and let the market speak...down 6pcnt

Arbitrage Hefge Funds bailing.

Not showing much confidence in IAG management





QBE INSURANCE GROUP LIMITED
MARKET ANNOUNCEMENT
QBE ANNOUNCES INCREASED MERGER PROPOSAL WITH IAG
QBE Insurance Group today advised that it approached IAG late last Friday with an increased final
proposal on price of 0.145 QBE shares and 90 cents cash for each IAG share which is equivalent to a
consideration of $8.7 billion or $4.60 per IAG share based on QBE’s closing share price on 16 May
2008. The final scheme proposal represents a very attractive premium of 24% to IAG’s 1 month and 3
month VWAP prior to our proposal of 10 April 2008.
QBE’s Chief Executive Officer, Frank O’Halloran, said “QBE considers its final proposal is very fair
and reasonable given IAG’s declining profitability in the past three years and the recent profit
downgrade. The recent rise in QBE’s share price means that our final proposal still meets QBE’s
acquisition criteria including earnings per share accretive in year one.”
QBE’s Chairman, Mr John Cloney, said “I have had further discussions with the Chairman of IAG over
the weekend. He has indicated that he believes our final proposal is well short of their expectations.
We are waiting on a formal notification from IAG on our final proposal following their board meeting
which we understand will be held tomorrow in New Zealand.”
19 May, 2008