By Sven Egenter

ZURICH (Reuters) - Swiss insurer Baloise (BALN.VX: Quote, Profile, Research) reported a 6.7 percent rise in business for the first quarter on Thursday and lower payouts from insurance claims.

Total business volume -- based on IFRS premiums and investment-linked life insurance -- was 3.3 billion Swiss francs ($3.13 billion) in the quarter, the group said.

It was the first time Baloise, the focus of takeover speculation after its own failed tilt at German rival Gothaer, released a first-quarter statement. The company's business grew by 6 percent in the full-year 2007.

Baloise shares fell 2.7 percent after initial gains, trading at 115.30 Swiss francs by 1251 GMT. Traders said investors were locking in recent gains from the stock, which has outperformed the European insurance sector this year.

"Considering the substantial capital position the company has, we believe Baloise to be one of the most solid, conservative and safe plays," said Landsbanki Kepler analyst Fabrizio Croce.

"The company is growing in solid high-margin traditional business."

Baloise said its non-life business grew by 3 percent to 1.58 billion francs in the first quarter, while life insurance premium volumes rose some 10 percent to 1.75 billion francs.

Growth was particularly strong in Switzerland, Belgium and Austria, the group said.