Verisk Analytics (VRSK) 10-K risk factor changes: FY2021 vs FY2020

For the fiscal year ended December 31, [removed: 2020][added: 2021]

As of June 30, [removed: 2020,] [added: 2021,] the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was [removed: $26,448,164,972] [added: $27,228,949,452] based on the closing price reported on the NASDAQ Global Select Market on such date.

As of February [removed: 19, 2021,] [added: 18, 2022,] there were [removed: 162,791,583] [added: 161,282,942] shares outstanding of the registrant's Common Stock, par value $.001.

Certain information required by Part III of this annual report on Form 10-K is incorporated by reference to our definitive Proxy Statement for our [removed: 2021] [added: 2022] Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission not later than 120 days after December 31, [removed: 2020.][added: 2021.]

| | Item 1A. | [Risk Factors](#i1a) | [removed: [14](#i1a)] [added: [16](#i1a)] |

| | Item 1B. | [Unresolved Staff Comments](#i1b) | [removed: [21](#i1b)] [added: [26](#i1b)] |

| | Item 2. | [Properties](#i2) | [removed: [21](#i2)] [added: [26](#i2)] |

| | Item 3. | [Legal Proceedings](#i3) | [removed: [21](#i3)] [added: [26](#i3)] |

| | Item 4. | [Mine Safety Disclosures](#i4) | [removed: [21](#i4)] [added: [26](#i4)] |

| | Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#i5) | [removed: [22](#i5)] [added: [27](#i5)] |

| | Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#i7) | [removed: [26](#i7)] [added: [30](#i7)] |

| | Item 7A. | [Quantitative and Qualitative Disclosures About Market Risk](#i7a) | [removed: [39](#i7a)] [added: [45](#i7a)] |

| | Item 8. | [Consolidated Financial Statements and Supplementary Data](#i8) | [removed: [39](#i8)] [added: [45](#i8)] |

| | | [Consolidated Balance Sheets](#cbs) | [removed: [48](#cbs)] [added: [54](#cbs)] |

| | | [Consolidated Statements of Operations](#cso) | [removed: [49](#cso)] [added: [55](#cso)] |

| | | [Consolidated Statements of Comprehensive Income](#cci) | [removed: [50](#cci)] [added: [56](#cci)] |

| | | [Consolidated Statements of Changes in Stockholders' Equity](#csse) | [removed: [51](#csse)] [added: [57](#csse)] |

| | | [Consolidated Statements of Cash Flows](#ccf) | [removed: [52](#ccf)] [added: [58](#ccf)] |

| | | [Notes to Consolidated Financial Statements](#notes) | [removed: [54](#notes)] [added: [60](#notes)] |

| | Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#i9) | [removed: [39](#i9)] [added: [45](#i9)] |

| | Item 9A. | [Controls and Procedures](#i9a) | [removed: [39](#i9a)] [added: [46](#i9a)] |

| | Item 9B. | [Other Information](#i9b) | [removed: [42](#i9b)] [added: [49](#i9b)] |

| | Item 10. | [Directors, Executive Officers and Corporate Governance](#i10) | [removed: [43](#i10)] [added: [49](#i10)] |

| | Item 11. | [Executive Compensation](#i11) | [removed: [43](#i11)] [added: [49](#i11)] |

| | Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#i12) | [removed: [43](#i12)] [added: [49](#i12)] |

| | Item 13. | [Certain Relationships and Related Transactions and Director Independence](#i13) | [removed: [43](#i13)] [added: [49](#i13)] |

| | Item 14. | [Principal Accounting Fees and Services](#i14) | [removed: [43](#i14)] [added: [49](#i14)] |

| | Item 15. | [Exhibits and Financial Statement Schedule](#i15) | [removed: [44](#i15)] [added: [50](#i15)] |

| | Item 16. | [Form 10-K Summary](#i16) | [removed: [44](#i16)] [added: [50](#i16)] |

| | | [EXHIBIT INDEX](#exind) | [removed: [90](#exind)] [added: [97](#exind)] |

| | | [SIGNATURES](#sigs) | [removed: [93](#sigs)] [added: [100](#sigs)] |

These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth [removed: strategies] [added: strategies,] and anticipated trends in our business.

There are important factors that could cause our actual results, level of activity, [removed: performance] [added: performance,] or achievements to differ materially from the results, level of activity, [removed: performance] [added: performance,] or achievements expressed or implied by the forward-looking statements, including those factors discussed under the caption entitled “Risk Factors.” You should specifically consider the numerous risks outlined under “Risk Factors.”

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, [removed: performance] [added: performance,] or achievements.

[removed: Verisk is] [added: We are] a leading data analytics provider serving customers in insurance, energy and specialized markets, and financial services.

We offer predictive analytics and decision support solutions to customers in rating, underwriting, claims, catastrophe and weather risk, [added: global risk analytics,] natural resources intelligence, economic forecasting, commercial banking and finance, and many other fields.

In [removed: 2020,] [added: 2021,] our customers included all of the top 100 property and casualty ("P&C") insurance providers in the U.S. for the lines of P&C services we offer and the top 30 credit card issuers in North America, the United Kingdom, and Australia as well as nine of the top ten global energy producers around the world.

We offer our solutions and services primarily through annual subscriptions or long-term agreements, which are typically prepaid and represented over [removed: 82%] [added: 81%] of our revenues in [removed: 2020.][added: 2021.]

For the year ended December 31, [removed: 2020,] [added: 2021,] we had revenues of [removed: $2,784.6] [added: $2,998.6] million and net income of [removed: $712.7] [added: $666.3] million.

For the five-year period ended December 31, [removed: 2020,] [added: 2021,] our consolidated revenues grew at a compound annual growth rate ("CAGR") of 8.7% and our net income grew at [removed: 4.8%.][added: 4.7%.]

| | Item 6. | [\[Reserved\]](#i6) | [29](#i6) |

| | Item 9C | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#i9c) | |

| | | Exhibit 21.1 | |

In 2021, we acquired Whitespace Software Limited ("Whitespace"), Ignite Software Systems Limited ("Ignite"), and Data Driven Safety, LLC ("Data Driven Safety") to enhance our solutions within the underwriting & rating category of our Insurance segment.

We also acquired Roskill Holdings Limited ("Roskill") to reinforce our ability to provide comprehensive analysis across the energy and metals and mining value chain and ACTINEO GmbH to support the entire bodily injury settlement process.

We also have a suite of advanced fraud analytics solutions: a solution that uses predictive models to accurately score claims based on fraud indicators; an injury claims solution that uses predictive analytics to detect medical provider fraud, waste, and abuse; and a network analytics solution that helps detect patterns indicative of organized fraud.

We also provide integrated conditional payment processing and a full range of Medicare Set-Aside ("MSA") services.

We have services that automatically extract unstructured medical records and demand packages for easy, efficient review and analysis.

Our virtual claims adjusting tools help improve policyholder satisfaction and save on loss adjustment expense.

These tools simplify collaboration among claims professionals, contractors, and policyholders as they work together remotely and efficiently.

Real-time video collaboration, remote measuring tools, AI-powered damage assessment, and image analytics fraud warnings are just a few of the advantages we deliver through these solutions.

Customers access our claims ecosystem to enhance their business and operations.

For example, they can tap into our weather API for near-real-time updates and valuable insights for responding to weather perils that can impact their policyholders and their business.

Plus, they can use our data insights to analyze and benchmark their performance against peers in the industry and manage claims assignments.

For example, we developed a digital media database that allows customers to view prior-loss images on claim matches so they can detect pre-existing damage on new claims.

Our cutting-edge image forensics can detect suspicious claim-related photos and our customers can flag stolen and synthetic identities in the database to help subscribers deter that type of fraud.

We continue to invest in our people worldwide by encouraging all employees to reach their full potential through our focus on learning in the flow of work, competitive compensation and benefits, and our culture anchored on innovation, collaboration, and inclusivity.

Starting in 2021, we have introduced a common global wellbeing day across the enterprise to recognize the importance of the total wellbeing of our workforce.

In addition, in 2022, we have introduced Juneteenth, as a U.S. holiday to recognize this significant milestone in U.S. history.

To help our employees grow in their careers, we curate self-paced learning resources, and create real-time opportunities for employees to connect and learn from each other.

We also encourage our managers to provide guidance, support, and clarity for our employees – through group town halls, engagement events, and on-going one-on-one discussions about goals, progress, and development.

The enterprise sponsored over ten special events in 2021 through our various employee network groups focused on helping our employees find ways to continue conversations that center around equality and the employee experience.

Included in these events were webcasts, author led book reviews, fundraisers and open discussions with topics ranging from “Teach Girls Bravery, Not Perfection” to the reflections of minority team members to how our Verisk Veterans have leveraged their skills in civilian life.

Starting in 2022, we will evaluate our senior leaders against an enterprise goal to attract and retain diverse talent across the globe.

The performance goal is linked to leaders' annual compensation and leaders' performance will be assessed by the senior operating committee and the Board of Directors.

The health and safety of our people working around the globe is a top priority, and our facilities worldwide follow rigorous, internally and externally audited, occupational health and safety policies.

We also recognize that protecting the health, safety and wellbeing of our employees is crucial to our ability to continue to address the impact of the global COVID-19 pandemic.

The majority of our people continued to work remotely in 2021.

We continue to evolve our preparedness strategy for office reopenings to integrate key learnings, safety measures and employee feedback to rethink the future of work.

Our employee engagement score for 2021 is at 76%.

Verisk continues to be recognized for our outstanding workplace culture by Great Place to Work® in the U.S., the United Kingdom, India, and Spain.

Moreover, from time to time we may also undertake dispositions of certain businesses or assets.

In addition, our international operations subject us to obligations associated with anti-corruption laws and regulations, such as the U.K. Bribery Act 2010, the U.S. Foreign Corrupt Practices Act and regulations established by the U.S. Office of Foreign Assets Control.

Government agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against companies for violations of export controls, anti-corruption laws or regulations, and other laws, rules, sanctions, embargoes, and regulations.

As of December 31, 2021, we had 382,351,399 shares of treasury stock.

This ASR was settled in February 2022.

Please refer to [Note 22](#FN_22_-_Subsequent_Events).

Subsequent Events, for more information.

| October 1, 2021 through October 31, 2021 | | | 299,596 | (1) | | $ | 200.27 | (1) | | | 299,596 | | | $ | 603.8 | |

| November 1, 2021 through November 30, 2021 | | | — | | | $ | — | | | | — | | | $ | 603.8 | |

| --- | --- | --- |

| | | |

| | Item 6. | [Selected Financial Data](#i6) | [24](#i6) |

| | | Exhibit 4.8 | |

For each line item, such as smoke cleaning, water extraction and hazardous cleanup, we report time and material pricing, including labor, labor productivity rates (for new construction and restoration), labor burden and overhead, material costs, and equipment costs.

Customers access our claims ecosystem to provide valuable insights into weather peril impact to their book of business, remotely connect with their policyholders to enhance communication for faster claims resolution, and analyze and benchmark performance against peers in the industry.

Increasingly, the Verisk suite of claims products leverages artificial intelligence and automation to streamline claims handling, connect vital data points, and improve the customer experience.

For example, we provide tools and platforms to help insurers, their customers, and providers of products and services to leverage the growing Internet of Things.

This technology connects devices, vehicles, and homes to the Internet and generates valuable data to underwrite, rate, and manage risk while enriching customer relationships.

By ingesting, storing, and normalizing this data, Verisk makes it accessible for users to extract business insights at a significantly lower cost and logistical burden than they could achieve on their own.

We provide market and cost intelligence to energy companies to optimize financial results.

We combine information, innovative technology, and expert services to produce market intelligence.

In addition, our client service team of technical and various other professionals plays an integral role at a number of energy companies.

We have engineers and supply chain professionals who consult on capital projects.

Our team members include experts from the energy industry with hands-on operational experience.

In 2020, our employee engagement score rose from 70% to 78%, and for the fifth consecutive year, we received U.S. certification from Great Place to Work® for our outstanding workplace culture.

We also received first-time certification in the United Kingdom, India, and Spain.

Although we may incur significant costs in protecting against or remediating cyberattacks or other cyber-incidents, no cyber-attack or other cyber-incident has, to our knowledge, had a material adverse effect on our business, financial condition or results of operations to date.

In the Xactware Solutions, Inc. patent litigation, on February 16, 2021, the United States District Court for the District of New Jersey granted the plaintiff'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 the plaintiff pre-judgment and post-judgment interest.

Following the outcome of the trial in 2019, we established a $125.0 million reserve in connection with this litigation.

Since our 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, there is a risk that 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.

to the consolidated financial statements.

Wood Mackenzie is based in the United Kingdom ("U.K.") and conducts its principal operations outside the U.S. As a result, the percentage of our revenues generated outside of the U.S. has increased materially.

The revenues and costs of Wood Mackenzie are primarily denominated in pound sterling.

_Economic and political instability and potential unfavorable changes in laws and regulations resulting from the U.K.’s exit from the E.U. could adversely affect our financial condition, results of operations and cash flows._

The results of the referendum on June 23, 2016 in the U.K., to exit the E.U., which is commonly referred to as “Brexit,” and to potentially significantly change the U.K.’s relationship with the E.U. and the laws and regulations impacting business conducted between the U.K. and E.U. countries could disrupt the overall stability of the E.U. given the diverse economic and political circumstances of individual E.U. countries and negatively impact our European operations.

An immediate consequence of the Brexit vote was an adverse impact to global markets, including currency markets which experienced a sharp drop in the value of the British pound.

Longer term, the ongoing uncertainty regarding the future terms of the U.K.’s relationship with the E.U. could result in the U.K. losing access to certain aspects of the single E.U. market and the global trade deals negotiated by the E.U. on behalf of its members.

While the U.K. formally exited the E.U. on January 31, 2020, uncertainty remains as to the process and future relationship between the U.K. and the E.U. The Brexit process and the perceptions as to the impact of the withdrawal of the U.K. may adversely affect business activity, political stability and economic conditions in the U.K., the E.U. and elsewhere, the impact of which could have an adverse effect our financial condition, results of operations and cash flows.

As of December 31, 2020, we had 381,185,512 shares of treasury stock.

In this transition year, the table and the graph below include both the prior and the new indices of peer companies.

The prior peer issuers used for this graph are Alliance Data Systems Corporation, CoStar Group Inc., Equifax Inc., Factset Research Systems Inc., Fidelity National Information Services, Inc., Fiserv, Inc., Gartner, Inc., IHS Markit, Moody’s Corporation, MSCI Inc., Nielsen Holdings plc, S&P Global, and TransUnion.

This ASR will be settled in March 2021.

| October 1, 2020 through October 31, 2020 | | | 215,855 | (1) | | $ | 185.31 | (1) | | | 215,855 | | | $ | 278.8 | |

| November 1, 2020 through November 30, 2020 | | | — | | | | — | | | | — | | | $ | 278.8 | |

| December 1, 2020 through December 31, 2020 | | | 47,042 | (1) | | $ | 190.19 | (1) | | | 47,042 | | | $ | 278.8 | |

| | | | 262,897 | (1) | | $ | 190.19 | (1) | | | 262,897 | | | | | |

| [](# "i6")Item 6. | Selected Financial Data |

| Verisk Analytics, Inc. Consolidated Financial Statements as of December 31, [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] and for the Years Ended December 31, [added: 2021,] 2020, [removed: 2019] and [removed: 2018.] [added: 2019.] | |

| [Report of Independent Registered Public Accounting [removed: Firm](#report)] [added: Firm (PCAOB ID No. 34)](#report)] | [removed: [46](#report)] [added: [52](#report)] |

| [Consolidated Balance Sheets](#cbs) | [removed: [48](#cbs)] [added: [54](#cbs)] |

| [Consolidated Statements of Operations](#cso) | [removed: [49](#cso)] [added: [55](#cso)] |

| [Consolidated Statements of Comprehensive Income](#cci) | [removed: [50](#cci)] [added: [56](#cci)] |

| [Consolidated Statements of Changes in Stockholders' Equity](#csse) | [removed: [51](#csse)] [added: [57](#csse)] |

| [Consolidated Statements of Cash Flows](#ccf) | [removed: [52](#ccf)] [added: [58](#ccf)] |

| [Notes to Consolidated Financial Statements](#notes) | [removed: [54](#notes)] [added: [60](#notes)] |

| [Schedule II, Valuation and Qualifying Accounts and Reserves](#schedule2) | [removed: [89](#schedule2)] [added: [96](#schedule2)] |

We have audited the accompanying consolidated balance sheets of Verisk Analytics, Inc. and subsidiaries (the "Company") as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] 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, [removed: 2020,] [added: 2021,] 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, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] 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, [removed: 2020,] [added: 2021,] 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 [removed: 23, 2021,] [added: 22, 2022,] expressed an unqualified opinion on the Company's internal control over financial reporting.

Goodwill - Energy and Specialized Markets [added: and Financial Services] Reportable [removed: Segment] [added: Segments] - Refer to Notes 2 and 12 to the financial statements

The goodwill balance was [removed: $4,108.1] [added: $4,331.2] million as of December 31, [removed: 2020] [added: 2021] of which [removed: $2,287.0] [added: $2,283.6] million was attributable to a reporting unit within the Energy [removed: &] [added: and] Specialized Markets reportable [added: segment and $475.4 million was attributable to the Financial Services 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 [added: and the Financial Services 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 [added: and the Financial Services reportable segment] required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

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 [removed: &] [added: and] Specialized Markets reportable segment [added: and the Financial Services 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 [added: and the Financial Services reportable segment] such as controls related to management’s selection of the discount rate, forecasts of future revenue and Revenue and EBITDA multiples. |

As of December 31, [removed: 2020] [added: 2021] and [removed: 2019][added: 2020]

| | | [added: _2021_ | | | |] _2020_ | | | | _2019_ | | |

| Cash and cash equivalents | | $ | [removed: 218.8] [added: 280.3] | | | $ | [removed: 184.6] [added: 218.8] | |

| Accounts receivable, net | | | [removed: 432.4] [added: 446.3] | | | | [removed: 441.6] [added: 432.4] | |

| Prepaid expenses | | | [removed: 81.2] [added: 102.6] | | | | [removed: 60.9] [added: 81.2] | |

| Income taxes receivable | | | [removed: 25.4] [added: 36.7] | | | | [removed: 25.9] [added: 25.4] | |

| Other current assets | | | [removed: 36.4] [added: 36.7] | | | | [removed: 17.8] [added: 36.4] | |

| [removed: Current] [added: Increase (decrease) in cash classified within current] assets held for sale | | | — | | | | [removed: 14.1] [added: 0.3] | | [added: | | (0.3 | ) |]

| Total current assets | | | [removed: 794.2] [added: 902.6] | | | | [removed: 744.9] [added: 794.2] | |

| Fixed assets, net | | | [removed: 632.3] [added: 658.2] | | | | [removed: 548.1] [added: 632.3] | |

| Operating lease right-of-use assets, net | | | [removed: 267.6] [added: 253.1] | | | | [removed: 218.6] [added: 267.6] | |

| Intangible assets, net | | | [removed: 1,384.8] [added: 1,225.9] | | | | [removed: 1,398.9] [added: 1,384.8] | |

| Goodwill | | | [removed: 4,108.1] [added: 4,331.2] | | | | [removed: 3,864.3] [added: 4,108.1] | |

| Deferred income tax assets | | | [removed: 9.1] [added: 6.6] | | | | [removed: 9.8] [added: 9.1] | |

| Other noncurrent assets | | | [removed: 365.7] [added: 430.5] | | | | [removed: 159.8] [added: 365.7] | |

| Total assets | | $ | [removed: 7,561.8] [added: 7,808.1] | | | $ | [removed: 7,055.2] [added: 7,561.8] | |

| Accounts payable and accrued liabilities | | $ | [removed: 406.7] [added: 320.7] | | | $ | [removed: 375.0] [added: 407.3] | |

| Acquisition-related liabilities | | | [removed: 0.6] [added: 0.5] | | | | [removed: 111.2] [added: 0.6] | |

| Short-term debt and current portion of long-term debt | | | [removed: 514.3] [added: 971.3] | | | | [removed: 499.4] [added: 514.3] | |

| Deferred revenues | | | [removed: 466.7] [added: 501.0] | | | | [removed: 440.1] [added: 466.7] | |

| Operating lease liabilities | | | [removed: 38.7] [added: 41.2] | | | | [removed: 40.6] [added: 38.7] | |

| Income taxes payable | | | [removed: 3.8] [added: 9.0] | | | | [removed: 6.8] [added: 3.8] | |

| Total current liabilities | | | [removed: 1,430.8] [added: 1,843.2] | | | | [removed: 1,491.8] [added: 1,430.8] | |

February 22, 2022

| | | _2021_ | | | | _2020_ | | |

| Total Verisk stockholders' equity | | | 2,816.5 | | | | 2,698.2 | |

| Noncontrolling interests | | | 26.0 | | | | — | |

| Less: Net income attributable to noncontrolling interests | | | (0.1 | ) | | | — | | | | — | |

| Net income attributable to Verisk | | $ | 666.2 | | | $ | 712.7 | | | $ | 449.9 | |

| Less: Comprehensive loss attributable to noncontrolling interests | | | 0.4 | | | | — | | | | — | |

| Comprehensive income attributable to Verisk | | $ | 647.3 | | | $ | 823.9 | | | $ | 554.9 | |

For The Years Ended December 31, 2021, 2020, and 2019

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net income | | | _—_ | | | | — | | | | — | | | | — | | | | 666.2 | | | | — | | | | 666.2 | | | | 0.1 | | | | 666.3 | |

| Investment in noncontrolling interests | | | _—_ | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 26.4 | | | | 26.4 | |

| Common stock dividend (1) | | | _—_ | | | | — | | | | — | | | | — | | | | (188.0 | ) | | | — | | | | (188.0 | ) | | | — | | | | (188.0 | ) |

| Balance as of December 31, 2021 | | | 544,003,038 | | | $ | 0.1 | | | $ | 2,608.7 | | | $ | (4,638.1 | ) | | $ | 5,240.4 | | | $ | (394.6 | ) | | $ | 2,816.5 | | | $ | 26.0 | | | $ | 2,842.5 | |

For The Years Ended December 31, 2021, 2020, and 2019

| Net income | | $ | 666.3 | | | $ | 712.7 | | | $ | 449.9 | |

| (Gain) loss from sale of assets | | | — | | | | (19.4 | ) | | | 6.2 | |

| Impairment of long-lived assets | | | 134.0 | | | | — | | | | — | |

| Payment of contingent liability related to acquisitions | | | (1.2 | ) | | | — | | | | — | |

For The Years Ended December 31, 2021, 2020, and 2019

As of _December 31, 2021,_ we reassessed the recoverability of long-lived assets for our Financial Services reporting unit based upon the weaker than expected operating performance as a result of changing market conditions.

These conditions constituted a triggering event, which resulted in a long-lived asset impairment for our Financial Services operating segment.

Please refer to [Note _9_](#FN_9_-_Fixed_Assets).

Fixed Assets and  [Note _12_](#FN_12_-_Goodwill_and_Intangible_Assets).

Goodwill and Intangible Assets for more information.

The lease of our Hyderabad, India office _may_ be terminated in six months without penalty.

PSUs are tied to the achievement of certain market performance conditions, namely relative total shareholder return as compared to the S&P _500_ index ("TSR-based PSUs").

| Compensation-Retirement Benefits-Defined Benefit Plans - General (Subtopic _715_\-_20_) In _August 2018,_ the FASB issued ASU _No._ _2018_\-_14,_ "Changes to the Disclosure requirements for defined benefit plans" ("ASU _No._ _2018_\-_14"_) Compensation-Retirement Benefits-Defined Benefit Plans - General (Subtopic _715_\-_20_) In _August 2018,_ the FASB issued ASU _No._ _2018_\-_14,_ "Changes to the Disclosure requirements for defined benefit plans" ("ASU _No._ _2018_\-_14"_) | | This amendment removes certain disclosures that are _not_ considered cost beneficial and helps clarify certain required disclosures along with adding additional disclosures. This impacts employers that sponsor defined benefit pension and/or other postretirement plans. The amendment clarifies guidance in ASC _715_\-_20_\-_50_\-_3_ to disclose projected benefit obligation ("PBO") and accumulated benefit obligation ("ABO"). | | Fiscal years ending after _December 15, 2020_ with early adoption permitted. | | We adopted ASU _No._ _2018_\-_14_ on _December 31, 2020_ on a retroactive basis and applied to each comparative period presented in our Consolidated Financial Statements. The adoption of ASU _No._ _2018_\-_14_ did _not_ have a material impact on our Consolidated Financial Statements. |

| | | _2021_ | | | | _2020_ | | |

| Underwriting & rating | | $ | 1,555.1 | | | $ | 1,413.0 | | | $ | 1,274.5 | |

| Total Insurance | | | 2,206.9 | | | | 2,008.7 | | | | 1,885.4 | |

| Total revenues | | $ | 2,998.6 | | | $ | 2,784.6 | | | $ | 2,607.1 | |

The following is a summary of the change in contract liabilities from _December 31, 2019_ through _December 31, 2021:_

| Revenue | | | (2,784.6 | ) |

| Billings | | | 2,809.6 | |

| Revenue | | | (2,998.6 | ) |

| Billings | | | 3,035.2 | |

| Contract Liabilities at December 31, 2021 | | $ | 504.8 | |

| | | | | __2021__ | | | | | | | | __2020__ | | | | | | |

On _May 25, 2021,_ we made an additional $15.0 million cash investment in Vexcel for an additional 3.7% ownership.

| --- | --- |

February 23, 2021

| | | | | | | | | |

| Noncurrent assets held for sale | | | — | | | | 110.8 | |

| Current liabilities held for sale | | | — | | | | 18.7 | |

| Noncurrent liabilities held for sale | | | — | | | | 38.1 | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 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 | |

| Realized gain on subordinated promissory note | | | — | | | | — | | | | (12.3 | ) |

| Proceeds from subordinated promissory note | | | — | | | | — | | | | 121.4 | |

| Less: Increase (decrease) in cash classified within current assets held for sale | | | 0.3 | | | | (0.3 | ) | | | — | |

| Gain on sale of assets included in other current and long-term assets | | $ | 3.5 | | | $ | — | | | $ | — | |

| Dividend payable included in other liabilities | | $ | 0.7 | | | $ | 0.6 | | | $ | — | |

Effective the _first_ quarter of _2018,_ our operating segments are Insurance, Energy and Specialized Markets, and Financial Services.

_54_

[](#toc)

_55_

_56_

_57_

_58_

| _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_](#FN_7_-_Fair_Value_Measurements). Fair Value Measurements for further discussions. |

| _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._ |

_59_

| Underwriting & rating | | $ | 1,390.6 | | | $ | 1,254.3 | | | $ | 1,153.5 | |

| Total Insurance | | | 1,986.3 | | | | 1,865.2 | | | | 1,714.9 | |

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_.

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.

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.

For the year ended _December 31, 2020,_ there was no provision for credit losses related to these investments.

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

| 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 | | | | — | |

| 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 | |