Challenges lie ahead for CPP as it embarks on journey to evolve

CPP today said it is on a journey to rebuild, improve, modernise, and evolve, after reporting a loss for the year but said significant challenges and risks lie ahead.

In its full year results for the year ended December 31 2013, the troubled York-based insurer which specialises in ID and credit card theft protection, reported group revenue from continuing operations of £178m, down from £269.9m in 2012.  The group reported an underlying pre-tax loss of £5.7m, compared to underlying pre-tax profit of £24.5m in the previous period.

Renewal rates were 4.1% lower at 69.4%, reflecting a reduction in Card Protection and Identity Protection renewal rates in the UK, CPP said.

CPP said its financial performance during 2013 reflects the challenges of the group’s environment, particularly in the UK, and has been compounded by the loss of key business contracts.

CPP was fined £10.5m by the Financial Conduct Authority in 2012 for mis-selling insurance products and is paying out £65.8m in compensation to customers. Earlier this year, it was announced that seven million customers who were mis-sold insurance would receive a pay-out. 

Chief executive officer, Brent Escott, said the group has developed a clear plan to stabilise the business whilst it completes the scheme, resulting from a “realistic understanding of the group’s strengths, market opportunities and the challenges that remain”.

However, he said uncertainties remain, particularly in relation to the Scheme, liquidity and the execution and delivery of its plans. “As a result, the outlook continues to reflect the significant challenges and risks ahead and performance in 2014 will continue to be constrained,” he said.

Escott added: “The key aspects of our immediate business plan are: rebuild, improve, modernise, and evolve. Our immediate priorities are to complete the Scheme whilst we rebuild the business, establishing a robust operational and IT environment, improving our governance and processes and modernising how we operate. This will establish a platform from which we can evolve in the longer term.”

Escott said in his first review as CEO of CPP,  he is encouraged by the progress the group has made, despite the challenges it has faced. 

“Much work took place during 2013 and we have made considerable progress in a short time. Since my appointment in September, there has been a clear focus on the actions required to strengthen the group and move forward with a stable foundation. CPP is on a journey to rebuild, improve, modernise, and evolve. As we move forward in 2014, we are focused on concluding the Scheme and continuing to make the improvements and changes required to rebuild CPP as a trusted, customer-focused business,” he said.

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