CRAWFORD & CO

Previous wording

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with (i) our unaudited condensed consolidated financial statements and accompanying notes thereto for the three and six months ended June 30, 2024 and 2023, and as of June 30, 2024, and December 31, 2023, contained in Item 1 of this Quarterly Report on Form 10-Q, and (ii) our Annual Report on Form 10-K for the year ended December 31, 2023. As described in Note 1, "Basis of Presentation," the financial results of our operations outside of the U.S., Canada, the Caribbean, and certain subsidiaries in the Philippines are included in our consolidated financial statements on a two-month delayed basis (fiscal year-end of October 31) as permitted by U.S. generally accepted accounting principles ("GAAP") in order to provide sufficient time for accumulation of their results.

Current wording

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with (i) our unaudited condensed consolidated financial statements and accompanying notes thereto for the three and nine months ended September 30, 2024 and 2023, and as of September 30, 2024, and December 31, 2023, contained in Item 1 of this Quarterly Report on Form 10-Q, and (ii) our Annual Report on Form 10-K for the year ended December 31, 2023. As described in Note 1, "Basis of Presentation," the financial results of our operations outside of the U.S., Canada, the Caribbean, and certain subsidiaries in the Philippines are included in our consolidated financial statements on a two-month delayed basis (fiscal year-end of October 31) as permitted by U.S. generally accepted accounting principles ("GAAP") in order to provide sufficient time for accumulation of their results.

Previous wording

Consolidated revenues before reimbursements decreased $10.3 million, or (3.2)%, for the three months ended June 30, 2024 and $25.0 million, or (3.9)%, for the six months ended June 30, 2024, compared with the same periods of 2023. This decrease was primarily due to decreases in our Platform Solutions operating segment in the 2024 three and six month periods. Changes in foreign exchange rates decreased our consolidated revenues before reimbursements by $1.9 million, or (0.6)%, for the three months ended June 30, 2024 and $1.0 million, or (0.1)%, for the six months ended June 30, 2024, as compared with the prior year periods. To illustrate this impact, segment revenues are presented below, using a constant exchange rate, for the three and six months ended June 30, 2024.

Current wording

Consolidated revenues before reimbursements decreased $0.7 million, or (0.2)%, for the three months ended September 30, 2024 and $25.8 million, or (2.7)%, for the nine months ended September 30, 2024, compared with the same periods of 2023. This decrease was primarily due to decreases in our Platform Solutions operating segment in the 2024 three and nine month periods. Changes in foreign exchange rates decreased our consolidated revenues before reimbursements by $2.2 million, or (0.6)%, for the three months ended September 30, 2024 and $3.2 million, or (0.4)%, for the nine months ended September 30, 2024, as compared with the prior year periods. To illustrate this impact, segment revenues are presented below, using a constant exchange rate, for the three and nine months ended September 30, 2024.

Previous wording

Excluding foreign currency impacts, consolidated revenues before reimbursements decreased $8.5 million, or (2.6)%, for the three months ended June 30, 2024, and decreased $24.1 million, or (3.8)%, for the six months ended June 30, 2024 compared with the same periods of 2023. Revenues from the North America Loss Adjusting segment decreased slightly in the 2024 second quarter, however, excluding foreign currency impacts, improved slightly in comparison to the 2023 quarter. North America Loss Adjusting decreased slightly in the 2024 year-to-date period due to increased weather-related activity in the prior year period. Revenues from the International Operations segment increased in the 2024 second quarter and year-to-date periods, excluding the impacts of foreign currency, primarily due to increases in the U.K., Europe, and Latin America. Revenues from the Broadspire segment increased for the quarter and year-to-date due to an increase in Claims and Medical Management revenues. Revenues from the Platform Solutions segment decreased in the second quarter and year-to-date periods primarily due to increased weather-related activity in the prior year periods in our Networks service line.

Current wording

Excluding foreign currency impacts, consolidated revenues before reimbursements increased $1.5 million, or 0.4%, for the three months ended September 30, 2024, but decreased $22.6 million, or (2.3)%, for the nine months ended September 30, 2024 compared with the same periods of 2023. Revenues from the North America Loss Adjusting segment decreased slightly in the 2024 third quarter and year-to-date periods due to higher weather-related activity in the prior year period. Revenues from the International Operations segment increased in the 2024 third quarter in all geographic regions. Excluding the impacts of foreign currency, revenues from the International Operations segment increased in the 2024 year-to-date period in the U.K., Europe, Asia, and Latin America. Revenues from the Broadspire segment increased for the quarter and year-to-date period due to an increase in Claims and Medical Management revenues. Revenues from the Platform Solutions segment decreased in the third quarter and year-to-date period primarily due to higher weather-related activity in the prior year periods in our Networks and Contractor Connection service lines.

Previous wording

Overall, there was a decrease in cases received of (11.6)% for the three months ended June 30, 2024 and a decrease of (7.9)% for the six months ended June 30, 2024. Within our North America Loss Adjusting segment, the reduction in cases received for the 2024 second quarter and year-to-date periods was primarily due to the loss of a customer in the Contractor Connection service line in Canada. There was a decline in cases within our Broadspire segment for the second quarter and year-to-date periods related to the non-recurrence of takeover claims for a disability client within Claims Management. The decrease in Broadspire claims was partially offset by an increase in Medical Management referrals for the second quarter, and more than offset by an increase in Medical Management referrals for the year-to-date period. Within our Platform Solutions segment, there was a decrease in each period presented related to the Networks and the Contractor Connection service lines. These reductions were partially offset by increases in our International Operations segment, primarily in Latin America and Australia, due increases in high-frequency, low-severity cases. Australia also had an increase in weather-related cases for the year-to-date period as compared to the prior year.

Current wording

Overall, there was a decrease in cases received of (14.5)% for the three months ended September 30, 2024 and a decrease of (10.2)% for the nine months ended September 30, 2024. Within our North America Loss Adjusting segment, the reduction in cases received for the 2024 third quarter and year-to-date period was primarily due to the loss of a customer in the Contractor Connection service line in Canada. Cases within our International Operations segment declined for the third quarter, primarily due to decreases in the U.K. and Latin America, due to decreases in high-frequency, low-severity cases, partially offset by increases in Europe, Australia, and Asia. For the year to date period, cases increased within the International Operations segment, due primarily to increases in Latin America related to high-frequency, low-severity cases, and Australia, which had an increase in weather-related cases compared to the prior year. There was a decline in cases within our Broadspire segment for the third quarter and year-to-date period related to the non-recurrence of takeover claims for disability clients within Claims Management. The decrease in Broadspire claims was partially offset by an increase in Medical Management referrals for the third quarter and year-to-date period. Within our Platform Solutions segment, there was a decrease in each period presented related to the Networks and the Contractor Connection service lines.

Previous wording

Cases received are presented below by segment for the three and six months ended June 30, 2024 and 2023:

Current wording

Cases received are presented below by segment for the three and nine months ended September 30, 2024 and 2023:

Previous wording

To illustrate exposure to the impact of changes in foreign currencies, revenues before reimbursements are presented below by denominated currency for the three and six months ended June 30, 2024:

Current wording

To illustrate exposure to the impact of changes in foreign currencies, revenues before reimbursements are presented below by denominated currency for the three and nine months ended September 30, 2024:

Previous wording

Costs of services provided, before reimbursements, decreased $11.8 million, or (5.0)%, for the three months ended June 30, 2024, and decreased $24.5 million, or (5.3)% for the six months ended June 30, 2024 as compared with the 2023 periods. These decreases were primarily due to a decrease in compensation expense and other costs in the Platform Solutions segment resulting from the lower revenues, partially offset by increases in compensation expense and other costs in our three other operating segments.

Current wording

Costs of services provided, before reimbursements, increased $6.0 million, or 2.6%, for the three months ended September 30, 2024, as compared to the 2023 period. The increase was primarily due to an increase in compensation expense and other costs in the all segments other than Platform Solutions, which had decreases in compensation expense and other costs due to lower revenues. Costs of services decreased $18.5 million, or (2.7)% for the nine months ended September 30, 2024 as compared with the 2023 periods. The decrease was primarily due to a decrease in compensation expense and other costs in the Platform Solutions segment resulting from the lower revenues, partially offset by increases in compensation expense and other costs in our three other operating segments.

Previous wording

Selling, general, and administrative ("SG&A") expenses increased $1.8 million, or 2.6%, in the three months ended June 30, 2024 as compared with the 2023 period. The increase was primarily due to professional fees, IT costs, and compensation expense, including taxes and benefits. SG&A expenses increased $12.4 million, or 9.0%, in the six months ended June 30, 2024 as compared with the 2023 period, primarily due to professional fees, IT costs, bad debt expense, and compensation expense, including taxes and benefits.

Current wording

Selling, general, and administrative ("SG&A") expenses decreased $(2.9) million, or (3.9)%, in the three months ended September 30, 2024 as compared with the 2023 period. The decrease was primarily due to a benefit from contingent earnout adjustments made in the 2024 third quarter. SG&A expenses increased $9.5 million, or 4.5%, in the nine months ended September 30, 2024 as compared with the 2023 period, primarily due to professional fees, IT costs, bad debt expense, and compensation expense, including taxes and benefits, partially offset by the benefit from contingent earnout adjustments.

Previous wording

Operating earnings in our North America Loss Adjusting segment totaled $4.9 million, or 6.4% of revenues before reimbursements, for the three months ended June 30, 2024, compared with 2023 operating earnings of $3.9 million, or 5.1% of revenues before reimbursements. For the six months ended June 30, 2024, our North American Loss Adjusting segment reported operating earnings of $9.4 million, or 6.1% of revenues before reimbursements, compared with 2023 operating earnings of $12.0 million, or 7.8% of revenues before reimbursements. The increase in operating earnings in the 2024 second quarter was due to an increase in productivity in Global Technical Services. The decrease in year-to-date operating earnings was due to the decrease in revenues in Canada and U.S. Field Operations and reduced staff utilization related to the increased weather-related activity in the prior year period.

Current wording

Operating earnings in our North America Loss Adjusting segment totaled $5.4 million, or 6.9% of revenues before reimbursements, for the three months ended September 30, 2024, compared with 2023 operating earnings of $10.5 million, or 13.1% of revenues before reimbursements. For the nine months ended September 30, 2024, our North American Loss Adjusting segment reported operating earnings of $14.8 million, or 6.4% of revenues before reimbursements, compared with 2023 operating earnings of $22.4 million, or 9.6% of revenues before reimbursements. The decrease in operating earnings in the 2024 third quarter was due to a decrease in revenues in U.S. Field Operations due to benign weather in the current year, increases in expenses within Global Technical Services related to investments to support growth, and a decrease in higher margin claims in Canada. The decrease in year-to-date operating earnings was due to the decrease in revenues in Canada and U.S. Field Operations and reduced staff utilization related to the higher weather-related activity in the prior year period.

Previous wording

North America Loss Adjusting segment revenues are primarily derived from the property and casualty insurance company markets in the U.S. and Canada. Revenues before reimbursements by major region, based on actual exchange rates and using a constant exchange rate, for the three and six months ended June 30, 2024 and 2023 were as follows:

Current wording

North America Loss Adjusting segment revenues are primarily derived from the property and casualty insurance company markets in the U.S. and Canada. Revenues before reimbursements by major region, based on actual exchange rates and using a constant exchange rate, for the three and nine months ended September 30, 2024 and 2023 were as follows:

Previous wording

Revenues before reimbursements from our North America Loss Adjusting segment totaled $76.0 million in the three months ended June 30, 2024, compared with $76.4 million in the 2023 period. This slight decrease was due to a decrease in Canada and U.S. Field Operations, partially offset by an increase in U.S. Global Technical Services revenues. The change in exchange rates decreased our North America Loss Adjusting segment revenues by approximately (0.5)%, or $(0.4) million, for the three months ended June 30, 2024 as compared with the 2023 period. Absent foreign exchange rate fluctuations, North America Loss Adjusting segment revenues would have been $76.4 million for the three months ended June 30, 2024. There was a decrease in segment unit volume, measured principally by cases received, of (19.2)% for the three months ended June 30, 2024, compared with the 2023 period. This includes a decrease in high-frequency, low-severity cases received in Contractor Connection in Canada of 13,500 or 18.3% for which minimal revenue was received. Changes in product mix and in the rates charged for those services accounted for a 1.0% revenue increase for the three months ended June 30, 2024 compared with the same period in 2023, due to increases in pricing and average fee per case.

Current wording

Revenues before reimbursements from our North America Loss Adjusting segment totaled $79.3 million in the three months ended September 30, 2024, compared with $80.0 million in the 2023 period. This slight decrease was due to a decrease in Canada and U.S. Field Operations, primarily driven by higher weather-related activity in the prior year period, partially offset by an increase in U.S. Global Technical Services revenues due to increased business from new and existing clients. The change in exchange rates decreased our North America Loss Adjusting segment revenues by approximately (0.5)%, or $(0.4) million, for the three months ended September 30, 2024 as compared with the 2023 period. Absent foreign exchange rate fluctuations, North America Loss Adjusting segment revenues would have been $79.7 million for the three months ended September 30, 2024. There was a decrease in segment unit volume, measured principally by cases received, of (16.2)% for the three months ended September 30, 2024, compared with the 2023 period. This includes a decrease in high-frequency, low-severity cases received in Contractor Connection in Canada of 10,700 or 13.6%. Changes in product mix and in the rates charged for those services accounted for a 2.3% revenue increase for the three months ended September 30, 2024 compared with the same period in 2023, due to increases in pricing and average fee per case.

Previous wording

Revenues before reimbursements from our North America Loss Adjusting segment totaled $153.4 million in the six months ended June 30, 2024, compared with $154.0 million in the 2023 period. This slight decrease was due to a decrease in Canada and U.S. Field Operations, partially offset by an increase in U.S. Global Technical Services revenues. The change in exchange rates decreased our North America Loss Adjusting segment revenues by approximately (0.3)%, or $(0.4) million, for the six months ended June 30, 2024 as compared with the 2023 period. Absent foreign exchange rate fluctuations, North America Loss Adjusting segment revenues would have been $153.8 million for the six months ended June 30, 2024. There was a decrease in segment unit volume, measured principally by cases received, of (17.2)% for the six months ended June 30, 2024, compared with the 2023 period. This includes a decrease in high-frequency, low-severity cases received in Contractor Connection in Canada of 23,900 or 16.3% for which minimal revenue was received. Changes in product mix and in the rates charged for those services accounted for a 0.8% revenue increase for the six months ended June 30, 2024 compared with the same period in 2023, due to increases in pricing and average fee per case.

Current wording

Revenues before reimbursements from our North America Loss Adjusting segment totaled $232.7 million in the nine months ended September 30, 2024, compared with $233.9 million in the 2023 period. This slight decrease was due to a decrease in Canada and U.S. Field Operations, primarily driven by higher weather-related activity in the prior year period, partially offset by an increase in U.S. Global Technical Services revenues due to increased business from new and existing clients. The change in exchange rates decreased our North America Loss Adjusting segment revenues by approximately (0.3)%, or $(0.8) million, for the nine months ended September 30, 2024 as compared with the 2023 period. Absent foreign exchange rate fluctuations, North America Loss Adjusting segment revenues would have been $233.5 million for the nine months ended September 30, 2024. There was a decrease in segment unit volume, measured principally by cases received, of (16.9)% for the nine months ended September 30, 2024, compared with the 2023 period. This includes a decrease in high-frequency, low-severity cases received in Contractor Connection in Canada of 34,500 or 15.3%. Changes in product mix and in the rates charged for those services accounted for a 1.4% revenue increase for the nine months ended September 30, 2024 compared with the same period in 2023, due to increases in pricing and average fee per case.

Previous wording

Reimbursements for out-of-pocket expenses incurred in our North America Loss Adjusting segment, which are included in total Company revenues, were $2.3 million and $2.4 million for the three months ended June 30, 2024 and 2023, respectively. Reimbursements were $4.3 million and $5.3 million for the six months ended June 30, 2024 and 2023, respectively. These decreases were due to the decrease in revenues and decrease in claims received in Canada.

Current wording

Reimbursements for out-of-pocket expenses incurred in our North America Loss Adjusting segment, which are included in total Company revenues, were $2.2 million and $2.5 million for the three months ended September 30, 2024 and 2023, respectively. Reimbursements were $6.5 million and $7.8 million for the nine months ended September 30, 2024 and 2023, respectively. These decreases were due to the decrease in claims in the U.S. and a decrease in revenues and claims received in Canada.

Previous wording

North America Loss Adjusting segment unit volumes by geographic region, measured by cases received, for the three and six months ended June 30, 2024 and 2023 were as follows:

Current wording

North America Loss Adjusting segment unit volumes by geographic region, measured by cases received, for the three and nine months ended September 30, 2024 and 2023 were as follows:

Previous wording

Overall, there was a decrease in cases of (19.2)% in the three months ended June 30, 2024, compared to the same period in 2023. The decrease in U.S. case volumes in the 2024 second quarter was due to increased weather-related activity in the prior year period partially offset by an increase in Global Technical Services. There was a decrease in cases in Canada in the 2024 second quarter primarily due to 13,500 less high-frequency, low-severity Contractor Connection cases related to the loss of a customer, as compared with the 2023 period.

Current wording

Overall, there was a decrease in cases of (16.2)% in the three months ended September 30, 2024, compared to the same period in 2023. The decrease in U.S. case volumes in the 2024 third quarter was due to higher weather-related activity in the prior year period partially offset by an increase in Global Technical Services. There was a decrease in cases in Canada in the 2024 third quarter primarily due to 10,700 less high-frequency, low-severity Contractor Connection cases related to the loss of a customer, as compared with the 2023 period.

Previous wording

There was a decrease in cases of (17.2)% in the six months ended June 30, 2024, compared to the same period in 2023. The decrease in U.S. case volumes in the 2024 year-to-date period was due to increased weather-related activity in the prior year period partially offset by an increase in Global Technical Services. There was a decrease in cases in Canada in the 2024 year-to-date period primarily due to 23,900 less high-frequency, low-severity Contractor Connection cases related to the loss of a customer, as compared with the 2023 period.

Current wording

There was a decrease in cases of (16.9)% in the nine months ended September 30, 2024, compared to the same period in 2023. The decrease in U.S. case volumes in the 2024 year-to-date period was due to higher weather-related activity in the prior year period partially offset by an increase in Global Technical Services. There was a decrease in cases in Canada in the 2024 year-to-date period primarily due to 34,500 less high-frequency, low-severity Contractor Connection cases related to the loss of a customer, as compared with the 2023 period.

Previous wording

The most significant expense in our North America Loss Adjusting segment is the compensation of employees, including related payroll taxes and fringe benefits, and the payments to outsourced service providers that augment the functions performed by our employees. As a percentage of revenues before reimbursements, these expenses were 72.0% for the three months ended June 30, 2024 compared with 71.5% for the 2023 period. For the six months ended June 30, 2024, these expenses were 71.8% compared with 70.7% for the 2023 period. The total dollar amount of these expenses increased slightly to $54.7 million for the three months ended June 30, 2024 from $54.6 million for the comparable 2023 period, and were $110.2 million for the six months ended June 30, 2024 increasing from $108.8 million in 2023. The year-to-date increase was due to an increase in employees in U.S. Global Technical Services. The increase in the percentage of revenues before reimbursements is due to lower staff utilization in U.S. Field Operations and Canada, compared to the 2023 periods. There was an average of 2,029 full-time equivalent employees in this segment in the six months ended June 30, 2024 compared with an average of 2,073 in the 2023 period.

Current wording

The most significant expense in our North America Loss Adjusting segment is the compensation of employees, including related payroll taxes and fringe benefits, and the payments to outsourced service providers that augment the functions performed by our employees. As a percentage of revenues before reimbursements, these expenses were 71.9% for the three months ended September 30, 2024 compared with 67.1% for the 2023 period. For the nine months ended September 30, 2024, these expenses were 71.9% compared with 69.4% for the 2023 period. The total dollar amount of these expenses increased to $57.1 million for the three months ended September 30, 2024 from $53.6 million for the comparable 2023 period, and were $167.2 million for the nine months ended September 30, 2024 increasing from $162.4 million in 2023. The third quarter and year-to-date increases were due to increases in expert adjusting staff in U.S. Global Technical Services, partially offset by decreases in employees in U.S. Field Operations and Canada. The increase in the percentage of revenues before reimbursements is due to lower staff utilization in U.S. Field Operations, Global Technical Services and Canada, compared to the 2023 periods. There was an average of 2,003 full-time equivalent employees in this segment in the nine months ended September 30, 2024 compared with an average of 2,058 in the 2023 period.

Previous wording

North America Loss Adjusting expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor were $16.4 million for the three months ended June 30, 2024 compared with $17.8 million for the 2023 period. As a percentage of revenues before reimbursements, these expenses were 21.6% for the three months ended June 30, 2024 compared with 23.4% for the 2023 period. For the six months ended June 30, 2024, these expenses were $33.9 million, compared with $33.2 million for the 2023 period. As a percentage of revenues before reimbursements, these expenses were 22.1% for the six months ended June 30, 2024 compared with 21.6% for the 2023 period. The decrease in the 2024 second quarter expenses and percentage of revenues before reimbursements was due improvements in the allowance for estimated credit losses as compared to the 2023 period. The increase in the 2024 year-to-date amounts and percentage of revenues before reimbursements was due to higher technology investments, auto expenses, and self-insurance costs, which offset the second quarter decrease.

Current wording

North America Loss Adjusting expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor were $16.8 million for the three months ended September 30, 2024 compared with $15.9 million for the 2023 period. As a percentage of revenues before reimbursements, these expenses were 21.2% for the three months ended September 30, 2024 compared with 19.9% for the 2023 period. For the nine months ended September 30, 2024, these expenses were $50.7 million, compared with $49.1 million for the 2023 period. As a percentage of revenues before reimbursements, these expenses were 21.8% for the nine months ended September 30, 2024 compared with 21.0% for the 2023 period. The increase in the 2024 third quarter expenses and percentage of revenues before reimbursements was due to an increase in allowance for estimated credit losses and higher self-insurance costs as compared to the 2023 period. The increase in the 2024 year-to-date amounts and percentage of revenues before reimbursements was due to higher technology investments, auto expenses, and self-insurance costs, partially offset by improvements in the allowance for estimated credit losses as compared to the 2023 period.

Previous wording

Operating earnings in our International Operations segment were $5.7 million, or 5.6% of revenues before reimbursements, for the three months ended June 30, 2024, compared with $3.7 million, or 3.9% of revenues before reimbursements, in the 2023 period. For the six months ended June 30, 2024, our International Operations segment reported operating earnings of $7.4 million, or 3.7% of revenues before reimbursements, compared with operating earnings in 2023 of $6.8 million, or 3.6% of revenues before reimbursements. The increase in operating earnings in the 2024 periods was primarily due to increases in the U.K. and Europe.

Current wording

Operating earnings in our International Operations segment were $5.1 million, or 4.9% of revenues before reimbursements, for the three months ended September 30, 2024, compared with $2.2 million, or 2.2% of revenues before reimbursements, in the 2023 period. For the nine months ended September 30, 2024, our International Operations segment reported operating earnings of $12.5 million, or 4.1% of revenues before reimbursements, compared with operating earnings in 2023 of $9.0 million, or 3.1% of revenues before reimbursements. The increase in operating earnings in the 2024 periods was primarily due to revenue increases in the U.K. and Europe.

Previous wording

Excluding centralized indirect support costs, gross profit increased from $17.0 million, or 17.9% of revenues before reimbursements in 2023, to $19.2 million, or 18.8% of revenues before reimbursements, in the three months ended June 30, 2024. For the six months ended June 30, 2024, gross profit increased from $32.7 million, or 17.5% of revenues before reimbursements in 2023, to $35.2 million, or 17.6% of revenues before reimbursements. The increase in gross profit in the 2024 periods was driven by the increase in revenues.

Current wording

Excluding centralized indirect support costs, gross profit increased from $14.5 million, or 14.8% of revenues before reimbursements in 2023, to $18.5 million, or 17.5% of revenues before reimbursements, in the three months ended September 30, 2024. For the nine months ended September 30, 2024, gross profit increased from $47.2 million, or 16.6% of revenues before reimbursements in 2023, to $53.7 million, or 17.5% of revenues before reimbursements. The increase in gross profit in the 2024 periods was driven by the increase in revenues.

Previous wording

Operating results for our International Operations segment, including gross profit, for the three and six months ended June 30, 2024 and 2023 were as follows:

Current wording

Operating results for our International Operations segment, including gross profit, for the three and nine months ended September 30, 2024 and 2023 were as follows:

Previous wording

International Operations segment revenues are primarily derived from the global property and casualty insurance company markets in the U.K, Europe, Australia, Asia and Latin America. Revenues before reimbursements by major region, based on actual exchange rates and using a constant exchange rate, for the three and six months ended June 30, 2024 and 2023 were as follows:

Current wording

International Operations segment revenues are primarily derived from the global property and casualty insurance company markets in the U.K, Europe, Australia, Asia and Latin America. Revenues before reimbursements by major region, based on actual exchange rates and using a constant exchange rate, for the three and nine months ended September 30, 2024 and 2023 were as follows:

Previous wording

Revenues before reimbursements from our International Operations segment totaled $200.4 million in the six months ended June 30, 2024, compared with $187.2 million in the 2023 period. This increase was primarily due to increases in the U.K, Europe, and Latin America. The change in exchange rates decreased our International Operations segment revenues by approximately (0.3)%, or $0.6 million, for the six months ended June 30, 2024 as compared with 2023. Absent foreign exchange rate fluctuations, International Operations segment revenues would have been $200.9 million for the six months ended June 30, 2024. There was an increase in segment unit volume, measured principally by cases received, of 6.8% for the six months ended June 30, 2024, compared with the 2023 period. There was an increase in high-frequency, low-severity cases of 3,500, or (1.5)%. Changes in product mix and in the rates charged for those services accounted for a 2.1% revenue increase for the six months ended June 30, 2024 compared with the same period in 2023.

Current wording

Revenues before reimbursements from our International Operations segment totaled $306.1 million for the nine months ended September 30, 2024, compared with $285.2 million in the 2023 period. This increase was primarily due to increases in the U.K, Europe, and Latin America. The change in exchange rates decreased our International Operations segment revenues by approximately (0.9)%, or $2.4 million, for the nine months ended September 30, 2024 as compared with 2023. Absent foreign exchange rate fluctuations, International Operations segment revenues would have been $308.5 million for the nine months ended September 30, 2024. There was an increase in segment unit volume, measured principally by cases received, of 2.2% for the nine months ended September 30, 2024, compared with the 2023 period. There was a net decrease in high-frequency, low-severity cases of 6,600 or (1.8%), driven primarily by fewer high-frequency, low-severity cases in the U.K., partially offset by an increase in high-frequency, low-severity cases in Brazil. There was also an increase in higher-value third-party administration claims in the U.K, which led to a 2.1% increase in revenue for the nine months ended September 30, 2024, compared with the 2023 period. Changes in product mix and in the rates charged for those services accounted for a 2.1% revenue increase for the nine months ended September 30, 2024 compared with the same period in 2023.

Previous wording

Based on constant foreign exchange rates, the increase in revenues in the U.K. for the 2024 second quarter and year-to-date periods was due to an increase in property and third party administration revenues driven by higher value claims. There was an increase in revenues in Europe in the 2024 periods, compared with 2023, due to increases in Netherlands and Germany. There was a decrease in revenues in Australia for the year-to-date period due to a large flooding event in 2022 that continued to provide revenues into 2023. There was a decrease in revenues in Asia in the 2024 second quarter, compared with 2023, due to decreased large loss claims in Thailand and increased weather-related activity in the prior year period in the Philippines. The increase in revenues in Latin America in the 2024 periods was primarily driven by increased volumes across third-party administration and loss adjusting.

Current wording

Based on constant foreign exchange rates, the increase in revenues in the U.K. for the 2024 third quarter and year-to-date period was due to an increase in property and third party administration revenues driven by higher value claims. There was an increase in revenues in Europe in the 2024 periods, compared with 2023, due to increases in Netherlands, Norway, the Middle East, and Germany. There was an increase in Australia in the 2024 third quarter, compared with 2023, due to an increase in Contractor Connection claims, while the year-to-date period had a decrease due to a large flooding event in 2022 that continued to provide revenues into 2023. There was an increase in revenues in Asia in the 2024 third quarter, compared with 2023, due to increases in Taiwan, and Hong Kong, while the year-to-date period experienced a decrease from the 2023 period due to decreased large loss claims in Thailand and higher weather-related activity in the prior year period in the Philippines. The increase in revenues in Latin America in the 2024 periods was primarily driven by increased volumes across third-party administration and loss adjusting in Brazil.

Previous wording

Revenue variance components for our International Operations segment, for the three and six months ended June 30, 2024 are summarized as follows:

Current wording

Revenue variance components for our International Operations segment, for the three and nine months ended September 30, 2024 are summarized as follows:

Previous wording

Reimbursements for out-of-pocket expenses incurred in our International Operations segment, which are included in total Company revenues, were $8.7 million and $9.1 million for the three months ended June 30, 2024 and 2023, respectively. Reimbursements were $17.2 million and $16.7 million for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Reimbursements for out-of-pocket expenses incurred in our International Operations segment, which are included in total Company revenues, were $9.4 million and $7.7 million for the three months ended September 30, 2024 and 2023, respectively. Reimbursements were $26.6 million and $24.4 million for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

International Operations segment unit volumes by geographic region, measured by cases received, for the three and six months ended June 30, 2024 and 2023 were as follows:

Current wording

International Operations segment unit volumes by geographic region, measured by cases received, for the three and nine months ended September 30, 2024 and 2023 were as follows:

Previous wording

Overall, there was an increase in cases received of 6.3% for the three months ended June 30, 2024, compared with the 2023 period. There was a decrease in the U.K. in the second quarter due to decreases in high-frequency, low-severity cases in third party administration. Cases increased in Europe due to an increase in high-frequency, low-severity cases in the Middle East and an increase in claims in Germany and the Netherlands. Cases increased in Australia due to an increase in high-frequency, low-severity cases in Contractor Connection. The decrease in cases received in Asia was due to a reduction in high-frequency, low-severity cases in Malaysia and a reduction in Travel claims in Singapore. Latin America experienced an increase in high-frequency, low-severity cases received in Brazil.

Current wording

Overall, there was a decrease in cases received of (6.8)% for the three months ended September 30, 2024, compared with the 2023 period. There was a decrease in the U.K. in the third quarter due to decreases in high-frequency, low-severity cases in third party administration. Cases increased in Europe due to an increase in the Middle East and the Netherlands. Cases increased in Australia due to an increase in high-frequency, low-severity cases in Contractor Connection. The increase in cases received in Asia was due to an increase in cases in Philippines. Latin America experienced an increase in cases received in Brazil due to flooding.

Previous wording

There was an increase in cases received of 6.8% for the six months ended June 30, 2024, compared with the 2023 period. There was a decrease in cases in the U.K., due to decreases in high-frequency, low-severity cases in third party administration. Cases increased in Europe due to an increase in high-frequency, low-severity cases in the Middle East and an increase in claims in Germany and the Netherlands, partially offset by a decrease in claims from Sweden. Australia increased due to an increase in weather-related cases as well as an increase in high-frequency, low-severity cases in Contractor Connection. The decrease in cases received in Asia was due to a reduction in high-frequency, low-severity cases in Malaysia and a reduction in Travel claims in Singapore. Latin America experienced an increase in high-frequency, low-severity cases received in Brazil as well as cases received in Chile.

Current wording

There was an increase in cases received of 2.2% for the nine months ended September 30, 2024, compared with the 2023 period. There was a decrease in cases in the U.K., due to decreases in high-frequency, low-severity cases in third party administration and property. Cases increased in Europe due to an increase in cases in the Middle East from flooding events and an increase in claims in Germany and the Netherlands, partially offset by a decrease in claims from Sweden. Australia increased due to an increase in weather-related cases as well as an increase in high-frequency, low-severity cases in Contractor Connection. The decrease in cases received in Asia was due to a reduction in high-frequency, low-severity cases in Malaysia and a reduction in Travel claims in Singapore. Latin America experienced an increase in high-frequency, low-severity cases received in Brazil as well as cases received in Chile.

Previous wording

The most significant expense in our International Operations segment is the compensation of employees, including related payroll taxes and fringe benefits, and the payments to outsourced service providers that augment the functions performed by our employees. As a percentage of revenues before reimbursements, these expenses were 64.6% for the three months ended June 30, 2024 compared with 65.4% for the 2023 period. The total dollar amount of these expenses was $66.0 million for the three months ended June 30, 2024, compared to $62.3 million for the 2023 period. For the six months ended June 30, 2024, these expenses were 65.4%, compared with 66.1% in 2023, and were $131.0 million for the six months ended June 30, 2024 compared to $123.8 million in 2023. The increase was due to increases in compensation expense, including incentive compensation. The decrease in the percentage of revenues before reimbursements is due to higher revenues in the 2024 periods and improved staff utilization. There was an average of 3,623 full-time equivalent employees in this segment in the six months ended June 30, 2024, compared with an average of 3,668 in the comparable 2023 period.

Current wording

The most significant expense in our International Operations segment is the compensation of employees, including related payroll taxes and fringe benefits, and the payments to outsourced service providers that augment the functions performed by our employees. As a percentage of revenues before reimbursements, these expenses were 65.6% for the three months ended September 30, 2024 compared with 67.7% for the 2023 period. The total dollar amount of these expenses was $69.4 million for the three months ended September 30, 2024, compared to $66.4 million for the 2023 period. For the nine months ended September 30, 2024, these expenses were 65.5%, compared with 66.7% in 2023, and were $200.4 million for the nine months ended September 30, 2024 compared to $190.2 million in 2023. The increase was due to increases in compensation expense, related to the increase in revenues, including incentive compensation. The decrease in the percentage of revenues before reimbursements is due to higher revenues in the 2024 periods and improved staff utilization. There was an average of 3,638 full-time equivalent employees in this segment in the nine months ended September 30, 2024, compared with an average of 3,660 in the comparable 2023 period.

Previous wording

International Operations expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor were $30.5 million for the three months ended June 30, 2024 compared with $29.2 million for the 2023 period. As a percentage of revenues before reimbursements, these expenses were 29.9% for the three months ended June 30, 2024 compared with 30.7% for the 2023 period. For the six months ended June 30, 2024, these expenses were $62.0 million, compared with $56.6 million for the 2023 period. As a percentage of revenues before reimbursements, these expenses were 30.9% for the six months ended June 30, 2024, compared with 30.3% for the 2023 period. The increase in the expense for the 2024 second quarter was due to an increase in revenues, while the percentage of revenues before reimbursements decreased due to improved operating leverage. The increase in the year-to-date expense and percent of revenues before reimbursements was due to increased IT application costs and increased self-insurance costs.

Current wording

International Operations expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor were $31.2 million for the three months ended September 30, 2024 compared with $29.4 million for the 2023 period. As a percentage of revenues before reimbursements, these expenses were 29.5% for the three months ended September 30, 2024 compared with 30.0% for the 2023 period. For the nine months ended September 30, 2024, these expenses were $93.2 million, compared with $86.1 million for the 2023 period. As a percentage of revenues before reimbursements, these expenses were 30.4% for the nine months ended September 30, 2024, compared with 30.2% for the 2023 period. The increase in the expense for the 2024 third quarter was due to an increase in revenues, while the percentage of revenues before reimbursements decreased due to improved operating leverage. The increase in the year-to-date expense and percent of revenues before reimbursements was due to increased IT application costs and increased self-insurance costs.

Previous wording

Our Broadspire segment reported operating earnings of $15.1 million, or 15.5% of revenues before reimbursements, for the three months ended June 30, 2024 as compared with $8.1 million, or 9.3% of revenues before reimbursements, for the second quarter of 2023. For the six months ended June 30, 2024, our Broadspire segment reported operating earnings of $27.9 million, or 14.6% of revenues before reimbursements, compared with 2023 operating earnings of $16.1 million, or 9.4% of revenues before reimbursements. The increase in the 2024 second quarter and year-to-date periods was due to an increase in revenues resulting from new client programs, increased medical management usage, and pricing improvements.

Current wording

Our Broadspire segment reported operating earnings of $14.4 million, or 14.5% of revenues before reimbursements, for the three months ended September 30, 2024 as compared with $13.5 million, or 14.7% of revenues before reimbursements, for the third quarter of 2023. For the nine months ended September 30, 2024, our Broadspire segment reported operating earnings of $42.3 million, or 14.6% of revenues before reimbursements, compared with 2023 operating earnings of $29.6 million, or 11.2% of revenues before reimbursements. The increase in the 2024 third quarter and year-to-date periods was due to an increase in revenues resulting from new client programs, increased medical management usage, and pricing improvements.

Previous wording

Excluding centralized indirect support costs, second quarter gross profit increased from $19.8 million, or 22.6% of revenues before reimbursements, in 2023 to $26.3 million, or 27.1% of revenues before reimbursements in 2024. For the six months ended June 30, 2024, gross profit increased from $39.0 million, or 22.8% of revenues before reimbursements in 2023, to $50.6 million, or 26.5% of revenues before reimbursements. This increase was due to the increased revenues and improved staff utilization.

Current wording

Excluding centralized indirect support costs, third quarter gross profit increased from $25.5 million, or 27.6% of revenues before reimbursements, in 2023 to $25.6 million, or 25.9% of revenues before reimbursements in 2024. For the nine months ended September 30, 2024, gross profit increased from $64.5 million, or 24.5% of revenues before reimbursements in 2023, to $76.2 million, or 26.3% of revenues before reimbursements. This increase was due to the increased revenues and improved staff utilization.

Previous wording

Operating results for our Broadspire segment, including gross profit, for the three and six months ended June 30, 2024 and 2023 were as follows:

Current wording

Operating results for our Broadspire segment, including gross profit, for the three and nine months ended September 30, 2024 and 2023 were as follows:

Previous wording

Broadspire revenues are derived from the casualty and disability insurance and self-insured markets in the U.S. Revenues before reimbursements by service line for the three and six months ended June 30, 2024 and 2023 were as follows:

Current wording

Broadspire revenues are derived from the casualty and disability insurance and self-insured markets in the U.S. Revenues before reimbursements by service line for the three and nine months ended September 30, 2024 and 2023 were as follows:

Previous wording

Revenues before reimbursements from our Broadspire segment totaled $97.1 million in the three months ended June 30, 2024 compared with $87.2 million in the 2023 period. This increase was primarily due to an increase in new client growth across both service lines. There was a decrease in segment unit volume, measured principally by cases received, of (3.4)% for the three months ended June 30, 2024 compared with the same period of 2023. This was primarily due to takeover claims for a disability client in the prior year second quarter, which resulted in 17,700 claims, or 12.3%, with minimal revenues which did not recur in 2024. Revenues were positively impacted by $1.1 million increase in revenues within our Claims Management service line related to income earned which offsets the costs of managing the funds maintained to administer claims for our customers, for which no cases are received, or 1.3% of the increase in revenues. There was also a $2.5 million increase in revenues within our Medical Management service line for which no cases are received, or 2.8% of the increase in revenues. Changes in product mix and in the rates charged for those services accounted for a (1.7)% revenue decrease for the 2024 second quarter compared with the 2023 period.

Current wording

Revenues before reimbursements from our Broadspire segment totaled $99.0 million in the three months ended September 30, 2024 compared with $92.2 million in the 2023 period. This increase was primarily due to an increase in new client growth across both service lines. There was a decrease in segment unit volume, measured principally by cases received, of (1.7)% for the three months ended September 30, 2024 compared with the same period of 2023. This was primarily due to takeover claims for a disability client in the prior year third quarter, which resulted in 7,000 claims, or 4.9%, with minimal revenues which did not recur in 2024. Revenues were positively impacted by $0.7 million increase in revenues within our Claims Management service line related to income earned which offsets the costs of managing the funds maintained to administer claims for our customers, for which no cases are received, or 0.7% of the increase in revenues. There was also a $2.1 million increase in revenues within our Medical Management service line for which no cases are received, or 2.3% of the increase in revenues. Changes in product mix and in the rates charged for those services accounted for a 1.2% revenue increase for the 2024 third quarter compared with the 2023 period.

Previous wording

For the six months ended June 30, 2024, revenues before reimbursements from our Broadspire segment totaled $191.4 million compared with $171.3 million in the 2023 period. This increase was primarily due to an increase in new client growth across both service lines. There was an increase in segment unit volume, measured principally by cases received, of 0.8% for the six months ended June 30, 2024 compared with the same period of 2023. There was a decrease in claims related to the prior year takeover claims for a disability client in the prior year second quarter, which resulted in 17,700 claims, or 6.5%, with minimal revenues which did not recur in 2024. Revenues were positively impacted by $2.3 million increase in revenues within our Claims Management service line related to income earned which offsets the costs of managing the funds maintained to administer claims for our customers, for which no cases are received, or 1.4% of the increase in revenues. There was also a $5.3 million increase in revenues within our Medical Management service line for which no cases are received, or 3.1% of the increase in revenues. Changes in product mix and in the rates charged for those services accounted for a (0.1)% revenue decrease for the 2024 six-month period compared with the 2023 period,

Current wording

For the nine months ended September 30, 2024, revenues before reimbursements from our Broadspire segment totaled $290.4 million compared with $263.5 million in the 2023 period. This increase was primarily due to an increase in new client growth across both service lines. There was a slight decrease in segment unit volume, measured principally by cases received, of (0.1)% for the nine months ended September 30, 2024 compared with the same period of 2023. There was a decrease in claims related to the prior year takeover claims for disability clients in the prior year second and third quarters, which resulted in 24,700 claims, or 6.0%, with minimal revenues which did not recur in 2024. Revenues were positively impacted by $3.0 million increase in revenues within our Claims Management service line related to income earned which offsets the costs of managing the funds maintained to administer claims for our customers, for which no cases are received, or 1.1% of the increase in revenues. There was also a $7.4 million increase in revenues within our Medical Management service line for which no cases are received, or 2.8% of the increase in revenues. Changes in product mix and in the rates charged for those services accounted for a 0.4% revenue increase for the 2024 nine-month period compared with the 2023 period.

Previous wording

Revenue variance components for our Broadspire segment, for the three and six months ended June 30, 2024 are summarized as follows:

Current wording

Revenue variance components for our Broadspire segment, for the three and nine months ended September 30, 2024 are summarized as follows:

Previous wording

Reimbursements for out-of-pocket expenses incurred in our Broadspire segment were $1.0 million and $0.9 million for the three months ended June 30, 2024 and 2023, respectively. Reimbursements were $1.9 million and $1.7 million for the six months ended June 30, 2024 and 2023, respectively. The increase in the 2024 periods was primarily due to the increased revenues in the current period.

Current wording

Reimbursements for out-of-pocket expenses incurred in our Broadspire segment were $0.8 million and $0.7 million for the three months ended September 30, 2024 and 2023, respectively. Reimbursements were $2.8 million and $2.4 million for the nine months ended September 30, 2024 and 2023, respectively. The increase in the 2024 periods was primarily due to the increased revenues in the current period.

Previous wording

Broadspire unit volumes by service line, as measured by cases received, for the three and six months ended June 30, 2024 and 2023 were as follows:

Current wording

Broadspire unit volumes by service line, as measured by cases received, for the three and nine months ended September 30, 2024 and 2023 were as follows: