Crawford’s Business Overview and History
Crawford & Company (CRD.A) is a leading global provider of claims management and outsourcing solutions to insurance companies and self-insured entities. The company has a long and storied history, dating back to its founding in 1941 as a small Atlanta-based firm. Over the decades, Crawford has grown to become a diversified, multinational organization with an expansive network serving clients in more than 70 countries.
Crawford & Company was founded in 1941 in Atlanta, Georgia as a claims management services provider for the insurance industry. The company began as a small, family-owned business focused on property and casualty claims handling. In the following decades, Crawford expanded its service offerings and geographic reach, establishing operations across North America and eventually globally.
A key milestone for the company came in 1961 when it became publicly traded on the New York Stock Exchange. This provided access to capital that allowed Crawford to pursue strategic acquisitions and grow into new markets. Over the following two decades, the company acquired several competing firms, solidifying its position as a leading global provider of claims management solutions.
In the 1980s and 1990s, Crawford faced a number of challenges as the insurance industry underwent significant changes. The rise of self-insured entities and the growing complexity of claims processing pressured the company to continuously adapt its service model. Crawford responded by investing in technology and expanding its capabilities in areas like medical management and supply chain services.
Despite these industry headwinds, Crawford maintained its status as a dominant force in the claims management market through the early 2000s. The company weathered the global financial crisis of 2008-2009, which saw many of its competitors struggle. Crawford’s diversified service portfolio and global footprint helped it navigate the economic uncertainty of that period.
Today, Crawford is organized into four reportable segments: North America Loss Adjusting, International Operations, Broadspire, and Platform Solutions. These diverse business units allow the company to serve a wide range of clients across various industries and geographies.
Financial Performance and Ratios
Crawford’s financial performance has been characterized by a mix of consistent growth and strategic challenges. Over the past three years, the company has reported the following results:
On a quarterly basis, Crawford’s recent performance has been as follows:
The company experienced a slight year-over-year revenue growth of 0.2% in Q3 2024. This modest increase was primarily due to decreases in the Platform Solutions segment, partially offset by increases in the International Operations and Broadspire segments. Earnings declined due to lower staff utilization and higher costs.
Financials
Crawford’s financial ratios demonstrate a generally healthy, yet complex, financial profile. The company’s current ratio of 1.28 and quick ratio of 1.28 indicate a strong liquidity position, while its debt-to-equity ratio of 1.64 suggests a moderately leveraged capital structure.
Liquidity
Crawford’s liquidity position appears to be strong, as evidenced by its current and quick ratios. This indicates that the company has sufficient short-term assets to cover its short-term liabilities, which is crucial for maintaining financial stability and operational flexibility. As of the latest reporting period, Crawford had $52.34 million in cash and $183.8 million available under its $400 million credit facility, providing ample liquidity for operations and potential investments.
Navigating Challenges and Diversifying the Portfolio
Over the years, Crawford has faced its share of challenges, including the impact of weather-related events, macroeconomic uncertainties, and competitive pressures. However, the company has consistently demonstrated its resilience and adaptability.
In recent quarters, Crawford’s North America Loss Adjusting and Platform Solutions segments have experienced revenue declines due to lower weather-related activity compared to the prior year. The company’s management team has responded by focusing on diversifying its revenue streams and optimizing its operations.
For example, Crawford’s International Operations and Broadspire segments have delivered strong performance, with revenue growth of 7.8% and 7.4%, respectively, in the third quarter of 2024. This diversification strategy has helped offset the challenges faced in other business units.
Additionally, Crawford has been investing in technology and digital capabilities to enhance its service offerings and improve efficiency. The company’s ongoing focus on innovation has allowed it to stay ahead of industry trends and better serve its clients.
Segment Performance
North America Loss Adjusting: This segment reported revenues before reimbursements of $79.33 million in Q3 2024, a slight decrease of 0.8% compared to the prior year period. The decrease was due to lower revenues in the U.S. Field Operations and in Canada, partially offset by an increase in the U.S. Global Technical Services. Segment operating earnings were $5.44 million, or 6.9% of revenues before reimbursements, compared to $10.47 million, or 13.1%, in the prior year quarter.
International Operations: Revenues before reimbursements for this segment were $105.74 million in Q3 2024, an increase of 7.8% compared to the prior year period. This increase was seen across all geographic regions, led by the U.K. and Europe. Segment operating earnings were $5.14 million, or 4.9% of revenues before reimbursements, up from $2.20 million, or 2.2%, in the third quarter of 2023.
Broadspire: This segment’s revenues before reimbursements were $99.01 million in Q3 2024, an increase of 7.4% compared to the prior year period. This growth was driven by new client wins and increased medical management referrals. Segment operating earnings were $14.40 million, or 14.5% of revenues before reimbursements, compared to $13.53 million, or 14.7%, in the same quarter last year.
Platform Solutions: Revenues before reimbursements for this segment were $45.30 million in Q3 2024, down 24.3% from the prior year period. This decrease was primarily due to lower revenues in the Networks and Contractor Connection service lines, which experienced declines due to reduced weather-related activity compared to the prior year. Segment operating earnings were $3.83 million, or 8.5% of revenues before reimbursements, down from $8.52 million, or 14.2%, in the third quarter of 2023.
Geographic Performance
Crawford generates the majority of its revenue in the United States, Canada, and the United Kingdom. The company’s global footprint extends to operations in over 70 countries, allowing it to serve a diverse international client base and mitigate risks associated with concentration in any single market.
Outlook and Future Prospects
Looking ahead, Crawford remains well-positioned to capitalize on the growing demand for claims management and outsourcing solutions. The company’s global reach, diversified service offerings, and commitment to innovation position it as a trusted partner for insurance companies and self-insured entities.
The claims management and outsourcing solutions industry has seen steady growth, with a compound annual growth rate (CAGR) of 4-6% in recent years. This growth is primarily driven by increased outsourcing of claims processing by insurance companies and self-insured entities, a trend that bodes well for Crawford’s future prospects.
However, the company will need to navigate ongoing macroeconomic and industry-specific challenges, such as the impact of weather events, geopolitical tensions, and potential changes in regulations. Crawford’s ability to adapt and execute its diversification strategy will be crucial in driving long-term growth and shareholder value.
Conclusion
Crawford & Company (CRD.A) is a resilient and adaptable leader in the claims management and outsourcing industry. With a rich history spanning over 80 years, the company has continuously evolved to meet the changing needs of its clients. By diversifying its revenue streams, investing in technology, and maintaining a strong financial profile, Crawford is well-positioned to navigate the challenges ahead and capitalize on the growing demand for its services.
The company’s performance across its four business segments demonstrates its ability to adapt to varying market conditions. While some segments, such as North America Loss Adjusting and Platform Solutions, have faced headwinds due to reduced weather-related activity, others like International Operations and Broadspire have shown robust growth. This diversification helps to stabilize Crawford’s overall financial performance and mitigate risks associated with any single market or service line.
Crawford’s strong liquidity position, with a healthy cash balance and significant available credit, provides the company with the flexibility to pursue strategic initiatives and weather potential economic downturns. The company’s global presence in over 70 countries further enhances its resilience and ability to capitalize on growth opportunities across different geographic markets.
As Crawford continues to execute its strategic initiatives, focusing on technology investments, operational efficiency, and market expansion, investors will be watching closely to see how the company’s story unfolds in the years to come. With its strong market position, diverse service offerings, and commitment to innovation, Crawford & Company remains a significant player in the evolving landscape of claims management and outsourcing solutions.
Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.