Good afternoon. My name is Danita, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Crawford & Company Fourth Quarter 2013 Earnings Release Conference Call. In conjunction with this call, a supplementary financial presentation is available on our website at www.crawfordandompany.com under the Investor Relations section. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. Instructions will follow at that time. (Operator Instructions) As a reminder, ladies and gentlemen, this conference is being recorded today, Wednesday, February 26, 2014. Now I’d like to introduce Allen W. Nelson, Crawford & Company's General Counsel and Chief Administrative Officer.

Thank you, Danita. Some of the matters to be discussed in this conference call and the supplementary financial presentation may include forward-looking statements that involve risks and uncertainties. These statements may include, but are not limited to statements regarding the funded status of our defined benefit pension plans, our expectations related to future revenues and expenses, our long-term liquidity requirements and our ability to pay dividend in the future. The company’s actual results achieved in future quarters could differ materially from results that maybe implied by such forward-looking statements. The company undertakes no obligation to publicly release revisions to any forward-looking statements made in this conference call to reflect events or circumstances occurring after the date of the call or to reflect the occurrence of an anticipated events. In addition you are reminded that operating results for any historical period are not necessarily indicative of results to be expected for any future period. For a complete discussion regarding factors that could affect the company’s financial performance, please refer to the company’s Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission, particularly the information under the headings, Business, Risk Factors, Legal Proceedings and Management’s Discussion and Analysis of Financial Condition and Results of Operations, as well as subsequent company filings with the SEC. This presentation also includes certain non-GAAP financial measures as defined under SEC rules. As required, a reconciliation is provided for those measures to the most directly comparable GAAP measures. I would now like to introduce Mr. Jeffrey Bowman, President and Chief Executive Officer of Crawford & Company. Jeff, you may begin our conference now.

Thank you, Allen. A warm welcome to our investors, clients and employees this afternoon. I am Jeffrey Bowman, President and CEO of Crawford & Company. Joining me from the global executive management team this afternoon are Bruce Swain, our CFO; and Allen Nelson, our General Counsel and Chief Administrative Officer. I thought I would take a few minutes to explain where we are in our strategic journey. Crawford’s 2013 results mark a five-year period of growth and improved profitability for the company. Since the recession of several years ago, Crawford’s revenue before reimbursements have grown at a compound annual rate of 3.7% from 2009 through to the present and consolidated operating earnings have grown by 79%. At the same time, we have diversified our revenue stream and put in place a significantly improved technology infrastructure that drives our business today. While results in our core businesses of claims processing, a subject to weather and catastrophe related events. Today, more than half of our revenue derived from business process outsourcing and consulting services within contractor connection, legal settlement administration and Broadspire. This is changing the way we operate globally, the way we continue to invest in our future and the way we expect to provide future earnings. We are creating a stronger company. There is no doubt that our strong results in the past several years have been driven by a number of large claim events such as the 2011 flooding in Thailand affecting our EMEA/AP operations and our legal settlement administration responsibilities in the Deepwater Horizon class action settlement. These projects also contributed to our 2013 results. Over the past year, however, we have seen a better balance to our earnings. Volumes have improved at our Broadspire TPA business with corresponding profitability growing. Our Americas businesses demonstrated a resilient performance…

Companywide revenues before reimbursements in the 2013 fourth quarter were $284.9 million, down 9% from $313 million in the prior year’s fourth quarter. Our net income attributable to Crawford & Company totaled $10.8 million in the 2013 fourth quarter, down from $14.2 million in the 2012 period. Fourth quarter 2013 diluted earnings per share were $0.20 for CRDA and $0.19 for CRDB compared to earnings per share of $0.26 for CRDA and $0.25 for CRDB in the 2012 period. Consolidated operating earnings, our non-GAAP financial measure totaled $20.2 million for the 2013 fourth quarter, down from $38.9 million reported in the 2012 fourth quarter. During the prior year fourth quarter, the company incurred a pretax special charge of $8.5 million related to a loss on our property sublease and North American severance costs. These special charges decreased earnings per share by $0.10 in the 2012 fourth quarter. The company’s selling, general and administrative expenses or SG&A totaled $58.2 million or 20.4% of revenues in the 2013 fourth quarter, up 7% from $54.4 million or 17.4% of revenues in the prior year quarter. Revenues from the Americas segment totaled $79.5 million in 2013 fourth quarter, down 15% from $93.5 million reported in last year’s quarter. The higher revenues in 2012 resulted from the handling of claims from Superstorm Sandy. Operating earnings in our America segment were $1.2 million in the 2013 fourth quarter or 1% of revenues. This is compared with operating earnings of $4.4 million or 5% of revenues in the prior year quarter. Revenues generated by our catastrophe adjusters in the U.S. totaled $5 million in the 2013 fourth quarter, down from $19.8 million in the 2012 quarter, reflecting the impact of Superstorm Sandy related catastrophe cases in the 2012. EMEA/AP revenues decreased 4% in 2013 fourth quarter to…

Thanks, Bruce. For the quarter, we reported operating earnings down versus 2012, but very much in line with our expectations. We are seeing the permissive of a balanced portfolio across our business segments and in addition, seeing improved performance of Broadspire. Both our EMEA/AP and Legal Settlement Administration operations are successfully broadening their new business pipelines. To help replace claims volumes tied to Thailand and the Deepwater Horizon project. You should always remember that half of our business relies on the weather. It is a part of the DNA of Crawford. For the quarter, we were pleased to see overall claims increased 1.9%, with claims and volumes in Broadspire and EMEA/AP, offset claims reductions in the Americas. So, let me now turn to the performance of each of our business unit, starting with the Americas segment, which represented 29% of our total consolidated revenues for the quarter. Overall performance in both revenue and operating earnings reflected the impact of superstorm Sandy year-over-year. As I mentioned earlier, we continue to emphasize with our claims that we have a unique cross-border capability within our Americas segment, which is a way to differentiate Crawford from our competitors and give carriers who have limited capacity and the ability to service their clients. The decline in revenues in the U.S. claim services result from the lack of major weather events, which was mitigated by the increasing flood losses in Canada that were serviced by U.S.-based claims adjusters and by increasing our Contractor Connection division. Contractor Connection grew by 40% in revenue over the fourth quarter of 2012, with both current and new insurer and consumer claims being contracted. We are developing and implementing private-label consumer website capabilities for consumer services. We remain excited about this product’s future. Canada also benefits from this business line, which…

(Operator Instructions) Your first question comes from the line of Mark Hughes of SunTrust.

Thank you very much. Good afternoon.

Hey, Mark.

Could you talk about the level of new business that you won in Broadspire as we think about the 2014 outlook? You had a very strong growth in last nine months of the year, double-digit this quarter. Is that new business going to allow you to sustain double-digit growth in the coming year?

Okay. Let me talk about some of the operational factors that are going on that are creating the margins. The number one, we’ve finished a significant consolidation of data systems which is enabling us to produce a better quality product in the organization. And as we’ve sort of explained over the past few months, the Broadspire sales team has been rehashed, it’s been -- different goals have been put in place, and we’re seeing a much better retention on account management of our current accounts. So we’re looking very much for that to continue into 2014. We’ve got very strong pipeline at this present moment and the team is working very hard to ensure that we get those cost efficiencies into the organization which will increase the margins that we currently have. We see 2014 being a significant step-up from where we were for the overall year end in ’13.

How about in terms of the top line growth, will that be a step-up as well in terms of the growth rate?

Yes, we believe it will be.

Okay. The pension expense, the EPS expense, I don't know if you gave us an idea on that growth, but how does it look in 2014 compared to 2013?

The pension expense?

Yes, in terms of EPS?

Yes. I think the expense will be down slightly. I think on a consolidated basis, we are about $3.3 million this year and from ’14, we will be at about $1.7 million. So think about (inaudible).

Can you talk about the -- when you look at the Legal Settlement business, the operating income in the quarter about $8 million and about 16% margin, that 16% margin seems like pretty consistent with where you were at before you picked up the Deepwater Horizon business. Is this a good margin? Is that kind of bottomed out at 16%? And likewise that run rate of EBIT, is that a good run rate, or is that going to come down a little bit as the revenue continues to taper off in 2014?

I think -- hey, Mark, this is Bruce. I think that the historical margin in GCG were in that upper teen range. And I think as the Deepwater Horizon project falls away, you will -- or any other large significant project falls away, you will see the margins probably migrate down towards that level. Any time we have a large project that comes in, we get a lot better absorption of overhead in that unit, so there is stronger increment margin and the pull back are probably bringing into the mid-teen level.

Correct.

Now in terms of the dollars and where we see that business going in ’14, our expectation and what we factored into our guidance is that and we think it will come down at ’14 versus where it was in ’13 but our visibility into that is not that great and but we are planning on it coming down and we are expecting other parts of our business to pick up slight.

I think to that point, Mark, as well, Crawford remains a claims driven business overall, but also we have value-added services that we are brining into the group, which in the business process outsourcing area, which are substantially stable and sometimes more profitable and we are driving those efficiencies through the Americas organization and through Broadspire and EMEA/AP organization which is where there is margin improvement that can be made.

Okay. The U.S. margin, you had tough comps against the Sandy claim, the 1.5% that was pretty low in historical periods, why so low, why do you think it will bounce back.

Okay. There are several reasons we are confident that the America is going to bounce back in that. Number one is, post-Canada, if you take Canada, North America, there was a benign period, we picked up flooding claims in Canada in the second half of the year, which improved their margins. But we have gone through in both of those areas. We have had transformation projects in terms of having cost reductions, looking at the market that’s we are in, the services that we are provided. We see in the U.S. continued growth in the contractor connection model, we see continued growth in the GTS which is the high-value complex claims area and then we seen development of specialty market and into the affinity groups playing into our hands in 2014. With that, with the cost control models that we put in place, we see that margins starting to improve, and anything from weather event, which improves over 2013 it just added benefit to us in that area.

Okay. Bruce, I don’t know if you gave an idea for CapEx for the coming year, if you could kind of walk through the, what the cash flow generation ought to be, how much is in a good CapEx, pension contribution, anything else that must be relevant?

Sure. So on a corporate…

(Inaudible) podium.

Okay. Nice. Okay. On an operating cash flow basis…

Okay. I apologies for that.

You’re welcome. On an operating cash flow basis we expect between $16 million to $17 million next year that's our guidance and that number is net of our pension contribution. So we think we are going to put in about $18 million in the U.S. in ’14 and in our international plans we put in between $6 and $7 each year. So that number is net of pension contributions. On a CapEx basis, we think our CapEx will run a little bit higher this year, I think in the $36 million to $37 million range and that's a little bit higher than where we've run in the past but that's where our planning is today.

When is that going to taper off? It's early for 2015, but is this an increase that won't be repeated? Is it still possible that 2015 could be up from here?

Mark our -- most of our capital expenditure is around software development and centered around IT. And where we see our industry going and early all facets of our business in a much more technology enabled place. And I think that there will always be a strong demand for increased investment or high level of investment and technology in order for us to stay on the forefront in our markets and meeting the demands of our clients.

The technology side, Mark, is increasingly critical to the way we operate as an organization. And we get those margins to a higher degree. It is also factor of this technology, we're able to introduce to on the street adjustors, how we move paced with our -- [technical difficulty]. Okay, so the technology part of this is critical. Our plans are much more sophisticated in the way that they segment claims now we have to be able to interface with them and we have to do that through the enabling of mobile technology, tablet technology with our justice and our operational will stop. But we think that making a very good strategic increase in the capabilities that we've got. Actually we won a couple of technology awards in 2013 for mobile devices and that’s down to some of the cutting edge technology that we've been putting in place. So that will drive some of the margin gains that we're going to get.

Okay. Thank you. Very good. I appreciate it.

(Operator Instructions) Your next question comes from the line of Joe Solomon, Solomon Capital.

Hi guys. Thanks so much for taking my questions.

Hi Joe. How are you?

Great. How you guys doing today?

Okay.

So just one, I wanted to follow-up on Mark's question on the pension contribution. And I guess this year it was around 80 million using I think if I heard you're right for 2013, it was $80 million and you're expecting to be similar. So given the fact that the pension liabilities come down so much it will point into 2015 or 2016 should we expect contribution to come down fairly dramatically, because at this rate I guess it's gone in very quickly five years or so?

Yeah, it comes down in ‘15 for sure and then declines from there. We put a table in the 10-K that we filed today that indicates were contributions are going. And actually in ‘15, based upon interest rates as they exist today or at the end of 2013 and our investment returns, we think that ’15 will be comparable to ’14, and then it drops to $13 million in ’16, $10 million in ’17 and about $8 million in ’18 and that’s all in our 10-K. These numbers will change. We know that because they were all based upon interest rates that exist today and investment return assumption of 6.75%. So there's -- I think that we’re not done with the pension plan, but we have substantially derisked this plan. And I think we’re looking at the horizon and seeing the finish line in sight as you alluded to. But we’re certainly happy about that.

Great. That's really good news. And then just also following up on Mark's question on the Americas and the margin there, I guess over time, if we look out over, say, a five-year period, when do you think we can get to kind of close to that double-digit operating margin? Assuming normal weather, Contractor Connection's margins are substantially higher than that, as the mix changes, do you have a thought as to over what time period, is it a few years, is that kind of a target that you guys are hoping to get to?

Okay. We’re pushing the margin side of this very, very hard with our operations at the moment, we did said earlier. We do see continued growth in Contractor Connection. We see growth in GTS and actually we see growth coming out through the deployment of better technology in the field operations as well. One of the areas that we've been investing is affinity programs. We’re in the early stages of that. We won quite a few accounts. But we’re able to offer the clients and this is really as our clients change as well. They want to be able to triage those claims and once you triage the claims you have to have several models in place to be able to do that. And we’ve set out some stall out to be able to do that. We see improvement in - significant improvement in 2014 without -- if you remember, replacing ’13 on a very benign weather event. Also, to give you an idea, someone said this morning that the storms in the U.S., storms of inconvenient, lot of damage. We’re seeing an increase in our claims of fairly significant proportions over last year, coming back to more than a normalized basis. And that’s going to help us get this model moving much more quickly.

That’s good to hear. And then just a couple more questions. One on Broadspire, which was really great surprise, at least according to us, that operating margin is much, much higher than we would have expected at this point and we were thinking kind of 10% by the end of 2015. Would you move up that goal now to earlier or are you still targeting at 10% by the end of 2015?

We’re still targeting 10% by the end of 2015. But what will drive this is new client wins. The technology is becoming much more of an enabler for us is an organization. Now, we’ve got all of the data in one database. We’re able to leverage from that. We’ve got some cost efficiencies that we’re still pushing through the system. And we’ll see where it goes the sort of first half of this year. And then, we’ll come back to that particular statement perhaps then. I mean, our target still on the plan that we’ve had laid out for the past few years is to get to the 10% margin around about the end of ’15. I think’14 will be a significant step-up.

And then finally, I guess, you guys saw the Sedgwick deal at 13 times embedded value to EBITDA. And it just kind of dumbfounds me when we see your stock trading at almost a 50% discount to that. Any thoughts on that huge disparity?

Sedgwick is a very good Company. I mean, they're obviously a very big competitor of ours. We’re very much concentrating on getting our business right, getting our margins, getting our reputation at quality and all of that business areas, correcting those areas that are not performing to our requirements at the moment. And hopefully, our shareholders will realize that and see the growth that we've made in the corporation. I went over the five-year history just to really sort of outline how far we’ve come in those five years. If we can keep that growth up, perhaps our valuation will start to increase significantly as well.

Great. Well, keep up the good work and thanks for the answers.

Thanks.

I will now turn the call back over to Mr. Bowman for closing remarks.

Thank you. I’d like to thank everyone for their time and questions this afternoon and for joining us on our 2013 year end call. I look forward to picking up with everyone after the first quarter of 2014. Thank you very much and have a great day.

Thank you for participating in today's Crawford & Company conference call. This call will be available for replay beginning at 6 PM today through 11:59 p.m. on March 26, 2014. The conference ID number for the replay is 61179190. The number to dial for the replay is 1-855-859-2056 or 404-537-3406. Thank you. You may now disconnect.