IAG is well on its way to achieving a solid 2003/04 performance after announcing a revenue increase of 45% to $5.2 billion for the 2002/03 year – but CEO Michael Hawker knows it doesn’t take much to change the situation. He won’t raise the group’s margin target range of 9-12% saying he wants to be prepared for any unforeseen events.

Speaking at the group’s AGM last week, Mr Hawker said the group is already ahead of target for 2003/04 because of unusually benign weather conditions in the first three months of the financial year. But those conditions could easily change, and that’s why he’s staying put with current predictions. 

“Weather patterns during the first three months of the year have been slightly unusual,” he told shareholders. “This has translated into lower than expected claims in one of our largest portfolios, comprehensive motor insurance.”

Over the next 12-18 months IAG will focus on the organic expansion of its Australian and New Zealand businesses, and Mr Hawker expects to see growth of about 7-9%. “We plan to do this by continuing to improve our service to customers, building a common culture and recognising our role in reducing risk in the community.”

He’ll have to be satisfied with organic growth because, as he noted last week, it’s not viable for IAG to acquire “anything else of significance” in Australia or NZ because of market concentration issues.

That means expansion will have to be concentrated overseas, and that’s where the company is headed. And it will probably be a joint venture. “Any international moves are likely to be in a partnership context and will rely on leveraging our core competencies,” Mr Hawker said.

He says the group is also benefiting from buoyant equity markets. Other favourable results include an insurance profit increase to $571 million and an underwriting profit of $199 million – $57 million up on last year.