The QBE Insurance Group has withdrawn its proposal for a merger with Insurance Australia Group after the latter's board formally rejected the proposal.

QBE has said that its final proposal on price was well short of Insurance Australia Group’s (IAG) expectations.

This is despite QBE’s proposal representing a premium of 22% to the closing price of IAG shares of $3.79 on April 9, 2008 prior to QBE’s first discussion. It also represented a 25% premium to IAG’s one month volume-weighted average price to April 9, 2008.

In addition, IAG’s shareholders would have benefited from substantial earnings per share accretion in year one from the significant synergies and diversification benefits of the merged group, as well as QBE’s profitability and strong track record.

Frank O’Halloran, CEO of QBE, said: QBE will now continue to focus on the pipeline of acquisitions that have been accumulating in recent months. The pipeline includes a range of opportunities in the Americas, Europe, Asia and Australia. We will continue to adhere to QBE’s strict acquisition criteria which have proven to be beneficial for shareholders over a long period of time.