STOCKHOLM (Bloomberg) ? Skandia AB, the Nordic region?s biggest insurer, posted a second-quarter loss as it made an unexpected writedown of the value of a UK personal investment unit and set aside money to cover the cost of a US regulatory settlement.

The net loss was 1.47 billion kronor ($191 million), or 0.98 krona a share, compared with net income of 79 million kronor, or 0.07 krona a share, in the year-earlier period, the company said today in a statement.

Chief executive officer Hans-Erik Andersson, 55, is trying to restore confidence in Stockholm-based Skandia after scandals over bonuses left it with a shrinking market share. Skandia, which is a possible takeover target of Old Mutual Plc, wrote down the value of Bankhall, which sells services to UK independent financial advisers, by 1.14 billion kronor to 350 million kronor.

The writedown was ?large and a negative surprise,? Fox-Pitt, Kelton analyst Duncan Russell said by telephone. ?It raises questions about the ongoing strategic position of the group.?

Shares of Skandia dropped 1.4 percent to close at 42.3 kronor in Stockholm.

Skandia had already reduced the value of the Bankhall unit in the fourth quarter last year, when it took a 931 million-kronor goodwill writedown for the unprofitable business. Bankhall posted a second-quarter operating loss of 18 million kronor, Skandia said.

Skandia took over Bankhall when it bought Lynx Group Plc for about ?247 million ($444 million) in 2002 to help strengthen its relationship with independent financial advisers in the UK. The advisers buy services such as legal advice and software programs that help them run their businesses of selling savings plans such as those offered by Skandia.

?Bankhall?s business plan has been subject to a close review,? the statement said. ?A new business plan has now been drafted which takes into account lower earnings expectations from certain business lines ? particularly mortgages and general insurance ? lower margins, and reduced synergy value.?

In the US, Skandia had to reserve 507 million kronor in the second quarter for American Skandia, a former business that was among companies investigated by the Securities and Exchange Commission over improper trading of mutual fund shares.

Old Mutual, which is the largest financial services company in South Africa and has a Bermuda subsidiary, said on May 13 it was in talks to buy Skandia as part of plans to expand outside its domestic market. Skandia said at the time that it had received ?proposals from potential partners?.