November 7, 2016 by Canadian Underwriter
Independent claims provider Crawford & Company announced on Monday net income attributable to shareholders of US$10.9 million in the third quarter of 2016 ending Sept. 30 compared to a net loss of US$0.9 million in the same period last year.
Atlanta, Ga.-based Crawford & Company, one of the world’s largest independent providers of claims management solutions to insurance companies and self-insured entities, noted that all four business segments achieved double digit operating margins this quarter.
U.S. Services revenues before reimbursements were US$56.5 million in the third quarter of 2016, decreasing 9% from $62.1 million in the third quarter of 2015, Crawford said in a press release. The revenue decrease was primarily due to a reduction in U.S. Catastrophe Services, partially offset by an increase in U.S. Contractor Connection revenues. Operating earnings were US$9.4 million in the 2016 third quarter, compared with US$10.8 million in the third quarter of 2015, representing operating margins of 17% in both the 2016 and 2015 periods, Crawford said.
Third quarter 2016 revenues before reimbursements for the International segment totalled US$121.6 million, compared to US$128.2 million in the 2015 third quarter. This decrease was primarily due to changes in foreign exchange rates, which negatively impacted revenues by approximately 5%, or US$6.1 million, in the third quarter compared with the prior year period. International segment operating earnings were US$13.2 million in the 2016 third quarter, compared with US$8 million in the 2015 third quarter. The segment’s operating margin was 11% in the 2016 period as compared to 6% in the 2015 period. The increase in operating margin for the 2016 quarter was a result of improvements in all major operating regions and the benefits of cost reduction initiatives implemented in 2015.
Broadspire segment revenues before reimbursements were US$76.7 million in the 2016 third quarter, up from US$74.2 million in the 2015 third quarter. The revenue increase was due to increased claims and medical management revenues and higher average case values when compared with the 2015 period, Crawford reported. Broadspire, a third party administrator, recorded operating earnings of US$8.3 million in the third quarter of 2016, representing an operating margin of 11%, compared with US$7.4 million, or 10% of revenues, in the 2015 third quarter.
Revenues before reimbursements for Garden City Group, a provider of legal administration services for class action settlements, bankruptcy cases and legal noticing programs, were US$22.5 million in Q3 2016, compared to US$28.8 million in the same period of 2015. “The expected decrease in revenues was primarily due to declines in volumes associated with certain large cases which are transitioning to conclusion,” Crawford said in the release. Operating earnings were US$2.4 million in the 2016 third quarter as compared to US$1.1 million in the 2015 period. The segment’s operating margin for the 2016 quarter was 10% as compared to 4% for the 2015 period as a result of the impact of cost reduction initiatives implemented earlier in 2016. At Sept. 30, 2016 there was a backlog of projects awarded totalling approximately $94 million as compared to $76 million at Sept. 30, 2015.
“Our third quarter results are a clear indication that the strategic initiatives implemented beginning over a year ago are unlocking the potential that exists at Crawford as we strive to deliver more predictable financial results regardless of the market backdrop,” said Harsha V. Agadi, chief executive officer of Crawford, in the release. “While the environment remained challenging once again this quarter, we achieved our best performance of the year as operating earnings grew 14%, year over year, driven by 160 basis points of margin expansion. Importantly, all four of our business segments generated double digit operating margins this quarter.”
Agadi said that while operating earnings have expanded by 40% year-to-date, “we believe significant untapped potential remains across our global operations. We will continue to evaluate our business segments as we strive to deliver revenue growth and further operational improvements in order to remain competitive and relevant in this ever-changing world.”