10-Q

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the quarterly period ended September 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the transition period from ____ to ____

Commission file number 1-10356

CRAWFORD & COMPANY

(Exact name of Registrant as specified in its charter)


Georgia		58-0506554
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5335 Triangle Parkway
Peachtree Corners, Georgia		30092
(Address of principal executive offices)		(Zip Code)

(404) 300-1000

(Registrant's telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock — $1.00 Par Value	CRD-A	New York Stock Exchange
Class B Common Stock — $1.00 Par Value	CRD-B	New York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

The number of shares outstanding of each class of the Registrant's common stock, as of November 1, 2022, was as follows:

Class A Common Stock, $1.00 par value: 28,556,699

Class B Common Stock, $1.00 par value: 19,848,490

CRAWFORD & COMPANY

Quarterly Report on Form 10-Q

Quarter Ended September 30, 2022

Table of Contents


		Page
Part I. Financial Information

Item 1.	Financial Statements:	3

	Condensed Consolidated Statements of Operations (unaudited) for the three months ended September 30, 2022 and 2021	3

	Condensed Consolidated Statements of Operations (unaudited) for the nine months ended September 30, 2022 and 2021	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and nine months ended September 30, 2022 and 2021	5

	Condensed Consolidated Balance Sheets (unaudited) as of September 30, 2022 and December 31, 2021	6

	Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2022 and 2021	8

	Condensed Consolidated Statements of Shareholders' Investment (unaudited) as of and for the three months ended March 31, June 30 and September 30, 2022 and 2021	9

	Notes to Condensed Consolidated Financial Statements (unaudited)	11

	Report of Independent Registered Public Accounting Firm	28

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	29

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50

Item 4.	Controls and Procedures	51

Part II. Other Information

Item 1A.	Risk Factors	52

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52

Item 6.	Exhibits	53

Signatures		54

Part I — Financial Information

Item 1. Financial Statements

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited


	Three Months Ended September 30,
(In thousands, except per share amounts)	2022			2021
Revenues:

Revenues before reimbursements	$	294,924		$	288,500
Reimbursements		11,493			9,062
Total Revenues		306,417			297,562

Costs and Expenses:

Costs of services provided, before reimbursements		221,233			211,017
Reimbursements		11,493			9,062
Total costs of services		232,726			220,079

Selling, general, and administrative expenses		62,983			60,759

Corporate interest expense, net of interest income of $191 and $0, respectively		2,903			1,648

Goodwill impairment		36,808			—

Total Costs and Expenses		335,420			282,486

Other Income, net		465			902

(Loss) Income Before Income Taxes		(28,538	)		15,978

(Benefit) Provision for Income Taxes		(13,286	)		4,866

Net (Loss) Income		(15,252	)		11,112

Net Loss Attributable to Noncontrolling Interests		108			83

Net (Loss) Income Attributable to Shareholders of Crawford & Company	$	(15,144	)	$	11,195

(Loss) Earnings Per Share - Basic:
Class A Common Stock	$	(0.31	)	$	0.21
Class B Common Stock	$	(0.31	)	$	0.21

(Loss) Earnings Per Share - Diluted:
Class A Common Stock	$	(0.31	)	$	0.20
Class B Common Stock	$	(0.31	)	$	0.21

Weighted-Average Shares Used to Compute Basic Earnings Per Share:
Class A Common Stock		28,553			30,711
Class B Common Stock		19,848			22,407

Weighted-Average Shares Used to Compute Diluted Earnings Per Share:
Class A Common Stock		28,553			31,954
Class B Common Stock		19,848			22,407

(See accompanying notes to condensed consolidated financial statements)

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited


	Nine Months Ended September 30,
(In thousands, except per share amounts)	2022			2021
Revenues:

Revenues before reimbursements	$	867,294		$	809,138
Reimbursements		30,564			27,124
Total Revenues		897,858			836,262

Costs and Expenses:

Costs of services provided, before reimbursements		644,948			589,375
Reimbursements		30,564			27,124
Total costs of services		675,512			616,499

Selling, general, and administrative expenses		193,222			178,120

Corporate interest expense, net of interest income of $549 and $319, respectively		6,201			4,443

Goodwill impairment		36,808			—

Total Costs and Expenses		911,743			799,062

Other Income, net		1,534			2,676

(Loss) Income Before Income Taxes		(12,351	)		39,876

(Benefit) Provision for Income Taxes		(8,092	)		10,927

Net (Loss) Income		(4,259	)		28,949

Net Loss Attributable to Noncontrolling Interests		41			90

Net (Loss) Income Attributable to Shareholders of Crawford & Company	$	(4,218	)	$	29,039

(Loss) Earnings Per Share - Basic:
Class A Common Stock	$	(0.08	)	$	0.55
Class B Common Stock	$	(0.09	)	$	0.55

(Loss) Earnings Per Share - Diluted:
Class A Common Stock	$	(0.08	)	$	0.53
Class B Common Stock	$	(0.09	)	$	0.54

Weighted-Average Shares Used to Compute Basic Earnings Per Share:
Class A Common Stock		29,397			30,786
Class B Common Stock		20,202			22,438

Weighted-Average Shares Used to Compute Diluted Earnings Per Share:
Class A Common Stock		29,397			31,916
Class B Common Stock		20,202			22,438

(See accompanying notes to condensed consolidated financial statements)

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Unaudited


	Three Months Ended September 30,
(In thousands)	2022			2021
Net (Loss) Income	$	(15,252	)	$	11,112

Other Comprehensive (Loss) Income:
Net foreign currency translation loss, net of tax of $0 and $0, respectively		(7,421	)		(5,529	)

Amortization of actuarial losses for retirement plans included in net periodic pension cost, net of tax of $623 and $657, respectively		1,838			1,908

Other Comprehensive Loss		(5,583	)		(3,621	)

Comprehensive (Loss) Income		(20,835	)		7,491

Comprehensive loss attributable to noncontrolling interests		292			282

Comprehensive (Loss) Income Attributable to Shareholders of Crawford & Company	$	(20,543	)	$	7,773


	Nine Months Ended September 30,
(In thousands)	2022			2021

Net (Loss) Income	$	(4,259	)	$	28,949

Other Comprehensive (Loss) Income:
Net foreign currency translation (loss) gain, net of tax of $0 and $0, respectively		(19,365	)		7,279

Amortization of actuarial losses for retirement plans included in net periodic pension cost, net of tax of $1,895 and $1,987, respectively		5,531			5,737

Other Comprehensive (Loss) Income		(13,834	)		13,016

Comprehensive (Loss) Income		(18,093	)		41,965

Comprehensive loss attributable to noncontrolling interests		345			273

Comprehensive (Loss) Income Attributable to Shareholders of Crawford & Company	$	(17,748	)	$	42,238

(See accompanying notes to condensed consolidated financial statements)

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited


			*
(In thousands)	September 30, 2022		December 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents	$	33,099	$	53,228
Accounts receivable, less allowance for expected credit losses of $9,630 and $8,768, respectively		137,360		134,458
Unbilled revenues, at estimated billable amounts		134,646		118,722
Income taxes receivable		23,099		4,936
Prepaid expenses and other current assets		35,532		34,576
Total Current Assets		363,736		345,920
Net Property and Equipment		28,407		33,721
Other Assets:
Operating lease right-of-use assets, net		96,364		99,369
Goodwill		76,783		116,526
Intangible assets arising from business acquisitions, net		91,285		97,571
Capitalized software costs, net		79,605		75,802
Deferred income tax assets		22,285		21,266
Other noncurrent assets		62,103		62,464
Total Other Assets		428,425		472,998
TOTAL ASSETS	$	820,568	$	852,639

* Derived from the audited Consolidated Balance Sheet

(See accompanying notes to condensed consolidated financial statements)

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS — CONTINUED

Unaudited


				*
(In thousands, except par value amounts)	September 30, 2022			December 31, 2021
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-term borrowings	$	37,696		$	10,704
Accounts payable		42,182			48,470
Accrued compensation and related costs		72,889			96,018
Self-insured risks		14,578			13,222
Income taxes payable		—			1,200
Operating lease liability		23,354			25,238
Other accrued liabilities		60,116			76,884
Deferred revenues		29,876			32,119
Total Current Liabilities		280,691			303,855
Noncurrent Liabilities:
Long-term debt and finance leases, less current installments		219,680			164,315
Operating lease liability		86,556			88,408
Deferred revenues		24,716			23,786
Accrued pension liabilities		10,218			17,892
Other noncurrent liabilities		37,374			42,986
Total Noncurrent Liabilities		378,544			337,387
Shareholders' Investment:
Class A common stock, $1.00 par value; 50,000 shares authorized; 28,557 and 30,996 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		28,557			30,996
Class B common stock, $1.00 par value; 50,000 shares authorized; 19,848 and 20,812 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		19,848			20,812
Additional paid-in capital		78,364			74,229
Retained earnings		230,085			266,369
Accumulated other comprehensive loss		(193,971	)		(180,441	)
Shareholders' Investment Attributable to Shareholders of Crawford & Company		162,883			211,965
Noncontrolling interests		(1,550	)		(568	)
Total Shareholders' Investment		161,333			211,397
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT	$	820,568		$	852,639

* Derived from the audited Consolidated Balance Sheet

(See accompanying notes to condensed consolidated financial statements)

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited


	Nine Months Ended September 30,
(In thousands)	2022			2021
Cash Flows from Operating Activities:
Net (loss) income	$	(4,259	)	$	28,949
Reconciliation of net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization		27,379			30,768
Goodwill impairment		36,808			—
Stock-based compensation		4,218			5,564
Gain on sale of property and equipment		(1,562	)		(38	)
Contingent earnout adjustments		3,246			—
Changes in operating assets and liabilities:
Accounts receivable, net		(9,329	)		(7,352	)
Unbilled revenues, net		(23,537	)		(18,990	)
Accrued or prepaid income taxes		(23,162	)		(8,627	)
Accounts payable and accrued liabilities		(20,612	)		6,798
Deferred revenues		(191	)		2,130
Accrued retirement costs		(1,684	)		(13,243	)
Prepaid expenses and other operating activities		(3,510	)		(5,916	)
Net cash (used in) provided by operating activities		(16,195	)		20,043

Cash Flows from Investing Activities:
Acquisitions of property and equipment		(4,983	)		(5,251	)
Capitalization of computer software costs		(19,933	)		(15,372	)
Proceeds from settlement of life insurance policies		—			4,937
Payments for business acquisitions, net of cash acquired		(26,309	)		(23,141	)
Cash proceeds from sale of property and equipment		3,032			—
Net cash used in investing activities		(48,193	)		(38,827	)

Cash Flows from Financing Activities:
Cash dividends paid		(8,938	)		(9,577	)
Repurchases of common stock		(26,749	)		(6,076	)
Increases in revolving credit facility borrowings		99,952			58,449
Payments on revolving credit facility borrowings		(15,129	)		(31,808	)
Payments of contingent consideration on acquisitions		(2,118	)		(1,683	)
Other financing activities		(87	)		629
Net cash provided by financing activities		46,931			9,934
Effects of exchange rate changes on cash and cash equivalents		(2,351	)		1,123
Decrease in Cash, Cash Equivalents, and Restricted Cash		(19,808	)		(7,727	)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Year		53,689			44,656
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	33,881		$	36,929

(See accompanying notes to condensed consolidated financial statements)

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT

Unaudited

(In thousands, except per share amounts)


	Common Stock												Accumulated			Shareholders' Investment Attributable to
2022	Class A Non-Voting			Class B Voting			Additional Paid-In Capital			Retained Earnings			Other Comprehensive Loss			Shareholders of Crawford & Company			Noncontrolling Interests			Total Shareholders' Investment
Balance at January 1, 2022	$	30,996		$	20,812		$	74,229		$	266,369		$	(180,441	)	$	211,965		$	(568	)	$	211,397
Net income		—			—			—			5,096			—			5,096			60			5,156
Other comprehensive (loss) income		—			—			—			—			(3,290	)		(3,290	)		14			(3,276	)
Cash dividends paid (Class A - $0.06 per share, Class B - $0.06 per share)		—			—			—			(3,114	)		—			(3,114	)		—			(3,114	)
Stock-based compensation		—			—			1,660			—			—			1,660			—			1,660
Repurchases of common stock		(1,498	)		(720	)		—			(13,871	)		—			(16,089	)		—			(16,089	)
Shares issued in connection with stock-based compensation plans, net		89			—			(89	)		—			—			—			—			—
Dividends paid to noncontrolling interests		—			—			—			—			—			—			(258	)		(258	)
Balance at March 31, 2022	$	29,587		$	20,092		$	75,800		$	254,480		$	(183,731	)	$	196,228		$	(752	)	$	195,476
Net income		—			—			—			5,830			—			5,830			7			5,837
Other comprehensive loss		—			—			—			—			(4,841	)		(4,841	)		(134	)		(4,975	)
Cash dividends paid (Class A - $0.06 per share, Class B - $0.06 per share)		—			—			—			(2,920	)		—			(2,920	)		—			(2,920	)
Stock-based compensation		—			—			1,750			—			—			1,750			—			1,750
Repurchases of common stock		(1,159	)		(244	)		—			(9,257	)		—			(10,660	)		—			(10,660	)
Balance at June 30, 2022	$	28,428		$	19,848		$	77,550		$	248,133		$	(188,572	)	$	185,387		$	(879	)	$	184,508
Net income		—			—			—			(15,144	)		—			(15,144	)		(108	)		(15,252	)
Other comprehensive income		—			—			—			—			(5,399	)		(5,399	)		(184	)		(5,583	)
Cash dividends paid (Class A - $0.06 per share, Class B - $0.06 per share)		—			—			—			(2,904	)		—			(2,904	)		—			(2,904	)
Stock-based compensation		—			—			808			—			—			808			—			808
Decrease in value of noncontrolling interest due to acquisitions		—			—			(686	)		—			—			(686	)		(379	)		(1,065	)
Shares issued in connection with stock-based compensation plans, net		129			—			692			—			—			821			—			821
Balance at September 30, 2022	$	28,557		$	19,848		$	78,364		$	230,085		$	(193,971	)	$	162,883		$	(1,550	)	$	161,333

(See accompanying notes to condensed consolidated financial statements)

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT

Unaudited

(In thousands, except per share amounts)


	Common Stock												Accumulated			Shareholders' Investment Attributable to
2021	Class A Non-Voting			Class B Voting			Additional Paid-In Capital			Retained Earnings			Other Comprehensive Loss			Shareholders of Crawford & Company			Noncontrolling Interests			Total Shareholders' Investment
Balance at January 1, 2021	$	30,847		$	22,510		$	67,193		$	265,245		$	(198,856	)	$	186,939		$	(11	)	$	186,928
Net income		—			—			—			6,064			—			6,064			(30	)		6,034
Other comprehensive income (loss)		—			—			—			—			12,590			12,590			(14	)		12,576
Cash dividends paid (Class A - $0.06 per share, Class B - $0.06 per share)		—			—			—			(3,198	)		—			(3,198	)		—			(3,198	)
Stock-based compensation		—			—			1,609			—			—			1,609			—			1,609
Repurchases of common stock		(90	)		(59	)		—			(1,041	)		—			(1,190	)		—			(1,190	)
Shares issued in connection with stock-based compensation plans, net		93			—			(87	)		—			—			6			—			6
Dividends paid to noncontrolling interests		—			—			—			—			—			—			(207	)		(207	)
Balance at March 31, 2021	$	30,850		$	22,451		$	68,715		$	267,070		$	(186,266	)	$	202,820		$	(262	)	$	202,558
Net income		—			—			—			11,780			—			11,780			23			11,803
Other comprehensive income		—			—			—			—			4,031			4,031			30			4,061
Cash dividends paid (Class A - $0.06 per share, Class B - $0.06 per share)		—			—			—			(3,196	)		—			(3,196	)		—			(3,196	)
Stock-based compensation		—			—			1,954			—			—			1,954			—			1,954
Repurchases of common stock		(166	)		(22	)		—			(1,621	)		—			(1,809	)		—			(1,809	)
Shares issued in connection with stock-based compensation plans, net		39			—			250			—			—			289			—			289
Decrease in value of noncontrolling interest due to acquisitions		—			—			(106	)		—			—			(106	)		—			(106	)
Balance at June 30, 2021	$	30,723		$	22,429		$	70,813		$	274,033		$	(182,235	)	$	215,763		$	(209	)	$	215,554
Net income		—			—			—			11,195			—			11,195			(83	)		11,112
Other comprehensive income		—			—			—			—			(3,422	)		(3,422	)		(199	)		(3,621	)
Cash dividends paid (Class A - $0.06 per share, Class B - $0.06 per share)		—			—			—			(3,183	)		—			(3,183	)		—			(3,183	)
Stock-based compensation		—			—			2,001			—			—			2,001			—			2,001
Repurchases of common stock		(275	)		(30	)		—			(2,772	)		—			(3,077	)		—			(3,077	)
Shares issued in connection with stock-based compensation plans, net		165			—			954			—			—			1,119			—			1,119
Dividends paid to noncontrolling interests		—			—			—			—			—			—			(198	)		(198	)
Balance at September 30, 2021	$	30,613		$	22,399		$	73,768		$	279,273		$	(185,657	)	$	220,396		$	(689	)	$	219,707

(See accompanying notes to condensed consolidated financial statements)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

Based in Atlanta, Georgia, Crawford & Company ("Crawford" or "the Company") is the world's largest publicly listed independent provider of claims management and outsourcing solutions to carriers, brokers and corporations with an expansive global network serving clients in more than 70 countries.

Shares of the Company's two classes of common stock are traded on the New York Stock Exchange ("NYSE") under the symbols CRD-A and CRD-B, respectively. The Company's two classes of stock are substantially identical, except with respect to voting rights and the Company's ability to pay greater cash dividends on the non-voting Class A Common Stock than on the voting Class B Common Stock, subject to certain limitations. In addition, with respect to mergers or similar transactions, holders of Class A Common Stock must receive the same type and amount of consideration as holders of Class B Common Stock, unless different consideration is approved by the holders of 75% of the Class A Common Stock, voting as a class. The Company's website is www.crawco.com. The information contained on, or hyperlinked from, the Company's website is not a part of, and is not incorporated by reference into, this report.

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the "SEC"). Accordingly, these unaudited condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. Due to the impact of weather activity, global pandemics such as COVID-19, and other macroeconomic uncertainties, the Company's operating results for the three and nine months ended September 30, 2022 and financial position as of September 30, 2022 are not necessarily indicative of the results or financial position that may be expected for the year ending December 31, 2022 or for other future periods. The financial results from the Company's operations outside of the U.S., Canada, the Caribbean, and certain subsidiaries in the Philippines, are reported and consolidated on a two-month delayed basis (fiscal year-end of October 31) as permitted by GAAP in order to provide sufficient time for accumulation of their results.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments (consisting only of normal recurring accruals and adjustments) considered necessary for a fair presentation have been included. There have been no material changes to our significant accounting policies and estimates from those disclosed in the Company's financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2021 other than as disclosed herein.

In January 2022, the Company realigned its operating segments by moving to a geographic reporting structure consisting of North America Loss Adjusting, International Operations, Broadspire, and Platform Solutions. Certain prior period amounts among the Company’s reportable segments have been reclassified to conform to the current presentation. These reclassifications had no effect on the Company's reported consolidated results. Significant intercompany transactions have been eliminated in consolidation.

The Condensed Consolidated Balance Sheet information presented herein as of December 31, 2021 has been derived from the audited consolidated financial statements as of that date. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

The Company consolidates the liabilities of its deferred compensation plan and the related assets, which are held in a rabbi trust and also considered a variable interest entity ("VIE") of the Company. The rabbi trust was created to fund the liabilities of the Company's deferred compensation plan. The Company is considered the primary beneficiary of the rabbi trust because the Company directs the activities of the trust and can use the assets of the trust to satisfy the liabilities of the Company's deferred compensation plan. At September 30, 2022 and December 31, 2021, the liabilities of the deferred compensation plan were $6,384,000 and $7,060,000, respectively, which represented obligations of the Company rather than of the rabbi trust, and the values of the assets held in the related rabbi trust were $10,043,000 and $9,925,000, respectively. These liabilities and assets are included in "Other noncurrent liabilities" and "Other noncurrent assets," respectively, on the Company's unaudited Condensed Consolidated Balance Sheets.

Noncontrolling interests represent the minority shareholders' share of the net income or loss and shareholders' investment in consolidated subsidiaries. Noncontrolling interests are presented as a component of shareholders' investment in the unaudited Condensed Consolidated Balance Sheets and reflect the initial fair value of these investments by noncontrolling shareholders, along with their proportionate share of the income or loss of the subsidiaries, less any dividends or distributions.

On March 27, 2020, the U.S. enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The Company took advantage of certain aspects of the CARES Act such as the deferral of payroll tax deposits in the U.S., of which $6,481,000 remains deferred until December 31, 2022.

The Canadian government enacted the Canada Emergency Wage Subsidy (“CEWS”) in 2020 to provide a wage subsidy to employers that suffered reductions in revenue resulting from the COVID-19 pandemic. The Company met the eligibility criteria to receive the wage subsidy in the first, second and third quarters of 2021. The wage subsidy is included in "Costs of services provided, before reimbursements” or “Selling, general, and administrative expenses” on the Company's unaudited Condensed Consolidated Statements of Operations, depending on the location of the employees, and is recorded as a reduction of compensation expense. The Company recognized $1,778,000 and $5,850,000 CEWS benefits in the three and nine months ended September 30, 2021, respectively, and no benefits in the 2022 periods. There are no future benefits under the CEWS.

2. Recently Issued Accounting Standards

Adoption of New Accounting Standards

There were no recently issued accounting standards adopted by the Company.

Pending Adoption of Recently Issued Accounting Standards

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification Topic 606. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted and should be applied prospectively to acquisitions occurring on or after the effective date. The Company does not expect to early adopt the accounting standards update. The adoption of this guidance is not expected to have a material effect on the Company's results of operations, financial condition, or cash flows.

3. Revenue Recognition

Revenue from Contracts with Customers

Revenues are recognized when control of the promised services is transferred to the Company's customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Revenues are recognized net of any sales, use or value added taxes collected from customers, which are subsequently remitted to governmental authorities. As the Company completes its performance obligations which are identified below, it has an unconditional right to consideration as outlined in the Company's contracts. Generally, the Company's accounts receivable are expected to be collected in less than two months, in accordance with the underlying payment terms.

The Company's North America Loss Adjusting and International Operations segments generate revenue for adjusting services provided to insurance companies and self-insured entities related to property and casualty losses caused by physical damage to commercial and residential real property and certain types of personal property. These segments also generate revenues for claims management services provided to insurance companies and self-insured entities related to large, complex losses with technical adjusting and industry experts servicing a broad range of industries. The Company charges on a fee-per-claim basis for each optional purchase of the claims management services exercised by its customer. The Company also performs Legal Services within its International Operations segment. Revenue is recognized over time as the performance obligations are satisfied through the effort expended to research, investigate, evaluate, document and report the claim and control of these services is transferred to the customer. Revenue is recognized based on the claim type for fixed fee claims applied utilizing a portfolio approach based on time elapsed for these claims. For claims billed on a time and expense incurred basis, which are considered variable consideration, the Company recognizes revenue at the amount in which it has the right to invoice for services performed. These methods of revenue recognition are the most accurate depiction of the transfer of the claims management services to the customer. Task assignment services are single optional purchase performance obligations which are generally satisfied at a point in time when the control of the service is transferred to the customer. Therefore, revenue is recognized when the customer receives the service requested.

The following table presents North America Loss Adjusting revenues before reimbursements disaggregated by geography for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
U.S.	$	41,161	$	43,276	$	122,438	$	113,999
Canada		25,661		21,058		74,597		62,845
Total North America Loss Adjusting Revenues before Reimbursements	$	66,822	$	64,334	$	197,035	$	176,844

The following table presents International Operations revenues before reimbursements disaggregated by service line for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
UK	$	25,547	$	32,530	$	86,773	$	93,744
Europe		20,535		21,851		68,217		66,802
Australia		24,602		20,131		63,052		58,652
Asia		5,196		4,671		16,376		14,015
Latin America		6,277		5,470		17,674		16,742
International Loss Adjusting	$	82,157	$	84,653	$	252,092	$	249,955

Crawford Legal Services	$	3,909	$	7,235	$	16,956	$	19,669
Total International Operations Revenues before Reimbursements	$	86,066	$	91,888	$	269,048	$	269,624

The Company’s Broadspire segment is a third party administrator that generates revenue through its Claims Management and Medical Management service lines.

The Claims Management service line includes Workers' Compensation, Liability, Property and Disability Claims Management. This service line also performs additional services such as Accident & Health claims programs, including Affinity type claims, and disability and leave management services. Each claim referred by the customer is considered an additional optional purchase of claims management services under the agreement with the customer. The transaction price is specified in the contract and is fixed for each service. Revenue is recognized over time as services are provided as the performance obligations are satisfied through the effort expended to research, investigate, evaluate, document, and report the claim and control of these services is transferred to the customer. Revenue is recognized based on historical claim closure rates and claim type applied utilizing a portfolio approach based on time elapsed for these claims as the Company believes this is the most accurate depiction of the transfer of the claims management services to its customer. Broadspire also provides Risk Management Information Services. For non-claim services provided in our Claims Management and Medical Management service lines, revenue is recognized over time as services are provided and control of these services is transferred to the customer. Revenue is recognized as time elapses as this is the most accurate depiction of the transfer of the service to the customer.

The Company's obligation to manage claims under the Claims Management service line can range from less than one year, on a one- or two-year basis or for the lifetime of the claim. Under certain claims management agreements, the Company receives consideration from a customer at contract inception prior to transferring services to the customer, however, it would begin performing services immediately. The period between a customer’s payment of consideration and the completion of the promised services could be greater than one year. There is no difference between the amount of promised consideration and the cash selling price of the promised services. The fee is billed upfront by the Company in order to provide customers with simplified and predictable ways of purchasing its services and it is customary to invoice service fees when the claim is assigned. The Company considered whether a significant financing component exists and determined that there is not a significant financing component at the contract level.

The Medical Management service line offers case managers who provide administration services by proactively managing medical treatment plans for claimants while facilitating an understanding of and participation in their rehabilitation process. Revenue for Medical Management services is recognized over time as the performance obligations are satisfied through the effort expended to manage the medical treatment for claimants and control of these services is transferred to the customer. Medical Management services are generally billed based on time incurred, are considered variable consideration, and revenue is recognized at the amount in which the Company has the right to invoice for services performed. This method of revenue recognition is the most accurate depiction of the transfer of the Medical Management service to the customer. Medical bill review services provide an analysis of medical charges for clients’ claims to identify opportunities for savings. Medical bill review services revenues are recognized over time as control of the service is transferred to the customer. Revenue is recognized based upon the transfer of the results of the medical bill review service to the customer as this is the most accurate depiction of the transfer of the service to the customer.

The following table presents Broadspire revenues before reimbursements disaggregated by service line for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Claims Management	$	40,275	$	38,326	$	120,252	$	114,028
Medical Management		38,106		37,478		114,697		111,954
Total Broadspire Revenues before Reimbursements	$	78,381	$	75,804	$	234,949	$	225,982

The Company's Crawford Platform Solutions segment principally generates revenues through its Contractor Connection, Networks and Subrogation service lines.

The Contractor Connection service line generates revenue through its independently managed contractor network. Contractor Connection primarily generates revenue by receiving a fee for each project that is sold by its network of contractors. Revenue is recognized at a point in time once the consumer accepts the contractor's proposal as Contractor Connection’s performance obligation of referring projects to its contractors has been completed and the Company is entitled to consideration at that time. The contractor takes control of the service upon the consumer’s acceptance of the contractor’s proposal.

The Networks service line generates revenues for claims management services provided to insurance companies and self-insured entities related to property, casualty and catastrophic losses. Networks also generates revenue by providing on-demand inspection, verification and other task specific field services for businesses and consumers. Revenue is recognized over time as the performance obligations are satisfied through the effort expended to research, investigate, evaluate, document and report the claim and control of these services is transferred to the customer. Revenue is recognized based on the claim type for fixed fee claims, applied utilizing a portfolio approach based on time elapsed for these claims. For claims billed on a time and expense incurred basis, which are considered variable consideration, the Company recognizes revenue at the amount in which it has the right to invoice for services performed. These methods of revenue recognition are the most accurate depiction of the transfer of the claims management services to the customer.

The Subrogation service line provides subrogation recovery and consultative services for the property and casualty insurance industry. Revenue is recognized at a point in time when the subrogation is successful and cash consideration is received.

The following table presents Platform Solutions revenues before reimbursements disaggregated by service line for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Contractor Connection	$	17,453	$	18,592	$	50,112	$	54,643
Networks		40,809		37,882		100,840		82,045
Subrogation		5,393		—		15,310		—
Total Platform Solutions Revenues before Reimbursements	$	63,655	$	56,474	$	166,262	$	136,688

In the normal course of business, the Company's segments incur certain out-of-pocket expenses that are thereafter reimbursed by its customers. The Company controls the promised good or service before it is transferred to its customer, therefore it is a principal in the transaction. These out-of-pocket expenses and associated reimbursements are reported on a gross basis within expenses and revenues, respectively, in the Company's unaudited Condensed Consolidated Statements of Operations.

Arrangements with Multiple Performance Obligations

For claims management services, the Company typically has one performance obligation; however, it also provides the customer with an option to acquire additional services. The Company sells multiple lines of claims processing and different levels of processing depending on the complexity of the claims. The Company typically provides a menu of offerings from which the customer chooses to purchase at its option. The price of each service is separate and distinct and provides a separate and distinct value to the customer. Pricing is consistent for each service irrespective of the other services or quantities requested by the customer. For example, if the Company provides claims processing for both auto and general liability, those services are priced and delivered independently.

Performance-based fees

The Company has contracts with certain clients within its International Operations that provide for additional fee revenues or revenue reductions based on its efficiency in managing claim portfolios and on the basis of claim outcomes and the resulting average claim costs for the respective portfolios. These amounts are in addition to, or a reduction of, the fee revenues discussed above. These performance-based revenues, which represent variable consideration, are based on performance metrics set forth in the underlying contracts. These are generally under multi-year contracts but with discrete individual contract year measurement periods that remain subject to adjustment until claim closure. Each period, the Company bases its estimates of performance-based revenues on an individual contract year basis, which are subject to adjustment in future years based on changes in average claim costs. Accordingly, the amounts represent the Company's best estimate of amounts earned using historical averages and other factors. Because the expectation of the ultimate contingent revenue amounts to be earned can vary from period to period, these estimates might change significantly from quarter to quarter, and such adjustments may occur in future periods until the individual contract year measurement period is closed. Variable consideration is recognized when the Company concludes, based on all the facts and information available at the reporting date, that it is probable that a significant revenue reversal will not occur in future periods.

Contract Balances

The timing of revenue recognition, billings and cash collections result in billed accounts receivables, contract assets (reported as "Unbilled revenues at estimated billable amounts") and contract liabilities (reported as "Deferred revenues") on the Company’s unaudited Condensed Consolidated Balance Sheets. Unbilled revenues is a contract asset for revenue that has been recognized in advance of billing the customer, resulting from professional services delivered that the Company expects and is entitled to receive as consideration under certain contracts. Billing requirements vary by contract but substantially all unbilled revenues are billed within one year.

When the Company receives consideration from a customer prior to transferring services to the customer under the terms of certain claims management agreements, it records deferred revenues on the Company’s unaudited Condensed Consolidated Balance Sheets, which represents a contract liability. These fixed-fee service agreements typically result from the Broadspire segment and require the Company to handle claims on either a one- or two-year basis, or for the lifetime of the claim. In cases where it handles a claim on a non-lifetime basis, the Company typically receives an additional fee on each anniversary date that the claim remains open. For service agreements where it provides services for the life of the claim, the Company is paid one upfront fee regardless of the duration of the claim. The Company recognizes deferred revenues as revenues as it performs services and transfers control of the services to the customer and satisfies the performance obligation which it determines utilizing a portfolio approach.

The Company's deferred revenues for claims handled for one or two years are not as sensitive to changes in claim closing rates since the performance obligations are satisfied within a fixed length of time. Deferred revenues for lifetime claim handling are more sensitive to changes in claim closing rates since the Company is obligated to handle these claims to conclusion with no additional fees received for long-lived claims. For all fixed fee service agreements, revenues are recognized over the expected service periods by type of claim. Based upon its historical averages, the Company closes approximately 98% of all cases referred to it under lifetime claim service agreements within five years from the date of referral. Also, within that five-year period, the percentage of cases remaining open in any one particular year has remained relatively consistent from period to period. Each quarter the Company evaluates its historical case closing rates by type of claim utilizing a portfolio approach and makes adjustments to deferred revenues as necessary. As a portfolio approach is utilized to recognize deferred revenues, any changes in estimates will impact the timing of revenue recognition and any changes in estimates are recognized in the period in which they are determined.

The table below presents the deferred revenues balance as of January 1, 2022 and the significant activity affecting deferred revenues during the nine months ended September 30, 2022:


(In Thousands)
Customer Contract Liabilities	Deferred Revenue
Balance at January 1, 2022	$	55,905
Quarterly additions		19,621
Revenue recognized from the prior periods		(14,682	)
Revenue recognized from current quarter additions		(4,785	)
Balance as of March 31, 2022	$	56,059
Quarterly additions		18,201
Revenue recognized from the prior periods		(15,797	)
Revenue recognized from current quarter additions		(4,497	)
Balance as of June 30, 2022	$	53,966
Quarterly additions		18,947
Revenue recognized from the prior periods		(13,864	)
Revenue recognized from current quarter additions		(4,457	)
Balance as of September 30, 2022	$	54,592

Remaining Performance Obligations

As of September 30, 2022, the Company had $94,831,000 of remaining performance obligations related to claims and non-claims services in which the price is fixed. Remaining performance obligations consist of deferred revenues as well as certain unbilled receivables where the claims processing has not yet occurred. The Company expects to recognize approximately 70% of our remaining performance obligations as revenues within one year and the remaining balance thereafter.

Costs to Obtain a Contract

The Company has a sales incentive compensation program where remuneration is based on the revenues recognized in the period. The remuneration does not represent an incremental cost to the Company that provides a future benefit expected to be longer than one year and would meet the criteria to be capitalized and presented as a contract asset on the Company's unaudited Condensed Consolidated Balance Sheets.

Practical Expedients Elected

As a practical expedient, the Company does not adjust the consideration in a contract for the effects of a significant financing component, when the period between a customer’s payment of consideration and the transfer of promised services to the customer is expected be one year or less at contract inception.

For claims management services that are billed on a time and expense incurred or per unit basis, the Company recognizes revenue at the amount to which it has the right to invoice for services performed.

The Company does not disclose the value of remaining performance obligations for (i) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed, or (ii) contracts with variable consideration allocated entirely to a single performance obligation.

4. Credit Losses

The Company estimates its expected credit losses based on past experience, current conditions and reasonable and supportable forecasts affecting collectability of these assets. We evaluate the risks related to our trade receivables and contract assets by considering customer type, geography, and aging.

5. Income Taxes

The Company's consolidated effective income tax rate may change periodically due to changes in enacted tax rates, fluctuations in the mix of income earned from the Company's various domestic and international operations, which are subject to income taxes at different rates, the Company's ability to utilize net operating loss and tax credit carryforwards, amounts related to uncertain income tax positions and goodwill impairments.

The provision for income taxes on consolidated income before income taxes totaled a benefit of $(13,286,000) and a provision of $4,866,000 for the three months ended September 30, 2022 and 2021. The overall effective tax rate increased to 46.6% for the three months ended September 30, 2022 compared with 30.5% for the 2021 period primarily due to the impact of a partially non-deductible goodwill impairment.

The provision for income taxes on consolidated income before income taxes totaled a benefit of $(8,092,000) and a provision of $10,927,000 for the nine months ended September 30, 2022 and 2021. The overall effective tax rate increased to 65.5% for the nine months ended September 30, 2022 compared with 27.4% for the 2021 period primarily due to the impact of a partially non-deductible goodwill impairment.

6. Defined Benefit Pension Plans

Net periodic benefit related to all of the Company's defined benefit pension plans recognized in the Company's unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021 included the following components:


	Three Months Ended						Nine Months Ended
(in thousands)	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Service cost	$	315		$	302		$	1,006		$	921
Interest cost		3,284			2,858			10,079			8,533
Expected return on assets		(6,250	)		(6,348	)		(19,090	)		(18,968	)
Amortization of actuarial loss		2,501			2,589			7,533			7,760
Net periodic (benefit)	$	(150	)	$	(599	)	$	(472	)	$	(1,754	)

For the three months ended September 30, 2022 and 2021, the non-service components of net periodic pension benefit of $(465,000) and $(901,000), respectively, are included in "Other Income, net" on the unaudited Condensed Consolidated Statement of Operations. For the nine months ended September 30, 2022 and 2021, the non-service components of net periodic pension benefit of $(1,478,000) and $(2,675,000), respectively, are included in "Other Income, net" on the unaudited Condensed Consolidated Statement of Operations. For the nine months ended September 30, 2022, the Company made no contributions to the U.S. defined benefit pension plan and $487,000 to the U.K. defined benefit pension plans, as compared with $9,000,000 of contributions to the U.S. defined benefit pension plan and $526,000 to the U.K. defined benefit pension plans during the nine months ended September 30, 2021, respectively.

7. Net Income Attributable to Shareholders of Crawford & Company per Common Share

The Company computes earnings per share of its non-voting Class A Common Stock ("CRD-A") and voting Class B Common Stock ("CRD-B") using the two-class method, which allocates the undistributed earnings in each period to each class on a proportionate basis. The Company's Board of Directors has the right, but not the obligation, to declare higher dividends on the CRD-A shares than on the CRD-B shares, subject to certain limitations. In periods when the dividend is the same for CRD-A and CRD-B or when no dividends are declared or paid to either class, the two-class method generally will yield the same earnings per share for CRD-A and CRD-B. During 2021 and 2022, the Board of Directors has declared the same dividend on CRD-A and CRD-B.

The computations of basic net income attributable to shareholders of Crawford & Company per common share were as follows:


	Three Months Ended										Nine months ended
	September 30, 2022						September 30, 2021				September 30, 2022						September 30, 2021
(in thousands, except per share amounts)	CRD-A			CRD-B			CRD-A		CRD-B		CRD-A			CRD-B			CRD-A		CRD-B
(Loss) earnings per share - basic:
Numerator:
Allocation of undistributed (loss) earnings	$	(10,647	)	$	(7,401	)	$	4,632	$	3,380	$	(7,797	)	$	(5,359	)	$	11,257	$	8,205
Dividends paid		1,713			1,191			1,839		1,344		5,299			3,639			5,539		4,038
Net (loss) income attributable to common shareholders, basic	$	(8,934	)	$	(6,210	)	$	6,471	$	4,724	$	(2,498	)	$	(1,720	)	$	16,796	$	12,243

Denominator:
Weighted-average common shares outstanding, basic		28,553			19,848			30,711		22,407		29,397			20,202			30,786		22,438
(Loss) earnings per share - basic	$	(0.31	)	$	(0.31	)	$	0.21	$	0.21	$	(0.08	)	$	(0.09	)	$	0.55	$	0.55

The computations of diluted net income attributable to shareholders of Crawford & Company per common share were as follows:


	Three Months Ended										Nine Months Ended
	September 30, 2022						September 30, 2021				September 30, 2022						September 30, 2021
(in thousands, except per share amounts)	CRD-A			CRD-B			CRD-A		CRD-B		CRD-A			CRD-B			CRD-A		CRD-B
(Loss) earnings per share - diluted:
Numerator:
Allocation of undistributed (loss) earnings	$	(10,647	)	$	(7,401	)	$	4,710	$	3,302	$	(7,797	)	$	(5,359	)	$	11,428	$	8,034
Dividends paid		1,713			1,191			1,839		1,344		5,299			3,639			5,539		4,038
Net (loss) income attributable to common shareholders, diluted	$	(8,934	)	$	(6,210	)	$	6,549	$	4,646	$	(2,498	)	$	(1,720	)	$	16,967	$	12,072

Denominator:
Weighted-average common shares outstanding, basic		28,553			19,848			30,711		22,407		29,397			20,202			30,786		22,438
Weighted-average effect of dilutive securities		—			—			1,243		—		—			—			1,130		—
Weighted-average common shares outstanding, diluted		28,553			19,848			31,954		22,407		29,397			20,202			31,916		22,438
(Loss) earnings per share - diluted	$	(0.31	)	$	(0.31	)	$	0.20	$	0.21	$	(0.08	)	$	(0.09	)	$	0.53	$	0.54

Listed below are the shares excluded from the denominator in the preceding computation of diluted earnings per share for CRD-A because their inclusion would have been antidilutive:


	Three Months Ended		Nine Months Ended
(in thousands)	September 30, 2022	September 30, 2021	September 30, 2022	September 30, 2021
Shares underlying stock options excluded	1,542	352	1,542	706
Performance stock grants excluded because performance conditions have not been met (1)	816	396	759	318

(1) Compensation cost is recognized for these performance stock grants based on expected achievement rates; however, no consideration is given to these performance stock grants when calculating diluted earnings per share until the performance measurements have been achieved.

The following table details shares issued during the three and nine months ended September 30, 2022 and 2021, including restricted shares that were returned prior to vesting. These shares are included from their dates of issuance in the weighted-average common shares used to compute basic and diluted earnings per share for CRD-A in the table above. There were no shares of CRD-B issued during any of these periods.


	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2022		September 30, 2021		September 30, 2022			September 30, 2021
CRD-A issued under the Non-Employee Director Stock Plan		5		—		99			67
CRD-A issued under the U.K. ShareSave Scheme		—		5		—			70
CRD-A issued under the Employee Stock Purchase Plan		124		159		124			159
CRD-A issued under the 2016 Omnibus Stock and Incentive Plan		—		—		(6	)		—

Effective May 9, 2019, the Company's Board of Directors authorized the repurchase of up to 2,000,000 shares of CRD-A or CRD-B (or a combination of the two) through December 31, 2020 (the "2019 Repurchase Authorization"). The Company’s Board of Directors subsequently amended this authorization to allow for repurchases through December 31, 2021. Under the 2019 Repurchase Authorization, repurchases may be made for cash, in the open market or privately negotiated transactions at such times and for such prices as management deems appropriate, subject to applicable contractual and regulatory restrictions. At September 30, 2022, there were no remaining shares authorized to repurchase under the 2019 Repurchase Authorization.

Effective November 4, 2021, the Company’s Board of Directors authorized the repurchase of up to 2,000,000 shares of CRD-A or CRD-B (or a combination of the two) through December 31, 2023 (the “2021 Repurchase Authorization”). On February 10, 2022, the Company's Board of Directors authorized the addition of 5,000,000 shares of CRD-A or CRD-B (or a combination of the two) to its 2021 Repurchase Authorization which had a remaining authorization to purchase 413,317 shares at December 31, 2021. Under the new repurchase program, repurchases may be made through December 31, 2023 in the open market or privately negotiated transactions at such times and for such prices as management deems appropriate, subject to applicable regulatory guidelines. The new authorization does not obligate Crawford to acquire any stock, and purchases may be commenced or suspended at any time based on market conditions and other factors that the Company deems appropriate. At September 30, 2022, there were 1,793,371 remaining shares authorized to repurchase under the 2021 Repurchase Authorization.

During the nine months ended September 30, 2022, the Company repurchased 2,656,474 shares of CRD-A and 963,472 shares CRD-B at an average cost of $7.41 and $7.32, respectively. During the nine months ended September 30, 2021, the Company repurchased 530,598 shares of CRD-A and 111,499 shares of CRD-B at an average cost of $9.63 and $8.68, respectively.

8. Accumulated Other Comprehensive Loss

Comprehensive (loss) income for the Company consists of the total of net income, foreign currency translation adjustments, and accrued pension and retiree medical liability adjustments. Foreign currency translation adjustments include the net realized (losses) gains from intra-entity loans that are long-term in nature of $(590,786) and $1,018,000 for the three and nine months ended September 30, 2022, respectively. The changes in components of "Accumulated other comprehensive loss" ("AOCL"), net of taxes and noncontrolling interests, included in the Company's unaudited condensed consolidated financial statements were as follows:


	Three Months Ended September 30, 2022									Nine Months Ended September 30, 2022
(in thousands)	Foreign currency translation adjustments			Retirement liabilities (1)			AOCL attributable to shareholders of Crawford & Company			Foreign currency translation adjustments			Retirement liabilities (1)			AOCL attributable to shareholders of Crawford & Company
Beginning balance	$	(33,584	)	$	(154,988	)	$	(188,572	)	$	(21,760	)	$	(158,681	)	$	(180,441	)
Other comprehensive loss before reclassifications		(7,237	)		—			(7,237	)		(19,061	)		—			(19,061	)
Amounts reclassified from accumulated other comprehensive income to net income		—			1,838			1,838			—			5,531			5,531
Net current period other comprehensive (loss) income		(7,237	)		1,838			(5,399	)		(19,061	)		5,531			(13,530	)
Ending balance	$	(40,821	)	$	(153,150	)	$	(193,971	)	$	(40,821	)	$	(153,150	)	$	(193,971	)


	Three Months Ended September 30, 2021									Nine Months Ended September 30, 2021
(in thousands)	Foreign currency translation adjustments			Retirement liabilities (1)			AOCL attributable to shareholders of Crawford & Company			Foreign currency translation adjustments			Retirement liabilities (1)			AOCL attributable to shareholders of Crawford & Company
Beginning balance	$	(18,000	)	$	(164,235	)	$	(182,235	)	$	(30,792	)	$	(168,064	)	$	(198,856	)
Other comprehensive income before reclassifications		(5,330	)		—			(5,330	)		7,462			—			7,462
Amounts reclassified from accumulated other comprehensive income to net income		—			1,908			1,908			—			5,737			5,737
Net current period other comprehensive (loss) income		(5,330	)		1,908			(3,422	)		7,462			5,737			13,199
Ending balance	$	(23,330	)	$	(162,327	)	$	(185,657	)	$	(23,330	)	$	(162,327	)	$	(185,657	)

(1) Retirement liabilities reclassified to net income are related to the amortization of actuarial losses and are included in "Other Income, net" in the Company's unaudited Condensed Consolidated Statements of Operations. See Note 6, "Defined Benefit Pension Plans" for additional details.

The other comprehensive loss amounts attributable to noncontrolling interests presented in the Company's unaudited Condensed Consolidated Statements of Shareholders' Investment are foreign currency translation adjustments.

9. Fair Value Measurements

The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy:


			Fair Value Measurements at September 30, 2022
					Significant Other		Significant
			Quoted Prices in		Observable		Unobservable
			Active Markets		Inputs		Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Money market funds (1)	$	10,075	$	10,075	$	—	$	—

Liabilities:
Contingent earnout liability (2)		17,130		—		—		17,130

(1) The fair values of the money market funds were based on recently quoted market prices and reported transactions in an active marketplace. Money market funds are included in the Company's unaudited Condensed Consolidated Balance Sheets as "Cash and cash equivalents."

(2) The contingent earnout liability relates to businesses acquired since 2020. See Note 12, "Business Acquisitions" for more information. The Level 3 fair value of the contingent earnout liability was estimated using internally-prepared revenue and EBITDA projections, and discount rates determined using a combination of observable and unobservable market data. The Company recognized a pretax contingent earnout expense totaling $887,000 and $3,246,000 in the three and nine months ended September 30, 2022 related to the fair value adjustment of earnout liabilities arising from recent acquisitions. The fair value adjustment is based on changes to projections of acquired entities over the respective earnout periods, which span multiple years. The fair value of the contingent earnout liability is included in "Other accrued liabilities" and "Other noncurrent liabilities" on the Company's Consolidated Balance Sheets, based upon the term of the contingent earnout agreement.

Fair Value Disclosures

There were no transfers of assets between fair value levels during the three and nine months ended September 30, 2022. The categorization of assets and liabilities within the fair value hierarchy and the measurement techniques are reviewed quarterly. Any transfers between levels are deemed to have occurred at the end of the quarter.

The fair values of accounts receivable, unbilled revenues, accounts payable and short-term borrowings approximate their respective carrying values due to the short-term maturities of the instruments. The interest rate on the Company's variable rate long-term debt resets at least every 90 days; therefore, the recorded value approximates fair value. These assets and liabilities are measured within Level 2 of the fair value hierarchy.

Nonrecurring Fair Value Disclosures

Goodwill is an asset that represents the excess of the purchase price over the fair value of the separately identifiable net assets (tangible and intangible) acquired in certain business combinations. Indefinite-lived intangible assets consist of trade names associated with acquired businesses. Goodwill and indefinite-lived intangible assets are not amortized, but are subject to impairment testing at least annually. Other long-lived assets consist primarily of property and equipment, deferred income tax assets, capitalized software, and amortizable intangible assets related to customer relationships, technology, and trade names with finite lives. Other long-lived assets are evaluated for impairment when impairment indicators are identified.

Subsequent to a business acquisition in which goodwill and indefinite-lived intangibles are recorded as assets, post-acquisition accounting requires that both be tested to determine whether there has been an impairment. The Company performs an impairment test of goodwill and indefinite-lived intangible assets at least annually on October 1 of each year. The Company regularly evaluates whether events and circumstances have occurred which indicate potential impairment of goodwill or indefinite-lived intangible assets. When factors indicate that such assets should be evaluated for possible impairment between the scheduled annual impairment tests, the Company performs an interim impairment test.

Goodwill impairment testing is performed on a reporting unit basis. If the fair value of the reporting unit exceeds its carrying value, including goodwill, goodwill is considered not impaired. If the carrying value of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The loss recognized cannot subsequently be reversed.

The carrying value of the reporting unit, including goodwill, is compared with the estimated fair value of the reporting unit as determined utilizing a combination of the income and market approaches. The income approach, which is a level 3 fair value measurement, is based on projected debt-free cash flow which is discounted to the present value using discount factors that consider the timing and risk of the cash flows. The market approach is based on the Guideline Public Company Method, which uses market pricing metrics to select multiples to value the Company's reporting units. The resulting estimated fair values of the combined reporting units are reconciled to the Company's market capitalization including an estimated implied control premium. The Company believes that the combination of these approaches is appropriate because it provides a fair value estimate based upon the combination of the reporting unit's expected long-term operating cash flow performance and multiples with which similar publicly traded companies are valued. The Company weights the income and market approaches equally. In our interim goodwill impairment test as of August 31, 2022 disclosed below, we also used the adjusted book value method to estimate the fair value of our Crawford Legal Services reporting unit.

In accordance with the accounting guidance, the Company performed a goodwill impairment assessment immediately before and after the January 1, 2022 change in operating segments, neither of which resulted in any additional impairment charges.

During the second quarter of 2022, the Company identified a goodwill impairment indicator in our International Operations reporting unit as a result of lower operating results compared to forecast. The Company performed an interim quantitative goodwill impairment test and determined no goodwill impairment existed.

During the third quarter of 2022, the Company identified goodwill impairment indicators in our International Operations reporting unit and Crawford Legal Services reporting unit, which are reflected in our International Operations reportable segment, as a result of a reduction in forecasted revenue and earnings, higher interest rates, and a lower Crawford & Company stock price. The Company also identified goodwill impairment indicators in its North America Loss Adjusting and Platform Solutions reportable segments related to the edjuster Inc. and Praxis Consulting Inc. reporting units, respectively, as these reporting units had minimal historical excess of fair value over the carrying value due to being recent acquisitions, given higher interest rates and a lower Crawford & Company stock price. As a result of these indicators, the Company performed an interim quantitative goodwill impairment test as of August 31, 2022 and recognized a pretax goodwill impairment of $36,808,000. The goodwill impairment charge reduced the carrying value of goodwill in the Company's edjuster Inc. and Praxis Consulting Inc. reporting units by $3,366,000 and $10,650,000 million, respectively. Goodwill related to the Company's International Operations and Crawford Legal Services reporting units was fully impaired with a charge of $19,640,000 and $3,152,000, respectively.

The key assumptions used in estimating the fair value of the Company's reporting units as of August 31, 2022 utilizing the income approach include the discount rate and the terminal growth rate. The discount rates utilized in estimating the fair value of the Company's reporting units as of August 31, 2022 range between 15.5% and 18.0%, reflecting its assessment of a market participant's view of the risks associated with the projected cash flows. The terminal growth rate used in the analysis was 2.0%. The assumptions used in estimating the fair values are based on currently available data and management's best estimate of revenues, EBITDA margin, and cash flows and, accordingly, a change in market conditions or other factors could have a material effect on the estimated values. There are inherent uncertainties related to the assumptions used and to management's application of these assumptions.

10. Segment Information

As of January 1, 2022, the Company has realigned its operating segments by moving to a geographic reporting structure consisting of North America Loss Adjusting, International Operations, Broadspire, and Platform Solutions. The Company's revised reportable segments are comprised of the following:

•

North America Loss Adjusting, which services the North American property and casualty market. This is comprised of the previously reported Crawford Loss Adjusting segment in the U.S. and Canada, including Global Technical Services and edjuster. The Canadian operations include all operations within that country, including those previously reported within the Crawford TPA Solutions and Crawford Platform Solutions segments.

•

International Operations, which services the global property and casualty market outside North America. This is comprised of the previously reported Crawford Loss Adjusting segment outside of North America, including Crawford Legal Services which was previously within the Crawford TPA Solutions segment. The International Operations include all operations within the respective countries, including those previously reported within the Crawford TPA Solutions and Crawford Platform Solutions segments.

•

Broadspire, which provides third party administration for workers' compensation, auto and liability, disability absence management, medical management, and accident and health to corporations, brokers and insurers in the U.S.

•

Platform Solutions, which consists of the Contractor Connection, Networks, and Subrogation service lines in the U.S. The Networks service line includes Catastrophe operations and WeGoLook.

Financial information for the three and nine months ended September 30, 2022 and 2021 related to the Company's reportable segments, including a reconciliation from segment operating earnings to income before income taxes, the most directly comparable GAAP financial measure, is presented below:


	Three Months Ended						Nine Months Ended
(in thousands)	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Revenues:
North America Loss Adjusting	$	66,822		$	64,334		$	197,035		$	176,844
International Operations		86,066			91,888			269,048			269,624
Broadspire		78,381			75,804			234,949			225,982
Platform Solutions		63,655			56,474			166,262			136,688
Total segment revenues before reimbursements		294,924			288,500			867,294			809,138
Reimbursements		11,493			9,062			30,564			27,124
Total revenues	$	306,417		$	297,562		$	897,858		$	836,262

Segment Operating Earnings (Loss)
North America Loss Adjusting	$	3,678		$	4,362		$	10,508		$	11,804
International Operations		(3,849	)		1,947			(7,623	)		3,400
Broadspire		6,198			6,939			20,299			20,243
Platform Solutions		10,080			9,724			22,714			22,833
Total segment operating earnings		16,107			22,972			45,898			58,280

Deduct:
Unallocated corporate and shared costs, net		(1,907	)		(2,173	)		(5,732	)		(4,835	)
Net corporate interest expense		(2,903	)		(1,648	)		(6,201	)		(4,443	)
Stock option expense		(142	)		(296	)		(478	)		(700	)
Amortization of customer-relationship intangible assets		(1,998	)		(2,877	)		(5,784	)		(8,426	)
Contingent earnout adjustments		(887	)		—			(3,246	)		—
Goodwill impairment		(36,808	)		—			(36,808	)		—
(Loss) income before income taxes	$	(28,538	)	$	15,978		$	(12,351	)	$	39,876

Operating earnings is the primary financial performance measure used by the Company's senior management and chief operating decision maker ("CODM") to evaluate the financial performance of the Company's operating segments and make resource allocation and certain compensation decisions. The Company believes this measure is useful to investors in that it allows them to evaluate segment operating performance using the same criteria used by the Company's senior management and CODM. Operating earnings will differ from net income computed in accordance with GAAP since operating earnings represents segment earnings before certain unallocated corporate and shared costs and credits, net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, contingent earnout adjustments, goodwill impairments, income taxes, and net income or loss attributable to noncontrolling interests.

Segment operating earnings includes allocations of certain corporate and shared costs. If the Company changes its allocation methods or changes the types of costs that are allocated to its four operating segments, prior period amounts presented in the current period financial statements are adjusted to conform to the current allocation process.

Intersegment transactions are not material for any period presented. Certain of the Company’s reportable segments represent the aggregation of certain business units which represent separate operating segments.

Revenues before reimbursements by major service line in the International Operations, Broadspire and Platform Solutions segments are shown in the following table. The Company considers all North America Loss Adjusting revenues to be primarily derived from one service line.


	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
International Operations
International Loss Adjusting	$	82,157	$	84,653	$	252,092	$	249,955
Crawford Legal Services		3,909		7,235		16,956		19,669
Total Revenues before Reimbursements--International Operations	$	86,066	$	91,888	$	269,048	$	269,624

Broadspire
Claims Management	$	40,275	$	38,326	$	120,252	$	114,028
Medical Management		38,106		37,478		114,697		111,954
Total Revenues before Reimbursements--Broadspire	$	78,381	$	75,804	$	234,949	$	225,982

Platform Solutions
Contractor Connection	$	17,453	$	18,592	$	50,112	$	54,643
Networks		40,809		37,882		100,840		82,045
Subrogation		5,393		—		15,310		—
Total Revenues before Reimbursements--Platform Solutions	$	63,655	$	56,474	$	166,262	$	136,688

11. Commitments and Contingencies

As part of the Company's credit facility, the Company maintains a letter of credit to satisfy certain of its own contractual requirements. At September 30, 2022, the aggregate committed amount of letters of credit outstanding under the credit facility was $8,777,000.

In the normal course of its business, the Company is sometimes named as a defendant or responsible party in suits or other actions by insureds or claimants contesting decisions made by the Company or its clients with respect to the settlement of claims. Additionally, certain clients of the Company have in the past brought, and may, in the future bring, claims for indemnification on the basis of alleged actions by the Company, its agents, or its employees in rendering services to clients. The majority of these claims are of the type covered by insurance maintained by the Company. However, the Company is responsible for the deductibles and self-insured retentions under various insurance coverages. In the opinion of Company management, adequate provisions have been made for such known and foreseeable risks. However, given the inherent unpredictability of litigation and disputes related to these matters, it is possible an adverse outcome or settlement, if not covered by insurance, could have a material effect on the Company's results of operations, financial position, or cash flows.

The Company is subject to numerous federal, state, and foreign labor, employment, worker health and safety, antitrust and competition, environmental and consumer protection, import/export, anti-corruption, and other laws. From time to time the Company faces claims and investigations by employees, former employees, and governmental entities under such laws or employment contracts with such employees or former employees. In addition, the Company may on occasion be engaged in disputes with certain of its clients, vendors or other trading partners. Such claims, investigations, negotiations, and any litigation involving the Company could divert management's time and attention from the Company's business operations and could potentially result in substantial costs of defense, settlement or other disposition, which could have a material adverse effect on the Company's results of operations, financial position, and cash flows. In the opinion of Company management, adequate provisions have been made for any items that are probable and reasonably estimable.

12. Business Acquisitions

HBA Group Acquisition

On November 1, 2020, the Company acquired 100% of HBA Group and its subsidiaries ("HBA") in Australia. HBA is a legal services provider that complements the Company’s International Operations segment in Australia.

The acquisition was funded primarily through additional borrowings under the Company's credit facility. The purchase price included an initial cash payment of $4,026,000 and a maximum of $3,200,000 payable over four years based on achievement of certain revenue and EBITDA performance goals as set forth in the purchase agreement. The acquisition accounting was based on the fair value of the acquisition consideration transferred to the sellers, assets acquired, and liabilities assumed as of the acquisition date. At the acquisition date, the fair value of the contingent consideration payable was estimated to be $2,409,000. At September 30, 2022, there were no material changes in the range of expected outcomes or the fair value of the contingent consideration from the acquisition date. Significant assumptions and estimates used in the valuation of intangible assets and contingent consideration included, but were not limited to future expected cash flows, including projected revenues and expenses, estimated customer attrition rates, and the applicable discount rates. These assumptions and estimates were level 3 inputs and based on assumptions that the Company believes to be reasonable. However, actual results may differ from these estimates.

Final acquisition accounting for this acquisition was completed as of March 31, 2022. Adjustments recorded during the first quarter included a reduction in goodwill and deferred tax liability of $827,000. The financial results of certain of the Company’s international subsidiaries, including HBA, are included in the Company’s consolidated financial statements on a two-month delayed basis. Goodwill is attributable to the synergies of the work force in place and business resources as a result of the combination of the companies. The Company does not expect that goodwill attributable to the acquisition will be deductible for tax purposes.

edjuster Inc. Acquisition

On August 23, 2021, the Company acquired 100% of edjuster Inc. in Canada and its U.S. subsidiary (collectively "edjuster"). edjuster is a technology-enabled, end-to-end contents services provider and platform. This acquisition enables the Company to expand its capability in the North American claims contents services market. The purchase price included an initial cash payment of $20,875,000, a working capital adjustment of $433,000, and an earn-out potential up to $13,334,000 based on the achievement of certain EBITDA performance goals over two one-year periods, beginning January 2022. The acquisition was funded primarily through additional borrowings under the Company’s credit facility.

The results of edjuster are reported in the North America Loss Adjusting segment. Goodwill is attributable to the assembled workforce acquired, and expected revenue and cost synergies as a result of the combination of the companies. The Company does not expect that goodwill attributable to the acquisition will be deductible for tax purposes.

The preliminary acquisition accounting was based on the fair value of the acquisition consideration transferred to the sellers, assets acquired and liabilities assumed as of the acquisition date. At the acquisition date, the fair value of the contingent consideration payable was estimated to be $2,437,000. At September 30, 2022, there were no material changes in the range of expected outcomes and the fair value of the contingent consideration from the acquisition date. Significant assumptions and estimates included, but were not limited to future expected cash flows, including projected revenues and expenses, estimated customer attrition rates, royalty rates, and the applicable discount rates. These assumptions and estimates were level 3 inputs and based on assumptions that the Company believes to be reasonable. However, actual results may differ from these estimates.

Final acquisition accounting for this acquisition was completed as of September 30, 2022.

Praxis Consulting Inc. Acquisition

On October 1, 2021, the Company acquired assets and certain liabilities of Praxis Consulting Inc. ("Praxis"), an established subrogation claims service provider in the U.S. The acquisition allows the Company to expand its footprint in the U.S. subrogation claims market.

The acquisition was funded primarily through additional borrowings under the Company’s credit facility. The purchase price included a cash payment of $21,544,000, a working capital adjustment payable of $735,000, a deferred cash payment of $20,000,000 which was paid in February 2022, and an earn-out potential up to $10,000,000 based on the achievement of certain revenue performance goals over two one-year periods, beginning February 2022. The acquisition accounting is based on the fair value of the acquisition consideration transferred to the sellers, assets acquired and liabilities assumed as of the acquisition date. The fair value of the contingent consideration payable increased to $7,569,000 at September 30, 2022 from $4,068,000 at the acquisition date based on revised internal revenue forecasts. Accordingly, the Company recognized $3,501,000 from changes in the fair value of contingent consideration related to this acquisition in "Selling, general, and administrative expenses" on the Consolidated Statement of Operations during the nine months ended September 30, 2022. Significant assumptions and estimates used in the valuation of intangible assets and contingent consideration included, but were not limited to future expected cash flows, including projected revenues and expenses, estimated customer attrition rates, and the applicable discount rates. These assumptions and estimates were level 3 inputs and based on assumptions that the Company believes to be reasonable. However, actual results may differ from these estimates.

The Company is in the process of reviewing the fair value of the assets and liabilities assumed, including, but not limited to intangible assets, accrued expenses, tax liabilities and goodwill. As additional information becomes available, the Company may further revise its preliminary acquisition accounting during the remainder of the measurement period, which will not exceed 12 months from the date of acquisition. The Company may update certain assumptions and inputs to incorporate additional information obtained subsequent to the closing of the transaction related to facts and circumstances that existed as of the acquisition date.

The results of Praxis Consulting are reported in the Platform Solutions segment. Goodwill is attributable to the synergies of the work force in place and business resources as a result of the combination of the companies. The Company expects that goodwill attributable to the acquisition will be deductible for tax purposes.

BosBoon Expertise Group B.V. Acquisition

On October 1, 2021, the Company acquired BosBoon Expertise Group B.V. ("BosBoon"), a specialist loss adjusting company based in the Netherlands. The acquisition supports the Company's strategic aim of strengthening its expertise in all key territories in which it operates. BosBoon offers a specialist range of loss adjusting services which will be added to the existing loss adjusting proposition in the Netherlands.

The acquisition was funded primarily through additional borrowings under the Company’s credit facility. The purchase price included an initial cash payment of $2,066,000, net of working capital adjustments, and an earn-out potential up to $1,854,000 based on the achievement of EBITDA performance goals and other nonfinancial milestones over two one-year periods, beginning January 2022.

The acquisition accounting is based on the fair value of the acquisition consideration transferred to the sellers, assets acquired and liabilities assumed as of the acquisition date. At the acquisition date, the fair value of the contingent consideration payable was estimated to be $568,000. At September 30, 2022, there were no material changes in the range of expected outcomes and the fair value of the contingent consideration from the acquisition date. Significant assumptions and estimates used in the valuation of intangible assets and contingent consideration included, but were not limited to future expected cash flows, including projected revenues and expenses, estimated customer attrition rates, and the applicable discount rates. These assumptions and estimates were level 3 inputs and based on assumptions that the Company believes to be reasonable. However, actual results may differ from these estimates.

The financial results of certain of the Company’s international subsidiaries, including BosBoon, are included in the Company’s consolidated financial statements on a two-month delayed basis. The results of BosBoon are reported in the International Operations segment. Goodwill is attributable to the synergies of the work force in place and business resources as a result of the combination of the companies. The Company does not expect that goodwill attributable to the acquisition will be deductible for tax purposes.

R.P. van Dijk B.V. Acquisition

On April 1, 2022, the Company purchased assets associated with R.P. van Dijk B.V. ("Van Dijk"), a bodily injury loss adjusting company based in the Netherlands. The acquisition was funded primarily through additional borrowings under the Company’s credit facility. The purchase price includes an initial cash consideration of $4,313,000, and an earn-out potential up to $2,200,000 payable over the next two years based on the achievement of revenue performance goals and other nonfinancial milestones over two one-year periods, beginning April 2022.

This acquisition expands the Company's network in the Netherlands and strengthen its bodily injury loss adjusting service offering by adding a highly qualified team of adjusters experienced in managing complex loss events resulting in injury or death, as well as handling medical liability claims. The acquisition supports the Company's strategic aim of strengthening its expertise in all key territories in which it operates.

The acquisition accounting is based on the fair value of the acquisition consideration transferred to the sellers, assets acquired and liabilities assumed as of the acquisition date. At the acquisition date, the fair value of the contingent consideration payable was estimated to be $1,342,000. At September 30, 2002, there were no material changes in the range of expected outcomes and the fair value of the contingent consideration from the acquisition date. Significant assumptions and estimates used in the valuation of intangible assets and contingent consideration included, but were not limited to future expected cash flows, including projected revenues and expenses, estimated customer attrition rates, and the applicable discount rates. These assumptions and estimates were level 3 inputs and based on assumptions that the Company believes to be reasonable. However, actual results may differ from these estimates.

The Company is in the process of reviewing the fair value of the assets and liabilities assumed, including, but not limited to intangible assets, unbilled receivables, accrued expenses, tax liabilities and goodwill. As additional information becomes available, the Company may further revise its preliminary acquisition accounting during the remainder of the measurement period, which will not exceed 12 months from the date of acquisition. The Company may update certain assumptions and inputs to incorporate additional information obtained subsequent to the closing of the transaction related to facts and circumstances that existed as of the acquisition date.

The financial results of certain of the Company’s international subsidiaries, including Van Dijk, are included in the Company’s consolidated financial statements on a two-month delayed basis. The results of Van Dijk are reported in the International Operations segment. Goodwill is attributable to the synergies of the work force in place and business resources as a result of the combination of the companies. The Company expects that goodwill attributable to the acquisition will be deductible for tax purposes.

Fair Value of Assets Acquired and Liabilities Assumed

Assets acquired and liabilities assumed as of acquisition date, inclusive of subsequent measurement period adjustments, are presented in the following table:


	HBA Group		edjuster Inc.		Praxis Consulting Inc.		BosBoon Expertise Group B.V.		R.P. van Dijk B.V.
	November 1, 2020		August 23, 2021		October 1, 2021		October 1, 2021		April 1, 2022
	(In thousands)
Tangible assets
Cash and cash equivalents	$	240	$	1,723	$	—	$	—	$	—
Accounts receivable		1,081		1,518		119		469		—
Unbilled revenues		598		1,531		—		597		509
Right-of-use lease assets		1,502		418		430		586		—
Other assets		205		1,520		316		75		231
Total tangible assets		3,626		6,710		865		1,727		740
Intangible assets
Customer relationships		1,574		5,346		20,000		1,384		3,215
Developed technology		—		2,673		1,500		—		—
Non-compete agreements		—		157		225		346		347
Tradenames		—		1,101		2,125		—		—
Goodwill		5,406		12,881		26,195		1,571		1,423
Total intangible assets		6,980		22,158		50,045		3,301		4,985
Total assets acquired		10,606		28,868		50,910		5,028		5,725

Liabilities assumed
Current liabilities		2,532		2,066		4,133		1,430		70
Operating lease liabilities		1,502		418		430		586		—
Tax liabilities		137		2,639		—		378		—
Total liabilities assumed		4,171		5,123		4,563		2,394		70

Net assets acquired	$	6,435	$	23,745	$	46,347	$	2,634	$	5,655

Purchase price (cash)	$	4,026	$	20,875	$	21,544	$	2,066	$	4,313
Deferred purchase consideration payable		—		433		20,735		—		—
Fair value of contingent consideration		2,409		2,437		4,068		568		1,342
Fair value of total consideration transferred	$	6,435	$	23,745	$	46,347	$	2,634	$	5,655

Acquired intangible assets include customer relationships, developed technologies, non-compete agreements, and tradenames. Intangible assets were valued using the multi-period excess earnings or the relief-from-royalty methods, both are forms of the income approach which utilizes a forecast of future cash flows generated from the use of each asset. The following table shows the preliminary fair values assigned to identifiable intangible assets:


	Fair Value		Weighted-Average Amortization Period (Years)
	(In thousands)
Amortizable intangible assets
Customer relationships	$	31,519		14
Developed technology		4,173		9
Non-compete agreements		1,075		5
Tradenames		3,226		10
Total amortizable intangible assets	$	39,993

13. Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and marketable securities with original maturities of three months or less. The fair value of cash and cash equivalents approximates carrying value due to their short-term nature. Cash balances that are legally restricted as to usage or withdrawal are separately included in "Prepaid expenses and other current assets" within the Company's unaudited Condensed Consolidated Balance Sheets. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Company's unaudited Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown within the Company's unaudited Condensed Consolidated Statement of Cash Flows:


	September 30, 2022		December 31, 2021		September 30, 2021		December 31, 2020
	(In thousands)
Cash and cash equivalents	$	33,099	$	53,228	$	36,929	$	44,656
Restricted cash within prepaid expenses and other current assets		782		461		—		—
Total cash, cash equivalents and restricted cash	$	33,881	$	53,689	$	36,929	$	44,656

The Company also maintains funds in various trust accounts to administer claims for certain clients. These funds are not available for our general operating activities and, as such, have not been recorded in the accompanying unaudited Condensed Consolidated Balance Sheets.

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Crawford & Company

Results of Review of Interim Financial Statements

We have reviewed the accompanying condensed consolidated balance sheet of Crawford & Company (the Company) as of September 30, 2022, the related condensed consolidated statements of operations, comprehensive income (loss) for the three and nine-month periods ended September 30, 2022 and 2021, the condensed consolidated statements of shareholders' investment for the three-month periods ended March 31, June 30 and September 30, 2022 and 2021, the condensed consolidated statements of cash flows for the nine-month periods ended September 30, 2022 and 2021, and the related notes (collectively referred to as the “condensed consolidated interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2021, the related consolidated statements of operations, comprehensive income, cash flows, and shareholders’ investment for the year then ended, and the related notes (not presented herein); and in our report dated March 14, 2022, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

These financial statements are the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ Ernst & Young LLP

November 8, 2022

Atlanta, Georgia

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Concerning Forward-Looking Statements

This report contains forward-looking statements within the meaning of that term in the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Statements contained in this report that are not statements of historical fact are forward-looking statements made pursuant to the "safe harbor" provisions thereof. 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 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, and our other long-term capital resource and liquidity requirements. These statements may also relate to our business strategies, goals and expectations concerning our market position, future operations, margins, case and project volumes, profitability, contingencies, liquidity position, and capital resources. The words "anticipate", "believe", "could", "would", "should", "estimate", "expect", "intend", "may", "plan", "goal", "strategy", "predict", "project", "will" and similar terms and phrases, or the negatives thereof, identify forward-looking statements contained in this report.

Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. Our operations and the forward-looking statements related to our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially adversely affect our financial condition and results of operations, and whether the forward-looking statements ultimately prove to be correct. Included among the risks and uncertainties we face are risks related to the following:

•

a decline in cases referred to us for any reason, including changes in the degree to which property and casualty insurance carriers outsource their claims handling functions,

•

changes in global economic conditions,

•

the impact of global pandemics, such as COVID-19, on claim volumes,

•

changes in interest rates,

•

changes in foreign currency exchange rates,

•

changes in regulations and practices of various governmental authorities,

•

changes in our competitive environment,

•

changes in the financial condition of our clients,

•

changes in the rate of inflation and our ability to recover increased operating costs,

•

the loss of any material customer,

•

our ability to successfully integrate the operations of acquired businesses,

•

regulatory changes related to funding of defined benefit pension plans,

•

our U.S., U.K. and other international defined benefit pension plans and our future funding obligations thereunder,

•

our ability to complete any transaction involving the acquisition or disposition of assets on terms and at times acceptable to us,

•

our ability to identify new revenue sources not tied to the insurance underwriting cycle,

•

our ability to develop or acquire information technology resources to support and grow our business,

•

our ability to attract and retain qualified personnel,

•

our ability to renew existing contracts with clients on satisfactory terms,

•

our ability to collect amounts due from our clients and others,

•

continued availability of funding under our financing agreements,

•

general risks associated with doing business outside the U.S., including changes in tax rates,

•

our ability to comply with the covenants in our financing or other agreements,

•

changes in the frequency or severity of man-made or natural disasters,

•

the ability of our third-party service providers, used for certain aspects of our internal business functions, to meet expected service levels,

•

our ability to prevent or detect cybersecurity breaches and cyber incidents,

•

our ability to achieve targeted integration goals with the consolidation and migration of multiple software platforms,

•

risks associated with our having a controlling shareholder, and

•

impairments of goodwill or our other indefinite-lived intangible assets.

As a result, undue reliance should not be placed on any forward-looking statements. Actual results and trends in the future may differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements speak only as of the date

they are made and we undertake no obligation to publicly update any of these forward-looking statements in light of new information or future events.

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, 2022 and 2021, and as of September 30, 2022, and December 31, 2021, 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, 2021. 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.

Business Overview

Based in Atlanta, Georgia, Crawford & Company (www.crawco.com) is the world's largest publicly listed independent provider of claims management and outsourcing solutions to carriers, brokers and corporations with an expansive global network serving clients in more than 70 countries. Shares of the Company's two classes of common stock are traded on the New York Stock Exchange under the symbols CRD-A and CRD-B, respectively. Our two classes of stock are substantially identical, except with respect to voting rights and the ability to pay greater cash dividends on the non-voting Class A Common Stock than on the voting Class B Common Stock, subject to certain limitations. In addition, with respect to mergers or similar transactions, holders of Class A Common Stock must receive the same type and amount of consideration as holders of Class B Common Stock, unless different consideration is approved by the holders of 75% of the Class A Common Stock, voting as a class.

In January 2022, we have realigned our operating segments by moving to a geographic reporting structure consisting of North America Loss Adjusting, International Operations, Broadspire, and Platform Solutions. Our revised reportable segments are comprised of the following:

•

Platform Solutions, which consists of the Contractor Connection, Networks, and Subrogation service lines in the U.S. The Networks service line includes Catastrophe operations and WeGoLook.

As discussed in more detail in subsequent sections of this MD&A, our four reportable segments represent components of our Company for which separate financial information is available, and which is evaluated regularly by our chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing operating performance.

Insurance companies rely on us for certain services such as field investigation and the evaluation of property and casualty insurance claims. Self-insured entities typically rely on us for a broader range of services. In addition to field investigation and claims evaluation, we may also provide initial loss reporting services for their claimants, loss mitigation services such as medical bill review, medical case management and vocational rehabilitation, risk management information services, and loss fund administration to pay their claims. Our Contractor Connection service line provides a managed contractor network to insurance carriers and consumer markets.

The global claims management services market is highly competitive and comprised of a large number of companies that vary in size and that offer a varied scope of services. The demand from insurance companies and self-insured entities for services provided by independent claims service firms like us is largely dependent on industry-wide claims volumes, which are affected by, among other things, the insurance underwriting cycle, weather-related events, general economic activity, overall employment levels and workplace injury rates. Demand is also impacted by decisions insurance companies and self-insured entities make with respect to the level of claims outsourced to independent claim service firms as opposed to those handled by their own in-house claims adjusters. In addition, our ability to retain clients and maintain or increase case referrals is also dependent in part on our ability to continue to provide high-quality, competitively priced services and effective sales efforts.

We typically earn our revenues on an individual fee-per-claim basis for claims management services that we provide to insurance companies and self-insured entities. Accordingly, the volume of claim referrals to us is a key driver of our revenues. We cannot predict the future trend of case volumes for a number of reasons, including the frequency and severity of weather-related cases and the occurrence of natural and man-made disasters, which are a significant source of cases for us and are not subject to accurate forecasting.

Results of Operations

Executive Summary

Consolidated revenues before reimbursements increased $6.4 million, or 2.2%, for the three months ended September 30, 2022 and $58.2 million, or 7.2% for the nine months ended September 30, 2022, compared with the same periods of 2021. This increase was primarily due to an increase in new client growth in our North America Loss Adjusting, Broadspire and Platforms Solutions operating segments, and recent acquisitions, partially offset by a decrease in International Operations. Changes in foreign exchange rates reduced our consolidated revenues before reimbursements by $11.0 million, or 3.9%, for the three months ended September 30, 2022 and $20.1 million, or 2.5%, for the nine months ended September 30, 2022 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, 2022.


	Three Months Ended							Three Months Ended
								Based on exchange rates for the three months ended September 30, 2021
(in thousands, except percentages)	September 30, 2022		September 30, 2021		Variance			September 30, 2022		% Variance
Revenues:
North America Loss Adjusting	$	66,822	$	64,334		3.9	%	$	67,758		5.3	%
International Operations		86,066		91,888		(6.3	)%		96,161		4.7	%
Broadspire		78,381		75,804		3.4	%		78,381		3.4	%
Platform Solutions		63,655		56,474		12.7	%		63,655		12.7	%
Total revenues before reimbursements		294,924		288,500		2.2	%		305,955		6.1	%
Reimbursements		11,493		9,062		26.8	%		12,343		36.2	%
Total Revenues	$	306,417	$	297,562		3.0	%	$	318,298		7.0	%


	Nine Months Ended							Nine Months Ended
								Based on exchange rates for the nine months ended September 30, 2021
(in thousands, except percentages)	September 30, 2022		September 30, 2021		Variance			September 30, 2022		% Variance
Revenues:
North America Loss Adjusting	$	197,035	$	176,844		11.4	%	$	198,915		12.5	%
International Operations		269,048		269,624		(0.2	)%		287,252		6.5	%
Broadspire		234,949		225,982		4.0	%		234,949		4.0	%
Platform Solutions		166,262		136,688		21.6	%		166,262		21.6	%
Total revenues before reimbursements		867,294		809,138		7.2	%		887,378		9.7	%
Reimbursements		30,564		27,124		12.7	%		31,961		17.8	%
Total Revenues	$	897,858	$	836,262		7.4	%	$	919,339		9.9	%

Excluding foreign currency impacts, consolidated revenues before reimbursements increased $17.5 million, or 6.1%, for the three months ended September 30, 2022, and increased $78.2 million, or 9.7%, for the nine months ended September 30, 2022. Revenues from the North America Loss Adjusting segment increased in the 2022 third quarter due to an increase in Canada and the recent edjuster, Inc. acquisition, partially offset by a reduction in weather-related cases in the U.S. due to hurricane Ida cases in the 2021 third quarter. On a year-to-date basis, revenues from the North America Loss Adjusting segment increased in the U.S. and Canada, and from the recent acquisition. Revenues from the International Operations segment decreased in the 2022 third quarter due to the change in foreign exchange rates. Excluding foreign exchange impacts, International Operations revenues increased in most regions. For the year-to-date period, excluding foreign exchange impacts, revenues from the International Operations segment increased due to an increase in weather-related activity in Australia and Asia, partially offset by reductions in the U.K. and our Legal Services service line. Revenues from the Broadspire segment increased for the quarter and year-to-date period due to an increase in case activity. Revenues from the Platform Solutions segment increased in both the quarter and year-to-date period primarily due to an increase in Networks and the recent Praxis Consulting acquisition. There was an $8.8 million increase in total company revenues in the 2022 third quarter and a $28.0 million increase in the year-to-date period as a result of recent acquisitions. See Note 12, “Business Acquisitions” of our accompanying consolidated financial statements for more details of this activity.

Overall, there was an increase in cases received of 13.1% for the three months ended September 30, 2022 due to an increase in all operating segments except for North America Loss Adjusting, which received cases in the 2021 third quarter as a result of hurricane Ida. There was an increase in cases received of 15.3% for the nine months ended September 30, 2022, compared with the 2021 period, due to increases in all operating segments. Recent acquisitions contributed 13,400, or 2.8% of cases received in the third quarter, and 43,200, or 3.0% of cases received in the nine months ended September 30, 2022.

Cases received are presented below by segment for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended							Nine Months Ended
(whole numbers, except percentages)	September 30, 2022		September 30, 2021		Variance			September 30, 2022		September 30, 2021		Variance
North America Loss Adjusting		72,112		78,422		(8.0	)%		225,524		210,540		7.1	%
International Operations		123,270		113,368		8.7	%		407,657		342,318		19.1	%
Broadspire		141,658		124,703		13.6	%		414,503		370,840		11.8	%
Platform Solutions		150,192		114,255		31.5	%		378,051		313,049		20.8	%
Total Crawford Cases Received		487,232		430,748		13.1	%		1,425,735		1,236,747		15.3	%

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, 2022:


		Three Months Ended
		September 30, 2022		September 30, 2021
(in thousands)		USD equivalent	% of total	USD equivalent	% of total
U.S.	USD	$183,197	62.1%	$175,553	60.8%
U.K.	GBP	25,534	8.7%	32,527	11.3%
Canada	CAD	25,661	8.7%	21,102	7.3%
Australia	AUD	24,601	8.3%	20,132	7.0%
Europe	EUR	20,535	7.0%	21,807	7.6%
Rest of World		15,396	5.2%	17,379	6.0%
Total Revenues, before reimbursements		$294,924		$288,500


		Nine Months Ended
		September 30, 2022		September 30, 2021
(in thousands)		USD equivalent	% of total	USD equivalent	% of total
U.S.	USD	$523,650	60.4%	$476,669	58.9%
U.K.	GBP	86,726	10.0%	93,741	11.6%
Canada	CAD	74,596	8.6%	63,139	7.8%
Australia	AUD	63,052	7.3%	58,652	7.2%
Europe	EUR	68,217	7.8%	66,508	8.2%
Rest of World		51,053	5.9%	50,429	6.3%
Total Revenues, before reimbursements		$867,294		$809,138

Costs of services provided, before reimbursements, increased $10.2 million, or 4.8%, for the three months ended September 30, 2022, and increased $55.6 million, or 9.4%, for the nine months ended September 30, 2022, as compared with the 2021 periods. This increase was primarily due to an increase in compensation expense and other costs in each of our operating segments resulting from the higher revenues, and the impact of recent acquisitions.

Selling, general, and administrative ("SG&A") expenses increased $2.2 million, or 3.7%, in the three months ended September 30, 2022 and increased $15.1 million, or 8.5%, for the nine months ended September 30, 2022, as compared with the 2021 periods. This increase was due to an increase in compensation expense, the impact of recent acquisitions, and contingent earnout adjustments, partially offset by a gain on the sale of our Canadian head office building.

We recognized a pretax non-cash goodwill impairment in the three months ended September 30, 2022 totaling $36.8 million related to the North America Loss Adjusting ($3.4 million), International Operations ($22.7 million), and Platform Solutions ($10.7 million) reportable segments.

We sold our Canadian head office building in Kitchener, Ontario Canada in the first quarter of 2022 for $3.1 million and recognized a pretax gain on disposal of $1.8 million. This gain is recorded as a credit within Unallocated Corporate and Shared Costs and is included in “Selling, general, and administrative expenses” on the Company's unaudited Condensed Consolidated Statements of Operations.

We received a benefit from the Canada Emergency Wage Subsidy ("CEWS") totaling $1.8 million and $5.9 million in the three months and nine months ended September 30, 2021, respectively, due to the negative economic impact of COVID-19 in that country. There was no similar benefit in the 2022 periods. This subsidy is recorded as a credit within Direct Compensation, Fringe Benefits and Non-Employee Labor and is included in "Costs of services provided, before reimbursements” or “Selling, general, and administrative expenses” on the Company's unaudited Condensed Consolidated Statements of Operations, depending on classification of the employees.

Operating Earnings of our Operating Segments

We believe that a discussion and analysis of the segment operating earnings of our operating segments is helpful in understanding the results of our operations. Operating earnings is our segment measure of profitability presented in conformity with the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") Topic 280 "Segment Reporting." Operating earnings is the primary financial performance measure used by our senior management and CODM to evaluate the financial performance of our operating segments and make resource allocation and certain compensation decisions.

We believe operating earnings is a measure that is useful for others to evaluate segment operating performance using the same criteria used by our senior management and CODM. Segment operating earnings represents segment earnings, including the direct and indirect costs of certain administrative functions required to operate our business, but excludes unallocated corporate and shared costs and credits, net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, contingent earnout adjustments, goodwill impairments, income taxes, and net income or loss attributable to noncontrolling interests.

Administrative functions such as finance, human resources, information technology, quality and compliance, exist both in a centralized shared-service arrangement and within certain operations. Each of these functions is managed by centralized management and the costs of those services is allocated to the segments as indirect costs based on usage.

Gross profit is defined as segment revenues, less segment direct costs, which exclude centralized indirect administrative support costs allocated to the business.

Income taxes, net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, and contingent earnout adjustments are recurring components of our net income, but they are not considered part of our segment operating earnings because they are managed on a corporate-wide basis. Income taxes are calculated for the Company on a consolidated basis based on statutory rates in effect in the various jurisdictions in which we provide services, and vary significantly by jurisdiction. Net corporate interest expense results from capital structure decisions made by senior management and the Board of Directors, affecting the Company as a whole. Stock option expense represents the non-cash costs generally related to stock options and employee stock purchase plan expenses which are not allocated to our operating segments. Contingent earnout adjustments represent fair value adjustments of earnout liabilities arising from recent acquisitions. Amortization expense is a non-cash expense for finite-lived customer-relationship and trade name intangible assets acquired in business combinations. None of these costs relate directly to the performance of our services or operating activities and, therefore, are excluded from segment operating earnings in order to better assess the results of each segment's operating activities on a consistent basis.

Goodwill impairments arise from time to time due to various factors, but are not allocated to our operating segments since they historically have not regularly impacted our performance and are not expected to impact our future performance on a regular basis.

Unallocated corporate and shared costs and credits include expenses and credits related to our chief executive officer and Board of Directors, certain provisions for bad debt allowances or subsequent recoveries such as those related to bankrupt clients, defined benefit pension costs or credits for our frozen U.S. pension plan, certain unallocated professional fees, CEWS benefits, and certain self-insurance costs and recoveries that are not allocated to our individual operating segments.

Additional discussion and analysis of our income taxes, net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, contingent earnout adjustments, goodwill impairments, and unallocated corporate and shared costs and credits follows the discussion and analysis of the results of operations of our four operating segments.

Segment Revenues

In the normal course of business, our operating segments incur certain out-of-pocket expenses that are thereafter reimbursed by our clients. Under GAAP, these out-of-pocket expenses and associated reimbursements are reported on a gross basis when reporting revenues and expenses, respectively, in our unaudited Condensed Consolidated Statements of Operations. In the discussion and analysis of results of operations which follows, we do not include a gross up of expenses and revenues for these pass-through reimbursed expenses. The amounts of reimbursed expenses and related revenues offset each other in our results of operations with no impact to our net income or operating earnings. A reconciliation of revenues before reimbursements to total revenues determined in accordance with GAAP is presented on the face of the accompanying unaudited Condensed Consolidated Statements of Operations.

Our segment results are impacted by changes in foreign exchange rates. We believe that a non-GAAP discussion and analysis of segment revenues before reimbursements by major region, based on actual exchange rates and using a constant exchange rate, is helpful in understanding the results of our segment operations.

Segment Expenses

Our discussion and analysis of segment operating expenses is comprised of two components: "Direct Compensation, Fringe Benefits & Non-Employee Labor" and "Expenses Other Than Direct Compensation, Fringe Benefits & Non-Employee Labor."

"Direct Compensation, Fringe Benefits & Non-Employee Labor" includes direct compensation, payroll taxes, and benefits provided to the employees of each segment, as well as payments to outsourced service providers that augment our staff in each segment. As a service company, these costs represent our most significant and variable operating expenses.

Costs of administrative functions, including direct compensation, payroll taxes, and benefits, are managed centrally and considered indirect costs. The allocated indirect costs of our shared-services infrastructure are allocated to each segment based on usage and reflected within "Expenses Other Than Direct Compensation, Fringe Benefits & Non-Employee Labor" of each segment.

In addition to allocated corporate and shared costs, "Expenses Other Than Direct Compensation, Fringe Benefits & Non-Employee Labor" includes travel and entertainment, office rent and occupancy costs, automobile expenses, office operating expenses, data processing costs, cost of risk, professional fees, and amortization and depreciation expense other than amortization of customer-relationship intangible assets.

In addition, we believe that a non-GAAP discussion and analysis of segment gross profit is helpful in understanding the results of our segment operations, excluding indirect centralized administrative support costs. Our discussion and analysis of segment gross profit includes the revenues and direct expenses of each segment.

Unless noted in the following discussion and analysis, revenue amounts exclude reimbursements for out-of-pocket expenses and expense amounts exclude reimbursed out-of-pocket expenses.

Segment Performance Indicators

We typically earn our revenues on an individual fee-per-claim basis for claims management services we provide to carriers, brokers and corporates. Accordingly, the volume of claim referrals to us is a key driver of our revenues. We believe that a discussion and analysis of the segment unit volumes, as measured by cases received, is helpful in understanding the results of our operations.

Valuation of Goodwill, Intangible Assets, and Other Long-Lived Assets

Subsequent to a business acquisition in which goodwill and indefinite-lived intangibles are recorded as assets, post-acquisition accounting requires that both be tested to determine whether there has been an impairment. We perform an impairment test of goodwill and indefinite-lived intangible assets at least annually on October 1 of each year. We regularly evaluate whether events and circumstances have occurred which indicate potential impairment of goodwill or indefinite-lived intangible assets. When factors indicate that such assets should be evaluated for possible impairment between the scheduled annual impairment tests, we perform an interim impairment test.

In accordance with the accounting guidance, we performed a goodwill impairment assessment immediately before and after the January 1, 2022 change in operating segments, neither of which resulted in any additional impairment charges.

During the second quarter of 2022, we identified a goodwill impairment indicator in our International Operations reporting unit as a result of lower operating results compared to forecast. We performed an interim quantitative goodwill impairment test and determined no goodwill impairment existed. However, the excess of the fair value over the carrying value was only $2.3 million, or 1.4% of book value.

During the third quarter of 2022, we identified goodwill impairment indicators in our International Operations reporting unit and Crawford Legal Services reporting unit, which are reflected in our International Operations reportable segment, as a result of a reduction in forecasted revenue and earnings, higher interest rates, and a lower Crawford & Company stock price. We also identified goodwill impairment indicators in our North America Loss Adjusting and Platform Solutions reportable segments related to the edjuster Inc. and Praxis Consulting Inc. reporting units, as these reporting units had minimal historical excess of fair value over the carrying value due to being recent acquisitions, given higher interest rates and a lower Crawford & Company stock price. As a result of these indicators, the Company performed an interim quantitative goodwill impairment test as of August 31, 2022 and recognized a pretax goodwill impairment of $36.8 million. This charge was partially offset by a $15.9 million reduction in income tax expense. Due to the non-discrete income tax treatment of the goodwill impairment, we anticipate the income tax benefit of the impairment to normalize during the fourth quarter, resulting in a lower anticipated full year income tax benefit of $3.4 million. The goodwill impairment charge reduced the carrying value of goodwill in our edjuster Inc. and Praxis Consulting Inc. reporting units by $3.4 million and $10.7 million, respectively. The goodwill related to our International Operations and Crawford Legal Services reporting units were fully impaired with charges of $19.6 million and $3.2 million, respectively.

The key assumptions used in estimating the fair value of our reporting units as of August 31, 2022 utilizing the income approach include the discount rate and the terminal growth rate. The discount rates utilized in estimating the fair value of our reporting units as of August 31, 2022 range between 15.5% and 18.0%, reflecting our assessment of a market participant's view of the risks associated with the projected cash flows. The terminal growth rate used in the analysis was 2.0%. The assumptions used in estimating the fair values are based on currently available data and management's best estimate of revenues, EBITDA margin, and cash flows and, accordingly, a change in market conditions or other factors could have a material effect on the estimated values. There are inherent uncertainties related to the assumptions used and to management's application of these assumptions.

Operating results for our North America Loss Adjusting, International Operations, Broadspire, and Platform Solutions segments reconciled to net income before income taxes and net income attributable to shareholders of Crawford & Company were follows:


	Three Months Ended						Nine Months Ended
(in thousands, except percentages)	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Revenues:
North America Loss Adjusting	$	66,822		$	64,334		$	197,035		$	176,844
International Operations		86,066			91,888			269,048			269,624
Broadspire		78,381			75,804			234,949			225,982
Platform Solutions		63,655			56,474			166,262			136,688
Total Revenues before reimbursements		294,924			288,500			867,294			809,138
Reimbursements		11,493			9,062			30,564			27,124
Total Revenues	$	306,417		$	297,562		$	897,858		$	836,262
Direct Compensation, Fringe Benefits & Non-Employee Labor:
North America Loss Adjusting	$	48,476		$	45,706		$	143,386		$	126,584
% of related revenues before reimbursements		72.5	%		71.0	%		72.8	%		71.6	%
International Operations		61,515			62,505			189,819			185,643
% of related revenues before reimbursements		71.5	%		68.0	%		70.6	%		68.9	%
Broadspire		49,863			47,187			147,611			139,025
% of related revenues before reimbursements		63.6	%		62.2	%		62.8	%		61.5	%
Platform Solutions		42,106			37,904			110,424			87,472
% of related revenues before reimbursements		66.1	%		67.1	%		66.4	%		64.0	%
Total	$	201,960		$	193,302		$	591,240		$	538,724
% of Revenues before reimbursements		68.5	%		67.0	%		68.2	%		66.6	%
Expenses Other than Direct Compensation, Fringe Benefits & Non-Employee Labor:
North America Loss Adjusting	$	14,668		$	14,266		$	43,141		$	38,456
% of related revenues before reimbursements		22.0	%		22.2	%		21.9	%		21.7	%
International Operations		28,400			27,436			86,852			80,581
% of related revenues before reimbursements		33.0	%		29.9	%		32.3	%		29.9	%
Broadspire		22,320			21,678			67,039			66,714
% of related revenues before reimbursements		28.5	%		28.6	%		28.5	%		29.5	%
Platform Solutions		11,469			8,846			33,124			26,383
% of related revenues before reimbursements		18.0	%		15.7	%		19.9	%		19.3	%
Total before reimbursements		76,857			72,226			230,156			212,134
% of Revenues before reimbursements		26.1	%		25.0	%		26.5	%		26.2	%
Reimbursements		11,493			9,062			30,564			27,124
Total	$	88,350		$	81,288		$	260,720		$	239,258
% of Revenues		28.8	%		27.3	%		29.0	%		28.6	%
Segment Operating Earnings (Loss):
North America Loss Adjusting	$	3,678		$	4,362		$	10,508		$	11,804
% of related revenues before reimbursements		5.5	%		6.8	%		5.3	%		6.7	%
International Operations		(3,849	)		1,947			(7,623	)		3,400
% of related revenues before reimbursements		(4.5	)%		2.1	%		(2.8	)%		1.3	%
Broadspire		6,198			6,939			20,299			20,243
% of related revenues before reimbursements		7.9	%		9.2	%		8.6	%		9.0	%
Platform Solutions		10,080			9,724			22,714			22,833
% of related revenues before reimbursements		15.8	%		17.2	%		13.7	%		16.7	%
Deduct:
Unallocated corporate and shared costs, net		(1,907	)		(2,173	)		(5,732	)		(4,835	)
Net corporate interest expense		(2,903	)		(1,648	)		(6,201	)		(4,443	)
Stock option expense		(142	)		(296	)		(478	)		(700	)
Amortization of customer-relationship intangible assets		(1,998	)		(2,877	)		(5,784	)		(8,426	)
Contingent earnout adjustments		(887	)		—			(3,246	)		—
Goodwill impairment		(36,808	)		—			(36,808	)		—
(Loss) income before income taxes		(28,538	)		15,978			(12,351	)		39,876
Benefit (provision) for income taxes		13,286			(4,866	)		8,092			(10,927	)
Net (loss) income		(15,252	)		11,112			(4,259	)		28,949
Net loss attributable to noncontrolling interests		108			83			41			90
Net (loss) income attributable to shareholders of Crawford & Company	$	(15,144	)	$	11,195		$	(4,218	)	$	29,039

NORTH AMERICA LOSS ADJUSTING SEGMENT

Operating earnings in our North America Loss Adjusting segment totaled $3.7 million, or 5.5% of revenues before reimbursements, for the three months ended September 30, 2022, compared with 2021 operating earnings of $4.4 million, or 6.8% of revenues before reimbursements. For the nine months ended September 30, 2022, our North America Loss Adjusting segment reported operating earnings of $10.5 million, or 5.3% of revenues before reimbursements, compared with 2021 operating earnings of $11.8 million, or 6.7% of revenues before reimbursements. The decrease in operating earnings in the 2022 third quarter and year-to-date period was primarily due to an increase in compensation expense. There was a $0.7 million and $2.6 million expense benefit in the three months and nine months ended September 30, 2021, respectively, as a result of the Canada Emergency Wage Subsidy (“CEWS”), compared to no benefit in the 2022 periods.

Excluding centralized indirect support costs, gross profit decreased from $12.6 million, or 19.6% of revenues before reimbursements in 2021, to $12.2 million, or 18.2% of revenues before reimbursements, in the three months ended September 30, 2022. For the nine months ended September 30, 2022, gross profit decreased from $35.2 million, or 19.9% of revenues before reimbursements in 2021, to $34.4 million, or 17.5% of revenues before reimbursements, due primarily to an increase in compensation expense and the absence of the CEWS benefit.

Operating results for our North America Loss Adjusting segment, including gross profit, for the three and nine months ended September 30, 2022 and 2021 were as follows:


	In thousands (except percentages)
	Based on actual exchange rates			Based on exchange rates for the three months ended September 30, 2021
Three Months Ended September 30,	2022	2021	Variance	2022	Variance
Revenues	$66,822	$64,334	3.9%	$67,758	5.3%
Direct expenses	54,658	51,703	5.7%	55,453	7.3%
Gross profit	12,164	12,631	(3.7)%	12,305	(2.6)%
Indirect expenses	8,486	8,269	2.6%	8,594	3.9%
Total North America Loss Adjusting Operating Earnings	$3,678	$4,362	(15.7)%	$3,711	(14.9)%

Gross profit margin	18.2%	19.6%	(1.4)%	18.2%	(1.4)%
Operating margin	5.5%	6.8%	(1.3)%	5.5%	(1.3)%


	In thousands (except percentages)
	Based on actual exchange rates			Based on exchange rates for the nine months ended September 30, 2021
Nine Months Ended September 30,	2022	2021	Variance	2022	Variance
Revenues	$197,035	$176,844	11.4%	$198,915	12.5%
Direct expenses	162,615	141,687	14.8%	164,210	15.9%
Gross profit	34,420	35,157	(2.1)%	34,705	(1.3)%
Indirect expenses	23,912	23,353	2.4%	24,162	3.5%
Total North America Loss Adjusting Operating Earnings	$10,508	$11,804	(11.0)%	$10,543	(10.7)%

Gross profit margin	17.5%	19.9%	(2.4)%	17.4%	(2.5)%
Operating margin	5.3%	6.7%	(1.4)%	5.3%	(1.4)%

Revenues before Reimbursements

North America Loss Adjusting segment revenues are primarily derived from the global 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, 2022 and 2021 were as follows:


	Three Months Ended
	Based on actual exchange rates							Based on exchange rates for the three months ended September 30, 2021
(in thousands, except percentages)	September 30, 2022		September 30, 2021		Variance			September 30, 2022		Variance
U.S.	$	41,161	$	43,276		(4.9	)%	$	41,161		(4.9	)%
Canada		25,661		21,058		21.9	%		26,597		26.3	%
Total North America Loss Adjusting Revenues before Reimbursements	$	66,822	$	64,334		3.9	%	$	67,758		5.3	%


	Nine Months Ended
	Based on actual exchange rates							Based on exchange rates for the nine months ended September 30, 2021
(in thousands, except percentages)	September 30, 2022		September 30, 2021		Variance			September 30, 2022		Variance
U.S.	$	122,438	$	113,999		7.4	%	$	122,438		7.4	%
Canada		74,597		62,845		18.7	%		76,477		21.7	%
Total North America Loss Adjusting Revenues before Reimbursements	$	197,035	$	176,844		11.4	%	$	198,915		12.5	%

Revenues before reimbursements from our North America Loss Adjusting segment totaled $66.8 million in the three months ended September 30, 2022, compared with $64.3 million in the 2021 period. This increase was due to an increase in case volumes in Canada from both new and existing clients and the recent edjuster, Inc. acquisition. The change in exchange rates decreased our North America Loss Adjusting segment revenues by approximately 1.4%, or $0.9 million, for the three months ended September 30, 2022 as compared with the 2021 period. Absent foreign exchange rate fluctuations, North America Loss Adjusting segment revenues would have been $67.8 million for the three months ended September 30, 2022. There was a $1.9 million increase, or 3.0% increase in North America Loss Adjusting revenues in the quarter as a result of the recent edjuster, Inc. acquisition. There was a decrease in segment unit volume, measured principally by cases received, of 8.0% (13.1% excluding edjuster cases) for the three months ended September 30, 2022, compared with the 2021 period, due to cases received in the 2021 third quarter resulting from hurricane Ida in the U.S. Changes in product mix and in the rates charged for those services accounted for a 15.4% revenue increase for the three months ended September 30, 2022 compared with the same period in 2021.

Revenues before reimbursements from our North America Loss Adjusting segment totaled $197.0 million in the nine months ended September 30, 2022, compared with $176.8 million in the 2021 period. This increase was due to an increase in case volumes in Canada from both new and existing clients and the recent acquisition. The change in exchange rates decreased our North America Loss Adjusting segment revenues by approximately 1.1%, or $1.9 million, for the nine months ended September 30, 2022 as compared with the 2021 period. Absent foreign exchange rate fluctuations, North America Loss Adjusting segment revenues would have been $198.9 million for the nine months ended September 30, 2022. There was a $9.1 million increase, or 5.1% increase in North America Loss Adjusting revenues in the year-to-date period as a result of the recent edjuster, Inc. acquisition. There was an increase in segment unit volume, measured principally by cases received, of 7.1% (1.8% excluding edjuster cases) for the nine months ended September 30, 2022, compared with the 2021 period. Changes in product mix and in the rates charged for those services accounted for an 5.6% revenue increase for the nine months ended September 30, 2022 compared with the same period in 2021.

The decrease in revenues in the U.S. for the three months ended September 30, 2022 was due to cases received in the 2021 third quarter resulting from hurricane Ida. The increase in revenues in the U.S. for the nine months ended September 30, 2022 was due to an increase in Global Technical Services revenues and a change in the mix of services provided, due to a lower proportion of high-frequency, low-severity cases in the current year. Based on constant foreign exchange rates, there was an increase in revenues in Canada in 2022, compared with 2021, primarily due to the recent edjuster, Inc. acquisition and the recovery from the negative economic impacts of COVID-19 that were present in 2021.

Reimbursed Expenses included in Total Revenues

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 $2.1 million for the three months ended September 30, 2022 and 2021, respectively.

Reimbursements were $6.2 million and $6.1 million for the nine months ended September 30, 2022 and 2021, respectively. These increases were due to the increase in revenues, partially offset by a change in the mix of claims handled in 2022.

Case Volume Analysis

North America Loss Adjusting segment unit volumes by geographic region, measured by cases received, for the three and nine months ended September 30, 2022 and 2021 were as follows:


	Three Months Ended							Nine Months Ended
(whole numbers, except percentages)	September 30, 2022		September 30, 2021		Variance			September 30, 2022		September 30, 2021		Variance
U.S.		32,279		45,356		(28.8	)%		100,694		114,935		(12.4	)%
Canada		39,833		33,066		20.5	%		124,830		95,605		30.6	%
Total North America Loss Adjusting Cases Received		72,112		78,422		(8.0	)%		225,524		210,540		7.1	%

Overall, there was a decrease in cases of 8.0% in the three months ended September 30, 2022 due to cases received in the 2021 third quarter resulting from hurricane Ida in the U.S. There was an increase in cases received of 7.1% for the nine months ended September 30, 2022, compared with the 2021 period. The decrease in U.S. case volumes in the 2022 third quarter was due to cases received in the 2021 third quarter resulting from hurricane Ida. The decrease in U.S. case volumes in the year-to-date period was due to a change in the mix of services provided due to a lower proportion of high-frequency, low-severity cases. There was an increase in cases in Canada in the 2022 third quarter and nine month period due to an increase in weather-related activity and due to the recovery from the impact of the pandemic which was present in the 2021 period. Edjuster, which was acquired in the third quarter of 2021, resulted in an increase of 4,000 cases, or 5.1% of cases received, and 11,200 cases, or 5.3% of cases received for the three months and nine months ended September 30, 2022, respectively, compared with the 2021 periods.

Direct Compensation, Fringe Benefits & Non-Employee Labor

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, direct compensation, fringe benefits, and non-employee labor expenses were 72.5% for the three months ended September 30, 2022 compared with 71.0% for the 2021 period. For the nine months ended September 30, 2022, direct compensation, fringe benefits, and non-employee labor expenses were 72.8%, compared with 71.6% in 2021. The total dollar amount of these expenses increased to $48.5 million for the three months ended September 30, 2022 from $45.7 million for the comparable 2021 period, and were $143.4 million for the nine months ended September 30, 2022 compared to $126.6 million in 2021. The increase in amounts was due to the increased revenues and an additional 203 employees from the recent acquisition. The increase in the percentage of revenues before reimbursements is due to increased compensation expense, including the variance due to the $0.7 million and $2.6 million expense benefit in the 2021 three month and nine month periods, respectively, as a result of CEWS, compared to no benefit in the 2022 periods. There was an average of 2,017 full-time equivalent employees in this segment in the nine months ended September 30, 2022 compared with an average of 1,740 in the 2021 period.

Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor

North America Loss Adjusting expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor were $14.7 million for the three months ended September 30, 2022 compared with $14.3 million for the 2021 period. As a percentage of revenues before reimbursements, expenses other than direct compensation, fringe benefits, and non-employee labor expenses were 22.0% for the three months ended September 30, 2022 compared with 22.2% for the 2021 period. For the nine months ended September 30, 2022, expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor were $43.1 million, compared with $38.5 million for the 2021 period. As a percentage of revenues before reimbursements, expenses other than direct compensation, fringe benefits, and non-employee labor expenses were 21.9% for the nine months ended September 30, 2022 compared with 21.7% for the 2021 period. The increase in the current year amounts was due to technology investments and integration costs of the recent acquisition.

INTERNATIONAL OPERATIONS SEGMENT

Operating loss in our International Operations segment was ($3.8) million, or (4.5)% of revenues before reimbursements, for the three months ended September 30, 2022, compared with operating earnings of $1.9 million, or 2.1% of revenues before reimbursements, in 2021. For the nine months ended September 30, 2022, our International Operations segment reported an operating loss of ($7.6) million, or (2.8)% of revenues before reimbursements, compared with 2021 operating earnings of $3.4 million, or 1.3% of revenues before reimbursements. The decrease in operating earnings in the 2022 periods was primarily due to lower profitability in certain international operations, primarily in the UK and our Legal Services service line, and an increase in compensation expense.

Excluding centralized indirect support costs, gross profit decreased from $14.0 million, or 15.2% of revenues before reimbursements in 2021, to $9.6 million, or 11.2% of revenues before reimbursements, in the three months ended September 30, 2022. For the nine months ended September 30, 2022, gross profit decreased from $39.2 million, or 14.5% of revenues before reimbursements in 2021, to $33.1 million, or 12.3% of revenues before reimbursements. These decreases were primarily due to losses in certain international operations and an increase in compensation expense.

Operating results for our International Operations segment, including gross profit, for the three and nine months ended September 30, 2022 and 2021 were as follows:


	In thousands (except percentages)
	Based on actual exchange rates			Based on exchange rates for the three months ended September 30, 2021
Three Months Ended September 30,	2022	2021	Variance	2022	Variance
Revenues	$86,066	$91,888	(6.3)%	$96,161	4.7%
Direct expenses	76,447	77,904	(1.9)%	85,697	10.0%
Gross profit	9,619	13,984	(31.2)%	10,464	(25.2)%
Indirect expenses	13,468	12,037	11.9%	15,190	26.2%
Total International Operations Operating (Loss) Earnings	$(3,849)	$1,947	(297.7)%	$(4,726)	(342.7)%

Gross profit margin	11.2%	15.2%	(4.0)%	10.9%	(4.3)%
Operating margin	(4.5)%	2.1%	(6.6)%	(4.9)%	(7.0)%


	In thousands (except percentages)
	Based on actual exchange rates			Based on exchange rates for the nine months ended September 30, 2021
Nine Months Ended September 30,	2022	2021	Variance	2022	Variance
Revenues	$269,048	$269,624	(0.2)%	$287,252	6.5%
Direct expenses	235,973	230,451	2.4%	252,114	9.4%
Gross profit	33,075	39,173	(15.6)%	35,138	(10.3)%
Indirect expenses	40,698	35,773	13.8%	43,906	22.7%
Total International Operations Operating (Loss) Earnings	$(7,623)	$3,400	(324.2)%	$(8,768)	(357.9)%

Gross profit margin	12.3%	14.5%	(2.2)%	12.2%	(2.3)%
Operating margin	(2.8)%	1.3%	(4.1)%	(3.1)%	(4.4)%

Revenues before Reimbursements

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, 2022 and 2021 were as follows:


	Three Months Ended
	Based on actual exchange rates							Based on exchange rates for the three months ended September 30, 2021
(in thousands, except percentages)	September 30, 2022		September 30, 2021		Variance			September 30, 2022		Variance
UK	$	25,352	$	35,662		(28.9	)%	$	28,852		(19.1	)%
Europe		20,535		21,851		(6.0	)%		23,382		7.0	%
Australia		27,434		22,391		22.5	%		29,886		33.5	%
Asia		5,196		4,671		11.2	%		5,483		17.4	%
Latin America		7,549		7,313		3.2	%		8,558		17.0	%
Total International Operations Revenues before Reimbursements	$	86,066	$	91,888		(6.3	)%	$	96,161		4.7	%


	Nine Months Ended
	Based on actual exchange rates							Based on exchange rates for the nine months ended September 30, 2021
(in thousands, except percentages)	September 30, 2022		September 30, 2021		Variance			September 30, 2022		Variance
UK	$	92,837	$	101,963		(9.0	)%	$	97,876		(4.0	)%
Europe		68,217		66,802		2.1	%		73,971		10.7	%
Australia		69,794		64,614		8.0	%		74,233		14.9	%
Asia		16,376		14,015		16.8	%		17,113		22.1	%
Latin America		21,824		22,230		(1.8	)%		24,059		8.2	%
Total International Operations Revenues before Reimbursements	$	269,048	$	269,624		(0.2	)%	$	287,252		6.5	%

Revenues before reimbursements from our International Operations segment totaled $86.1 million in the three months ended September 30, 2022, compared with $91.9 million in the 2021 period. This decrease was primarily due to the change in foreign exchange rates. Excluding foreign exchange impacts, International Operations revenues increased in most regions. The change in exchange rates decreased our International Operations segment revenues by approximately 11.0%, or $10.1 million, for the three months ended September 30, 2022 as compared with the 2021 period. Absent foreign exchange rate fluctuations, International Operations segment revenues would have been $96.2 million for the three months ended September 30, 2022. There was a $1.4 million increase, or 1.5% increase in International Operations revenues in the quarter as a result of the recent BosBoon and Van Dijk acquisitions in Europe. There was an increase in segment unit volume, measured principally by cases received, of 8.7% (8.4% excluding acquired cases) for the three months ended September 30, 2022, compared with the 2021 period. Changes in product mix and in the rates charged for those services accounted for a 5.2% revenue decrease for the three months ended September 30, 2022 compared with the same period in 2021, due to an increase in high-frequency, low-severity cases in Latin America.

Revenues before reimbursements from our International Operations segment totaled $269.0 million in the nine months ended September 30, 2022, compared with $269.6 million in the 2021 period. This slight decrease was primarily due to the change in foreign exchange rates; excluding foreign exchange impacts, International Operations revenues increased due to an increase in weather-related activity in Australia and Asia, partially offset by reductions in the U.K. and our Legal Services service line. The change in exchange rates decreased our International Operations segment revenues by approximately 6.7%, or $18.2 million, for the nine months ended September 30, 2022 as compared with the 2021 period. Absent foreign exchange rate fluctuations, International Operations segment revenues would have been $287.3 million for the nine months ended September 30, 2022. There was a $3.5 million increase, or 1.3% increase in International Operations revenues in the year-to-date period as a result of the recent European acquisitions. There was an increase in segment unit volume, measured principally by cases received, of 19.1% (18.7% excluding acquired cases) for the nine months ended September 30, 2022, compared with the 2021 period. 3.5% of this increase was due to an increase of 12,000 high-frequency, low-severity cases received in Latin America, primarily from the first quarter for which only minimal revenues are recognized. Changes in product mix and in the rates charged for those services accounted for a 10.0% revenue decrease for the nine months ended September 30, 2022 compared with the same period in 2021, due to an increase in high-frequency, low severity cases in Latin America, Europe and Asia.

Based on constant foreign exchange rates, the decrease in revenues in the U.K. for the 2022 third quarter and year-to-date period was due to a decrease in case volumes and a reduction in our Legal Services service line. There was an increase in revenues in Europe in the 2022 year-to-date period, compared with 2021, due to an increase in high-frequency, low-severity case volume increases in Scandinavia, and the recent BosBoon and Van Dijk acquisitions. There was an increase in revenues in Australia in the quarter and year-to-date periods due to an increase in weather-related case activity. There was an increase in revenues in Asia in the 2022 quarter and year-to-date periods, compared with 2021, due to an increase in high-frequency, low-severity weather-related case activity in the Philippines and Malaysia. There was an increase in revenues in Latin America in 2022 due to an increase in high-frequency, low-severity cases and a change in the mix of services provided.

Reimbursed Expenses included in Total Revenues

Reimbursements for out-of-pocket expenses incurred in our International Operations segment, which are included in total Company revenues, were $8.1 million and $5.3 million for the three months ended September 30, 2022 and 2021, respectively. Reimbursements were $21.3 million and $16.7 million for the nine months ended September 30, 2022 and 2021, respectively. The increase in reimbursed expenses were due to an increased use of third parties in the current year period, primarily related to handling cases received from the catastrophe in Australia.

Case Volume Analysis

International Operations segment unit volumes by geographic region, measured by cases received, for the three and nine months ended September 30, 2022 and 2021 were as follows:


	Three Months Ended							Nine Months Ended
(whole numbers, except percentages)	September 30, 2022		September 30, 2021		Variance			September 30, 2022		September 30, 2021		Variance
UK		33,785		37,247		(9.3	)%		113,035		107,448		5.2	%
Europe		51,119		51,480		(0.7	)%		165,093		155,733		6.0	%
Australia		14,461		11,224		28.8	%		55,965		39,238		42.6	%
Asia		4,152		3,428		21.1	%		16,293		10,692		52.4	%
Latin America		19,753		9,989		97.7	%		57,271		29,207		96.1	%
Total International Operations Cases Received		123,270		113,368		8.7	%		407,657		342,318		19.1	%

Overall, there was an increase in cases received of 8.7% for the three months ended September 30, 2022, compared with the 2021 period. This increase was due to an increase in weather-related cases in Australia related to flooding resulting in an increase in 2,000 cases, for which revenues are recognized across multiple quarters as services are performed. Latin America experienced increases in high-frequency, low-severity cases in Brazil and Colombia. The increase in cases received in Asia was due to an increase in high-frequency, low-severity weather-related activity in the Philippines and Malaysia. The U.K. declined due to a reduction in client referrals. Cases slightly declined in Europe despite an increase of 400 cases, or 0.3% of cases received for the three months ended September 30, 2022, due to the recent BosBoon and Van Dijk acquisitions.

Overall, there was an increase in cases received of 19.1% for the nine months ended September 30, 2022, compared with the 2021 period. 3.5% of the year-to-date increase was due to an increase of 12,000 high-frequency, low-severity cases received in Latin America for which only minimal revenues are recognized. In addition, 4.4% of the increase related to an increase in 15,000 high-frequency cases in Brazil, that while revenue was associated with those cases, it was lower relative to historical cases. There was an increase of 17,000 cases in Australia due to flooding in the second quarter, for which revenues are recognized across multiple quarters as services are performed. The increase in cases received in Asia was due to an increase in high-frequency, low-severity weather-related activity in the Philippines and Malaysia. There was an increase in Europe in the 2022 year-to-date period, compared with 2021, due to an increase in high-frequency, low-severity case volume increases in Scandinavia, and the recent BosBoon and Van Dijk acquisitions, which accounted for 1,400 cases, or 0.4%. The increase in cases received in the UK in the year-to-date period was due to changes in the mix of services provided.

Direct Compensation, Fringe Benefits & Non-Employee Labor

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, direct compensation, fringe benefits, and non-employee labor expenses were 71.5% for the three months ended September 30, 2022 compared with 68.0% for the 2021 period. The total dollar amount of these expenses were $61.5 million for the three months ended September 30, 2022, compared to $62.5 million for the 2021 period. For the nine months ended September 30, 2022, direct compensation, fringe benefits, and non-employee labor expenses were 70.6%, compared with 68.9% in 2021, and were $189.8 million for the nine months ended September 30, 2022 compared to $185.6 million in 2021. The increase in amounts was primarily due to an increase in employees, including 25 from the recent acquisition. The increase in the percentage of revenues before reimbursements is because compensation expense increased higher than the revenues in certain international operations, and higher compensation expense in our legal services business. There was an average of 3,631 full-time equivalent employees in this segment in the nine months ended September 30, 2022 compared with an average of 3,512 in the 2021 period.

Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor

International Operations expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor were $28.4 million for the three months ended September 30, 2022 compared with $27.4 million for the 2021 period. As a percentage of revenues before reimbursements, expenses other than direct compensation, fringe benefits, and non-employee labor expenses were 33.0% for the three months ended September 30, 2022 compared with 29.9% for the 2021 period. For the nine months ended September 30, 2022, expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor were $86.9 million, compared with $80.6 million for the 2021 period. As a percentage of revenues before reimbursements, expenses other than direct compensation, fringe benefits, and non-employee labor expenses were 32.3% for the nine months ended September 30, 2022, compared with 29.9% for the 2021 period. The increase in the expenses as a percent of revenues before reimbursements were due to technology investments and an increase in administrative support costs.

BROADSPIRE SEGMENT

Our Broadspire segment reported operating earnings of $6.2 million, or 7.9% of revenues before reimbursements, for the three months ended September 30, 2022 as compared with $6.9 million, or 9.2% of revenues before reimbursements, for the third quarter of 2021. For the nine months ended September 30, 2022, our Broadspire segment reported operating earnings of $20.3 million, or 8.6% of revenues before reimbursements, compared with 2021 operating earnings of $20.2 million, or 9.0% of revenues before reimbursements. The decrease in the third quarter was due to an increase in administrative support costs.

Excluding centralized indirect support costs, third quarter gross profit increased from $17.0 million, or 22.5% of revenues before reimbursements, in 2021 to $17.9 million, or 22.8% of revenues before reimbursements in 2022, due to the increase in revenues. For the nine months ended September 30, 2022, gross profit increased from $49.8 million, or 22.0% of revenues before reimbursements in 2021, to $52.0 million, or 22.1% of revenues before reimbursements, due to the increased revenues.

Operating results for our Broadspire segment, including gross profit, for the three and nine months ended September 30, 2022 and 2021 were as follows:


	In thousands (except percentages)
Three Months Ended September 30,	2022			2021			Variance
Revenues	$	78,381		$	75,804			3.4	%
Direct expenses		60,494			58,775			2.9	%
Gross profit		17,887			17,029			5.0	%
Indirect expenses		11,689			10,090			15.8	%
Total Broadspire Operating Earnings	$	6,198		$	6,939			(10.7	)%

Gross profit margin		22.8	%		22.5	%		0.3	%
Operating margin		7.9	%		9.2	%		(1.3	)%


	In thousands (except percentages)
Nine Months Ended September 30,	2022			2021			Variance
Revenues	$	234,949		$	225,982			4.0	%
Direct expenses		182,914			176,171			3.8	%
Gross profit		52,035			49,811			4.5	%
Indirect expenses		31,736			29,568			7.3	%
Total Broadspire Operating Earnings	$	20,299		$	20,243			0.3	%

Gross profit margin		22.1	%		22.0	%		0.1	%
Operating margin		8.6	%		9.0	%		(0.4	)%

Revenues before Reimbursements

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, 2022 and 2021 were as follows:


	Three Months Ended
(in thousands, except percentages)	September 30, 2022		September 30, 2021		Variance
Claims Management	$	40,275	$	38,326		5.1	%
Medical Management		38,106		37,478		1.7	%
Total Broadspire Revenues before Reimbursements	$	78,381	$	75,804		3.4	%


	Nine Months Ended
(in thousands, except percentages)	September 30, 2022		September 30, 2021		Variance
Claims Management	$	120,252	$	114,028		5.5	%
Medical Management		114,697		111,954		2.5	%
Total Broadspire Revenues before Reimbursements	$	234,949	$	225,982		4.0	%

Revenues before reimbursements from our Broadspire segment totaled $78.4 million in the three months ended September 30, 2022 compared with $75.8 million in the 2021 period. This increase was primarily due to an increase in new client growth across both service lines. Revenues were positively impacted by an increase in unit volumes, measured principally by cases received, of 13.6% for the three months ended September 30, 2022 compared with the same period of 2021. Changes in product mix and in the rates charged for those services accounted for a 10.2% revenue decrease for the 2022 third quarter compared with the 2021 period, due to an increase in Disability and Accident and Health ("A&H") claims which have a lower average fee per claim.

For the nine months ended September 30, 2022, revenues before reimbursements from our Broadspire segment totaled $234.9 million compared with $226.0 million in the 2021 period. This increase was primarily due to an increase in new client growth across both service lines, and general recovery from pandemic-impacted activity in 2021. Revenues were positively impacted by an increase in unit volumes, measured principally by cases received, of 11.8% for the nine months ended September 30, 2022 compared with the same period of 2021. Changes in product mix and in the rates charged for those services accounted for a 7.8% revenue decrease for the 2022 nine month period compared with 2021, due to an increase in Disability and A&H claims which have a lower average fee per claim.

Reimbursed Expenses included in Total Revenues

Reimbursements for out-of-pocket expenses incurred in our Broadspire segment were $0.8 million for the three months ended September 30, 2022, compared with $0.7 million in the comparable 2021 period. Reimbursements were $2.5 million and $2.2 million for the nine months ended September 30, 2022 and 2021, respectively. The increase in reimbursed expenses in the 2022 periods was due to the increased revenues and employee travel related to servicing cases from clients.

Case Volume Analysis

Broadspire unit volumes by service line, as measured by cases received, for the three and nine months ended September 30, 2022 and 2021 were as follows:


	Three Months Ended							Nine Months Ended
(whole numbers, except percentages)	September 30, 2022		September 30, 2021		Variance			September 30, 2022		September 30, 2021		Variance
Claims Management		110,242		91,905		20.0	%		315,636		270,746		16.6	%
Medical Management		31,416		32,798		(4.2	)%		98,867		100,094		(1.2	)%
Total Broadspire Cases Received		141,658		124,703		13.6	%		414,503		370,840		11.8	%

Overall case volumes were 13.6% and 11.8% higher for the three months and nine months ended September 30, 2022, respectively, due to an increase in new clients and an increase in Disability and A&H cases volumes. The decline in both periods for Medical Management cases received was due to fewer utilization review and physician consultant cases that were not fully offset with an increase in case management cases that typically result in higher average revenue per case. In addition, the 2021 period was negatively impacted by the pandemic. Broadspire unit volumes are sensitive to overall employment levels and workplace reported injuries.

Direct Compensation, Fringe Benefits & Non-Employee Labor

The most significant expense in our Broadspire 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. For the three months ended September 30, 2022, direct compensation, fringe benefits, and non-employee labor, as a percent of the related revenues before reimbursements, increased from 62.2% in 2021 to 63.6% in 2022. For the nine months ended September 30, 2022, direct compensation, fringe benefits, and non-employee labor expenses were 62.8%, compared with 61.5% in 2021. The total dollar amount of these expenses increased to $49.9 million for the three months ended September 30, 2022 from $47.2 million in 2021, and were $147.6 million for the nine months ended September 30, 2022 compared to $139.0 million for the 2021 period. The increase in the amounts was due to the increased revenues and an increase in average full-time equivalent employees. The increase in expense as a percent of revenues before reimbursements was due to an increase in compensation, advance hiring for new business, and additional staffing in support of client requirements. Average full-time equivalent employees in this segment totaled 2,473 in the first nine months ended September 30, 2022, compared with 2,235 in the comparable 2021 period.

Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor

Broadspire segment expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor as a percent of revenues before reimbursements were 28.5% for the three months ended September 30, 2022, compared with 28.6% in the 2021 period. The amount of these expenses increased slightly from $21.7 million for the three months ended September 30, 2021 to $22.3 million in 2022. For the nine months ended September 30, 2022, expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor were $67.0 million, compared with $66.7 million for the 2021 period. As a percentage of revenues before reimbursements, expenses other than direct compensation, fringe benefits, and non-employee labor expenses were 28.5% for the nine months ended September 30, 2022, compared with 29.5% for the 2021 period. The increase in the overall expense was due to the increase in revenues and higher indirect cost allocations that were partially offset with lower software amortization costs.

PLATFORM SOLUTIONS SEGMENT

Our Platform Solutions segment reported operating earnings of $10.1 million for the three months ended September 30, 2022, increasing from operating earnings of $9.7 million in the comparable 2021 period. The segment operating margin decreased from 17.2% for the three months ended September 30, 2021, to 15.8% in the comparable 2022 period. For the nine months ended September 30, 2022, our Crawford Platform Solutions segment reported operating earnings of $22.7 million, or 13.7% of revenues before reimbursements, compared with 2021 operating earnings of $22.8 million, or 16.7% of revenues before reimbursements. The decrease in operating margin in 2022 was due to an increase in compensation expense to support new client growth and an increase in technology investments.

Excluding indirect support costs, gross profit in the third quarter increased from $13.9 million, or 24.6% of revenues before reimbursements in 2021, to $15.6 million, or 24.5% of revenues before reimbursements, in 2022. For the nine months ended September 30, 2022, gross profit increased from $34.7 million, or 25.4% of revenues before reimbursements in 2021, to $38.0 million, or 22.8% of revenues before reimbursements in 2022. These increases were due to an increase in revenues in our Networks service line and the recent Praxis Consulting acquisition.

Operating results for our Platform Solutions segment, including gross profit, for the three and nine months ended September 30, 2022 and 2021 were as follows:


	In thousands (except percentages)
Three Months Ended September 30,	2022			2021			Variance
Revenues	$	63,655		$	56,474			12.7	%
Direct expenses		48,054			42,594			12.8	%
Gross profit		15,601			13,880			12.4	%
Indirect expenses		5,521			4,156			32.8	%
Total Platform Solutions Operating Earnings	$	10,080		$	9,724			3.7	%

Gross profit margin		24.5	%		24.6	%		(0.1	)%
Operating margin		15.8	%		17.2	%		(1.4	)%


	In thousands (except percentages)
Nine Months Ended September 30,	2022			2021			Variance
Revenues	$	166,262		$	136,688			21.6	%
Direct expenses		128,279			102,004			25.8	%
Gross profit		37,983			34,684			9.5	%
Indirect expenses		15,269			11,851			28.8	%
Total Platform Solutions Operating Earnings	$	22,714		$	22,833			(0.5	)%

Gross profit margin		22.8	%		25.4	%		(2.6	)%
Operating margin		13.7	%		16.7	%		(3.0	)%

Revenues before Reimbursements

Platform Solutions segment revenues are primarily derived from the property and casualty insurance company markets in the U.S. Revenues before reimbursements by service line for the three and nine months ended September 30, 2022 and 2021 were as follows:


	Three Months Ended
(in thousands, except percentages)	September 30, 2022		September 30, 2021		Variance
Contractor Connection	$	17,453	$	18,592		(6.1	)%
Networks		40,809		37,882		7.7	%
Subrogation		5,393		—	nm
Total Platform Solutions Revenues before Reimbursements	$	63,655	$	56,474		12.7	%


	Nine Months Ended
(in thousands, except percentages)	September 30, 2022		September 30, 2021		Variance
Contractor Connection	$	50,112	$	54,643		(8.3	)%
Networks		100,840		82,045		22.9	%
Subrogation		15,310		—	nm
Total Platform Solutions Revenues before Reimbursements	$	166,262	$	136,688		21.6	%

Revenues before reimbursements from our Platform Solutions segment totaled $63.7 million in the three months ended September 30, 2022, compared with $56.5 million in the 2021 period. This increase was primarily due to an increase in case volumes in our Networks service line due to new client growth and increased utilization with existing clients, and a $5.4 million increase, or 9.5% increase in Platform Solutions revenues, as a result of the recent Praxis Consulting acquisition. There was an increase in segment unit volume, measured principally by cases received, of 31.5%, including 7.9% from the Praxis acquisition, for the three months ended September 30, 2022, compared with the 2021 period. There was an increase in high-frequency, low-severity cases in our WeGoLook service line of 40,500 cases, or 35.4% in the three months ended September 30, 2022. Excluding cases from the Praxis acquisition and the WeGoLook cases, changes in product mix and in the rates charged for those services accounted for a 15.0% revenue increase for the three months ended September 30, 2022, compared with the same period in 2021.

For the nine months ended September 30, 2022, revenues before reimbursements from our Platform Solutions segment totaled $166.3 million, compared with $136.7 million in the 2021 period. This increase was primarily due to an increase in case volumes in our Networks service line due to new client growth and increased utilization with existing clients, and a $15.3 million increase, or 11.2% increase in Platform Solutions revenues, as a result of the recent acquisition. There was an increase in segment unit volume, measured principally by cases received, of 20.8%, 9.8% of which was from the Praxis acquisition for the nine months ended September 30, 2022, compared with the 2021 period. There was an increase in high-frequency, low-severity cases in our WeGoLook service line of 66,900 cases, or 21.4%, in the nine months ended September 30, 2022. Excluding cases from the Praxis acquisition and the WeGoLook cases, changes in product mix and in the rates charged for those services accounted for a 20.8% revenue increase for the nine months ended September 30, 2022, compared with the same period in 2021.

The increase in revenues for the three months and nine months ended September 30, 2022 was due to an increase in our Networks service line, and revenues from the recent acquisition. The decrease in Contractor Connection was due to a reduction in claim volumes in the current year, and the absence of weather-related cases that were present in the 2021 year-to-date period.

Reimbursed Expenses included in Total Revenues

Reimbursements for out-of-pocket expenses incurred in our Crawford Platform Solutions segment were $0.4 million for the three months ended September 30, 2022 compared with $1.0 million in the 2021 period. Reimbursements were $0.7 million and $2.3 million for the nine months ended September 30, 2022 and 2021, respectively. These decreases were due to a decreased use of third parties in the 2022 periods.

Case Volume Analysis

Platform Solutions unit volumes by service line, as measured by cases received, for the three and nine months ended September 30, 2022 and 2021 were as follows:


	Three Months Ended							Nine Months Ended
(whole numbers, except percentages)	September 30, 2022		September 30, 2021		Variance			September 30, 2022		September 30, 2021		Variance
Contractor Connection		41,573		46,241		(10.1	)%		117,801		135,659		(13.2	)%
Networks		99,606		68,014		46.4	%		229,680		177,390		29.5	%
Subrogation		9,013		—	nm				30,570		—	nm
Total Platform Solutions Cases Received		150,192		114,255		31.5	%		378,051		313,049		20.8	%

Overall case volumes were 31.5% and 20.8% higher in the three and nine months ended September 30, 2022, respectively, compared with the 2021 periods due to an increase in our Networks service line and the recent acquisition in our Subrogation service line. Excluding acquisition-related subrogation cases, the increase in cases received was 23.6% in the third quarter and 11.0% for the nine months ended September 30, 2022. This increase was primarily from high-frequency, low-severity cases in our WeGoLook service line of 40,500 cases, or 35.4% of the increase in cases from the three months ended September 30, 2021, and 66,900 cases, or 21.4% of the increase in cases from the nine months ended September 30, 2021. The decrease in cases in the Contractor Connection service line was due to carrier clients experiencing reduced claims activity, and the absence of weather-related cases that were present in the 2021 period.

Direct Compensation, Fringe Benefits & Non-Employee Labor

Platform Solutions direct compensation, fringe benefits, and non-employee labor expenses as a percent of revenues before reimbursements were 66.1% in the 2022 third quarter compared with 67.1% in the 2021 quarter. For the nine months ended September 30, 2022, direct compensation, fringe benefits, and non-employee labor expenses were 66.4%, compared with 64.0% in 2021. The dollar amount of these expenses was $42.1 million for the 2022 third quarter and $37.9 million in the 2021 quarter, and were $110.4 million for the nine months ended September 30, 2022 compared to $87.5 million in 2021. The increase in costs was due to the higher revenues in the current year and increased employees to support client growth in our Networks Service line, and the Praxis acquisition. The increase as a percentage of revenues before reimbursements in the current year was due to the change in product mix and higher compensation expense to support the new client growth. There was an average of 1,259 full-time equivalent employees in the Platform Solutions segment in the 2022 nine month period, compared with an average of 961 for the comparable 2021 period, including 105 from the Praxis Consulting acquisition.

Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor

Expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor were 18.0% of Platform Solutions revenues before reimbursements for the three months ended September 30, 2022 compared with 15.7% for the comparable period in 2021. For the nine months ended September 30, 2022, expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor were $33.1 million, compared with $26.4 million for the 2021 period. As a percentage of revenues before reimbursements, expenses other than direct compensation, fringe benefits, and non-employee labor expenses were 19.9% for the nine months ended September 30, 2022, compared with 19.3% for the 2021 period. The dollar amount of these expenses increased to $11.5 million in the 2022 third quarter as compared with $8.8 million in the 2021 period. The increase in the expense in the 2022 periods is due to the increased revenues and the recent acquisition. The increase as a percent of revenues before reimbursements is due to technology investments and an increase in travel and entertainment expenses.

EXPENSES AND CREDITS EXCLUDED FROM SEGMENT OPERATING EARNINGS

Income Taxes

Our consolidated effective income tax rate may change periodically due to changes in enacted tax rates, fluctuations in the mix of income earned from our various domestic and international operations, which are subject to income taxes at different rates, our ability to utilize net operating loss and tax credit carryforwards, amounts related to uncertain income tax positions, and goodwill impairments. We estimate that our effective income tax rate for 2022 will be approximately 250% to 260% after considering known discrete items as of September 30, 2022.

The provision for income taxes on consolidated income before income tax totaled a benefit of $(13.3) million and a provision of $4.9 million for the three months ended September 30, 2022 and 2021, respectively. The overall effective tax rate increased to 46.6% for the three months ended September 30, 2022 compared with 30.5% for the 2021 period primarily due to the impact of a partially non-deductible goodwill impairment.

The provision for income taxes on consolidated income before income tax totaled a benefit of $(8.1) million and a provision of $10.9 million for the nine months ended September 30, 2022 and 2021, respectively. The overall effective tax rate increased to 65.5% for the nine months ended September 30, 2022 compared with 27.4% for the 2021 period primarily due to the impact of a partially non-deductible goodwill impairment. There was a $15.9 million reduction in income tax expense in the third quarter due to the goodwill impairment referenced above. Due to the non-discrete income tax treatment of the goodwill impairment, the income tax benefit of the impairment will normalize during the fourth quarter, resulting in a lower anticipated full year income tax benefit of $3.4 million.

Net Corporate Interest Expense

Net corporate interest expense consists of interest expense that we incur on our short- and long-term borrowings, partially offset by any interest income we earn on available cash balances and short-term investments. These amounts vary based on interest rates, borrowings outstanding and the amounts of invested cash. Corporate interest expense totaled $3.1 million and $1.6 million for the three months ended September 30, 2022 and 2021, respectively. Interest income was $0.2 million and below $0.1 million for the three months ended September 30, 2022 and 2021, respectively. Corporate interest expense totaled $6.8 million and $4.8 million for the nine months ended September 30, 2022 and 2021, respectively. Interest income was $0.5 million and $0.3 million for the nine months ended September 30, 2022 and 2021, respectively.

Stock Option Expense

Stock option expense, a component of stock-based compensation, is comprised of non-cash expenses related to stock options granted under our various stock option and employee stock purchase plans. Stock option expense is not allocated to our operating segments. Stock option expense totaled $0.1 million and $0.3 million for the three months ended September 30, 2022 and 2021, respectively. Stock option expense totaled $0.5 million and $0.7 million for the nine months ended September 30, 2022 and 2021, respectively.

Amortization of Customer-Relationship Intangible Assets

Amortization of customer-relationship intangible assets represents the non-cash amortization expense for finite-lived customer-relationship and trade name intangible assets. Amortization expense associated with these intangible assets totaled $2.0 million and $2.9 million for the three months ended September 30, 2022 and 2021, respectively. Amortization expense associated with these intangible assets totaled $5.8 million for the nine months ended September 30, 2022 and $8.4 million for the 2021 period. The decrease in 2022 is due to the amortization period of a significant intangible asset ended in the fourth quarter of 2021. This amortization expense is included in "Selling, general, and administrative expenses" in our unaudited Condensed Consolidated Statements of Operations.

Unallocated Corporate and Shared Costs, Net

Certain unallocated corporate and shared costs are excluded from the determination of segment operating earnings. For the three and nine months ended September 30, 2022 and 2021, unallocated corporate and shared costs and credits represented costs of our frozen U.S. defined benefit pension plan, expenses for our chief executive officer and our Board of Directors, certain adjustments to our self-insured liabilities, certain unallocated legal costs and professional fees, and certain adjustments and recoveries to our allowances for estimated credit losses.

Unallocated corporate and shared costs were $1.9 million and $2.2 million for the three months ended September 30, 2022 and 2021, respectively. The decrease in the 2022 third quarter was due to a $1.8 million reduction in incentive compensation, partially offset by the absence of a $1.1 million CEWS benefit which was present in 2021, and an increase in self-insurance costs. For the nine months ended September 30, 2022 and 2021, unallocated corporate and shared costs were $5.7 million and $4.8 million, respectively. The increase for the year-to-date period is primarily due to the absence of a $3.2 million CEWS benefit which was present in 2021, and an increase in other unallocated costs, partially offset by a $1.8 million gain on sale of our Canadian head office building in Kitchener, Ontario, and a reduction in incentive compensation expense.

Contingent Earnout Adjustments

Contingent earnout expense represents the fair value adjustment of earnout liabilities arising from recent acquisitions. These expenses totaled $0.9 million and $3.2 million in the 2022 third quarter and year-to-date periods. The fair value adjustment is based on changes to projections of acquired entities over the respective earnout periods, which span multiple years.

Goodwill Impairment

We recognized a pretax non-cash goodwill impairment in the 2022 third quarter totaling $36.8 million. This impairment consisted of $3.4 million related to our North America Loss Adjusting reportable segment, $22.7 million related to our International Operations reportable segment, and $10.7 million related to our Platform Solutions reportable segment. See Note 9, "Fair Value Measurements" of our accompanying consolidated financial statements for further discussion about goodwill impairment.

LIQUIDITY, CAPITAL RESOURCES, AND FINANCIAL CONDITION

At September 30, 2022, our working capital balance (current assets less current liabilities) was approximately $83.0 million, an increase of $40.9 million from the working capital balance at December 31, 2021. Our cash and cash equivalents were $33.1 million at September 30, 2022, compared with $53.2 million at December 31, 2021.

Cash and cash equivalents as of September 30, 2022 consisted of $14.2 million held in the U.S. and $18.9 million held in our foreign subsidiaries. The Company generally does not provide for additional U.S. and foreign income taxes on undistributed earnings of foreign subsidiaries because they are considered to be indefinitely reinvested. During 2020 and 2021, the Company changed its permanent reinvestment assertion on a portion of prior year undistributed earnings for certain foreign operations and accrued deferred taxes attributable to these earnings. The remaining historical earnings and future foreign earnings are expected to remain permanently reinvested and will be used to provide working capital for these operations, fund defined benefit pension plan obligations, repay non-U.S. debt, fund capital improvements, and fund future acquisitions.

However, if at a future date or time funds that remain permanently reinvested are necessary for our operations in the U.S. or we otherwise believe it is in our best interests to repatriate all or a portion of such funds, we may be required to accrue and pay taxes to repatriate these funds. No assurances can be provided as to the amount or timing thereof, the tax consequences related thereto, or the ultimate impact any such action may have on our results of operations or financial condition.

Cash Used in/Provided by Operating Activities

Cash used in operating activities was $16.2 million for the nine months ended September 30, 2022, compared with $20.0 million provided by operating activities in the comparable period of 2021. The increase in cash used by operating activities was driven by a $19.9 million increase in the use of payroll and related tax accruals, increased incentive compensation payments of $10.4 million, $6.5 million increase in the use of billed and unbilled receivables, and $6.1 million of prior year CEWS benefits received that were not present in 2022, offset by a $9.1 million reduction in pension contributions.

Cash Used in Investing Activities

Cash used in investing activities was $48.2 million for the nine months ended September 30, 2022, compared with $38.8 million used in the first nine months of 2021. The increase in use for 2022 was primarily due to $20.9 million deferred payments related to the Praxis acquisition, partially offset by the cash paid for the prior year acquisitions of edjuster and HBA Legal. Capital expenditures were $24.9 million in 2022 compared to $20.6 million in 2021.

Cash Provided by Financing Activities

Cash provided by financing activities was $46.9 million for the nine months ended September 30, 2022, compared with $9.9 million for the 2021 period. We paid $8.9 million in dividends in the nine months ended September 30, 2022 compared with $9.6 million in the 2021 period. During the first nine months of 2022, there was an increase of $84.8 million of net borrowing from our revolving credit facility, compared with a net increase during the first nine months of 2021 of $26.6 million. Share repurchases totaled $26.7 million in the 2022 period, compared with $6.1 million for the first nine months of 2021.

Other Matters Concerning Liquidity and Capital Resources

As a component of our credit facility, we maintain a letter of credit facility to satisfy certain contractual obligations. Including $8.8 million of undrawn letters of credit issued under the letter of credit facility, the available balance under our credit facility totaled $183.3 million at September 30, 2022. Our short-term debt obligations typically peak during the first half of each year due to the annual payment of incentive compensation, contributions to retirement plans, working capital fluctuations, and certain other recurring payments, and generally decline during the balance of the year. The balance of short-term borrowings represents amounts under our credit facility that we expect, but are not required, to repay in the next twelve months. Long- and short-term borrowings outstanding, including current installments and finance leases, totaled $257.4 million as of September 30, 2022 compared with $175.0 million at December 31, 2021.

Our liquidity is defined as cash on hand and borrowing capacity under our Credit Facility with Bank of America (the "Credit Facility") based on our trailing twelve month EBITDA, as defined in our Credit Facility. At September 30, 2022, we had $33.1 million of cash on hand and, based on trailing twelve month EBITDA, additional borrowing capacity of $109.3 million, resulting in total liquidity of $142.4 million at September 30, 2022.

Defined Benefit Pension Funding and Cost

We sponsor a qualified defined benefit pension plan in the U.S. (the "U.S. Qualified Plan"), three defined benefit pension plans in the U.K., and defined benefit pension plans in the Netherlands, Norway, Germany, and the Philippines. Effective December 31, 2002, we froze our U.S. Qualified Plan. Our frozen U.S. Qualified Plan and U.K. plans were underfunded by $15.2 million and overfunded by $30.3 million, respectively, at December 31, 2021, based on accumulated benefit obligations of $403.3 million and $281.8 million for the U.S. Qualified Plan and the U.K. plans, respectively.

For the nine months ended September 30, 2022 the Company made no contributions to its U.S. defined benefit pension plan and $0.5 million to its U.K defined benefit pension plans, compared with $9.0 million in contributions to the U.S. plan and $0.5 million to the U.K. plans for the nine months ended September 30, 2021. The Company does not expect to make any additional discretionary contributions to its U.S. defined benefit pension plan during the remainder of 2022. Anticipated funding for the other international plans is not significant.

Dividend Payments

Our Board of Directors makes dividend decisions from time to time based in part on an assessment of current and projected earnings and cash flows. During the nine months ended September 30, 2022, we paid $8.9 million in dividends. Our ability to pay future dividends could be impacted by many factors including the funding requirements of our defined benefit pension plans, repayments of outstanding borrowings, levels of cash expected to be generated by our operating activities, and covenants and other restrictions contained in any credit facilities or other financing agreements. The covenants in our existing credit facility limit dividend payments to shareholders.

Financial Condition

Other significant changes on our unaudited Condensed Consolidated Balance Sheet as of September 30, 2022, compared with our unaudited Condensed Consolidated Balance Sheet as of December 31, 2021 were as follows:

•

Unbilled revenues increased $23.5 million excluding foreign currency exchange impacts. This increase was primarily due to an increase in weather-related activity in Australia in our International Operations segment, and an increase in the U.S. and Canada in our North America Loss Adjustment segment.

•

Accounts payable and accrued liabilities decreased $20.6 million excluding foreign exchange impacts. The decrease is primarily due to timing of payroll and related tax accruals and incentive compensation payments in the year.

•

Prepaid income taxes increased $23.2 million excluding foreign currency exchange impacts. The increase was primarily due to the impact of recording the goodwill impairment during the third quarter.

At September 30, 2022, we were not a party to any off-balance sheet arrangements which we believe could materially impact our operations, financial condition, or cash flows.

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, we have certain material obligations under operating lease agreements to which we are a party. The Company records operating lease-related assets and liabilities on our unaudited Condensed Consolidated Balance Sheets.

We also maintain funds in various trust accounts to administer claims for certain clients. These funds are not available for our general operating activities and, as such, have not been recorded in the accompanying unaudited Condensed Consolidated Balance Sheets. We have concluded that we do not have a material off-balance sheet risk related to these funds.

APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Except as set forth below, there have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.

New Accounting Standards Adopted

Additional information related to adoption of accounting standards is provided in Note 2 to the accompanying unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q.

Pending Adoption of New Accounting Standards

Additional information related to pending adoption of recently issued accounting standards is provided in Note 2 to the accompanying unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For a discussion of quantitative and qualitative disclosures about the Company's market risk, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," of our Annual Report on Form 10-K for the year ended December 31, 2021. Our exposures to market risk have not changed materially since December 31, 2021.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applies its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management's control objectives. The Company's management, including the Chief Executive Officer and the Chief Financial Officer, does not expect that our disclosure controls and procedures can prevent all possible errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. There are inherent limitations in all control systems, including the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of one or more persons. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and, while our disclosure controls and procedures are designed to be effective under circumstances where they should reasonably be expected to operate effectively, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in any control system, misstatements due to possible errors or fraud may occur and not be detected.

As of the end of the period covered by this report, we performed an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b). Based upon the foregoing, the Chief Executive Officer along with the Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at providing reasonable assurance that all information relating to the Company (including its consolidated subsidiaries) required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported in a timely manner.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1A. Risk Factors

In addition to the other information set forth in this report, the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021 could materially affect our business, financial condition, or results of operations. The risks described in this report and in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company's share repurchase authorization, approved on November 4, 2021 by the Company's Board of Directors, provided the Company with the ability to repurchase up to 2,000,000 shares of CRD-A or CRD-B (or a combination of the two) through December 31, 2023 (the "2021 Repurchase Authorization"). On February 11, 2022, the Company’s Board of Directors added 5,000,000 shares to this authorization. Under the 2021 Repurchase Authorization, repurchases may be made for cash, in the open market or privately negotiated transactions at such times and for such prices as management deems appropriate, subject to applicable contractual and regulatory restrictions. Since December 31, 2021, the Company has purchased 3,619,946 shares pursuant to the 2021 Repurchase Authorization. As of September 30, 2022 the Company was authorized to repurchase 1,793,371 shares under the 2021 Repurchase Authorization.


Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares That May be Purchased Under the Plans or Programs
Balance as of June 30, 2022		3,619,946				3,619,946		1,793,371
July 1, 2022 - July 31, 2022
CRD-A		—	$	—		—
CRD-B		—	$	—		—
Totals of July 31, 2022								1,793,371
August 1, 2022 - August 31, 2022
CRD-A		—	$	—		—
CRD-B		—	$	—		—
Totals of August 31, 2022								1,793,371
Septemeber 1, 2022 - September 30, 2022
CRD-A		—	$	—		—
CRD-B		—	$	—		—
Totals as of September 30, 2022		3,619,946				3,619,946		1,793,371

Item 6. Exhibits


Exhibit
No.		Description
15		Letter of Ernst & Young LLP
31.1		Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Crawford & Company
		(Registrant)

Date:	November 8, 2022	/s/ Rohit Verma
		Rohit Verma
		Chief Executive Officer
		(Principal Executive Officer)

Date:	November 8, 2022	/s/ W. Bruce Swain
		W. Bruce Swain
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)