chief operating officer Michael Wilkins promoted with immediate effect.
IAG chief executive Michael Hawker has resigned just days after rejecting rival QBE’s A$8.7bn bid for the company.
He will be replaced by chief operating officer, Michael Wilkins, who joined the company in November.
Hawker, who was appointed chief executive of IAG in 2001, admitted he had lost the confidence of a number of shareholders following the collapse of the company's share price and the issuing of three profit warnings in the past seven months.
Hawker said: "It's with great personal regret that I have decided to resign from my position as CEO.
“I believe we are currently undervalued and our underlying performance is improving, however, I also believe I have lost the confidence of a number of our shareholders which is not tenable for the company."
“Given ultimate accountability sits with me, I have offered my resignation to the board
Since IAG company rebuffed QBE's unofficial takeover approaches leading shareholders, analysts and bankers, including Merrill Lynch, have criticised the IAG board for its lack of transparency and investment strategy - in particular the UK - and have called for heads to roll.
"Given ultimate accountability sits with me, I have offered my resignation to the board," Hawker added.
Last week, QBE finally withdrew its sweetened $8.7 billion approach for the company. IAG described the offer, equating to about A$4.60 per IAG share, as “opportunistic,” as it represented only a 10 per cent premium to its closing share price on April 14, the day before its original approach was made.
IAG chairman James Strong said the insurer had begun a review of "every aspect of its business in Australia and overseas". He added that he expected to brief the market in July.
IAG shares are currently trading at A$3.99, up slightly since Hawker’s resignation, but 13 per cent less than the value of QBE’s revised offer.