Lee M. Shavel
Chief Executive Officer at Verisk Analytics
Thanks, Stacey, and good day, everyone. I'm pleased to share that Verisk delivered solid second quarter results. As you review the financial results, please be aware that due to the dispositions of 3E and Verisk Financial Services, certain year-over-year comparisons will be distorted by the impacts of these transactions. For example, the decrease in our free cash flow year-over-year was primarily the result of a significant tax on the realized gain from the sale of 3E. Dave will provide more details in his financial review. Second quarter organic constant currency revenue grew approximately 5% and organic constant currency adjusted EBITDA grew approximately 4%. Adjusted for the impact of the suspension of commercial operations in Russia, organic constant currency revenue grew approximately 6% and organic constant currency adjusted EBITDA grew approximately 6%.
Adjusted EBITDA margins expanded 140 basis points to 51% through cost discipline, operational efficiencies, the benefit of decisions affecting recent portfolio actions and some very early steps taken in our previously announced margin improvement initiative. This level of margin also includes headwinds from cloud transition and a partial normalization of travel and entertainment expenses as we continue to hold more in-person conferences and visits as we engage with our customers. While overall organic constant currency revenue growth, excluding Russian revenues, was below our long-term targets, we saw solid performance in our subscription revenues, offset by weakness in our transactional revenues due to the continued impact of the work-from-home environment on certain businesses as we'll describe. We did see sequential improvements in the second quarter, reflecting some normalization in certain businesses, including international travel.
Subscription revenue, organic constant currency growth, excluding Russian revenues, of approximately 7%, representing 81% of total revenue, was solid and improved sequentially in both Insurance and Energy. Insurance OCC subscription revenues were above our 7% long-term target, demonstrating the mission-critical nature of our solutions. Energy subscription growth improved sequentially as positive pricing momentum from our Lens investment and strong annual contract value growth begins to convert into revenue growth. We also had strong growth in our energy transition, chemicals and metals and mining research. Transactional organic constant currency revenue growth of approximately 2%, representing 19% of total revenue, improved slightly in the quarter with sequential improvement in Insurance due to solid underwriting growth, offset by weaker performance in claims due to ongoing declines in workers' compensation claims volumes across the industry of at least 25% and new regulations that went into effect in early 2022 that are slowing clean settlement.
In addition, we are also experiencing some softness in personal lines auto related to the market dislocation as Mark will describe in his section. We have seen normalization progress across our businesses and expect this to continue. However, several of these impacts are having longer cycle recovery times than we originally expected. Energy transactional revenue declined modestly on an organic constant currency basis due primarily to resource constraints in our consulting business as a result of strong demand from our professionals, particularly in [Indecipherable] region as well as tough compares versus last year's rebound level growth rates. You can find more details about our subscription and transactional growth rates by segment in our quarterly earnings deck, which can be found in the Investors section of our website. Since taking over the CEO role at the end of May, I've been meeting with the leadership teams of many of our key customers and stakeholders. In these valuable conversations, where I'm learning how we can improve, I hear repeatedly that Verisk is a critical partner with a unique seat to analyze performance and technology across the industries we serve and most importantly, implement technology change for the benefit of all of our clients.
As one of our clients put it, not only do we need Verisk's help on this issue, the industry needs your help. Our value proposition is clear. Verisk strategically invests in data and technology at scale to deliver economic value to our customers through operational efficiencies and better decision-making. In both the Insurance and Energy industries, we benefit from the growing demand for data analytics from our customers, along with their increased ability to ingest and use our rapidly growing data sets. We deliver greater value per dollar invested than our clients would be able to individually. And we are in an advantaged position as few companies enjoy closer ties to and a greater understanding of their clients' businesses than Verisk. This is a responsibility that we do not take lightly as it is this unique proposition that will power our growth and drive long-term value creation for shareholders, customers and employees. As we focus and define the strategic orientation over 2022, we expect to lay out our plans in greater detail at an Investor Day in the first quarter of 2023 following the reporting of our fourth quarter 2022 results. During the second quarter, we made a series of new leadership announcements as we build out the team that will lead Verisk forward. Of importance to many of you on this call, we recently announced that Elizabeth Mann will be joining Verisk as our Chief Financial Officer. Elizabeth joins us from S&P Global, where she was the Chief Financial Officer of the Ratings and Mobility divisions.
And before that, she was Senior Vice President of Capital Management, which included oversight of the treasury department. Elizabeth will bring very relevant experience and a fresh perspective that I know will improve our organization financially and operationally. She will be joining us on September 15, and we look forward to introducing her to you, and she will welcome your perspectives as she comes up the curve on Verisk. In addition, we recently announced that Maroun Mourad has been named President of Claims Solutions. Maroun has been a key leader in our Underwriting and Rating business since 2015, serving as President of ISO Commercial Lines; President, Global Underwriting; and most recently, President, Life and Growth Markets. Maroun brings deep industry expertise from his many leadership roles at Gen Re, AIG, Arch and Zurich across underwriting operations and general management. He also brings a great entrepreneurial spirit and a true customer-centric approach to the business, and is the right leader to help drive our vision of revolutionizing claims for the industry through automation, technology and advanced analytics. Maroun takes the reins from Rich Della Rocca, who has retired after 27 years with Verisk. We thank Rich for all of his many contributions to Verisk and wish him very well in his retirement. We also announced that Tim Rayner has been named President of Verisk's Specialty Business Solutions, our U.K.-based business, centered around our Sequel suite of insurance software. The Specialty Business Solutions team is a linchpin in our strategy to create an automated and interconnected ecosystem for the Insurance industry in the U.K., EU and beyond, and Tim is the right leader to drive that strategy.
Tim joined Verisk in 2018 after a long and successful career in the Insurance industry, holding various leadership roles at Miller Insurance Services. Now let me provide an update on both our progress towards being an insurance-focused data analytics solutions provider and our commitment to furthering margin expansion. We are making steady progress on our evaluation of the separation of the Energy business. The preparation of the internal separation analysis and stand-alone financials are ongoing, and we have hired a team of outside advisers, who are engaged in the next phase of our process of developing all alternatives available to us. Our timing expectations remain unchanged. And as we have stated previously, our decisions will continue to be guided by shareholder feedback, value considerations and market conditions. As many of you know, we've also undertaken a broad shareholder survey for the benefit of your perspectives, not only on the energy separation, but how we can improve and meeting investor expectations generally. On our EBITDA margin expansion objective, we continue to be very confident in our ability to achieve our stated target to deliver 300 to 500 basis points of margin expansion by 2024 off an insurance-only baseline of 50% to 51% normalized adjusted EBITDA margins.
We have taken some early steps, including the restructuring of our marketing function, office space consolidation and a greater emphasis on our global talent optimization hiring. Additionally, we have embarked on a span of control analysis to guide further operational efficiencies. We continue to experience the impact of the stranded corporate allocations from the businesses we have sold in our reported segment margins. It is important to remember that 2022 is likely to remain quite noisy due to the impact of portfolio changes and implementation costs. As such, we continue to expect the margin expansion to be increasingly visible over 2023 as we move past the timing impacts of the portfolio changes in implementations and work toward previously stated 2024 target. Now I will turn the call over to Mark for some more color on the Insurance business performance.