UPDATE 2-Fortis positive on inflows after Q3 profit

* Q3 net profit 196 mln euros ($293 mln)s

* Gross inflows stable in first nine months

* Sees 2009 inflows at least in line with those of 2008

* Shares up 3.3 pct

(Updates after conference call, adds shares, analyst comment)

By Philip Blenkinsop

BRUSSELS, Nov 17 (Reuters) - Fortis FOR.BR forecast 2009 inflows would at least match last year's levels after a third-quarter net profit that analysts said showed signs the Belgian insurer was stabilising after a year of crisis.

The former Dutch-Belgian bancassurance group, which was broken apart after becoming one of the Europe's largest victims of the global financial crisis, said net profit totalled 196 million euros ($293.2 million) in the July-September period.

Some analysts said the profit of the two insurance divisions was higher than expected, with improved ratios of premiums to claims and expenses, although very few had issued forecasts before Tuesday.

While the financial market recovery this year has helped insurers significantly by reversing earlier writedowns, they are facing increasing challenges as low interest rates cut the return they get by investing in government bonds.

European non-life insurers are struggling to hike prices in the face of absorb rising claims during the recession [ID:nL517042]. Cash-strapped consumers have delayed purchases of new life products. [ID:nS41223] [ID:nL8291920]

Shares in Fortis were trading up 3.3 percent at 2.9860 euros at 1210 GMT, making them among the top 10 gainers in the FTSEurofirst 300 index .FTEU3.

Bank Degroof raised its rating to "hold" from "reduce" on the belief that the company's situation was stabilising.

Degroof analyst Ivan Lathouders described the results as "not great, but OK", adding that the complex results of general division, including legacy Fortis assets and liabilities, contained no unpleasant surprises -- itself positive news.

The company said gross inflows rose 1 percent in the year to date in life insurance and fell by 1 percent in non-life. For Belgium, the figure was up 3 percent, outside Belgium down 2 percent.

"We are confident that inflows by the end of the year will be at least at the level of last year," Chief Executive Bart De Smet told a conference call.

The Belgian arm of what remains of the former Low Countries financial powerhouse is primarily an insurance business with a dominant position in Belgium and operations in Europe and Asia.

The part of the former Fortis insurance business now consolidated in Belgium made a profit after minorities of 106 million euros in the third quarter, the majority from its life operations and with a gain on its investment portfolio.

Its international insurance division registered a 37 million euro profit, with higher inflows from China, Thailand and Portugal and a tailoff in France and Luxembourg.

The general division also made a profit -- of 53 million euros -- including an 83 million euro positive impact from revaluing a call option on BNP Paribas (BNPP.PA) shares.

Fortis said its capital position remained strong with a total insurance solvency ratio of 232 percent.

Shareholders equity rose to 8.5 billion euros at the end of September from 7.7 billion euros at the end of June, boosted by the net profit and some 0.6 billion from unrealised gains on government bonds and corporate debt.

Fortis said it had 'discretionary' capital of 1.3 billion euros, some of which could be used for new investments.

Fortis has concluded a deal to provide UK motor and household insurance with Tesco (TSCO.L) and taken a stake in the non-life insurance unit of Italy's UBI Banca (UBI.MI) and agreed to pull out of Russia, sell non-life in Luxembourg and cut its stake in a Thai joint venture.

CEO De Smet said Fortis was aware of insurance assets set to be sold, such as of Dutch ING (ING.AS), but that many were likely to be beyond its economic reach.

The Fortis group was broken up along national lines last October after a partial nationalisation by the governments of Belgium, Luxembourg and the Netherlands.

The Dutch state took control of the Netherlands operations. France's BNP Paribas took control of Fortis Bank and a quarter of Fortis Insurance Belgium. (Reporting by Philip Blenkinsop; Editing by Greg Mahlich and Simon Jessop) ($1=.6685 euros)