LONDON (Reuters) - Insurer Friends Provident said on Tuesday third-quarter sales rose 28 percent, towards the bottom of expectations, and gave a downbeat outlook for sales of mortgage-related insurance, a key product area.

"We see little improvement in the mortgage market but would expect many of our new protection focussed distribution deals to have a positive impact through 2006," the company's head of life and pensions, Ben Gunn, said in a statement.

Rounding off the life insurers' sales-reporting season, Friends Provident said revenues in the third quarter were 142 million pounds compared with 111 million pounds in the same period last year.

Third-quarter revenues were boosted by a 149 percent leap in overseas sales following Friends' acquisition of Lombard, an upmarket, Luxembourg-based life insurer, in January, and strong revenues in the Middle East and Asia from its offshore unit.

Friends said changes in the geographic mix of its products could modestly reduce its overseas margins but it said it expected Lombard's traditionally strong fourth quarter to outperform the same period last year.

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