LONDON (Bloomberg) — Old Mutual Plc, the biggest insurer in Africa, may sell some US assets to reduce debt after posting a loss for 2009.

The insurer is "exploring" the sale of its US life business and plans to complete an initial public offering of the US asset-management division by the end of 2012, London-based Old Mutual said yesterday in a statement. The company, which didn't pay a dividend for 2008, recommended a payout of 1.5 pence a share in cash or stock.

The company has a Bermuda operation, which it closed to new business last year.

Old Mutual, with operations in South Africa, the UK and the US, is looking to sell the US assets after guarantees offered to policyholders and write-downs on investments including Lehman Brothers Holdings Inc. forced former chief executive officer Jim Sutcliffe to step down. The insurer, listed in London and Johannesburg, is the best-performing stock in the past 12 months on the FTSE/JSE Africa Life Assurance Index.

"The issues that nearly caused this company to tumble a few years ago are still there," said Eamonn Flanagan, a Liverpool, England-based analyst with a "hold" rating on the stock. "They haven't completed anything yet. The market probably expected at little bit more traction, rather than just plans."

The stock dropped 1.7 pence, or 1.4 percent, to 121.9 pence in London trading, valuing the insurer at about £6.6 billion ($9.9 billion).

Old Mutual posted a net loss of £340 million, compared with a profit of £441 million a year earlier. The loss was caused by a revision of the value of the company's debt, finance director Philip Broadley said. Gross premiums dropped eight percent to 8.5 billion rand and the claims ratio rose to 69.4 percent.

The insurer has about £2.3 billion of debt, which it plans to reduce by £1.5 billion over the next three years through the asset sales and future earnings. It also aims to reduce costs by £100 million over the next three years.

"The three equal legs the company had in the past, we are moving away from that concept," chief executive officer Julian Roberts said on a call with reporters. "What I'm more concerned about is having businesses that give a good return, that fit together, that work together and really I'm not concerned about which geographies they are in."

Old Mutual will keep a majority stake in its asset-management business after the IPO, which will probably take place on the New York Stock Exchange, Roberts said. He declined to put an expected selling price on the US assets.

The insurer plans to pay a dividend after its capital reserves doubled to £1.5 billion and it didn't have to inject further capital into its US life insurance business.