CRAWFORD & CO (CRD-A)

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:

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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,

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changes in global economic conditions, including the impact of tariffs,

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the impact of changing climate conditions,

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changes in interest rates,

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changes in foreign currency exchange rates,

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changes in regulations and practices of various governmental authorities,

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changes in our competitive environment,

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changes in the financial condition of our clients,

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

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the loss of any material customer,

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our ability to successfully integrate the operations of acquired businesses,

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our ability to timely identify and effectively remediate material weaknesses in internal control over financial reporting,

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regulatory changes related to funding of defined benefit pension plans,

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

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

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

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

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our ability to attract and retain qualified personnel,

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

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

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continued availability of funding under our financing agreements,

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

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

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

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

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

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

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proliferation and escalation of international hostilities and geopolitical events, such as the ongoing conflicts in the Middle East and Russia/Ukraine,

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risks associated with our having a controlling shareholder, and

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

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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 six months ended June 30, 2026 and 2025, and as of June 30, 2026, and December 31, 2025, 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, 2025. 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.

Results of Operations

Consolidated revenues before reimbursements decreased $1.6 million, or (0.5)%, for the three months ended June 30, 2026, compared with the same period of 2025. This decrease was primarily driven by lower volumes in our U.S. Property & Casualty reportable segment, as well as revenue reductions due to the disposal of the Crawford Legal Services businesses in our International Operations reportable segment. Changes in foreign exchange rates increased our consolidated revenues before reimbursements by $7.7 million, or 2.4%, for the three months ended June 30, 2026 and increased revenues by $15.5 million, or 2.5%, for the six months ended June 30, 2026, 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 six months ended June 30, 2026.

Excluding foreign currency impacts, consolidated revenues before reimbursements decreased $9.3 million, or (2.9)%, for the three months ended June 30, 2026 and decreased $19.6 million, or (3.1)%, for the six months ended June 30, 2026 compared with the same periods of 2025. Revenues from the U.S. Property & Casualty segment decreased in the 2026 second quarter and year to date period primarily due to a continued decrease in staff augmentation and weather-driven services within our Catastrophe Services and Contractor Connection businesses. Revenues from the Broadspire segment increased for each of the 2026 periods due to an increase in Claims and Medical Management revenues, partially offset by a reduction in Subrogation revenues. Excluding foreign currency impacts, revenues from the International Operations segment decreased in the 2026 second quarter compared with the same period in 2025 due to reductions in the U.K. and Latin America, partially offset by revenue increases in Australia, Canada, and Asia. Excluding foreign currency impacts, revenues from the International Operations segment decreased in the six months ended June 30, 2026 as compared to the same period in 2025 due to reductions in the U.K., Europe, and Latin America, partially offset by revenue increases in Australia, Canada, and Asia.

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Overall, there were slight increases in cases received of 0.1% and 0.4% for the three and six months ended June 30, 2026, respectively. Within our U.S. Property & Casualty segment, cases decreased for the three and six months ended June 30, 2026 as a result of a weather-related reduction in all service lines. There was a slight decrease in cases within our Broadspire segment for the three months ended June 30, 2026 as compared to the prior year period due to a decline in Subrogation cases. For the six months ended June 30, 2026, Broadspire cases increased due primarily to increases in new disability clients within our Claims Management service line, partially offset by a decline in Subrogation cases and decreased casualty claims within our Claims Management service line. Cases within our International Operations segment increased for the three and six months ended June 30, 2026, as compared to the prior year period, primarily due to an increase in high-frequency, low-severity cases in Spain.

Cases received are presented below by segment for the three and six months ended June 30, 2026 and 2025:

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand the Company, our operations, and our business environment. This MD&A is provided as a supplement to — and should be read in conjunction with — our audited consolidated financial statements and the accompanying notes thereto contained in Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K. As described in Note 1, "Significant Accounting and Reporting Policies," of those accompanying audited consolidated financial statements, financial results from our 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 in accordance with the provisions of ASC 810, "Consolidation," in order to provide sufficient time for accumulation of their results. Accordingly, the Company's December 31, 2025, 2024, and 2023 consolidated financial statements include the financial position of such operations as of October 31, 2025 and 2024, respectively, and the results of their operations and cash flows for the fiscal periods ended October 31, 2025, 2024 and 2023, respectively.

Business Overview

Based in Atlanta, Georgia, Crawford & 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.

We have a geographic reporting structure consisting of North America Loss Adjusting, International Operations, Broadspire, and Platform Solutions. Our reportable segments are comprised of the following:

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North America Loss Adjusting, which services the North American property and casualty market. This is comprised of Loss Adjusting operations in the U.S. and Canada, including Global Technical Services, and Field Operations. The Canadian operations include all operations within that country, including third party administration and Contractor Connection.

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International Operations, which services the global property and casualty market outside North America. This is comprised of all operations in the U.K., Europe, Australia, Asia and Latin America. The International Operations include Loss Adjusting, Global Technical Services, Legal Services, third party administration, and where applicable, Contractor Connection services, within the respective countries.

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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.

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

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. The Company’s CEO is considered the CODM as he is responsible for strategic decisions including the allocation of resources to each reporting segment and the assessment of their performance.

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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 were $1.266 billion in 2025, a decrease of 2.1% compared with $1.293 billion in 2024. Net income attributable to the Company decreased to $19.6 million in 2025, from $26.6 million in 2024, primarily due to restructuring and other costs, net of $14.0 million in the current year.

Consolidated revenues before reimbursements decreased $26.8 million, or 2.1%, in 2025, compared with 2024. This decrease was due to declines in weather-related activity within the Platforms Solutions and North America Loss Adjusting segments. This was partially offset by growth in our International Operations and Broadspire segments. Changes in foreign exchange rates increased our consolidated revenues before reimbursements by $2.0 million, or 0.1%, for 2025 as compared with the prior year.

Excluding foreign currency impacts, consolidated revenues before reimbursements decreased $28.7 million, or (2.2)%, for 2025. Revenues from the North America Loss Adjusting segment decreased in 2025 primarily due to a decrease in U.S. Field Operations. Revenues from the International Operations segment increased due to increases in the U.K., Europe and Asia. Revenues from the Broadspire segment increased due to increases in Claims and Medical Management. Revenues from the Platform Solutions segment decreased primarily due to a reduction in our Networks service line, which experienced a reduction in catastrophe related claims.

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Overall, there was a decrease in cases received of (6.9)% in 2025 compared with 2024. Within our North America Loss Adjusting segment, cases increased in 2025 as a result of an increase in low value inspection services cases transferred from our Platforms Solutions group with minimal revenues. Excluding the impact of this transfer, cases decreased (6.1)% due to decreased business in the U.S. from existing clients and the absence of significant weather-related activity in 2025. Cases within our International Operations segment declined in 2025, primarily due to decreases in high-frequency, low-severity cases in the U.K., Europe, and Latin America, and decreases in Australia due to higher weather-related activity in the prior year. There was an increase in cases within our Broadspire segment primarily due to an increase in new disability clients within Claims Management. Within our Platform Solutions segment, the decrease is primarily related to the transfer of low value inspection services to North America Loss Adjusting, as well as a decrease in Contractor Connection and Subrogation cases and the absence of significant weather-related activity in 2025.

Cases received are presented below by segment:

Segment operating earnings (a measure of segment operating performance used by our management that is defined and discussed in more detail below) increased in our North America Loss Adjusting, International Operations, and Broadspire operating segments, partially offset by a decrease in our Platform Solutions segment.

Although 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 that a non-GAAP discussion and analysis of segment gross profit is also 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.

In the North America Loss Adjusting segment, operating earnings increased from $18.2 million, or 5.8% of revenues before reimbursements in 2024, to $21.0 million, or 6.9% of revenues before reimbursements in 2025, primarily due to improved staff utilization in U.S. Global Technical Services and Canada Loss Adjusting, a decrease in allowance for estimated credit losses, and a reduction in centralized indirect support costs. Excluding indirect expenses, gross profit increased slightly from $56.8 million, or 18.2% of revenues before reimbursements in 2024, to $57.0 million, or 18.7% of revenues before reimbursements in 2025.

In the International Operations segment, operating earnings increased from $21.0 million, or 5.0% of revenues before reimbursements in 2024, to $25.1 million, or 5.7% of revenues before reimbursements in 2025, primarily due to a $19.6 million increase in revenues and improved operating efficiencies in the U.K., Australia, and Asia, partially offset b

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