Sutcliffe calls it a day

IN  WITH THE NEW: Julian Roberts, right, it taking over from Jim Sutcliffe, on screen. Pic. Robert Botha. 10/09/2009. © Business Day.
IN WITH THE NEW: Julian Roberts, right, it taking over from Jim Sutcliffe, on screen. Pic. Robert Botha. 10/09/2009. © Business Day.

Richard Stovin-Bradford

Richard Stovin-Bradford

From the outside looking in, it looks as though Old Mutual chief executive Jim Sutcliffe has done the decent thing and fallen on his sword.

Investor pressure was mounting on him to deal with the financial services group's lacklustre stock market performance, and yet another overseas acquisition had gone pear-shaped.

But it is just as likely that he resigned yesterday after tiring of running a business that required constant fixing on top of day-to-day management.

He is said to have been mulling his departure for a few months.

His latest headache was the Bermudan outpost of Old Mutual's US life assurer, which had designed and sold into Asian market an offshore variable annuity product with minimum return guarantees.

The product had basic design flaws that were not picked up before it was marketed and was badly hedged. As a result, the London-listed group had to tip an initial $300million into the business to help back the guarantees. Yesterday it said it would have to pump in another $155million.

Markets could yet turn and reduce the impact on Old Mutual's bottom line, but it has to take the hit on the chin for now.

The initial setback reawakened talk in investment circles about Old Mutual's patchy track record at making international acquisitions and the cumulative goodwill paid on them, resulting in investor goodwill towards the company wearing thin.

The early acquisitions were made on former chairman and chief executive Mike Levett's watch, shortly after Old Mutual's London listing in 1999. When Sutcliffe became chief executive in 2001, he had to devote much of his energy to fixing them.

But the Bermudan setback was part of a US life assurance business acquired on Sutcliffe's watch. Now he has run out of time to realise his ambition of turning Old Mutual into a big-league wealth management group.

His successor, Julian Roberts, was previously Sutcliffe's finance director and right-hand man.

He will relinquish his current role as chief executive of Sutcliffe's most successful acquisition, Swedish financial services group Skandia.

Roberts is regarded as having a background in the life assurance industry every bit as strong as Sutcliffe's, but Old Mutual insiders say he lacks the outgoing chief executive's long term, big picture vision.

They add that he has long nursed ambitions of being chief executive, so has finally got what he wants. He inherits a business in which, according to Sutcliffe's interim results presentation, seven out of eight operations are performing satisfactorily in tough markets.

As is normal when there is a parting of executive ways, Sutcliffe received an honourable mention from chairman Chris Collins, who said: "On behalf of the board, I would like to express our thanks for the great contribution Jim has made to the group over the past eight years. We wish him well for the future."