(Fixes typographical error in paragraph 6)
* Q1 net profit 660 mln euros, up 9.4 pct
* Solvency 1 ratio at around 160 pct in April
* Says to meet capital, asset sales target ahead of time
* Prospective BSI sale to offset planned east Europe buy
By Lisa Jucca
MILAN, May 15 (Reuters) - Italian insurer Generali expects to meet key capital and asset sales targets ahead of time after kicking off talks with Brazil's BTG Pactual for a possible sale of Swiss unit BSI, a central plank of its 4-billion-euro disposal strategy.
Europe's No.3 insurer by market value followed up on the announcement of exclusive sales talks late on Wednesday by posting a 9.4 percent rise in first-quarter net profit on Thursday, a further sign that CEO Mario Greco's drive to exit non-core businesses and focus on insurance is working.
Generali said net profit had risen to 660 million euros ($905 million), helped by a rebound in life insurance in Italy, a 3.7 percent increase in the non-life segment and improved financial markets.
Quarterly operating profit edged up to 1.3 billion euros and premiums rose 1.5 percent to 18.5 billion euros, helped in Italy by the strength of its Banca Generali network. Rivals Zurich Insurance and Aegon also posted improved results in the quarter.
Italy's biggest insurer said its Solvency I ratio - a closely-watched measure of capital strength - stood at approximately 160 percent at the end of April. Under its business plan unveiled last year, the company is targeting a ratio of above 160 percent by the end of 2015.
"We will be able to meet our capital strengthening target regardless of the performance of financial market," Chief Financial Officer Alberto Minali said on Thursday.
At 0910 GMT, Generali shares were up 0.4 percent at 16.59 euros, outperforming a 0.2 percent fall in the European insurance index.
Minali declined to give details on expected proceeds from the sale of BSI or on the expected timeframe. But analysts said the Swiss wealth manager could be worth between 1.2 billion euros and 1.4 billion euros.
The sale of BSI is crucial for meeting the capital target and Minali said it would help offset a capital hit Generali is expected to suffer from the purchase of minorities in eastern Europe planned later this year.
The CFO said the purchase of the minorities would depress Generali's capital ratio by around 7 percentage points.
Generali is pushing ahead with the sale of non-core assets to focus on its insurance business. It has already sold assets for around 2.6 billion euros.
BSI, a private bank based in Switzerland's Italian-speaking Ticino area, has been on the block for a number of years but had failed to draw sufficiently attractive bids.
Generali wrote down 217 million euros from BSI's value at the end of 2013 in a bid to pave the way for a sale.
Latin America's largest independent investment bank Grupo BTG Pactual SA, controlled by billionaire financier Andre Esteves, is seeking the purchase of a wealth management company to add more fee-related activities to the fast-growing banking empire Esteves has built since 2009.
"If we get to the end of this deal, BSI will be part of BTG's core business," Esteves told Italian daily Il Sole 24 Ore.
$1 = 0.7294 Euros Editing by David Goodman and Mark Potter