Crawford & Company · NYSE:CRD.A
Crawford & — Investor Presentation (September 2021)
51 slides from Crawford &'s investor presentation, Sep 22, 2021
Slide 1: Investor Presentation September 2021
CRD - A & CRD - B (NYSE) Investor Presentation September 2021
Slide 2: Forward-Looking Statements
2 Forward - Looking Statements This presentation contains forward - looking statements, including statements about the expected future financial condition, resul ts of operations and earnings outlook of Crawford & Company. Statements, both qualitative and quantitative, that are not statements of his
Slide 3: Table of Contents
3 3 4 - 6 Company Profile 7 - 12 Long - Term Growth Strategy 13 - 23 Platform Solutions Deep Dive 24 - 27 Capital Allocation Strategy 28 - 29 edjuster Overview 30 Crawford Leadership Team 31 Environmental, Social, and Governance 32 Investment Thesis 33 Global Reach 31 - 49 Appendix Table of Contents
Slide 4: Uniquely positioned as the largest public company in global claims management
4 $ 18 BILLION + Claims managed annually 1.6 MILLION Claims handled 4 Uniquely positioned as the largest public company in $60 billion global claims global claims management market. BY GLOBAL SERVICE LINES BY GEOGRAPHY 44% ⎹ Loss Adjusting 38% ⎹ TPA: Broadspire 18% ⎹ Platform Solutions 58% ⎹ US 9% ⎹
Slide 5: Crawford brands offer technologically advanced solutions to clients
5 5 The Crawford brands offer high - quality and technologically advanced solutions to clients : LOSS ADJUSTING TPA: BROADSPIRE PLATFORM SOLUTIONS • Loss Adjusting (Property / Auto / Liability) • Vehicle & Heavy Equipment Inspections • Casualty Large & Complex • Property Large & Complex • Specialty
Slide 6: Industry looking to leverage technology and seek cost-efficient solutions
6 6 Industry is looking to leverage technology and seek new cost - efficient solutions to improve profitability Climate change: rising frequency and severity of weather claims Digitization of volume claims: Increasing digitization of high - frequency, low complexity claims Scale is critical: Market
Slide 7: Evolving Crawford's Strategy for Long-Term Growth
7 Strategic evolution to reimagine claims ecosystem LOSS ADJUSTING TPA PLATFORM SOLUTIONS Our enhanced operating structure creates a better focus for management to take market share by differentiation • Become the benchmark in quality and expertise • Digitally enabled for efficiency • Broadest globa
Slide 8: Crawford Loss Adjusting
8 For clients seeking to increase policyholder satisfaction across the full spectrum of loss adjusting needs, Crawford is the one - stop - shop delivering efficiency and savings through unmatched experience, specialized expertise and digitally - enabled solutions. Crawford Loss Adjusting *First Noti
Slide 9: Focused Hiring of Major and Complex Loss Adjusting Experts
9 9 0 50 100 150 200 250 Q2 21 YTD Medium Term Focused Hiring of Major and Complex Loss Adjusting Experts Aiming for +200 Expert hires in three to four years Crawford Loss Adjusting Adding experts for major and complex claims Creating digitally enabled solutions Setting benchmark of quality Major an
Slide 10: Crawford TPA Solutions: Broadspire
10 For companies looking to enhance the claims experience and drive quantifiable savings, TPA: Broadspire is the third party administrator that delivers client - centric integrated outsourced solutions powered by innovation and data science. Crawford TPA Solutions: Broadspire Workers Compensation Au
Slide 11: Leveraging Data & Analytics to Drive Growth in TPA Broadspire
11 15% reduction in average paid when using full clinical & analytical claim model 98% return - to - work rate with case management program 8.5% savings in average incurred with litigation predictive model Claim Resolution Desk Adjuster Omni - channel FNOL*/ Intake Intelligent Triage WeGoLook On - d
Slide 12: Crawford Platform Solutions: Growth Engine of the Future
12 12 • Reimagining and simplifying the historically complex claims process through digital solutions • 1H21 Revenue: $83.6M • 1H21 Operating Margin: 16.2% • Double - digit growth over the next 3 - 5 years Transformational Driver Crawford Platform Solutions: Growth Engine of the Future Platforms str
Slide 13: Reimagining the Claims Process: Crawford Platform Solutions
13 13 13 Reimagining the Claims Process Crawford Platform Solutions
Slide 14: The Claims Process Evolution
14 14 Policyholder reports claim. Carrier uses manual process to segment and channel claim. Field Adjuster assigned and completes on site inspection. Estimate created by adjuster and goes through QA process. Claim payment made based on adjuster estimate. Subject to post loss QA re - inspection leaka
Slide 15: Reimagining the Claims Process
15 15 Contractor Network 2% Fast Track Desk 18% Traditional 80% Network Low Touch Traditional Past (2000) Traditional: 80% Network/Fast Track Desk: 20% • Loss Adjusting • Managed Repair Contractor Network 20% Virtual/On Demand 10% Traditional 70% Network Low Touch Traditional Present (2020) Traditio
Slide 16: Crawford Platform Solutions
16 Clients Scope & Scale Value Proposition • Carriers • Corporates • Risk Managers and Brokers • 6,000 General/Specialty Contractors • $3B total managed repair project costs • 45,000 on demand resources • 7,000+ licensed and trained catastrophe resources • 175,000+ claim calls handled • Enhancing th
Slide 17: Digital platform offerings
17 Digital X iOT RPA Escape of Water Alexa Asservio Renovo Job Track Digital FNOL Digital Assist Digital Desk Asservio • Digital claim intake process • Increased scale & efficiency in claim capture • Omni - Channel approach: Web, SMS, Alexa, iOT sensors • Assisted self - service ( YouGoLook )* • On
Slide 18: Platforms Driving Loss Ratio Improvement
18 Driving Loss Ratio Improvement Platforms Driving Loss Ratio Improvement J.D. Power 2020 Certified Customer Service Program recognition is based on successful completion of an evaluation and exceedi ng a customer satisfaction benchmark through a survey of recent servicing interactions. For more in
Slide 19: Managed Repair Network Summary
19 Summary Speed – Quality – Accuracy – Exceptional Customer Experiences The largest managed repair network in the U.S., driving increased policy holder satisfaction and indemnity accuracy, while enhancing client operational capacity Value Proposition • Digitalization of Processes – Continuous proce
Slide 20: Catastrophe Response Field Services
20 Enhancing the customer experience through scalable claims adjudication solutions leveraging the full spectrum of technology and the highest trained field personnel in the industry. Value Proposition Value Delivery System • Network of over 6,000 licensed and trained resources throughout the U.S. •
Slide 21: Crawford is Partnering with Leading Insurtechs
21 Smart Water Meters Property Measurement and 3 - D Modeling Digital Desk for Interior Property Claims Immersive 3D Technology Cloud Service Platform for P&C Insurers Mobile Claims Handling Insurance Risk Data Analytics Crawford is Partnering with Leading Insurtechs
Slide 22: On-Demand Services
22 Enhancing the policyholder experience and optimizing claim expense by combining technology with accessible, on - demand data collection solutions that are fast and reliable. Value Proposition • Vast, diverse and vetted on - demand workforce−45,000 strong • Innovative technologies drive consistent
Slide 23: Asservio
23 • QA Automation & Digitalization providing continuous improvement process • Rules based on Crawford industry expertise and customizable by client • Delivers consistent estimate accuracy • Automated processes reduce cycle time • Compliance results communicated in an easily transferrable format • C
Slide 24: Our Capital Allocation Strategy
24 24 Our Capital Allocation Strategy 24
Slide 25: Disciplined Capital Allocation Strategy
25 Strong financial position and liquidity Continuing share repurchase program as a component of our capital allocation strategy $0.06 per share quarterly dividends for CRD - A and CRD - B Capital Allocation 2016 – 2020¹ $260 M $60 M Free Cash Flow + Disposals Share Repurchases Debt Repayment 2 Divi
Slide 26: Net Debt and Pension Liability
26 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 2015 2016 2017 2018 2019 2020 Q2 2021 Net Debt - 20,000 40,000 60,000 80,000 100,000 120,000 140,000 2015 2016 2017 2018 2019 2020 Q2 2021 Pension Liability $80.3 million $44.2 million Net debt at $80.3 million Pension
Slide 27: M&A Strategy
27 27 Acquire ancillary services to bolster presence in property claim ecosystem Bolster technical capabilities by attracting top - tier technical adjusting talent globally Drive market share within fragmented independent loss adjusting market in the U.S. Increase presence in rapidly growing P&C ins
Slide 28: Acquisition of edjuster
28 In August 2021, Crawford acquired 100% of edjuster , the c ontents valuation leader in North America Total purchase price of $33.1 million, structured as an upfront payment of $20.1 million in cash and net receivables with the balance structured in various earnout scenarios over a two - year
Slide 29: edjuster Expands Crawford's Reach in Claims Ecosystem
29 edjuster Expands Crawford's Reach in Claims Ecosystem * See testimonials: https://www.edjuster.com/why - edjuster/#our - clients Strategy and current situation: • Expands market presence in critical contents market adjacency • Enhances wallet share and deepens customer relationships • Bolsters Cr
Slide 30: Led By Experienced Leadership Team
30 30 Rohit Verma Chief Executive Officer Andrew Bart President, Loss Adjusting International Joseph Blanco President Pat Van Bakel President, Canada & Loss Adjusting North America Larry Thomas Global President, Platform Solutions Mike Hoberman President, TPA Solutions: Broadspire North America Bene
Slide 31: Environmental, Social and Governance
31 Inclusion and Diversity Established Employee Resource Groups and an Employee Advisory Council aligned with our purpose to foster a safe and inclusive working environment Human Capital Development Promote an environment where employees are empowered to grow, emboldened to act, and inspired to inno
Slide 32: Why Invest in Crawford?
32 32 Attractive investment profile Strategically positioned in a rapidly changing industry Investing to drive innovation and accelerate growth Committed to environmental, social and governance initiatives Financial strength and flexibility Experienced leadership team Why Invest in Crawford? Crawfor
Slide 33: Global coverage that goes beyond borders
33 9K 50K 70 6K Employees Worldwide Field Resources Countries Network Contractors Crawford & Company Global coverage that goes beyond borders 33
Slide 34: Appendix A: Changing Industry Environment & Growing Market Opportunity
34 34 Appendix A: Changing Industry Environment & Growing Market Opportunity 34
Slide 35: More Frequent and Destructive CAT Events
35 35 (1) SwissRe Industry seeks cost effective solutions to address volatility and surge events that exceed their capacity with reduced claims staff. Virtual desk integrated with technology enabled networks will be solution. Catastrophe - related insured losses (1970 - 2020) 1 More Frequent and Des
Slide 36: Targeting National and Regional Players
36 36 2 % 63 % 6% 22% 92% 15% # of Carriers Total Premium Medium: $1B - $5B Small: Less than $1B Large: Greater than $5B 1. ~98% of carriers are small to medium sized¹ 2. They have limited financial capacity¹ • Insurance carriers currently operate with a large operating expense base, which is unsust
Slide 37: Appendix B: Global Service Lines & Q2 2021 Segment Results
37 37 Appendix B: Global Service Lines & Q2 2021 Segment Results 37
Slide 38: Financial Snapshot
38 (1) As of 7/30/2021 ( 2 ) See appendix for non - GAAP explanation and reconciliation of non - GAAP measures OVERVIEW Q2 2021 GAAP Q2 2021 NON - GAAP 2 ~$ 500 MILLION Market capitalization¹ Financial Snapshot $ 80 MILLION Net debt $ 20 MILLION Operating earnings $ 268 MILLION Revenues before reimb
Slide 39: Second Quarter 2021 Financial Summary
39 (1) See appendix for non - GAAP explanation and reconciliation of non - GAAP measures. 39 Second Quarter 2021 Financial Summary Quarter Ended June 30 , June 30 , ($ in millions, except per share amounts) 20 21 20 20 % Change Revenues $ 267.5 $ 234.4 14% Non - GAAP Revenues excluding foreign excha
Slide 40: Crawford Loss Adjusting
40 40 Highlights • 15% revenue growth in US • Recovering economic activity in US • Strong demand for major and complex adjustors driving investment in talent • Won ~$10 million of new business in the quarter Operating Results (2Q 2021 v. 2Q 2020) • Revenues of $116.0 million versus $109.1 million •
Slide 41: Crawford Platform Solutions
41 41 Highlights • Transformational area for Crawford • Volume increasing – Q2 saw the highest number of transactions in past two years • Despite benign weather, saw strong flow through • Won nearly $2 million of new business in the quarter Operating Results (2Q 2021 v. 2Q 2020) • Revenues of $51.1
Slide 42: Crawford TPA Solutions: Broadspire
42 42 Highlights • Claims volume up ~5% versus prior year • Impact of COVID still being felt in Canada and EU • Medical management is below pre - pandemic levels • Won more than $8 million of new business in the quarter Operating Results (2Q 2021 v. 2Q 2020) • Revenues of $100.4 million versus $88.7
Slide 43: Appendix C: Non-GAAP Financial Information
43 43 Appendix C: Non - GAAP Financial Information 43
Slide 44: Non-GAAP measures explanation
44 Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessaril y comparable to other similarly - titled measu
Slide 45: Segment and Consolidated Gross Profit; Adjusted EBITDA
45 Segment and Consolidated Gross Profit Gross profit is defined as revenues less direct expenses which exclude indirect overhead expenses allocated to the business. Ind irect expenses consist of centralized administrative support costs, regional and local shared services that are allocated to each
Slide 46: Total Revenues Before Reimbursements by Major Currency
46 46 Total Revenues Before Reimbursements by Major Currency The following table illustrates revenue as a percentage of total revenue in the major currencies of the geographic areas in which Crawford does business: Three Months Ended ( in thousands ) June 30, 2021 June 30, 2020 Geographic Area Curre
Slide 47: Reconciliation of Non-GAAP Items
47 47 Reconciliation of Non - GAAP Items Revenues, Costs of Services Provided, and Operating Earnings Quarter Ended Quarter Ended June 30 , June 30 , Unaudited ($ in thousands) 2021 2020 Revenues Before Reimbursements Total Revenues $ 276,545 $ 242,875 Reimbursements ( 9,088 ) ( 8,459 ) Revenues Bef
Slide 48: Reconciliation of Non-GAAP Items: Adjusted EBITDA
48 48 Reconciliation of Non - GAAP Items (cont.) Adjusted EBITDA ) Quarter Ended June 30 , June 3 0 , Unaudited ($ in thousands) 20 21 20 20 Net income attributable to shareholders of Crawford & Company $ 11,780 $ 5,898 Add: Depreciation and amortization 10,464 9,390 Stock - based compensation 1,954
Slide 49: Reconciliation of Non-GAAP Items: Net Debt
49 49 Reconciliation of Non - GAAP Items (cont.) Net Debt June 30 , December 31, Unaudited ($ in thousands) 20 21 20 20 Net Debt Short - term borrowings $ 7,000 $ 1,570 Current installments of finance leases and other obligations 84 267 Long - term debt and finance leases, less current installments
Slide 50: Reconciliation of Non-GAAP Items: Segment Gross Profit
50 50 Reconciliation of Non - GAAP Items (cont.) Segment Gross Profit Three months ended ( $ in thousands) June 30, 20 21 June 30 , 20 20 Segment gross profit: Crawford Loss Adjusting $ 27 , 244 $ 30,525 Crawford Platform Solutions 15 , 435 10,662 Crawford TPA Solutions 19,064 17,170 Segment gross p
Slide 51: Reconciliation of Second Quarter Non-GAAP Results
51 51 Reconciliation of Second Quarter Non - GAAP Results Three Months Ended June 3 0 , 20 21 Unaudited ($ in thousands) Revenues Non - GAAP Operating Earnings Pretax Earnings Net Income Attributable to Crawford & Company Diluted Earnings per CRD - A Share (1) Diluted Earnings per CRD - B Share GAAP