By Jo Winterbottom

MILAN (Reuters) - Assicurazioni Generali (GASI.MI: Quote, Profile, Research), Europe's number-three insurer, reported a 2.7 percent rise in 2007 gross premiums to 64.78 billion euros, largely as analysts expected, but France remained a difficult market.

New life business volumes rose 9.1 percent to 4.6 billion euros ($6.7 billion), Generali said in a statement on Thursday, and non-life business premiums increased 13.4 percent to 20.4 billion.

Generali, whose performance and strategy have been criticized by small fund shareholders, said the gains "reflected a stronger performance in all its main markets thanks to (its) successful multi-channel distribution strategy and continued focus on the retail and (small and medium business) markets."

New life business is on an annual premium equivalent basis (APE), an industry benchmark that smoothes out swings created by sales of single-premium products, such as annuities and investment bonds.

The life business increase was "a fair score given difficult markets and slower growth in the fourth quarter," said Michael Huttner, analyst at JP Morgan, whose growth forecast matched results.

Analysts at Keefe, Bruyette & Woods had forecast a 2 percent rise in non-life premiums for the year and a fall of 2 percent in life revenues, while Societe Generale was looking for consolidated premiums of about 66 billion euros.

Arch-rival Axa (AXAF.PA: Quote, Profile, Research) reported last month a 24 percent rise in 2007 life and savings new business sales and an increase in its non-life revenues of 28 percent.

Generali will release detailed full-year results in March.