Old Mutual, the London-listed life insurer, today revealed that its chief executive has resigned and it expects to make a $135 million (£76.4 million) writedown in its US life business as a result of the US Government's $200 billion bailout of Fannie Mae and Freddie Mac.

Shares in the company fell 2.2 per cent to 98.8p after it announced that Jim Sutcliffe, who has been chief executive of the company since 2001, had decided to step down with immediate effect.

Julian Roberts, chief executive of Skandia, Old Mutual's main European business since February 2006 and previously finance director of Old Mutual, will take over.

Mr Sutcliffe's resignation is understood to be a result of the issues that have arisen in the US.

While most financial institutions have enjoyed a share price rally since the weekend when the US intervened to bail out the mortgage financiers, Old Mutual appears to have been caught out by the move, which also helped the dollar stage a strong recovery.

In a statement, Old Mutual said that it would have to take a $135 million writedown on the value of its holdings of Fannie Mae and Freddie Mac preference stock, following the sharp fall in the value of the financiers after the announcement on Sunday of the US Government's rescue.

A spokesman for the company said that Mr Sutcliffe had said in August that he would take personal responsibility for the problems. "He has tried to do everything he can to put it right and he is an honourable guy," the spokesman said.

The outgoing chief executive is expected to receive at least a year's salary in compensation, in line with his contractual terms.

Last month, Old Mutual revealed losses of £107 million after it failed to hedge properly against falls in Asian stock markets, leaving it badly exposed on investment products that had promised customers a guaranteed minimum return.

At that point, the company injected £150 million to shore up the finances of its US life business.

The subsequent strengthening of the dollar has led to a further increase in the costs associated with the guaranteed benefits on its variable annuity contracts.

Old Mutual said it would recognise additional guarantee reserves of $155 million.

It added that it was not looking to sell its US life business.

The two new charges will have a combined impact in the current year of 1.2p a share.

The insurer will also set aside $250 million of capital to support the capital needs of its Bermuda business, which is also exposed. Other steps to try and limit the Bermuda business's exposure include withdrawing products, currency hedging and corporate actions to derisk the business.

Apart from the US life business, the remainder of Old Mutual's operations continue to perform in line with expectations, the company said.

The latest setbacks follow hard on the heels of other problems. One of Old Mutual's investment boutiques, Barrow, Hanley, Mewhinney & Strauss, took a bath on a $1 billion investment in Bear Stearns, the Wall Street securities group now in the hands of JPMorgan.

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