Insurance Australia Group indicated Monday evening it would reject an improved A$8.7bn offer from QBE, which had raised the stakes in the country’s largest insurance takeover battle on Friday by declaring its latest proposal final.

QBE late on Friday contacted IAG with a revised proposal of 0.145 QBE shares plus 90 cents cash for each IAG share, equating to A$4.60 a share. However, James Strong, IAG chairman, told QBE that the terms “fell short of fair value” but a formal decision would be made at a board meeting on Tuesday.