The financial crisis at Fannie Mae and Freddie Mac has claimed its first British scalp with Old Mutual chief executive Jim Sutcliffe quitting as the firm announced big falls in the value of its investments in the two United States mortgage finance giants.

Sutcliffe, who has headed the Anglo-South African financial services giant since 2001, could be in line for a farewell handout worth up to
£7million although lawyers are still negotiating the terms of his departure and Old Mutual will be keen to pay far less than that.

Chairman Chris Collins said: "Jim felt that he should resign after the surfacing of further issues in the US life business."

He is being replaced by Julian Roberts, who has been running Old Mutual's latest acquisition Skania for the past two years.

Roberts said: "Although we are not looking to dispose of the US business for the time being, clearly a disposal will be one of our options once we have got to the bottom of the issues."

In a litany of writedowns and provisions today Old Mutual revealed that the situation in the States is far worse than when it made a
$125million (£71million) provision last month.

Today it said that it had lost $135million on the value of preferred shares it held in Fannie Mae and Freddie Mac.

It put aside an extra $250million of capital to bolster its Bermudian business.

The company will also have to strengthen its reserves to the tune of $155million to reflect increased demands on its annuity business.

In total these will cut the current year's profits by around £66million. Old Mutual shares dropped by 3p to 97.9p.