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Moody’s to Acquire RMS for $2 Billion

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Moody’s Corporation and RMS announced they have entered into a definitive agreement for Moody’s to acquire RMS, a global provider of climate and natural disaster risk modeling and analytics, for approximately $2.0 billion from Daily Mail and General Trust.

The acquisition will immediately increase Moody’s insurance data and analytics business to nearly $500 million in revenue and will accelerate the development of the Company’s global integrated risk capabilities to address the next generation of risk assessment.

With over 400 risk models covering 120 countries, RMS is the world’s leading provider of climate and natural disaster risk modeling serving the global property and casualty (P&C) insurance and reinsurance industries. For the fiscal year ending September 30, 2021, RMS is expected to generate revenue of approximately $320 million and adjusted operating income of approximately $55 million.

“Today’s leaders face a complex, interlinked world of risks and stakeholders,” said Rob Fauber, President and Chief Executive Officer of Moody’s. “In the context of a global pandemic, the climate crisis and increasing cyberattacks, our customers must manage a wider range of risks than ever before. We are excited to add RMS and its team of world-class data scientists, modelers and software engineers to the Moody’s family to help accelerate solutions that enable customers to build resilience and make better decisions.”

“Moody’s is an exceptional fit for RMS and our customers,” said Karen White, Chief Executive Officer of RMS. “Global risks are now more complex, connected and systemic. Climate change and catastrophic events like extreme weather, pandemics and cyberattacks have broader and more harmful impacts across virtually all industries. We share the vision to bring a global, integrated risk assessment platform to our markets with the goals of deeper, more sophisticated risk insights and greater global resiliency. Within Moody’s, I’m confident RMS will be able to accelerate technology and model innovations while combining with Moody’s core data and analytics offerings for powerful, holistic solutions. The team and I are excited to bring new value to customers as we transform how we are able to understand and mitigate the future of risk.”

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The acquisition builds upon Moody’s and RMS’s complementary customer bases and capabilities in the life and P&C insurance and reinsurance segments. Moody’s offers leading risk and finance solutions for life insurers, such as pricing, capital management, financial and regulatory reporting capabilities. RMS provides extensive climate and catastrophe risk modeling solutions for P&C insurers and reinsurers, enabling them to better understand, measure and manage risk.

Through further innovation and a combination of both companies’ core strengths and offerings, RMS will meaningfully accelerate Moody’s integrated risk assessment strategy for customers in the insurance industry and beyond, with significant capabilities across climate, cyber, commercial real estate and supply chain risk.

As part of the Moody’s Analytics platform, RMS is expected to generate up to $150 million of incremental run-rate revenue by 2025. On a U.S. GAAP basis, the acquisition is expected to be accretive to Moody’s diluted EPS in 2025 and, excluding purchase price amortization, is expected to be accretive to adjusted diluted EPS in 2024.

Moody’s will fund the transaction through a combination of cash-on-hand and the issuance of new debt. The acquisition is expected to close in late 3Q 2021, subject to the satisfaction of customary closing conditions, including the expiration or termination of any applicable regulatory waiting periods.

As a result of the RMS acquisition, Moody’s has updated its guidance for full year 2021. Share repurchases are now expected to be approximately $750 million, subject to available cash, market conditions and other ongoing capital allocation decisions. Additionally, Moody’s full year 2021 diluted EPS is now projected to be in the range of $10.90 to $11.20. The Company’s 2021 adjusted diluted EPS outlook remains in the range of $11.55 to $11.85.

Moody’s was advised on the transaction by Centerview Partners LLC and Paul Hastings LLP.

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