ZURICH, July 12 (Reuters) - Swiss Re (RUKN.VX: Quote, Profile, Research) expects global insurance industry profits to rise this year, with life insurance premiums growing but non-life premium volume in Europe shrinking, the reinsurer said in a study released on Wednesday.

The non-life sector had almost zero growth last year in saturated markets, but big hurricane losses in 2005 would support premium growth in the United States this year, the reinsurer said.

"In other industrialised countries, easing prices should lead to a slight premium decrease," in the non-life insurance business, Swiss Re said.

In 2005, the worldwide insurance industry wrote premiums of $3.426 trillion -- or 7.7 percent of the worldwide gross domestic product -- with life insurance volume rising 3.9 percent and non-life gaining 0.6 percent.

Emerging markets had fastest overall premium growth, rising 6.9 percent in 2005 and outpacing saturated markets in industrialised countries, which expanded 1.9 percent. South and east Asia reported 9.5 percent growth.

Life insurance showed fastest overall growth as governments privatised pension schemes and appetite for unit-linked products -- life insurance policies that promise their holders higher gains if stock markets rise -- rose as markets boomed.

"European life insurers have overcome their 2001-2003 crisis, which was characterised by the decline of equity capital and the loss of policyholders' confidence: in 2005 they recorded the highest premium increase since 2000," the study said.

Profits were set to rise further, it said, after the industry showed in 2005 it had a tight grip on costs and was making a profit out of its underwriting business, unlike in the past when it relied on investment income.

______________________________

© Reuters 2006. All Rights Reserved.