Insurance Australia Group has rejected a A$7.5bn ($6.9bn) offer by larger Australian rival QBE that would have created one of the world’s top 15 general insurers, saying the bid was “totally inadequate”.

QBE said on Tuesday that it made public the rejection of its shares-and-cash “merger” proposal, put to IAG last week, to avoid further market speculation. QBE had offered 0.142 of its shares and 70 cents in cash for each IAG share