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Fitch: Verisk's Ratings Unaffected by Incremental Share Repurchase
December 17, 2014 / 5:47 PM / 3 years ago

Fitch: Verisk's Ratings Unaffected by Incremental Share Repurchase

(The following statement was released by the rating agency) CHICAGO, December 17 (Fitch) In Fitch Ratings' view, Verisk Analytics, Inc.'s (Verisk) 'A-' Issuer Default Rating (IDR) will not be affected by the $500 million incremental share repurchase program approved by the company's board of directors. The program will be executed through an equivalent-sized accelerated share repurchase program (ASR). The ASR is incremental to the $280 million remaining in the current share repurchase program as of Sept. 30, 2014. The company anticipates funding the ASR with a combination of cash on hand and $150 million of incremental borrowings. Verisk's dominant market position within its Property and Casualty (P&C) insurance related businesses along with Fitch's view that Verisk's core products are largely non-discretionary purchases for most if not all of its clients provide sufficient flexibility within the current ratings to accommodate the modest increase in leverage resulting from the ASR. Fitch estimates Verisk's leverage increases to 1.8x on a pro forma basis from 1.6x on an actual basis as of the LTM ended Sept. 30, 2014. The pro forma leverage remains within the company's 2x leverage target and Fitch's tolerance within the current rating. Merger and Acquisition activity will remain core to Verisk's overall strategy to grow the company's data and product offerings and expand internationally. Fitch believes the company's capital allocation strategy remains unchanged and focused on maintaining its 2x leverage target. The ratings have tolerance to exceed targeted levels for an acquisition, with the expectation that leverage would be reduced to target levels within a 12-to-18-month timeframe. Verisk's decision to implement the ASR follows its election to discontinue efforts to acquire EagleView Technology Corporation in a transaction valued at $650 million, as a result of the vote by the Federal Trade Commission to challenge the proposed transaction. As of Sept. 30, 2014, the company had solid liquidity consisting of $432.5 million in cash, and full availability under its $990 million revolving credit facility due 2019. Verisk's liquidity position and overall financial flexibility is supported by anticipated free cash flow generation (FCF) which amounted to approximately $358 million during the LTM period ended Sept. 30, 2014. Fitch calculates FCF to adjusted debt of 25%, which is solid for the ratings. Fitch expects FCF to range from $350 million to $400 million during the ratings horizon and FCF to adjusted debt to remain above 20%. Verisk's maturity schedule is well laddered and within FCF expectations, consisting of approximately $170 million due during 2015 and $50 million scheduled to mature during 2016. The ratings could be upgraded if the company were to target a more conservative unadjusted leverage metric with a rationale for such a target. Ratings may be pressured if the company's performance does not materially meet Fitch's expectations and leverage is unable to return to the 2x target level within 18 months. While not expected, material share buyback activity or additional debt-funded acquisitions that delayed the company's planned reduction in leverage may also pressure the ratings. Fitch's ratings for Verisk and its wholly owned subsidiary, Insurance Services Office, Inc., are as follows: Verisk --Long-term IDR at 'A-'; --Short-term IDR at 'F2'; --Senior unsecured notes at 'A-'. Insurance Services Office, Inc. (ISO) --Long-term IDR at 'A-'; --Short-term IDR at 'F2'; --Revolving credit facility at 'A-'; --Unsecured private placement notes at 'A-'. Contact: Primary Analyst David Peterson Senior Director +1-312-368-3177 Fitch Ratings, Inc., 70 W. Madison, Chicago, IL 60602 Secondary Analyst Brian Yoo, CFA Associate Director +1-212-908-9175 Committee Chairperson Mike Simonton, CFA Managing Director +1-212-368-3138 Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.bertsch@fitchratings.com. Additional information is available at 'www.fitchratings.com'. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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