Financial services group Old Mutual has said it will split itself into four separate companies following the outcome of a strategic review.

The Anglo-South African company said its current structure was “too costly” and inefficient.

Changes to the regulatory environment in Europe and South Africa had also made the business more complex to run.

It came as the firm reported a 4% rise in annual pre-tax adjusted operating profit to £1.7bn.

Old Mutual said it expected the separation of its four main units to be completed by the end of 2018.

The company plans to separate into Old Mutual Emerging Markets, Old Mutual Wealth, Nedbank Group and OM Asset Management.

Chief executive Bruce Hemphill said: “The strategy we have announced today sets out a bold new course to unlock value currently trapped within the group structure.

“We have four strong businesses that can reach their full potential by freeing them from the costs and constraints of the group.

“These businesses are performing strongly, have excellent competitive positions in sizeable markets and the underlying growth potential to flourish independently.”

He said the current organisation of the group was “a costly structure with insufficient synergies to justify those costs”.

The group said it had yet to decide how it would go about spinning off the units.

Old Mutual announced its strategic review in November, after former Standard Bank executive Mr Hemphill took over as chief executive.

The group, which was founded in South Africa in 1845, currently has a majority stake in South African lender Nedbank. But it plans to reduce it to a minority stake by the end of 2018.

The company’s Old Mutual Wealth unit, a sponsor of England rugby union, has also received a takeover approach from private equity firms, according to reports citing unnamed sources.