Crawford & Company - Q4 2021

Transcript

Operator (participant)

Good morning. My name is Phyllis, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Crawford & Company Fourth Quarter and Full Year 2021 Earnings Release Conference Call. In conjunction with this call, a supplementary financial presentation is available on our website at www.crawco.com under the investor relations section. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer period. Instructions will follow at that time. Should anyone need assistance at any time during this conference, please press star then zero, and an operator will assist you. As a reminder, ladies and gentlemen, this conference is being recorded today, Tuesday, March 15, 2022.

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 relate to, among other things, the impact of COVID-19, our expected future operating results and financial condition, our ability to grow our revenues and reduce our operating expenses, expectations regarding our anticipated contributions to our underfunded defined benefit pension plans, collectibility of our billed and unbilled accounts receivable, financial results from our recently completed acquisitions, our continued compliance with the financial and other covenants contained in our financing agreements, our long-term capital resource and 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 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, 2021, filed with the Securities and Exchange Commission, particularly the information under the headings Risk Factors 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. Rohit Verma, Chief Executive Officer of Crawford & Company. Rohit, you may begin your conference.

Rohit Verma (CEO)

Thank you, Phyllis. Good morning, and welcome to our Fourth Quarter and Full Year 2021 Earnings Call. Joining me today is Bruce Swain, our Chief Financial Officer, Joseph Blanco, our President, and Tami Stevenson, our General Counsel. After our prepared remarks, we will open the call for your questions. Before I review our results, I would like to extend my thoughts to our colleagues, clients and partners who have family and friends in and around Ukraine. As you all may know, we do not have any assets on the ground in Ukraine or Russia, but we hope for the safety of the Ukrainian people, especially all those who are directly in harm's way, and for a swift and peaceful resolution. We will continue to monitor this evolving situation to understand how this might affect our colleagues in Ukraine as well as Europe.

Crawford finished the year with record revenue and strong momentum and continued its growth trajectory. Adjusting for the 2018 sale of the Garden City Group, we reported our highest quarterly and full year revenue in Crawford's history. I am incredibly proud of the team's hard work and dedication in what has been a challenging environment. Our impressive top-line growth underscores the strength of our technology and people-focused growth strategy, which is driving results across the company. Full year revenue was $1.1 billion, representing a 12% increase over 2020. In particular, we saw strong performance from our U.S. operations, where we continued to gain market share across all segments of our business. Our focused efforts to scale our offerings resulted in revenue growth from both established relationships and new clients.

We continued to deploy a record number of CAT resources in 2021 and responded to the increasing demand for major and complex specialist adjusters. Despite a continued lag in medical management revenue recovery, our Broadspire business grew as claim volumes continued to climb with recovering economic activity as well as new account wins. While the U.S. experienced tremendous growth, we had challenges in our international market that diluted margins below our desired levels. This weakness was driven by the same factors that we reviewed with you in our Q3 earnings call. Bruce will go into segment-level detail, but this can be largely attributed to three main factors, lower economic activity due to COVID, benign weather activity, and weakness in some international operations. On a non-GAAP basis, full-year EPS was $0.72 for both CRDA and CRDB for 2021.

We continued to execute our M&A strategy during 2021, which included the completion of three acquisitions, Praxis, edjuster, and BosBoon. As a reminder, our M&A strategy is centered around evaluating opportunities to acquire expertise and adjacent capabilities. The independent loss adjusting market continues to consolidate, while the P&C industry is increasingly embracing digitally enabled solutions that increase efficiency and help reduce allocated loss adjusting expense. We will selectively invest in P&C markets with secular tailwinds where we see value in further building upon our ecosystem of claims. Additionally, we are actively reinvesting in our core business, while at the same time maintaining our strong balance sheet, which is reinforced by our solid cash generation.

Our long-term growth strategy is based on the bedrock of organic growth augmented by selective M&A, and continues to be driven by a relentless pursuit for service excellence that stems from our legacy, our purpose, and our values. As a reminder, our strategic approach was built around our three pillars of differentiation, quality that sets the industry benchmark, expertise that is deep and eminent, and digital that simplifies. Overall, we're making good progress and are pleased that our results are showing up in the ways we have expected over the past several quarters. Platforms continues to be the growth engine for Crawford, significantly growing revenues year-over-year, driving strong margins. The investments we are making to add strength to our bench of experts in loss adjusting continues to enable Crawford to address the increasingly complex nature of claims.

Lastly, our heightened focus on certain pockets of our international business is beginning to bear fruit. We are seeing an early step in the diversification of our European business through the acquisition of BosBoon. We're also starting to see the benefits of our other recent acquisitions, which Joseph will talk more about in a few minutes. Looking ahead, we expect to maintain momentum in the U.S. and start to see growth across our major international geographies like the UK. and Australia. We believe Europe, Canada, and Latin America have bright prospects in the long term, but will have a slow path to recovery as business activity ramps up. The impact of COVID and international weakness in certain aspects of the business may continue. However, our commitment is to improve profitability and capitalize on future opportunities while continuing prudent expense management.

We finished the year in a strong financial position with the liquidity necessary to respond and adapt to continued challenges presented by the ever-changing economic environment as well as evolving client demand. Our capital allocation priorities remain first and foremost to invest in the long-term growth and health of our company, particularly in our organic growth and M&A, followed by share buybacks and consistent dividends. Our strong cash flow, favorable debt profile, and nearly fully funded pension liability gave us the confidence to pay a dividend last week of $0.06 per share for both CRDA and CRDB. This is the 45th quarter of continuous dividend payments. Additionally, on February 10, Crawford's board of directors authorized the addition of 5 million shares of CRDA and CRDB to its 2021 repurchase authorization, which had approximately 413,000 shares remaining at year-end.

Under the repurchase program, repurchases may be made through December 31, 2023, further demonstrating our confidence in our strategy and belief that our shares trade well below their intrinsic value. With that, I'd like to hand the call over to Joseph, who will walk through more details on our recent operational reorientation and discuss the progress we're making in our individual businesses. Joseph?

Joseph Blanco (President)

Thanks, Rohit. Before we turn to our business on results, as promised, we are continuing to streamline our business for efficiency and effectiveness. As a result, we realigned our management responsibilities to create better scale and synergies and have moved to a geographic reporting structure effective January 1, 2022. Moving forward, our reportable segments are comprised of North America Loss Adjusting, International Operations, Broadspire, and Platform Solutions. North America Loss Adjusting, which services the North American property and casualty market, is comprised of the previously reported Crawford Loss Adjusting segment in the U.S. and Canada, including Global Technical Services and edjuster. The Canadian operations will include all operations within that country, including those previously reported within the Crawford TPA Solutions and Crawford Platform Solutions segments.

International Operations, which services the global property and casualty market outside of North America, is comprised of the previously reported Crawford Loss Adjusting segment outside of North America and includes Crawford Legal Services, which was previously within the Crawford TPA Solutions segment. Similar to Canada, the individual countries in International Operations will include those service lines previously reported within the Crawford TPA and Platform Solutions segments. Broadspire provides third-party administration for workers' compensation, auto and liability, disability absence management, medical management, and accident and health to corporations, brokers, and insurers in the U.S. Platform Solutions consists of Contractor Connection, networks, and subrogation service lines in the U.S. The network service line includes catastrophe operations and WeGoLook. We believe that this new geographic center reporting structure will not only create greater synergies, but also give greater impetus for our sales and client engagement, as well as provide greater cross-selling capabilities.

Turning now to our business line results for the year, which we are reporting under our structure from 2021. In Loss Adjusting, we continue to gain traction with the large U.S. carriers and small to mid-size carriers. For the full year, we saw revenue growth of nearly 9% compared to the prior year period. This was aided by recovering economic activity in the U.S. and the impact from Hurricane Ida. Our strategy on the volume side of the business is to differentiate ourselves by enhancing the efficiency of low complexity, high-frequency claims processing using digital simplification and quality control. We are seeing positive momentum in those areas as we continue to actively invest in the quality and digital aspect to our claims processing capabilities, underscored by our recent acquisition of edjuster.

To become the market leader on the major and complex side, our strategy continues to focus on building our bench of experts to meet rapidly increasing demand for specialist adjusters as claims become more complex. In line with this focus, we onboarded 86 specialist adjusters in the past 12 months, and we continue on track to our three-year goal of adding 200 specialist adjusters to our bench. Looking forward, we are focused on continuing to capitalize on recovering economic activity and increased demand for specialist adjusters to drive growth in major and complex claims. Turning to Platform Solutions, we saw a record year of growth in our networks business as our focused efforts to scale our offerings continued to yield positive results.

For the full year, the segment achieved tremendous revenue growth of 32% with improving flow-through as the volume of transactions continued to increase over the course of the year. Additionally, we have seen positive contributions from our recent acquisition of Praxis, which is driving margin expansion in the platforms business. Moving to TPA, the business in the U.S. has continued to expand in both revenue and profit compared to last year, despite a lag in medical management revenue recovery. Revenues were up over 7% for the full year compared to the prior year. Although the revenue we are seeing is profitable, it is offset by a handful of weak spots, especially internationally. Volumes were down in Canada, but this was partially offset by the CEWS support we were receiving in 2021, which was less favorable compared to what we received in CEWS support during the prior year.

In Europe, our TPA book of business is largely weighted towards travel and entertainment, which has seen a disproportionate decline in profitability as a result of the delayed COVID recovery during the second half of 2021. In Asia, we are resetting our approach to better exploit the opportunities of the region and are actively making more hires and increasing our competitiveness. We are evolving our approach in these geographies, and we expect to see a positive impact in 2022. In short, we feel good about all the segments despite some pockets of transitory weakness. We will continue to take a fresh look at challenged businesses to ensure we are operating at optimized level to realize the benefits of top-line growth in both the near term and the long term. Overall, we remain confident about the long-term health of the business and expect organic growth momentum to continue.

We won over $28 million in new and enhanced business in the fourth quarter, taking the tally of new and enhanced business won in 2021 to $103 million. We increased our NPS score up to 51, up six points compared to 2020, and up three points from the third quarter of 2021. Additionally, we retained 94% of our U.S. Broadspire business in 2021, and we are increasing market share with key carrier clients. We will continue our commitment to delivering service excellence as we move through 2022. We are committed to continuously developing and designing our culture as a key differentiator for organizational success. During 2021, we made consistent progress on our DEI initiatives. We introduced new questions on our pulse survey to measure employee sentiment regarding our DEI initiatives.

Additionally, our employee resource groups, or ERGs, continued to engage employee segments such as multiracial and ethnic employees, women, and LGBTQ+ employees. To ensure that leaders model fairness and inclusivity in their behaviors, unconscious bias training was completed by the executive team members and mandated for all of our 1,340 managers globally. We continue to look for opportunities across our enterprise to become more socially responsible and are increasingly integrating ESG best practices into our operations. Overall, we remain steadfast in our commitment to diversity, equity, and inclusion, and we are committed to cultivating a safe, inclusive environment in which everyone's unique perspectives and experiences are heard and valued.

As a key component to our success, we are devoted to protecting the safety and well-being of all of our employees, and as a result, we've been able to see a high level of performance and engagement despite the continued challenges presented by COVID. With that, let me turn the call over to Bruce for a deeper look at our financial performance.

Bruce Swain (CFO)

Thank you, Joseph. Company-wide revenues before reimbursements in the 2021 fourth quarter were $292.9 million, up 14% from $257.4 million in the prior year fourth quarter. Foreign exchange rate benefits increased revenues before reimbursements by $3 million. On a constant dollar basis, revenues before reimbursements totaled $289.9 million. GAAP diluted EPS in the 2021 fourth quarter was $0.03 for both CRDA and CRDB, compared to EPS of $0.18 for both CRDA and CRDB in the 2020 period. On a non-GAAP basis, fourth quarter 2021 diluted EPS was $0.07 for both CRDA and CRDB, compared with $0.27 for both share classes in the 2020 period.

The company's non-GAAP operating earnings totaled $9.1 million in the 2021 fourth quarter, or 3.1% of revenues, decreasing from $18.5 million or 7.2% of revenues in the prior year period. Consolidated adjusted EBITDA was $17.6 million in the 2021 fourth quarter, or 6% of revenues, compared to $27.5 million or 10.7% of revenues in the 2020 quarter. I'll now review the fourth quarter 2021 performance of each of our segments. Crawford Loss Adjusting revenues totaled $123.1 million in the 2021 fourth quarter, increasing 10.5% from $111.4 million reported in last year's quarter.

Foreign exchange rate benefits totaled $2.1 million in the 2021 quarter. The segment reported operating earnings of $4.9 million in the 2021 fourth quarter, decreasing from $16.3 million reported in last year's quarter. The operating margin was 4% in the 2021 quarter, compared to 14.6% in the 2020 quarter. Operating earnings and margin weakness during the quarter were pressured by lower CEWS benefits, higher centralized support cost, and weakness in certain international business lines in the UK., Canada, and Asia. Revenues for Crawford Platform Solutions were $70.6 million in the 2021 fourth quarter, increasing 40.7% over the $50.2 million in the prior-year quarter. Foreign exchange rate benefits were immaterial in the quarter.

Operating earnings in Crawford Platform Solutions totaled $10.4 million or 14% of revenues in the 2021 fourth quarter, increasing over operating earnings of $6.7 million or 13.4% of revenues in the prior year quarter. Expanding margins in our network service line and the positive contribution from the recent Praxis acquisition drove the profit improvements. Crawford TPA Solutions revenues were $99.1 million in the 2021 fourth quarter, increasing 3.4% from $95.8 million in the 2020 period. Foreign exchange rate benefits were immaterial in the quarter. Crawford TPA Solutions operating earnings were $3.1 million in the 2021 fourth quarter, decreasing from last year's fourth quarter operating earnings of $6.8 million.

The operating margin in this segment was 3.1% in the 2021 quarter and 7.1% in the 2020 period. We saw a decrease in the U.S. as a result of a change in revenue mix, as well as weakness in Europe and Canada. Unallocated corporate costs were $9.3 million in the 2021 fourth quarter, compared to cost of $11.2 million in the same period of 2020. This decrease was primarily due to lower self-insured expenses, pension expense, incentive compensation, and other unallocated costs, partially offset by a reduction in the unallocated portion of the CEWS benefit compared to 2020.

During the 2021 fourth quarter, the company recognized no benefits from CEWS as compared to an overall benefit of $4.8 million in the 2020 fourth quarter. As previously communicated, the company does not expect to recognize any further benefits from CEWS. For the full year, the company repurchased approximately 531,000 shares of CRDA and 1.7 million shares of CRDB at an average cost per share of $9.63 and $8.26, respectively. The total cost of share repurchases during 2021 was $19.1 million. Lastly, in connection with the realignment of operating segment manager responsibilities on January 1, 2022, Crawford updated its operating segments by moving to a geographic reporting structure consisting of North America Loss Adjusting, International Operations, Broadspire, and Platform Solutions.

The succeeding interim and annual periods will disclose the reportable segments under the new basis, with prior periods restated to reflect the change. We intend to issue an 8-K in the coming weeks, restating our segment results for 2021, 2020, and 2019, including all quarters. The company's cash and cash equivalent position as of December 31, 2021 totaled $53.2 million, compared to $44.7 million as of December 31, 2020. Our total receivables were up $26.6 million from December 31, 2020, largely driven by our International Operations and accounts receivable from our recently completed acquisitions. Goodwill and intangible assets increased by $76.4 million from 2020 as a result of the recent edjuster, Praxis, and BosBoon acquisitions.

We made $9 million in discretionary contributions to our U.S. defined benefit pension plan for 2021, in line with contributions that we made during 2020. Although the company has made these contributions for the last several years, given the significant improvement in funding levels, we do not intend to make contributions during 2022. The company's total debt outstanding as of December 31, 2021 totaled $175 million, compared with $113.6 million as of December 31, 2020, reflecting borrowings for recent acquisitions and share repurchases. Net debt stood at $121.8 million as of December 31, 2021, while our leverage ratio under our credit agreement closed at 1.66x EBITDA.

Additionally, our pension liability was down to $17.9 million at the end of 2021, and our U.S. pension funding level improved materially during 2021 to 96%. We are very pleased with this progress. Cash provided by operations totaled $54.3 million during 2021, decreasing $38.9 million compared to 2020. The decrease in cash provided by operating activities was primarily due to a $16.8 million increase in the change in billed and unbilled accounts receivable, a $19.5 million increase in payroll tax payments deferred in 2020 under the CARES Act, and an increase in income tax payments.

As Rohit mentioned earlier, we ended the year with better-than-expected cash flow driven by favorable collection activity, primarily in the U.S., where collections of Hurricane Ida receivables were strong in the fourth quarter. We generated $23.4 million of free cash flow in 2021, compared with $55.8 million in the prior year. With that, I would like to turn the call back to Rohit for concluding remarks.

Rohit Verma (CEO)

Thank you, Bruce. Overall, we are pleased where we ended 2021, especially given the uncertainty that plagued the year. We enter 2022 in high spirits, and we will continue to work on our strategy and refine it to represent the new geography-based operating model that has been implemented for 2022. We will also continue the cultural evolution throughout the organization, which we believe is the underpinning of our strategy, execution, and profitable growth. As we look ahead, we remain keenly focused on our pursuit of restoring lives, businesses, and communities. We are confident in our growth trajectory and are committed to delivering further value to our shareholders. Thank you for your time today. Operator, please open the call for questions.

Operator (participant)

At this time, if you would like to ask a question, please press star, then 1 on your telephone keypad. To withdraw your question, press the pound key. If you are using a speakerphone, please pick up your handset before asking your question. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Kevin Steinke with Barrington Research.

Rohit Verma (CEO)

Hi, Kevin.

Kevin Steinke (Equity Research Analyst)

Good morning. Good morning, everyone. How are you?

Rohit Verma (CEO)

Good.

Kevin Steinke (Equity Research Analyst)

Good. Hey, I wanted to start off by asking about, you know, obviously some continued challenges in, international markets. You had, I think, referred last quarter as well to taking a fresh look at, you know, just the cost base in some of those markets, given the slower-than-expected recovery. I'm just trying to get a sense as to whether, you've started to implement measures or you're still just taking a look and figuring out what the steps are. Just how far along are you in that process?

Rohit Verma (CEO)

Yeah, Kevin, great question. Look, we are extremely excited about the growth that we've had, but obviously that excitement is dampened by the margin challenges that we've had in the international markets. Europe is only one part of that story. However, we have started to make some changes and realign our cost structure to the new market realities. The diversification that we're starting to do in Europe is a step in that direction. We've started to increase our penetration in the loss adjusting space by onboarding some more teams. Also looking at diversifying our TPA clients outside of just travel and hospitality, and we're starting to see some success there. But it is a slower journey.

I expect to see real results coming really after Q2, where you'll be able to see them flow through in the P&L.

Kevin Steinke (Equity Research Analyst)

Okay. That's helpful. You mentioned the efforts to diversify. You referenced BosBoon. Is the diversification partly organic? You mentioned adding clients in different areas outside of travel and entertainment, as well as continuing to look for acquisition opportunities.

Rohit Verma (CEO)

Yes, it is both.

Kevin Steinke (Equity Research Analyst)

Mm-hmm.

Rohit Verma (CEO)

As you know, we are extremely disciplined about the acquisitions that we make. We need to make sure that the structure of the acquisition is right, the return profile of the acquisition is right. I think it will be a balanced approach between organic and inorganic ways to diversify the business.

Kevin Steinke (Equity Research Analyst)

Okay, that's helpful. You know, this is starting to hopefully move into the rearview mirror here, but you know, obviously the fourth quarter we saw a spike in COVID-19 cases driven by Omicron and, you know, even into early 2022. Do you think there was any noticeable impact on your business, either from your ability to access labor or, you know, impact on revenue or anything that measurable that you might have seen there?

Rohit Verma (CEO)

Yeah. As long as economic activity doesn't slow down, you know, we don't get impacted by COVID from a labor pool perspective. We did see a little bit of labor issues when there was some storm activity last year and COVID was at its high to deploy some people where people were not keen on going to geographies where COVID was high and the safety measures were not prescribed by the governments. I would say that short of actual lockdowns happening where economic activity comes to a stop, I don't see that to be a big issue.

Kevin Steinke (Equity Research Analyst)

Okay, good. Just following up again on international, I think you referenced some challenges in some specific international markets, specifically in the press release you mentioned increased competition for talent in Asia, and you mentioned how you're ramping up your hiring efforts there. You also mentioned pressure in one of your UK. businesses. I don't know if you could expand on those areas?

Rohit Verma (CEO)

Yeah

Kevin Steinke (Equity Research Analyst)

Internationally and any others if they're worth highlighting.

Rohit Verma (CEO)

Yeah, let me see if I can talk a little bit about Asia first. If you look at our Asian operation, it was really an operation that was built by stringing together a bunch of entrepreneurial operations, right? It wasn't sort of operating as a formal enterprise operation. What we felt was that the Asian market was, excuse me, transitioning to be a much more structured market than it has been in the past. It was important for us to start to build much more of an enterprise infrastructure in Asia. That's what we've been focused on. But as you build that, you always bring about some changes. You're moving towards a much more structured approach than an entrepreneurial approach that may have been used before. It's bound to cause some consternation.

I think that's what we're sort of going through and making sure that we're putting on the right people in the organization that we want. As far as the specific business operation in UK. is concerned, we've had one aspect of our operation, which has actually done extremely well for us. In the short term, we've seen some issues with it which relate to labor shortages, lead times on construction projects, which have resulted in some profitability challenges in that business. We believe that those challenges are largely behind us, but we're still working through them. Again, it might take a quarter or two to work through the tail of those challenges. Bruce, I don't know if you wanna add to that.

Bruce Swain (CFO)

No, I think that's right. We see it largely as transitory issues.

Rohit Verma (CEO)

Yeah.

Kevin Steinke (Equity Research Analyst)

Okay, great. You mentioned how you're continuing to actively invest in your core business. You know, you talked about some of the areas there, like the major and complex hiring specialist adjusters. You know, it looks like the direct compensation expenses across your three segments in each segment were up a little faster than revenue. Should we think about some of the investments just being people-based? What other investments might you wanna talk about that you expect to drive growth in the future?

Rohit Verma (CEO)

True to our strategy, we have three strategic pillars, quality, expertise, and digital. Our investments are very much aligned in those. In the area of large and complex losses, we have been investing quite a lot in people. I think we mentioned that we've hired 82 adjusters. Our target is to hire 200 adjusters. These are what we call adjusters that are deep and eminent in their fields. We're also investing in technology, which is a major part of our strategy, where we've already initiated the process of moving towards cloud, which we believe in the longer term will give us resilience. It'll also give us flexibility and scale, which usually requires a higher upfront investment than and the results start to come through over a period of time.

We continue to innovate, which we believe is resonating with our customers. We've already talked about Asservio in the past. We've talked about some other investments in data and analytics, particularly in our Broadspire space, which are really creating the differentiation that we need and is evident in the $103 million of new business that we wrote last year, which we believe is largely due to this differentiated strategy that we're taking. So as you can imagine, oftentimes technology and people investments tend to be front-loaded, and that's what we're seeing in our business as well. Look, I think we've talked a lot about growth for almost a decade.

What happened is every time we would talk about growth, we would immediately shift our focus to just pure margin and start to take expense reduction initiatives that probably were more short-term results-oriented than a long-term result-oriented. I think we are squarely focused on growth right now. We are absolutely expense aware. We're absolutely gonna be prudent in our expense management, but we're not gonna take our focus away from growth.

Kevin Steinke (Equity Research Analyst)

Right. No, that makes a lot of sense, Ted, in terms of being able to drive the long-term growth that you're looking for. You know, can you talk about you know, obviously the quarter had some really nice growth on the top line. Can you talk about your market share gains you're seeing specifically in the U.S.? You know, you mentioned within the U.S. cat business I mean, gains with some of the top carriers. Just you know, maybe progression of market share gains and penetration that you're seeing there.

Rohit Verma (CEO)

Sure. In the U.S., I still don't think that we or anybody for that matter, truly has a meaningful share of the market. I think it's a highly fragmented market, and we continue to be a participant in that highly fragmented market. I believe there is a tremendous amount of headroom that exists. We believe again, that our strategy of quality, expertise and digital is the right strategy to create the necessary differentiation. We've got a great brand recognition, but I think we need to work on our brand awareness. What I mean by that is, people understand who Crawford is, but they don't understand exactly all of the things that we do. That's been a major focus area for us.

As we've done that, we've seen our share of wallet grow with the large carriers where there's an opportunity for us to grow our share of wallet. We believe there is still a huge opportunity with mid-sized carriers as well. We've been making quite a lot of investments in the sales infrastructure, which we've talked about over the last couple of years. I'm pleased to see that investment is starting to show the results in the U.S. We believe that there is continued momentum in the U.S. Our challenge always is that the results are often dependent on the weather. We will continue to gain new clients, but if there's volatility in the weather, it might not show up in our numbers.

If we look at it on a pure client basis, our market share is continuing to grow.

Kevin Steinke (Equity Research Analyst)

All right, great. And you did touch there on more of the small and mid-size carrier market in the U.S. and the investments you're making there. You know, I guess can you just again talk about maybe some early traction you're seeing there? I think you're very early on in that opportunity, but it seems like that could be a fairly significant opportunity over the longer term.

Rohit Verma (CEO)

It is. We truly believe it's a fairly significant opportunity, but it does require, as you can imagine, you know, one top five carrier wins is equal to sometimes 10 or 12 mid-size carrier wins, right? It just takes a little bit longer for those wins to start to show. Those wins tend to be stickier. They tend to have more repeatable business. We are seeing success there. Another place that we're seeing success is what I call early stage companies, which are starting out and don't have the claims infrastructure. We've seen success there as well. Overall, I believe that's why I made the statement that we're seeing growth across all our segments in the U.S.

I think we will continue to see this growth, if we stay true to our strategy, which we plan to be.

Kevin Steinke (Equity Research Analyst)

Okay. I just wanted to ask a couple more here. This is more just a numbers or a question around. I'm trying to just recall, in terms of unallocated corporate costs, you know, if there's some seasonality associated with the fourth quarter where they kind of spike up sequentially. I know that's happened in the last couple of years. Or if there's, you know, true ups or something going on there. I just can't kind of recall what the sequential progression is, on that line.

Bruce Swain (CFO)

Yeah. Kevin, this is Bruce. There really shouldn't be seasonality per se in those costs. Although you are right, the last couple of years we've seen higher than normal amounts hit in the fourth quarter. On a quarterly basis, you know, we go through true ups of bad debt provision, self-insured reserves and the like, and those items be they credits or debits, will show up in corporate unallocated. So you'll see a little bit of volatility. And we saw a little bit higher number this year than we were anticipating. But you know, as far as seasonality, you really shouldn't expect the fourth quarter to spike, you know, year in, year out.

Kevin Steinke (Equity Research Analyst)

Okay. All right. Got it. Just lastly, can you just talk about the health of the overall new business pipeline across your segments and, you know, what you're seeing there? Did you see any slowdown related to Omicron, or is it just continuing to build as you would hope?

Rohit Verma (CEO)

Yeah. The new business pipeline continues to build. We haven't seen a slowdown in the U.S. from Omicron. I must admit, we saw a slowdown because of Omicron in Europe, and in the UK. to some extent. We haven't really seen a slowdown from a pipeline perspective just because of Omicron. We feel good about it. We continue to feel good about the pipeline that we have.

Kevin Steinke (Equity Research Analyst)

Okay, great. Thanks for taking all the questions.

Rohit Verma (CEO)

Thanks, Kevin.

Bruce Swain (CFO)

Thank you, Kevin.

Kevin Steinke (Equity Research Analyst)

Appreciate it. Okay.

Operator (participant)

At this time, there are no further questions. I would like to turn the call back over to Mr. Verma for closing remarks.

Rohit Verma (CEO)

Thank you, Phyllis. In 2021, we made tremendous strides in advancing our purpose of restoring lives, businesses and communities. Our long-term strategy enables our growth plans and envision future as we continue to deliver innovative and market-leading solutions. Above all else, we remain deeply committed to protecting the health and safety of our employees while continuing to provide best-in-class service to our clients despite the current global environment. In that spirit, I want to thank our colleagues in Australia and UK., who, under the leadership of Lisa Bartlett and Tim Jarman, are doing a spectacular job under very difficult conditions to deliver on our purpose post the storms and floods there.

As we embark on 2022 and beyond, we are committed to moving forward from a position of strength as we find new ways to excel for our clients while also delivering further value to our shareholders. Our fourth quarter and full year 2021 growth trajectory is not only indicative of Crawford's strength and resilience through 2021, but also evidence of our incredible momentum moving forward. We look forward to having you join us on the journey ahead, and thank you for your support. Thank you, and God bless.

Operator (participant)

Thank you for participating in today's Crawford & Company conference call. This call will be available for replay beginning at 11:30 AM. Eastern Standard Time today through 11:59 PM. Eastern Standard Time on April 15, 2022. The conference ID number for the replay is 4285212. The number to dial for the replay is 800-585-8367 or 416-621-4642. Thank you. You may now disconnect.