Weather-related claims activity and a doubling of revenue in its legal settlement division led Crawford and Company to a 22-percent increase in second-quarter consolidated revenues.
The independent provider of claims management solutions to the risk management and insurance industry said consolidated revenues before reimbursements totaled $291.7 million in the second quarter, up from $238.2 million in the 2010 second quarter. Second quarter 2011 net income attributable to Crawford & Company was $13.5 million, compared with a net loss of $2.5 million recorded in the 2010 second quarter. Second quarter 2011 diluted earnings per share were $0.25 compared with the loss per share of $(0.05) reported in the prior-year quarter.
"The Americas segment rebounded nicely from a slow start in the first quarter driven by weather-related claims increases in the U.S. and Canada," says CEO Jeffrey Bowman. "In the U.S., our catastrophe adjuster revenues exceeded $10 million in a quarter for the first time since the 2008 fourth quarter. The strong contribution margins from this revenue surge helped drive the segment's operating margin to 11 percent for the 2011 second quarter."
Crawford's Legal Settlement Administration segment, which includes the Gulf Coast Claims Facility (GCCF) that is used to file claims for costs and damages caused Deepwater Horizon oil spill, earned revenues before reimbursements of $50.8 million in the 2011 second quarter, compared with $24.3 million in the 2010 second quarter. Operating earnings totaled $14.8 million in the 2011 second quarter, or 29 percent of revenues, compared with $5.6 million, or 23 percent of revenues, in the prior-year period.
"We continue to see strong performance due to our engagement in the GCCF special project," says Bowman. "We have a strong backlog of awarded projects in this segment and expect the special project activity to continue through 2011, although at a reduced pace compared to current levels."
The only blemish on Crawford's earnings came from its Broadspire segment, which saw revenues before reimbursements at $57.9 million in the 2011 second quarter, down five percent from the 2010 second quarter. It posted an operating loss of $3.1 million in the 2011 second quarter, or a negative operating margin of five percent, compared with an operating loss of $1.8 million, or a negative operating margin of three percent, in the prior year period.
Crawford said these declines were primarily due to lower revenues from existing clients due to a lengthening in the duration of certain workers' compensation claims and a shift in mix to lower-margin claims, partially as a result of a special project for one of our clients.
"We continue to see persistent high levels of unemployment in the U.S., which has put pressure on workplace-related claims volumes affecting our Broadspire segment," says Bowman. "In addition, we are seeing the duration of certain workers' compensation claims lengthening, and we are also experiencing changes in the mix of claims we are handling, with a higher percentage of less complex low-value claims. These factors are combining to put pressure on the Broadspire business."
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