Crawford & Company · NYSE:CRD.A
Crawford & — Investor Day (November 2008)
61 slides from Crawford &'s investor day presentation, Nov 21, 2008
Slide 1: Strength of Working Together: Analyst Day
Exhibit 99.1 STRENGTH of Analyst Day New York Stock Exchange November 21, 2008
Slide 2: Forward-looking Statements and Segment Operating Earnings
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 q
Slide 3: Overview
Overview Jeffrey T. Bowman President and Chief Executive Officer November 21, 2008
Slide 4: Agenda
Agenda • Overview • Financials • International Operations • U.S. Property & Casualty • Broadspire • Legal Settlement Administration • Summary
Slide 5: Crawford is "Positioned for Growth"
Crawford is “Positioned for Growth” • Access to growing global markets • Increasing market share both domestically and internationally • Crawford expects to benefit from global consolidation of TPA vendors • Diverse, high quality customer base • High customer retention rates • Emphasis on quality an
Slide 6: Crawford & Company
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 compan
Slide 7: What we do…Our Global Products and Services
What we do…Our Global Products and Services Class Actions Administration & Bankruptcy Warranty CAT Marine & Transport TPA Workers Compensation Medical and Case Management (Broadspire) Property Casualty Motor & Auto The Crawford System of Claims Solutions Contractor Connection
Slide 8: Where We Do It: Locations Across a Global Economy
Where We Do It : Locations Across a Global Economy More than 700 locations in 63 countries
Slide 9: Group Strategies
Property & y fs Group Strategies a CH Crawford
Slide 10: Administration
Administration ‘
Slide 11: Strategies to Meet the Demands of our Clients, Employees and Shareholders
Strategies to Meet the Demands of our Clients, Employees and Shareholders Strong Demand • Brand and reputation through quality • Global footprint • Broad product offering • Industry experts • Building a performance driven workplace • Executing a sound business strategy
Slide 12: Non-Life Premium Income Analysis
Non-Life Premium Income Analysis “a Major Driver’ Global segmentation in the Non-Life Premium Income market drives our strategy • U.S. largest market • Potential to increase penetration of clients in Europe • Growing market in Asia Pacific Source: Crawford & Company % to total Market Total 99.3% * U
Slide 13: A Diversified Portfolio of Business
A Diversified Portfolio of Business 42.7% 7.3% 20.0% 2008 Revenues before Reimbursements of $786 Million for nine months ended September 30, 2008 • Property and Casualty Services • Global Technical Services • Global Marine and Transportation • Global Markets 30.0% International Ops. U.S. Property &
Slide 14: Global Executive Management Team
Global Executive Management Team Bruce Swain Chief Financial Officer Jeffrey T. Bowman President & CEO Ian Muress Property & Casualty EMEA & Asia Pacific Kevin Frawley Property & Casualty Americas David Isaac Legal Settlement Administration Allen W. Nelson General Counsel, Corporate Secretary and Ch
Slide 15: Financial Review
Financial Review Bruce Swain Chief Financial Officer November 21, 2008
Slide 16: Four year Crawford Financial Performance
Four year Crawford Financial Performance • Improving performance in a difficult operating environment Revenue CAGR of 10.6% from 2005 to 2008 Operating earnings CAGR of 41.0% from 2005 to 2008 • Strong revenue growth internationally aided by impact of Broadspire acquisition International growth (bef
Slide 17: Financial Overview for the nine months ended September 30, 2008
Financial Overview for the nine months ended September 30, 2008 • Strong performance for the year to date... Revenue growth of 7.6% Net income up 86.7% • Led by operational improvements... Operating earnings up over 100% Operating margin up 320 basis points • And cost control initiatives... SG&A dow
Slide 18: Consolidated Revenue (Trailing Months)
Consolidated Revenue (Trailing 12 months) As of September 2008 12-Month Moving Total Revenue Average Annual Rate of Change - 12 Month Moving Total ($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% 1
Slide 19: Consolidated Operating Earnings (Trailing Months)
Consolidated Operating Earnings (Trailing 12 months) As of September 2008 12-Month Moving Operating Earnings Average Annual Rate of Change - 12 Month Moving Total ($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 Septe
Slide 20: Consolidated Operating Margin (Trailing Months)
Consolidated Operating Margin (Trailing 12 Months) As of September 2008 12-Month Moving Total Ratio Average Annual Rate of Change - 12 Month Moving Total ($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%
Slide 21: September 30, 2008 Balance Sheet
September 30, 2008 Balance Sheet September 30, 2008) net of cash and cash equivalents. ($50,855 at December 31, 2007 and $56,819 at September 30, 2008). Crawford & Company Consolidated Balance Sheet Highlights As of September 30, 2008 and December 31, 2007 In thousands, except percentages Unaudited
Slide 22: Consolidated Operating Cash Flow (Trailing Months)
Consolidated Operating Cash Flow (Trailing 12 Months) As of September 2008 12-Month Moving Operating Cash Flow Average Annual Rate of Change - 12 Month Moving Total ($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 Sep
Slide 23: International Operations
International Operations Ian V. Muress Chief Executive Officer, Property & Casualty - EMEA & Asia-Pacific
Slide 24: Year-to-Date International Operations Results
Year-to-Date International Operations Results $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% o
Slide 25: International Property & Casualty Insurance Market (excluding U.S.)
International Property & Casualty Insurance Market (excluding U.S.) ROW Unallocated Loss Adjusting Expenses ROW Outsourced Loss Adjusting Expenses Crawford CL GAB Regional/Local Providers $41.1 Billion 95.6% $1.9 Billion 4.4% $1.053 Billion 55.6% $140 Million 7.3% $377 Million 19.8% Source: Crawford
Slide 26: Global Three-Tiered International Operations
Global Three-Tiered International Operations 1 2 3 U.K. Canada Australia Asia select Europe Latin America Mature Sophisticated Variable Developing Robust Emerging Emerging Cohesive Diverse Diverse Significant opportunity for cross leverage & synergy Tier Area Market Regulatory/Compliance Business Cu
Slide 27: Products and Services
Products and Services Global Technical Services Gen Insurance Volume Markets Specialty Markets Third Party Administration Property Casualty - Public Liability - Employer’s Liability Professional Indemnity Product Recall CAT Response Major Loss IT & Telecommunications Banking & Finance Energy; Mining
Slide 28: Key International Trends
Key International Trends INDUSTRY TREND... SUPPORTS... •Regulation •Service/Data •Catastrophe Management •Outsourcing •Best practice technology and business process •Capacity/capability •Global reach and local/technical credentials •Trusted, experienced partners
Slide 29: International Property & Casualty Key Customers
International Property & Casualty Key Customers (excluding U.S.) • Top 100 International Clients represent 83% of annual fees invoiced Percentage by number of clients in USD categories based on YTD September 2008 fees invoiced, annualized 2% 10% 6% 7% 74% Over $1,000,000 $100,000 up to $999,999 $50,
Slide 30: International Growth Opportunities
International Growth Opportunities • Revenue/Claims growth from: – Increased penetration of Tier One markets – Leveraging into Tier Two and Tier Three markets – Global clients seeking global partners • Operational gains from: – Exporting best practices – Leading edge technology – Process efficiency
Slide 31: U.S. Property & Casualty
U.S. Property & Casualty Kevin Frawley Chief Executive Officer, Property & Casualty - Americas
Slide 32: YTD U.S. Property & Casualty Results
YTD U.S. Property & Casualty Results $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 earn
Slide 33: US Property & Casualty Services
US Property & Casualty Services Tech Services Liability Services Crawford Central Educational Services Marine & Transportation A System of Claims Solutions SWS Casualty Auto Property CAT Services Contractor Connection
Slide 34: U.S. Insurance Market Loss Adjusting Expenses
U.S. Unallocated Loss Adjusting Expenses U.S. Outsourced Loss Adjusting Expenses U.S. Insurance Market 4,000+ Local & Regional Providers National Providers Crawford $21.7 Billion 86.1% $3.5 Billion 13.9% $3 Billion 86% $280 Million 8% $193 Million 6% Source: Cochran, Caronia & Co. and Crawford & Com
Slide 35: U.S. Property & Casualty Key Customers
U.S. Property & Casualty Key Customers • Top 250 Clients represent approximately 80% of annual revenue • Key accounts – National in scope • Historically – many regional/local accounts • Carriers and Crawford were organized on regional basis • Marketplace evolving Percentage by number of clients in U
Slide 36: Key Industry Trends
Key Industry Trends • Challenging Trends – Claims as commodities – Carriers in-sourcing claims handling • Positive Trends – Consolidation of independent adjusters by major Carriers – Carriers focus on speed and enhanced communication – Increased importance of technology including more work from remo
Slide 37: Key opportunities
Key opportunities • U.S Property & Casualty focus: – New revenue – restructure and grow our sales force – Program business – deliver end to end claims processing to national and regional carriers – Middle market – seek greater outsourcing of internal claims • Cross-sell existing customer base – High
Slide 38: U.S. Property & Casualty Strategic Plan
U.S. Property & Casualty Strategic Plan Future success expected to come from: • Expanded application of technology to enhance effectiveness and reduce cost • Revenue growth from increased market share in national and regional accounts • Shift to program business model
Slide 39: Broadspire
Broadspire Ken Martino President & Chief Executive Officer, Broadspire
Slide 40: Year-to-Date Broadspire Results
Year-to-Date Broadspire Results $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 Summary Results, Br
Slide 41: Broadspire
Broadspire Fourth Largest TPA in Workers’ Compensation/Liability Market FY2007 Revenue: $321.3 million Fifth Largest Medical Management Firm Products and Services: Workers’ Compensation Claims Services Auto and General Liability Claims Services Medical and Disability Management Services Long-Term Ca
Slide 42: U.S. TPA Market Opportunities
U.S. TPA Market Opportunities Outsourced Loss Adjusting Expenses Unallocated Loss Adjusting Expenses Self-Insureds, Large Accounts and Captives outsource most of their claim services Market stable in terms of claim counts – lower frequency offset by economic expansion Outsourced claim services are f
Slide 43: Key Industry Trends
Key Industry Trends Positive Trends Workers’ Compensation legislative changes and cost increases Litigious nature of our society Focus on health and productivity More data – More metrics Challenges Declining frequency of Workers’ Compensation claims Current market turmoil has risk managers distracte
Slide 44: Broadspire Key Customers
Broadspire Key Customers Client retention rate 93%+ Leveraging our relationships – locking in multi-year deals The chart below details Broadspire’s broad based market appeal: > $5 m $1 m - $4.9 m $500 k - $999 k $250 k - $499 k $100 k - $249 k < $100 k Account Size Number of Accounts 58% $100k - $24
Slide 45: Broadspire's Focus
Broadspire’s Focus Implementation of Risk Tech November 2008 Claims inventory management Grow TPA & standalone Leverage existing products and services Dedicated sales team Grow existing accounts Brand globalization Investment in staff
Slide 46: Legal Settlement Administration
Legal Settlement Administration David Isaac Chief Executive Officer, The Garden City Group, Inc. (GCG)
Slide 47: Products and Services
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 Se
Slide 48: Legal Settlement Administration Results
Legal Settlement Administration Results $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 ma
Slide 49: Market Overview and Position
Market Overview and Position • GCG is a nationwide leader in class action administration and is increasing its position in bankruptcy administration. • Principal publicly-traded competitors are Epiq (Nasdaq: Epiq), Administar (AUS: CPU) and U.S. Bancorp (NYSE:USB). • Market size is not well defined
Slide 50: Competitive Strengths
Competitive Strengths – Largest securities class action administrator in the U.S. September 30, 2008] • Comprehensive class action administrative services with nearly 25 years experience in both securities and consumer cases. • Senior executives are former class action litigation attorneys, Chapter
Slide 51: Securities Class Action Cases
Securities Class Action Cases AB Data, Ltd. Berdon LLP Complete Claims Solutions Heffer Radetich & Saitra LLP Gilardi and Co., LLC Garden City Group Source: RiskMetrics Group (SCAS Top 100, September 30, 2008)
Slide 52: Securities Class Action Administration
Securities Class Action Administration Most Frequent Claims Administrators – Class Action GCG has been selected to administer 6 of the ten largest securities class action settlements since the passage of the PSLRA in 1995. Rank Case Name Settlement (MMs) Year Claims Agent Enron Corp. $7,231 Gilardi
Slide 53: Key Industry Trends
Key Industry Trends • Commoditization of the industry creates price competitive environment • Sustaining organic growth in face of declining numbers of class action settlements – Settlement scope and size; fewer mega cases settled since tech bubble of early 2000’s – Subprime cases are being filed bu
Slide 54: Long Term Growth Opportunities
Long Term Growth Opportunities • Bankruptcy market • Potential opportunity in filing of major class actions • Diversification of services • Capitalizing on reputation for quality in a consolidating market • Strong deep management team with unmatched experience in core services
Slide 55: Summary
Summary Jeffrey T. Bowman President and Chief Executive Officer
Slide 56: "The Strength of Working Together"
“The Strength of Working Together” “The Together” is unifying 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
Slide 57: 2008 Year To Date Performance
2008 Year To Date Performance • Strong performance for the 2008 nine months year to date... – Revenue growth of 7.6% – Net income up 86.7% • Led by operational improvements... – Operating earnings up over 100% – Operating margin up 320 basis points • And cost control initiatives... – SG&A down 140 b
Slide 58: Medium Term Goals
Medium Term Goals • Medium Term Financial Goals: – Grow revenues organically by 5% CAGR through – Achieve a 10% EBIT margin by 2010 – Target debt as a percentage of total capital at 25% to 30% – Continued commitment to sound financial management and maximizing shareholder value
Slide 59: Crawford is "Positioned for Growth"
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 va
Slide 60: The Strength of Working Together
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
Slide 61: Analyst Day
Analyst Day New York Stock Exchange November 21, 2008