Crawford & Co (CRD.A) 2012 Q3 法說會逐字稿

Good afternoon. My name is Maya and I will be your conference facilitator today. At this time I would like to welcome everyone to the Crawford & Company third quarter 2012 earnings release conference call. In conjunction with this call, a supplementary financial presentation is available on our website at www.crawfordandcompany.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, November 5, 2012.

Some of the matters to be discussed in the conference call and in the supplementary financial presentation may include forward-looking statements that involve risk and uncertainty. 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, our long-term liquidity requirements, and our ability to pay dividends in the future. 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 its revisions to any forward-looking statements made in the 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, 2012 filed for the Securities and Exchange Commission. Particularly the information under the heading Business Risk Factors, Legal Proceedings, and Management Discussion and Analysis of Financial Condition and Results of Operation, as wells 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 direct compared 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, Maya. A warm welcome to our investors, clients and employees this afternoon. I am Jeffrey Bowman, President and CEO of Crawford & Company. Joining me from the Global Executive Management team this afternoon are Bruce Swain, our CFO, and Allen Nelson, our General Counsel and Chief Administrative Officer.

Let me start by saying that our thoughts and prayers and sympathy and condolences are with our employees, clients and their families affected by the devastation that has taken place through Superstorm Sandy in the Northeast part of the US. Particularly in New Jersey and in the Metropolitan New York area. As well as in Caribbean and Jamaica and the Bahamas. We have employees who have experienced significant damage to their homes. And as a corporation we have mobilized our Corporate Crawford Cares program to assist them financially.

By all accounts from firsthand reports from our staff, along with the televised images we are seeing, this is an unprecedented event with far-reaching consequences and challenges. Our corporate role is to support our clients in responding to the insurance claims made. And assist businesses and individuals get back to some sense of normalcy as quickly as possible. So getting back to the third-quarter results. I will begin with some opening comments on our third-quarter results. Bruce will then review the third-quarter financials in more detail. And which will be followed by a review of our business performance, comments on our strategic initiatives, and conclude with our corporate focus and an update on our increased 2012 guidance.

There is no doubt that 2012 is shaping up as a strong year for Crawford & Company. We talk about our business model being a portfolio of companies that have different dynamics. 50% to 60% of our base business is driven by natural weather and man-made events. The growing remainder of our business is program-driven, which indeed provides balance and a stable and growing base of operations. Large events such as Superstorm Sandy can be hard to predict. However, we have to be ready to manage these events when they occur. At this moment, we are seeing some of those dynamics play out in the form of Sandy, which we project will have a meaningful impact on claims in our Americas operation in the near term. While the full scope of the recovery process is still evolving, we are mobilizing significant resources to assist our clients.

Our consolidated results for the third quarter were very encouraging. We saw record quarterly revenues, net income, and earnings per share. Primarily based on very strong results in two of our four segments, and improving results in the other two segments. Our EMEA/AP operations reflected ongoing handling of catastrophic flood losses in Thailand. And we are still involved in handling assignments in Australia. As we reported in the second quarter, Crawford's GCG subsidiary was awarded a role to provide administration services in the class action surrounding the Deepwater Horizon settlement. The results of our Legal Settlement Administration segment reflect this very important special project, which deeply engaged GCG's resources over the third quarter. Through the remainder of the year, we expect activity in this area to continue, although at a reduced rate.

In the Broadspire segment, we saw substantial year-over-year improvement, as we have reduced losses by $8.8 million for the year-to-date period. Our goal continues to be bringing Broadspire back to a sustained, acceptable level of profitability. The turnaround of Broadspire continues as our key objective. And we are optimistic that Broadspire will be profitable in the fourth quarter and will end the year profitably, which is an encouraging achievement in itself. The Americas segment benefited from claims activity during the 2012 third quarter, resulting from Hurricane Isaac in the US and catastrophe-related events in Canada. Together with ongoing cost control measures, this helped generate sequential improvement over the 2012 second quarter, despite relatively weak industry-wide claims volumes which have persisted throughout 2012.

That concludes my initial remarks. And I will discuss the business unit operations and a brief update on Sandy after Bruce has reviewed the financials.

Company-wide revenues before reimbursements in the 2012 third quarter were $302.1 million, up 7% from the $283 million in the prior year's third quarter. Strong results in our Legal Settlement Administration and EMEA/AP segments drove this improvement. Our net income attributable to Crawford & Company totaled $18.2 million in the 2012 third quarter. Up 19% over the $15.3 million in the 2011 period. Third-quarter 2012 diluted earnings per share were $0.33 for CRDA and CRDB compared to earnings per share for each class of $0.28 in the 2011 period. The Company's selling, general and administrative expenses, or SG&A, totaled $59.2 million, or 19.6% of revenues in the 2012 third quarter. Increasing 10% over $53.6 million or 18.9% of revenues in the prior-year quarter. This increase in cost is primarily due to higher professional indemnity self-insurance expense and professional fees.

During the 2012 third quarter, the Company incurred a pre-tax charge of $333,000 related to the completion of a project to outsource certain aspects of our US technology infrastructure. This special charge decreased earnings per share by less than $0.01 in the 2012 third quarter. During the 2011 third quarter, the Company recorded a special credit of $7 million or $0.11 per share of CRDA and CRDB after related income taxes resulting from an arbitration award.

During 2012, the Company paid a higher dividend on its CRDA common stock than on its CRDB shares. This dividend differential can sometimes result in different earnings per share for each class of stock due to the two-class method of computing EPS as required by current accounting guidance. Reference to EPS in this call will generally be only for CRDB, as that is the more dilutive measure.

Compared to the 2011 period, revenues, net income attributable to Crawford & Company, and earnings per share in the 2012 third quarter were not materially impacted by foreign exchange movements. The net change between the third quarter 2011 arbitration award and this year's special charge in the 2012 third quarter reduced earnings per share by $0.11 in the 2012 third quarter. The Company continues to benefit from lower interest expense under its new credit facility, which contributed $0.02 per share in the 2012 third quarter.

As a result of changes in the mix of income we receive from our various operations and related income tax rates, our effective tax rate in 2012 is higher. Which reduced earnings per share by $0.03 for the third quarter. Compared to the prior year, the Company's operations generated incremental earnings of $0.17 per share in the 2012 third quarter, driven largely by Legal Settlement Administration and EMEA/AP.

Revenues from the Americas segment totaled $85.9 million in the 2012 third quarter. Down 9% from the $94.7 million reported in last year's quarter. Reflecting weak industry-wide claim volumes in the US and Canada as a result of relatively mild weather when compared to the 2011 period. Operating earnings in our Americas segment were $6.5 million in the 2012 third quarter, or 8% of revenues. This is compared to operating earnings of $6.8 million, or 7% of revenues in the prior-year quarter. Revenues generated by our catastrophe adjustors in the US totaled $9.6 million in the 2012 third quarter. Decreasing from $12.9 million in the 2011 quarter. The decrease in revenues was in line with the decline in catastrophe cases.

EMEA/AP revenues increased 10% in the 2012 third quarter to $95.9 million, from $87 million in the 2011 period. Our revenue improvement reflects catastrophe-related increases in our Asia-Pacific region. EMEA/AP operating earnings increased to $13 million during the current quarter, more than doubling last year's third-quarter operating earnings of $5.7 million. The operating margin in this segment was 14% in the 2012 quarter, increasing from 7% in the 2011 third quarter.

Revenues from our Broadspire segment increased to $59.8 million in the 2012 third quarter. Up 2% from $58.9 million in the prior year quarter. Reflecting an increase in workers' compensation claims and strong medical management revenues. Broadspire's operating loss in the 2012 quarter totaled $216,000, or less than negative 1% of revenues. Improving from the operating loss of $2.9 million, or negative 5% of revenues, in the 2011 third quarter. We continue to focus on strategies to drive profitability in this segment's operating results.

Legal Settlement Administration revenues comprised of class action and bankruptcy claims administration services, as well as significant special project revenues, totaled $60.6 million in the 2012 third quarter. Increasing 43% from the $42.5 million in the prior-year quarter. This revenue increase was largely related to our work on the Deepwater Horizon class action settlement. Operating earnings totaled $15.6 million in the 2012 third quarter, or 26% of revenues, as compared to $10.8 million or 25% of revenues in the prior-year period. Legal Settlement Administration continues to have a strong backlog of projects awarded, totaling $118 million at September 30, 2012, as compared to $72.5 million at September 30, 2011.

Our cash and cash equivalent position at September 30, 2012 totaled $66.4 million, as compared to $77.6 million at December 31, 2011. Our investment in unbilled and billed receivables has increased by $42.8 million during 2012, primarily as a result of growth in Asia-Pacific and Legal Settlement Administration. Our pension liabilities declined by $21.2 million through the 2012 third quarter. Our total debt has increased in 2012 by $11.2 million, reflecting our seasonal pattern of borrowings that typically occur early in the year.

Cash provided by operations totaled $10.3 million for year-to-date 2012, compared to $17.6 million used in operations in the prior-year period. This $27.9 million improvement was primarily due to lower cash payments for accounts payable and accrued expenses in 2012, as well as reductions in pension contributions and taxes paid. Free cash flow improved during 2012 by $28.2 million over the 2011 period. Back to you, Jeff.

Thanks, Bruce. As I stated earlier, our consolidated revenue and cases increased sequentially for the group versus the second quarter of 2012. The case volume decreased slightly against the third quarter 2011, reflecting continued mild weather and a benign event environment in the US and Canada. For the quarter, group case volume decreased less than 1% from a year ago. Our EMEA/AP segment results were driven primarily by the ongoing handling of catastrophic flood losses in Thailand. Also during the quarter, our Legal Settlement Administration segment was heavily involved in Deepwater Horizon class action settlement.

The Americas segment saw a sequential increase in claims activity in the 2012 third quarter, resulting from Hurricane Isaac in the US and catastrophic-related claims in Canada. Given recent events, we are mobilizing our resources to assist our clients with claims from Superstorm Sandy. And currently have 320 catastrophe adjustors deployed. These adjustors are handling household claims which engage our field force and Contractor Connection resources through to the Global Technical Services claims involving the infrastructure of New York and New Jersey. We also have small operations in Jamaica and Bahamas working Sandy claims, as well.

We have also seen an improvement in the Broadspire segment, where workers' compensation claims increased 9.2% in the quarter, and 11.8% year-to-date. In the quarter, our client retention rate was extremely high. And we are pleased with these developments.

During the third quarter, we also added new members to the Global Executive Management team. With our continual goal to improve Global client and business development, we have added Manny Lauria, who brings 25 years in the broker community. And is now responsible for deploying our consolidated sales capacity throughout our business units. We also added Vince Cole as our Global Strategy and Business Performance Director, tasked with ensuring alignment of our corporate and business unit strategies with improved business performance. I am convinced that both of these individuals will help move the organization forward.

Let me now turn to the outlook for each of our business units, starting with the Americas segment which represented 28% of our consolidated revenues year-to-date. Compared against high frequency claims in 2011, the US P&C business saw claims frequency fall short of the prior year in the third quarter 2012, due to the benign weather we experienced through the first three quarters. Nonetheless, frequency increased from the second quarter levels, primarily due to Hurricane Isaac.

Financial performance by the US Property & Casualty division was stronger in the 2012 third quarter than the previous two quarters in 2012, demonstrating the operating leverage we enjoy from incremental revenue gains. The US Property & Casualty group has also invested in resources for our casualty services business, especially in the US transportation area. And we are growing this part of our business through new client wins.

While Calgary and Quebec saw weather events in quarter three, like the US, Canada experienced an overall negative impact from weather with, a decline in case volume and revenue in the third quarter. Where needed, the US was able to support Canada with catastrophe adjustors. And we continue to actively manage costs in this area, as well, reflecting the overall claims volumes conditions. In Latin America, we have seen a downturn in revenue from weakness in our largest market, Brazil, but we anticipate improvement in the fourth quarter with new client wins.

Our industry-leading Contractor Connection business in the US continues to build momentum as we add more contractors and clients to the program. The ongoing expansion of Contractor Connection in the US, as well as Canada, is a result of insurance carriers moving high frequency, low severity property claims directly to repair networks. We expect this trend to continue in the future and we are positioned as the market leaders in this important area. In the aftermath of Superstorm Sandy, Contractor Connection is proving to be an important resource for our clients.

The EMEA/AP operations represent 31% of our consolidated revenues year-to-date. Our focus on sustainable client revenue has been very successful in this business unit. In the third quarter, our revenue grew in the Asia-Pacific region, primarily due to our ongoing response to the Thailand floods. As previously reported, the UK market continues to be undergoing change with increased focus on price and a shift to in-sourcing for the volume property business. In the UK, we saw a continuing drop in revenue against the prior year, as benign weather and a lack of volume in the market depressed our claims volume.

The significant actions taken in reducing headcount and restructuring our sales and marketing will pay dividends in the fourth quarter and into 2013, as we have been very successful in winning new business in the UK. In this market, we continue to emphasize the broad range of Crawford's services, including GTS and Broadspire, and believe that these efforts are making meaningful progress. We also continued to expand our Broadspire TPA services beyond the UK in Europe with US multinational clients, supporting our global initiative of cross-selling our services worldwide. We are now providing these services from 21 of our international locations.

In the CEMEA region we are seeing encouraging developments and positive changes. Our Management team is driving a new performance culture into this region to improve operational and financial improvement.

In the Asia-Pacific region, the significant weather events that took place during 2011 and 2012 in Australia and Thailand have increased our revenue for the quarter by 58% over 2011. We have significantly improved margin and overall financial performance of this division. And I'm pleased to report that our Thailand performance is regarded as a showcase in catastrophe response by our clients. We currently have teams working in Thailand and Australia, responding to both local and international instructions on the catastrophic events that affected those countries last year. We expect to see related revenues continue for the remainder of 2012 and into the first six months of 2013.

Our Broadspire operation, which represents 21% of our consolidated revenues year-to-date, reported a very small loss for the third quarter. Although our goal continues to be sequential improvement, and thus profitability, this business unit has shown very distinct progress and recovery within a weak economic environment. In this market environment, our workers' compensation claims volume is up 11.8% year-to-date. And we saw incremental volume from new customer wins. We expect to see continued improvement in Broadspire's performance through the fourth quarter and into 2013.

We believe strongly that Broadspire's solid market position, integrated service model, and quality of service offer the market a truly competitive product. And should be profitable as we move through 2013. We see the increased use of medical management services as an opportunity growing out of increased medical costs in the industry. Broadspire's internal ability to fully integrate all of our services -- claims management, medical management and medical bill review -- give us market-leading capabilities to provide innovative solutions and improve the bottom line for our customers.

This is critical to Crawford's strategic development, as we take every opportunity to cross-sell our services and work on improving results in these operations. Broadspire is an important contributor to the Crawford product line and global strategy. We continue to be focused on our major improvement strategies as previously laid out -- sales force effectiveness and executing on client analytics. Customer retention -- our quarter three retention rate was very strong. Technology investments. And global sourcing of non customer-facing back-office operations.

Broadspire's sales run rate improved again in the third quarter. We continue to receive a significant number of new RFPs, which confirms that the prospects in our pipeline are very encouraging. We are emphasizing the development of new business opportunities with an enhanced value proposition and target market approach, executed by the cross-selling of additional services and balancing our cost base over this period. The trend to outsourcing medical management is a positive for Broadspire. In summary, we remain encouraged by Broadspire's progress in 2012 to date, and are excited about the 2013 prospects.

We continue to be very pleased with the Legal Settlement Administration, or LSA segment revenue and operating earnings this quarter. LSA represented 20% of our 2012 revenue to date. The quarterly results were ahead of our expectations as GCG has been heavily involved in providing administration services in the Deepwater Horizon class action surrounding the Gulf Oil settlement. We expect to see solid performance from LSA for the remainder of the year due to this important project. Turning to the other LSA business areas, the class action market remains challenging overall. However, we have been successful in retaining new class actions and bankruptcy assignments. Our backlog at the end of 2012 third quarter was very strong at $118 million, a record for GCG.

That concludes my comments on our business segments. Let me turn to our guidance and 2012 focus. On balance, we are seeing positive trends in our businesses, and remain optimistic about the final quarter of 2012 and beyond. We are increasing our guidance for 2012 as follows. Consolidated revenues before reimbursements between $1.13 billion and $1.14 billion. Consolidated operating earnings between $85 million and $90 million. Consolidated cash provided by operating activities between $45 million and $50 million. Net income attributable to Crawford & Company on a GAAP basis between $37.5 million and $40.8 million. Or $0.68 to $0.74 diluted earnings per Crawford B share.

As stated in our press release, we remain focused on our core strategic and operational goals. And expect to expand market share, drive efficiencies, and capitalize on emerging opportunities as we enter 2013. Additionally, in order to improve the Company's financial performance in 2013, we anticipate taking a restructuring charge in the 2012 fourth quarter of approximately $5 million before tax, or $0.06 per share. We expect the cost efficiencies gained by this charge to produce annualized operating savings of approximately $4.2 million in our North American operations, helping to improve future operating margins in our Americas and Broadspire segments. This charge is included in the updated 2012 guidance I provided a moment ago.

Before reflecting the fourth quarter charge just discussed, our guidance calls for 2012 net income attributable to shareholders of Crawford & Company on a non-GAAP basis of between $40.7 million and $44 million. Or $0.74 to $0.80 diluted earnings per CRDB share. I want to emphasize that the foregoing 2012 guidance does not include any estimated impact from the Company's response to claims resulting from Superstorm Sandy. While we are at the very early stages of responding to this event, as of this morning we have deployed 320 adjustors from our catastrophe division and have received in excess of 17,000 claims.

Our third-quarter performance reflects a number of encouraging results and trends. We continue to be very encouraged by the performance of GCG and EMEA/AP. And are very positive on the directional trend of Broadspire. As always, weather-driven claims volumes can provide both positive and negative swings in our operations. Which we saw in the third quarter in the US and Canada. While we are in the early days of a response to our clients, we anticipate that Superstorm Sandy will generate significant claims volume for Crawford in the 2012 fourth quarter.

So, as we look at the remainder of 2012 and 2013, we remain focused on five areas. First, bringing Broadspire and the Americas to an acceptable earnings profile. Secondly, we have improved our balance sheet and financial flexibility during the year. And we intend to reduce our debt further as we close the year by managing accounts receivable and work in progress to drive improved cash flow. Thirdly, we are continuing to grow our core revenue and improve our operating earnings. Fourth, capitalizing on the Global opportunities we have with clients. And fifth and lastly, enhancing returns to our shareholders.

We are very focused on delivering operating improvement in our Broadspire business, both domestically and globally. We will continue to push performance improvement in the Americas, EMEA/AP and LSA business segments for the remainder of 2012 and for 2013. And our worldwide Management team is aggressively executing on our strategies as laid out. Given the market strength and reputation of our business segments, and the balance of earnings power 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)

Mark Hughes from SunTrust.

On the Sandy claims volume, how does that 320 adjustors compare to other storms? What do you feel like the feedback you're getting from your clients are about the sustainability of these assignments? I'll ask also, in times past it seems like maybe some of these disaster events have been a little more compressed in time. How long do you think this will extend? I know it's early, but what do you think?

Thanks for that one, Mark. It's still very early in the process. We literally are just a week into the event. There's no doubt that with the Sandy superstorm, the actual number of people impacted was far greater than, say, the Irene situation that we handled last year in the northeast. This one is also affected, we think, with more commercial losses. We're getting reports from our carriers that there's still significant claims to come in from the prior year.

I'll give you a reference point. We handled in Irene 14,000 claims. And we're already at 17,000 this year with the Sandy. So I think each event is different. I could take you back over several years. But in terms of resourcing, we're working very hard at that. Our induction centers are open and we're processing individuals through those induction centers, as we speak.

How about in Thailand and Australia, it seems like you continue to generate meaningful revenue from those catastrophes. What should we assume about the pace of that in the fourth quarter into 2013?

Thailand has probably another minimum of nine months to run through the end of the second quarter probably next year. There is a great deal of difference. All of the claims we're handling in Thailand are commercial. We have a lot of adjustors working on those claims. Most of it is around business interruption and continuous business interruption. That will be an extended period going through to the half year next year. Australia, we significantly worked on all of those files and that will be coming back to a normalcy in terms of events taking place in Australia.

In the Broadspire business, workers' comp claims, what has been the underlying trend? If you take aside new customers, look at your same clients you've been serving, what's your feeling about the claims frequency there?

Our clients that we've been working with for many years, I think there is a stabilization that's taken place. And we're seeing a slight uptick in a number of different industries, especially in temporary employment companies and healthcare companies. But our main increases come from winning new accounts. That's the best way to have that.

Are you able to break out how much of the backlog is the Deepwater Horizon versus traditional legal settlement business?

We don't break the backlog out in that manner. We don't want to single out any clients or programs in that disclosure. But in our 10-Q we did talk about where we think that revenue comes in, in the future. And we've got, of that backlog, $48 million of it we believe will be recognized in the fourth quarter of '12 with $70 million of it related to 2013.

Right. And then one final question. The cash flow for this year, the $45 million to $50 million cash from ops, Bruce, could you give me a quick snapshot of the uses of that cash this year? And then as we look at next year, how those requirements for cash may be the same or different?

Yes. I think to get down to the free cash flow number, our CapEx this year, we're projecting to be at about the $32 million level. And I think that that's probably a number that is safe to assume for '13, as well. Once we get past that, we look at, obviously, providing return to our shareholders through our dividend and investments back in the business to foster future growth. We'll also look at paying down some debt, delevering, as we've been doing over the past few years, as well, to strengthen the Company's balance sheet position.

Are there any pension liabilities at this point or pension payments that are required?

In 2012, we made our required -- or we've made most of our required contributions that we have in '12. In '12 our requirement in the US is $13 million. We do have future contributions that will be due in the US. And we have updated our future contributions in the 10-Q that we filed today. One thing that we're getting a benefit from in terms of future pension contributions is the beneficial impact of this law, so-called MAP-21 which was a transportation bill that had some pension funding relief in it. And so we'll be taking advantage of that.

And our pension contributions, while not low by any stretch of the imagination, are much lower based upon market conditions that exist today. And again, we'll have to remeasure this at the end of the year. But given the beneficial impact of MAP-21, our pension contributions for the next five years will be much lower than those that we disclosed in our 2011 10-K. So, if you look at our Q that we filed and line it up with the 10-K from last year, you'll see the difference. And it's, I think, a significant decline, which is good news.

Thank you.

[Chris Lycom] of William Blair.

I just wanted to follow up quickly on the $5 million charge in the fourth quarter. If you guys could give us a couple more details on that. And also what kind of profit initiatives you're thinking about for 2013?

Okay. The restructuring charge is effectively a North American event. It gives us the opportunity to take out some inefficiencies that we have in the organization and create a higher profit level for 2013. We've been working on this for a couple of weeks since our strategic plan was produced. So that's going through in the fourth quarter. In terms of initiatives for 2013, our strategic plan has us very much focused on, obviously, developments within our Broadspire operation, our international expansion of their operations, looking at US multi-nationals and how we can offer a completely one-stop shopping approach to claims overseas and in the US. We're looking at a number of developments in our European operations, in terms of volume-based businesses. And the same in our Asia-Pacific. So it's a mixture of technology and new products being brought to the marketplace.

Okay. Great. And those cost saves for 2013 are going to be both North America and Broadspire? Is that right?

Right.

Okay. And then as far as the Legal Settlement business, ex-Deepwater, could you just talk a little bit about underlying trends that you see? And where you've seen new wins, what segments that you guys are seeing progress in?

Yes. The Garden City Group obviously is very well positioned in both class actions, bankruptcy, and employee/employer class actions, as well. We don't talk about individual clients or business sectors, but we see pricing as an issue at the moment in the organization. There's obviously a decrease at the moment in the number of class actions filed. Although we feel we're well positioned to provide quality service to our clients on that basis. It's going to be an interesting year the balance of 2012 and 2013 for the class action industry.

Okay. Great. Thank you very much.

(Operator Instructions)

There are no further questions. I'll turn the call back over to Mr. Bowman for his closing remarks.

Thank you. Thank you very much, everyone, for your time and questions this afternoon. I'd like to thank everyone for joining us and wish you all a great rest of the week. Thank you.

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 on November 26, 2012. The conference ID number for the replay is 53763973. The number to dial for the replay is 1-855-859-2056 or 404-537-3406. Thank you. You may now disconnect.