Verisk to consider separating energy business following activist challenge

Verisk Analytics Inc. plans to move towards being an insurance-focused data analytics provider, and will consider options for separating its energy business, following an activist challenge from D.E. Shaw & Co. LP.

Following input from D.E. Shaw and other shareholders, the company also plans to nominate three new independent directors to its board, and to deliver margin expansion through "sustainable cost efficiencies," it said in a March 21 news release.

The changes followed a March 17 letter in which D.E. Shaw, which manages funds that it said have "significant economic position" in Verisk, cited what it called a "longstanding pattern of underperformance." The investor called for Verisk to transform itself into a pure-play insurance data company, and calling the acquisition of non-core businesses dilutive to the quality of Verisk's insurance assets.

Verisk said in its response that, as part of an ongoing comprehensive review, it determined that the focus on insurance data analytics represents the best path towards enhancing shareholder value. The company said it "continues to actively evaluate all available strategic alternatives for separating the Energy business, with relevant workstreams underway."

Verisk plans to conclude the strategic review and provide details on the transaction structure it intends to pursue no later than the end of the third fiscal quarter of 2022, with an expectation than a transaction would be executed by the first quarter of 2023.

The company expects the cost efficiencies it achieves as part of its transition to produce a target of 300 to 500 basis points of EBITDA margin expansion in the consolidated remaining insurance-focused businesses by 2024.

The company's three new independent director nominees are Jeffrey Dailey, the CEO of Farmers Group Inc.; Wendy Lane, a member of the Willis Towers Watson board of directors; and Kimberly Stevenson, a technology executive. The candidates will be included in the company's slate of nominees for election at Verisk's 2022 annual shareholder meeting.

D.E. Shaw recommended Lane for the board and has indicated its support for all three candidates, as well as the company's "ongoing governance enhancements and business initiatives," Verisk said.