WRAPUP 2-European insurers spring back to life

ZFS, Aviva, Delta Lloyd, Generali life sales up

Aviva shares up 6 percent, outperforming flat index

Life sales following more positive trend - analyst

(Adds Generali results, analyst's comment, updates shares) By Myles Neligan

LONDON, Aug 5 (Reuters) - European insurers benefited from better life sales in the first half, prompting talk that a stabilising economy could help life insurance replace general insurance as the sector's main growth engine.

Generali, Zurich Financial Services, Aviva, and Delta Lloyd on Thursday reported life sales up by between 4 and 13.3 percent compared with a year ago, when premiums mostly fell as economic worries deterred European consumers from saving and investing.

The companies sounded an optimistic note about prospects, with Aviva Chief Executive Andrew Moss saying savings rates were now "going upwards very substantially" in its main markets.

The upturn tallied with stronger life sales reported by France's Axa on Wednesday and suggests that European consumers are no longer putting off major savings and investment decisions as memories of the financial crisis fade.

"I think both Aviva and Axa have shown there is the beginning of a more positive trend in terms of life sales," said Execution Noble analyst Joy Ferneyhough.

"Speaking to clients this morning, there's a real sense of 'is the non-life story done for now, is it life and asset managment I need to be exposed to?'"

Shares in Aviva were up 6 percent at 390 pence by 1415 GMT, making it the biggest riser by far in the Stoxx 600 European insurance index, after the company easily beat profit forecasts thanks to cost cuts and a renewed focus on higher-margin products.

PRICE PRESSURE

Shares in non-life insurers, seen as recesssion-resistant because consumers have little discretion over whether to buy many of their products, have outperformed those of pure life insurers since the onset of the crisis.

However, the non-life sector has struggled because of persistently weak prices, blamed on intense competition between insurers holding abundant supplies of capital.

During the first half of 2010, it also had to absorb a big rise in claims, fuelled by the Chilean earthquake and winter storms in Europe and the United States.

Reinsurer Munich Re estimates that total insured losses in the first six months of the year stand at $22 billion, more than for the whole of 2009.

Higher catastrophe losses, coupled with write-downs against bad property loans, reduced ZFS's profit by 10 percent to $2.3 billion, missing analyst estimates, and sending its shares down 4 percent.

Increased disaster claims also took their toll on reinsurer Swiss Re, cutting its underwriting profit by more than expected, and pushing the stock down 2.7 percent.

But Britain's RSA, which focuses largely on motor and home insurance, bucked the trend with slightly lower than expected insured losses, helping it beat profit expectations and driving its shares up 4.7 percent.

"There've been no real negative surprises out of these stocks today. Underlying profitability adjusting for noise seems to be holding up reasonably well," said Jefferies analyst James Shuck.

Generali, Europe's third-biggest insurer, confirmed the trend of rising life sales, with total life premiums up 13.3 percent. Shares in the group were flat after it reported net profit up 73 percent, narrowly beating expectations.

The European insurance index, which has broadly tracked the wider market this year, was also flat. (Additional reporting by Jason Rhodes in Zurich and Gilbert Kreijger in Amsterdam; Editing by David Cowell)

REUTERS