Chartered Insurance Institute  

CII pledges to restore finances after de-registration row

CII pledges to restore finances after de-registration row

The Chartered Insurance Institute has admitted to "not [being] where we want to be" on financial strength and pledged to restore its finances, following questions raised by members.

Robin Melley, managing director of Shropshire-based advice firm Matrix Capital, and vice president of CII affiliate body the Insurance Institute for Shropshire and Mid-Wales, had accused the CII of failing to keep its finances in check. 

Having examined the body's annual accounts, he noted its net asset position had dropped over the years from £25.8m in 2016 to £16.8m in 2020.

While the wider CII group's assets have only fallen from £38.7m to £34.3m over the same timeframe, the institute's liabilities remain relatively high.

The accounts show liabilities in 2020 amounted to £27.6m, a chunk of which was owed to the Personal Finance Society, leading some to speculate that if the body were to be de-registered the debt burden on its parent would be eased. 

The PFS's accounts show the amount owed by parent undertakings was £16.3m. The money is made up of contributions from the PFS to the CII, such as member contributions, which cover the cost of running the adviser body. 

The CII denies the debt position has anything to do with its attempts to de-register the PFS. 

Responding to analysis of its financials by Melley, John Bissell, chief operating officer at the CII, said: “To be clear, the figure is an inter-company balance owed to subsidiary companies of the CII, of which the PFS is one such entity.

“We cannot comment upon what happens if the PFS de-registers as that would be an agreement between the boards of each entity.”

Melley believes if the CII loses a similar amount of money to that which was lost in 2020 - confirmed by the CII to be £8.3m in revenue - again in 2021, and continues to spend on its transformation projects, it could find itself in trouble. 

He said: "The CII’s financial position has been taken from one of a strong balance sheet with good cash reserves and an appreciating, unencumbered asset, to one that now appears to be at risk".

But Sian Fisher, chief executive officer of the CII, said work was already underway to strengthen the CII's balance sheet. 

However, she added the pandemic, which had impacted its events and exams business in particular, seeing events cancelled and exams moved to online, had disrupted its growth trajectory. 

She said: "A review of the CII by PWC in 2016 found, in their words, that we ‘were not fit for future purpose’ and needed to commit to being more ‘Relevant, Modern and Diverse’. We also needed to de-risk and make the CII’s financial foundations more sustainable and less costly.

“Following a period of sustained growth, the impact of the pandemic saw 2020 revenue fall to £36.9m, down £8.3m from 2019. Literally overnight, we lost any ability to host examinations and in-person events and during all the uncertainty, there was also a small decline in membership numbers.”