Old Mutual announced Friday that it is selling its Baltimore-based life insurance operation to a private equity firm for $350 million, far less than what it paid nine years ago.

The company bought the division — part of the former U.S. Fidelity & Guaranty Corp. — from the St. Paul Cos. in 2001 for $635 million. Old Mutual is trying to improve its balance sheet and reduce its "risk profile," and is selling to an affiliate of New York-based Harbinger Capital Partners LLC.

The life insurance operation employs 163 in Baltimore.

Philip Falcone, Harbinger's chief executive, called the deal "an attractive proposition" in a statement. The firm could not be reached for comment about the effect on local jobs.

Old Mutual, which says the deal requires approval from state regulators in Maryland and New York, expects to close on or after Dec. 31.

Old Mutual, Africa's largest insurer, said it bought the operation to build a life insurance business in the United States but now sees the move as a mistake.

"This has proved to be a poor acquisition for the group … largely due to taking excessive credit risk, the impact for which came to a head in the 2008 global financial crisis," Old Mutual CEO Julian Roberts told analysts Friday, according to a Bloomberg transcript.

The Baltimore division was USF&G's Fidelity & Guaranty Life Insurance arm. The St. Paul Cos. acquired the company when it bought USF&G in 1998.

Leland C. Launer Jr., former chief investment officer of MetLife, has been tapped by Harbinger as chairman and CEO of the life insurance business.

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