LONDON (Bloomberg) — Old Mutual Plc, South Africa's biggest insurer, is closing its Bermuda-based US life-insurance unit to new customers to control potential liabilities and cut costs.

Old Mutual Bermuda, which has "significant" excess capital above its regulatory needs, the London-based company said today in a statement.

About two-thirds of its 30 staff will leave, Matthew Gregorowski, a spokesman for Old Mutual in London, said in an interview. It was unclear whether those jobs were base d in Bermuda.

The closure "will provide greater certainty in respect of the business's future liabilities and will therefore strengthen the group as a whole", chief executive officer Julian Roberts said in the statement. "One of our key priorities is strengthening governance and risk management."

Old Mutual this month scrapped dividends and said profit fell 55 percent last year partly because of losses at its US unit, which offered guaranteed investor returns on annuities and only partially hedged against the risk of market declines. The Standard & Poor's 500 Index dropped 38 percent last year amid the worst economic crisis since the Great Depression.

Old Mutual rose 2.5 percent, to 41.3 pence in London trading, valuing the insurer at 2.2 billion pounds ($3.1 billion).

Hedging effectiveness at the Bermuda unit improved to 94 percent this year to March 8, from 92 percent in the fourth quarter, Old Mutual said.

Old Mutual on March 4 said it transferred $582 million to the Bermuda unit last year as the division posted a loss of $508 million and reserves increased on the annuity contracts. The company at the time said it would develop new investment and insurance products at the division.

"It was pretty much on the cards and was predictable that the unit would close to new business," said Greig Paterson, an analyst at Keefe, Bruyette & Woods Ltd. in London who has a "market perform" rating on the stock.