Zurich Financial Services is to become the sole owner of Endsleigh Insurance Services Ltd, following the sale of the NUS stake in the company. The deal will see a large cash inflow to the NUS, some of which is being re-invested in preference shares.
Preference shares carry no voting rights, but have a guaranteed return believed to be £0.5m per year, double the previous return received from Endsleigh shares. The NUS National Executive Committee is discussing lower affiliation fees in light of this extra income as part of an ongoing review.
The precise use of this extra regular income will be the subject of some debate, as the NUS has lost between £300k and £500k per year for the past few years. NUS Extra was intended to fill that gap, but take-up is lower than expected.
NUS finances are currently in the black following the sale of their headquarters, however were expected to drop back into the red with the purchase of a replacement building. The cash value remaining after re-investing in preference shares will be able to offset this cost, with the extra fixed income removing the annual deficit. Any reduction in fees could therefore be expected to come from NUS Extra income, leading to a model where institutions pay a lower affiliation fee collectively, but their members make up the difference through the discount card.