iag rejects qbe take over, page-32

IAG says QBE takeover not a given

20th April 2008, 12:30 WST



Insurance Australia Group Ltd (IAG) chairman James Strong says it is not certain that QBE Insurance Group Ltd, or anyone else, will buy the company.

"This is a very significant company. It's got tremendous market share in Australia. So it's certainly not a question of regarding ourselves as sitting here for sale, it's just the opposite," Mr Strong said on ABC's Inside Business program.

IAG, Australia's largest home and motor insurer, rejected QBE's takeover bid on April 15 as "totally inadequate", although Mr Strong said at the time that a union between the two companies would make sense - at the right price.

QBE's proposal, which closes on Monday, comprises 0.142 QBE shares and 70 cents cash for each IAG share. Based on QBE's closing price on Friday, it values IAG at $4.06 per share, or a total $7.63 billion.

IAG shares fell one cent to $4.29 on Friday while QBE added 9 cents to $23.64.

Mr Strong said IAG itself had plans to expand, mainly overseas because it was already so big in Australia and New Zealand.

"Part of it's implemented. The large part of the UK strategy is going as expected. We're, obviously, going to push on with other aspects of our strategy in Asia," he said.

IAG, which reported a 68 per cent decline in half-year profit in February, was in a difficult part of the insurance cycle but was headed for better times, Mr Strong said.

"The cycles are starting to strengthen here in Australia," he said.

Mr Strong said there was no plan in the short term to make changes to the company's senior management, whose performance had recently been the subject of commentary.

IAG chief operating officer Mike Wilkins was now responsible for running the company day to day, while chief executive Mike Hawker was driving the long-term strategy, he said.

"We've made Mike Wilkins a director, which I think is a very clear indications of our confidence in him and the fact that we see him as somebody who's, in due course, a possible successor to Michael (Hawker).

"It's really a very good arrangement and it would be stupid for us just to do some knee jerk reaction and lose all that skill and experience of Mike Hawker," Mr Strong said.

AAP