CPP shares hit by Barclaycard pull-out

Shares in credit card insurer CPP Group have fallen sharply following yesterday's announcement that Barclaycard will stop using some of its services.

CPP's shares closed trading at 129p yesterday, down 14% on Friday's close of 150p.

CPP said in a regulatory filing yesterday that Barclaycard has decided to stop sales in the 'call to confirm' channel - where CPP's card protection and indentity protection products are offered to Barclaycard customers who phone to confirm safe receipt of credit cards - while the group completes a review of the channel.

The insurer announced on 28 March that it is in discussions with the Financial Services Authority (FSA) in relation to "certain issues surrounding the sale of the group's card protection and identity protection products in the UK."

CPP said sales to Barclaycard customers in the call to confirm channel are currently less than 2% of revenue, and added the impact on underlying profit in 2011 and 2012 will be "immaterial".

CPP will continue to offer card protection to Barclaycard customers who currently hold the identity protection product and who call CPP's customer service department.

The insurer has 200 business partners and said it has been encouraged by support received in connection with the continuing FSA discussions. It added that any other product sales that have been suspended in addition to Barclaycard have been at levels not material to the group.

"Whilst the group believes that new business volume uncertainty may remain whilst the FSA investigations progress, the board continues to believe in the ongoing relevance and consumer appeal of its products and services," the company statement read.