CRAWFORD & CO

Previous wording

changes in global economic conditions,

Current wording

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

Previous wording

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, 2024 and 2023, and as of September 30, 2024, and December 31, 2023, 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, 2023. 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.

Current wording

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 months ended March 31, 2025 and 2024, and as of March 31, 2025, and December 31, 2024, 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, 2024. 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.

Previous wording

Consolidated revenues before reimbursements decreased $0.7 million, or (0.2)%, for the three months ended September 30, 2024 and $25.8 million, or (2.7)%, for the nine months ended September 30, 2024, compared with the same periods of 2023. This decrease was primarily due to decreases in our Platform Solutions operating segment in the 2024 three and nine month periods. Changes in foreign exchange rates decreased our consolidated revenues before reimbursements by $2.2 million, or (0.6)%, for the three months ended September 30, 2024 and $3.2 million, or (0.4)%, for the nine months ended September 30, 2024, 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, 2024.

Current wording

Consolidated revenues before reimbursements increased $10.4 million, or 3.4%, for the three months ended March 31, 2025, compared with the same period of 2024. This increase was due to increases in our North America Loss Adjusting, International Operations and Broadspire operating segments. Changes in foreign exchange rates decreased our consolidated revenues before reimbursements by $4.4 million, or (1.5)%, for the three months ended March 31, 2025, as compared with the prior year period. To illustrate this impact, segment revenues are presented below, using a constant exchange rate, for the three months ended March 31, 2025.

Previous wording

Excluding foreign currency impacts, consolidated revenues before reimbursements increased $1.5 million, or 0.4%, for the three months ended September 30, 2024, but decreased $22.6 million, or (2.3)%, for the nine months ended September 30, 2024 compared with the same periods of 2023. Revenues from the North America Loss Adjusting segment decreased slightly in the 2024 third quarter and year-to-date periods due to higher weather-related activity in the prior year period. Revenues from the International Operations segment increased in the 2024 third quarter in all geographic regions. Excluding the impacts of foreign currency, revenues from the International Operations segment increased in the 2024 year-to-date period in the U.K., Europe, Asia, and Latin America. Revenues from the Broadspire segment increased for the quarter and year-to-date period due to an increase in Claims and Medical Management revenues. Revenues from the Platform Solutions segment decreased in the third quarter and year-to-date period primarily due to higher weather-related activity in the prior year periods in our Networks and Contractor Connection service lines.

Current wording

Excluding foreign currency impacts, consolidated revenues before reimbursements increased $14.8 million, or 4.9%, for the three months ended March 31, 2025 compared with the same period of 2024. Revenues from the North America Loss Adjusting segment increased in the 2025 first quarter due to revenue growth in U.S. Field Operations and U.S. Global Technical Services, partially offset by a decline in revenues in Canada. Excluding foreign currency impacts, revenues from the International Operations segment increased in the 2025 first quarter in all geographic regions. Revenues from the Broadspire segment increased for the quarter due to an increase in Claims and Medical Management revenues. Revenues from the Platform Solutions segment decreased slightly in the first quarter due to a reduction in low value inspection service cases, partially offset by an increase in revenues from weather-related activity and staff augmentation services.

Previous wording

Overall, there was a decrease in cases received of (14.5)% for the three months ended September 30, 2024 and a decrease of (10.2)% for the nine months ended September 30, 2024. Within our North America Loss Adjusting segment, the reduction in cases received for the 2024 third quarter and year-to-date period was primarily due to the loss of a customer in the Contractor Connection service line in Canada. Cases within our International Operations segment declined for the third quarter, primarily due to decreases in the U.K. and Latin America, due to decreases in high-frequency, low-severity cases, partially offset by increases in Europe, Australia, and Asia. For the year to date period, cases increased within the International Operations segment, due primarily to increases in Latin America related to high-frequency, low-severity cases, and Australia, which had an increase in weather-related cases compared to the prior year. There was a decline in cases within our Broadspire segment for the third quarter and year-to-date period related to the non-recurrence of takeover claims for disability clients within Claims Management. The decrease in Broadspire claims was partially offset by an increase in Medical Management referrals for the third quarter and year-to-date period. Within our Platform Solutions segment, there was a decrease in each period presented related to the Networks and the Contractor Connection service lines.

Current wording

Overall, there was a decrease in cases received of (5.6)% for the three months ended March 31, 2025. Within our North America Loss Adjusting segment, cases increased for the 2025 first quarter as a result of an increase in low value inspection services cases transferred from our Platforms Solutions group with minimal revenues. Cases within our International Operations segment declined for the first quarter, primarily due to decreases in the U.K. and Australia, due to decreases in high-frequency, low-severity cases, and higher weather-related activity in the prior year period. There was an increase in cases within our Broadspire segment for the first quarter primarily due to an increase in new disability clients within Claims Management. Within our Platform Solutions segment, the decrease was primarily related to the transfer of low value inspection services to North America Loss Adjusting, as well as a decrease in Contractor Connection cases.

Previous wording

Cases received are presented below by segment for the three and nine months ended September 30, 2024 and 2023:

Current wording

Cases received are presented below by segment for the three months ended March 31, 2025 and 2024:

Previous wording

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, 2024:

Current wording

To illustrate exposure to the impact of changes in foreign currencies, revenues before reimbursements are presented below by denominated currency for the three months ended March 31, 2025:

Previous wording

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 acquisition-related intangible assets, contingent earnout adjustments, non-service pension costs, income taxes, and net loss attributable to noncontrolling interests.

Current wording

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 acquisition-related intangible assets, contingent earnout adjustments, non-service pension costs, income taxes, and net (income) loss attributable to noncontrolling interests.

Previous wording

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.

Current wording

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 are allocated to the segments as indirect costs based on usage.

Previous wording

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.

Current wording

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

Previous wording

Income taxes, net corporate interest expense, stock option expense, amortization of acquisition-related intangible assets, contingent earnout adjustments, and non-service pension costs 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 acquisition-related and trade name intangible assets acquired in business combinations. Non-service pension costs represent the U.S. and U.K. non-service defined benefit pension costs, which are non-operating in nature as the U.S. plan is frozen and the U.K. plans are closed to new participants. The service cost component of the U.K. plans remains in compensation expense. The exclusion of this measurement is intended to exclude market volatility related to an expense that is non-operating in nature and not related to business performance. 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.

Current wording

Income taxes, net corporate interest expense, stock option expense, amortization of acquisition-related intangible assets, contingent earnout adjustments, and non-service pension costs 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. Non-service pension costs represent the U.S. and U.K. non-service defined benefit pension costs, which are non-operating in nature as the U.S. plan is frozen and the U.K. plans are closed to new participants. The service cost component of the U.K. plans remains in compensation expense. The exclusion of this measurement is intended to exclude market volatility related to an expense that is non-operating in nature and not related to business performance. 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.

Previous wording

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, certain unallocated professional fees, and certain self-insurance costs and recoveries that are not allocated to our individual operating segments.

Current wording

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, certain unallocated professional fees, certain payroll tax and benefits, and certain self-insurance costs and recoveries that are not allocated to our individual operating segments.

Previous wording

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.

Current wording

In the normal course of business, our 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 required to be included when reporting expenses and revenues, respectively, in our consolidated results of operations as we are considered the principal in these transactions. 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 consolidated revenues determined in accordance with GAAP is self-evident from the face of the accompanying statements of operations. Unless noted in the following discussion and analysis, revenue amounts exclude reimbursements for out-of-pocket expenses.

Previous wording

Operating results for our North America Loss Adjusting segment, including gross profit, for the three and nine months ended September 30, 2024 and 2023 were as follows:

Current wording

Operating results for our North America Loss Adjusting segment, including gross profit, for the three months ended March 31, 2025 and 2024 were as follows:

Previous wording

North America Loss Adjusting segment revenues are primarily derived from the 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, 2024 and 2023 were as follows:

Current wording

North America Loss Adjusting segment revenues are primarily derived from the 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 months ended March 31, 2025 and 2024 were as follows:

Previous wording

Revenues before reimbursements from our North America Loss Adjusting segment totaled $79.3 million in the three months ended September 30, 2024, compared with $80.0 million in the 2023 period. This slight decrease was due to a decrease in Canada and U.S. Field Operations, primarily driven by higher weather-related activity in the prior year period, partially offset by an increase in U.S. Global Technical Services revenues due to increased business from new and existing clients. The change in exchange rates decreased our North America Loss Adjusting segment revenues by approximately (0.5)%, or $(0.4) million, for the three months ended September 30, 2024 as compared with the 2023 period. Absent foreign exchange rate fluctuations, North America Loss Adjusting segment revenues would have been $79.7 million for the three months ended September 30, 2024. There was a decrease in segment unit volume, measured principally by cases received, of (16.2)% for the three months ended September 30, 2024, compared with the 2023 period. This includes a decrease in high-frequency, low-severity cases received in Contractor Connection in Canada of 10,700 or 13.6%. Changes in product mix and in the rates charged for those services accounted for a 2.3% revenue increase for the three months ended September 30, 2024 compared with the same period in 2023, due to increases in pricing and average fee per case.

Current wording

Revenues before reimbursements from our North America Loss Adjusting segment totaled $79.7 million in the three months ended March 31, 2025, compared with $77.4 million in the 2024 period. Revenue growth was led by U.S. Global Technical Services revenues due to increased business from new and existing clients. The transfer of the inspection services business from Platform Solutions contributed $1.4 million to the increase in revenues. The change in exchange rates decreased our North America Loss Adjusting segment revenues by approximately (1.8)%, or $(1.4) million, for the three months ended March 31, 2025 as compared with the 2024 period. Absent foreign exchange rate fluctuations, North America Loss Adjusting segment revenues would have been $81.2 million for the three months ended March 31, 2025. There was an increase in segment unit volume, measured principally by cases received, of 44.1% for the three months ended March 31, 2025, compared with the 2024 period. This includes an increase in low value inspection services cases, previously handled within Platform Solutions, of (31,700) or (51.2)%, an increase in higher value U.S. Global Technical Services cases which contributed to a 4.9% increase in revenues before reimbursements, and a decrease in low-severity cases received in Contractor Connection in Canada of 2,032 or 3.3%. Changes in product mix and in the rates charged for those services accounted for a 3.8% revenue increase for the three months ended March 31, 2025 compared with the same period in 2024, due to increases in pricing and average fee per case.

Previous wording

Revenue variance components for our North America Loss Adjusting segment, for the three and nine months ended September 30, 2024 are summarized as follows:

Current wording

Revenue variance components for our North America Loss Adjusting segment, for the three months ended March 31, 2025 are summarized as follows:

Previous wording

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 $2.5 million for the three months ended September 30, 2024 and 2023, respectively. Reimbursements were $6.5 million and $7.8 million for the nine months ended September 30, 2024 and 2023, respectively. These decreases were due to the decrease in claims in the U.S. and a decrease in revenues and claims received in Canada.

Current wording

Reimbursements for out-of-pocket expenses incurred in our North America Loss Adjusting segment, which are included in total Company revenues, were $2.3 million and $1.9 million for the three months ended March 31, 2025 and 2024, respectively. The increase was due to the increase in revenues in U.S. Global Technical Services.

Previous wording

North America Loss Adjusting segment unit volumes by geographic region, measured by cases received, for the three and nine months ended September 30, 2024 and 2023 were as follows:

Current wording

North America Loss Adjusting segment unit volumes by geographic region, measured by cases received, for the three months ended March 31, 2025 and 2024 were as follows:

Previous wording

Overall, there was a decrease in cases of (16.2)% in the three months ended September 30, 2024, compared to the same period in 2023. The decrease in U.S. case volumes in the 2024 third quarter was due to higher weather-related activity in the prior year period partially offset by an increase in Global Technical Services. There was a decrease in cases in Canada in the 2024 third quarter primarily due to 10,700 less high-frequency, low-severity Contractor Connection cases related to the loss of a customer, as compared with the 2023 period.

Current wording

Overall, there was an increase in cases of 44.1% in the three months ended March 31, 2025, compared to the same period in 2024. The increase in U.S. case volumes in the 2025 first quarter was primarily due to the increase in low value inspection services of 31,700 cases, transferred from Platform Solutions. There was a decrease in cases in Canada in the 2025 first quarter primarily due to 2,032 less high-frequency, low-severity Contractor Connection cases related to the loss of a customer, as compared with the 2024 period.

Previous wording

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, these expenses were 71.9% for the three months ended September 30, 2024 compared with 67.1% for the 2023 period. For the nine months ended September 30, 2024, these expenses were 71.9% compared with 69.4% for the 2023 period. The total dollar amount of these expenses increased to $57.1 million for the three months ended September 30, 2024 from $53.6 million for the comparable 2023 period, and were $167.2 million for the nine months ended September 30, 2024 increasing from $162.4 million in 2023. The third quarter and year-to-date increases were due to increases in expert adjusting staff in U.S. Global Technical Services, partially offset by decreases in employees in U.S. Field Operations and Canada. The increase in the percentage of revenues before reimbursements is due to lower staff utilization in U.S. Field Operations, Global Technical Services and Canada, compared to the 2023 periods. There was an average of 2,003 full-time equivalent employees in this segment in the nine months ended September 30, 2024 compared with an average of 2,058 in the 2023 period.

Current wording

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, these expenses were 70.3% for the three months ended March 31, 2025 compared with 71.7% for the 2024 period. The total dollar amount of these expenses increased to $56.0 million for the three months ended March 31, 2025 from $55.5 million for the comparable 2024 period. The first quarter increase was due to increases in expert adjusting staff in U.S. Global Technical Services, partially offset by decreases in employees in U.S. Field Operations and Canada. The decrease in the percentage of revenues before reimbursements is due to improved staff utilization in U.S. Field Operations, compared to the 2024 period. There was an average of 2,078 full-time equivalent employees in this segment in the three months ended March 31, 2025 compared with an average of 2,046 in the 2024 period.

Previous wording

Operating earnings in our International Operations segment were $5.1 million, or 4.9% of revenues before reimbursements, for the three months ended September 30, 2024, compared with $2.2 million, or 2.2% of revenues before reimbursements, in the 2023 period. For the nine months ended September 30, 2024, our International Operations segment reported operating earnings of $12.5 million, or 4.1% of revenues before reimbursements, compared with operating earnings in 2023 of $9.0 million, or 3.1% of revenues before reimbursements. The increase in operating earnings in the 2024 periods was primarily due to revenue increases in the U.K. and Europe.

Current wording

Operating earnings in our International Operations segment were $3.5 million, or 3.3% of revenues before reimbursements, for the three months ended March 31, 2025, compared with $1.7 million, or 1.7% of revenues before reimbursements, in the 2024 period. The increase in operating earnings in the 2025 period was primarily due to improved operating results in the U.K. and Asia, partially offset by an increase in centralized indirect support costs.

Previous wording

Excluding centralized indirect support costs, gross profit increased from $14.5 million, or 14.8% of revenues before reimbursements in 2023, to $18.5 million, or 17.5% of revenues before reimbursements, in the three months ended September 30, 2024. For the nine months ended September 30, 2024, gross profit increased from $47.2 million, or 16.6% of revenues before reimbursements in 2023, to $53.7 million, or 17.5% of revenues before reimbursements. The increase in gross profit in the 2024 periods was driven by the increase in revenues.

Current wording

Excluding centralized indirect support costs, gross profit increased from $16.0 million, or 16.3% of revenues before reimbursements in 2024, to $18.9 million, or 18.1% of revenues before reimbursements, in the three months ended March 31, 2025. The increase in gross profit in the 2025 period was mainly driven by increased revenues and an insurance recovery.

Previous wording

Operating results for our International Operations segment, including gross profit, for the three and nine months ended September 30, 2024 and 2023 were as follows:

Current wording

Operating results for our International Operations segment, including gross profit, for the three months ended March 31, 2025 and 2024 were as follows:

Previous wording

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, 2024 and 2023 were as follows:

Current wording

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 months ended March 31, 2025 and 2024 were as follows:

Previous wording

Revenues before reimbursements from our International Operations segment totaled $105.7 million in the three months ended September 30, 2024, compared with $98.1 million in the 2023 period. This increase was due to an increase in all geographic regions. The change in exchange rates decreased our International Operations segment revenues by approximately (1.9)%, or $1.8 million, for the three months ended September 30, 2024 as compared with the 2023 period. Absent foreign exchange rate fluctuations, International Operations segment revenues would have been $107.6 million for the three months ended September 30, 2024. There was a decrease in segment unit volume, measured principally by cases received, of (6.8)% for the three months ended September 30, 2024, compared with the 2023 period. There was a decrease in high-frequency, low-severity cases of 10,100, or (8.3)%, primarily in the U.K. There was also an increase in higher-value third-party administration claims in the U.K, which led to a 3.9% increase in revenue for the three months ended September 30, 2024, compared with the 2023 period. Changes in product mix and in the rates charged for those services accounted for a 4.3% revenue increase for the three months ended September 30, 2024 compared with the same period in 2023.

Current wording

Revenues before reimbursements from our International Operations segment totaled $104.4 million in the three months ended March 31, 2025, compared with $98.1 million in the 2024 period. Absent foreign exchange fluctuations, each geographic region increased in revenues for the quarter. The change in exchange rates decreased our International Operations segment revenues by approximately (3.1)%, or $(3.0) million, for the three months ended March 31, 2025 as compared with the 2024 period. Absent foreign exchange rate fluctuations, International Operations segment revenues would have been $107.4 million for the three months ended March 31, 2025. There was a decrease in segment unit volume, measured principally by cases received, of (13.5)% for the three months ended March 31, 2025, compared with the 2024 period. There was a decrease in high-frequency, low-severity cases of 11,700, or 8.6%, primarily in Australia and in the U.K. In addition, the prior year had 9,000 more cases, or 6.6%, with minimal revenues recognized in the first quarter related to storms in Australia. There was also an increase in higher-value third-party administration claims in the U.K, which led to a 5.5% increase in revenue for the three months ended March 31, 2025, compared with the 2024 period. Changes in product mix and in the rates charged for those services accounted for a 2.3% revenue increase for the three months ended March 31, 2025 compared with the same period in 2024.

Previous wording

Based on constant foreign exchange rates, the increase in revenues in the U.K. for the 2024 third quarter and year-to-date period was due to an increase in property and third party administration revenues driven by higher value claims. There was an increase in revenues in Europe in the 2024 periods, compared with 2023, due to increases in Netherlands, Norway, the Middle East, and Germany. There was an increase in Australia in the 2024 third quarter, compared with 2023, due to an increase in Contractor Connection claims, while the year-to-date period had a decrease due to a large flooding event in 2022 that continued to provide revenues into 2023. There was an increase in revenues in Asia in the 2024 third quarter, compared with 2023, due to increases in Taiwan, and Hong Kong, while the year-to-date period experienced a decrease from the 2023 period due to decreased large loss claims in Thailand and higher weather-related activity in the prior year period in the Philippines. The increase in revenues in Latin America in the 2024 periods was primarily driven by increased volumes across third-party administration and loss adjusting in Brazil.

Current wording

Based on constant foreign exchange rates, the increase in revenues in the U.K. for the 2025 first quarter was due to an increase in higher-value third-party administration revenues. There was an increase in revenues in Europe in the 2025 period, compared with 2024, due to increases in flood related claims in the Middle East and Spain. There was a slight increase in Australia in the 2025 first quarter, compared with 2024. There was an increase in revenues in Asia in the 2025 first quarter, compared with 2024, due to increases in Taiwan for claims related to the earthquake that occurred in 2024. The increase in revenues in Latin America in the 2025 period was primarily driven by increased revenues in Brazil and Chile.

Previous wording

Revenue variance components for our International Operations segment, for the three and nine months ended September 30, 2024 are summarized as follows:

Current wording

Revenue variance components for our International Operations segment, for the three months ended March 31, 2025 are summarized as follows:

Previous wording

Reimbursements for out-of-pocket expenses incurred in our International Operations segment, which are included in total Company revenues, were $9.4 million and $7.7 million for the three months ended September 30, 2024 and 2023, respectively. Reimbursements were $26.6 million and $24.4 million for the nine months ended September 30, 2024 and 2023, respectively.

Current wording

Reimbursements for out-of-pocket expenses incurred in our International Operations segment, which are included in total Company revenues, were $7.9 million and $8.5 million for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

International Operations segment unit volumes by geographic region, measured by cases received, for the three and nine months ended September 30, 2024 and 2023 were as follows:

Current wording

International Operations segment unit volumes by geographic region, measured by cases received, for the three months ended March 31, 2025 and 2024 were as follows:

Previous wording

Overall, there was a decrease in cases received of (6.8)% for the three months ended September 30, 2024, compared with the 2023 period. There was a decrease in the U.K. in the third quarter due to decreases in high-frequency, low-severity cases in third party administration. Cases increased in Europe due to an increase in the Middle East and the Netherlands. Cases increased in Australia due to an increase in high-frequency, low-severity cases in Contractor Connection. The increase in cases received in Asia was due to an increase in cases in Philippines. Latin America experienced an increase in cases received in Brazil due to flooding.

Current wording

Overall, there was a decrease in cases received of (13.5)% for the three months ended March 31, 2025, compared with the 2024 period. There was a decrease in the U.K. in the first quarter due to decreases in high-frequency, low-severity cases. The increase in Europe was primarily due to increases in high-frequency, low-severity cases in third party administration within the Netherlands, as well as expansion in Spain. Cases decreased in Australia due to higher weather-related activity in the prior year. The increase in cases received in Asia was due to an increase in cases in Taiwan. Latin America experienced a decrease in high-frequency, low-value cases received in Brazil.

Previous wording

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, these expenses were 65.6% for the three months ended September 30, 2024 compared with 67.7% for the 2023 period. The total dollar amount of these expenses was $69.4 million for the three months ended September 30, 2024, compared to $66.4 million for the 2023 period. For the nine months ended September 30, 2024, these expenses were 65.5%, compared with 66.7% in 2023, and were $200.4 million for the nine months ended September 30, 2024 compared to $190.2 million in 2023. The increase was due to increases in compensation expense, related to the increase in revenues, including incentive compensation. The decrease in the percentage of revenues before reimbursements is due to higher revenues in the 2024 periods and improved staff utilization. There was an average of 3,638 full-time equivalent employees in this segment in the nine months ended September 30, 2024, compared with an average of 3,660 in the comparable 2023 period.

Current wording

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, these expenses were 67.6% for the three months ended March 31, 2025 compared with 66.2% for the 2024 period. The total dollar amount of these expenses was $70.6 million for the three months ended March 31, 2025, compared to $65.0 million for the 2024 period. The increase in cost and as a percentage of revenues before reimbursements was due to an increase in compensation expense, related to the increase in revenues, including incentive compensation, and an increase in non-employee labor. There was an average of 3,539 full-time equivalent employees in this segment in the three months ended March 31, 2025, compared with an average of 3,611 in the comparable 2024 period.

Previous wording

Operating results for our Broadspire segment, including gross profit, for the three and nine months ended September 30, 2024 and 2023 were as follows:

Current wording

Operating results for our Broadspire segment, including gross profit, for the three months ended March 31, 2025 and 2024 were as follows:

Previous wording

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, 2024 and 2023 were as follows:

Current wording

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 months ended March 31, 2025 and 2024 were as follows:

Previous wording

Revenues before reimbursements from our Broadspire segment totaled $99.0 million in the three months ended September 30, 2024 compared with $92.2 million in the 2023 period. This increase was primarily due to an increase in new client growth across both service lines. There was a decrease in segment unit volume, measured principally by cases received, of (1.7)% for the three months ended September 30, 2024 compared with the same period of 2023. This was primarily due to takeover claims for a disability client in the prior year third quarter, which resulted in 7,000 claims, or 4.9%, with minimal revenues which did not recur in 2024. Revenues were positively impacted by $0.7 million increase in revenues within our Claims Management service line related to income earned which offsets the costs of managing the funds maintained to administer claims for our customers, for which no cases are received, or 0.7% of the increase in revenues. There was also a $2.1 million increase in revenues within our Medical Management service line for which no cases are received, or 2.3% of the increase in revenues. Changes in product mix and in the rates charged for those services accounted for a 1.2% revenue increase for the 2024 third quarter compared with the 2023 period.

Current wording

Revenues before reimbursements from our Broadspire segment totaled $96.4 million in the three months ended March 31, 2025 compared with $94.3 million in the 2024 period. This increase was primarily due to an increase in pricing in both lines and a rise in cases in Claims Management. There was an increase in segment unit volume, measured principally by cases received, of 1.3% for the three months ended March 31, 2025 compared with the same period of 2024. This was primarily due to an increase in new disability clients within our Claims Management service line. Revenues were negatively impacted by a $(0.7 million) decrease in revenues within our Claims Management service line related to income earned which offsets the costs of managing the funds maintained to administer claims for our customers, for which no cases are received, or (0.7)% decrease in revenues. There was also a $1.1 million increase in revenues within our Medical Management service line for which no cases are received, or a 1.2% increase in revenues. Changes in product mix and in the rates charged for those services accounted for a 0.4% revenue increase for the 2025 first quarter compared with the 2024 period.

Previous wording

Revenue variance components for our Broadspire segment, for the three and nine months ended September 30, 2024 are summarized as follows:

Current wording

Revenue variance components for our Broadspire segment, for the three months ended March 31, 2025 are summarized as follows:

Previous wording

Reimbursements for out-of-pocket expenses incurred in our Broadspire segment were $0.8 million and $0.7 million for the three months ended September 30, 2024 and 2023, respectively. Reimbursements were $2.8 million and $2.4 million for the nine months ended September 30, 2024 and 2023, respectively. The increase in the 2024 periods was primarily due to the increased revenues in the current period.

Current wording

Reimbursements for out-of-pocket expenses incurred in our Broadspire segment were $0.8 million and $0.9 million for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

Broadspire unit volumes by service line, as measured by cases received, for the three and nine months ended September 30, 2024 and 2023 were as follows:

Current wording

Broadspire unit volumes by service line, as measured by cases received, for the three months ended March 31, 2025 and 2024 were as follows:

Previous wording

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. These expenses totaled $59.7 million for the three months ended September 30, 2024, compared to $54.3 million for the 2023 period. As a percent of the related revenues before reimbursements, these expenses increased from 58.9% in the 2023 third quarter to 60.3% in 2024 third quarter. For the nine months ended September 30, 2024, these expenses totaled $175.1 million, compared to $161.5 million in 2023. For the nine months ended September 30, 2024, these expenses, as a percent of the related revenues before reimbursements, decreased from 61.3% in 2023 to 60.3% in 2024. The increase in cost in the third quarter and year-to-date period was primarily due to increased employees, average wages, and incentive compensation, related to the increase in revenues. Improved efficiency with higher revenues combined for lower percentages of revenues before reimbursements for the nine-month period, while the three months ended September 30, 2024 had a higher percentage of revenues before reimbursements due to increased employees and lower revenue growth compared to the year-to-date period. Average full-time equivalent employees in this segment totaled 2,691 in the nine months ended September 30, 2024, compared with 2,601 in the 2023 period.

Current wording

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. These expenses totaled $58.4 million for the three months ended March 31, 2025, compared to $57.3 million for the 2024 period. As a percent of the related revenues before reimbursements, these expenses decreased slightly from 60.7% in the 2024 first quarter to 60.5% in 2025 first quarter. The increase in cost in the first quarter was primarily due to increased employees, average wages, and incentive compensation, related to the increase in revenues. The three months ended March 31, 2025 had a slightly lower percentage of revenues before reimbursements due to improved operating leverage. Average full-time equivalent employees in this segment totaled 2,764 in the three months ended March 31, 2025, compared with 2,601 in the 2024 period.

Previous wording

Broadspire segment expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor as a percent of revenues before reimbursements were 25.2% for the three months ended September 30, 2024, compared with 26.4% in the 2023 period. The amount of these expenses increased from $24.4 million for the three months ended September 30, 2023 to $24.9 million in 2024 related to higher professional fees and self-insurance costs, partially offset by lower amortization and indirect support costs. For the nine months ended September 30, 2024 these expenses were $73.0 million, compared with $72.5 million for the 2023 period. As a percentage of revenues before reimbursements, these expenses were 25.1% for the nine months ended September 30, 2024, compared with 27.5% for the 2023 period. The decrease in the expense as a percent of revenues before reimbursements was due to the increased revenues and operating efficiencies.

Current wording

Broadspire segment expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor as a percent of revenues before reimbursements were 26.8% for the three months ended March 31, 2025, compared with 25.7% in the 2024 period. The amount of these expenses increased from $24.2 million for the three months ended March 31, 2024 to $25.8 million in 2025. The increase in the 2025 first quarter expenses and as a percentage of revenues before reimbursements was due to higher cost of risk expenses and indirect support costs.