Crawford & Company (CRD.A) Q1 2023 Earnings Call Transcript
Good morning. My name is Brian and I’ll be your conference facilitator today. At this time, I would now like to welcome everyone to the Crawford & Company First Quarter 2023 Earnings Release Conference Call. In conjunction with this call, a supplementary financial presentation is available on our website at www.crawco.com under the Investor Relations section. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded today, Thursday, May 4, 2023.
Now I would like to introduce Tami Stevenson, Crawford & Company’s General Counsel.
Thank you, Brian. Some of the matters to be discussed in this conference call and in the supplementary financial presentation may include forward-looking statements that involve risks and uncertainties. These statements may relate to, among other things, our expected future operating results and financial condition, our ability to grow our revenues and reduce our operating expenses, expectations regarding our anticipated contributions to our underfunded defined benefit 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, our long-term capital resource and liquidity requirements, and our ability to pay dividends in the future.
The company’s actual results achieved in future quarters could differ materially from the results that may be implied by such forward-looking statements. The company undertakes no obligation to publicly release revisions to any forward-looking statements made in this conference call to reflect events or circumstances occurring after the date of the call or to reflect the occurrence of any unanticipated events.
In addition, you are reminded that operating results for any historical period are not necessarily indicative of the results to be expected for any future period. For a complete discussion regarding factors which could affect the company’s financial performance, please refer the company’s Form 10-K — excuse me, 10-Q for the quarter ended March 31, 2023, filed with the Securities and Exchange Commission, particularly the information under the headings Risk Factors and Management’s Discussion and Analysis of financial condition, and results of operations as well as subsequent company filings with the SEC.
The presentation also includes certain non-GAAP financial measures as defined under SEC rules. As required, a reconciliation is provided for those measures to the most directly comparable GAAP measures.
I would now like to introduce Mr. Rohit Verma, Chief Executive Officer of Crawford & Company. Rohit?
Thank you, Tami. Good morning and welcome to our first quarter 2023 earnings call.
Joining me today is Bruce Swain, our Chief Financial Officer; Joseph Blanco, our President; and Tami Stevenson, our General Counsel. After our prepared remarks, we will open the call for your questions.
We continued our momentum and delivered another quarter of exceptional results. Revenues grew by 12% or 16% on a constant currency basis and operating earnings nearly doubled year-over-year. We experienced revenue growth and profit expansion across all segments, highlighting the underlying strength of our business model and solid execution of our stated strategy.
Our outstanding first quarter results marks our 10th consecutive quarter of revenue growth, not only reflecting continued top line momentum and increasing profitability, but also the hard work and dedication of our valued teams across the globe. Their unwavering commitment to quality and customer excellence is enabling us to execute our long-term strategy and bring our envisioned future to life.
Two years ago, we shared our long-term growth strategy focused on driving organic growth and improving margins across our business. I’m extremely pleased to share that to date, we have made tremendous progress against our goals, including sustained revenue growth and margin improvement. Recall for North America Loss Adjusting, our strategy was to drive low to mid-single-digit revenue growth and improve margins through efficiency on the volume side and investment in the expertise on the major and complex side.
Our ongoing investment in expertise, expansion of our geographic footprint and industry-leading quality have continued to drive growth in the North America Loss Adjusting business. During the first quarter, our pricing actions and improved utilization drove meaningful margin expansion. Moving forward, we believe we will see further growth resulting from our efforts to hire additional specialist adjusters and increasingly scale the business.
Our focus in Broadspire was to capture share in alternative markets and leverage data to offer cutting-edge analytic services to our clients. In the quarter, overall sales momentum was driven by new client wins and accelerated improvement in medical management revenues. We expect continued recovery in medical management as claims frequency improves through new and existing client wins as well as healthy pricing.
Similarly, we had previously stated that our long-term focus in Platform Solutions is to scale this business to deliver double-digit revenue growth and strong flow-through to the bottom line. We’re delivering on this objective as our Platform business remains our highest margin operating segment and continues to serve as a key growth engine for our business.
We delivered double-digit revenue growth in the quarter, driven by pricing and improved utilization in contractor connection, along with increased market share gains with our top five carriers, partners in our CAT business. We expect continued strength moving forward supported by healthy underlying demand and solid execution.
We are very pleased with the turnaround we’re seeing in our international business, which is now tracking towards our mid-single-digit growth target. This is resulting from the specific actions we have taken to address pricing and productivity, where we have implemented new systems, improved processes and better aligned our cost structure with current market conditions. We expect continued momentum and further improvement as we move forward.
Overall, we continue to deliver on our strategic vision for growth and margin expansion across the business that we shared with you two years ago. This track record of delivering what we laid out gives us confidence in our continued execution. Our success to date position us for sustainable growth and we remain focused on delivering value to our shareholders.
Turning now to capital allocation. We continue to maintain a disciplined and prudent capital allocation strategy. We leveraged our liquidity to fund working capital needs related to the strong activities in the U.S. during the first quarter.
As mentioned in the last quarter, we expect improved cash flow as we move forward, which will be used to pay down debt and reduce our leverage ratio, taking it below 2x EBITDA by 2023 which is in line with our previously stated leverage target.
Our positive earnings results and conservatively managed balance sheet gives us tremendous flexibility to move forward with making investments for the benefit of the company. These have also enabled us to continue our quarterly dividend of $0.06 per share for both CRD-A and CRD-B.
As a point of reference, we have returned more than $120 million of capital to shareholders through share buybacks and dividends over the last four years, further highlighting our commitment to deliver shareholder value. Overall, we are in a strong financial position and feel confident in our ability to continue execution on our long-term growth strategy.
With that, I’d like to hand the call over to Joseph, who will discuss our business line results for the first quarter.
Beginning with North America Loss Adjusting, we experienced 20% revenue growth and expanded our operating margin by more 400 basis points. Strength in the quarter was driven by adjuster additions, increased utilization, and carryover from Hurricane Ian and winter storms in the U.S. We also gained new clients and saw organic growth with existing clients in the quarter.
Our hiring efforts on the major and complex side during the first quarter allowed us to reach a significant milestone. We officially surpassed our 3-year global hiring goal of 200 specialist adjusters and we did it one year ahead of schedule. Looking ahead, we will continue to augment our deep bench of experts to drive penetration with top carriers as Crawford remains a premier destination for talent even in difficult labor market.
We are pleased with the progress we have made in our international operations, which grew revenues and expanded margins. As Rohit mentioned, our actions to improve pricing and productivity as well as simplify our processes and cost structure are bearing fruit. These actions, combined with weather-related activity, drove a turnaround in the quarter. Australia experienced continued strength from last year’s unprecedented flooding events in Southeast Queensland and New South Wales, along with the recovery in specialty claims.
In the U.K., revenue growth was driven by winter freeze-related claim activity during the first quarter resulting in increased volumes. Our business in Europe also reported increased revenues and we made progress on our regionalization efforts, which have helped restructure our cost basis.
Flooding in the Philippines, along with search activity in Thailand, and client wins in Singapore and Taiwan created higher-than-expected revenue in Asia. In Latin America, growth was driven by strength in Brazil where we continue to add clients to our core business.
Looking at our Broadspire business, strength in the quarter was driven by an 11% increase in medical management revenues, stemming from both recent new business wins and further post-pandemic stabilization in the sector. We anticipate a continued steady recovery in this business moving forward.
Additionally, we are pleased with the continued pricing momentum we are seeing in this segment. We also continue to gain traction in the alternative market, where we are targeting captives and MGAs through a dedicated sales effort that is bearing fruit. Clients are driving more data and analytical services work to us as well.
Platform Solutions are experiencing strong results delivering double-digit revenue growth of 29% year-over-year. This was led by networks where we continue to deepen our relationship with two of the top five carriers in our property and flood businesses. In addition, we onboarded a new top five carrier client.
In contractor connection, we continued the momentum we saw late last year and delivered the best first quarter ever. We benefited from price increases and improved utilization, along with continued market share gains. The exceptional growth in our networks business is now outpacing growth in contractor connection, which is shifting the overall mix and slightly impacting segment margins. We remain confident in the long-term health of the business and expect organic growth momentum to continue.
We won over $36 million of new and enhanced business in the first quarter. Additionally, our NPS score remains healthy at 47, and we are continuously looking for opportunities to improve our score. We retained 97% of our U.S. Broadspire business in the first quarter and we are increasing market share with key carrier clients as well as corporate entities.
At Crawford, everything we do ties back to our purpose of restoring lives, businesses and communities. We believe in minimizing our environmental impact, behaving with honesty and integrity in driving conscious inclusion and diversity at every level of the organization.
We continue to make consistent progress on our DEI and human capital initiatives. Our employee resource groups, or ERGs, continue to engage employee segments such as multiracial and ethnic employees, women, LGBTQ+ employees and disabled employees.
Additionally, to monitor employee satisfaction and engagement, Crawford continues to conduct employee poll surveys. This helps us gather open and honest feedback about where our organization is succeeding and where more support is needed.
In 2022, we had an overall response rate of 75%, which shows that our employees have a strong desire to be heard and that their voices matter. The survey items also revealed the state of current employee sentiments around DEI with a significant number of respondents agreeing that they did not face any bias due to their personal identity and that Crawford is committed to the fair treatment of its employees.
The outcome from the survey underscores the efficacy of our culture and people programs in creating an inclusive workplace. We will continue to focus on the areas to enhance our overall employee experience. We also strive to be an organization where our people can thrive with our focus on professional development and operational excellence.
In 2022, our employees won multiple awards around the globe in a wide range of categories, including DEI, corporate counsel, excellence in claims management and technological innovation. For example, we are proud to have been named on the 2022 Insurance Business Five Star Diversity, Equity and Inclusion list, which is given to a small number of companies across the insurance industry that are demonstrating effective DEI programs that help foster change.
Overall, we remain steadfast in our commitment to ESG and we are dedicated to cultivating a safe, inclusive environment in which everyone’s unique perspectives and experiences are heard and valued.
We will continue to look for opportunities across our enterprise to become more socially responsible and are increasingly integrating ESG best practices into our operations. In the coming weeks, we’ll be publishing our 2022 Global Citizenship Report, which highlights our accomplishments thus far and outlines our commitments for the future as we continue on our journey to help make the world a better place.
With that, let me turn the call over to Bruce for a deeper look at our financial performance.
Thank you, Joseph.
Company-wide revenues before reimbursements in the 2023 first quarter were $313 million, up 12% from $279 million in the prior year first quarter. Foreign exchange rates decreased revenues by $9.4 million or 3%. On a constant dollar basis, revenues totaled $322.4 million, increasing nearly 16% compared to the 2022 first quarter.
GAAP diluted EPS in the 2023 first quarter was $0.22 for both CRD-A and CRD-B compared to $0.10 for both share classes in the 2022 period. On a non-GAAP basis, first quarter 2023 diluted EPS was $0.28 for both CRD-A and CRD-B compared to $0.14 for both share classes in the prior year period.
Company’s non-GAAP operating earnings totaled $24.9 million in the 2023 first quarter or 7.9% of revenues, up from $12.5 million or 4.5% of revenues in the prior year period. Consolidated adjusted EBITDA was $32.8 million in the 2023 first quarter or 10.5% of revenues compared to $21.3 million or 7.6% of revenues in the 2022 quarter.
I’ll now review the first quarter 2023 performance for each of our segments. North America Loss Adjusting revenues totaled $77.1 million in the 2023 first quarter, increasing 19.7% from $64.4 million reported in last year’s quarter as we expanded our GTS roster and benefited from weather-related activity.
Segment reported operating earnings of $8.1 million in the 2023 first quarter, nearly doubling the $4.1 million reported in last year’s quarter. The operating margin was 10.5% in the 2023 quarter compared to 6.4% in the 2022 quarter.
International operations revenues totaled $91.9 million in the 2023 first quarter, up 2.9% from the $89.3 million reported in last year’s quarter, including $700,000 from the Van Dijk acquisition. On a constant dollar basis, International revenues totaled $99.6 million, growing 11.6% over last year’s quarter.
The segment reported operating earnings of $3 million in the 2023 first quarter, improving significantly from losses of $3.1 million reported in last year’s quarter. The operating margin was 3.3% in the 2023 quarter compared to negative 3.4% in the 2022 quarter.
Broadspire revenues were $81.2 million in the 2023 first quarter, increasing 6.2% from $76.5 million in the 2022 period, driven by improving medical management revenues. Broadspire operating earnings were $7.9 million in the 2023 first quarter, up from last year’s first quarter operating earnings of $6.4 million. The operating margin in this segment was 9.8% in the 2023 quarter, improving from 8.4% in the 2022 period.
Revenues for Platform Solutions were $62.8 million in the 2023 first quarter, increasing 28.6% over the $48.9 million in the prior year quarter due to growth in networks and contractor connection. Operating earnings in Platform Solutions totaled $10 million or 15.9% of revenues in the 2023 first quarter compared to operating earnings of $8 million or 16.5% of revenues in the prior year quarter.
Unallocated corporate costs were $4.1 million in the 2023 first quarter compared to cost of $3 million in the same period of 2022. The variance was primarily due to a $1.8 million gain on the sale of our Canadian head office in the 2022 first quarter and an increase in self-insurance cost in 2023, partially offset by other cost reductions.
During the 2023 first quarter, non-service pension costs were $2.2 million compared to a $500,000 credit in the 2022 period. These costs and credits are not a component of operating earnings and are added back for non-GAAP earnings and EPS similar to how we treat the amortization of intangible assets and contingent earnout adjustments.
We recognized a pretax contingent earn-out expense of $200,000 in the 2023 period compared to $2.1 million in the 2022 quarter. This was a result of net changes to projections of certain recently acquired entities.
During the first three months of 2023, the company did not repurchase any shares of CRD-A or CRD-B. As a reminder, approximately 1.8 million shares are eligible to be repurchased under our 2021 share repurchase authorization.
The company’s cash and cash equivalent position as of March 31, 2023 totaled $43.3 million compared to $46 million at the 2022 year-end. Our total receivables were up $15.4 million from the 2022 year-end, primarily due to increased U.S. revenues. We made no discretionary contributions to our U.S. defined benefit pension plan for the first quarter of 2023 and we do not intend to make contributions during the remainder of the year.
The company’s total debt outstanding as of March 31, 2023, totaled $249.4 million compared with $238.9 million as of December 31, 2022. Net debt stood at $206.1 million as of March 31, 2023, while our leverage ratio under our credit agreement closed at 2.07x EBITDA. Additionally, our pension liability was $25.7 million at the end of the first quarter, reflecting a funding ratio of 91.9%.
Cash used in operations totaled $445,000 during 2023 compared with $15.3 million used in 2022. The $14.8 million improvement in operating cash flow was driven by the increase in operating earnings and an improvement in working capital. Free cash flow was negative $9.1 million for the first three months of 2023, improving from negative $22.9 million in the prior year period.
With that, I’ll turn the call back to Rohit for concluding remarks.
Thank you, Bruce.
Overall, we are tremendously pleased with our strong results for the first quarter, which highlight the effectiveness of our long-term strategy, commitment to our people and confidence of our customers.
As we look to the year ahead, we are excited about our promising growth trajectory and will continue our focus on delivering healthy margins and earnings growth across the business. We remain in an enviable financial position and we look forward to delivering value to our shareholders in 2023, while fulfilling our purpose of restoring lives, businesses and communities.
Thank you for your time today. Brian, please open the call for questions.
[Operator Instructions] Your first question comes from the line of Kevin Steinke with Barrington Research. Please go ahead.
Hi, good morning, everyone. Congratulations on the strong results.
Thank you, Kevin. Good morning.
Thank you, Kevin. Good morning.
I just wanted to start off by asking generally about market share gains and if you feel like you’re gaining momentum on that front across your various business lines based on the investments you’ve made. I know you mentioned onboarding a new top carrier client networks. Maybe that’s one example. Or I don’t know if you could point to any other color or examples on that front.
Sure. Kevin, this is Rohit. There is — this is our 10th consecutive quarter of growth. So there’s definitely market share that we’re gaining. And I think if you look carefully across the results, you will see that every segment has grown in revenue as well as has expanded contribution of profit. So we definitely believe that we are gaining market share.
Also we were certainly helped by the severe weather that we saw in the U.S. as well as U.K. and doing well in those weather conditions is also indicative that our clients are turning more towards us in their hour of need. So whether we look at our North America Loss Adjusting business, which contains Canada and U.S. loss adjusting, we’ve seen tremendous momentum in U.S. loss adjusting, both on the volume side as well as on the expertise side. As you know, we’ve doubled our expertise-based business over the last 2.5 years or so, which clearly demonstrates the addition of new clients or, I would say, market share gain.
The same thing we’re seeing in our Platforms business, whether it’s networks, contractor connection. In contractor connection, as an example, we’re now writing a majority of the top 10 carriers, and our goal is to grow in concentration with them. If you look at our Broadspire business, we have been winning a number of new clients in that business. In fact, we’re just starting to eclipse the rate from a pre-pandemic level where we were. So we fully recovered from the pre-pandemic by addition of new clients as well as the growth in frequency.
And then I think I was very pleased to see what we saw in international as well where we’re starting to demonstrate that we are hitting the mid-single-digit growth rate that we had promised two years ago. And the key work for us there is to continue the transformation of our operating environment, which allows us to drive better margin.
So in short, yes, we believe we are gaining market share. It’s coming through across all our segments and the investments that we’ve made are starting to show results. And we’re excited about the journey we’re on.
Okay, great. And you mentioned there the severe weather. Just trying to get a sense as to how material that was in terms of the year-over-year growth. Maybe you should talk about weather surge revenue. But even, I guess, wrapped up within that I suppose would be the fact that you’re probably capturing a greater share of weather-related claims than you even would have a year ago or two years ago. So I guess any comment on that.
Certainly. It’s the easiest to measure in our catastrophe-related businesses. And that’s where we’ve certainly seen a pretty significant movement. We can’t always tell what is related to surge weather because sometimes our clients will take their internal adjusters and move them towards surge weather and use us on their sort of day-to-day claims.
So it’s not always easy to tell exactly what was surge or what was not. What I can tell you is that with some of our largest clients, we’ve seen double-digit increases in revenue with them. And we believe that probably 20% to 30% of that is related to them being distracted with weather or deploying us directly on their weather-related work.
Bruce, do you want to comment on that?
No, I think that’s exactly right.
Thanks. Okay. And you mentioned when you laid out your longer term goals, you’re targeting low to mid-single digit growth in North American Loss Adjusting. Obviously, you’ve been growing faster than that. Do you think like that — do you think that’s still the kind of the right longer term target to think about as that business develops?
Yes. I think longer term, that still is the right target. Do I think that we will continue to eclipse that growth, say, for the next few quarters? I do believe that that we will continue to eclipse that growth. But I think that is the right long-term growth for that because there are forces in that place of the market.
And we try to predict this more on an overall cycle — over the long-term cycle, as opposed to quarter-to-quarter because that business is extremely sensitive to what we were just talking about, the weather. That business is also extremely sensitive to potential disruptions that are coming into the marketplace.
Now we’re participating in those disruptions and we will see picking some of that revenue up on the Platform side. But I think for that segment, I still maintain that that’s the right growth rate. We’ll see maybe by the end of this year, we’ll take another look at it and revise it. But at least for now, I think that’s the right growth rate for us.
Okay, understood. And you mentioned reaching your target of 200 specialty adjusters. Hiring those folks with the North American Loss Adjusting, you’ve reached that 200 goal a year ahead of schedule. And I think I might have asked this something similar before, but now that you’ve reached that goal, would you like to continue adding there? Is there more capacity to do that or willingness to do that? And are you seeing the demand where that would require you to continue hiring there?
Yes. When we had set that original goal, we had a certain expectation of how much market share we can gain. Candidly speaking, I think we’ve done better than what we had originally expected in terms of market share that we can gain. So at this point, we don’t believe there is any need for us to put our foot off the accelerator. So I think we will continue to find people that make sense, that align with our culture, that bring something differentiated to our expertise base. And if we find them, we’ll bring them on.
Okay, great. I wanted to ask specifically about contractor connection. There was a sequential increase in revenue relative to kind of the quarterly run rate you’ve been on. I think you mentioned you’re gaining traction with top carriers. Is that playing into that improved revenue? How much of that was related to weather? Just trying to get a sense as to what the trend line might be there going forward.
Yes, it was Q1. I believe it was the best Q1 we’ve had for contractor connection as far as we can remember. And I do believe that we’re seeing traction from not only the new clients we brought in, but the sort of increased frequency that we’ve seen, also the increased inflation we’ve seen in construction cost. I think I feel that this traction will continue. Whether we’ll have similar kind of growth trend or not, it’s hard for me to comment at this point.
But overall, we feel good about that business. We feel good about the traction that we are building as a result of the new clients that we’re adding. As we had shared with you last time where we’ve been making pricing tweaks across the business, contractor connection was certainly one of them where we made some pricing tweaks. We believe that pricing tweak will hold. So we feel good about the business. It’s hard for me to comment whether that exact same trend will continue or not because weather does play a pretty critical role in that business.
Okay. And where are you on your overall pricing journey as you think about offsetting inflationary headwinds? How far are you into that process? Is there a point where we kind of start to lap those increases? Do you feel like you have to put more increases in place? Or are you seeing inflation moderate somewhat?
I would probably not correlate it to inflation. I would say that pricing is a discipline that we have been working to build in our business. And it’s a muscle memory that we’re building. It’s certainly building better in some parts of our business than others. But as a management team, we don’t expect to relent on our pricing discipline.
Now will we see similar kind of double-digit pricing increases that we’ve seen, say, in the latter half of last year or early part of this year? Probably not. But I think it will be sufficient to sustain us for solid profitability going forward.
Okay, thanks for taking all the questions. I’ll turn it over.
Thanks Kevin as always.
Thank you. Your next question comes from Mark Hughes with Truist. Please go ahead.
Thanks. Good morning. Just a little bit — hello, I missed a little bit of the early presentation, so I apologize if you’ve touched on some of these things. Medical management revenue, it sounds like it’s up pretty strong. What is driving that? I know that had been under some pressure for a while. Is it finally just normalizing? Or is there some particular catalyst?
I don’t — I won’t say it’s normalizing. It’s certainly up 10% from where it was last year. I still believe that it’s below from a pre-pandemic level. And I think the major reason for the change that you’ve seen is: 1, I do believe that things are starting to normalize; 2, our claims volume has continued to increase as we’ve added new clients. I expect that it will continue to sort of ladder up, but I think it will take the full this year to come back to where it was in the pre-pandemic levels based on what we’re seeing today.
And then on North America, the Loss Adjusting, the revenue was up pretty sharply, but the claim numbers were down year-over-year. Is that — obviously a mix issue, but could you expand on that?
Yes, it’s absolutely a mix issue. Look, what we’re seeing now is that as we continue to grow our large and complex business, that business just tends to be having a much higher average cost or average revenue per file. And as a result of that, we’re seeing definitely, as that business — the growth of that outpaces the other parts of North America Loss Adjusting, we will continue to see that.
Also the strength was more in the U.S. versus Canada where we tend to see larger sized claims versus, say, in Canada where the claim size is smaller in terms of the revenue that those claims produce for us. And so I think that’s the big push. We’ve also seen in Canada some weakness in our TPA business, which tends to have much higher claim count compared to, say, what we see in the U.S. So it’s absolutely a mix issue.
And look, I think that we will continue to see that, right? Whether we’ll see that at the same magnitude as we saw or not, time will tell. But our large and complex business continues to be extremely strong. And even on the volume side, we’re tending to see claims which are a little bit larger in terms of the revenue that they create.
One thing I’d add to that is — one thing I’d add to that, Mark, is it’s not just a North America Loss Adjusting phenomenon. Actually, our cases in each of our segments are down while our revenues are up. And you kind of have the same sort of mix issue where maybe we had takeover cases in the prior year that weren’t present this year; the number of looks, there’s variability there year-over-year.
And some of our revenues are generated by us providing staff to our carrier clients and that revenue is not denominated in claims. So we particularly see that in the networks business within Platforms where revenues can be up materially and there won’t be any cases associated with it because our folks are working within the carrier’s offices on their systems.
Thank you for that. And then on the Platform systems, how much more build-out is there? You’ve got the increased market share you highlight with the two carriers you’re onboarding, onboarding another carrier. Is there — how much growth is in the pipeline, so to speak, as you continue to ramp those relationships? Or are you at kind of stability with some of them and it was the benefit of the CAT this quarter that drove the top line growth?
Mark, there’s definitely a benefit of CAT that drove the top line growth. There’s no question about it. But I think as far as the opportunity is concerned, we believe that there is still significant opportunity in the network business to continue grow. The two clients that we already have, there’s still headroom for us to scale with them.
You called it right. We’ve added a third client, which we are scaling and will likely add more. There’s certainly more that we can do on the looker side of our business. So I think there is still quite a lot of headroom for us to grow there. That business will continue to be dependent significantly on weather. So the individual quarterly revenue on that will depend on how much weather we saw. But I think at this point, what we’re trying to do is we’re trying to onboard as many clients as we can. And be as we move forward and we drive greater quality in our CAT execution, we should start to see more traction of market share in that business.
So I feel extremely excited about that business in terms of the growth prospects ahead of us and certainly don’t believe that it’s tapering by any stretch of the imagination.
And you had mentioned — last question. You had mentioned work or potential work with MGAs or other third parties. Could you expand on that a little bit? How meaningful, if at all, is it in your current book of business? And how real are those prospects?
Yes. I would put that all in what we call alternative market segment. And it’s not — it’s there in our book today, but it’s probably not as meaningful as we’d like it to be. There is — if you look at the market, there is a consistent increase happening in MGAs and alternate market sort of activity. You’re seeing more captives being formed, you’re seeing more MGAs being formed. And a lot of them are looking for unbundling of claims, meaning the places where they’re getting the paper from is different from where they want to place their claims.
So I think that is a trend that will continue, particularly given the harder market on the P&C side, as I’m sure you’re covering for your carrier clients. And as a result of that, the clients would like to take on more risk and will use different vehicles to take on risk. So us being present there as the chosen claims provider for that is pretty important.
So I just want to make sure that we, as a claims company, is capturing that aspect of the market going forward. And having the kind of capabilities that we have in Broadspire like digital capabilities, like med management and coupled with that, the capabilities to handle field claims as well as large and complex claims I think places us very uniquely in the market to serve that segment.
Understood. Thank you very much.
And there are no further questions. I’ll pass the call over to Mr. Verma for closing remarks.
Thank you, Brian, and thank you all of our employees, our clients, our shareholders, for your continued commitment to Crawford & Company. Our fantastic start to 2023 provides strong momentum for the rest of the year and beyond. As always, we wish you well and look forward to taking you along on the journey with us. Thank you and God bless.
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