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Director of insurance firm IAG steps down -

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ELEANOR HALL: The board of IAG could be about to undergo a further shake-up with institutional
investors now calling for other directors to follow Michael Hawker out the door.

Less than four weeks after he told investors he would be staying on as chief executive, Mr Hawker
has stepped down.

He had lost the support of the company's major shareholders and that meant his position was
untenable.

But his departure has raised questions about just who should take responsibility for the bungled
handling of the attempted takeover of IAG by rival insurer, QBE.

Emma Alberici reports

EMMA ALBERICI: Michael Hawker first made a name for himself as a rugby union great.

(Extract from rugby union game)

ANNOUNCER: Hawker. Hawker straight through!

EMMA ALBERICI: He was celebrated as a member of the Grand Slam Wallabies who toured Europe in the
80s. He was one of the best inside centres the game had ever seen but his undoing would come more
than 20 years later when, as chief executive of IAG, he was blind-sided by QBE proposing a takeover
that had the potential to create the country's biggest general insurer.

Michael Hawker thought the $8.7-billion bid undervalued the company. Investors took no particular
issue with that. What upset them was the lack of discussion about the deal which the IAG boss
rejected point blank.

Institutional investor Peter Morgan of 452 Capital owns four per cent of IAG.

PETER MORGAN: You know we said we don't want the company having it both ways. If they go to say no,
they have to be transparent, accountable to share holders. Particularly with regard to a hard
valuation for a company.

Far too often there is plenty in history where companies have walked away from deals only to see
their share price never reach those heights again.

EMMA ALBERICI: At the time, Michael Hawker assured the market he was there to stay. His boss, IAG
chairman James Strong was equally enthusiastic about Michael Hawker's longevity at the helm of the
insurer. Here he is last month speaking on Lateline Business

ALI MOORE: Michael Hawker has your full support?

JAMES STRONG: Yes and he has right through. I think you know that Ali and I think for people to say
well, why don't you change that now, well that would actually be detrimental.

EMMA ALBERICI: Six weeks later, Michael Hawker is gone - replaced by his chief operating officer
and former head of rival Promina - Michael Wilkins

Michael Hawker released a statement saying that after seven years at the helm of IAG he had decided
to resign. He said he believed he had lost the confidence of a number of shareholders which was not
tenable for the company

Anton Tagliaferro is investment director at Investors Mutual - another big shareholder in IAG.

ANTON TAGLIAFERRO: The reality is that the company in the last few years hasn't performed very well
and obviously the managing director has to take the responsibility.

EMMA ALBERICI: IAG's most recognised brands are the RACV and NRMA.

(Excerpt from television advertisement)

ANNOUNCER: At the NRMA we are famous for helping people.

EMMA ALBERICI: Many observers now feel that it's the former chief executive himself that's been
left stranded. Taking all the blame for the company's woes. The share price at $3.98 - a long way
from the $6.95 it was trading at in early 2004.

Shareholder Peter Morgan again.

PETER MORGAN: You've had a board there say no to a negotiation yet they are carrying out a review
of the company.

Heaven help shareholders you know, if the dividend is cut. The capital position is cut. There are
right-offs. You know, why is it all happening after a negotiation? Why aren't shareholders informed
of that before the negotiation ends?

EMMA ALBERICI: Do you think in some respects Michael Hawker has been made a scapegoat?

PETER MORGAN: I think he has been made 100 per cent the scapegoat and I think it reflects very
badly on that incumbent board. They should be hanging their head in same today. It is un-Australian
just to let one bloke take the blame for everything.

EMMA ALBERICI: Would you like to see other members of the board?

PETER MORGAN: We have voted against members of that board previously. We will continue to do that
going forward. If that board thinks it is getting itself off as lightly as it thinks it is today
with regards to what is going on, it has got another thing coming as far as I am concerned.

I will be pushing that at an AGM. I would encourage every IAG shareholder if they feel the same to
write to the Chairman today to stop him from being yellow and show a bit of backbone.

EMMA ALBERICI: You have been largely held responsible for squeezing Michael Hawker out of the
company. Indeed, he said his position was untenable because he didn't have the support of major
shareholders like yourselves. How does that sit with you?

PETER MORGAN: I am not happy with it. I respect Michael for taking some accountability but their
attack is not totally on Michael. It is on the board itself on not being transparent and
accountable.

ELEANOR HALL: That is Peter Morgan of fund manager 452 Capital ending that report by Emma Alberici.