Michael Wilkins to replace Michael Hawker at helm at Australian insurer as shareholders hope QBE will renew its offer

IAG chief executive Michael Hawker has resigned less than a week after his board rejected an A$8.7bn (£4.2bn) offer for the company from rival QBE.

Hawker will be replaced by chief operating officer Michael Wilkins, who joined the Australian insurer last November and has been overseeing the day-to-day running of the business.

At the time, sources said the appointment of Wilkins was a prelude to Hawker’s departure.

Hawker, who was chief executive for seven years, has been under pressure from shareholders and the board since sanctioning the purchase of the group’s underperforming UK assets, including Hastings, for which it paid £140m in October 2006.

The company has posted three successive years of declining profits and has issued three profit warnings in the past seven months. Its share price has fallen by a third in the past year.

Announcing his resignation, Hawker admitted shareholder discontent had taken its toll. “I believe we are currently undervalued and our underlying performance is improving,” he said. “However, I also believe I have lost the confidence of a number of our shareholders, which is not tenable for the company.”

In the past month, as IAG rebuffed unofficial approaches from QBE, shareholders and bankers including Merrill Lynch criticised the IAG board for its lack of transparency and investment strategy.

Hawker added: “Given ultimate accountability sits with me, I have offered my resignation to the board.”

It is believed QBE will look to renew its bid once IAG completes a strategic review of the business. IAG chairman James Strong said the market would be updated in July.

Australian press reports suggested Wilkins – who expanded insurer Promina from a A$2.5bn (£1.2bn) business until its A$7.9bn (£3.8bn) takeover by Suncorp in 2006 – would make an ideal successor to QBE chief Frank O’Halloran if a deal is struck.

Anton Tagliaferro, investment director at Investors Mutual, which owns 10 million shares in IAG,said “the door remained open” toa deal. There was nothing to stop QBE pushing ahead with other offers, including an official or a hostile takeover approach, he added.

As Insurance Times went to press, IAG shares were trading at A$3.99 (194p), up slightly since Hawker’s resignation but 13% less than the value of QBE’s offer.