IAG shares fall over 4 pct after spurns QBE bid

MELBOURNE, May 21 (Reuters) - Shares in Insurance Australia Group Ltd (IAG.AX) fell over 4 percent in early trade after it rejected a A$8.7 billion ($8.4 billion) takeover offer from bigger rival QBE Insurance Ltd (QBE.AX).

IAG's shares fell 4.3 percent to A$4.05 by 0006 GMT. QBE shares have yet to trade.

IAG, Australia's top home and car insurer, said late on Tuesday that QBE's sweetened offer, pitched at a 10 percent premium to IAG's share price before their deal discussions were announced last month, was still too low.

QBE raised its bid by 6 percent this week to 0.145 QBE shares and A$0.90 in cash for each IAG share, looking to secure a board recommendation on what it called its final offer.

It said the relatively low premium was justified in light of IAG's falling profits over the past three years and its profit downgrade last month.

($1=A$1.04)

(Reporting by Sonali Paul)

((sonali.paul@reuters.com; +61 3 9286 1419; Reuters Messaging: sonali.paul.reuters.com@reuters.net)) Keywords: IAG QBE/SHARES

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