ING Asigurari: We'll cover VAT increase from profit, there will be no tariff hikes

ING Asigurari, the biggest life insurer, has budgeted profit half the 2009 level for this year, with the VAT increase starting July 1 as one of the reasons for the reduction. The company’s general manager, Cornelia Coman, expects net income worth 35-40m RON (according to Romanian accounting standards) in 2010, after the net income reached 77.3m RON (18.3m euros) last year. “We had anyway budgeted lower profit than last year, but the impact of VAT raise will drag the figure even lower. We haven’t calculated the impact, yet, but we decided we would bear the increase from our profit. We may manage to cut part of expenses, but others will rise, such as rent ones. We cannot start renegotiating rents for all offices now,” said Coman. The impact of this tax hike is greater in the case of general insurers, as claims costs also include VAT, unlike in the case of life insurance. ING Asigurari this year targets a 5% increase in gross underwritten premiums against 2009, but the plan may be revised as the VAT hike will hurt the population’s disposable income, meaning a possible slump in insurance sales.