CRD.B (CRD.B) Q4 2017 Earnings Report, Transcript and Summary

Good morning. My name is Angela, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Crawford & Company Fourth Quarter 2017 Earnings Release Conference Call. In conjunction with this call, a supplementary financial presentation is available on our website at www.crawfordandcompany.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 session. Instructions will follow at that time. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded today, Thursday, March 8, 2018. Now I would like to introduce Joseph Blanco, Crawford & Company’s General Counsel.

Good morning. Some of the matters to be discussed in this conference call and in the supplementary financial presentation may include forward-looking statements that involve risks and uncertainties. These statements may relate to, among other things, our expected future operating results and financial condition; our ability to grow our revenues and reduce our operating expenses; expectations regarding our anticipated contributions to our underfunded defined benefit and pension plans; collectability of our billed and unbilled accounts receivable; financial results from our recently completed acquisitions; our continued compliance with the financial and other covenants contained in our financing agreements; expectations regarding the timing, cost and synergies from our global business and technology service centers; our other long-term capital resource and liquidity requirements; and our ability to pay dividends in the future. The Company’s actual results achieved in future quarters could differ materially from results that may be 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 unanticipated 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 the factors which could affect the Company’s financial performance, please refer to the Company’s Form 10-K for the year ended December 31, 2017, 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 Conditions 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. Harsha Agadi, President and Chief Executive Officer of Crawford & Company. Harsha, you may begin your conference.

Good morning, and welcome to our fourth quarter and full year 2017 earnings call. Joining me today are Bruce Swain, our Chief Financial Officer; and Joseph Blanco, our General Counsel. After our prepared remarks, we will open the call for your questions. 2017 ended solidly. To start, I’d like to frame our recent results in the context of our broader strategy. As you know, over the past 2.5 years, we have been focused on reorganizing Crawford, working to simplify the company and driving a cultural change, all while reducing our expense structure with the goal of delivering financial stability. Our results for the fourth quarter and full year 2017 clearly demonstrate the success we have achieved in streamlining our organization and restoring profitability of the business as our U.S. Services, International and Broadspire segments, all delivered operating margins in excess of 10% for the full year. In addition, we have grown non-GAAP CRD-B diluted earnings per share at a 39% compounded annual rate over the last two years. Crawford is now positioned for a return to revenue growth, which is our number one priority looking forward. Turning to our fourth quarter results in more detail. We delivered fourth quarter operating earnings growth of 19% by strength in our U.S. Services segment, which continued to benefit from the third quarter’s CAT activity, our International segment which experienced strong operating margin expansion, and Broadspire which continued to deliver consistent revenue and earnings growth. On a non-GAAP basis, our diluted earnings per share for our B shares surged by 87% in the fourth quarter of 2017. In addition to our strong results, we have also invested heavily in our business to support our clients through the third and fourth quarters as they manage through an unprecedented level of CAT activity. We believe this investment has differentiated Crawford in the market and positioned the company to increase market share as we strive to become the leading CAT services provider to the industry by delivering unparalleled value to our clients. The one challenge to note was our Garden City Group segment, which posted a loss for the quarter and the year as they continue to experience a difficult market backdrop, combined with the expected wind down of a large project. These challenging market conditions look set to persist through 2018, and will continue to pressure Garden City Group results. As Bruce will discuss in more detail, the difficult outlook for GCG is offsetting some of the growth that we see for our U.S. Services, International and Broadspire segments, which is reflected in our 2018 guidance. Importantly, the financial stability that we have achieved is just Phase 1 of Crawford’s transformation. What is less visible is the cultural change we’re driving through our organization in order to remain a leader in the industry as technology continues to change how business is done. Over the past two years, we have also reassessed our management, our people and our core values. What was clear was that we needed to recruit new senior talent like Rohit Verma, our Chief Operating Officer, as well as experienced solution-based salespeople to improve our sales capabilities as we focus on delivering sustained topline growth. Beyond our people, we have also reviewed our core values and realigned our organization around our refresh corporate mission and vision, which will drive how we go to market, how we serve our clients, and who we hire. Our mission is to restore and enhance lives, businesses and community. This is at the center of what we do every day. Our vision is for profit to be the leading provider and the most trusted source for expert assistance, serving those who insure and self-insure the risks of businesses and communities anywhere in the world. These core values now define Crawford and can, clearly, be seen in our response to the unprecedented hurricane activity that challenged the capabilities of the entire property and casualty insurance industry this past year. To support our clients and they’re insured in their time of great need, we’ve mobilized a multinational force of adjusters from around the globe as well as hired and framed a new generation of adjusters. We viewed these efforts as a significant investment in our business, which we believe demonstrated our strong commitment to our clients and will build the brand loyalty as well as position Crawford as a more valuable partner for the future. In addition to establishing our corporate mission and vision, we also performed an extensive review of the market to assess our clients were organized – how our clients were organized and how to most effectively service them. We determined through our review that our current business structure was not meeting our client needs, not to mention, limiting the growth potential of the company. As a result, we have made the strategic decision to reorganize the company into global service lines that will sharpen our method of delivery to our clients and better enable our sales teams to increase market share and grow the company. These operating segments are known as: first, Crawford Claim Solutions, which comprises our Global Insurance Claims business; second, Crawford TPA Solutions; Broadspire, which includes our global Broadspire business; and finally, Crawford Specialty Solutions which contains Contractor Connection, Garden City Group and our Global Technical Services businesses. The objective of this reorganization is to allow our salespeople to be subject matter experts in every solution they sell, globally. Currently, our capabilities vary greatly by country as we may be strong in high-volume, low value claims, but we can complex claims in one country, while being strong in worker’s compensation, but weak in high-volume, low value claims in another country. Our move to global service lines will solve this challenge as we change our depth of service in the key geographies, where we do business and is an important step to our achievement of long-term goal of delivering 5% revenue growth and 15% earnings growth, annually. Our global service lines will also position Crawford to be a stronger partner to our clients as technology continues to drive the evolution of our industry. We are working to embrace this trend and be innovators. We are also working to better understand our clients’ needs and offer solutions to help them tackle the complex challenges that they face. We are doing this today through Crawford Innovative Ventures and its acquisition of WeGoLook, along with our recently announced partnership with the City of Hartford’s InsurTech Hub. Our goal is to drive innovation in the claim settlement process, in order to not only deliver value to our clients in the form of improved customer satisfaction and service, but also improved market share and profitability for Crawford. Our recently launched TruLook Solution is an important example. TruLook utilizes WeGoLook the initial claims process and determine whether an adjusters actually necessary to handle the claim. TrueLook also utilizes Contractor Connection on the backend, and thereby, providing an integrated solution and elevating the claim settlement process from an art to a science, and ultimately, resulting in improved speed of service, accuracy, and importantly, improved profitability to our clients and Crawford. We want to own the market and represent the complete claim solution through one Crawford & Company. We’re also working to launch new intelligent and integrated solutions for our clients’ focus on specific industry. These solutions are an embodiment of our depth of experience, technology and innovation that we can grow upon to efficiently and effectively solve long-standing industry problems. Our recently launched Total Construction Solution is focused on the construction industry and is the first of many verticals to follow. Crawford’s Total Construction Solution represents the most comprehensive offering available to this industry in an unparalleled approach to fitting the unique needs of our construction clients. Crawford Construction Solution will be driven by our TPA capability in Broadspire with dedicated construction account management, builders risk, jurisdiction-specific worker’s compensation and forensic accounting capabilities, contractor emergency services and large loss with better solutions to handle the entire spectrum of construction industry claims. With this new solution, Crawford has a truly integrated approach to client service that extends worldwide. As you can see, technological innovation continues to drive the markets we serve in our investments and digital solutions, data analytics and intelligent products are differentiating us in the eyes of our clients. We are now leveraging advanced data analytics to drive superior financial outcomes for our clients. For example, we’re applying predictive analytics to accelerate the closing and improve the outcomes of mitigated claims, increase medical billing savings and achieve faster return to work metrics or worker’s compensation claims. Beyond new innovative solutions, we will also explore opportunities to increase the penetration of our industry-leading services across the world as we move to global service lines. A good example of this is our recent expansion of our service offering in Australia to include worker’s compensation, which will be delivered through Broadspire and will complement our existing professional claim solutions, which are already well established in the country. This is, but one example, of the many opportunities that we are identifying as part of our move to global service lines. To conclude, this is an exciting time at Crawford. We have achieved financial stability through our focus and cost control as evidenced by the improved profitability that we have achieved in our U.S. Services, International and Broadspire businesses. Looking forward, our move to global service lines, combined with our investment and innovation, will position Crawford to deliver sustained revenues and earnings growth, which is our team’s number one priority. I would now like to turn the call over to Bruce to review the financial results for the fourth quarter in more detail.

Thank you, Harsha. Company-wide revenues before reimbursements in the 2017 fourth quarter were $298.8 million, up 10% compared with $272.4 million in the prior year’s fourth quarter. Before reimbursements, cost of services provided totaled $213.3 million or 71.4% of revenues in the 2017 fourth quarter, compared to $193.1 million or 70.9% of revenues in the prior year period. The company’s selling, general and administrative expenses, totaled $64.7 million, up from $61.7 million in the prior year quarter. As a percentage of revenues, these costs decreased to 21.6% of revenues in the 2017 fourth quarter from 22.6% of revenues in the prior year quarter. During the 2017 fourth quarter, the company recorded a non-cash goodwill impairment charge of $19.6 million or $0.22 per share after tax related to its GCG segment. This charge had no effect on the company’s credit agreement, liquidity or operating results. Also, during the 2017 fourth quarter, the company recorded restructuring and special charges of $3.3 million or $0.04 per diluted CRD-B share after tax, compared to $2.1 million or $0.02 per share in the 2016 quarter. These charges were associated with cost-reduction activities in our various operations and lease termination costs. Lastly, during the 2017 fourth quarter, the company recorded the initial estimated impact associated with the enactment of U.S. tax reform of $3.8 million or $0.07 per share, primarily related to the preliminary calculation of the transition tax and remeasurement of deferred tax balances. The company does not anticipate any cash taxes to be paid associated with the transition tax. The estimated 2017 impact of U.S. tax reform enactment is subject to adjustment throughout 2018 as the company completes its calculations and files its 2017 tax returns. Our net income attributable to shareholders of Crawford & Company totaled a loss of $2 million in the 2017 fourth quarter compared to income of $7.8 million in the 2016 period. Fourth quarter 2017 diluted earnings per share were a loss of $0.0.3 for CRD-A and $0.05 for CRD-B, compared to earnings of $0.14 for CRD-A and $0.13 for CRD-B in the 2016 period. On a non-GAAP basis before restructuring costs, special charges, goodwill impairment charges and the estimated impact of U.S. tax reform in the 2016 and 2017 periods as applicable. Fourth quarter 2017 diluted earnings per share were $0.30 for CRD-A and $0.28 for CRD-B, compared to non-GAAP diluted earnings per share of $0.17 for CRD-A and $0.15 for CRD-B in the 2016 period. I will now review the fourth quarter performance of each of our business units, starting with the U.S. Services segment. Revenues from the U.S. Services segment totaled $84.8 million, up significantly from the $57.4 million reported in last year’s quarter, primarily as a result of revenues from Hurricanes Harvey, Irma and Maria as well as acquired revenues from WeGoLook. Operating earnings in our U.S. Services segment were $9.5 million in the 2017 fourth quarter or 11% of revenues, compared to operating earnings of $7.7 million or 13% of revenues in the prior year quarter. Margins declined primarily as a result of higher operating expenses related to the expansion of WeGoLook. Revenues generated by our catastrophe adjusters in the U.S. totaled $35.5 million in the 2017 fourth quarter more than doubling the $15.4 million in the 2016 quarter. The revenue increase for the 2017 quarter was primarily driven by our response to the recent hurricanes, partially offset by lower revenues from a project-based outsourcing contract with a major U.S. insurance carrier. International revenues increased to $118.9 million from $116.8 million in the 2016 period, largely due to increased catastrophe related volumes. The change in the U.S. – in the UK customer contract discussed last quarter, which changed our revenue presentation for certain contracts from a growth to a net basis reduced revenues by $5.6 million during the 2017 fourth quarter. However, this change had no impact on operating earnings. Changes in foreign exchange rates increased revenues in the quarter by $4 million, reversing the FX trend we have seen through the first three quarters of 2017. International operating earnings were $17.6 million during the current quarter, increasing from last year’s fourth quarter operating earnings of $11.4 million. The operating margin in this segment was 15% in the 2017 quarter compared to 10% in the 2016 fourth quarter. Broadspire revenues were $78.6 million in the 2017 fourth quarter, increasing from $74 million in the prior year quarter, as a result of growth in our worker’s compensation, liability and disability product lines. Operating earnings in Broadspire totaled $8.5 million or 11% of revenues in the 2017 fourth quarter compared to operating earnings of $6.5 million or 9% of revenues in the 2016 fourth quarter. Garden City Group revenues totaled $16.5 million in the 2017 fourth quarter, decreasing from $24.2 million in the prior year quarter. This revenue decrease was largely related to reduced levels of work on certain large projects, which were continuing to wind down during the 2017 period, and new cases with lower anticipated settlement values. The operating loss totaled $2.1 million in the 2017 fourth quarter compared to operating earnings of $1.2 million in the prior year period. The operating margin in this segment was negative 13% in the 2017 period, down from 5% in the 2016 quarter. Our backlog at the end of the 2017 fourth quarter was $66 million, down from $81 million at the end of the 2016 quarter. The company’s cash and cash equivalent position at December 31, 2017, totaled $54 million as compared to $81.6 million at the 2016 year-end. Our investment in unbilled and billed receivables has increased by $27.5 million during 2017, reflecting higher receivables in International and U.S. Services, driven by revenue increases from recent catastrophic events. Goodwill and Intangible Assets increased by net of $15.4 million, reflecting the goodwill reported for the WeGoLook acquisition, partially offset by the $19.6 million impairment charge related to GCG’s goodwill recorded this quarter. Pension liabilities decreased by $18.1 million, reflecting cash contributions made in the U.S. and U.K. during 2017 and year-end mark-to-market accounting adjustments. Our total debt increased in 2017 by $37.7 million, primarily as a result of the funding of the WeGoLook acquisition and growth in working capital needs. Cash provided by operations totaled $40.8 million for the 2017 period, compared to $98.9 million provided by operations in the prior year period. This decrease was primarily due to growth in billed and unbilled accounts receivable balances and other higher working capital needs in 2017. Free cash flow declined by $73.8 million year-over-year. During the 2017 fourth quarter, the company repurchased 150,000 shares of CRD-A and 12,592 shares of CRD-B at an average cost of $8.30 and $8.75, respectively. During the full year 2017, the company repurchased approximately 700,000 shares of CRD-A and 188,000 shares of CRD-B at an average coast of $8.21 and $8.88 per share respectively. Let me now review the initial guidance for 2018. As Harsha mentioned previously, our outlook for GCG is depressing the growth we expect in our other business lines during 2018, and as a result, our initial guidance range of earnings reflect this headwind. The company is not anticipating restructuring cost or special charges during 2018. Guidance includes the impact of U.S. tax reform and our estimated effective tax rate of 31.7%. Our 2018 guidance is as follows. Consolidated revenues before reimbursements between $1.12 billion and $1.14 billion. Net income attributable to shareholders of Crawford & Company between $43 million and $48 million or $0.78 to $0.88 per diluted CRD-A share and $0.71 to $0.81 per diluted CRD-B share; consolidated operating earnings between $85 million and $95 million; and consolidated adjusted EBITDA between $127 million and $137. In order to provide historical context, the company will be providing restated historical quarterly results in the new operating segment format, prior to filing its first quarter 2018Form 10-Q. With that, I would like to turn the call back to Harsha for any concluding remarks.

Thank you, Bruce. This is an exciting time in Crawford’s more than 75 year history, as we have clearly accomplished six key goals. First, we reorganized Crawford into global service lines, which will position our solution-based sales teams to take market share and deliver revenue growth. Second, we successfully reduced our cost structure and streamlined our company. Third, we refreshed our core mission and values, which drives everything that we do as a company. Fourth, we recruited experienced senior leadership. Fifth, we launched new products and services, which will position Crawford as an innovator as technology continues to disrupt the industry. And finally, we position the company to achieve our longer-term target of 5% revenue growth and 15% earnings growth annually. Anything less from my team and I would not be expectable. Thank you again for your time today. Operator, please open the call for questions.

[Operator Instructions] And your first question – caller, please go ahead. Katelyn Young, please go ahead with your questions. Jack Wang, your line is open.

Hi, good morning. My first question is, do you guys have any – could you guys provide any updates to the gross outlook for Contractor Connections, please?

Sure. Contractor Connection’s growth outlook is robust. As you already may know, we are scaled up quite a bit in the U.S. We’re scaling in Canada as well as the U.K. and Australia. And I’m pleased to tell you that we’ve successfully launched Contractor Connection operations in Germany. And so having said that, Contractor Connection continues to have robust growth and a potential going forward that’s very promising.

Okay, thank you. And also, I’d like to ask what new specific steps are you – being taking to turn around GCG? Also, you said in the past that return to profitability should take several quarters to achieve, any changes to that outlook? And I’m assuming, maybe optimistically, by the end of this year, going in the next year?

Sure. So first of all I think my statement of – it’ll take several quarters is true, and we’re working through it. You have to remember, when we had a large case like Deepwater Horizon, and as that started to scale down, we had to get the infrastructure aligned to the current run rate post the large plays – the large case. So we’re going through that. In addition to that, we also have a higher close rate now than we had even in the past, where we’re winning a larger number of cases. The issue is the cases we’re winning are generally smaller in size, and we’re working on, if you will, obtaining larger cases. The market does have the larger cases – available has gone down a little bit. In addition to all this, I would also say that we’re rolling out a new system that will replace our legacy systems, and therefore, should lower the cost for us and our clients, that will make a difference. And also, we are getting into new areas of offering solutions and services. Case in point is we’re offering crisis management [indiscernible] in the data breach area or in the product recall area, both of those simultaneously. And finally, a very important point to note. Two years ago, we went through a management change at the top, and we are successfully retaining all of our market clients, and in fact, our backlog looks robust and promising going forward.

Understood, thank you. And then finally – and finally, are you seeing any changes to the rate of adoption for WeGoLook?

We are increasing the rate of adoption. Our Crawford Claims Solutions, particularly, in the U.S., followed by Canada, is now partnering with WeGoLook on multiple fronts, as we’re providing solutions to the carriers. WeGoLook steps right in behind the first notice of loss, and actually it speeds up the claim, reduces – as I have mentioned in my prepared remarks, our process called TruLook is reducing the cost of the claim for the carrier and increasing, if you will, the promptness and the quality of the claims’ resolution, which is central to our DNA. That was originally said, interestingly, by our Founder, Jim Crawford, and we’re following it to date, 76 years later.

Got it. Thank you very much. That’s all I have.

Thank you.

Thanks, Jack.

And your next question is from Katelyn Young with William Blair.

Hi, good morning, everybody.

Good morning.

Hey Katelyn.

Hi, sorry about that. Thanks for the questions. First one, looking back on 2017, obviously, a large weather year. How much of 2017 EPS would you say is weather-related? And how do you think about baking weather into – between 2018 guidance?

Yes, so first of all, I would say, when you use the word weather-related, you’re probably meeting the CAT events.

Yes.

And I would say, the CAT events last year, and that is primarily in the fourth quarter, did give us a few cents of EPS, but that’s not the real issue. What it really tested us is how adept we are at handling large CAT events. We were able to mobilize a global adjuster workforce to deploy against Harvey, Maria, Irma, and most recently, Riley, and actually, Quinn, which is right now, going on somewhere in New England, as we speak. So having said that, it did give us some earnings lift. But I think I wouldn’t be too focused on that as much as we we’re able to prove, not only to existing clients, but new clients who came on with a large amount of activity that we were able to deliver on target and we do believe that this CAT business has a lot of potential for Crawford & Company to continue to grow forward.

Great, thank you. And then around the Garden City Group. Understand that group has been pressured, margins are taking, at least, a couple of quarters to turn around. I guess, what has changed in your outlook of this segment, say, versus a year ago that prompted the goodwill write-down? And, I guess, what’s different in terms of thinking about the next couple of years for that segment?

Sure. I think the only change that I see in the market is, there are fewer larger cases available as much as, say, five years ago. They are a flow of smaller cases. Having said that, I think the market is still robust, and we’re having a very good close rate. But I think we need to use more and more one technology to scale the solution, and also gives us more variability in our cost structure. So as large cases come and go, we’re able to bring our cost structure up and down, so therefore, handling, if you will, the size of case appropriately. We do believe, long-term, that GCG should be 10-plus percent margin moving forward, once all of the noise settles.

Got it, thank you. And last question just on the tax rate for 2018, this 31.7%. I guess you would’ve expected it to be a little lower, what are kind of the high-level determinants that got you guys that number?

Right, so this is Bruce. The U.S. federal rate went down to a 21% from 35%, but that’s just the U.S. rate. So about half of our income comes out of the U.S. So we certainly see a benefit there. From the – to that 21% rate, you have to then add in the states. And so the state rate is going to be around 6%. And then, you have to consider the foreign aspects. A key change this year compared to prior years is, it used to be the U.S. with the high – one of the highest tax jurisdictions in the world, now it’s one of the lowest. So when we look at the composition of our international income, a lot of those countries have rates that are higher than the U.S. So that adds to our effective tax rate. If we look at 2017 and back out the one-time benefit we got from some international tax planning and the impact of tax reform and the goodwill impairment, our effective tax rate was about 37% or so. So we’re going to see close to a 6% drop on an apples-to-apples basis in our ETR in 2018.

Got it. That’s helpful. Thank you very much.

Thank you.

[Operator Instructions] Your next question is from the line of Mark Hughes with SunTrust.

Yes, thanks. Good morning.

Good morning, Mark.

What the – I don’t know whether I had – I jumped on late. But the – Bruce, did you give any thoughts on expected cash flow this year? It’s been kind of a little more volatile the last couple of years. What do you think about – thinking about 2018?

Yes, we’re not, specifically, giving guidance on operating cash flow, but what I would tell you is that directionally, we expect to see a significant improvement over where we ended 2017. At the end of 2017, we had a fair amount of receivables hung up on the balance sheet related to our catastrophe work. And so that should all come in and get collected this year. And we think that, that’s going to provide a little bit of the tailwind to us from an operating cash flow perspective. But directionally, we expect some significant improvement in 2018 over our 2017 levels.

Mark, one other piece is, we as a executive team is very focused on free cash flow generation. So we should have 2018 – should be definitely a better year as we move forward, only because we do believe free cash flow will be the long-term indicator of health for any company, so we’re very focused on that.

Bruce, I’m not sure if you were able to respond to the point about the – when we think about weather contribution this year above the normal kind of trend in terms of the catastrophes. We’re just thinking this is, obviously, unusually, a large year in terms of CAT losses. Is there any way to quantify that? How many sense of earnings or proportion of your net income that might’ve been kind of above trend?

Yes, I think that if you look at hurricanes Harvey, Irma and Maria, and the contribution we got there is probably about $0.04 or $0.05.

Okay. And then on the Broadspire. Yes, you’ve been working to try to rollout [indiscernible] more of a disability offering as a compliment to your workers comp. Any commentary on the progress there? I’m not sure whether you touched earlier on kind of your overall backlog and thoughts about growth within Broadspire, but I’m curious as to the broader question, and specifically, about your progress on disability?

Sure, I think, Mark, this is Harsha. We’re continuing to ramp up disability. There’s no question. And we are also targeting, if you will, certain sectors, quite focused and heavily to go after disability. So our narrowing of the focus will actually help us and to start driving more market share there. Having said that, the other lines of business, whether workers comp or medical management within Broadspire, also continue to grow robust.

Just a question about the economics of the catastrophe claims. $0.04 to $0.05 is a good contribution, but it’s not overwhelming. Have the economics changed there? Is there more of the upside being captured by adjusters? Is there, perhaps, more competition on these large catastrophes?

Yes, let me respond to that. I think the $0.04 or $0.05 is not stellar necessarily but it was reasonably good. But I would say that we did err purposefully, on the side of delivering, not just meeting expectations, but exceeding expectations to our clients, because it was a multi-CAT event situation. Now in addition to that, we did not hesitate to bring in our adjusters from overseas. There is a real pressure, more than competition, it’s a demand/supply shift between adjusters and independent claims providers. So we had to take on a little more cost than we typically would. But having said that, I think it was worthwhile because we have established ourselves as a serious player in the CAT business. We also understood some of our own weaknesses through that process, and therefore, have strengthened it. Mark, an interesting point to note, even though there were four or five large CAT events, there are literally hundreds of very small CATs, all over. And we have now have a system that we can capture, a lot of that activity and actually generate a decent margin.

Thank you very much.

Thank you, Mark.

And we have no further questions.

Yes, thank you very much for the time today, and I appreciate everybody listening in. One last thing. Thank you to all of the Crawford employees globally for a very good 2017, and looking onward and upward to 2018. Goodbye.