Elizabeth Mann: Thanks, Tom, for the question. Yes, it’s good context. You heard Lee talk about the industry and the relative strength in the industry as well as the hard market that we are in. So as he highlighted for our contracts that have a tie to net written premium growth, we’re seeing generally positive tailwinds in line — I would say, in line overall with last year. I think what’s most important for us from a pricing standpoint is the increased engagement that we are having with our clients, and you’re seeing the benefit of the investments that we’re putting in our products and those are driving for us strong renewals, strong outcomes on the pricing conversations.
Lee Shavel: Yes. And Tom, I’d say that on that, we are — we see a receptive environment because I think the industry is doing well. We’re seeing recognition of the value of the products. But I would also mention that I think with some of our efforts to improve our go-to-market strategy, we’re seeing a more effective sales organization that is contributing to good outcomes on the pricing side as well. So I think we feel very positive about some of the changes that we put in place in 2024 as a function of a close examination of what we could be doing better there.
Operator: Your next question comes from the line of Toni Kaplan with Morgan Stanley.
Toni Kaplan: During the prepared remarks, you mentioned you’re discontinuing the auto telematic offering. I was wondering, clearly, it’s not generating much revenue for you, but was — what was — what prompted deciding to discontinue it? Was the data not valuable? Was it costly to maintain? Just any color there.
Lee Shavel: Certainly. Thank you, Toni. And the short answer is, and first, it was a small financial impact for us. The simple answer is that the entities that were providing that data to us decided to discontinue collecting that data. And so there was really not sufficient analytical value in that without the data that was being provided. And I think it’s fair to assume that it’s a function of some of the media attention to collect connected car data. So that really was the simple reason. It had been an area where we felt it was worth investing. We do believe in looking at broad data sets that are useful in evaluating driver risk. But I would emphasize that while we have discontinued that operation, and it was immaterial from a financial standpoint, we do continue to serve auto insurers in a significant way with a wide variety of products, including our LightSpeed auto, our coverage verifier, damage assessment from a claims perspective.
So this is a very substantial business for us, and the discontinuation of the Verisk Data Exchange will not have any impact in our legacy auto businesses.
Operator: Your next question comes from the line of Faiza Alwy with Deutsche Bank.
Faiza Alwy: I wanted to talk about subscription growth. You mentioned the stronger renewal cycle and the price realization, but I’m curious if you held this level of subscription growth is normal for this year. And help us better understand some of the factors that can impact us. I asked because there has been some quarterly variation here last year, so if there’s anything that you would highlight as we look ahead.
Elizabeth Mann: Yes. Faiza, thanks for the question. In terms of quarterly variations, there can always be minor puts and takes as things move from quarter-to-quarter, but nothing that we see at this point that would indicate significant quarterly changes. The drivers of strength for us this quarter have been really broad-based across the business. Forms, rules and loss cost has been the largest driver as the largest business, and we talked about some of the trends benefiting it there. We’ve had strong strength in the antifraud business. I would call that both absolute strength as well as benefiting from the conversion from transaction to subscription. And the extreme events business actually had strong subscription growth as well given the demonstrated value there.
Lee Shavel: Yes. And Faiza, maybe to add a little additional color, and we use this as an opportunity to say we talked about the environment. We’ve talked about the benefit of engaging as partners with our leading clients, which I think has helped us on that front, probably most primarily at a senior level to help our clients understand the value that we are providing to them across the enterprise. But something — to your question of kind of sustainability and growth, we clearly want to grow the subscription revenues at a higher rate where possible. And coming out of a lot of intense engagement at a senior level in 2023, we have had three clients in different areas, one is an international insurer, one is a large U.S. insurer, one is outside of the insurer, but in a variety of areas, that have come to us with ideas of products that we might jointly develop or distribute with them.
And I think it’s a reflection of how we can potentially develop new incremental revenue sources. This was certainly part of our plan originally, but we’ve been delighted to see that, that engagement has enabled real commercial opportunities that we are in the process of exploring and structuring at this stage. That is certainly a primary path for us to find ways to continue to sustain and grow that subscription growth.
Operator: Your next question comes from the line of Jeff Silber with BMO Capital Markets.
Jeffrey Silber: I know you talked in the past about three, I guess, buckets of investment. You talked about the Core Lines Reimagine, investing in your sales force and investing in AI. Can we just get a refresh in terms of how much you’re thinking of spending in those areas and where we are in that process?
Elizabeth Mann: Yes. Thanks for the question, Jeff. We don’t break out sort of specific areas of investment by element. I think on the last quarter call, I mentioned those as some of the top areas for investment this year. And I think our investment in those areas is pretty much in line with our expectation for the year and embedded in the margin that you’re seeing and the guidance for the full year.
Operator: Your next question comes from the line of Gregory Peters with Raymond James.
Charles Peters: So I’m going to focus on the transactional revenue piece because if I look at the quarterly numbers last year, you had some pretty strong results for second and third quarter. Given the conversion of the antifraud business, is it your expectation that the transactional piece of OCC will be having some headwinds for the next couple of quarters? Or any sort of visibility there would be helpful.
Elizabeth Mann: Yes. Happy to cover that, Greg. Thanks. You are right that we do see headwinds on the transactional revenue side largely because the comps from last year have been so strong. You saw double-digit transactional growth for about a 1-year period last year. I think some of the main areas of tough comps have been and will be on the auto transactional shopping activity, which was a real area of strength last year, in addition to the nonrate action activity. And we — that really picked up in the first quarter of last year. So we’re starting to anniversary it now. The shopping activity did actually continue strong in the first quarter. But starting next quarter, we really anniversary strong growth there. The other area where it could be tough comps has been on the weather activity.
