CRAWFORD & CO (CRD-A) FY 2021 MD&A

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand Crawford & Company, our operations, and our business environment. This MD&A is provided as a supplement to — and should be read in conjunction with — our audited consolidated financial statements and the accompanying notes thereto contained in Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K. As described in Note 1, "Significant Accounting and Reporting Policies," of those accompanying audited consolidated financial statements, financial results from our operations outside of the U.S., Canada, the Caribbean, and certain subsidiaries in the Philippines, are reported and consolidated on a two-month delayed basis in accordance with the provisions of ASC 810, "Consolidation," in order to provide sufficient time for accumulation of their results. Accordingly, the Company's December 31, 2021, 2020, and 2019 consolidated financial statements include the financial position of such operations as of October 31, 2021 and 2020, respectively, and the results of their operations and cash flows for the fiscal periods ended October 31, 2021, 2020 and 2019, respectively.

16

Business Overview

Based in Atlanta, Georgia, Crawford & Company (www.crawco.com) is the world's largest publicly listed independent provider of claims management and outsourcing solutions to carriers, brokers and corporations with an expansive global network serving clients in more than 70 countries. Shares of the Company's two classes of common stock are traded on the NYSE under the symbols CRD-A and CRD-B, respectively. The Company's two classes of stock are substantially identical, except with respect to voting rights and the Company's ability to pay greater cash dividends on the non-voting Class A Common Stock than on the voting Class B Common Stock, subject to certain limitations. In addition, with respect to mergers or similar transactions, holders of Class A Common Stock must receive the same type and amount of consideration as holders of Class B Common Stock, unless different consideration is approved by the holders of 75% of the Class A Common Stock, voting as a class.

As of January 1, 2021, the Company realigned its operating segment manager responsibilities and reorganized its global service line structure to consist of Crawford Loss Adjusting, Crawford TPA Solutions, and Crawford Platform Solutions. The Company's revised reportable segments are comprised of the following:

•
Crawford Loss Adjusting, which services the global property and casualty market. This is comprised of the previously reported Crawford Claims Solutions segment, excluding both Networks (as defined below) and Crawford Legal Services, and including the Global Technical Services service line previously reported within Crawford Specialty Solutions.

•
Crawford TPA Solutions, which provides third party administration for workers' compensation, auto and liability, disability absence management, medical management, and accident and health to corporations, brokers and insurers worldwide. This is comprised of the previously reported Crawford TPA Solutions segment and the Crawford Legal Services service line previously reported within the Crawford Claims Solutions segment.

•
Crawford Platform Solutions, which consists of the Contractor Connection and Networks service lines and serves the global property and casualty insurance company markets. This is comprised of the previously reported Contractor Connection service line within Crawford Platform Solutions and the Networks service line, which includes Catastrophe operations, WeGoLook, Praxis Consulting, and certain international network businesses previously reported within the Crawford Claims Solutions segment.

As discussed in more detail in subsequent sections of this MD&A, we have three reportable segments: Crawford Loss Adjusting, Crawford TPA Solutions, and Crawford Platform Solutions. Our three reportable segments represent components of the Company for which separate financial information is available, and which is evaluated regularly by our chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing operating performance. Crawford Loss Adjusting serves the global property and casualty insurance company markets. Crawford TPA Solutions serves the global casualty, disability and self-insurance marketplace worldwide. Crawford Platform Solutions serves the global property and casualty insurance company markets.

Insurance companies rely on us for certain services such as field investigation and the evaluation of property and casualty insurance claims. Self-insured entities typically rely on us for a broader range of services. In addition to field investigation and claims evaluation, we may also provide initial loss reporting services for their claimants, loss mitigation services such as medical bill review, medical case management and vocational rehabilitation, risk management information services, and loss fund administration to pay their claims. Our Contractor Connection service line in our Crawford Platform Solutions segment provides a managed contractor network to insurance carriers and consumer markets.

The global claims management services market is highly competitive and comprised of a large number of companies that vary in size and that offer a varied scope of services. The demand from insurance companies and self-insured entities for services provided by independent claims service firms like us is largely dependent on industry-wide claims volumes, which are affected by, among other things, the insurance underwriting cycle, weather-related events, general economic activity, overall employment levels and workplace injury rates. Demand is also impacted by decisions insurance companies and self-insured entities make with respect to the level of claims outsourced to independent claim service firms as opposed to those handled by their own in-house claims adjusters. In addition, our ability to retain clients and maintain or increase case referrals is also dependent in part on our ability to continue to provide high-quality, competitively priced services and effective sales efforts.

We typically earn our revenues on an individual fee-per-claim basis for claims management services we provide to insurance companies and self-insured entities. Accordingly, the volume of claim referrals to us is a key driver of our revenues. Generally, fees are earned over time on cases as services are provided, which generally occurs in the period the case is assigned to us, although sometimes a portion or substantially all of the revenues generated by a specific case assignment will be earned in subsequent periods. We cannot predict the future trend of case volumes for a number of reasons, including the frequency and severity of weather-related cases and the occurrence of natural and man-made disasters, which are a significant source of cases for us and are not subject to accurate forecasting.

17

Results of Operations

Executive Summary

Consolidated revenues before reimbursements were $1.102 billion in 2021, an increase of 12.2% compared with $982.5 million in 2020. Net income attributable to Crawford & Company was $30.7 million in 2021, compared with $28.3 million in 2020.

Consolidated revenues before reimbursements increased $119.5 million, or 12.2%, in 2021 due to an increase in Hurricane Ida activity in the U.S. in our Crawford Loss Adjusting and Crawford Platform Solutions segments, an increase in new client growth in our Crawford Platform Solutions segment, and an increase in our Crawford TPA Solutions segment. Changes in foreign exchange rates increased our consolidated revenues before reimbursements by $29.9 million, or 3.1%, for 2021 as compared with the prior year. Excluding the change in foreign exchange rates, consolidated revenues before reimbursements increased $89.6 million, or 9.1% compared with 2020.

Revenues from the Crawford Loss Adjusting segment increased in 2021 due to an increase in weather-related cases resulting from Hurricane Ida in the U.S. Revenues from the Crawford TPA Solutions segment increased for the year due to growth in the U.S. and revenues from recent acquisitions, partially offset by continued weakness as a result of the economic impact of COVID-19 in Canada and Europe. Revenues from the Crawford Platform Solutions segment increased primarily due to an increase in Hurricane Ida related cases in the U.S. and new client growth. There was a net $24.1 million positive increase in total company revenues in 2021 as a result of acquisitions and dispositions in 2020 and 2021. See Note 3, “Business Acquisitions and Dispositions” of our accompanying consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further discussion about this activity.

We have experienced continued recovery from the negative economic impact of COVID-19 in 2021, particularly in the U.S., compared to the significant reductions experienced in the prior year, where revenues were down in the range of $45.0 to $55.0 million as a result of the economic impacts of COVID-19. Due to ongoing negative impacts in multiple regions, it is uncertain whether such recovery can be sustained and continue. The economic impact from COVID-19 could have a material impact on our results of operations, financial condition, and cash flows in one or more future periods. In addition, it is possible that changes in economic conditions and steps taken by international, federal, state and/or local governments in response to COVID-19 could have negative impacts, including labor shortages which could increase compensation costs and other expenses, unless mitigated by government assistance programs to corporations.

Overall, there was an increase in cases received of 5.8% in 2021 compared with 2020, primarily due to the increase in Hurricane Ida activity in the U.S. As a result of the impact from the COVID-19 pandemic, cases received in future periods could be materially negatively impacted, unless offset by the impact of cases received from new clients or weather-related activity.

Cases received are presented below by segment:

18

Segment operating earnings (a measure of segment operating performance used by our management that is defined and discussed in more detail below) increased in our Crawford Platform Solutions operating segment, partially offset by decreases in our Crawford Loss Adjusting and Crawford TPA Solutions operating segments.

Although operating earnings is the primary financial performance measure used by our senior management and CODM to evaluate the financial performance of our operating segments and make resource allocation and certain compensation decisions, we believe that a non-GAAP discussion and analysis of segment gross profit is also helpful in understanding the results of our segment operations excluding indirect centralized administrative support costs. Our discussion and analysis of segment gross profit includes the revenues and direct expenses of each segment.

In the Crawford Loss Adjusting segment, operating earnings decreased from $41.1 million, or 9.4% of revenues before reimbursements in 2020, to $23.0 million, or 4.8% of revenues before reimbursements in 2021, primarily due to losses in certain international operations and an increase in compensation expense. There was a $1.7 million expense benefit in 2021 as a result of the Canada Emergency Wage Subsidy ("CEWS") and a benefit of $5.2 million in 2020. Excluding indirect support costs, gross profit decreased from $118.9 million, or 27.1% of revenues before reimbursements in 2020, to $106.7 million, or 22.4% of revenues before reimbursements in 2021.

In the Crawford TPA Solutions segment, operating earnings decreased from $20.5 million, or 5.5% of revenues before reimbursements in 2020, to $17.6 million, or 4.4% of revenues before reimbursements in 2021, primarily due to the continued impact of COVID-19 in Canada and Europe. There was a $0.7 million expense benefit in 2021 as a result of the CEWS and a benefit of $1.6 million in 2020. Excluding indirect support costs, gross profit decreased from $76.7 million, or 20.6% of revenues before reimbursements in 2020, to $75.9 million, or 19.1% of revenues before reimbursements in 2021.

In the Crawford Platform Solutions segment, operating earnings increased from $27.7 million, or 16.0% of revenues before reimbursements in 2020, to $36.3 million, or 15.9% of revenues before reimbursements in 2021, primarily due to the increase in revenues. Excluding indirect support costs, gross profit increased from $43.6 million, or 25.3% of revenues before reimbursements in 2020, to $57.5 million, or 25.1% of revenues before reimbursements in 2021.

Cost of services provided, before reimbursements, increased $106.6 million, or 15.2% for 2021 compared with 2020. This increase was primarily due to an increase in compensation expense, including incentive compensation and other costs in each of our operating segments resulting from the higher revenues, the change in foreign exchange rates, and the impact of recent acquisitions.

Selling, general, and administrative ("SG&A") expenses increased $25.9 million, or 11.8%, in 2021, as compared with 2020. This increase was due to an increase in compensation expense, including incentive compensation, an increase in centralized data processing costs and professional fees, the change in foreign exchange rates, and the impact of recent acquisitions.

The Canadian government enacted the CEWS in 2020 to provide a wage subsidy to employers that suffered reductions in revenue resulting from the COVID-19 pandemic. We met the eligibility criteria to receive the wage subsidy in 2020 and 2021, We received a benefit totaling $5.9 million in 2021 and $13.8 million in 2020, due to the negative economic impact of COVID-19 in that country. This subsidy is recorded as a credit within Direct Compensation, Fringe Benefits and Non-Employee Labor and is included in "Costs of services provided, before reimbursements” or “Selling, general, and administrative expenses” on the Company's unaudited Condensed Consolidated Statements of Operations, depending on classification of the employees. We do not expect any benefit from this subsidy in future periods.

On October 4, 2021, we acquired BosBoon Expertise Group B.V. ("BosBoon"), a Netherlands-based specialist loss adjusting company. The acquisition supports our strategic aim of strengthening our expertise in all key territories in which we operate. BosBoon offers a specialist range of loss adjusting services which will be added to the existing Crawford Global Technical Services proposition in the Netherlands. The purchase price includes an initial cash consideration of $2.1 million, before working capital adjustment, and a maximum $1.9 million payable over the next two years based on achieving certain financial and nonfinancial goals, as defined in the purchase agreement.

On October 1, 2021, we acquired 100% of Praxis Consulting, Inc. ("Praxis"), an established subrogation claims service provider in the U.S. This acquisition allows us to expand our footprint in the U.S. subrogation claims market. The purchase price includes an initial cash consideration of $21.5 million, working capital adjustment payable of $0.7 million, a deferred payment of $20.0 million in February 2022, and a maximum $10.0 million payable over the next two years based on achieving certain revenue performance goals, as defined in the purchase agreement.

19

On August 23, 2021, we acquired 100% of edjuster Inc. in Canada and its U.S. subsidiary (collectively "edjuster"). Edjuster is a technology-enabled, end-to-end contents services provider and platform. This acquisition will enable us to expand our capability in the North American claims contents services market. The purchase price included an initial cash payment of $20.9 million, working capital adjustment payable of $0.4 million, and an earn-out potential up to $13.3 million in cash based on the achievement of certain EBITDA performance goals over two one-year periods, beginning January 2022.

On November 1, 2020, we acquired 100% of HBA Group in Australia. The HBA Group is a legal services provider that will complement the Company’s Crawford TPA Solutions segment in Australia. The purchase price included an initial cash payment of $4.0 million, net of working capital adjustment, and a maximum $3.2 million payable in cash over the next four years based on achieving certain revenue and EBITDA performance goals as set forth in the purchase agreement. The financial results of certain of the Company’s international subsidiaries, including HBA Group, are included in the Company’s consolidated financial statements on a two-month delayed basis. Accordingly, the acquisition of HBA was reported as of January 1, 2021.

On October 1, 2020, we acquired most of the remaining 85% equity interests in Crawford Carvallo and its subsidiaries. Crawford Carvallo is a leading provider of loss adjusting, claims management solutions and legal services in Chile. The Company held a 15% interest in Crawford Carvallo prior to this acquisition. The purchase price includes an initial cash payment of $11.6 million and a maximum of $11.7 million payable over the next six years based on achieving certain EBITDA performance goals as set forth in the purchase agreement.

These acquisitions were funded primarily through additional borrowings under the Company's credit facility. See Note 3, “Business Acquisitions and Dispositions” of our accompanying consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further discussion about these transactions.

During 2020, we recognized a pretax gain on disposal totaling $13.8 million related to the sale of the Lloyd Warwick International (“LWI”) business in our Crawford Loss Adjusting segment, net of a loss on the disposal of Crawford Compliance. The gain on disposal is presented in the Consolidated Statements of Operations as a separate item "Gain on disposition of businesses, net." There was no gain on disposal in 2021 or 2019.

We recognized a pretax non-cash goodwill impairment in the 2020 first quarter totaling $17.7 million related to our former Crawford Claims Solutions reporting unit. This expense was partially offset by a $1.8 million reduction in income tax expense and $1.7 million credit in noncontrolling interest expense. In 2019, we recognized a non-cash goodwill impairment totaling $17.5 million, also related to our former Crawford Claims Solutions segment. This charge was partially offset by a $2.2 million reduction in income tax expense and $2.2 million credit in noncontrolling interest expense. There was no goodwill impairment in 2021.

We recognized pretax restructuring costs totaling $8.1 million in 2020, related primarily to severance and other termination costs in an effort to consolidate and streamline various functions of our workforce. The restructuring and other costs are comprised of $9.4 million severance expense and related payroll taxes, $2.5 million in asset impairment and lease termination costs, partially offset by a $1.1 million gain from fair value remeasurement of a cost method investment, $1.2 million in liquidation dividends from a cost method investment, and a $1.4 million gain from sale of IP addresses. This pretax expense is presented in the Consolidated Statements of Operations as a separate charge "Restructuring and Other Costs, Net." See Note 16, “Restructuring and Other Costs, Net” of our accompanying consolidated financial statements for further discussion about these transactions. There were no restructuring costs in 2019 or 2021.

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The Company took advantage of certain aspects of the CARES Act such as the deferral of payroll tax deposits, which deferred the payment of 2020 payroll tax withholdings in the U.S., totaling $13.0 million, to be paid in equal installments at the end of 2021 and 2022. As of December 31, 2021, we have made the first installment of $6.5 million.

In 2019 we recognized $12.6 million for an arbitration settlement related to additional payments awarded to former executives of our former Garden City Group related to their departure in 2015. There are no other potential claimants related to this matter. This pretax expense is presented in the Consolidated Statements of Operations as a separate charge "Arbitration and claim settlements."

Segment Operating Earnings

We believe that a discussion and analysis of the segment operating earnings of our three operating segments is helpful in understanding the results of our operations. Operating earnings is our segment measure of profitability presented in conformity with the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") Topic 280 "Segment Reporting." Operating earnings is the primary financial performance measure used by our senior management and CODM to evaluate the financial performance of our operating segments and make resource allocation and certain compensation decisions.

20

We believe operating earnings is a measure that is useful to others in that it allows them to evaluate segment operating performance using the same criteria used by our senior management and CODM. Segment operating earnings represent segment earnings, including the direct and indirect costs of certain administrative functions required to operate our business, but excludes unallocated corporate and shared costs and credits, net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, goodwill impairment, restructuring and other costs, gain on disposition of businesses, arbitration and claim settlements, income taxes, and net income or loss attributable to noncontrolling interests and redeemable noncontrolling interests.

Administrative functions such as finance, human resources, information technology, quality and compliance, exist in both a centralized shared-service arrangement and within certain operations. Each of these functions are managed by centralized management and we allocate the costs of those services to the segments as indirect costs based on usage.

In addition, we believe that a non-GAAP discussion and analysis of segment gross profit is helpful in understanding the results of our segment operations, excluding indirect centralized administrative support costs. Our discussion and analysis of segment gross profit includes the revenues and direct expenses of each segment. Segment gross profit is defined as revenues, less direct costs, which exclude indirect centralized administrative support costs allocated to the business.

Income taxes, net corporate interest expense, stock option expense, and amortization of customer-relationship intangible assets are recurring components of our net income, but they are not considered part of our segment operating earnings because they are managed on a corporate-wide basis. Income taxes are calculated for the Company on a consolidated basis based on statutory rates in effect in the various jurisdictions in which we provide services, and vary significantly by jurisdiction. Net corporate interest expense results from capital structure decisions made by senior management and the Board of Directors, affecting the Company as a whole. Stock option expense represents the non-cash costs generally related to stock options and employee stock purchase plan expenses which are not allocated to our operating segments. Amortization expense is a non-cash expense for finite-lived customer-relationship and trade name intangible assets acquired in business combinations. None of these costs relate directly to the performance of our services or operating activities and, therefore, are excluded from segment operating earnings in order to better assess the results of each segment's operating activities on a consistent basis.

Unallocated corporate and shared costs and credits include expenses and credits related to our chief executive officer and Board of Directors, certain provisions for bad debt allowances or subsequent recoveries such as those related to bankrupt clients, defined benefit pension costs or credits for our frozen U.S. pension plan, certain unallocated professional fees, and certain self-insurance costs and recoveries that are not allocated to our individual operating segments.

Restructuring and other costs, as well as gain on disposition of businesses, goodwill impairment, and arbitration and claim settlements arise from time to time from events (such as internal restructurings, losses on subleases, establishment of new operations, and asset impairments) that are not allocated to any particular segment since they historically have not regularly impacted our performance and are not expected to impact our future performance on a regular basis.

Additional discussion and analysis of our income taxes, net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, unallocated corporate and shared costs, goodwill impairment, restructuring and other costs, gain on disposition of businesses, and arbitration and claim settlements follows the discussion and analysis of the results of operations of our three operating segments.

Segment Revenues

In the normal course of business, our operating segments incur certain out-of-pocket expenses that are thereafter reimbursed by our clients. Under GAAP, these out-of-pocket expenses and associated reimbursements are required to be included when reporting expenses and revenues, respectively, in our consolidated results of operations as the Company is considered the principal in these transactions. In the discussion and analysis of results of operations which follows, we do not include a gross up of expenses and revenues for these pass-through reimbursed expenses. The amounts of reimbursed expenses and related revenues offset each other in our results of operations with no impact to our net income or operating earnings. A reconciliation of revenues before reimbursements to consolidated revenues determined in accordance with GAAP is self-evident from the face of the accompanying statements of operations. Unless noted in the following discussion and analysis, revenue amounts exclude reimbursements for out-of-pocket expenses.

Our segment results are impacted by changes in foreign exchange rates. We believe that a non-GAAP discussion and analysis of segment revenues before reimbursements by major region, based on actual exchange rates and using a constant exchange rate, is helpful in understanding the results of our segment operations.

21

Segment Expenses

Our discussion and analysis of segment operating expenses is comprised of two components: "Direct Compensation, Fringe Benefits & Non-Employee Labor" and "Expenses Other Than Direct Compensation, Fringe Benefits & Non-Employee Labor."

"Direct Compensation, Fringe Benefits & Non-Employee Labor" includes direct compensation, payroll taxes, and benefits provided to the employees of each segment, as well as payments to outsourced service providers that augment our staff in each segment. As a service company, these costs represent our most significant and variable operating expenses.

Costs of administrative functions, including direct compensation, payroll taxes, and benefits, are managed centrally and considered indirect costs. The allocated centralized indirect administrative support costs of our shared-services infrastructure are allocated to each segment based on usage and reflected within "Expenses Other Than Direct Compensation, Fringe Benefits & Non-Employee Labor" of each segment.

In addition to allocated corporate and shared costs, "Expenses Other Than Direct Compensation, Fringe Benefits & Non-Employee Labor" includes travel and entertainment, office rent and occupancy costs, automobile expenses, office operating expenses, data processing costs, cost of risk, professional fees, and amortization and depreciation expense other than amortization of customer-relationship intangible assets.

Unless noted in the following discussion and analysis, revenue amounts exclude reimbursements for out-of-pocket expenses and expense amounts exclude reimbursed out-of-pocket expenses.

Operating results for our segments reconciled to income before income taxes and net income attributable to shareholders of Crawford & Company are as shown in the following table.

22

nm = not meaningful

YEAR ENDED DECEMBER 31, 2021 COMPARED WITH YEAR ENDED DECEMBER 31, 2020

CRAWFORD LOSS ADJUSTING SEGMENT

Operating Earnings

Our Crawford Loss Adjusting segment reported operating earnings of $23.0 million, or 4.8% of revenues before reimbursements in 2021, as compared with $41.1 million, or 9.4% of revenues before reimbursements in 2020. Operating earnings decreased from 2020 to 2021 primarily due to losses in certain international operations and an increase in compensation expense. Additionally, there was a $1.7 million expense benefit in 2021 as a result of the Canada Emergency Wage Subsidy (“CEWS”), and a benefit of $5.2 million in 2020.

Excluding centralized indirect support costs, gross profit decreased from $118.9 million, or 27.1% of revenues before reimbursements in 2020, to $106.7 million, or 22.4% of revenues before reimbursements in 2021. This decrease is primarily due to losses in certain international operations and an increase in compensation expense.

Operating results for our Crawford Loss Adjusting segment, including gross profit, are as shown in the following table:

Revenues before Reimbursements

23

Crawford Loss Adjusting revenues are primarily derived from the global property and casualty insurance company markets in the U.S., U.K., Canada, Australia, Europe and Rest of World. Crawford Loss Adjusting revenues before reimbursements by major region, based on actual exchange rates and using a constant exchange rate were as follows:

Revenues before reimbursements from our Crawford Loss Adjusting segment totaled $475.6 million in 2021 compared with $438.5 million in 2020. This increase was primarily due to an increase in weather-related cases resulting from Hurricane Ida in the U.S. and new client growth. Changes in foreign exchange rates resulted in an increase of our Crawford Loss Adjusting segment revenues by approximately 4.9% or $21.1 million for 2021. Absent foreign exchange rate fluctuations, Crawford Loss Adjusting segment revenues would have been $454.5 million for 2021. There was a $1.0 million increase, or 0.2%, in Crawford Loss Adjusting revenues in 2021 as a result of acquisitions and dispositions. Revenues were positively impacted by an increase in unit volumes, measured principally by cases received, which increased revenues 7.0% in 2021 compared with 2020. Changes in product mix and in the rates charged for those services accounted for a 3.6% revenue decrease for 2021 compared with the 2020 period.

The increase in revenues in the U.S. was due to the increase in weather-related case activity in 2021 and new client growth. Based on constant foreign exchange rates, there was a decrease in revenues in the U.K. in 2021 period, compared with 2020, primarily due to the Lloyd Warwick International ("LWI") disposition in June 2020 and a change in the mix of services provided. There was a decrease in revenues in Australia due to a decrease in weather-related cases in 2021. Revenues in Canada decreased in 2021 due to the continued negative economic impact of COVID-19. There was an increase in revenues in Europe in the 2021 period due to a change in the mix of services provided. There was an increase in revenues in Rest of World in the 2021 period, primarily due to the acquisition in Chile in October 2020, partially offset by a decrease in Asia.

Reimbursed Expenses Included in Total Revenues

Reimbursements for out-of-pocket expenses incurred in our Crawford Loss Adjusting segment, which are included in total Company revenues, were $23.1 million in 2021 compared with $24.9 million in 2020. The decrease in reimbursed expenses was due to a decreased use of third parties in the 2021 period.

Case Volume Analysis

Crawford Loss Adjusting unit volumes by underlying case category, as measured by cases received, for 2021 and 2020 were as follows:

24

Overall, there was an increase in cases received of 7.0% in 2021, compared with the 2020 period. There was an increase in U.S. case volumes in 2021 due to the increase in weather-related activity and the change in the mix of services provided. The U.K. case volumes were higher in 2021 due to an increase in high-frequency, low-severity cases due to an increase in new clients. There was an increase in cases in Canada in 2021 due to an increase in high-frequency, low-severity cases, partially offset by the ongoing impact of COVID-19. There was a decrease in cases in Australia due to a reduction in weather-related case activity in the current period. There was a slight decrease in cases received in Europe in 2021 due to a change in the mix of services provided. There was an increase in cases received in the 2021 period in Rest of World primarily due to our 2020 acquisition in Chile.

As a result of the economic contraction from the COVID-19 pandemic, cases received in future periods could be materially negatively impacted, unless offset by the impact of cases received from new client programs or weather-related activity.

Direct Compensation, Fringe Benefits & Non-Employee Labor

The most significant expense in our Crawford Loss Adjusting segment is the compensation of employees, including related payroll taxes and fringe benefits, and payments to outsourced service providers that augment our staff. Crawford Loss Adjusting direct compensation, fringe benefits, and non-employee labor expense, as a percent of segment revenues before reimbursements, was 66.3% for 2021 and 61.5% for 2020. The dollar amount of these expenses increased from $269.8 million in 2020 to $315.2 million in 2021. This increase was due to the increased revenues, higher incentive compensation expense, change in foreign exchange rates, and recent acquisitions. The increase in the percentage of revenues before reimbursements was because the increase in costs to support the new client growth and increase in incentive compensation was higher than the increase in revenues. Additionally, there was a $1.7 million and $5.2 million expense benefit in 2021 and 2020, respectively, as a result of CEWS.

There was an average of 3,491 FTEs in 2021 compared with an average of 3,327 FTEs in 2020.

Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor

Crawford Loss Adjusting segment expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor increased from $127.6 million in 2020 to $137.4 million in 2021, but decreased slightly as a percent of segment revenues from 29.1% in 2020 to 28.9% in 2021. The increase in costs was due to technology investments, an increase in the allowance for credit losses, and an increase in administrative support costs in 2021. Costs were lower in 2020 due to COVID-19 cost reduction initiatives that resulted in lower travel and entertainment and other administrative expenses.

CRAWFORD TPA SOLUTIONS SEGMENT

Operating Earnings

Our Crawford TPA Solutions segment, which operates under the Broadspire brand in North America, reported operating earnings of $17.6 million, or 4.4% of revenues before reimbursements in 2021, as compared to $20.5 million, or 5.5% of revenues before reimbursements in 2020. This decrease was due to the continued negative impact of COVID-19 in Canada and Europe, partially offset by an increase in revenues in the U.S. and U.K. There was a $0.7 million expense benefit in 2021 as a result of CEWS, and a benefit of $1.6 million in 2020.

Excluding centralized indirect support costs, gross profit decreased from $76.7 million, or 20.6% of revenues before reimbursements in 2020, to $75.9 million, or 19.1% of revenues before reimbursements in 2021, due to the continued negative impact of COVID-19 in Canada and Europe, partially offset by an increase in revenues in the U.S. and U.K.

Operating results for our Crawford TPA Solutions segment, including gross profit, are as shown in the following table:

25

Revenues before Reimbursements

Crawford TPA Solutions revenues are from the global casualty and disability insurance and self-insured markets in the U.S., U.K., Canada, and Europe and Rest of World. Revenues before reimbursements by major region, based on actual exchange rates and using a constant exchange rate were as follows:

Revenues before reimbursements from our Crawford TPA Solutions totaled $398.0 million in 2021, compared with $371.4 million in 2020. This increase was primarily due to an increase in U.S. and U.K. revenues and a $18.9 million, or 5.1%, increase in revenues due to recent acquisitions. Changes in foreign exchange rates increased our Crawford TPA Solutions segment revenues by $6.8 million, or approximately 1.9%, for 2021. Absent foreign exchange rate fluctuations, Crawford TPA Solutions segment revenues would have been $391.1 million in 2021. Revenues were negatively impacted by a decrease in unit volumes, measured principally by cases received, of 2.1% in 2021 compared with 2020. Changes in product mix and in the rates charged for those services accounted for a 2.3% revenue increase for 2021 compared with 2020.

The increase in revenues in the U.S. for 2021 was due to an increase in the mix of services provided as business activity continued to improve from the impact of COVID-19 economic conditions that were present in the prior year. Based on constant foreign exchange rates, there was an increase in revenues in the U.K. in 2021 due to client case volume increases in our legal services business line. Revenues in Canada decreased in the current year as a result of continued negative COVID-19 economic conditions and the 2020 exit from a service line in that country. Revenues increased in Europe and Rest of World in 2021 primarily due to recent acquisitions in Chile and Australia which strengthened our legal services offerings in those countries, which offset declines in Europe.

Reimbursed Expenses Included in Total Revenues

Reimbursements for out-of-pocket expenses incurred in our Crawford TPA Solutions segment which are included in total Company revenue increased to $10.8 million in 2021 from $7.5 million in 2020. The increase in reimbursed expenses in the 2021 period was due to the increased revenues and increased use of third parties from the recent acquisitions.

Case Volume Analysis

Crawford TPA Solutions unit volumes, as measured by cases received, by region for 2021 and 2020 were as follows:

26

Overall case volumes were 2.1% lower in 2021 compared with 2020 due to decreases in Canada and Europe, partially offset by an increase in the U.S. and U.K. The increase in the U.S. was due to the general economic recovery and business growth in Disability. The increase in the U.K. was due to an increase in high-frequency, low-severity liability cases. The decrease in Canada was primarily due to the continued negative impact from COVID-19 and the 2020 exit from a service line in that country. The decrease in cases in Europe and Rest of World was due to a decrease in high-frequency, low-complexity cases received in Europe, partially offset by a 6,300 increase in cases from recent acquisitions.

Crawford TPA Solutions unit volumes, particularly in the U.S., are sensitive to overall employment levels and workplace reported injuries. As a result of the uncertainty from the COVID-19 pandemic in the U.S. and other geographic regions, future case referrals could be materially negatively impacted unless offset by new client programs.

Direct Compensation, Fringe Benefits & Non-Employee Labor

The most significant expense in our Crawford TPA Solutions segment is the compensation of employees, including related payroll taxes and fringe benefits, and payments to outsourced service providers that augment the functions performed by our employees. Direct compensation expenses, fringe benefits, and non-employee labor, as a percent of Crawford TPA Solutions segment revenues before reimbursements, increased from 63.1% in 2020 to 64.5% in 2021. The total dollar amount of these expenses increased from $234.2 million in 2020 to $256.8 million in 2021. This increase was due to an increase in average full-time equivalent employees related to the higher revenues and recent acquisitions. The increase in expense as a percent of revenues before reimbursements is due to increased compensation, including incentive compensation, and higher compensation expense in our legal services service line, which increased at a higher rate than revenues. There was a benefit of $0.7 million in 2021 and $1.6 million in 2020 as a result of the CEWS.

There was an average of 3,579 FTEs in this segment in 2021, an increase from an average of 3,128 FTEs in the 2020 period. The increase in employees was due to 430 FTEs from recent acquisitions and the higher revenues.

Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor

Expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor increased in the Crawford TPA Solutions segment from $116.7 million in 2020 to $123.6 million in 2021, but decreased slightly as a percent of revenues before reimbursements from 31.5% in 2020 to 31.0% in the 2021 period. The increase in amount was due to higher revenues, recent acquisitions and the change in exchange rates. The slight decrease as a percent of revenues was due to increased revenues in the U.S.

CRAWFORD PLATFORM SOLUTIONS

Operating Earnings

Crawford Platform Solutions recorded operating earnings of $36.3 million in 2021, or 15.9% of revenues before reimbursements, compared with operating earnings of $27.7 million in 2020, or 16.0% of revenues before reimbursements. The increase in operating earnings in 2021 was due to an increase in weather-related cases in our Networks service line resulting from an increase in Hurricane Ida case activity and new client growth in 2021. There was a $0.2 million expense benefit in 2021 as a result of CEWS, and a benefit of $0.3 million in 2020.

Excluding indirect support costs, gross profit increased from $43.6 million, or 25.3% of revenues before reimbursements in 2020, to $57.5 million, or 25.1% of revenues before reimbursements in 2021, as a result of the Networks revenue increase in the U.S., a change in the mix of services provided in the U.K., and the absence of client start-up expenses that were present in 2020.

Operating results for our Crawford Platform Solutions segment, including gross profit, are as shown in the following table:

27

Revenues before Reimbursements

Crawford Platform Solutions segment revenues are primarily derived from the global property and casualty insurance company markets in the U.S., U.K., Canada, Europe and Rest of World. Revenues before reimbursements by major region, based on actual exchange rates, using a constant exchange rate, were as follows:

Revenues before reimbursements from our Crawford Platform Solutions segment totaled $228.5 million in 2021, compared with $172.6 million in 2020. This increase was primarily due to an increase in Hurricane Ida case volumes in the U.S. and an increase in new client growth. Changes in foreign exchange rates resulted in an increase of our Crawford Platform Solutions segment revenues by approximately 1.1%, or $1.9 million for 2021. Excluding the change in foreign exchange rates, Crawford Platform Solutions segment revenues before reimbursements totaled $226.6 million. There was a $4.2 million increase, or 2.4%, in Crawford Platform Solutions revenues in 2021 as a result of acquisitions and dispositions.

There was an increase in segment unit volume, measured principally by cases received, of 18.9% in 2021 compared with 2020. 9.7% of this increase was due to an increase of 42,900 high-frequency, low-severity cases received in our WeGoLook service line. Excluding these WeGoLook cases, there was an increase in segment unit volume of 41,100, or 9.2% of the increase in Crawford Platform Solutions cases received. Revenues in our U.S. Crawford Platform Solutions segment include revenues from a new client and expanding services from an existing client where we provide staff augmentation for our clients, which resulted in $22.7 million of increased revenues in 2021, or a 13.2% increase in Crawford Platform Solutions revenue. The revenues from these clients do not typically result in cases received. Excluding the impact of the WeGoLook case increase, changes in product mix and in the rates charged for those services accounted for an 6.5% revenue increase for 2021 compared with 2020.

The increase in revenues in the U.S. for 2021 was due to an increase in weather-related case activity and an increase in new client growth. On a constant currency basis, there was a revenue increase in the U.K. in 2021 due to an increase in our Contractor Connection service line, driven by increased cases received and expanding new services. Revenues in Canada increased in 2021 due to an increase in new clients, partially offset by the negative impact of COVID-19. There was a revenue increase in Europe and Rest of World due to new client growth.

Reimbursed Expenses Included in Total Revenues

Reimbursements for out-of-pocket expenses incurred in our Crawford Platform Solutions were $3.3 million in 2021, increasing from $1.2 million in 2020. The increase in the 2021 period was consistent with the increase in revenues.

28

Case Volume Analysis

Crawford Platform Solutions unit volumes by geographic region, as measured by cases received, for 2021 and 2020 were as follows:

Overall case volumes were 18.9% higher in 2021 compared with 2020 due to increases in all regions. 9.7% of the increase was due to an increase of 42,900 high-frequency, low-severity cases received in our WeGoLook service line. Excluding these WeGoLook cases, there was an increase in segment unit volume of 41,100, or 9.2% in Crawford Platform Solutions cases received in 2021.

The increase in U.S. case volumes in 2021 was primarily due to an increase in Hurricane Ida case activity. A portion of the increase in revenues in the U.S. is the result of new client growth, however the revenues generated for these clients consist of us providing dedicated employees which is not measured by cases, and accordingly there is no increase in cases received to match the increase in revenues. The increase in cases in Canada is due to an increase in new clients in our Contractor Connection service line. The U.K. case volumes were higher in 2021 due to an increase in assignments to our Contractor Connection service line. Cases received in Rest of World were higher in 2021 due to new client growth.

As a result of the impact from the COVID-19 pandemic, cases received in future periods could be materially negatively impacted, unless offset by the impact of cases received from new client programs or weather-related activity.

Direct Compensation, Fringe Benefits & Non-Employee Labor

The most significant expense in our Crawford Platform Solutions segment is the compensation of employees, including related payroll taxes and fringe benefits, and payments to outsourced service providers that augment the functions performed by our employees. Crawford Platform Solutions direct compensation, fringe benefits, and non-employee labor expense, as a percent of the related revenues before reimbursements, was 65.3% in 2021 and 63.0% in 2020. The amount of these expenses increased from $108.7 million in 2020 to $149.2 million in 2021. The increase in costs was due to the higher revenues in the current year and increased employees to support new client growth. The increase in the percentage of revenues before reimbursements in the current year was due to the change in product mix and higher compensation expense to support the new client growth. There was a benefit of $0.2 million in 2021 and a benefit of $0.3 million in 2020 as a result of the CEWS.

Average FTEs in this segment totaled 1,337 in 2021, compared to an average of 1,086 FTEs in 2020.

Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor

Crawford Platform Solutions segment expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor decreased as a percent of segment revenues before reimbursements from $36.3 million, or 21.0% of revenues before reimbursements in 2020, to $42.9 million, or 18.8% of revenues before reimbursements in 2021. The increase in overall expenses was due to the increased revenues. The decrease in the expense as a percent of revenues before reimbursements in 2021 is due to the higher revenues and a decrease in administrative support costs.

29

YEAR ENDED DECEMBER 31, 2020 COMPARED WITH YEAR ENDED DECEMBER 31, 2019

CRAWFORD LOSS ADJUSTING SEGMENT

Operating Earnings

Our Crawford Loss Adjusting segment reported operating earnings of $41.1 million, or 9.4% of revenues before reimbursements in 2020, as compared with $30.1 million, or 6.6% of revenues before reimbursements in 2019. Operating earnings increased from 2019 to 2020 primarily due to an increase in weather-related cases and new client growth in the U.S. and a reduction in administrative support expenses, partially offset by the negative economic impact of COVID-19. There was a $5.2 million expense benefit in 2020 as a result of the CEWS.

Excluding centralized indirect support costs, gross profit increased from $116.8 million, or 25.5% of revenues before reimbursements in 2019, to $118.9 million, or 27.1% of revenues before reimbursements in 2020, due primarily to cost reduction initiatives in 2020.

Operating results for our Crawford Loss Adjusting segment, including gross profit, are as shown in the following table:

Revenues before Reimbursements

Crawford Loss Adjusting revenues before reimbursements by major region, based on actual exchange rates and using a constant exchange rate were as follows:

Revenues before reimbursements from our Crawford Loss Adjusting segment totaled $438.5 million in 2020 compared with $457.5 million in 2019. This decrease was primarily due to the negative economic impacts of the COVID-19 pandemic. Changes in foreign exchange rates resulted in a decrease of our Crawford Loss Adjusting segment revenues by approximately 1.0%, or $4.5 million for 2020. Absent foreign exchange rate fluctuations, Crawford Claims Solutions segment revenues would have been $443.0 million for 2020. Revenues were negatively impacted by a decrease in unit volumes, measured principally by cases received, which decreased revenues 4.8% in 2020 compared with 2019. Changes in product mix and in the rates charged for those services accounted for a 1.6% revenue increase for 2020 compared with the 2019 period.

30

There was a decrease in revenues in the U.S. for 2020 due to the negative economic impact of COVID-19 pandemic, partially offset by an increase in in weather-related activity. Based on constant foreign exchange rates, there was a slight increase in revenues in the U.K. for 2020 compared with 2019 due to an increase in new clients and expanding new services. Revenues in Canada decreased in 2020 compared with the 2019 period due to the impact of COVID-19. There was a revenue increase in Australia due to an increase in weather-related case activity in 2020. The increase in revenues in Europe was also due to an increase in weather-related activity. The decrease in revenues in Rest of World for 2020 compared with 2019 was due to a reduction in weather-related case activity in Asia and Latin America.

Reimbursed Expenses Included in Total Revenues

Reimbursements for out-of-pocket expenses incurred in our Crawford Loss Adjusting segment, which are included in total Company revenues, were $24.9 million in 2020 compared to $28.9 million in 2019. The 2020 decrease was due to the decreased revenues and the 2020 disposal of LWI.

Case Volume Analysis

Crawford Loss Adjusting unit volumes by underlying case category, as measured by cases received, for 2020 and 2019 were as follows:

Overall, there was a 4.8% decrease in cases received in the Crawford Loss Adjusting segment in 2020 compared to 2019. The decrease in U.S. case volumes was due to lower weather-related activity and a change in the mix of cases received in 2020. The U.K. case volumes were higher in the 2020 period due to a change in the mix of services provided. There was a reduction in cases in Canada in 2020 due to the negative impact of COVID-19. The increase in cases in Australia was due to an increase in weather-related case activity in 2020. There was an increase in cases received in Europe due to increased high-frequency, low-complexity property cases. The decrease in cases in Rest of World was due to a decline in high-frequency, low-complexity property cases in Asia and a reduction in weather-related case activity in Latin America.

Direct Compensation, Fringe Benefits & Non-Employee Labor

The most significant expense in our Crawford Loss Adjusting segment is the compensation of employees, including related payroll taxes and fringe benefits, and payments to outsourced service providers that augment our staff. Crawford Loss Adjusting direct compensation, fringe benefits, and non-employee labor expense, as a percent of segment revenues before reimbursements, was 61.5% for 2020 and 62.3% for 2019. The decrease was primarily due to improved staff utilization in 2020.

The dollar amount of these expenses decreased from $284.9 million in 2019 to $269.8 million in 2020. There was an average of 3,327 FTEs in 2020 compared with an average of 3,429 FTEs in 2019. The decrease in expenses and FTEs in 2020 was primarily due to the reduction in employees related to the lower revenues in the current period resulting from the pandemic. There was a $5.2 million expense benefit in 2020 as a result of the CEWS.

Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor

Crawford Loss Adjusting segment expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor decreased from $142.5 million in 2019 to $127.6 million in 2020, and decreased as a percent of segment revenues from 31.1% in 2019 to 29.1% in 2020. The decrease in expenses was due to the decline in revenues and the change in foreign exchange rates. The decrease in expense as a percent of revenues was due to cost reduction initiatives that resulted in lower travel and entertainment expense and lower administrative support costs in the 2020 period.

31

CRAWFORD TPA SOLUTIONS

Operating Earnings

Our Crawford TPA Solutions segment reported operating earnings of $20.5 million, or 5.5% of revenues before reimbursements in 2020, as compared with $28.5 million, or 7.2% of revenues before reimbursements in 2019. The decrease in operating earnings for the 2020 period was due to lower revenues resulting from the negative economic impact of COVID-19 in the U.S. and Canada, partly offset by lower administrative costs. There was a $1.6 million benefit in 2020 as a result of the CEWS.

Excluding centralized indirect support costs, gross profit decreased from $89.3 million, or 22.5% of revenues before reimbursements in 2019, to $76.7 million, or 20.6% of revenues before reimbursements in 2020, due primarily to the revenue decline.

Operating results for our Crawford TPA Solutions segment, including gross profit, are as shown in the following table:

Revenues before Reimbursements

Crawford TPA Solutions revenues before reimbursements by major region, based on actual exchange rates and using a constant exchange rate were as follows:

Revenues before reimbursements from our Crawford TPA Solutions totaled $371.4 million in 2020, compared with $397.6 million in 2019. Changes in foreign exchange rates decreased our Crawford TPA Solutions segment revenues by $1.2 million, or approximately 0.3%, for 2020. Absent foreign exchange rate fluctuations, Crawford TPA Solutions segment revenues would have been $372.6 million in 2020. Revenues were negatively impacted by a decrease in unit volumes, measured principally by cases received, of 5.3% in 2020 compared with 2019. Changes in product mix and in the rates charged for those services accounted for a 1.0% revenue decrease for 2020 compared with the 2019 period.

The decrease in revenues in the U.S. for 2020 was due to a decrease in case volumes as a result of COVID-19 economic conditions and a reduction in Medical Management utilization. Based on constant foreign exchange rates, there was a slight increase in revenues in the U.K. for 2020 due to a change in the mix of services provided. Revenues in Canada decreased due to a decrease in case volumes as a result of COVID-19 economic conditions. Revenues increased in Europe and Rest of World due to the 2020 fourth quarter acquisition in Chile, partially offset by a change in the mix of services provided in Europe.

32

Reimbursed Expenses Included in Total Revenues

Reimbursements for out-of-pocket expenses incurred in our Crawford TPA Solutions segment which are included in total Company revenues decreased to $7.5 million in 2020 from $11.8 million in 2019. This was due the decrease in revenues in the 2020 period.

Case Volume Analysis

Crawford TPA Solutions unit volumes, as measured by cases received, by region for 2020 and 2019 were as follows:

Overall case volumes were 5.3% lower in 2020 compared with 2019 due to decrease in the U.S., Canada and Europe. The reduction in cases in the U.S. was primarily driven by COVID-19 economic conditions that affected Claims Management, Medical Management, and Accident & Health case volumes. There was an increase in the U.K. due to an increase in high-frequency, low-severity cases from new clients. Canada case volumes were negatively impacted by COVID-19. The decrease in cases in Europe and Rest of World was due to a decrease in high-frequency, low-complexity cases received in Europe.

Direct Compensation, Fringe Benefits & Non-Employee Labor

The most significant expense in our Crawford TPA Solutions segment is the compensation of employees, including related payroll taxes and fringe benefits, and payments to outsourced service providers that augment the functions performed by our employees. Direct compensation expenses, fringe benefits, and non-employee labor, as a percent of Crawford TPA Solutions segment revenues before reimbursements, increased from 62.1% in 2019 to 63.1% in 2020. The U.S. dollar amount of these expenses decreased from $246.9 million in 2019 to $234.2 million in 2020. This reduction in the amount was due to the decline in revenues in 2020. The increase in expense as a percent of revenues before reimbursements is because the decrease in expense did not offset the decrease in revenues. There was a $1.6 million benefit in 2020 as a result of the CEWS.

There was an average of 3,128 FTEs in this segment in 2020, a decrease from an average of 3,156 FTEs in the 2019 period. The decrease in employees was due to cost reduction initiatives in light of the decrease in revenues.

Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor

Expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor decreased in the Crawford TPA Solutions segment from $122.2 million in 2019 to $116.7 million in 2020, but increased as a percent of revenues before reimbursements from 30.8% in 2019 to 31.5% in the 2020 period. The decrease in amount was due to lower revenues and expense controls implemented in 2020, but the increase as a percent of revenues was due to the lower revenues.

CRAWFORD PLATFORM SOLUTIONS

Operating Earnings

Crawford Platform Solutions recorded operating earnings of $27.7 million in 2020, or 16.0% of revenues before reimbursements, compared with operating earnings of $26.7 million in 2019, or 17.7% of revenues before reimbursements. The increase in operating earnings in 2020 was due to the increase in revenues in the U.S. There was a benefit of $0.3 million in 2020 as a result of the CEWS.

Excluding indirect support costs, gross profit increased from $41.9 million, or 27.8% of revenues before reimbursements in 2019, to $43.6 million, but decreased as a percent of revenues before reimbursements in 2020 to 25.3%, due primarily to start-up expenses to support new client growth in 2020.

33

Operating results for our Crawford Platform Solutions segment, including gross profit, are as shown in the following table:

Revenues before Reimbursements

Crawford Platform Solutions segment revenues before reimbursements by major region, based on actual exchange rates, using a constant exchange rate, were as follows:

Crawford Platform Solutions segment revenues before reimbursements increased 14.5% to $172.6 million in 2020 compared with $150.7 million in 2019. Changes in foreign exchange rates resulted in a slight decrease of our Crawford Platform Solutions segment revenues by approximately 0.1% for 2020.

Excluding the change in foreign exchange rates, Crawford Platform Solutions segment revenues before reimbursements increased by $21.9 million, or 14.6%, compared with 2019, primarily due to an increase in the U.S. due to to increased weather-related activity and new client growth. Revenues in our U.S. Crawford Platform Solutions segment include revenues from a new client and expanding services from an existing client where we provide staff augmentation for the client, which resulted in $20.9 million of increased revenues in 2020, or a 13.9% increase in Crawford Platform Solutions revenue. The revenues from this client does not typically result in cases received.

Overall case volumes were 5.3% higher for 2020 compared with 2019. Changes in product mix and in the rates charged for those services accounted for a 0.8% revenue increase for 2020 compared with 2019.

The increase in revenues in the U.S. in 2020, compared with 2019, was due to increased weather-related activity and new client growth. On a constant dollar basis, there was a revenue increase in the U.K. in the 2020 period due to an increase in our Contractor Connection service line. Revenues in Canada decreased in 2020 compared with 2019 due to the negative impact of COVID-19. There was a revenue decrease in Europe and Rest of World due to a reduction in high frequency, low severity cases in 2020.

Reimbursed Expenses Included in Total Revenues

Reimbursements for out-of-pocket expenses incurred in our Crawford Platform Solutions segment were $1.2 million in 2020, increasing from $1.1 million in 2019, due to the increase in revenues.

34

Case Volume Analysis

Crawford Platform Solutions unit volumes by geographic region, as measured by cases received, for 2020 and 2019 were as follows:

Overall, there was an 5.3% increase in cases received in 2020 compared with 2019. This increase was due to an increase of 23,000 high-frequency, low-severity cases received in our WeGoLook service line. Excluding these WeGoLook cases, there was a slight decrease in segment unit volume of 600, or 0.1% in Crawford Platform Solutions cases received in 2021.

The increase in U.S. case volumes in 2020 was due to an increase in weather-related cases and new client growth. A portion of the increase in revenues in the U.S. is the result of new client growth, however the revenues generated for these clients consist of us providing dedicated employees which is not measured by cases, and accordingly there is no increase in cases received to match the increase in revenues. The U.K. case volumes were higher in the 2020 period due to an increase in our Contractor Connection service line. The decrease in Canada was due to the negative impact of COVID-19 in that country. The decrease in Europe and Rest of World was due to a change in the mix of services provided in Europe and Asia.

Direct Compensation, Fringe Benefits & Non-Employee Labor

The most significant expense in our Crawford Platform Solutions segment is the compensation of employees, including related payroll taxes and fringe benefits, and payments to outsourced service providers that augment the functions performed by our employees. Crawford Platform Solutions direct compensation, fringe benefits, and non-employee labor expense, as a percent of the related revenues before reimbursements, increased from 59.1% in 2019 to 63.0% in 2020. The amount of these expenses increased from $89.1 million in 2019 to $108.7 million in 2020. This increase was due to an increase in staff and compensation expense to support client growth. There was a benefit of $0.3 million in 2020 as a result of the CEWS. Average FTEs in this segment totaled 1,086 in 2020, compared to an average of 1,048 FTEs in 2019.

Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor

Crawford Platform Solutions segment expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor increased from $34.9 million in 2019 to $36.3 million in 2020, although decreased as a percent of segment revenues before reimbursements from 23.2% in 2019 to 21.0% in 2020. The increase in the amount was due to increased office expenses and technology investments related to new client growth, but the decrease in the percent of revenues before reimbursements was due to the increase in revenues.

35

EXPENSES AND CREDITS EXCLUDED FROM SEGMENT OPERATING EARNINGS

Income Taxes

Our consolidated effective income tax rate for financial reporting purposes may change periodically due to changes in enacted tax rates, changes in tax law, fluctuations in the mix of income earned from our various domestic and international operations, which are subject to income taxes at different rates, our ability to utilize loss and tax credit carryforwards, and amounts related to uncertain income tax positions. Income tax provisions totaled $13.3 million, $12.0 million, and $14.1 million for 2021, 2020, and 2019, respectively. Our effective tax rate for financial reporting purposes was 30.4%, 30.7%, and 59.7% for 2021, 2020, and 2019, respectively. The Company's effective income tax rate in 2021 was impacted by enacted foreign tax rate changes, change in valuation allowances for certain jurisdictions, and deferred taxes attributable to certain undistributed foreign earnings that are no longer permanently reinvested. The Company's effective income tax rate in 2020 was impacted by goodwill impairment, disposals and liquidations of businesses, and deferred taxes attributable to certain undistributed foreign earnings that are no longer permanently reinvested. The Company's effective income tax rate in 2019 was impacted by goodwill impairment, arbitration and claim settlements, and valuation allowances established on certain state net operating loss carryforwards and foreign tax credits. Based on our 2022 operating plans, we anticipate our effective tax rate for financial reporting purposes in 2022 to be in the 29% to 31% range before considering any discrete items and assuming no material changes to tax law and policy in the material jurisdictions in which we operate.

Net Corporate Interest Expense

Net corporate interest expense consists of interest expense that we incur on our short- and long-term borrowings, partially offset by interest income we earn on available cash balances and short-term investments. These amounts vary based on interest rates, borrowings outstanding, and the amounts of invested cash. Corporate interest expense totaled $7.0 million, $8.2 million, and $11.5 million for 2021, 2020, and 2019, respectively. Corporate interest income totaled $0.4 million, $0.3 million, and $0.7 million in 2021, 2020, and 2019, respectively. We pay interest on borrowings under our Credit Facility based on variable rates. Our level of interest expense is dependent on the future direction of interest rates as well as the level of outstanding borrowings relative to prior periods. The weighted average interest rates under our Credit Facility were 2.2%, 2.8%, and 4.0% for the years ending December 31, 2021, 2020, and 2019, respectively.

Stock Option Expense

Stock option expense, a component of stock-based compensation, is comprised of non-cash expenses related to stock options granted under our various stock option and employee stock purchase plans. Stock option expense is not allocated to our operating segments. Stock option expense of $1.1 million, $1.1 million and $1.9 million was recognized during 2021, 2020, and 2019, respectively. Other stock-based compensation expense related to our Executive Stock Bonus Plan and our Omnibus Stock and Incentive Plan (pursuant to which we have authority to grant performance shares and restricted shares) is charged to our operating segments and included in the determination of segment operating earnings or loss.

Amortization of Customer-Relationship Intangible Assets

Amortization of customer-relationship intangible assets represents the non-cash amortization expense for finite-lived customer-relationship and trade name intangible assets. Amortization expense associated with these intangible assets totaled $11.0 million, $11.7 million, and $11.3 million in 2021, 2020, and 2019, respectively. This amortization is included in "Selling, general and administrative expenses" in our Consolidated Statements of Operations.

Unallocated Corporate and Shared Costs, Net

Certain unallocated costs and credits are excluded from the determination of segment operating earnings. These unallocated corporate and shared costs and credits represent costs of our frozen U.S. defined benefit pension plan, expenses for our chief executive officer and our Board of Directors, certain adjustments to our self-insured liabilities, certain unallocated professional fees, and certain adjustments and recoveries to our allowances for doubtful accounts receivable. From time to time, we evaluate which corporate costs and credits are appropriately allocated to one or more of our operating segments. If changes are made to our allocation methodology, prior period allocations are revised to conform to our then-current allocation methodology.

Unallocated corporate and shared costs and credits were $14.4 million, $17.4 million, and $7.7 million in 2021, 2020, and 2019, respectively. The decrease for 2021 was due to a $2.3 million decrease in self-insurance and related legal costs, $5.0 million in severance and other transition costs in 2020 that were not present in 2021, and a $2.7 million decrease in pension expense, partially offset by a $3.6 million lower credit from the CEWS, and a $3.4 million increase in other unallocated costs.

36

The increase in costs in 2020 compared with 2019 was due to a $4.4 million increase in self-insurance and related legal costs, severance and other transition costs totaling $5.0 million, a $3.6 million increase in incentive compensation, and a $3.5 million increase in professional fees and other unallocated expenses, partially offset by a $6.8 million credit from the CEWS.

Goodwill and Intangible Asset Impairments

We recognized a pretax non-cash goodwill impairment in 2020 totaling $17.7 million related to our former Crawford Claims Solutions reporting unit. This expense was partially offset by a $1.8 million reduction in income tax expense and $1.7 million credit in noncontrolling interest expense. We also recognized a non-cash goodwill impairment in 2019 totaling $17.5 million related to our former Crawford Claims Solutions reporting unit, which was partially offset by a $2.2 million reduction in income tax expense and $2.2 million credit in noncontrolling interest expense. There was no goodwill impairment in 2021. See the "Critical Accounting Policies" in Item 7 and Note 4, "Goodwill and Intangible Assets" of our accompanying consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further discussion about goodwill impairments.

Restructuring and Other Costs, Net

We recognized pretax restructuring and other costs totaling $8.1 million in 2020, related primarily to severance and other termination costs in an effort to consolidate and streamline various functions of our workforce. The restructuring and other costs are comprised of $9.4 million in severance expense and related payroll taxes, $2.5 million in asset impairment and lease termination costs, partially offset by a $1.1 million gain from fair value remeasurement of cost and equity method investments, a $1.2 million liquidation dividend from a cost method investment, and a $1.4 million gain from the sale of IP addresses. There were no restructuring costs in 2021 or 2019. See Note 16, "Restructuring and Other Costs, Net" of our accompanying consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further discussion about the restructuring and other costs.

Gain on Disposition of Businesses, Net

During 2020, we recognized a pretax gain on disposal totaling $13.8 million related to the disposal of the LWI business in our former Crawford Claims Solution reporting unit, net of a loss on the disposal of Crawford Compliance. The gain on disposal is presented in the Consolidated Statements of Operations as a separate item "Gain on disposition of businesses, net". There was no gain on disposal of businesses in 2021 or 2019. See Note 3, “Business Acquisitions and Dispositions” of our accompanying consolidated financial statements for further discussion about these transactions.

Arbitration and Claim Settlements

In 2019 we recognized $12.6 million for an arbitration settlement related to additional payments awarded to former executives of our former Garden City Group related to their departure in 2015. There are no other potential claimants related to this matter. This pretax expense is presented in the Consolidated Statements of Operations as a separate charge "Arbitration and claim settlements."

Liquidity, Capital Resources, and Financial Condition

We fund our working capital requirements, capital expenditures, share repurchases, and acquisitions from net cash provided by operating activities and borrowings under bank credit facilities.

On November 5, 2021, the Company and certain of its subsidiaries (Crawford & Company Risk Services Investments Limited (the "UK Borrower"), Crawford & Company (Canada) Inc. (the "Canadian Borrower") and Crawford & Company (Australia) Pty. Ltd, (the "Australian Borrower"), collectively known with the Company, as the "Borrowers") entered into a Credit Facility (the " Credit Facility"), which replaced our prior credit agreement, dated as of December 8, 2011, as subsequently amended.

The Credit Facility consists of a $450.0 million revolving credit facility, with a letter of credit subcommitment of $125.0 million. The Credit Facility contains sublimits of $250.0 million for borrowings by the UK Borrower, $125.0 million for borrowings by the Canadian Borrower, and $75.0 million for borrowings by the Australian Borrower. The Credit Facility matures, and all amounts outstanding thereunder, will be due and payable on November 5, 2026.

37

Borrowings under the Credit Facility may be made in U.S. dollars, Euros, the currencies of Canada, Japan, Australia or United Kingdom and, subject to the terms of the Credit Facility, other currencies. Borrowings under the Credit Facility bear interest, at the option of the applicable Borrower, based on the Base Rate (as defined below) or a Eurocurrency Rate or an alternative reference rate, in each case plus an applicable interest margin based on the Company's leverage ratio (as defined below), provided that borrowings in foreign currencies may be at an alternative reference rate. The Credit Facility defines Benchmark Replacement to encompass accepted alternative reference rates when the London Interbank Offered Rate ("LIBOR") is no longer quoted. The Credit Facility defines alternative reference rates for non-U.S. Dollar currencies as Alternative Currency Term Rates or Alternative Currency Daily Rates. The interest margin for Eurocurrency Rate or alternative reference rate loans ranges from 1.00% to 1.625% and for Base Rate loans ranges from 0.00% to 0.625%. Base Rate is defined as the highest of (a) the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 0.50%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate” and (c) the Eurocurrency rate plus 1.00%, subject to interest rate floors, with a minimum rate of zero. The weighted average interest rates under our Credit Facility were 2.2%, 2.8%, and 4.0% for the years ending December 31, 2021, 2020, and 2019, respectively.

At December 31, 2021, a total of $175.0 million of short-term and long-term debt was outstanding, and there was an undrawn amount of $11.3 million under the letters of credit subcommitment of the Credit Facility. These letter of credit commitments were for the Company's own obligations. Including the amounts committed under the letters of credit subcommitment, the available borrowing capacity under the Credit Facility totaled $260.2 million at December 31, 2021.

The obligations of the Borrowers under the Credit Facility are guaranteed by each existing material domestic subsidiary of the Company, certain other domestic subsidiaries of the Company and certain existing material foreign subsidiaries of the Company that are disregarded entities for U.S. income tax purposes (each such foreign subsidiary, a "Disregarded Foreign Subsidiary"), and such obligations are required to be guaranteed by each subsequently acquired or formed material domestic subsidiary and Disregarded Foreign Subsidiary (each, a "Guarantor"), and the obligations of the Borrowers other than the Company ("Foreign Borrowers") for which the Company is not the primary obligor are also guaranteed by the Company. In addition, (i) the Borrowers’ obligations under the Credit Facility are secured by a first priority lien (subject to liens permitted by the Credit Facility) on substantially all of the personal property of the Company and the Guarantors as set forth in the Security and Pledge Agreement and (ii) the obligations of the Foreign Borrowers are secured by a first priority lien on 100% of the capital stock of the Foreign Borrowers.

The representations, covenants and events of default in the Credit Facility are customary for financing transactions of this nature, including required compliance with a minimum fixed charge coverage ratio and a maximum interest coverage ratio (each as defined below).

We have two principal financial covenants in our Credit Facility. The consolidated leverage ratio, defined as the ratio of (i) consolidated total funded debt minus unrestricted cash to (ii) consolidated EBITDA, must not be greater 4.50 to 1.00 at the end of each fiscal quarter. Also, the consolidated interest coverage ratio, defined as the ratio of (a) consolidated EBITDA to (b) consolidated interest expense, must not be less than 2.50 to 1.00 for the four-quarter period ending at the end of each fiscal quarter.

At December 31, 2021, the Company was in compliance with the financial covenants under the Credit Facility. Our leverage ratio was 1.66 and 1.11 as of December 31, 2021 and December 31, 2020, respectively, and our interest coverage ratio was 15.01 as of December 31, 2021. Interest coverage ratio was not a financial covenant under our previous credit facility in place at December 31, 2020. If the Company does not meet the covenant requirements in the future, it would be in default under the Credit Facility. Upon the occurrence of an event of default, the lenders may terminate the loan commitments, accelerate all loans and exercise any of their rights under the Credit Facility and ancillary documents.

We are not aware of any additional restrictions placed on us, or being considered to be placed on us, related to our ability to access capital, such as borrowings under the Credit Facility. We do not rely on repurchase agreements or the commercial paper market to meet our short-term or long-term funding needs. For additional information on the key covenants contained in our Credit Facility, see "Other Matters Concerning Liquidity and Capital Resources" below.

We continue the ongoing monitoring of our customers' ability to pay us for the services that we provide to them. Based on historical results, we currently believe there is a low likelihood that write-offs of our existing accounts receivable will have a material impact on our financial results. However, if one or more of our key customers files bankruptcy or otherwise becomes unable to make required payments to us, or if overall economic conditions deteriorate, we may need to make material provisions in the future to increase our allowance for accounts receivable.

38

The operations of each of our reporting segments expose us to a number of risks, including foreign currency exchange rate changes that can impact translations of foreign-denominated assets and liabilities into U.S. dollars and future earnings and cash flows from transactions denominated in different currencies, as well as the risk of changes in tax rates or tariffs on earnings or services provided outside the U.S. Changes in the relative values of non-U.S. currencies to the U.S. dollar affect our financial results. Decreases in the value of the U.S. dollar compared with the other functional currencies in certain of the locations in which we do business positively impacted our revenues and operating earnings in 2021, but a stronger U.S. dollar negatively impacted revenues and operating earnings in 2020 and 2019. We cannot predict the impact that foreign currency exchange rates may have on our future revenues or operating earnings.

At December 31, 2021, our working capital balance (current assets less current liabilities) was approximately $42.1 million, compared with $59.2 million at December 31, 2020. The decrease in working capital was primarily due to a deferred payment on our recent Praxis acquisition, an increase in short term borrowings, and increased accrued incentive compensation, offset by increases in cash, accounts receivable, and unbilled revenues. Cash and cash equivalents at the end of 2021 totaled $53.2 million, compared with $44.7 million at the end of 2020.

Cash and cash equivalents, excluding restricted cash, as of December 31, 2021 consisted of $19.0 million held in the U.S. and $34.2 million held in our foreign subsidiaries. All of the cash and cash equivalents held by our foreign subsidiaries is available for general corporate purposes. The Company generally does not provide for additional U.S. and foreign income taxes on undistributed earnings of foreign subsidiaries because they are considered to be indefinitely reinvested. During 2021 and 2020, the Company changed its permanent reinvestment assertion on a portion of prior year undistributed earnings for certain foreign operations and accrued deferred taxes attributable to these earnings. The remaining historical earnings and future foreign earnings are expected to remain permanently reinvested and will be used to provide working capital for these operations, fund defined benefit pension plan obligations, repay non-U.S. debt, and fund capital improvements and future acquisitions.

However, if at a future date or time funds that remain permanently reinvested are necessary for our operations in the U.S. or we otherwise believe it is in our best interests to repatriate all or a portion of such funds, we may be required to accrue and pay taxes to repatriate these funds. No assurances can be provided as to the amount or timing thereof, the tax consequences related thereto, or the ultimate impact any such action may have on our results of operations or financial condition. We have estimated that we have book over tax basis differences of approximately $90.3 million. Due to withholding tax, basis computations, and other related tax considerations, it is not practicable to estimate any taxes to be provided on outside basis differences at this time.

Cash Provided by Operating Activities

Cash provided by operating activities totaled $54.3 million in 2021 compared to $93.2 million in 2020. The $38.9 million decrease in cash provided by operating activities was primarily due to an increase in the change in billed and unbilled accounts receivable of $16.8 million, $12.7 million higher income tax payments, $19.5 million payroll tax payments previously deferred under the CARES Act, and higher CEWS in the prior year. In 2020, we deferred payroll tax filings of $13.0 million as allowed by the CARES Act, and in 2021 we paid $6.5 million of that deferred total. We have received a cash inflow of $7.9 million related to the CEWS in 2021, compared to $11.8 million in 2020. Interest payments were $5.6 million in 2021, and tax payments, net of refunds, were $24.9 million in 2021.

Cash provided by operating activities increased by $18.0 million in 2020, from $75.2 million in 2019 to $93.2 million in 2020. This increase in cash provided by operating activities was primarily due to deferred payroll tax filings in the U.S. and the CEWS in 2020, compared with the same period of 2019. We have deferred payroll tax filings of $13.0 million as allowed by the CARES Act, which will be paid in 2021 and 2022. We received a cash inflow of $11.8 million related to the CEWS in the 2020 period. Interest payments on our debt were $7.2 million in 2020, and tax payments, net of refunds, were $12.2 million in 2020.

Cash Used in Investing Activities

Cash used in investing activities, primarily for acquisitions, capital expenditures and capitalized software, increased by $43.8 million in 2020, from $27.0 million in 2020 to $70.8 million in 2021. In 2021, we acquired HBA Group for $3.8 million, edjuster for $19.0 million, Praxis for $22.2 million and BosBoon for $2.1 million, each amount net of cash acquired. In 2020, we made an acquisition in Chile for $10.0 million and also sold LWI for $20.3 million in proceeds. These transactions are discussed in Note 3, "Business Acquisitions and Dispositions" included in Item 8 of this Annual Report on Form 10-K. These increases in cash used for 2021 were partially offset by the settlement of certain company-owned life insurance policies of $6.5 million and a $6.4 million decrease in capital expenditures. In 2021, cash used to acquire property and equipment and capitalized software, including capitalization of costs for internally developed software, was $31.0 million compared with $37.4 million in 2020. We forecast that our property and equipment additions in 2022, including capitalized software, will approximate $30 to $35 million.

39

Cash used in investing activities, primarily for acquisitions of property and equipment and capitalized software, increased by $3.6 million in 2020, from $23.4 million in 2019 to $27.0 million in 2020. The increase in cash used for 2020 was due to an increase in capital expenditures in 2020 to support initiatives in our operating segments and $10.0 million for the Chile acquisition, partially offset by proceeds of $20.3 million from the sale of LWI. Cash used to acquire property and equipment and capitalized software, including capitalization of costs for internally developed software, was $37.4 million in 2020 compared with $21.1 million in 2019.

Cash Provided by (Used in) Financing Activities

Cash provided by financing activities was $24.7 million in 2021, compared with cash used of $74.4 million in 2020. In 2021, we borrowed $113.3 million in short-term borrowings for capital expenditures, share repurchases, and acquisitions and we repaid a total of $52.3 million. The increase in net borrowings in 2021 was primarily due to our increased acquisition activity. We used cash to pay cash dividends totaling $12.7 million in 2021, we repurchased shares of $19.1 million, we incurred $2.3 million in capitalized costs related to our Credit Facility, and we received shares of CRD-A stock that were surrendered by employees to settle $1.4 million of withholding taxes owed on the issuance of restricted and performance shares.

Cash used in financing activities was $74.4 million in 2020, compared with $53.4 million used in 2019. In 2020, we borrowed $108.1 million in short-term borrowings for working capital needs and we repaid a total of $169.7 million. The decrease in borrowings in 2020 was primarily due to proceeds from the LWI disposition and the increase in operating cash flow used to repay borrowings. We used cash to pay cash dividends totaling $9.6 million in 2020, we repurchased shares of $2.7 million, and we received shares of CRD-A stock that were surrendered by employees to settle $0.5 million of withholding taxes owed on the issuance of restricted and performance shares.

Other Matters Concerning Liquidity and Capital Resources

Our short-term debt obligations typically peak during the first quarter of each year due to the payment of incentive compensation awards, contributions to retirement plans, and certain other recurring payments, and generally decline during the balance of the year. However, certain events, such as the COVID-19 pandemic, could impact the level and timing of our short-term debt obligations in the future. Our maximum month-end short-term debt obligations were $16.5 million and $39.9 million in 2021 and 2020, respectively. Our average month-end short-term debt obligations were $7.8 million and $28.0 million in 2021 and 2020, respectively. The outstanding balance of our short-term borrowings, excluding outstanding but undrawn letters of credit under our Credit Facility, was $10.7 million and $1.8 million at December 31, 2021 and 2020, respectively. The balance in short-term borrowings at December 31, 2021 primarily represents amounts under our revolving Credit Facility that we expect, but are not required, to repay in the next twelve months. We have historically used the proceeds from our long-term borrowings to finance, among other things, business acquisitions.

Our liquidity is defined as cash on hand and borrowing capacity based on our trailing twelve month EBITDA, as defined under our Credit Facility. Excluding restricted cash, at December 31, 2021, we had $53.2 million of cash on hand and, based on trailing twelve month EBITDA, additional borrowing capacity of $260.2 million, resulting in total liquidity of $313.5 million at December 31, 2021. In response to the COVID-19 pandemic, during 2020 we took a number of steps to enhance our liquidity including temporarily reducing our planned capital expenditures, pausing our discretionary U.S. defined benefit pension plan contributions until later in the year, suspending share repurchases under our 10b5-1 repurchase plan, and adjusting our employment levels through furloughs and reductions in force. None of these actions were taken in 2021. We have not applied for governmental loans to support the Company’s operations but took advantage of certain aspects of the CARES Act such as the deferral of payroll tax deposits during 2020. In addition, there are numerous international legislative responses that we have evaluated, such as the Canadian Emergency Wage Subsidy program where we have received a benefit during 2020 and 2021, among other enactments.

Based on our financial plans, we expect to be able to remain in compliance with all required covenants throughout 2022. Our compliance with the consolidated total leverage ratio and consolidated interest coverage ratio is particularly sensitive to changes in our EBITDA, and if our financial plans for 2022 or other future periods do not meet our current projections, we could fail to remain in compliance with these financial covenants in our Credit Facility.

Our compliance with the consolidated total leverage ratio covenant is also sensitive to changes in our level of consolidated total funded debt, as defined in our Credit Facility. In addition to short- and long-term borrowings, capital leases, and bank overdrafts, among other things, consolidated total funded debt includes letters of credit, the need for which can fluctuate based on our business requirements. An increase in borrowings under our Credit Facility could negatively impact our leverage ratio, unless those increased borrowings are offset by a corresponding increase in our EBITDA. In addition, a reduction in EBITDA in the future could limit our ability to utilize available credit under the Credit Facility, which could negatively impact our ability to fund our current operations or make needed capital investments.

40

Our compliance with the consolidated interest ratio covenant, which measures our ability to pay interest expense is also sensitive to the level of debt outstanding and interest rates. A decrease in EBITDA could negatively impact our interest coverage ratio, as could increases in our interest expense. If we do not manage those items carefully, we could be in default under the Credit Facility, which would negatively impact our ability to fund our current operations or make needed capital investments.

We believe our current financial resources, together with funds generated from operations and existing and potential borrowing capabilities, will be sufficient to maintain our current operations for the next 12 months.

Material Cash Commitments

As of December 31, 2021, the impact that our material cash commitments, including estimated interest payments, are expected to have on our liquidity and cash flow in future periods is as follows:

(Note references in the following table refer to the note in the accompanying consolidated financial statements in Item 8 of this Annual Report on Form 10-K).

(1)
Assumes principal amounts are repaid at maturity and not refinanced.

Borrowings under our Credit Facility bear interest at a variable rate, based on a Eurocurrency Rate, an alternative reference rate or a Base Rate, in either case plus an applicable margin. The Credit Facility defines Benchmark Replacement to encompass accepted alternative reference rates when the LIBOR rate is no longer quoted. Long-term debt refers to the required principal repayment at maturity of the Credit Facility, and may differ significantly from estimates, due to, among other things, actual amounts outstanding at maturity or any refinancings prior to such date. Interest amounts are based on projected borrowings under our Credit Facility and interest rates in effect on December 31, 2021, and the actual interest payments may differ significantly from estimates due to, among other things, changes in outstanding borrowings and prevailing interest rates in the future.

At December 31, 2021, we had approximately $3.8 million of unrecognized income tax benefits related to uncertain tax positions. We cannot reasonably estimate when all of these unrecognized income tax benefits may be settled. We do not expect material reductions to unrecognized income tax benefits within the next 12 months.

Gross deferred income tax liabilities as of December 31, 2021 were approximately $62.3 million. This amount is not included in the contractual obligations table because we believe this presentation would not be meaningful. Deferred income tax liabilities are calculated based on temporary differences between the tax basis of assets and liabilities and their respective book basis, which will result in taxable amounts in future years when the liabilities are settled at their reported financial statement amounts. The results of these calculations do not have a direct connection with the amount of cash taxes to be paid in any future periods. As a result, we believe scheduling deferred income tax liabilities as payments due by period could be misleading, because this scheduling would not relate to liquidity needs.

41

Defined Benefit Pension Funding and Cost

We sponsor a qualified defined benefit pension plan in the U.S., (the "U.S. Qualified Plan") three defined benefit plans in the U.K. (the "U.K. Plans"), and defined benefit pension plans in the Netherlands, Norway, Germany, and the Philippines (the "other international plans"). Future cash funding of our defined benefit pension plans will depend largely on future investment performance, interest rates, changes to mortality tables, and regulatory requirements. Effective December 31, 2002, we froze our U.S. Qualified Plan. The aggregate deficit in the funded status of the U.S. Plan and other international plans totaled $17.9 million and $53.9 million at the end of 2021 and 2020, respectively. The 2021 decrease in the unfunded deficit of our defined benefit pension plans primarily resulted from actuarial gains in the year. In 2021, we made contributions of $9.0 million to our U.S Qualified Plan and $0.7 million to our U.K. Plans. In 2020, we made contributions of $9.0 million to our U.S. Qualified Plan and $0.5 million to our U.K. Plans. The U.K. Plans were in a funded status totaling $30.3 million and $36.8 million at the end of 2021 and 2020, respectively, with the fair value of plan assets exceeding the projected benefit obligation. There was a $6.5 million decrease during 2021 in the net prepaid pension balances of the U.K. defined benefit plans.

Our frozen U.S. Qualified Plan was underfunded by $15.2 million at December 31, 2021 based on an accumulated benefit obligation of $403.3 million. Crawford does not expect to make any discretionary contributions to the U.S. Qualified Plan for 2022.

Funding requirements are no longer as sensitive to changes in the discount rate used to determine the present value of projected benefits payable under the U.S. Qualified plan. Volatility in the capital markets, mortality changes and future legislation may have a negative impact on our pension plans, which may further increase the underfunded portion and our attendant funding obligations. Expected and required contributions to our underfunded defined benefit pension plans will reduce our liquidity, restrict available cash for our operating, financing, and investing needs and may materially adversely affect our financial condition and our ability to deploy capital to other opportunities.

Commercial Commitments

As a component of our Credit Facility, we maintain a letter of credit facility to satisfy certain contractual obligations. At December 31, 2021, the issued, but undrawn, letters of credit totaled approximately $11.3 million. These letters of credit are typically renewed annually, but unless renewed, will expire as follows:

Changes in Financial Condition

The following addresses changes in our financial condition not addressed elsewhere in this MD&A.

Significant changes on our Consolidated Balance Sheet as of December 31, 2021, compared with our Consolidated Balance Sheet as of December 31, 2020, were as follows:

•
Accounts receivable increased by $5.5 million, excluding the impacts of business acquisitions and dispositions, as well as the impacts from foreign currency exchange, in 2021 compared with 2020. The increase was primarily due to increased receivables within Crawford Loss Adjusting and Platform Solutions in the U.S as a result of Hurricane Ida activity, as well as increases in the U.K. and Australia.

•
Unbilled revenues increased $10.0 million, excluding the impacts of business acquisitions and dispositions, as well as the impacts from foreign currency exchange. The increase was primarily due to an increase in Crawford Loss Adjusting and Platform Solutions related to the increase in weather-related activity in the U.S. and an increase in the U.K.

•
Accounts Payable and Accrued Liabilities increased $13.5 million, excluding the impacts of business acquisitions and dispositions, as well as the impacts from foreign currency exchange. The increase was primarily due to $12.1 million higher accrued employee compensation and incentive compensation, and an increase due to the timing of accounts payable payments, offset by a payment of $6.5 million on a deferred payroll tax filing in the U.S. as allowed by the CARES Act.

42

Critical Accounting Policies and Estimates

This MD&A addresses our consolidated financial statements, which are prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate these estimates and judgments based upon historical experience and various other factors that we believe are reasonable under then-existing circumstances. The results of these evaluations form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies require significant judgments and estimates in the preparation of our consolidated financial statements. Changes in these underlying estimates could potentially materially affect consolidated results of operations, financial position and cash flows in the period of change. Although some variability is inherent in these estimates, the amounts provided for are based on the best information available to us and we believe these estimates are reasonable.

We have discussed the following critical accounting policies and estimates with the Audit Committee of our Board of Directors, and the Audit Committee has reviewed our related disclosure in this MD&A.

Revenue Recognition

Our revenues are primarily comprised of claims processing or program administration fees. Fees for professional services are recognized as unbilled revenues at estimated collectible amounts at the time such services are rendered. Substantially all unbilled revenues are billed within one year. Out-of-pocket costs incurred in administering a claim are typically passed on to our clients and included in our revenues under GAAP. Deferred revenues represent the estimated unearned portion of fees related to future services to be performed under certain fixed-fee service arrangements. Deferred revenues are recognized into revenues based on the estimated rate at which the services are provided. These rates are primarily based on an evaluation of historical claim closing rates by major claim type. Additionally, recent claim closing rates are evaluated for a significant deterioration or improvement in the longer-term historical closing rates used.

Our fixed-fee service arrangements typically require us to handle claims on either a one- or two-year basis, or for the lifetime of the claim. In cases where we handle a claim on a non-lifetime basis, we typically receive an additional fee on each anniversary date that the claim remains open. For service arrangements where we provide services for the life of the claim, we are only paid one fee for the life of the claim, regardless of the duration of the claim. As a result, our deferred revenues for claims handled for one or two years are not as sensitive to changes in claim closing rates since the revenues are recognized in the near future, and additional fees are generated for handling long-lived claims. Deferred revenues for lifetime claim handling are considered more sensitive to changes in claim closing rates since we are obligated to handle these claims to their conclusion with no additional fees received for long-lived claims. For all fixed fee service arrangements, revenues are recognized over the expected service periods, by type of claim.

Based upon our historical averages, we close approximately 99% of all cases referred to us under lifetime claim service arrangements within five years from the date of referral. Also, within that five-year period, the percentage of cases remaining open in any one particular year has remained relatively consistent from period to period. Each quarter we evaluate our historical case closing rates by type of claim and make adjustments as necessary. Any changes in estimates are recognized in the period in which they are determined.

As of December 31, 2021, deferred revenues related to lifetime claim handling arrangements approximated $38.0 million. If the rate at which we close cases changes, the amount of revenues recognized within a period could be affected. In addition, given the competitive environment in which we operate, we may be unable to raise our prices to offset the additional expense associated with handling longer-lived claims should such case closing rates change. The change in our first-year case closing rates over the last ten years has ranged from a decrease of 3.3% to an increase of 2.2%, and has averaged a decrease of 0.1%. A 1.0% change is a reasonably likely change in our estimate based on historical data. Absent an increase in per-claim fees from our clients, a 1.0% decrease in claim closing rates for lifetime claims would have resulted in the deferral of additional revenues of approximately $1.3 million, $1.3 million, and $1.4 million for the years ended December 31, 2021, 2020, and 2019, respectively. If our average claim closing rates for lifetime claims increased by 1.0%, we would have recognized additional revenues of approximately $1.3 million, $1.2 million, and $1.3 million in 2021, 2020 and 2019, respectively.

43

We often sell multiple types of claims processing and different levels of processing depending on the complexity of the claims within a contract. We also typically provide a menu of offerings from which the customer chooses to purchase or not at their discretion. The price of each service is separate and distinct and provides a separate and distinct value to the customer. Pricing is consistent for each service irrespective of the other service(s) or quantities requested by the customer. For example, if we provide claims processing for auto and general liability, those services are priced and delivered independently.

Allowance for Expected Credit Losses

We maintain allowances for expected credit losses resulting from the inability of our clients to make required payments and for adjustments to invoiced amounts. Losses resulting from the inability of clients to make required payments are accounted for as bad debt expense, while adjustments to invoices are accounted for as reductions to revenues. These allowances are established by using historical write-off or adjustment information intended to determine future loss expectations and by considering the current credit worthiness of our clients, any known specific collection problems, and our assessment of current industry conditions. Actual experience may differ significantly from historical or expected loss results. Each quarter, we evaluate the adequacy of the assumptions used in determining these allowances and make adjustments as necessary. Changes in estimates are recognized in the period in which they are determined. Historically, our estimates have been materially accurate.

As of December 31, 2021 and 2020, our allowance for expected credit losses totaled $8.8 million and $9.5 million, or approximately 6.1% and 7.1% of gross billed receivables at December 31, 2021 and 2020, respectively. If the financial condition of our clients deteriorates, resulting in an inability to make required payments to us, or if economic conditions deteriorate, additional allowances may be deemed to be appropriate or required. If the allowance for expected credit losses changed by 1.0% of gross billed receivables, reflecting either an increase or decrease in expected future write-offs, the impact to consolidated pretax income would have been approximately $1.4 million, $1.3 million, and $1.4 million in 2021, 2020, and 2019, respectively.

Valuation of Goodwill, Indefinite-Lived Intangible Assets, and Other Long-Lived Assets

We regularly evaluate whether events and circumstances have occurred which indicate that the carrying amounts of goodwill, indefinite-lived intangible assets, or other long-lived assets have been impaired. Goodwill is an asset that represents the excess of the purchase price over the fair value of the separately identifiable net assets (tangible and intangible) acquired in certain business combinations. Our indefinite-lived intangible assets consist of trade names associated with acquired businesses. Goodwill and indefinite-lived intangible assets are not amortized, but are subject to impairment testing at least annually. When factors indicate that such assets should be evaluated for possible impairment between the scheduled annual impairment tests, we perform an interim impairment test. Our other long-lived assets consist primarily of property and equipment, deferred income tax assets, capitalized software, and amortizable intangible assets related to customer relationships, technology, and trade names with finite lives. Other long-lived assets are evaluated for impairment when impairment indicators are identified.

In the annual impairment analysis of goodwill, we compare the carrying value of our reporting units, including goodwill, to the estimated fair values of those reporting units as determined by a combination of the income approach, specifically discounting future projected cash flows, and the market approach, specifically the Guideline Public Company Method, as described in more detail in Note 1, "Significant Accounting and Reporting Policies," of our accompanying consolidated financial statements in Item 8 of this Annual Report on Form 10-K. We perform an interim impairment analysis of goodwill when an event occurs or circumstances change between annual tests that would more likely than not reduce the fair value of the reporting unit below its carrying value. The estimated fair values of our reporting units are based upon certain assumptions made by us. The estimated fair values of our reporting units are reconciled to the Company's total market capitalization, including an estimated implied control premium, as determined by its stock price in order to assist in evaluating the reasonableness of the estimated fair values of each of the reporting units.

Goodwill impairment testing is performed on a reporting unit basis. If the fair value of the reporting unit exceeds its carrying value, including goodwill, goodwill is considered not impaired. If the carrying value of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The loss recognized cannot subsequently be reversed.

We have the option to perform a qualitative assessment of goodwill prior to completing the quantitative analysis described above to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill. If we conclude that this is the case, we perform the quantitative analysis discussed above.

During 2021, the Company performed its goodwill impairment testing. The estimated fair value of each reporting unit tested exceeds their carrying value by a significant margin. The Company intends to continue to monitor the performance of its reporting units for potential indicators of impairment. If impairment indicators exist, the Company will perform an interim goodwill impairment analysis.

44

The key assumptions used in estimating the fair value of our reporting units utilizing the income approach include the discount rate and the terminal growth rate. The discount rates utilized in estimating the fair value of our reporting units in 2021 range between 12.5% and 15.0%, reflecting our assessment of a market participant's view of the risks associated with the projected cash flows. The terminal growth rate used in the analysis was 2.0%. The assumptions used in estimating the fair values are based on currently available data and management's best estimates of revenues and cash flows and, accordingly, a change in market conditions or other factors could have a material effect on the estimated values. There are inherent uncertainties related to the assumptions used and to management's application of these assumptions.

During the first quarter of 2020, the Company identified a goodwill impairment indicator in its former Crawford Claims Solutions reporting unit as a result of lower operating results and the overall decline in market conditions as a result of the COVID-19 pandemic. As a result, the Company recognized a goodwill impairment of $17.7 million, reducing the goodwill carrying value of the former Crawford Claims Solutions to $0 as of March 31, 2020.

The indefinite-lived intangible assets consisting of the Crawford TPA Solutions and SLS trade names, with carrying values of $29.1 million and $1.8 million, respectively, are also evaluated for potential impairment on an annual basis or when indicators of potential impairment are identified. SLS operates in the Crawford Loss Adjusting International segment within the U.K. Based on our 2021 analysis, we do not believe these trade names are impaired. The indefinite-lived intangible asset impairment test involves estimating the fair value using an internally prepared discounted cash flow analysis. The fair values of the Company's trade names are established using the relief-from-royalty method, a form of the income approach. This method recognizes that, by virtue of owning the trade name as opposed to licensing it, a company or reporting unit is relieved from paying a royalty, usually expressed as a percentage of net sales, for the asset's use. The present value of the after-tax costs savings (i.e., royalty relief) at an appropriate discount rate including a tax amortization benefit indicates the value of the trade name. We determined the discount rate based on our performance compared to similar market participants, factored by risk in forecasting using a modified capital asset pricing model.

The values of the Broadspire and SLS trade names are each sensitive to changes in the assumptions used above, however the estimated fair value of our Broadspire and SLS trade names exceed their carrying value. We will continue to monitor the value of these trade names for potential indicators of impairment.

Defined Benefit Pension Plans

We sponsor various defined benefit pension plans in the U.S. and U.K. that cover a substantial number of current and former employees in each location. Certain other employees located in the Netherlands, Norway, Germany, and the Philippines have retirement benefits that are accounted for as defined benefit pension plans under GAAP. We utilize the services of independent actuaries to help us estimate our pension obligations and measure pension costs. Our U.S. Qualified Plan was frozen on December 31, 2002. Our U.K. Plans were closed to new employees as of October 31, 1997, but existing participants may still accrue additional limited benefits based on salary levels existing at the close date. Benefits payable under our U.S. Qualified Plan are generally based on career compensation; however, no additional benefits accrue on our frozen U.S. Qualified Plan after December 31, 2002. Benefits payable under the U.K. Plans are generally based on an employee's salary at the time the applicable plan was closed. Our funding policy is to make cash contributions in amounts sufficient to maintain the plans on an actuarially sound basis, but not in excess of amounts deductible under applicable income tax regulations. Note 8, "Retirement Plans," of our accompanying consolidated financial statements included in Item 8 of this Annual Report on Form 10-K provides details about the assumptions used in determining the funded status of the plans, the unrecognized actuarial gain/(loss), the components of net periodic benefit cost, benefit payments expected to be made in the future and plan asset allocations.

Investment objectives for the Company's U.S. and U.K. pension plan assets are to:

•
ensure availability of funds for payment of plan benefits as they become due;

•
provide for a reasonable amount of long-term growth of capital, without undue exposure to volatility, and protect the assets from erosion of purchasing power; and

•
provide investment results that meet or exceed the plans' actuarially assumed long-term rate of return.

45

The long-term goal for the U.S. and U.K. defined benefit pension plans is to reach fully-funded status and to maintain that status. The investment policies contemplate the plans' asset return requirements and risk tolerances changing over time. Accordingly, reallocation of the portfolios' mix of return-seeking assets and liability-hedging assets will be performed as the plans' funded status improves. In conjunction with our investment policies we have rebalanced the U.S. and U.K. defined benefit pension plans' target allocation mix from an equity-weighted to a fixed-income weighted investment strategy, as we have made cash contributions to the plan and the plans' funded status has improved.

The rules for pension accounting are complex and the assumptions used can produce volatility in our results, financial condition and liquidity. Our pension expense is primarily a function of the value of our plan assets and the discount rate used to measure our pension liability at a single point in time at the end of our fiscal year (the measurement date). Both of these factors are significantly influenced by the stock and bond markets, which are subject to volatility.

In addition to expense volatility, we are required to record mark-to-market adjustments to our balance sheet on an annual basis for the net funded status of our pension plans. These adjustments have fluctuated significantly over the past several years and, like our pension expense, are a result of the discount rate and value of our plan assets at each measurement date, as well as periodic changes to mortality tables used to estimate the life expectancy of plan participants. The funded status of our plans may also impact our liquidity, as changes to funding laws in the U.S. may require higher funding levels for our pension plans.

The principal assumptions used in accounting for our defined benefit pension plans are the discount rate, the expected long-term return on plan assets, and the mortality expectations for plan participants. The discount rate assumptions reflect the rates at which the benefit obligations could be effectively settled. Our discount rates were determined with the assistance of actuaries, who calculate the yield on a theoretical portfolio of high-grade corporate bonds (rated Aa or better) with cash flows that generally match our expected benefit payments in future years. At December 31, 2021, the discount rate used to compute the benefit obligations of the U.S. and U.K. defined benefit pension plans were 2.76% and 1.82%, respectively.

The estimated average rate of return on plan assets is a long-term, forward-looking assumption that also materially affects our pension cost. It is required to be the expected future long-term rate of earnings on plan assets. Our pension plan assets are invested primarily in collective funds. As part of our strategy to manage future pension costs and net funded status volatility, we have transitioned to a liability-driven investment strategy with a greater concentration of fixed-income securities as described above.

Establishing the expected future rate of investment return on our pension assets is a judgmental matter. Management considers the following factors in determining this assumption:

•
the duration of our pension plan liabilities, which drives the investment strategy we can employ with our pension plan assets;

•
the types of investment classes in which we invest our pension plan assets and the expected return we can reasonably expect those investment classes to earn over time; and

•
the investment returns we can reasonably expect our investment management program to achieve in excess of the returns we could expect if investments were made strictly in indexed funds.

We review the expected long-term rate of return on an annual basis and revise it as appropriate. To support our conclusions, we periodically commission asset/liability studies performed by third-party professional investment advisors and actuaries to assist us in our reviews. These studies project our estimated future pension payments and evaluate the efficiency of the allocation of our pension plan assets into various investment categories. These studies also generate probability-adjusted expected future returns on those assets. As a result of the transition to a liability-driven investment strategy described previously, the expected long-term rates of return on plan assets assumption used to determine 2022 net periodic pension cost are estimated to be 4.80% and 2.40% for the U.S. and U.K. plans, respectively.

We review our employee demographic assumptions annually and update the assumptions as necessary. During 2021, we revised the mortality assumptions for the U.S. plans to incorporate the new mortality tables issued by the Society of Actuaries, adjusted to reflect Company-specific experience and future expectations. This resulted in a $1.2 million decrease in the projected benefit obligation for the U.S. plans.

46

Pension expense is also affected by the accounting policy used to determine the value of plan assets at the measurement date. We apply our expected return on plan assets using fair market value as of the annual measurement date. The fair market value method results in greater volatility to our pension expense than the calculated value method. The amounts recognized in the balance sheet reflect a snapshot of the state of our long-term pension liabilities at the plan measurement date and the effect of mark-to-market accounting on plan assets. At December 31, 2021, we recorded an increase to equity through other comprehensive income ("OCI") of $1.6 million (net of tax at the applicable jurisdictional rate) to reflect unrealized actuarial gains during 2021. At December 31, 2020, we recorded a decrease to equity through OCI of $5.0 million (net of tax at the applicable jurisdictional rate) to reflect unrealized actuarial losses during 2020. Those changes are subject to amortization over future years and may be reflected in future income statements.

Cumulative unrecognized actuarial losses for all plans were $251.6 million through December 31, 2021, compared with $264.2 million through December 31, 2020. These unrecognized losses reflect changes in the discount rates, differences between expected and actual asset returns, and changes to mortality expectations for plan participants, which are being amortized over future periods. These unrecognized losses may be recovered in future periods through actuarial gains. However, unless the minimum amount required to be amortized is below a corridor amount equal to 10.0% of the greater of the projected benefit obligation or the market-related value of plan assets, these unrecognized actuarial losses are required to be amortized and recognized in future periods. For example, projected pension plan expense includes $10.2 million of amortization of these actuarial losses in 2022 versus $10.4 million in 2021 and $10.8 million in 2020.

Net periodic pension expense for our defined benefit pension plans is sensitive to changes in the underlying assumptions for the expected rates of return on plan assets and the discount rates used to determine the present value of projected benefits payable under the plans. If our assumptions for the expected returns on plan assets of our U.S. and U.K. defined benefit pension plans changed by 0.50%, representing either an increase or decrease in expected returns, the impact to 2021 consolidated pretax income would have been approximately $3.5 million. If our assumptions for the discount rates used to determine the present value of projected benefits payable under the plans changed by 0.25%, representing either an increase or decrease in interest rates used to value pension plan liabilities, holding all other assumptions constant, the projected benefit obligations of our U.S. and U.K. defined benefit pension plans would have changed by approximately $20.1 million, and the impact to 2021 consolidated pretax income would have been approximately $0.3 million. Net periodic pension expense is also sensitive to mortality assumptions. If the life expectancy of pension plan participants in our U.S. Qualified Plan was to increase by one year compared to current assumptions, our pension obligations would have changed by $14.7 million and our annual pension cost would have changed by $0.7 million, respectively.

We estimate the service and interest components of net periodic benefit cost for U.S. and international pension and other postretirement benefits. This approach discounts the individual expected cash flows underlying the service cost and interest cost using the applicable spot rates derived from the yield curve used to discount the cash flows used to measure the benefit obligation. For the pension plans, the weighted average spot rates used to determine interest costs were 2.18% for the Company’s U.S. plan and 1.68% for the U.K. plans.

Income Taxes

We account for certain income and expense items differently for financial reporting and income tax purposes. Provisions for deferred taxes are made in recognition of these temporary differences. The most significant differences relate to accrued compensation and pensions, depreciation and amortization.

For financial reporting purposes in accordance with the liability method of accounting for income taxes, the provision for income taxes is the sum of income taxes both currently payable and deferred. Currently payable income taxes represent the liability related to our income tax returns for the current year, while the net deferred tax expense or benefit represents the change in the balance of deferred tax assets or liabilities as reported on our consolidated balance sheets that are not related to balances in "Accumulated other comprehensive loss." The changes in deferred tax assets and liabilities are determined based upon changes between the basis of assets and liabilities for financial reporting purposes and the basis of assets and liabilities for income tax purposes, multiplied by the enacted statutory tax rates for the year in which we estimate these differences will reverse. We must estimate the timing of the reversal of temporary differences, as well as whether taxable income in future periods will be sufficient to fully recognize any gross deferred tax assets.

Other factors which influence our effective tax rate used for financial reporting purposes include changes in enacted statutory tax rates, changes in tax law or policy, changes in the composition of taxable income from the countries in which we operate, our ability to utilize net operating loss and tax credit carryforwards, and changes in unrecognized tax benefits.

47

Our effective tax rate, defined as our provision for income taxes divided by income before income taxes, for financial reporting purposes in 2021, 2020, and 2019 was 30.4%, 30.7%, and 59.7%, respectively. If our effective tax rate used for financial reporting purposes changed by 1.0%, we would have recognized an increase or decrease to income taxes of approximately $0.4 million, $0.4 million and $0.2 million for the years ended December 31, 2021, 2020, and 2019, respectively. Our effective tax rate for financial reporting purposes is expected to range between 29% and 31% in 2022 before considering any unknown discrete items and assuming no changes in tax law or policy in the material jurisdictions in which we operate.

It is possible that future changes in the tax laws of jurisdictions in which we operate, including but not limited to changes in tax law or policy, could have a significant impact on U.S.-based multinational companies such as our Company. At this time, we cannot predict the likelihood or details of any such changes or their specific potential impact on our Company.

Our most significant deferred tax assets are related to the unfunded liability of our defined benefit pension plans, tax credit carryforwards and net operating loss ("NOL") carryforwards. The tax deduction for defined benefit pension plans generally occurs upon funding of plan liabilities. Assuming that the estimated minimum funding requirements for the defined benefit pension plans and the income projections are met, the deferred tax asset should be realized.

In accordance with GAAP, we have considered the four possible sources of taxable income that may be available to realize a tax benefit for deductible temporary differences and carryforwards and have a $13.4 million valuation allowance on certain net operating loss and tax credit carryforwards in our international and domestic operations. For our remaining deferred tax assets, we believe that it is more likely than not that we will realize these assets based on our forecast of future taxable income and tax planning strategies that are available to the Company. Future changes in the valuation allowance, if required, should not affect our liquidity or our compliance with any existing debt covenants.

Our tax credit carryforwards primarily consist of $1.5 million of U.S. foreign tax credit ("FTC") carryforwards, of which $0.9 million expire in 2022. Companies that cannot credit all the foreign taxes paid or deemed paid in a particular tax year because their foreign taxes exceed their FTC limitation are allowed to carry their excess taxes back to the preceding tax year and then forward to the ten succeeding years. Utilization of our FTCs is dependent upon sufficient U.S. regular taxable income and foreign source income in the relevant foreign tax credit basket, which is impacted by the interaction of overall domestic and overall foreign loss rules. Based on our projections of income through 2022, we expect to fully utilize all but $0.8 million of the FTC carryforwards before expiration, for which a valuation allowance is recorded, after consideration of the four sources of taxable income.

The NOL carryforwards for which a valuation allowance is not recorded primarily consists of $16.1 million of U.K. NOL carryforwards and $4.3 million of state NOL carryforwards generated by our domestic companies. In the U.K., NOL carryforwards have an unlimited life. Based on our evaluation of sources of taxable income, we expect to utilize all but $1.0 million of the U.K. NOL carryforwards. For the remaining $15.1 million, we concluded that it was more likely than not that we should be able to utilize our U.K. NOL carryforwards.

In order to fully utilize these state NOL carryforwards, our domestic operations must generate taxable income prior to the expiration of the carryforwards. After consideration of the four sources of taxable income, we concluded that it was more likely than not that the Company should be able to utilize its state NOL carryforwards in the majority of jurisdictions before expiration. However, there were certain filing groups and jurisdictions that the Company does not expect to fully utilize its state NOL carryforwards before expiration. For those jurisdictions, we concluded that it was not more likely than not that the Company should be able to utilize its state NOL carryforwards and a valuation allowance was recorded. The valuation allowance against state NOL carryforwards was $0.4 million and $2.2 million for the periods ended December 31, 2021 and 2020, respectively.

The remaining NOL carryforwards were generated by certain foreign jurisdictions and are generally offset by full valuation allowances.

48

Self-Insured Risks

We self-insure certain insurable risks consisting primarily of professional liability, auto liability, employee medical, disability, and workers' compensation. Insurance coverage is obtained for catastrophic property and casualty exposures, including professional liability on a claims-made basis, and those risks required to be insured by law or contract. Most of these self-insured risks are in the U.S. Provisions for claims incurred under self-insured programs are made based on our estimates of the aggregate liabilities for claims incurred, including estimated legal fees, losses that have occurred but have not been reported to us, and the adverse developments on reported losses. These estimated liabilities are calculated based on historical claim payment experience, the expected life of the claims, and other factors considered relevant to the claims. The liabilities for claims incurred under our self-insured workers' compensation and employee disability programs are discounted at the prevailing risk-free rate for government issues of an appropriate duration. All other self-insured liabilities are undiscounted. Each quarter we evaluate the adequacy of the assumptions used in developing these estimated liabilities and make adjustments as necessary. Changes in estimates are recognized in the period in which they are determined. Historically, our estimates have been materially accurate.

As of December 31, 2021 and 2020, our estimated liabilities for self-insured risks totaled $26.2 million and $25.0 million, respectively. The estimated liability is most sensitive to changes in the ultimate liability for a claim and, if applicable, the interest rate used to discount the liability. We believe our provisions for self-insured losses are adequate to cover the expected cost of losses incurred. However, these provisions are estimates and amounts ultimately settled may be significantly greater or less than the provisions established. We used a discount rate of 1.2% to determine the present value of our self-insured workers' compensation liabilities as of December 31, 2021. If the average discount rate was decreased or increased by 1.0%, reflecting either an increase or decrease in underlying interest rates, our estimated liabilities for these self-insured risks at December 31, 2021 would have been impacted by approximately $0.6 million, resulting in an equivalent increase or decrease to 2021 consolidated pretax income.

Business Combinations

The assets acquired and liabilities assumed in a business combination, including identifiable intangible assets, are recorded at their estimated fair values as of the acquisition date. Goodwill is recorded as the excess of the fair value of consideration transferred, including any contingent consideration, over the fair value of the net assets acquired. We estimate the fair values of identifiable intangible assets, including customer relationships, tradenames, and developed technology, on valuations that require management to make significant judgments, estimates, and assumptions, such as the expected future cash flows to be derived from the intangible assets based on projected revenues, EBITDA, customer attribution rates, and royalty rates. Additionally, we make assumptions related to discount rates that reflect the risk factors associated with future cash flows, and estimates of useful lives.

We measure and recognize contingent consideration at fair value as of the acquisition date based on a Monte Carlo simulation model. These fair value measurements require the use of significant judgments, estimates, and assumptions, including projected financial results such as projected revenues and EBITDA, discount rates, and volatility during the contingent consideration earnout period. The fair value of the contingent consideration is reassessed quarterly based on assumptions used in our latest financial projections and input from management, with any change in the fair value estimate recorded in earnings in that period. Increases or decreases in the fair value of contingent consideration liabilities resulting from changes in the estimates or assumptions could materially impact the financial statements. See Note 3 “Business Acquisitions and Dispositions” of our accompanying consolidated financial statements for additional information on our acquisitions and Note 12 “Fair Value Measurements” of our accompanying consolidated financial statements for additional information on our contingent consideration liabilities.

New Accounting Standards

See Note 1, "Significant Accounting and Reporting Policies," of our accompanying consolidated financial statements in Item 8 of this Annual Report on Form 10-K for a description of recent accounting pronouncements including the dates, or expected dates of adoption, and effects, or expected effects, on our disclosures, results of operations, financial condition and cash flows.