ING Asigurari, the biggest life insurer, has budgeted profithalf the 2009 level for this year, with the VAT increase startingJuly 1 as one of the reasons for the reduction. The company'sgeneral manager, Cornelia Coman, expects net income worth 35-40mRON (according to Romanian accounting standards) in 2010, after thenet income reached 77.3m RON (18.3m euros) last year. "We hadanyway budgeted lower profit than last year, but the impact of VATraise will drag the figure even lower. We haven't calculated theimpact, yet, but we decided we would bear the increase from ourprofit. We may manage to cut part of expenses, but others willrise, such as rent ones. We cannot start renegotiating rents forall offices now," said Coman. The impact of this tax hike isgreater in the case of general insurers, as claims costs alsoinclude VAT, unlike in the case of life insurance. ING Asigurarithis year targets a 5% increase in gross underwritten premiumsagainst 2009, but the plan may be revised as the VAT hike will hurtthe population's disposable income, meaning a possible slump ininsurance sales.
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