Crawford & Co.
Annual Report 2015

Plain-text annual report

360° Crawford & Company ® 2015 Annual Report COMPANY PROFILE Based in Atlanta, GA, Crawford & Company® (www.crawfordandcompany.com) is one of the world's largest independent providers of claims management solutions to the risk management and insurance industry as well as self-insured entities, with an expansive global network serving clients in more than 70 countries. The Crawford Solution™ offers comprehensive, integrated, claims services, business process outsourcing and consulting services for major product lines including property and casualty claims management, workers' compensation claims and medical management, and legal settlement administration. The Company’s shares are traded on the NYSE under the symbols CRDA and CRDB. TABLE OF CONTENTS 02 Message to Shareholders 06 Global Executive Management Team 07 Vision & Values 08 360 Degrees of Global Vision The Crawford Solution™ 1 1 12 14 16 18 24 360 Degrees of Expertise 360 Degrees of Data 2015 Financial Highlights Condensed Consolidated Financial Statements Board of Directors 360° 2015 Annual Report 1 CHALLENGES CAN COME FROM ANY DIRECTION. JUST LIKE OPPORTUNITY. With the broadest array of services in the industry, Crawford is a true 360° global claims solutions provider that can quickly configure a full range of solutions for customers – anywhere and anytime. 2 Crawford & Company 2015 Annual Report A MESSAGE FROM THE INTERIM PRESIDENT & CEO TO OUR SHAREHOLDERS I am pleased with the progress that we have made through 2015 and excited with what the future holds as we work to unleash the tremendous, untapped potential that I see residing in Crawford & Company. While the market backdrop continues to be challenging, Crawford’s global position has never been stronger as we generated almost $1.2 billion in revenues in 2015 while handling 1.6 million claims around the world. As we enter 2016, Crawford remains one of the world’s largest independent providers of claims management solutions with an unparalleled competitive position whose brand is well recognized globally. Our clients value the complex solutions that we deliver oftentimes under dire circumstances when speed of execution matters most. Simply put, we partner with our clients daily to deliver mission critical claims services, business process outsourcing (BPO), and consulting programs for all aspects of their claims management needs. While our brand, customer relationships and product solutions are all strong, it is our financial performance that has lagged expectations in the past. The opportunity we have is to deliver the vast potential that exists in our company today. While Crawford’s global competitive position is unmatched, our organization has been slowed by unnecessary costs and a business structure that has served to limit collaboration and growth. This has been compounded by a dearth of severe weather, leading our clients to outsource fewer claims and especially fewer high value, complex claims. Against a backdrop of rising expenses, this has contributed to margin contraction and disappointing earnings in the past. 360° Message to Shareholders 3 In performing an extensive business review this fall, we identified numerous areas of redundancy as well as opportunities for productivity and revenue enhancement. Based upon our findings, we quickly created and implemented a broad restructuring initiative with the goal of reducing our expense base by $25 million as we strive to restore our profit margins to their historical levels and better. We are focused on expanding our margins without any regard or expectations for an improving market. This goal is within our grasp and will provide operational leverage if the market does improve over time. Importantly, we expect this cost reduction plan to be seamless with no impact to the high levels of service that we currently provide to our clients on a daily basis. The second important finding of our review was the value that our clients place in their business partnerships with Crawford. Our clients were uniform in their praise of the Crawford brand and product offerings. What became quickly apparent, however, was the minimal customer overlap that we currently possess across our business segments. This represents a real growth opportunity as we look to introduce our full suite of products to our existing customer base. To that end, we have empowered and incentivized our four business segment CEOs to collaborate globally in order to cross sell their products and drive improved revenue growth. This is a key strategic initiative for 2016; and while this effort is nascent, I can already see an energy and excitement within our leadership team as they begin to work together to win new business. At this point, I would like to review the 2015 highlights of our four business segments that provide claims management, BPO and consulting services to multinational insurance carriers, brokers, local insurance firms, law firms and governmental agencies, as well as more than 200 of the Fortune® 500 companies. U.S. Services Our U.S. Services segment offers property & casualty, liability, marine & aviation, vehicle, transportation, catastrophe claims management along with contractor managed repair services (Contractor Connection®), Global Technical Services (GTS®) for large and complex losses, and Crawford Forensic Accounting Services. U.S. Services enjoyed a strong year of growth as revenues expanded 13 percent year over year driven by the continued success in U.S. Contractor Connection and the benefit of an outsourcing project from a major U.S. insurance carrier. Our cost reduction efforts combined with improved revenue growth drove operating margins of 13 percent, a 500 basis points expansion from 2014’s result of eight percent. We see room for expenses to fall further and believe margins have support at current levels in this difficult environment. This helped to offset the headwind that we continue to experience from declining weather-related cases. We continue to invest in GTS and its specialty markets niche areas due to client demand for specialized expertise. We have reorganized quality review functions to better optimize resources and improve product delivery. Late in the year we appointed a leader to leverage the statistical analytics we capture in our Atlanta-based Performance Management Center and to expand its capabilities. Importantly, our U.S. Contractor Connection business both on the commercial and consumer side continues to have ample room for continued growth. 4 Crawford & Company 2015 Annual Report International Our International segment provides property & casualty claims services, third party administration services, Contractor Connection, personal lines claims handling and GTS for large, complex or specialty claims outside the United States. Specialist services include aviation, marine & transportation, cyber risk, environmental, forensic accounting and financial risks. Our 2014 acquisition of GAB Robins Holdings UK Limited firmly entrenched Crawford as the number one claims processor in the U.K. As we worked to integrate the two companies throughout the year we were proud to renew all major contracts of key GAB clients. In addition to launching a definitive solution for cyber-related events and partnering with global insurance carriers to provide this service, we launched financial lines claims services to support clients in the changing risk and exposure landscape. The end of 2015 and into 2016 saw a surge of flood claims from various storms impacting the U.K. that continue to be handled. In Canada, our Contractor Connection business is making progress, and we will opportunistically expand this offering into new geographic regions in 2016. Our Asia Pacific region saw strong operating results, and continental Europe showed volume increases as we exited 2015, boding well for the start of 2016. Broadspire® Our Broadspire segment is a leading third party administrator to employers and insurance companies, offering workers' compensation, casualty claim, medical management, disability and absence management solutions, and risk management information services, helping to increase employee productivity and reduce the cost of risk through early intervention, professional expertise and data analytics. Broadspire delivered another strong year with revenues increasing nine percent year over year. Operating margins were eight percent, a 200 basis point expansion from 2014’s result of six percent due to higher revenues and improved control over operating expenses. Our medical management, disability and absence management services products continued to gain traction in the market and all contributed to the robust revenue growth. In addition to launching a liability litigation review service, we remained focused on enhancing operational efficiency to the benefit of our clients. Our client retention rate, a key metric in sustainable growth, ended the year at 92 percent. Garden City Group™ The Garden City Group, LLC (GCG®) is a recognized leader in legal administration for class action settlements, mass tort matters, bankruptcy cases and legal notice programs. GCG managed the decline of several large projects through calendar year 2015 which had the effect of pressuring both revenues and margins. The wind-down of these projects led by the Deepwater Horizon class action settlement will continue to be a headwind as we enter 2016. We are pleased with the recent appointment of Kenneth Cutshaw as interim chief executive officer given his deep experience set which will help GCG work to reduce costs as well as build its new business pipeline in order to stabilize its financial results. 360° Message to Shareholders 5 Looking forward As we approach the 75th anniversary of Crawford & Company, I know Jim Crawford, our founder, would be proud of our progress. I remain optimistic with what the future holds for our clients, our employees, and our shareholders. We are in the midst of significant change that will transform Crawford into a company that can deliver more consistent financial results regardless of the market backdrop. We will also continue to develop our Global Business Services Centers in Manila, Philippines and Pune, India (the “Centers”). The Manila facility has already begun to drive improved efficiencies and cost savings in our Broadspire segment. As we expand the Centers through 2016, we expect to drive further cost savings and margin expansion across our business segments. The Centers are expected to continue to strengthen our client service, realize additional operational efficiencies, and provide new capabilities for growth. WE ARE IN THE MIDST OF SIGNIFICANT CHANGE THAT WILL TRANSFORM CRAWFORD INTO A COMPANY THAT CAN DELIVER MORE CONSISTENT FINANCIAL RESULTS REGARDLESS OF THE MARKET BACKDROP. We will also invest back into the business to take advantage of attractive growth opportunities. Leveraging client relationships across our business segments represents a real opportunity to expand our product sales and enhance revenue growth. I am pleased to report that D. Richard Williams joined our Board of Directors in early 2016. Rick is a retired co-chief executive officer of Primerica, Inc., and remains active as its non- executive chairman of the Board. He joins Crawford at an integral time in our history and we welcome his leadership, expertise and guidance. In conclusion, our goal is to deliver the vast potential that exists in Crawford and to transform the business for my ultimate successor. We believe that our goals are achievable and would like to conclude by thanking all of our employees for their hard work and commitment. Without their tireless efforts this transformation would not be possible. Sincerely, Harsha V. Agadi Interim President and Chief Executive Officer 6 Crawford & Company Global Executive Management Team C R A W F O R D & C O M P A N Y GLOBAL EXECUTIVE MANAGEMENT TEAM 1. Harsha V. Agadi Interim President and Chief Executive Officer 2. W. Bruce Swain Executive Vice President, Chief Financial Officer 3. Allen W. Nelson Executive Vice President, General Counsel, Corporate Secretary & Chief Administrative Officer 4. Ian V. Muress Executive Vice President, Chief Executive Officer, International 5. Larry C. Thomas Executive Vice President, Chief Executive Officer, U.S. Services 6. Danielle M. Lisenbey Executive Vice President, Chief Executive Officer, Broadspire 7. Kenneth A. Cutshaw Executive Vice President, Interim Chief Executive Officer, Garden City Group 8. Michael F. Reeves Executive Vice President, Head of Global Technical Services 9. Brian S. Flynn Executive Vice President, Global Chief Information Officer 10. Kenneth M. Fraser Executive Vice President, Strategy & Performance Development 11. Bonnie C. Sawdey Senior Vice President, Chief People Officer 2 8 5 9 6 10 1 7 11 3 4 360° Vision & Values 7 THE KEYS TO OUR SUCCESS VISION & VALUES VISION Our vision is to be the world’s leading provider of claim services, business process outsourcing and consulting solutions. We will inspire our organization to develop world-class technology and innovative solutions to clients; to employ the best and brightest people; and to deliver a strong financial performance. VALUES INTEGRITY: Do the right thing, always COLLABORATION: Leverage collective genius QUALITY: What we do, we do well ACCOUNTABILITY: If it’s to be, it’s up to me INNOVATION: Change is constant PASSION: Committed in heart and mind COMMUNICATION: Engage and be in the know DIVERSITY: As inclusive as our services LEADERSHIP: Leaders lead 8 Crawford & Company 2015 Annual Report 360 DEGREES OF GLOBAL VISION INTERNATIONAL Our constant aim is to provide the best claims service across a range of geographies and cultures. We seek to innovate through training our people for the future; designing process improvements such as Customer First; and developing advanced technology solutions to enhance analytical capabilities and to support our work on predictive analytics. We recognize the changing demands of our clients and will align our approach with ever-rising customer expectation particularly amongst millennials. — Ian V. Muress Chief Executive Officer, International U.S. SERVICES Our vision is to be the provider of choice in the markets we serve by being quality focused and performance driven while centering on our clients’ evolving needs. We will provide innovative, integrated solutions leveraging highly trained professionals and technology to deliver consistent prompt quality service that delivers high customer satisfaction backed by performance metrics. — Larry C. Thomas Chief Executive Officer, U.S. Services 360° of Global Vision 9 BROADSPIRE Over the last few years, Broadspire has built a solid foundation for further growth and development allowing for the expansion of its core services, new innovative solutions, technology advancements and the continued focus on our most important asset, our employees. As a leader in our industry, these investments help prepare us for the ever- changing future landscape. — Danielle M. Lisenbey Chief Executive Officer, Broadspire GARDEN CITY GROUP Garden City Group continues to be the settlement administrator of choice for law firms, corporations, courts, and government agencies. For more than 30 years, GCG’s team of highly trained legal and operations professionals, including more attorneys than any other administration firm in the industry, has provided Best In Class® administration services in many of the nation’s largest and most complex class action, mass tort, data breach and bankruptcy matters. Regardless of case size or complexity, GCG’s commitment to quality is paramount in every administration we handle. — Kenneth A. Cutshaw Interim Chief Executive Officer, Garden City Group 10 Crawford & Company 2015 Annual Report IF YOU THINK OF US AS JUST A CLAIMS PROCESSING COMPANY, THINK AGAIN Our comprehensive, integrated service platform is a 360° approach to helping customers manage risk, reduce costs and operate more efficiently. 360° The Crawford Solution 11 The Crawford Solution™ 360° approach The Crawford Solution maximizes Crawford's global resources, delivers industry leading quality and efficiency, and integrates our portfolio of businesses, all of which helps clients understand the ways Crawford can assist their companies to become more efficient and profitable. Claims Services With the broadest array of services in the industry, Crawford can administer virtually any claim function. ENVIRONMENTAL RISK SERVICES WORKERS’ COMP/ EMPLOYERS’ LIABILITY RISK MANAGEMENT INFORMATION Business Process Outsourcing We can deliver Business Process Outsourcing (BPO) programs for all aspects of claims management. LEGAL SETTLEMENT ADMIN PROPERTY LIABILITY CATASTROPHE SERVICES THIRD PARTY ADMIN CLAIMS ADMIN DISABILITY & LEAVE MANAGEMENT ACCIDENT & HEALTH MEDICAL MANAGEMENT MANAGED PROPERTY REPAIR CYBER RISK SERVICES PRODUCT RECALL RECOVERY/SUBROGATION/ DISPUTE MANAGEMENT FORENSIC ACCOUNTING SERVICES COUNTER FRAUD SERVICES AUDIT CUSTOMER FIRST ANALYTICS MOTOR/AUTO/ SALVAGE LARGE COMPLEX/ SPECIALTY LOSSES CRAWFORD IQ™ STAFFING EDUCATIONAL SERVICES FINANCIAL RISKS MULTINATIONAL AND GLOBAL PROGRAMS PRE- & POST-LOSS SERVICES Consulting We offer and design strategic assessments for streamlined and cost-effective solutions for clients. 12 Crawford & Company 2015 Annual Report 360 DEGREES OF EXPERTISE Wherever you need us, we’re already there. 1.6 MILLION CLAIMS HANDLED AROUND THE WORLD 8,900+ EMPLOYEES 460+ EXPERIENCED SENIOR ADJUSTERS AND INDUSTRY SPECIALISTS 70+ COUNTRIES WITH PHYSICAL LOCATIONS 30+ LANGUAGES 360° of Expertise 13 As an independent, international leader of claims administration, Crawford & Company offers a powerful portfolio of integrated global solutions that adds value and reduces costs for our clients. With 75 years of industry experience, our practices and procedures are proven. However, it’s our specialized expertise that allows us to meet and to exceed specific client needs. A sampling of our expertise includes: Crawford Global Technical Services (GTS) is comprised of experts with the Broadspire, a leading third-party Garden City Group is the recognized leader in administrator, offers casualty legal settlement administration experience and industry focus claims, medical management, services for class action to evaluate and assess damages disability and absence settlements and other claims for major insurance claim events, management solutions; accident administration, bankruptcy cases often under extreme conditions. and health services; and risk and legal noticing programs. The Covering a broad range of management information firm has been engaged in many industries and geographic services. These services help high-profile distribution matters, regions, our team of strategic clients increase employee including the General Motors loss managers and technical productivity and reduce the bankruptcy, the $20 billion Gulf adjusters is the largest and most cost of risk through early Coast Claims Facility, the $6.15 experienced in the world. intervention, professional billion WorldCom settlement, expertise and data analytics. the $3.4 billion Native American Trust Settlement and the $3.05 billion VisaCheck/MasterMoney Antitrust settlement. Crawford Specialty Markets is a subset of GTS created to serve the unique needs of clients Contractor Connection, an industry leader in contractor who require highly technical managed repair and home claims handling, including improvement services, provides Lloyd’s of London, the London insurance carriers and consumers market, and specialty and a national network of residential underwriting centers around and commercial contractors that the world. Specialty Markets are vetted and managed for offers a single solution to meet performance, measuring the large, complex and specific quality, timeliness and claims needs of clients and their customer satisfaction. insureds in niche areas, such as marine, energy and aviation— regardless of location. 14 Crawford & Company 2015 Annual Report 360 DEGREES OF DATA Data is the lifeblood of business today. 360° Investment in Technology 360° of Data 15 Not surprisingly, our clients routinely rank developing business intelligence and predictive analytics capabilities among their top technology spending initiatives. Crawford supports our clients by investing continually in technology to deliver automation, global reporting and intake, advanced process mining and analytics, as well as security designed to meet the expanding needs of our global client base. Version 8.0 of our risk management Crawford continually strives to protect the information system DMITRI SM was released confidentiality and data integrity of our in 2015, and this version demonstrates an clients’ sensitive and personally-identifiable intelligent, contextually adaptable interface information. With the diversity of networks that, among other features, helps risk used throughout the world as well as the managers proactively assess the likelihood progressive ingenuity of system hackers, that a claim’s total cost could develop successfully protecting client data requires adversely. Broadspire has analysts and programmers who work on predicative analytics both on the macro level, which is used in claims operations, as well as micro models developed in collaboration with our Fortune 500 clients. “Micro triggers” are being developed to integrate the continuous review and refinement of security processes. Crawford takes data protection very seriously and has invested in tools and processes to protect sensitive data that leaves our computing environment whether through email or electronic data transmissions. Our encryption tools provide secure communication for all parties involved – customers, vendors, and other predictive models and allows us to produce partners outside the organization. customizable models for clients. This technology is used to put the adjusters in the best position to make the most informed decisions and is the way of the future. At Crawford’s performance management centers around the world, claims progress is tracked in real time through inventory management of operations trending, allowing tailored reports to be delivered for customer utilization. CIO 100 HONOREE 2015 RECIPIENT OF CIO MAGAZINE 100 AWARD 2015 SECOND CONSECUTIVE AWARD FOR DEMONSTRATING EXCELLENCE AND ACHIEVEMENT IN INFORMATION TECHNOLOGY. NAMED TO 2015 INFORMATIONWEEK ELITE 100 FOR THE SECOND CONSECUTIVE YEAR NAMED TO ONE OF THE IT INDUSTRY’S MOST PRESTIGIOUS AWARDS, THE INFORMATIONWEEK ELITE 100 CORPORATE RANKINGS, WHICH SPOTLIGHTS THE MOST INNOVATIVE USERS OF INFORMATION TECHNOLOGY. 16 Crawford & Company 2015 Annual Report 2015 FINANCIAL HIGHLIGHTS 4 . 0 7 1 , 1 $ 7 . 1 6 $ 4 . 0 7 $ 4 . 5 2 1 , 1 $ 7 . 6 7 1 , 1 $ 4 . 3 6 1 , 1 $ 9 . 2 4 1 , 1 $ 7 . 6 3 $ 9 . 2 9 $ 8 . 7 7 $ 6 . 6 $ 6 . 8 7 $ 2 . 0 1 1 $ 9 . 4 9 $ 1 . 3 7 $ 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 REVENUES BEFORE(1) REIMBURSEMENTS ($ in millions) CASH PROVIDED BY OPERATING ACTIVITIES ($ in millions) CONSOLIDATED OPERATING EARNINGS(1) ($ in millions) 6 . 0 0 6 , 1 5 . 3 1 $ 2 . 1 7 1 $ . 4 7 1 3 , 1 7 . 5 4 3 , 1 8 . 9 2 4 , 1 9 . 4 5 5 , 1 9 . 4 $ 9 . 9 $ 8 . 8 $ . 7 1 1 $ 6 . 6 3 1 $ 2 . 5 9 $ . 7 1 6 $ 4 . 4 0 1 $ 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 CASES RECEIVED (in thousands) TOTAL CASH DIVIDENDS PAID ($ in millions) NET DEBT(1) ($ in millions) (1) Measurements of financial performance not calculated in accordance with U.S. Generally Accepted Accounting Principles (“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. For additional information about the non-GAAP financial information presented herein, see the Appendix shown on our website at crawfordandcompany.com/media/2019834/ summaryannualreportappendix_2015.pdf 360° 2015 Financial Highlights 17 FOR THE YEARS ENDED DECEMBER 31, (dollars in millions, except per share amounts) (unaudited) Revenues Before Reimbursements (1) Net (Loss) Income Attributable to Shareholders of Crawford & Company Cash Provided by Operating Activities Diluted (Loss) Earnings per Share – CRDA Diluted (Loss) Earnings per Share – CRDB Return on Average Shareholders’ Investment 2015 2014 $ $ $ $ $ 1,170.4 (45.5) 61.7 (0.79) (0.87) $ $ $ $ $ 1,142.9 30.6 6.6 0.57 0.52 ( 31.7)% 16.4% U.S. SERVICES 20.7% INTERNATIONAL 43.3% Percentage of Total Company Revenues Before Reimbursement by Business Segment GARDEN CITY GROUP 11.0% BROADSPIRE 25.0% 18 Crawford & Company 2015 Annual Report CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (In thousands, except per share amounts) FOR THE YEAR ENDED DECEMBER 31, 2015 2014 2013 Revenues from Services: Revenues before reimbursements Reimbursements Total Revenues Costs and Expenses: Costs of services provided, before reimbursements Reimbursements Total costs of services Selling, general, and administrative expenses Corporate interest expense, net of interest income of $600, $781, and $768, respectively Goodwill impairment charges Restructuring and special charges Total Costs and Expenses Other Income (Loss) Income Before Income Taxes Provision for Income Taxes Net (Loss) Income Net Loss (Income) Attributable to Noncontrolling Interests Net (Loss) Income Attributable to Shareholders of Crawford & Company (Loss) Earnings Per Share - Basic: Class A Common Stock Class B Common Stock (Loss) Earnings Per Share - Diluted: Class A Common Stock Class B Common Stock Weighted-Average Shares Used to Compute Basic (Loss) Earnings Per Share: Class A Common Stock Class B Common Stock Weighted-Average Shares Used to Compute Diluted (Loss) Earnings Per Share: Class A Common Stock Class B Common Stock Cash Dividends Per Share: Class A Common Stock Class B Common Stock $ 1,170,385 71,135 1,241,520 $ 1,142,851 74,112 1,216,963 $ 1,163,445 89,985 1,253,430 869,217 71,135 940,352 241,602 8,383 49,314 34,395 1,274,046 753 (31,773) 13,832 (45,605) 117 (45,488) (0.79) (0.87) (0.79) (0.87) 30,596 24,690 30,596 24,690 $ $ $ $ $ 840,702 74,112 914,814 237,880 6,031 — — 1,158,725 1,650 59,888 28,780 31,108 (484) 30,624 0.58 0.52 0.57 0.52 30,237 24,690 30,983 24,690 $ $ $ $ $ 846,442 89,985 936,427 232,307 6,423 — — 1,175,157 2,829 81,102 29,766 51,336 (358) 50,978 0.95 0.91 0.93 0.90 29,853 24,690 30,855 24,690 $ $ $ $ $ $ $ 0.28 0.20 $ $ 0.24 0.18 $ $ 0.18 0.14 This financial information should be read with the Company’s audited consolidated financial statements and notes thereto, and related risks included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission. 360° Condensed Consolidated Financial Statements 19 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (unaudited) (In thousands) YEAR ENDED DECEMBER 31, Net (Loss) Income Other Comprehensive (Loss) Income: Net foreign currency translation loss, net of tax benefit of $0, $91, and $0, respectively Amounts reclassified into net income for defined benefit pension plans, net of tax provision of $3,265, $3,039, and $4,220, respectively Net unrealized gain (loss) on defined benefit plans arising during the year, net of tax (provision) benefit of $(2,349), $25,746, and ($13,846), respectively Other Comprehensive (Loss) Income Comprehensive (Loss) Income Comprehensive loss (income) attributable to noncontrolling interests Comprehensive (Loss) Income Attributable to Shareholders of Crawford & Company $ 2015 2014 2013 $ (45,605) $ 31,108 $ 51,336 (20,426) (8,600) (4,283) 10,806 8,636 8,834 8,209 (1,411) (47,016) 855 (46,161) (43,181) (43,145) (12,037) (87) (12,124) $ 15,671 20,222 71,558 (309) 71,249 $ This financial information should be read with the Company’s audited consolidated financial statements and notes thereto, and related risks included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission. 20 Crawford & Company 2015 Annual Report CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (In thousands) FOR THE YEAR ENDED DECEMBER 31, 2015 2014 2013 Cash Flows from Operating Activities: Net (loss) income Reconciliation of net income to net cash provided by operating activities: Depreciation and amortization Impairment of goodwill Deferred income taxes Gain on sale of interest in former corporate headquarters property Stock-based compensation costs (Gain) loss on disposals of property and equipment, net Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: Accounts receivable, net Unbilled revenues, net Accrued or prepaid income taxes Accounts payable and accrued liabilities Deferred revenues Accrued retirement costs Prepaid expenses and other operating activities Net cash provided by operating activities Cash Flows from Investing Activities: Acquisitions of property and equipment Proceeds from disposals of property and equipment Capitalization of computer software costs Proceeds from sale of interest in former corporate headquarters property Cash surrendered from sale of business Payments for business acquisitions, net of cash acquired Net cash used in investing activities Cash Flows from Financing Activities: Cash dividends paid Payments related to shares received for withholding taxes under stock-based compensation plans Proceeds from shares purchased under employee stock-based compensation plans Repurchases of common stock Increase in short-term and revolving credit facility borrowings Payments on short-term and revolving credit facility borrowings Payments on capital lease obligations and long-term debt Capitalized loan costs Dividends paid to noncontrolling interests Net cash provided by (used in) financing activities Effects of exchange rate changes on cash and cash equivalents Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year Cash and Cash Equivalents at End of Year $ (45,605) $ 31,108 $ 51,336 43,498 49,314 4,120 — 3,229 (356) 26,526 3,053 5,948 (21,151) 363 (16,402) 9,118 61,655 (12,144) — (20,775) — — (68,259) (101,178) 37,644 — 15,189 (836) 1,189 (239) (24,358) (1,216) 3,099 (23,100) (4,645) (18,497) (8,732) 6,606 (12,485) 1,289 (16,712) 836 (1,554) (3,141) (31,767) 33,903 — 15,625 — 3,835 273 2,102 16,528 (2,160) (22,328) (5,895) (22,086) 6,711 77,844 (14,037) — (16,976) — — (2,515) (33,528) (13,511) (11,717) (8,840) (479) 1,320 (1,240) 147,509 (62,017) (1,993) (1,299) (401) 67,889 (4,756) 23,610 52,456 76,066 (2,085) 1,270 (3,390) 121,110 (98,821) (856) (218) (761) 4,532 (2,868) (23,497) 75,953 52,456 $ $ (1,322) 1,884 (3,631) 88,460 (99,461) (15,823) (30) (369) (39,132) (388) 4,796 71,157 75,953 $ This financial information should be read with the Company’s audited consolidated financial statements and notes thereto, and related risks included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission. 360° Condensed Consolidated Financial Statements 21 CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (In thousands) DECEMBER 31, ASSETS Current Assets: Cash and cash equivalents Accounts receivable, less allowance for doubtful accounts of $13,133 and $10,960, respectively Unbilled revenues, at estimated billable amounts Income taxes receivable Prepaid expenses and other current assets Total Current Assets Property and Equipment: Property and equipment Less accumulated depreciation Net Property and Equipment Other Assets: Goodwill Intangible assets arising from business acquisitions, net Capitalized software costs, net Deferred income tax assets Other noncurrent assets Total Other Assets TOTAL ASSETS LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities: Short-term borrowings Accounts payable Accrued compensation and related costs Self-insured risks Income taxes payable Deferred income taxes Deferred rent Other accrued liabilities Deferred revenues Current installments of capital leases Total Current Liabilities Noncurrent Liabilities: Long-term debt and capital leases, less current installments Deferred revenues Self-insured risks Accrued pension liabilities Other noncurrent liabilities Total Noncurrent Liabilities Shareholders' Investment: Class A common stock, $1.00 par value, 50,000 shares authorized; 30,537 and 30,497 shares issued and outstanding, respectively Class B common stock, $1.00 par value, 50,000 shares authorized; 24,690 shares issued and outstanding Additional paid-in capital Retained earnings Accumulated other comprehensive loss Shareholders' Investment Attributable to Shareholders of Crawford & Company Noncontrolling interests Total Shareholders' Investment TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT 2015 2014 $ 76,066 164,596 98,659 4,255 26,601 370,177 140,383 (102,331) 38,052 95,616 104,861 79,996 47,371 47,333 375,177 $ 783,406 $ 19,958 44,615 68,843 14,122 4,419 — 13,303 44,577 46,552 1,959 258,348 225,365 26,592 9,354 121,732 17,664 400,707 $ $ $ 52,456 180,096 103,163 2,779 29,089 367,583 143,273 (102,414) 40,859 131,885 75,895 75,536 66,927 30,634 380,877 789,319 2,002 48,597 82,151 14,491 2,618 14,523 13,576 35,784 45,054 763 259,559 154,046 26,706 10,041 142,343 17,271 350,407 30,537 24,690 41,936 239,161 (222,631) 113,693 10,658 124,351 $ 783,406 30,497 24,690 38,617 301,091 (221,958) 172,937 6,416 179,353 789,319 $ This financial information should be read with the Company’s audited consolidated financial statements and notes thereto, and related risks included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission. 22 Crawford & Company 2015 Annual Report CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT (unaudited) (In thousands) Balance at December 31, 2012 Net income Other comprehensive income (loss) Cash dividends paid Stock-based compensation Repurchases of common stock Shares issued in connection with stock-based compensation plans, net Increase in value of noncontrolling interest due to acquisition of controlling interest Dividends paid to noncontrolling interests Balance at December 31, 2013 Net income Other comprehensive loss Cash dividends paid Stock-based compensation Repurchases of common stock Shares issued in connection with stock-based compensation plans, net Decrease in value of noncontrolling interest due to sale of controlling interest Dividends paid to noncontrolling interests Balance at December 31, 2014 Net loss Other comprehensive loss Cash dividends paid Stock-based compensation Repurchases of common stock Shares issued in connection with stock-based compensation plans, net Increase in value of noncontrolling interest due to acquisition of controlling interest Dividends paid to noncontrolling interests Balance at December 31, 2015 Class A Non-Voting $ 29,335 — — — — (553) 1,093 — — 29,875 — — — — (409) 1,031 — — 30,497 — — — — (517) 557 — — — — — — — — 24,690 — — — — — — — — 24,690 — — — — — — — Common Stock Class B Voting Additional Paid-In Capital Accumulated Accumulated Other Other Comprehensive Comprehensive (Loss) Income (Loss) Income Retained Earnings Shareholders' Shareholders' Investment Investment Attributable to Attributable to Shareholders Shareholders of Crawford & of Crawford & Company Company Noncontrolling Noncontrolling Interests Interests Total Total Shareholders' Shareholders' Investment Investment $ 24,690 — $ 35,550 — $ 246,105 50,978 $ (199,481) — $ 136,199 50,978 $ 5,600 358 $ 141,799 51,336 — — 3,835 — (8,840) — 20,271 — — 20,271 (8,840) 3,835 (49) — — 20,222 (8,840) 3,835 — (3,078) — — — — (100) — — 39,285 — — — 1,189 (1,857) — — 38,617 — — — 3,198 — 285,165 30,624 — (11,717) — — (179,210) — (42,748) — — — (2,981) — 301,091 (45,488) — (13,511) — — (221,958) — (673) — — — (2,931) 121 — — — — — — — — — — — — (3,631) 993 — — (3,631) 993 — 2,188 2,188 — 199,805 30,624 (42,748) (11,717) 1,189 (3,390) (826) (369) 7,728 484 (397) — — — — (369) 207,533 31,108 (43,145) (11,717) 1,189 (3,390) (826) — (638) (638) — 172,937 (45,488) (673) (13,511) 3,198 (3,448) 678 (761) 6,416 (117) (738) — — — — (761) 179,353 (45,605) (1,411) (13,511) 3,198 (3,448) 678 — 5,498 5,498 — $ 30,537 — $ 24,690 — $ 41,936 — $ 239,161 — — $ (222,631) $ 113,693 (401) $ 10,658 (401) $ 124,351 This financial information should be read with the Company’s audited consolidated financial statements and notes thereto, and related risks included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission. 360° Condensed Consolidated Financial Statements 23 SELECTED FINANCIAL DATA (unaudited) The following selected financial data should be read in conjunction with Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the audited consolidated financial statements and notes thereto contained in Item 8, "Financial Statements and Supplementary Data" included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission. (In thousands, except per share amounts and percentages) YEAR ENDED DECEMBER 31, 2015 2014 2013 2012 2011 Revenues before Reimbursements Reimbursements Total Revenues Total Costs of Services U.S. Services Operating Earnings (1) International Operating Earnings (1) Broadspire Operating Earnings (Loss) (1) Garden City Group Operating Earnings (1) Unallocated Corporate and Shared Costs and Credits, Net Net Corporate Interest Expense Stock Option Expense Amortization of Customer-Relationship Intangible Assets Goodwill Impairment Charges Restructuring and Special (Charges) Credits Income Taxes Net Loss (Income) Attributable to Noncontrolling Interests Net (Loss) Income Attributable to Shareholders of Crawford & Company (Loss) Earnings Per CRDB Share (2): Basic Diluted Current Assets Total Assets Current Liabilities Long-Term Debt, Less Current Installments Total Debt Shareholders' Investment Attributable to Shareholders of Crawford & Company Total Capital Current Ratio Total Debt to Total Capital Ratio Return on Average Shareholders' Investment Cash Provided by Operating Activities Cash Used in Investing Activities Cash Provided By (Used in) Financing Activities Shareholders' Investment Attributable to Shareholders of Crawford & Company Per Diluted Share Cash Dividends Per Share: CRDA CRDB Weighted-Average Shares and Share-Equivalents: Basic Diluted $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1,170,385 71,135 1,241,520 940,352 32,702 18,799 24,017 11,507 $ 1,142,851 74,112 1,216,963 914,814 18,039 25,344 15,469 22,849 $ 1,163,445 89,985 1,253,430 936,427 11,895 38,795 8,245 46,752 (16,605) (8,383) (433) (9,668) (49,314) (34,395) (13,832) (8,582) (6,031) (859) (6,341) — — (28,780) (10,829) (6,423) (948) (6,385) — — (29,766) 1,176,717 89,421 1,266,138 936,059 13,164 47,195 21 60,284 (10,504) (8,607) ( 408) (6,373) — (11,332) (33,686) $ 1,125,355 86,007 1,211,362 917,929 11,918 36,185 (11,417) 51,307 (9,403) (15,911) (450) (6,177) — 2,379 (12,739) 117 (484) (358) (866) (288) $ (45,488) $ 30,624 (0.87) (0.87) 370,177 783,406 258,348 225,365 247,282 $ $ $ $ $ $ $ 0.52 0.52 367,583 789,319 259,559 154,046 156,811 $ $ $ $ $ $ $ $ 50,978 0.91 0.90 369,681 790,058 317,393 101,779 137,645 $ $ $ $ $ $ $ $ 48,888 $ 45,404 0.88 0.87 386,765 847,415 318,174 152,293 166,406 0.84 $ $ 0.83 $ 369,549 818,477 $ 286,749 $ 211,983 $ 214,187 $ $ $ 113,693 360,975 1.4:1 68.5% (31.7)% 61,655 (101,178) 67,889 $ $ $ 6,606 (31,767) 4,532 2.06 0.28 0.20 $ $ $ 3.11 0.24 0.18 $ $ 172,937 329,748 1.4:1 47.6% 16.4% 199,805 337,450 1.2:1 40.8% 30.3% $ 136,199 $ 302,605 1.2:1 55.0% 36.3% $ $ $ $ $ $ $ $ 77,844 (33,528) (39,132) 3.60 0.18 0.14 $ $ $ $ $ $ 92,853 ( 33,803) ( 64,918) 2.48 0.20 0.16 $ $ $ $ $ $ 133,472 347,659 1.3:1 61.6% 40.7% 36,676 (34,933) (17,964) 2.46 0.10 0.08 55,286 55,286 54.927 55,673 54,543 55,545 54,229 54,965 53,517 54,246 (1) This is a segment financial measure calculated in accordance with ASC Topic 280, "Segment Reporting," and representing segment earnings (loss) before certain unallocated corporate and shared costs and credits, net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, goodwill impairment, restructuring and special charges and credits, income taxes, and net loss or income attributable to noncontrolling interests. (2) The Company computes (loss) earnings per share of CRDA and CRDB using the two-class method, which allocates the undistributed (loss) earnings for each period to each class on a proportionate basis. The Company's Board of Directors has the right, but not the obligation, to declare higher dividends on the non-voting CRDA shares than on the voting CRDB shares, subject to certain limitations. In periods when the dividend is the same for CRDA and CRDB or when no dividends are declared or paid to either class, the two-class method generally will yield the same (loss) earnings per share for CRDA and CRDB. 24 Crawford & Company Board of Directors C R A W F O R D & C O M P A N Y BOARD OF DIRECTORS 1. Harsha V. Agadi Interim President and Chief Executive Officer, Crawford & Company 2. P. George Benson Retired President, College of Charleston 3. Jesse C. Crawford Chief Executive Officer, Crawford Media Services, Inc. 4. Jesse C. Crawford, Jr Independent Investor 5. Roger A.S. Day Retired Executive, ACE American Insurance Company 6. James D. Edwards Retired Partner, Arthur Andersen, LLP 7. Joia M. Johnson Executive Vice President, General Counsel and Corporate Secretary, Hanesbrands, Inc. 8. Charles H. Ogburn Non-Executive Chairman of the Board, Crawford & Company 9. D. Richard Williams Non-Executive Chairman of the Board, Primerica, Inc 9 5 4 1 6 3 8 2 7 Corporate Information CORPORATE HEADQUARTERS 1001 Summit Boulevard Atlanta, Georgia 30319 404.300.1000 INQUIRIES Individuals seeking financial data should contact: W. Bruce Swain Investor Relations Chief Financial Officer 404.300.1051 TRANSFER AGENT Wells Fargo Shareowner Services P.O. Box 64854 St. Paul, Minnesota 55164-0854 1.800.468.9716 shareowneronline.com INTERNET ADDRESS www.crawfordandcompany.com CERTIFICATIONS In 2015, Crawford & Company’s chief executive officer (CEO) provided FORM 10-K A copy of the Company’s annual report on Form 10-K as filed with the to the New York Stock Exchange the annual CEO certification regarding Crawford’s compliance with the New York Stock Exchange’s Securities and Exchange Commission is available without charge upon corporate governance listing standards. In addition, Crawford’s CEO request to: Allen W. Nelson General Counsel, Corporate Secretary, and Chief Administrative Officer Crawford & Company 1001 Summit Boulevard Atlanta, Georgia 30319 404.300.1021 Our Form 10-K is also available online at either www.sec.gov or in the Investor Relations section at www.crawfordandcompany.com ANNUAL MEETING The Annual Meeting of shareholders will be held at 2:00 p.m. on May 11, 2016, at the corporate headquarters of Crawford & Company 1001 Summit Boulevard Atlanta, Georgia 30319 404.300.1000 COMPANY STOCK Shares of the Company’s two classes of common stock are traded on the NYSE under the symbols CRDA and CRDB, respectively. The Company's 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 percent of the Class A Common Stock, voting as a class. and chief financial officer filed with the U.S. Securities and Exchange Commission all required certifications regarding the quality of Crawford’s public disclosures in its fiscal 2015 reports. FINANCIAL INFORMATION The financial information contained herein should not be considered a substitute for the Company's audited financial statements, inclusive of footnotes and Managemement's Discussion and Analysis of Financial Condition and Results of Operations, included in the Company's annual report on Form 10-K, as filed with the Securities and Exchange Commission. The Form 10-K also contains detailed discussions of certain major uncertainties, contingencies, risks, and other issues the Company faces. A copy of the Form 10-K including the full financial statements, can be obtained by calling 404.300.1021 or accessing it online at either www.sec.gov or in the Investor Relations section at www.crawfordandcompany.com. FORWARD-LOOKING STATEMENTS This report 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. 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 SEC and available at www.sec.gov or in the Investor Relations section of Crawford & Company’s website at www.crawfordandcompany.com. B ROADS PI RE ® CO NTR ACTO R CO N N ECTIO N ® E D U CATIO N AL SE RVIC ES GCG ® GLO BAL TEC H N ICAL SE RVIC ES TM PRO PE RTY & CASUALTY RISK SC I E N C ES G RO U P ® S PEC IALIST LIAB I LITY SE RVIC ES TM Crawford & Company ® 2015 Annual Report Crawford & Company • 1001 Summit Boulevard, Atlanta, GA 30319 • An equal opportunity employer 

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