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Images not being generated at correct size

I have my WordPress Media settings set like so. Based on these settings no generated large image should exceed the width of 540px. I embed an image in a post like so. I choose "Large" as a image ...
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158 views

is it possible to force wordpress to always save thumbnails as 'jpg' not 'png'

I cant see any settings and cant see much in the php api docs regarding this? for instance if the original file upload is a png wordpress converts to jpg