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Australia's IAG Chief Quits After Rejecting QBE

Insurance Australia Group, which last week spurned a takeover offer by rival QBE, said on Monday its Chief Executive Michael Hawker had resigned with immediate effect, triggering a 3 percent jump in its shares.

IAG shares slumped last week after it rejected as too low an A$8.7 billion (US$8.3 billion) takeover offer by rival QBE Insurance.

It did not put the offer to shareholders and some large institutional shareholders including fund manager 452 Capital said IAG did not give sufficient reason for rejecting the offer.

IAG, the country's top home and car insurer, said Hawker will be replaced by Chief Operating Officer Michael Wilkins.

"I believe we are currently undervalued and our underlying performance is improving, however, I also believe I have lost the confidence of a number of our shareholders which is not tenable for the company," Hawker said in a statement.

Chairman James Strong said IAG was conducting a review of every aspect of its business in Australia and overseas and it planned to brief the market on the results of the review in early July.

QBE scrapped its revised offer on May 21, after offering a 10 percent premium to IAG's share price before the deal talks were revealed in April.

QBE said the relatively low premium was justified in the the light of AIG's falling profits over the past three years and a profit downgrade last month.

Analysts expect IAG, which controls about one-third of Australia's general insurance market, to report a 55 percent drop in profit this year.