Crawford & Co (CRD.A) 2010 Q4 法說會逐字稿

Good afternoon, my name is Christy, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Crawford & Company fourth quarter and year end 2010 earnings release conference call. In conjunction with this call, a supplementary financial presentation is available on our website at www.crawfordcandcompany.com, under the investor relations section. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period. Instructions will follow at that time. (Operator Instructions)As a reminder, ladies and gentlemen, this conference is being recorded today, Monday, February 7, 2011.

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 include, but are not limited to, statements regarding the funded status of our defined benefit pension plan, our expectations related to future revenues and expenses and our long-term liquidity requirements. The company's actual results achieved in future quarters could differ materially from 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 unanticipated events. In addition, you are reminded that operating results for any historical period are not necessarily indicative of results to be expected for any future period.

For a complete discussion regarding factors which could affect the company's financial performance, please refer to the company's Form 10-K for the year ended December 31, 2009 filed with the Securities and Exchange Commission, particularly the information under the heading business, risk factors, legal proceedings, and management's discussion and analysis of financial condition and results of operations, as well as subsequent company filings with the SEC. This 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. Jeffrey Bowman, President and Chief Executive Officer of Crawford & Company. Mr. Bowman, you may begin your conference.

Thank you, Christy. A warm welcome to our investors, clients and employees this afternoon for a discussion of our strong 2010 fourth quarter and improved year end results, together with a brief outlook for 2011. My commentary on key events by each business segment. I'm Jeffrey Bowman, President and CEO of Crawford & Company. Joining me from the global executive management team this afternoon are Bruce Swain, our CFO, and Alan Nelson, our General Counsel and Chief Administrative Officer. I will begin with some comments on our improved fourth quarter. Bruce will then review the quarter and year end financials in more detail, which will be followed by a review of our business segments and then some comments on our strategic initiatives and conclude with some comments on our corporate focus and guidance.

Let me start by addressing our shareholders. Firstly, I'd like to welcome Joanna Johnson to our board of directors following our board meeting last week. She is currently Chief Legal Officer for Haines Brands, Inc. She brings with her more than 20 years of legal experience, and I look forward to working with her on the board of directors.

The Company has delivered on its pledge four years ago to restore a dividend on our common stock as declared by our board of directors last week. The decision to restore the dividend was made possible by improved operating results and by progress made in addressing the Company's frozen US defined benefit pension plan obligations during the fourth quarter of 2010 and in January 2011. The $50 million in contributions made over that period to the funding of the frozen pension plan will benefit the Company in future years through increased financial flexibility and liquidity as the required pension contributions in the United States are significantly reduced over the next two years. The consolidated financial results for the fourth quarter were very strong. However, for our North American Property and Casualty and Broadspire operations, the quarter was challenging. We remain confident that the strategies and actions taken by management will get both these business segments back to acceptable operating margins. I will talk further about all of our business segments after Bruce has presented the financials.

Our worldwide team continues to make progress building on the operational strategies we are implementing through our strategic initiatives. Like everyone in our marketplace, we still face economic conditions or challenges outside our control. The economic outlook in North America has not changed significantly from the third quarter. Nonetheless, we continue to execute on our plans to strengthen our corporation for medium- and long-term growth and increase shareholder value. Looking forward, we continue to expect claims activity to stabilize, followed by a slow increase tracking the economic recovery going forward. We are very well positioned to take advantage of any upturn in the economy and an increase in adverse weather events.

Now, turning to our fourth quarter corporate performance. Fourth quarter revenue improved over the three previous 2010 quarters and 26% over the previous year to a new record quarterly -- quarterly record. Revenue and strong operating earnings in our Legal Settlement Administration segment increased sharply over the second half of the year, due to primarily to our engagement in the Gulf Coast claims facility special project. In addition to Legal Settlement Administration, our international property and casualty operation had a strong quarter on a consolidated basis. Our expense reduction efforts gained ground throughout the year, producing increased efficiencies, particularly in selling, general, administrative costs, where we can report the 3% decrease for the year.

We were pleased with the substantial improvement in operating cash in the fourth quarter. All business segments contributed to that result. We believe the result was aided by linking business unit performance plans with individual performance incentives. Improvement goals in day sales outstanding since 2007, have reduced DSO by nearly 30 days on a consolidated basis, which translates into over $100 million in operating cash flow. Also of significance during the fourth quarter, we accelerated funding to the US frozen defined benefit pension plan that enabled us to improve the plan's risk profile and the Company's financial flexibility. I am pleased to report that the Crawford delivered GAAP earnings of $0.28 per share versus $0.17 per share for 2009.

Moving from GAAP EPS to an adjusted non-GAAP EPS, the comparison for the quarter was $0.33 per share versus $0.17 in the prior year. For the current quarter, reported earnings reflected a goodwill impairment charge of $0.05 related to our Broadspire segment. This charge was related to the determination in an arbitration proceeding related to the October 2006 acquisition of Broadspire Management Services, Inc. For the full year, the reported EPS gives an adjusted non-GAAP EPS result of $0.72 against an adjusted prior year figure of $0.48 EPS. We are pleased with this improved result for our shareholders. That concludes my initial remarks. Bruce, would you please review the Company's overall financial performance for the fourth quarter?

Company-wide revenues before reimbursements in the 2010 fourth quarter were a record $301.5 million, up 26% over the $238.4 million in the prior year's fourth quarter. Strong growth in our Legal Settlement Administration segment and organic growth in our International Operations segment accounted for the improvement. Our net income attributable to Crawford & Company totaled $14.8 million in the 2010 fourth quarter, increasing 67% over $8.9 million in the 2009 period. Fourth quarter diluted earnings per share on a GAAP basis were $0.28 in the 2010 period, compared to earnings per share of $0.17 in the 2009 period. The Company's selling, general, and administrative expenses, or SG&A, totaled $53.1 million, or 18% of revenues in the 2010 fourth quarter, increasing $3.4 million from $49.7 million, or 21% of revenues in the prior year quarter. This increase in costs is primarily due to higher self insurance costs, planned increases in the Company's 401(k) matching formula and incentive compensation, as well as increased bad debt expense. During the 2010 fourth quarter, the Company recorded a net goodwill impairment charge of $3.5 million, or $0.05 per share.

This charge is only partially deductible for tax purposes and was related to a purchase price arbitration regarding the October 2006 acquisition of Broadspire Management Services, Inc. Net income attributable to Crawford & Company and earnings per share in the 2010 fourth quarter, were impacted by several items, including the positive effects of decreased defined benefit pension expense, and the absence of restructuring costs during the 2010 quarter, offset by an increased income tax expense in the 2010 period. Earnings per share on an adjusted non-GAAP basis totaled $0.33 per share in the 2010 fourth quarter, compared to $0.17 on a GAAP basis in the 2009 period. Before considering the $0.05 impact of the goodwill impairment charges in the 2010 period, this improvement was driven by a net $0.18 improvement from our operating segments.

International revenues increased 10.7% in the 2010 fourth quarter, to $114.8 million. Our revenue performance reflects weather-related increases in our Canadian and Asia-Pacific operating regions as compared to the 2009 period, during the 2010 fourth quarter, the foreign exchange impact to the Company was minimal. Operating earnings -- international operating earnings increased to $13.2 million during the current quarter, up 26% from last year's fourth quarter operating earnings of $10.4 million. The operating margin in this segment was 11.5% in the 2010 quarter, increasing from 10.1% in the 2009 fourth quarter. Revenues from the US Property and Casualty segment totaled $45.2 million in the 2010 fourth quarter, a slight increase from the $44.9 million reported in last year's fourth quarter. Operating earnings in our US Property and Casualty segment totaled a loss of $452,000, for an operating margin of negative 1% of revenues in the 2010 fourth quarter. This is compared to operating earnings of $1.6 million, or 3.6% of revenues in the prior year quarter. This loss was primarily the result of higher operating expenses during the 2010 fourth quarter. Revenues generated by our US catastrophe adjustors totaled approximately $5.2 million in the 2010 fourth quarter, increasing from $3.7 million in the 2009 quarter. Despite the increase in the 2010 fourth quarter, catastrophic claims frequency has been lower in the US over the past several quarters.

Revenues from our Broadspire segment decreased to $60.7 million in the 2010 fourth quarter, down 14% from $70.6 million in the prior year quarter, reflecting lower industry-wide workers' compensation claim referrals as a result of weak US employment levels, and the impact of a previously announced 2009 nonrenewal of a major contract within this segment. Broadspire's operating results in the 2010 quarter were a loss of $6.9 million, or negative 11.5% of revenues, declining from operating earnings of $2.1 million, or 3% of revenues in the 2009 fourth quarter. This loss reflects the bankruptcy of a major client, and certain nonrecurring expenses during the 2010 fourth quarter. We continue to focus on cost efficiency within this segment in light of the unfavorable claim trends.

Legal settlement administration revenues, comprised of class action and bankruptcy claims administration services, as well as significant special project revenues, totaled $80.8 million in the 2010 fourth quarter, compared to $19.2 million in the prior year quarter. Operating earnings totaled $27.8 million in the 2010 fourth quarter, or 34.5% of revenues as compared to $3.2 million, or 16.8% of revenues in the prior year period. Legal settlement administration continues to have a strong backlog of projects awarded, totalling a record $90 million at year end 2010 as compared to $55 million at December 31, 2009.

Our cash and cash equivalent position at December 31, 2010 totaled $93.5 million as compared to $70.4 million at December 31, 2009, reflecting borrowings held at year end 2010 that were used to make a $20 million contribution to the frozen US defined benefit pension plan in January 2011. Our investment in unbilled and billed receivables has increased by $32.4 million during 2010 as a result of sharply higher fourth quarter revenues. Our DSO was 59.9 days at the 2010 year end, which is an 8.5-day decline from 68.4 days at December 31, 2009. Our pension liabilities declined in 2010 by $47.5 million as a result of higher contributions to our US plan during 2010. Our total debt has increased in 2010 by $42 million, due to the additional $50 million in borrowings under the Company's existing credit facility, which were used to make accelerated contributions to the Company's frozen US defined pension plan during December 2010 and January 2011.

Cash provided by operations totaled $26.2 million for 2010, compared to $51.7 million provided by operations in the prior year. This $25.5 million decrease was primarily due to accelerated US pension contributions during the 2010 fourth quarter. Excluding the $30 million accelerated contribution made in December, operating cash flow for the year on a non-GAAP basis would have been $56.2 million. The Company's cash requirements typically peak during the first half of the year and decline over the balance of the year. The substantial cash inflows usually occurring in the fourth quarter from some of our major markets. Our free cash flows stood at $5.5 million for 2010, decreasing $19.4 million from the $24.9 million in 2009. In addition to the increase in defined benefit pension funding, this decline reflects the principal payment we made against our outstanding debt in the 2010 first quarter, and additional consideration paid related to the Broadspire acquisition as a result of determinations made under arbitration proceedings. Back to you, Jeff.

Thanks, Bruce. Let me now turn to the outlook for each of our business units, starting with International Operations, which represents 42% of our consolidated revenue. The international segment reflected an increase in claims volume of 8.6% for 2010. In our International Operations, we continue to be focused on new client acquisition and sustainable revenue from the acquisition of new claims programs. Internationally, we are seeing a continued soft market, with associated pressure on the insurer's cost base. Our international clients continue to look for best in class global solutions, but our competitive pricing remains. In pursuit of new business, we continue to make excellent progress with our initiatives to grow Crawford's market share of the Lloyd's Market. Our goal, to increase our visibility in Lloyd's so that we will be viewed as the claim provider of choice on a global basis.

Turning to our Canadian operation, year-over-year, the single biggest variance in international performance was reduced frequency in personal lines activity in Canada, in part due to benign weather. Our ongoing cost management initiatives continue. We were pleased by our fast-growing contractor connection division in Canada, which we launched in 2010 second quarter. The results to date for contractor connection have been excellent, and most importantly, our clients are excited about this product. Of note, we have just renewed two contracts with our two largest clients in Canada.

Turning to the UK and Australia, which are both topical because of weather effects at this moment, in both markets, we are seeing competitive consolidation that has resulted in new business wins from significant clients. Our UK operation benefited from two surges in weather events in 2010, and our Australian operation also had to deal with weather events in Melbourne and Perth. It is worth noting that the buildup of unbilled work in progress mentioned in Q3 continues to be a focus in quarter four. And our efforts resulted in better DSO figures and improved cash balances by the end of the year in both operations.

Weather events have continued into 2011 for both the UK and Australia, and we have supported the Australian operation by transferring approximately 40 USA catastrophe adjustors to help our clients in Australia. In the Latin America region, we also continue to be pleased with the growth of our businesses where we have taken on a significant number of Definity claim programs. We see growth in these new programs in Brazil, Peru, Mexico, and Colombia. Our Chilean operations are winding down claims that arose from the very significant earthquakes that occurred in February 2010. International TPA services, we are seeing growth in our International Operations coming from the growth of our TPA offerings to new and existing clients. We continue to be in discussions on a number of significant opportunities which result from the expansion of our TPA model through the acquisition of new claims programs. We continue to develop meaningful collaborative relationships and dialogues with our multinational clients, and are pleased with the progress we are making as the global market leader.

Our property and casualty clients in the United States, similar to the rest of the world, still see a softening of property and casualty premiums. In reported figures, industry gross written premium was down 9% in 2010. However, there is an expectation that 2011 will increase as much as 4% over 2010. The decline in catastrophe-related revenues for 2010 was $6.8 million from 2009. The overall revenue decrease in 2010 was driven by a reduction in field operation revenues, reflecting lower overall industry-wide claims frequency, driven by fewer weather-related events that produced insurance claims. As previously -- as reported previously, our US field operation is under pressure, as the industry has seen a reduction in claims frequency. We have seen a contraction in US Property and Casualty across the major lines of business and a related contraction in underlying exposures and gross written premium.

Over the year, Crawford has experienced a reduction in claims reported of 10% for the 2010 fourth quarter, and 7% for the year 2010 from 2009. From our analysis, we are satisfied that we are performing better than the industry in securing new accounts while we await an increase in frequency to reemerge. We have to remember that a significant portion of our revenue is tied to weather events. Although expenses are being managed aggressively in all respects, we did incur some one-time expenses in the fourth quarter in respect of 401(k) contributions and salary costs related to employee retention. We do not expect these costs to recur in the coming quarters.

It is also important to mention there are some bright spots for US Property and Casualty that give us confidence in our 2011 outlook. Firstly, the US group has invested in resources for our casualty service business and we expect to grow this area in 2011. Secondly, in line with our goal of growing global technical services, or GTS, our large complex claims unit in the United States, we continue to aggressively add executive general adjustors as we win high complex claim nominations. Thirdly, our industry-leading contractor connection business in the US continues to build momentum as we add more contractors to the program, and more importantly, several new clients. 2010 claims are up 27% over 2009. The ongoing expansion of contractor connection in the US is a direct result of insurance carriers moving high frequency, low severity property claims to repair networks. We expect this trend to continue to grow in the future, where we are the market leader and will expand the consumer markets in quarters one and two in 2011 with several significant clients.

Moving to our technology, our clients require us to manage data and reporting with improved analytics and business intelligence that improve the decision-making and identification of trends. Working with our lead -- industry-leading analytics company, Risk Sciences Group, we have developed improved business intelligence, which we are now deploying to our clients. Finally, looking forward to 2011, the outsourcing and right sourcing of claims by carriers is made in the interest of reducing cost of delivery by turning fixed costs in-house claims departments into a variable cost. This continues to be a positive business proposition for Crawford in discussions with our clients. What is essential in these types of arrangements is delivering world class service by aligning the vision of the client through the quality of the service and then being able to validate the process. This is a Crawford strength.

There is an urgency in getting our Broadspire business back into profitability. The fourth quarter and new year were unacceptable. In quarter four, we had some significant one-time costs that affected our earnings, as well as the bad debt provision related to a bankrupt client. The most important economic indicator remains the payroll employment figures, and the jobless recovery has affected our revenues significantly over the past year.

We have recently seen directional indications of improvement in the US unemployment, as I said earlier, particularly in the temporary staffing and healthcare accounts which are included in job gains. Overall, we cannot expect to see workers' compensation frequency grow until the US is increasing jobs in the long-term. Growth in the near term, then, comes from winning new accounts. On a positive note, in the fourth quarter, we saw an increase in claims. We continue to receive significant numbers of new RFPs which confirm that both our reputation and quality are very solid, and the prospects in our pipeline are very encouraging. Our focus is to convert these opportunities into new revenue.

Risk managers have become very sensitive to administrative costs, or any costs, due to the pressure their businesses are facing, and they need to find ways to reduce costs. This has created a disconnect with reality on pricing and costs in some parts of the marketplace, which is fueling behaviors to reduce costs in the short-term and not worry about the long-term consequences. We have also seen some merger and acquisition activity with our competitors, and we see opportunities for further client wins as these companies grapple with the integration issues. We continue to emphasize the development of new business opportunities with an enhanced value proposition and targeted market approach, executed by cross-selling additional services of balancing our cost base over this period.

As a result of the current economic environment, service innovation is critical success for Broadspire. We continue to enhance current services and develop new ways of managing lost costs to meet the complex challenges in today's marketplace. Broadspire's internal ability to fully integrate all of our services, claims management, medical management and medical bill review, gives us market-leading capabilities to provide innovative solutions and improve the bottom line of our customers. We believe that our aggressive marketing and sales programs are gaining traction on this basis. We remain committed as a management team to the Broadspire strategic plan that we have in place. While we expect to see Broadspire's results improve through the coming year, we do not expect to see profitability until the second half of 2011.

We are very pleased with the Legal Settlement Administration, or LSA, segment's revenue and operating earnings. For LSA, 2010 was a record year in respect to revenue, earnings and cash flow. Revenue and earnings have increased significantly due to the special project that started in the 2010 third quarter. Our intention to assist in the creation of management of the Gulf Coast claims facility has been an important assignment for the Corporation, and has had a very positive effect on our results.

In addition, through 2010, we were also retained in several new significant class action and bankruptcy matters, including a large mutual fund settlement, a consumer case in which we e-mailed over 50 million notices and several legal notice programs. We were also appointed the Indian trust settlement case in the fourth quarter. While the bankruptcy market pace is definitely slower than last year, we believe our position as a market leader has produced an increased flow of opportunities. Beyond that, growing our revenue in a very difficult climate remains a challenge. We are very proud of what the LSA team has accomplished and congratulate them for an astounding 2010. Based on the backlog of $90 million entering 2011, we anticipate strong performance through the first half of 2011 as well. That concludes my comments on our business segments.

Let me turn to our 2010 corporate achievements and 2011 focus. I look at 2010 with some pride in the progress we made in the group results. The advantage of diversity of business has enabled us to make progress in our 2010 earnings. Our operating performance improved significantly, although primarily as a result of the record performance in LSA. Second, the overhang of the pension fund is reduced while maintaining our financial flexibility. Further reduction along these lines are possible as our operating cash flows improve. And thirdly, management has delivered on a promise made four years ago, to reinstate a dividend. That took place last week, with the declaration of a $0.02 per share quarterly dividend by the board.

Our focus on attracting new business and retaining our current customers is linked to the launch last year of the Crawford system of claims solution, which is predominantly displayed on our website. The system defines our competitive advantage, reinforces our industry leadership and clarifies our portfolio of businesses to our clients. Significant attention has been put into key account management and cross-selling initiatives throughout our businesses globally. Also, as a result of client discussions, we are seeing our clients challenge us to be more responsive in our claims handling, as they demand sustainable performance improvement through better control of indemnity spent, improved business processes, better automation and increased data analytics. We are well positioned to handle these challenges going forward.

We are focused on innovation as a means of creating value for our clients. As one example, by accelerating our overall technology strategy and investment to deliver better analytics for both local and global clients. And we have introduced new technology that provides effective central oversight for our claims organization, and we are seeing improvement in the quality of our products as a result. We will continue to be diligent on expense control, as is demonstrated by the reductions in force taken in mid-2010, and we'll stay focused on maintaining our long-term goals of improving operating performance and maximizing our cash generation.

Our 2011 outlook is affected by the runoff of the special project in LSA. However, we do expect to see improvement in 2011 in our North American vertical from Broadspire, US Property and Casualty, and our Canadian operations. This anticipated improvement is not expected to fully offset the decline in LSA for the full year.

Therefore, we have issued our initial guidance for fiscal 2011 as follows; consolidated revenue before reimbursements, between $990 million and $1.02 billion, consolidated operating earnings between $58 million and $63 million, consolidated cash provided by operating activities, between $30 million and $35 million. Net income attributable to Crawford & Company on a GAAP basis between $25 million and $28 million, or $0.46 to $0.52 diluted earnings per share.

Crawford enters 2011 in a strengthened financial position, but with a number of operational challenges ahead. The hard work in 2010 on our balance sheet and cost control positions us to make progress in implementing these operating challenges over the next 12 months. We regard the improvement of operating performances in our Broadspire and US property casualty businesses as our top priority for the coming year. We are still dealing with a period of extended economic difficulty.

Over the past few years, we have created, in Crawford, a worldwide management team that will aggressively execute our strategies as laid out. We have employees worldwide that understand the values that create an environment to produce and execute improved performance. Our 2010 results and our 2011 guidance are tangible evidence of the benefit of having a diversity of earnings in a difficult market. Given the market strength of our business segments and the diversity of earning powers for our corporation, we continue to remain very optimistic and confident about our growth opportunities as we execute on our corporate strategies for our shareholders. Thank you for your time, and we look forward to your questions. Operator, will you please explain the process for asking questions to our audience.

(Operator Instructions)And your first question comes from the line of Mark Hughes of SunTrust.

Thank you very much. Good afternoon, congratulations on the quarter.

Hello Mark, how are you? Thank you.

The Legal Settlement business, how much of the backlog comes from the spill opportunity versus the non-spill?

Yes, hello Mark, this is Bruce. We don't break down our backlog by projects as such. We don't discuss it publicly that way, similar to how we don't discuss the components of their business by special project or securities or bankruptcy.

Anything directionally, if we look year-over-year, excluding the spill work, anything you can say about the backlog?

Well, I think that the increase is in part driven by the special project that we're anticipating is going to continue for some period in 2011.

(inaudible) the special project?

Pardon?

Is that to say that the backlog is up, even aside from the special project?

Yes. We have other projects that we are working on within the organization as well that have grown during the last couple of months of the year.

Right, exactly. How about in -- this is along the same lines, the trend in profitability on the underlying business excluding the spill-related work?

It's in that market, as we've talked about, on a -- on several past calls. They -- there is competitive pressure in that market and pricing pressure. However, they -- that business has shown the ability to manage to a good profit margin, given a given level of revenues. So, we feel confident that when the impact of the special project does subside in the future, that they will be left with a strong operating margin as they have demonstrated in the past.

I think the other thing, Mark, is our LSA division really, really prides themselves on quality work in the projects that they get. And that is a key differentiator, I think, for the LSA division.

Okay, and then you talked about the significant opportunities for new contracts. Has that market opened up a bit? I know that the new business activity was modest. Maybe people were looking, but business wasn't necessarily changing hands. Want to give us some thoughts on that, how it sits now versus six months ago?

Which segment are you talking about, Mark? Are you still talking about LSA?

No, I'm thinking more either Broadspire, really more Broadspire.

Yes, we have lots of projects that we are renewing or we are entering into significant discussions in, not only the USA Broadspire and in the US Property and Casualty, but in our international division as well. We see this as a -- really as a strength in the technology systems, the processes we're able to deliver and the cross-selling we're able to do throughout the world, especially with multinational corporations where we are able to offer a unified technology process to each of those clients where the risk managers are able to get data in a much more efficient and accurate basis. So, we have a number of projects and hopefully in the next few quarters, we'll be able to announce a few of them.

Thank you.

(Operator Instructions) We have a follow-up from the line of Mark Hughes of SunTrust.

Yes, thank you. The auto volume in Canada I guess bounced back a bit this quarter. Do you think that increase is sustainable?

I think the Canadian operation has -- the first three quarters we had significant decreases in the -- regular claims because of, really, the benign weather patterns that Canada had. There is a certain expectation of regularity of claims coming in, and Canada had a very tough time in the first three quarters. We then saw some weather come in, and that really built up in the fourth quarter. We do see that as an aberration in the weather patterns and hopefully, there's a return back to normal patterns in the 2011 year. Canada did have a significant issue with that.

Right. The international business, and forgive me if you did share this, the claims volume I think was up 8.6%.

Correct.

What was it for the quarter?

12.6%.

And then in Broadspire, I think you said the fourth quarter you said an increase in claims. Can you share the specific numbers for the quarter and the year?

Yes, the year was up 0.9%, and the quarter was up 14.2%.

And then claims frequency, I think you had, maybe in addition to workers' comp, you were doing some liability claims there with good increase in frequency or claims count. Why did that not translate as much into revenue in the quarter?

Mainly because of our revenue recognition policy, and some of that will be deferred over into 2011. The significant increase in Broadspire was in the casualty claims.

Right. Now, does that become a mix issue from a revenue standpoint, or is it a timing issue?

It's a little bit of both. The claims increase that we saw was in liability claims, which is related to a product recall project that we're working on. And those claims tend to have smaller fees than a workers' compensation claim, which tends to be much higher in fees than a liability claim. So you've got a little bit of a mix issue there. But also, we handle these claims over the -- typically over the life of the claim. So, there is a revenue deferral that occurs when you first get the claim that comes in over the life of the claim.

Right. Any way to characterize in the US how much of the expense in the quarter was one-time items? I think you had referred to 401(k) and then retention costs. Any way to frame up the magnitude of that?

Yes, I think for the combination of US Property and Casualty and Broadspire, the one-time costs are in the $4 million to $5 million range.

And that excludes the $2 million from the bankruptcy?

That would include the bankruptcy.

Okay. Okay. Thank you.

Thanks, Mark.

I will now turn the call back over to Mr. Bowman for closing remarks.

Thank you. Thanks for your questions, Mark. I'll just finish on a couple of points. Our strategies remain intact as an organization. Firstly, and most importantly, securing new business wins for all of our business units. Secondly, focusing on improving operational efficiency and delivering results to our clients. Thirdly, a disciplined approach to expense management and working capital. Fourthly, our employee commitment and engagement. We continue to emphasize having a positive attitude, which manifests itself in exceeding the requirements that our clients have. And fifthly, our 100% commitment to our shareholders that we are improving the corporation. Through 2011, we continue to manage the corporation with integrity and innovation every day to ensure we are building sustainability. We will continue to fully capitalize on the opportunities presented that will drive current and future growth for our shareholders. I would like to thank everyone for joining us this afternoon and wish you all a great week. Thank you, and good-bye.

Thank you for participating in today's Crawford & Company conference call. This call will be available for replay beginning at 6.00 PM today through 11.59 PM on February 14, 2011. The conference ID number for the replay is 38399880. The number to dial for the replay is 1-800-642-1687 or 706-645-9291. Thank you. You may now disconnect.