State-owned insurer VHI will not be subject to the new higher 15 per cent corporate tax rate until January 1st, 2029 due to an exemption in the legislation for large-scale domestic companies with no international activity, according to the company’s annual report.
Under legislation introduced last year, the State’s 12.5 per cent tax rate increased to 15 per cent from January 1st, 2023 by way of a top-up for companies with turnover in excess of €750 million. The move was part of a global agreement led by the Organisation for Economic Co-operation and Development (OECD), which set the rate to a minimum of 15 per cent for the 140 territories that signed up.
The OECD agreement is mostly targeted at multinational companies and the VHI report notes that a deferral period of five years applies to the insurer. “The group continues to assess the impact of the Pillar Two [of the OECD process] income taxes legislation on its future financial performance,” the report states.
VHI earned total income last year of €1.8 billion, according to the report, which would put it in scope for the higher rate of corporation tax.
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The insurer made a loss of €48.8 million last year compared with a profit of €39.7 million a year earlier. The deficit was blamed on an 18 per cent rise in healthcare claims which outstripped the increase in premium income.
Higher demand for healthcare services, combined with rising labour costs and energy inflation was behind the increase in claims costs, which exceeded €1.68 billion, VHI said.
The report, which was laid before the Oireachtas on Thursday, shows that VHI’s employee numbers rose during the year by 187 to 1,776 while its bill for wages and salaries rose by 17 per cent to €123.2 million. On average, VHI staff received €69,369 in salaries last year, up from €66,205 per cent on average for 2022.
The report shows that VHI chief executive Brian Walsh was paid €447,247 last year, including a basic salary of €276,667, according to the annual report.
Mr Walsh was appointed as CEO on March 1st, 2023, having served as interim chief from May 1st, 2022. His remuneration last year included other taxable benefits of €99,289 and pension contributions of €67,292. The report notes that Mr Walsh’s annualised salary as CEO is €287,000 and he is operating on a seven-year contract.
VHI had two interim CEOs during 2022. Declan Moran held the position until April 30th of that year and received total remuneration of €174,457. Mr Walsh received €192,240 for his time as interim chief in 2022.
The total remuneration of the VHI board’s key management personnel for last year was €3.9 million, up from €3.3 million.
At the end of 2023, VHI had a record 1.7 million insurance members. This comprised just more than 1.2 million for its health insurance policies and close to 480,000 across travel, dental, life and international health.
VHI said its multitrip travel insurance product had returned to pre-pandemic levels, with membership from these policies rising by 8.4 per cent during the year to 354,698.
VHI closed the year with capital and reserves of €903 million, down from €949 million in 2022. “The solvency position of our insurance business stands at a healthy 175 per cent at year end,” the report said.
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