* Deal for 403 mln pounds in cash
* Comes after Zurich Insurance makes 5.6 bln pound RSA bid
* Analysts say it could cut Zurich's equity-raising needs (Adds Zurich comment, impact on capital raising, updates shares)
By Carolyn Cohn and Esha Vaish
Sept 8 (Reuters) - British insurer RSA is selling its Latin American operations to Colombia's GrupoSura for 403 million pounds ($617 million) in a deal that could ease RSA's own takeover by Zurich Insurance.
The sale is the latest move by Chief Executive Stephen Hester to sell off non-core assets and shore up the firm's balance sheet. It comes after RSA received a friendly takeover approach from rival Zurich Insurance.
RSA, which gave Zurich four weeks to come up with a firm takeover offer following an initial 5.6 billion pound proposal, said it had informed the insurer about the sales process prior to Zurich's announcement last month.
The outcome of Zurich's possible offer will not affect the transaction, it added.
For its part, Zurich would remain disciplined in price negotiations, a spokeswoman for the company said in an emailed statement.
It has previously said it wants a return on any investment in RSA of at least 10 percent, and reserved the right to make a lower offer than its 550 pence a share initial cash bid.
Eammon Flanagan, analyst at Shore Capital, reiterated his "buy" recommendation on RSA stock and saw little reason to doubt talks would continue to be based on a 550p share valuation.
Analysts at Bernstein, meanwhile, said the deal proceeds would improve RSA's balance sheet, cutting the cash Zurich would need to spend to manage the funding needs of RSA's 7 billion pound pension scheme.
"We now expect a capital raise of $2 billion by Zurich, down from $2.6 billion, which reduces (any) potential dilution of current Zurich shareholders," they wrote in a client note.
RSA said the deal with Suramericana's insurance business was expected to be significantly positive for its capital ratios on all measures on completion.
"With RSA's focus on its largest markets in the UK & Ireland, Scandinavia and Canada, it has become increasingly clear to us that RSA is no longer the best strategic owner of these businesses," Hester said in a statement.
"In Suramericana we have an experienced and committed regional player who can make the business a much more central part of their strategy."
At 1355 GMT, RSA shares were up 0.8 percent at 507.5 pence, slightly underperforming a rise in the FTSE 100 Index.
RSA Latin America has operations in Chile, Argentina, Brazil, Mexico, Colombia and Uruguay. It had total assets of 1.34 billion pounds at end-December, with net tangible assets of 258 million pounds, RSA said.
Net written premiums in the first half of 2015 were 333 million pounds with a post-tax profit of 9 million pounds, it added. (bit.ly/1VK6pLv) ($1 = 0.6496 pounds) (Additional reporting by Simon Jessop, Oliver Hirt and Nishant Kumar; Editing by Gopakumar Warrier and Keith Weir)