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IAG Not Apologetic For Rebuffing QBE Low Ball Bid
The Chairman of Insurance Australia Group (IAG), James Strong strongly defended the decision to reject a proposed acquisition by rival and dominant Australian insurer QBE earlier this year. Mr. Strong said at the AGM that the valuation of IAG was inadequate and the A$9 billion bid undervalued the company.
QBE either felt differently or was simply unprepared to make a hostile bid and withdrew its takeover proposal after the board of IAG rejected it. Mr. Strong did however say that the company was not averse to being acquired by QBE and is open to another approach, but that the initial proposed acquisition price was not acceptable.
Mr. Strong said “It was the board’s view that QBE sought to take advantage of the then current negative insurance cycle in Australia to attempt to acquire our company at a very low price, without offering a satisfactory premium to shareholders in IAG.”
IAG Chief Executive told shareholders at IAG’s annual general meeting in Sydney that the company expects premium growth of up to 2 per cent in the year ahead, despite a disappointing 2008 result. Mr. Wilkins also said that the group was on track to increase its insurance margin to 10 per cent.
Angry shareholders questioned the IAG board for four hours, particularly the reappointment of Mr. Strong as chairman – a robust 18 per cent of votes were registered against the move. The directors of IAG moved to freeze pay rises for themselves in the next 12 months, but conceded that increasing the directors’ remuneration “pool” would be reviewed after the period. “I can understand that they are disappointed in the performance of the business,” Mr. Wilkins said after the meeting.
The board said the current environment was a “bad cycle”’ for insurance businesses globally that could spark merger and acquisition activity in the sector. “I think we will start to see some consolidation. There’s fallout starting to come through with AIG,” Mr. Wilkins said.
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2 Responses to “IAG Not Apologetic For Rebuffing QBE Low Ball Bid”
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Wow, I can’t believe you got JAMES Strong’s name wrong. Well done. High quality writing.
Hi Mark
Thank you for pointing out a glaring error. I have corrected it. Honestly speaking, there is no real excuse for that kind of mistake. I made it, the best I can do is correct it, thanks for pointing it out, my apologies and much appreciated.