CPP Holdings, which was founded in 1980 to provide protection for credit card-holders, was loss-making for the first ten years of its existence. But in the early 1990s it crawled into the black and has never looked back. Profits grew by 41% pa, from £2.1m in 1996 to £6m in 1999. Sales in the same period rose 29% pa to reach £39.2m in 1999. London-based CPP holdings owns 100% of Card Protection Plan, which provides insurance policies for all forms of plastic cards, including credit, debit and store cards. A policy holder registers all cards with CPP, which blocks the cards in case of loss or theft and issues replacements. CPP markets its services through card-issuing companies such as Marks & Spencer and HSBC and pays the issuer a commission, by far the greatest variable cost to the company. CPP’s profits have grown as the ratio of old customers renewing their policies to new customers has increased. With 4.3m current UK clients, the company’s marketing costs as a proportion of sales are much reduced.
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