A £150 million black hole has opened up in the accounts of Old Mutual as the financial services giant admitted a huge foul-up on bets in highly volatile Far Eastern stock markets.

News of the disaster in “minimum guaranteed return” products sold by its US Life insurance arm to Asian clients sent Old Mutual shares reeling, wiping nearly half a billion pounds off the company's stock listed in London, which fell 8.3p to 98.1p.

Old Mutual said it had been selling offshore variable annuity products in which premiums have been invested in Asian unit trusts. A hedging programme to make sure it could cover the guaranteed returns was installed but subsequently found to offer only 60% protection against the sharp falls in Asian equities.

A US Life executive has been fired over the affair and Old Mutual said it is having to inject £150 million into the business. An initial £63 million hit on its Asian investments has turned into a £107 million exposure, the company said.