Insurance Australia Group CEO Michael Hawker has called a halt to Australian acquisitions for a while. Now he wants the group, Australia’s largest insurance entity, to concentrate on organic growth for at least two years.

The next big acquisition will probably occur offshore, Mr Hawker told an analysts’ briefing last week. But it could be up to five years before IAG thinks of taking steps towards any other major acquisition.

Mr Hawker said the group is focusing on driving its CGU and NZI businesses, which it bought last year for $1.86 billion, to reach the goal of doubling IAG’s premium income to $6.6 billion by 2007.

Noting that IAG has “a huge amount of earnings growth sitting in the company”, he said: “We believe we have a substantial period of time… without having to do anything more in terms of acquisitive growth. That timeframe for us is a minimum of two years and could quite easily be five.”

Mr Hawker also told AAP IAG might have been interested in purchasing Lumley – which is now in exclusive negotiations with Wesfarmers – if it hadn’t acquired CGU and NZI last year. But he said that in hindsight Lumley doesn’t have the same scale benefits as CGU or NZI.

In recent times fund managers and analysts have estimated IAG will exceed its target of $160 million for synergy benefits, but Mr Hawker won’t budge on the group’s initial forecast of $140 million costs savings in Australia and $20 million in NZ.

“There’s a whole array of speculation in the marketplace on what people think we can make and we really just wanted to be definitive and say that we believe we will generate synergy benefits of $160 million, not more, not less,” he said.

He expects growth of up to 10% in gross written premiums for the rest of 2003, and slightly less for 2004, and said IAG would try to achieve the growth through increasing its market share in Queensland and increasing rates further.

IAG hasn’t shifted from its long-term goals, either: a return on equity of 13-15% over five years, keeping its AA credit rating and maintaining a combined operating ratio of less than 100%.