UPDATE 2-Generali sees stable life margins despite Solvency II

* Preparing for EU’s Solvency II capital rules

* Aims to cut capital absorption of life products

* Ups real estate exposure, to expand in U.S., China (Adds further details, share price)

MILAN, Nov 26 (Reuters) - Assicurazioni Generali GASI.MI, Europe's third-largest insurer, sees stable margins in its life insurance operations as it overhauls the business to prepare for the EU's new capital requirement rules, its CEO said on Friday.

“We are preparing the budget (for 2011) and the three-year rolling plan. The aim is for stabilisation in margins in life,” Giovanni Perissinotto said at a presentation day for investors in Venice.

He was outlining the strategy for its 330 billion-euro ($441 billion) investment portfolio, including an expansion of real estate in China and the United States, and less capital absorption by life products.

At 1218 GMT Generali shares were down 2.8 percent at 14.05 euros, slightly underperforming the Stoxx 600 European insurance sector index .SXIP, down 2.5 percent.

In non-life, Perissinotto said Generali was looking at “derisking” investments in a weakly performing sector and whether to stay in some businesses and areas.

But the focus at the Investor Day was on life operations, which covers the major part of the investment portfolio, and the impact of the EU’s Solvency II capital rules.

“Specifically in the life segment ... Generali will be able to offer products providing on the one hand improved performance for policyholders, on the other lower capital absorption,” the company said in a statement.

Single premium policies are easy to manage under Solvency II but annual premium products require a substantial change and innovation because they are capital hungry, Chief Financial Officer Raffaele Agrusti said.

Analysts on Thursday welcomed Generali’s revamp of its life insurance operations for the new capital rules, saying in particular that they liked a shift in emphasis to unit-linked products which require less capital than traditional policies. [ID:nLDE6AI18Z]

The EU’s Solvency II rules -- aimed at more closely aligning insurers’ capital cushions to the risks on their books -- are still being finalised for a Jan. 1, 2013 launch. [ID:nLDE6AGOSJ]

On investments, Generali said it plans to boost its real estate exposure by around 24 percent to 30 billion euros, with China and the United States in particular in its sights.

In China Generali sees its asset management tie with Guotai as a 50:50 joint venture starting up in early 2011 and Generali managers are in touch with major Chinese institutions about distribution, Generali Investments’ chief executive Philippe Setbon said.

The Guotai venture was announced in July 2009 and Generali said then it was taking a 30 percent stake.

Turning to the eurozone crisis Setbon said Generali has a 100 million euro exposure to Irish banks and less to Greek ones and altogether it has a 2 billion-euro exposure to peripheral euro zone states, mostly state bonds.

“The bank exposure is very limited,” he said. ($1=.7479 euros) (Writing by Nigel Tutt; Editing by Michael Shields ,Greg Mahlich)