A Message to Shareholders

CEO Letter

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Jeffrey T. Bowman — President & Chief Executive Officer

The strength of Crawford’s global integrated business offerings produced record financial results in 2012. We reported record revenues of $1.177 billion, growth of 40 percent in consolidated operating earnings to a record $110.2 million and strong diluted earnings per share of $0.91 for CRDA and $0.87 for CRDB. We saw meaningful improvements in the operating performance of all business segments except in our Americas segment where lower claims volume affected some results primarily in the first half of the year. Nonetheless, Crawford was able to capitalize on global opportunities and events that enhanced our returns to shareholders in 2012 and position us well for 2013.

This performance is a tribute to our employees. Despite the difficult economic conditions of the past several years, our people have made our operations leaner, faster and smarter. They have accomplished these objectives in a variety of ways, many of which receive special discussion in our Leaner, Faster, Smarter section.

In my five years as Chief Executive, a principal goal has been the rebalancing of Crawford’s business operations to reflect changes in our industry. The 72-year history of Crawford is based in the business of handling claims, a vision Jim Crawford first put into practice in the 1940s. Today, however, our operating environment is unlike anything envisioned 70 years ago. Two areas of change stand out in this regard. First, the introduction and use of technology has transformed every aspect of our business. Initially, new technology creates efficiency. In the longer term, the benefits of technology have transformed how we do business, from tracking weather events globally to applying predictive analytics to anticipated claims volumes. And second, the way in which Crawford’s business services have come to complement the traditional processing of claims, giving our clients diagnostic tools, process management support, and incremental volume handling capability. The Crawford System of Claims Solutions® brings all of these elements together in a unique and integrated process that provides us with competitive advantages in the marketplace.

Our clients, who include the largest multinational insurance carriers, brokers and local insurance firms, as well as many of the Fortune® 500 corporations, are demanding increasing efficiencies in the management of their business. Crawford’s technology strategy is driven by our Global Systems Roadmap which comprises several core technologies, including business intelligence; data privacy and cross border data transfer; business process management; mobile technologies; and our transitioning to a global standardized technology platform. Crawford is at the forefront of these areas through its client initiatives which include the global intake of claims; predictive analytics; and advanced process mining.

As we move to next generation platforms in our property and casualty and workers compensation operations, CMS and RiskTech, Crawford’s ability to support clients through analysis and application of technology to a broad base of information will continue to expand in scope and increase in speed and efficiency. Crawford will continue to invest in technology as it has the last five years, to deliver further performance improvement, speed, automation and analytics. All are essential components of the Crawford solution, designed to meet the expanding demands of all our clients.

Integrated Solutions >> The Crawford System of Claims Solutions® is the phrase we use to describe the most comprehensive global, integrated solution for all corporate, insurer, and re-insurer claims administration. The term integrated is fundamental to understanding how Crawford provides more than outsourced claims processing. Beyond Crawford’s comprehensive claim processing services, we have successfully grown our operations into the legal settlement and mega-event arena with GCG, and we continue to grow our business process outsourcing (BPO) solutions, with our very successful Contractor Connection operation and Broadspire as examples. We offer clients support across a wide range of services, including data management, medical management, network management and project management. We help clients address the circumstances that can lead to claims in the first place, improving their experience and risk profile.

Review of 2012 >> Results for 2012 reflected a number of weather-related catastrophic events. Crawford’s ability to respond rapidly and efficiently with both highly qualified individuals and advanced technology affirmed our leadership position in our industry and demonstrated our capability to handle major events globally. In fact we were honored to receive the International Service Partner of the Year award by Insurance Times.

The events of 2012 called on all our resources, requiring us to manage the large numbers of claims generated by massive flooding in Thailand, as well as tackling the very large and complex claims that come with an urban event like Superstorm Sandy in the U.S. The breadth of our business portfolio was very evident in the strong performance of our Legal Settlement Administration operations, which reported double-digit revenue gains and operating earnings growth, primarily as a result of responsibility for the massive Deepwater Horizon class action project.

Our global reach produced 71 percent growth in operating earnings in the EMEA/AP segment, underlining the expertise that guided Crawford in response to flooding in Thailand. Revenues in EMEA/AP more than offset lower volumes in our Americas property and casualty operations for the year, despite a surge in Americas performance in the fourth quarter due primarily to Superstorm Sandy.

Crawford’s advanced technology and business solutions helped deliver strong results as well. In our Broadspire workers compensation operations, a continued emphasis on delivering services that help our clients effectively manage their cost of risk produced an important improvement in operating results from an $11.4 million loss in 2011 to a small operating profit for 2012 on 1.8 percent revenue expansion.

Looking forward, our goals in 2013 include the following:

Strengthening our Balance Sheet >> The financial base of this Company is at its strongest point in many years, with reduced leverage and higher cash generation. Crawford has steadily reduced its borrowings, which have declined by 26 percent since 2010. In 2012, Crawford generated $92.9 million of cash from operations, compared with $36.7 million in 2011, principally due to growth in operating earnings, and our continued focus on cash efficiency in all of our operations. We remain disciplined in our approach to both our balance sheet and cash management, which should allow us to further improve our financial flexibility during the coming year.

Driving operating performance to enhance share price >> Both EMEA/AP and Legal Settlement Administration segments reported very strong results in 2012, on the volumes generated by global weather events and the Deepwater Horizon class action settlement. We expect that claims arising from these events will continue into 2013, but at a lower volume than in 2012. Offsetting these trends, we believe we have the opportunity for substantial improvement in our two other business segments. Our Americas business segment reported a very strong fourth quarter as claims relating to Superstorm Sandy began to flow through our operations.

Also, our Broadspire business reported improved results in 2012. We have extensive opportunities to improve Broadspire’s operating performance over the coming year and return this business to a stronger earnings profile while maintaining our reputation for excellent service.

Improving our total return to shareholders >> Crawford’s stronger balance sheet and improved cash generation through operations supported both growth of dividends and our share repurchases, which enhanced shareholder return. Crawford continued its quarterly dividend policy through the year and declared an additional special dividend of $0.06 per Class A and Class B share in the fourth quarter. In May 2012, the Board of Directors authorized a share repurchase program under which the Company may purchase up to 2,000,000 shares of its common stock (either CRDA or CRDB or both) until May 2015. 607,877 shares of Class A and 7,000 shares of the Class B stock were repurchased under this authorization in 2012.

Conclusion >> Crawford enters 2013 leaner, faster, smarter and stronger. Our excellent global management team is entirely focused on our core strategic and operational goals. Our employees understand the values that foster improved performance for clients and shareholders. 2012 results are tangible evidence of the benefit of having a diverse portfolio of operations in a volatile market. We expect to continue to expand market share, drive efficiencies and capitalize on the opportunities that present themselves in 2013. Reflecting on our strong market position, our ongoing investments in efficiency and innovative support services, and the quality reputation of our business segments, we are optimistic about Crawford’s opportunities in the coming year.

On behalf of the entire management team, I would like to thank our employees for their hard work and dedication and their continuous effort towards exceptional service and improvement. I would also like to thank our clients for the opportunity to work with each of them and their continued support on a global basis. We are encouraged by the opportunities in front of us, our future is vibrant and I look forward to delivering on our strategies in 2013.

Jeffrey T. Bowman
President and Chief Executive Officer