Delaware | 7374 | 26-2994223 | ||
(State or Other Jurisdiction
of
Incorporation or Organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification Number) |
Richard J. Sandler
Ethan T. James Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017 (212) 450-4000 |
Eric J. Friedman
Richard B. Aftanas Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 (212) 735-3000 |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
Proposed Maximum
|
Proposed Maximum
|
Amount of
|
||||||||||
Title of Each Class
|
Amount
|
Offering Price per
|
Aggregate
|
Registration
|
||||||||
of Securities to be Registered | to be Registered(1) | Share(2) | Offering Price(2) | Fee(3) | ||||||||
Class A common stock, par value $0.001 per share
|
97,995,750 | $21.00 | $2,057,910,750 | $114,832 | ||||||||
(1) | Includes 12,745,750 shares of common stock that the underwriters have the option to purchase to cover over-allotments, if any. |
(2) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933. |
(3) | Includes a $29,475 registration fee previously paid with the initial filing of this Form S-1 on August 12, 2008. |
The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell
these securities and is not soliciting an offer to buy these
securities in any jurisdiction where the offer or sale is not
permitted.
|
Per Share
|
Total | |||
Public offering price
|
$ | $ | ||
Underwriting discount
|
$ | $ | ||
Proceeds, before expenses, to the selling stockholders
|
$ | $ |
BofA Merrill Lynch | Morgan Stanley |
J.P. Morgan | Wells Fargo Securities |
William Blair & Company |
Fox-Pitt Kelton Cochran Caronia Waller |
Keefe, Bruyette & Woods |
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120
F-1
EX-3.1
EX-3.2
EX-4.1
EX-5.1
EX-10.2
EX-10.7
EX-10.8
EX-10.9
EX-21.1
EX-23.1
EX-23.2
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102
103
104
F-15
F-18
F-55
1
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the total value of exposures in risk transactions is increasing;
the number of participants in risk transactions is often large
and the asymmetry of information among participants is often
substantial; and
the failure to understand risk can lead to large and rapid
declines in financial performance.
Our Solutions are Embedded In Our Customers Critical
Decision Processes.
Our customers use our
solutions to make better risk decisions and to price risk
appropriately. In the U.S. P&C insurance industry, our
solutions for prospective loss costs, policy language,
rating/underwriting rules and regulatory filing services are the
industry standard. In the U.S. healthcare and mortgage
industries, our predictive models, loss estimation tools and
fraud identification applications are the primary solutions that
allow customers to understand their risk exposures and
proactively manage them. Over the last three years, we have
retained 98% of our customers across all of our businesses,
which we believe reflects our customers recognition of the
value they derive from our solutions.
Extensive and Differentiated Data Assets and Analytic
Methods.
We maintain what we believe are some
of the largest, most accurate, and most complete databases in
the markets we serve. Much of the information we provide is not
available from any other source and would be difficult and
costly for another party to replicate. As a result, our
accumulated experience and years of significant investment have
given us a competitive advantage in serving our customers.
Culture of Continuous Improvement.
Our
intellectual capital and focus on continuous improvement have
allowed us to develop proprietary algorithms and solutions that
assist our customers in making informed risk decisions. Our team
includes approximately 578 individuals with advanced degrees,
certifications and professional designations in such fields as
actuarial science, data management, mathematics, statistics,
economics, soil mechanics, meteorology and various engineering
disciplines. Our compensation and benefit plans are
pay-for-performance-
2
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oriented, including incentive compensation plans and substantial
equity participation by employees. As of June 30, 2009, our
employees owned approximately 25% of the company.
Attractive Operating Model.
We believe
we have an attractive operating model due to the recurring
nature of our revenues, the scalability of our solutions and the
low capital intensity of our business.
Increase Sales to Insurance
Customers.
We expect to expand the
application of our solutions in insurance customers
internal risk and underwriting processes. Building on our deep
knowledge of, and embedded position in, the insurance industry,
we expect to sell more solutions to existing customers tailored
to individual insurance segments. By increasing the breadth and
relevance of our offerings, we believe we can strengthen our
relationships with customers and increase our value to their
decision making in critical ways.
Develop New, Proprietary Data Sets and Predictive
Analytics.
We work with our customers to
understand their evolving needs. We plan to create new solutions
by enriching our mix of proprietary data sets, analytic
solutions and effective decision support across the markets we
serve. We constantly seek to add new data sets that can further
leverage our analytic methods, technology platforms and
intellectual capital.
Leverage Our Intellectual Capital to Expand into Adjacent
Markets and New Customer Sectors.
Our
organization is built on nearly four decades of intellectual
property in risk management. We believe we can continue to
profitably expand the use of our intellectual capital and apply
our analytic methods in new markets, where significant
opportunities for long-term growth exist. We also continue to
pursue growth through targeted international expansion. We have
already demonstrated the effectiveness of this strategy with our
expansion into healthcare and non-insurance financial services.
Pursue Strategic Acquisitions that Complement Our
Leadership Positions.
We will continue to
expand our data and analytics capabilities across industries.
While we expect this will occur primarily through organic
growth, we have and will continue to acquire assets and
businesses that strengthen our value proposition to customers.
We have developed an internal capability to source, evaluate and
integrate acquisitions that have created value for shareholders.
As of June 30, 2009, we have acquired 15 businesses in
the past five years, which in the aggregate have increased their
revenue with a weighted average CAGR of 31% over the same period.
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Class A common stock offered by the selling stockholders
85,250,000 shares
Class A common stock outstanding after the offering
113,076,100 shares (125,821,850 shares if the underwriters
exercise their over-allotment option in full)
Over-allotment option
12,745,750 shares of Class A common stock from certain
of the selling stockholders
Class B common stock outstanding after the offering
66,983,700 shares (54,237,950 shares if the
underwriters exercise their over-allotment option in full)
Sale and transfer restrictions on Class B common stock
The Class B (Series 1) common stock is not
transferable until 18 months after the date of this
prospectus and the Class B (Series 2) common
stock is not transferable until 24 months after the date of
this prospectus.
These transfer restrictions are subject to limited exceptions,
including transfers to another holder of Class B common
stock. See Description of Capital Stock Common
Stock Transfer Restrictions.
Conversion of Class B common stock
After termination of the restrictions on transfer described
above for each series of Class B common stock, such series
of Class B common stock will be automatically converted
into Class A common stock. No later than 24 months
after the date of this prospectus, there will be no outstanding
shares of Class B common stock.
In the event that Class B common stock is transferred and
converts into Class A common stock, it will have the effect
of diluting the voting power of our existing holders of
Class A common stock. See Description of Capital
Stock Common Stock Conversion.
Use of proceeds
The Company will not receive any proceeds from the sale of
common stock in the offering.
Dividend policy
We currently do not intend to pay dividends on our Class A
common stock or Class B common stock.
Voting rights
The holders of Class A common stock and Class B common stock
generally have identical voting rights, except that only holders
of Class A common stock are entitled to vote on the election of
Class A directors and only holders of Class B common stock are
entitled to vote on the election of Class B directors. From the
consummation of this offering of our Class A common stock until
the earlier of (a) the 24-month anniversary of the date of this
prospectus or (b) the date on which there are no shares of Class
B common stock issued and outstanding, the amendment of certain
of the provisions in our amended and restated certificate of
incorporation will require the affirmative vote of at least
two-thirds of the votes cast thereon by the outstanding shares
of each of the Class A common stock and the Class B common
stock, voting separately as a class. See Description of
Capital Stock
5
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Common Stock. See also Risk Factors Risks
Related to the Offering The holders of our Class B common
stock have the right to elect up to three out of twelve of our
directors and their interests in our business may be different
than yours.
Stock symbol
VRSK
23,898,150 shares of Class A common stock issuable
upon the exercise of outstanding stock options at a weighted
average exercise price of $9.38 per share; and
an aggregate of 13,750,000 shares of Class A common
stock that will be reserved for future issuances under our 2009
Equity Incentive Plan, including up to 3,177,650 shares of
Class A common stock available for issuance to our
directors, executive officers and employees in connection with
grants of options upon the closing of this offering with an
exercise price equal to the price of the shares sold in this
offering.
6
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Six Months
Year Ended December 31,
Ended June 30,
2006
2007
2008
2008
2009
(In thousands, except for share and per share data)
$
472,634
$
485,160
$
504,391
$
253,356
$
262,873
257,499
317,035
389,159
184,334
240,794
730,133
802,195
893,550
437,690
503,667
331,804
357,191
386,897
190,678
220,501
100,124
107,576
131,239
59,028
72,225
28,007
31,745
35,317
16,424
18,913
26,854
33,916
29,555
14,937
16,974
486,789
530,428
583,008
281,067
328,613
243,344
271,767
310,542
156,623
175,054
6,101
9,308
(327
)
317
(273
)
(16,668
)
(22,928
)
(31,316
)
(14,173
)
(16,677
)
(10,567
)
(13,620
)
(31,643
)
(13,856
)
(16,950
)
232,777
258,147
278,899
142,767
158,104
(91,992
)
(103,184
)
(120,671
)
(61,818
)
(67,250
)
140,785
154,963
158,228
80,949
90,854
7
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Six Months
Year Ended December 31,
Ended June 30,
2006
2007
2008
2008
2009
(In thousands, except for share and per share data)
(1,805
)
(4,589
)
$
138,980
$
150,374
$
158,228
$
80,949
$
90,854
$
34.08
$
38.58
$
43.26
$
21.73
$
26.20
(0.44
)
(1.14
)
$
33.64
$
37.44
$
43.26
$
21.73
$
26.20
$
32.72
$
37.03
$
41.59
$
20.87
$
25.21
(0.42
)
(1.10
)
$
32.30
$
35.93
$
41.59
$
20.87
$
25.21
4,130,962
4,016,928
3,657,714
3,724,876
3,468,196
4,302,867
4,185,151
3,804,634
3,877,906
3,604,086
$
202,872
$
212,780
$
222,706
$
113,500
$
121,197
95,333
124,648
152,708
74,484
89,744
$
298,205
$
337,428
$
375,414
$
187,984
$
210,941
$
(25,742
)
$
(32,941
)
$
(30,652
)
$
(17,810
)
$
(16,195
)
223,499
248,521
247,906
141,929
184,529
(243,452
)
(110,831
)
(130,466
)
(98,402
)
(152,683
)
75,907
(212,591
)
(107,376
)
(16,759
)
(19,157
)
As of December 31,
As of June 30,
2006
2007
2008
2008
2009
(In thousands)
$
99,152
$
24,049
$
33,185
$
50,835
$
45,962
739,282
830,041
928,877
867,128
1,009,335
448,698
438,330
669,754
642,182
689,066
1,125,933
1,171,188
749,539
1,006,287
842,117
(1,123,977
)
(1,203,348
)
(1,009,823
)
(1,186,569
)
(1,028,489
)
(1)
As of December 31, 2007, we discontinued operations of our
claim consulting business located in New Hope, Pennsylvania and
the United Kingdom. There was no impact of discontinued
operations on the results of operations for the periods
subsequent to December 31, 2007.
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(2)
In conjunction with the initial public offering, the stock of
Insurance Services Office, Inc. will convert to stock of Verisk
Analytics, Inc., which plans to effect a stock split of its
common stock. The numbers in the above table do not reflect this
stock split. Giving effect to the fifty-for-one stock split that
will have occurred prior to the completion of this offering, pro
forma basic and diluted income/(loss) per share from continuing
operations and discontinued operations would have been as
follows:
Year Ended December 31,
Six Months Ended June 30,
2006
2007
2008
2008
2009
$
0.68
$
0.77
$
0.87
$
0.43
$
0.52
(0.01
)
(0.02
)
$
0.67
$
0.75
$
0.87
$
0.43
$
0.52
206,548,100
200,846,400
182,885,700
186,243,800
173,409,800
$
0.65
$
0.74
$
0.83
$
0.42
$
0.50
(0.01
)
(0.02
)
$
0.64
$
0.72
$
0.83
$
0.42
$
0.50
215,143,350
209,257,550
190,231,700
193,895,300
180,204,300
(3)
EBITDA is the financial measure which management uses to
evaluate the performance of our segments. EBITDA is
defined as income from continuing operations before investment
income and interest expense, income taxes, depreciation and
amortization. See note 19 to our audited consolidated
financial statements and note 15 to our unaudited condensed
consolidated financial statements included elsewhere in this
prospectus.
Although EBITDA is frequently used by securities analysts,
lenders and others in their evaluation of companies, EBITDA has
limitations as an analytical tool, and should not be considered
in isolation, or as a substitute for an analysis of our results
of operations or cash flow from operating activities reported
under U.S. GAAP. Management uses EBITDA in conjunction with
traditional GAAP operating performance measures as part of its
overall assessment of company performance. Some of these
limitations are:
EBITDA does not reflect our cash expenditures, or future
requirements for capital expenditures or contractual commitments;
EBITDA does not reflect changes in, or cash requirements for,
our working capital needs;
Although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized often will have to be
replaced in the future and EBITDA does not reflect any cash
requirements for such replacements; and
Other companies in our industry may calculate EBITDA differently
than we do, limiting its usefulness as a comparative measure.
9
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Six Months
Year Ended December 31,
Ended June 30,
2006
2007
2008
2008
2009
(In thousands)
$
140,785
$
154,963
$
158,228
$
80,949
$
90,854
54,861
65,661
64,872
31,361
35,887
(6,101
)
(9,308
)
327
(317
)
273
16,668
22,928
31,316
14,173
16,677
91,992
103,184
120,671
61,818
67,250
$
298,205
$
337,428
$
375,414
$
187,984
$
210,941
(5)
Prior to this offering, we are required to record our
Class A common stock and vested options at redemption value
at each balance sheet date as the redemption of these securities
is not solely within our control, due to our contractual
obligations to redeem these shares. We classify this redemption
value as redeemable common stock. Subsequent to this offering,
we will no longer be obligated to redeem these shares and
therefore we will not be required to record any redeemable
common stock.
10
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changes in the business analytics industry;
changes in technology;
our inability to obtain or use state fee schedule or claims data
in our insurance solutions;
saturation of market demand;
11
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loss of key customers;
industry consolidation; and
failure to execute our customer-focused selling approach.
12
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amendment, enactment, or interpretation of laws and regulations
which restrict the access and use of personal information and
reduce the supply of data available to customers;
changes in cultural and consumer attitudes to favor further
restrictions on information collection and sharing, which may
lead to regulations that prevent full utilization of our
solutions;
failure of our solutions to comply with current laws and
regulations; and
failure of our solutions to adapt to changes in the regulatory
environment in an efficient, cost-effective manner.
13
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deterring customers from using our solutions;
deterring data suppliers from supplying data to us;
harming our reputation;
exposing us to liability;
increasing operating expenses to correct problems caused by the
breach;
affecting our ability to meet customers expectations; or
causing inquiry from governmental authorities.
14
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failing to implement or remediate controls, procedures and
policies appropriate for a larger public company at acquired
companies that prior to the acquisition lacked such controls,
procedures and policies;
paying more than fair market value for an acquired company or
assets;
failing to integrate the operations and personnel of the
acquired businesses in an efficient, timely manner;
assuming potential liabilities of an acquired company;
managing the potential disruption to our ongoing business;
distracting management focus from our core businesses;
difficulty in acquiring suitable businesses;
impairing relationships with employees, customers, and strategic
partners;
incurring expenses associated with the amortization of
intangible assets;
incurring expenses associated with an impairment of all or a
portion of goodwill and other intangible assets due to changes
in market conditions, weak economies in certain competitive
markets, or the failure of certain acquisitions to realize
expected benefits; and
diluting the share value and voting power of existing
stockholders.
15
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16
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actual or anticipated fluctuations in our quarterly operating
results;
changes in financial estimates by securities research analysts;
changes in the economic performance or market valuations of
other companies engaged in our industry;
regulatory developments in our industry affecting us, our
customers or our competitors;
announcements of technological developments;
sales or expected sales of additional common stock;
17
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continued dislocations and downward pressure in the capital
markets; and
terrorist attacks or natural disasters or other such events
impacting countries where we or our customers have operations.
18
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authorize the issuance of blank check preferred
stock that could be issued by our board of directors to increase
the number of outstanding shares to thwart a takeover attempt;
prohibit cumulative voting in the election of directors, which
would otherwise allow holders of less than a majority of the
stock to elect some directors;
require that vacancies on the board of directors, including
newly-created directorships, be filled only by a majority vote
of directors then in office;
limit who may call special meetings of stockholders;
authorize the issuance of authorized but unissued shares of
common stock and preferred stock without stockholder approval,
subject to the rules and regulations of The NASDAQ Global Select
Market;
19
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prohibit stockholder action by written consent, requiring all
stockholder actions to be taken at a meeting of the
stockholders; and
establish advance notice requirements for nominating candidates
for election to the board of directors or for proposing matters
that can be acted upon by stockholders at stockholder meetings.
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on an actual basis; and
on an as adjusted basis to give effect to changes in the terms
of our capital stock in connection with this initial public
offering and the consequent expiration of our obligations to
redeem our Class A common stock.
As of June 30, 2009
Actual
As Adjusted
(In thousands,
except share numbers)
$
689,066
$
689,066
845,126
(3,009
)
842,117
45
100
85
579,631
(3,009
)
(79,130
)
(79,130
)
(265,465
)
(683,994
)
(683,994
)
(1,028,489
)
(186,372
)
$
502,694
$
502,694
(1)
Prior to this offering, we were required to record our
Class A common stock and vested options at redemption value
at each balance sheet date as the redemption of these securities
is not solely within our control, due to our contractual
obligations to redeem these shares. We classify this redemption
value as redeemable common stock. Subsequent to this offering,
we will no longer be obligated to redeem these shares and
therefore we will not be required to record any redeemable
common stock. Refer to note 11 of the unaudited condensed
consolidated interim financial statements for further
information.
(2)
Giving effect to the fifty-for-one stock split that will have
occurred prior to the completion of this offering. Class B
common stock sold in this offering will be automatically
converted into Class A common stock.
(3)
The number of shares of Class A common stock outstanding as
adjusted includes 2,084,900 shares issued upon the exercise
of options and sold in this offering.
(4)
Prior to the completion of this offering, we intend to
accelerate the allocation of a portion of the shares to the
ESOP, which will result in a
non-recurring
non-cash
charge of approximately $50.0 million, based on the
mid-point of the range set forth on the cover page of this
prospectus.
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Six Months Ended
Year Ended December 31,
June 30, 2009
2004
2005
2006
2007
2008
2008
2009
(In thousands, except for share and per share data)
$
403,616
$
448,875
$
472,634
$
485,160
$
504,391
$
253,356
$
262,873
144,711
196,785
257,499
317,035
389,159
184,334
240,794
548,327
645,660
730,133
802,195
893,550
437,690
503,667
263,332
294,911
331,804
357,191
386,897
190,678
220,501
81,020
88,723
100,124
107,576
131,239
59,028
72,225
19,569
22,024
28,007
31,745
35,317
16,424
18,913
11,412
19,800
26,854
33,916
29,555
14,937
16,974
375,333
425,458
486,789
530,428
583,008
281,067
328,613
172,994
220,202
243,344
271,767
310,542
156,623
175,054
950
2,932
6,101
9,308
(327
)
317
(273
)
(5,241
)
(10,465
)
(16,668
)
(22,928
)
(31,316
)
(14,173
)
(16,677
)
(4,291
)
(7,533
)
(10,567
)
(13,620
)
(31,643
)
(13,856
)
(16,950
)
168,703
212,669
232,777
258,147
278,899
142,767
158,104
(68,925
)
(85,722
)
(91,992
)
(103,184
)
(120,671
)
(61,818
)
(67,250
)
99,778
126,947
140,785
154,963
158,228
80,949
90,854
(508
)
(2,574
)
(1,805
)
(4,589
)
$
99,270
$
124,373
$
138,980
$
150,374
$
158,228
$
80,949
$
90,854
$
20.12
$
29.81
$
34.08
$
38.58
$
43.26
$
21.73
$
26.20
(0.10
)
(0.61
)
(0.44
)
(1.14
)
$
20.02
$
29.20
$
33.64
$
37.44
$
43.26
$
21.73
$
26.20
$
19.28
$
28.45
$
32.72
$
37.03
$
41.59
$
20.87
$
25.21
(0.10
)
(0.58
)
(0.42
)
(1.10
)
$
19.18
$
27.87
$
32.30
$
35.93
$
41.59
$
20.87
$
25.21
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Six Months Ended
Year Ended December 31,
June 30, 2009
2004
2005
2006
2007
2008
2008
2009
(In thousands, except for share and per share data)
4,958,161
4,258,989
4,130,962
4,016,928
3,657,714
3,724,876
3,468,196
5,174,281
4,462,109
4,302,867
4,185,151
3,804,634
3,877,906
3,604,086
$
(17,516
)
$
(24,019
)
$
(25,742
)
$
(32,941
)
$
(30,652
)
$
(17,810
)
$
(16,195
)
174,780
174,071
223,499
248,521
247,906
141,929
184,529
(41,851
)
(107,444
)
(243,452
)
(110,831
)
(130,466
)
(98,402
)
(152,683
)
(114,280
)
(90,954
)
75,907
(212,591
)
(107,376
)
(16,759
)
(19,157
)
As of December 31,
As of June 30,
2004
2005
2006
2007
2008
2008
2009
(In thousands)
$
67,700
$
42,822
$
99,152
$
24,049
$
33,185
$
50,835
$
45,962
386,496
466,244
739,282
830,041
928,877
867,128
1,009,335
206,152
276,964
448,698
438,330
669,754
642,182
689,066
722,532
901,089
1,125,933
1,171,188
749,539
1,006,287
842,117
(740,478
)
(940,843
)
(1,123,977
)
(1,203,348
)
(1,009,823
)
(1,186,569
)
(1,028,489
)
(1)
As of December 31, 2007, we discontinued operations of our
claim consulting business located in New Hope, Pennsylvania and
the United Kingdom. There was no impact of discontinued
operations on the results of operations for the periods
subsequent to December 31, 2007.
(2)
In conjunction with the initial public offering, the stock of
Insurance Services Office, Inc. will convert to stock of Verisk
Analytics, Inc., which plans to effect a stock split of its
common stock. The numbers in the above table do not reflect this
stock split. Giving effect to the fifty-for-one stock split that
will have occurred prior to the completion of this offering, pro
forma basic and diluted
income/(loss)
per share from continuing operations and discontinued operations
would have been as follows:
Six Months Ended
Year Ended December 31,
June 30,
2004
2005
2006
2007
2008
2008
2009
$
0.40
$
0.60
$
0.68
$
0.77
$
0.87
$
0.43
$
0.52
(0.02
)
(0.01
)
(0.02
)
$
0.40
$
0.58
$
0.67
$
0.75
$
0.87
$
0.43
$
0.52
247,908,050
212,949,450
206,548,100
200,846,400
182,885,700
186,243,800
173,409,800
$
0.39
$
0.57
$
0.65
$
0.74
$
0.83
$
0.42
$
0.50
(0.01
)
(0.01
)
(0.02
)
$
0.39
$
0.56
$
0.64
$
0.72
$
0.83
$
0.42
$
0.50
258,714,050
223,105,450
215,143,350
209,257,550
190,231,700
193,895,300
180,204,300
(3)
Includes capital lease obligations.
(4)
Prior to this offering, we are required to record our
Class A common stock and vested options at redemption value
at each balance sheet date as the redemption of these securities
is not solely within our control, due to our contractual
obligations to redeem these shares. We classify this redemption
value as redeemable common stock. Subsequent to this offering,
we will no longer be obligated to redeem these shares and
therefore we will not be required to record any redeemable
common stock.
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OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
27
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28
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30
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Six Months
Ended
Year Ended December 31,
June 30,
2006
2007
2008
2008
2009
(In thousands)
$
4,703
$
4,914
$
5,408
$
2,660
$
2,459
2,105
2,788
3,162
1,542
1,794
6,808
7,702
8,570
4,202
4,253
473
720
370
588
268
421
215
117
741
1,141
585
705
8,105
8,807
7,927
4,289
3,161
3,627
4,997
4,636
2,488
2,619
11,732
13,804
12,563
6,777
5,780
$
18,540
$
22,247
$
22,274
$
11,564
$
10,738
31
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32
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Six Months
Ended
Year Ended December 31,
June 30,
2006
2007
2008
2008
2009
45.4
%
44.5
%
43.3
%
43.6
%
43.8
%
13.7
%
13.4
%
14.7
%
13.5
%
14.3
%
3.8
%
4.0
%
4.0
%
3.8
%
3.8
%
3.7
%
4.2
%
3.3
%
3.4
%
3.4
%
66.7
%
66.1
%
65.2
%
64.2
%
65.2
%
33.3
%
33.9
%
34.8
%
35.8
%
34.8
%
0.8
%
1.2
%
(0.0
)%
0.1
%
(0.1
)%
(2.3
)%
(2.9
)%
(3.5
)%
(3.2
)%
(3.3
)%
(1.4
)%
(1.7
)%
(3.5
)%
(3.2
)%
(3.4
)%
31.9
%
32.2
%
31.2
%
32.6
%
31.4
%
(12.6
)%
(12.9
)%
(13.5
)%
(14.1
)%
(13.4
)%
19.3
%
19.3
%
17.7
%
18.5
%
18.0
%
(0.3
)%
(0.6
)%
0.0
%
0.0
%
0.0
%
19.0
%
18.7
%
17.7
%
18.5
%
18.0
%
40.8
%
42.1
%
42.0
%
42.9
%
41.9
%
33
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34
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Six Months Ended
June 30,
Percentage
2008
2009
Change
(In thousands)
$
165,719
$
172,193
3.9
%
63,344
65,869
4.0
%
13,820
14,135
2.3
%
10,473
10,676
1.9
%
35
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Six Months Ended
June 30,
Percentage
2008
2009
Change
(In thousands)
$
102,858
$
130,475
26.8
%
46,260
66,896
44.6
%
35,216
43,423
23.3
%
36
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37
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38
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Year Ended
December 31,
Percentage
2007
2008
Change
(In thousands)
$
311,087
$
329,858
6.0
%
126,291
125,835
(0.4
)%
27,282
27,451
0.6
%
20,500
21,247
3.6
%
39
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Year Ended
December 31,
Percentage
2007
2008
Change
(In thousands)
$
172,726
$
213,994
23.9
%
81,110
95,128
17.3
%
63,199
80,037
26.6
%
40
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41
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42
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Year Ended
December 31,
Percentage
2006
2007
Change
(In thousands)
$
303,957
$
311,087
2.3
%
123,627
126,291
2.2
%
25,793
27,282
5.8
%
19,257
20,500
6.5
%
43
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Year Ended
December 31,
Percentage
2006
2007
Change
(In thousands)
$
168,189
$
172,726
2.7
%
67,129
81,110
20.8
%
22,181
63,199
184.9
%
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For the Quarter Ended
September 30,
December 31,
March 31,
June 30,
September 30,
December 31,
March 31,
June 30,
2007
2008
2009
(In thousands)
$
120,997
$
119,607
$
127,039
$
126,317
$
125,186
$
125,849
$
129,566
$
133,307
78,726
82,877
88,579
95,755
99,205
105,620
116,185
$
124,609
199,723
202,484
215,618
222,072
224,391
231,469
245,751
257,916
85,343
95,346
93,310
97,368
98,307
97,912
107,523
112,978
26,989
24,987
28,674
30,354
32,265
39,946
33,320
38,905
7,799
8,448
7,907
8,517
9,054
9,839
9,195
9,718
7,724
8,952
8,041
6,896
7,041
7,577
8,510
8,464
127,855
137,733
137,932
143,135
146,667
155,274
158,548
170,065
71,868
64,751
77,686
78,937
77,724
76,195
87,203
87,851
1,725
2,620
(458
)
775
2
(646
)
(355
)
82
(5,578
)
(5,876
)
(6,326
)
(7,847
)
(8,393
)
(8,750
)
(8,154
)
(8,523
)
(3,853
)
(3,256
)
(6,784
)
(7,072
)
(8,391
)
(9,396
)
(8,509
)
(8,441
)
68,015
61,495
70,902
71,865
69,333
66,799
78,694
79,410
(28,841
)
(21,911
)
(29,876
)
(31,942
)
(28,493
)
(30,360
)
(33,779
)
(33,471
)
39,174
39,584
41,026
39,923
40,840
36,439
44,915
45,939
(2,020
)
(1,267
)
$
37,154
$
38,317
$
41,026
$
39,923
$
40,840
$
36,439
$
44,915
$
45,939
$
55,199
$
52,762
$
58,122
$
55,378
$
53,813
$
55,393
$
60,599
$
60,598
32,192
29,389
35,512
38,972
40,006
38,218
44,309
45,435
$
87,391
$
82,151
$
93,634
$
94,350
$
93,819
$
93,611
$
104,908
$
106,033
45
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46
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47
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For the Six Months
For the Years Ended December 31,
Ended June 30,
2006
2007
2008
2008
2009
(In thousands)
$
223,499
$
248,521
$
247,906
$
141,929
$
184,529
$
(243,452
)
$
(110,831
)
$
(130,466
)
$
(98,402
)
$
(152,683
)
$
75,907
$
(212,591
)
$
(107,376
)
$
(16,759
)
$
(19,157
)
48
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Payments Due by Period
Less than
More than
Total
1 Year
1-3 Years
3-5 Years
5 Years
(In thousands)
$
675,637
$
128,890
$
175,279
$
186,189
$
185,279
10,162
5,315
4,800
47
199,662
20,554
39,714
36,174
103,220
82,700
82,700
215,221
11,059
79,773
70,206
54,183
12,914
377
1,106
433
10,998
$
1,196,296
$
248,895
$
300,672
$
293,049
$
353,680
(1)
As of June 30, 2009, our long-term debt due in less than
1 year has decreased approximately $100 million
primarily due to the repayment of $100.0 million Prudential
Series D senior notes. Our debt due in
3-5 years
and more than 5 years periods increased by approximately
$39.0 million and $58.0 million, respectively, due to
the issuance of $30.0 million Aviva Series A senior notes,
and $50.0 million Prudential Series J senior notes,
respectively.
(2)
As of June 30, 2009, we have settled all acquisition
contingent payments.
(3)
Our funding policy is to contribute an amount at least equal to
the minimum legal funding requirement.
(4)
Other long-term liabilities shown in the table above consists of
our ESOP contributions and our employee-related deferred
compensation plan. We also have a deferred compensation plan for
our Board of
49
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Directors; however, based on past performance and the
uncertainty of the dollar amounts to be paid, if any, we have
excluded such amounts from the above table.
(5)
Unrecognized tax benefits of approximately $31.7 million
have been recorded as liabilities in accordance with
FIN 48, which have been omitted from the table above, and
we are uncertain as to if or when such amounts may be settled,
with the exception of those amounts subject to a statute of
limitation. Related to the unrecognized tax benefits, we have
also recorded a liability for potential penalties and interest
of $8.1 million.
50
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For the Six
For the Year Ended
Months Ended
December 31
June 30
2006
2007
2008
2008
2009
(In thousands)
$
2,661
$
2,424
$
2,209
$
1,158
$
724
3,487
2,512
1,870
1,171
780
3,308
2,561
1,313
757
3,241
979
1,647
1,607
$
6,148
$
8,244
$
9,881
$
4,621
$
5,515
51
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52
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1% Decrease
1% Increase
(In thousands)
$
(63
)
$
59
$
(86
)
$
24
53
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$
56.8 million
0.6 million
30.8 million
$
88.2 million
54
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our loss predictions are typically used by P&C insurance
and healthcare actuaries, advanced analytics groups and loss
control groups to help drive their own assessments of future
losses;
our risk selection and pricing solutions are typically used by
underwriters as they manage their books of business;
our fraud detection and prevention tools are used by P&C
insurance, healthcare and mortgage underwriters to root out
fraud prospectively and by claims departments to speed claims
and find fraud retroactively; and
our tools to quantify loss are primarily used by claims
departments, independent adjustors and contractors.
55
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56
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57
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the total value of exposures in risk transactions is increasing;
the number of participants in risk transactions is often large
and the asymmetry of information among participants is often
substantial; and
the failure to understand risk can lead to large and rapid
declines in financial performance.
U.S. property value exposed to hurricanes continues to
increase dramatically due to population dynamics and increase of
wealth among other factors, with the current trend predicting a
doubling of losses every ten years. At this rate, a repeat of
the 1926 Great Miami hurricane could result in $500 billion
in economic damage as soon as the 2020s according to
Natural Hazards Review; and
U.S. health expenditures have grown at a CAGR of 7% between
1997 and 2007 and are expected to grow over 6% annually through
2018, according to data compiled by the U.S. Department of
Health and Human Services; and
The total value of outstanding U.S. mortgage debt grew from
$10.7 trillion at the end of 2004 to $14.6 trillion at
December 31, 2008, a CAGR of over 8%.
58
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identification applications are the primary solutions that allow
customers to understand their risk exposures and proactively
manage them. Over the last three years, we have retained 98% of
our customers across all of our businesses, which we believe
reflects our customers recognition of the value they
derive from our solutions.
59
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60
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61
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62
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63
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64
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65
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66
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estimating replacement costs during the insurance underwriting
process;
quantifying the ultimate cost of repair or reconstruction of
damaged or destroyed buildings;
aiding in the settlement of insurance claims; and
tracking the process of repair or reconstruction and
facilitating communication among insurers, adjusters,
contractors and policyholders.
67
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68
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69
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LOCATION Analyst, a new portfolio-assessment system that uses
proprietary insurance industry data, visual maps and
sophisticated reporting to help insurers make better risk
management decisions;
360Value, an innovative web-based system for estimating
replacement values of residential, commercial and agricultural
properties; and
Predictive models to help insurers classify, segment and price
risks for a variety of lines of insurance.
70
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71
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72
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Square Feet
Lease Expiration Date
390,991
May 21, 2021
68,343
January 1, 2017
47,000
March 31, 2015
28,666
October 30, 2011
23,505
May 31, 2014
73
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74
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75
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60
Chairman of the Board of Directors, President and Chief
Executive Officer
52
Executive Vice President and Chief Operating Officer
43
Senior Vice President and Chief Financial Officer
49
Senior Vice President, General Counsel and Corporate Secretary
69
Executive Vice President Information Services and
Government Relations
58
Senior Vice President AISG
56
Senior Vice President Insurance Services
71
Director
73
Director
51
Director
59
Director
66
Director
60
Director
52
Director
57
Director
74
Director
60
Director
76
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78
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between eight to ten Class A directors; and
three Class B directors.
79
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Fees Earned or
Stock Awards
Option Awards
Total
Paid in Cash ($)
($)(1)
($)(1)
($)
4,500
4,500
32,500
25,000
48,863
106,363
10,500
103,863
114,363
12,000
98,863
110,863
12,000
12,500
87,500
112,000
180,000
180,000
187,500
187,500
12,500
12,500
31,000
73,863
104,863
7,500
175,000
182,500
9,000
62,500
125,000
196,500
10,500
50,000
48,863
109,363
9,000
50,000
62,500
121,500
(1)
The amounts associated with option awards reflect the expense
incurred for accounting purposes in accordance with
FAS 123R for options granted in 2008 and prior years. For a
discussion of the assumptions used to calculate the amounts
shown in the option awards and stock awards columns, see
note 2(j) of the notes to our audited consolidated
financial statements included as part of this prospectus.
(2)
Mr. Brandon was a director until June 27, 2008.
(3)
Mr. Brown received stock awards during 2008 with a fair
value of $25,000. As of December 31, 2008, Mr. Brown
owned 354 stock awards and options covering 3,000 shares.
The amount shown in the option column above includes expense
amounts recognized, under FAS 123R, in 2008 relating to
option grants made in 2006.
(4)
Mr. Dell received options during 2008 with a fair value of
$55,000. As of December 31, 2008, Mr. Dell owned
options covering 746 shares. The amount shown in the option
column above includes expense amounts recognized, under
FAS 123R, in 2008 relating to option grants made in 2006.
(5)
Mr. Feinberg received options during 2008 with a fair value
of $50,000. As of December 31, 2008, Mr. Feinberg
owned options covering 2,963 shares. The amount shown in
the option column above
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includes expense amounts recognized, under FAS 123R, in
2008 relating to option grants made in 2006. Mr. Feinberg was a
director until June 17, 2009.
(6)
Mr. Foskett received stock awards and options during 2008
with a fair value of $12,500 and $87,500, respectively. As of
December 31, 2008, Mr. Foskett owned 90 stock awards
and options covering 1,112 shares.
(7)
Mr. Iordanou received options during 2008 with a fair value
of $117,500. As of December 31, 2008, Mr. Iordanou
owned options covering 9,042 shares. The amount shown in
the option column above includes expense amounts recognized,
under FAS 123R, in 2008 relating to option grants made in
2007.
(8)
Mr. Lehman received options during 2008 with a fair value
of $125,000. As of December 31, 2008, Mr. Lehman owned
options covering 1,797 shares. The amount shown in the
option column above includes expense amounts recognized, under
FAS 123R, in 2008 relating to option grants made in 2007.
(9)
Mr. Lilienthal received stock awards during 2008 with a
fair value of $12,500. Mr. Lilienthal was a director from
June 27, 2008 until December 17, 2008.
(10)
Mr. Liss received options during 2008 with a fair value of
$25,000. As of December 31, 2008, Mr. Liss owned
options covering 1,982 shares. The amount shown in the
option column above includes expense amounts recognized, under
FAS 123R, in 2008 relating to option grants made in 2006.
(11)
Mr. Mills received options during 2008 with a fair value of
$112,500. As of December 31, 2008, Mr. Mills owned
options covering 5,832 shares. The amount shown in the
option column above includes expense amounts recognized, under
FAS 123R, in 2008 relating to option grants made in 2007.
(12)
Mr. Rothkopf received stock awards and options during 2008
with a fair value of $62,500 and $62,500, respectively. As of
December 31, 2008, Mr. Rothkopf owned 219 stock awards
and options covering 1,021 shares. The amount shown in the
option column above includes expense amounts recognized, under
FAS 123R, in 2008 relating to option grants made in 2007.
(13)
Ms. Stewart received stock awards during 2008 with a fair
value of $50,000. As of December 31, 2008, Ms. Stewart
owned 1,524 stock awards and options covering 1,500 shares.
The amount shown in the option column above includes expense
amounts recognized, under FAS 123R, in 2008 relating to
option grants made in 2006. Ms. Stewart was a director
until June 17, 2009.
(14)
Mr. Wright received stock awards and options during 2008
with a fair value of $50,000 and $62,500, respectively. As of
December 31, 2008, Mr. Wright owned 116 stock awards
and options covering 3,142 shares.
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base salary;
annual cash incentive awards;
long-term equity incentive awards; and
health, welfare and retirement plans.
83
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84
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Revenue Growth
EBITDA Margin
15
%
37
%
12
%
34
%
10
%
30
%
6
%
27
%
85
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a combined 401(k) Savings Plan and ESOP,
a defined benefit pension plan with (i) a traditional final
pay formula applicable to employees who were 49 years old
with 15 years of service as of January 1, 2002, and
(ii) a cash balance formula applicable to other employees
hired prior to March 1, 2005, and
a profit sharing plan (as a component of the 401(k) plan) which
is available to employees hired on or after March 1, 2005.
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Change in Pension
Value and
Non-Equity
Non-qualified
Option
Incentive Plan
Deferred
Awards ($)
Compensation ($)
Compensation
All Other
Year
Salary ($)
(1)
(2)
Earnings ($)
Compensation ($)
Total ($)
2008
1,036,154
1,062,800
2,800,000
401,539
59,691
(3)
5,360,184
2007
898,654
1,062,800
2,000,000
300,610
80,907
(4)
4,342,971
2008
303,462
445,530
400,000
86,594
10,641
(5)
1,246,227
2007
256,769
247,512
300,000
63,668
11,868
(6)
879,817
2008
451,539
923,841
675,000
92,011
49,758
(7)
2,192,149
2007
419,812
644,107
600,000
83,782
52,386
(8)
1,800,087
2008
385,385
421,965
350,000
10,928
(9)
1,168,278
2007
355,000
276,646
300,000
15,173
(10)
946,819
2008
246,538
293,961
220,000
46,356
11,230
(11)
818,085
88
Table of Contents
(1)
The amounts in this column reflect the expense incurred for
accounting purposes in accordance with FAS 123R for options
granted in 2008 and prior years under the LTI plan. For a
discussion of the assumptions used to calculate the amounts
shown in this column, see note 2(j) of the notes to our
audited consolidated financial statements included as part of
this prospectus.
(2)
The amounts in this column are cash incentive awards under the
STI plan in respect of performance for the years ended
December 31, 2007 and 2008.
(3)
Amount includes $16,429 for life insurance premiums, a 401(k)
matching contribution of $10,350 and $32,912 for costs of
personal benefits, including club memberships, automobile
allowance and reimbursement of personal travel expenses.
(4)
Amount includes $15,187 for life insurance premiums, a 401(k)
matching contribution of $10,125 and $55,595 for costs of
personal benefits, including club memberships of $44,439, and
automobile allowance.
(5)
Amount includes a 401(k) matching contribution of $10,350.
(6)
Amount includes a 401(k) matching contribution of $11,625.
(7)
Amount includes a 401(k) matching contribution of $10,350 and
$38,355 for costs of personal benefits, including commutation
via commercial air carrier between the Companys
headquarters and the executives home and temporary living
quarters near the Companys headquarters of $25,891. Costs
of commercial air travel were determined using average rates
incurred for such travel.
(8)
Amount includes a 401(k) matching contribution of $10,125 and
$41,291 for costs of personal benefits, including commutation
via commercial air carrier between the Companys
headquarters and the executives home at a cost of $32,367,
and temporary living quarters near the Companys
headquarters. Costs of commercial air travel were determined
using average rates incurred for such travel.
(9)
Amount includes a 401(k) matching contribution of $10,350.
(10)
Amount includes a 401(k) matching contribution of $10,125.
(11)
Amount includes a 401(k) matching contribution of $10,263.
All Other
Estimated
Option
Grant Date
Future Payouts
Awards:
Fair Value of
Under Non-Equity
Number of
Exercise or
Stock and
Incentive Plan
Securities
Base Price
Stock
Option
Awards
Underlying
of Option
Value on
Awards
Target ($)
Options
Awards ($/Sh)
Grant Date
($)
NA
March 1, 2008
January 30, 2008
NA
4,000
862
862
818,880
March 1, 2008
January 30, 2008
NA
5,500
862
862
1,125,960
March 1, 2008
January 30, 2008
NA
3,000
862
862
614,160
March 1, 2008
January 30, 2008
NA
2,000
862
862
409,440
89
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Option Awards(1)
Number of
Number of
Securities
Securities
Underlying
Underlying
Unexercised
Unexercised
Option
Date of
Options (#)
Options (#)
Exercise
Option
Exercisable
Unexercisable
Price ($)
Expiration Date
July 1, 2000
10,000
100
July 1, 2010
July 1, 2000
50,000
110
July 1, 2010
December 18, 2002
75,000
155
December 18, 2012
June 29, 2005
40,000
10,000
420
June 29, 2015
March 1, 2001
1,250
92
March 1, 2011
March 1, 2002
1,750
108
March 1, 2012
March 1, 2003
5,000
144
March 1, 2013
March 1, 2004
5,000
231
March 1, 2014
March 1, 2005
1,875
625
437
March 1, 2015
March 1, 2006
1,050
1,050
565
March 1, 2016
March 1, 2007
525
1,575
755
March 1, 2017
June 1, 2007
75
225
836
June 1, 2017
March 1, 2008
4,000
862
March 1, 2018
March 1, 2003
18,750
144
March 1, 2013
March 1, 2004
13,000
231
March 1, 2014
March 1, 2005
6,000
2,000
437
March 1, 2015
March 1, 2006
2,700
2,700
565
March 1, 2016
March 1, 2007
1,300
3,900
755
March 1, 2017
March 1, 2008
5,500
862
March 1, 2018
October 2, 2006
2,000
2,000
681
October 2, 2016
March 1, 2007
500
1,500
755
March 1, 2017
March 1, 2008
3,000
862
March 1, 2018
March 1, 2003
3,000
144
March 1, 2013
March 1, 2004
3,000
231
March 1, 2014
March 1, 2005
1,275
425
437
March 1, 2015
March 1, 2006
900
900
565
March 1, 2016
March 1, 2007
450
1,350
755
March 1, 2017
March 1, 2008
2,000
862
March 1, 2018
(1)
The right to exercise stock options vests ratably on the first,
second, third and fourth anniversaries of the date of grant for
options granted to NEOs other than Mr. Coyne. A portion of
Mr. Coynes options with an exercise price above the
grant date fair market value vested immediately.
90
Table of Contents
Option Awards
Number of
Shares Acquired
Value
on Exercise
Realized on
(#)
Exercise ($)
2,674
2,350,446
Number of Years
Present Value of
Payments During
Credited Service
Accumulated Benefit
Last Fiscal Year
Plan Name
(#)
($)
($)
PPIO
10
170,267
Supplemental Plan
10
1,759,182
PPIO
17
205,114
Supplemental Plan
17
149,744
PPIO
8
105,221
Supplemental Plan
8
326,815
NA
NA
NA
PPIO
35
698,377
Supplemental Plan
35
305,894
91
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Aggregate
Executive
Registrant
Aggregate
Aggregate
Balance
Contributions
Contributions
Earnings
Withdrawals/
at End of
in Last FY
in Last FY
in Last FY
Distributions
Last FY
($)(1)
($)
($)
($)
($)
48,369
1,275
749,566
5,638
682
128,571
13,523
1,275
3,373
154,583
9,323
1,151
22,561
111,392
1,362
13,044
571,594
(1)
All amounts shown are also shown in the Executive Compensation
and Benefits table in the Salary and/or
Non-Equity Incentive Plan Compensation column.
(i)
a pro rata STI award;
92
Table of Contents
(ii)
a severance payment equal to the executives base salary
plus a target bonus amount times two;
(iii)
continuation of health benefits (at the executives expense) for
18 months; and
(iv)
immediate vesting of any remaining unvested options.
93
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94
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95
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96
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Year Ended
Year Ended
As of
As of
December 31, 2006
December 31, 2007
December 31, 2008
June 30, 2009
(In thousands)
$
6,449
$
6,449
$
$
5,160
5,323
503
519
4,193
5,039
766
1,428
315
2,496
3,107
1,727
1,791
1,991
2,054
1,862
1,921
438
457
489
511
8,716
10,588
(1)
Mr. Geraghty was Chief Financial Officer of the Company
until termination of his employment effective March 8, 2007.
97
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Year Ended
Year Ended
Year Ended
Six Months Ended
December 31, 2006
December 31, 2007
December 31, 2008
June 30, 2009
(In thousands)
$
26,931
$
16,436
$
$
6,505
2,511
8,060
5,447
838
413
1,923
1,971
2,525
3,039
594
62
2,031
13,417
3,815
8,987
978
916
62,993
10,438
6,019
83,256
(1)
Mr. Geraghty was our Chief Financial Officer until
termination of his employment effective March 8, 2007.
(2)
Mr. Marcon was our Chairman and Chief Executive Officer and
was the beneficial owner of greater than 5% of our Class A
common stock.
98
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99
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100
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each person whom we know to own beneficially more than 5% of our
common stock;
each of the directors and named executive officers individually;
all directors and executive officers as a group; and
each of the selling stockholders, which consist of the entities
and individuals shown as having shares listed in the column
Number of Shares Being Offered.
Shares Beneficially
Shares Beneficially
Owned After the
Owned Before
Offering(2)
Class of Our
the Offering
Number
Common Stock
Name and Address of
Common
Percent
of Shares
Beneficially
Percent
Beneficial Owner
Stock
Number
of Class
Being Offered(1)
Owned
of Class
Class A
28,061,050
80.7
%
5,000,000
23,061,050
20.4
%
Class B
9,136,100
6.4
%
7,826,950
1,309,150
2.0
%
Philadelphia, PA 19106
Class B
9,605,400
6.7
%
3,100,200
6,505,200
9.7
%
Cincinnati, OH 45202
Class B
8,862,550
6.2
%
7,592,600
1,269,950
1.9
%
New York, NY 10270
Class B
7,156,300
5.0
%
7,156,300
10.7
%
Omaha, NE 68131
Class B
17,500,000
12.2
%
14,992,400
2,507,600
3.7
%
Chicago, IL 60604
Class B
17,040,600
11.9
%
14,598,800
2,441,800
3.6
%
Hartford, CT 06115
Class B
17,424,100
12.2
%
7,463,700
9,960,400
14.9
%
New York, NY 10017
Class A
9,455,900
21.5
%
2,034,450
7,421,450
6.2
%
Class A
3,581,250
9.6
%
703,000
2,878,250
2.5
%
Class A
1,113,750
3.1
%
150,000
963,750
*
Class A
237,500
*
237,500
*
Class A
809,300
2.3
%
155,000
654,300
*
Class A
614,750
1.7
%
78,750
536,000
*
Class A
656,200
1.9
%
118,700
537,500
*
Class A
196,850
*
196,850
*
Class A
564,500
1.6
%
130,400
434,100
*
Class A
93,800
*
93,800
*
Class A
535,850
1.5
%
95,000
440,850
*
101
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Shares Beneficially
Shares Beneficially
Owned After the
Owned Before
Offering(2)
Class of Our
the Offering
Number
Common Stock
Name and Address of
Common
Percent
of Shares
Beneficially
Percent
Beneficial Owner
Stock
Number
of Class
Being Offered(1)
Owned
of Class
Class A
772,300
2.2
%
50,000
722,300
*
Class A
115,100
*
115,100
*
Class A
328,250
*
328,250
*
Class A
4,350
*
4,350
*
Class A
499,750
1.4
%
499,750
*
Class A
294,150
*
58,500
235,650
*
Class A
19,873,550
50.6
%
3,573,800
16,299,750
13.9
%
Class B
51,900
*
44,450
7,450
*
Fort Lauderdale, FL 33309
Class B
588,350
*
504,050
84,300
*
DePere, WI 54115
Class B
2,299,950
1.6
%
1,970,400
329,550
*
Providence, RI 02940
Class B
1,560,000
1.1
%
1,336,450
223,550
*
Charlotte, NC 28273
Class B
6,107,250
4.3
%
1,046,400
5,060,850
7.6
%
Fairfield, OH 45014
Class B
1,332,350
*
1,141,450
190,900
*
Bloomington, IL 61701
Class B
303,350
*
52,450
250,900
*
Marietta, PA 17547
Class B
4,836,750
3.4
%
2,071,800
2,764,950
4.1
%
Des Moines, IA 50309
Class B
3,933,550
2.7
%
1,684,950
2,248,600
3.4
%
Owatonna, MN 55060
Class B
4,079,950
2.8
%
2,023,950
2,056,000
3.1
%
Southfield, MI 48034
Class B
691,350
*
592,300
99,050
*
Grinnell, IA 50112
Class B
429,400
*
183,950
245,450
*
Hastings, MI 49058
Class B
797,900
*
546,850
251,050
*
Indianapolis, IN 46268
Class B
718,000
*
615,100
102,900
*
Burlington, NC 27215
Class B
2,472,450
1.7
%
423,600
2,048,850
3.1
%
Boston, MA, 02116
Class B
5,200
*
4,450
750
*
Chesterfield, MO 63017
Table of Contents
Shares Beneficially
Shares Beneficially
Owned After the
Owned Before
Offering(2)
Class of Our
the Offering
Number
Common Stock
Name and Address of
Common
Percent
of Shares
Beneficially
Percent
Beneficial Owner
Stock
Number
of Class
Being Offered(1)
Owned
of Class
Class B
79,300
*
67,950
11,350
*
P.O. Box 26894
San Francisco, CA 94126
Class B
1,635,550
1.1
%
1,401,200
234,350
*
Dedham, MA 02026
Class B
333,250
*
57,100
276,150
*
Warwick, RI 02886
Class B
2,020,250
1.4
%
1,730,750
289,500
*
New York, NY 10016
Class B
3,150
*
2,700
450
*
Austin, TX 78755
Class B
46,500
*
7,950
38,550
*
Gallup, NM 87301
Class B
2,298,400
1.6
%
1,969,050
329,350
*
Armonk, NY 10504
Class B
349,250
*
149,600
199,650
*
Bel Air, MD 21014
Class B
6,800
*
5,850
950
*
Nashville, TN 37201
Class B
103,500
*
17,750
85,750
*
San Juan, PR 00936
Company
Class B
96,300
*
82,500
13,800
*
Wyalusing, PA 18853
Class B
190,400
*
81,550
108,850
*
Chicago, IL 60601
Class B
503,250
*
86,250
417,000
*
Montpelier, VT 05601
Class B
4,237,200
3.0
%
725,950
3,511,250
5.2
%
Greenwich, CT 06830
Class A
11,000
*
1,100
9,900
*
Class A
26,250
*
5,500
20,750
*
Class A
5,500
*
500
5,000
*
Class A
141,200
*
26,200
115,000
*
Class A
14,550
*
2,450
12,100
*
Class A
16,250
*
2,200
14,050
*
Class A
55,500
*
7,500
48,000
*
Class A
28,850
*
5,900
22,950
*
Class A
6,400
*
1,250
5,150
*
Class A
154,900
*
27,150
127,750
*
Class A
25,750
*
4,750
21,000
*
Class A
19,750
*
4,700
15,050
*
Class A
153,750
*
28,250
125,500
*
Table of Contents
Shares Beneficially
Shares Beneficially
Owned After the
Owned Before
Offering(2)
Class of Our
the Offering
Number
Common Stock
Name and Address of
Common
Percent
of Shares
Beneficially
Percent
Beneficial Owner
Stock
Number
of Class
Being Offered(1)
Owned
of Class
Class A
92,500
*
21,250
71,250
*
Class A
55,000
*
11,100
43,900
*
Class A
478,000
1.4
%
25,600
452,400
*
Class A
18,500
*
5,000
13,500
*
Class A
118,100
*
7,500
110,600
*
Class A
79,900
*
21,000
58,900
*
Class A
139,850
*
37,200
102,650
*
Class A
295,650
*
66,900
228,750
*
Class A
46,000
*
10,300
35,700
*
Class A
6,400
*
1,000
5,400
*
Class A
35,850
*
6,100
29,750
*
Class A
54,950
*
10,000
44,950
*
Class A
17,700
*
4,500
13,200
*
Class A
6,400
*
1,100
5,300
*
Class A
12,500
*
1,750
10,750
*
Class A
266,000
*
66,500
199,500
*
Class A
26,500
*
6,200
20,300
*
Class A
45,250
*
8,150
37,100
*
Class A
78,500
*
11,450
67,050
*
Class A
146,500
*
10,000
136,500
*
Class A
137,500
*
22,750
114,750
*
*
Less than 1%.
(1)
Class B common stock sold in this offering will be
automatically converted into Class A common stock.
(2)
Assumes no exercise of the underwriters over-allotment
option. The underwriters have an option to purchase up to
12,745,750 additional shares of our common stock from our
Class B stockholders on a
pro rata
basis to cover
over-allotments. See Underwriting.
(3)
Includes shares owned and being offered by Ace American
Insurance Company, Indemnity Insurance Company of North America
and Insurance Company of North America.
(4)
Includes shares owned and being offered by Great American
Insurance Company.
(5)
Includes shares owned by General Reinsurance Corporation and
Government Employees Insurance Company.
(6)
Includes shares owned and being offered by Continental Casualty
Company and The Continental Insurance Company. Thomas F.
Motamed, one of our Class B directors, is the Chairman of
the Board and Chief Executive Officer of CNA Financial
Corporation. Mr. Motamed disclaims beneficial ownership of
any shares beneficially owned by CNA Financial Corporation
except to the extent of his pecuniary interest therein.
(7)
Includes shares owned and being offered by Hartford Fire
Insurance Company.
(8)
Includes shares owned and being offered by The Travelers
Companies, Inc. and United States Fidelity and Guaranty Company.
Samuel G. Liss, one of our Class B directors, is Executive
Vice President of The Travelers Companies. Mr. Liss
disclaims beneficial ownership of any shares beneficially owned
by The Travelers Companies, Inc. and United States Fidelity and
Guaranty Company except to the extent of his pecuniary interest
therein.
(9)
Includes shares owned and being offered by the Barbara M. Dell
GST Family Trust, of which Mr. Dell is the trustee.
Mr. Dell disclaims beneficial ownership of any shares
beneficially owned by the trust except to the extent of his
pecuniary interest therein.
Table of Contents
(10)
Includes shares owned by the Lehman Business Trust, of which
John F. Lehman, Jr. is the trustee. Mr. Lehman disclaims
beneficial ownership of any shares beneficially owned by the
trust except to the extent of his pecuniary interest therein.
(11)
Includes shares owned by the Arthur J. Rothkopf Revocable trust,
of which Mr. Rothkopf is one of the trustees.
Mr. Rothkopf disclaims beneficial ownership of any shares
beneficially owned by the trust except to the extent of his
pecuniary interest therein.
(12)
Includes shares owned and being offered by IDS Property Casualty
Insurance Company.
(13)
Includes shares owned and being offered by Cincinnati Insurance
Company.
(14)
Includes shares owned and being offered by Cotton States Mutual
Insurance Co., Holyoke Mutual Insurance Co. in Salem, and
Middlesex Mutual Assurance Co.
(15)
Includes shares owned and being offered by Southern Insurance
Company of Virginia.
(16)
Includes shares owned and being offered by Dakota Fire Insurance
Company, EMC National Life Company, EMC Property &
Casualty Company, EMCASCO Insurance Company, Employers Mutual
Casualty Company, Illinois EMCASCO Insurance Company and Union
Insurance Company of Providence.
(17)
Includes shares owned and being offered by Motors Insurance
Corporation.
(18)
Includes shares owned and being offered by First Financial
Insurance Company and The Burlington Insurance Company.
(19)
Includes shares owned and being offered by The Ohio Casualty
Insurance Company.
(20)
Includes shares owned and being offered by Norfolk &
Dedham Mutual Fire Insurance Company, Fitchburg Mutual Insurance
Company, Dorchester Mutual Insurance Company.
(21)
Includes shares owned and being offered by Swiss Re America
Holding Corporation, Swiss Reinsurance America Corporation and
Westport Insurance Corporation.
(22)
Includes shares owned and being offered by Firstline National
Insurance Company and Harford Mutual Insurance Company.
(23)
Includes shares owned and being offered by Unitrin Preferred
Insurance Company.
(24)
Includes shares owned by the Wayne Lattuca 2009 GRAT Trust, of
which Mr. Lattuca is the trustee. Mr. Lattuca
disclaims beneficial ownership of any shares beneficially owned
by the trust except to the extent of his pecuniary interest
therein.
105
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106
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any transfer to us by any person or entity;
any transfer of any shares of Class B common stock of
either series to any other holder of Class B common stock
or its affiliate;
any transfer of any shares of Class B common stock of any
applicable series to an affiliate of such holder; and
any transfer by a holder of Class B common stock to any
person that succeeds to all or substantially all of the assets
of such holder, whether by merger, consolidation, amalgamation,
sale of substantially all assets or other similar transactions.
107
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the transaction is approved by the board of directors prior to
the date the interested stockholder obtained such status;
upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the stockholder
owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced; or
on or subsequent to such date the business combination is
approved by the board of directors and authorized at an annual
or special meeting of stockholders by the affirmative vote of at
least
66
2
/
3
%
of the outstanding voting stock which is not owned by the
interested stockholder.
between eight to ten Class A directors; and
three Class B directors.
108
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109
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NON-U.S.
HOLDERS OF COMMON STOCK
a non-resident alien individual, other than certain former
citizens and residents of the United States subject to tax as
expatriates,
a corporation, or other entity treated as a corporation for
U.S. federal income tax purposes, created or organized in
or under the laws of a jurisdiction other than the United States
or any state or political subdivision thereof; or
an estate or trust, other than an estate or trust the income of
which is subject to U.S. federal income taxation regardless
of its source.
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the gain is effectively connected with a trade or business of
the
non-U.S. holder
in the United States, subject to an applicable income treaty
providing otherwise, or
the Company is or has been a U.S. real property holding
corporation at any time within the five-year period preceding
the disposition or the
non-U.S. holders
holding period, whichever period is shorter, and its common
stock has ceased to be traded on an established securities
market prior to the beginning of the calendar year in which the
sale or disposition occurs.
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On the date of this prospectus.
After 180 days from the date of this prospectus (subject,
in some cases, to volume limitations).
At various times after 18 months from the date of this
prospectus (subject, in some cases, to volume limitations).
112
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one percent of the number of shares of our Class A common
stock then outstanding, which will equal approximately
1,130,761 shares immediately after this offering; and
the average weekly trading volume of our Class A common
stock on The NASDAQ Global Select Market during the four
calendar weeks preceding the filing of a notice on Form 144
with respect to the sale.
113
Table of Contents
114
Table of Contents
Number of
Shares
Incorporated
85,250,000
115
Table of Contents
Per Share
Without Option
With Option
$
$
$
$
$
$
$
$
$
the valuation multiples of publicly traded companies that the
representatives believe to be comparable with us;
our financial information;
the history of, and the prospects for, our company and the
industry in which we compete;
116
Table of Contents
an assessment of our management, our past and present
operations, and the prospects for, and timing of, our future
revenues;
the present state of our business; and
the factors listed above in relation to market values and
various valuation measures of other companies engaged in
activities similar to ours.
117
Table of Contents
to legal entities which are authorized or regulated to operate
in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities;
to any legal entity which has two or more of (1) an average
of at least 250 employees during the last financial year;
(2) a total balance sheet of more than 43,000,000 and
(3) an annual net turnover of more than 50,000,000,
as shown in its last annual or consolidated accounts;
to fewer than 100 natural or legal persons (other than qualified
investors as defined in the Prospectus Directive) subject to
obtaining the prior content of the manager for any such offer; or
in any other circumstances which do not require the publication
by us of a prospectus pursuant to Article 3 of the
Prospectus Directive.
they have complied and will comply with all applicable
provisions of the Financial Services and Markets Act 2000, or
FSMA, with respect to anything done by them in relation to our
common stock in, from or otherwise involving the United Kingdom;
they have only communicated or caused to be communicated and
will only communicate or cause to be communicated any invitation
or inducement to engage in investment activity (within the
meaning of Section 21 of the FSMA) received by them in
connection with the issue or sale of our common stock in
circumstances in which Section 21(1) of the FSMA does not
apply to us; and
they and each of their affiliates have not (i) offered or
sold and will not offer or sell in Hong Kong, by means of any
document, our common stock other than (a) to
professional investors as defined in the Securities
and Futures Ordinance (Cap. 571) of Hong Kong and any rules
made under that Ordinance or (b) in other circumstances
which do not result in the document being a
prospectus as defined in the Companies Ordinance
(Cap. 32) of Hong Kong or which do not constitute an offer
to the public within the meaning of that Ordinance or
(ii) issued or
118
Table of Contents
had in their possession for the purposes of issue, and will not
issue or have in their possession for the purposes of issue,
whether in Hong Kong or elsewhere, any advertisement, invitation
or document relating to our common stock, which is directed at,
or the contents of which are likely to be accessed or read by,
the public of Hong Kong (except if permitted to do so under the
securities laws of Hong Kong) other than with respect to our
common stock which are or are intended to be disposed of only to
persons outside Hong Kong or only to professional
investors as defined in the Securities and Futures
Ordinance and any rules made under that Ordinance. The contents
of this document have not been reviewed by any regulatory
authority in Hong Kong. You are advised to exercise caution in
relation to the offer. If you are in any doubt about any of the
contents of this document, you should obtain independent
professional advice.
119
Table of Contents
120
Table of Contents
Page
F-2
F-3
F-4
F-5
F-7
F-31
F-32
F-33
F-34
F-35
F-36
F-37
F-38
F-40
F-1
Table of Contents
CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 31, 2008 and June 30, 2009
F-2
Table of Contents
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For The Six Months Ended June 30, 2008 and 2009
2008
2009
(In thousands, except for
share and per share data)
$
437,690
$
503,667
190,678
220,501
59,028
72,225
16,424
18,913
14,937
16,974
281,067
328,613
156,623
175,054
1,603
92
(1,286
)
(365
)
(14,173
)
(16,677
)
(13,856
)
(16,950
)
142,767
158,104
(61,818
)
(67,250
)
80,949
90,854
$
21.73
$
26.20
$
20.87
$
25.21
3,724,876
3,468,196
3,877,906
3,604,086
$
0.43
$
0.52
$
0.42
$
0.50
186,243,800
173,409,800
193,895,300
180,204,300
F-3
Table of Contents
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS DEFICIT (UNAUDITED)
For The Year Ended December 31, 2008 and
The Six Months Ended June 30, 2009
Accumulated
Other
Class B Common Stock
Total
Accumulated
Comprehensive
Treasury
Stockholders
Deficit
Loss
Shares
Par Value
Stock
Deficit
(In thousands, except for share data)
$
(515,756
)
$
(8,699
)
10,004,500
$
100
$
(678,993
)
$
(1,203,348
)
158,228
158,228
(73,735
)
(73,735
)
84,493
(5,001
)
(5,001
)
114,033
114,033
$
(243,495
)
$
(82,434
)
10,004,500
$
100
$
(683,994
)
$
(1,009,823
)
90,854
90,854
3,304
3,304
94,158
(112,824
)
(112,824
)
$
(265,465
)
$
(79,130
)
10,004,500
$
100
$
(683,994
)
$
(1,028,489
)
F-4
Table of Contents
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For The Six Months Ended June 30, 2008
and 2009
2008
2009
(In thousands)
$
80,949
$
90,854
16,424
18,913
14,937
16,974
1,093
509
11,564
10,738
550
4,621
5,515
2,327
1,385
(980
)
1,286
365
(199
)
30
30
308
196
(17,032
)
(658
)
(4,937
)
(20,256
)
(4,426
)
(3,964
)
6,622
9,538
(1,270
)
(3,901
)
(16,088
)
(11,196
)
(2,200
)
(300
)
49,151
60,452
(692
)
9,226
141,929
184,529
F-5
Table of Contents
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(UNAUDITED)
For The Six Months Ended June 30, 2008
and 2009
2008
2009
(In thousands)
(41
)
(51,618
)
(98,100
)
(78,100
)
549
(3,320
)
(7,000
)
(78
)
(398
)
21,457
628
(17,810
)
(16,195
)
184
(1,243
)
(98,402
)
(152,683
)
150,000
80,000
70,000
40,000
(232,144
)
(38,282
)
(5,001
)
(100,000
)
(17,587
)
(2,659
)
17,032
658
941
1,126
(16,759
)
(19,157
)
18
88
26,786
12,777
24,049
33,185
$
50,835
$
45,962
$
55,127
$
60,464
$
12,609
$
16,527
$
20,148
$
$
18,663
$
$
2,827
$
456
$
$
(8,744
)
$
1,368
$
1,972
$
$
619
$
$
(4,300
)
$
3,320
$
$
11,300
$
F-6
Table of Contents
(Amounts in thousands, except for share and per share data,
unless otherwise stated)
1.
Organization:
2.
Basis of
Presentation and Summary of Significant Accounting
Policies:
F-7
Table of Contents
F-8
Table of Contents
F-9
Table of Contents
3.
Concentration
of Credit Risk:
F-10
Table of Contents
4.
Accounts
Receivables:
December 31,
June 30,
2008
2009
$
81,302
$
107,809
9,036
4,317
90,338
112,126
(6,397
)
(4,975
)
$
83,941
$
107,151
5.
Investments:
Gross
Gross
Adjusted
Unrealized
Unrealized
Cost
Gains
Losses
Fair Value
$
5,162
$
$
(48
)
$
5,114
$
4,566
$
441
$
$
5,007
15
1
16
$
4,581
$
442
$
$
5,023
June 30,
June 30,
2008
2009
$
(1,286
)
$
21
(386
)
$
(1,286
)
$
(365
)
F-11
Table of Contents
6.
Fair
Value Measurements
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.
F-12
Table of Contents
Quoted Prices
in Active Markets
Significant Other
Significant
for Identical
Observable
Unobservable
Total
Assets (Level 1)
Inputs (Level 2)
Inputs (Level 3)
$
5,114
$
5,114
$
$
$
752,912
$
$
$
752,912
$
5,007
$
5,007
$
$
$
16
$
16
$
$
$
845,126
$
$
$
845,126
$
2,800
$
$
$
2,800
(1)
Registered investment companies and
equity securities are classified as
available-for-sale
securities and are valued using quoted prices in active markets
multiplied by the number of shares owned.
(2)
The fair value of the
Companys Class A redeemable common stock is
established for purposes of the ISO 401 (K) Savings and
Employee Stock Ownership Plan (KSOP) generally on
the final day of the quarter and such price is utilized for all
share transactions in the subsequent quarter. The current
valuation in effect for the KSOP is also considered the fair
value for Class A redeemable common stock and related
transactions within the Insurance Services Office, Inc. 1996
Incentive Plan. See Note 11 for a description of the
valuation process.
(3)
Under FAS No. 141(R),
contingent consideration is recognized at fair value at the end
of each reporting period. Subsequent changes in the fair value
of contingent consideration is recorded in the statement of
operations. See Note 8 for further information regarding
the 2009 acquisitions. For the six-months ended June 30,
2009, no adjustments to the initial assessment were required.
Significant
Unobservable
Inputs (Level 3)
$
752,912
(37,157
)
129,371
$
845,126
(1)
See Note 11 for a description of
the valuation process.
F-13
Table of Contents
7.
Goodwill
and Intangible Assets:
Risk
Decision
Assessment
Analytics
Total
$
27,908
$
419,464
$
447,372
44,494
44,494
(4,300
)
(4,300
)
(347
)
(347
)
$
27,908
$
459,311
$
487,219
Weighted Average
Accumulated
Useful Life
Cost
Amortization
Net
5 years
$
164,127
$
(98,810
)
$
65,317
4 years
31,733
(18,363
)
13,370
6 years
6,555
(5,940
)
615
12 years
53,317
(19,906
)
33,411
$
255,732
$
(143,019
)
$
112,713
F-14
Table of Contents
Weighted Average
Accumulated
Useful Life
Cost
Amortization
Net
6 years
$
176,274
$
(108,530
)
$
67,744
4 years
38,614
(22,003
)
16,611
6 years
6,555
(5,995
)
560
12 years
58,097
(23,465
)
34,632
$
279,540
$
(159,993
)
$
119,547
Amount
$
16,203
$
27,957
$
21,421
$
17,506
$
11,933
$
24,527
8.
Acquisitions:
Table of Contents
Weighted Average
Useful Life
Total
10 years
$
12,147
5 years
6,881
6 years
4,780
$
23,808
9.
Income
Taxes:
F-16
Table of Contents
10.
Debt:
Issuance
Maturity
December 31,
June 30,
Date
Date
2008
2009
long-term debt:
12/15/2008
1/15/2009
$
5,000
$
12/17/2008
1/17/2009
30,000
12/22/2008
1/22/2009
15,000
12/24/2008
1/24/2009
5,000
6/18/2009
7/2/2009
30,000
6/18/2009
7/2/2009
5,000
6/29/2009
7/2/2009
15,000
6/26/2009
7/2/2009
15,000
6/29/2009
7/2/2009
50,000
12/1/2008
1/2/2009
10,000
12/12/2008
1/12/2009
4,000
12/18/2008
1/20/2009
20,000
12/24/2008
1/24/2009
20,000
12/29/2008
1/29/2009
5,000
6/29/2009
7/2/2009
19,000
6/8/2009
7/8/2009
20,000
6/14/2005
6/13/2009
100,000
Various
Various
5,058
5,208
Various
Various
340
1,164
$
219,398
$
160,372
F-17
Table of Contents
Issuance
Maturity
December 31,
June 30,
Date
Date
2008
2009
6/14/2005
6/13/2011
$
50,000
$
50,000
8/8/2006
8/8/2011
25,000
25,000
8/8/2006
8/8/2013
75,000
75,000
10/26/2007
10/26/2013
17,500
17,500
10/26/2007
10/26/2015
17,500
17,500
4/29/2008
4/29/2013
15,000
15,000
4/29/2008
4/29/2015
85,000
85,000
6/15/2009
6/15/2016
50,000
8/8/2006
8/8/2011
50,000
50,000
8/8/2006
8/8/2013
25,000
25,000
10/26/2007
10/26/2013
17,500
17,500
10/26/2007
10/26/2015
17,500
17,500
4/29/2008
4/29/2015
50,000
50,000
4/27/2009
4/27/2013
30,000
Various
Various
4,723
3,319
Various
Various
633
375
$
450,356
$
528,694
Table of Contents
11.
Redeemable
Common Stock:
F-19
Table of Contents
Total
Class A Common Stock
Redeemable
Redemption
Unearned
Additional
Common
Shares
Value
KS OP
Paid-in-Capital
Stock
746,139
$
752,912
$
(3,373
)
$
$
749,539
(49,047
)
(38,738
)
(38,738
)
364
10,374
10,738
5,515
5,515
3,096
1,581
658
2,239
129,371
(16,547
)
112,824
700,188
$
845,126
$
(3,009
)
$
$
842,117
12.
Stockholders
Deficit:
F-20
Table of Contents
June 30,
June 30,
2008
2009
$
80,949
$
90,854
3,724,876
3,468,196
153,030
135,890
3,877,906
3,604,086
$
21.73
$
26.20
$
20.87
$
25.21
$
0.43
$
0.52
$
0.42
$
0.50
186,243,800
173,409,800
193,895,300
180,204,300
December 31,
June 30,
2008
2009
$
(31
)
$
262
(773
)
(685
)
(81,630
)
(78,707
)
$
(82,434
)
$
(79,130
)
F-21
Table of Contents
Tax Benefit/
Before Tax
(Expense)
After Tax
$
(370
)
$
146
$
(224
)
1,120
(448
)
672
18
18
(35,589
)
13,907
(21,682
)
$
(34,821
)
$
13,605
$
(21,216
)
$
104
$
(41
)
$
63
386
(156
)
230
88
88
4,900
(1,977
)
2,923
$
5,478
$
(2,174
)
$
3,304
13.
Stock
Option Plan:
Weighted
Aggregate
Number
Average
Intrinsic
of Options
Exercise Price
Value
463,145
$
389.39
$
179,981
66,245
$
805.00
(3,096
)
$
510.57
$
891
(4,110
)
$
780.06
522,184
$
438.32
$
235,336
381,417
$
305.23
$
222,659
F-22
Table of Contents
Options Outstanding
Options Exercisable
Weighted-
Weighted-
Weighted-
Weighted-
Average
Stock
Average
Average
Stock
Average
Range of
Remaining
Options
Exercise
Remaining
Options
Exercise
Contractual Life
Outstanding
Price
Contractual Life
Exercisable
Price
1.2
72,329
$
107.24
1.2
72,329
$
107.24
3.6
45,102
$
141.89
3.6
45,102
$
141.89
3.9
112,475
$
179.64
3.9
112,475
$
179.64
5.8
87,360
$
415.51
5.8
87,360
$
415.51
6.8
40,171
$
594.86
6.8
29,163
$
598.53
7.6
37,284
$
755.00
7.6
16,921
$
755.00
9.7
69,520
$
806.55
8.0
3,325
$
836.00
8.6
57,943
$
864.79
8.6
14,742
$
864.94
522,184
381,417
Number of
Fair Value
Black-Scholes
Stock Options
of Common
Exercise
Value of
Granted
Stock(1)
Price
Options
5,357
$
892.00
$
892.00
$
223.56
600
$
892.00
$
892.00
$
241.85
66,245
$
805.00
$
805.00
$
234.63
(1)
The fair value for these shares is the current valuation in
effect for the KSOP. The fair value is also utilized for all
Class A share transactions for the Insurance Services
Office, Inc. 1996 Incentive Plan.
December 31, 2008
June 30, 2009
Black-Scholes
Black-Scholes
28.02%
30.95%
2.58%
1.98%
5.0
5.72
1.81%
1.00%
$206.68
$234.63
F-23
Table of Contents
14.
Pension
and Postretirement Benefits:
For the Six Months Ended June 30,
Pension Plan
Postretirement Plan
2008
2009
2008
2009
$
3,876
$
3,830
$
$
10,844
10,658
850
800
100
100
(13,720
)
(9,216
)
(400
)
(400
)
250
5,100
100
$
850
$
9,972
$
950
$
1,000
$
2,405
$
2,885
$
1,816
$
1,790
F-24
Table of Contents
15.
Segment
Reporting
F-25
Table of Contents
For the Six Months Ended
June 30, 2008
Risk
Decision
Assessment
Analytics
Total
$
253,356
$
184,334
$
437,690
103,140
87,538
190,678
36,716
22,312
59,028
113,500
74,484
187,984
9,278
7,146
16,424
427
14,510
14,937
103,795
52,828
156,623
1,603
(1,286
)
(14,173
)
$
142,767
$
7,849
$
11,329
$
19,178
For the Six Months Ended
June 30, 2009
Risk
Decision
Assessment
Analytics
Total
$
262,873
$
240,794
$
503,667
104,467
116,034
220,501
37,209
35,016
72,225
121,197
89,744
210,941
9,549
9,364
18,913
306
16,668
16,974
111,342
63,712
175,054
92
(365
)
(16,677
)
$
158,104
$
4,045
$
14,741
$
18,786
F-26
Table of Contents
For the Six Months Ended
June 30,
June 30,
2008
2009
$
165,719
$
172,193
63,344
65,869
13,820
14,135
10,473
10,676
253,356
262,873
102,858
130,475
46,260
66,896
35,216
43,423
184,334
240,794
$
437,690
$
503,667
16.
Research
and Development Costs:
17.
Related
Parties:
18.
Commitments
and Contingencies:
F-27
Table of Contents
F-28
Table of Contents
19.
Subsequent
Events:
F-29
Table of Contents
F-30
Table of Contents
F-31
Table of Contents
F-32
Table of Contents
1.
Organization:
2.
Basis of
Presentation:
3.
Commitments
and Contingencies:
4.
Subsequent
Events:
F-33
Table of Contents
Insurance Services Office, Inc.
Jersey City, New Jersey
April 10, 2009
F-34
Table of Contents
F-35
Table of Contents
2006
2007
2008
(In thousands, except for share and per share data)
$
730,133
$
802,195
$
893,550
331,804
357,191
386,897
100,124
107,576
131,239
28,007
31,745
35,317
26,854
33,916
29,555
486,789
530,428
583,008
243,344
271,767
310,542
6,585
8,442
2,233
(375
)
857
(2,511
)
(16,668
)
(22,928
)
(31,316
)
(109
)
9
(49
)
(10,567
)
(13,620
)
(31,643
)
232,777
258,147
278,899
(91,992
)
(103,184
)
(120,671
)
140,785
154,963
158,228
(1,805
)
(4,589
)
$
138,980
$
150,374
$
158,228
$
34.08
$
38.58
$
43.26
(0.44
)
(1.14
)
$
33.64
$
37.44
$
43.26
$
32.72
$
37.03
$
41.59
(0.42
)
(1.10
)
$
32.30
$
35.93
$
41.59
4,130,962
4,016,928
3,657,714
4,302,867
4,185,151
3,804,634
$
0.68
$
0.77
$
0.87
(0.01
)
(0.02
)
$
0.67
$
0.75
$
0.87
$
0.65
$
0.74
$
0.83
(0.01
)
(0.02
)
$
0.64
$
0.72
$
0.83
206,548,100
200,846,400
182,885,700
215,143,350
209,257,550
190,231,700
F-36
Table of Contents
Accumulated
Other
Total
Accumulated
Comprehensive
Class B Common Stock
Treasury
Stockholders
Deficit
Loss
Shares
Par Value
Stock
Deficit
(In thousands, except for share data)
$
(293,892
)
$
(2,734
)
10,004,500
$
100
$
(641,768
)
$
(938,294
)
(2,549
)
(2,549
)
(296,441
)
(2,734
)
10,004,500
100
(641,768
)
(940,843
)
138,980
138,980
2,352
2,352
141,332
(15,635
)
(15,635
)
(1,115
)
(1,115
)
(81,516
)
(81,516
)
(226,200
)
(226,200
)
$
(465,177
)
$
(16,017
)
10,004,500
$
100
$
(642,883
)
$
(1,123,977
)
150,374
150,374
7,318
7,318
157,692
(36,110
)
(36,110
)
(36,655
)
(36,655
)
(10,338
)
(10,338
)
(153,960
)
(153,960
)
$
(515,756
)
$
(8,699
)
10,004,500
$
100
$
(678,993
)
$
(1,203,348
)
158,228
158,228
(73,735
)
(73,735
)
84,493
(5,001
)
(5,001
)
114,033
114,033
$
(243,495
)
$
(82,434
)
10,004,500
$
100
$
(683,994
)
$
(1,009,823
)
F-37
Table of Contents
2006
2007
2008
(In thousands)
$
138,980
$
150,374
$
158,228
28,119
31,843
35,317
26,854
33,916
29,555
2,148
3,286
1,536
18,779
22,247
22,274
9,027
3,605
300
6,148
8,244
9,881
1,909
2,182
(91
)
1,744
(2,190
)
(2,454
)
(1,050
)
2,318
375
(857
)
2,511
(11,848
)
(5,698
)
19,895
216
298
284
2,374
1,791
1,082
(31,964
)
(12,798
)
(26,099
)
(6,135
)
3,908
3,609
(1,751
)
2,213
(6,486
)
15,634
18,137
5,969
8,699
(5,075
)
(5,977
)
1,452
1,759
3,075
(17,493
)
(13,658
)
(2,200
)
27,219
3,751
(1,042
)
6,947
(237
)
(4,983
)
223,499
248,521
247,906
F-38
Table of Contents
2006
2007
2008
(In thousands)
(201,617
)
(50,658
)
(18,951
)
(5,800
)
(3,191
)
(98,100
)
297
3,039
558
(14,600
)
(4,375
)
(1,500
)
(35,081
)
(44,101
)
(361
)
34,893
22,872
21,724
(25,742
)
(32,941
)
(30,652
)
301
3,863
(1,602
)
(1,777
)
(1,247
)
(243,452
)
(110,831
)
(130,466
)
15,000
30,000
114,000
175,000
85,000
150,000
(126,857
)
(168,660
)
(387,561
)
(1,115
)
(36,110
)
(5,001
)
(18,356
)
(136,008
)
(35,287
)
31,964
12,798
26,099
29,482
271
389
892
75,907
(212,591
)
(107,376
)
376
(202
)
(928
)
56,330
(75,103
)
9,136
42,822
99,152
24,049
$
99,152
$
24,049
$
33,185
$
78,800
$
94,258
$
99,323
$
14,901
$
22,752
$
28,976
$
(24,438
)
$
(15,130
)
$
(20,148
)
$
12,577
$
32,389
$
42,202
$
1,277
$
3,040
$
4,281
$
10,001
$
2,643
$
$
7,542
$
24
$
(2,963
)
$
$
9,554
$
2,610
$
$
4,688
$
$
4,362
$
98,343
$
82,400
$
1,936
$
4,455
$
4,388
F-39
Table of Contents
1.
Organization:
2.
Basis of
Presentation and Summary of Significant Accounting
Policies:
F-40
Table of Contents
(a)
Intercompany Accounts and Transactions
(b)
Revenue Recognition
F-41
Table of Contents
(c)
Fees Received in Advance
F-42
Table of Contents
F-43
Table of Contents
F-44
Table of Contents
2006
2007
2008
Black-Scholes
Black-Scholes
Black-Scholes
13.53
%
13.40
%
28.02
%
4.59
%
4.54
%
2.58
%
6.18
6.19
5.0
1.81
%
$
166.25
$
210.69
$
206.68
F-45
Table of Contents
$
13,933
$
7,620
$
31,891
$
10,338
(l)
Earnings Per Share
F-46
Table of Contents
(m)
Pension and Postretirement Benefits
(n)
Product Warranty Obligations
(o)
Loss contingencies
(p)
Recent Accounting Pronouncements
F-47
Table of Contents
F-48
Table of Contents
3.
Concentration
of Credit Risk:
4.
Cash and
Cash Equivalents:
F-49
Table of Contents
5.
Accounts
Receivables:
2007
2008
$
88,370
$
81,302
6,365
9,036
94,735
90,338
(8,247
)
(6,397
)
$
86,488
$
83,941
6.
Notes
Receivable from Stockholders:
7.
Investments:
Gross
Gross
Unrealized
Unrealized
Cost
Gains
Losses
Fair Value
$
29,036
$
$
(686
)
$
28,350
$
5,162
$
$
(48
)
$
5,114
F-50
Table of Contents
2006
2007
2008
$
114
$
922
$
(1,306
)
(1,205
)
135
(205
)
(284
)
(200
)
$
(375
)
$
857
$
(2,511
)
8.
Fair
Value Measurements
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.
F-51
Table of Contents
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.
Quoted Prices
in Active Markets
Significant Other
Significant
December 31,
for Identical
Observable
Unobservable
2008
Assets (Level 1)
Inputs (Level 2)
Inputs (Level 3)
$
5,114
$
5,114
$
$
$
752,912
$
$
$
752,912
(1)
Available-for-sale equity securities are valued using quoted
prices in active market multiplied by the number of shares owned.
(2)
The fair value of the Companys Class A redeemable
common stock is established for purposes of the ISO 401
(K) Savings and Employee Stock Ownership Plan
(KSOP) generally on the final day of the quarter and
such price is utilized for all share transactions in the
subsequent quarter. The current valuation in effect for the KSOP
is also considered the fair value for Class A redeemable
common stock and related transactions within the Insurance
Services Office, Inc. 1996 Incentive Plan. See Note 15 for
a description of the valuation process.
Significant
Unobservable
Inputs (Level 3)
$
1,217,942
(408,495
)
(56,535
)
$
752,912
(1)
See Note 15 for a description of the valuation process.
F-52
Table of Contents
9.
Fixed
Assets:
Accumulated
Depreciation and
Useful Life
Cost
Amortization
Net
3-10 years
$
102,745
$
(67,687
)
$
35,058
Lease term
24,049
(7,876
)
16,173
3 years
30,918
(25,431
)
5,487
3 years
69,758
(45,632
)
24,126
3-4 years
17,080
(12,488
)
4,592
$
244,550
$
(159,114
)
$
85,436
3-10 years
$
97,900
$
(74,429
)
23,471
Lease term
27,624
(9,920
)
17,704
3 years
41,419
(30,869
)
10,550
3 years
78,046
(55,304
)
22,742
3-4 years
17,556
(9,436
)
8,120
$
262,545
$
(179,958
)
$
82,587
10.
Goodwill
and Intangible Assets:
F-53
Table of Contents
Risk
Decision
Assessment
Analytics
Total
$
27,665
$
197,015
$
224,680
243
98,100
98,343
14,157
14,157
4,455
4,455
(1,744
)
(1,744
)
27,908
311,983
339,891
82,400
82,400
12,845
12,845
7,848
7,848
4,388
4,388
$
27,908
$
419,464
$
447,372
Weighted
Average
Accumulated
Useful Life
Cost
Amortization
Net
5 years
$
164,317
$
(80,419
)
$
83,898
4 years
25,846
(13,667
)
12,179
6 years
6,555
(5,596
)
959
13 years
57,906
(13,782
)
44,124
$
254,624
$
(113,464
)
$
141,160
F-54
Table of Contents
Weighted Average
Accumulated
Useful Life
Cost
Amortization
Net
5 years
$
164,127
$
(98,810
)
$
65,317
4 years
31,733
(18,363
)
13,370
6 years
6,555
(5,940
)
615
12 years
53,317
(19,906
)
33,411
$
255,732
$
(143,019
)
$
112,713
Amount
$
29,698
$
24,502
$
17,932
$
14,034
$
8,461
$
18,086
11.
Acquisitions
and Discontinued Operations:
Table of Contents
Xactware
All other
Total
$
7,061
$
926
$
7,987
2,320
107
2,427
11
11
121,603
7,234
128,837
63,309
6,019
69,328
194,304
14,286
208,590
6,348
93
6,441
6,348
93
6,441
$
187,956
$
14,193
$
202,149
(1)
These amounts do not include earnout payments or the release of
contingent escrows.
2006
$
761,192
$
142,939
$
34.60
$
33.22
F-56
Table of Contents
Weighted
Average
Useful Life
Xactware
All Other
Total
6 years
$
94,604
$
5,221
$
99,825
3 years
4,640
1,074
5,714
12 years
22,359
939
23,298
7 years
$
121,603
$
7,234
$
128,837
F-57
Table of Contents
Weighted Average
Useful Life
Total
4 years
$
6,181
4 years
8,856
23 years
13,312
$
28,349
F-58
Table of Contents
Weighted Average
Useful Life
Total
3 years
$
5,887
5 years
2,230
$
8,117
F-59
Table of Contents
2006
2007
$
4,456
$
2,352
$
(2,517
)
$
(6,085
)
712
1,496
$
(1,805
)
$
(4,589
)
12.
Income
Taxes:
2007
2008
$
18,118
$
14,970
11,231
10,163
(3,281
)
(6,645
)
7,391
8,979
3,598
4,508
6,383
1,772
5,621
55,146
274
17
15,686
8,283
8,586
3,774
11,655
10,689
(1,534
)
(2,098
)
(5,395
)
(4,812
)
$
78,333
$
104,746
F-60
Table of Contents
Amount
$
56,803
577
30,850
$
88,230
2006
2007
2008
$
91,368
$
96,277
$
93,522
12,663
17,843
12,358
$
104,031
$
114,120
$
105,880
$
(9,800
)
$
(7,041
)
$
9,789
(2,239
)
(3,895
)
5,002
$
(12,039
)
$
(10,936
)
$
14,791
$
91,992
$
103,184
$
120,671
F-61
Table of Contents
2006
2007
2008
35.0
%
35.0
%
35.0
%
2.9
%
3.2
%
5.0
%
2.7
%
2.9
%
2.7
%
(0.9
)%
(0.3
)%
0.0
%
(0.2
)%
(0.8
)%
0.6
%
39.5
%
40.0
%
43.3
%
2007
2008
$
27,052
$
32,030
5,958
(3,548
)
7,662
4,454
(3,240
)
(2,684
)
(3,995
)
$
32,030
$
31,659
F-62
Table of Contents
13.
Composition
of Certain Financial Statement Captions:
2007
2008
$
5,767
$
12,724
2,758
3,463
$
8,525
$
16,187
$
48,417
$
44,913
29,817
38,468
$
78,234
$
83,381
$
39,023
$
39,735
11,028
11,883
12,034
24,576
$
62,085
$
76,194
F-63
Table of Contents
14.
Debt:
Issuance
Maturity
Date
Date
2007
2008
10/25/2007
4/25/2008
$
15,000
$
12/15/2008
1/15/2009
5,000
12/17/2008
1/17/2009
30,000
12/22/2008
1/22/2009
15,000
12/24/2008
1/24/2009
5,000
12/31/2007
1/3/2008
15,000
12/1/2008
1/2/2009
10,000
12/12/2008
1/12/2009
4,000
12/18/2008
1/20/2009
20,000
12/24/2008
1/24/2009
20,000
12/29/2008
1/29/2009
5,000
6/14/2005
6/13/2009
100,000
Various
Various
4,408
5,058
Various
Various
763
340
$
35,171
$
219,398
6/14/2005
6/13/2009
$
100,000
$
6/14/2005
6/13/2011
50,000
50,000
8/8/2006
8/8/2011
25,000
25,000
8/8/2006
8/8/2013
75,000
75,000
10/26/2007
10/26/2013
17,500
17,500
10/26/2007
10/26/2015
17,500
17,500
4/29/2008
4/29/2013
15,000
4/29/2008
4/29/2015
85,000
8/8/2006
8/8/2011
50,000
50,000
8/8/2006
8/8/2013
25,000
25,000
10/26/2007
10/26/2013
17,500
17,500
10/26/2007
10/26/2015
17,500
17,500
4/29/2008
4/29/2015
50,000
Various
Various
7,299
4,723
Various
Various
860
633
$
403,159
$
450,356
F-64
Table of Contents
F-65
Table of Contents
Amount
$
219,398
$
4,617
$
125,693
$
46
$
150,000
$
170,000
F-66
Table of Contents
Effective
Expiration
Maximum Available
Interest
Borrowings
Date
Date
Committed
Uncommitted
Rate
Outstanding
10/1/2007
9/30/2008
$
25,000
$
50,000
LIBOR + .65%
$
15,000
9/30/2007
9/30/2008
10,000
50,000
LIBOR + .65%
15,000
10/31/2007
10/29/2008
20,000
30,000
LIBOR + .65%
8/29/2007
8/28/2008
50,000
Determined at the
time of borrowing
$
55,000
$
180,000
$
30,000
10/31/2008
9/30/2009
$
25,000
$
50,000
LIBOR + .80%
$
59,000
9/30/2008
9/30/2009
110,000
LIBOR + .95%
55,000
12/9/2008
12/8/2009
30,000
Determined at the
time of borrowing
$
165,000
$
50,000
$
114,000
F-67
Table of Contents
15.
Redeemable
Common Stock:
F-68
Table of Contents
F-69
Table of Contents
Notes
Total
Class A Common Stock
Receivable
Redeemable
Redemption
Unearned
Additional
from
Common
Shares
Value
KSOP
Paid-in-Capital
Stockholders
Stock
1,420,341
$
943,854
$
(5,723
)
$
$
(37,042
)
$
901,089
(253,000
)
(105,670
)
9,277
(96,393
)
810
17,969
18,779
6,148
6,148
179,967
62,435
31,964
(24,438
)
69,961
232
149
149
282,281
(56,081
)
226,200
1,347,540
$
1,183,049
$
(4,913
)
$
$
(52,203
)
$
1,125,933
(256,842
)
(190,336
)
24,708
(165,628
)
784
21,463
22,247
8,244
8,244
72,083
28,526
12,798
(15,130
)
26,194
285
238
238
196,465
(42,505
)
153,960
1,163,066
$
1,217,942
$
(4,129
)
$
$
(42,625
)
$
1,171,188
(502,435
)
(434,044
)
62,773
(371,271
)
756
21,518
22,274
9,881
9,881
85,256
25,324
26,099
(20,148
)
31,275
252
225
225
(56,535
)
(57,498
)
(114,033
)
746,139
$
752,912
$
(3,373
)
$
$
$
749,539
16.
Stockholders
Deficit:
F-70
Table of Contents
2006
2007
2008
$
140,785
$
154,963
$
158,228
(1,805
)
(4,589
)
$
138,980
$
150,374
$
158,228
4,130,962
4,016,928
3,657,714
171,905
168,223
146,920
4,302,867
4,185,151
3,804,634
$
34.08
$
38.58
$
43.26
(0.44
)
(1.14
)
$
33.64
$
37.44
$
43.26
$
32.72
$
37.03
$
41.59
(0.42
)
(1.10
)
$
32.30
$
35.93
$
41.59
$
0.68
$
0.77
$
0.87
(0.01
)
(0.02
)
$
0.67
$
0.75
$
0.87
$
0.65
$
0.74
$
0.83
(0.01
)
(0.02
)
$
0.64
$
0.72
$
0.83
206,548,100
200,846,400
182,885,700
215,143,350
209,257,550
190,231,700
F-71
Table of Contents
2007
2008
$
(412
)
$
(31
)
154
(773
)
(8,441
)
(81,630
)
$
(8,699
)
$
(82,434
)
Tax Benefit/
Before Tax
(Expense)
After Tax
$
467
$
(176
)
$
291
91
(34
)
57
376
376
2,814
(1,186
)
1,628
$
3,748
$
(1,396
)
$
2,352
$
(2,250
)
$
885
$
(1,365
)
1,057
(422
)
635
(203
)
(203
)
12,577
(4,326
)
8,251
$
11,181
$
(3,863
)
$
7,318
$
(1,687
)
$
666
$
(1,021
)
2,325
(923
)
1,402
(927
)
(927
)
(122,714
)
49,525
(73,189
)
$
(123,003
)
$
49,268
$
(73,735
)
F-72
Table of Contents
17.
Compensation
Plans:
F-73
Table of Contents
2007
2008
865,166
879,948
135,382
145,205
860
2,327
142,392
116,320
1,143,800
1,143,800
$
122,742
$
90,497
F-74
Table of Contents
Weighted
Aggregate
Number
Average
Intrinsic
of Options
Exercise Price
Value
647,028
$
200.89
$
235,589
69,441
$
586.53
(179,967
)
$
144.16
$
81,516
(12,734
)
$
360.11
523,768
$
267.64
$
255,264
55,979
$
760.35
(72,083
)
$
257.46
$
36,655
(10,911
)
$
458.18
496,753
$
320.46
$
269,012
62,947
$
864.84
(85,256
)
$
297.05
$
48,399
(11,299
)
$
704.11
463,145
$
389.39
$
179,981
328,994
$
253.95
$
172,408
329,503
$
208.35
$
215,380
Weighted
Average
Number
Grant-Date
of Options
Fair Value
315,512
$
60.63
69,441
$
166.25
(136,068
)
$
54.86
(12,734
)
$
89.34
236,151
$
93.83
55,979
$
210.69
(113,969
)
$
76.89
(10,911
)
$
117.45
167,250
$
142.94
62,947
$
206.68
(84,747
)
$
123.87
(11,299
)
$
184.97
134,151
$
220.60
F-75
Table of Contents
Options Outstanding
Options Exercisable
Weighted-
Weighted-
Weighted-
Average
Weighted-
Average
Stock
Average
Remaining
Stock
Average
Range of
Remaining
Options
Exercise
Contractual
Options
Exercise
Contractual Life
Outstanding
Price
Life
Exercisable
Price
1.7
72,329
$
107.24
1.7
72,329
$
107.24
4.1
45,102
$
141.89
4.1
45,102
$
141.89
4.4
113,250
$
179.99
4.4
113,250
$
179.99
6.3
88,150
$
415.70
6.3
66,260
$
411.23
7.3
41,396
$
593.97
7.3
20,411
$
612.91
8.8
102,918
$
821.75
8.4
11,642
$
794.60
463,145
328,994
Number of
Fair Value
Black-Scholes
Stock Options
of Common
Exercise
Value of
Granted
Stock(1)
Price
Options
56,990
$
862.00
$
862.00
$
204.72
5,357
$
892.00
$
892.00
$
223.56
600
$
892.00
$
892.00
$
241.85
(1)
The fair value of these shares is the current valuation in
effect for the KSOP. This fair value is also utilized for all
Class A share transactions for the Insurance Services
Office, Inc. 1996 Incentive Plan.
F-76
Table of Contents
18.
Pension
and Postretirement Benefits:
Target
Percentage of Plan Assets
Allocation
2007
2008
60
%
62
%
51
%
40
%
36
%
46
%
0
%
2
%
3
%
100
%
100
%
100
%
F-77
Table of Contents
Pension Plan
Postretirement Plan
2007
2008
2007
2008
$
373,674
$
363,840
$
30,595
$
28,340
8,152
7,789
20,952
21,698
1,669
1,689
(15,934
)
(4,869
)
441
2,650
2,227
2,738
(23,004
)
(21,537
)
(6,936
)
(6,777
)
344
$
363,840
$
366,921
$
28,340
$
28,640
$
341,829
$
356,622
6.25
%
6.00
%
5.75
%
6.00
%
4.25
%
4.00
%
N/A
N/A
$
344,235
$
346,013
$
$
24,604
(97,595
)
178
5,571
4,365
4,039
2,227
2,738
(23,004
)
(21,537
)
(6,936
)
(6,777
)
344
$
346,013
$
232,452
$
$
$
17,827
$
134,469
$
28,340
$
28,640
F-78
Table of Contents
Pension Plan
Postretirement Plan
2007
2008
2007
2008
$
$
$
831
$
665
(4,117
)
(3,316
)
14,515
134,183
2,833
5,244
$
10,398
$
130,867
$
3,664
$
5,909
Pension Plan
Postretirement Plan
2006
2007
2008
2006
2007
2008
$
8,464
$
8,152
$
7,789
$
5
$
$
20,054
20,952
21,698
1,716
1,669
1,689
166
166
166
4
2
241
(26,430
)
(27,458
)
(27,441
)
(801
)
(801
)
(801
)
901
572
499
$
2,188
$
1,417
$
1,744
$
1,891
$
1,837
$
2,096
N/A
$
$
N/A
$
(166
)
$
(166
)
N/A
(572
)
(499
)
N/A
N/A
801
801
N/A
N/A
(13,079
)
120,167
N/A
439
2,411
N/A
(12,850
)
120,469
N/A
273
2,245
$
2,188
$
(11,433
)
$
122,213
$
1,891
$
2,110
$
4,341
Pension
Postretirement
Plan
Plan
Total
$
$
166
$
166
(801
)
(801
)
10,506
180
10,686
$
9,705
$
346
$
10,051
F-79
Table of Contents
Pension Plan
Postretirement Plan
2006
2007
2008
2006
2007
2008
5.50
%
5.75
%
6.25
%
5.50
%
5.75
%
5.75
%
8.25
%
8.25
%
8.25
%
N/A
N/A
N/A
3.75
%
3.75
%
4.25
%
N/A
N/A
N/A
$
254
$
190
$
555
$
4,070
$
4,446
$
4,842
29,185
17,637
133,914
26,525
23,894
23,798
$
29,439
$
17,827
$
134,469
$
30,595
$
28,340
$
28,640
Pension
Postretirement
Plan
Plan
$
23,634
$
4,987
$
24,352
$
4,709
$
25,410
$
4,382
$
26,458
$
3,943
$
28,114
$
3,487
$
159,723
$
11,186
1% Decrease
1% Increase
$
(63
)
$
59
$
(86
)
$
24
F-80
Table of Contents
19.
Segment
Reporting
F-81
Table of Contents
2006
Risk
Decision
Assessment
Analytics
Total
$
472,634
$
257,499
$
730,133
203,878
127,926
331,804
65,884
34,240
100,124
202,872
95,333
298,205
17,931
10,076
28,007
3,001
23,853
26,854
181,940
61,404
243,344
6,585
(375
)
(16,668
)
(109
)
$
232,777
$
11,753
$
13,989
$
25,742
2007
Risk
Decision
Assessment
Analytics
Total
$
485,160
$
317,035
$
802,195
204,182
153,009
357,191
68,198
39,378
107,576
212,780
124,648
337,428
19,397
12,348
31,745
1,047
32,869
33,916
192,336
79,431
271,767
8,442
857
(22,928
)
9
$
258,147
$
33,059
$
14,124
$
47,183
F-82
Table of Contents
2008
Risk
Decision
Assessment
Analytics
Total
$
504,391
$
389,159
$
893,550
199,872
187,025
386,897
81,813
49,426
131,239
222,706
152,708
375,414
19,447
15,870
35,317
806
28,749
29,555
202,453
108,089
310,542
2,233
(2,511
)
(31,316
)
(49
)
$
278,899
$
12,598
$
20,664
$
33,262
For the Years Ended December 31,
2006
2007
2008
$
303,957
$
311,087
$
329,858
123,627
126,291
125,835
25,793
27,282
27,451
19,257
20,500
21,247
472,634
485,160
504,391
168,189
172,726
213,994
67,129
81,110
95,128
22,181
63,199
80,037
257,499
317,035
389,159
$
730,133
$
802,195
$
893,550
20.
Related
Parties:
F-83
Table of Contents
21.
Commitments
and Contingencies:
Operating
Capital
Leases
Leases
$
20,554
$
5,315
20,127
4,418
19,587
382
18,470
47
17,704
71,987
31,233
$
199,662
$
10,162
381
$
9,781
F-84
Table of Contents
F-85
Table of Contents
22.
Subsequent
Events
23.
Correction
of Errors
F-86
Table of Contents
For the year ended December 31, 2006
As Previously
Correction of
Caption of Consolidated Statement of Operations
Reported
Error
As Corrected
(In thousands, except for share and per share data)
$
(86,921
)
$
(5,071
)
$
(91,992
)
145,856
(5,071
)
140,785
$
144,051
$
(5,071
)
$
138,980
$
35.31
$
(1.23
)
$
34.08
34.87
(1.23
)
33.64
$
33.85
$
(1.13
)
$
32.72
33.43
(1.13
)
32.30
4,308,976
(6,109
)
4,302,867
For the year ended December 31, 2006
As Previously
Correction of
Caption of Consolidated Statement of Cash Flows
Reported
Error
Reclassification (1)
As Corrected
$
144,051
$
(5,071
)
$
$
138,980
19,262
5,071
(24,333
)
15,634
15,634
8,699
8,699
As of December 31, 2007
As Previously
Correction of
Caption of Consolidated Balance Sheet
Reported
Error
As Corrected
$
3,003
$
(3,003
)
$
4,561
4,561
181,025
1,558
182,583
828,483
1,558
830,041
9,178
9,178
346,248
9,178
355,426
853,023
9,178
862,201
(508,136
)
(7,620
)
(515,756
)
(1,195,728
)
(7,620
)
(1,203,348
)
828,483
1,558
830,041
(1)
Reclassifications have been made to conform to the 2008
presentation within the consolidated statement of cash flows.
F-87
Table of Contents
Table of Contents
Amount
to be Paid
$
114,832
75,500
150,000
20,000
300,000
2,948,109
4,468,146
173,630
$
8,250,217
Item 14.
Indemnification
of Directors and Officers.
II-1
Table of Contents
Item 15.
Recent
Sales of Unregistered Securities.
Item 16.
Exhibits
and Financial Statement Schedules.
Exhibit
1
.1
Form of Underwriting Agreement**
3
.1
Amended and Restated Certificate of Incorporation
3
.2
Amended and Restated By-Laws
4
.1
Form of Common Stock Certificate
4
.2
Prudential Uncommitted Master Shelf Agreement, dated as of June
13, 2003, among Insurance Services Office, Inc., The Prudential
Insurance Company of America, U.S. Private Placement Fund,
Baystate Investments, LLC, United of Omaha Life Insurance
Company and Prudential Investment Management, Inc.**
4
.3
Amendment No. 1 to the Prudential Uncommitted Master Shelf
Agreement, dated February 1, 2005, among Insurance Services
Office, Inc., The Prudential Insurance Company of America,
Prudential Investment Management, Inc. and the other purchasers
party thereto**
4
.4
Amendment No. 2 to the Prudential Uncommitted Master Shelf
Agreement, dated June 1, 2005, among Insurance Services Office,
Inc., The Prudential Insurance Company of America, Prudential
Investment Management, Inc. and the other purchasers party
thereto**
4
.5
Amendment No. 3 to the Prudential Uncommitted Master Shelf
Agreement, dated January 23, 2006, among Insurance Services
Office, Inc., The Prudential Insurance Company of America,
Prudential Investment Management, Inc. and the other purchasers
party thereto**
4
.6
Waiver and Amendment No. 4 to the Prudential Uncommitted Master
Shelf Agreement, dated February 28, 2007, among Insurance
Services Office, Inc., The Prudential Insurance Company of
America, Prudential Investment Management, Inc. and the other
purchasers party thereto**
4
.7
New York Life Uncommitted Master Shelf Agreement, dated as of
March 16, 2007, among Insurance Services Office, Inc., New
York Life Insurance Company and the other purchasers party
thereto**
5
.1
Opinion of Davis Polk & Wardwell
10
.1
401(k) Savings Plan and Employee Stock Ownership Plan**
10
.2
Verisk Analytics, Inc. 2009 Equity Incentive Plan
10
.3
Form of Letter Agreement**
10
.4
Form of Master License Agreement and Participation Supplement**
10
.5
Schedule of Master License Agreements Substantially Identical in
All Material Respects to the Form of Master License Agreement
and Participation Supplement filed as Exhibit 10.4**
II-2
Table of Contents
Exhibit
10
.6
Credit Agreement, dated as of July 2, 2009, between
Insurance Services Office, Inc. and Bank of America, N.A., as
Administrative Agent, and the lenders party thereto**
10
.7
Employment Agreement with Frank J. Coyne
10
.8
Form of Change of Control Severance Agreement
10
.9
Insurance Services Office, Inc. 1996 Incentive Plan and Form of
Stock Option Agreement thereunder
21
.1
Subsidiaries of the Registrant
23
.1
Consent of Deloitte & Touche LLP
23
.2
Consent of Deloitte & Touche LLP
23
.3
Consent of Davis Polk & Wardwell (included in
Exhibit 5.1)
24
.1
Power of Attorney**
**
Previously filed
Schedule
Schedule II
Valuation and Qualifying Accounts and Reserves
Years Ended December 31, 2006, 2007 and 2008
II-3
Table of Contents
Item 17.
Undertakings
II-4
Table of Contents
By:
Title:
Chief Executive Officer, President and
Chairman of the Board of Directors
Chief Executive Officer, President
and Chairman of the Board of Directors (principal executive
officer)
September 21, 2009
Chief Financial Officer
(principal financial officer and principal accounting officer)
September 21, 2009
Director
September 21, 2009
Director
September 21, 2009
Director
September 21, 2009
Director
September 21, 2009
Director
September 21, 2009
Director
September 21, 2009
Director
September 21, 2009
II-5
Table of Contents
Director
September 21, 2009
Director
September 21, 2009
Director
September 21, 2009
*By:
September 21, 2009
II-6
Table of Contents
Years Ended December 31, 2006, 2007 and 2008
(In thousands)
Balance at
Charged to
Beginning
Costs and
Deductions
Balance at
of Year
Expenses(1)
Write-offs(2)
End of Year
$
3,623
$
2,148
$
(498
)
$
5,273
$
2,144
$
$
$
2,144
$
5,273
$
3,286
$
(312
)
$
8,247
$
2,144
$
$
(610
)
$
1,534
$
8,247
$
1,536
$
(3,386
)
$
6,397
$
1,534
$
564
$
$
2,098
(1)
Primarily additional reserves for bad debts.
(2)
Primarily accounts receivable balances written off, net of
recoveries, and the expiration of loss carryforwards.
S-1
Table of Contents
Exhibit
1
.1
Form of Underwriting Agreement**
3
.1
Amended and Restated Certificate of Incorporation
3
.2
Amended and Restated By-Laws
4
.1
Form of Common Stock Certificate
4
.2
Prudential Uncommitted Master Shelf Agreement, dated as of June
13, 2003, among Insurance Services Office, Inc., The Prudential
Insurance Company of America, U.S. Private Placement Fund,
Baystate Investments, LLC, United of Omaha Life Insurance
Company and Prudential Investment Management, Inc.**
4
.3
Amendment No. 1 to the Prudential Uncommitted Master Shelf
Agreement, dated February 1, 2005, among Insurance Services
Office, Inc., The Prudential Insurance Company of America,
Prudential Investment Management, Inc. and the other purchasers
party thereto**
4
.4
Amendment No. 2 to the Prudential Uncommitted Master Shelf
Agreement, dated June 1, 2005, among Insurance Services Office,
Inc., The Prudential Insurance Company of America, Prudential
Investment Management, Inc. and the other purchasers party
thereto**
4
.5
Amendment No. 3 to the Prudential Uncommitted Master Shelf
Agreement, dated January 23, 2006, among Insurance Services
Office, Inc., The Prudential Insurance Company of America,
Prudential Investment Management, Inc. and the other purchasers
party thereto**
4
.6
Waiver and Amendment No. 4 to the Prudential Uncommitted Master
Shelf Agreement, dated February 28, 2007, among Insurance
Services Office, Inc., The Prudential Insurance Company of
America, Prudential Investment Management, Inc. and the other
purchasers party thereto**
4
.7
New York Life Uncommitted Master Shelf Agreement, dated as of
March 16, 2007, among Insurance Services Office, Inc., New York
Life Insurance Company and the other purchasers party thereto**
5
.1
Opinion of Davis Polk & Wardwell
10
.1
401(k) Savings Plan and Employee Stock Ownership Plan**
10
.2
Verisk Analytics, Inc. 2009 Equity Incentive Plan
10
.3
Form of Letter Agreement**
10
.4
Form of Master License Agreement and Participation Supplement**
10
.5
Schedule of Master License Agreements Substantially Identical in
All Material Respects to the Form of Master License Agreement
and Participation Supplement filed as Exhibit 10.4**
10
.6
Credit Agreement, dated as of July 2, 2009, between
Insurance Services Office, Inc. and Bank of America, N.A., as
Administrative Agent, and the lenders party thereto**
10
.7
Employment Agreement with Frank J. Coyne
10
.8
Form of Change of Control Severance Agreement
10
.9
Insurance Services Office, Inc. 1996 Incentive Plan and Form of
Stock Option Agreement thereunder
21
.1
Subsidiaries of the Registrant
23
.1
Consent of Deloitte & Touche LLP
23
.2
Consent of Deloitte & Touche LLP
23
.3
Consent of Davis Polk & Wardwell (included in
Exhibit 5.1)
24
.1
Power of Attorney**
**
Previously Filed.
Name | Mailing Address | Designation | ||||
Class I
|
J. Hyatt Brown | c/o Insurance Services | Class A Director | |||
|
Glen A. Dell | Office, Inc. | Class A Director | |||
|
Samuel G. Liss | 545 Washington | Class B Director | |||
|
Boulevard | |||||
|
Jersey City, New Jersey | |||||
|
07310-1686 | |||||
Class II
|
John F. Lehman, Jr. | c/o Insurance Services | Class A Director | |||
|
Andrew G. Mills | Office, Inc. | Class A Director | |||
|
Arthur J. Rothkopf | 545 Washington | Class A Director | |||
|
Constantine Iordanou | Boulevard | Class B Director | |||
|
Jersey City, New Jersey | |||||
|
07310-1686 | |||||
Class III
|
Christopher M. Foskett | c/o Insurance Services | Class A Director | |||
|
David B. Wright | Office, Inc. | Class A Director | |||
|
Frank J. Coyne | 545 Washington | Class A Director | |||
|
Thomas F. Motamed | Boulevard | Class B Director | |||
|
Jersey City, New Jersey | |||||
|
07310-1686 |
|
||||
TEN COM
|
- | as tenants in common | ||
|
||||
TEN ENT
|
- | as tenants by the entireties |
JT TEN
|
- | as joint tenants with right | ||
|
||||
|
of survivorship and not as | |||
|
||||
|
tenants in common |
|
Custodian | |||||
|
||||||
|
||||||
(Cust)
|
(Minor) |
Act
|
||||
|
||||
|
||||
|
(State) |
|
Custodian (until age | ) | ||||||||
|
||||||||||
|
||||||||||
(Cust)
|
|
under Uniform Transfers | |||
|
||||
|
||||
(Minor)
|
to Minors Act
|
||||
|
||||
|
||||
|
(State) |
|
Very truly yours, | |
|
||
|
/s/ Davis Polk & Wardwell LLP |
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- 5 -
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- 8 -
- 9 -
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- 12 -
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- 15 -
- 16 -
- 17 -
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4
5
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19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
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36
VERISK ANALYTICS, INC. | ||||||
|
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|
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By | /s/ Kenneth E. Thompson | ||||
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Kenneth E. Thompson | |||||
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Senior Vice President, General | |||||
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Counsel and Corporate Secretary | |||||
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INSURANCE SERVICES OFFICE, INC. | ||||||
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By : | /s/ Kenneth E. Thompson | ||||
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Kenneth E. Thompson | |||||
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Senior Vice President, General | |||||
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Counsel and Corporate Secretary | |||||
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/s/ Frank J. Coyne | ||||||
Frank J. Coyne |
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1. | Definitions. | |
1.1 | Board . The term Board means the Board of Directors of Verisk. | |
1.2 | Cause . The term Cause means the occurrence of any one or more of the following: |
(a) | the Executive is convicted of (or pleas nolo contendere to) a felony involving moral turpitude; | ||
(b) | the Executives willful and continued failure to substantially perform the Executives material duties for the Company after written notice from the Company; | ||
(c) | the Executive engages in willful misconduct or gross neglect in the performance of the Executives duties, in either case resulting in material harm to the Company; or | ||
(d) | the Executive willfully violates the written policies of the Company applicable to the Executive, resulting in material harm to the Company. |
For purposes of this Agreement, no act or failure to act on the part of the Executive shall be deemed to be willful unless such act or omission was not in good faith and without a reasonable belief that the Executives action or omission was in the best interest of the |
Company. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause hereunder unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the members of the Board at a meeting called and held for such purpose, after reasonable notice to the Executive and an opportunity for the Executive, together with the Executives counsel (if the Executive chooses to have counsel present at such meeting), to be heard before the Board, finding that, in the good faith opinion of the Board, the Executive has committed an act constituting Cause as herein defined and specifying the particulars thereof in detail. Nothing herein will limit the right of the Executive or the Executives beneficiaries to contest the validity or propriety of any such determination. |
Notwithstanding the foregoing, no event described hereunder shall constitute Cause if such event is a result of an isolated, insubstantial and inadvertent action that is not taken in bad faith and that is remedied by the Executive within ten (10) days after receipt of the Executive of written notice that such action constitutes Cause from the Company. |
1.3 | Change in Control . The term Change in Control means the occurrence of any one of the following events: |
(a) | any person , as such term is used as of the Effective Date in Section 13(d) of the Securities Exchange Act of 1934, or group of persons (excluding persons that are Company benefit plans) becomes (directly or indirectly) a beneficial owner , as such term is used as of the Effective Date in Rule 13d-3 promulgated under that Act, of thirty percent (30%) or more of the Voting Securities of either Verisk or ISO (as defined below) (measured either by number of Voting Securities or by voting power); | ||
(b) | a majority of the Board consists of individuals other than Incumbent Directors , which term means the members of such Board on the Effective Date; provided that any individual becoming a director subsequent to such date whose election or nomination for election was supported (other than in connection with any actual or threatened proxy contest) by two-thirds of the directors who then comprised the Incumbent Directors shall be considered to be an Incumbent Director; | ||
(c) | the Board of either Verisk or ISO approves a plan of liquidation for such company; or | ||
(d) | (x) either of Verisk or ISO combines with another entity and is the surviving entity, or (y) all or substantially all of the assets or business of either of Verisk or ISO is disposed of pursuant to a sale, merger, consolidation, liquidation, dissolution or other transaction or series of transactions (collectively, a Triggering Event ) unless the holders of Voting Securities of such entity immediately prior such Triggering Event own, directly or indirectly, by reason of their ownership of Voting Securities of such entity immediately prior to such Triggering Event, more than fifty percent (50%) of the Voting Securities (measured both by number of Voting Securities and by voting power) of (q) in the |
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case of a combination in which such entity is the surviving entity, the surviving entity and (r) in any other case, the entity (if any) that succeeds to substantially all of such entitys business and assets. |
For the avoidance of doubt, an initial public offering of Verisks or ISOs common stock shall not constitute a Change in Control. | ||
1.4 | Disability . The term Disability means the Executive is covered under the Companys long-term disability program . | |
1.5 | Effective Date . The term Effective Date means the date first written above. | |
1.6 | Good Reason . The term Good Reason means, without the Executives express prior written consent, the occurrence of any one or more of the following: |
(a) | a material adverse change in either the Executives duties and responsibilities (including removal from any position the Executive holds) or reporting relationship from those in effect immediately prior to Change in Control, provided that Verisk no longer being a public company will not in and of itself constitute a Good Reason event under this clause (a) as long as Verisk has an independent Board; | ||
(b) | a material reduction by the Company of the Executives base salary in effect immediately prior to the Change in Control or as the same shall be increased from time to time, unless such reduction is part of an across-the-board reduction of not more than 10% (in the aggregate including all reductions) applicable to all senior executives of the Company; | ||
(c) | a material reduction by the Company of the Executives Target Bonus in effect immediately prior to the Change in Control or as the same shall be increased from time to time, unless such reduction is part of an across-the-board reduction of not more than 10% (in the aggregate including all reductions) applicable to all senior executives of the Company; | ||
(d) | the relocation of the Executives office more than 40 miles from the Executives principal place of employment immediately prior to the Change in Control if such relocation materially increases the Executives commute; | ||
(e) | a reduction by at least 5% of the aggregate benefits under employee benefit plans provided to the Executive by the Company following a Change in Control as compared with the aggregate benefits made available to the Executive immediately prior to such Change in Control; or | ||
(f) | any failure by a successor to Verisk to obtain the assumption in writing or by operation of law of its obligations under this Agreement by any successor to all or substantially all of the Companys business or assets upon or prior to the consummation of any such transaction. |
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Notwithstanding the foregoing, the Executive shall not be entitled to terminate employment for Good Reason unless the Executive provides the Company with written notice of the events giving rise to Good Reason no later than 120 days after the date the Executive learns of the occurrence of the event and the Company fails to cure such event(s) within ten (10) days following receipt of such notice (provided that in the case of any notice pursuant to clause (f) the Companys cure right shall end on the date of the consummation of the transaction). | ||
1.7 | ISO . The term ISO means Insurance Services Office, Inc., a Delaware corporation. | |
1.8 | Pro-Rata Bonus . The term Pro-Rata Bonus means the Target Bonus multiplied by a fraction, the numerator of which is the number of days the Executive was employed by the Company during the year of termination and the denominator of which is 365. | |
1.9 | Qualifying Termination . The term Qualifying Termination means |
(a) | The occurrence of any one or more of the following employment termination events during the Protection Period shall constitute a Qualifying Termination: |
(i) | The Companys termination of the Executives employment without Cause (as defined in Section 1.2); or | ||
(ii) | The Executives resignation for Good Reason (as defined in Section 1.7). |
(b) | A Qualifying Termination shall also include the termination of the Executives employment without Cause by the Company or by the Executive for Good Reason on or after the execution of a definitive agreement which results in a Change in Control. | ||
(c) | A Qualifying Termination shall not include a termination of employment by reason of death, Disability, the Executives voluntary termination of employment without Good Reason, or the Boards termination of the Executives employment for Cause. | ||
(d) | The date of a Qualifying Termination shall be the date the Executive has a separation from service under Section 409A of the Internal Revenue Code of 1986, as amended from time to time, and the regulations thereunder (the Code ). |
1.10 | Protection Period . The Term Protection Period means the two (2) year period commencing on the Change in Control and ending on the second anniversary of the Change in Control. | |
1.11 | Target Bonus . The term Target Bonus means the higher of (i) the target cash award opportunity as a percentage of the Executives annual base salary under the Companys annual short term incentive compensation plan in effect for the Executive immediately prior to the Change in Control and (ii) the target cash award opportunity as a percentage of the Executives annual base salary under the Companys annual short term incentive |
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plan in effect for the Executive for the fiscal year in which the Qualifying Termination occurs. | ||
2. | Severance Benefits for a Qualifying Termination. Upon the occurrence of a Qualifying Termination: |
(a) | Severance Payment . The Company shall pay to the Executive an amount equal to two times the sum of (i) the greater of (A) the Executives annual base salary as of immediately prior to the occurrence of the Change in Control or (B) the Executives annual base salary as in effect on the date of the Qualifying Termination (but not reduced by any reduction described in Section 1.6(b) above that would constitute Good Reason) and (ii) the Target Bonus. The payment shall be made in a lump sum within 30 days after the Executive delivers an executed release (as provided in clause (f) below) to the Company, provided that the Executive delivers such release on or after the date of the Qualifying Termination and does not revoke such release in accordance with its terms. | ||
(b) | Additional Severance Payment . The Company shall pay to the Executive at the same time as the payment in clause (a) above, a Pro-Rata Bonus. | ||
(c) | Vesting of Equity Awards. The Executives outstanding equity awards shall fully vest on the date of the Qualifying Termination, and the Executive shall have full term to exercise any vested stock options (including options vesting pursuant to this clause (c)). | ||
(d) | Severance Health Benefits . Commencing upon a Qualifying Termination and continuing through the 18-month anniversary of such Qualifying Termination, the Executive and/or the Executives family, as the case may be, shall receive all medical and dental benefits provided to active employees of the Company, and such benefits shall be provided to the Executive (and his family) at the same cost active employees are paying for such coverage. | ||
(e) | Other Entitlements . The Company shall also pay the Executive for any earned but unpaid amounts, including, without limitation, base salary through the date of termination, any accrued but unused vacation days, any incentive award for performance periods which ended prior to the date of termination, and reimbursement of any unreimbursed business expenses. | ||
(f) | Release . The benefits described in this Section 2 are payable by the Company to the Executive only if after the date of the Qualifying Termination, the Executive executes (and does not subsequently revoke) and delivers to the Company a release and waiver of legal claims in the form attached hereto as Exhibit A no later than 30 days following the Qualifying Termination. |
3. | Non-Exclusivity of Rights . Nothing in this Agreement shall prevent or limit the Executives continuing or future participation in any plan, program, policy or practice provided by the Company or a successor to the Company for which the Executive may |
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qualify, nor shall anything in this Agreement limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or a successor to the Company. However, if the Executive receives severance benefits under this Agreement, the Executive is not also entitled to any benefit under any other severance plan, program, arrangement or agreement maintained by the Company. Vested benefits and other amounts that the Executive is otherwise entitled to receive under any incentive compensation (including, but not limited to any restricted stock or stock option agreements), deferred compensation and other benefit programs listed in Section 1.6(e), life insurance coverage, or any other plan, policy, practice or program of, or any contract or agreement with, the Company or a successor to the Company ( Company Arrangement ) on or after the date of the Qualifying Termination shall be payable in accordance with the terms of each such plan, policy, practice, program, contract or agreement, as the case may be, except as explicitly modified by this Agreement. | ||
4. | Full Settlement . The Companys obligation to make the payments provided for in, and otherwise to perform its obligations under, this Agreement shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action that the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and, such amounts shall not be reduced, regardless of whether the Executive obtains other employment. | |
5. | Section 280G Cut-Back . |
(a) | If (i) the aggregate of all payments, benefits, entitlements or distributions in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement, any Company Arrangement or otherwise (including, without limitation, any payment, benefit, entitlement or distribution paid or provided by the person or entity effecting the change in control) if received by Executive in full and valued under Section 280G of the Code, constitute parachute payments as such term is defined in and under Section 280G of the Code (collectively, 280G Benefits ), and if (ii) such aggregate would, if reduced by all federal, state and local taxes applicable thereto, including the excise tax imposed pursuant to Section 4999 of the Code, be less than the amount that Executive would receive, after all taxes, if the Executive received aggregate 280G Benefits equal (as valued under Section 280G of the Code) to only three times the Executives base amount, as defined in and under Section 280G of the Code, less $1.00, then (iii) cash 280G Benefits shall (to the extent that the reduction of such cash 280G Benefits can achieve the intended result) be reduced or eliminated to the extent necessary so that the 280G Benefits received by the Executive will not constitute parachute payments. The determinations with respect to this Section 5(a) shall be made by an independent auditor (the Auditor ) paid by the Company. The Auditor shall be the Companys regular independent auditor unless the Executive reasonably objects to the use of that firm, in which event the Auditor shall be a nationally recognized United States public accounting firm chosen by the parties. |
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(b) | It is possible that after the determinations and selections made pursuant to Section 5(a) the Executive will receive 280G Benefits that are, in the aggregate, either more or less than the amount provided under Section 5(a) (hereafter referred to as an Excess Payment or Underpayment , respectively). If it is established, pursuant to a final determination of a court or an Internal Revenue Service proceeding that has been finally and conclusively resolved, that an Excess Payment has been made, the Executive shall promptly repay the Excess Payment to the Company, together with interest on the Excess Payment at the applicable federal rate (as defined in and under Section 1274(d) of the Code) from the date of the Executives receipt of such Excess Payment until the date of such repayment. For purposes of this provision, an Excess Payment shall only be a payment which exceeds the sum of (x) the amount that the Executive is required to pay (including interest, taxes and penalties) to the Internal Revenue Service plus the Executives costs (including attorneys fees for defending such action) and (y) the amount he would have otherwise retained if Section 5(a) had been properly applied. In the event that it is determined by a court or by the Auditor upon request by the Company or the Executive, that an Underpayment has occurred, the Company shall promptly pay an amount equal to the Underpayment to the Executive, together with interest on such amount at the applicable federal rate from (x) the date such amount would have been paid to Executive had the provisions of Section 5(a) not been applied through (y) the date of payment. For the avoidance of doubt, in the event Executive is paid or provided additional parachute payments which result in the cutback under Section 5(a) no longer being applicable, the Company shall pay the Executive an additional amount equal to the value of the 280G Benefits which were originally cutback. |
6. | Compliance With Section 409A of the Code. Notwithstanding anything herein to the contrary, this Agreement is intended to be interpreted and applied so that the payment of the benefits set forth herein either shall either be exempt from the requirements of Section 409A of the Code or shall comply with the requirements of such provision; provided however that in no event shall the Company be liable to the Executive for or with respect to any taxes, penalties or interest which may be imposed upon the Executive pursuant to Section 409A. To the extent that any amount payable pursuant to Section 2 constitutes a deferral of compensation subject to Section 409A and does not otherwise qualify under the exemptions under Treas. Regs. Section 1.409A-1 (including without limitation, the short-term deferral exemption or the permitted payments under Treas. Regs. Section 1.409A-1(b)(9)(iii)(A)) (a 409A Payment ), then, if on the date of the Executives separation from service, as such term is defined in Treasury Regulation Section 1.409A-1(h)(1), from the Company (his Separation from Service ), Executive is a specified employee, as such term is defined in Treasury Regulation Section 1.409A-1(i), as determined from time to time by the Company, then such 409A Payment shall not be made to the Executive prior to the earlier of (i) six (6) months after the Executives Separation from Service; or (ii) the date of his death. The 409A Payments under this Agreement that would otherwise be made during such period shall be aggregated and paid in one lump sum, with interest at the Companys cost of borrowing, on the first business day following the end of the six (6) month period or following the date of the |
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Executives death, whichever is earlier, and the balance of the 409A Payments, if any, shall be paid in accordance with the applicable payment schedule provided in Section 2. Each payment under this Agreement or otherwise shall be treated as a separate payment for purposes of Section 409A of the Code. In no event may the Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement which constitutes a deferral of compensation within the meaning of Section 409A of the Code. All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A of the Code. To the extent that any reimbursements pursuant to this Agreement are taxable to the Executive, any reimbursement payment due to the Executive pursuant to such provisions shall be paid to the Executive on or before the last day of the Executives taxable year following the taxable year in which the related expense was incurred. The reimbursements pursuant to this Agreement are not subject to liquidation or exchange for another benefit and the amount of such reimbursements that the Executive receives in one taxable year shall not affect the amount of such reimbursements that the Executive receives in any other taxable year. |
7. | Confidentiality. Executive acknowledges that by virtue of his employment with the Company Parties, he has or may be exposed to or has had or may have access to confidential information of the Company Parties regarding their businesses (whether or not developed by Executive), including, but not limited to, algorithms, source code, system designs, data formats, customer lists or records, customer information, mark-ups, project materials, information regarding independent contractors, marketing techniques, supplier information, accounting methodology or other information which gives, or may give, the Company an advantage in the marketplace against their competitors (all of the foregoing are hereinafter referred to collectively as the Proprietary Information except for information which was in the public domain when acquired or developed by the Company, or which subsequently enters the public domain other than as a result of a breach of this or any other agreement or covenant). Executive further acknowledges that it would be possible for Executive to use the Proprietary Information to unfairly benefit himself or other individuals or entities. Executive acknowledges that the Company has expended considerable time and resources in the development of the Proprietary Information and that the Proprietary Information has been disclosed to or learned by Executive solely in connection with Executives employment with the Company. Executive acknowledges that the Proprietary Information constitutes a proprietary and exclusive interest of the Company Parties, and, therefore, Executive agrees that during the term of his employment and after the termination thereof, for whatever reason, Executive shall not directly or indirectly disclose the Proprietary Information to any person, firm, court, governmental entity or agency, corporation or other entity or use the Proprietary Information in any manner, except in connection with the business and affairs of the Company or pursuant to a validly issued and enforceable court or administrative order. In the event that any court, governmental agency, administrative hearing officer or the like shall request or demand disclosure of any Proprietary Information, Executive shall promptly notify the Company of the same and cooperate with the Company, at the Companys expense, to obtain appropriate protective orders in respect thereof. Executive further agrees to execute such further agreements or understandings regarding |
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his agreement not to misuse or disclose Proprietary Information as the Company may reasonably request. | ||
8. | Non-Solicitation/Non-Competition. Executive covenants and agrees that, while employed by the Company, and for a period of 12 months following the termination of his employment, for any reason whatsoever, he shall not: |
(a) | directly or indirectly solicit for employment (by Executive or any other person), offer employment to, or employ or contract for the services of any person who was an employee of the Company or its affiliates |
(i) | at the time Executives employment with the Company terminates, or | ||
(ii) | at any time within three (3) months prior to such termination; |
(b) | directly or indirectly, for himself or on behalf of any other, solicit from any person or entity who was a customer of the Company at any time within a two-year period prior to the termination of Executives employment with the Company any business that is directly or indirectly competitive with the business of the Company or any of its affiliates; | ||
(c) | without the written consent of the Company, directly or indirectly enter into any business relationship (either as principal, agent, board member, officer, consultant, employee, member, shareholder, or any other capacity) with any person, business or other entity that competes in any material respect with any material business activity conducted by the Company any of its affiliates. |
Upon the written request of Executive, the Company will advise Executive whether or not a specific activity which Executive is contemplating would violate the foregoing restriction, provided that (i) such request is made prior to Executive engaging in such activity and (ii) Executive provides the Company with such information as the Company determines is necessary to make such determination. The current and continuing effectiveness of any such determination shall be conditioned on all such information provided by Executive being complete and accurate in all material respects. | ||
9. | Successors and Assigns. |
(a) | This Agreement shall inure to the benefit of and be enforceable by the Executives legal representatives. | ||
(b) | This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. | ||
(c) | The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would |
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have been required to perform it if no such succession had taken place. As used in this Agreement, Company shall mean both the Company as defined above and any such successor that assumes and agrees to perform this Agreement, by operation of law or otherwise. |
10. | Director & Officer Insurance and Indemnification. During the Protection Period and, upon a Qualifying Termination, for so long thereafter as the Executive could be subject to liability, the Company, as applicable, shall keep in place a directors and officers liability insurance policy (or policies) providing comprehensive coverage to the Executive for claims relating to the Executives service as an employee, officer, or director of the Company, on terms and conditions no less favorable to the Executive (e.g., with respect to scope, amounts and deductibles) provided to then-existing officers and directors of the Company. The Company shall indemnify the Executive to the fullest extent permitted by the general laws of the State of New Delaware and shall provide indemnification expenses in advance to the extent permitted thereby. The Company will follow the procedures required by applicable law in determining persons eligible for indemnification and in making indemnification payments and advances. The indemnification and advancement of expenses provided by the Company pursuant to this Agreement shall not be deemed exclusive of any other rights to which the Executive may be entitled pursuant to the Companys Articles of Incorporation or By-laws or under any law (common or statutory), or any agreement, vote of stockholders or disinterested directors or other provision that is consistent with law, both as to action in his official capacity and as to action in another capacity while holding office or while employed or acting as agent for the Company, shall continue in respect of all events occurring while the Executive was a director of or employed by the Company after the Executive has ceased to be a director of or employed by the Company, and shall inure to the benefit of the estate, heirs, executors and administrators of the Executive. | |
11. | Reimbursement of Legal Fees. The Company shall pay in advance of final disposition all reasonable fees and expenses, if any (including without limitation, legal fees and expenses) that are incurred by the Executive to enforce this Agreement and that result from a breach of this Agreement by the Company, subject to the Executives repayment of such fees and expenses if the Executive does not substantially prevail in connection with any such dispute. The Company shall pay such fees promptly following the Executives request for such payment supported by appropriate documentation of such fees and expenses. | |
12. | Notice. All notices, requests, demands or other communications which are required, permitted or contemplated hereunder shall be given or made in writing delivered in person or by certified mail (return receipt requested) to the Company at 545 Washington Blvd., Jersey City, NJ, 07310-1686, Attention: General Counsel, and to Executive at the address on the Companys records, or such other address as a party may designate in a notice delivered in accordance with this Section 11. Such notices shall be effective, in the case of personal delivery, upon such delivery; and, in the case of mailing by certified mail, on the second (2nd) business day after mailing thereof. |
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13. | Severability. Each of the terms and provisions of this Agreement is to be deemed severable in whole or in part and, if any term or provision or the application thereof in any circumstances should be held invalid, illegal or unenforceable, the remaining terms and provisions or the application thereof to circumstances other than those as to which it is held invalid, illegal or unenforceable, shall not be affected thereby and shall remain in full force and effect. | |
14. | Withholding. Notwithstanding any other provision of this Agreement, the Company may withhold from amounts payable under this Agreement all federal, state, and local taxes that are required to be withheld by applicable laws or regulations. | |
15. | Entire Agreement. Unless otherwise specifically provided in this Agreement, the Executive and the Company acknowledge that this Agreement supersedes any other agreement between them concerning the subject matter hereof. This Agreement shall be effective from the Effective Date and can only be amended, modified or terminated in a writing, specifically referencing the provision being so amended, modified or terminated, and signed by the Company and the Executive. | |
16. | Controlling Law; Jurisdiction. This Agreement shall be governed by, interpreted and construed according to the laws of the State of New Jersey (without regard to conflict of laws principles). The Executive hereby consents to the jurisdiction of the state and Federal courts in the State of New Jersey in the event that any disputes arise under this Agreement. | |
17. | Failure to Enforce . The failure to enforce any of the provisions of this Agreement shall not be construed as a waiver of such provisions. Further, any express waiver by any party with respect to any breach of any provision hereunder by any other party shall not constitute a waiver of such partys right to thereafter fully enforce each and every provision of this Agreement. | |
18. | Survival. Except as otherwise set forth herein, the obligations contained in this Agreement shall survive the termination, for any reason whatsoever, of the Executives employment with the Company. | |
19. | Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and said counterparts shall constitute but one and the same instrument. |
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VERISK ANALYTICS, INC.
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By: | ||||
Name: | ||||
Title: | ||||
THE EXECUTIVE
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1. PURPOSE OF PLAN
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2. DEFINITIONS
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4. AWARDS, OFFERS AND PARTICIPANT LOANS
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7. STOCK PURCHASE OFFERS
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8. LOAN PROGRAM
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9. LIMITATIONS AND CONDITIONS
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10. STOCK ADJUSTMENTS; PUBLIC OFFERING
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12. WITHHOLDING TAXES
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13. LEGENDS
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14. EFFECTIVE DATE
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INSURANCE SERVICES OFFICE, INC.
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By: | /s/ Frank J. Coyne | |||
Frank J. Coyne | ||||
Chairman, President and
Chief Executive Officer |
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(a) | Notwithstanding anything to the contrary contained in Section 5(f), 6(vii), 7(k) or any other provision of this Plan or in any Award Agreement, a Participant shall be permitted to pledge or otherwise grant a security interest in such Participants shares of Common Stock to a lender to secure a loan or other extension of credit made to such Participant. Such pledge or other security interest shall be subject to all other provisions of the Plan, including, without limitation the right of the Company to repurchase shares of Common Stock set forth in Sections 5(e), 5(f), 6(vi), and 7(i). |
(b) | Notwithstanding anything to the contrary contained this Plan or in any Award Agreement, a Participant shall be permitted to collaterally assign such Participants right to require the Company to repurchase shares of Common Stock contained in Sections 5(c), 6(v) or 7(j) of the Plan (or any similar provision of any Award Agreement) to a lender to secure a loan or other extension of credit made to such Participant. Such pledge or other security interest shall be subject to all other provisions of the Plan and/or Award Agreement, including, without limitation, Section 10 of the Plan. Notwithstanding the first sentence of this Section 15(b), a Participant shall not be permitted to assign any such rights to the extent such assignment is prohibited by applicable law, including, without limitation Section 402 of the Sarbanes-Oxley Act of 2002. |
INSURANCE SERVICES OFFICE, INC.
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By: | /s/ Frank J. Coyne | |||
Frank J. Coyne | ||||
Chairman, President and Chief Executive Officer |
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(i) | the Optionee ceases to be an employee of the Company on account of the Optionees death, Disability or Retirement or, | ||
(ii) | within two years following a Change of Control, the Optionee ceases to be an employee of the Company because the Optionee terminates his or her employment for Good Reason or the Company terminates the Optionees employment without Cause, |
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If to ISO: | |
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INSURANCE SERVICES OFFICE, INC. | |
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545 Washington Boulevard | |
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Jersey City, New Jersey 07310-1686 | |
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Attention: Secretary | |
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Facsimile: (201) 748-1429 |
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INSURANCE SERVICES OFFICE, INC.
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By: | ||||
Mark V. Anquillare | ||||
Senior Vice President and Chief Financial Officer | ||||
OPTIONEE: | ||||
I hereby (i) acknowledge that the Insurance Services
Office, Inc. 1996 Incentive Plan was amended on September
18, 2002 to place restrictions on transactions of ISO
common stock when similar restrictions are placed on
transactions of common stock in the ISO 401(k) and
Employee Stock Ownership Plan; (ii) agree, acknowledge and
consent that any and all Awards granted to me under the
Plan (and any and all securities received in respect of
such Awards), whether past, present or future, shall be
bound by the terms and conditions as set forth in the
Plan, as so amended, including, but not limited to, the
restrictions described above; and (iii) acknowledge
receipt of the Plan, as so amended.
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«Full_Name» |
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NAME OF SUBSIDIARY
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JURISDICTION
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Insurance Services Office, Inc.
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Delaware | |
ISO Staff Services, Inc.
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Delaware | |
Xactware Solutions, Inc.
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Delaware | |
ISO Services Inc.
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Delaware | |
ISO Claims Services, Inc.
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Delaware | |
AIR Worldwide Corporation
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Delaware | |
Interthinx, Inc.
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California | |
Verisk Health, Inc.
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Massachusetts |