Scott G. Stephenson
Chairman, President, and Chief Executive Officer at Verisk Analytics
Thanks, Stacey. Good morning, everyone, and thank you for joining us for our fourth quarter 2021 earnings conference call. Before we discuss the company's performance, I want to first reflect on the recently announced leadership succession plan. After 21 years at Verisk I will be retiring as CEO following our Annual Meeting of Shareholders and I'm pleased that Lee Shavel will succeed me as CEO and Mark Anquillare as President. It has been an honor and privilege to lead Verisk through critical and transformative periods for our company and the industries we serve. With a dynamic executive team, deep bench of talent, strong balance sheet, collaborative culture, a modernized technical environment and leading-edge analytic and software platforms in place, this is the right time to begin the transition to Verisk's next CEO.
I have every confidence that under Lee and Mark's steady leadership the team will continue to empower a better, more resilient and sustainable tomorrow for customers and the world. I'd like to personally thank all 9,000-plus Verisk teammates for their passion and dedication to always being innovative, for their underlying commitment to our customers, and for conducting business each and every day with the utmost integrity. I know that Verisk I will be leaving as more data rich, more modern and more integrated with our customers and the future is very bright.
Most of you know Lee quite well. Since joining Verisk in 2017 he has served as our Chief Financial Officer and has been a trusted partner to sharpened our focus on the effective allocation of capital. In 2021, Lee became Group President of our Energy and Financial Services segments and successfully integrated the business for improved strategic and operating coordination and accelerated investment in the company's energy data analytic platform. In addition, he has been actively engaged in the company's ongoing business and portfolio review, which I'll speak to in just a bit.
Partnering with Lee will be Mark Anquillare who has been elemental to Verisk's growth, operational excellence and customer-centric culture for 30 years. Mark has been instrumental in growing the company's insurance vertical and aligning the company's enterprise risk assessment and management with its core operations. With Lee as CEO and Mark as President, I have great confidence that we have the right team in place as we execute on our plans to enhance shareholder value and I look forward to working together towards a smooth transition of leadership.
I also want to comment briefly on the recent governance actions that were announced last week. These actions were the culmination of a broad shareholder engagement and outreach program that the management team and independent members of our Board of Directors have undertaken since last year's Annual Meeting. As part of our proactive approach, we focused on environmental, social and governance matters as well as long-term strategic positioning and operational excellence. We appreciated the broad set of perspectives we heard over the course of conversations with investors who represented a wide variety of geographies and investment styles and we greatly value the input we received.
Reflecting this feedback from shareholders we've taken a series of actions, including; first, our proposal in the company's 2022 proxy statement to de-classify the Board of Director election terms; second, the separation of the Chairman and CEO roles effective at the 2022 Annual Meeting; third, the implementation of return on invested capital based incentives for named executive officers and other leaders; fourth, direct oversight from the Board on the risks and opportunities that sustainability issues create; and fifth, continued ongoing Board refreshment. We believe these actions will bring improved transparency, increased accountability and further align our corporate governance with best in class practices.
Turning now to the financial results, I'm pleased to share that Verisk delivered a strong fourth quarter, demonstrating the consistency and stability of our subscription-based business model, the relevancy and mission critical nature of our solutions and our relentless focus on our customers. The net result for the fourth quarter was organic constant currency revenue growth of 5.2% and organic constant currency adjusted EBITDA growth of 7.6%, reflecting solid growth in our Insurance segment and sequential improvement in Energy and Financial Services.
For the full year, Verisk reported consolidated revenue growth of 7.7% and adjusted EBITDA growth of 6.8%, reflecting the positive impact of the acquisitions, including Jornaya, Data Driven Safety, Roskill and Whitespace. On an organic constant currency basis, Verisk grew revenue 5% and adjusted EBITDA 4.7%. The last year was also one of major technological transformation, international expansion and continued investment in innovation, all of which occurred alongside our comprehensive portfolio review. Starting with our Insurance business, 2021 was a strong year as we reported 6.9% organic constant currency revenue growth and 6.5% working on a constant currency adjusted EBITDA growth.
We experienced exceptional new sales growth across a broad range of insurance solutions, including underwriting, claims, extreme events and international software solutions, and strong uptake for new InsurTech solutions like our LightSpeed platform. We continue to see strong demand for our ESG-related solutions for corporate customers, including our country, climate and human rights data and analytic solutions. Overall, our insurance franchise remains competitively positioned and we are advancing our lead by continually building our data advantage and maximizing the strategic synergies across our insurance data assets and solutions.
This year we added 47 new data contributors to our statistical agent database to support rate making across our core insurance lines and provide our insurance customers with valuable analytics that can help them innovate and expand in the rapidly changing marketplace. This includes contributions from global, national, super regional and regional companies and built upon the 37 contributors we added in 2020. Additionally, we expanded our contributory image library with real time images of damaged property and autos for claim settlement with the contribution of evidence from a top five insurer. We also expanded our data use rights for automated underwriting, analytics and subrogation.
We continue to experience exponential growth in our small business database, which should fuel future opportunities across the small business lines of insurance. This continued growth in our contributory data is a testament to our partnership with our customers who entrust us with their data assets, our responsibility that we do not take for granted. These ever growing data sets not only enable and empower us to innovate further to solve our customers' problems, but they also fortify our competitive position and strengthen our growth potential into the future. Importantly, our strategic decision to extend our data analytics to additional areas within the broader Insurance segment is delivering results for our customers and for bearers.
For example, Verisk Life Insurance solutions combine our data analytics and software platforms within the life and annuity segment, helping carriers, distributors and acquirers transform their product roll out, customer buying experience, underwriting, policy management and claims. In addition, we are saving our customers' significant capex and opex and expediting their speed to market for new products. During 2021, Verisk Life Insurance solutions delivered strong double-digit growth with faster growth in our license revenues. Moreover, our late 2020 acquisition of Jornaya and the subsequent acquisition of Contact State in the U.K. is enabling us to expand our data analytic capabilities into the marketing suite of our insurance customers and is driving strong growth for Verisk.
Our marketing analytic solutions help insurance carriers and financial services companies improve the timing, relevancy and compliance of consumer engagements using end market behaviors and consent-based data solutions. Marketers are increasingly focused on first-party data enrichment at their foundational strategy, all while managing risk and protecting consumer privacy in an increasingly complex and evolving privacy landscape. Jornaya partners with the biggest insurers and powers data-driven personalized marketing programs for their customers, acquisition and retention.
We are also excited about the added capabilities we will be bringing into our marketing solutions through the addition of Infutor, a strategic acquisition that we closed earlier this month. The investment rationale for this transaction is clear. Infutor offers real time identity resolution and consumer intelligence to marketers to help understand the consumer behind each marketing interaction. Combining this with Jornaya's unique insight into end market behaviors positions Verisk marketing solutions as a key data partner to our insurance customers. It also further strengthens our insurance offering as we continue our portfolio reshaping efforts and increase our focus on the Insurance segment.
Turning to our Energy and Specialized Markets segment. For the full year 2021, we delivered organic constant currency revenue growth of 2.4% and organic constant currency EBITDA growth of 6.4%, reflecting sequential improvement as we move through the year. This was driven in large part by an enthusiastic reception to our Lens platform, which helped our energy business is deliver solid annualized contract value growth, resulting from three consecutive quarters of mid single-digit ACV growth. As we continue to integrate the business for improved strategic and operating coordination and accelerate technology investments, we have an active pipeline of new features and functionality scheduled to be released during 2022 within our Lens platform, including ongoing development of discovery and valuation capabilities and our power, upstream and subsurface packages. In addition, we will continue to bolster our existing data to include emerging technologies such as hydrogen and carbon capture and storage. These combined efforts should continue to drive increased adoption and uptake by our customers. With just over 10% of our ACV related to Lens, we feel confident in our penetration runway and expect us to support continued sequential growth in 2022.
Now, let's turn and discuss our portfolio review process. As we've mentioned on previous earnings calls, we've been engaged in an ongoing and comprehensive bottoms-up review of our non-insurance businesses and overall portfolio composition. With the assistance of outside advisors, our Board and management team have extensively studied each of our non-insurance business units analyzing them across a broad spectrum of financial and operating metrics, including long-term sustainable growth, operating leverage, and capital return potential. We also carefully explored competitive positioning, business scale, cross vertical data and technology synergies, and the shape and long-term development of the end markets.
Here our decision-making is driving synergies across our businesses and improving sustainable returns on invested capital. It is with this in mind that we determined to sell two of our business units that after careful review did not meet certain operating metrics or did not prove to generate the needed synergies. First, we recently announced the sale of our environmental health and safety business 3E to New Mountain Capital for a total potential aggregate consideration of up to $950 million. Verisk intends to return the immediate after-tax proceeds of roughly $460 million to shareholders through share repurchases once the transaction closes late in the first quarter of 2022.
Second, as we announced yesterday, we have signed a definitive agreement to sell Verisk Financial Services to TransUnion for a total cash consideration of $550 million. VFS has a unique and proprietary data set that positions them at the nexus of payments, commerce and banking as the only provider of a full customer wallet view of consumer banking and spending behavior. This transaction will best position Verisk Financial to capitalize on the changing market dynamics and continued digitization of banking and retail, while providing increased focus for Verisk going forward. The closing of this transaction is subject to customary closing conditions, including regulatory approvals, like with 3E, we intend to return the after-tax proceeds to shareholders through share repurchases.
Moving on to our Energy business. We continue to actively evaluate alternatives for this business with relevant work streams underway. This includes preparing for the potential creation of a standalone public entity that would benefit from enhanced independence, agility and unique brand value. We are also exploring how to structure such a transaction in a way that enhances tax efficiency to the benefit of our shareholders. We believe the 2021 ACV momentum the penetration runway we have for Lens and the long-term growth prospects of the energy transition represent an immediate growth and return opportunities. We are also undertaking a more intensive review of where we can leverage data sets across our insurance and energy businesses to create value for our clients and shareholders.
These actions combined with an improving energy industry end market and newly changed leadership team within the business unit give us confidence in the continued momentum of this business and gives us the necessary flexibility regardless of which long-term strategic path we pursue. In connection with our comprehensive portfolio review we are also undertaking a proactive study of our cost structure, make sure that we better align our costs with the scale and requirements of our ongoing Verisk businesses. Under Mark's leadership we will continue to work to reduce our overall expense base by more than just those costs associated with the two business units we have agreed to divest.
This work includes productivity initiatives from our Lean Six Sigma teams, use of our global talent optimization hubs, the continued modest modernization of our technology infrastructure and careful management headcount. Certain of these actions are already underway and we plan to further update you on our progress on our next earnings call. We have confidence that through our active management of costs and ongoing transformation of our portfolio, cost structure and technology infrastructure we can return to growth in line with our long-term objectives and deliver OCC adjusted EBITDA growth ahead of revenue growth in 2022 and beyond.
On our technology transformation, we continue to make progress on our move to the cloud and 2022 marks a pivotal year. I'm pleased to share that Verisk the longer owns the mainframe and we've outsourced our small remaining mainframe footprint. Additionally, as we approach over three quarters of our computing environment residing in the cloud, we will reach the point late this year where we will begin closing the first of our U.S. data centers with the second to follow in 2023 and officially retired the mainframe at that time. This is an exciting milestone for Verisk and we look forward to achieving these goals and delivering all the benefits of cloud to our customers.
Before turning it to Lee, let me touch on our strong free cash flow generation, which enables us to fund the highest return on invested capital opportunities, while also directly returning capital to our shareholders. In 2021, we returned over $660 million to shareholders through dividends and share repurchases. I'm pleased to announce that our Board of Directors has approved a 7% increase in our annualized cash dividend to $1.24 a share and an incremental $1 billion in our share repurchase authorization to support ongoing capital return.
And now with that, let me turn the call over to Lee for the financial review.
