Verisk Analytics Inc

Previous wording

We use year-over-year EBITDA growth as metrics to measure our performance. EBITDA and EBITDA margin are non-GAAP financial measures. EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization of fixed and intangible assets. We calculate EBITDA margin as EBITDA divided by revenues. The respective nearest applicable GAAP financial measures are net income and net income margin. Although EBITDA is a non-GAAP financial measure, 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 operating income, net income, or cash flow from operating activities reported under GAAP. Management uses EBITDA and EBITDA margin in conjunction with traditional GAAP operating performance measures as part of its overall assessment company performance. We believe these measures are useful and meaningful because they help us allocate resources, make business decisions, allow for greater transparency regarding our operating performance, and facilitate period-to-period comparisons. Some of these limitations involved in the use of EBITDA are:

Current wording

EBITDA. We use year-over-year EBITDA growth as a key performance metric. EBITDA and EBITDA margin are non-GAAP financial measures. EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization of fixed and intangible assets. We calculate EBITDA margin as EBITDA divided by revenues. The respective nearest applicable GAAP financial measures are net income and net income margin. Although EBITDA is a non-GAAP financial measure, 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 operating income, net income, or cash flow from operating activities reported under GAAP. Management uses EBITDA and EBITDA margin in conjunction with traditional GAAP operating performance measures as part of its overall assessment company performance. We believe these measures are useful and meaningful because they help us allocate resources, make business decisions, allow for greater transparency regarding our operating performance, and facilitate period-to-period comparisons. Some of these limitations involved in the use of EBITDA are:

Previous wording

We earn revenues through agreements for hosted subscriptions, advisory/consulting services, and for transactional solutions, recurring and non-recurring. Subscriptions for our solutions are generally paid in advance of rendering services either quarterly or in full upon commencement of the subscription period, which is usually for one year and automatically renewed each year. As a result, the timing of our cash flows generally precedes our recognition of revenues and income and our cash flow from operations tends to be higher in the first quarter as we receive subscription payments. Examples of these arrangements include subscriptions that allow our customers to access our standardized coverage language, our claims fraud database, or our actuarial services throughout the subscription period. In general, we experience minimal revenue seasonality within the business. Approxi mately 80% and 81% of the revenues in our Insurance segment for the years ended December 31, 2023 and 2022 were derived from hosted subscriptions through agreements (generally one to five years) for our solutions, respectively.

Current wording

We earn revenues through agreements for hosted subscriptions, advisory/consulting services, and for transactional solutions, recurring and non-recurring. Subscriptions for our solutions are generally paid in advance of rendering services either quarterly or in full upon commencement of the subscription period, which is usually for one to five years and automatically renewed each year. As a result, the timing of our cash flows generally precedes our recognitionof revenues and income and our cash flow from operations tends to be higher in the first quarter as we receive subscription payments. Examples of these arrangements include subscriptions that allow our customers to access our standardized coverage language, our claims fraud database, or our actuarial services throughout the subscription period. In general, we experience minimal revenue seasonality within the business. Approximately 81% and 80% of the revenues in our Insurance segment for the years ended December 31, 2024 and 2023, respectively, were derived from hosted subscriptions through agreements for our solutions, respectively.

Previous wording

We also provide advisory/consulting services, which help our customers get more value out of our analytics and their subscriptions. In addition, certain of our solutions are paid for by our customers on a transactional basis, recurring and non-recurring. For example, we have solutions that allow our customers to access property-specific rating and underwriting information to price a policy on a commercial building, or compare a P&C insurance or a workers' compensation claim with information in our databases, or use our repair cost estimation solutions on a case-by-case basis. For the years ended December 31, 2023 and 2022, approximately 20% and 19% of our consolidated revenues were derived from providing transactional and advisory/consulting solutions, respectively.

Current wording

We also provide advisory/consulting services, which help our customers get more value out of our analytics and their subscriptions. In addition, certain of our solutions are paid for by our customers on a transactional basis, recurring and non-recurring. For example, we have solutions that allow our customers to access property-specific rating and underwriting information to price a policy on a commercial building, or compare a P&C insurance or a workers' compensation claim with information in our databases, or use our repair cost estimation solutions on a case-by-case basis. For the years ended December 31, 2024 and 2023, approximately 19% and 20% of our consolidated revenues, respectively, were derived from providing transactional and advisory/consulting solutions, respectively.

Previous wording

Personnel expenses are a major component of both our cost of revenues and selling, general and administrative expenses. Personnel expenses, which represented approximately 57% and 59% of ourtotal operating expenses (excluding gains/losses related to dispositions) for each of the years ended December 31, 2023 and 2022, respectively, include salaries, benefits, incentive compensation, equity compensation costs, sales commissions, employment taxes, recruiting costs, and outsourced temporary agency costs.

Current wording

Personnel expenses are a major component of both our cost of revenues and selling, general and administrative expenses. Personnel expenses, which represented approximately 56% and 57% of our total operating expenses (excluding gains/losses related to dispositions) for each of the years ended December 31, 2024 and 2023, respectively, include salaries, benefits, incentive compensation, equity compensation costs, sales commissions, employment taxes, recruiting costs, and outsourced temporary agency costs.

Previous wording

A significant change in P&C insurers’ profitability could affect the demand for our solutions. For insurers, the keys to profitability include increasing investment income, premium growth and disciplined and accurate underwriting of risks. Growth in P&C insurers’ direct written premiums has been cyclical, with total industry premium growth receding from a peak of 14.8% in 2002 to a trough of negative 3.1% in 2009 and subsequently recovering to 5.1% in 2019. In 2020, industry premium growth declined to 2.3% due to the COVID-19 pandemic. Direct premium growth accelerated to 9.5% in 2021 and 9.7% in 2022 indicating a recovery from the pandemic. Based on the most recent results available, direct written premiums continued to grow in 2023 on comparable level. In 2023, the main economic indicators stabilized, inflation began to fall, and the federal interest rate increases stopped mid-year. Despite high interest rates in 2023, the annualized yield on investments (not attributable to cash transfers from outside the P/C industry) was 3.0% as of nine-months 2023, down from the 3.3% yield for year-end 2022. Both recent results are lower than the historical 15-year average of 3.4%, showing that yields have yet to follow the trend in interest rates.

Current wording

A significant change in the profitability of P&C insurers could affect the demand for our solutions. The keys to profitability for insurers include premium growth, increasing investment income, and disciplined and accurate underwriting of risks. The growth of direct written premiums for P&C insurers has exhibited cyclical patterns, with total industry premium growth declining from a peak of 14.8% in 2002 to a trough of (3.1)% in 2009 and subsequently recovering to 5.1% in 2019. In 2020, industry premium growth declined to 2.3% due to the impact of the pandemic. Direct premium growth accelerated to 9.5% in 2021, 9.7% in 2022, and further increased to 10.4% in 2023, indicating a continued recovery from the pandemic. Based on the most recent results available, written premiums continued to grow in 2024 at a comparable level.

Previous wording

In response to rising inflation, carriers are working to reset pricing to fix loss ratios and improve profitability. This has slowed their marketing spend for customer acquisition. Until premium pricing adjustments take effect and profitability improves, carriers are refraining from spending to drive new policy volume, creating short term impacts on demand and volume for our Marketing Solutions offerings and auto underwriting solutions.

Current wording

Despite some progress made towards actuarially sound pricing, carriers are still working to improve loss ratios and profitability in the face of heightened inflation. Until premium pricing adjustments are fully implemented, and profitability improves, some carriers are not yet spending as much as they have in the past to drive new policy volume, which could have a short-term impact on demand and volume for our Marketing Solutions offerings and auto underwriting solutions.

Previous wording

Trends in catastrophe and non-catastrophe losses (such as from weather, climate, casualty, terrorism, pandemics, and tsunamis) can have an effect on our customers’ profitability, and therefore on their appetite for buying analytics to help them manage their risks. Any increase or decrease in frequency or severity of these events over time could lead to an increased or decreased demand for our catastrophe modeling, catastrophe loss information, and repair cost solutions. Likewise, any structural changes in the reinsurance and related brokerage industry from alternative capital or newer technologies could affect demand for our products. We also have a portion of our revenue related to the number of claims processed due to losses, which can be impacted by seasonal storm activity. The need by our customers to fight insurance fraud - both in claims and at policy inception - could lead to increased demand for our underwriting and claims solutions.

Current wording

These trends in catastrophe and non-catastrophe losses (such as from weather, climate, casualty, terrorism, pandemics, and tsunamis) can influence our customers’ profitability, and therefore their appetite for buying analytics to help them manage their risks. Any increase or decrease in frequency or severity of these events over time could lead to an increased or decreased demand for our catastrophe modeling, catastrophe loss information, and repair cost solutions. Likewise, any structural changes in the reinsurance and related brokerage industry from alternative capital or newer technologies could affect demand for our products. A portion of our revenue is also related to the number of claims processed due to losses, which can be impacted by seasonal storm or wildfire activity. The need by our customers to fight insurance fraud - both in claims and at policy inception - could also lead to increased demand for our underwriting and claims solutions.

Previous wording

We acquired 13 businesses since January 1, 2021. These acquisitions affect the comparability of our consolidated results of operations between periods. See a description of our 2023 acquisitions below and Note 10. Acquisitions to our consolidated financial statements included in this annual report on Form 10-K for further discussions.

Current wording

We acquired 8 businesses since January 1, 2022. These acquisitions affect the comparability of our consolidated results of operations between periods. See a description of our 2024 acquisition below and Note 10. Acquisitions to our consolidated financial statements included in this annual report on Form 10-K for further discussions.

Previous wording

Our recent acquisitions (Morning Data within the underwriting category of our Insurance segment; and Mavera and Krug within the claims category of the Insurance segment) contributed net revenues of $32.4 million, while the remaining Insurance revenues increased $212.0 million or 8.7%. Our underwriting revenues increased $146.6 million or 8.5% primarily due to an annual increase in prices derived from continued enhancements to the content of the solutions within our forms, rules and loss cost services as well as selling expanded solutions to new and existing customers within underwriting solutions. In addition, extreme events, life insurance, and specialty business solutions contributed to the growth. Our claims revenues increased $65.4 million or 9.3%, primarily due to growth in property estimating solutions and anti-fraud solutions.

Current wording

Our recent acquisitions (Morning Data within the underwriting category of our Insurance segment; Rocket, Mavera and Krug within the claims category of the Insurance segment) and dispositions (AER) within the underwriting category of our Insurance segment) contributed net revenues of $7.4 million, while the remaining Insurance revenues increased $192.9 million or 7.2%. Our underwriting revenue increased $131.9 million or 7.0%, primarily due to an annual increase in prices derived from continued enhancements to the models and content of the solutions within our forms, rules and loss cost services, as well as selling expanded solutions to new and existing customers within extreme event solutions, underwriting data and analytic solutions, and specialty business solutions. Our claims revenue increased $61.0 million or 7.8%, primarily due to growth in anti-fraud solutions and property estimating solutions.

Previous wording

Amortization of intangible assets was $74.4 million for the year ended December 31, 2022 compared to $79.9 million for the year ended December 31, 2021, a decrease of $5.5 million or 6.9%. The decrease was primarily driven by recent dispositions of $20.1 million, and intangible assets that were fully amortized of $8.6 million, partially offset by additional amortization of intangible assets incurred in connection with our recent acquisitions of $23.2 million.

Current wording

Amortization of intangible assets was$72.3 million for the year ended December 31, 2024 compared to$74.6 million for the year ended December 31, 2023, a decrease of$2.3 million or 3.1%. The decrease was primarily due to intangible assets that were fully amortized, partially offset by an increase due to our recent acquisition of $0.3 million.

Previous wording

Investment income (loss) and others, net was a gain of$11.0 million for the year ended December 31, 2023 compared to a loss of$5.3 million for the year ended December 31, 2022. The increase was primarily due to impact of foreign currencies.

Current wording

Investment income (loss) and others, net was a gain of$95.7 million for the year ended December 31, 2024 compared to a gain of$11.0 million for the year ended December 31, 2023. The increase was primarily driven by net gains associated with the settlement of retained interests related to the prior sales of our healthcare business in 2016 and our specialized markets business in 2022, partially offset by the impact of foreign currencies.

Previous wording

As a result of these sale transactions, we have excluded the Energy and Specialized Markets and Financial Services segments from our management's discussion and analysis of the results of operations by segment.

Current wording

As a result of these sale transactions, we have excluded the Energy and Specialized Markets and Financial Services segments from our management's discussion and analysis of the results of operations.

Previous wording

Revenues were$2,681.4 million for the year ended December 31, 2023 compared to$2,497.0 million for the year ended December 31, 2022, an increase of$184.4 million or 7.4%. The growth in our revenues was partially offset by the sale of 3E and our Financial Services segment, both of which did not qualify as discontinued operations and as a result, their prior year revenues of $60.0 million were included in our results. Our recent acquisitions (Morning Data within the underwriting category of our Insurance segment; and Mavera and Krug within the claims category of the Insurance segment increased net revenues by $32.4 million. The remaining growth in revenues of $212.0 million or 8.7% is related to increased revenues within our Insurance segment. Refer to the Results of Operations by Segment within this section for more information regarding our revenues. Our Specialized Market business was sold in March 2022; and our Energy business, which qualified for discontinued operations in the fourth quarter of 2022, was subsequently sold in February 2023. Our Financial Services segment was sold in April 2022. Our Energy and Specialized Markets and Financial Services segments did not have revenues from continuing operations in 2023.

Current wording

Revenues were$2,681.4 million for the year ended December 31, 2023 compared to$2,497.0 million for the year ended December 31, 2022, an increase of$184.4 million or 7.4%. The growth in our revenues was partially offset by the sale of 3E and our Financial Services segment, both of which did not qualify as discontinued operations and as a result, their prior year revenues of $60.0 million were included in our results. Our recent acquisitions (Morning Data within the underwriting category of our Insurance segment; and Mavera and Krug within the claims category of the Insurance segment) increased net revenues by $32.4 million. The remaining growth in revenues of $212.0 million or 8.7% is related to increased revenues within our Insurance segment. Refer to the Results of Operations by Segment within this section for more information regarding our revenues. Our Specialized Market business was sold in March 2022; and our Energy business, which qualified for discontinued operations in the fourth quarter of 2022, was subsequently sold in February 2023. Our Financial Services segment was sold in April 2022. Our Energy and Specialized Markets and Financial Services segments did not have revenues from continuing oper ations in 2023.

Previous wording

Cost of revenues was$876.5 million for the year ended December 31, 2023 compared to$824.6 million for the year ended December 31, 2022, an increase of $51.9 million or 6.3%. Our recent acquisitions and dispositions accounted for a net decrease of $16.5 million in cost of revenues, which was primarily related to salaries and employee benefits. The cost of revenues increase of $68.4 million or 8.7% was primarily due to increases in salaries and employee benefits of $51.0 million, rent expense of $6.6 million, bad debt expense of $3.8 million, travel expenses of $3.6 million, data costs of $1.8 million, and other operating costs of $3.9 million. These increases were partially offset by decreases in information technology expenses of $2.1 million and professional consulting fees $0.2 million.

Current wording

Cost of revenues was $876.5 million for the year ended December 31, 2023 compared to $824.6 million for the year ended December 31, 2022, an increase of $51.9 million or 6.3%. Our recent acquisitions and dispositions accounted for a net decrease of $16.5 million in cost of revenues, which was primarily related to salaries and employee benefits. The cost of revenues increase of $68.4 million or 8.7% was primarily due to increases in salaries and employee benefits of $51.0 million, rent expense of $6.6 million, bad debt expense of $3.8 million, travel expenses of $3.6 million, data costs of $1.8 million, and other operating costs of $3.9 million. These increases were partially offset by decreases in information technology expenses of $2.1 million and professional consulting fees $0.2 million.

Previous wording

Selling, general and administrative expenses ("SGA") were$391.8 million for the year ended December 31, 2023 compared to$381.5 million for the year ended December 31, 2022, an increase of$10.3 million or 2.7%. Our recent acquisitions, primarily related to salaries and benefits of $24.5 million, contributed to the increase, offset by our recent dispositions and acquisition-related earn out costs, which accounted for decreases of $34.1 million and $16.5 million, respectively. The remaining SGA increase of $36.4 million or 10.0% was primarily due to a litigation reserve expense of $38.2 million associated with an indemnification of an ongoing inquiry related to our former Financial Services segment, increases in travel expenses of $3.9 million, professional consulting fees(mostly related to ERP costs)of $3.4 million, information technology expenses of $0.6 million, and other operating costs of $0.9 million, partially offset by a decrease in salaries and employee benefits of $10.6 million.

Current wording

Selling, general and administrative expenses ("SGA") were $391.8 million for the year ended December 31, 2023 compared to $381.5 million for the year ended December 31, 2022, an increase of $10.3 million or 2.7%. Our recent acquisitions, primarily related to salaries and benefits of $24.5 million, contributed to the increase, offset by our recent dispositions and acquisition-related earn-out costs, which accounted for decreases of $34.1 million and $16.5 million, respectively. The remaining SGA increase of $36.4 million or 10.0% was primarily due to a litigation reserve expense of $38.2 million associated with an indemnification of an ongoing inquiry related to our former Financial Services segment, increases in travel expenses of $3.9 million, professional consulting fees (mostly related to ERP costs) of $3.4 million, information technology expenses of $0.6 million, and other operating costs of $0.9 million, partially offset by a decrease in salaries and employee benefits of $10.6 million.

Previous wording

Depreciation and amortization of fixed assets was$206.8 million for the year ended December 31, 2023 compared to$164.2 million for the year ended December 31, 2022, an increase of$42.6 million or 25.9%. The increase was primarily driven by $44.6 million of depreciation and amortization expense attributed to an increase in assets placed into service to support revenue growth and recent acquisitions of $0.2 million, partially offset by $2.2 million related to recent dispositions. The increase in assets placed into service in 2023 primarily resulted from the timing of certain large internally developed software projects that were completed and placed into service during the year.

Current wording

Depreciation and amortization of fixed assets was $206.8 million for the year ended December 31, 2023 compared to $164.2 million for the year ended December 31, 2022, an increase of $42.6 million or 25.9%. The increase was primarily driven by $44.6 million of depreciation and amortization expense attributed to an increase in assets placed into service to support revenue growth and recent acquisitions of $0.2 million, partially offset by $2.2 million related to recent dispositions. The increase in assets placed into service in 2023 primarily resulted from the timing of certain large internally developed software projects that were completed and placed into service during the year.

Previous wording

Amortization of intangible assets was$74.6 million for the year ended December 31, 2023 compared to$74.4 million for the year ended December 31, 2022, an increase of$0.2 million or 0.3%. The increase was primarily driven by recent acquisitions of $3.7 million, partially offset by our recent dispositions of $3.5 million.

Current wording

Amortization of intangible assets was $74.6 million for the year ended December 31, 2023 compared to $74.4 million for the year ended December 31, 2022, an increase of $0.2 million or 0.3%. The increase was primarily driven by recent acquisitions of $3.7 million, partially offset by our recent dispositions of $3.5 million.

Previous wording

Other operating income was$0.0 million for the year ended December 31, 2023 compared to$354.2 million for the year ended December 31, 2022. The gain in the prior year was primarily driven by the sale of 3E and Financial Services segment recognized in the prior year.

Current wording

Other operating income was $0.0 million for the year ended December 31, 2023 compared to $354.2 million for the year ended December 31, 2022. The gain in the prior year was primarily driven by the sale of 3E and Financial Services segment recognized in the prior year.

Previous wording

Investment income (loss) and others, net was a gain of $11.0 million for the year ended December 31, 2023 compared to a loss of$4.7 million for the year ended December 31, 2022. The increase was primarily due to impact of foreign currencies.

Current wording

Investment income (loss) and others, net was a gain of $11.0 million for the year ended December 31, 2023 compared to a loss of $5.3 million for the year ended December 31, 2022. The increase was primarily due to impact of foreign currencies.

Previous wording

Interest expense was$115.5 million for the year ended December 31, 2023 compared to$138.8 million for the year ended December 31, 2022, a decrease of$23.3 million or 16.8%. The decrease in interest expense was primarily due to the paydown in the current year of our outstanding borrowings on our Syndicated Revolving and Bilateral credit facilities, and an increase in interest income of $15.8 million, partially offset by interest expense related to the issuance of our 2033 Senior Notes.

Current wording

Interest expense was $115.5 million for the year ended December 31, 2023 compared to $138.8 million for the year ended December 31, 2022, a decrease of $23.3 million or 16.8%. The decrease in interest expense was primarily due to the paydown in the current year of our outstanding borrowings on our Syndicated Revolving and Bilateral credit facilities, and an increase in interest income of $15.8 million, partially offset by interest expense related to the issuance of our 2033 Senior Notes.

Previous wording

Energy and Specializes Markets and Financial Segments

Current wording

Energy and Specialized Markets and Financial Segments

Previous wording

As a result of these sale transactions, we have excluded the Energy and Specialized Markets and Financial Services segments from our management's discussion and analysis of the results of operations by segment.

Current wording

As a result of these sale transactions, we have excluded the Energy and Specialized Markets and Financial Services segments from our management's discussion and analysis of the results of operations.

Previous wording

As of December 31, 2023 and 2022, we had cash and cash equivalents and available-for-sale securities totaling $303.9 million and $296.7 million, respectively, inclusive of cash included within assets held for sale. Subscriptions for our solutions are billed and generally paid in advance of rendering services either quarterly or in full upon commencement of the subscription period, which is usually for one year. Subscriptions are automatically renewed at the beginning of each calendar year. We have historically generated significant cash flows from operations. As a result of this factor, as well as the availability of funds under our Syndicated Credit Facility (as defined below), we believe we will have sufficient cash to meet our working capital, human capital and capital expenditure needs, and to fuel our future growth plans.

Current wording

Asof December 31, 2024 and 2023, we had cash and cash equivalents and available-for-sale securities totaling $292.5 million and $303.9 million, respectively. We maintain our cash and cash equivalents in higher credit quality financial institutions in order to limit the amount of credit exposure. As of December 31, 2024 and December 31, 2023, a vast majority of our domestic cash and cash equivalents is with TD Bank, N.A., and JPMorgan Chase N.A. Subscriptions for our solutions are billed and generally paid in advance of rendering services either quarterly or in full upon commencement of the subscription period, which is usually for one year. Subscriptions are automatically renewed at the beginning of each calendar year. We have historically generated significant cash flows from operations. As a result of this factor, as well as the availability of funds under our Credit Facility, we expect that we will have sufficient cash to meet our working capital and capital expenditure needs and to fuel our future growth plans.

Previous wording

We have historically managed the business with a working capital deficit due to the fact that, as described above, we offer our solutions and services primarily through annual subscriptions or long-term contracts, which are generally prepaid quarterly or annually in advance of the services being rendered. When cash is received for prepayment of invoices, we record an asset (cash and cash equivalents) on our balance sheet with the offset recorded as a current liability (deferred revenues). This current liability is deferred revenue that does not require a direct cash outflow since our customers have prepaid and are obligated to purchase the services. In most businesses, growth in revenue typically leads to an increase in the accounts receivable balance causing a use of cash as a company grows. Unlike these businesses, our cash position is favorably affected by revenue growth, which results in a source of cash due to our customers prepaying for most of our services.

Current wording

We have historically managed the business with a working capital deficit due to the fact that, as described above, we offer our solutions and services primarily through annual subscriptions or long-term contracts, which are generally prepaid quarterly or annually in advance of the services being rendered. When cash is received for prepayment of invoices, we record an asset (cash and cash equivalents) on our balance sheet with the offset recorded as a liability (deferred revenues). This current liability is deferred revenue that does not require a direct cash outflow since our customers have prepaid and are obligated to purchase the services. In most businesses, growth in revenue typically leads to an increase in the accounts receivable balance causing a use of cash as a company grows. Unlike these businesses, our cash position is favorably affected by revenue growth, which results in a source of cash due to our customers prepaying for most of our services.

Previous wording

Our capital expenditures for the years ended December 31, 2023 and 2022 were $230.0 million and $274.7 million, respectively. Expenditures related to developing and enhancing our solutions are predominately related to internal-use software and are capitalized in accordance with ASC 350-40,Accounting for Costs of Computer Software Developed or Obtained for Internal Use. We also capitalize amounts in accordance with ASC 985-20,Software to be Sold, Leased or Otherwise Marketed.

Current wording

Our capital expenditures for the years ended December 31, 2024, 2023, and 2022 were $223.9 million, $230.0 million, and $274.7 million, respectively. Expenditures related to developing and enhancing our solutions are predominately related to internal-use software and are capitalized in accordance with ASC 350-40,Accounting for Costs of Computer Software Developed or Obtained for Internal Use.

Previous wording

We have historically used a portion of our cash for repurchases of our common stock from our stockholders. For the years ended December 31, 2023, 2022, and 2021, we repurchased $2,762.3 million, $1,662.5 million, and $475.0 million, respectively, of our common stock. For the years ended December 31, 2023, 2022, and 2021, we also paid dividends of $196.8 million, $195.2 million, and $188.2 million, respectively.

Current wording

We have historically used a portion of our cash for repurchases of our common stock from our stockholders. For the years ended December 31, 2024, 2023, and 2022, we repurchased $1,005.0 million, $2,762.3 million, and $1,662.5 million, respectively, of our common stock. For the years ended December 31, 2024, 2023, and 2022, we also paid dividends of $221.3 million, $196.8 million, and $195.2 million, respectively.

Previous wording

We had total debt, excluding finance lease obligations, unamortized discounts and premium, and debt issuance costs, of $2,850.0 million and $3,740.0 million at December 31, 2023 and 2022, respectively. The debt at December 31, 2023 primarily consists of senior notes issued in 2023, 2020, 2019, and 2015. Interest on the senior notes is payable semi-annually each year. The unamortized discount and debt issuance costs were recorded as "Long-term debt" in the accompanying consolidated balance sheets, and will be amortized to "Interest expense" in the accompanying consolidated statements of operations within this Form 10-K over the life of the respective senior note. The indenture governing the senior notes restricts our ability to, among other things, create certain liens, enter into sale/leaseback transactions, and consolidate with, sell, lease, convey, or otherwise transfer all or substantially all of our assets, or merge with or into, any other person or entity. We have made, and may from time to time in the future make, optional repayments on our debt obligations, which may include repurchases or exchanges of our outstanding notes, depending on various factors, such as market conditions. Any such repurchases may be effected through privately negotiated transactions, market transactions, tender offers, redemptions or otherwise. See Note 15 for additional information on our financing activities.

Current wording

We had total debt, excluding finance lease obligations, unamortized discounts and premium, and debt issuance costs, of $3,050.0 million and $2,850.0 million at December 31, 2024 and 2023, respectively. The debt at December 31, 2024 primarily consists of senior notes issued in 2024, 2023, 2020, 2019, and 2015. Interest on the senior notes is payable semi-annually each year. The unamortized discount and debt issuance costs were recorded as "Long-term debt" in the accompanying consolidated balance sheets, and will be amortized to "Interest expense" in the accompanying consolidated statements of operations within this Form 10-K over the life of the respective senior note. The indenture governing the senior notes restricts our ability to, among other things, create certain liens, enter into sale/leaseback transactions, and consolidate with, sell, lease, convey, or otherwise transfer all or substantially all of our assets, or merge with or into, any other person or entity. We have made, and may from time to time in the future make, optional repayments on our debt obligations, which may include repurchases or exchanges of our outstanding notes, depending on various factors, such as market conditions. Any such repurchases may be effected through privately negotiated transactions, market transactions, tender offers, redemptions or otherwise. See Note 15. Debt for additional information on our financing activities.

Previous wording

We have a $1,000.0 million Syndicated Credit Facility with Bank of America N.A., HSBC Bank USA, N.A., JP Morgan Chase Bank, N.A., Wells Fargo Bank, National Association, Citibank, N.A., Morgan Stanley Bank, N.A., TD Bank, N.A., Goldman Sachs Bank USA, and the Northern Trust Company that was amended on April 5, 2023. The amendment does not change the current borrowing capacity of $1,000.0 million, but does extend the maturity date to April 5, 2028. Borrowing under the Amendment is payable at an interest rate of SOFR plus 100.0 to 162.5 basis points, depending on the public debt rating. The financial covenants require that, at the end of any fiscal quarter, we have a consolidated funded debt leverage ratio of less than 3.75 to 1.0*.* At our election, the maximum consolidated funded debt leverage ratio could be permitted to increase to 4.50 to 1.0 (no more than once) and to 4.25 to 1.0 (no more than once) in connection with the closing of a permitted acquisition. The Syndicated Credit Facility may be used for general corporate purposes, including working capital needs and capital expenditures, acquisitions, dividend payments, and the Repurchase Program. As of December 31, 2023, we were in compliance with all financial and other debt covenants under the Syndicated Credit Facility. As of December 31, 2023 and December 31, 2022, the available capacity under the Syndicated Revolving Credit Facility was $995.4 and $5.6 million, which takes into account outstanding letters of credit of $4.6 and $4.4 million, respectively.

Current wording

We have a $1,000 million Syndicated Credit Facility with Bank of America N.A., HSBC Bank USA, N.A., JP Morgan Chase Bank, N.A., Wells Fargo Bank, National Association, Citibank, N.A., Morgan Stanley Bank, N.A., TD Bank, N.A., Goldman Sachs Bank USA, and the Northern Trust Company with a maturity date of April 5, 2028. Borrowing under the facility is payable at an interest rate of SOFR plus 100.0 to 162.5 basis points, depending on the public debt rating. The financial covenants require that, at the end of any fiscal quarter, we have a consolidated funded debt leverage ratio of less than 3.75 to 1.0*.* At our election, the maximum consolidated funded debt leverage ratio could be permitted to increase to 4.50 to 1.0 (no more than once) and to 4.25 to 1.0 (no more than once) in connection with the closing of a permitted acquisition. The Syndicated Credit Facility may be used for general corporate purposes, including working capital needs and capital expenditures, acquisitions, dividend payments, and the Repurchase Program. As of December 31, 2024, we were in compliance with all financial and other debt covenants under the Syndicated Credit Facility. As of December 31, 2024 and December 31, 2023, the available capacity under the Syndicated Revolving Credit Facility was $995.4 million, which takes into account outstanding letters of credit of $4.6 million.

Previous wording

Net cash provided by operating activities was$1,060.7 million for the year ended December 31, 2023 compared to$1,059.0 million for the year ended December 31, 2022, an increase of$1.7 million, or 0.2%.The increase in net cash provided by operating activities reflects an increase in the operating profit of our Insurance segment and lower tax payments in the current year, offset by the disposition of our Energy business in February 2023. Cash taxes paid in the prior year were higher primarily due to the gain on the sale of 3E.

Current wording

Net cash provided by operating activities was$1,060.7 million for the year ended December 31, 2023 compared to$1,059.0 million for the year ended December 31, 2022, an increase of$1.7 million, or 0.2%. The increase in net cash provided by operating activities reflects an increase in the operating profit of our Insurance segment and lower tax payments in 2023, offset by the disposition of our Energy business in February 2023. Cash taxes paid in 2022 were higher primarily due to the gain on the sale of 3E.

Previous wording

Net cash provided by investing activities of$2,746.5 million for the year ended December 31, 2023 wasprimarily related to proceeds from the sale of our Energy business of $3,066.4 million, partially offset by capital expenditures of $230.0 million, and acquisitions, including escrow funding of $87.1 million.

Current wording

Net cash provided by investing activities of$2,746.5 million for the year ended December 31, 2023 was primarily related to proceeds from the sale of our Energy business of $3,066.4 million, partially offset by capital expenditures of $230.0 million, and acquisitions, including escrow funding of $87.1 million.

Previous wording

Net cash used in investing activities of$301.4 million for the year ended December 31, 2022 was primarily related to the $1,073.3 million in proceeds from the sale of 3E and our Financial Services segment, partially offset by acquisitions and purchase of non-controlling interest, including escrow funding associated with these acquisitions, of $451.2 million, capital expenditures of $274.7 million, and investments in nonpublic companies of $46.0 million.

Current wording

Net cash provided by** **investing activities of $301.4 million for the year ended December 31, 2022 was primarily related to the $1,073.3 million in proceeds from the sale of 3E and our Financial Services segment, partially offset by acquisitions and purchase of non-controlling interest, including escrow funding associated with these acquisitions, of $451.2 million, capital expenditures of $274.7 million, and investments in nonpublic companies of $46.0 million.

Previous wording

Net cash used in financing activities of$3,786.5 million for the year ended December 31, 2023 wasprimarily driven by the funding of $2,799.8 million in share repurchases, repayments of debt under our revolving credit and bilateral credit facilities of $1,265.0 million, and dividend payments of $196.8 million, partially offset by the proceeds from the issuance of our 2033 Senior Notes of $495.2 million, and proceeds from stock options exercised of $141.9 million.

Current wording

Net cash used in financing activities of$3,786.5 million for the year ended December 31, 2023 was primarily driven by the funding of $2,799.8 million in share repurchases, repayments of debt under our revolving credit and bilateral credit facilities of $1,265.0 million, and dividend payments of $196.8 million, partially offset by the proceeds from the issuance of our 2033 Senior Notes of $495.2 million, and proceeds from stock options exercised of $141.9 million.

Previous wording

Net cash used in financing activities of$1,330.2 million for the year ended December 31, 2022 was primarily related to repurchases of common stock of $1,662.5 million, repayment of our $350.0 million 4.125% senior notes on September 12, 2022, and dividend payments of $195.2 million, partially offset by proceeds under our Bilateral Term Loan Credit Facility of $125.0 million, proceeds from our Bilateral Revolving Credit Facility of $275.0 million, proceeds, net of repayments of debt under our Syndicated Credit Facility, of $380.0, million and proceeds from stock options exercised of $132.5 million.

Current wording

Net cash used in financing activities of $1,330.2 million for the year ended December 31, 2022 was primarily related to repurchases of common stock of $1,662.5 million, repayment of our $350.0 million 4.125% senior notes on September 12, 2022, and dividend payments of $195.2 million, partially offset by proceeds under our Bilateral Term Loan Credit Facility of $125.0 million, proceeds from our Bilateral Revolving Credit Facility of $275.0 million, proceeds, net of repayments of debt under our Syndicated Credit Facility of $380.0 million, and proceeds from stock options exercised of $132.5 million.

Previous wording

Stock-based compensation cost, including nonqualified stock options, restricted stock, TSR-based performance share units ("PSUs"), and ROIC-based PSUs, is measured at the grant date, based on the fair value of the awards granted, and is recognized as expense over the requisite service period. The fair value of stock options is measured using a Black-Scholes option-pricing model, which requires the use of several estimates, including expected term, expected risk-free interest rate, expected volatility, and expected dividend yield. The stock options have an exercise price equal to the adjusted closing price of our common stock on the grant date with a ten-year contractual term. The fair value of the restricted stock is determined using the closing price of our common stock on the grant date. The restricted stock is not assignable or transferable until it becomes vested. The fair value of TSR-based PSUs is determined on the grant date using the Monte Carlo Simulation model and their ultimate achievement is based on relative total shareholder return as compared to the companies that compromise the S&P 500 index. The fair value of ROIC-based PSUs is determined on the closing price of our common stock on the grant date and their ultimate achievement is tied to incremental return on invested capital based on net operating profit. Each of the TSR-based PSUs and ROIC-based PSUs has a three-year performance period, subject to the recipients continued service. Each PSU represents the right to receive one share of our common stock and the ultimate realization is based on our achievement of certain market and financial performance criteria and may range from 0% to 200% of the recipients target levels of 100% established on the grant date.

Current wording

Stock-based compensation cost, including nonqualified stock options, restricted stock, performance share units tied to the achievement of certain market performance conditions, namely relative total shareholder return as compared to the S&P 500 index ("TSR-based PSU's"), and performance share units tied to the achievement of certain financial performance conditions, namely incremental return on invested capital ("ROIC-based PSUs"), is measured at the grant date, based on the fair value of the awards granted, and is recognized as expense over the requisite service period. The fair value of stock options is measured using a Black-Scholes option-pricing model, which requires the use of several estimates, including expected term, expected risk-free interest rate, expected volatility, and expected dividend yield. The stock options have an exercise price equal to the adjusted closing price of our common stock on the grant date with a ten-year contractual term. The fair value of the restricted stock is determined using the closing price of our common stock on the grant date. The restricted stock is not assignable or transferable until it becomes vested. The fair value of TSR-based PSUs is determined on the grant date using the Monte Carlo Simulation model and their ultimate achievement is based on relative total shareholder return as compared to the companies that compromise the S&P 500 index. The fair value of ROIC-based PSUs is determined on the closing price of our common stock on the grant date and their ultimate achievement is tied to incremental return on invested capital based on net operating profit. Each of the TSR-based PSUs and ROIC-based PSUs has a three-year performance period, subject to the recipients continued service. Each PSU represents the right to receive one share of our common stock and the ultimate realization is based on our achievement of certain market and financial performance criteria and may range from 0% to 200% of the recipients target levels of 100% established on the grant date.

Previous wording

Option grants and restricted stock awards are generally expensed ratably over the four-year vesting period. PSUs are generally expensed ratably over the three-year vesting period. We follow the substantive vesting period approach for awards granted after January 1, 2005, which requires that stock-based compensation expense be recognized over the period from the date of grant to the date when the award is no longer contingent on the employee providing additional service.

Current wording

Option grants and restricted stock awards are generally expensed ratably over the four-year vesting period. PSUs are generally expensed ratably over the three-year vesting period. We follow the substantive vesting period approach which requires that stock-based compensation expense be recognized over the period from the date of grant to the date when the award is no longer contingent on the employee providing additional service.

Previous wording

As of December 31, 2023, we had goodwill associated with continuing operations of $1,760.8 million, which represents 40.3% of our total assets. Goodwill and intangible assets with indefinite lives are subject to impairment testing annually as of June 30, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. When evaluating goodwill for impairment, we may decide to first perform a qualitative assessment, or “Step Zero” impairment test, to determine whether it is more likely than not that impairment has occurred. The qualitative assessment includes a review of macroeconomic conditions, industry and market considerations, internal cost factors, and our own overall financial and share price performance, among other factors. If we do not perform a qualitative assessment, or if we determine that it is more likely than not that the carrying amounts of our reporting units exceeds their fair value, we perform a quantitative assessment and calculate the estimated fair value of the respective reporting unit. If the carrying amount of a reporting unit’s goodwill exceeds the fair value of that goodwill, an impairment loss is recognized. As of June 30, 2023, we completed our Step Zero impairment test at the reporting unit level and determined it was not more likely than not that the carrying values of our reporting units exceeded their fair values. We did not recognize any additional impairment charges related to our goodwill and indefinite-lived intangible assets. Subsequent to the test performed on June 30, 2023, we continued to monitor these reporting units for events that would trigger an interim impairment test; we did not identify any such events.

Current wording

As of December 31, 2024, we had goodwill of $1,726.6 million, which represents 40.5% of our total assets. Goodwill and intangible assets with indefinite lives are subject to impairment testing annually as of June 30, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. When evaluating goodwill for impairment, we may decide to first perform a qualitative assessment, or “Step Zero” impairment test, to determine whether it is more likely than not that impairment has occurred. The qualitative assessment includes a review of macroeconomic conditions, industry and market considerations, internal cost factors, and our own overall financial and share price performance, among other factors. If we do not perform a qualitative assessment, or if we determine that it is more likely than not that the carrying amount of our reporting units exceeds their fair value, we perform a quantitative assessment and calculate the estimated fair value of the respective reporting unit. If the carrying amount of a reporting unit’s goodwill exceeds the fair value of that goodwill, an impairment loss is recognized. As of June 30, 2024, we completed our Step Zero impairment test at the reporting unit level and determined it was not more likely than not that the carrying values of our reporting units exceeded their fair values. We did not recognize any additional impairment charges related to our goodwill and indefinite-lived intangible assets. Subsequent to the test performed on June 30, 2024, we continued to monitor these reporting units for events that would trigger an interim impairment test; we did not identify any such events.

Previous wording

In determining the discount rate, we utilize quoted rates from long-term bond indices, and changes in long-term bond rates over the past year, cash flow models and other data sources we consider reasonable based upon the life expectancy and mortality rate of eligible employees. As part of our evaluation, we calculate the approximate average yields on securities that were selected to match our separate projected cash flows for both the pension and postretirement plans. Our separate benefit plan cash flows are input into actuarial models that include data for corporate bonds rated AA or better at the measurement date. The outputs from the actuarial models are assessed against the prior year’s discount rate and quoted rates for long-term bond indices. For our pension plans at December 31, 2023, we determined this rate to be 5.37% and 5.49% at December 31, 2023 and 2022, respectively. Our postretirement rate was 4.75% and 5.25% at December 31, 2023 and 2022, respectively.

Current wording

In determining the discount rate, we utilize quoted rates from long-term bond indices, and changes in long-term bond rates over the past year, cash flow models and other data sources we consider reasonable based upon the life expectancy and mortality rate of eligible employees. As part of our evaluation, we calculate the approximate average yields on securities that were selected to match our separate projected cash flows for both the pension and postretirement plans. Our separate benefit plan cash flows are input into actuarial models that include data for corporate bonds rated AA or better at the measurement date. The outputs from the actuarial models are assessed against the prior year’s discount rate and quoted rates for long-term bond indices. For our pension plans at December 31, 2024, we determined this rate to be 5.64% and 5.37% at December 31, 2024 and 2023, respectively. Our postretirement rate was 5.17% and 4.75% at December 31, 2024 and 2023, respectively.

Previous wording

The expected return on plan assets is determined by taking into consideration our analysis of our actual historical investment returns to a broader long-term forecast adjusted based on our target investment allocation, and the current economic environment. Our pension asset investment guidelines target an investment portfolio allocation of 60.0% debt securities and 40.0% equity securities. As of December 31, 2023, the pension plan assets were allocated 53.5% debt securities, 40.0% equity securities, 5.3% real estate and 1.2% other. The VEBA Plan target allocation is 100% debt securities. We have used our target investment allocation to derive the expected return as we believe this allocation will be retained on an ongoing basis that will be commensurate with the projected cash flows of the plan. The expected return for each investment category within our target investment allocation is developed using average historical rates of return for each targeted investment category, considering the projected cash flow of the qualified pension plan and postretirement plan. The difference between this expected return and the actual return on plan assets is generally deferred and recognized over subsequent periods through future net periodic benefit (credits) costs. We believe these considerations provide the basis for reasonable assumptions with respect to the expected long-term rate of return on plan assets.

Current wording

The expected return on plan assets is determined by taking into consideration our analysis of our actual historical investment returns to a broader long-term forecast adjusted based on our target investment allocation, and the current economic environment. Our pension asset investment guidelines target an investment portfolio allocation of 60% debt securities and 40% equity securities. As of December 31, 2024, the pension plan assets were allocated 57.5% debt securities, 36.5% equity securities, 4.9% real estate and 1.1% other. The VEBA Plan target allocation is 100% debt securities. We have used our target investment allocation to derive the expected return as we believe this allocation will be retained on an ongoing basis that will be commensurate with the projected cash flows of the plan. The expected return for each investment category within our target investment allocation is developed using average historical rates of return for each targeted investment category, considering the projected cash flow of the qualified pension plan and postretirement plan. The difference between this expected return and the actual return on plan assets is generally deferred and recognized over subsequent periods through future net periodic benefit (credits) costs. We believe these considerations provide the basis for reasonable assumptions with respect to the expected long-term rate of return on plan assets.

Previous wording

When actual plan experience differs from the assumptions used, actuarial gains or losses arise. We amortize, as a component of annual pension expense, total outstanding actuarial gains or losses over the estimated average expected remaining lifetime of plan participants to the extent that the gain/loss exceeds 10% of the greater of the beginning-of-year projected benefit obligation or the market-related value of plan assets. For our pension and postretirement plans, the total actuarial losses as of December 31, 2023 that have not been recognized in annual expense are $118.3 million and $3.6 million, respectively, and we expect to recognize a net periodic pension and postretirement expenses of $3.6 million and $0.3 million, respectively, in 2024 related to the amortization of actuarial losses.

Current wording

When actual plan experience differs from the assumptions used, actuarial gains or losses arise. We amortize, as a component of annual pension expense, total outstanding actuarial gains or losses over the estimated average expected remaining lifetime of plan participants to the extent that the gain/loss exceeds 10% of the greater of the beginning-of-year projected benefit obligation or the market-related value of plan assets. For our pension and postretirement plans, the total actuarial losses as of December 31, 2024 that have not been recognized in annual expense are $122.6 million and $3.1 million, respectively, and we expect to recognize a net periodic pension and postretirement expenses of $4.2 million and$0.3 million, respectively, in 2025 related to the amortization of actuarial losses.

Previous wording

We estimate unrecognized tax positions of $0.7 million that may berecognized by December 31, 2024, due to expiration of statutes of limitations and resolution of audits with taxing authorities, net of additional uncertain tax positions.

Current wording

We estimate unrecognized tax positions of $0.9 million that may berecognized by December 31, 2025, due to expiration of statutes of limitations and resolution of audits with taxing authorities, net of additional uncertain tax positions.