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Verisk Analytics (VRSK) Signs Agreement for Rulebook Buyout

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Verisk Analytics, Inc. (VRSK - Free Report) announced yesterday that it has inscribed an agreement to acquire business intelligence and software solutions provider for the London Insurance Market, Rulebook.

The transaction price is fixed at $87 million, which will be funded through cash on hand and existing bank facilities.

Through Rulebook Hub platform, Rulebook possesses a distinct pricing engine utilized for the purpose of internal pricing and underwriting as well as external distribution for the specialty insurance market. It also offers data analytics that provide business intelligence solutions to aid clients in historical, current, and predictive views of business operations.

Mark Anquillare, chief operating officer, Verisk, stated, "Rulebook is a Verisk-like business that furthers our goal of providing leading solutions to the global insurance market, including a comprehensive chain of solutions to specialty insurers for mitigating risk and optimizing total cost of operations."

The transaction is expected to be completed by the fourth quarter of 2018, subject to customary closing conditions.

Shares of Verisk have fared well in a year’s time. The stock has rallied 30% compared with the industry’s rise of 9.9%.

 

Our Take

We believe that the buyout will boost the Insurance segment that offers analytics in the areas of fraud detection, catastrophe modeling, loss estimation and underwriting. Performance in the segment was particularly strong in the last reported quarter with revenues of $427.7 million, up 8% year over year on a reported basis and 5.5% at organic constant currency (cc).

In the segment, underwriting and rating revenues of $285.1 million rose 8.9% on a reported basis and 6.3% at organic cc.

Verisk estimates the transaction to be accretive to the company’s adjusted EPS in 2019. Also, the company expects the buyout to generate an attractive return in excess of the company's cost of capital.

Zacks Rank & Stocks to Consider

Currently, Verisk carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few better-ranked stocks in the Zacks Business Services sector are Total System Services, Inc. (TSS - Free Report) , WEX Inc. (WEX - Free Report) and Robert Half International Inc. (RHI - Free Report) , each carrying a Zacks Rank #2 (Buy).

The long-term expected EPS (three to five years) growth rate for Total System Services, WEX and Robert Half International is 14.2%, 15%, and 13.3%, respectively.

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