Table of Contents

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

 
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172018
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                     
Commission File Number: 001-34480

VERISK ANALYTICS, INC.
(Exact name of registrant as specified in its charter)
 

Delaware 26-2994223
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
   
545 Washington Boulevard
Jersey City, NJ
 07310-1686
(Address of principal executive offices) (Zip Code)
(201) 469-3000
(Registrant’s telephone number, including area code)
 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐
       
Non-accelerated filer ☐  (Do not check if a smaller reporting company) Smaller reporting company ☐
       
    Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of October 27, 2017,26, 2018, there were 164,691,912164,620,141 shares outstanding of the registrant's Common Stock, par value $.001.
 

Verisk Analytics, Inc.
Index to Form 10-Q
Table of Contents
 
 Page Number
  
PART I — FINANCIAL INFORMATION 
  
Item 1. Financial Statements (unaudited)
 
  
Condensed Consolidated Balance Sheets
1
  
Condensed Consolidated Statements of Operations
2
  
Condensed Consolidated Statements of Comprehensive Income (Loss)
3
  
Condensed Consolidated Statements of Changes in Stockholders’ Equity
4
  
Condensed Consolidated Statements of Cash Flows
5
  
Notes to Condensed Consolidated Financial Statements
6
  
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
2526
  
Item 3. Quantitative and Qualitative Disclosures About Market Risk
3638
  
Item 4. Controls and Procedures
3638
  
PART II — OTHER INFORMATION
 
  
Item 1. Legal Proceedings
3739
  
Item 1A. Risk Factors
3739
  
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
3739
  
Item 3. Defaults Upon Senior Securities
3739
  
Item 4. Mine Safety Disclosures
3739
  
Item 5. Other Information
3739
  
Item 6. Exhibits
3740
  
SIGNATURES
3841
  
Exhibit 31.1 
  
Exhibit 31.2 
  
Exhibit 32.1 

PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
As of September 30, 20172018 and December 31, 20162017
2017 20162018 2017
        
(In millions, except for
share and per share data)
(In millions, except for
share and per share data)
ASSETS
Current assets:        
Cash and cash equivalents$142.0
 $135.1
$147.6
 $142.3
Available-for-sale securities 3.7
 3.4
 4.0
 3.8
Accounts receivable, net of allowance for doubtful accounts of $4.7 and $3.4,
respectively		 285.8
 263.9
Accounts receivable, net of allowance for doubtful accounts of $5.8 and $4.6,
respectively		 324.2
 345.5
Prepaid expenses 42.4
 28.9
 59.4
 38.1
Income taxes receivable 34.3
 49.3
 11.9
 28.8
Other current assets 36.5
 20.3
 46.6
 39.1
Total current assets 544.7
  500.9
 593.7
  597.6
Noncurrent assets:        
Fixed assets, net 437.8
 380.3
 518.5
 478.3
Intangible assets, net 1,256.2
 1,010.8
 1,254.4
 1,345.3
Goodwill 3,188.8
 2,578.1
Goodwill, net 3,339.0
 3,368.7
Deferred income tax assets 16.9
 15.6
 15.4
 15.9
Other assets 183.8
 145.5
 130.1
 214.5
Total assets$5,628.2
 $4,631.2
$5,851.1
 $6,020.3
        
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:        
Accounts payable and accrued liabilities$210.2
 $184.0
$243.7
 $225.4
Short-term debt and current portion of long-term debt 602.9
 106.8
 542.3
 724.4
Deferred revenues 390.0
 330.8
 433.2
 384.7
Income taxes payable —
 3.1
Total current liabilities 1,203.1
  621.6
 1,219.2
  1,337.6
Noncurrent liabilities:        
Long-term debt 2,278.8
 2,280.2
 2,044.9
 2,284.4
Deferred income taxes, net 384.1
 322.2
Deferred income tax liabilities 341.6
 337.8
Other liabilities 89.6
 74.8
 104.2
 135.1
Total liabilities 3,955.6
  3,298.8
 3,709.9
  4,094.9
Commitments and contingencies 
 
 
 
Stockholders’ equity:        
Common stock, $.001 par value; 2,000,000,000 shares authorized; 544,003,038
shares issued and 164,516,754 and 166,915,772 shares outstanding, respectively		 0.1
 0.1
Common stock, $0.001 par value per share; 2,000,000,000 shares authorized;
544,003,038 shares issued and 164,810,578 and 164,878,930 shares outstanding,
respectively		 0.1
 0.1
Additional paid-in capital 2,165.8
 2,121.6
 2,265.3
 2,180.1
Treasury stock, at cost, 379,486,284 and 377,087,266 shares, respectively (3,153.4) (2,891.4)
Treasury stock, at cost, 379,192,460 and 379,124,108 shares, respectively (3,411.0) (3,150.5)
Retained earnings 3,103.4
 2,752.9
 3,796.4
 3,308.0
Accumulated other comprehensive losses (443.3)  (650.8) (509.6)  (412.3)
Total stockholders’ equity 1,672.6
  1,332.4
 2,141.2
  1,925.4
Total liabilities and stockholders’ equity$5,628.2
 $4,631.2
$5,851.1
 $6,020.3






The accompanying notes are an integral part of these condensed consolidated financial statements.

VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For The Three and Nine Months Ended September 30, 2017 and 2016
 
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 20162018 2017 2018 2017
                
(In millions, except for share and per share data)(In millions, except for share and per share data)
Revenues$549.1
 $498.1
 $1,574.9
 $1,489.1
$598.7
 $549.1
 $1,781.2
 $1,574.9
Expenses:        
Operating expenses:        
Cost of revenues (exclusive of items shown
separately below)		 198.5
 169.7
 575.1
 521.4
 219.2
 198.5
 662.2
 575.1
Selling, general and administrative 80.9
 77.8
 235.6
 224.4
 95.7
 80.9
 281.0
 235.6
Depreciation and amortization of fixed assets 33.8
 29.5
 99.4
 90.7
 39.5
 33.8
 121.6
 99.4
Amortization of intangible assets 27.5
  22.7
  73.6
  70.4
 33.2
  27.5
  98.5
  73.6
Total expenses 340.7
  299.7
  983.7
  906.9
Total operating expenses 387.6
  340.7
  1,163.3
  983.7
Operating income 208.4
  198.4
  591.2
  582.2
 211.1
  208.4
  617.9
  591.2
Other income (expense):                
Investment income and others, net 2.6
 2.1
 7.9
 3.0
 14.1
 2.6
 19.3
 7.9
Interest expense (30.3)  (28.1)  (87.3)  (91.7) (32.4)  (30.3)  (97.1)  (87.3)
Total other expense, net (27.7)  (26.0)  (79.4)  (88.7) (18.3)  (27.7)  (77.8)  (79.4)
Income from continuing operations before income
taxes		 180.7
 172.4
 511.8
 493.5
Income before income taxes 192.8
 180.7
 540.1
 511.8
Provision for income taxes (60.0)  (44.8)  (161.3)  (149.5) (26.8)  (60.0)  (87.6)  (161.3)
Income from continuing operations 120.7
  127.6
  350.5
  344.0
Discontinued operations: 

 

    
Income from discontinued operations —
 —
 —
 256.5
Provision for income taxes from discontinued
operations		 —
  —
  —
  (118.6)
Income from discontinued operations —
 —
  —
  137.9
Net income$120.7
 $127.6
 $350.5
 $481.9
$166.0
 $120.7
 $452.5
 $350.5
Basic net income per share:        
Income from continuing operations$0.73
 $0.76
 $2.12
 $2.04
Income from discontinued operations —
 —
 —
 0.82
Basic net income per share$0.73
 $0.76
 $2.12
 $2.86
$1.01
 $0.73
 $2.74
 $2.12
Diluted net income per share:        
Income from continuing operations$0.72
 $0.74
 $2.08
 $2.01
Income from discontinued operations —
 —
 —
 0.80
Diluted net income per share$0.72
 $0.74
 $2.08
 $2.81
$0.99
 $0.72
 $2.68
 $2.08
Weighted average shares outstanding:                
Basic 164,577,575
  168,874,129
  165,314,267
  168,541,399
 164,829,250
  164,577,575
  164,962,647
  165,314,267
Diluted 167,957,058
  171,785,900
  168,807,405
  171,495,189
 168,200,766
  167,957,058
  168,614,835
  168,807,405












The accompanying notes are an integral part of these condensed consolidated financial statements.

VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
For The Three and Nine Months Ended September 30, 2017 and 2016
 
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 20162018 2017 2018 2017
                
(In millions)(In millions)
Net income$120.7
 $127.6
 $350.5
 $481.9
$166.0
 $120.7
 $452.5
 $350.5
Other comprehensive income (loss), net of tax:                
Foreign currency translation adjustment 82.2
 (62.1) 204.9
 (278.6) (35.7) 82.2
 (98.6) 204.9
Unrealized holding gain on available-for-sale
securities		 —
 0.1
 0.2
 0.3
Available-for-sale securities adjustment —
 —
 —
 0.2
Pension and postretirement liability adjustment 0.9
  0.2
  2.4
  1.4
 0.3
  0.9
  2.0
  2.4
Total other comprehensive income (loss) 83.1
  (61.8)  207.5
  (276.9)
Total other comprehensive (loss) income (35.4)  83.1
  (96.6)  207.5
Comprehensive income$203.8
 $65.8
 $558.0
 $205.0
$130.6
 $203.8
 $355.9
 $558.0






















The accompanying notes are an integral part of these condensed consolidated financial statements.

VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
For The Year Ended December 31, 20162017 and The Nine Months Ended September 30, 20172018
 
Common Stock
Issued
 
Par 
Value
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Retained
Earnings
 
Accumulated
Other Comprehensive
Losses
 
Total
Stockholders’
Equity 
                    
 (In millions, except for share data)
Balance, January 1, 2016544,003,038
 $0.1
 $2,023.4
 $(2,571.2) $2,161.7
 $(242.0) $1,372.0
Net income—
  —
  —
  —
  591.2
  —
  591.2
Other comprehensive loss—
  —
  —
  —
  —
  (408.8)  (408.8)
Treasury stock acquired (4,325,548 shares)—
  —
  —
  (333.3)  —
  —
  (333.3)
KSOP shares earned (181,198 shares reissued from treasury stock)—
  —
  13.2
  1.3
  —
  —
  14.5
Stock options exercised, including tax benefit of $22.1 (1,409,803
shares reissued from treasury stock)		—
  —
  56.2
  10.2
  —
  —
  66.4
Restricted stock lapsed, including tax benefit of $1.2 (169,365 shares
reissued from treasury stock)		—
  —
  —
  1.2
  —
  —
  1.2
Employee stock purchase plan (29,867 shares reissued from treasury
stock)		—
  —
  2.1
  0.2
  —
  —
  2.3
Stock based compensation—
  —
  29.9
  —
  —
  —
  29.9
Net share settlement from restricted stock awards (38,250 shares
withheld for tax settlement)		—
  —
  (3.1)  —
  —
  —
  (3.1)
Other stock issuances (26,106 shares reissued from treasury stock)—
  —
  (0.1)  0.2
  —
  —
  0.1
Balance, December 31, 2016544,003,038
  0.1
  2,121.6
  (2,891.4)  2,752.9
  (650.8)  1,332.4
Net income—
  —
  —
  —
  350.5
  —
  350.5
Other comprehensive gain—
  —
  —
  —
  —
  207.5
  207.5
Treasury stock acquired (3,356,360 shares)—
  —
  —
  (269.8)  —
  —
  (269.8)
Stock options exercised (773,206 shares reissued from treasury stock)—
  —
  22.5
  6.3
  —
  —
  28.8
Restricted stock lapse (141,961 shares reissued from treasury stock)—
  —
  (1.1)  1.1
  —
  —
  —
Employee stock purchase plan (23,391 shares reissued from treasury
stock)		—
  —
  1.7
  0.2
  —
  —
  1.9
Stock based compensation—
  —
  24.2
  —
  —
  —
  24.2
Net share settlement of restricted stock awards (36,067 shares withheld
for tax settlement)		—
  —
  (2.9)  —
  —
  —
  (2.9)
Other stock issuances (18,784 shares reissued from treasury stock)—
  —
  (0.2)  0.2
  —
  —
  —
Balance, September 30, 2017544,003,038
 $0.1
 $2,165.8
 $(3,153.4) $3,103.4
 $(443.3) $1,672.6
 
Common Stock
Issued
 
Par 
Value
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Retained
Earnings
 
Accumulated
Other Comprehensive
Losses
 
Total
Stockholders’
Equity 
                    
 (In millions, except for share data)
Balance, January 1, 2017544,003,038
 $0.1
 $2,121.6
 $(2,891.4) $2,752.9
 $(650.8) $1,332.4
Net income—
  —
  —
  —
  555.1
  —
  555.1
Other comprehensive income—
  —
  —
  —
  —
  238.5
  238.5
Treasury stock acquired (3,356,360 shares)—
  —
  —
  (269.8)  —
  —
  (269.8)
Stock options exercised (1,125,004 shares reissued from treasury stock)—
  —
  28.7
  9.2
  —
  —
  37.9
Restricted stock lapsed (143,557 shares reissued from treasury stock)—
  —
  (1.1)  1.1
  —
  —
  —
Employee stock purchase plan (29,605 shares reissued from treasury
stock)		—
  —
  2.2
  0.2
  —
  —
  2.4
Stock-based compensation—
  —
  31.8
  —
  —
  —
  31.8
Net share settlement from restricted stock awards (36,067 shares
withheld for tax settlement)		—
  —
  (2.9)  —
  —
  —
  (2.9)
Other stock issuances (21,352 shares reissued from treasury stock)—
  —
  (0.2)  0.2
  —
  —
  —
Balance, December 31, 2017544,003,038
  0.1
  2,180.1
  (3,150.5)  3,308.0
  (412.3)  1,925.4
Adjustments to opening retained earnings related to Topic 606 and
ASU 2016-01		—
  —
  —
  —
  35.9
  (0.7)  35.2
Net income—
  —
  —
  —
  452.5
  —
  452.5
Other comprehensive loss—
  —
  —
  —
  —
  (96.6)  (96.6)
Treasury stock acquired (2,574,123 shares)—
  —
  —
  (282.2)  —
  —
  (282.2)
Stock options exercised (2,301,868 shares reissued from treasury stock)—
  —
  58.0
  20.0
  —
  —
  78.0
Restricted stock lapsed (170,833 shares reissued from treasury stock)—
  —
  (1.4)  1.4
  —
  —
  —
Employee stock purchase plan (21,988 shares reissued from treasury
stock)		—
  —
  2.1
  0.2
  —
  —
  2.3
Stock-based compensation—
  —
  30.1
  —
  —
  —
  30.1
Net share settlement from restricted stock awards (33,499 shares
withheld for tax settlement)		—
  —
  (3.5)  —
  —
  —
  (3.5)
Other stock issuances (11,082 shares reissued from treasury stock)—
  —
  (0.1)  0.1
  —
  —
  —
Balance, September 30, 2018544,003,038
 $0.1
 $2,265.3
 $(3,411.0) $3,796.4
 $(509.6) $2,141.2


The accompanying notes are an integral part of these condensed consolidated financial statements.

VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For The Nine Months Ended September 30, 20172018 and 20162017
2017 20162018 2017
        
(In millions)(In millions)
Cash flows from operating activities:        
Net income$350.5
 $481.9
$452.5
 $350.5
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization of fixed assets 99.4
 97.7
 121.6
 99.4
Amortization of intangible assets 73.6
 76.3
 98.5
 73.6
Amortization of debt issuance costs and original issue discount 3.1
 4.0
 3.1
 3.1
Allowance for doubtful accounts 1.4
 1.5
KSOP stock based compensation expense —
 11.4
Stock based compensation 24.2
 23.8
Gain on sale of discontinued operations —
 (269.4)
Realized (gain) loss on available-for-sale securities, net (0.1) 0.3
Gain on exercise of common stock warrants —
 (1.5)
Provision for doubtful accounts 4.1
 1.4
Realized gain on subordinated promissory note (12.3) —
Stock-based compensation 30.1
 24.2
Realized gain on available-for-sale securities, net (0.3) (0.1)
Deferred income taxes (4.1) (1.7) (8.7) (4.1)
Loss on disposal of fixed assets, net —
 0.9
 0.2
 —
        
Changes in assets and liabilities, net of effects from acquisitions:        
Accounts receivable 4.0
 32.6
 15.7
 4.0
Prepaid expenses and other assets (26.4) (22.4) (22.4) (26.4)
Income taxes 14.1
 45.3
 13.9
 14.1
Accounts payable and accrued liabilities 21.7
 (7.2) 43.2
 21.7
Deferred revenues 47.2
 14.7
 51.3
 47.2
Other liabilities (16.5)  (3.8) (29.5)  (16.5)
Net cash provided by operating activities 592.1
  484.4
 761.0
  592.1
Cash flows from investing activities:        
Acquisitions, net of cash acquired of $22.1 and $1.0, respectively (674.3) (45.2)
Purchase of equity method investments in non-public companies (5.0) —
Sale of non-controlling equity investments in non-public companies —
 8.5
Proceeds from sale of discontinued operations —
 719.4
Acquisitions, net of cash acquired of $3.1 and $22.1, respectively (61.4) (674.3)
Purchase of equity method investments in nonpublic companies —
 (5.0)
Escrow funding associated with acquisitions (30.9) (4.4) (6.3) (30.9)
Proceeds from subordinated promissory note 121.4
 —
Capital expenditures (113.8) (98.6) (154.5) (113.8)
Purchases of available-for-sale securities (0.3) (0.2) (0.1) (0.3)
Proceeds from sales and maturities of available-for-sale securities 0.4
 0.4
 0.2
 0.4
Other investing activities, net —
 (0.6) (3.1) —
Net cash (used in) provided by investing activities (823.9)  579.3
Net cash used in investing activities (103.8)  (823.9)
Cash flows from financing activities:        
Proceeds (repayment) of short-term debt, net 40.0
 (870.0)
(Repayments) proceeds of short-term debt, net (430.0) 40.0
Proceeds from issuance of short-term debt with original maturities greater than
three months		 455.0
 —
 —
 455.0
Payment of debt issuance costs —
 (0.5)
Repurchases of common stock (276.2) (182.5) (282.2) (276.2)
Payment of debt issuance costs (0.5) (0.5)
Net share settlement of restricted stock awards (2.9) (3.1)
Proceeds from stock options exercised 26.0
 32.6
 74.7
 26.0
Net share settlement from restricted stock awards (3.5) (2.9)
Other financing activities, net (7.1)  (4.4) (7.5)  (7.1)
Net cash provided by (used in) financing activities 234.3
  (1,027.9)
Net cash (used in) provided by financing activities (648.5)  234.3
Effect of exchange rate changes 4.4
  (9.4) (3.4)  4.4
Increase in cash and cash equivalents 6.9
 26.4
 5.3
 6.9
Cash and cash equivalents, beginning of period 135.1
  138.3
 142.3
  135.1
Cash and cash equivalents, end of period$142.0
 $164.7
$147.6
 $142.0
Supplemental disclosures:        
Income taxes paid$150.6
 $221.4
$81.7
 $150.6
Interest paid$68.8
 $75.8
$81.4
 $68.8
Noncash investing and financing activities:        
Repurchases of common stock included in accounts payable and accrued liabilities$—
 $7.3
Promissory note received for sale of discontinued operations$—
 $82.9
Equity interest received for sale of discontinued operations$—
 $8.4
Deferred tax liability established on date of acquisition$53.2
 $3.8
$5.1
 $53.2
Tenant improvement included in other liabilities$—
 $0.1
Tenant improvement allowance$0.1
 $—
Capital lease obligations$4.2
 $11.5
$12.8
 $4.2
Capital expenditures included in accounts payable and accrued liabilities$1.3
 $2.3
Fixed assets included in accounts payable and accrued liabilities$1.8
 $1.3







The accompanying notes are an integral part of these condensed consolidated financial statements.

VERISK ANALYTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Amounts in millions, except for share and per share data, unless otherwise stated)
1. Organization:
Verisk Analytics, Inc. and its consolidated subsidiaries (“Verisk” or the “Company”) enable risk-bearing businessesis a data analytics provider serving customers in insurance, energy and specialized markets, and financial services. Using various technologies to better understandcollect and manage their risks. The Company provides its customers proprietaryanalyze billions of records, Verisk draws on numerous data assets and domain expertise to provide first-to-market innovations that combined with analytic methods, create embedded decision support solutions. The Company is one of the largest aggregators and providers of data pertaining to property and casualty (“P&C”) insurance risks in the United States of America (“U.S.”). The Companyare integrated into customer workflows. Verisk offers predictive analytics and decision support solutions to customers in rating, underwriting, claims, catastrophe and weather risk, global risk analytics, natural resources intelligence, economic forecasting, and many other fields. Around the world, Verisk helps customers protect people, property, and financial assets.
Verisk was established to serve as the parent holding company of Insurance Services Office, Inc. (“ISO”) upon completion of the initial public offering ("IPO"(“IPO”), which occurred on October 9, 2009. ISO was formed in 1971 as an advisory and rating organization for the property and casualty ("P&C&C") insurance industry to provide statistical and actuarial services, to develop insurance programs and to assist insurance companies in meeting state regulatory requirements. For overOver the past decade, the Company has broadened its data assets, entered new markets, placed a greater emphasis on analytics, and pursued strategic acquisitions. Verisk trades under the ticker symbol “VRSK” on the NASDAQNasdaq Global Select Market.
2. Basis of Presentation and Summary of Significant Accounting Policies:
The accompanying unaudited condensed consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the U.S. (“U.S. GAAP”). The preparation of financial statements in conformity with these accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include acquisition purchase price allocations, the fair value of goodwill, the realization of deferred tax assets and liabilities, acquisition related liabilities, fair value of stock basedstock-based compensation for stock options granted, and assets and liabilities for pension and postretirement benefits. Actual results may ultimately differ from those estimates.
The condensed consolidated financial statements as of September 30, 20172018 and for the three and nine months ended September 30, 20172018 and 2016,2017, in the opinion of management, include all adjustments, consisting of normal recurring items, to present fairly the Company’s financial position, results of operations and cash flows. The operating results for the three and nine months ended September 30, 20172018 are not necessarily indicative of the results to be expected for the full year. TheOther than adopting Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (“Topic 606”) and ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU No. 2016-01”) as of January 1, 2018, the condensed consolidated financial statements and related notes as of and for the three and nine months ended September 30, 20172018 have been prepared on the same basis as and should be read in conjunction with the annual report on Form 10-K for the year ended December 31, 2016.2017. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules of the Securities and Exchange Commission (“SEC”). The Company believes the disclosures made are adequate to keep the information presented from being misleading.

Effective the first quarter of 2018, the operating segments of the Company are Insurance, Energy and Specialized Markets, and Financial Services. Previously, its operating segments were Decision Analytics and Risk Assessment. (See Note 13).
(a) Revenue Recognition
The following describes the Company’s primary types of revenues and the applicable revenue recognition policies. The Company recognizes revenues through agreements (generally one to five years) for hosted subscriptions, advisory/consulting services, and on a transactional basis. Each of our reportable segments, Insurance, Energy and Specialized Markets, and Financial Services has a portion of its revenue from more than one of these revenue types. The Company’s revenues are primarily derived from the sales of services and revenue is recognized when control of the promised services is transferred to the customers, in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those services. Fees for services provided by the Company are nonrefundable. Revenue is recognized net of applicable sales tax withholdings.

Hosted Subscriptions

The Company offers two forms of hosted subscriptions. The first and most prevalent form of hosted subscription is where customers access content only through the online portal (the "Hosted Subscription"). The Company grants a license to the customer to enter the online portal. The license is a contractual mechanism that allows the customer to access the online portal for a defined period of time. As the license alone does not provide utility to the customer, the customer has no contractual right to take possession of the online portal at any time, and the customer cannot engage another party to host the online portal and related content, it is not considered a functional license under ASC 606. The Company's promise to the customer is to provide continuous access to the online portal and to update the content throughout the subscription period. Hosted Subscription is a single performance obligation that represents a series of distinct services (daily access to the online portal and related content) that are substantially the same and that have the same pattern of transfer to the customer. The Company recognizes revenue for Hosted Subscriptions ratably over the subscription period on a straight-line basis as services are performed and continuous access to information in the online portal is provided over the entire term of the agreements.

The second form of hosted subscription is where customers have access to the Company's online portals combined with software content that is delivered via disk drive/download to the customer (“Hosted Subscription with Disk Drive/Download”) and is offered only on a limited basis. For this form of hosted subscription, the Company also grants the customer a license to enter the online portal and access the software content as needed and acts as the same contractual mechanism as described for Hosted Subscriptions. The Hosted Subscription with Disk Drive/Download works in such a manner that the customer gains significant benefit, functionality and overall utility only when the online portal and the software content are used together. The disk drive/download contains the models and the online portal contains the most up to date data and research which is updated throughout the subscription period. The models within the disk drive/download depend on the data and research contained within the online portal. The data and research within the online portal is only useful when the customer can utilize it within the models (e.g., queries, projections, etc.) so that they may use the most current information and alerts to forecast potential future losses. The software content is only sold together with the online portal to provide a highly interdependent and interrelated promise and therefore represents a single performance obligation. As the customer has no contractual right to take possession of the online portal at any time, and the customer cannot engage another party to host the online portal and related software content, it is not considered a functional license under ASC 606. The Company's promise to the customer is to deliver the disk drive/download, to provide continuous access to the online portal, and to update the software content throughout the subscription period. The Company recognizes revenue for Hosted Subscriptions with Disk Drive/Download ratably over the subscription period on a straight-line basis as services are performed and continuous access to information is provided over the entire term of the agreements.

Subscriptions are generally paid in advance of rendering services either quarterly or annually upon commencement of the subscription period, which is usually for one year and in most instances automatically renewed each year.

            Advisory/Consulting

The Company provides certain discrete project based advisory/consulting services, which are recognized over time by measuring the progress toward complete satisfaction of the performance obligation, based on the input method of consulting hours worked; this aligns with the results achieved and value transferred to the customer. The hours consumed are most reflective of the measure of progress towards satisfying the performance obligation, as the resources hours worked directly tie to the progress of the services to be provided. In general, they are billed over the course of the project.

Transactional Basis

Certain solutions are also paid for by customers on a transactional basis. The Company recognizes these revenues as the solutions are delivered or services performed at point in time. In general, the customers are billed monthly at the end of each month.

Practical Expedient and Exemption

The Companygenerally recognizes revenues, provided that all other revenue recognition criteria are met, and related costs when incurred in accordance with Topic 606, because the period of recognition would have been one year or less. These costs are recorded within “Cost of revenues” and “Selling, general and administrative” expenses in the condensed consolidated statements of operations.
Accounts Receivables and Allowance for Doubtful Accounts

Accounts receivables are generally recorded at the invoiced amount. The allowance for doubtful accounts is estimated based on an analysis of the aging of the accounts receivable, historical write-offs, customer payment patterns, individual customer credit worthiness, current economic trends, and/or establishment of specific reserves for customers in adverse financial condition. The Company assesses the adequacy of the allowance for doubtful accounts on a quarterly basis.
Deferred Commissions
The incremental costs of obtaining a contract with a customer, which primarily consist of sales commissions, are deferred and amortized over a useful life of 5 years that is consistent with the transfer to the customer the services to which the asset relates. The Company classifies deferred commissions as current or noncurrent based on the timing of expense recognition. The current and noncurrent portions of deferred commissions are included in prepaid expenses and other assets, respectively, in the condensed consolidated balance sheets as of September 30, 2018. Amortization expense related to deferred commissions is computed on a straight-line basis over its estimated useful lives and included in the condensed consolidated statements of operations.
Recent Accounting Pronouncements
In May 2014,February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09,2016-02, Leases ("ASU No. 2016-02"). This guidance amends the existing accounting considerations and treatments for leases through the creation of Topic 842, Leases, to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet and the disclosure of key information about lease arrangements. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from such leases.
In July 2018, FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, ("ASU No. 2018-10") to further clarify, correct and consolidate various areas previously discussed in ASU 2016-02. FASB also issued ASU No. 2018-11, Leases: Targeted Improvements ("ASU 2018-11") to provide entities another option for transition and lessors with a practical expedient. The transition option allows entities to not apply ASU No. 2016-02 in comparative periods in the financial statements in the year of adoption. The practical expedient offers lessors an option to not separate non-lease components from the associated lease components when certain criteria are met.
The Company established a corporate implementation team, which engages with cross-functional representatives from all of its businesses. The Company is utilizing a bottom-up approach to analyze the impact of the standard on its lease contract portfolio by reviewing current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to lease arrangements. In addition, the Company is in the process of identifying and/or implementing the appropriate changes to its business processes, systems and controls to support recognition and disclosure under the new standard.
    The amendments in ASU No. 2016-02, ASU No. 2018-10 and ASU No. 2018-11 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and allow for modified retrospective adoption with early adoption permitted. The Company has decided not to early adopt the amendments and will adopt on January 1, 2019. The Company is also assessing the impact associated with the adoption of ASU No. 2016-02, ASU No. 2018-10 and ASU No. 2018-11 on the condensed consolidated financial statements, which is expected to be material based upon review of the future contractual obligations.
In June 2018, FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting ("ASU No. 2018-07") intended to reduce cost and complexity and to improve financial reporting for share-based payments issued to nonemployees. This ASU expands the scope of Topic 718, Compensation - Stock Compensation ("Topic 718"), to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted. The Company has decided not to early adopt the amendments. The adoption of ASU No. 2018-07 is not expected to have a material impact on the Company's condensed consolidated financial statements.
In August 2018, FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement ("ASU No. 2018-13"), which eliminates, adds and modifies certain fair value measurement disclosure requirements of Accounting Standards Codification 820, Fair Value Measurement ("ASC 820"). The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company has decided not to early adopt the amendments. The adoption of ASU No. 2018-13 is not expected to have a material impact on the Company's condensed consolidated financial statements.

In August 2018, FASB issued ASU No. 2018-14, Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plan ("ASU 2018-14"), which removes, adds and clarifies certain disclosure requirements for employers who sponsor defined benefit pension and other postretirement plans. The amendments in this ASU are effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Company is evaluating the impact of ASU 2018-14, but does not expect to have a material impact on the Company's condensed consolidated financial statements.
In August 2018, FASB issued ASU No. 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU No. 2018-15"). Under the amendments of this guidance, customers will apply the same criteria for capitalizing implementation costs as they would for an arrangement that has a software license. The guidance also prescribes the balance sheet, income statement, and cash flow classification of the capitalized implementation costs and related amortization expense, and requires additional quantitative and qualitative disclosures. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company will evaluate the impact of ASU No. 2018-15 for future implementation costs incurred subsequent to the effective date.
3. Revenues:
In May 2014, the FASB issued Topic 606, which replaces numerous requirements under Topic 605, Revenue from Contracts with CustomersRecognition (“("Topic 606”605"). Topic 606 replaces numerous requirements, in U.S. GAAP, including industry-specific requirements, and provides companies with a single revenue recognition model for recognizing revenue from contracts with customers. The core principle of Topic 606the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Revenue is recognized in a five-step model: 1) identify the contract with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations in the contract; and 5) recognize revenue when or as the company satisfies a performance obligation. The two permitted transition methods under Topic 606the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. In July 2015,Effective January 1, 2018, the FASB approved the deferral of Topic 606's effective date by one year. Topic 606 is effective for annual reporting periods beginning after December 15, 2017. The FASB permits companies to adopt Topic 606 early, but not before the original effective date of the annual reporting periods beginning after December 15, 2016.

The Company established a corporate implementation team, which engages with cross-functional representatives from all of its business verticals. The Company utilized a bottom-up approach, with the assistance of third party specialists, to analyze the impact of the standard on the contract portfolio by reviewing current accounting policies and practices to identify potential differences that would result from applyingadopted the requirements of Topic 606 to revenue contracts. In addition, the

Company identified and is in the process of implementing appropriate changes to its business processes, systems, and controls to support recognition and disclosure under Topic 606.

The Company is currently planning to adopt Topic 606 using the modified retrospective approachmethod. The results of operations for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and iscontinue to be reported in accordance with the historic accounting under Topic 605. The accounting policies related to Topic 605 were presented in the processForm 10-K for the year ended December 31, 2017, for which the Company recognized revenue when the following four criteria were met: persuasive evidence of evaluatingan arrangement existed, delivery had occurred or services had been rendered, fees and/or price was fixed or determinable, and collectability was reasonably assured.
The following table shows cumulative effect of the changes made to the January 1, 2018 condensed consolidated balance sheet for the adoption of Topic 606 related to contracts that were entered into prior to and remained in progress subsequent to the adoption:

December 31, 2017
Adjustments due to Topic 606
January 1, 2018
Accounts receivable$345.5
 $3.0
(1) 
 $348.5
Prepaid expenses 
$38.1

$14.9
(2) 
 $53.0
Other assets$214.5
 $27.0
(2) 
 $241.5
Deferred revenues$384.7

$(1.5)  $383.2
Deferred income tax liabilities$337.8

$11.2
  $349.0
Retained earnings$3,308.0

$35.2
 
$3,343.2
_______________
(1)Relates to unbilled receivables
(2)Relates to current and non-current deferred commissions, respectively

In accordance with Topic 606, the disclosure of the impact of adopting Topic 606adoption on itsthe unaudited condensed consolidated financial statements. The Company’s revenue streams primarily consiststatement of subscription services provided through a hosted environment or by delivering term based softwareoperations and the condensed consolidated balance sheet for and as well as other services including consulting and transactional solutions. Based on a preliminary assessment, the analysis of the contract portfoliothree and nine months ended September 30, 2018 are as follows:
 Three months ended September 30, 2018 under Topic 605 Adjustments due to Topic 606 Three months ended September 30, 2018 under Topic 606
Revenues$598.2

$0.5

$598.7
Selling, general and administrative (3)
$96.8

$(1.1)
$95.7
Provision for income taxes$(26.4)
$(0.4)
$(26.8)
Net income$164.8

$1.2

$166.0
 Nine months ended September 30, 2018 under Topic 605 Adjustments due to Topic 606 Nine months ended September 30, 2018 under Topic 606
Revenues$1,780.3
 $0.9
 $1,781.2
Selling, general and administrative (3)
$285.0
 $(4.0) $281.0
Provision for income taxes$(86.4) $(1.2) $(87.6)
Net income$448.8
 $3.7
 $452.5
_______________
(3)Includes deferred commission amortization under Topic 606 results in the revenue
 As of September 30, 2018 under Topic 605 Adjustments due to Topic 606 As of September 30, 2018 under Topic 606
Accounts receivable$319.5
 $4.7
 $324.2
Prepaid expenses 
$43.1

$16.3

$59.4
Other assets$99.7

$30.4

$130.1
Accounts payable and accrued liabilities$242.9
 $0.8
 $243.7
Deferred revenues$433.9
 $(0.7) $433.2
Deferred income tax liabilities$329.2

$12.4

$341.6
Retained earnings$3,757.5

$38.9

$3,796.4
Disaggregated revenues by type of service and by country are provided below for the majoritythree and nine months ended September 30, 2018 and 2017. No individual country outside of the U.S. accounted for 10.0% or more of the Company's customer contracts being recognized over time, asconsolidated revenues for the Company offers most of its solutions through a series of services primarily in a hosted environment, which is consistent with thethree and nine months ended September 30, 2018 or 2017.

Three Months Ended September 30, Nine Months Ended September 30,
 2018 2017 2018 2017
Insurance: 

 
      
Underwriting & rating$285.1
 $261.8
 $854.6
 $777.0
Claims 142.6
  134.2
  415.1
  368.3
Total Insurance 427.7
  396.0
  1,269.7
  1,145.3
Energy and Specialized Markets 127.7

 111.4
  383.1
  328.0
Financial Services 43.3

 41.7
  128.4
  101.6
Total revenues$598.7

$549.1
 $1,781.2
 $1,574.9


Three Months Ended September 30, Nine Months Ended September 30,

2018
2017 2018 2017
Revenues: 

 
      
U.S.$464.0

$435.1
 $1,373.9
 $1,240.1
U.K. 36.6

 27.8
  107.6
  77.6
Other countries 98.1

 86.2
  299.7
  257.2
Total revenues$598.7

$549.1
 $1,781.2
 $1,574.9
The Company's current revenue recognition model. For the majority of its contracts, there is continuous transfer of control to the customer and the number ofremaining performance obligations under Topic 606 is consistentrepresent future revenues not yet recorded for services that have not yet been performed. The Company’s most significant remaining performance obligations relate to providing customers with those identified under the existing standard. The Company is also closely reviewing its licensing revenue streams to determine whether the nature of a promise in granting a license is to provide a right to access the Company’s intellectual property, which is satisfied over time and for which revenue is recognized over time, or to provide a right to use and update the Company’s intellectual property, whichonline content over the remaining contract term. Revenues expected to be recognized in the future related to performance obligations, included within our deferred revenue and other liabilities, that are unsatisfied at September 30, 2018 are $435.5 million. Our disclosure of the timing for satisfying the performance obligation is satisfied at a point inbased on the requirements of contracts with customers. However, from time and for which revenue is recognized at a point in time.

An identified impact of adopting Topic 606 relates to the deferral of commissions on revenuetime, these contracts which are currently expensed as incurred but under Topic 606 the majority of such commissions will likely be capitalized and amortized over a period of time. The Company expects that a major portion of its commission expenses for sales employees will be capitalized and willmay be subject to modifications, impacting the timing of satisfying the performance obligations. These performance obligations, which are expected to be satisfied within one year and greater than one year, comprised 98.0% and 2.0% of the balance at September 30, 2018, respectively.
4. Contract Assets and Contract Liabilities
Contract assets are defined as an amortization periodentity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of uptime. As of September 30, 2018 and January 1, 2018, the Company had no contract assets. Contract liabilities are defined as an entity's obligation to five years.transfer goods or services to a customer for which the entity has received consideration (an amount of consideration is due) from the customer. As of September 30, 2018 and January 1, 2018, the Company had contract liabilities of $435.5 million and $386.7 million, respectively. The Company's commission expense is about 1.2% and 1.0%$48.8 million increase in contract liabilities from January 1, 2018 to September 30, 2018 was primarily due to billings of its total expenses, for$484.5 million that were paid in advance, partially offset by $435.7 million of revenue recognized in the nine months ended September 30, 20172018. Contract liabilities are included in "Deferred revenues" and for the year ended December 31, 2016, respectively.

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU No. 2016-09”). The objective of this update is to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company adopted the guidance prospectively for the income statement impact of income taxes and has retrospectively applied the guidance to the condensed consolidated statements of cash flows for the impact of excess tax benefits on January 1, 2017 in accordance with ASU No. 2016-09. The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact to any of the periods presented"Other liabilities" in the condensed consolidated statementsbalance sheet as of cash flows, since such cash flows have historically been presented in financing activities. The treatment of forfeitures has not changed as the Company is electing to continue the current process of estimating the number of forfeitures. Accordingly, excess tax benefits from exercised stock options in 2017 were recorded as income tax benefit in the condensed consolidated statements of operations and presented as an operating activity on the condensed consolidated statements of cash flows for the nine months ended September 30, 2017. There was no cumulative-effect adjustment required to retained earnings under the prospective method as of the beginning of the year because all tax benefits had been previously recognized when the tax deductions related to stock compensation were utilized to reduce tax payable. The Company did not record any deferred tax assets or tax liabilities as the result of the adoption of ASU 2016-09.2018 and January 1, 2018.

In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting ("ASU 2017-09"), that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the guidance within this update, a company will not apply modification accounting to a share-based payment award if all of the following are the same immediately before and after the change:
• The award’s fair value (or calculated value or intrinsic value, if those measurement methods are used)
• The award’s vesting conditions
• The award’s classification as an equity or liability instrument.

ASU No. 2017-09 is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments in this update should be applied prospectively to an award modified on or after the effective date. The Company will evaluate the impact of ASU No. 2017-09 for future award changes subsequent to the effective date.

3.5. Fair Value Measurements:
Certain assets and liabilities of the Company are reported at fair value in the accompanying condensed consolidated balance sheets. To increase consistency and comparability of assets and liabilities recorded at fair value, ASC 820-10, Fair Value Measurements (“ASC 820-10”), established a three-level fair value hierarchy to prioritize the inputs to valuation techniques used to measure fair value. ASC 820-10 requires disclosures detailing the extent to which companies measure assets and liabilities at fair value, the methods and assumptions used to measure fair value and the effect of fair value measurements on earnings. In accordance with ASC 820-10, the Company applied the following fair value hierarchy:
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 are internally-developed, and considers
   risk premiums that market participants would require.
The fair values of cash and cash equivalents, accounts receivable, securities accounted for under ASC 323-10-25, accounts payable and accrued liabilities, and short-term debt approximate their carrying amounts because of the short-term nature of these instruments.

The following table summarizes fair value measurements by level for cash equivalents and registered investment companies that were measured at fair value on a recurring basis:
 
Quoted Prices
in Active Markets
for Identical
Assets (Level 1)
September 30, 2017  
Registered investment companies (1)$3.7
December 31, 2016  
Registered investment companies (1)$3.4
______________________
 
Quoted Prices
in Active Markets
for Identical
Assets (Level 1)
September 30, 2018  
Registered investment companies (1)
$4.0
December 31, 2017  
Registered investment companies (1)
$3.8
(1) Registered investment companies are classified as available-for-sale securities and are valued using quoted prices in active markets multiplied by the number of shares owned._______________
(1)
Registered investment companies are classified as available-for-sale securities and are valued using quoted prices in active markets multiplied by the number of shares owned.
The Company has elected not elected to carry its subordinated promissory note receivable and long-term debt at fair value. The subordinated promissory note had a face value of $100.0 million, an interest rate of 9.0% that was paid-in kind and an eight year maturity with a prepayment option without penalty. As of December 31, 2017, the carrying value of the subordinated promissory note receivable represents amortized cost and has beenwas included in "Other assets"“Other assets” in the accompanying condensed consolidated balance sheets. On August 27, 2018, the debtor chose to exercise their prepayment option to settle the subordinated promissory note receivable in full. As a result of the settlement of the note receivable, the Company recorded a gain of $12.3 million during the three and nine months ended September 30, 2018, which was included under "Investment income and others , net" in the accompanying condensed consolidated statements of operations. The carrying value of the long-term debt represents amortized cost less unamortized discount and debt issuance costs. The Company assesses the fair value of these financial instruments based on an estimate of interest rates available to the Company for financial instruments with similar features, the Company’s current credit rating and spreads applicable to the Company. The following table summarizes the carrying value and estimated fair value of these financial instruments as of September 30, 20172018 and December 31, 2016,2017, respectively:
   2018 2017
 Fair Value Hierarchy 
Carrying
Value
 
Estimated
Fair Value
 
Carrying
Value
 
Estimated
Fair Value
Financial instruments not carried at fair value:             
Subordinated promissory note receivableLevel 2 $—
 $—
 $95.3
 $83.3
Long-term debt excluding capitalized
leases and credit facility		Level 2 $2,283.1
 $2,325.9
 $2,280.6
 $2,439.8
   2017 2016
 Fair Value Hierarchy 
Carrying
Value
 
Estimated
Fair Value
 
Carrying
Value
 
Estimated
Fair Value
Financial instruments not carried at fair value:             
Subordinated promissory note receivableLevel 2 $94.8
 $84.9
 $84.1
 $76.8
Long-term debt excluding capitalized
leases		Level 2 $2,279.8
 $2,456.7
 $2,277.3
 $2,402.6
The Company received a 10.0% non-participating interest in VCVH Holdings LLC in 2016 with the sale of the Company's healthcare business.  As of September 30, 2018, the balance of this investment was $8.4 million and accounted for as a cost based investment under ASC 323-10-25, The Equity Method of Accounting for Investments in Common Stock ("ASC 323-10-25"), because the interest is currently non-participating, and the Company does not have the ability to exercise significant influence over the investees’ operating and financial policies. As of September 30, 2018, the Company also had an investment in a limited partnership of $7.0 million accounted for in accordance with ASC 323-10-25 as an equity method investment.
4.6. Acquisitions:
20172018 Acquisitions
On January 21, 2017,June 20, 2018, the Company acquired 100 percent of the stock of AriumValidus-IVC Limited ("Arium"Validus"), a provider of claims management solutions and developer of the subrogation portal in the UK, verifyTM, for a net cash purchase price of $1.9 million. Arium specializes in liability risk modeling and decision support. Arium$46.1 million, of which $5.9 million represents contingent escrows. Validus has become part of the insurance verticalclaims category within the Decision Analytics segment,Company's Insurance segment. The integration of Validus' verifyTM platform with the Company's global claims analytic services allows insurers to take advantage of enhanced analytic and enablestechnology tools to help improve and automate the claims settlement process. The preliminary purchase price allocation of the acquisition is presented in the table below.
On February 21, 2018, the Company acquired 100 percent of the stock of Business Insight Limited (“Business Insight”), a provider of predictive analytics for insurers in the U.K. and Ireland, for a net cash purchase price of $17.1 million, including a holdback of $0.9 million. Business Insight has become part of the underwriting and ratings category within the Insurance segment. Business Insight offers a comprehensive set of peril models to provide its customers with additionalsupport underwriting and rating for the

modeling solutionscommercial property and analytics for the casualtyhomeowners insurance market. The preliminary purchase price allocation of the acquisition is presented as part of "Others" in the table below.
On February 16, 2017,January 5, 2018, the Company acquired 100 percent of the stock of Healix International HoldingsMarketview Limited (“Healix”("Marketview"), a software analytics provider in automated medical risk assessment for the travel insurance industry, for a net cash purchase price of $52.4$4.0 million, of which $7.5$0.4 million represents indemnity escrows. HealixMarketview is withina provider of consumer spending analysis and insights across the Company's Risk Assessmentretail, hospitality, property, and government sectors in New Zealand. Marketview has become part of the Financial Services segment. The acquisition further expandshelps expand the Company's offerings forsolutions related to consumer spending analytics across the global insurance industry, providing solutions that are embeddedAustralasia and Oceania regions by combining its domain expertise and proprietary data assets with customer workflows and can help underwrite medical coverage for travelers with greater speed, accuracy, and efficiency. The preliminary purchase price allocationthose of the acquisition is presented in the table below.
On February 24, 2017, the Company acquired 100 percent of the stock of Emergent Network Intelligence Limited (“ENI”), a developer in insurance claims efficiency and fraud detection solutions based in the United Kingdom ("U.K."), for a net cash purchase price of $6.1 million, of which $0.5 million represents indemnity escrows. With the acquisition of ENI within the Decision Analytics segment, the Company's customers in the U.K. can take advantage of technologically advanced tools that allow them to improve motor vehicle claims workflow and reduce their costs and exposure to fraud.Marketview. The preliminary purchase price allocation of the acquisition is presented as part of "Others" in the table below.
On March 31, 2017, the Company acquired 100 percent of the stock of Fintellix Solutions Private Limited ("Fintellix"), a Bangalore-based data solutions company specializing in the development of data management platforms and regulatory reporting solutions for financial institutions, for a net cash purchase price of $16.9 million, of which $1.8 million represents indemnity escrows. Fintellix has become part of the financial services vertical within the Decision Analytics segment. The acquisition of Fintellix positions the Company to expand the data hosting and regulatory platforms and better address the increasingly complex needs of its customers. The preliminary purchase price allocation of the acquisition is presented in the table below.
On May 19, 2017, the Company acquired 100 percent of the stock of MAKE Consulting A/S ("MAKE"), a research and advisory business specializing in wind power, for a net cash purchase price of $16.9 million, of which $2.7 million represents indemnity escrows. MAKE has become part of the energy and specialized markets vertical within the Decision Analytics segment. MAKE enhances the Company's offering to existing customers and forms a market analysis and advisory consortium on renewables and the transformation of the global electricity industry. With detailed coverage of power market fundamentals, solar, wind, energy storage, and grid edge technologies, the energy and specialized markets vertical is positioned to bring customers market analysis and insight on the evolution of the energy landscape and provide a comprehensive platform for the future. The preliminary purchase price allocation of the acquisition is presented as part of "Others" in the table below.
During the three months ended June 30, 2017, the Company acquired the net assets of Blue Skies Consulting, LLC, ControlCam, LLC, Krawietz Aerial Photography, LLC, Richard Crouse & Associates, Inc., Rocky Mountain Aerial Surveys, Inc., Skyview Aerial Photo, Inc., and Valley Air Photos, LLC (collectively referred to as "Aerial Imagery acquisitions"), a group of similar but unrelated companies, which gives the Company broad geographic coverage of the United States for aerial image capture purposes. The Aerial Imagery acquisitions provide multi-spectral aerial photographic services with expertise in offering digital photogrammetric and remote sensing data for mapping and surveying applications. The purchase consideration consists of an aggregate net cash purchase price of $28.1 million and a holdback of $3.1 million. Within the Company's Decision Analytics segment, the Aerial Imagery acquisitions enable the Company to enhance and maintain its database of images with the required frequency, resolution, and coverage across the U.S. to support the Company's objective as the leading provider of loss quantification data, analytics, and decision-support solutions to the insurance industry, the photogrammetry, surveying and mapping and other related markets. The preliminary purchase price allocation of the acquisition is presented as part of "Others" in the table below.
On August 3, 2017, the Company acquired 100 percent of the stock of G2 Web Services ("G2"), a provider of merchant risk intelligence solutions for acquirers, commercial banks, and other payment system providers, for a net cash purchase price of $112.0 million, of which $5.6 million represents indemnity escrows. G2 has become part of the financial services vertical within the Decision Analytics segment. The acquisition of G2 positions the Company to further enhance its offerings to clients and partners, by providing solutions that help fight fraud, transaction laundering, and reputational risk within the global payments and e-commerce ecosystem. The preliminary purchase price allocation of the acquisition is presented in the table below.
On August 23, 2017, the Company acquired 100 percent of the stock of Sequel Business Solutions Ltd. ("Sequel"), a provider of commercial and specialty insurance and reinsurance software based in the U.K., for a net cash purchase price of $320.3 million. Sequel has become part of the insurance vertical within the Decision Analytics segment. The acquisition of Sequel further enhances the Company's comprehensive offerings to the global complex commercial and specialty insurance

industry, enabling integrated global data analytics through a specialized end-to-end workflow solution. The preliminary purchase price allocation of the acquisition is presented in the table below.
On August 31, 2017, the Company acquired 100 percent of the stock of Lundquist Consulting, Inc. ("LCI"), a provider of risk insight, prediction, and management solutions for banks and creditors, for a net cash purchase price of $150.6 million, of which $12.8 million represents indemnity escrows. LCI has become part of the financial services vertical within the Decision Analytics segment. This acquisition brings together the Company's propriety data assets and LCI's proprietary time-series data, including consumer and commercial bankruptcies, consumer behavior, and legal and technical terms associated with debtor settlements. The preliminary purchase price allocation of the acquisition is presented in the table below.
The preliminary purchase price allocations of the 20172018 acquisitions resulted in the following:

Healix
Fintellix G2 Sequel LCI Others TotalValidus Others Total
Cash and cash equivalents$0.9

$1.1

$1.0
 $16.0
 $1.1
 $2.0
 $22.1
$0.9
 $2.2
 $3.1
Accounts receivable
0.9


2.1

 3.4
 9.5
 3.1
 
2.9
 
21.9
 1.5
 
1.1
 
2.6
Current assets
—

0.9

 3.6
 1.4
 —
 
0.7
 
6.6
 6.2
 
0.3
 
6.5
Fixed assets
—

0.1

 6.4
 7.5
 5.7
 
11.9
 
31.6
 0.4
 
0.2
 
0.6
Intangible assets
21.1

6.6

 41.0
 107.3
 55.7
 
12.2
 
243.9
 20.9
 
8.3
 
29.2
Goodwill
35.2

11.3

 74.2
 226.0
 100.7
 
33.5
 
480.9
 25.0
 
15.8
 
40.8
Other assets
7.5

2.0

 2.8
 —
 12.8
 
3.3
 
28.4
 —
 
0.4
 
0.4
Total assets acquired
65.6


24.1

 132.4
  367.7
  179.1
 
66.5
 
835.4
 54.9
 
28.3
 
83.2
Current liabilities
1.1

1.3

 3.2
 9.9
 1.1
 
1.4
 
18.0
 4.1
 
1.0
 
5.1
Deferred revenues
0.1

0.8

 0.4
 2.4
 0.3
 
1.7
 
5.7
 0.1
 
1.1
 
1.2
Deferred income taxes, net
3.6

2.2

 13.0
 19.1
 13.2
 
2.1
 
53.2
 3.5
 
1.6
 
5.1
Other liabilities
7.5

1.8

 2.8
 —
 12.8
 
6.3
 
31.2
 0.2
 
1.3
 
1.5
Total liabilities assumed
12.3


6.1

 19.4
  31.4
  27.4
 
11.5
 
108.1
 7.9
 
5.0
 
12.9
Net assets acquired
53.3


18.0

 113.0
 336.3
 151.7
 
55.0
 
727.3
 47.0
 
23.3
 
70.3
Cash acquired
(0.9)
(1.1)
 (1.0)  (16.0)  (1.1) 
(2.0) 
(22.1) (0.9) 
(2.2) 
(3.1)
Net cash purchase price$52.4

$16.9

$112.0
 $320.3
 $150.6
 $53.0
 $705.2
$46.1
 $21.1
 $67.2
The preliminary amounts assigned to intangible assets by type for the 20172018 acquisitions are summarized in the table below:


Weighted Average Useful Life
TotalWeighted Average Useful Life Total
Technology-related
7 years
$66.3
6 years $12.4
Marketing-related
8 years
15.3
7 years 1.7
Customer-related
10 years
110.0
10 years 15.1
Database-related
12 years

52.3
Total intangible assets
$243.9
 $29.2
The preliminary allocations of the purchase price for the 20162017 and 20172018 acquisitions with less than a year ownership are subject to revisions as additional information is obtained about the facts and circumstances that existed as of each acquisition date. The revisions may have a significant impact on the condensed consolidated financial statements. The allocations of the purchase price will be finalized once all information is obtained, but not to exceed one year from the acquisition date. The primary areas of the purchase price allocation that are not yet finalized relate to operating leases, income and non-income taxes, deferred revenues, the valuation of intangible assets acquired, and residual goodwill. The preliminary amounts assigned to intangible assets by type for these acquisitions were based upon the Company's valuation model and historical experiences with entities with similar business characteristics.
For the nine months ended September 30, 2017,2018, the Company finalized the purchase accounting for the acquisitions of RII, Greentech MediaArium Limited ("Arium"), Healix International Holdings Limited ("Healix"), Emergent Network Intelligence Limited ("ENI"), Fintellix Solutions Private Limited ("Fintellix"), MAKE Consulting A/S ("MAKE"), and Quest Offshorethe net assets of Blue Skies Consulting, LLC, ControlCam, LLC, Krawietz Aerial Photography, LLC, Richard Crouse & Associates, Inc., Rocky Mountain Aerial Surveys, Inc., Skyview Aerial Photo, Inc., and Valley Air Photos, LLC (collectively referred to as "Aerial Imagery

acquisitions"), G2 Web Services, LLC ("G2"), Sequel Business Solutions Ltd. ("Sequel") and Lundquist Consulting, Inc. ("LCI") during the measurement periods in accordance with ASC 805.805, Business Combinations. The impact of finalization of the purchase accounting associated with these acquisitions werewas not material to the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 20172018 and 2016.2017.

For the three and nine months ended September 30, 2018, the Company incurred transaction costs of $0 and $1.2 million, respectively, for the 2018 acquisitions. For the three and nine months ended September 30, 2017, the Company incurred transaction costs related to Arium, Healix, ENI, Fintellix, MAKE, Aerial Imagery acquisitions, G2, Sequel and LCI of $3.2 million and $5.9 million, respectively. For the three and nine months ended September 30, 2016, the Company incurred transaction costs of $0.8 million and $1.0 million, respectively, related to the acquisitions of the RII, Greentech Media and Quest Offshore.2017 acquisitions. The transaction costs were included within "Selling, general and administrative" expenses in the accompanying condensed consolidated statements of operations. For the 20172018 acquisitions, the goodwill of $465.8$40.8 million associated with the stock purchases of Arium, Healix, ENI, Fintellix, MAKE, G2, SequelMarketview, Business Insight and LCIValidus is not deductible for tax purposes, with the exception of $19.9 million of goodwill attributable to G2.  The goodwill of $15.1 million associated with the Aerial Imagery asset acquisitions is deductible for tax purposes.  For the 2016 acquisitions, the goodwill of $34.9 million associated with the stock purchases of RII and Greentech Media is not deductible for tax purposes, whereas the goodwill of $6.2 million associated with the asset acquisition of Quest Offshore is deductible for tax purposes.
The 20172018 acquisitions were immaterial, both individually and in the aggregate, to the Company's condensed consolidated financial statements for the three and nine months ended September 30, 20172018 and 20162017, and therefore, supplemental information disclosure on an unaudited pro forma basis is not presented.

Acquisition Escrows

and Related Liabilities
Pursuant to the related acquisition agreements, the Company has funded various escrow accounts to satisfy pre-acquisition indemnity and tax claims arising subsequent to the acquisition date, as well as a portion of the contingent payments. At September 30, 20172018 and December 31, 2016,2017, the current portion of the escrows amounted to $19.9$33.1 million and $4.1$22.9 million, and the noncurrent portion of the escrows amounted to $22.1 million$0 and $6.3$26.3 million, respectively. The current and noncurrent portions of the escrows have been included in “Other current assets” and "Other assets" in the accompanying condensed consolidated balance sheets, respectively.
5. Discontinued Operations:

On June 1, 2016,The acquisitions of PowerAdvocate and Validus include acquisition related contingencies, for which the sellers of PowerAdvocate and Validus could receive additional payments by achieving the specific predetermined revenue and EBITDA earn-out targets for exceptional performance. As of each respective acquisition date, the Company sold 100 percentrecorded acquisition related liabilities and goodwill of $34.2 million associated with PowerAdvocate and $3.1 million associated with Validus. The Company believes that the stock of its healthcare business, Verisk Health ("Verisk Health"), in exchange for a purchase price that consisted of $714.6 million of cash consideration after a working capital adjustment of $5.4 million, a subordinated promissory note with a face value of $100.0 million and an eight year maturity (the "Note"), and other contingent consideration (collectively, the "Sale"). Results of operations for the healthcare business are reportedliabilities recorded as a discontinued operation for the nine months ended September 30, 2016.

The Note has a stated interest rate of 9.0% per annum, increasing to 11.0% per annum at the earlier of specified refinancings or acquisitions, or the fourth anniversary of the closing of the Sale. Interest shall accrue from the closing date and on each anniversary of the Sale until the Note is paid in full on the unpaid principal amount of the Note outstanding at the interest rate in effect (computed on the basis of a 360-day year of twelve 30-day months). On each anniversary of the Sale, accrued interest shall be paid in kind by adding the amount of such accrued interest to the outstanding principal amount of the Note. The issuer of the Note may, at its option at any time prior to the maturity date, prepay any, or all, of the principal amount of the Note, plus accrued but unpaid interest as of the elected prepayment date, without any premium or penalty. There is a mandatory prepayment of the Note as a result of (i) the proceeds of a specified dividend recapitalization received by the issuer, (ii) the consummation of a change of control of the issuer, or (iii) the sale, transfer or other disposition by the parent of the issuer of more than 10.0% of the capital stock of the issuer. As of September 30, 2017,2018 reflect the Company had a receivablebest estimate of $94.8acquisition contingent payments. The acquisition related liabilities of these acquisitions of $8.3 million outstanding under the Note. The carrying value of the Note represents amortized cost. The fair value of the Note is based on management estimates with the assistance of valuations performed by third party specialists, discounted cash flow analysis based on current market conditions and assumptions that the Note would be paid in full at maturity, including accrued interest, with no prepayment election. Refer to Note 3 Fair Value Measurements for further discussion.

The Company also received a 10.0% non-participating interest in the issuer's stock, the exercise value of which will be contingent on the parent of the issuer realizing a specified rate of return on its investment. As of September 30, 2017, the Company had an equity investment of $8.4$30.5 million related to such interest accounted for in accordance with ASC 323-10-25, The Equity Method of Accounting for Investments in Common Stock ("ASC 323-10-25"). The value of the equity investment hashave been included in “Accounts payable and accrued liabilities” and “Other assets”liabilities” in the accompanying condensed consolidated balance sheets.


The following table summarizes the results from the discontinued operation for the nine months ended September 30:
 Nine Months Ended September 30,
 2017
2016
Revenues from discontinued operations$—

$112.3
Expenses:     
Cost of revenues (exclusive of items shown separately below) —
  75.9
Selling, general and administrative —
  36.6
Depreciation and amortization of fixed assets —
  7.0
Amortization of intangible assets —
  5.9
Total expenses —
  125.4
Operating loss —
  (13.1)
Other income:     
Gain on sale —
  269.3
Investment income and others, net —
  0.3
Total other income —
  269.6
Income from discontinued operations before income taxes
—


256.5
Provision for income taxes (included tax on gain of $118.0)
—


(118.6)
Income from discontinued operations, net of tax$—

$137.9

Net cash provided by operating activities and net cash used in investing activities from the discontinued operation for the nine months endedsheets as of September 30, are presented below:
 2017
2016
Net cash provided by operating activities$—

$21.4
Net cash used in investing activities$—

$(10.6)

2018, respectively.
6.7. Goodwill and Intangible Assets:
The following is a summary of the change in goodwill from December 31, 20162017 through September 30, 2017,2018, both in total and as allocated to the Company’s operating segments:
 
Risk
Assessment
 
Decision
Analytics
 Total
Goodwill at December 31, 2016 (1)$71.3
 $2,506.8
 $2,578.1
Current year acquisitions 35.2
  445.7
  480.9
Purchase accounting reclassification (1.6)  (2.2)  (3.8)
Foreign currency translation 3.2
  130.4
  133.6
Goodwill at September 30, 2017 (1)$108.1
 $3,080.7
 $3,188.8
 Insurance Energy and Specialized Markets Financial Services Total
Goodwill, net at December 31, 2017 (1)
$749.5
 $2,149.6
 $469.6
 $3,368.7
Current period acquisitions 38.0
  —
  2.8
  40.8
Purchase accounting reclassification 5.1
  (10.1)  1.4
  (3.6)
Foreign currency translation (11.5)  (53.7)  (1.7)  (66.9)
Goodwill, net at September 30, 2018 (1)
$781.1
 $2,085.8
 $472.1
 $3,339.0
_____________________________________
(1)
These balances are net of accumulated impairment charges of $3.2 million that occurred prior to December 31, 2016.2017.
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. Goodwill impairment testing compares the carrying value of each reporting unit to its fair value. If the fair value of the reporting unit exceeds the carrying value of the net assets, including goodwill assigned to that reporting unit, goodwill is not impaired. If the carrying value of the reporting unit’s net assets including goodwill exceeds the fair value of the reporting unit, then the Company will determine the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then an impairment loss is recorded for the difference between the carrying amount and the implied fair value of goodwill. The Company completed the required annual impairment test as of June 30, 2017,2018, and

concluded that there was no impairment of goodwill.

There were no triggering events for the three months ended September 30, 2018 that would impact the results of the impairment test performed as of June 30, 2018.
The Company’s intangible assets and related accumulated amortization consisted of the following: 
Weighted
Average
Useful Life
 Cost 
Accumulated
Amortization
 Net
Weighted
Average
Useful Life
 Cost 
Accumulated
Amortization
 Net
September 30, 2017      
September 30, 2018      
Technology-based7 years $387.8
 $(215.9) $171.9
8 years $424.4
 $(247.6) $176.8
Marketing-related17 years 257.8
 (59.9) 197.9
16 years 258.2
 (74.3) 183.9
Contract-based6 years 5.0
 (5.0) —
6 years 5.0
 (5.0) —
Customer-related13 years 618.5
 (161.7) 456.8
14 years 720.4
 (212.0) 508.4
Database-related19 years 481.0
 (51.4) 429.6
19 years 459.9
 (74.6) 385.3
Total intangible assets $1,750.1
 $(493.9) $1,256.2
 $1,867.9
 $(613.5) $1,254.4
December 31, 2016      
December 31, 2017      
Technology-based7 years $310.9
 $(196.6) $114.3
8 years $421.0
 $(222.9) $198.1
Marketing-related17 years 227.5
 (47.5) 180.0
17 years 263.9
 (62.9) 201.0
Contract-based6 years 5.0
 (5.0) —
6 years 5.0
 (5.0) —
Customer-related14 years 483.1
 (128.5) 354.6
14 years 704.2
 (174.0) 530.2
Database-related20 years  393.9
  (32.0)  361.9
19 years  474.7
  (58.7)  416.0
Total intangible assets $1,420.4
 $(409.6) $1,010.8
 $1,868.8
 $(523.5) $1,345.3
Amortization expense related to intangible assets for the three months ended September 30, 2018 and 2017 and 2016 was $27.5$33.2 million and $22.7$27.5 million, respectively. Amortization expense related to intangible assets for the nine months ended September 30, 2018 and 2017 and 2016 was $73.6$98.5 million and $70.4$73.6 million, respectively. Estimated amortization expense for the remainder of 20172018 and the years through 20222023 and thereafter for intangible assets subject to amortization is as follows:
YearAmountAmount
2017$30.5
2018 121.8
$32.5
2019 120.8
 129.4
2020 118.2
 127.2
2021 108.3
 116.9
2022 and thereafter 756.6
2022 105.5
2023 and thereafter 742.9
$1,256.2
$1,254.4
7.8. Income Taxes:
The Company’s effective tax rate for the three and nine months ended September 30, 20172018 was 33.19%13.91% and 31.51%16.22%, respectively, compared to the effective tax rate for the three and nine months ended September 30, 20162017 of 26.00%33.19% and 30.29%31.51%. The effective tax rate for the three and nine months ended September 30, 20172018 is higherlower than the effective tax rate for the three and nine months ended September 30, 20162017 primarily due to reducedthe impact of tax reform lowering the U.S. tax rate from 35.0% to 21.0%, as well as the impact of greater tax benefits from equity compensation in the current period resulting from legislation enacted inversus the U.K., and mix of foreign income, partially offset by the tax rate benefit of adopting ASU No. 2016-09.prior period. The difference between statutory tax rates and the Company’s effective tax rate is primarily due to tax benefits attributable to income earned in foreign jurisdictions with tax rates lower than the U.S. rate,equity compensation, offset by additional state and local income taxes.

8.9. Debt:
The following table presents short-term and long-term debt by issuance as of September 30, 20172018 and December 31, 2016:2017: 
Issuance
Date
 
Maturity
Date
 2017 2016
Issuance
Date
 
Maturity
Date
 2018 2017
Short-term debt and current portion of long-term debt:        
Syndicated revolving credit facilityVarious Various $595.0
 $100.0
Various Various $285.0
 $715.0
Capital lease obligationsVarious Various  7.9
  6.8
Various Various 7.5
 9.4
4.875% senior notes, less unamortized discount
and debt issuance costs of $0.2 in 2018		12/8/2011 1/15/2019  249.8
  —
Short-term debt and current portion of long-term
debt		  602.9
  106.8
  542.3
  724.4
Long-term debt:        
Senior notes:        
4.000% senior notes, less unamortized discount
and debt issuance costs of $9.5 and $10.4,
respectively		5/15/2015
6/15/2025 890.5
 889.6
5.500% senior notes, less unamortized discount
and debt issuance costs of $4.9 and $5.0,
respectively		5/15/2015
6/15/2045 345.1
 345.0
4.125% senior notes, less unamortized discount
and debt issuance costs of $3.0 and $3.5,
respectively		9/12/2012 9/12/2022 347.0
 346.5
4.875% senior notes, less unamortized discount
and debt issuance costs of $0.8 and $1.4,
respectively		12/8/2011 1/15/2019 249.2
 248.6
5.800% senior notes, less unamortized discount
and debt issuance costs of $1.9 and $2.4,
respectively		4/6/2011
5/1/2021 448.1
 447.6
4.000% senior notes, less unamortized discount
and debt issuance costs of $8.2 and $9.1,
respectively		5/15/2015
6/15/2025 891.8
 890.9
5.500% senior notes, less unamortized discount
and debt issuance costs of $4.7 and $4.9,
respectively		5/15/2015
6/15/2045 345.3
 345.1
4.125% senior notes, less unamortized discount
and debt issuance costs of $2.4 and $2.9,
respectively		9/12/2012 9/12/2022 347.6
 347.1
4.875% senior notes, less unamortized discount
and debt issuance costs of $0.7 in 2017		12/8/2011 1/15/2019 —
 249.3
5.800% senior notes, less unamortized discount
and debt issuance costs of $1.4 and $1.8,
respectively		4/6/2011
5/1/2021 448.6
 448.2
Capital lease obligationsVarious Various 3.1
 7.1
Various Various 14.8
 7.6
Syndicated revolving credit facility debt issuance
costs		Various
Various  (4.2)  (4.2)Various
Various  (3.2)  (3.8)
Long-term debt  2,278.8
  2,280.2
  2,044.9
  2,284.4
Total debt $2,881.7
 $2,387.0
 $2,587.2
 $3,008.8
As of September 30, 20172018 and December 31, 2016,2017, the Company had senior notes with an aggregate principal amount of $2,300.0 million outstanding and was in compliance with their financial debt covenants.
As of September 30, 2017,2018, the Company had a borrowing capacity of $1,500.0 million under the committed senior unsecured Syndicated Revolving Credit Facility (the "Credit Facility") with Bank of America N.A., JP Morgan Chase, N.A., and a syndicate of banks. The Credit Facility may be used for general corporate purposes, including working capital needs and capital expenditures, acquisitions and the share repurchase program (the "Repurchase Program"). The Company was in compliance with all financial debt covenants under the Credit Facility as of September 30, 2017. As of2018. Subsequent to September 30, 2017 and December 31, 2016,2018, the Company had outstanding borrowings of $35.0 million and repayments of $25.0 million under the Credit Facility of $595.0 million and $100.0 million, respectively. On May 18, 2017, the Company entered into the third amendment to the Credit Facility, which, among other things, extended the maturity date one year to May 15, 2022.Facility.
9.10. Stockholders’ Equity:
The Company has 2,000,000,000 shares of authorized common stock. TheCompany's common shares have rights to any dividend declared by the board of directors (the "Board"), subject to any preferential or other rights of any outstanding preferred stock, and voting rights to elect all thirteentwelve members of the Board.
The Company has 80,000,000 shares of authorized preferred stock, par value $0.001 per share. The preferred shares have preferential rights over the common shares with respect to dividends and net distribution upon liquidation. The Company did not issue any preferred shares as of September 30, 2017.

2018.

Share Repurchase Program

Since the introduction of the Repurchase Program as a feature of the Company's capital management strategies inMay 2010, the Company has authorized repurchases of up to $2,800.0$3,300.0 million of its common stock andthrough its Repurchase Program, including an additional authorization of $500.0 million approved on May 16, 2018. The Company has repurchased shares with an aggregate value of $2,433.8$2,716.0 million. The Company repurchased 3,356,3602,574,123 shares of common stock with an aggregate value of $269.8$282.2 million during the nine months ended September 30, 2017.2018. As of September 30, 2017,2018, the Company had $366.2$584.0 million available to repurchase shares. Theshares through its Repurchase Program.
On June 15, 2018, the Company has no obligationentered into an Accelerated Share Repurchase ("ASR") agreement to repurchase shares of its common stock for an aggregate purchase price of $50.0 million. The ASR agreement is accounted for as an initial treasury stock transaction and a forward stock purchase agreement indexed to the Company's own common stock. The forward stock purchase agreement is classified as an equity instrument under this programASC 815-40, Contracts in Entity's Own Equity ("ASC 815-40") and intendswas deemed to use this authorizationhave a fair value of zero at the effective date. Upon payment of the aggregate purchase price on July 2, 2018, the Company received an initial delivery of 371,609 shares of its common stock. The aggregate purchase price was recorded as a meansreduction to stockholders' equity in the Company's condensed consolidated statements of offsetting dilution fromchanges in stockholders' equity for the issuancenine months ended September 30, 2018. Upon the final settlement of the ASR agreement in September 2018, the Company received an additional 61,188 shares underof the KSOP,Company's common stock. These 432,797 shares, which were repurchased at an average price of $115.53 per share, resulted in a reduction of outstanding shares used to calculate the Verisk 2013 Equity Incentive Plan (the “2013 Incentive Plan”weighted average common shares outstanding for basic and diluted earnings per share ("EPS"),.
On September 14, 2018, the Verisk 2009 Equity Incentive Plan (the “2009 Incentive Plan”), and the ISO 1996 Incentive Plan (the “1996 Incentive Plan”), while providing flexibilityCompany entered into an additional ASR agreement to repurchase additional shares if warranted. This authorization has no expiration date and may be increased, reduced, suspended, or terminatedof its common stock for an aggregate purchase price of $50.0 million. Upon payment of the aggregate purchase price on October 1, 2018, the Company received an initial delivery of 331,812 shares of its common stock at any time. Shares that are repurchased undera price of $120.55 per share, representing approximately $40.0 million of the Repurchase Program will beaggregate purchase price. The aggregate purchase price was recorded as a reduction to stockholders' equity, consisting of a $40.0 million increase in treasury stock and willa $10.0 million decrease in additional paid-in capital, in the Company's condensed consolidated statements of changes in stockholders' equity subsequent to September 30, 2018. Upon the final settlement of the ASR agreement in December 2018, the Company may be available for future issuance.

entitled to receive additional shares of its common stock or, under certain limited circumstances, be required to deliver shares to the counterparty.
Treasury Stock

As of September 30, 2017,2018, the Company’s treasury stock consisted of 379,486,284379,192,460 shares of common stock. During the nine months ended September 30, 2017,2018, the Company reissued 957,3422,505,771 shares of common stock from the treasury shares at a weighted average price of $8.07$8.62 per share.

Earnings Per Share (“EPS”)

Basic EPS is computed by dividing income from continuing operations, income from discontinued operations and net income respectively, by the weighted average number of common shares outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding, using the treasury stock method, if the dilutive potential common shares, including vested and nonvested stock options, nonvested restricted stock awards, nonvested restricted stock units, and nonvested restricteddeferred stock units, had been issued.

The following is a reconciliationpresentation of the numerators and denominators of the basic and diluted EPS computations for the three and nine months ended September 30, 20172018 and 2016:2017:
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 20162018 2017 2018 2017
Numerator used in basic and diluted EPS:                
Income from continuing operations$120.7
 $127.6
 $350.5
 $344.0
Income from discontinued operations (Note 5) —
  —
  —
  137.9
Net income$120.7
 $127.6
 $350.5
 $481.9
$166.0
 $120.7
 $452.5
 $350.5
Denominator:                
Weighted average number of common shares used
in basic EPS		 164,577,575
 168,874,129
 165,314,267
 168,541,399
 164,829,250
 164,577,575
 164,962,647
 165,314,267
Effect of dilutive shares:   
   
   
   
Potential common shares issuable from stock
options and stock awards		 3,379,483
  2,911,771
  3,493,138
  2,953,790
 3,371,516
  3,379,483
  3,652,188
  3,493,138
Weighted average number of common shares
and dilutive potential common shares used
in diluted EPS		 167,957,058
  171,785,900
  168,807,405
  171,495,189
 168,200,766
  167,957,058
  168,614,835
  168,807,405
The potential shares of common stock that were excluded from diluted EPS were 2,471,487956,014 and 1,239,4062,471,487 for the three months ended September 30, 2018 and 2017, and 2016,622,199 and 2,158,723 and 1,890,460 for the nine months ended September 30, 20172018 and 2016,2017, respectively, because the effect of including these potential shares was anti-dilutive.

Accumulated Other Comprehensive Losses
The following is a summary of accumulated other comprehensive losses as of September 30, 20172018 and December 31, 2016:2017:
2017
20162018
2017
Foreign currency translation adjustment$(356.5) $(561.4)$(433.0) $(334.4)
Unrealized holding gains on available-for-sale securities, net of tax 0.5
 0.3
 —
(1) 
 0.7
Pension and postretirement adjustment, net of tax (87.3)  (89.7) (76.6)  (78.6)
Accumulated other comprehensive losses$(443.3) $(650.8)$(509.6) $(412.3)

_______________
(1)
Includes an adjustment of $0.7 million to opening retained earnings related to adoption of ASU 2016-01 at January 1, 2018.
The before tax and after tax amounts of other comprehensive income for the three and nine months ended September 30, 20172018 and 20162017 are summarized below:

Before Tax
Tax (Expense) Benefit
After TaxBefore Tax
Tax (Expense) Benefit
After Tax
For the Three Months Ended September 30, 2018







Foreign currency translation adjustment$(35.7)
$—

$(35.7)
Pension and postretirement adjustment before reclassifications
1.9


(0.8)

1.1
Amortization of net actuarial loss and prior service benefit
reclassified from accumulated other comprehensive losses (1)

(0.9)

0.1


(0.8)
Pension and postretirement adjustment
1.0


(0.7)

0.3
Total other comprehensive loss$(34.7)
$(0.7)
$(35.4)
For the Three Months Ended September 30, 2017















Foreign currency translation adjustment$82.2

$—

$82.2
$82.2

$—

$82.2
Pension and postretirement adjustment before reclassifications
2.4


(0.7)

1.7

2.4


(0.7)

1.7
Amortization of net actuarial loss and prior service benefit
reclassified from accumulated other comprehensive losses (2)
(1.2)

0.4


(0.8)
Amortization of net actuarial loss and prior service benefit
reclassified from accumulated other comprehensive losses (1)

(1.2)

0.4


(0.8)
Pension and postretirement adjustment
1.2


(0.3)

0.9

1.2


(0.3)

0.9
Total other comprehensive gain$83.4

$(0.3)
$83.1
$83.4

$(0.3)
$83.1
For the Three Months Ended September 30, 2016







Foreign currency translation adjustment$(62.1)
$—

$(62.1)
Unrealized holding gain on available-for-sale securities before
reclassifications
0.7


(0.3)

0.4
Amount reclassified from accumulated other comprehensive losses
(1)
(0.6)

0.3


(0.3)
Unrealized holding gain on available-for-sale securities
0.1


—


0.1
Pension and postretirement adjustment before reclassifications
1.8


(1.0)

0.8
Amortization of net actuarial loss and prior service benefit
reclassified from accumulated other comprehensive losses (2)
(0.9)

0.3


(0.6)
Pension and postretirement adjustment
0.9


(0.7)

0.2
Total other comprehensive loss$(61.1)
$(0.7)
$(61.8)


Before Tax Tax (Expense) Benefit After TaxBefore Tax Tax (Expense) Benefit After Tax
For the Nine Months Ended September 30, 2018      
Foreign currency translation adjustment$(98.6) $—
 $(98.6)
Pension and postretirement adjustment before reclassifications 5.6
 (1.5) 4.1
Amortization of net actuarial loss and prior service benefit
reclassified from accumulated other comprehensive losses (1)
 (2.7)  0.6
  (2.1)
Pension and postretirement adjustment 2.9
  (0.9)  2.0
Total other comprehensive loss$(95.7) $(0.9) $(96.6)
For the Nine Months Ended September 30, 2017 

 

 
      
Foreign currency translation adjustment$204.9

$—

$204.9
$204.9
 $—
 $204.9
Unrealized holding gain on available-for-sale securities before
reclassifications		 0.3

 (0.1)
 0.2
 0.3
 (0.1) 0.2
Unrealized holding gain on available-for-sale securities 0.3

 (0.1)
 0.2
 0.3
  (0.1)  0.2
Pension and postretirement adjustment before reclassifications 7.4

 (2.7)
 4.7
 7.4
 (2.7) 4.7
Amortization of net actuarial loss and prior service benefit
reclassified from accumulated other comprehensive losses (2)		 (3.7)
 1.4

 (2.3)
Amortization of net actuarial loss and prior service benefit
reclassified from accumulated other comprehensive losses (1)
 (3.7) 1.4
 (2.3)
Pension and postretirement adjustment 3.7

 (1.3)
 2.4
 3.7
  (1.3)  2.4
Total other comprehensive gain$208.9

$(1.4)
$207.5
$208.9
 $(1.4) $207.5
For the Nine Months Ended September 30, 2016 

 

 
Foreign currency translation adjustment$(278.6)
$—

$(278.6)
Unrealized holding gain on available-for-sale securities before
reclassifications		 0.8

 (0.3)
 0.5
Amount reclassified from accumulated other comprehensive losses
(1)		 (0.3)
 0.1

 (0.2)
Unrealized holding gain on available-for-sale securities 0.5

 (0.2)
 0.3
Pension and postretirement adjustment before reclassifications 5.4

 (2.3)
 3.1
Amortization of net actuarial loss and prior service benefit
reclassified from accumulated other comprehensive losses (2)		 (2.7)
 1.0

 (1.7)
Pension and postretirement adjustment 2.7

 (1.3)
 1.4
Total other comprehensive loss$(275.4)
$(1.5)
$(276.9)
_______________
(1)
This accumulated other comprehensive loss component, before tax, is included under “Investment income and others, net” in the accompanying condensed consolidated statements of operations.
(2)These accumulated other comprehensive loss components, before tax, are included under “Cost of revenues” and “Selling, general and administrative” in the accompanying condensed consolidated statements of operations. These components are also included in the computation of net periodic (benefit) cost (see Note 1112 Pension and Postretirement Benefits for additional details).
10.11. Equity Compensation Plans:

ISO 401(k) Savings and Employee Stock Ownership Plan ("KSOP")
The Company has established the KSOP for the benefit of eligible employees in the U.S. and Puerto Rico. The KSOP includes both an employee savings component and an employee stock ownership component. The purpose of the combined plan is to enable the Company’s employees to participate in a tax-deferred savings arrangement under Internal Revenue Service Code Sections 401(a) and 401(k), and to provide employee equity participation in the Company through the employee stock ownership plan accounts.
For the nine months ended September 30, 2017, the Company opted to fund the 401(k) matching contributions in cash in lieu of issuance of common stock from treasury shares. For the nine months ended September 30, 2017 and 2016, the Company made cash contributions of $13.0 million and common stock contributions of 143,439 shares at a weighted average price per share of $79.38, respectively.
Equity Compensation Plans
All of the Company’s outstanding stock options and restricted stock awards are covered under the 2013 Incentive Plan 2009 Incentive Plan or the 19962009 Incentive Plan. Awards under the 2013 Incentive Plan may include one or more of the following types: (i) stock options (both nonqualified and incentive stock options), (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, (v) performance awards, (vi) other share based awards, and (vii) cash. Employees, directors and consultants are eligible for awards under the 2013 Incentive Plan. The Company issued common stock under these plans from the Company’s treasury shares. As of September 30, 2017,2018, there were 6,798,9165,590,996 shares of common stock reserved and

available for future issuance under the 2013 Incentive Plan. Cash received from stock option exercises for the nine months ended September 30, 2018 and 2017 and 2016 was $26.0$74.7 million and $32.6$26.0 million, respectively.
The Company granted equity awards to key employees of the Company. The nonqualified stock options have an exercise price equal to the closing price of the Company’s 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 the Company’s common stock on the grant date. The restricted stock is not assignable or transferable until it becomes vested. Performance share units (“PSU”) vest at the end of a three-year performance period, subject to the recipient’s continued service. Each PSU represents the right to receive one share of Verisk common stock and the ultimate realization is based on the Company’s achievement of certain market performance criteria and may range from 0% to 200% of the recipient’s target levels established on the grant date.  The fair value of performance share units is determined on the grant date using the Monte Carlo Simulation model. The Company recognizes the expense of the equity awards ratably over the vesting period. A summary of the equity awards granted for the nine months ended September 30, 20172018 is presented below.
Grant Date Service Vesting Period Stock Options Restricted Stock Common Stock Performance Share Units
January 1 to September 30, 2018 Four-year graded vesting 899,492
 192,805
 —
 —
April 1, 2018 Three-year cliff vesting —
 —
 —
 46,705
July 1, 2018
One-year graded vesting 17,402
 11,880
 —
 —
July 1 to September 30, 2018 Not applicable 19,798
 1,858
 1,094
 —
    936,692
 206,543
 1,094
 46,705
Grant Date Service Vesting Period Stock Options Restricted Stock Common Stock
January 1 to March 31, 2017 Four-year graded vesting 2,669
 525
 —
April 1, 2017 Four-year graded vesting 1,300,007
 248,489
 —
April 1, 2017
Two-year graded vesting 47,030
 11,272
 —
May 30, 2017 Not applicable —
 —
 372
July 1, 2017 One-year graded vesting 75,133
 10,308
 —
July 1, 2017 Not applicable —
 1,304
 3,201
July 1 to September 30, 2017
Four-year graded vesting 5,240
 1,078
 —
    1,430,079
 272,976
 3,573

The fair value of the stock options granted for the nine months ended September 30, 20172018 and 20162017 was estimated using a Black-Scholes valuation model that uses the weighted average assumptions noted in the following table:

2017 20162018 2017
Option pricing model Black-Scholes

 Black-Scholes
 Black-Scholes

 Black-Scholes
Expected volatility 18.72%
 20.27% 18.51%
 18.72%
Risk-free interest rate 1.82%
 1.14% 2.52%
 1.82%
Expected term in years 4.5

 4.5
 4.4

 4.5
Dividend yield —%
 —% —%
 ��%
Weighted average grant date fair value per stock option$15.71

$15.34
$21.37

$15.71
The expected term for the stock options granted was estimated based on studies of historical experience and projected exercise behavior. However, for certain awards granted, for which no historical exercise pattern exists, the expected term was estimated using the simplified method. The risk-free interest rate is based on the yield of U.S. Treasury zero coupon securities with a maturity equal to the expected term of the equity award. The volatility factor is calculated using historical daily closing prices over the most recent period that is commensurate with the expected term of the stock option award. The expected dividend yield was based on the Company’s expected annual dividend rate on the date of grant.
A summary of the stock options outstanding and exercisable as of December 31, 20162017 and September 30, 20172018 and changes during the interim period are presented below:
 Number
of Options		 Weighted
Average
Exercise Price		 Aggregate
Intrinsic
Value
Outstanding at December 31, 20168,770,917
 $46.67
 $302.6
Granted1,430,079
 $81.32
  
Exercised(773,206) $37.24
 $35.0
Cancelled or expired(156,963) $76.40
  

Outstanding at September 30, 20179,270,827
 $52.29
 $286.4
Exercisable at September 30, 20176,170,584
 $41.08
 $259.8
Exercisable at December 31, 20166,148,349
 $35.35
 $281.7
 Number
of Options		 Weighted
Average
Exercise Price		 Aggregate
Intrinsic
Value
Outstanding at December 31, 20178,907,109
 $53.31
 $380.2
Granted936,692
 $104.24
  
Exercised(2,301,868) $33.83
 $172.5
Cancelled or expired(269,397) $78.53
  

Outstanding at September 30, 20187,272,536
 $65.10
 $403.2
Exercisable at September 30, 20184,794,316
 $53.27
 $322.5
Exercisable at December 31, 20175,995,339
 $41.50
 $326.8
Intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the quoted price of Verisk common stock as of the reporting date. The Company adopted ASU No. 2016-09 prospectively on January 1, 2017 and excessExcess tax benefits from exercised stock options were recorded as income tax benefit in the condensed consolidated

statements of operations. This tax benefit is calculated as the excess of the intrinsic value of options exercised and restricted stock lapsed in excess of compensation recognized for financial reporting purposes. Prior to the adoption of ASU No. 2016-09, for the nine months ended September 30, 2016, the Company recorded excess tax benefits of $18.4 million in "Additional paid-in capital" in the accompanying condensed consolidated balance sheets. Stock basedStock-based compensation expense for the nine months ended September 30, 2018 and 2017 and 2016 was $24.2$30.1 million and $23.8$24.2 million, respectively.
The Company estimates expected forfeitures of equity awards at the date of grant and recognizes compensation expense only for those awards that the Company expects to vest. The forfeiture assumption is ultimately adjusted to the actual forfeiture rate. Changes in the forfeiture assumptions may impact the total amount of expense ultimately recognized over the requisite service period and may impact the timing of expense recognized over the requisite service period.

A summary of the status of the restricted stock and performance share units awarded under the 2013 Incentive Plan as of December 31, 20162017 and September 30, 20172018 and changes during the interim period are presented below: 
Number
of Shares		 Weighted Average Grant
Date Fair Value Per Share		Number
of Shares		 Weighted Average Grant
Date Fair Value Per Share
Outstanding at December 31, 2016537,667
 $73.34
Outstanding at December 31, 2017604,464
 $78.28
Granted272,976
 $81.29
253,248
 $111.04
Vested(193,239) $70.14
(214,320) $76.02
Forfeited(28,572) $76.87
(53,120) $87.38
Outstanding at September 30, 2017588,832
 $77.83
Outstanding at September 30, 2018590,272
 $92.32
The Company’s employee stock purchase plan (“ESPP”) offers eligible employees the opportunity to purchase shares of the Company’s common stock at a discount of its fair market value at the time of purchase. During the nine months ended September 30, 20172018 and 2016,2017, the Company issued 23,39121,988 and 23,16823,391 shares of common stock at a weighted discounted price of $78.77$105.14 and $76.64$78.77 for the ESPP, respectively.
As of September 30, 2017,2018, there was $76.1$81.3 million of total unrecognized compensation costs, exclusive of the impact of vesting upon retirement eligibility, related to nonvested share-based compensation arrangements granted under the 2009 and 2013 Incentive Plans. That cost is expected to be recognized over a weighted average period of 2.672.62 years. As of September 30, 2017,2018, there were 2,943,7432,478,220 and 588,612590,031 nonvested stock options and restricted stock, respectively, of which 2,507,3352,092,374 and 497,670513,345 are expected to vest. The total grant date fair value of options vested was $12.4 million and $12.3 million during the nine months ended September 30, 20172018 and 2016 was $12.3 million and $10.5 million,2017, respectively. The total grant date fair value of restricted stock vested during the nine months ended September 30, 2018 and 2017 and 2016 was $13.1$14.7 million and $10.6$13.1 million, respectively.
11.12. Pension and Postretirement Benefits:
The Company maintained a frozen qualified defined benefit pension plan for certain of its employees through membership in the Pension Plan for Insurance Organizations (the “Pension Plan”), a multiple-employer trust. The Company has applied a cash balance formula to determine future benefits. Under the cash balance formula, each participant has an account, which is credited annually based on the interest earned on the previous year-end cash balance. The Company also has a frozen non-qualified supplemental cash balance plan (“SERP”) for certain employees. The SERP is funded from the general assets of the Company.

The Company also provides certain healthcare and life insurance benefits to certain qualifying active and retired employees. The Postretirement Health and Life Insurance Plan (the “Postretirement Plan”), which has been frozen, is contributory, requiring participants to pay a stated percentage of the premium for coverage. The components of net periodic (benefit) cost for the three and nine months ended September 30, are summarized below: 
Pension Plan and SERP
Postretirement PlanPension Plan and SERP
Postretirement Plan
For the Three Months Ended September 30,For the Three Months Ended September 30,

2017
2016
2017
20162018 2017 2018 2017
Interest cost$4.3

$4.9

$0.1

$0.1
$3.8
 $4.3
 $—
 $0.1
Expected return on plan assets (7.8)
 (7.9)
 (0.1)
 (0.1) (8.2) (7.8) —
 (0.1)
Amortization of net actuarial loss 1.1

 0.9

 0.1

 —
 0.8
  1.1
  0.1
  0.1
Net periodic (benefit) cost$(2.4)
$(2.1)
$0.1

$—
$(3.6) $(2.4) $0.1
 $0.1
Employer contributions, net$0.3

$0.3

$(0.2)
$0.3
$0.2
 $0.3
 $0.2
 $(0.2)

Pension Plan and SERP Postretirement Plan
For the Nine Months Ended September 30,For the Nine Months Ended September 30,
2017
2016
2017
20162018 2017 2018 2017
Interest cost$12.9

$14.5

$0.3

$0.3
$11.4
 $12.9
 $0.2
 $0.3
Expected return on plan assets (23.3)
 (23.8)
 (0.3)
 (0.4) (24.6) (23.3) (0.1) (0.3)
Amortization of prior service cost 0.1

 —

 (0.1)
 (0.1) 0.1
 0.1
 (0.1) (0.1)
Amortization of net actuarial loss 3.4

 2.5

 0.3

 0.3
 2.4
  3.4
  0.3
  0.3
Net periodic (benefit) cost$(6.9)
$(6.8)
$0.2

$0.1
$(10.7) $(6.9) $0.3
 $0.2
Employer contributions, net$0.8

$0.8

$0.4

$0.5
$0.7
 $0.8
 $(0.1) $0.4
The expected contributions to the Pension Plan, SERP and Postretirement Plan for the year ending December 31, 20172018 are consistent with the amounts previously disclosed as of December 31, 2016.2017.
12.13. Segment Reporting:
ASC 280-10, Disclosures About Segments of an Enterprise and Related Information (“ASC 280-10”), establishes standards for reporting information about operating segments. ASC 280-10 requires that a public business enterprise reports financial and descriptive information about its operating segments.
Operating segments are components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”)CODM in deciding how to allocate resources and in assessing performance. The Company’s President and Chief Executive OfficerCEO is identified as the CODM as defined by ASC 280-10. Consistent with the internal management of the Company’s business operations
The Company previously reported results based on service offerings, the Company is organized into the followingits two operating segments, whichDecision Analytics and Risk Assessment. During the first quarter of 2018, the CODM changed how he makes operating decisions, assesses the performance of the business, and allocates resources in a manner that caused its operating segments to change. Consequently, effective as of the first quarter of 2018, the operating segments of the Company are based on three vertical markets it serves: Insurance, Energy and Specialized Markets, and Financial Services. These three operating segments are also the Company’sCompany's reportable segments:
Decision Analytics: The Company develops solutions that its customers usesegments, which have been recast to analyzereflect the key processes in managing risk: ‘prediction of loss’, ‘detection and prevention of fraud’ and ‘quantification of loss’. The Company’s combination of algorithms and analytic methods incorporates its proprietary data to generate solutions. In most cases, the Company’s customers integrate the solutions into their models, formulas or underwriting criteria in order to predict potential loss events, such as hurricanes and earthquakes claims. The Company develops catastrophe and extreme event models and offers solutions covering natural and man-made risks, including acts of terrorism. The Company also develops solutions that allow customers to quantify costs after loss events occur. Fraud solutions include data on claim histories, analysis of claims to find emerging patterns of fraud, and identification of suspicious claims in the insurance sectors. The Company offers services and a suite of solutions to a client base that includes credit and debit card issuers, retail bank and other consumer financial services providers, payment processors, insurance companies and other industry stakeholders. The Company further leverages predictive models and proprietary data to advise customers to make asset investment and portfolio allocation decisions in the global energy market. The Company discloses revenue within this segment based on the industry vertical groupings of insurance, energy and specialized markets, and financial services. On June 1, 2016, the Company sold its healthcare business, Verisk Health, which was part of the Decision Analytics segment. Results of operationsnew segments for the healthcare business are reported as a discontinued operation for thethree and nine months ended September 30, 2016. Refer to2017.
Each of our reportable segments, Insurance, Energy and Specialized Markets, and Financial Services has a portion of its revenue from more than one of the three revenue types described within our revenue recognition policy described within Note 5 for more information.

2. Basis of Presentation and Summary of Significant Accounting Policies. Below is the overview of the solutions offered within each reportable segment.
Risk Assessment:Insurance: The Company is the leading provider of statistical, actuarial and underwriting data for the U.S. P&C insurance industry. The Company’s databases include cleansed and standardized records describing premiums and losses in insurance transactions, casualty and property risk attributes for commercial buildings and their occupants and fire suppression capabilities of municipalities. The Company uses this data to create policy language and proprietary risk classifications that are industry standards and to generate prospective loss cost estimates used to price insurance policies.policies, which are accessed via a hosted platform. The Company also develops solutions that its customers use to analyze key processes in managing risk. The Company’s combination of algorithms and analytic methods incorporates its proprietary data to generate solutions. In most cases, the Company’s customers integrate the solutions into their models, formulas or underwriting criteria in order to predict potential loss events, ranging from hurricanes to earthquakes. The Company develops catastrophe and extreme event models and offers solutions covering natural and man-made risks, including acts of terrorism. The Company further develops solutions that allow customers to quantify costs after loss events occur. The Company's multitier, multispectral terrestrial imagery and data acquisition, processing, analytics, and distribution system using the remote sensing and machine learning technologies help gather, store, process, and deliver geographic and spatially referenced information that supports uses in many markets. Additionally, the Company offers fraud-detection solutions including review of data on claim histories, analysis of claims to find emerging patterns of fraud, and identification of suspicious claims in the insurance sector. The Company’s underwriting & rating, insurance anti-fraud claims, catastrophe modeling, loss quantification and aerial imagery solutions are included in this segment.
Energy and Specialized Markets: The Company is a leading provider of data analytics via hosted platform for the global energy, chemicals, and metals and mining industries. Its research and consulting solutions focus on exploration strategies and screening, asset development and acquisition, commodity markets, and corporate analysis in the areas of business environment, business improvement, business strategies, commercial advisory, and transaction support. The Company gathers and manages proprietary information, insight, and analysis on oil and gas fields, mines, refineries and other assets across the interconnected global energy sectors to advise customers in making asset investment and portfolio allocation decisions. The Company also helps businesses and governments better anticipate and manage climate and weather-related risks. The

Company's analytical tools measure and observe environmental properties and translate those measurements into actionable information based on customer needs. The Company further offers a suite of data and information services that enable improved compliance with global Environmental Health and Safety requirements related to the safe manufacturing, distribution, transportation, usage, and disposal of chemicals and products. The Company’s energy business, environmental health and safety services and, weather risk solutions are included in this segment.
Financial Services: The Company maintains a bank account consortia to provide competitive benchmarking, decisioning algorithms, business intelligence, and customized analytic services that help financial institutions, payment networks and processors, alternative lenders, regulators and merchants make better strategy, marketing, and risk decisions. Customers apply the Company's solutions in the areas of tailored data management and media effectiveness that include business intelligence platforms, profile views, mobile data solutions, enterprise database services, and fraud risk scoring algorithms for marketing, fraud, and risk mitigation. In addition, the Company's bankruptcy management solutions assist creditors, debt servicing businesses and credit services to enhance regulatory compliance by eliminating stay violation and portfolio valuation risk. The Company’s financial services and retail analytics solutions are included in this segment.
The twothree aforementioned operating segments represent the segments for which discrete financial information is available and upon which operating results are regularly evaluated by the CODM in order to assess performance and allocate resources. The Company uses EBITDA as the profitability measure for making decisions regarding ongoing operations. EBITDA is net income before interest expense, provision for income taxes, depreciation and amortization of fixed and intangible assets. EBITDA is the measure of operating results used to assess corporate performance and optimal utilization of debt and acquisitions. Operating expenses consist of direct and indirect costs principally related to personnel, facilities, software license fees, consulting, travel, and third-party information services. Indirect costs are generally allocated to the segments using fixed rates established by management based upon estimated expense contribution levels and other assumptions that management considers reasonable. The Company does not allocate interest expense and provision for income taxes, since these items are not considered in evaluating the segment’s overall operating performance. In addition, the CODM does not evaluate the financial performance of each segment based on assets. On a geographic basis,See Note 3 Revenues for information on disaggregated revenues from countries outsideby type of the U.S. accounted for 21.3%service and 22.0% of the Company's consolidated revenues for the nine months ended September 30, 2017 and 2016, respectively. No individual country outside of the U.S. accounted for 5.0% or more of the Company's consolidated revenues for the nine months ended September 30, 2017 or 2016.by country.
The following table provides the Company’s revenue and EBITDA by reportable segment for the three and nine months ended September 30, 20172018 and 2016,2017, and the reconciliation of EBITDA to operating income as shown in the accompanying condensed consolidated statements of operations:
 For the Three Months Ended

September 30, 2017
September 30, 2016
 Decision
Analytics
Risk
Assessment
Total
Decision
Analytics
Risk
Assessment
Total
Revenues$355.9

$193.2

$549.1

$317.3

$180.8

$498.1
Expenses:




















Cost of revenues (exclusive of items
shown separately below)
(141.7)

(56.8)

(198.5)

(117.6)

(52.1)

(169.7)
Selling, general and administrative
(60.4)

(20.5)

(80.9)

(55.4)

(22.4)

(77.8)
Investment income and others, net
2.5


0.1


2.6


0.6


1.5


2.1
EBITDA
156.3


116.0


272.3


144.9


107.8


252.7
Depreciation and amortization of fixed
assets
(26.2)

(7.6)

(33.8)

(22.6)

(6.9)

(29.5)
Amortization of intangible assets
(26.6)

(0.9)

(27.5)

(22.5)

(0.2)

(22.7)
Less: Investment income and others, net
(2.5)

(0.1)

(2.6)

(0.6)

(1.5)

(2.1)
Operating income$101.0

$107.4


208.4

$99.2

$99.2


198.4
Investment income and others, net






2.6








2.1
Interest expense






(30.3)







(28.1)
Income from continuing operations
before income taxes





$180.7







$172.4

 For the Three Months Ended

September 30, 2018
September 30, 2017
 Insurance
Energy and Specialized Markets
Financial Services
Total
Insurance
Energy and Specialized Markets
Financial Services
Total
Revenues$427.7

$127.7
 $43.3

$598.7

$396.0

$111.4
 $41.7

$549.1
Expenses:
                   


Cost of revenues
(exclusive of items
shown separately
below)
(142.1)

(53.2)  (23.9)

(219.2)

(129.3)

(49.0)  (20.2)

(198.5)
Selling, general and
administrative
(57.5)

(34.1)  (4.1)

(95.7)

(48.6)

(28.3)  (4.0)

(80.9)
Investment income and
others, net
12.0


0.8
  1.3


14.1


3.3


(0.8)  0.1


2.6
EBITDA
240.1


41.2
  16.6


297.9


221.4


33.3
  17.6


272.3
Depreciation and
amortization of fixed
assets
(25.2)

(10.2)  (4.1)

(39.5)

(22.6)

(9.0)  (2.2)

(33.8)
Amortization of
intangible assets
(5.9)

(21.4)  (5.9)

(33.2)

(4.4)

(18.0)  (5.1)

(27.5)
Less: Investment income
and others, net
(12.0)

(0.8)  (1.3)

(14.1)

(3.3)

0.8
  (0.1)

(2.6)
Operating income$197.0

$8.8
 $5.3


211.1

$191.1

$7.1
 $10.2


208.4
Investment income and others,
net




   

14.1






   

2.6
Interest expense




   

(32.4)





   

(30.3)
Income before income
taxes




   
$192.8






   
$180.7

 For the Nine Months Ended

September 30, 2017 September 30, 2016
 Decision
Analytics
Risk
Assessment
Total
Decision
Analytics
Risk
Assessment
Total
Revenues$999.7

$575.2

$1,574.9

$947.4

$541.7

$1,489.1
Expenses: 

 

 

 

 

 
Cost of revenues (exclusive of items
shown separately below)		 (405.3)
 (169.8)
 (575.1)
 (362.6)
 (158.8)
 (521.4)
Selling, general and
administrative		 (174.2)
 (61.4)
 (235.6)
 (161.8)
 (62.6)
 (224.4)
Investment income and others, net 8.0

 (0.1)
 7.9

 1.6

 1.4

 3.0
EBITDA from discontinued operations
(including the gain on sale)		 —

 —

 —

 269.4

 —

 269.4
EBITDA 428.2

 343.9

 772.1

 694.0

 321.7

 1,015.7
Depreciation and amortization of
fixed assets		 (76.7)
 (22.7)
 (99.4)
 (69.9)
 (20.8)
 (90.7)
Amortization of intangible assets (71.0)
 (2.6)
 (73.6)
 (70.0)
 (0.4)
 (70.4)
Less: Investment income and others,
net		 (8.0)
 0.1

 (7.9)
 (1.6)
 (1.4)
 (3.0)
EBITDA from discontinued operations
(including the gain on sale)		 —

 —

 —

 (269.4)
 —

 (269.4)
Operating income$272.5

$318.7

 591.2

$283.1

$299.1

 582.2
Investment income and others, net 

 

 7.9

 

 

 3.0
Interest expense 

 

 (87.3)
 

 

 (91.7)
Income from continuing operations
before income taxes		 

 

$511.8

 

 

$493.5

Operating segment revenues by type of service is provided below:
 For the Three Months Ended September 30, For the Nine Months Ended September 30,
 2017
2016
2017
2016
Decision Analytics:           
Insurance$203.9
 $174.4
 $573.5
 $521.4
Energy and specialized markets 111.4
  109.1
  328.0
  333.2
Financial services 40.6
  33.8
  98.2
  92.8
Total Decision Analytics 355.9
  317.3
  999.7
  947.4
Risk Assessment:           
Industry-standard insurance programs 149.0
  138.2
  442.7
  414.2
Property-specific rating and underwriting
information		 44.2
  42.6
  132.5
  127.5
Total Risk Assessment 193.2
  180.8
  575.2
  541.7
Total revenues$549.1
 $498.1
 $1,574.9
 $1,489.1

 For the Nine Months Ended
 September 30, 2018
September 30, 2017
 Insurance
Energy and Specialized Markets
Financial Services
Total
Insurance
Energy and Specialized Markets
Financial Services
Total
Revenues$1,269.7
 $383.1
 $128.4
 $1,781.2
 $1,145.3
 $328.0
 $101.6
 $1,574.9
Expenses: 

  

  
  
  

  

  
  
Cost of revenues
(exclusive of items
shown separately
below)		 (422.2)  (164.7)  (75.3)  (662.2)  (375.4)  (143.5)  (56.2)  (575.1)
Selling, general and
administrative		 (163.3)  (103.6)  (14.1)  (281.0)  (143.1)  (84.1)  (8.4)  (235.6)
Investment income and
others, net		 16.2
  1.2
  1.9
  19.3
  8.9
  (1.3)  0.3
  7.9
EBITDA 700.4
  116.0
  40.9
  857.3
  635.7
  99.1
  37.3
  772.1
Depreciation and
amortization of fixed
assets		 (77.6)  (32.2)  (11.8)  (121.6)  (68.0)  (26.1)  (5.3)  (99.4)
Amortization of
intangible assets		 (16.8)  (64.2)  (17.5)  (98.5)  (9.4)  (52.1)  (12.1)  (73.6)
Less: Investment income
and others, net		 (16.2)  (1.2)  (1.9)  (19.3)  (8.9)  1.3
  (0.3)  (7.9)
Operating income$589.8
 $18.4
 $9.7
  617.9
 $549.4
 $22.2
 $19.6
  591.2
Investment income and others,
net		          19.3
           7.9
Interest expense          (97.1)           (87.3)
Income before income
taxes		         $540.1
          $511.8
Long-lived assets by country are provided below:

September 30, 2017 December 31, 2016September 30, 2018 December 31, 2017
Long-lived assets: 
 
    
United States of America$2,101.9
 $1,754.0
United Kingdom 2,658.7
 2,102.5
U.S$2,360.3
 $2,438.6
U.K. 2,575.0
 2,656.6
Other countries 322.9
  273.8
 322.1
  327.5
Total long-lived assets$5,083.5
 $4,130.3
$5,257.4
 $5,422.7

13.14. Related Parties:
The Company considers its stockholders that own more than 5.0% of the outstanding common stock to be related parties as defined within ASC 850, Related Party Disclosures. As of September 30, 20172018 and December 31, 2016,2017, the Company had no material transactions with related parties owning more than 5.0% of its common stock, except for transactions with the KSOP as disclosed in Note 16 Compensation Plans of the Company's consolidated financial statements included in the 2016 Form 10-K filing.parties.
14.15. Commitments and Contingencies:
The Company is a party to legal proceedings with respect to a variety of matters in the ordinary course of business, including the mattersmatter described below. With respect to the ongoing matters,matter, the Company is unable, at the present time, to determine the ultimate resolution of or provide a reasonable estimate of the range of possible loss attributable to these mattersthis matter or the impact theyit may have on the Company’s results of operations, financial position or cash flows. This is primarily because the matters are generally in early stages and discovery has either not commenced or been completed. Although the Company believes it has strong defenses and intends to vigorously defend these matters,this matter, the Company could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations, financial position or cash flows.
Intellicorp Records, Inc. Litigation
On September 9, 2015, the Company was served with a nationwide putative class action complaint filed in the Court of Common Pleas, Cuyahoga County in Ohio naming the Company’s subsidiary Intellicorp Records, Inc. (“Intellicorp”) titled Sherri Legrand v. Intellicorp Records, Inc. and The Cato Corporation et al. Defendants removed the case to the United States District Court for the Northern District of Ohio on October 8, 2015. Plaintiffs filed their First Amended Class Action Complaint on November 5, 2015 (“Amended Complaint”), which like the prior complaint claims violations of the Fair Credit Reporting Act ("FCRA") and alleges two putative class claims against Intellicorp, namely (i) a section 1681k(a) claim on behalf of all individuals  who were the subjects of  consumer reports furnished  by Intellicorp, which contained  public record  information in the “Government Sanctions” section of the report on or after September 4, 2013 and continuing through the date the class list is prepared, and (ii) a section 1681e(b) claim  on behalf of all individuals  who were the subjects of  consumer reports furnished  by Intellicorp, which contained  public record  information in the “Government Sanctions” section of the report where the address or social security number of the subject of the report do not match the social security number or address contained in the government database on or after September 4, 2013 and continuing through the date the class list is prepared. Count I of the Amended Complaint alleges that defendant Cato violated the FCRA by procuring consumer reports on the plaintiff and other class members without making the stand-alone disclosure required by FCRA section 1681b(b)(2)(A)(i). Counts II and III allege that Intellicorp violated the FCRA section 1681e (b) by failing to follow reasonable procedures to assure maximum accuracy of the adverse information included in its consumer reports and FCRA section 1681k (a) by failing to maintain strict procedures to assure that the public record information reported, which was likely to have an adverse effect on the consumer was complete and up to date, respectively. The Amended Complaint alleges that defendants acted willfully and seeks statutory damages for the classes in an amount not less than one hundred dollars and not more than one thousand dollars per violation, punitive damages, equitable relief, costs and attorney’s fees. 
On April 24, 2017, the parties agreed to resolve the litigation in a Settlement Agreement and Release and plaintiffs filed their Motion for Preliminary Approval of the settlement on the same day. The settlement provides for a non-material cash payment by the Company, as well as certain non-monetary relief. The District Court granted the Motion for Preliminary Approval on April 25, 2017 and the final approval hearing has been re-scheduled for October 31, 2017.
Xactware Solutions, Inc. Patent Litigation
On October 8, 2015, the Company was served with a summons and complaint in an action titled Eagle View Technologies, Inc. and Pictometry International Group, Inc. v. Xactware Solutions, Inc. and Verisk Analytics, Inc. filed in the United States District Court for the District of New Jersey. The complaint alleges that the Company’s Roof InSight (now known as Geomni Roof), Property InSight product (now known as Geomni Property) and Aerial Sketch productsproduct in combination with the Company's Xactimate product infringe seven patents owned by Eagle View and Pictometry namely, Patent Nos. 436, 840, 152, 880, 770, 732 and 454. On November 30, 2015, plaintiffs filed a First Amended Complaint adding Patent Nos. 376 and 737 to the Patents in Suit.lawsuit. The First Amended Complaint seeks an entry of judgment by the Court that defendants have and continue to directly infringe and/or indirectly infringe, including by way of inducement the Patents-in-Suit, permanent injunctive relief, damages, costs and attorney’s fees. On May 17,19, 2017, the District Court so ordered a Joint Stipulated Order of Partial Dismissal with Prejudice dismissing all claims or assertions pertaining to Pictometry Patents Nos. 880 and 732 and certain enumeratedasserted claims or assertions pertaining toof the Eagle View Patents Nos. 436, 840, 152, 770, 454, 376 and 737 (collectively the “Patents in Suit”).

Eagle View further reduced the number of asserted claims pertaining to the Patents in Suit to 18 asserted claims. Fact discovery and expert discovery are now closed and defendants' summary judgment motion was fully submitted on October 26, 2018. At this time, it is not reasonably possible to determine the ultimate resolution of, or estimate the liability related to, this matter.
Interthinx, Inc. Litigation
On April 20, 2015, the Company was served with a putative class action titled John Weber v. Interthinx, Inc. and Verisk Analytics, Inc. The plaintiff, a former employee of the Company’s former subsidiary Interthinx, Inc. in Missouri, filed the class action complaint in the United States District Court for the Eastern District of Missouri on behalf of all review appraisers and individuals holding comparable positions with different titles who were employed by Interthinx for the last three years nationwide and who were not paid overtime wages. The class complaint claims that the review appraiser employees were misclassified as exempt employees and, as a result, were denied certain wages and benefits that would have been received if they were properly classified as non-exempt employees. It pleads a Collective Action under section 216(b) of the Fair Labor Standards Act for unpaid overtime and seeks overtime wages, liquidated damages, declaratory relief, interest, costs and attorneys’ fees. On March 11, 2014, the Company sold 100 percent of the stock of Interthinx, Inc. The parties agreed to resolve this matter with the Company’s contribution of a non-material amount in the Class Action Settlement Agreement executed on November 8, 2016. For settlement purposes only, this matter was consolidated with a related action pending in the Los Angeles Superior Court in which the Company is not a party, titled Sager v. Interthinx. On February 21, 2017, the Los Angeles Superior Court approved the settlement at the preliminary approval hearing. The Court held a final approval hearing on August 22, 2017 and issued its Final Order and Judgment Approving the Class Settlement on September 25, 2017.
Insurance Services Office, Inc. Litigation
On August 1, 2014 the Company was served with an Amended Complaint filed in the United States District Court for the District of Colorado titled Snyder, et. al. v. ACORD Corp., et al. The action is brought by nineteen individual plaintiffs, on their own behalf and on behalf of a putative class, against more than 120 defendants, including the Company and ISO. Except for the Company, ISO and the defendant Acord Corporation, which provides standard forms to assist in insurance transactions, most of the other defendants are property and casualty insurance companies that plaintiffs claim conspired to underpay property damage claims. Plaintiffs claim that the Company and ISO, along with all of the other defendants, violated state and federal antitrust and racketeering laws as well as state common law. On September 8, 2014, the Court entered an Order striking the Amended Complaint and granting leave to the plaintiffs to file a new complaint. On October 13, 2014, plaintiffs filed their Second Amended Complaint, which was re-filed by plaintiffs to correct errors as the Third Amended Complaint. The Third Amended Complaint similarly alleges that the defendants conspired to underpay property damage claims, but does not specifically allege what role the Company or ISO played in the alleged conspiracy. It claims that the Company and ISO, along with all of the other defendants, violated state and federal antitrust and racketeering laws as well as state common law, and seeks all available relief including injunctive, statutory, actual and punitive damages as well as attorneys’ fees. On January 15, 2016, the Court granted defendants’ motions to dismiss all claims asserted in the Third Amended Complaint. Plaintiffs filed a motion for reconsideration of this dismissal on February 16, 2016. The Court granted defendants’ motion to strike the motion for reconsideration on March 2, 2016 and gave plaintiffs leave to file another motion for reconsideration in accordance with the rules which plaintiffs filed on March 11, 2016 and, which was denied by the Court on April 25, 2016. On April 1, 2016, plaintiffs also filed a Notice of Appeal of the Court’s January 15, 2016 Order, which dismissed all claims in the Third Amended Complaint. Plaintiffs also filed an appeal of the Court’s denial of the motion for reconsideration, which the Court of Appeals for the 10th Circuit consolidated with the appeal of the Court’s January 15, 2016 dismissal. Appellants filed their brief in support of the consolidated appeal on July 21, 2016 and Appellees filed their brief in response on September 21, 2016. On April 6, 2017, the Court of Appeals for the 10th Circuit affirmed the Court’s dismissal of the Third Amended Complaint. Appellants filed a motion for en banc reconsideration of the 10th Circuit’s affirmance of the dismissal of the Third Amended Complaint which was denied on May 26, 2017.  Appellants filed their petition for a writ of certiorari in the Supreme Court on August 24, 2017 which was denied on October 30, 2017.  



**************


Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our historical financial statements and the related notes included in our annual report on Form 10-K, or 20162017 10-K, dated and filed with the Securities and Exchange Commission on February 21, 2017.20, 2018. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in or implied by any of the forward-looking statements as a result of various factors, including but not limited to those listed under “Risk Factors” and “Special Note Regarding Forward Looking Statements” in our 20162017 10-K.

Verisk Analytics is a leading data analytics provider serving customers in insurance, natural resourcesenergy and specialized markets, and financial services. Using advanced technologies to collect and analyze billions of records, we draw on unique data assets and deep domain expertise to provide innovations that may be integrated into customer workflows. We offer predictive analytics and decision support solutions to customers in rating, underwriting, claims, catastrophe and weather risk, natural resources intelligence, economic forecasting, and many other fields. In the United States, or U.S., and around the world, we help customers protect people, property, and financial assets.

Our customers use our solutions to make better decisions about risk and opportunities with greater efficiency and discipline. We refer to these products and services as solutions due to the integration among our services and the flexibility that enables our customers to purchase components or a comprehensive package. These solutions take various forms, including data, expert insight, statistical models and tailored analytics all designed to allow our customers to make more logical decisions. We believe our solutions for analyzing risk positively impact our customers’ revenues and help them better manage their costs.
We organizepreviously reported results based on two operating segments, Decision Analytics and Risk Assessment. During the first quarter of 2018, the CODM changed how he makes operating decisions, assesses the performance of the business, and allocates resources in a manner that caused the Company's operating segments to change. Consequently, effective as of the first quarter of 2018, our business in two segments: Risk Assessmentoperating segments are based on three vertical markets we serve: Insurance, Energy and Decision Analytics. Specialized Markets, and Financial Services. These three operating segments are also our reportable segments, which have been recast to reflect the new segments for the three and nine months ended September 30, 2017.
Our Risk AssessmentInsurance segment provides statistical, actuarialunderwriting and underwritingratings, and claims insurance data for the U.S. P&C insurance industry. Our Risk Assessment segmentThis segment's revenues represented approximately 36.5%71.3% and 36.4%72.7% of our revenues for the nine months ended September 30, 20172018 and 2016,2017, respectively. Our Decision AnalyticsEnergy and Specialized Markets segment provides solutions to our customers within three vertical market-related groupings of insurance,research and consulting data analytics for the global energy, chemicals, and specialized markets,metals and financial services.mining industries. Our Decision Analytics segmentEnergy and Specialized Markets segment's revenues represented approximately 63.5%21.5% and 63.6%20.8% of our revenues for the nine months ended September 30, 2018 and 2017, respectively. Our Financial Services segment provides competitive benchmarking, decisioning algorithms, business intelligence, and 2016, respectively.

Discontinued Operations

On June 1, 2016, we sold 100 percentcustomized analytic services to financial institutions, payment networks and processors, alternative lenders, regulators and merchants. Our Financial Services segment's revenues represented 7.2% and 6.5% of the stock of the healthcare business, or Verisk Health, in exchange for a purchase price that consisted of $714.6 million of cash consideration after a working capital adjustment of $5.4 million, a subordinated promissory note with a face value of $100.0 million and an eight year maturity, or the Note, and other contingent consideration. Results of operationsour revenues for the healthcare business are reported as a discontinued operation for the three and nine months ended September 30, 2016. See Note 5 of our condensed consolidated financial statements included in this Form 10-Q. As necessary, all amounts have been retroactively adjusted in all periods presented to give recognition to this discontinued operation.    2018 and 2017, respectively.
Executive Summary
Key Performance Metrics    
We believe our business' ability to generate recurring revenue and positive cash flow is the key indicator of the successful execution of our business strategy. We use year-over-year revenue growth and EBITDA margin as metrics to measure our performance. EBITDA and EBITDA margin are non-GAAP financial measures (See footnote 1 within the Condensed Consolidated Results of Operations section of Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations). The respective GAAP financial measures are net income and net income margin.
Revenue growth. We use year-over-year revenue growth as a key performance metric. We assess revenue growth based on our ability to generate increased revenue through increased sales to existing customers, sales to new customers, sales of new or expanded solutions to existing and new customers, and strategic acquisitions of new businesses.
EBITDA growth. We use EBITDA growth as a proxy for the cash generated by the business and as an indicator of segment performance. EBITDA growth serves as a measure of our ability to balance the size of revenue growth with cost management and investing for future growth.

EBITDA margin. We use EBITDA margin as a metric to assess segment performance and scalability of our business. We assess EBITDA margin based on our ability to increase revenues while controlling expense growth.

Revenues
We earnrecognize revenues through subscriptions, long-term agreements for hosted subscriptions, advisory/consulting services and on a transactional basis. Subscriptionsbasis, recurring and non-recurring. Hosted subscriptions for our solutions are generally paid in advance of rendering services either quarterly or in full uponannually 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. Our long-term agreements are generally for periods of three to five years. We recognize revenue from subscriptions ratably over the term of the subscription and most long-term agreements are recognized ratably over the term of the agreement.agreements.
Approximately 90.9% and 90.8%81.0% of the revenues in our Risk AssessmentInsurance segment for the nine months ended September 30, 20172018 and 2016, respectively,2017 were derived from hosted subscriptions andwith long-term agreements for our solutions. Our customers in this segment include most of the P&C insurance providers in the U.S. Approximately 75.0%78.0% and 77.6%83.0% of the revenues in our Decision AnalyticsEnergy and Specialized Markets segment for the nine months ended September 30, 2018 and 2017, respectively, were derived from hosted subscriptions with long-term agreements for our solutions. Our customers in this segment include most of the top 10 global energy providers around the world. Approximately 72.0% and 2016,69.0% of the revenues in our Financial Services segment for the nine months ended September 30, 2018 and 2017, respectively, were derived from subscriptions andwith long-term agreements for our solutions. Insolutions, respectively. Our customers in this segment include all of the top 30 credit card issuers in North America, the United Kingdom, and Australia.
We also provide advisory/consulting services, which help our customer bases are within the insurance, energycustomers get more value out of our analytics and specialized markets, and financial services verticals.
Certaintheir subscriptions. In addition, certain of our solutions are also 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 workers' compensation claim with information in our databases. We also provide advisory services, which helpdatabases, or use our customers get more value out of our analytics and their subscriptions.repair cost estimation solutions on a case-by-case basis. For the nine months ended September 30, 2018 and 2017, approximately 20.0% and 2016, approximately 19.2% and 17.6%19.0%, respectively, of our revenues were derived from providing transactional recurring and non-recurring solutions. We earn these revenues as our solutions are delivered or services performed. In general, transactions are billed monthly at the end of each month.
Principal Operating Costs and Expenses
Personnel expenses are the major component of both our cost of revenues and selling, general and administrative expenses. Personnel expenses, which represented 47.8%58.3% and 47.1%59.5% of our total operating expenses for the nine months ended September 30, 20172018 and 2016,2017, respectively, include salaries, benefits, incentive compensation, equity compensation costs, sales commissions, employment taxes, recruiting costs, and outsourced temporary agency costs.
We allocateassign personnel expenses between two categories, cost of revenues and selling, general and administrative expense, based on the actual costs associated with each employee. We categorize employees who maintain our solutions as cost of revenues, and all other personnel, including executive managers, sales people, marketing, business development, finance, legal, human resources, and administrative services, as selling, general and administrative expenses. A significant portion of our other operating costs, such as facilities and communications, is also either captured within cost of revenues or selling, general and administrative expenses based on the nature of the work being performed.
While we expect to grow our headcount over time to take advantage of our market opportunities, we believe that the economies of scale in our operating model will allow us to grow our personnel expenses at a lower rate than revenues. Historically, our EBITDA margin has improved because we have been able to increase revenues without a proportionate corresponding increase in expenses. However, part of our corporate strategy is to invest in new solutions and new businesses which may offset margin expansion.
Cost of Revenues. Our cost of revenues consists primarily of personnel expenses. Cost of revenues also includes the expenses associated with the acquisition and verification of data, the maintenance of our existing solutions and the development and enhancement of our next-generation solutions. Our cost of revenues excludes depreciation and amortization.
Selling, General and Administrative Expenses. Our selling, general and administrative expenses consist primarily of personnel costs. A portion of the other operating costs such as facilities, insurance and communications is also allocated to selling, general and administrative expenses based on the nature of the work being performed by the employee. Our selling, general and administrative expenses exclude depreciation and amortization.    

Condensed Consolidated Results of Operations
Three Months Ended September 30, 
Percentage
Change
 Nine Months Ended September 30, 
Percentage
Change
Three Months Ended September 30, 
Percentage
Change
 Nine Months Ended September 30, 
Percentage
Change
2017 2016 2017 2016 2018 2017 2018 2017 
                        
(In millions, except for share and per share data)(In millions, except for share and per share data)
Statement of income data:                        
Revenues:                        
Decision Analytics revenues$355.9
 $317.3
 12.2 % $999.7
 $947.4
 5.5 %
Risk Assessment revenues 193.2
 180.8
 6.9 % 575.2
 541.7
 6.2 %
Insurance$427.7
 $396.0
 8.0 % $1,269.7
 $1,145.3
 10.9 %
Energy and Specialized Markets 127.7
 111.4
 14.6 % 383.1
 328.0
 16.8 %
Financial Services 43.3
 41.7
 4.0 % 128.4
 101.6
 26.3 %
Revenues 549.1
  498.1
 10.2 %  1,574.9
  1,489.1
 5.8 % 598.7
  549.1
 9.0 %  1,781.2
 1,574.9
 13.1 %
Expenses:            
Operating expenses:            
Cost of revenues (exclusive of items shown
separately below)
 198.5
 169.7
 17.0 % 575.1
 521.4
 10.3 % 219.2
 198.5
 10.4 % 662.2
 575.1
 15.1 %
Selling, general and administrative 80.9
 77.8
 4.0 % 235.6
 224.4
 5.0 % 95.7
 80.9
 18.3 % 281.0
 235.6
 19.3 %
Depreciation and amortization of fixed assets 33.8
 29.5
 14.5 % 99.4
 90.7
 9.5 % 39.5
 33.8
 16.9 % 121.6
 99.4
 22.3 %
Amortization of intangible assets 27.5
 22.7
 21.2 % 73.6
 70.4
 4.7 % 33.2
 27.5
 21.0 % 98.5
 73.6
 33.7 %
Total expenses 340.7
  299.7
 13.7 %  983.7
  906.9
 8.5 %
Total operating expenses 387.6
  340.7
 13.8 %  1,163.3
 983.7
 18.2 %
Operating income 208.4
  198.4
 5.0 %  591.2
  582.2
 1.5 % 211.1
  208.4
 1.3 %  617.9
 591.2
 4.5 %
Other income (expense):                       
Investment income and others, net 2.6
 2.1
 23.2 % 7.9
 3.0
 163.2 % 14.1
 2.6
 438.0 % 19.3
 7.9
 144.0 %
Interest expense (30.3)  (28.1) 7.8 %  (87.3)  (91.7) (4.7)% (32.4)  (30.3) 6.6 %  (97.1) (87.3) 11.2 %
Total other expense, net (27.7)  (26.0) 6.5 %  (79.4)  (88.7) (10.4)% (18.3)  (27.7) (34.1)%  (77.8) (79.4) (2.0)%
Income before income taxes 180.7
 172.4
 4.8 % 511.8
 493.5
 3.7 % 192.8
 180.7
 6.7 % 540.1
 511.8
 5.5 %
Provision for income taxes (60.0)  (44.8) 33.8 %  (161.3)  (149.5) 7.9 % (26.8)  (60.0) (55.3)%  (87.6)  (161.3) (45.7)%
Income from continuing operations 120.7
  127.6
 (5.4)%  350.5
  344.0

1.9 %
Discontinued operations     

      
Income from discontinued operations —
 —
 — % —
 256.5
 (100.0)%
Provision for income taxes —
  —
 — %  —
  (118.6) (100.0)%
Income from discontinued operations (2) —
  —
 — %  —
  137.9
 (100.0)%
Net Income$120.7
 $127.6
 (5.4)% $350.5
 $481.9
 (27.3)%$166.0
 $120.7
 37.5 % $452.5
 $350.5
 29.1 %
Basic net income per share:     

      $1.01
 $0.73
 38.4 % $2.74
 $2.12
 29.2 %
Income from continuing operations$0.73
 $0.76
 (3.9)% $2.12
 $2.04
 3.9 %
Income from discontinued operations —
 —
 — % —
 0.82
 (100.0)%
Basic net income per share$0.73
 $0.76
 (3.9)% $2.12
 $2.86
 (25.9)%
Diluted net income per share:     

      $0.99
 $0.72
 37.5 % $2.68
 $2.08
 28.8 %
Income from continuing operations$0.72
 $0.74
 (2.7)% $2.08
 $2.01
 3.5 %
Income from discontinued operations —
 —
 — % —
 0.80
 (100.0)%
Diluted net income per share$0.72
 $0.74
 (2.7)% $2.08
 $2.81
 (26.0)%
Weighted average shares outstanding:                       
Basic 164,577,575
  168,874,129
 (2.5)%  165,314,267
  168,541,399
 (1.9)% 164,829,250
  164,577,575
 0.2 %  164,962,647
  165,314,267
 (0.2)%
Diluted 167,957,058
  171,785,900
 (2.2)%  168,807,405
  171,495,189
 (1.6)% 168,200,766
  167,957,058
 0.1 %  168,614,835
  168,807,405
 (0.1)%
                        
The financial operating data below sets forth the information we believe is useful for investors in evaluating our overall financial performance:
Other data:                        
EBITDA (1):            
Decision Analytics EBITDA$156.3
 $144.9
 7.8 % $428.2
 $694.0
 (38.3)%
Risk Assessment EBITDA 116.0
  107.8
 7.6 %  343.9
  321.7
 6.9 %
EBITDA (1):
            
Insurance EBITDA$240.1
 $221.4
 8.4 % $700.4
 $635.7
 10.2 %
Energy and Specialized Markets EBITDA 41.2
 33.3
 24.0 % 116.0
 99.1
 17.2 %
Financial Services EBITDA 16.6
  17.6
 (5.7)%  40.9
  37.3
 9.2 %
EBITDA$272.3
 $252.7
 7.7 % $772.1
 $1,015.7
 (24.0)%$297.9
 $272.3
 9.4 % $857.3
 $772.1
 11.0 %
The following is a reconciliation of net income to EBITDA:
Net income$120.7
 $127.6
 (5.4)% $350.5
 $481.9
 (27.3)%$166.0
 $120.7
 37.5 % $452.5
 $350.5
 29.1 %
Depreciation and amortization of fixed assets and
intangible assets from continuing operations		 61.3
 52.2
 17.4 % 173.0
 161.1
 7.4 %
Interest expense from continuing operations 30.3
 28.1
 7.8 % 87.3
 91.7
 (4.7)%
Provision for income taxes from continuing operations 60.0
 44.8
 33.8 % 161.3
 149.5
 7.9 %
Depreciation, amortization, interest and provision for
income taxes from discontinued operations		 —
  —
 — %  —
  131.6
 (100.0)%
Depreciation and amortization of fixed assets and
intangible assets		 72.7
 61.3
 18.7 % 220.1
 173.0
 27.1 %
Interest expense 32.4
 30.3
 6.6 % 97.1
 87.3
 11.2 %
Provision for income taxes 26.8
  60.0
 (55.3)%  87.6
  161.3
 (45.7)%
EBITDA$272.3
 $252.7
 7.7 % $772.1
 $1,015.8
 (24.0)%$297.9
 $272.3
 9.4 % $857.3
 $772.1
 11.0 %
(1)
EBITDA is thea financial measure whichthat management uses to evaluate the performance of our Company. “EBITDA” is defined as net income before interest expense, provision for income taxes, and depreciation and amortization of fixed and intangible assets. In addition, this Management’s Discussion and Analysis of Financial Condition and Results of Operations includes references to EBITDA margin, which is computed as EBITDA divided by revenues. See Note 1213 of our condensed consolidated financial statements included in this Form 10-Q filing. 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 results of operations or cash flows from operating activities reported under GAAP. Management uses EBITDA in conjunction with 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 noncash 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. Please note because EBITDA is calculated from net income, this presentation included EBITDA from discontinued operations of our healthcare business.
(2)On June 1, 2016, we sold our healthcare business, Verisk Health. Results of operations for the healthcare business are reported as a discontinued operation for the three and nine months ended September 30, 2016. See Note 5 of our condensed consolidated financial statements included in this Form 10-Q. As necessary, all amounts have been retroactively adjusted in all periods presented to give recognition to this discontinued operation.    
Consolidated Results of Continuing Operations
Three Months Ended September 30, 20172018 Compared to Three Months Ended September 30, 20162017
Revenues
Revenues were $598.7 million for the three months ended September 30, 2018 compared to $549.1 million for the three months ended September 30, 2017, compared to $498.1 million for the three months ended September 30, 2016, an increase of $51.0$49.6 million or 10.2%9.0%. Excluding revenues of $18.6$24.1 million from Greentech Media, Quest Offshore, Analyze Re, Arium, ENI, Fintellix, MAKE, Aerial Imagery, G2, Sequel, Rebmark, Service Software, Business Insight, and LCI,Validus, our recent acquisitions within the Decision AnalyticsInsurance segment, PowerAdvocate, our recent acquisition within the Energy and Specialized Markets segment, and GeoInformation, MarketStanceG2, LCI, and Healix,Marketview, our recent acquisitions within the Risk AssessmentFinancial Services segment, all collectively referred to as our recent acquisitions, our consolidated revenue increased $32.4$25.5 million or 6.5%4.7%. Revenues within our Decision AnalyticsInsurance segment, excluding our recent acquisitions named above, increased $23.5$21.7 million or 7.5%5.5%. Revenues within our Energy and revenues in our Risk AssessmentSpecialized Markets segment, excluding our recent acquisitions named above, increased $8.9$7.3 million or 4.9%6.6%. The increase in Decision Analytics' revenues,Revenues within our Financial Services segment, excluding our recent acquisitions was driven by an increase in our insurance category. Within Risk Assessment, excluding recent acquisitions, both industry-standard insurance programs and property-specific rating and underwriting information contributed to its revenue growth.named above, decreased $3.5 million or 9.8%. Refer to the Results of Continuing Operations by Segment within this section for furthermore information regarding our revenues.

Three Months Ended September 30,
Percentage change Percentage change excluding recent acquisitions

2018 2017

          

(In millions)



Insurance$427.7

$396.0

8.0%
5.5 %
Energy and Specialized Markets 127.7

 111.4

14.6%
6.6 %
Financial Services 43.3

 41.7

4.0%
(9.8)%
Total Revenues$598.7

$549.1

9.0%
4.7 %
Cost of Revenues
Cost of revenues was $219.2 million for the three months ended September 30, 2018 compared to $198.5 million for the three months ended September 30, 2017, compared to $169.7 million for the three months ended September 30, 2016, an increase of $28.8$20.7 million or 17.0%10.4%. Our recent acquisitions accounted for an increase of $15.1$7.5 million in cost of revenues, primarily related to salaries and employee benefits. Excluding the impact of our recent acquisitions, our cost of revenues increased $13.7$13.2 million or 8.1%6.8%. The increase was primarily due to increases in salaries and employee benefits of $8.9$7.8 million, rent and facilities expenses of $1.6 million, data costs of $1.6 million, information technology expenses of $1.7 million, data costs of $1.0$0.6 million, and other operating costsexpenses of $2.1$1.6 million.

Selling, General and Administrative Expenses
Selling, general and administrative expenses, or SGA, were $95.7 million for the three months ended September 30, 2018 compared to $80.9 million for the three months ended September 30, 2017, compared to $77.8 million for the three months ended September 30, 2016, an increase of $3.1$14.8 million or 4.0%18.3%. Our recent acquisitions accounted for an increase of $4.7$7.6 million in SGA.SGA, primarily related to salaries and employee benefits. Excluding costs associated with our recent acquisitions, our SGA decreased $1.6increased $7.2 million or 2.1%9.4%. The decreaseincrease was primarily due to decreasesincreases in salaries and employee benefits of $4.7 million, information technology expenses of $1.1$1.3 million, professional consulting costs of $1.0$0.9 million and other general expenses of $0.3 million. These decreases were partially offset by an increase in salaries and employee benefits of $0.8 million.

Depreciation and Amortization of Fixed Assets
Depreciation and amortization of fixed assets was $39.5 million for the three months ended September 30, 2018 compared to $33.8 million for the three months ended September 30, 2017, compared to $29.5 million for the three months ended September 30, 2016, an increase of $4.3$5.7 million or 14.5%16.9%. The increase in depreciation and amortization of fixed assets includes depreciation and amortization related to ourthe capital expenditures of $2.9was $4.8 million and related to fixed assets associated with recent acquisitions of $1.4was $0.9 million.
Amortization of Intangible Assets
Amortization of intangible assets was $33.2 million for the three months ended September 30, 2018 compared to $27.5 million for the three months ended September 30, 2017, compared to $22.7 million for the three months ended September 30, 2016, an increase of $4.8$5.7 million or 21.2%21.0%. The increase was primarily due to amortization related to our recent acquisitions of $5.1$6.2 million offset byand currency fluctuations impacting amortization denominated in currencies other than U.S. dollars.
Investment Income and Others, net
Investment income and others, net was a gain of $14.1 million for the three months ended September 30, 2018, compared to a gain of $2.6 million for the three months ended September 30, 2017, compared2017. The increase of $11.5 million was primarily due to a realized gain of $2.1$12.3 million on the repayment of subordinated promissory note receivable prior to its maturity, partially offset by a reduction in interest income, associated with its payoff in August 2018.
Interest Expense
Interest expense was $32.4 million for the three months ended September 30, 2016. The increase was primarily due2018, compared to an increase in net gain on foreign currencies of $0.5 million.
Interest Expense
Interest expense was $30.3 million for the three months ended September 30, 2017, comparedan increase of $2.1 million or 6.6%. The increase was due to $28.1 millionour higher average outstanding borrowings for the three months ended September 30, 2016, an increase of $2.2 million or 7.8%. The increase is due to weighted average debt outstanding of approximately $300 million during the three months ended September 30, 20172018 related to our Credit Facilitythe credit facility. These higher average outstanding borrowings in 2018 were primarily associated with borrowings primarily for the funding of the acquisitions of G2, LCI G2 and Sequel.  We did not have any debt outstanding during the three months ended September 30, 2016 relatedSequel, which occurred in August of 2017, and PowerAdvocate, which occurred in December of 2017, as well as borrowings used to fund our Credit Facility.share repurchase program.   
Provision for Income Taxes
The provision for income taxes was $26.8 million for the three months ended September 30, 2018 compared to $60.0 million for the three months ended September 30, 2017, compared to $44.8a decrease of $33.2 million or 55.3%. The effective tax rate was 13.9% for the three months ended September 30, 2016, an increase of $15.2 million or 33.8%. The effective tax rate was2018 compared to 33.2% for the three months ended September 30, 2017 compared to 26.0% for the three months ended September 30, 2016.2017. The effective rate for the three months ended September 30, 20172018 was higherlower than the September 30, 20162017 effective tax rate primarily due to the reducedimpact of tax reform lowering the U.S. tax rate from 35.0% to 21.0%, as well as the impact of greater tax benefits from equity compensation in the current period resulting from legislation enacted inversus the U.K., and mix of foreign income, partially offset by the tax rate benefit of adopting ASU No. 2016-09.prior period.
Net Income Margin
The net income margin for our consolidated results was 22.0%27.7% for the three months ended September 30, 20172018 compared to 25.6% for the three months ended September 30, 2016. The legislation enacted in the U.K., and mix of foreign income, partially offset by the tax rate benefit of adoption ASU No. 2016-09 lowered our net income margin by 1.9%22.0% for the three months ended September 30, 2017.
EBITDA Margin
The EBITDA margin for our consolidated results was 49.8% for the three months ended September 30, 2018 as compared to 49.6% for the three months ended September 30, 2017 as compared to 50.7% for the three months ended September 30, 2016.2017.

Nine Months Ended September 30, 20172018 Compared to Nine Months Ended September 30, 20162017
Revenues
Revenues were $1,781.2 million for the nine months ended September 30, 2018 compared to $1,574.9 million for the nine months ended September 30, 2017, compared to $1,489.1 million for the nine months ended September 30, 2016, an increase of $85.8$206.3 million or 5.8%13.1%. Excluding revenues of $35.6 million$96.0 from Greentech Media, Quest Offshore, Analyze Re, Arium, Healix, ENI, Fintellix, MAKE, and Aerial Imagery, Sequel, Rebmark, Service Software, Business Insight, and Validus, our recent acquisitions within the Decision AnalyticsInsurance segment, MAKE and RII, GeoInformation, MarketStance and Healix,PowerAdvocate, our recent acquisitions within the Risk AssessmentEnergy and Specialized Markets segment, and Fintellix, G2, LCI, and Marketview, our recent acquisitions within the Financial Services segment, all collectively referred to as our recent acquisitions, our consolidated revenue growth increased $50.2$110.3 million or 3.4%7.0%. Revenues within our Decision AnalyticsInsurance segment, excluding our recent acquisitions named above, increased $25.9$86.1 million or 2.7%7.5%. Revenues within our Energy and revenues in our Risk AssessmentSpecialized Markets segment, excluding our recent acquisitions named above, increased $24.3$25.8 million or 4.5%7.9%. The increase in Decision Analytics' revenues,Revenues within our Financial Services segment, excluding our recent acquisitions was primarily driven by an increase in our insurance category, which was offset by currency headwinds in our energy and specialized market category and in our financial services category. Within Risk Assessment, excluding recent acquisitions, both industry-standard insurance programs and property-specific rating and underwriting information contributed to its revenue growth.named above, decreased $1.6 million or 1.6%. Refer to the Results of Continuing Operations by Segment within this section for furthermore information regarding our revenues.

Nine Months Ended September 30,
Percentage change Percentage change excluding recent acquisitions

2018 2017

          

(In millions)    
Insurance$1,269.7
 $1,145.3
 10.9%
7.5 %
Energy and Specialized Markets 383.1
  328.0
 16.8%
7.9 %
Financial Services 128.4
  101.6
 26.3%
(1.6)%
Total Revenues$1,781.2
 $1,574.9
 13.1%
7.0 %
Cost of Revenues
Cost of revenues was $662.2 million for the nine months ended September 30, 2018 compared to $575.1 million for the nine months ended September 30, 2017, compared to $521.4 million for the nine months ended September 30, 2016, an increase of $53.7$87.1 million or 10.3%15.1%. Our recent acquisitions accounted for an increase of $28.3$51.1 million in cost of revenues, primarily related to salaries and employee benefits. Excluding the impact of our recent acquisitions, our cost of revenues increased $25.4$36.0 million or 4.9%6.3%. The increase was primarily due to increases in salaries and employee benefits of $19.8$25.3 million, data costs of $3.6$3.9 million, rent and facilities expenses of $3.3 million, information technology expenses of $1.2$1.7 million, and other operating costs of $0.8$1.8 million.
Selling, General and Administrative Expenses
Selling, general and administrative expenses, or SGA, were $281.0 million for the nine months ended September 30, 2018 compared to $235.6 million for the nine months ended September 30, 2017, compared to $224.4 million for the nine months ended September 30, 2016, an increase of $11.2$45.4 million or 5.0%19.3%. Our recent acquisitions accounted for an increase of $10.5$22.0 million in SGA.SGA, primarily related to salaries and employee benefits, and transaction costs of $1.2 million. Excluding costs associated with our recent acquisitions, our SGA increased $0.7$23.4 million or 0.3%10.2%. The increase was primarily due to increases in salaries and employee benefits of $1.8$15.6 million, andinformation technology expenses of $2.8 million, professional consulting costs of $1.0 million. These increases were offset by decreases in information technology expenses of $1.6$2.3 million, and other general expenses of $0.5$2.7 million.
Depreciation and Amortization of Fixed Assets
Depreciation and amortization of fixed assets was $121.6 million for the nine months ended September 30, 2018 compared to $99.4 million for the nine months ended September 30, 2017, compared to $90.7 million for the nine months ended September 30, 2016, an increase of $8.7$22.2 million or 9.5%22.3%. The increase in depreciation and amortization of fixed assets includes depreciation and amortization primarily related to our capital expenditures.expenditures was $13.1 million and related to fixed assets associated with recent acquisitions was $9.1 million.
Amortization of Intangible Assets
Amortization of intangible assets was $98.5 million for the nine months ended September 30, 2018 compared to $73.6 million for the nine months ended September 30, 2017, compared to $70.4 million for the nine months ended September 30, 2016, an increase of $3.2$24.9 million or 4.7%33.7%. The increase was primarily due to amortization related to our recent acquisitions of $8.3$22.0 million offset byand currency fluctuations impacting amortization denominated in currencies other than U.S. dollars.

Investment Income and Others, net
Investment income and others, net was a gain of $19.3 million for the nine months ended September 30, 2018, compared to a gain of $7.9 million for the nine months ended September 30, 2017 as compared2017. The increase of $11.4 million was primarily due to a realized gain of $3.0$12.3 million on the repayment of subordinated promissory note receivable prior to its maturity, partially offset by a reduction in interest income, associated with its payoff in August 2018.
Interest Expense
Interest expense was $97.1 million for the nine months ended September 30, 2016. The increase was primarily due2018, compared to an increase in interest income of $4.9 million generated from the subordinated promissory note related to the divestiture of our healthcare business in 2016.
Interest Expense
Interest expense was $87.3 million for the nine months ended September 30, 2017, comparedan increase of $9.8 million or 11.2%. The increase was due to $91.7 millionour higher average outstanding borrowings for the nine months ended September 30, 2016, a decrease2018 related to the credit facility. These higher average outstanding borrowings in 2018 were primarily associated with the funding of $4.4 million or 4.7%. The decrease is primarily duethe acquisitions of G2, LCI and Sequel, which occurred in August of 2017 and PowerAdvocate, which occurred in December of 2017, as well as borrowings used to repayments in 2016 of $910.0 million on the Credit Facility funded by the net proceeds from the divestiture offund our healthcare business and cash from operations.

share repurchase program.
Provision for Income Taxes
The provision for income taxes was $87.6 million for the nine months ended September 30, 2018 compared to $161.3 million for the nine months ended September 30, 2017, compared to $149.5a decrease of $73.7 million or 45.7%. The effective tax rate was 16.2% for the nine months ended September 30, 2016, an increase of $11.8 million or 7.9%. The effective tax rate was2018 compared to 31.5% for the nine months ended September 30, 2017 compared to 30.3% for the nine months ended September 30, 2016.2017. The effective rate for the nine months ended September 30, 20172018 was higherlower than the September 30, 20162017 effective tax rate primarily due to reducedthe impact of tax reform lowering the U.S. tax rate from 35.0% to 21.0%, as well as the impact of greater tax benefits from equity compensation in the current period resulting from legislation enacted inversus the U.K., and mix of foreign income, partially offset by the tax rate benefit of adopting ASU No. 2016-09.prior period.
Net Income Margin
The net income margin for our consolidated results including discontinued operations, was 25.4% for the nine months ended September 30, 2018 compared to 22.3% for the nine months ended September 30, 2017 compared to 30.1%2017.
EBITDA Margin
The EBITDA margin for our consolidated results was 48.1% for the nine months ended September 30, 2016. Our net income margin for the nine months ended September 30, 2016 was positively impacted by the discontinued operations, including the gain on sale of our healthcare business of 7.0%.
EBITDA Margin
The EBITDA margin for our consolidated results, including discontinued operations, was2018 as compared to 49.0% for the nine months ended September 30, 2017 as compared to 63.4% for the nine months ended September 30, 2016. Our2017. The decrease in EBITDA margin for the nine months ended September 30, 2016 was positively impacted by the discontinued operations,primarily related to our recent acquisitions including the gain on salean acquisition contingent consideration of our healthcare business, of 13.3%.$4.2 million.
Results of Continuing Operations by Segment
Decision AnalyticsInsurance
Revenues
Revenues for our Decision AnalyticsInsurance segment were $355.9$427.7 million for the three months ended September 30, 2018 compared to $396.0 million for the three months ended September 30, 2017, compared to $317.3 million for the three months ended September 30, 2016, an increase of $38.6$31.7 million or 12.2%8.0%. Excluding revenue of $15.1$10.0 million from our recent acquisitions, Decision AnalyticsInsurance revenue increased $23.5$21.7 million or 7.5%5.5%.
Our revenue by category for the periods presented is set forth below:

For the Three Months Ended September 30,
Percentage

2017 2016
Change
        

(In millions)

Insurance$203.9

$174.4

16.9%
Energy and specialized markets 111.4

 109.1

2.1%
Financial services 40.6

 33.8

20.2%
Total Decision Analytics$355.9

$317.3

12.2%

For the Three Months Ended September 30,
Percentage Percentage change excluding recent acquisitions

2018
2017
Change 








  

(In millions)

  
Underwriting & Rating$285.1

$261.8

8.9% 6.3%
Claims
142.6


134.2

6.3% 4.0%
Total Insurance$427.7

$396.0

8.0% 5.5%
Our insuranceunderwriting & rating revenue increased $29.5$23.3 million or 16.9%8.9%; excluding revenues from recent acquisitions of $5.5$7.0 million, our insuranceunderwriting & rating revenue increased $24.0$16.3 million or 13.7%6.3%, primarily due to increases within our loss quantification, underwriting & rating solutions and catastrophe modeling and claims analytics solutions.services revenue.
Our energy and specialized marketsclaims revenue increased $2.3$8.4 million or 2.1%6.3%; excluding revenues from recent acquisitions of $2.1$3.0 million, our energy and specialized marketsclaims revenue increased $0.2$5.4 million or 0.2%4.0%, primarily due to growth in our energy businessclaims analytics and in our environmental health and safety solutions.repair cost estimating
Our financial services
solutions revenue, increased $6.8 million or 20.2%; excluding revenues from the recent acquisition of $7.5 million, our financial services revenue decreased $0.7 million or 2.0%, due to several contract completions in 2016which was partially offset by growtha decline in media effectiveness solutions.

our aerial imagery solutions revenue. The severe storm-related repair costs estimating and aerial imagery-based solutions contributed approximately $8.0 million for the three months ended September 30, 2017, which did not reoccur in 2018.
Revenues for our Decision AnalyticsInsurance segment were $999.7$1,269.7 million for the nine months ended September 30, 2018 compared to $1,145.3 million for the nine months ended September 30, 2017, compared to $947.4 million for the nine months ended September 30, 2016, an increase of $52.3$124.4 million or 5.5%10.9%. Excluding revenue of $26.4$38.3 million from our recent acquisitions, Decision AnalyticsInsurance revenue increased $25.9$86.1 million or 2.7%7.5%.
Our revenue by category for the periods presented is set forth below:

For the Nine Months Ended September 30,
Percentage

2017 2016 Change
     

 (In millions)

Insurance$573.5

$521.4

10.0 %
Energy and specialized markets 328.0

 333.2

(1.5)%
Financial services 98.2

 92.8

5.8 %
Total Decision Analytics$999.7

$947.4

5.5 %
 For the Nine Months Ended September 30, Percentage Percentage change excluding recent acquisitions
 2018 2017 Change 
          
 (In millions)    
Underwriting & Rating$854.6
 $777.0
 10.0% 6.5%
Claims 415.1
  368.3
 12.7% 9.8%
Total Insurance$1,269.7
 $1,145.3
 10.9% 7.5%
Our insuranceunderwriting & rating revenue increased $52.1$77.6 million or 10.0%; excluding revenues from recent acquisitions of $7.2$27.5 million, our insuranceunderwriting & rating revenue increased $44.9$50.1 million or 8.6%6.5%, primarily due to increases within our underwriting & rating solutions and catastrophe modeling loss quantification, and claims analytics solutions.services revenue.
Our energy and specialized marketsclaims revenue decreased $5.2increased $46.8 million or 1.5%12.7%; excluding revenues from recent acquisitions of $10.0$10.8 million, our energy and specialized marketsclaims revenue decreased $15.2increased $36.0 million or 4.6%9.8%, primarily as a result of currency headwinds affecting the energy business and lower revenue in environmental health and safety solutions.
Our financial services revenue increased $5.4 million or 5.8%; excluding revenues from the recent acquisition of $9.2 million, our financial services revenue decreased $3.8 million or 4.0%, due to several contract completions in 2016 offset by growth in media effectiveness solutions.our repair cost estimating solutions, claims analytics and aerial imagery solutions revenue. The severe storm-related repair costs estimating and aerial imagery-based solutions contributed approximately $8.0 million for the nine months ended September 30, 2017, which did not reoccur in 2018.
Cost of Revenues
Cost of revenues for our Decision AnalyticsInsurance segment was $141.7$142.1 million for the three months ended September 30, 2018 compared to $129.3 million for the three months ended September 30, 2017, compared to $117.6 million for the three months ended September 30, 2016, an increase of $24.1$12.8 million or 20.5%9.9%. Our recent acquisitions within the Decision AnalyticsInsurance segment, represented an increase of $13.3$1.0 million in cost of revenues, which was primarily related to salaries and employee benefits. Excluding the impact of our recent acquisitions, our cost of revenues increased $10.8$11.8 million or 9.3%. The increase was primarily due to increases in salaries and employee benefits of $5.3$6.4 million, rent and facilities expenses of $1.6 million, data costs of $1.2 million, information technology expenses of $1.7 million, data costs of $0.8$0.5 million, and other operating costsexpenses of $3.0$2.1 million.
Cost of revenues for our Decision AnalyticsInsurance segment was $405.3$422.2 million for the nine months ended September 30, 2018 compared to $375.4 million for the nine months ended September 30, 2017, compared to $362.6 million for the nine months ended September 30, 2016, an increase of $42.7$46.8 million or 11.8%12.5%. Our recent acquisitions within the Decision AnalyticsInsurance segment, represented an increase of $23.2$21.2 million in cost of revenues, which was primarily related to salaries and employee benefits. Excluding the impact of our recent acquisitions, our cost of revenues increased $19.5$25.6 million or 5.4%6.9%. The increase was primarily due to increases in salaries and employee benefits of $13.7$17.1 million, data costs of $3.2$4.1 million, rent and facilities expenses of $2.9 million, information technology expenses of $1.7$1.1 million, and other operating costs of $0.9$0.4 million.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for our Decision AnalyticsInsurance segment were $60.4$57.5 million for the three months ended September 30, 2018 compared to $48.6 million for the three months ended September 30, 2017, compared to $55.4 million for the three months ended September 30, 2016, an increase of $5.0$8.9 million or 9.0%18.3%. Our recent acquisitions within the Decision AnalyticsInsurance segment accounted for an increase of $4.2$4.6 million in SGA.SGA, primarily related to salaries and employee benefits. Excluding costs associated with our recent acquisitions, SGA increased $0.8$4.3 million or 1.5%9.2%. The increase was primarily due to increases in salaries and employee benefits of $2.2 million, information technology expenses of $1.0 million, professional consulting costs of $0.8 million, and other general expenses of $0.6 million. These increases were offset by decreases in information technology expenses of $0.7 million and professional consulting costs of $0.1$0.3 million.

Selling, general and administrative expenses for our Decision AnalyticsInsurance segment were $174.2$163.3 million for the nine months ended September 30, 2018 compared to $143.1 million for the nine months ended September 30, 2017, compared to $161.8 million for the nine months ended September 30, 2016, an increase of $12.4$20.2 million or 7.7%14.1%. Our recent acquisitions within the Decision AnalyticsInsurance segment accounted for an increase of $8.7$7.7 million in SGA.SGA, primarily related to salaries and employee benefits and transaction costs. Excluding costs associated with our recent acquisitions, SGA increased $3.7$12.5 million or 2.3%9.0%. The increase was primarily due to increases in salaries and employee benefits of $2.5$7.9 million, information technology expenses of $2.1 million, professional consulting costs of $1.4$1.6 million, and other general expenses of $0.7 million. These increases were offset by a decrease in information technology expenses of $0.9 million.
     EBITDA Margin
The EBITDA margin for our Decision AnalyticsInsurance segment including discontinued operations, was 42.8%$700.4 million for the nine months ended September 30, 20172018 compared to 65.5%$635.7 million for the nine months ended September 30, 2016.2017. The decrease in our EBITDA margin for our Insurance segment was primarily attributed to the gain on sale from the divestiture of our healthcare business55.2% for the nine months ended September 30, 2016.2018 compared to 55.5% for the nine months ended September 30, 2017.
Risk AssessmentEnergy and Specialized Markets
Revenues
Revenues for our Risk AssessmentEnergy and Specialized Markets segment were $193.2$127.7 million for the three months ended September 30, 2018 compared to $111.4 million for the three months ended September 30, 2017, compared to $180.8an increase of $16.3 million or 14.6%. Excluding revenue of $9.0 million from our recent acquisitions, Energy and Specialized Markets revenue increased $7.3 million or 6.6% for the three months ended September 30, 2016, an2018. The increase of $12.4within this segment primarily resulted from continuing end-market improvements in the energy sector and growth in our environmental health and safety services revenue.
Revenues for our Energy and Specialized Markets segment were $383.1 million or 6.9%. Excluding revenue of $3.5 million from our recent acquisitions, Risk Assessment revenue increased $8.9 million or 4.9% for the threenine months ended September 30, 2017. Revenues for our Risk Assessment segment were $575.22018 compared to $328.0 million for the nine months ended September 30, 2017, compared to $541.7an increase of $55.1 million or 16.8%. Excluding revenue of $29.3 million from our recent acquisitions, Energy and Specialized Markets revenue increased $25.8 million or 7.9% for the nine months ended September 30, 2016, an increase of $33.5 million or 6.2%. Excluding revenue of $9.2 million from our recent acquisitions, Risk Assessment revenue increased $24.3 million or 4.5% for the nine months ended September 30, 2017.2018. The overall increase within this segment primarily resulted from an increasecontinuing end-market improvements in prices derived from continued enhancements to the content ofenergy sector, favorable currency fluctuations in the energy business and growth in our industry-standard insurance programs' solutions as well as selling expanded solutions to existing customers.
Our revenue by category for the periods presented is set forth below:
 Three Months Ended 
 September 30,		 Percentage Nine Months Ended 
 September 30,		 Percentage
 2017
2016 Change 2017
2016 Change
            
 (In millions)
Industry-standard insurance
programs		$149.0
 $138.2
 7.8% $442.7
 $414.2
 6.9%
Property-specific rating and
underwriting information		 44.2
  42.6
 3.7%  132.5
  127.5
 4.0%
Total Risk Assessment$193.2
 $180.8
 6.9% $575.2
 $541.7
 6.2%
environmental health and safety services revenue.
Cost of Revenues
Cost of revenues for our Risk AssessmentEnergy and Specialized Markets segment was $56.8$53.2 million for the three months ended September 30, 2018 compared to $49.0 million for the three months ended September 30, 2017, compared to $52.1 million for the three months ended September 30, 2016, an increase of $4.7$4.2 million or 9.2%8.3%. Our recent acquisitions within the Risk AssessmentEnergy and Specialized Markets segment represented an increase of $1.8$3.3 million in cost of revenues, which was primarily related to salaries and employee benefits. Excluding the impact of our recent acquisitions, our cost of revenues increased $2.9$0.9 million or 5.6%1.9%. The increase was primarily due to increases in salaries and employee benefits costs of $3.6$0.4 million, and data costs of $0.2 million. These increases were offset by a decrease in other operating costs of $0.9$0.5 million.
Cost of revenues for our Risk AssessmentEnergy and Specialized Markets segment was $169.8$164.7 million for the nine months ended September 30, 2018 compared to $143.5 million for the nine months ended September 30, 2017, compared to $158.8 million for the nine months ended September 30, 2016, an increase of $11.0$21.2 million or 7.0%14.7%. Our recent acquisitions within the Risk AssessmentEnergy and Specialized Markets segment represented an increase of $5.1$11.3 million in cost of revenues, which was primarily related to salaries and employee benefits. Excluding the impact of our recent acquisitions, our cost of revenues increased $5.9$9.9 million or 3.7%6.9%. The increase was primarily due to increases in salaries and employee benefits costs of $6.1$6.6 million, and data costs of $0.4 million. These increases were offset by decreases in information technology expenses of $0.5 million, rent and facilities expenses of $0.4 million, and other operating costs of $0.1$2.6 million.

These increases were partially offset by a decrease in data costs of $0.2 million.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for our Risk AssessmentEnergy and Specialized Markets segment were $20.5$34.1 million for the three months ended September 30, 2018 compared to $28.3 million for the three months ended September 30, 2017, compared to $22.4 million for the three months ended September 30, 2016, a decreasean increase of $1.9$5.8 million or 8.6%20.4%. Our recent acquisitions within the Risk AssessmentsEnergy and Specialized Markets segment accounted for an increase of $0.5$3.4 million in SGA.SGA, primarily related to salaries and employee benefits and transaction costs. Excluding costs associated with our recent acquisitions, SGA decreasedincreased $2.4 million or 10.8%8.6%. The decreaseincrease was primarily due to decreasesincreases in professional consulting costssalaries and employee benefits of $0.9$1.9 million, information technology expenses of $0.4$0.3 million, salaries and employee benefitsprofessional consulting costs of $0.2$0.1 million, and other general expenses of $0.9$0.1 million.

Selling, general and administrative expenses for our Risk AssessmentEnergy and Specialized Markets segment were $61.4$103.6 million for the nine months ended September 30, 2018 compared to $84.1 million for the nine months ended September 30, 2017, comparedan increase of $19.5 million or 23.1%. Our recent acquisitions within the Energy and Specialized Markets segment accounted for an increase of $10.5 million in SGA, primarily related to $62.6salaries and employee benefits and transaction costs. Excluding costs associated with our recent acquisitions, SGA increased $9.0 million or 10.7%. The increase was primarily due to increases in salaries and employee benefits of $6.5 million, information technology expenses of $0.7 million, and other general expenses of $1.8 million.
EBITDA Margin
EBITDA for our Energy and Specialized Markets segment was $116.0 million for the nine months ended September 30, 2016, a decrease2018 compared to $99.1 million for the nine months ended September 30, 2017. EBITDA margin for our Energy and Specialized Markets segment was 30.3% for the nine months ended September 30, 2018 compared to 30.2% for the nine months ended September 30, 2017.
Financial Services
Revenues
Revenues for our Financial Services segment were $43.3 million for the three months ended September 30, 2018 compared to $41.7 million for the three months ended September 30, 2017, an increase of $1.2$1.6 million or 2.1%4.0%. Excluding revenue of $5.1 million from our recent acquisitions, Financial Services revenue decreased $3.5 million or 9.8% for the three months ended September 30, 2018. The decrease within this segment primarily resulted from a $6.0 million nonrecurring project revenue that occurred during the three months ended September 30, 2017 and did not reoccur in 2018.
Revenues for our Financial Services segment were $128.4 million for the nine months ended September 30, 2018 compared to $101.6 million for the nine months ended September 30, 2017, an increase of $26.8 million or 26.3%. Excluding revenue of $28.4 million from our recent acquisitions, Financial Services revenue decreased $1.6 million or 1.6% for the nine months ended September 30, 2018. The decrease within this segment primarily resulted from a $6.0 million nonrecurring project revenue earned in the third quarter of 2017 and did not reoccur in 2018, partially offset by the growing demand for our enterprise data management and portfolio management solutions revenue.
Cost of Revenues
Cost of revenues for our Financial Services segment was $23.9 million for the three months ended September 30, 2018 compared to $20.2 million for the three months ended September 30, 2017, an increase of $3.7 million or 18.8%. Our recent acquisitions within the Risk AssessmentsFinancial Services segment accounted forrepresented an increase of $1.8$3.2 million in SGA.cost of revenues, which was primarily related to salaries and employee benefits. Excluding the impact of our recent acquisitions, our cost of revenues increased $0.5 million or 2.9%. The increase was primarily due to increases in salaries and employee benefits costs of $1.0 million, data costs of $0.4 million, and information technology expenses of $0.1 million. These increases were partially offset by a decrease in other operating costs of $1.0 million.
Cost of revenues for our Financial Services segment was $75.3 million for the nine months ended September 30, 2018 compared to $56.2 million for the nine months ended September 30, 2017, an increase of $19.1 million or 33.9%. Our recent acquisitions within the Financial Services segment represented an increase of $18.6 million in cost of revenues, which was primarily related to salaries and employee benefits and an acquisition contingent payment. Excluding the impact of our recent acquisitions, our cost of revenues increased $0.5 million or 0.9%. The increase was primarily due to increases in salaries and employee benefits costs of $1.6 million and information technology expenses of $0.1 million. These increases were partially offset by a decrease in other operating costs of $1.2 million.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for our Financial Services segment were $4.1 million for the three months ended September 30, 2018 compared to $4.0 million for the three months ended September 30, 2017, an increase of $0.1 million or 3.3%. Excluding costs associated with our recent acquisitions, SGA decreased $3.0increased $0.5 million or 4.8%21.8%. The decreaseincrease was primarily due to decreasesan increase in salaries and employee benefits of $0.7$0.6 million, information technology expenses of $0.7 million, professional consulting costs of $0.4 million andpartially offset by a decrease in other general expenses of $1.2$0.1 million. Our recent acquisitions within the Financial Services segment accounted for a decrease of $0.4 million in SGA, primarily related to lower acquisition related fees.
EBITDA Margin
EBITDA marginSelling, general and administrative expenses for our Risk AssessmentFinancial Services segment was 59.8%were $14.1 million for the nine months ended September 30, 2018 compared to $8.4 million for the nine months ended September 30, 2017, comparedan increase of $5.7 million or 69.5%. Our recent acquisitions within the Financial Services segment accounted for an increase of $3.8 million in SGA, primarily related to 59.4%salaries and employee benefits, and transaction costs. Excluding costs associated with our recent acquisitions, SGA increased $1.9 million or 30.7%. The increase was primarily due to increases in salaries and employee benefits of $1.2 million and professional consulting costs of $0.7 million.
EBITDA Margin
EBITDA for our Financial Services segment was $40.9 million for the nine months ended September 30, 2016.2018 compared to $37.3 million for the nine months ended September 30, 2017. EBITDA margin for our Financial Services segment was 31.8% for the nine months ended September 30, 2018 compared to 36.8% for the nine months ended September 30, 2017. The decrease in EBITDA margin was primarily due to an acquisition contingent payment of $3.5 million related to the Fintellix acquisition that negatively impacted our margin for the nine months ended September 30, 2018.
Liquidity and Capital Resources
As of September 30, 20172018 and December 31, 2016,2017, we had cash and cash equivalents and available-for-sale securities of $145.7$151.6 million and $138.5$146.1 million, respectively. Subscriptions for our solutions are billed and generally paid in advance of rendering services either quarterly or upon commencement of the annual or multi-year subscription period in annual amounts. Most of our 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 $1,500.0 million Syndicated Revolving Credit Facility, or the Credit Facility, we believe that we will have sufficient cash to meet our working capital and capital expenditure needs, and to fuel our future growth plans.
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 those 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.
Our capital expenditures as a percentage of consolidated revenues for the nine months ended September 30, 2018 and 2017, were 8.7% and 2016, were 7.2% and 6.2%, respectively. The capital expenditures for the year ending December 31, 2017 are expected to be approximately $185.0 million, which primarily include expenditures on our technology infrastructure and our continuing investments in developing and enhancing our solutions. Expenditures related to developing and enhancing our solutions are predominately related to internal use software and are capitalized and amortized over a period of three to seven years 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."
We have also historically used a portion of our cash for repurchases of our common stock from our stockholders. During the nine months ended September 30, 20172018 and 2016,2017, we repurchased $276.2$282.2 million and $182.5$276.2 million of our common stock, respectively. 
Financing and Financing Capacity
We had total short-term and long-term debt, excluding capital lease obligations and the discounts and debt issuance costs on our senior notes and credit facility, of $2,895.0$2,585.0 million and $2,400.0$3,015.0 million at September 30, 20172018 and December 31, 2016,2017, respectively. As of September 30, 2017,2018, we were in compliance with our financial debt covenants.
As of September 30, 2017,2018, we had a borrowing capacity of $1,500.0 million, of which $901.4$1,208.3 million, net of outstanding letters of credit, was available for borrowings under the Credit Facility with Bank of America N.A., JP Morgan Chase, N.A., and a syndicate of banks. The Credit Facility may be used for general corporate purposes, including working capital needs and capital expenditures, acquisitions, and the share repurchase program.

The Credit Facility contains certain financial and other covenants that, among other things, impose certain restrictions on indebtedness, liens, investments, and capital expenditures. These covenants also place restrictions on mergers, asset sales, sale/leaseback transactions, payments between us and our subsidiaries, and certain transactions with affiliates. The financial covenants require that, at the end of any fiscal quarter, we have a consolidated interest coverage ratio of at least 3.0 to 1.0 and that we maintain, during any period of four fiscal quarters, a consolidated funded debt leverage ratio of 3.5 to 1.0. We were in compliance with all financial debt covenants under the Credit Facility as of September 30, 2017.2018. Interest on borrowings under

the Credit Facility is payable at an interest rate of LIBOR plus 1.125% to 1.625%, depending upon the consolidated funded debt leverage ratio. A commitment fee on any unused balance is payable periodically and will range from 12.5 to 25.0 basis points based upon the consolidated funded debt leverage ratio. As of September 30, 20172018 and December 31, 2016,2017, we had outstanding borrowings under the Credit Facility of $595.0$285.0 million and $100.0$715.0 million, respectively. During the nine months ended September 30, 2017,2018, we had borrowings of $640.0$145.0 million and repayments of $145.0$575.0 million under the Credit Facility. On May 18, 2017,Subsequent to September 30, 2018, we entered into the third amendment tohad borrowings of $35.0 million and repayments of $25.0 million under the Credit Facility, which, among other things, extended the maturity date one year to May 15, 2022.Facility.
Cash Flow
The following table summarizes our cash flow data for the nine months ended September 30, 20172018 and 2016:
2017:
 Nine Months Ended September 30, 
Percentage
Change
 2017 2016 
        
 (In millions)  
Net cash provided by operating activities$592.1
 $484.4
 22.2 %
Net cash (used in) provided by investing activities$(823.9) $579.3
 (242.2)%
Net cash provided by (used in) financing activities$234.3
 $(1,027.9) (122.8)%
 Nine Months Ended September 30, 
Percentage
Change
 2018 2017 
        
 (In millions)  
Net cash provided by operating activities$761.0
 $592.1
 28.5 %
Net cash used in investing activities$(103.8) $(823.9) (87.4)%
Net cash (used in) provided by financing activities$(648.5) $234.3
 (376.8)%
Operating Activities
Net cash provided by operating activities was $761.0 million for the nine months ended September 30, 2018 compared to $592.1 million for the nine months ended September 30, 2017 compared to $484.4 million for the nine months ended September 30, 2016.2017. The increase in net cash provided by operating activities was primarily related to a decrease in income tax payments due to the tax paid on the gain on the sale of the Company's healthcare business in the second quarter of 2016 and an increase in cash receipts from customers driven by an increase in revenues and operating profit, as well as a decrease in tax payments due to tax reform passed in 2017, partially offset by the prior year cash flow from operations for the healthcare business prior to the disposition.an increase in interest payments.
 
Investing Activities
Net cash used in investing activities of $103.8 million for the nine months ended September 30, 2018 was primarily related to current year acquisitions, including escrow payments, of $67.7 million and capital expenditures of $154.5 million, partially offset by proceeds from the repayment of subordinated promissory note receivable of $121.4 million. Net cash used in investing activities of $823.9 million for the nine months ended September 30, 2017 was primarily related to currentprior year acquisitions, including escrow payments, of $705.2 million and capital expenditures of $113.8 million. The $40.7 million increase in capital expenditures for the for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 was primarily related to the purchase of aircraft, sensors, and software development for our aerial imagery business.
Financing Activities
Net cash provided by investingused in financing activities of $579.3$648.5 million for the nine months ended September 30, 20162018 was primarily driven by proceeds from the salenet debt repayments on our Credit Facility of our healthcare business$430.0 million and repurchases of $719.4common stock of $282.2 million, partially offset by capital expendituresproceeds from stock option exercises of $98.6 million and acquisitions including escrow payments of $49.6$74.7 million.
Financing Activities
Net cash provided by financing activities of $234.3 million for the nine months ended September 30, 2017 was primarily related to borrowings, net of payments, from our Credit Facility of $495.0 million and proceeds from stock options exercises of $26.0 million, partially offset by repurchases of common stock of $276.2 million. Net cash used in financing activities of $1,027.9 million for the nine months ended September 30, 2016 was primarily driven by net debt repayments of our Credit Facility of $870.0 million as well as repurchases of common stock of $182.5 million, partially offset by proceeds from stock options exercises of $32.6 million.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Contractual Obligations
There have been no material changes to our contractual obligations outside the ordinary course of our business from those reported in our annual report on Form 10-K and filed with the Securities and Exchange Commission on February 21, 2017.20, 2018.

Critical Accounting Policies and Estimates
Our management’s discussion and analysis of financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements require management to make estimates and judgments that affect reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the dates of the financial statements and revenue and expenses during the reporting periods. These estimates are based on historical experience and on other assumptions that are believed to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates, including those related to acquisition purchase price allocations, revenue recognition, goodwill and intangible assets, pension and other post retirement benefits, stock-based compensation, income taxes and allowance for doubtful accounts. Actual results may differ from these assumptions or conditions. Some of the judgments that management makes in applying its accounting estimates in these areas are discussed under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K dated and filed with the Securities and Exchange Commission on February 21, 2017.20, 2018. Since the date of our annual report on Form 10-K, there have been no material changes to our critical accounting policies and estimates other than the itemitems noted below.
AsEffective January 1, 2018, we adopted the requirements of Topic 606 using the modified retrospective method. The related critical accounting policies and disclosures were presented in Part I Item 1. Note 2 and Note 3 to our condensed consolidated financial statements for the three and nine months ended September 30, 2017, we had goodwill of $3,188.8 million, which represents 56.7% of our total assets. We performed an impairment test as of June 30, 2017 and confirmed that no impairment charge was necessary. As part of this process, we conducted the annual impairment test of our energy reporting unit at June 30, 2017, at which time the fair value exceeded its carrying value by less than 10%. This outcome is consistent with our expectation due to the decline in the GBP/USD exchange rate as well as current energy market conditions. The carrying value of the goodwill associated with our energy reporting unit was $1,841.8 million as of June 30, 2017. There were no triggering events prior to the filing of this Form 10-Q that would impact the results of the impairment test performed as of June 30, 2017.2018.
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Market risks at September 30, 20172018 have not materially changed from those discussed under Item 7A in our annual report on Form 10-K dated and filed with the Securities and Exchange Commission on February 21, 2017.20, 2018.
Item 4.Controls and Procedures
Disclosure Controls and Procedures
We are required to maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives at the reasonable assurance level.
Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly report on Form 10-Q. Based upon the foregoing assessments, our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2017,2018, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting

During the nine months ended September 30, 2017,2018, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION
Item 1.Legal Proceedings
We are party to legal proceedings with respect to a variety of matters in the ordinary course of business. See Part I Item 1. Note 1415 to our condensed consolidated financial statements for the nine months ended September 30, 20172018 for a description of our significant current legal proceedings, which is incorporated by reference herein.
Item 1A.Risk Factors
There has been no material change in the information provided under the heading “Risk Factors” in our annual report on Form 10-K dated and filed with the Securities and Exchange Commission on February 21, 2017.20, 2018.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Securities
There were no unregistered sales of equity securities by the Company during the period covered by this report.
Issuer Purchases of Equity Securities
Our board of directors has authorized a share repurchase program of up to $2.8 billion. As of September 30, 2017,2018, we had $366.2$584.0 million available to repurchase shares.shares, which included the authorization of $500.0 million approved on May 16, 2018. These authorizations have no expiration dates and may be suspended or terminated at any time. On September 14, 2018, the Company entered into an Accelerated Share Repurchase ("ASR") agreement to repurchase shares of its common stock for an aggregate purchase price of $50.0 million. The ASR will be effective October 1, 2018. Since the introduction of share repurchase as a feature of our capital management strategies in 2010, we have repurchased shares with an aggregate value of $2.4 billion.$2,716.0 million. Our share repurchases for the quarter ended September 30, 20172018 are set forth below:


  
  Total Number of Approximate Dollar


  
  Shares Purchased Value of Shares that

 Total Number  Average  as Part of Publicly May Yet Be

 of Shares  Price Paid  Announced Plans Purchased Under the
PeriodPurchased  per Share  or Programs Plans or Programs
         (in millions)
July 1, 2017 through July 31, 2017—
 $—
 —
 $376.4
August 1, 2017 through August 31, 2017—
 $—
 —
 $376.4
September 1, 2017 through September 30, 2017124,500
 $81.85
 124,500
 $366.2

124,500
  

 124,500
  


  
  Total Number of Approximate Dollar


  
  Shares Purchased Value of Shares that

 Total Number  Average  as Part of Publicly May Yet Be

 of Shares  Price Paid  Announced Plans Purchased Under the
PeriodPurchased  per Share  or Programs Plans or Programs
         (in millions)
July 1, 2018 through July 31, 2018371,609
 $107.64
 371,609
 $645.8
August 1, 2018 through August 31, 2018135,436
 $118.88
 135,436
 $629.7
September 1, 2018 through September 30, 2018355,912
 $128.40
 355,912
 $584.0

862,957
  

 862,957
  
Item 3.Defaults Upon Senior Securities
None.
Item 4.Mine Safety Disclosures
None.
Item 5.Other Information
None.

Item 6.Exhibits
See Exhibit Index.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 


 Verisk Analytics, Inc.
 (Registrant)
   
   
   
Date: October 31, 201730, 2018By:/s/ Eva F. HustonLee M. Shavel
       Eva F. HustonLee M. Shavel
       SeniorExecutive Vice President and Chief Financial Officer
       (Principal Financial Officer and Duly Authorized Officer)


EXHIBIT INDEX
 
Exhibit
Number
 Description
31.1
 
Certification of the Chief Executive Officer of Verisk Analytics, Inc. pursuant to Rule 13a-14 under the Securities Exchange Act of 1934.*
   
31.2
 
Certification of the Chief Financial Officer of Verisk Analytics, Inc. pursuant to Rule 13a-14 under the Securities Exchange Act of 1934.*
   
32.1
 
Certification of the Chief Executive Officer and Chief Financial Officer of Verisk Analytics, Inc. pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.*
   
101.INS XBRL Instance Document.*
   
101.SCH XBRL Taxonomy Extension Schema.*
   
101.CAL XBRL Taxonomy Extension Calculation Linkbase.*
   
101.DEF XBRL Taxonomy Definition Linkbase.*
   
101.LAB XBRL Taxonomy Extension Label Linkbase.*
   
101.PRE XBRL Taxonomy Extension Presentation Linkbase.*
 
*Filed herewith.



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