Crawford Reports Lowered Revenues for 4thQ 2002

Atlanta’s Crawford & Company announced that fourth quarter 2002 revenues before reimbursements totaled $173.7 million, down from $178.1 million in the comparable 2001 period. Operating earnings (earnings before amortization of goodwill, net corporate interest and taxes) in the 2002 fourth quarter were also down slightly at $10.3 million compared with $11.5 million in the 2001 period. Year-over-year fourth quarter net income was unchanged at $5.8 million.

U.S. revenues before reimbursements were $121.7 million in the 2002 fourth quarter compared with $129.8 million in the prior year fourth quarter. Revenues from the U.S. insurance company market were $60.5 million in the 2002 fourth quarter versus $66.8 million in the 2001 quarter, reflecting a continued softening in the company’s U.S. insurance company referrals for high-frequency, low-severity claims in the current quarter. Revenues from self-insured clients were $44.4 million in the 2002 fourth quarter compared with $51.1 million in the 2001 quarter.

Fourth quarter 2002 international revenues before reimbursements reached $52.1 million, up from $48.3 million in the 2001 period. This growth was aided in part by the company’s recent acquisition in Australia and growth within its European operations.

Grover Davis, chairman and CEO of Crawford & Company, noted, “Our fourth quarter results reflect the continued industry-wide decline in property & casualty claims frequency. Conservative underwriting, increases in policy deductibles and mild weather have all contributed to a decline in property and casualty claims frequency, resulting in an overall 17 percent decline in cases received in the U.S. These factors impacted our U.S. insurance company referrals for high-frequency, low-severity claims and resulted in lower U.S. revenues.

“On a positive note, we successfully reduced our cost of services by 4 percent in the 2002 fourth quarter despite a $2.5 million increase in pension expense in the quarter. Without the pension expense increase, our cost of services would have declined over 6 percent during the 2002 fourth quarter. In addition, we continued to realize the benefits of the cost reduction initiatives we undertook earlier in the year to reduce our operating costs by $1.0 million per month from second quarter 2002 levels. We remain committed to vigilantly managing our operating costs in 2003. Cash flow from operations was also very strong in the current quarter, as we ended the year with $31.1 million in cash, up from $22.0 million at the end of 2001.”