Moody's Corp to Acquire Risk Management Solutions Inc- M&A Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Andrew Owen Nicholas - William Blair & Company L.L.C., Research Division - Analyst : I guess my first one is just kind of on the evolution of RMS' product lineup over the past 5 to 10 years. My understanding is there's been a lot of starts and stops and revamps going on there in terms of the primary offering. And I'm just wondering if you could kind of speak to some of the major changes over that time frame to the extent that you're familiar. But maybe more importantly, curious if anything is left in terms of major product rollouts or upgrades or investments or if your margin expectations for that business are largely reflective of those investments being done. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Andrew Owen Nicholas - William Blair & Company L.L.C., Research Division - Analyst : Great. That's helpful. And then for my follow-up, and I apologize if I missed this already, but I was hoping you could speak to kind of the pacing of revenue growth over the course of the next 3, 4 years. Mainly just kind of wondering if there is a kind of integration pause or technology work that needs to be done to integrate RMS into Moody's platform that could potentially kind of pause or delay the realization of some of these synergies later on into next year and beyond.

Question: Ashish Sabadra - RBC Capital Markets, Research Division - Analyst : I just had a question on valuation. The valuation looks a bit steep. When you look at purely on a trailing 12-month adjusted operating income basis, I was wondering how -- can you -- if you could provide us any color on how you were thinking about valuation? How do we think about a normalized adjusted operating income in the business given how strategic it is and the revenue growth potential as well as ability to raise margins in the business? So any thoughts there.

Question: Ashish Sabadra - RBC Capital Markets, Research Division - Analyst : That's very helpful color. And then maybe if I can just hold on further on the cross-sell. A lot of your product suite, as you mentioned, right now, existing in RMS is focused on the life insurance market. Is there an opportunity to sell that into the P&C? Are those products applicable for the P&C insurers as well and opportunity to sell them in those markets?

Question: Judah Efram Sokel - JPMorgan Chase & Co, Research Division - Analyst : During your due diligence on this space, what do you sense is the growth rate of the underlying cat modeling industry?

Question: Judah Efram Sokel - JPMorgan Chase & Co, Research Division - Analyst : Understood. Okay. One other thing that didn't really come up on this call is the topic of CAT bonds. And I get that 95% of RMS is tied to insurance and reinsurance customers. But I'd imagine that in that last 5% or so or maybe somewhere embedded in the 95% is just serving financial customers in terms of catastrophe bond issuance. And so I was just wondering with the main competitor in the case of various CAT bond issuance has been a source of volatile, but sometimes strong growth at times. And I was wondering if that plays into RMS's revenues at all and especially the volatility aspect where you definitely highlighted the 95% recurring revenue base? So maybe you could just touch on CAT bonds. And I guess, also just the maybe synergy that Moody's has in their core credit rating business in terms of that syndication, that credit ratings of CAT bonds.