UPDATE 1-Innovation Group says chairman steps down

* Co names board member David Thorpe as interim chairman

* Shares fall 4 percent (Adds details)

Jan 5 (Reuters) - British software firm Innovation Group Plc (TIG.L) said on Monday its Chairman Geoff Squire stepped down and it appointed David Thorpe, a non-executive director, as its interim chairman.

Squire will remain as a non-executive board member until its annual general meeting on March 16, Innovation, which provides software and outsourcing services to the insurance industry, said.

Innovation, whose customers include Ford Motor Co (F.N) and AXA Insurance, said its nomination committee would begin search for a new chairman.

The company had rejected several offer approaches in December saying that they were "not at a level acceptable to the majority of the company's shareholders.

Innovation shares were down about 4 percent at 5.5 pence at 1036 GMT. The shares have underperformed the Software and Computer Services index .FTAS9530 by 79 percent over the past year. (Reporting by Balachander Surianarayanan in Bangalore; Editing by Gopakumar Warrier)