CPP Group ("CPP or "the Group") announces that it has been informed by Barclaycard, one of its business partners, that following a competitive tender in line with its normal business practice, it does not intend to renew its contract when it expires on 31 March 2012.
In April last year CPP announced that Barclaycard had decided to stop sales in the call to confirm channel operated by the Group whilst it completed a review of the channel. Since that announcement, the Group has continued to offer Card Protection to Barclaycard customers who currently hold the Identity Protection product and who call the Group's customer service department and Barclaycard has continued to offer Identity Protection and Card Protection to its customers in all their existing channels.
The loss of this contract means that new sales of the Group's Card Protection and Identity Protection products to Barclaycard's customers will cease although renewals to the existing back book of Barclaycard customers will continue for a period of at least three years. The exact timing of the cessation of new sales has yet to be determined, but is likely to be within 3 to 6 months of the date of this announcement.
New policy sales to Barclaycard customers were estimated to be less than 1% of Group revenue in 2012. The impact of this change on underlying operating profit in 2012 and 2013 will not be material due to savings in commissions and marketing costs, although reduced sales in 2012 and 2013 will have an adverse impact on revenue and profitability beyond 2012 as the renewals revenues (upon which CPP pays a smaller commission to its Business Partners) will also be lower.
The FSA investigation into certain issues surrounding the sale of the Group's Card Protection and Identity Protection products in the UK, and the suspension of Identity Protection sales in the Group's UK voice channels, both of which were announced in March 2011, are continuing to have a material impact on the Group's ability to sell its full range of products in the UK. The duration and outcome of the FSA investigation continues to be uncertain.
Whilst disappointed at Barclaycard's decision, the Board remains positive about the Group's prospects in the UK as the new business pipeline continues to build, the consumer appeal of the Group's products remains strong, and relationships with business partners remain good. Meanwhile the Group's long-term international prospects continue to develop well in markets where the large bankable populations offer significant potential for further market penetration.
Paul Stobart, Group Chief Executive
Shaun Parker, Chief Financial Officer
Tel: +44 (0)1904 544702
Tel. +44 (0)20 7353 4200
Notes to editors:
CPP is a leading international Life Assistance business with operations in 15 countries in both developed and developing markets. CPP's products and services are designed to meet consumer needs across a range of requirements, in particular relating to credit and debit card ownership, personal identity, mobile telephones, travel and the home. The Group primarily focuses on providing customer assistance during stressful life events such as losing or having a wallet, purse, mobile telephone or keys stolen, as well as support in the event of identity theft.
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