CPP sells stake in joint venture
Updated 12:51pm Wednesday 26th March 2014 in Business news
YORK insurance firm CPP has sold its stake in a home emergency assistance firm as it focuses on rebuilding its core business.
CPP, which employs 550 staff at its headquartes in Holgate, is recovering after being fined a record £10.5 million by the Financial Conduct Authority in November 2012 for mis-selling insurance products.
Ahead of a redress scheme, which will see CPP pay out an estimated £65.8 million in compensation, the business announced yesterday that it has sold its 49 per cent stake in Home3Assistance.
CPP's share of the business has been sold to its joint venture partner Mapfre Abraxas Software for £275,000.
As part of its exit of the joint venture arrangement CPP agreed to invest a further £1 million to absorb its share of losses in Home3, which will be reported as part of discontinued operations in the group's income statement for the year ending 31 December, 2014.
CPP will make the net cash payment of £725,000 to Mapfre over a two year period.
Brent Escott, CPP Group chief executive, said: "The sale of our shareholding in Home3 represents further progress in repositioning the business model to provide longer term stability for the group.
"It's all part of how we give greater focus to what's important to this business and our restructuring and rebuilding. It's all consistent to giving greater clarity to what we are doing.
"We referenced the sale of Home3 in the interim statement last August, so it's nothing that is a surprise, we have been planning it for a while.
"It's allowing us to focus on what's important for the future of the group."
CPP is awaing the go-ahead to begin paying out compensation to customers in a redress scheme, voted in by those affected and approved by the High Court in January.
The Financial Conduct Authority revealed in August last year the redress scheme in which banks and financial institutions, along with CPP, will pay compensation to as many as seven million people in the UK who were sold policies between 2005 and 2011.
The scheme became affective from January 31, with the first payment due to be made in the spring.
Mr Escott said: "It is something we are closely monitoring on a daily basis, but no further decisions have been made as yet as to when payments will begin."
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