![]() Crawford & Company New York City December 4, 2013 Exhibit 99.1 |
![]() Crawford & Company FORWARD-LOOKING STATEMENTS AND ADDITIONAL INFORMATION 2 Forward-looking statements Revenues Before Reimbursements (“Revenues”) Segment and Consolidated Operating Earnings Earnings Per Share Non-GAAP Financial Information –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 statements of historical fact may be “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 and other securities laws. 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. –Crawford’s business is dependent, to a significant extent, on case volumes. The Company cannot predict the future trend of case volumes for a number of reasons, including the fact that the frequency and severity of weather-related claims and the occurrence of natural and man-made disasters, which are a significant source of claims and revenue for the Company, are generally not subject to accurate forecasting. –Revenues Before Reimbursements are referred to as “Revenues” in both consolidated and segment charts, bullets and tables throughout this presentation. –Under the Financial Accounting Standards Board’s Accounting Standards Codification Topic 280, “Segment Reporting,” the Company has defined segment operating earnings as 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, stock option expense, earnings or loss attributable to non-controlling interests, certain unallocated corporate and shared costs and credits, and special charges and credits. Consolidated operating earnings is the total of segment operating earnings and certain unallocated and shared costs and credits. –In certain periods, the Company has paid a higher dividend on CRDA than on CRDB. This may result in a different earnings per share ("EPS") for each class of stock due to the two-class method of computing EPS as required by the guidance in Accounting Standards Codification Topic 260 - "Earnings Per Share". The two-class method is an earnings allocation method under which EPS is calculated for each class of common stock considering both dividends declared and participation rights in undistributed earnings as if all such earnings had been distributed during the period. Further references to EPS in this presentation will generally be only for CRDB, as that is the more dilutive measure. –For additional information about certain non-GAAP financial information presented herein, see the Appendix following this presentation. |
![]() Crawford & Company Crawford & Company at a Glance at market close November 29, 2013 Exchange/Tickers: NYSE: CRDA and CRDB Trailing 52 week High/Low: CRDA: $4.65-$8.48 CRDB: $5.62-$11.30 Market Capitalization : $488.0 million Quarterly Dividend/ Normalized Yield: CRDA: $0.05/quarter or 2.6% yield CRDB: $0.04/quarter or 1.6% yield Analyst Coverage: Adam Klauber, William Blair Mark Hughes, Suntrust Greg Peters, Raymond James 3 |
![]() Crawford & Company A Business Services Leader since 1941 The world’s largest independent provider of global claims management solutions Multiple globally recognized brand names: Crawford, Broadspire, GCG Clients include multinational insurance carriers, brokers and local insurance firms as well as over 200 of the Fortune 500 companies 4 EMEA-A/P Americas Broadspire Legal Settlement Administration Serves the U.K., European, Middle Eastern, African and Asia Pacific markets Serves the U.S., Canadian and Latin American markets Serves large national accounts, carriers and self- insured entities Provides administration for class action settlements and bankruptcy matters |
![]() Crawford & Company $1.2 Billion Revenue Company 700 Locations 70+ Countries 8,500 Employees OUR GLOBAL STRENGTH 5 |
![]() Crawford & Company Diversified Business and Clients 2012 Revenues of Approximately $1.2 Billion • Property and Casualty Services • Global Technical Services • Third Party Administration • Global Markets 28.6% 21.6% 17.1% EMEA/AP Americas • Property and Casualty Services • Catastrophe Management Services • Contractor Connection • Centralized Claim Administration • Affinity Programs 32.7% 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) 6 |
![]() Crawford & Company Catalysts/Drivers 7 Cyclical Positive Industry Claim Trends: Increased underwriting pressure creates a positive claim trend. Weather/Catastrophe Trends: Catastrophic events worldwide are increasing in severity and frequency. Crawford is uniquely positioned to serve these markets. Healthcare Reform: Increased healthcare spending is a positive for Broadspire’s medical case management and cost containment services. Future Inflation: Rising interest rates drive interest income in Broadspire and lower the Company’s anticipated pension obligations. Market Position: Leading market position in each of our segments. |
![]() Crawford & Company Crawford Provides More Than Claims Services 8 P&C outsourced claims services provided about $575 million, or 49%, of total Crawford revenue in 2012 • Claims services is a mature business in most geographies • Revenues are driven by claims volume, which is affected by regional economies, economic growth • Severe weather and natural disasters can create volatility in claims volume • Global Technical Services is the leader in mega-claims $600 million, or 51%, was derived from higher-value added business services • Third Party Administration • Direct repair services • Legal Settlement Administration • Medical Management • Analytics • Forensic Accounting –BPO –Consulting |
![]() Crawford’s Expertise Claims Services: Thai Flooding Catastrophe Response Business Process Outsourcing: Deepwater Horizon Consulting: Medical Management |
![]() Crawford & Company Catastrophe Response: Thai Flooding Top ten historic insurance loss Crawford handled losses in excess of $4 billion Flooding affected an area the size of South Carolina Leveraged global capabilities through deployment of 160 staff including 50 support staff and 35 senior adjusters from other locations globally In-house forensic accountants utilized 10 |
![]() Crawford & Company Natural catastrophes worldwide 1980 – 2012 Natural catastrophes per year more than doubled over period Crawford is uniquely positioned to respond on a global basis 11 Global Natural Catastrophe Update © 2013 Munich Re Source: Geo Risks Research, NatCatSERVICE – As at January 2013 |
![]() Crawford & Company High-Volume Claims Services: Deepwater Horizon 12 The Garden City Group (GCG) is the recognized leader in legal administration services for class action settlements and other claims administration, bankruptcy cases and legal noticing programs Largest program is the combined GCCF/Deepwater Horizon settlement This special project resolves economic loss and property damage claims related to the Deepwater Horizon Incident GCG’s other high-profile distribution matters include: –the General Motors bankruptcy –the $6.15 billion WorldCom settlement –the $3.4 billion Native American Trust Settlement –the $3.05 billion VisaCheck/MasterMoney Antitrust settlement. |
![]() Crawford & Company Garden City Group Ranks First Among Claims Administrators 13 Source: Securities Class Action Services Report, Most Frequent Claims Administrators in SCAS 100, Jan. 2013 |
![]() Crawford & Company 14 Consulting: Medical Management Medical costs are currently 60% of workers compensation cost and are estimated to be over 70% by 2016, increasing the importance of effective medical cost containment. Broadspire case managers proactively manage medical treatment in the rehabilitation process, enabling our clients’ employees to recover as quickly as possible in the most cost-effective manner. Healthcare reform is expected to increase activity in the healthcare market overall, which could negatively impact access to providers and slow return to work, which could increase medical and workers compensation cost and potentially increase claims frequency. Broadspire’s in-house integrated model provides services to mitigate increasing medical costs, ultimately decreasing our clients’ overall loss costs. This is a key element of Broadspire’s value proposition to clients. |
![]() Financial Review and Operational Focus |
![]() Crawford & Company 2012 Business Summary 16 Record revenues of $1.177 billion Record consolidated operating earnings of $110.2 million Record operating cash flow of $92.9 million Including special payment, dividends of $0.20 per CRDA and $0.16 per CRDB |
![]() Crawford & Company YTD September 2013 Business Summary 17 Revenues increased 2% to $878.6 million Consolidated operating earnings increased 5% to $74.7 million Improvement in Broadspire and Americas operating results Net income increased 16% to $40.2 million Diluted earnings per share of $0.74 for CRDA and $0.71 for CRDB |
![]() Crawford & Company Year To Date 2013 Financials 18 Crawford & Company Income Statement Highlights Unaudited ($ in thousands, except per share amounts) Nine months ended September 30, 2013 2012 % Change Revenues $878,566 $863,736 2% Costs of Services 638,049 625,001 2% Selling, General, and Administrative 174,077 173,967 0% Corporate Interest Expense, Net 4,762 6,785 -30% Special Charges - 2,794 nm Total Costs and Expenses 816,888 808,547 1% Other Income 2,800 1,473 90% Income Before Income Taxes 64,478 56,662 14% Provision for Income Taxes 24,221 21,213 14% Net Income 40,257 35,449 14% Add: Net Income Attributable to Noncontrolling Interests 105 744 -86% Net Income Attributable to Shareholders of Crawford & Company $40,152 $34,705 16% Earnings Per Share - Diluted: Class A Common Stock 0.74 $ 0.65 $ 14% Class B Common Stock 0.71 $ 0.62 $ 15% Cash Dividends Per Share: Class A Common Stock 0.13 $ 0.10 $ 30% Class B Common Stock 0.10 $ 0.07 $ 43% nm=not meaningful |
![]() Crawford & Company Operational Focus 19 Sustain Operating Performance through Improved Profitability Americas improvement in U.S. Property & Casualty and Canada Continued progress in Broadspire EMEA/AP improvement in the United Kingdom Strengthen the Balance Sheet Manage debt levels and pension obligations Drive operating cash flow to support business growth Enhance Total Return to Shareholders Dividend policy to provide meaningful yield Seek opportunities to repurchase outstanding shares below intrinsic value |
![]() Crawford & Company 2013 Guidance 20 Consolidated revenues before reimbursements between $1.13 and $1.15 billion Consolidated operating earnings between $95.0 and $99.0 million Consolidated cash provided by operating activities between $50.0 and $55.0 million Consolidated net income attributable to shareholders of Crawford & Company between $51.5 and $54.0 million, or $0.90 to $0.95 diluted earnings per CRDB share On November 4, 2013, Crawford & Company affirmed and updated certain aspects of its full year 2013 guidance as follows: |
![]() Crawford & Company Enhanced Return to Shareholders 21 Dividends and Buyback: TTM Total Return (12/3/12 to 11/29/13): After the 2013 third quarter, Crawford declared a regular quarterly dividend of $0.05 on CRDA and $0.04 on CRDB During the first nine months of 2013, Crawford has paid dividends of $0.13 per share on CRDA and $0.10 per share on CRDB, compared to $0.10 and $0.07, respectively, for the comparable 2012 period Through September 30, 2013, Crawford has repurchased 933,249 shares of CRDA at an average cost of $5.07 CRDA price increased 57.6%. Total return was 62.1% CRDB price increased 65.2%. Total return was 68.1% |
![]() Crawford & Company Crawford Capital Structure 22 Improving Balance Sheet Supports Return to Shareholders Debt reduced by $62 million, or 25% since 2010 through 2012 Pension risk management program driving positive results Material improvement in cash flow from both operations and working capital management Net debt of $95.2 million at December 31, 2012 |
![]() Crawford & Company 23 Crawford Dynamic Investment Policy Glide Path 9/30/13 Desired Liability Hedging 60% Plan Status Frozen Funded Status 82% Asset Allocation 38/62 Road Map Trade Equities for Long Bonds as Funded Status Improves Hedging 60% Hedging 60% Hedging 60% Hedging 66% Hedging 74% Return Seeking 40% Return Seeking 40% Return Seeking 40% Return Seeking 40% Return Seeking 34% Hedging 90% Hedging 82% Hedging 60% Return Seeking 10% Return Seeking 18% Return Seeking 26% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% <70% 70% 75% 80% 85% 90% 95% 100% + Asset Allocation by Funded Status Plan Status De-risk & Maintain Funded Status Fully Funded Asset Allocation Risk Optimized Liability Hedging 100% Hedged |
![]() Crawford & Company Management Alignment with Shareholders Short-Term Incentive Compensation Plan Matrix: Metric: Weight: Revenues 30% Operating Earnings 25% Operating Margin 25% DSO 20% 24 Stock Ownership Guidelines: Multiple of Officer: Base Salary: President/CEO 3x CFO/EVPs 2x Balanced short and long term system focused on strategic priorities and aligned with shareholders Long-term incentive compensation plan based on three-year EPS performance tied to the Company’s strategic plan |
![]() Crawford & Company Capital Structure and Governance Class A and B Shares: As of October 31, 2013, there were approximately 29.9 million shares of Class A Common Stock and 24.7 million shares of Class B Common Stock outstanding. The two classes of stock are substantially identical, except with respect to voting rights and the Company's ability to pay greater cash dividends on the non-voting Class A Common Stock than on the voting Class B Common Stock, subject to certain limitations. In addition, with respect to mergers or similar transactions, holders of Class A Common Stock must receive the same type and amount of consideration as holders of Class B Common Stock, unless different consideration is approved by the holders of 75% of the Class A Common Stock, voting as a class. Insider Ownership: The Jesse C. Crawford family beneficially owned 40.1% of outstanding Class A shares and 52.0% of outstanding Class B shares as of March 5, 2013. Board Diversification and Makeup: Eight of nine members are independent, with the exception of the CEO, Jeff Bowman. CEO and chairman roles are split. 25 |
![]() Crawford & Company Global Footprint World’s largest independent provider of claims management solutions Diverse customer base Global catastrophe response Innovative Technology Platforms Analytics RiskTech Risk Sciences Group/Dmitri Claims Management System (CMS) Command Center Specialized Resources Legal Settlement Administration (GCG) Global Technical Services (GTS) Medical Cost Containment Contractor Connection Business Process Outsourcing Gaining Market Share North American vertical Positioned to benefit from expected global consolidation of TPA vendors Emerging Asia Pacific and Latin American markets 26 CRAWFORD IS POSITIONED FOR STRONG RETURNS |
![]() Crawford & Company Appendix |
![]() Crawford & Company Appendix: Non-GAAP Financial Information 28 Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comparable to other similarly-titled measurements employed by other companies. Reimbursements for Out-of-Pocket Expenses In the normal course of our business, our operating segments incur certain out-of-pocket expenses that are thereafter reimbursed by our clients. Under GAAP, these out-of-pocket expenses and associated reimbursements are required to be included when reporting expenses and revenues, respectively, in our consolidated results of operations. In this presentation, we do not believe it is informative to include the GAAP-required gross up of our revenues and expenses for these pass-through reimbursed expenses. The amounts of reimbursed expenses and related revenues offset each other in our consolidated results of operations with no impact to our net income or operating earnings (loss). Unless noted in this presentation, revenue and expense amounts exclude reimbursements for out-of-pocket expenses. Segment and Consolidated Operating Earnings Operating earnings is the primary financial performance measure used by our senior management and chief operating decision maker (“CODM”) to evaluate the financial performance of our Company and operating segments, and make resource allocation and certain compensation decisions. Management believes operating earnings is useful to others in that it allows them to evaluate segment and consolidated operating performance using the same criteria our management and chief operation decision maker use. Consolidated operating earnings (loss) represent segment earnings (loss) including certain unallocated corporate and shared costs and credits, but before net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, special charges and credits, income taxes, and net income or loss attributable to noncontrolling interests. Net debt Net debt is computed as the sum of long-term debt, capital leases and short-term borrowings less cash and cash equivalents. Management believes that net debt is useful because it provides investors with an estimate of what the Company’s debt would be if all available cash was used to pay down the debt of the Company. The measure is not meant to imply that management plans to use all available cash to pay down debt. |
![]() Crawford & Company Non-GAAP Financial Information 29 Unaudited ($ in thousands) 2008 2009 2010 2011 2012 YTD through September 30, 2013 YTD through September 30, 2012 Revenues Before Reimbursements Total Revenues 1,135,916 $ 1,048,202 $ 1,110,801 $ 1,211,362 $ 1,266,138 $ 946,710 $ 930,608 $ Reimbursements (87,334) (78,334) (80,384) (86,007) (89,421) (68,144) (66,872) Revenues Before Reimbursements 1,048,582 $ 969,868 $ 1,030,417 $ 1,125,355 $ 1,176,717 $ 878,566 $ 863,736 $ YTD through September 30, 2013 YTD through September 30, 2012 Costs of Services Before Reimbursements Total Costs of Services 706,193 $ 691,873 $ Reimbursements (68,144) (66,872) Costs of Services Before Reimbursements 638,049 $ 625,001 $ 2008 2009 2010 2011 2012 YTD through September 30, 2013 YTD through September 30, 2012 Operating Earnings (Loss) Americas 28,766 $ 29,394 $ 20,748 $ 19,851 $ 11,877 $ 17,355 $ 7,429 $ EMEA/AP 32,999 23,401 24,828 28,421 48,585 19,486 30,267 Broadspire 3,526 (1,602) (11,712) (11,434) 27 4,475 (573) Legal Settlement Administration 10,814 13,130 47,661 51,307 60,284 38,714 42,114 Unallocated corporate and shared costs, net (6,362) (10,996) (5,841) (9,555) (10,613) (5,355) (7,930) Consolidated Operating Earnings 69,743 53,327 75,684 78,590 110,160 74,675 71,307 (Deduct) Add: Goodwill and intangible asset impairment charges - (140,945) (10,788) - - - - Net corporate interest expense (17,622) (14,166) (15,002) (15,911) (8,607) (4,762) (6,785) Stock option expense (861) (914) (761) (450) (408) (652) (322) Amortization expense (6,025) (5,994) (5,995) (6,177) (6,373) (4,783) (4,744) Special charges and credits (788) (4,059) (4,650) 2,379 (11,332) - (2,794) Income before income taxes 44,447 $ (112,751) $ 38,488 $ 58,431 $ 83,440 $ 64,478 $ 56,662 $ |
![]() Crawford & Company Non-GAAP Financial Information, continued 30 Unaudited ($ in thousands) December 31, 2012 Net Debt Short-term borrowings 13,275 $ Current installments of long-term debt and capital leases 838 Long-term debt and capital leases, less current installments 152,293 Total debt 166,406 Less: Cash and cash equivalents 71,157 Net debt 95,249 $ Reconciliation of Non-GAAP Items |
![]() Crawford & Company |