Crawford & Company announced its financial results for the first quarter ended March 31, 2003, noting that revenues before reimbursements totaled $167.3 million compared with $171.8 million in the 2002 first quarter. First quarter 2003 net income was $3.2 million versus $8.2 million for the 2002 first quarter.
Net income in the 2002 first quarter included a payment received from a former vendor in full settlement of a business dispute of $3.8 million, net of related income tax expense, or $0.08 per share. First quarter 2003 net income per share was $0.07 per share, compared with $0.17 in the prior-year quarter.
Operating earnings is one of the key performance measures used by the company’s senior management to evaluate the performance of its business and make resource allocation decisions. The company believes this measure is useful to investors in that it allows them to evaluate its performance using the same criteria that management uses. Operating earnings (earnings before special credit, net corporate interest and taxes) in the 2003 first quarter totaled $6.4 million compared with $8.0 million in the comparable 2002 quarter.
U.S. revenues before reimbursements were $115.1 million in the first quarter of 2003 compared with $126.6 million in the 2002 first quarter. Revenues from the insurance company market were $58.7 million in the 2003 first quarter compared with $64.8 million in the 2002 period, reflecting a continued softening in the company’s U.S. insurance company referrals for high-frequency, low-severity claims in the current quarter.
Lower medical bill auditing revenues associated with the previously reported non-renewal of a contract with a major domestic insurer contributed $3.1 million of this decline. Revenues from self-insured clients were $42.5 million in the 2003 first quarter compared with $50.3 million in the 2002 quarter, primarily reflecting declines in U.S. employment levels and associated injury rates which have contributed to a reduction in workers’ compensation claims. Class action services revenues were $13.9 million for the 2003 first quarter, compared with $11.5 million in the comparable year-ago quarter.
Grover L. Davis, chief executive officer of Crawford & Company, stated, “Our first quarter results reflect a continued industry-wide decline in property & casualty claims frequency. Conservative underwriting, increases in policy deductibles, and mild weather have contributed to a decline in property and casualty claims frequency, resulting in an overall 14 percent decline in cases received in the U.S. These factors impacted our U.S. insurance company referrals for high-frequency, low-severity claims and resulted in lower U.S. revenues.”
Davis added that in response to the decline in claims volume, Crawford successfully reduced its U.S. operating expenses by around 8 percent in the current quarter. He said the company remains “committed to preserving our profitability and are currently taking aggressive steps to reduce our U.S. annual operating costs by approximately $15 million from their current level.”
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