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SYDNEY, Australia -- A proposed $3.01 billion Australian ($2.0 billion) takeover of GIO Australia Holdings Ltd. by AMP Ltd. would create Australia's largest commercial non-life insurer.

Sydney, Australia-based AMP last week announced the takeover bid for GIO Australia Holdings, but GIO's board of directors urged shareholders to reject the offer, calling it "unwelcome and clearly inadequate."

AMP's stock transaction would give GIO shareholders two AMP shares for nine GIO shares.

If successful, the acquisition would increase AMP's annual premium volume to about $1 billion Australian ($564.8 million) a year. AMP already is Australia's largest life insurance company. Its non-life operations rank 11th among the nation's non-life insurers.

GIO shareholders will decide next month whether to accept the offer.

George Trumbull, AMP Ltd. chief executive officer, said AMP's plans call for combining the property/casualty and financial services businesses of both companies to realize substantial cost savings.

GIO reported a $27 million Australian ($15.3 million) loss in its fiscal year-end results, stemming mainly from large losses in its reinsurance division. AMP said it would review GIO's reinsurance operations for possible sale, if the takeover bid succeeds.