Old Mutual Bermuda (OMB), the group's US Life offshore business, is being closed to new business with immediate effect.
The OMB management team has concentrated on rebuilding the business by writing specialist investment products to meet customer needs, provided they fell within the group's agreed risk appetite.
However, management now believes it is unlikely OMB will be able to launch products meeting these requirements as well as providing a satisfactory return on capital.
The closing of OMB to new business is expected to assist further de-risking as well as cut costs by streamlining the team. However, the firm stresses it is committed to all existing policy obligations.
Hedging effectiveness has improved from 92% in Q4 2008 to 94% from 1 January to 8 March. Old Mutual says OMB remains well capitalised with a significant amount of excess capital over its regulatory requirement.
"One of our key priorities is strengthening governance and risk management and we have taken the decision to close OMB to new business with this in mind," says Julian Roberts, Old Mutual group chief executive.
"We have improved controls across the Group and each business has been allocated clear risk appetites within which it must trade."
"The action in connection with OMB will provide greater certainty in respect of the business's future liabilities and will therefore strengthen the Group as a whole," he says.
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