UPDATE 2-Old Mutual CEO resigns; sees $135 mln writedowns

(Adds analyst comment, detail)

LONDON, Sept 10 (Reuters) - UK-listed insurer Old Mutual (OML.L) said on Wednesday Chief Executive Jim Sutcliffe would resign with immediate effect, as it announced further writedowns of $135 million at its troubled U.S. life business.

In a statement, South Africa's largest insurer said Sutcliffe would be replaced by Julian Roberts, the former head of Old Mutual's Skandia operations.

"Jim felt that he should resign after the surfacing of further issues (in the U.S. life business)," said non-executive chairman Chris Collins on a conference call with journalists.

The resignation was expected after a series of blemishes on the company's performance including its failure to sell its South African insurance unit Mutual & Federal (MAFJ.J), a string of reserve charges in the U.S. life business and worries over its exposure to the South African market.

This has seen its shares trade at one of the lowest multiples in the European sector. Old Mutual said on Wednesday it would take writedowns of $135 million in the value of preferred stock of Fannie Mae (FNM.N) and Freddie Mac (FRE.N) held by Old Mutual's U.S. life business.

The insurer also announced a strengthening of its reserves by $155 million, of which $93 million will be taken through adjusted operating profits as a result of its variable annuity product guarantees being hit by volatile equity markets.

This has led to Old Mutual putting aside $250 million of capital to support its Bermuda business, part of its U.S. group, until the end of the year, Old Mutual said.

The charges will result in a combined impact of 1.2 pence per share on adjusted operating EPS for 2008, Old Mutual said. This figure came as a relief to analysts at Merrill Lynch, who said today's announcement "has to be put into perspective" in spite of the ongoing uncertainty surrounding the business.

"Speculation that Old Mutual will be subject to a takeover bid and/or a possible break-up may also increase," the investment bank said in a note to clients.

U.S. LIFE SALE

Analysts and shareholders called for a radical overhaul of Old Mutual's business, including a possible sale of its U.S. unit, after it took a $125 million provision in the unit in August to cover hedging failures -- double the levels estimated by the company's profit warning in June.

Roberts told journalists on a conference call that the company was not looking to sell the troubled unit. He later qualified this on a call to analysts, saying that selling its U.S. business may be an option once it has completed a review of the business and the extent of its exposures.

"Although we're not looking to dispose of the U.S. business for the time being, clearly a disposal will be one of our options once we've got to the bottom of the issues," Julian Roberts later told Reuters.

Kevin Ryan, an equities analyst at ING, said that the unit is "unsalable" at present. "Old Mutual is stuck with it", until it can sort out the issues, he said.