13.0
ASC 842/Deferred rent		10.3			7.3
Net operating loss carryover		22.7			28.8
Litigation accrual		31.3			31.2
Capital and other unrealized losses		1.6			1.7
Interest expense		44.1			33.4
Other		12.2			16.4
Total		129.5			131.8
Less valuation allowance		(48.0	)		(46.5	)
Deferred tax assets		81.5			85.3
Deferred tax liabilities:
Fixed assets and intangible assets		(445.3	)		(411.0	)
Commissions		(16.6	)		(14.3	)
Other		(7.4	)		(6.2	)
Deferred tax liabilities		(469.3	)		(431.5	)
Deferred tax liabilities, net	$	(387.8	)	$	(346.2	)

The net deferred tax liabilities of $387.8 million consist primarily of timing differences involving depreciation and amortization.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The ultimate realization of the deferred tax assets depends on our ability to generate sufficient taxable income in the future. We have provided a valuation allowance against the deferred tax assets associated with the interest expense deduction limitation in the U.K. We have also provided for a valuation allowance against the deferred tax assets associated with the net operating losses of certain subsidiaries. Our net operating loss carryforwards expire as follows:

Years Ending	*Amount*
2021 - 2028	$	22.7
2029 - 2033		20.5
2034 - 2040		177.9
Total	$	221.1

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

As of December 31, 2020, we have not made a provision for U.S. or additional foreign withholdings taxes for any additional outside basis difference inherent in our foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practicable. We do not rely on these unremitted earnings as a source of funds for our domestic business as we expect to have sufficient cash flow in the U.S. to fund our U.S. operational and strategic needs.

We follow 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, we 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:

	*2020*			*2019*			*2018*
Unrecognized tax benefit as of January 1	$	11.5		$	17.4		$	16.3
Gross increase in tax positions in prior period		0.5			0.6			2.0
Gross decrease in tax positions in prior period		(0.2	)		(3.3	)		(0.1	)
Settlements		—			(2.4	)		(0.3	)
Lapse of statute of limitations		(1.9	)		(0.8	)		(0.5	)
Unrecognized tax benefit as of December 31	$	9.9		$	11.5		$	17.4

Of the total unrecognized tax benefits as of December 31, 2020, 2019, and 2018, $8.1 million, $8.6 million, and $14.4 million, respectively, represent the amounts that, if recognized, would have a favorable effect on our effective tax rate in any future periods.

The total gross amount of accrued interest and penalties for the years ended December 31, 2020, 2019, and 2018 was $3.9 million, $4.6 million, and $5.7 million, respectively. Our practice is to recognize interest and penalties associated with income taxes as a component of “Provision for income taxes” in our accompanying consolidated statements of operations.

We do not expect a significant increase in unrecognized benefits related to federal, state, or foreign tax exposures within the coming year. In addition, we believe that it is reasonably possible that approximately $5.8 million of our currently remaining unrecognized tax positions, each of which is individually insignificant, may be recognized by the end of 2021 as a result of a combination of audit settlements and lapses of statute of limitations, net of additional uncertain tax positions.

We are subject to tax in the U.S., various state, and foreign jurisdictions. Joined by our domestic subsidiaries, we file a consolidated income tax return. With a few exceptions, none of which are material to our consolidated financial statements as of December 31, 2020, we are no longer subject to U.S. federal, state and local, or non-US income tax examinations by tax authorities for tax years before 2016. In New Jersey, we are being audited for the years ended December 31, 2013 through 2018 with a statute extension until June 30, 2021. In Massachusetts, we are being audited for the years ended December 31, 2016 through 2018. We do not expect that the results of these examinations will have a material effect on our financial position, results of operations, or cash flow.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

14. Composition of Certain Financial Statement Caption:

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

	*2020*		*2019*
Accounts payable and accrued liabilities:
Accrued salaries, benefits and other related costs	$	158.7	$	147.4
Legal accrual (1)		126.5		128.4
Escrow liabilities		1.5		0.2
Accrued interest	20.7			19.0
Trade accounts payable and other accrued expenses		99.3		80.0
Total accounts payable and accrued liabilities	$	406.7	$	375.0

(1)	Included a litigation reserve for Xactware Solutions, Inc. Patent Litigation of $125.0 million.

The following table presents the components of "Other noncurrent assets" as of December 31:

	*2020*		*2019*
Other noncurrent assets:
Pension benefits	$	77.3	$	60.3
Other assets - prepaid expenses		70.6		57.0
Acquisition related escrows		18.5		10.5
Investments in non-public companies		192.6		27.1
Deposits and other		6.7		4.9
Total other noncurrent assets	$	365.7	$	159.8

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

15. Debt:

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

	*Issuance*	*Maturity*
	*Date*	*Date*	*2020*			*2019*
Short-term debt and current portion of long-term debt:
Syndicated revolving credit facility	Various	Various	$	50.0		$	495.0
Senior notes:
5.800% senior notes, less unamortized discount and debt issuance costs of $(0.1)	4/6/2011	5/1/2021		449.9			—
Finance lease liabilities (1)	Various	Various		14.4			4.4
Short-term debt and current portion of long-term debt				514.3			499.4
Long-term debt:
Senior notes:
3.625% senior notes, less unamortized discount and debt issuance costs of $(10.7)	5/13/2020	5/15/2050		489.3			—
4.125% senior notes (2), inclusive of unamortized premium, and net of unamortized discount and debt issuance costs of $12.4 and $13.9, respectively	3/6/2019	3/15/2029		612.4			613.9
4.000% senior notes, less unamortized discount and debt issuance costs of $(5.4) and $(6.7), respectively	5/15/2015	6/15/2025		894.6			893.3
5.500% senior notes, less unamortized discount and debt issuance costs of $(4.3) and $(4.5), respectively	5/15/2015	6/15/2045		345.7			345.5
4.125% senior notes, less unamortized discount and debt issuance costs of $(1.1) and $(1.6), respectively	9/12/2012	9/12/2022		348.9			348.4
5.800% senior notes, less unamortized discount and debt issuance costs of $(0.7)	4/6/2011	5/1/2021		—			449.3
Finance lease liabilities	Various	Various		10.3			3.3
Syndicated revolving credit facility debt issuance costs	Various	Various		(1.6	)		(2.1	)
Long-term debt				2,699.6			2,651.6
Total debt			$	3,213.9		$	3,151.0

(1) Refer to Note 8. Leases

(2) We offered an additional issuance of these notes on September 6, 2019.

Accrued interest associated with our outstanding debt obligations was $20.7 million and $19.0 million as of December 31, 2020 and 2019, respectively, and included in “Accounts payable and accrued liabilities” within our accompanying consolidated balance sheets. Interest expense associated with our finance lease and outstanding debt obligations, including amortization of debt issuance costs and original discounts, was $138.3 million, $125.7 million and $128.2 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Senior Notes

On May 8, 2020, we completed an issuance of $500.0 million aggregate principal amount of 3.625% senior notes due 2050 (the "2050 notes"). The 2050 notes mature on May 15, 2050 and accrue interest at a fixed rate of 3.625% per annum. Interest is payable semiannually on the 2050 notes on May 15th and November 15th of each year, beginning on November 15, 2020. The 2050 notes were issued at a discount of $5.2 million, and we incurred debt issuance costs of $5.7 million. The original issue discount and debt issuance costs were included in "Long-term debt" in our accompanying consolidated balance sheets, and these costs will be amortized to "Interest expense" in our accompanying consolidated statements of operations over the life of the 2050 notes. The net proceeds from the issuance of the 2050 notes were utilized to partially repay the committed senior unsecured Syndicated Revolving Credit Facility (the "Credit Facility") and for general corporate purposes. The indenture governing the 2050 notes restricts our 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 our assets, or merge with or into, any other person or entity. As of December 31, 2020 and December 31, 2019, we had senior notes with an aggregate principal amount of $3,150.0 million and $2,650.0 million outstanding, respectively, and were in compliance with our financial and other debt covenants.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Syndicated Revolving Credit Facility

We have a Credit Facility with a borrowing capacity of $1,000.0 million with Bank of America N.A., HSBC Bank USA, N.A., JP Morgan Chase Bank, N.A., Wells Fargo Bank, National Association, Citibank, N.A., Credit Suisse AG, Cayman Islands Branch, Morgan Stanley Bank, N.A., TD Bank, N.A., and the Northern Trust Company. Interest on borrowings under the Credit Facility is payable at an interest rate of LIBOR plus 1.0% to 1.625%, depending upon the public debt rating. A commitment fee on any unused balance is payable periodically and may range from 8.0 to 20.0 basis points based upon the public debt rating. The Credit Facility also contains certain financial and other covenants that, among other things, impose certain restrictions on indebtedness, liens, investments, and capital expenditures. These covenants place restrictions on mergers, asset sales, sale/leaseback transactions, and certain transactions with affiliates. The financial covenants require that, at the end of any fiscal quarter, we have a consolidated funded debt leverage ratio of less than 3.5 to 1.0. At our election, the maximum consolidated funded debt leverage ratio could be permitted to increase one time each to 4.0 to 1.0 and 4.25 to 1.0. The Credit Facility may be used for general corporate purposes, including working capital needs and capital expenditures, acquisitions, dividends and the share repurchase program (the "Repurchase Program"). As of December 31, 2020, we were in compliance with all financial and other debt covenants under the Credit Facility. As of December 31, 2020 and 2019, the available capacity under the Credit Facility was $944.6 million and $500.2 million, net of the letters of credit of $5.4 million and $4.8 million, respectively. Subsequent to December 31, 2020, we had no borrowings and made repayments of $50.0 million under the Credit Facility.

Debt Maturities

The following table reflects our debt maturities:

Years Ending	*Amount*
2021	$	514.4
2022		360.0
2023		0.3
2024		—
2025		900.0
2026 and thereafter		1,450.0
Total	$	3,224.7

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

16. Stockholders’ Equity:

We have 2,000,000,000 shares of authorized common stock as of December 31, 2020 and 2019. The common shares have rights to any dividend declared by our board of directors, subject to any preferential or other rights of any outstanding preferred stock, and voting rights to elect all eleven members of our board of directors.

We have 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. We did not issue any preferred shares as of December 31, 2020.

At December 31, 2020, 2019 and 2018, the adjusted closing price of our common stock was $207.59, $149.34, and $108.28 per share, respectively.

On February 12, 2020, April 29, 2020, July 29, 2020, and October 28, 2020, our board approved a cash dividend of $0.27 per share of common stock issued and outstanding to the holders of record as of March 13, 2020, June 15, 2020, September 15, 2020, and December 15, 2020, respectively. The cash dividends of $43.9 million, $44.0 million, $43.9 million, and $43.9 million were paid on March 31, 2020, June 30, 2020, September 30, 2020, and December 31, 2020 and recorded as a reduction to retained earnings, respectively.

Share Repurchase Program

Since May 2010, we have authorized repurchases of up to $3,800.0 million of our common stock through our Repurchase Program, inclusive of the $500.0 million authorization approved by our board on February 12, 2020. Since the introduction of share repurchase as a feature of our capital management strategies in 2010, we have repurchased shares with an aggregate value of $3,521.2 million. As of December 31, 2020, we had $278.8 million available to repurchase shares. We have no obligation to repurchase stock under this program and intend to use this authorization as a means of offsetting dilution from the issuance of shares under our 2013 Equity Incentive Plan (the "2013 Incentive Plan"), our 2009 Equity Incentive Plan (the “2009 Incentive Plan”), our sharesave plan (“UK Sharesave Plan”), and our employee stock purchase plan ("ESPP") 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 2019, March 2020, June 2020, and September 2020 we entered into Accelerated Share Repurchase ("ASR") agreements to repurchase shares of our common stock for an aggregate purchase price of $50.0 million, $75.0 million, $50.0 million, and $50.0 million, respectively, with HSBC Bank USA, N.A, Bank of America, N.A., and Citibank, N.A. The ASR agreements are each accounted for as a treasury stock transaction and a forward stock purchase agreement indexed to our common stock. The forward stock purchase agreements are each classified as an equity instrument under ASC 815-40, Contracts in Entity's Own Equity ("ASC 815-40") and were deemed to have a fair value of zero at the respective effective date. Upon payments of the aggregate purchase price on January 2, 2020, April 1, 2020, July 1, 2020, and October 1, 2020, we received an aggregate delivery of 267,845, 430,477, 235,018, and 215,855 shares of our common stock at a price of $149.34, $139.38, $170.20, and $185.31, respectively. Upon the final settlement of the ASR agreements in February 2020, June 2020, September 2020, and December 2020, we received additional shares of 40,901, 61,052, 41,272, and 47,042, respectively, as determined by the volume weighted average share price of our common stock during the term of the ASR agreements. The aggregate purchase price was recorded as a reduction to stockholders' equity in our consolidated statements of changes in stockholders' equity for the year ended December 31, 2020. These repurchases of 1,339,462 shares for the year ended December 31, 2020 resulted in a reduction of 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, 2020 and 2019, we repurchased 2,155,084 and 2,178,151 shares of common stock as part of the Repurchase Program, inclusive of the ASRs, at a weighted average price of $161.84 and $137.73 per share, respectively. We utilized cash from operations and borrowings from our Credit Facility to fund these repurchases.

Treasury Stock

As of December 31, 2020, our treasury stock consisted of 381,185,512 shares of common stock. During the years ended December 31, 2020, 2019 and 2018, we transferred 1,811,046, 1,369,305 and 2,973,947 shares of common stock, under the 2013 Incentive Plan and 2009 Incentive Plan, from the treasury shares at a weighted average price of $10.67, $9.72 and $8.71 per share, respectively.

Earnings Per Share

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

	*2020*		*2019*		*2018*
	(In millions, except for share and per share data)
Numerator used in basic and diluted EPS:
Net income	$	712.7	$	449.9	$	598.7
Denominator:
Weighted average number of common shares used in basic EPS		162,610,586		163,535,438		164,808,110
Effect of dilutive shares:
Potential common stock issuable from stock options and stock awards		2,710,123		3,024,677		3,489,726
Weighted average number of common shares and dilutive potential common shares used in diluted EPS		165,320,709		166,560,115		168,297,836

The potential shares of common stock that were excluded from diluted EPS were 513,137, 674,983 and 496,446 at December 31, 2020, 2019 and 2018, respectively, because the effect of including those potential shares was anti-dilutive.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accumulated Other Comprehensive Losses

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

	*2020*			*2019*
Foreign currency translation adjustment	$	(292.2	)	$	(400.1	)
Pension and postretirement adjustment, net of tax		(83.5	)		(86.8	)
Accumulated other comprehensive losses	$	(375.7	)	$	(486.9	)

The before tax and after tax amounts of other comprehensive income (loss) for the years ended December 31, 2020, 2019 and 2018 are summarized below:

				*Tax Benefit*
	*Before Tax*			*(Expense)*			*After Tax*
December 31, 2020
Foreign currency translation adjustment	$	107.9		$	—		$	107.9
Pension and postretirement adjustment before reclassifications		11.1			(2.9	)		8.2
Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (1)		(6.7	)		1.8			(4.9	)
Pension and postretirement adjustment		4.4			(1.1	)		3.3
Total other comprehensive income	$	112.3		$	(1.1	)	$	111.2
December 31, 2019
Foreign currency translation adjustment	$	88.4		$	—		$	88.4
Pension and postretirement adjustment before reclassifications		26.7			(6.4	)		20.3
Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (1)		(4.9	)		1.2			(3.7	)
Pension and postretirement adjustment		21.8			(5.2	)		16.6
Total other comprehensive income	$	110.2		$	(5.2	)	$	105.0
December 31, 2018
Foreign currency translation adjustment	$	(154.1	)	$	—		$	(154.1	)
Pension and postretirement adjustment before reclassifications	(36.7		)		9.1			(27.6	)
Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (1)		3.7			(0.9	)		2.8
Pension and postretirement adjustment		(33.0	)		8.2			(24.8	)
Total other comprehensive loss	$	(187.1	)	$	8.2		$	(178.9	)


(1)	These accumulated other comprehensive loss components, before tax, are included under “Cost of revenues” and “Selling, general and administrative” in our accompanying consolidated statements of operations. These components are also included in the computation of net periodic (benefit) cost (See Note 18. Pension and Postretirement Benefits for additional details).

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

17. Compensation Plans:

KSOP

We have 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 our 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 our employees equity participation 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 $19.5 thousand for 2020, $19.0 thousand for 2019 and $18.5 thousand for 2018. Certain eligible participants (age 50 and older) may contribute an additional $6.5 thousand on a pre-tax basis for 2020 and $6.0 thousand for 2019 and 2018. After-tax contributions are limited to 10.0% of a participant’s compensation. The matching contributions prior to April 1, 2018 were primarily equal to 75.0% of the first 6.0% of the participant’s contribution. Effective April 1, 2018, we amended the KSOP to increase the matching contributions to 87.5% of the first 6.0% of the participant’s contribution. Effective January 1, 2019, we increased the matching contributions to 100.0% of the first 6.0% of the participant’s contribution. The 401(k) matching contributions under the KSOP for the years ended December 31, 2020, 2019 and 2018, were $31.6 million, $31.0 million, $22.0 million, respectively; which, at our option, were funded in cash or in common stock issued from treasury shares.

In 2005, we 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. We can make a discretionary contribution to the Profit Sharing Plan based on our annual performance. Participants vest once they have completed four years and 1,000 hours of service. For the years ended December 31, 2020, 2019 and 2018, there were no profit sharing contributions.

Equity Compensation Plans

All of our outstanding stock options, restricted stock and PSUs are covered under our 2013 Incentive Plan or 2009 Incentive Plan. Awards under our 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 our 2013 Incentive Plan. We issued common stock under these plans from our treasury shares. The number of shares of common stock available for issuance under our 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 our 2013 Incentive Plan that become forfeited, expired or otherwise terminated shall again be available for issuance under our 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. We have granted equity awards to key employees and directors. The ultimate realization of the PSUs may range from 0% to 200% of the recipient’s target levels established on the grant date. As of December 31, 2020, there were 3,104,938 shares of common stock reserved and available for future issuance.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A summary of the status of the stock options, restricted stock and PSUs awarded under our 2013 Incentive Plan as of December 31, 2020, 2019 and 2018 and changes during the years is presented below.

	Stock Option							Restricted Stock					PSU
											*Weighted*						*Weighted*
				*Weighted*							*Average*						*Average*
				*Average*		*Aggregate*					*Grant Date*						*Grant Date*
	*Number*			*Exercise*		*Intrinsic*		*Number*			*Fair Value*		*Number*				*Fair Value*
	*of Options*			*Price*		*Value*		*of Shares*			*Per Share*		*of Shares*				*Per Share*
						(in millions)
Outstanding at January 1, 2018		8,907,109		$	53.31	$	380.2		604,464		$	78.28		—			$	—
Granted		958,332		$	104.23				207,041		$	104.34		46,705			$	140.70
Exercised or lapsed		(2,752,735	)	$	33.00	$	213.0		(225,205	)	$	76.88		—			$	—
Canceled, expired or forfeited		(292,660	)	$	79.16				(52,965	)	$	82.64		(4,655	)		$	140.70
Outstanding at December 31, 2018		6,820,046		$	67.27	$	284.9		533,335		$	88.55		42,050			$	140.70
Granted		920,398		$	135.64				167,231		$	135.82		51,792			$	173.59
Dividend reinvestment		—		$	—				—		$	—		550			Not applicable
Exercised or lapsed		(1,131,970	)	$	51.20	$	101.0		(242,815	)	$	84.60		—			$	—
Canceled, expired or forfeited		(175,660	)	$	92.27				(29,022	)	$	109.72		(432	)		$	134.24
Outstanding at December 31, 2019		6,432,814		$	79.51	$	449.2		428,729		$	107.96		93,960			$	158.50
Granted		936,843		$	159.28				163,441		$	159.96		50,736			$	192.93
Dividend reinvestment		—		$	—				—		$	—		913			Not applicable
Exercised or lapsed		(1,623,740	)	$	56.83	$	189.8		(178,317	)	$	102.00		—
Canceled, expired or forfeited		(134,140	)	$	125.95				(23,799	)	$	124.40		—
Outstanding at December 31, 2020		5,611,777		$	98.28	$	613.4		390,054		$	131.63		145,609			$	170.75
Exercisable at December 31, 2020		3,494,164		$	76.84	$	456.9
Exercisable at December 31, 2019		4,175,855		$	65.05	$	352.0
Nonvested at December 31, 2020		2,117,613							390,054					102,999
Expected to vest at December 31, 2020		1,900,586							354,959					268,294		(1)

(1)	Includes estimated performance achievement

The fair value of our 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:

	*2020*			*2019*			*2018*
Expected volatility		18.48	%		18.76	%		18.51	%
Risk-free interest rate		1.51	%		2.25	%		2.53	%
Expected term in years		4.3			4.4			4.4
Dividend yield		0.71	%		0.80	%		—	%
Weighted average grant date fair value per stock option	$	25.87		$	24.13		$	21.48

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A summary of the status of our nonvested options and changes are presented below:

			*Weighted Average Grant-Date Fair Value Per Share*
Nonvested balance at January 1, 2018	2,911,770		$	14.86
Granted	958,332		$	21.48
Vested	(1,117,513	)	$	14.79
Cancelled or expired	(292,660	)	$	15.33
Nonvested balance at December 31, 2018	2,459,929		$	17.41
Granted	920,398		$	24.13
Vested	(947,708	)	$	17.29
Cancelled or expired	(175,660	)	$	17.77
Nonvested balance at December 31, 2019	2,256,959		$	20.17
Granted	936,843		$	25.87
Vested	(942,049	)	$	18.30
Cancelled or expired	(134,140	)	$	22.40
Nonvested balance at December 31, 2020	2,117,613		$	23.39

Intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the quoted price of our common stock as of the reporting date. Excess tax benefits of $42.9 million, $23.2 million and $48.9 million from exercised stock options were recorded as income tax benefit in our accompanying consolidated statements of operations for the years ended December 31, 2020, 2019 and 2018, respectively. Stock-based compensation expense for the years ended December 31, 2020, 2019 and 2018 was $47.6 million, $42.7 million and $38.5 million, respectively. Cash received from stock option exercises for the years ended December 31, 2020, 2019 and 2018 was $88.0 million, $52.4 million and $87.3 million, respectively. As of December 31, 2020, the weighted average remaining contractual terms were 6.0 years and 4.7 years for outstanding and exercisable stock options, respectively. As of December 31, 2019, the weighted average remaining contractual terms were 5.8 years and 4.6 years for outstanding and exercisable stock options, respectively.

For the year ended December 31, 2020 and 2019, certain employees had restricted stock vesting and covered the aggregate statutory minimum tax withholding of $4.1 million and $5.5 million through a net settlement of 27,890 shares and 40,578 shares, respectively.

As of December 31, 2020, there was $82.4 million of total unrecognized compensation cost, exclusive of the impact of vesting upon retirement eligibility, related to nonvested share-based compensation arrangements granted under our 2013 Incentive Plan. That cost is expected to be recognized over a weighted-average period of 2.3 years. The total grant date fair value of options vested during the years ended December 31, 2020, 2019 and 2018 was $20.1 million, $17.4 million and $16.8 million, respectively. The total grant date fair value of restricted stock vested during the years ended December 31, 2020, 2019 and 2018 was $22.3 million, $20.2 million and $18.6 million, respectively. The total grant date fair value of PSUs vested during the years ended December 31, 2020, 2019 and 2018 was $8.2 million, $4.2 million and $1.5 million, respectively.

Our UK Sharesave Plan offers qualifying employees in the United Kingdom the opportunity to own shares of our common stock. Employees who elect to participate are granted stock options, of which the exercise price is equal to the adjusted closing price of our common stock on the grant date discounted by 5%, and enter into a savings contract, the proceeds of which are then used to exercise the options upon the three-year maturity of the savings contract. During the years ended December 31, 2020, 2019 and 2018, we granted 8,174, 18,713 and 19,247 stock options under the UK Sharesave Plan at a discounted exercise price of $159.98, $136.35 and $101.27, respectively. As of December 31, 2020, there were 454,178 shares of common stock reserved and available for future issuance under our UK Sharesave Plan.

We also offer eligible employees the opportunity to participate in an ESPP. Under our 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 $25.0 thousand in any calendar year, to purchase shares of our common stock at a 5.0% discount of its fair market value at the time of purchase. In accordance with ASC 718, our 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, 2020, 2019 and 2018, we issued 32,502, 30,705 and 30,550 shares of common stock at a weighted average discounted price of $164.44, $141.17 and $104.71, respectively. As of December 31, 2020, there were 1,260,266 shares of common stock reserved and available for future issuance under our ESPP.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

18. Pension and Postretirement Benefits:

We have a frozen qualified defined benefit pension plan for certain of our employees through membership in the Pension Plan for Insurance Organizations (the “Pension Plan”), a multiple-employer trust. Prior to the freeze, we applied a cash balance formula to determine future benefits. Under the cash balance formula, each participant has an account, which was credited annually based on salary rates determined by years of service, as well as the interest earned on the previous year-end cash balance. We also have a non-qualified frozen supplemental cash balance plan (“SERP”) for certain employees. Our SERP is funded from our general assets.

Our 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. The minimum contribution requirement was and is expected to be $0 in 2020 and 2021, respectively. We contributed $0.7 million to our SERP in 2020 and 2019, and expect to contribute $1.0 million in 2021.

We also provide 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. We do not expect to contribute to our Postretirement Plan in 2021.

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

	Pension Plan and SERP						Postretirement Plan
	*2020*			*2019*			*2020*			*2019*
Change in benefit obligation:
Benefit obligation at January 1	$	443.6		$	407.8		$	8.2		$	9.7
Interest cost		12.6			15.6			0.2			0.3
Actuarial loss (gain)		32.1			48.2			(0.2	)		(0.4	)
Plan participants’ contributions		—			—			1.6			2.1
Benefits paid		(28.4	)		(28.0	)		(2.3	)		(3.6	)
Federal subsidy on benefits paid		—			—			—			0.1
Benefit obligation at December 31	$	459.9		$	443.6		$	7.5		$	8.2
Accumulated benefit obligation at December 31	$	459.9		$	443.6
Change in plan assets:
Fair value of plan assets at January 1	$	488.9		$	421.3		$	10.3		$	9.7
Actual return on plan assets, net of expenses		59.6			94.9			0.3			0.6
Employer contributions, net		0.7			0.7			0.6			1.4
Plan participants’ contributions		—			—			1.6			2.1
Benefits paid		(28.4	)		(28.0	)		(2.3	)		(3.6	)
Federal subsidies received		—			—			—			0.1
Fair value of plan assets at December 31	$	520.8		$	488.9		$	10.5		$	10.3
Funded status at December 31	$	(60.9	)	$	(45.3	)	$	(3.0	)	$	(2.1	)
Amounts recognized in the consolidated balance sheets consist of:
Pension assets, noncurrent (1)	$	(74.3	)	$	(58.2	)	$	(3.0	)	$	(2.1	)
Pension, SERP and postretirement benefits, current (2)		1.0			0.8			—			—
Pension, SERP and postretirement benefits, noncurrent (3)		12.4			12.1			—			—
Total Pension, SERP and Postretirement benefits	$	(60.9	)	$	(45.3	)	$	(3.0	)	$	(2.1	)

(1) Included in "Other assets" in our accompanying consolidated balance sheets

(2) Included in "Accounts payable and accrued liabilities" in our accompanying consolidated balance sheets

(3) Included in "Other liabilities" in our accompanying consolidated balance sheets

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

	Pension Plan and SERP				Postretirement Plan
	*2020*		*2019*		*2020*			*2019*
Prior service benefit cost (credit)	$	3.0	$	3.2	$	(0.1	)	$	(0.3	)
Actuarial losses		133.2		137.1		3.1			3.8
Accumulated other comprehensive losses, pretax	$	136.2	$	140.3	$	3.0		$	3.5

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

	Pension Plan and SERP									Postretirement Plan
	*2020*			*2019*			*2018*			*2020*			*2019*			*2018*
Interest cost	$	12.6		$	15.6		$	15.2		$	0.2		$	0.3		$	0.3
Expected return on plan assets		(29.9	)		(30.3	)		(32.9	)		(0.2	)		(0.2	)		(0.2	)
Amortization of prior service cost (credit) reclassified from accumulated other comprehensive losses		0.2			0.2			0.2			(0.1	)		(0.1	)		(0.1	)
Amortization of net actuarial loss reclassified from accumulated other comprehensive losses		6.3			4.5			3.2			0.3			0.3			0.4
Net periodic benefit (credit) cost		(10.8	)		(10.0	)		(14.3	)		0.2			0.3			0.4
Amortization of prior service (cost) credit reclassified from accumulated other comprehensive losses		(0.2	)		(0.2	)		(0.2	)		0.1			0.1			0.1
Amortization of actuarial loss reclassified from accumulated other comprehensive losses		(0.2	)		(0.1	)		(0.1	)		—			—			—
Net loss recognized reclassified from accumulated other comprehensive losses		(6.1	)		(4.4	)		(3.1	)		(0.3	)		(0.3	)		(0.4	)
Actuarial (gain) loss		2.4			(16.4	)		37.0			(0.3	)		(0.8	)		(0.3	)
Total recognized in other comprehensive (income) loss		(4.1	)		(21.1	)		33.6			(0.5	)		(1.0	)		(0.6	)
Total recognized in net periodic benefit (credit) cost and other comprehensive (income) loss	$	(14.9	)	$	(31.1	)	$	19.3		$	(0.3	)	$	(0.7	)	$	(0.2	)

The weighted-average assumptions used to determine benefit obligations as of December 31, 2020 and 2019 and net periodic benefit (credit) cost for the years 2020, 2019 and 2018 are provided below:

	Pension Plan and SERP									Postretirement Plan
Weighted-average assumptions used to determine benefit obligations:	*2020*			*2019*						*2020*			*2019*
Discount rate		2.49	%		3.24	%					1.50	%		2.50	%
Expected return on plan assets		6.50	%		6.75	%					2.00	%		2.00	%
Cash balance interest credit rate		2.57	%		2.57	%					Not applicable

Weighted-average assumptions used to determine net periodic benefit (credit) loss:	*2020*			*2019*			*2018*			*2020*			*2019*			*2018*
Discount rate		2.83	%		3.82	%		3.50	%		2.50	%		3.75	%		3.00	%
Expected return on plan assets		6.75	%		7.00	%		7.00	%		2.00	%		2.00	%		2.00	%
Cash balance interest credit rate		2.57	%		2.57	%		2.57	%		Not applicable

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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*		Postretirement
	*and SERP*		Plan
	*Gross*		*Gross*		*Medicare*			*Net*
	*Benefit*		*Benefit*		*Subsidy*			*Benefit*
	*Amount*		*Amount*		*Payments*			*Amount*
2021	$	30.5	$	1.2	$	(0.2	)	$	1.0
2022	$	30.1	$	1.1	$	(0.2	)	$	0.9
2023	$	30.3	$	1.0	$	(0.2	)	$	0.8
2024	$	29.9	$	0.8	$	—		$	0.8
2025	$	28.9	$	0.7	$	—		$	0.7
2026-2030	$	135.5	$	2.4	$	(0.1	)	$	2.3

The healthcare cost trend rate for 2021 was 8.00% gradually decreasing to 4.50% in 2035. Assumed healthcare cost trend rates have a significant effect on the amounts reported for the healthcare plan. However, a 1.00% change in assumed healthcare cost trend rates would have an immaterial effect to our postretirement benefit obligation.

The subsidy benefit from the Medicare Prescription Drug, Improvement and Modernization Act of 2003 reduced our accumulated postretirement benefit assets by approximately $0.8 million as of December 31, 2020 and 2019. The subsidy cost increased the net periodic benefit cost by approximately $58.2 thousand, $48.5 thousand and $51.0 thousand in fiscal 2020, 2019 and 2018, respectively.

The expected return on our Pension Plan assets as of December 31, 2020 and 2019 was 6.50% and 6.75%, respectively, which was determined by taking into consideration our analysis of our actual historical investment returns to a broader long-term forecast after adjusting for the target investment allocation and reflecting the current economic environment. During the first quarter of 2020, we changed the investment guidelines on our Pension Plan assets to target investment allocation of 55% to equity securities and 45% to debt securities from our previous target allocation of 60% to equity securities and 40% to debt securities as of December 31, 2019. Our 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. As of December 31, 2020 and 2019, the domestic equity portion of the total portfolio ranged between 40% and 60%. The international equity portion of the total portfolio ranged between 10% and 20%. The fixed income portion of the total portfolio ranged between 20% and 40%.

The asset allocation at December 31, 2020 and 2019, and target allocation by asset category are as follows:

	*Target*			Percentage of Plan Assets
Asset Category	*Allocation*			*2020*			*2019*
Equity securities		55.0	%		52.5	%		53.7	%
Debt securities		45.0	%		40.0	%		37.9	%
Other		—	%		7.5	%		8.4	%
Total		100.0	%		100.0	%		100.0	%

We have used the target investment allocation to derive the expected return as we believe 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 our 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. We believe 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.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We also maintain 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 our VEBA Plan at December 31, 2020 and 2019 was 100% in debt securities.

There were no transfers among Levels 1, 2 or 3 for the years ended December 31, 2020 and 2019. 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 our Pension Plan and Postretirement Plan assets:

			*Quoted Prices*		*Significant*
			*in Active*		*Other*		*Significant*
			*Markets for*		*Observable*		*Unobservable*
			*Identical Assets*		*Inputs*		*Inputs*
	*Total*		*(Level 1)*		*(Level 2)*		*(Level 3)*
December 31, 2020
Equity
Managed equity accounts (1)	$	206.3	$	206.3	$	—	$	—
Equity — pooled separate account (2)		67.2		—		67.2		—
Debt
Fixed income manager — pooled separate account (2)		208.3		—		208.3		—
Fixed income manager — government securities (4)		10.5		10.5		—		—
Others
Cash — pooled separate account (2)		2.1		—		2.1		—
Global real estate account (5)		36.9		—		36.9		—
Total	$	531.3	$	216.8	$	314.5	$	—
December 31, 2019
Equity
Managed equity accounts (1)	$	196.1	$	196.1	$	—	$	—
Equity — pooled separate account (2)		66.1		—		66.1		—
Equity — partnerships (3)		0.1		—		—		0.1
Debt
Fixed income manager — pooled separate account (2)		185.4		—		185.4		—
Fixed income manager — government securities (4)		10.3		10.3		—		—
Others
Cash — pooled separate account (2)		3.4		—		3.4		—
Global real estate account (5)		37.8		—		37.8		—
Total	$	499.2	$	206.4	$	292.7	$	0.1


(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.

(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.


(5)	The funds invested in common stocks and other equity securities issued by domestic and foreign real estate companies, including real estate investment trusts ("REIT") and similar REIT-like entities. The fair values of these stocks, bonds and mutual funds are publicly quoted and are used in determining the NAV of the funds, which is not publicly quoted.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

19. 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. Our President and CEO is identified as the CODM as defined by ASC 280-10.

Each of our reportable segments, Insurance, Energy and Specialized Markets, and Financial Services has a portion of its revenue from more than one of the three revenue types described within the revenue recognition policy within Note 2. Basis of Presentation and Summary of Significant Accounting Policies. Below is the overview of the solutions offered within each reportable segment.

Insurance: We are the leading provider of statistical, actuarial and underwriting data for the U.S. P&C insurance industry. Our 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. We use 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, which are accessed via a hosted platform. We also develop solutions that our customers use to analyze key processes in managing risk. Our combination of algorithms and analytic methods incorporates our proprietary data to generate solutions. In most cases, our customers integrate the solutions into their models, formulas or underwriting criteria in order to predict potential loss events, ranging from hurricanes to earthquakes. We develop catastrophe and extreme event models and offer solutions covering natural and man-made risks, including acts of terrorism. We further develop solutions that allow customers to quantify costs after loss events occur. Our multitier, multispectral terrestrial imagery and data acquisition, processing, analytics, and distribution system using the remote sensing and machine learning technologies help gather, store, process, and deliver geographic and spatially referenced information that supports uses in many markets. Additionally, we offer fraud-detection solutions including review of data on claim histories, analysis of claims to find emerging patterns of fraud, and identification of suspicious claims in the insurance sector. Our underwriting & rating, insurance anti-fraud claims, catastrophe modeling, and loss quantification are included in this segment. During the first quarter of 2020, our CODM transferred Maplecroft, an immaterial component of the Energy and Specialized Markets segment, to the Insurance segment. Consequently, effective as of the first quarter 2020, Maplecroft became part of the underwriting and rating category within the Insurance segment. We previously reported results from Maplecroft under the Energy and Specialized Markets segment. Our prior year results have been recast to reflect this change. The related impact to our consolidated financial statements was not material for all periods presented.

Energy and Specialized Markets: We are a leading provider of data analytics via hosted platform for the global energy, chemicals, and metals and mining industries. Our research and consulting solutions focus on exploration strategies and screening, asset development and acquisition, commodity markets, and corporate analysis in the areas of business environment, business improvement, business strategies, commercial advisory, and transaction support. We gather and manage proprietary information, insight, and analysis on oil and gas fields, mines, refineries and other assets across the interconnected global energy sectors to advise customers in making asset investment and portfolio allocation decisions. We also help businesses and governments better anticipate and manage climate and weather-related risks. Our analytical tools measure and observe environmental properties and translate those measurements into actionable information based on customer needs. In addition, we provide market and cost intelligence to energy companies to optimize financial results. We further offer a suite of data and information services that enable improved compliance with global Environmental Health and Safety requirements related to the safe manufacturing, distribution, transportation, usage, and disposal of chemicals and products. Our energy business, environmental health and safety services and, weather risk solutions are included in this segment

Financial Services: We maintain a bank account consortia to provide competitive benchmarking, decisioning algorithms, business intelligence, and customized analytic services that help financial institutions, payment networks and processors, alternative lenders, regulators and merchants make better strategy, marketing, and risk decisions. Customers apply our solutions in the areas of tailored data management and media effectiveness that include business intelligence platforms, profile views, mobile data solutions, enterprise database services, and fraud risk scoring algorithms for marketing, fraud, and risk mitigation. In addition, our bankruptcy management solutions assist creditors, debt servicing businesses and credit services to enhance regulatory compliance by eliminating stay violation and portfolio valuation risk.

The three aforementioned operating segments represent the segments for which discrete financial information is available and upon which operating results are regularly evaluated by our CODM in order to assess performance and allocate resources. We use 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. EBITDA is the measure of operating results used to assess corporate performance and optimal utilization of debt and acquisitions. 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. We do not allocate interest expense and provision for income taxes, since these items are not considered in evaluating the segment’s overall operating performance. In addition, our CODM does not evaluate the financial performance of each segment based on assets. See Note 6. Revenues for information on disaggregated revenues by type of service and by country.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

	2020												2019												2018
	*Insurance*			*Energy and Specialized Markets*			*Financial Services*			*Total*			*Insurance*			*Energy and Specialized Markets*			*Financial Services*			*Total*			*Insurance*			*Energy and Specialized Markets*			*Financial Services*			*Total*
Revenues	$	1,986.3		$	641.6		$	156.7		$	2,784.6		$	1,865.2		$	563.9		$	178.0		$	2,607.1		$	1,714.9		$	504.3		$	175.9		$	2,395.1
Expenses:
Cost of revenues (exclusive of items shown separately below)		(628.4	)		(272.7	)		(92.8	)		(993.9	)		(639.9	)		(239.7	)		(97.2	)		(976.8	)		(575.6	)		(210.7	)		(99.9	)		(886.2	)
Selling, general and administrative		(243.3	)		(150.9	)		(19.7	)		(413.9	)		(402.7	)		(181.1	)		(19.7	)		(603.5	)		(223.2	)		(136.7	)		(18.8	)		(378.7	)
Other operating income (loss)		15.9			—			3.5			19.4			—			—			(6.2	)		(6.2	)		—			—			—			—
Investment (loss) income and others, net		(1.2	)		(1.2	)		—			(2.4	)		0.7			(1.9	)		(0.5	)		(1.7	)		13.0			0.6			1.7			15.3
EBITDA	$	1,129.3		$	216.8		$	47.7			1,393.8		$	823.3		$	141.2		$	54.4			1,018.9		$	929.1		$	157.5		$	58.9			1,145.5
Depreciation and amortization of fixed assets											(192.2	)											(185.7	)											(165.3	)
Amortization of intangible assets											(165.9	)											(138.0	)											(130.8	)
Interest expense											(138.2	)											(126.8	)											(129.7	)
Income before income taxes										$	897.5											$	568.4											$	719.7

Long-lived assets by country are provided below as of December 31:

	*2020*		*2019*
Long-lived assets:
U.S.	$	3,525.0	$	3,162.5
U.K.		2,775.8		2,685.3
Other countries		466.8		462.5
Total long-lived assets	$	6,767.6	$	6,310.3

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

20. Related Parties:

We consider our 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. We had no material transactions with related parties owning more than 5% of the entire class of stock as of December 31, 2020 and 2019.

In addition, we had no revenues from related parties for the years ended December 31, 2020, 2019 and 2018.

21. Commitments and Contingencies:

We are 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, we are unable, at the present time, to determine the ultimate resolution of or provide a reasonable estimate of the range of possible loss attributable to ongoing matters or the impact these matters may have on our results of operations, financial position or cash flows. Although we believe we have strong defenses and intend to appeal any adverse rulings to us, we could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on our results of operations, financial position or cash flows.

Xactware Solutions, Inc. Patent Litigation

On October 8, 2015, we were 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 "Court"). The complaint alleged that our Roof InSight (now known as Geomni Roof), Property InSight product (now known as Geomni Property) and Aerial Sketch product in combination with our Xactimate product infringe seven patents owned by Eagle View and Pictometry namely, Patent Nos. 8,078,436 (the "436 patent"), 8,170,840 (the "840 patent"), 8,209,152 (the "152 patent"), 8,542,880 (the "880 patent"), 8,818,770 (the "770 patent"), 8,823,732 (the "732 patent"), and 8,825,454 (the "454 patent"). On November 30, 2015, plaintiffs filed a First Amended Complaint adding Patent Nos. 9,129,376 (the "376 patent") and 9,135,737 (the "737 patent") to the lawsuit. The First Amended Complaint sought an entry of judgment by the Court that defendants have and continue to directly infringe and/or indirectly infringe, including by way of inducement, the Patents-in-Suit, permanent injunctive relief, damages, costs and attorney’s fees. On May 19, 2017, the District Court entered a Joint Stipulated Order of Partial Dismissal with Prejudice dismissing all claims or assertions pertaining to the 880 and 732 patents, and certain asserted claims of the 436, 840, 152, 770, 454, 376 and 737 patents (collectively the “Patents in Suit”). Subsequently, Eagle View dropped the 152 patent and the 737 patent and reduced the number of asserted claims from the five remaining Patents in Suit to six asserted claims. On September 25, 2019, following a trial, the jury determined that we had willfully infringed the six asserted claims, and assessed damages in the amount of $125.0 million. After trial, Eagle View moved for a temporary restraining order (“TRO”) and a permanent injunction preventing our sales of the Geomni Roof, Geomni Property and Aerial Sketch products in combination with Xactimate. The Court granted the motion for a TRO on September 26, 2019 and on October 18, 2019, issued an Order permanently enjoining our sales of the Geomni Roof, Geomni Property and Aerial Sketch products in combination with Xactimate. In addition, Eagle View has asked the Court to award enhanced damages by trebling the jury's damages award, together with attorneys' fees, costs, and pre- and post-judgment interest. We opposed all of Eagle View's requests and asked the Court for judgment as a matter of law and for a new trial. Eagle View opposed our requests. On September 9, 2020, the Court denied our motion seeking judgment as a matter of law and a new trial. We timely filed our Amended Notice of Appeal on October 8, 2020. Eagle View filed a motion to dismiss or deactivate the appeal for lack of appellate jurisdiction on November 4, 2020 which was denied by the Federal Circuit on December 15, 2020. We filed our appellate brief on December 24, 2020. On February 16, 2021, the Court granted Eagle View's motion for enhanced damages and attorneys' fees. The Court trebled the jury's award of $125.0 million, awarding enhanced damages for a total of $375.0 million, and also awarded Eagle View pre-judgment and post-judgment interest. The Court's award of Eagle View's attorneys' fees was limited to the period just before the commencement of trial through the trial, and did not include the earlier approximately four-year period in the case. Following the outcome of the trial, we established a $125.0 million reserve in connection with this litigation, which was included in selling, general and administrative expenses in our consolidated statements of operations for the year ended December 31, 2019. Since the appeal to the Federal Circuit remains pending, it is not reasonably possible to determine the ultimate resolution of this matter at this time. While the ultimate resolution of this matter remains uncertain at this time, should our appeal be unsuccessful, we could incur additional expenses up to the amount by which the enhanced damages award, plus pre-judgment and post-judgment interest and attorneys' fees, exceeds the existing $125.0 million reserve.

ERISA Litigation

On September 24, 2020, former employees Jillyn Peterson, Gabe Hare, Robert Heynen and Adam Krajewski (“Plaintiffs”), filed suit in the United States District Court, District of New Jersey (No. 2:20-cv-13223-CCC-MF) against Defendants Insurance Services Office Inc. (“ISO”), the Plan Administration Committee of Insurance Services Office Inc. and its members ("Committee Defendants"), and the Trust Investment Committee of Insurance Services Office Inc. and its members. The class action complaint alleges violations of the Employee Retirement Income Security Act, ERISA. The class is defined as all persons who were participants in or beneficiaries of the ISO 401(k) Savings and Employee Stock Ownership Plan (“Plan”), at any time between September 24, 2014 through the date of judgment. The complaint alleges that all defendants are fiduciaries with respect to the Plan. Plaintiffs challenge the amount of fees paid by Plan participants to maintain the investment funds in the plan portfolio and the amount of recordkeeper fees paid by participants. Plaintiffs allege that by permitting the payment of excessive fees, the Committee Defendants breached their ERISA duties of prudence and loyalty. Plaintiffs further allege that ISO breached its ERISA duty by failing to monitor the Committee Defendants who they allege committed known breaches of their fiduciary duties. The complaint does not specify damages but alleges the fiduciary breaches cost Plan participants millions of dollars. Defendants filed their motion to dismiss the complaint on January 12, 2021. At this time, it is not possible to reasonably estimate the liability related to this matter.

ISO Claims Partners Litigation

On October 23, 2020, Cara Jane Penegar, as Executrix of the Estate of Johnny Ray Penegar, Jr., filed a putative class action lawsuit in the United States District Court for the Western District of North Carolina, 3:20-cv-585-RJC-DCK, against Liberty Mutual Insurance Company and Liberty Mutual Fire Insurance Company (collectively “Liberty Mutual”), as well as Verisk Analytics, Inc. and ISO Claims Partners, Inc. (collectively “we”). The complaint alleges that Liberty Mutual violated the Medicare Secondary Payer Act (“MSPA”) by failing to reimburse Medicare for medical services that should have been covered by its policies, with the result that Medicare bore the cost instead. The suit alleges that we are jointly and severally liable because of our involvement in Medicare reporting and/or other plan management. The complaint pleads a North Carolina class and a nationwide class, each composed of: all Medicare enrollees (within the respective geographic areas) for whom Medicare paid for an item or service where Liberty Mutual was the carrier and/or we were involved in claims administration; where defendants were demonstrated to be responsible for payment of the medical services via a workers’ compensation judgment, settlement, award, or contractual obligation; where defendants provided notice to the government of the fact of the settlement, judgment or award establishing their responsibility on or after October 23, 2017; but where defendants failed to make timely payment. The complaint does not identify the amount of damages sought but seeks double damages under the MSPA on behalf of all class members for all amounts at issue, as well as interest and attorneys’ fees. Defendants’ motions to dismiss the complaint were fully briefed on January 28, 2021. At this time, it is not possible to reasonably estimate the liability related to this matter.

Jornaya Litigation

On February 2, 2021 we were served with a punitive class action lawsuit brought by Peter Dyloco in the United States District Court for the Northern District of California against Mazda Motor of America, Inc. and Lead Intelligence, Inc. d/b/a/ Jornaya (collectively “we”, "us") and Mouseflow, Inc. No. 3:20-cv-09099-JCS. In this action plaintiff alleges a class of all California residents who visited mazdausa.com and whose electronic communications were intercepted or recorded by Jornaya and/or Mouseflow without their consent. The class complaint alleges that we, Mazda and Mouseflow violated California Invasion of Privacy Act (“CIPA”), Cal. Penal Code sections 631 and 635 by “wiretapping” and “intercepting” the communications of California residents with Mazda during their visit to Mazda’s website. For each of these counts the complaint claims damages pursuant to Cal. Penal Code section 637 for the greater of 5,000 dollars or three times the actual damages per violation of the statute and injunctive relief. At this time, it is not possible to reasonably estimate the liability related to this matter.

VERISK ANALYTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

22. Subsequent Events:

In December 2020, we entered into an additional ASR agreement with HSBC Bank USA, N.A. to repurchase shares of our common stock for an aggregate purchase price of $50.0 million. Upon payment of the aggregate purchase price on January 4, 2021, we received an initial delivery of 192,687 shares of our common stock at a price of $207.59 per share, representing approximately $40.0 million of the aggregate purchase price. Upon the final settlement of the ASR agreement in March 2021, we may be entitled to receive additional shares of our common stock or, under certain limited circumstances, be required to deliver shares to the counter-party. See Note 16. Stockholders' Equity for further discussion.

On January 15, 2021, we granted 706,851 stock options, 134,840 shares of restricted stock, and 59,144 performance share units to key employees. The stock options and restricted stock have a graded service vesting period of four years, and the performance share units have a three-year performance period, subject to the recipients' continued service. See Note 17. Compensation Plans for further discussion.

On February 16, 2021, our Board approved an additional share repurchase authorization of $300.0 million.

On February 17, 2021, our Board approved a cash dividend of $0.29 per share of common stock issued and outstanding, payable on March 31, 2021, to holders of record as of March 15, 2021.

Schedule II

Valuation and Qualifying Accounts and Reserves

For the Years Ended December 31, 2020, 2019 and 2018

(In millions)

	*Balance at*		*Charged to*
	*Beginning*		*Costs and*		*Deductions—*			*Balance at*
Description	*of Year*		*Expenses (1)*		*Write-offs (2)*			*End of Year*
Year ended December 31, 2020
Allowance for doubtful accounts	$	11.7	$	13.1	$	(7.1	)	$	17.7
Valuation allowance for income taxes	$	46.5	$	10.7	$	(9.2	)	$	48.0
Year ended December 31, 2019
Allowance for doubtful accounts	$	5.7	$	7.2	$	(1.2	)	$	11.7
Valuation allowance for income taxes	$	34.5	$	16.7	$	(4.7	)	$	46.5
Year ended December 31, 2018
Allowance for doubtful accounts	$	4.6	$	5.6	$	(4.5	)	$	5.7
Valuation allowance for income taxes	$	17.6	$	21.2	$	(4.3	)	$	34.5

	(1)	Primarily additional reserves for bad debts


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

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 3.1 to the Company’s Current Report on Form 8-K, dated February 15, 2019.

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	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.

4.5	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.

4.6	Senior Notes Indenture, dated March 6, 2019, among Verisk Analytics, Inc. 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 March 6, 2019.

4.7	First Supplemental Indenture, dated March 6, 2019, 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 March 6, 2019.

4.8	Second Supplemental Indenture, dated May 13, 2020, between Verisk Analytics, Inc. 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 May 13, 2020.

4.9	Description of Verisk Analytics, Inc.’s securities registered pursuant to Section 12 of the Securities Exchange Act, incorporated herein by reference to Exhibit 4.8 to the Company's Annual Report on Form 10-K, dated February 18, 2020.

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.

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.

Exhibit Number	Description
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 10.12 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 10.13 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.

10.16	Second Amendment to the Second Amended and Restated Credit Agreement dated May 26, 2016 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 May 26, 2016.

10.17	Third Amendment to the Second Amended Restated Credit Agreement dated May 18, 2017 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 May 19, 2017.

10.18	Fourth Amendment dated August 15, 2019 to the 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 10.18 to the Company’s Current Report on Form 8-K, dated August 16, 2019.

Exhibit Number	Description
10.19	Agreement of Purchase and Sale dated April 25, 2016 among Verisk Analytics, Inc., Argus Information and Advisory Services, LLC, Verisk Health, Inc., MediConnect Global, Inc., VCVH Holding Corp., VCVH Holdings LLC, VCVH Intermediate Holding Corp. and VCVH Holding II Corp., incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 28, 2016.

10.20	Restated Transition and Separation Agreement and General Release dated February 5, 2021 between Verisk Analytics, Inc. and Kenneth E. Thompson.*

21.1	Subsidiaries of the Registrant, incorporated herein by reference to Exhibit 21.1 to the Company’s annual report on Form 10-K dated February 20, 2018.

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	Inline XBRL Instance Document.*

101.SCH	Inline XBRL Taxonomy Extension Schema.*

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase.*

101.DEF	Inline XBRL Taxonomy Definition Linkbase.*

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase.*

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase.*

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).*


*	Filed herewith.

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, 2021.

	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, 2021.

Signature		Capacity

/S/ SCOTT G. STEPHENSON		President and Chief Executive Officer (principal executive officer and director)
Scott G. Stephenson

/S/ LEE M. SHAVEL		Executive Vice President and Chief Financial Officer
Lee M. Shavel		(principal financial officer)

/S/ DAVID J. GROVER		Vice President and Controller
David J. Grover		(principal accounting officer)

/S/ CHRISTOPHER M. FOSKETT		Lead Independent Director
Christopher M. Foskett

/S/ ANNELL BAY		Director
Annell R. Bay

/S/ VINCENT BROOKS		Director
Vincent K. Brooks

/S/ BRUCE E. HANSEN		Director
Bruce E. Hansen

/S/ KATHLEEN HOGENSON		Director
Kathleen A. Hogenson

/S/ CONSTANTINE P. IORDANOU		Director
Constantine P. Iordanou

/S/ LAURA K. IPSEN		Director
Laura K. Ipsen

/S/ SAMUEL G. LISS		Director
Samuel G. Liss

/S/ ANDREW G. MILLS		Director
Andrew G. Mills

/S/ THERESE M. VAUGHAN		Director
Therese M. Vaughan

/S/ DAVID B. WRIGHT		Director
David B. Wright

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