Good morning. My name is Dennis, and I will be your conference facility today. At this time, I'd like to welcome everyone to the Crawford & Company Second Quarter 2023 Earnings Release Conference Call. In conjunction with this call, a supplementary financial presentation is available on our website at www.crawford.com under the Investor Relations section. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded today, Friday, August 1, 2023. Some of the matters to be discussed in this conference call and in the supplementary financial presentation may include forward-looking statements and involve risks and uncertainties. These statements may relate to, among other things, our expected future operating results and financial condition, our ability to grow revenues and reduce our operating expenses, expectations regarding anticipated contributions certain the fund defined benefit pension plans, collectability of our billed and unbilled accounts receivable, financial results from our recently completed acquisitions, our continued compliance with financial and other covenants contained in our financing agreements, our 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 to 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 to occur after the date of the call or to reflect the occurrence of 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, which could affect the company's financial performance, please refer to the company's Form 10 securities and excision, particularly the information under the headings Risk Factors and Management's Discussion and Analysis of financial conditions and results of operations as well as subsequent compact filings with the SEC. This presentation also includes certain non-GAAP financial measures as defined under SEC rules. As required, reconciliation is provided for those measures to the most really comparable GAAP measures. I would now like to introduce Mr. Rohit Verma, Chief Executive Officer of Crawford.

Good morning, and welcome to our second quarter 2023 earnings call. Joining me today is Bruce Swain, our Chief Financial Officer; and Joseph Blanco, our President. After our prepared remarks, we will open the call for your questions. During Q2, we continued to build upon our strong start to 2023, our sustained momentum taking revenue growth and margin improvement for the company. Before I jump into specific achievements in the quarter, I think it's important to take a moment to step back to highlight our market position and some of the broader trends we're seeing in the business. As many of you know, Crawford continues to strategically scale our business across complementary service offerings within the claims space. We operate globally, manage over $18 billion in claims annually and have approximately 10,000 employees and thousands of field resources. Our customer base is diversified and growing, including a wide spectrum of brand names who are increasingly looking to Crawford as a claims solution to low single digits. Clearly, we have a large market opportunity in front of us. There are some important growth drivers that support our confidence in the long-term opportunity before us. First, natural catastrophes are becoming more prevalent, and our services are increasingly called for as carriers and other providers need increased resources to help policyholders recover in the aftermath. Importantly, we do not take us patents continue to get more frequent and more severe. Rather, we work with carriers, self-insured corporations and captives to deliver outsourced claim solutions that offer expertise, timeliness, scale, proximity and most of all, quality of service that is representative of their brand and the outsourcing of claims processing. P&C margin pressure is leading to more outsourcing of major and complex claims, and there is a greater need for a more nimble and…

Thanks, Rohit. As most of you know, we reported our business in 4 operating segments. North America loss adjusting encompasses primarily our loss-adjusting business in the U.S. and Canada. Our international operations is comprised of all reported service lines outside of North America. Broadspire's our TPA in the U.S. and platform solutions includes contractor Connection, our networks business, including catastrophe and WIGO -- look as well as our subrogation business. As you can see, revenue contribution is fairly evenly spread North America loss adjusting, we achieved revenues of $75.8 million, representing 15% year-over-year revenue growth. Operating earnings were $3.9 million, and we expanded our margin by 112 basis points. Strength in the quarter was driven by specialist adjuster additions as Crawford continues to seek and secure the highest quality industry talent. Additionally, Q2 revenue increases are attributed to new account nominations and optimum storm activity. We continue to see progress in our International segment, where second quarter revenue was $95.3 million and operating earnings were $3.7 million, noted $4 million year-over-year, and margins expanded by 463 basis points. Our ability to significantly improve operating metrics is a direct result of our actions to improve pricing and productivity as well as simplifying our cost structure. We saw growth in our U.K. TPA business and large loss performance in Latin America with continued volume improvement in Brazil and Peru. Our Australian business continues to see benefits from the tail of 2022 cat activity. For Europe, revenue growth was primarily attributed to growth in high-margin areas, including Holland and the middle in Europe, helped drive increased margins. As Rod mentioned, we remain focused on enhancing organic growth in this segment. Looking at our Broadspire business, Q2 revenue grew 5%. Medical management services continued to perform well with revenues growing 7% as we saw sales momentum in alternative markets and data and analytical services. Our innovative technology, including advanced data analytics and predictive modeling this year-to-date platform Solutions also delivered strong results with double-digit revenue growth of 22% over the continue to deepen our relationships with 2 of the top 5 carriers in our property and flood businesses. We are expanding relations now with a third carrier in this space and are excited about the prospects, fitting from pricing actions and improved utilization, along with continued market share gains, and our subrogation business had a stellar quarter. With that, let me turn the call over to Bruce for a deeper look at our financial performance.

Thank you, Joseph. Company-wide revenues before reimbursements in the 2023 second quarter were $320.7 million, up 9% from $293.3 million in the prior year second quarter. Foreign exchange rates decreased revenues before reimbursements by $7.5 million or 3%. On a constant dollar basis, revenues before reimbursements totaled $328.1 million, increasing 12% compared to the 2022 second quarter. GAAP net income attributable to shareholders totaled $8.4 million, increasing 45% from $5.8 million in the same period of 2022. The GAAP diluted EPS in the 2023 second quarter was $0.17 for both CRD-A and CRD-B compared to $0.12 for both share classes in the 2022 period. On a non-GAAP basis, second quarter 2023 diluted EPS was $0.24 for both CRD-A and CRD-B compared to $0.15 for boat share trading earnings totaled $22.8 million in the 2023 second quarter or 7.1% of revenues, up 85% from $12.3 million or 4.2% of revenues in the prior year period. Consolidated adjusted EBITDA was $31.5 million in the 2023 second quarter or 9.8% of revenues compared to $21.2 million or 7.2% of revenues in the 2022 quarter. I will now review the second quarter performance for each of our segments. North America loss adjusting revenues totaled $75.8 million from $65.8 million reported in last year's quarter due to the continued addition of expert adjusters in the segment and the impact to $3.9 million in the 2023 second quarter, increasing from $2.6 million reported in last year's quarter. The operating margin was 5.1% in the 2023 quarter compared to portal operations revenues totaled $95.3 million in the 2023 second quarter, up 1.7% from $93.7 million reported in last year's quarter, including $600,000 from the Van Dijk acquisition. On a constant dollar basis, International revenues totaled $101.5 million, growing 8.3% over last year's quarter. The segment reported operating…

Thank you, Bruce. This quarter reinforces our confidence in the long-term strategy we're implementing at Crawford, the company's financial strength and liquidity provides us with the flexibility to grow our market share as we continue to invest in our industry-leading capabilities. These top quality services differentiate us as a reliable and trusted partner, which is of critical importance in a landscape where higher volume of cat events. Crawford is an industry leader in the next-generation insurance Tech capabilities, a very exciting opportunity for us, reflected in the strong growth we're seeing in our platforms revenue, and we will continue to leverage new and existing customer relationships in order to create deeper and more durable partnerships. This is an exciting time to be part of Crawford, and as we advance through 2023, we'll continue to work towards driving shareholder value while delivering top quality services promptly for our customers. Thank you for your time today. Anders, please open the call for questions.

Thank you, Mr. Verma. [Operator Instructions]. The first question comes from Mark Hughes with Truist.

Yes. Thank you. Good morning. How much of the momentum in your business do you think is being spurred by just the harder on carriers, how much is that contributing to the good momentum you're seeing? Mark?

I think it's a factor. As you know, inflation environment per se doesn't change for us and it just doesn't change the business. We do have some parts of our business that are impacted by inflation. But as a macro trend, I don't think that is what's impacting our business. I do think that as the property market is putting pressure on our cloud comes better, and I think they're increasingly looking towards us to help them with that. So I do see that as a factor.

You had mentioned more outsourcing of complex claims. Could you talk a little bit more about that? Is there -- how do you gauge that? I know you're seeing your own flow of business, that's kind of intriguing point.

Yes. I think 3 things. Number one, as severe convective storms have increased in the U.S., we're seeing more and more attention of the claims adjusters inside the organizations focused on those, and that's creating a -- and a lot of times, those are the large and complex claims because they just have a longer trajectory. Second factor that I believe is that there are just more large and complex claims period, right? The number of $1 billion buildings that you had in the world is more today than it was 2 years ago or 3 years ago. So I think that there is just that frequency, and then the third thing is that the complexity of claims is not just increasing because of the value but also because of the structure is that are being written with multiple carriers using quota shares or layers as opposed to before where the capacity was more easy to come. So I think those are the 3 biggest factors that are creating more outsourcing of the large and complex claims.

So the complexity of the claim just because you've got more participants in the coverage tower leads to Yes.

Any time you have more than one participant in a coverage tower, the general rule is to bring an independent adjuster in the mix.

Yes. Okay, and then you had mentioned in Broadspire part opportunities. Could you expand on that?

Yes. I think it's -- that is also related to what we're seeing in terms of market trends. We're seeing more and more business moving to alternative markets and alternate markets, we define as MGAs, MGUs, captives, sort of other instruments that are being used by risk-bearing entities, both from a distribution perspective as well as sort of risk transfer, and in a lot of cases, those new sort of entrants don't have the claims capabilities and are relying on providers like us to provide those claims capabilities. We think it's an attractive segment. We also think it's a segment which is less price sensitive than, say, at the corporate segment and is looking for more technology and more value. So -- and we are well positioned to take charge of that segment.

Then one final one, you mentioned in networks to in the top 5, top 10? And does it...

I would say top 10. I don't have the best list in front of me, so I can't tell you if they're top 5 or not, but they're definitely top 10.

Yes, and do you think those will scale like -- or that will scale like the other 2 have?

That's our intention to scale it. But as you know, with a lot of these large clients, it takes time to scale as we've shared that with you all before.

Your next question comes from Kevin Stein with Barrington Research.

You talked about continued investments in technology and leading the technology revolution for the industry. Just wondering what you're seeing from the competition? I mean, if you feel like you're continuing to build a competitive differentiation through those investments, and when you go out and competing for new business, how much of a differentiator your technology investments have been.

Sure. Kevin, we are extremely excited about this space. We definitely believe that it is a competitive advantage for us. We don't believe that we're seeing the same thing from our traditional competitors as much as we have seen that from more of what I would call insurance tech competitors and because of what's happening in the capital markets broadly, and as our name, our expertise and claims space already is giving us the edge to sort of push forward on these technology solutions. And because of our history, because of our brand, because of our expertise very good about the progress that we're making here, and we certainly believe that a lot of the business that we're winning, as an example in our broad spa unit can be attributed to our superior technology capabilities in that space.

Okay, great. I wanted to just get an update on your hiring of specialist adjusters. I think you talked about last quarter surpassing that goal of 200 hires and if you're continuing to make progress there? And maybe just talk about if your platform is really something that's helping to attract your stability and your expertise and client relationships, et cetera.

Yes. When in 2020, we set our strategy, and we set our vision, a critical element of our vision was to be the place where experts want to be. So we've been investing a lot in our culture, in our approach to people to be a place where experts want to be, and yes, we had this target that we surpassed in Q1 that we had targeted to surpass by Q4 of this year. But we're not slowing down -- we are into our business. Even in Q2, we added additional experts. So we don't see that slowing down. Yes, certainly, we're getting to a point where we -- within markets, there are not -- no longer are there that many experts left for us to attract, but we're also starting to build our own quite a bit now. So we're investing quite a back experts from the outside, but build and develop experts and then retain them to be part of the Crawford family.

The development of experts, internally standpoint Or, are the investments in growing them similar to maybe trying to attract experts from the outside.

When we say growing them from within, it is about giving them the exposure and the experiences that they need to become experts. It is about mentoring and coaching them for them to become experts. So there's definitely an element of financial investment that comes with it but it's also about a mindset and attitude which is of the organization. At the end of the day, we are an expertise-based organized area that we continue to invest in. As you know, due to the demographics, it's becoming a age is that we're also focused on that for the long-term view of our organization and the industry, we're continuing to bring in new talent into the industry or I would say, talent, which has a significant more runway or tenure left.

Okay. That's great. Maybe just a few questions on the particular segments, you talked about your growth aspirations within international, and you saw a sequential improvement in the quarter and your operating earnings, both on an absolute dollar basis as well as the operating earnings margin. How much more room do you think there is to run, do you think on international profitability in terms of the ability to improve margins in that segment?

Mark, that -- there is still more work to be done, and we're continuing to do the work. We believe that there is absolutely more room in our international set the entire international team is diligently working on that, and over the coming quarters, you should see continued improvement. As you see with our North America business where there can be fluctuations on a quarterly basis just based on volumes coming from either a cat event or onetime project event. We might see something similar to international, but the overall trajectory is towards improved margins. both over the short term as well as over the long term.

Okay. And you just kind of touched on it there, I guess, with the North American -- North America loss adjusting the operating sequentially. Could you just speak to the -- a little bit more to the sequential trend that you saw there?

Yes, so a couple of things that impacted the sequential trend. As you know, we had quite a lot of business that we were carrying into Q1 that was coming from Q4 storm activity. So -- and as you've been working with us, you're aware that typically, we have some costs that are upfront loaded on a cat event. So I think what you saw in Q1 was the costs were more probably in Q4 of last year versus what came into Q1. So you saw Incan continuing to invest in adding more people into our business where we see expertise. We continue to do that in Q2. So there was a little bit of drag that came from that. We also saw some softness in Canada in Q2. Q2 tends to be a quarter for us where we should have seen some strong activity in Canada, which usually gives us around in Canada. So those were probably the biggest factors. I don't know, Bruce, if you want to add anything to that?

No, I think you covered that. I think that's right.

But we're not worried about the margin. I mean, this was -- there was some onetime...

Okay. That's helpful. Maybe speak to contractor connection. It sounds like you had some further momentum there Maybe just how that business is developing. I think you recently added some kind of ramp-up for that business going forward.

Yes. We continue to feel good about the Contractor Connection business. That is one business. As a matter of fact, just referring back to Mark's question before, that does have a positive and gets a positive impact from inflation because of the size of the project. So we feel that business is in good shape. Yes, we've added a new client or we've added several new clients, and we'll continue to do that. As you know, in Contractor Connection, particularly with our larger clients, the change management on the large client side is time consuming. So it takes time for us to hit the run rate, but our goal has been to on-house pull through more assignments for those clients. So again, we feel very good about it, and we feel that the trajectory is solid.

Okay. Great, just lastly, on medical management, you referenced some new business there as well as post-pandemic stability. Just in terms of where you were versus prior where you are prior to the pandemic? Is that kind of just to…

Yes, we're getting there. We're still below -- if we look at our 2019 Q1 and Q2 in 3% to 5% below that level from where we were in 2019, but certainly much better from where we were in Q2 of 2020, 2021, 2022. So we've seen a sequential improvement in our medical management business, but we're still not at that pre-pandemic level. But because of what we've seen in the prior quarters, we feel the trajectory continues to be on the up, and we should pretty soon either get to or eclipse what was their pre-pandemic.

Okay. Great, thank you.

Thank you, gentlemen, there are no further questions at this time. I will turn the conference back to Mr. Verma for closing remarks.

Thank you, Andreas, and thank you to all our employees, clients and shareholders for your continued commitment to Crawford & Company. We look forward to building on a strong second quarter as we move into the second half of 2023, and as always, we wish you well and look forward to taking you along on this journey with us. Thank you, and God bless.

Thank you for participating in today's Crawford & Company conference call. This call will be available for replay beginning at 11:30 a.m. 2023. The conference ID number for the replay is 2038. The #2 dial for the replay is (877) 674-7070 or 416-7648.