A large multinational insurer says it is suffering from currency fluctuations as well as the turmoil in world investment markets.
Old Mutual P.L.C., London, the parent of OM Financial Life Insurance Company, Atlanta, announced Wednesday the Julian Roberts, a former Old Mutual group finance director who has been chief executive of Skandia Insurance Company Ltd., Stockholm, will be succeeding Jim Sutcliffe as chief executive.
The government takeover of the Federal National Mortgage Association, Washington, and the Federal Home Loan Mortgage Corp., Washington, will force Old Mutual to write down about $135 million in Old Mutual U.S. investment holdings, Old Mutual warned.
Old Mutual says it also will have to increase reserves by $155 million to back U.S. variable annuity benefits.
In addition to market volatility, a “significant strengthening of the U.S. dollar [has] led to a further increase in the costs associated with the guaranteed benefits on these variable annuity contracts,” Old Mutual says.
“Old Mutual is a great company with fantastic potential but also a number of challenges, which I look forward to tackling,” Roberts says in a statement about his new post.
To limit exposure, Old Mutual’s U.S. operations will be withdrawing products, using new currency hedging strategies, trying to improve fund mapping to reduce basis risk, and looking into the possibility of taking “corporate actions” to reduce the amount of risk associated with in-force policies, the company says.
Old Mutual operations outside of the United States have been meeting company expectations, the company says.