Investor Presentation September 18-19, 2008 Exhibit 99.1 |
The Strength of Working Together SM 2 Forward-looking Statements This presentation includes forward-looking statements, including statements about the financial condition, results of operations and earnings outlook of Crawford & Company. Statements, both qualitative and quantitative, that are not historical facts may be “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from historical experience or Crawford & Company’s present expectations. Accordingly, no one should place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Crawford & Company does not undertake to update forward-looking statements to reflect the impact of circumstances or events that may arise or not arise after the date the forward-looking statements are made. For further information regarding Crawford & Company, please read the Crawford & Company reports filed with the United States Securities and Exchange Commission and available at www.sec.gov or in the Investor Relations section of Crawford & Company’s website at www.crawfordandcompany.com. |
3 Crawford & Company • World’s largest fully-integrated independent provider of global claims management solutions. • Four reporting segments: – International Operations • Serves the global insurance industry and multi-national corporations – U.S. Property & Casualty • Serves the U.S. insurance company market – Broadspire • Serves large national accounts, carriers and self-insured entities – Legal Settlement Administration • Provides administration for class action settlements, bankruptcy matters, and product performance. • Opportunities • Improved quality has restored client confidence, improved retention • Short term emphasis on cost control • Increase market share: both new clients and cross-selling existing services • Investment in enhanced technology • Crawford will benefit from global consolidation of TPA vendors |
The Strength of Working Together SM 4 Locations 700 locations in 63 countries |
The Strength of Working Together SM 5 Diversified Business Mix Revenues before Reimbursements of $519 Million Six Months Ended June 30, 2008 • Property and Casualty Services • Global Technical Services • Global Marine and Transportation • Global Markets 42.5% 30.7% 7.4% International U.S. Property & Casualty • Property and Casualty Services • Catastrophe Management Services • Auto Appraisal Services • Centralized Claim Administration • Strategic Warranty Services 19.4% Legal Settlement Administration • Class Actions – Securities – Product Liability • Bankruptcy Administration Broadspire • Workers’ Compensation and Liability Claims Administration • Medical and Case Management • Long-Term Care Services • Integrated Disability Management • Risk Management Information Systems (RSG) • Claim Triage Solution (e-Triage) |
The Strength of Working Together SM 6 Insurance Carrier Internal Claims Dept. Outsourced International (excluding U.S.) Property & Casualty Insurance Market Opportunities Crawford CL GAB Regional/Local Providers • Only 4.4% of dollars spent by rest of world (ROW) carriers on claims are outsourced to third party independent adjusters • Very few global claims providers • As ROW insurance carriers look to consolidate claims services vendors, small firms lose market share ROW Unallocated Loss Adjusting Expenses $41.1 Billion 95.6% $1.9 Billion 4.4% $1.053 Billion 55.6% $140 Million 7.3% ROW Outsourced Loss Adjusting Expenses $377 Million 19.8% Source: Crawford & Company $330 Million 17.3% |
The Strength of Working Together SM 7 International Strengths and Opportunities • Best infrastructure among independents builds on industry trend of consolidation of clients. • Bench strength of International Leadership Team required to grow in industry marked by demanding, value-driven clients, with high service level expectations. • Global service differentiation from simple/low value claims through to complex/high value claims. • International specialities: Class Action, Subsidence, Counter Fraud Solutions, Managed Care, Desktop Claims, Affinity Business, Supply Chain Management. • Goals include product and market share expansion in Canada, UK, and Asia Pacific as well as development of Latin America and other emerging markets. |
The Strength of Working Together SM 8 U.S. Insurance Market Opportunities 4,000+ Local & Regional Providers National Providers Crawford U.S. Unallocated Loss Adjusting Expenses $21.7 Billion 86.1% $3.5 Billion 13.9% $3 Billion 86% $280 Million 8% U.S. Outsourced Loss Adjusting Expenses $193 Million 6% Source: Cochran, Caronia & Co. and Crawford & Company • Approximately 14% of dollars spent by U.S. carriers on claims services are outsourced to third parties – High propensity to outsource non-core lines and/or non-core states • Outsourced claims service provider market is highly fragmented – Crawford is the market leader with 6.0% • As insurance carriers look to consolidate claims services vendors, small firms lose market share – Most U.S. carriers are dramatically reducing the number of vendors on “approved lists” Insurance Carrier Internal Claims Dept. Outsourced |
The Strength of Working Together SM 9 U.S. Property & Casualty Growth Opportunities • Strategic Growth – Target large insurers who are consolidating their vendor lists and ensure Crawford is named an approved vendor • Quality improvement • Efforts toward training and product development – Target markets • Small and mid-market carriers • Managing general agents (London Market) • Non-standard insurers • Property & casualty programs run by self-insured corporations • Organic Growth – Key account plans for top clients – Account managers for each major client – Easily accessible database of client instructions |
The Strength of Working Together SM 10 U.S. Self-Insured Entities and Captives Market Opportunities 9 Largest Providers Broadspire Local and Regional Providers • Self-insured entities and captives outsource practically all of their claims services • Outsourced total claims management is fragmented • Local and regional providers unable to leverage technology investment $0.4 Billion $3.2 Billion Unallocated Loss Adjusting Expenses Outsourced Loss Adjusting Expenses $1.8 Billion 55.9% $1.1 Billion 34.1% $321 Million 10.0% Source: Cochran, Caronia & Co. and Crawford & Company Internal Outsourced |
The Strength of Working Together SM 11 Broadspire Strengths and Opportunities • Strengths – Proven faster return-to-work for employees and cost savings to clients – Superior measurement and reporting of those results – Fully integrated services that make programs easy to administer – Superior medical protocols that produce bottom-line results for customers – Greater flexibility and more success in customizing programs for clients – A proprietary web-based claims intake function that helps claim professionals identify potential problems and develop action plans to deal with them – Claims Advantage program utilizing e-Triage • Opportunities: – Increase sales of unbundled medical and case management services – Brand globalization – Grow integrated disability management business – Cross-sell Broadspire and Crawford customers |
The Strength of Working Together SM 12 Legal Settlement Administration • The Garden City Group, Inc. (GCG) Products and Services – Administers class action settlements – Designs and implements legal notice programs – Manages chapter 11 bankruptcy claims administration – Executes complete document management services – Obtains expert consultation in complex legal business matters • GCG Growth Opportunities – Win larger market share of class action settlements – Expand bankruptcy administration business – Take advantage of emerging cross border opportunities – Examine and pursue appropriate acquisition opportunities |
13 “The Strength of Working Together” “The Strength of Working Together” is unifying the Company around consistent goals: Adaptive leadership team responding to changing economic conditions Increasing emphasis on sources of additional revenue growth – Selling Crawford services into the existing client base through key account management Driving technology forward – Creating operational efficiencies – Global economies of scale Being a target-driven organization – Setting medium term goals, 2009 to 2011 |
The Strength of Working Together SM 14 Medium Term Goals • Grow revenues organically by 5% CAGR through 2010 • Achieve a 10% EBIT margin by 2010 • Continued commitment to sound financial management and maximizing shareholder value • Target debt as a percentage of total capital at 25% to 30% |
Financial Review |
The Strength of Working Together SM 16 Year-to-Date June 30, 2008 Overview • Strong performance in a difficult operating environment Revenue growth of 7.2% supported by cost reduction initiatives Net Income up 81.6% • Strong revenue growth internationally and in U.S. Property & Casualty offset declines in remaining U.S. businesses International growth (before currency effects) of 17.9% Revenue declines at Broadspire and Legal Settlement Administration • Solid earnings per share performance at $0.34 Double-digit operating margin in U.S. Property & Casualty and Legal Settlement Administration All four segments reported positive operating earnings and margin improvement SG&A costs reduced by 1.8% • Planned for difficult U.S. economy Continued growth trends internationally Ongoing emphasis on growing existing client base through cross selling Focus on cost control US claims value holding steady 460 470 480 490 500 510 520 YTD 2008 YTD 2007 Revenues Before Reimbursements $ in millions 0 5 10 15 20 YTD 2008 YTD 2007 Net Income $ in millions $518.8 $484.1 $17.0 $9.4 |
The Strength of Working Together SM 17 Year-to-Date June 30, 2008 Financials Six Months Ended June 30 2008 2007 % Change Revenues: Revenues Before Reimbursements $518,777 $484,145 7% Reimbursements 45,162 34,678 30% Total Revenues 563,939 518,823 9% Costs and Expenses: Cost of Services Before Reimbursements 377,369 361,656 4% Reimbursements 45,162 34,678 30% Total Cost of Services 422,531 396,334 7% Selling, General, and Administrative 105,906 107,816 -2% Corporate Interest Expense, Net 9,072 8,600 5% Total Costs and Expenses 537,509 512,750 5% Gain on Disposal of Subrogation Business - 3,980 nm Gain on Sale of Former Corporate Headquarters - 4,844 nm Income Before Income Taxes 26,430 14,897 77% Income Taxes 9,430 5,538 70% Net Income $17,000 $9,359 82% Diluted Earnings Per Share - After Gains on Asset Sales $0.34 $0.19 76% Diluted Earnings Per Share - Before Gains on Asset Sales (1) $0.34 $0.08 325% nm = not meaningful (1) 2007 diluted earnings per share - before gains on asset sales is defined as 2007 diluted earnings per share - after gains on asset sales ($0.19) less 2007 diluted earnings per share attributed to gains on asset sales ($0.11). CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Per Share Amounts) Unaudited |
The Strength of Working Together SM 18 0 20 40 60 80 100 120 YTD 2008 YTD 2007 Revenues Before Reimbursements $ in millions $ in millions $98.7 $100.7 $4.6 $11.0 Revenue improvement complemented by strong cost control Improved operating earnings and margin Catastrophe revenue up $2.2 million from 2007 to 2008 Reduction in claim referrals due to major client decision to in-source high volume, low margin vehicle claims. Property claims up 6.5% Growth in tough environment Year-to-Date June 30, 2008 Financials U.S. Property & Casualty Summary Results For the year-to-date periods ended June 30, 2008 and 2007 in Thousands Except Percentages Unaudited 2008 2007 % Change Revenues Before Reimbursements 100,708 $ 98,744 $ 2.0% Total Operating Expenses 89,667 94,171 -4.8% Operating Earnings 11,041 $ 4,573 $ 141.4% Operating Margin 11.0% 4.6% 6.4% 0 2 4 6 8 10 12 YTD 2008 YTD 2007 Operating Earnings |
The Strength of Working Together SM 19 $ in millions $ in millions Revenue increased 17.9% on a constant dollar basis Increased operating margin Strong operating earnings Significant new client wins in Canada Strength in Canada, UK and Asia Pacific Claims referred increased 3.1% 0 50 100 150 200 250 YTD 2008 YTD 2007 Revenues Before Reimbursements Year-to-Date June 30, 2008 Financials International Summary Results For the year-to-date periods ended June 30, 2008 and 2007 in Thousands Except Percentages Unaudited 2008 2007 % Change Revenues Before Reimbursements 220,143 $ 172,595 $ 27.5% Total Operating Expenses 200,710 164,065 22.3% Operating Earnings 19,433 $ 8,530 $ 127.8% Operating Margin 8.8% 4.9% 3.9% 0 5 10 15 20 YTD 2008 YTD 2007 Operating Earnings $220.1 $172.6 $19.4 $8.5 |
The Strength of Working Together SM 20 $ in millions $ in millions Broadspire Summary Results For the year-to-date periods ended June 30, 2008 and 2007 in Thousands Except Percentages Unaudited 2008 2007 % Change Revenues Before Reimbursements 159,378 $ 167,658 $ -4.9% Total Operating Expenses 155,091 165,560 -6.3% Operating Earnings 4,287 $ 2,098 $ 104.3% Operating Margin 2.7% 1.3% 1.4% Revenue decline Improved margin through strong cost management produced positive operating results Strong client retention Claims frequency down 7.2% in workers’ compensation Increased cross selling, new RFP activity expanding BPO operations Year-to-Date June 30, 2008 Financials 0 50 100 150 200 YTD 2008 YTD 2007 Revenues Before Reimbursements 0 1 2 3 4 5 YTD 2008 YTD 2007 Operating Earnings $167.7 $159.4 $4.3 $2.1 |
The Strength of Working Together SM 21 $ in millions $ in millions Legal Settlement Administration Summary Results For the year-to-date periods ended June 30, 2008 and 2007 in Thousands Except Percentages Unaudited 2008 2007 % Change Revenues Before Reimbursements 38,548 $ 45,148 $ -14.6% Total Operating Expenses 32,909 39,479 -16.6% Operating Earnings 5,639 $ 5,669 $ -0.5% Operating Margin 14.6% 12.6% 2.0% Revenue decline due to timing of business Operating margin increases minimized decline in operating earnings Growing backlog of $52.8 million at June 30, 2008 Year-to-Date June 30, 2008 Financials 34 36 38 40 42 44 46 YTD 2008 YTD 2007 Revenues Before Reimbursements 0 1 2 3 4 5 6 YTD 2008 YTD 2007 Operating Earnings $38.5 $45.1 $5.6 $5.7 |
The Strength of Working Together SM 22 June 30, 2008 Financials Crawford & Company Consolidated Balance Sheet Highlights As of June 30, 2008 and December 31, 2007 (in thousands, except percentages) Unaudited June 30, December 31, 2008 2007* Change Cash and cash equivalents $48,346 $50,855 ($2,509) Accounts receivable, net 191,980 178,528 13,452 Unbilled revenues at estimated billable amounts 131,899 136,652 (4,753) Total receivables 323,879 315,180 8,699 Deferred revenues, net 104,396 111,036 (6,640) Pension liabilities 67,375 76,977 (9,602) Current portion of long-term debt, capital leases and short-term borrowings 35,724 31,864 3,860 Long-term debt, less current portions 182,381 183,449 (1,068) Total debt 218,105 215,313 2,792 Total shareholders' investment 272,576 254,215 18,361 Net debt** 169,759 164,458 5,301 Total debt / total shareholders' investment 44% 46% * Derived from the audited Consolidated Balance Sheet **Net debt is defined by the Company as total debt ($218,105 at June 30, 2008 and $215,313 at December 31, 2007), less cash and cash equivalents ($48,346 at June 30, 2008 and $50,855 at December 31, 2007) |
The Strength of Working Together SM 23 Crawford & Company Total Company Total Revenue Trend Currency: USD Crawford & Company Confidential ($000's) 2008 2007 2006 2008/2007 2007/2006 2006/2005 1st Quarter 987,046 861,524 789,255 As of June 2008 11% 14% 4% 2nd Quarter 1,009,775 909,458 795,856 FULL YEAR 19% 6% 3rd Quarter 958,174 808,194 4th Quarter 975,143 819,522 NOTES: Revenue is measured as total revenues before reimbursements for client expenses. 12-Month Moving Total Revenue Average Annual Rate of Change - 12 Month Moving Total 12-Month Moving Revenue $750,000 $800,000 $850,000 $900,000 $950,000 $1,000,000 $1,050,000 Actual |
The Strength of Working Together 24 SM Crawford & Company Total Company Operating Earnings Trend Currency: USD Crawford & Company Confidential ($000's) 2008 2007 2006 2008/2007 2007/2006 2006/2005 1st Quarter 49,538 29,399 30,221 As of June 2008 76% 1% 0% 2nd Quarter 57,963 32,617 32,233 FULL YEAR 16% 28% 3rd Quarter 33,845 35,667 4th Quarter 37,230 32,195 NOTES: Operating earnings is defined as earnings before special charges/credits, net corporate interest, income taxes, stock option expense, and amortization of customer-relationship intangible assets. 12-Month Moving Operating Earnings Average Annual Rate of Change - 12 Month Moving Total 12-Month Moving Operating Earnings $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $60,000 $65,000 Actual |
The Strength of Working Together SM 25 Crawford & Company Total Company Operating Earnings-to-Revenue Ratio Trend Currency: USD Crawford & Company Confidential ($000's) 2008 2007 2006 2008/2007 2007/2006 2006/2005 1st Quarter 5.02% 3.42% 3.83% As of June 2008 2.10% -0.46% -0.18% 2nd Quarter 5.74% 3.59% 4.05% FULL YEAR -0.11% 0.68% 3rd Quarter 3.53% 4.41% 4th Quarter 3.82% 3.93% NOTES: Operating earnings is defined as earnings before special charges/credits, net corporate interest, income taxes, stock option expense, and amortization of customer relationship intangible assets. Revenue is measured as total revenues before reimbursements for client expenses. 12-Month Moving Total Ratio Average Annual Rate of Change - 12 Month Moving Total 12-Month Moving Ratio 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% Actual |