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Crawford Reports Third Quarter 2006 Results

Crawford & Company (NYSE: CRDA; CRDB), the world's largest independent provider of claims management solutions to insurance companies and self-insured entities, today announced its financial results for the third quarter ended September 30, 2006.

Third quarter 2006 revenues before reimbursements totaled $197.1 million compared with $184.7 million in the 2005 third quarter. Third quarter 2006 net income was $6.2 million compared to $1.9 million for the 2005 third quarter. Third quarter 2006 earnings per share were $0.13 per share compared to $0.04 in the prior-year quarter. Net income in the 2006 third quarter included a gain on disposal of assets of $2.0 million, net of related income taxes, or $0.04 per share, resulting from the sale of the Company's investigative services units.

Revenues before reimbursements, by market type, for the Company's operating segments for the quarter ended September 30, 2006 and 2005 were as follows (in 000s):

Quarter ended

Market Type September 30, September 30, % Change

2006 2005

Insurance companies $52,118 $50,291 3.6%

Self-insured entities 35,699 37,562 (5.0)%

Legal settlement administration 34,363 26,629 29.0%

U.S. Segment 122,180 114,482 6.7%

International Segment 74,877 70,238 6.6%

Total revenues

before reimbursements $197,057 $184,720 6.7%

U.S. revenues before reimbursements were $122.2 million in the third quarter of 2006 compared with $114.5 million in the 2005 third quarter. Revenues from the insurance company market were $52.1 million in the 2006 third quarter compared with $50.3 million in the 2005 period. This increase includes an $800,000 improvement in revenues generated by the Company's U.S. catastrophe adjusters, which grew from $4.5 million in the 2005 third quarter to $5.3 million in the 2006 period. Revenues from self-insured clients were $35.7 million in the 2006 third quarter compared with $37.6 million in the 2005 quarter, declining primarily due to a reduction in claim referrals from the Company's existing clients, only partially offset by net new business gains. Legal settlement administration revenues were $34.4 million for the 2006 third quarter, compared with $26.6 million in the comparable year-ago quarter. The Company's legal settlement administration unit revenues are project-based and can fluctuate significantly. However, this unit continues

to enjoy a strong backlog of projects awarded, totaling approximately $43.3 million at quarter end.

Third quarter 2006 international revenues grew to $74.9 million from $70.2 million for the same period in 2005. This growth is due to increased case referrals in the Company's United Kingdom, Asia-Pacific and Latin America regions. Compared to the 2005 third quarter, the U.S. dollar weakened against the British pound and the euro during the current quarter, resulting in a 1.1% net exchange rate benefit in the quarter. Excluding the benefit of exchange rate fluctuations, international revenues would have been $74.1 million in the 2006 third quarter, reflecting growth in revenues on a constant dollar basis of 5.5%. International operating expenses increased by $3.8 million in U.S. dollars, a 5.7% increase, and by 3.2 % on a constant dollar basis.

Mr. Thomas W. Crawford, chief executive officer of Crawford & Company, stated, "Our U.S. operations continued to benefit from the strong performance of our legal settlement administration unit and the on-going improvement in our core U.S. property and casualty unit, both of which helped lead to the third straight quarter of earnings growth over the prior-year period. Revenues produced by our catastrophe adjusters in the quarter grew slightly, as there was a lack of significant catastrophic claims referred to us in the 2006 third quarter. Overall, our U.S. operating margin improved by 2.1% in the quarter, from 1.1% in the 2005 period to 3.2% in the quarter ended September 30, 2006. We are still turning around our Crawford Integrated Services unit, which serves the self-insured marketplace in the U.S. However, we believe this turnaround will be greatly accelerated with our upcoming acquisition of Broadspire Services, Inc. and we are very enthusiastic about our long-term prospects in this important market."

"During the third quarter we completed a global strategic alliance with MJM Investigations, Inc., a leader in insurance fraud mitigation and investigation services. As part of this transaction, Crawford sold the operating assets of our investigation services unit to MJM for $3.0 million in cash at closing and a note receivable of $2.0 million due in two installments through 2013. We recognized a pretax gain of $3.1 million from this transaction in the 2006 third quarter. MJM will now be our preferred provider of surveillance and fire and forensic investigations worldwide, allowing us to provide these services to our global client base through a proven market leader. Under the terms of our strategic alliance with MJM, we will receive a network administration fee for each case sent to MJM."

"Operating earnings in our international segment improved nearly 27%, to $3.8 million, reflecting an improvement in our operating margin from 4.3% in the 2005 third quarter to 5.1% in the 2006 quarter. This growth reflects increased case referrals in our United Kingdom operations resulting from claims management agreements entered into during 2005 and 2006. In addition, catastrophic claims handled by our Australian operations helped contribute to our margin improvement during the current quarter. For the remainder of 2006, we continue to expect growth and margin improvement in our international division."

Total revenues before reimbursements for the nine months ended September 30, 2006 were $591.3 million compared with $555.1 million in 2005. Net income for the 2006 nine-month period totaled $16.3 million, or $0.33 per share, compared with $6.9 million, or $0.14 per share, reported in the prior year.

U.S. revenues before reimbursements for the 2006 nine-month period were $372.0 million compared with $341.4 million in 2005. International revenues before reimbursements were $219.3 million in the 2006 year-to-date period compared with $213.7 million during 2005. As compared to the 2005 year-to- date period, during the 2006 period, the U.S. dollar has strengthened against the British pound and the euro, resulting in a net exchange rate decline for the 2006 period. Excluding the negative effect of exchange rate fluctuations, international revenues would have been $222.1 million in the current year-to- date period, reflecting growth in revenues on a constant dollar basis of 3.9%. International operating expenses increased by $6.9 million in U.S. dollars, a 3.4% increase, and by 4.7 % on a constant dollar basis.

Mr. Crawford continued, "Our operating cash flows for the 2006 nine-month period reflect an improvement of $20.3 million as compared to the prior-year period. Overall, our consolidated cash position as of September 30, 2006

continues to be strong, totaling $68.8 million, up $32.6 million from the $36.2 million reported at September 30, 2005."

"Our company has a 38 year history of paying dividends and both management and the Board remain committed to this policy and practice. However, our recently announced pending acquisition of Broadspire Services, Inc. will require us to incur new borrowings in order to finance the transaction. As a result of these borrowings and the operating requirements and financial restrictions applicable under our proposed new credit agreement, we are required at this time to suspend the payment of a dividend. We believe the acquisition of Broadspire will produce earnings and cash flows that will enable us to resume a quarterly dividend payment within a reasonable period," Mr. Crawford concluded.

Mr. Jesse C. Crawford, chairman of the board of Crawford & Company, stated, "The board of directors is very excited about the opportunities afforded by the Broadspire acquisition and believes it is in the best long- term interest of our shareholders. We remain committed to paying a dividend and we plan to resume the payment of a dividend as soon as practical, which could come as early as the end of 2007."

Crawford & Company updated its previously disclosed guidance for fiscal 2006 (including the operating results anticipated from the pending Broadspire acquisition) to the following amounts:

- Revenues before reimbursements between $515 million and $525 million in

U.S. operations and operating earnings between $17 million and

$18 million.

- Revenues before reimbursements between $300 million and $305 million in

international operations and operating earnings between $15 million and

$16 million.

- Severance and lease termination expenses in the Company's existing

operation related to the pending Broadspire acquisition between

$2.8 million and $3.4 million.

- After reflecting the gain on disposal of assets of $3.1 million, stock

option expense of $1.2 million, net corporate interest expense between

$5.7 million and $5.9 million and income taxes between $8.6 million and

$9.4 million, net income between $16.0 million and $18.0 million, or

$0.32 to $0.36 per share.

Crawford & Company's management will host a conference call on Monday, October 23, 2006 at 3:00 p.m. EDT, to discuss its quarterly earnings and other developments. The call will be recorded and available for replay through October 30, 2006. You may dial 1-800-642-1687 (706-645-9291 international) to listen to the replay. The access code is 9063122. Alternatively, please visit our web site at http://www.crawfordandcompany.com for a live audio web cast.

Further information regarding the Company's financial position, operating results, and cash flows for the quarter and year-to-date period ended September 30, 2006 is shown on the attached statements. Operating earnings (a non-GAAP financial measure) 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. Net corporate interest expense, stock option expense and income taxes are recurring components of our net income, but they are not considered part of our operating earnings since they are managed on a corporate-wide basis. Net corporate interest expense results from capital structure decisions made by the Company, stock option expense relates to historically granted stock options which are not allocated to our operating units, and income taxes are based on statutory rates in effect in each of the locations where we provide services and vary throughout the world. None of these costs relates directly to the performance of our services and are therefore excluded in order to accurately assess the results of our segment operating activities on a consistent basis. Gains and losses related to nonrecurring events are not considered part of our operating earnings since they historically have not impacted our performance and are not expected to impact our performance within the next two years. Following is a reconciliation of segment operating earnings to consolidated net income on a GAAP basis and the related margins as a percentage of revenues before reimbursements for all periods presented:

Quarter ended Nine months ended

Sept. Sept. Sept. Sept.

30, % 30, % 30, % 30, %

2006 Margin 2005 Margin 2006 Margin 2005 Margin

U.S. operating

earnings $3,864 3.2% $1,236 1.1% $16,800 4.5% $4,882 1.4%

International

operating

earnings 3,825 5.1 3,019 4.3 8,724 4.0 10,060 4.7

Add gain on

disposal of

assets 3,069 1.6 - - 3,069 0.5 - -

Deduct:

Stock

option

expense (248) (0.1) - - (865) (0.1) - -

Net corporate

interest (839) (0.4) (1,334) (0.7) (2,431) (0.4) (4,216) (0.8)

Income

taxes (3,423) (1.7) (1,034) (0.6) (8,988) (1.5) (3,797) (0.7)

Net income $6,248 3.2% $1,887 1.0% $16,309 2.8% $6,929 1.2%

Based in Atlanta, Georgia, Crawford & Company (http://www.crawfordandcompany.com) is the world's largest independent provider of claims management solutions to insurance companies and self-insured entities, with a global network of more than 700 offices in 63 countries. Major service lines include property and casualty claims management, integrated claims and medical management for workers' compensation, legal settlement administration, including class action and warranty inspections, and risk management information services. The Company's shares are traded on the NYSE under the symbols CRDA and CRDB.

Except for historical information contained herein, the matters discussed in this news release are forward-looking statements that involve risks and uncertainties including statements regarding our pending acquisition of Broadspire Services, the timing of the closing, the integration, the results of the acquisition and our ability to pay dividends. Crawford & Company faces risks associated with the acquisition, including, but not limited to, risks that the transaction may close more slowly than expected or not at all, that the integration of Broadspire Services into the Company's operations may not be successful or may be more expensive than anticipated and that the anticipated results of the combined company following the acquisition may not meet expectations. The results achieved in the quarter ended September 30, 2006 are not necessarily indicative of future prospects for the Company. Actual results in future quarters may differ materially. For a discussion regarding other factors which could affect the Company's financial performance, see the Company's Form 10-K for the year ended December 31, 2005 filed with the Securities and Exchange Commission, in particular the information under the headings "Business," "Legal Proceedings" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

The Company undertakes no obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. The Company's actual results may differ materially from those projected in forward-looking statements made by, or on behalf of, the Company.

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Unaudited

(In Thousands, Except Per Share Amounts)

Nine Months Ended September 30 2006 2005 % Change

Revenues:

Revenues Before Reimbursements $591,266 $555,056 7%

Reimbursements 62,506 57,588 9%

Total Revenues 653,772 612,644 7%

Costs and Expenses:

Cost of Services Before

Reimbursements 460,528 438,538 5%

Reimbursements 62,506 57,588 9%

Cost of Services 523,034 496,126 5%

Selling, General, and

Administrative 106,079 101,576 4%

Gain on Disposal of Assets (1) (3,069) - nm

Corporate Interest Expense, Net 2,431 4,216 -42%

Total Costs and Expenses 628,475 601,918 4%

Income Before Income Taxes 25,297 10,726 136%

Income Taxes 8,988 3,797 137%

Net Income $16,309 $6,929 135%

Earnings Per Share - Basic and

Diluted $0.33 $0.14 136%

Average Numbers of Shares Used to

Compute:

Basic Earnings Per Share 49,225 48,911

Diluted Earnings Per Share 49,383 49,416

Cash Dividends Per Share:

Class A Common Stock $0.18 $0.18

Class B Common Stock $0.18 $0.18

nm = not meaningful

(1) Related to the sale of the Company's investigations unit.

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Unaudited

(In Thousands, Except Per Share Amounts)

Quarter Ended September 30 2006 2005 % Change

Revenues:

Revenues Before Reimbursements $197,057 $184,720 7%

Reimbursements 25,276 21,500 18%

Total Revenues 222,333 206,220 8%

Costs and Expenses:

Cost of Services Before

Reimbursements 155,569 146,284 6%

Reimbursements 25,276 21,500 18%

Cost of Services 180,845 167,784 8%

Selling, General, and

Administrative 34,047 34,181 0%

Gain on Disposal of Assets (1) (3,069) - nm

Corporate Interest Expense, Net 839 1,334 -37%

Total Costs and Expenses 212,662 203,299 5%

Income Before Income Taxes 9,671 2,921 231%

Income Taxes 3,423 1,034 231%

Net Income $6,248 $1,887 231%

Earnings Per Share - Basic and

Diluted $0.13 $0.04 225%

Average Numbers of Shares Used to

Compute:

Basic Earnings Per Share 49,392 48,978

Diluted Earnings Per Share 49,566 49,462

Cash Dividends Per Share:

Class A Common Stock $0.06 $0.06

Class B Common Stock $0.06 $0.06

nm = not meaningful

(1) Related to the sale of the Company's investigations unit.

CRAWFORD & COMPANY

SUMMARY RESULTS BY OPERATING SEGMENT

Nine Months Ended September 30

Unaudited

(In Thousands, Except Percentages)

U.S. % International %

2006 2005 Change 2006 2005 Change

Revenues Before

Reimbursements $372,029 $341,343 9.0% $219,237 $213,713 2.6%

Compensation &

Benefits 236,559 218,868 8.1% 154,990 149,014 4.0%

% of Revenues 63.6% 64.1% 70.7% 69.7%

Expenses Other

than Reimbursements,

Compensation &

Benefits 118,670 117,593 0.9% 55,523 54,639 1.6%

% of Revenues 31.9% 34.5% 25.3% 25.6%

Total Operating

Expenses 355,229 336,461 5.6% 210,513 203,653 3.4%

Operating Earnings

(1) $16,800 $4,882 244.1% $8,724 $10,060 -13.3%

% of Revenues 4.5% 1.4% 4.0% 4.7%

Quarter Ended September 30

Unaudited

(In Thousands, Except Percentages)

U.S. % International %

2006 2005 Change 2006 2005 Change

Revenues Before

Reimbursements $122,180 $114,482 6.7% $74,877 $70,238 6.6%

Compensation &

Benefits 79,344 72,552 9.4% 52,593 48,547 8.3%

% of Revenues 64.9% 63.4% 70.2% 69.1%

Expenses Other than

Reimbursements,

Compensation &

Benefits 38,972 40,694 -4.2% 18,459 18,672 -1.1%

% of Revenues 31.9% 35.5% 24.7% 26.6%

Total Operating

Expenses 118,316 113,246 4.5% 71,052 67,219 5.7%

Operating Earnings (1) $3,864 $1,236 212.6% $3,825 $3,019 26.7%

% of Revenues 3.2% 1.1% 5.1% 4.3%

(1) A non-GAAP financial measurement which represents earnings before gain

on disposal of assets, net corporate interest

expense, stock option expense, and income taxes.

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2006 and December 31, 2005

(In Thousands)

Unaudited *

September 30 December 31

Assets 2006 2005

Current Assets:

Cash and Cash Equivalents $68,778 $49,441

Accounts Receivable, Net 163,975 163,087

Unbilled Revenues, Net 112,499 109,319

Prepaid Expenses and Other

Current Assets 18,958 14,964

Total Current Assets 364,210 336,811

Property and Equipment, at

Cost 135,079 150,008

Less Accumulated

Depreciation (100,942) (113,071)

Net Property and Equipment 34,137 36,937

Other Assets:

Goodwill, Net 111,031 110,035

Capitalized Software Costs,

Net 34,764 33,068

Deferred Income Tax Asset 37,979 38,217

Other 19,597 16,596

Total Other Assets 203,371 197,916

Total Assets $601,718 $571,664

Liabilities and Shareholders'

Investment

Current Liabilities:

Short-Term Borrowings $31,176 $28,888

Accounts Payable 39,243 42,434

Accrued Liabilities 84,652 78,047

Self-Insured Risks 15,158 17,664

Accrued Income Taxes 20,848 17,880

Deferred Revenues 19,990 19,608

Current Installments of

Long-Term Debt and Capital

Leases 366 6,441

Total Current Liabilities 211,433 210,962

Noncurrent Liabilities:

Long-Term Debt To Be

Refinanced 50,000 -

Long-Term Debt and Capital

Leases, Less Current

Installments 1,143 45,810

Deferred Revenues 10,217 10,409

Self-Insured Risks 11,184 9,122

Postretirement Medical

Benefit Obligation 4,243 4,569

Minimum Pension Liabilities 104,444 101,406

Other 14,265 10,355

Total Noncurrent Liabilities 195,496 181,671

Shareholders' Investment:

Class A Common Stock, $1.00

Par Value 24,786 24,293

Class B Common Stock, $1.00

Par Value 24,697 24,697

Additional Paid-in Capital 9,917 6,311

Unearned Stock-Based

Compensation - (37)

Retained Earnings 209,189 202,351

Accumulated Other

Comprehensive Loss (73,800) (78,584)

Total Shareholders' Investment 194,789 179,031

Total Liabilities and

Shareholders' Investment $601,718 $571,664

* Derived from the audited Consolidated Balance Sheet

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2006 and September 30, 2005

Unaudited

(In Thousands)

2006 2005

Cash Flows From Operating Activities:

Net Income $16,309 $6,929

Reconciliation of Net Income

to Net Cash Provided by

Operating Activities:

Depreciation and

Amortization Expenses 14,381 14,335

Stock-Based

Compensation Expense 2,249 181

Loss on Sales of

Property and

Equipment, net 104 75

Gain on Sale of

Investigations Unit (3,069) -

Changes in Operating

Assets and Liabilities,

net of effects of

acquisitions:

Accounts

Receivable, net 1,790 3,858

Unbilled Revenues, net (575) (2,771)

Accrued or Prepaid

Income Taxes 2,945 (5,369)

Accounts Payable and

Accrued Liabilities (2,444) (3,606)

Deferred Revenues 197 (1,802)

Accrued Retirement Costs 1,344 386

Prepaid Expenses

and Other (1,661) (990)

Net Cash Provided by Operating

Activities 31,570 11,226

Cash Flows From Investing

Activities:

Acquisitions of Property and

Equipment, net (9,044) (10,353)

Capitalization of Computer

Software Costs (7,170) (4,796)

Proceeds from 2004 Sale of

Undeveloped Land - 7,562

Proceeds from Sale of

Corporate Headquarters 8,000 -

Proceeds from Sale of

Investigations Unit 3,000 -

Payments for Equity

Investments/Prior

Acquisitions (388) (121)

Prepaid Acquisition Costs for

Broadspire Services (1,184) -

Net Cash Used in Investing

Activities (6,786) (7,708)

Cash Flows From Financing

Activities:

Dividends Paid (8,869) (8,805)

Proceeds from Stock Issued to

Employees Under Incentive Plans 1,883 593

Increase (Decrease) in Short-

Term Borrowings, Net 1,471 (960)

Payments on Long-Term Debt and

Capital Lease Obligations (840) (1,397)

Net Cash Used in Financing

Activities (6,355) (10,569)

Effect of Exchange Rate Changes on

Cash and Cash Equivalents 908 (344)

Increase (Decrease) in Cash and

Cash Equivalents 19,337 (7,395)

Cash and Cash Equivalents at

Beginning of Period 49,441 43,571

Cash and Cash Equivalents at End

of Period $68,778 $36,176

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