The first priority for newly installed IAG CEO Mike Wilkins will be to stare down shareholders dismayed at QBE walking away from a merger proposal that would have valued IAG shares at $4.60.

The QBE proposal is dead in the water – at least for now – with the IAG board last week rejecting improved terms.

As insuranceNEWS.com.au reported last Tuesday, QBE withdrew its “final proposal” of 0.145 QBE shares and 90 cents cash for each IAG share with a parting appeal to IAG’s army of 900,000 retail shareholders to recognise the “significant” synergies, diversification and earnings per share benefits that would have accrued from a merger.

IAG Chairman James Strong had challenged QBE to table a formal offer if it believed it had a strong enough case.

Mr Wilkins is admired by analysts and institutional shareholders who did well out of Promina, a group he effectively built over several years. This is expected to help him win time to rebuild IAG’s performance and share price.

Institutional investors are unhappy with IAG’s blunt rejection of QBE, with Merrill Lynch calling for the IAG board to explain itself and fund manager 452 Capital’s Peter Morgan launching an extraordinary email attack calling the IAG response “a joke”.

QBE CEO Frank O’Halloran could resurrect the deal after a sustained period of pressure on rates. “Frank will be keeping his foot on their throat through the June renewals process,” one leading market source told insuranceNEWS.com.au.