![]() the STRENGTH of WORKING TOGETHER SM Investor Presentation December 15-16, 2008 Exhibit 99.1 |
![]() The Strength of Working Together SM 2 Forward-looking Statements and Segment Operating Earnings Forward Looking Statements: This presentation contains forward-looking statements, including statements about the future 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. Results for any interim period presented herein are not necessarily indicative of results to be expected for the full year or for any other future period. For further information regarding Crawford & Company, and the risks and uncertainties involved in forward-looking statements, please read Crawford & Company’s 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. Consolidated Operating Earnings: Consolidated operating earnings, a non-GAAP measurement, represent earnings before net corporate interest expense, amortization of customer-relationship intangible assets, stock option expense, income tax expense, gains on asset sales and certain other expenses. Segment Operating Earnings: Under Statement of Financial Accounting Standards Number 131, Disclosures about Segments of an Enterprise and Related Information, segment operating earnings is the primary measure used by the Company to evaluate the results of each of its four operating segments. Segment operating earnings exclude income taxes, interest expense, amortization of customer-relationship intangible assets, and certain other nonrecurring gains and expenses. On January 1, 2008, the Company’s Strategic Warranty Services unit was moved from the Legal Settlement Administration segment to the U.S. Property & Casualty segment. Prior period results for both segments have been restated to reflect this transfer. Subsequent to March 31, 2007, the Company changed its method of allocating certain corporate overhead costs to each of its operating segments. Prior period results have been restated to reflect the current allocation method. Reimbursements for Out-of-Pocket Expenses: All amounts included herein for consolidated revenues and consolidated operating margin as well as segment revenues, segment operating expenses and segment operating margin are based on amounts that exclude reimbursements for out-of-pocket expenses. |
![]() The Strength of Working Together SM 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. OUR MARKET- LEADING GLOBAL BUSINESS |
![]() 4 The Strength of Working Together SM Class Actions Administration & Bankruptcy Warranty CAT Marine & Transport TPA Workers Compensation Medical and Case Management (Broadspire) Property Casualty Motor & Auto What we do…Our Global Products and Services The Crawford System of Claims Solutions Contractor Connection |
![]() 5 The Strength of Working Together SM Where We Do It: Locations Across a Global Economy More than 700 locations in 63 countries |
![]() 6 The Strength of Working Together SM Diversified Business Segments 2008 Revenues before Reimbursements of $786 Million Nine months ended September 30, 2008 • Property and Casualty Services • Global Technical Services • Global Marine and Transportation • Global Markets 42.7% 30.0% 7.3% International U.S. Property & Casualty • Property and Casualty Services • Catastrophe Management Services • Auto Appraisal Services • Centralized Claim Administration • Strategic Warranty Services 20.0% 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 Financial Review |
![]() 8 The Strength of Working Together SM Consolidated Revenue (Trailing 12 months) As of September 2008 ($000s) 2008 Actual 2007 Actual 2006 Actual 2005 Actual 2008/2007 2007/2006 2006/2005 1st Quarter 987,046 861,524 789,255 748,046 As of September 30 8% 19% 6% 2nd Quarter 1,009,775 909,458 795,856 762,033 FULL YEAR 19% 6% 3rd Quarter 1,030,917 958,174 808,194 760,882 4th Quarter 975,143 819,522 771,983 NOTES: Revenues are measured as total revenue before reimbursements for client expenses. 12-Month Moving Total Revenue Average Annual Rate of Change - 12 Month Moving Total 12-Month Moving Revenue 730,000 780,000 830,000 880,000 930,000 980,000 1,030,000 1,080,000 Growth led by: 10.6% CAGR from 2005 to 2008 Strong organic growth internationally Incremental revenues of $200 million from Broadspire acquisition |
![]() 9 The Strength of Working Together SM As of September 2008 ($000s) 2008 Actual 2007 Actual 2006 Actual 2005 Actual 2008/2007 2007/2006 2006/2005 1st Quarter 49,540 29,399 30,221 32,473 As of September 30 91% 20% 27% 2nd Quarter 57,963 32,617 32,233 32,248 FULL YEAR 48% 28% 3rd Quarter 64,616 33,845 35,667 28,132 4th Quarter 37,230 32,195 25,085 NOTES: Operating earnings is defined as earnings before net corporate interest, income taxes, stock option expense, amortization of customer-related intangible assets, gains on asset sales and certain other expenses 12-Month Moving Operating Earnings Average Annual Rate of Change - 12 Month Moving Total 12-Month Moving Operating Earnings 23,000 28,000 33,000 38,000 43,000 48,000 53,000 58,000 63,000 68,000 Consolidated Operating Earnings (Trailing 12 months) Operating earnings improvement generated through: 41.0% CAGR from 2005 to 2008 Leverage of cost base in International Operations and U.S. Property & Casualty Post acquisition synergies from Broadspire |
![]() 10 The Strength of Working Together SM As of September 2008 ($000s) 2008 Actual 2007 Actual 2006 Actual 2005 Actual 2008/2007 2007/2006 2006/2005 1st Quarter 5.02% 3.42% 3.83% 4.34% As of September 30 2.74% -0.88% 0.72% 2nd Quarter 5.74% 3.59% 4.05% 4.23% FULL YEAR -0.11% 0.68% 3rd Quarter 6.27% 3.53% 4.41% 3.70% 4th Quarter 3.82% 3.93% 3.25% NOTES: Operating earnings is defined as earnings before net corporate interest, income taxes, stock option expense, amortization of customer-related intangible assets, gains on asset sales and certain other expenses Revenues are measured as total revenue before reimbursements for client expenses. 12-Month Moving Total Ratio Average Annual Rate of Change - 12 Month Moving Total 12-Month Moving Operating Margin 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% Consolidated Operating Margin (Trailing 12 Months) Over 300 basis point improvement from year end 2005 |
![]() 11 The Strength of Working Together SM Year-to-Date September 30, 2008 Financials Nine Months Ended September 30 2008 2007 % Change Revenues: Revenues Before Reimbursements $785,693 $729,919 8% Reimbursements 69,578 54,874 27% Total Revenues 855,271 784,793 9% Costs and Expenses: Cost of Services Provided, Before Reimbursements 574,243 547,189 5% Reimbursements 69,578 54,874 27% Total Cost of Services 643,821 602,063 7% Selling, General, and Administrative Expenses 162,128 160,975 1% Corporate Interest Expense, Net 13,406 13,172 2% Total Costs and Expenses 819,355 776,210 6% Gain on Sale of Subrogation Business - 3,980 nm Gain on Sale of Former Corporate Headquarters - 4,844 nm Income Before Income Taxes 35,916 17,407 106% Provision for Income Taxes 11,994 4,595 161% Net Income $23,922 $12,812 87% Diluted Earnings per Share - After Gains on Asset Sales $0.47 $0.25 88% Diluted Earnings per Share - Before Gains on Asset Sales (1) $0.47 $0.14 236% (1) 2007 Diluted Earnings Per Share Before Gains on Asset Sales defined as: 2007 Diluted Earnings per Share After Gains on Asset Sales ($0.25) less 2007 Diluted Earnings Per Share attributed to gains on asset sales ($0.11). CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited (In Thousands, Except Earnings Per Share and Percentages) |
![]() 12 The Strength of Working Together SM September 30, 2008 Balance Sheet Crawford & Company Consolidated Balance Sheet Highlights As of September 30, 2008 and December 31, 2007 In thousands, except percentages Unaudited September 30, December 31, 2008 2007 Change Cash and cash equivalents $56,819 $50,855 $5,964 Accounts receivable, net 178,429 178,528 (99) Unbilled revenues 131,752 136,652 (4,900) Total receivables 310,181 315,180 (4,999) Deferred revenues, net 99,567 111,036 (11,469) Accrued pension liabilities 52,190 76,977 (24,787) Current portion of long-term debt, capital leases and short-term borrowings 30,199 31,864 (1,665) Long-term debt 181,790 183,449 (1,659) Total debt 211,989 215,313 (3,324) Total shareholders' equity 281,822 254,215 27,607 Net debt* 155,170 164,458 (9,288) Total debt / capitalization 43% 46% *Net debt, a non-GAAP measure, is defined by the Company as total debt ($215,313 at December 31, 2007 and $211,989 at September 30, 2008) net of cash and cash equivalents ($50,855 at December 31, 2007 and $56,819 at September 30, 2008). |
![]() 13 The Strength of Working Together SM Year-to-Date Free Cash Flow Crawford & Company Free Cash Flow (a non-GAAP measure) For the year-to-date periods ended September 30, 2008 and 2007 In thousands Unaudited September 30, September 30, 2008 2007 Variance Net Income $23,922 $12,812 $11,110 Depreciation and Non-Cash Items 22,737 22,146 591 Special Credits - (8,824) 8,824 Change in Working Capital 1,382 (21,713) 23,095 U.S. Pension Contributions (14,916) (549) (14,367) Cash Flow from Operating Activities 33,125 3,872 29,253 Capital Expenditures for PP&E (12,753) (15,614) 2,861 Internally Developed Software (9,133) (5,452) (3,681) Mandatory Principal Payments (1,575) (1,575) - Free Cash Flow (a non-GAAP measure) $9,664 ($18,769) $28,433 |
![]() 14 The Strength of Working Together SM Consolidated Operating Cash Flow (Trailing 12 Months) As of September 2008 ($000s) 2008 Actual 2007 Actual 2006 Actual 2005 Actual 2008/2007 2007/2006 2006/2005 1st Quarter 51,372 11,989 61,066 32,526 As of September 30 105% -58% 2nd Quarter 40,619 27,204 52,017 49,173 FULL YEAR -56% 29% 3rd Quarter 52,537 25,585 60,539 37,936 4th Quarter 23,284 52,717 40,761 NOTES: Operating cash flow is defined as consolidated cash flows from operations. 12-Month Moving Operating Cash Flow Average Annual Rate of Change - 12 Month Moving Total 12-Month Moving Operating Cash Flow 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Operating cash flow improved through: Focus on working capital management Reduction in Days Sales Outstanding (DSO) |
![]() the STRENGTH of WORKING TOGETHER SM Operating Segments |
![]() 16 The Strength of Working Together SM $200 $220 $240 $260 $280 $300 $320 $340 YTD 2008 YTD 2007 Revenue $0 $5 $10 $15 $20 $25 $30 YTD 2008 YTD 2007 Operating Earnings $ in millions $ in millions $335.5 $269.3 $28.0 $14.8 An expanding business, the growth engine of Crawford Revenue up 16.8% on a constant dollar basis YTD 42% of consolidated revenues in 2008 YTD Increased operating margin and sustained earnings growth YTD Strength in UK, Canada, and Asia Pacific Year-to-Date International Operations Results Summary Results, International Operations For the quarters ended September 30, 2008 and 2007 in thousands except percentages Unaudited 2008 2007 % Change Revenues 115,362 $ 96,735 $ 19.3% Total Operating Expenses 106,768 90,455 18.0% Operating Earnings 8,594 $ 6,280 $ 36.8% Operating Margin 7.4% 6.5% |
![]() 17 The Strength of Working Together SM 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% Insurance Carrier Internal Claims Dept. Outsourced |
![]() 18 The Strength of Working Together SM Global Three-Tiered International Operations Significant opportunity for cross leverage & synergies Tier Area Market Regulatory/Compliance Business Culture 1 2 3 Transition Transition U.K. Canada Australia Asia select Europe Latin America Brazil Scandinavia Holland Mature Sophisticated Variable Developing Robust Emerging Emerging Cohesive Diverse Diverse |
![]() 19 The Strength of Working Together SM $130 $140 $150 $160 $170 YTD 2008 YTD 2007 Revenue $0 $5 $10 $15 $20 YTD 2008 YTD 2007 Operating Earnings $ in millions $ in millions $148.7 $156.9 $8.1 $17.8 Revenue improvement complemented by strong cost control with enhanced technology Improved operating earnings and margin Catastrophe revenue up $5.1 million from 2007 to 2008 Growth in a difficult operating environment YTD U.S. Property & Casualty Results Summary Results, U.S. Property & Casualty For the quarters ended September 30, 2008 and 2007 in thousands except percentages Unaudited 2008 2007 % Change Revenues 56,227 $ 49,983 $ 12.5% Total Operating Expenses 49,446 46,469 6.4% Operating Earnings 6,781 $ 3,514 $ 93.0% Operating Margin 12.1% 7.0% |
![]() 20 The Strength of Working Together SM Insurance Carrier Internal Claims Dept. Outsourced 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 approximately 6% • 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” U.S. Insurance Market |
![]() 21 The Strength of Working Together SM 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 |
![]() 22 The Strength of Working Together SM $100 $150 $200 $250 YTD 2008 YTD 2007 Revenue $0 $1 $2 $3 $4 $5 $6 YTD 2008 YTD 2007 Operating Earnings $ in millions $ in millions $236.3 $246.1 $5.4 Improved margin through strong cost management High client retention Building sales momentum $3.5 Year-to-Date Broadspire Results Summary Results, Broadspire For the quarters ended September 30, 2008 and 2007 in thousands except percentages Unaudited 2008 2007 % Change Revenues 76,911 $ 78,434 $ -1.9% Total Operating Expenses 75,832 77,003 -1.5% Operating Earnings 1,079 $ 1,431 $ -24.6% Operating Margin 1.4% 1.8% |
![]() 23 The Strength of Working Together SM Broadspire Fourth Largest TPA in Workers’ Compensation/Liability Market Products and Services: Workers’ Compensation Claims Services Auto and General Liability Claims Services Medical and Disability Management Services Long-Term Care Services Risk Management Information Systems (Risk Sciences Group) Claim Triage Solution (e-Triage) X Long Term Care X Claim Triage X Peer Review X FCM X X TCM/UM X X Med Bill Review X X X X X RMIS X X X X X Claim ESIS SRS Sedgwick Gallagher Basset Broadspire Comparison of Service Providers |
![]() 24 The Strength of Working Together SM U.S. TPA Market Opportunities Self-Insureds, Large Accounts and Captives outsource most of their claim services Market stable in terms of claim counts Outsourced claim services are fragmented but consolidating 9 Largest Providers Broadspire Local and Regional Providers $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 |
![]() 25 The Strength of Working Together SM $50 $55 $60 $65 $70 YTD 2008 YTD 2007 Revenue $4 $5 $6 $7 $8 $9 YTD 2008 YTD 2007 Operating Earnings $ in millions $ in millions $57.0 $65.8 $7.8 $8.5 Revenue decline due in part to cyclical nature of business Operating earnings increase due to cost control management Backlog of $43.5 million Legal Settlement Administration Results Summary Results, Legal Settlement Administration For the quarters ended September 30, 2008 and 2007 in thousands except percentages Unaudited 2008 2007 % Change Revenues 18,416 $ 20,622 $ -10.7% Total Operating Expenses 15,563 18,496 -15.9% Operating Earnings 2,853 $ 2,126 $ 34.2% Operating Margin 15.5% 10.3% |
![]() 26 The Strength of Working Together SM Products and Services • The Garden City Group, Inc. (GCG) provides these core services: – GCG Class Action Services provides technology-intensive administrative services for plaintiff and defense counsel and corporate defendants to expedite high-volume class action settlements. • GCG Class Action Services has administered a diverse portfolio of litigation settlements, including: – sensitive and high-profile consumer, employee-related, human rights, mass tort, antitrust, product and securities cases. – GCG Bankruptcy Services offers cost-effective, end-to-end solutions for managing the administration of bankruptcy under Chapter 11. – GCG Communications specializes in legal notice programs for successful case administration. We offer a range of complementary services for developing and implementing effective legal notice programs worldwide. |
![]() 27 The Strength of Working Together SM 0 5 10 15 20 25 30 35 AB Data, Ltd. Berdon LLP Complete Claims Solutions, LLC Heffler Radetich & Saitra LLP Gilardi and Co., LLC Garden City Group Securities Class Action Cases Source: RiskMetrics Group (SCAS Top 100 since 1995, September 30, 2008) 4 4 4 11 26 33 GCG has handled one third of the top 100 securities class action cases |
![]() the STRENGTH of WORKING TOGETHER SM Summary |
![]() 29 The Strength of Working Together SM Crawford is “Positioned for Growth” • Access to growing global markets • Increasing market share both domestic and internationally • Crawford expects to benefit from global consolidation of TPA vendors • Diverse, high quality customer base • High customer retention rates • Emphasis on quality and value provided sustains client confidence • Disciplined management • Improved financial performance • Consolidated revenues, earnings, margins, and cash flows improved in 2008 • Investment in enhanced technology in all divisions |
![]() 30 The Strength of Working Together SM The Strength of Working Together “Crawford & Company will be known as a target driven corporation that meets its promises to clients and shareholders.” Jeffrey T. Bowman President and CEO |